Punjab National Bank (NSE:PNB) Q4 FY21 earnings Concall dated Jun. 07, 2021
Corporate Participants:
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
Analysts:
Bhavik Shah — Batlivala & Karani Securities — Analyst
Sandeep Agarwal — Naredi Investments — Analyst
Mahrukh Adajania — Elara Securities — Analyst
Akshay Ashok — Dalal & Broacha Stock Broking — Analyst
Ashok Ajmera — Ajcon Global Services — Analyst
Sunny Sehgal — — Analyst
Jayant Kharote — Credit Suisse — Analyst
Abhijeet Sakhare — Kotak Securities — Analyst
Manish Shukla — Citigroup — Analyst
Sneha Kothari — Subhkam Ventures — Analyst
Dhaval Gada — DSP Mutual Fund — Analyst
Sushil Choksey — Indus Equity — Analyst
Harsh — Reliance General Insurance — Analyst
Ankit Bansal — — Analyst
Mangesh Kulkarni — Almondz Global Securities — Analyst
Jai Mundhra — B&K Securities — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Punjab National Bank Q4 and FY ’21 Post Results Conference Call hosted by Batlivala & Karani Securities India Private Limited. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions] Please note that this conference is being recorded.
Participation in this conference call 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. Bhavik Shah from Batlivala & Karani Securities. Thank you and over to you, sir.
Bhavik Shah — Batlivala & Karani Securities — Analyst
Thanks, Steven. Good afternoon everyone and thanks for joining the call. On behalf of Batlivala & Karani Securities, we welcome you all to Punjab National Bank Q4 and FY ’21 post results conference call. We have with us today the management of Punjab National Bank represented by Mr. S. S. Mallikarjuna Rao, MD and CEO sir; Mr. Sanjay Kumar, Executive Director; Mr. Vijay Dube, Executive Director; Mr. S. K. Saha, Executive Director and other senior officials. I would now request MD and CEO sir, to start the call with his opening remarks on Q4 and FY ’21 results, post which we can start the Q&A session. Over to you, sir.
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
Right, once again, good afternoon to all of you. The year 2021 has been tough as you are aware across the globe and our country is no exception for that. Tough not only sociologically, but tough even from the economy perspective. Besides the impact of COVID, we also had additional responsibility related to amalgamation of Oriental Bank of Commerce and United Bank of India into PNB. Now during the entire year, we have also because of the amalgamation got certain legacy in terms of the composition of balance sheet where we thought probably there is a requirement for us to rebalance the same effectively by looking at. So in the entire year, we have done all these measures which were required.
First, technology integration we have finished by November one bank, December another bank. Second, entire organization has been restructured effective from 1st of July, which is now functional effectively. Third, human integration, to the extent it was possible, we have done because of the COVID, not many transfers could have taken place. However, later on, we have adjusted in such a way that there is no issue at this point of time though COVID second wave has come, which can be taken care in the next couple of months. So on the front of amalgamation related to technology integration, human integration, and business integration was completed.
Now with respect to carrying the legacy, we were carrying INR50,000 crores over in bulk and CD deposits, which we decided to reduce it. Accordingly, we reduced to INR20,000 crores liability, around INR30,000 crores, INR32,000 crores has been completely removed in the liability in the bulk level. On the contrary, if you look at the increase in CASA has been more than 11%, 12% savings and increase in deposits up to INR2 crores has been 19.5%.
So it has been very, what you call, good growth in terms of the liability to the extent it is required because the lending was not taking place in the absence of high demand because of COVID. As such, we have balanced our liabilities entire book in such a way that the cost of deposit will be reduced and accordingly, you would have seen in the figures that cost of deposit has come down.
On the credit profile side, we were carrying a high element of pool outstanding in retail as well as MSME. So the recoveries which we have issued during the pool, we did not want to replenish because the pool during the COVID would not have been carrying — would have been carrying the stress. So to the extent of almost INR6,000 crores, there was a reduction in pool where we did not replenish.
Then the other way is regarding the corporate credit as well because of high liquidity available, we have seen good amount of competition in terms of interest rates wherever the line of credit was available and utilization of funds by even triple-digit rated companies where the tough competition was there. So in the domain to the extent where we were comfortable, we have gone, otherwise, we did not move further to provide the price.
So these are all the consolidating reasons when we come with respect to the assets and liabilities and in terms of assets our growth in retail has been 9.5%, MSME has been 7.5% and agriculture was around 6%, core retail. Within the retail as well after the pent-up demand started coming from — in October 2020, we concentrated on personal loans, we concentrated on vehicle loans and we concentrated on mortgage loans more than that and there we can see the percentage of increase there.
In terms of other loans like loans against deposits or otherwise where the people were required to utilize the money, then it has come down. So overall in the balance sheet what we have seen is consolidation we have done and we did not want to carry anything beyond March ’21 with respect to any element of composition, which we thought it is not required to be continued.
Now coming to asset quality, the amount of pro forma NPA at the end of December was INR13,000 crores and in the month of March, April, May because of the impact on how we have to go about for restructuring in terms of the window available under OTR 1.0 which was given in the month of August. So we have seen that wherever the accounts restructuring may not show much of benefit, we have allowed them to become NPA. As a result by March 2021, the NPA was around INR23,000 crores for the entire year and plus slippage which contains majority in retail and MSME.
This composition also contains roughly INR2,000 crores, which would be upgraded because of restructuring. It is a corporate book where restructuring window was invoked prior to 31st December. Now it has been done, restructuring is complete because there is a consortium advance whereas in March it became NPA, but that will be upgraded. Further out of INR23,000 crores, already as on today, INR3,000 crores upgradation has already taken place across the banking industry, sorry, across the PNB country. So, roughly around INR5,000 crores is upgradable or upgraded as on today out of the INR23,000 crores.
Now coming to the other factors, if you look at the kind of guidance what we had given last time when we were declaring the results for March 2020, we predicted that we should get profit in each quarter and our total should be around INR2,000 crores and by March 2021, we booked a profit of INR2,022 crores. CRAR minimum we said 12.5% whereas we are standing at 14.32%. However, this also will be added by another 30 basis points because of INR1,800 crores what we had taken in the month of May. So CRAR will become 14.62% and CET1 will become 11.80%.
CASA share we predicted at 45%. Now we stand at 45.5%. NIM we had given a guidance anything between 2.5% to 2.75%, we stand at 2.88%. Global NIM in case of domestic it is 2.99%. In case of credit cost, we gave a guidance between 2% to 2.5%, it stands at 2.24%. That is related to what we have done by March 2021. Now, without going into further details since I have given already the important figures, I’ll be open for, what you call, question and answer session now directly. Thank you very much.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Sandeep Agarwal from Naredi Investments. Please go ahead.
Sandeep Agarwal — Naredi Investments — Analyst
Hello.
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
Yeah, Mr. Sandeep, please go ahead.
Sandeep Agarwal — Naredi Investments — Analyst
Yeah, sir my question is regarding PNB Housing Finance. What is our further plan after the rights [Phonetic] issue. Do you want to remain as a promoter and jointly manage company or looking for more stake over a period of medium to long-term?
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
Okay, see, I’ll take a minute to properly give you the what you call, background before you understand our call. Number one is PNB Housing Finance was requiring the capital for the last 1.5 years and originally estimated at INR2,000 crores earlier, that was almost 1.5 years back. PNB is holding 32.62% stake, which is above the regulatory requirement of 30%. So there was a regulatory conflict. We should have reduced to below 30%. Communication was given to us in the year 2017, when for the first time, we have reduced our stake, it got it down to 32.64%. At that time, the price was INR1,600. Now, after that, the price has gone down as a result, bank could not dilute to the extent of the required of little over 2% or 2.62% so that it could have come below 30%. Initially, that is one background.
Second point is in the last 1.5 years, when PNB Housing Finance wanted to increase the capital, the first option they had looked at is the rights issue because from market, they have already selected four-BLMs [Phonetic] who have given opinion that market update may not be very high, particularly COVID was also there after March. So this was from October [Technical Issues] there endurance was there. Based on the feedback, they initially thought of getting some rights issue contribution which did not happen since PNB could not contribute.
Then PNB made it clear to them that you should go to the market now for getting the money, by which time the COVID impact also has come. As a result, there was an elevated requirement of capital for them. So, under these circumstances from market they are not able to get the money, they’ve relied on the investors existing for getting the capital. These were the reasons for the investors coming forward and investing. Now from the PNB perspective, we are not diluting any stake. Our stake remains the same, but in percentage terms, it will go down because of the contribution of the capital from other investors. The number of shares what we hold will continue.
Now with respect to what in future you’re going to be there. As per the trademark agreement which we have signed recently. Earlier trademark agreement was that PNB stake will not go down below 26%. Now, if it was not going below 26%, the sufficient capital cannot be taken by the company. As a result we have gone for change in the trademark agreement where we put a benchmark of 20%. So we will not go below 20%. How in the new scenario what you call, position expected could be anything around 20.5% or 20.4% it will come out finally. So that would be the figure.
So our commitment to the company remains as on today. We will continue to be the promoter for which we are permitted and valuations have also increased which would not have been expected by any one of us and the company should run effectively post COVID when the demand is coming up for the housing finance company, it should have wonderful opportunity for lending. So it should be a solution in permanence rather than again going to the market for capital again and again in the next two, three years.
These are all the important objectives, which were discussed before this call was taken and accordingly this call was taken. So to the limited point of your question with respect to what is PNB’s wiewpoint, PNB will remain there. We don’t have any plan to exit. Already we have taken a decision with respect to Canara HSBC [Phonetic] insurance company where we have decided to exit. The formalities will take place. It is not a listed company. However, valuations will be done and according to the shareholder agreement, the process will be followed.
Sandeep Agarwal — Naredi Investments — Analyst
Okay, thank you, sir. That’s all.
Operator
Thank you. The next question is from the line of Mahrukh Adajania from Elara Securities. Please go ahead.
Mahrukh Adajania — Elara Securities — Analyst
Yeah, hello, sir. My question is on restructuring. So you’ve implemented restructuring of INR2,600 crores and in the last quarter you had indicated a much higher figure, especially for corporate restructuring. So the implemented restructuring in the corporate segment is around INR5.6 billion [Phonetic] whereas last time you had indicated a pipeline of INR90 [Phonetic] billion. So you did comment earlier that INR20 billion has probably been restructured in 1Q, but of that INR90 [Phonetic] billion, are there any other accounts in the pipeline as well. So what is the total restructured number for the corporate segment including pipeline?
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
Okay, see the restructuring what we indicated in Slide number 33 of INR2,372 crores is a normal course of restructuring not related to OTR 1.0 as envisaged, Mahrukh, guidelines for which came in August 2021. Now, out of that figure, the restructuring position is, just one minute. See, if you remember our indicated amount was around INR9,000 crores in the corporate book and others together INR11,000 crores we indicated. Out of that in the corporate book the restructuring what was done is only an amount of around INR500 crores whereas now we have invoked to the value equivalent to INR9,000 crores.
So out of INR9,000 crores, only around INR500 crores was done before March and after March we have already done INR2,000 crores. So this INR2,000 crores has become NPA in the opening remarks I told, which would be upgraded. So remaining INR7,000 crores also will be undertaken before 30th of June. However, in case of accounts up to around INR2,000 crores to INR3,000 crores the response has not been there for undertaking the restructuring as they — they think that restructuring is not required, they can continue. So, if I summarize everything as against the INR11,000 crores including corporate book of INR9,000 crores [Technical Issues] MSME together of INR2,000 crores — overall INR11,000 crores, we may end up with INR9,000 crores overall under the OTR 1.0 before 30th of June.
Mahrukh Adajania — Elara Securities — Analyst
Okay sir, thanks. Sir, my other question was, what is the total interest reversal on NPAs in the first quarter?
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
Total interest reversal on the —
Mahrukh Adajania — Elara Securities — Analyst
On NPAs.
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
That is at the end of March?
Mahrukh Adajania — Elara Securities — Analyst
Yeah, for the fourth quarter, during the fourth quarter. Not for the full year, for the fourth quarter.
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
It is 1,277 [Phonetic].
Mahrukh Adajania — Elara Securities — Analyst
1,277 [Phonetic]. Okay, sir.
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
[Speech Overlap] Because it is a period of nine months. Sorry, seven months. See pro forma NPA —
Mahrukh Adajania — Elara Securities — Analyst
[Speech Overlap] pro forma, yes, yes, yes.
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
Do you remember pro forma NPA what we have shown interest reversal of INR431 crores in the provision we have shown.
Mahrukh Adajania — Elara Securities — Analyst
Correct.
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
If you go through last time’s figure, the INR431 crores is included in the INR1,277 [Phonetic] crores.
Mahrukh Adajania — Elara Securities — Analyst
Got it, sir. Got it. Thank you, sir.
Operator
Thank you. The next question is from the line of Akshay Ashok from Dalal & Broacha Stock Broking. Please go ahead.
Akshay Ashok — Dalal & Broacha Stock Broking — Analyst
Yeah, hi, sir. The question I had sort of doubt regarding this restructuring. So restructuring of accounts, they need to be standard as on date of invocation or they should be standard as on March 31st, 2021.
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
So as on date of invocation.
Akshay Ashok — Dalal & Broacha Stock Broking — Analyst
So that will, that could become a problem, right, because now that the second wave, then there could have been accounts that have slipped in April, May and June and [Speech Overlap] not standard then you cannot restructure them.
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
No, no, no, listen to me, restructuring window opened by RBI in the month of August has two dimensions, one is for corporate through the Kamath Committee recommendations and all other factors are there. Second window was related to retail and MSME. In case of MSME, eligibility was different. SMA-0 and 1 were also eligible. In case of retail only, SMA-0. So, considering all these factors, restructuring was undertaken differently. In case of retail and MSME, there is no question of any invocation and undertaking because there cannot be any time window, it can be implemented immediately. In case of corporate only you will invoke because it requires RP4 rating and all the consortium members coming. That is the reason why there is a window required.
So restructuring related to retail and MSME under the guidelines given in the month of August got closed as of 31st March, 2021 and whatever restructuring was required, we have undertaken. Only for corporate segment, we have invoked before 31st of December for the accounts involving an amount of INR9,000 crores against which before 31st March, we could restructure only around INR600 crores and as of today, INR2,000 crores further have been implemented. However, this INR2,000 crores what I’m referring has slipped into NPA as on 31st March, but in terms of the RBI guidelines, they can be upgraded immediately after implementation and that has already been upgraded.
So the remaining roughly around INR7,000 crores in corporate book where invocation is done and the restructuring has to be implemented will be completed before 30th of June, 2021. That is related to restructuring window opened in August. Now recent guidelines of restructuring is open [Phonetic] only to the MSME, non-MSME small business and what you call other sectors, that is individual cases.
Akshay Ashok — Dalal & Broacha Stock Broking — Analyst
So these accounts, if they would have slipped in April, May and June, so these just cannot go for restructuring.
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
Not April, only by 31st March if they have slipped into NPA, they are eligible.
Akshay Ashok — Dalal & Broacha Stock Broking — Analyst
Okay, but they should be standard as on date of invocation right, you told now. So if they would have slipped now, you cannot restructure them.
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
Again, listen to me, I’m clarifying to you, clause of invocation is applicable only for corporate advances. That window was already closed now by 31st March regarding invocation — 31st December I’m sorry. So for all other accounts, now the second window is only MSME. There is no clause of invocation there. RBI’s requirement is as on 31st March, 2021 the account should be standard.
Akshay Ashok — Dalal & Broacha Stock Broking — Analyst
Okay, thank you.
Operator
The next question is from the line of Ashok Ajmera from Ajcon Global Services. Please go ahead.
Ashok Ajmera — Ajcon Global Services — Analyst
Hello, sir. Good afternoon, sir.
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
Yeah, good afternoon.
Ashok Ajmera — Ajcon Global Services — Analyst
Very outset, I mean, take my compliments for overall good performance of the bank, sir. I mean, you have got a very good capital adequacy of 14.32%, good CASA, a very good amount of the NIM in this difficult time, cost to income ratio is just 46.9%, net profit also INR586 crore. So some of these parameters I mean you have come really very well in spite of all these difficult time and the problems and for that, please accept my compliment.
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
Thank you.
Ashok Ajmera — Ajcon Global Services — Analyst
Sir, I have got few data points and some observation. Some small points when I went through the results. Number one in the case of this JSC Tengri Bank which has gone for, I think action there with the local regulator, the provision in this quarter was INR351 crores.
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
Correct.
Ashok Ajmera — Ajcon Global Services — Analyst
And up to 30th September, it was INR341 crores. So any more provision is left to be done in this bank because or any chances of any recovery out of that?
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
See, first of all, there is no provision further required. I will explain you both the provisions were different. First provision in September what we have undertaken was the capital what we have input in the company. When the company has gone for liquidation, the capital is nullified first. So that provision 100% we have done. Then there was a liquidity support what we had given. We means, our branches in Dubai — Dubai branch has given. So that amount is a liquidity support, which is like need to be settled when the liquidation proceedings are in progress. So our claim has already been recognized by the liquidator. Now money is to be received. However, as a matter of abundant precaution and prudent measure, we have provided 100% now at the end of March. So, right now there is no provision required. However, there will be amount will be recovered through the liquidation proceedings once the process is completed at their end.
Ashok Ajmera — Ajcon Global Services — Analyst
Point well taken, sir. Sir in case of this — this brought your provision of INR1,013 [Phonetic] crore will be — now the balance is still pending. So do you plan to make the provision in this quarter or as per the regulation. What is the regulation says?
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
Regulation is one-fourth. 25% you can do in each quarter.
Ashok Ajmera — Ajcon Global Services — Analyst
So now how much is left for how many quarters?
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
See INR1,041 crores or INR1,005 crores is the left which we have shown in our notes on accounts. [Speech Overlap], but it is not a big amount, it can be adjusted easily. In the next three quarters, it will be nullified. Even we can do it in two quarters as well depending upon the flexibility what we have.
Ashok Ajmera — Ajcon Global Services — Analyst
Good sir, sir in case of this new [Indecipherable] have you worked out, out of this INR84,000 crores, INR85,000 crores which has been identified, how much is yours and whether it is 100% written-off accounts?
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
It is INR8,000 crores roughly from our side. It is 100% provided. We don’t call it as written-off.
Ashok Ajmera — Ajcon Global Services — Analyst
Sorry, not written-off, but provided.
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
Yeah, yeah 100% provided accounts. INR8,000 crores is the rough estimate. INR7,900 crores something figure in the Tranche 1.
Ashok Ajmera — Ajcon Global Services — Analyst
Okay, sir. Sir in the provision, there is a provision of INR440 crores in the other provision. What is this other provision for INR440 crores.
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
Tengri Bank and OTR, one-time restructuring provision.
Ashok Ajmera — Ajcon Global Services — Analyst
Okay, so Tengri Bank has been included here in this. And sir, when I look at the advances, I mean in the aviation advances of INR6,353 crores and tourism advances of INR1,690 crores, there has been increase in this year of this advances in this two field, which are badly affected by COVID. So what kind of advances these are and why was the need of I mean extending further to tourism and hotel and the aviation?
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
Aviation is trictly government guaranteed, INR1,000 crores.
Ashok Ajmera — Ajcon Global Services — Analyst
That is okay. They are fully — the entire amount.
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
Yeah, 100% guaranteed by the government. Central government that too.
Ashok Ajmera — Ajcon Global Services — Analyst
Yes, sir and Tourism —
Operator
Mr. Ajmera, sir, sorry to interrupt, but for any follow-up may we request you to rejoin the queue please. Thank you. The next question is from the line of Sunny Sehgal [Phonetic]. Please go ahead.
Sunny Sehgal — — Analyst
Hello, sir. Thank you for giving me the opportunity. Sir, I have couple of questions. The first question is on the slippages side. So roughly, you had INR4,000 [Phonetic] crores of slippages in 4Q and something around INR29,000 [Phonetic] crores slippages in FY ’21. If you can, sir give me a broad breakup segment wise, like how much it was in retail, corporate, agri, and MSME and were there any lumpy accounts in it?
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
See total slippage our fresh addition is INR25,000 crores in the entire year. Correct?
Sunny Sehgal — — Analyst
Right.
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
INR25,000 crores in the quarter. Now here majority is in agri, retail, and MSME. Agriculture is INR5,316 crores; Retail is INR3,441 crores; MSME INR9,341 crores and in other category, it is INR5,087 crores and it is not a chunky one, large corporate is not very huge.
Sunny Sehgal — — Analyst
Okay sir. Sir, there are no lumpy accounts if I understand correctly.
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
No.
Sunny Sehgal — — Analyst
And the second question is sir, I mean on the guidance on the recovery side for FY ’22, I mean how much overall recovery you are expecting in this current fiscal and you know how much I mean are any major NCLT accounts that you are counting for recovery as well?
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
See in the NCLT cases not many bigger accounts are left, only DHFL is there, but DHFL also the expected recovery is not very huge. INR2,827 crores is our credit outstanding against them, 100% provided. So we are expecting as far as the resolution plan around INR440 crores recovery which would be a full write back. Originally we were expecting to happen before — that is before June, but probably because of the litigation, it could go and come in the month of — it may not happen in Q1, it may happen in Q2.
So in Q1 and Q2 together, we are expecting around INR1,100 crores of recovery — cash recovery where around INR6,500 crores of outstanding will be settled — INR6,400 crores of loan book will be settled and the cash extraction could be around INR1,100 crores in Q1 and Q2 together. That is in NCLT. Now, we have not estimated for Q3 and Q4, probably after June, we will have a better visibility because once the NCLT cases also move further. Then with respect to other recoveries, in the current quarter already we have received recovery and upgradation of INR2,300 crores as of now and we expect another INR3,000 crores to INR3,500 crores. So roughly around INR5,500 crores to INR6,000 crores we are expecting. The follow-up is in progress.
If you look at for the entire year, we will have a better estimate while declaring the results for June because COVID impact still we are assessing. Now our approach as in this quarter, what has to be done immediately we are working on that. Once the COVID recedes, we will have a better estimate in terms of understanding for recovery, but majority of recoveries will come in the accounts up to INR1 crore because slippage was there in that and I expect retail to settle down by 30th September and MSME to settle down in Q3 and Q4 because MSME stress will continue for some more time. Exact figures and identification we will do it once Q1 results are being submitted during next month.
Sunny Sehgal — — Analyst
Okay, sir, understood sir, thank you so much. Should I have any follow-up, I will come back in the queue.
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
Sure. Thank you very much.
Operator
Thank you. The next question is from the line of Jayant Kharote from Credit Suisse. Please go ahead.
Jayant Kharote — Credit Suisse — Analyst
Can you hear me, sir?
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
Hello.
Jayant Kharote — Credit Suisse — Analyst
Hello, can you hear me sir?
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
Yeah, yeah, I can hear you. Please go ahead.
Jayant Kharote — Credit Suisse — Analyst
Sir actually two questions, one is if you can give us the SMA-1 number which we had as of December in the QIP document. And second question is basically on the ageing provisions. How much do we expect ageing provision to come through in FY ’22.
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
See, ageing provision, we will have a little amount in the first quarter, but in the Q2, Q3, Q4, it will be very less. If I have to give a figure correctly I’ll just compile and tell you. Just check it out before we conclude. It could be on an average around INR1,600 crores, INR1,700 crores per quarter. So roughly around INR7,000 crores could be the overall provision required in the year.
Jayant Kharote — Credit Suisse — Analyst
Okay, sir. Sir, and the SMA-1 number?
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
The SMA-1 number is around INR50,000 crores.
Jayant Kharote — Credit Suisse — Analyst
Sir, but any indications on the stress right now in Wave 2, I know it’s little bit early, but what are your estimates given we’ve had I mean when retail and MSME do you think much of the stress would have gone through or do you see another build around a build up.
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
MSME stress though it is still there, but majority of the accounts we have identified, but still there is an element of restructuring required to be done in the new window opened which I’m expecting around INR5,000 crores to INR6,000 crores. If you look at our MSME restructuring right from 1/1/2019 till 31/3/2021 where that window was open, our entire restructuring book is only INR4,900 crores or INR5,000 crores including INR1,277 crores which we have done in ORT 1.0 which came in August. So MSME book not very high book we have restructured. It is roughly around INR5,200 crores, out of INR1,27,000 crores of outstanding in the MSME.
Jayant Kharote — Credit Suisse — Analyst
And you’re expecting another INR5,000 crores on top of that.
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
Another INR5,000 crores maximum. INR5,000 crores to INR5,500 crores we are identifying the accounts we are following up, but we would like to have recovery rather than restructuring unless it is warranted because GECL has also been extended now, so we can look at GECL and also if there are eligible accounts other than what we have done. We have already funded INR12,700 crores under GECL 1.0 and 2.0 when it is extended up to INR50 crores further INR500 crores funding we have done. If it is extended up to INR500 crores, we could not get many accounts. Now they have removed the cap and add the stressed sector. So there we expect around INR500 crores to INR600 crores disbursement.
So considering the fact that MSME units functioning, we would like to support them by way of additional funding if they require and looking at working capital rather than bringing another restructuring, unless it is warranted. So, we are assessing on that. So that is why our estimate could be anything around INR5,000 crores to INR6,000 crores in the restructuring under MSME. Retail, I’m very confident it will settle down though it appears to be a little high in terms of slippage. For example, our slippage was almost — around INR6,000 crores in terms of retail, but we expect it to here — retail slippage one minute was INR3,345 crores. So I expect retail to settle down by September because we are able to reach out to the customers. There are incomes in public sector, majority of the retail is given to salaried where mortgage is available.
Only in the housing loan we find there has been a delay, but then we’ll get many [Phonetic]. So if you ask me straight with respect to the stress, MSME stress is there, but accretion will not be as much as what has happened up to March 2021, we’ll be able to handle and what has accrued also we are confident of what upgrading some category. So overall in the year ’21, ’22, we will have a control on MSME in Q3 and Q4 and in retail by Q2 itself, there won’t be any issue. Coming to increase in NPA, there won’t be any further increase in NPA. Even if it is coming, it will be offsetting with the recoveries. That means slippages will be the offsetting with the recoveries. If you observe the outstanding in gross NPA and net NPA, it has been flat compared to March ’20 and March ’21. The percentage is elevated because of the loan book not being high, which contracted by 3%. Otherwise, to the extent of the slippages, we have already recovered or we have upgraded.
Jayant Kharote — Credit Suisse — Analyst
Okay, thank you, sir. Thank you very much.
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
Thank you.
Operator
Thank you. The next question is from the line of Abhijeet Sakhare from Kotak Securities. Please go ahead.
Abhijeet Sakhare — Kotak Securities — Analyst
Yeah, hi. Sir, going back to the question on MSME restructuring. If you could just highlight why is it that the borrowers are not choosing to restructure or use the ECLGS money to a greater extent.
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
ECLGS money I think reasonably we have given all the outstanding as on 29th of February, 20% of the amount outstanding they were eligible and we had given to them. That is why INR12,700 crores lending we have done exclusively up to INR25 crores. There are some people who did not want. There were some people who were eligible only for smaller amounts. So they did not go ahead, but there was a good chunk of people who’s outstanding was not there, who are having limits but credit balance they maintained, they were not eligible, but there we are helping them differently by way of any increase in limit is required because they are in a better position as account is standard.
So GECL funding has happened reasonably. So I don’t think somebody has not used. Only question is when we were doing restructuring, eligibility is units should run, units should have the capability with the availability. So those factors were seen and if some of the factors appealing to us that it may not be viable, then we have allowed those accounts to become NPA and we can bill them separately if the unit is still running order book is available, we can still fund even if it is NPA instead of restructuring only for a brief period and then again, it is coming into problem like what we have seen now COVID second wave has impacted those which are restructured also.
So there we have to again handle them more properly. So that was the reason why restructuring book compared to other banks and our bank has been smaller one vis-a-vis loans outstanding. In the restructured book 2.0 restructure guidelines 2.0, which are standard accounts as of 31st March 2021, we are identifying as I’ve indicated maybe around INR5,000 crores to INR6,000 crores would be undertaking restructuring because they have already withstood the COVID 1 wave and continued to be standard. So we have the visibility of restructuring and in terms of their capability to come out of this problem will be much higher.
Abhijeet Sakhare — Kotak Securities — Analyst
Got it, got it. The second one is a clarification on Slide number 14 where you have the rating wise mix of loan book. There is about INR9,000 crores of loans, which is rated D but still standard.
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
Which one? 14 number slide?
Abhijeet Sakhare — Kotak Securities — Analyst
Yeah.
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
Yeah, D is — this is some of the government accounts and a couple of accounts — restructured book standard where rating will continue to be D.
Abhijeet Sakhare — Kotak Securities — Analyst
Okay, understood. And sir second one was a clarification on Slide 37 on the exposure to Top 10 groups where we see a 500 basis points jump quarter-on-quarter.
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
Top 10 groups. Actually, there was a mistake. Actual figure is 12.93%. We will correct and put it immediately. It is not 18.73%. It is 12.93%. Now we corrected and put up in the website.
Abhijeet Sakhare — Kotak Securities — Analyst
Okay, understood. Just final one, sir on the NARCL sale that will happen, do you expect to get 15% cash upfront on the fully provided NPLs?
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
Actually what happens, our identified book is around INR8,000 crores, which is 100% provided. Now the extraction amount we have to see. It is not on INR8,000 crores you will get 15%. What is the extraction? On an average if you look at, the extraction is between 25% to 30% going by what IBC and everything happened even though real auction will take place by the NARCL through AMC. So initially based on the each asset, a figure will be arrived at. A reasonable figure. That could be anything around 25%, 30%. Suppose we take 25% as our theoretical understanding, for INR8,000 crores, 25% will be INR2,000 crores. Out of INR2,000 crores, 15% will be the cash. That means INR300 crores will be the cash which can directly go to P&L to us and 85% will be given by OFS [Phonetic] which is expected to be guaranteed by Government of India.
Abhijeet Sakhare — Kotak Securities — Analyst
Got it, got it. And last one is what is the DT outstanding as of March 31st?
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
INR27,000 crores.
Abhijeet Sakhare — Kotak Securities — Analyst
Okay, all right.
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
This year we have reduced INR1,400 crores you must have seen in the balance sheet.
Abhijeet Sakhare — Kotak Securities — Analyst
Sure. Thanks a lot.
Operator
Thank you. The next question is from the line of Manish Shukla from Citigroup. Please go ahead.
Manish Shukla — Citigroup — Analyst
Yeah, good afternoon and thank you for the opportunity. The pro forma [Technical Issues] as of December was about INR13,000 crores and for the March quarter you have reported INR23,000 crores. That means addition of INR10,000 crore for the March quarter over and above what was the situation as of December, is that correct?
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
Correct, you are correct.
Manish Shukla — Citigroup — Analyst
So could you give a color on this incremental INR10,000 crore where it has come from?
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
It has come these sectors only that is retail, MSME, and agriculture.
Manish Shukla — Citigroup — Analyst
And within retail how much would it be secured or unsecured?
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
Completely secured. We don’t have retail unsecured. Even it is a personal loan, given to only employees, salaried class.
Manish Shukla — Citigroup — Analyst
Sir, I’m just curious because INR10,000 crores across retail SME does imply that a very large number of accounts have slipped into NPA after December. I’m just trying to understand what exactly is playing out here.
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
No, I do agree with you. It is only because of the collections not coming. There is no element of unsecured position problem here. That is why I was indicating retail will settle down by next quarter itself by September the slippages would be reduced and upgradations will be much higher. We have to deal with only MSME.
Manish Shukla — Citigroup — Analyst
So given the lockdowns, which have happened in April and May, is it fair to assume that the number in the current quarter can be meaningfully higher than this?
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
It will not be higher because all the collection efficiency in April was 84% and in May it is 91% currently and June also, we are pursuing very well though the stress is there like we have already given the figure SMA-2 which was around INR32,000 crores when we have indicated — INR33,000 crores and we’ve indicated, but it has come down substantially as on today and we are working on that. So I don’t expect the slippage to be more than what has happened in March, not even more, it will be much lower than that.
Manish Shukla — Citigroup — Analyst
Sorry, sir. You said May was 91%.
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
May was 91%. Correct.
Manish Shukla — Citigroup — Analyst
Compared to March, what would be March.
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
March was also around 84%.
Manish Shukla — Citigroup — Analyst
So May is higher than even March.
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
Correct.
Manish Shukla — Citigroup — Analyst
Okay.
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
October, November, December were better. Then January was moderate, January, February. March it has come down a little. Again, April and May it has increased. [Speech Overlap].
Manish Shukla — Citigroup — Analyst
On the asset sale to NARCL, how are these INR8,000 crore identified. I mean, if you could just explain what are the nature of those assets?
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
See, in all the assets for which there is a value and 100% provided and not declared as a fraud [Phonetic].
Manish Shukla — Citigroup — Analyst
Okay because you are saying that the recovery is likely to be about 25%, 30%. So I’m just curious if this is the best. I mean in that sense is this the best out of the stress book that you have? [Speech Overlap].
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
No, no, I have only given you a mathematical example. In one case, it could be 40%, 50%, in one case it could be 10%, 15%. So what we have identified is predominantly not being fraud account. Second is under 100% provided and where all other banks are there. See, first what we have done is above INR500 crores exposure in each bank, there is a multiple banks involvement in the public sector space not being declared as a fraud 100% provided. So these conditionalities we have applied.
Manish Shukla — Citigroup — Analyst
Okay, right. Really the last question, what’s your expectation on net interest margin?
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
NIM, our domestic stood at 2.99%. Global stood at 2.88% and it will not be lower than 2.75% during the current year.
Manish Shukla — Citigroup — Analyst
Okay, understood. Thank you. Those were my questions.
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
Thank you. Thank you.
Operator
Thank you. The next question is a follow-up from the line of Mahrukh Adajania from Elara Capital. Please go ahead.
Mahrukh Adajania — Elara Securities — Analyst
Yeah, hi, sir. So just a few clarifications. So the NARCL in the first stage itself say by June you will transfer INR8,000 crores right, on which the recovery will be 25% as in that the net asset value or the valuation will be 25% to 30% and of which you will get 15% in return. That’s correct right?
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
So listen to me, NARCL while transferring the net book value concept will not come because net book value as per the RBI guideline is the outstanding minus provision is in its book value. So here in every case, it will be zero only. So it is not the criteria. Criteria is what kind of recovery we can get when we sell through auctions. NARCL advantage will be aggregation of debt from all the banks at one location and the person who will be bidding through the tender process will have visibility in getting control of the asset immediately protection of value of the asset. These are the advantages. So I had only given an example that it in case of each asset, based on the position, the amount [Technical Issues] assessed though ultimately it will go for CIF [Phonetic] challenge and then only you will get the money. So I gave an example that if 25% is the amount, out of that 15% will be cash; 85% will be SR [Phonetic].
Mahrukh Adajania — Elara Securities — Analyst
Sure sir. Sir, you had said that this — there is INR1,100 crore of recovery in first and second quarter and that’s across two accounts. That’s correct?
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
Not two accounts. There are — one minute, there are 17 accounts where outstanding will be reduced to the extent of INR6,500 crores and cash recovery expected would be INR1,100 crores.
Mahrukh Adajania — Elara Securities — Analyst
And they are all NCLT?
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
They are from NCLT only. I’m giving you NCLT details only.
Mahrukh Adajania — Elara Securities — Analyst
Got it. And sir, my other question was that what is your recovery from Bhushan Power?
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
INR3,000 crores. INR3,017 crores to be exact.
Mahrukh Adajania — Elara Securities — Analyst
Okay, INR3,017 crores and its taken through recovery in written-off assets right?
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
Recovery in written-off, correct.
Mahrukh Adajania — Elara Securities — Analyst
Okay, sir. Than you so much.
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
No, it is — one minute it is not fully written-off. It is actually recovery only. It is not written-off because it was there in the books of accounts.
Mahrukh Adajania — Elara Securities — Analyst
Oh, but it was 100% provided, right.
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
100% provided, but not written-off.
Mahrukh Adajania — Elara Securities — Analyst
Okay, so went through the provisioning line, is it or through the —
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
Yes, yes.
Mahrukh Adajania — Elara Securities — Analyst
The provisions were lower by INR3,000 crores, correct?
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
But we have diverted provision to other areas. Correct it is a provision write-back.
Mahrukh Adajania — Elara Securities — Analyst
Okay, sir, thanks.
Operator
Thank you. The next question is from the line of Sneha from Subhkam Ventures. Please go ahead.
Sneha Kothari — Subhkam Ventures — Analyst
[Indecipherable]
Operator
Ms. Sneha, if you can speak closer to the handset please. Your voice is not clear.
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
Yeah, I’m not able to understand properly.
Sneha Kothari — Subhkam Ventures — Analyst
Two questions. First question is your thinking of what is the outlook on the credit cost over the next fiscal year. Second is now are we seeing overall the credit cost considering the stress is coming down both in retail and MSME and in the corporate. So, what would be your guidance on the credit cost. If possible, can you guide us on how would be the slippages trend going ahead for this next fiscal?
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
See, before coming to economy related, I’ll first come to credit cost. Credit cost our year ended March it stood at 2.24% where our guidance was anything between 2.25% to 2.5%. Similarly last time when I spoke after the December result, I was indicating to you that the credit cost in ’21, ’22 could be anything between 1.25% to 1.5%. Now at that time the COVID second wave was not there. Even now, what we would like to stick is probably the credit cost could hover around 1.5% in the financial year ’21, ’22.
Sneha Kothari — Subhkam Ventures — Analyst
Okay and outlook on the credit growth?
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
Credit growth I am expecting at a conservative level 8% because Q1 has already gone and even though Q1 has already gone the RBI estimated GDP growth of 9.5%, very recently and the new investments are yet not visible in the system. In the last 1.5 years we have not seeing new units coming up or new industries coming up. As a result, last year also we were not having lot of opportunity in terms of lending [Technical Issues] competing for the interest rates. Debt was moving from one bank to another bank, not much. Even today we see growth projects some of them have come up where we have given the sanction. In aviation industry we have also seen few requests of Tier 2 or Tier 3 airports where we have given in principal sanction not much, but then we have given in four, five cases.
So unless the investments come into the system, it will be very difficult to visualize at this point of time except those sectors like cement, steel and the pharmaceutical industry, biotech industry where they are growing but pharmaceutical industry is flushed with funds, cash rich they are. So opportunity what we can see is what they have declared in the budget regarding the infrastructure push, ports where government is looking for investment it should come up, Aviation industry what government is looking up, it should come up, then we can see large amount of demand. Otherwise demand will be there but then supply will be very high. Currently supply side is very high even as on today.
Sneha Kothari — Subhkam Ventures — Analyst
Any plans to sell any of the subsidiaries?
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
We have already come into the public domain related to CHOICE that is Canara HSBC Oriental Bank of Commerce Insurance Company. We are having ownership in two companies. As per IRDAS guidelines, we have to have ownership in the second company only to the extent of 10%. So currently we own 30% in PNB MetLife, 23% in CHOICE. So that forbearance was available up to 31st March, 2021 and then we have taken a strategic call to exit —
Sneha Kothari — Subhkam Ventures — Analyst
Hello —
Operator
Ma’am request you to please stay connected, we lost the line for the management. [Technical Issues] Ladies and gentlemen, we have the line for the management reconnected. Thank you and over to you, sir.
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
Yeah, I will replying to that. So we have already taken a call to exit Canara HSBC. It will take time. It is not a listed company. So we’ll be going through valuations and other things. There is also a shareholder agreement related to right of resolution. So these things will be taken care and we are expecting in the next 12 months to 18 months, the amount can be received and it could happen earlier than that, but we are putting this on horizon and we have already sold 3% stake in UTI AMC in October where we booked a profit of INR160 crores. We’ll be selling our stake in RCL [Phonetic] around INR60 crores INR70 crores we are expecting profit. There is one more company where another INR50 crores we are expecting. So these are the plans at this point of time.
Sneha Kothari — Subhkam Ventures — Analyst
Okay, sir for this recent raising of the capital. Any plans to raise going ahead in the next calendar year or in the end of [Indecipherable].
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
See as on today if you look at our capital it’s 14.32% and if you add another 30 basis points for INR1,800 crores what we got through QIP in the month of May CRAR will stand at 14.62% and Tier 1 capital will be 11.8% which is sufficient. Even if you look at 2% of worst-case scenario as in terms of RBI’s assessment, still we are sufficiently capitalized. So we still have the headroom for AT1 capital of INR2,500 crores, which we can raise anytime. We have not raised because of the market conditions where because of SEBI guidelines, the prices have gone up. So we have that headroom available. We will assess the position after June quarter results. Otherwise, as per my assessment, we don’t require any capital during the current year even for taking care of the growth requirement.
Sneha Kothari — Subhkam Ventures — Analyst
Okay and sir any number you would like to share on the slippages trend if possible how you shared the numbers on the recoveries trend you are expecting.
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
Recoveries I said see INR1,100 crores in the NCLT and H1 and our general recovery generally will be around INR3,000 crores minimum in every quarter. So we would like to maximize on that because slippages have been very high. So I will have a better estimate when we declare the results for June because still we are in COVID where we are coming out of the problem of the collections issues. Now only slowly collections are increasing. So any estimate as on today would not be appropriate mathematically. So June declaration when we come with results, we’ll have a proper estimate. Otherwise generally INR3,000 crores recovery comes in normal accounts and NCLT this time compared to last year not many accounts are there. Even including DHFL our recovery is expected to be INR1,100 crores in cash whereas the debt reduction [Phonetic] will be around INR6,500 crores.
Sneha Kothari — Subhkam Ventures — Analyst
Okay. Okay, got it sir. Thank you.
Operator
Thank you. The next question is from the line of Dhaval Gada from DSP Mutual Fund. Please go ahead.
Dhaval Gada — DSP Mutual Fund — Analyst
Yeah, hi, sir. Just two follow-up question. One is on the, you know the national ARC that you talked about just in your example of the INR8,000 crore, this will get knocked off completely from NPA or the amount from NPE reduction would be lower than INR8,000 crores. And if I understood you right sir, you will get INR300 crore cash and the rest will be written down against which you will hold a security receipt worth INR1,700 crore in the example that you gave. Is that understanding correct?
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
I’ll split that example into two parts. INR8,000 crores could be some part is written-off, some part is not written-off. Which is written-off, there is nothing discussion on that because it is completely written-off with the provision. So whatever 15% comes, it will go to my P&L directly. There is no further commitment on that. We’ll hold the SR, since there is no outstanding, there is no provision required to be done. SR also will be like without any book entry. However, even if we create the book entry, the amount will be to current to the SR in the provision since it is a written-off account. With respect to amount outstanding in the book, so once the cash recovery comes, cash recovery will go there, but SR because it is 100% provided. SR we are having the provision, which is there against that. So, technically, we’ll have SR with 100% provided since all these accounts are 100% provided accounts.
Dhaval Gada — DSP Mutual Fund — Analyst
[Speech Overlap]. No, no I understand and approximately, sir of the INR8,000 crores, how much is right now in NPA, approximately?
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
One minute. So majority is written-off, INR7,500 crores.
Dhaval Gada — DSP Mutual Fund — Analyst
Okay got it. And the second one, sir on the collection part that you said that May was better than April. Is it because of restructuring the collection looked optically better or this is actual underlying collection the recovery that we’re seeing right now because actually system as a whole we’ve been thing May to be more worse than April. So just trying to understand why the difference?
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
No, no, it is only a follow-up only. There is nothing. Otherwise, it has been very tough for us but April was not very good then immediately we started following up little intensively. That is why we got — in fact if you compare with other banks also, our position in slippage was little worst or little bad because of geographies as well. If you look at our geographical presence is more in North, particularly Punjab, Haryana and again West Bengal and Northeast. These are the places which are badly impacted in terms of COVID and the agitation of farmers and agitation of other factors have led to collection being impacted in Punjab and Haryana and again in West Bengal as well the COVID has been very high whereas in other areas our collection has been much better. So May has been better only because of the follow-up and we are expecting it to improve even in the month of June.
Dhaval Gada — DSP Mutual Fund — Analyst
Understood, understood sir. Thank you and all the best.
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
Thank you.
Operator
Thank you. The next question is from the line of Sushil from Indus Equity. Please go ahead.
Sushil Choksey — Indus Equity — Analyst
Good afternoon, sir. I had a simple question and most of the question [Technical Issues] realized best result which you got out of PNB Housing. You’ve already highlighted Canara HSBC OBC. Is PNB Gilts a possiblity?
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
PNB Housing or Gilts you are talking about.
Sushil Choksey — Indus Equity — Analyst
PNB Housing you tested the results, which has been so positively taken by market. You already highlighted Canara HSBC you have a compulsion to sell as per the regulation. PNB MetLife, I’m sure you will hold 30% and you will not dilute. PNB Gilt is another gang [Phonetic] where there is a possibility because India the equity cult market, debt market is yet to develop and who have such a big retail franchisee there’s a potential to grow that market for retail participation. Currently, Gilt may not be able to do it, but views and norms can change over a period of time. So can you look at that?
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
At the first level, I appreciate your in-depth understanding. PNB Gilt currently we have not thought of doing anything. We hold 74% as on today and 26% is held by the market and because of the changes and the kind of decision what we have taken in the recent times the market has positively reacted to PNB Housing Finance and PNB Gilt as well. Gilt also has improved in the market price, but frankly there is no discussion with respect to PNB Gilt as on today and if at all we discuss it will be related to expanding as to how they can do the business in the market in the days to come by increasing the variance in terms of doing business. So only after the strategic discussion then we will look at — otherwise as on today, we don’t have any plan for selling in the stake — for selling stake in the PNB Gilt.
Sushil Choksey — Indus Equity — Analyst
Looking at your performance on selecting a nice partner and market rewarding on the stock price, the bank management — the current management which decision to realize of PNB and PNB entity, how you can tap the market and how you can be rewarded where the current market capitalization is concerned. To reap the reward over a period of next two, three years, there are any other thought processes on any of the divisions of PNB other than subsidiaries to do something dramatically different than public sector bank, which has been doing.
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
There are quite a few initiatives we have taken in the last one year though we may not be — we may not have discussed in the public domain. For example, we have started a credit card company separately. Now, there are two ways of looking at the discussion. One is already credit card market has matured in our country because, SBI started in 1998. Prior to that, very few companies was there. After 1998, tremendous maturity has come in credit card. As such if you ask me, you can also say that where is the demand for credit card. However, currently, if you look at our credit card base is very low for PNB for a franchise of 18 crore customers, 3 lakh or 3.5 lakh credit card base is so low that within the existing I can improve upon with the credit card subsidiary. So that is our target, which we are going there where our income from other sources can increase.
Second, the MetLife insurance which we can take it forward aggressively where the operating income that is the other income from the insurance business can increase because COVID has brought about high element of awareness in terms of the insurance policies in the country. Then digitalization completely going away from the branch what you call aspect of operational working. So these initiatives are in line with what is taking place — what kind of changes are taking place in the banking industry.
PNB is frankly a little behind in terms of comparison with our peers itself. If I want to compare with Bank of Baroda probably we are not able to match in terms of the initiatives what they have taken in the three, four years. So we are looking at to catch up with them, move ahead so that on other income basis, our contributions would be much higher so that the dependency on NIM is reduced. That is dependency on interest income on loans and handling the liability is reduced to greater extent. That would give a wonderful opportunity for a bank of our size in the years ahead.
Sushil Choksey — Indus Equity — Analyst
Sir, seeing that you have 180 million customers in the bank, why is your retail customer base not giving you sufficient business or branches were inactive in COVID that your home loans have not even grown by a bare minimum of INR1,000 crores [Phonetic] INR1,500 crores per annum.
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
I do agree with you, whereas the growth was much better earlier six months back because of COVID it got impacted. However, we have completely revamped the organization in the month of July. Now it is working well. We are very confident of increasing the retail and MSME and particularly the housing segment in the days to come. Already proponents are in the pipeline. We have already implemented even application software where automatic processing — automatic means uniform processing of credit underwriting up to INR25 crores is implemented now across the country through all the outlets.
Sushil Choksey — Indus Equity — Analyst
I’m thankful for your frankness on accepting wherever PNB lagged. I wish you best of luck and let’s see [Indecipherable].
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
Thank you very much. Thank you.
Operator
Thank you. The next question is from the line of Harsh [Phonetic] from Reliance General Insurance. Please go ahead.
Harsh — Reliance General Insurance — Analyst
Thank you. My question has been answered.
Operator
Thank you. The next question is from the line of Ankit Bansal [Phonetic]. Please go ahead.
Ankit Bansal — — Analyst
Good afternoon sir. Sir, I want to know that you are in the media saying INR6,000 crores profit in FY ’23. Sir, how come you — please can you elaborate on this?
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
See, one important thing is if you have observed about the provision requirement what we have done up to March, which was quite high. Now, we are not expecting that much of provision to be there because NPA what — accretion in corporate is reduced and ageing provision is also not very high currently required. That is one area, then slide if you observe, even though our credit growth has been negative by 3%, our average credit has grown by 2.5% positively. How it could happen is we have removed just like bumps across during the period and we have more consistency in credit outstanding. We have taken various measures internally with respect to interest rate optimization in terms of liability, in terms of assets.
So balance sheet what it required after amalgamation with legacy, what kind of rationalization it required that we have completed by March 2021. Now, if it all there is a legacy, it is only one DTA because we are not shifted to new tax structure. State Bank of India and Bank of Baroda have shifted in the public sector domain and some of the private sector banks have shifted. That is the only when which is left as a matter of legacy for us, for which there is no mandatory requirement as on today. Otherwise, the capacity of our balance sheet in terms of credit has got good potential for earning the profit. On basis of these factors only, I’ve mentioned confidently that our profit during the current year should be around INR6,000 crores.
Operator
Thank you. The next question is from the line of Mangesh Kulkarni from Almondz Global Securities. Please go ahead.
Mangesh Kulkarni — Almondz Global Securities — Analyst
Yes, sir. Last quarter, we have mentioned about the opportunities from the sale of some real estate assets. So what is status of this?
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
So far, we have not sold any property, which were there in domain under tendering but certification has not taken place so far in the real estate assets. In terms of branch rationalization we have already closed. That means merged 420 branches as on today, which was a target up to 500 up to June, which we have already done 420 and I am confident of doing that. Regarding real estate, we are yet to get the accounts.
Mangesh Kulkarni — Almondz Global Securities — Analyst
Thank you, sir. Okay, thank you very much.
Operator
Thank you. The next question is from the line of Jai Mundhra from B&K Securities. Please go ahead.
Jai Mundhra — B&K Securities — Analyst
Yeah, hi, sir. Just two things. One is I think you had given the slippages breakup of INR25,000 crore but I mean if you can repeat I think the total is not adding up because every 5,300 [Phonetic]
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
No, no, I have given only INR23,185 crores for Q4. For overall INR25,000 crores, you can note it down. Agri is INR5,460 crores; retail INR3,345 crores; MSME INR9,341 [Phonetic] crores and others is INR6,380 crores.
Jai Mundhra — B&K Securities — Analyst
Okay, sir. So MSME is the highest chunk right.
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
Correct, MSME is the highest chunk and we are working on that. In the other category, INR6,380 crores. INR2,000 crores has already been upgraded. That is under restructuring category.
Jai Mundhra — B&K Securities — Analyst
And do you suspect MSME once you restructure maybe under, let’s say, restructuring 2.0 or maybe you do let’s say ECLGS the recent tweak which Finance Ministry and IBA has approved, do you see there is a case for some of the upgrade to standard out of this INR9,800 crores slippages?
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
INR9,800 crores is not eligible for restructuring. It is only recovery upgradation or if the unit is running additional funding, but it will continue to be NPA even after additional funding until the improvement comes for the recovery. So, technically this INR9,817 crores will remain NPA. We’ll be following up for recoveries or if there is any requirement we can additional funding not GECL. GECL eligibility is different and restructuring current window 2.0 is covering only accounts, which are standard as on 31/3/2021.
Jai Mundhra — B&K Securities — Analyst
Right, that’s good sir. And the second question is sir, now the merger has been complete and I think we have mentioned also that it is a very quick in terms of timeline, so now how should one look at is the cost synergies and maybe for the FY ’22. So you have rationalized quite a few branches and ATM etc and maybe the headcount also. So what could be the cost savings for FY ’22.
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
FY ’21 already we realized around INR950 crores and FY ’22 we’ll be realizing around INR1,200 crores because branches itself we have closed around 430 branches. We’ll complete 500 by this month end and another 500 we’ll complete by March 2022.
Jai Mundhra — B&K Securities — Analyst
So in terms of, sir, your cost growth right salary plus non-salary opex growth, could we see — this year, we have seen on a YoY basis, it was clear decline. Sir, could we see a more or less a similar trajectory. I mean INR20,000 crores of opex expenses, how should it trend in FY ’22.
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
See main thing is if you look at cost to income ratio which has gone down very heavily, there was an exception case in the month of March 2020 when three banks were being merged. In fact, the figures as of 1st April 2021, after the merger balance sheet was prepared — because of harmonizing the policy on AS15, that is for funding to pension and other related issues, there was a requirement of higher provision to be made by the merging banks. As a result, the amount was very high, that’s why observed that percentage wise there is a larger difference. However, at 46% of the cost to income ratio, it is sustainable even if you’ve seen December, it was 47% and 46%, which is sustainable and in the year during the current year, the level will be the same what you are indicating to me.
Jai Mundhra — B&K Securities — Analyst
Understood, sir. Yeah. Thank you, sir. Thank you so much and all the best.
Operator
Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to Mr. Bhavik Shah for closing comments. Over to you, sir.
Bhavik Shah — Batlivala & Karani Securities — Analyst
Thanks, Steven. 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.
CH. S. S. Mallikarjuna Rao — Managing Director and Chief Executive Officer
Thank you very much. Thank you.
Operator
[Operator Closing Remarks]