Punjab National Bank (PNB) Q3 FY22 Earnings Concall Transcript

Punjab National Bank (NSE: PNB) Q3 FY22 Earnings Concall dated Jan. 28, 2022 

Corporate Participants:

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

Analysts:

Suraj Das — Analyst

Mahrukh Adajania — Elara Securities — Analyst

Dev — Horsepower Securities — Analyst

Unidentified Participant — — Analyst

Aditya Ranjan Pattanayak — HCL Capital — Analyst

Sneha — Subhkam Ventures — Analyst

Shashank Verma — Axis Mutual Fund — Analyst

Abhijeet Sakhare — Kotak Securities — Analyst

Rahul Jain — — Analyst

Ankit Bansal — — Analyst

Jai Mundhra — Batlivala & Karani Securities — Analyst

Ashok Ajmera — Ajcon Global Services — Analyst 

Presentation:

Operator

Ladies and gentlemen, good day and welcome to the Punjab National Bank’s Q3 FY’22 Post Results Conference Call hosted by Batlivala & Karani Securities India Private Limited. [Operator Instructions]

Participation in this conference is by invitation-only. Punjab National Bank reserves the right to block access to any person to whom an invitation is not sent. Unauthorized dissemination of the content or the proceedings of the call is strictly prohibited. And prior explicit permission and written approval of Punjab National Bank is imperative. Please note that this call is only for investors or analysts.

I now hand the conference over to Mr. Suraj Das from Batlivala & Karani Securities India Private Limited. Thank you and over to you.

Suraj Das — Analyst

Thank you, Mohsin [Phonetic]. Good afternoon everyone and thanks for joining the call. On behalf of Batlivala & Karani Securities, we welcome you to Punjab National Bank’s 3Q FY’22 post result conference call. We have with us today the management team of Punjab National Bank represented by Mr. S. S. Mallikarjuna Rao, MD and CEO sir; Mr. Atul Kumar Goel, the special officer on duty; Mr. Sanjay Kumar, Executive Director; Mr. Vijay Dube, Executive Director; Mr. S.K. Saha, Executive Director; Mr. Kalyan Kumar, Executive Director; and other senior officials of the Bank.

I would now request MD and CEO sir to start the call with his opening remarks on 3Q FY’22 results post which we will start the Q&A period. Thank you, and over to you, sir.

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

Right, good afternoon once again, I’m Mallikarjuna Rao here. I have with me Mr. Atul Goel, who is a MD designate, will be taking charge from 1st of February. Now with respect to the results what we have declared yesterday for the quarter ended 31st December, I would like to just give you the key highlights. Our operating profit has improved by 26.24% on quarter-on-quarter basis, net interest income has increased by 22.8% on quarter-on-quarter basis, global net interest margin has improved by 54 bps to 2.93% in Q3 FY’22 compared to 2.39% in Q2 FY’22. Cost-to-income ratio has also improved by 660 bps to 51.67% in Q3 over Q2. Fee-based income has increased by 10.2%. Then return on equity improved by 7 basis points. Gross NPA stood at 12.88%, that is reduction of 75 bps sequentially on quarter-on-quarter compared to September ’21. Net NPA stood at 4.9%, that is a reduction of 59 bps compared to the position as on September ’21.

Provision coverage ratio excluding TWO has improved by 200 basis points to 65.17% in December ’21 compared to September ’21. Capital adequacy ratio has improved to 14.91%. Now here I’m using the word very clearly, improvement. I would like to give what you call little more clarification here. The capital adequacy ratio stood in September was 15.20%. As you are aware, the pension liability, because of the new guideline earlier for the banks, RBI has permitted them to amortize over a period of 5 years. Accordingly, our overall liability has been INR3,000 crores, INR3,070 crores or INR3,060 crores out of which one-fifth we have already debited to P&L, remaining amount has been what you call kept for amortization in the next 4, 5 years. However, here, the entire amount is required to be allocated for the capital line taking the capital adequacy ratio. So roughly around 34 basis points to 35 basis points are given which are allocated here. If you look at in adjusting the figure of 34 basis points to 14.91%, it will be 15.25%. There is an improvement over what was there at the September.

Second, retail credit has grown by 7.7%, agri has grown by 6.2% year-on-year. MSME has grown by 4.1%. Domestic CASA share stood at 45.65%, that is an improvement of 99 basis points. Savings has grown by 8.76% year-on-year. CASA has grown by 7.59% year-on-year. And further in terms of the efficiency ratios as well, there has been an improvement in terms of NIM, in terms of cost on deposits and other ratios. The growth within the retail also we have seen good amount of growth in housing loan, vehicle loan, personal loan and gold loan. Composition of RAM has also increased from 51.8% to 54.3% at the end of December ’21, 250 bps year-on-year basis. In terms of government, what you call related priority sector lending, all the requirements under regulatory have been met by us.

In terms of profitability, the improvements you will observe on quarter-on-quarter basis. In terms of year-on-year basis, there has been a what you call reduction in terms of net interest income as well as operating profit predominantly because in December the NPA identification December ’20, NPA identification was not there for a period of 9 months, NPA was identified only in the month of March, as a result of which the accumulated position, because of the interest what you call recognition and other things, the position was elevated at that time, though we have made provision, it was a provision under standard but income was recognized. So INR28,000 crores of NPA has become in March ’21 because of that reason. So that if you look at consideration, the comparative position is better represented on quarter-on-quarter basis.

With respect to asset quality in absolute terms as well, gross NPA stood at INR97,259 crores as against INR1,00,291 crores. In terms of net NPA as well, it has come down to INR33,879 crores as against INR36,934 crores besides the reduction in the NPA ratios. We are very confident that the NPA ratios further will be reduced by March 2022 and even March 2023. Current GNPA of 12.88%, at even conservative level, we are very confident it will come down below 12%, and in case of 4.9%, we are expecting at the very conservative level less than 4.5%. In fact, our endeavor will be to bring it below 4% by March ’22 itself. In case of March [Indecipherable], further improvement will be there because there are many areas which in terms of given transfer to any RCL or otherwise, they would not have taken place, even if something happens before March, it would only TWO accounts. But in realistic sense, more and more accounts could be transferred in the next financial year.

There have been lot of initiatives we have taken in terms of digitalization as well and even fintech-related activities, particularly for coal thing we’ve entered into arrangement with four companies and as on today even the traction is not there, but we are expecting good amount of traction to move forward, because we have done these things recently. In terms of fintech usage for digital lending, this also, we have tested on pilot basis in the last 4 months to 5 months, and we have reviewed in terms of the parameters determinable for pre-approved lending, that also we are expecting the traction to move up much better in the current quarter, but much more visible in the next financial year. These are the what you call preliminary observations from my side in terms of the quarterly results what we have declared. Now I will be open for — I want to get the questions from your side. Thank you.

Questions and Answers:

Operator

Thank you very much, sir. We will now begin the question-and-answer session. [Operator Instructions] We have our first question from the line of Mahrukh Adajania, an analyst. Please go ahead.

Mahrukh Adajania — Elara Securities — Analyst

Hello, sir. Hi. Sir, my first question is on your credit cost, why has it risen sequentially?

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

No, why are we present sequentially means?

Mahrukh Adajania — Elara Securities — Analyst

Why has it increased sequentially?

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

That is because we have done additional provisioning in some of the NPA accounts.

Mahrukh Adajania — Elara Securities — Analyst

Okay. So that’s aging based only?

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

No, much more than what is required from regulatory perspective.

Mahrukh Adajania — Elara Securities — Analyst

Got it, sir. Sir, the second one —

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

To be very clear, in one account, we have provided very high. That is what you call SREI account.

Mahrukh Adajania — Elara Securities — Analyst

So you made extra provisions —

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

— extra provision there even though it is not required as per regulatory.

Mahrukh Adajania — Elara Securities — Analyst

Got it. So what would be our total provisioning on SREI right now?

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

70%.

Mahrukh Adajania — Elara Securities — Analyst

Okay. So that’s one of the highest of totals.

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

Yes.

Mahrukh Adajania — Elara Securities — Analyst

And sir, the other question is, what would be outlook on loan growth. So we’ve seen good traction this quarter but going ahead?

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

Correct. You’re absolutely right. If you look at the quarter-on-quarter growth, it was at 2.66% which is much better if you compare with any other quarter in the past. This is because last time also, if you remember when I have spoken in the Analyst Meet, we have created a good pipeline of sanctions, it is just a matter of time for disbursement. In fact, this 2.66% also to certain extent is muted because Air India the amount in the last week of December, we have received INR4,000 crores in the standard category where what you call re-feed. As a result, it is muted to that extent, otherwise the growth would have been little even better. And the pipeline is still there. As a result, our confidence is around 6% growth at the end of March ’22, by March ’23, it could be anything around between 8% to 10% kind of growth we are envisaging.

Mahrukh Adajania — Elara Securities — Analyst

Got it. Sir, what is the outlook specifically on MSME because a lot of stay tuned banks now are becoming again — have lend a lot to the MSME sector again in this quarter. And we hear that there were some MSME schemes also. So I mean while COVID would have impacted this sector, why is there a fresh round of lending aggression there again?

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

No, first line of lending, if you intrinsically look at that, majority is only emergency line of credit. Even in our case also, around INR19,000 crores as on today has been sanctioned in the last 1.5 years under the emergency line of credit to MSMEs and that is very important input for the MSME because they’re going through tough time because of the COVID.

With respect to stress in the segment if you look at under OTR and OTR1 and OTR2, the restructuring profile of our bank has not been very high, it is together around INR18,000 crores and even if we look at understanding whether any amount of slippages has been there, it is also not very high, maximum is INR1,000 crores to INR1,100 crores is the slippage overall in this quarter, it was only INR500 crores from the OTR1. So majority of lending to MSME incremental has happened through emergency line of credit where government guarantee is available and not only that they’re all for the existing borrowers where the units are working.

With respect to normal lending to MSME, there are green shoots where opportunities are there, but it has not been very aggressive as on today. If you look at our growth, It was only 4% growth, in MSME 4.1% growth, but it can be much better in the next few quarters to come, because investment by the private party in large corporate will also create impetus for ancillary industries and MSME segment.

Mahrukh Adajania — Elara Securities — Analyst

Got it, sir. Sir, and just in terms of asset quality, you did mention that you received INR4,000 crores over Air India. So would that be all? Is the entire amount now received and how much provision did you reverse there, and even in terms of future that is classified still as SMA-2?

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

Which one?

Mahrukh Adajania — Elara Securities — Analyst

Future.

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

Future, okay. So as far as Air India is concerned, INR4,000 crores received in December and the rest of your amount of INR900 crores received during the current month. So now it stands without any outstanding balance, it is zero from Air India side, because they have paid everything they have taken over the account on severance or what you call Government of India. So provision reversal has been there to the extent of INR400 crores in terms of Air India, more so in terms of the interest recognition.

Mahrukh Adajania — Elara Securities — Analyst

Interest recognition. Okay. And future?

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

Together, It is — 1 minute, together how much?

Unidentified Speaker —

INR1,200 crores [Indecipherable] plus remaining plus provision.

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

Provision and interest recovery together impact is around INR1,100 crores.

Mahrukh Adajania — Elara Securities — Analyst

Okay, so INR400 crores has gone to —

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

INR400 crores is interest reversal, INR400 crores is interest recognition and the remaining is provision reversal.

Mahrukh Adajania — Elara Securities — Analyst

Got it. And sir, what is the status of Future Retail?

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

Future Retail, it is a standard as on today because it is a restructured account, but we are waiting for the situation, now they may default in terms of payment. They have approached the court intervention, we’ll wait and see. If required, that is not very big — huge outstanding, it is around INR980 crores, which we can take either way, there won’t be any problem, and in case it has to become NPA, we can do that in the month of March and we can even provide adequately. 20% is already there provision.

Mahrukh Adajania — Elara Securities — Analyst

Okay sir. Thank you so much.

Operator

Thank you. [Operator Instructions] We have our next question from the line of Dev from Horsepower Securities [Phonetic]. Please go ahead.

Dev — Horsepower Securities — Analyst

Yes, good evening, gentlemen. I want to ask you regarding this increase in gross NPA of around INR4,000 crores. Okay. INR97,000 crores, minus INR94,000 crores, if I’m not mistaken, okay. So what did led the increase in this quarter suddenly — which account of —

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

There is no increase.

Unidentified Speaker —

No increase, yeah.

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

There is no increase. Where is the figure of INR94,000 crores? iNR 97,000 crores is quarter figure, earlier figure was INR1,00,000 crore.

Dev — Horsepower Securities — Analyst

No that was the earlier quarter when sequentially earlier quarter this October quarter right, September quarter?

Unidentified Speaker —

INR1,00,291 crores.

Dev — Horsepower Securities — Analyst

INR1,00,291 crores. right. So sequentially. I mean —

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

It has come down, it has come to INR97,259 crores. Are you looking at year-on-year?

Dev — Horsepower Securities — Analyst

No sequentially. I’m talking about the sequentially in October —

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

It has come down.

Dev — Horsepower Securities — Analyst

Yes, and year-on-year, also come down.

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

No, no, year-on-year what you’re telling INR94,479 crores, it is INR97,000. You need to be referring to March results where accumulation of 9 months NPA identification because of Supreme Court judgment has happened where the NPA accretion was around iNR 25,000 crores, INR28,000 crores [Indecipherable]. That was the reason. That is why December ’20 figures are not comparable, sequentially later on if you look at, it has been a reversion in NPA.

Dev — Horsepower Securities — Analyst

Of course. And the extra INR500 crores provision you declared on that debt NPA right, you have provided for, the schedule you have provided in the notes of accounts, the schedule — in the schedule in the notes of accounts, you have shown the breakup that INR500-plus crores has been provided excess, so that the excess portion is related to the Supreme Court judgment?

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

No, no, no, no, Supreme Court judgement has come in March only and that matter is closed there, already NPA s have been identified. External provisioning is related to different factors. For example, as I’ve indicated earlier, we have been extra provisioning in case of SREI account, even though the requirement is lower, we have made additional provision and currently the provision coverage is 70% in terms of that account. So wherever there is a requirement, we have provided additionally, much more than what is regulatory requirement. [Speech Overlap] If you are reading notes on accounts of December ’20, you may be finding this figure. This INR500 crores was extra provided only for the sake of pro forma NPA accounts, but not now, it is not related to December ’21.

Operator

Thank you. We have the next question from the line of [Indecipherable]. Please go ahead.

Unidentified Participant — — Analyst

Good evening, everyone. Am I audible?

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

You are audible.

Unidentified Participant — — Analyst

Congratulations sir on the wonderful numbers. What I wanted to ask you is, how much of your NPAs, have you transferred to NARCL and how much are you planning to in the near future as in by Q4 FY’22 and ’23?

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

See, so far, we have not transferred anything because NARCL is yet to take shape, originally identified there was roughly around INR8,000 crores, out of which more than INR7,500 crores were totally written-off accounts, TWO accounts. However, after scrutiny by the NARCL and discussion IBA had with various banks, this amount will be transferred to them in two or three tranches. See, first tranche could be anything around INR2,200 crores to INR2,300 crores, and the next tranche will be a little more than INR4,000 crores to INR5,000 crores, and the remaining out of the INR8,000 crores will be transferred in the third tranche. There is a delay in functioning because of anticipation of final approval from RBI. We are also in chain. Once it happens, the transfers of the money can take place, though the amount of transfer will not impact the balance sheet because they are in the TWO. However, there can be a positive impact on the profitability, based on the amount what we receive in the cash component of 15%.

Unidentified Participant — — Analyst

All right, thank you so much.

Operator

Thank you, sir. We have the next question from the line of Aditya Ranjan Pattanayak from HCL Capital. Please go ahead.

Aditya Ranjan Pattanayak — HCL Capital — Analyst

Hi, good evening. My question on total asset, how you distribute, as per now, your [Technical Issues] asset allocation —

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

Aditya, your voice is not clear, we are unable to understand.

Aditya Ranjan Pattanayak — HCL Capital — Analyst

Hello, right now, it’s clear?

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

It’s clear but it is reverberating. You can continue, let me see how I can understand.

Aditya Ranjan Pattanayak — HCL Capital — Analyst

Okay, my question is that how your asset allocation over the distribution, because currently near about 90% and above — above 90% are [Indecipherable] below triple asset class. So that —

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

No, I am not able to understand what you’re talking about. [Speech Overlap] Hello, you are taking about rating?

Aditya Ranjan Pattanayak — HCL Capital — Analyst

Yeah, yeah.

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

Okay, INR100 crore and above, we have given the details to you, INR100 crores and above we have given what you call details in the presentation at page number 11, and BBB and Above, it is 91.92%; and BB & Below, it is 5.86%. Unrated is 2.22%. That is the status which we had indicated. Any further —

Aditya Ranjan Pattanayak — HCL Capital — Analyst

Whether BB-rated [Indecipherable] are increased in this quarter-on-quarter, do you think that how you increase — do you increase further or you will reduce in this rating?

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

No, increase, what increase? That is better rated, 91% [Speech Overlap] it is because [Speech Overlap] consciously considering only AAA category and AA category. That is the reason why you will find in AA marginal increase, AAA also marginal increase, but the better increase was there in A. The reason is that we have reduced our exposure in BBB & Below, as a result of which you have found that difference. So, there is a quality to increase in terms of the higher rated advances above INR100 crores, and this will improve further as well.

Operator

Thank you. We have the next question from the line of Sneha from Subhkam Ventures. Please go ahead.

Sneha — Subhkam Ventures — Analyst

Sir, two questions from my side. Just wanted to know, considering — how do we see the overall credit costs from here on? Second question is, and what is outlook on the asset quality basically, what would be your guidance on the slippages as well as how much we’re expecting recoveries and upgrades going ahead?

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

Right. See, regarding overall credit costs, if you look at currently, we don’t have any bigger stack to become NPA from the corporate segment. Only from RAM segment, whatever is coming, it is coming. However, we wanted to strengthen the balance sheet effectively, if there is an opportunity for increase in the provisioning. If you look at it technically as well, the credit cost remaining for 9 months at 1.72% at the end of December could have been lower as well, if you look at the provision requirement only compliant to the regulatory provision. However, we have done additional provisioning. As a result, credit cost appears to be high in NPA accounts. But in reality, it was with an approach of strengthening the balance sheet, particularly where I had given SREI, we have increased the provision up to 70%; even, we will do 100% by March depending upon the availability. Even at that time, it appears to be higher provisioning in the NPA category wherever such kind of requirement is there. But overall, if you look at our guidance, it will remain 1.5% because we are very confident that the control and slippages will be there, if you have observed the fresh slippages also from March ’21 onwards, in June, it was more than INR8,800 crores, in September, it was INR6,800 crores, whereas now it is around INR3,800 crores. So, there has been a very good improvement in asset quality. Collections improvement has been there. So, our guidance will remain around 1.5% in terms of this credit cost. So what was your second question?

Unidentified Speaker —

Asset quality.

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

Asset quality. Asset quality is improving and you must have seen in terms of the percentage improvement in gross NPA as well as in net NPA, 12.88% gross NPA. We are very confident at the conservative level by March ’22 to bring it down below 12% — below 11%, how much is now? 11.88% — [Speech Overlap] 12.88%. It will be below 12%. And in case of net NPA as well, currently it is at 4.9%. It could be even — we can try for below 4% even though the conservative target could be below 4.5% because we are seeing good amount of credit growth, good amount of recovery, as a result of which there will be an impact on the gross and net NPA in a downward vertical outstanding, and ’22, ’23 also will be very good in terms of controlling the what you call gross and net NPA ratios as well as improving the asset quality.

Sneha — Subhkam Ventures — Analyst

Okay. Got it. Sir, when you mention about the growth, this growth is coming from which segment, sir?

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

Yeah, all segments, madam. Generally, you see, quarter to quarter, there may be a shift here and there; particularly for the December quarter, there has been a shift towards RAM segment. That is why the composition of RAM has improved to 54% from 51% year-on-year. In the month of October, we have launched a campaign of [Indecipherable] particularly on the RAM segment, retail, MSME, and agriculture by identifying certain clusters for MSME growth. So even though the growth percentage is 4.1%, there has been good amount of recovery as well, as a result of which the fresh sanctions are muted. We have done even the what you call emergency line of credit in MSME sanctions. Corporate also, we have grown well, we have sanctioned very well, but because of pressure of interest rate, some of the outstandings have been shifted from one bank to the other. And also there has been a recovery during the month of December to the extent of INR6,000 crores to INR7,000 crores, unexpected in terms of the corporate, including the what you call Air India, which has a little reduced the outstanding of the corporate. Otherwise as a big bank, large bank, we look at every segment to grow; i.e., great delivery to happen in every segment.

Sneha — Subhkam Ventures — Analyst

How do you see the overall treasury income moving around considering the yields remain elevated from your [Speech Overlap]

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

It will be reduced definitely. If you look at treasury income that has gone from compared to year on year. In the current year also, it has come down. September ’21, it was INR1,048 crores and in December now it is INR614 crores. So, it will remain — if you even closely observe or rather probably — it may not be there in the presentation. As per RBI guidelines from HTM, we can sell up to 5%. That is like a available amount, which we did not do that, we have only used up to 1.4% [Phonetic]. Still, there is a 3.6% available, which we will do in the next quarter. So, that is current quarter. Even in March quarter as well, we are confident of getting a little over INR500 crores to INR600 crores in treasury, but in the next few months to come, a few quarters to come, our next financial year, it will be muted. It’ll not be as high as what we were earning in the last 1.5 years because of firming up of the interest rates. Nevertheless, even we will have a control on MTM as well.

Sneha — Subhkam Ventures — Analyst

Okay. And how do you see the overall margins panning out considering — the ideal growth for the retail for this next calendar — for the current calendar year?

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

Margins, net interest margin has been under stress in the last 1.5 years because of the high liquidity pushing the interest rates low on credit. Commensurate reduction did not take place in the deposit. That is the main reason across the banking industry, and PNB is no exception. So, coming for the future, if you look at in December, we’ve improved our NIM to December quarter in isolation to 2.92% whereas overall it remains at 2.68% what you call globally and domestically 2.75%, so by March also, our NIM will be more than 2.75% overall. That is at the minimum level, what we are looking at, but in the next year, definitely there will be an improvement. We would have been very happy to touch around 2.9% to 2.95%, which we can do it in the next year because we had a very tough time during the last 1.5 years in terms of pressure on interest rates, which is slowly easing out because of RBI’s policy of sucking the liquidity and firming up in the market in terms of the —

Sneha — Subhkam Ventures — Analyst

Okay. And sir, last question is considering the growth, any plans to raise capital going ahead?

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

There is no requirement. If you look at our capital at the end of September, it was 15.2%. As of March, it is 14.91%, but I have given an explanation whereupon 34 basis points we had allocated for unamortize the figure of our pension liability, as a result of which the capital allocation — capital ratio appears 14.91%. Otherwise in reality, it could have been 15.25%. Even if the approval what we have taken from the Board for raising INR6,000 crores from the market, we have already done that. INR2,000 crores from Tire II and INR4,000 crores from AT I bonds, we’ve taken from the market. So as of now, even for envisaging the credit growth between 8% to 10% during year ’22, ’23, the capital what we currently have is more than sufficient.

Sneha — Subhkam Ventures — Analyst

And your view on any expectations on the budget?

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

Budget, I don’t think capital allocation is one area. That is probably one or two banks require because of particularly the zero-coupon capital what they had given where RBI has come out by reducing the net present value, as a result of which capital adequacy has come down to couple of banks. In those cases, probably government may support. That is from the capital perspective. From otherwise banking perspective, I don’t think any specific what you call announcement could be there in the budget, but budget should what we expect is — might continue on the decisions or declarations what they’ve done in the earlier budget related allocation for infrastructure in terms of port segment, aviation segment, and road segment, and also there are green shoots where probably private investment could come in industries, which did not happen even after tax reforms that could come from October 1, 2019. So, these will give opportunity for increased investment in industry, as a result ancillary and MSME, as a result, job creation. So, the challenge in front of the government, I believe, which is even eloquently discussed in the public domain is job creation. Probably, they will be concentrating more on that area during this budget.

Sneha — Subhkam Ventures — Analyst

Okay. Okay. Any worry on the restructured book that some of the accounts can slip into the NPA?

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

No, we don’t have a worry. If you look at the restructured book, itself is very low in our bank compared to our debt outstanding. It is around INR18,000 crores, both together OTR1 and OTR2, and so far, cumulatively there has been a slippage of INR1,200 crores, and in this quarter, it is only around INR500 crores. We don’t have very large concern in that area. Collections have improved. Units are being left.

Sneha — Subhkam Ventures — Analyst

Okay. Got it, sir. Thank you and all the best.

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

Thank you.

Operator

Thank you. We have the next question from the line of Shashank Verma from Axis Mutual Fund. Please go ahead.

Shashank Verma — Axis Mutual Fund — Analyst

Hi, sir. I had a couple of questions. First on this SMA2, what will be the number for less than INR5 crore accounts, sir, less than INR5 crore?

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

It is around INR14,000 crores.

Shashank Verma — Axis Mutual Fund — Analyst

Okay. Because last quarter, this number used to be, I think, INR7,500 crores, so…

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

No, no, no, it was high, that was also you see last one INR7,500 crores is more than INR5 crores. Today, it is less than INR3,000 crores. [Speech Overlap]

Shashank Verma — Axis Mutual Fund — Analyst

Yeah, because of Air India. Okay.

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

Last time, we indicated to you Air India. [Speech Overlap]

Shashank Verma — Axis Mutual Fund — Analyst

Okay. One thing, sir, on your notes to account, there is this restructuring of MSME advances under that Feb ’20 circular. The amount seems to have reduced from INR2,700-odd crores to INR1,200-odd crores. What will this reduction be on account of?

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

No, some of the what you call amount could be because of identification in NPA and some of them we have been invoked, but then not implemented.

Shashank Verma — Axis Mutual Fund — Analyst

Okay sir, this amount either would have slipped or would be included in — I mean this would have slipped, right — because or it would have come back is what you are saying?

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

No, not the entire amount. If it is — if you’re looking at an MSME what you call perspective, the slippage overall has been only INR765 crores in the entire year.

Shashank Verma — Axis Mutual Fund — Analyst

Okay.

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

If you look at for the current quarter, it is around what you call INR300 crores.

Shashank Verma — Axis Mutual Fund — Analyst

Okay. So, one last question from my side on this ECLG so last you said that the number is INR19,000-odd crores today. I think this was 14 — sorry, correct me if I’m wrong. And this was INR14,000 crores last quarter. I mean is it done now or I mean is there something else, which needs to be pending for implementation etc?

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

No, no, no. There is no question of any implementation because in GECL, it is a matter of sanction and disbursement, so INR19,000 crores, overall — one minute. Overall, disbursement is around INR16,000 crores and the sanction is INR19,114 crores.

Shashank Verma — Axis Mutual Fund — Analyst

Got it.

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

So, recently, if you look at — various industry representatives have represented to RBI for the extension of this time. We’ll have to wait and see. Otherwise, there is a good profile, existing accounts where units are running, they needed the support, which we have extended. As you rightly say, last time it was INR14,000 crores.

Shashank Verma — Axis Mutual Fund — Analyst

Sure, sir. Thanks a lot. Thank you.

Operator

Thank you. We have the next question from the line of Abhijeet Sakhare from Kotak Securities. Please go ahead.

Abhijeet Sakhare — Kotak Securities — Analyst

Sir, first one is again a clarification on SMA2. If I recall, you said ex-Air India that number was INR12,000 crores as of second quarter. And you just said that that number is now INR14,000 crores, so has it actually increased excluding Air India?

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

It has decreased. The amount was high. Last time also when we have given to you, it was above INR5 crores only. Including Air India, it was almost INR7,000 crores or INR8,000 crores at that time.

Abhijeet Sakhare — Kotak Securities — Analyst

I was talking about the accounts — including accounts less than INR5 crores.

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

I do agree. That’s what I’m saying. There is no increase, it is a reduction. Earlier, it was much higher figure.

Abhijeet Sakhare — Kotak Securities — Analyst

Okay.

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

Total figure, if you look at — one minute. I’ll give you SMA2 December ’21 is INR19,537 crores, including everything that is put together INR5 crores and above and INR5 crores and below. Okay? Hello?

Abhijeet Sakhare — Kotak Securities — Analyst

Yeah, yeah.

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

And whereas in September, it was INR27,000 crores.

Abhijeet Sakhare — Kotak Securities — Analyst

INR27,000 crores?

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

Yeah. There is a reduction of INR8,000 crores, and then there also where the collections have improved, if you look at the real slippage, it was very low at the end of December. So, going forward by March, this figure will be further reduced.

Abhijeet Sakhare — Kotak Securities — Analyst

Understood. The second question is on lending rates. We have an exhibit on the breakup across MCLR reporting loans, so what would be the average lending rates across these different benchmarks?

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

Different benchmarks. That data I’ll have to check and give it to you personally [Speech Overlap] No, he is asking for the average rate in each benchmark. We have not calculated that. Yeah. Overall, we know, but then we can come back to you on this. We will look at — in each category; for example, BPLR, MCLR, RLLR, this category.

Abhijeet Sakhare — Kotak Securities — Analyst

So we are 7.1% on an overall basis, so [Speech Overlap] what I was looking for is, let’s say how much higher is MCLR versus let’s say repo or some of the other rates?

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

The only thing is you can have just guess on weighted average basis regarding the composition, but then we will calculate and then come back to you. [Speech Overlap] if you look at the percentage, it is very high in terms of the MCLR at 44.7% [Speech Overlap] in the composition.

Abhijeet Sakhare — Kotak Securities — Analyst

Okay, understood. And sir, on this one, is it possible to know once the incremental lending rates that we are doing on the corporate side the last couple of quarters?

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

Incremental lending rate at the corporate side is very low at this point of time. So, at least it is better in the last one month because in December where RBI started VRRR, the price at which we were getting the rate when we were putting money with RBI was 3.97%. So that is better the position. Now, still a lot of improvement is required, we are expecting that beyond after February, there will be a better improvement in the minimum level of lending for the incremental towards the corporate.

Abhijeet Sakhare — Kotak Securities — Analyst

But, do you expect that the transition from MCLR — away from MCLR would extend some pressure on the overall lending rates, even if the overall system level rates continue to go up?

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

It will be — see, the problem is, high liquidity has brought very unhealthy competition and shift towards other benchmark even other than RLLR; for example, GSEC rates and then treasury bill rates, those rates are lower compared to the rates offered in MCLR and RLLR, so the shift towards that has been what you call high if you compare even from March ’21 onwards. So, I expect this to continue for some more time. Then, the liquidity gets reduced, all those things will get [Indecipherable]. Then we will also be very careful in offering the rates under TB leaves [Phonetic] and then GSEC leaves.

Abhijeet Sakhare — Kotak Securities — Analyst

Understood. The last question is, are we expecting any sizable recoveries on the corporate side in the next few quarters?

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

No, not very bigger accounts are there except that SREI where we are — our exposure is around INR2,800 crores, but we don’t know when it will take some time, but Sintex is one case where we’re expecting recovery. Our exposure is roughly around INR1,200 crores in that account [Speech Overlap] and we can get good amount of recovery, which is in the final stages. Our anticipation in NCLT is roughly around INR1,000 crores recovery before March and the non-NCLT mid corporate segment around INR2,000 crores and the general recovery involving RAM and other things around INR2,000 crores. So overall, INR5,000 crores recovery, we are expecting by March ’22.

Abhijeet Sakhare — Kotak Securities — Analyst

Got it, sir. Thanks a lot.

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

That is in Q4.

Operator

Thank you. We have the next question from the line of Rahul Jain. Please go ahead.

Rahul Jain — — Analyst

Thank you for the opportunity. Sir, I have two questions. So one, sir, what will be our outstanding non-specific provisions as on December? The second is on the restructuring. Sir, what is the outstanding restructured book including COVID 1.0, 2.0, MSME and any other restructuring? And also on the slippages front, can you give us a breakup of segmental slippages? In the PPT, you have shown the fresh slippages breakup, but for overall including the debits in existing NPA accounts, what is the total segmental breakup?

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

Okay. Coming to non-specific provisioning, it is not very high because whatever provisioning in standard advances and restructured standard advances and the standard advances where the resolution is yet to take place in terms of RBI guidelines provision is required, we are all doing the provisions. If at all there is a provision excess done other than regulatory requirement, it is an NPA what we have done like I’ve already indicated in case of [Speech Overlap] SREI we have increased the provisioning. There are a couple of accounts where we have increased the provision much more than required so that we can protect the balance sheet in a better manner in terms of the recoveries, which we [Indecipherable] in those accounts, so non-NPA category’s specific provision other than these categories is not there. Then, what was the other question he has asked? [Speech Overlap] restructured book is — already I have indicated to you, INR17,854 crores including OTR1 and OTR2. OTR1 is INR5,892 crores and OTR2 is INR11,864 crores.

Operator

Thank you. We have the next question from the line of Ankit Bansal [Phonetic]. Please go ahead. Thank you. We have the next question from the line of Ankit Bansal [Phonetic]. Please go ahead. [Speech Overlap] Mr. Bansal, please go ahead.

Ankit Bansal — — Analyst

Good afternoon, sir.

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

Good afternoon.

Ankit Bansal — — Analyst

My question is, sir, what are your targets of net NPA and gross NPA for Q4 and for the whole year?

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

Q4, it should be less than 12% for gross NPA and for net NPA, very aggressively less than 4%.

Ankit Bansal — — Analyst

Okay. Sir, my next question will be, sir, what — I am seeing your results. I’m seeing overall growth. Sir, but the shareholder value is not increasing. Sir, what steps are you taking to increase the shareholder value, their positivity [Foreign Speech] how could you the positivity of shareholders in the PNB?

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

Right. See, 50% of the answer to your question lies with you only and 50% with me. The reason is the more and more analytical understanding of our results and the kind of confidence shown by the analysts will get percolated into the market impetus and positivity to be created. Second reason was the public sector space share market has been topsy-turvy in the last so many what you call months, more than one, two years except probably there are three scrips, State Bank of India, Bank of Baroda, and Canara Bank, in the last 1.5 years, there has been some stability in terms of the price, frankly what you call admitting before you. Now, coming to the role of ours, we will be working very hard henceforth because it is not that we have not worked very hard, there were occasions where our price has moderated very well, even it has gone cross the INR50 rupees at some point of time in the last 6 months, but again, it has come down. So, the kind of negative legacy, which we have inherited from 2017, ’18 onwards, we are working towards shedding that very consciously, but it is taking time. Now, if you look at — clearly analyze the balance sheet, we don’t have many skeletons in the Board and the large corporate segment, we are not seeing any slippages, growth has been very steady. Capital, we have improved over a period of time. Now, we have the capability to lend, even to grow at 8% to 10% time. So, I expect that 2022, ’23, the growth is expected — the share market price also would improve. The most important thing is when you talk about higher NPA, at the same time, it is an advantage for us that we can show good amount of recovery with 82% provision coverage ratio including TWO and more than 60%, the recoveries will go towards increasing the profitability. So, strong the areas we would like to embark on talking to the people by showing the results so that we can improve the market price. If you look at the guidance, what we had given in the last 1.5 years in terms of profitability and other areas, we have achieved that. ’20, ’21, we gave a guidance of INR2,000 crores we have done. ’21, ’22, we gave a guidance of profitability, profit between INR4,000 crores to INR5,000 crores. Already for nine months, we have achieved INR3,250 crores and our profit could be even more than INR4,000 crores and touching INR5,000 crores by March. So, we are achieving what we are giving the guidance. It’s just a matter of analytical understanding of our balance sheet and positivity coming into the market, 50% or more on the analyst side — and what you call on our side as well, whatever responsibility is there, we will take it forward.

Operator

Thank you. We have the next question from the line of Jai Mundhra from Batlivala & Karani Securities. Please go ahead.

Jai Mundhra — Batlivala & Karani Securities — Analyst

Yeah, hi, sir. I have few — a couple of questions, sir.

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

Yeah, please.

Jai Mundhra — Batlivala & Karani Securities — Analyst

First is on ECLGS sir, so the quantum has increased by around, if I look at quarter-on-quarter, it has increased very sharply by around 30% to this number that we have shown in presentation. Is it fair to assume that you have given loans to the people who — I mean because the scheme was liberalized, so ECLGS 1.0, it was extended by one more year and you could have disbursed additionally 10%. So, I mean, a large proportion would have gone there. Is this the right understanding?

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

No, I don’t like to subscribe to the view that it was liberalized. It is more — canvas has been increased. More coverage has come. Earlier, some of the people genuinely requiring the GECL were not eligible. If you look at successively, GECL 1.0, 2.0, 3.0, and 4.0, it is more of covering more and more what you call MSME borrowers rather than liberalizing the determining factor for selecting them. So, that way, the amount of sanction what we’ve increased is more attributable to what you call GECL — canvas increase in covering more accounts; for example, the tourism industry and then other industry where — and even amount beyond going INR50 crores, INR100 crores. These are all the reasons why we’ve increased it. Quality is really good. Absolutely, there is no problem.

Jai Mundhra — Batlivala & Karani Securities — Analyst

Okay, understood. And second sir, I mean you had given the total of restructuring book of around INR17,850 crores.

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

Correct.

Jai Mundhra — Batlivala & Karani Securities — Analyst

If you have the — this breakup into corporate, retail, agri, and MSME maybe, if you have that breakup.

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

I’ll give you. [Speech Overlap] In case of OTR1, it was INR5,892 crores overall, which comprises INR652 crores from MSME category and corporate category is INR4,777 crores, personal was INR459 crores and others were INR4 crores [Phonetic]. That is related to OTR1. And in terms of OTR2, it is personal, INR4,933 crores, small business INR1,056 crores, MSME INR5,873 crores whereas corporate was not there in OTR2, so total OTR2 is INR11,862 crores, OTR1 was INR5,892 crores. If you want what you call combined figure, corporate remains INR4,777 crores, MSME is INR6,400 crores, personal segment is INR5,400 crores, small business is around INR1,100 crores. That is the position.

Jai Mundhra — Batlivala & Karani Securities — Analyst

Right. And sir, if I were to include this MSME in Feb — I mean the earlier scheme of MSME, it is over and above this, right?

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

Absolutely [Speech Overlap] Before OTR1, the restructuring what we have done under MSME, if I remember exactly, it is INR4,500 crores.

Jai Mundhra — Batlivala & Karani Securities — Analyst

Right, but that number has come down, right? I mean that number [Speech Overlap]

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

You are right. It has come down.

Jai Mundhra — Batlivala & Karani Securities — Analyst

So, whatever is the outstanding, I should be just adding on top of this number?

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

Correct, correct.

Jai Mundhra — Batlivala & Karani Securities — Analyst

Right. And there is no erstwhile SDR or those accounts, right?

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

No, no, nothing is there.

Jai Mundhra — Batlivala & Karani Securities — Analyst

Okay. Because — and okay. Sure. And sir, have you completed the divergence exercise for this financial year because, or sorry, previous financial year? And is there any…

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

March ’21, they are yet to give the report, but March ’20 already done.

Jai Mundhra — Batlivala & Karani Securities — Analyst

Yeah. No, no. March ’21, sir.

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

’21, they are yet to give the report.

Jai Mundhra — Batlivala & Karani Securities — Analyst

Okay. Okay. And…

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

So, I don’t expect anything, we don’t expect anything. Even in case of one account where non-funded facility also, we have done the provisioning.

Jai Mundhra — Batlivala & Karani Securities — Analyst

Okay. Understood. Because the other — I mean one bank had showed, IDBI had showed some divergence in there. I mean they have reported some [Indecipherable] divergence

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

They must have received the report. We are yet to receive that.

Jai Mundhra — Batlivala & Karani Securities — Analyst

Correct, correct. Okay. Okay and any — sir, do we have the breakup of the slippages like INR3,000 crores or INR3,400 crores kind of slippages. How much is [Speech Overlap].

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

That is retail INR704 crores, agriculture INR903 crores, MSME INR1,480 crores, and others INR344 crores.

Jai Mundhra — Batlivala & Karani Securities — Analyst

Sorry, other is INR430 crores, right?

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

No, no, INR344 crores.

Jai Mundhra — Batlivala & Karani Securities — Analyst

Okay. And retail is INR709 crores?

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

Yeah, agriculture is INR900 crores, retail INR700 crores; and INR1,480 crores — roughly INR1,500 crores is MSME.

Jai Mundhra — Batlivala & Karani Securities — Analyst

Sure. Okay, sir. And last question, sir. If I see your AFS duration, it looks like the presentation — in the presentation, it looks like your AFS duration has gone up versus last quarter, so just wanted to check in a probably likely hardening yield environment, why do you want to position that way that it looks like — or is this right reading or no because…

Unidentified Speaker —

Currently, investment profile [Indecipherable] INR10 crores. Every 1 bps hike in the interest rate, the impact will be around INR10 crores.

Jai Mundhra — Batlivala & Karani Securities — Analyst

Okay. So, if I look at Slide 14 wherein you have given the AFS and HFT duration from 2.38, it has become 2.71, right? So…

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

You are correct.

Jai Mundhra — Batlivala & Karani Securities — Analyst

And your AFS has also increased slightly, so would this be a very aggressive treasury stance in case –depending on whatever happens to the rate, you have made your portfolio pro — more aggressive in that sense whichever way the cycle turns?

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

No. If you look at here, there is one difference, see, for example, when the interest reduction scenario when you are booking profits, you may not be acquiring the assets at that point of time, considering that it may not be viable, whereas when the rates are firming up, you may look at an opportunity for acquiring, so it could be a balance factor, which would have come to represent the position of 2.71 from 2.38, but it is not a trend. What I would like to say is it is not a trend.

Unidentified Speaker —

He is talking about hike in the AFS…

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

No, there is a duration only he is talking — modified duration.

Jai Mundhra — Batlivala & Karani Securities — Analyst

Understood, And thank you, sir, and all the best.

Operator

Thank you. We have the next question from the line of Ashok Ajmera from Ajcon Global Services. Please go ahead.

Ashok Ajmera — Ajcon Global Services — Analyst

Thank you for giving me this opportunity. And congratulations and compliments to you, Mr. Mallikarjuna.

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

Thank you.

Ashok Ajmera — Ajcon Global Services — Analyst

At the signing off, you have given the excellent set of the number that we were very much disappointed during the last quarter. I think the results were not up to the expectation, but this time, there is a lot of improvement on the overall operating profit side, net profit side, provisioning, improvement in the asset quality, so my compliments to you.

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

Thank you.

Ashok Ajmera — Ajcon Global Services — Analyst

And we welcome the new MD and CEO coming in from 1st of February, Atulji. All the best to you. Sir, having said that, I have got some — one is that small data numbers calculation. If you look at our advance figure, it is INR6,92,807 crores in the balance sheet, and your advance is totally INR7,55,306 crores, so if you [Indecipherable] non-provided figure between the gap between the gross NPA and net NPA, then there is a difference of INR880 crores. Can I know in which account this INR880 crores is lying or [Speech Overlap]

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

But, how you are calculating INR692 crores, our advances figure is INR7,55,306 crores.

Ashok Ajmera — Ajcon Global Services — Analyst

Yes, yes. I’m — what I’m telling, that INR6,92,807 crores is your balance sheet advances figure [Speech Overlap] Sir, let me give the number.

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

Yeah, yeah.

Ashok Ajmera — Ajcon Global Services — Analyst

The difference between the gross NPA and net NPA is INR63,379 crores, so it becomes total of INR7,56,186 crores [Indecipherable] your advances number, but it is INR7,55,306 crores. So, there is a gap of INR880 crores.

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

We’ll look at that immediately. I’m not able to get the point. However, we’ll look at what calculation you have done, we’ll just verify that, how it could be a gap of INR880 crores.

Ashok Ajmera — Ajcon Global Services — Analyst

Okay, sir. Because, point is very clear. [Speech Overlap] Yeah, the gap between the gross NPA and net NPA and the balance sheet advances to be added and that should be your advances…

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

Correct.

Ashok Ajmera — Ajcon Global Services — Analyst

Figure, global advances, but anyway, this is — I leave it for the calculation, and coming back, somebody CFO, Mr. D.K. Jain can come back to me [Speech Overlap] on that. Sir, I also have observation that — when the amortization of the revision of the family pension, you have done as per the RBI rule of only providing INR619 crores and leaving the balance of INR2,475 crores, what was the need for the auditor to put it as an emphasis matter, because that way, there are many circulars of RBI, and if they are provided for properly, the provisions are followed, there is no need of any emphasis on that particular point.

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

No what happens, generally, these people follow how the results are declared for other banks. If in any other bank, they show it as an emphasis matter, they will also insist. It is like an innocuous observation because it is as per the dispensation given by RBI.

Ashok Ajmera — Ajcon Global Services — Analyst

Yes. Of course. Some banks like Canara Bank has provided for the entire five years in this year only, this quarter only. So, that’s a different thing.

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

Correct.

Ashok Ajmera — Ajcon Global Services — Analyst

But even if you have followed, anyway this is also another point for the CFO.

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

[Speech Overlap] we have taken note of this [Speech Overlap] in fact what you call — better from — what we have decided at this time is to provide for NPA accounts in a higher level than required that is what we have done, but in the days to come or months to come, quarters to come, if it permits, we will do aggressively what you call allocation from the even — this pension liability as well, though we may not keep for five years as dispensation given by RBI.

Ashok Ajmera — Ajcon Global Services — Analyst

Sir, I have no problem with your providing lesser — I mean as per RBI. Only my, — I am also a chartered accountant.

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

Yeah, I agree with your point [Speech Overlap]

Ashok Ajmera — Ajcon Global Services — Analyst

[Speech Overlap] you followed something as per RBI circular, there is no need for emphasis on that particular point.

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

Correct, correct.

Ashok Ajmera — Ajcon Global Services — Analyst

It is my point [Speech Overlap].

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

Yeah, please tell me.

Ashok Ajmera — Ajcon Global Services — Analyst

Point is sir, transfer — NPA to a transfer of INR2,421 crores, where you have done the reversal of the provision of INR860 crores, isn’t it? What is the total reversal in this quarter overall of the provisions on any such accounts [Speech Overlap]

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

We have not transferred to NARCL [Speech Overlap].

Ashok Ajmera — Ajcon Global Services — Analyst

Okay. There is a drop in the aviation advances from I think INR6,462 crores to INR1,883 crores. This drop is…

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

Air India, INR4,000 crores has been paid.

Ashok Ajmera — Ajcon Global Services — Analyst

Air India, fully paid. Okay, all right, sir. That is a good clarification. And sir, looking at your advances growth trend, advances of the NBFCs are growing INR89,000 crores to INR92,000 crores, and also you are growing into the — I think a little bit of a real estate sector, whether this trend is going to continue, you have still out of your sectoral allocation, something is still available for NBFCs to the [Speech Overlap].

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

NBFCs, our growth has been strictly in AAA and AA category. Whatever incremental we have given from INR89,000 crores to INR92,000 crores [Indecipherable] strictly in AAA and AA category. We were very conscious of that. See, in NBFC, always potential is available, but we are very carefully moving what you call in terms of the exposure. Then, our loan book is overall increasing the percentage wise, NBFC also increases. There are other segments where we are looking for opportunity for lending, which will happen, [Speech Overlap].

Ashok Ajmera — Ajcon Global Services — Analyst

Point well taken, sir. Sir, in SREI, you have done the — I think provision for almost about 70% now, 40% plus 30%.

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

Correct.

Ashok Ajmera — Ajcon Global Services — Analyst

Is there any specific reason because — do you feel it will not be even 30%, 40%, or 50%?

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

No, no, no, no [Speech Overlap] that is not the reason, that is not the reason. The reason in providing is once it is settled, we will get the write back. If you look at many of the accounts where we do provide 100%, instead of waiting for the RBI aging process, we have done earlier than that. It is nothing to do with the expected recovery in the account. We always want to have write back once the settlement takes place.

Ashok Ajmera — Ajcon Global Services — Analyst

Okay, sir. Let me, sir, on SRs [Phonetic] INR1,767 crores of SR under the various categories and rated and finally some figure is non-rated because beyond certain year, you don’t require rating…

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

Correct.

Ashok Ajmera — Ajcon Global Services — Analyst

How much provision have we made against these SRs?

Unidentified Speaker —

It is close to 90%.

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

90% is the provision.

Ashok Ajmera — Ajcon Global Services — Analyst

How much, sir?

Unidentified Speaker —

2017 onward entire SRs have been fully provided for and earlier to that close to 80% have been provided for. Overall roughly 90% [Speech Overlap].

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

Overall, it comes to 90%.

Ashok Ajmera — Ajcon Global Services — Analyst

Okay, that’s great, sir. Sir, on the profitability front on the segment wise, if you see sir, your treasury has given the profit of INR2,023 crores, the income — treasury income and the trading profit is INR614 crores. and even if you take even [Indecipherable] INR2,441 crores and INR1,049 crores of dealing trading profit, it only amounts to about 2.77% to 3.37% on the amount invested on the treasury, which is INR3,79,761 crores.

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

Correct.

Ashok Ajmera — Ajcon Global Services — Analyst

So, do you feel that this kind of between 2.75% to 3.3% from the treasury is a good enough amount and the money to remain invested into the treasury assets?

Unidentified Speaker —

Mr. Ajmera, you have to take into account the interest on investment also. The interest on investment and the trading profit both taken together, you have to arrive at the return on investment. You are taking the trading profit in isolation.

Ashok Ajmera — Ajcon Global Services — Analyst

No and also the income from treasury?

Unidentified Speaker —

Yeah, you have to add [Speech Overlap] interest income, you should take interest on investment and then…

Ashok Ajmera — Ajcon Global Services — Analyst

What would be the total on the INR3,79,000 crores…

Unidentified Speaker —

The return on the treasury is 6.24%.

Ashok Ajmera — Ajcon Global Services — Analyst

6.24%. All right, sir.

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

Thank you. Thank you, Mr. Ashok Ajmera.

Ashok Ajmera — Ajcon Global Services — Analyst

Thank you very much.

Operator

Thank you. Ladies and gentlemen, that was our last question. I now hand the conference over to Mr. Suraj Das for closing comments.

Suraj Das — Analyst

Thank you. On behalf of Batlivala & Karani Securities, we thank Punjab National Bank management for giving us the opportunity to host the call. Thank you, everyone, and have a good day.

S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer

Thank you. Thank you very much.

Operator

[Operator Closing Remarks]