IDFC First Bank Limited (539437) Earnings Call Transcript
October 28, 2023
Earnings Call Speaker Segments
Ladies and gentlemen, good day, and welcome to the Q2 FY '24 Earnings Conference Call of IDFC First Bank, hosted by ICICI Securities. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Chintan Shah from ICICI Securities. Thank you, and over to you.
Yes, thank you, Yashasvi. Good evening, everyone, and welcome to the Q2 FY '24 Results Conference Call for IDFC First Bank. We have with us from the senior management, Mr. V. Vaidyanathan, Managing Director and CEO along with the senior management team. So without further delay, I would now like to hand over the floor to the management. Thank you, and over to you, sir.
Hello, everyone. I'm Vaidyanathan.
Yes. Hello, everyone. I'm Sudhanshu Jain. I'm the CFO and Head of Corporate Center.
Hi, everyone. This is Saptarshi Bapari, Head of Investor Relations.
Hello, everyone. First of all, thank you very much for joining us this Saturday afternoon. We just announced results just a very short while ago. The key highlights I'd like to call out for this quarter is as follows: number one, as far as our broad direction of deposits, of loan growth, of profitability, of asset quality, all of them are quite stable, and I think things are proceeding very well at our bank. The numbers briefly are as follows: number one, on the deposit front, I think it's one of our big strengths, I'd say. Now it has been established for many, many years in a row that we're able to raise deposits in a very strong manner. So our deposits have now reached over INR 1.65 lakh crores and it's grown by over INR 50,000-odd crores, with a growth of about 44% over the last year. So the second thing that I'd point out is that the CASA ratio, as all of you know, the CASA ratio, there is a movement of money from current, saving into term deposit, et cetera. But we have seen a CASA ratio being quite stable at 46.4% this quarter, down marginally from 46.5% last quarter, but that's -- really that's marginal. Number three is that our plan to diversify our liability base, the strategy which we started about 4, 5 years ago, continues. Now we have close to about 77% of our loan book is -- sorry, of our deposit side, is now retail diversified deposits and of the total deposits of INR 1.65 lakh crores. Just for context, by the way, that at merger when we started, 73% was institutional was wholesale and 27% was retail. Now it's the other way round. So that's one massive progress I'd like to call out and that process continues. Number four, what is interesting is that our ability to raise deposits is so strong that we're able to fund our growth of the loan book at 25% comfortably and also be able to repay the high-cost bonds that as and when they are maturing. As you know, we had close to about INR 25,000 crores, INR 26,000 crores of high-cost bonds at the time when the merger started. Today, that number has come down to something like INR 15,000 crores. Even I think for the rest of this financial year, another INR 3,000 crores is coming up for repayment. We are quite confident that our deposit gathering machine is so strong that we can fulfill our obligations to the past as well as fund growth of the future. And the next thing on the asset side is the second part I'd like to speak about. On the asset side, the really good thing is that our asset side is very, very, very diversified. The only book that is 28% of the book is mortgages backed. So except that book, which is a big block, which we say of 28%, rest is all highly diversified. There's vehicle financing, it's close to 10% of the book, commercial vehicle is 3%, rural finance is 11%, consumer loans is like personal loans and digital loans, et cetera, all that is like 13%, education loan is 1%, credit card is 2%, other retail loans are 8%, gold loans are like less than 1%, SME loans are 5%, large corporates are 1%, small -- emerging mid-enterprises are 6%, financial institutions like NBFCs, et cetera, are 8%. So -- and other corporates -- so you get the drift. They're all like 2%, 3%, 4%, 5%, 6%, 10%. So this makes the book very diversified, and now we are feeling quite happy about the way. We're actually feeling good for the future because we feel that such a diversified book we can stand the test of time up and down. Now we wanted to call out there is talk about unsecured credit, and what is the performance of the unsecured credit so on and so forth and there is a lot of media stories around that. So I'd like to speak 2 minutes about that. The key thing that I'd like to point out is that the entire lending of unsecured credit, minus only the credit cards and BNPL kind of loans. I'll call them out separately to you in a moment. Our entire lending book of retail book, whether it's secured or unsecured, it follows the fundamental philosophy that we do cash flow assessment. Now this is very important to note. Our cash flow assessment is done -- what is cash flow assessment? Cash flow assessment is you pick a bank statement of a customer and see through PDF file, et cetera, what are the balances customer is maintaining in the bank account. So if you see, for example, customer is keeping, say, INR 2 lakhs in the bank account, then you know the customer can only honor an EMI of INR 1 lakh. If the customer is honoring an EMI of INR 1 lakh, then you give a loan that can fit within that INR 1 lakh of EMI. So similarly, we do GST filing. That's the cash flow. You can see what kind of cash flow. Third is there are a lot of data in the bureau, which indicates a certain cash flow. For example, if the customer is honoring a particular EMI of INR 50,000 to another bank on -- so you know the customer is having a -- you estimate the cash flow on that basis. So these are various examples of understanding cash flow. So entire book of the bank is built on this concept of cash flow. And that is the main reason why, frankly, our book has been doing well all this period, but we want to specifically call this out. Now the second part of the point to understand is that cash flow supported is what? Suppose there's cash in your bank, how do you pick it up from there? So we -- there is a point B that goes along the cash flow. And that point is we take a debit instruction to your bank account, if you take loan from us. It could be from any bank, it could be any other bank, it could be our own bank also. So we take a debit instruction. So if we trap the -- if money is trapped -- the natural activity of the customers' bank account, natural activity, and then we also take a debit instruction to their account. Then on the due date, we simply pull the money from their account. So this is a very fundamental point. And these 2, we are -- in a way, this is security. I just want to let you know. And if you hear, Nandan Nilekani speak about this, Nandan calls it a digital security. So this is very important to understand that this is a very -- this is the reason why our portfolio -- we treat this concept for both secured and unsecured everything. Now the other thing is that we saw some bureau information and data which says that less than INR 50,000 ticket-size loans, the delinquency is relatively higher in the industry. So we want to call out the number of the extent of our loan book at less than INR 50,000. Just one second while I speak that out, my colleagues will pull it out for you. I think INR 540 crores, yes?
Yes.
INR 540 crore. So that exposure for us, personal loans is -- that is INR 540 crores, which is about -- what percentage of the overall exposure?
It's 0.3% of the overall funded assets.
Okay. Let's call it 0.4%. So Sudhanshu will talk about this number. But I want to just call out the amount to you, so that gives a full picture. Frankly, the short point is that we don't lend in the really small ticket size less than INR 50,000 ticket size, et cetera. That's really a small portion of a book. Now this does not include a BNPL book, right? It is the e-comm kind of book, which we have. Now the next thing that I'd call out -- therefore, the short point is that we are very careful. And with the kind of heightened attention to this matter, we have also become very -- we have been very cautious anywhere, frankly, but I think we've become more cautious now. So we have tightened many of our norms because we don't want to be caught in the wrong foot. And there's a long list of tightening that we have done over the last 2 years, which we presented to our risk management committee of the Board in today's Board Meeting as well. And then -- and one is we want to demonstrate the seriousness of the issue, but also wanted to be sure for ourselves because we don't want to spoil our own track record of asset quality. The next thing I want to bring out to you is that what is the total asset quality of the bank. Now the good news is that the bank gross NPA has come down to 2.11%. The net NPA has come down to 0.68%. The breakup is more important because if you exclude infrastructure and all that, because we know there are known issue and they will go away with time. The bank -- the NPA without infrastructure is 1.69% gross, net NPA is 0.46%, so you can see that, that's also really very strong. We have not seen any disturbance. So frankly, investors should take heart that nothing is disturbing us at the bank and asset quality, in fact is only improving. The last thing is that I want to specifically call out is that the retail, rural and MSME finance, this is the 3 what traditionally banking system also calls it a RAM. That portfolio, our gross NPA is 1.53%, which is ditto same as last quarter and our net NPA is 0.52%. So the long and short of it, I want to share with you that please nothing to worry here. At this bank, things are absolutely stable. And we'll try to maintain it like that going forward. Then we also want to call out one more important piece of information because you might say or anybody might say that asset quality is good, but what about -- how do you feel good for it for the future? So our -- this is one point I want to share with you that we monitor collection percentage because after all, it's collection percentage that leads to SMA and NPA and all that. Now our collection percentage in the current bucket continues at 99.5%. And it's been -- so if you've been tracking our bank for a while, it's been close to 2.5 years since the COVID ended, those days it used to be 99.1% to 99.3%. And now it has been at 99.5% for a little like 12, 13 months in a row. And frankly, it's been that way for a long time now, for not just 13 months, like 12, 13 years in a row, it's been quite strong. So my quick comment, therefore, is that as long as these numbers are what they are, our net NPA will also remain low only because net NPA is after all a derived number from how much collection efficiency is. So we disclose in our bank these numbers month by month every quarter. I mean every quarter, we disclose for the 3 months of that quarter, and then we also historically trended for 2, 3 years at a stretch also. Why we say it's important is that if we were to have a credit quality problem as in gross NPA, net NPA and retail, you will first see it in our collection percentage dipping from 99.5%. So the day you don't -- until the day you don't see the number dipping from 99.5%, you can think of it as a lead indicator. And therefore, frankly, if you were to know -- we'll know maybe just 3 months before you because every quarter, we are now duty bound to report it and we cannot report it any quarter. The next thing that -- the last thing that SMA continues to be very low, it's 0.77%, it's probably lowest we've seen it. And for the reason I told you earlier, we feel confident about that. Now we have also disclosed product by product, the -- our gross NPA, net NPA. And we've been disclosing it for quite a while now, maybe, I think, 4 or 5 quarters, where we actually disclose our NPA in loan against property specifically, consumer loans specifically. For example, in consumer loans, our gross NPA is 1.96% and net is 0.5%, vehicles, credit cards, digital loans, SME, home loans, rural. We disclose every one of them and the sum total six sigma is tending to 1.53% and 0.52% I told you. So long and short, I'd like to say that it's a pretty stable quarter. We feel quite confident on the overall growth prospects and gross, net, everything looks good. So you should expect this kind of a stable performance from the bank for a while now because we don't see anything fundamentally changing in our story. And if there's anything changing, we'll, of course, constantly make changes to our strategy. But you can -- we assure you from our side that you can feel comfortable about us and all the parameters. So I'd like to pause here and thank all of you for being here with me. And maybe Sudhanshu can give some more color on any of this in case I'm -- in fact, I try to avoid if my numbers have been [ subtraction ]. Thanks much so much, folks. Thanks, friends.
Yes. Thank you, Vaidya. First of all, again, good evening, everyone. I'll touch upon key numbers for the quarter and the half year ended on September '23. To start with the balance sheet side now stands at INR 2.64 lakh crores and expanded by 24% on a Y-o-Y basis. We continue to witness a strong momentum on our lending book and in deposit mobilization, as Vaidya said. Customer deposits, he already said that we had a very strong growth of 44% on a Y-o-Y basis to reach INR 1.64 lakh crores. In fact, the growth in retail deposits was higher at 50% on a Y-o-Y basis. CASA ratio was also very stable at 46.4%. CASA deposits increased by 26% on a Y-o-Y basis. Average current account deposits increased by 31% on a Y-o-Y basis, while average CASA increased by 24% on a Y-o-Y basis. We continue to see a faster growth in term deposits, which grew by 68% on a Y-o-Y basis and 11% sequentially as customers are looking for locking in the higher base interest rates in the system. The growth here was predominantly driven by retail. We opened 38 branches during the current quarter, thereby taking the branch count to 862 branches. The high-cost legacy borrowings has come down by about INR 1,000-odd crores in the current quarter. In the next -- in the balance half of this year, there's about INR 2,600 crores, which is scheduled to further runoffs. Moving quickly to assets. The overall funded assets grew by 26% on a Y-o-Y basis to reach INR 1.8 lakh crores. I will cover this in 4 parts. First is that the retail book, which comprises of mortgages, consumer loans, credit cards and vehicles, that grew by 29% on a Y-o-Y basis and 7% sequentially. We have seen strong growth across all categories like to mentioned a few, home loan book grew by 26% on a Y-o-Y basis. Vehicle segment, which includes two-wheelers and car, it grew by 41% on account of increased distribution. Consumer loans increased by 22% and credit card is coming from a small base that also had a very good growth. The bank has now issued more than 1.9 million cards. The gross spends on credit card increased by 64% in H1 of '24. Rural book, which primarily helps us to meet the PSL requirements, also registered a strong growth of 51% on a yearly basis. Funding for SME for business purposes and Corporate segment increased by 22% on a Y-o-Y basis. Infrastructure book now is just nearly 1.8% of the total funded assets at INR 3,300 crores. You can refer to Slide 93 for more details around product growth. Moving on to asset quality. The gross NPA of the bank further improved by 7 bps during the current quarter to 2.11% and net NPA improved by 2 bps to 0.68% during the current quarter. If we exclude the rundown infrastructure book, this GNPA is more like 1.69% and net NPA is 0.46% at bank level. PCR gross of technical write-off was at 84% as of this quarter. GNPA, retail, rural and SME segment on a combined basis stood at 1.53% and net is just at 0.52%. The corporate non-infra book is well provided and has a net NPA ratio of only 0.11%. The restructured book continues to come down.
Ladies and gentlemen, please stay connected. Ladies and gentlemen, we have the management team back on the call. Sir, please go ahead.
Yes. So I got cut off in between. I'll just repeat my last few points, which I would have mentioned otherwise. GNPA in retail, rural and SME segment stood at 1.53% and net NPA is just down to 0.52%. The corporate non-infra book is well provided and has a net NPA ratio of 0.11%. The standard restructure book continues to come down and has further reduced to 0.38% as compared to 0.47% last quarter. More than 85% of the restructured book is secured in nature. The SMA-1 and SMA-2, as Vaidya mentioned, that has reduced to now only 0.77%, which is a good indicator of a better portfolio. Even in the corporate book, the ratio of SMA-1 and 2 is very low at around 0.3%. Moving on to profitability. Profit after tax for H1 FY '24 increased to INR 1,516 crore versus INR 1,030 crores in H1 of last year and this was up by 47%. For the quarter, profit grew by 35% Y-o-Y to INR 751 crore versus INR 556 crores in Q2 FY '23. This was largely driven by strong growth in corporate core operating income. Core operating profit, which is NII plus fees excluding trading gains, for H1 grew by 41% Y-o-Y to INR 2,883 crores. For the quarter, it grew by 28% to INR 1,456 crores. NII increased by 32% on a Y-o-Y basis to INR 3,950 crores. The net interest margin was steady on a sequential basis at 6.32%. Fee and other income increased by 46% to INR 1,376 crores for Q2 '24. And this was largely retail led, which is at 93% of the total fee. Operating expenses increased by 34% on a Y-o-Y basis due to increase in business volumes, branch expansion and increase in some tech expenses. We had a trading gain of INR 54 crores during the quarter, and provisions came in at INR 528 crores for the quarter. The credit cost on an annualized basis as a percentage of average funded assets was at 1.19%, which is well below our guidance which we have given earlier. On an annualized basis, the ROA stood at 1.2% and ROE stood at 11.36% for H1 FY '24. Moving on to capital adequacy. The bank has maintained strong capital adequacy and capital adequacy, including profits for H1 '24, was at 16.54% at September 30, 2023, with CET ratio at 13.49%. During first week of October '23, the bank successfully raised INR 3,000 crores through a QIP from a set of marquee investors. Considering this, CET1 and total capital adequacy would be higher by about 150 bps at September. We continue to maintain healthy liquidity levels and average LCR was at 122% for Q2 '24. We would like to maintain it around these levels going forward as well. With this, we can move on to the Q&A.
[Operator Instructions] We have our first question from the line of Lalit Deo from Equirus Securities.
Congrats on a good set of numbers. So sir, I'll just ask a couple of questions. So first on the retail loan portfolio. So like we are seeing a strong growth in the digital loan segment. So could you give us more color like how is -- like what is the nature of those loans -- these loans? And how -- what is the ticket size over there? Like who are the major customers as well?
These are the digital loans, like how every other institution is doing digital loans because these are loans that you can originate either through partners, where loans are originated digitally. They could come from a partner or could even be loans that are maybe we advertise, say, in Google or somewhere and people -- customer click on it -- prospective customers click on it and then we process them digitally end-to-end.
Got you. Again and what would be -- like how would it be different in terms of ticket sizes as compared to our consumer loans in terms of -- within consumer loans and the digital loans?
No, no, much bigger, much bigger. For example, consumer loans of durable financing for that we do, that ticket size could be as low as even INR 30,000, INR 40,000, INR 50,000, but these loans could be even maybe INR 2.5 lakh, INR 3 lakh.
Got you. And sir, my second question was on like while you have indicated that our collection efficiency has been strong at about 99.5%. But like if we see the segment-wise GNPA in the retail segment, we see that in the credit card, consumer durable loans, there has been a small increase in -- on a sequential basis, there's been small increase in the GNPA. So like do we see some -- on a sequential basis, do we see some higher slippages in these segments? Or like could you give us some more color on this?
No. I mean if you see the numbers there, like marginal moment of 10 basis points up or down can keep happening in any business any month. But if you see, for example, the credit card, 1.87% gross, 0.46% net. If you see vehicles, 1.76% gross, 0.73% net. Now I don't remember what it was last quarter, but it is unlikely to be any materially different than the last quarter. So like that's how it works. For example, if you see SME loans, gross is 1.42%, net is 0.7%. So like last quarter, it could be like 1.52% or 1.32%. So I mean, what I'm trying to say they're all operating in a particular range and nothing has fundamentally changed. That's why we focus on sigma. The sigma is 1.53% and 0.52%.
Right, sir. And sir, just lastly, could you give the gross and net slippages for the quarter?
Pardon?
Gross and the net slippages during the quarter.
Sudhanshu?
Yes. So gross slippages for the quarter were about INR 1,350 crores and net slippages was around INR 850 crores.
We have our next question from the line of Hardik Shah from Goldman Sachs.
Can you hear me?
Yes, yes.
I had just one question. The bureau data is indicating that the unsecured loans per borrower has been increasing in the last couple of years. Can you share some color around this for your book in terms of what the data is like?
See we -- I called it out earlier, but specifically for less than INR 50,000, I called it out earlier in the discussion. I will ask Sudhanshu tell me what it constitutes as a percentage of the book. But our book is INR 540 crores of the book, that is below ticket size of INR 50,000, which is what was flagged for us, by the way. Even that book is behaving well because when you have overall composition what the numbers I read out to you, in a -- it works out at 0.3%. I think you called it out. It works out at 0.3% of the overall funded book of the bank, and it works out to 0.37% of the retail, rural and MSME book. That is a number that we are calling on because it was specifically. But other than that, as we discussed earlier -- see, there are 3 categories, just to give you a little more color. The way we do it is that whether secured or unsecured, we follow the concept of cash flow. I've described it earlier, so I'll request you that I don't repeat that. So we follow the concept of cash flow. Whether it is secured through digital security or whether it's not. And because we believe this trapping of cash flow is itself a security. So we follow the model. Now that -- we believe that is a distributing factor. For example, let me give you color. For example, if there is a product in which a customer has to pay you on due date vis-à-vis there's a product in which you take the money from the customer's bank account on the due date. So the performance is very different between the 2. The former is an example like a credit card. Now imagine I give you a credit card. On the due date, what do you do? You pay us. I can't touch your bank account, take money from your bank account. But imagine, you took a personal loan from us, what do you do? You're not paying us. We are taking money from your bank account. So there's a fundamental difference between the fact that we can pull money from your bank account or we have to wait for you to pay us. This is the very, very fundamental point. And all our unsecured loans or secured loans, with the exception of credit card business is where we take money from the customer's account. You can think about it like we have a retail book of -- actually retail book and MSME book and rural book all put together of about INR 1.3 lakh crores. And of that, the only the credit card book of INR 3,000-odd crores is where you pay us and everything else we pull money from your bank account.
Okay.
I'll give you a breakup, if that gives you a little more color. So our retail financing book, there are 3 categories of financing we do, just to -- so one is retail financing book. That includes home loans, vehicle loans, consumer loans, education loans, credit cards, gold loans, et cetera, et cetera. So that book is INR 104,000 crores. Second is rural finance. That's INR 22,800 crores. Third is SME finance that is INR 52,500 crores. SME finance -- SME -- actually, sorry, my -- hold it. It's about INR 5,000 -- INR 9,500 crores. Okay. Now corporate -- so basically, if you take these products and all of these products, except credit cards, which is a 3,000 -- sorry, INR 4,282 crore of exposure. Everything else is we take money from the customer's account.
Mr. Shah?
Understood, sir. But sir, my question was coming from the fact that what we are seeing is that the borrowers who are taking unsecured loans, they are taking those unsecured loans from multiple institutions. So if we can share the color on our borrower wherever we are lending, if you have that kind of a cut in terms of whether that customer is an exclusive customer for us or if that customer is borrowing from multiple institutions, if you have any color on that stuff.
No, I don't have the color off hand.
Okay. Yes. Okay.
Mr. Shah, are you through with your questions?
One more question, sir, is that we had one more company reporting yesterday, SBI Cards, which sounded caution on the stress building up in the unsecured loan book, and that is also showing stress in their credit card book. So are we seeing any of that sort in our book?
No. Interesting, to take out credit cards as an example. I really believe that, frankly, every product, whether unsecured and secured credit card whatever, everywhere, we should be careful, okay, because that's the nature of lending, we should be very careful. But specifically, since you brought up SBI Cards by your own words, now that's a credit card matter. I told you the difference. In credit cards, you should be extra careful. Everywhere you should be careful, but in credit card, extra careful because credit card customer pays when they pay. So even if the customer has money in the bank, we can't touch the money, right? So you should be extra careful in credit cards. So maybe they should -- whatever maybe you pointed out, maybe they should bother about the book. But as far we are concerned, our credit card book, I told you numbers, 1.7% gross, we don't see -- 1.87%, we have no problem. And our net NPA is 0.46%. Particularly in credit cards, what we do because we want to be extra careful, we lend largely to a -- give credit card largely, I don't say exclusively, but largely to our customers who have our relationship maybe savings, et cetera. So it just makes it a little better for us, I think.
We have our next question from the line of Dixit Doshi from Whitestone Financial Advisors.
Can you hear me?
Yes, sir, very much.
So just one question. So almost on all the fronts, be it advances, asset quality, deposits, we are doing exceedingly well. Just one question is, if I see our H1 or even the Q2 number, the operating income growth is around 37%, 35%. But at the same pace, our operating expenses are also growing. So we are in that 71%, 72% cost-to-income from last almost 3 quarters now. So when do you see that -- obviously, we are expanding the branches for the growth also, but when do you see we will start seeing the material reduction in the cost-to-income ratio, if you can touch upon that? And my second question is regarding the credit card business. So at some point, you were saying that in the earlier calls that by FY '24, and we may touch breakeven. So where do you see that? Do you feel that we will be breakeven by this year-end, maybe start making profits next year?
Yes. On the cost-income front, yes, I mean, as long as expansion is continuously going on, because remember, we are growing our deposits very strongly at INR 50,000 crores a year. So probably next year, we'll need to raise INR 60,000 crores, INR 65,000 crores. So yes, we'll continue to incur the necessary expenses and, frankly, the drag is coming on the liability side. Our asset side is -- retail asset side is posting a return on equity of 20%, even though we give a transfer pricing at some attractive rates from the liabilities point of view. So as long as you keep expanding, I guess, on the liability side, there will always be a bit of a drag. But we should look at in composite sense, as long as you meet the return on equity because after all cost-income is a component that is going to deliver ROE. So since we have a slightly higher NIM that we -- than we initially guided The Street for when we did the merger, we had guided 5.5%, we're running 6.3%. So our fee income is also very strong at about 2.2% to 2.3%. So therefore, even with a slightly higher cost-to-income ratio than what we initially guided for, our -- the way the economics fall in the P&L, the ROE, return on equity front, we will broadly -- we are quite confident that the exit quarter of '25, we should be able to meet our guidance. So that's one important thing to remember about cost-income that look, after all, it's an input material, it's not an output item. Output item is ROE. Now what's the second question?
Credit card business profitability?
Yes, credit card profitability. Yes. I mean, broadly, we don't see any major discomfort to it. We had said that by -- yes, you're right, we had said that by '25, we should be able to breakeven and '26 we should start making money. That broadly, the direction continues.
Okay. And one last, if you can throw some update on the merger. So have we already applied to the reserve banking and all, just an update?
Yes, Sudhanshu?
Yes. So we have applied to Reserve Bank of India as well as to SEBI through NSE and BSE. As you would have also noted that we have already received the approval from CCI. There are a few other bodies where approval needs to be sought. We are very much into the process. I can say that this is very much on track. Of course, it takes its own time, difficult to predict, but things are moving smoothly on this front.
Things are moving smoothly, friends. I know you people may want to know more details. But you should process that regulator, BSE, NSE, Competition Commission, all the process is working and there is no hiccup anywhere.
We have our next question from the line of Kaitav Shah from Anand Rathi.
Congratulations on the good set of numbers.
Thank you.
So first question from my side would be on the interest rate, on the deposit side. So are we largely through you think on the interest rate pricing on the deposit front? Or do you see that there is still some sort of increase left for your deposits to get repriced?
Yes. Paritosh, I'll take that -- Kaitav, sorry. So I would say large part of the catch-up cost has already come in. There could be another 10, 15 bps, which could happen in H2. Having said that, as I mentioned earlier, we have also some legacy borrowings which would retire. So that came down by INR 1,000-odd crores in Q2, another INR 2,500 crores, which is broadly evenly spread between Q3 and Q4, that will come off. That is at 8.9%. That should give us some relief on the interest cost. So I -- we feel that cost of fund could go up marginally from the current levels, but the large part of the term deposit pricing has sort of come in. Maybe some increase could happen in Q3 and then things could play to -- or if the interest rates have to come down, then we could see some benefit down the quarter.
Got it. Got it. The second question is more on the exposures that you have towards the NBFC. And if you can kind of give us some sort of numbers that you look at to get comfort on the lending to NBFCs because the exposure to below INR 50,000 or smaller ticket size has largely been through the NBFC route. So what sort of comfort do you look at? And if you can just make us understand a bit more about.
Yes. So our NBFC book, we are seeing very -- I would say, a very strong performance on this book. Again, we have been doing this for quite a while, right, that book is broadly about INR 15,000-odd crores today. On a rating, just to give you more comfort, more than 80% of the book is rated A and above, right? And there is a -- and rest is BBB, BBB+, right? And only 1% of the book is less than BB -- is BB and below. So we see a very strong performance on this book. We have not seen any blown-ups.
And to your question about how we think about it, okay? And how we -- see, the one fundamental thing in NBFCs is that we should be very careful about the NBFC's ability to manage cash flow. It is never really the underlying whether the lending for less than INR 50,000 or more than INR 50,000 because at the end of the day they also have a strong amount of capital and the capital cushions on most NBFCs are running at 15%, 18%, 20%, some of them even more. So unlikely that you're going to blow up so much of the book, that capital gets wiped out. That's pretty less likely. But it's more important to understand the cash flows. So when we lend to NBFCs, we'll look at basically the level of capitalization, their ability to raise capital that's also very important and that make a reasonable assumption and guess based on understanding of the people or the founders, promoters, their own track record, their ability to -- their historical record of how they raise capital from time to time. We also understand the discipline of their lending practices themselves. We understand the reputation. As all of you know, there are reputations and reputations and that makes a very big difference. Then we also understand their -- trends of their asset quality, their flows, et cetera, all the usual stuff that people do. So when we look at this and we feel that look we feel comfortable then we lend.
Okay. Okay. Just one last question. Sir, so given what has been -- kind of been alluded to within the retail space, and of course, a lot of players are -- have been going down on the unsecured lending piece, personal loans, a lot being said, does it in any way change the growth trajectory for you? Or you will be more data dependent on what's happening within your firm and you will be going ahead with the show as it's been going?
See, it is our job to very carefully heed the market, heed, H-E-E-D, heed the market because when there is a particular news flow, we have to look at it and we have to immediately call for the data and double check, triple check. To be honest, frankly, we evaluate our portfolio at a -- really at a microscopic level in the bank. To give you one idea, we have like 4 or 5 or maybe 6 levels of control, so let me read them out to you -- let me speak them out to you. Number one, the teams which are doing the underwriting themselves, so they have their own KPIs, that their NPA should not cross X and net gross should not be more than X and Y and all that. Then beyond that, there is a risk -- the policy management team, the people who approve the policy. They have their own conditions, and they are an independent team. Then thirdly is the risk management division of the bank, which runs independent of the underwriting teams. Now RMC -- not RMC, not the risk management committee, I mean the risk management team, which is the independent team. So they have no truck with the first team that either wrote the policy or the people who wrote the underwriting. They are independently evaluating and seeing what's going on every month, and they're looking at every city, every state, every location, every segment. Everything is micro monitored and they all track the numbers and see the numbers going up and down. Anything goes up, they keep identifying what went up and they keep making changes. Then that's actually level 3. Then next at my level because after all of this, end of the day, I'm responsible to the market, I'm responsible to the Board, I'm response to the shareholders. So I am keeping a very hawk eye on this issue because we have -- like I said, we have very proud record of 13 years -- well, don't count on 13, it's unlucky. Even the 13th year is behaving well for us. So we have record of 13 years where our gross NPA has never crossed 2, net has never crossed 1. So why would we disturb that? So it comes to me. So when I look at it, I take it very seriously. Even if I find an incident in the marketplace, where I find that, oh my God, I got how did this customer of our bank get this offer from the bank. We go and do a -- we turn the unit upside down, thinking how did this loan go through our bank. So that becomes a big issue because for me, it's very important. Then after my level of evaluation, this is a problem, I can call myself the fourth. Then after that, the risk management committee of the Board. The risk management committee of fact is anything like 160, 170 pages and there, everything is presented to the RMC where we presented by like a full trend line of 12 months or 6 or 4 quarters, 8 quarters as required. There, it is presented by ticket size, by LTV, by geography, everything. Then after risk management committee, then it come to the Board. Then we find -- or present all of these members to the Board and literally every single Board Meeting, we present all the key parameters to the Board. And just for information, I hope this will give you some comfort. To the Board, we don't present single or retail NPAs running at 1.55% and net is 1.5%. That would be really very basic, and that doesn't give any color. So back to the Board, we present all these numbers and then we present all the trend lines and everything that are material secured, unsecured, unsecured but secured by cash flow, unsecured and secured like products and credit cards, there is no ability to take the money from the customer, et cetera. So -- and then finally, it is you, you, meaning the shareholders and everybody and analysts, et cetera. So imagine it is just going through so many levels that almost everybody here is becoming a PhD in retail credit in terms of asset quality monitoring. So I'm only assuring you, this is I'm saying this I'm on record. So all of you can keep the record if you're interested, that we have so many checks and balances. I'm personally focused on it, but it's not only me because the whole team has to work. And that's how we focus on it. So hopefully, our Board will hear this call and they will take their response. They will take it even more seriously because I'm invoking their name as well. But I can only say that we are -- that first. In fact, in today's Board Meeting, we -- in SA's Risk Management Committee, we presented vintage analysis. Vintage analysis what we do is that we see a loan booked in, say, January of 2019. And then we see that 6 months later, i.e., June of 2019, what is the delinquency. So then you take a loan that booked in January of 2023. And then we see after June of 2023, the exact 6 months, so that is very comparable. What is the delinquency? So then we see, has it gotten better over time? Or has it gotten worse? And if it's -- so we present every single data like this, every single product we present vintage analysis, only yesterday we did with RMC. So we do this level of detail. So I can tell you that it's very unlikely that we will -- so many people can miss up an item.
We have our next question from the line of Manish Shukla from Axis Capital. [Operator Instructions] As there is no response, we'll move onto the next question from the line of Nitin Aggarwal from Motilal Oswal.
Congrats on a good quarter. Two questions. One is on margins. Like while we have reported a stable margin, but this quarter, we have also raised a lot of liquidity and deposit growth has been very strong. And -- but for this, it looks like margins could have been better this quarter. And now that we have sailed through the entire last year and with a relatively higher mix of interest rate book, how do you look at the margins going ahead? What levels will be comforting to us given that some risks on the delinquency side of the industry's watching for? And how do you want this to progress going ahead?
Yes, Nitin, we expect the NIMs to be quite stable, right? In fact, as you saw for this quarter also, we came down by 1 bp. There was 2 bps impact, which came because of ICRR. Going ahead, as I said, a large part of the deposit cost has come in on the term deposit front. There could be some increase, which could happen. But at the same time, we are also seeing some benefit, which continues to come in, in terms of repricing of investments when they get churned in terms of -- on the liquidity, which we get deployed, interest rates have moved over a period of time. Then even on advances because we had certain loans, which were linked to 1-year MCLR, some benefit has -- is coming in. So we feel that NIMs will be quite stable for us even into the remaining quarters of this year.
Okay. And the other question is on the deposits. So if I look at the deposits, sir, the traction has been very, very strong over the last 4, 4.5 years. And the deposit per branch now is quite comparable to some of the large private banks. And while they have been in existence for more than 2 decades and we have started our journey like, say, 4, 5 years back. So how do you look at the trend going ahead? And if you can provide some color on the deposit productivity, therefore, as the branches, they achieve vintage? And how are you looking at because we have also opened a large number of branches in the recent years. So how do you distinguish in terms of productivity between the early branches that we opened and versus what we are opening now and how good is this metric to really looked at like deposits for branch for IDFC Bank?
See, I'll give you more specific response. Our deposit per branch is running like INR 185 crores and it is, like you rightly said, it's comparable. I think some large private sector banks are probably better than us. They're probably in the mid-200s kind of zone. But at pace at which we caught up, I think, is really something. In fact, I'd say that we've almost caught up with banks, which have been there for like 15, 20 years in terms of deposit per branch. So the good news is that our brand has become very strong. You may have missed the annual report, but one comment I've written out there. It's not about being -- it's not about how much a brand is known, it is about -- it's not about how many people know a brand, it is about what people think of a brand. And that is the hardest to track. If you advertise a lot or you're having some news for some good reasons or bad reasons, you can be in the news. But it's not the same thing is being known for the right reasons. I don't know how it came to us, but I can't put a finger on to it, but our bank is really -- I mean, just people say good things about us in a brand. We've done our own brand surveys and our brand surveys our own employees when I go and visit branches, and talk to them, et cetera. And I do that quite frequently somewhere or the other ago. And employees are almost like jumping with happiness. When I walk around, they say, oh my god, customers are coming and appreciating our bank and our product level appreciate et cetera. So the point is that, that is a good thing. Now with that power of the brand, our products are quite good, genuinely clean. We don't charge any penny from customers through this route or that route and don't change fee structures under fly without the customer's knowledge and all those things. So when we have a good image and a good brand and good products, then now you open a branch. Straight away, we get a lift off. Any location you go and put a branch like almost our bank gets like -- the flow of money to a branch is quite fantastic. So we think we are very encouraged by all this, to be honest.
We have our next question from the line of Manish Shukla from Axis Capital.
Apologies there was an issue with my audio line earlier. Sudhanshu, if you can come to Slide 93, loans and advances. Firstly, could you give us the size of the credit substitute book?
It's a small book of about INR 5,000-odd crores, which includes certain bonds and on the PTC portfolio, which we have.
Sure. And then our unsecured retail, right, in all form and shape, if I were to look at this loan mix, where does it fit? And what is the size of the total unsecured retail book? I'm not talking small ticket. I'm talking about overall unsecured retail.
We have committed more a product-wise cut in this portfolio, and that's the kind of disclosure we put out since the beginning.
Which is what I'm trying to understand that of the consumer loan book, for example, INR 22,000 crores, how much would be unsecured retail of the other retail, which is INR 14,000 crores, how much would be unsecured retail.
No, no. I think I've answered this to you already that the -- just for people to take a reasonably informed assessment of what portion of secure, unsecured, for example, you can imagine that home loan, you can imagine LAP, you can imagine vehicle is a portion of consumer income, so portion is not, gold loans, tractor loans is, say, equipment financing is, commercial vehicle is, education is not consumer loans. These are well-known product business banking, yes. Business banking is basically working capital product finance to small enterprises. So it is for you to make a good guess. I think these are well understood businesses.
Fair point. I mean, if I were to guess, I can get anyway just between -- anywhere between 25% and 100%, right? So it will be better if we could have an estimate from you rather than I was guessing it.
Okay. So when...
Secondly Mr. Vaidyanathan in the opening comments, you get a statement that given there's so much of noise around media, you have change certain policies, if I heard it right or made some changes and made the presentation to the Board as well today.
Yes.
Can you make some qualitative comments around the same what exactly is it that you're trying to do incrementally.
Incrementally, see, we are -- and constantly identifying pockets that we -- it's a continuous process, frankly, it's not just for this quarter. Any good organization would continuously do it. It's not like Oh, my God, let's go and tighten things. It doesn't work like that. We have to be sensitive to the news flow, but we have to do our own thing with or without news proactively also. So what we do is that, for example, if you identify that in the course of your analysis, you find that -- let me give an example. Now suppose the income installment ratio in play is 50% and you have given out loans at 50%. And then you find this income installment ratio in the -- in one particular segment, you're finding that delinquency is more than the other. You might then say that, okay, for this segment. I don't want to take 50%, I want it at 40%, whereby in other words, we'll lend only INR 40 to the amount of income. So these are continuous criteria that we touch like this. I mean there are many more examples. There could be the location. In the case of another tightening could be -- say, for example, if it's secured example for the sake of argument. That for example if you find that it's loan against property in a particular city, it's not behaving as well as other cities. And of the mean, then you might say, I don't want to give 65% LTV to this market, let's give 50%, that kind of stuff. It's a continuous process. I mean it's a long list, it runs into like what we presented today to the Board, we compile this for the period of about like for a quarter, it ran into some 4 pages of cuts -- I mean, changes to credit policy. It is a continuous process.
We have our next question from the line of Jai Mundhra from ICICI Securities.
Sir, I wanted to check on your term deposit pricing strategy, right? So if I look at your current structure of term deposit. Right now, we are offering up to 1 year at 6.5%, whereas our SA rate above INR 5 lakh is 7%, right? So that looks a bit unusual, and I mean, what does it mean? Could TD rates be revised upward? Or do you think there is a chance that SA rate could move downwards? Or how should one think of this? And what are we trying to achieve -- of course, given a choice at 6.5% TD and 7% SA, you would see a lot of inflow in SA only. But from your ALM perspective, does -- I mean, is that the optimal way you would want to strategize?
So I will tell you our rates, and then we can derive our view from there. So our interest rates on term deposit for, let me say, 180 days is 4.5%. There's some disturbance at your end, kindly if you go on mute it will be nice for others also, while I answer you. So we paid 3% up to, say, 45 days. So 46 days to, say, 180 days, we pay 4.5%. And let me say, 180 days, 181 days to say a year, we pay 5.75%. And maybe 1 year and above -- up to 1 year, we pay only 6.5% for your information. So 1 year, 1 day and above, we pay 7.5%. So by the way, these rates are not too high, let me tell you. If you go and check out the interest rates for, let me say, even leading state-owned banks, our rates are very competitive. Competitive meaning not high, in fact it's on the lower end. And even 1 year, 1 day, 7.5%, it's fine, maybe 30, 40 basis points more than some leading banks. So we find that our bank has acquired that sort of a stature now or whatever goodwill now, I told you this before, that we are able to raise deposits like this.
No, no, point taken, sir, what I was trying to understand the relative strategy of term deposit in SA, right? So your term deposits are competitive and maybe a few basis points spread over other banks. But within your banks, you are offering SA at 7% above INR 5 lakh. And you have the TD rates, which are much lower than even SA. So how does this benefit bank from ALM and what do you -- what are you prioritizing the SA over TD? Or how should one look at it?
Okay. That's a good question. If you can turn mute back again. See, we are -- for our bank, whether frankly, you brought money to the form of TD route or whether you bought -- kept money in savings, end of the day, it's costing us a certain amount of money. So the banks which have traditionally been in business for maybe 20, 30 years, they hate to touch the savings rate because it changes the interest cost of the whole base. So they normally prefer to just raise the interest rates in the TD front and pick up money and hope for the interest rate cycle to change, where TD rates come down and they can protect the low-cost savings rate. You get -- did you get the point because of progress?
Yes, yes, yes, sir.
Okay, got it. So they are interested parties who're never touching this. We come -- we are free-footed people. We have no interest to say, oh my god, I've got to protect the whole base because my whole business is in new bank. So we say, no, no, we don't want to play these games. We just -- if we are willing to pay -- keep the SA rates, what they deserve to be from the customer's point of view and even from our point of view, it makes sense. So that's our thinking on the issue. So we have nothing -- so that's how we play our card. That's why I always say to all of you that look, on the savings front, I make no forward commitments on what the rates will be. There will be -- sometime when market will be tight, I will increase and not tight, I will drop it. That's how it works. And right now, just see what we've done, you may have missed it. That INR 0 to INR 1 lakh, we have dropped savings rate to 3% now, 3%. Now at 3%, frankly, it's in the league of your many other well-known banks, 3%. But amazing thing is that we still feel deposits will come to us, so -- and it's coming to us. So we feel that, frankly, it's a very epochal moment that we drop our rate to 3% on the savings rate INR 0 to INR 1 lakh. And if our deposit trend continues like this for another 3, 4, 5 months, 6 months, et cetera, then we may even extend the INR 0 to INR 1 lakh, even INR 2 lakhs, 3 lakhs, who knows. But it's a very important moment to the bank that we dropped the rates to 3% and INR 0 and INR 1 lakh. So that's how we see.
And Jai, just to add, as I said, that we are -- we continue to see strong inflows on the term deposit. As you see the rates for 1 year 1 day to 2 years is 7.5%. So people want to lock. It's a good rate, right? And we are getting deposits in that bucket. Of course, if you keep money in savings account, it gives you more flexibility, and we offer the rates which Vaidya mentioned about.
So just to finish this point, so they have a water purifier. So the thing is that we feel very comfortable with our strategy at this point of time. And if you notice -- see, we think of the banks as 2 categories of banks, okay? One is a big 4. Big 4 is another league. They've been around for 25 years, 30 years. They have a great brand, maybe good product, good service, everything. And they have also been there. The entire ecosystem has been trapped by -- not -- I can't say trapped, but let me say, service by these banks. So over the whole chain of money coming from, let me say, a vendor to the principal, principal to the dealer, dealer to the distributor, distributor to the dealer, the whole chain is there. The government banking money -- government money from the government to the scheme right to the Taluk or Zila Parishad level is all there. So people -- a lot of these institutions have a very strong brand and good capabilities. So the good thing is that as far as our bank is concerned, despite being a new entrant, like I said, just a goodwill brand image, whatever you call it, even if you're paying competitive pricing, we are competitive to our peer group. We are able to get the deposits. So let me just -- since I made -- I just put this in one more thing. So let me say big 4, they have all the benefits I told you, legacy benefits. Now think of the next 4. Next 4 think of banks like, say, IndusInd Bank, YES Bank, say, maybe Bandhan Bank, our bank, maybe a few banks, which are Tier 2 banks in that sense. Among those banks, we are like very well priced, like competitively priced. We don't pay more. In fact, now we are nudging in the bigger bank category by offering 3% from INR 0 to INR 1 lakh. And still this kind of deposits are flowing to us. So it gives confidence to us.
Right, right. Okay. And sir, a small observation and maybe you can correct, right? So FY '23 slippages as a percentage of AUM was around 3%. And considering current quarter slippages are also around 3%. And so is this the normalized run rate for slippages? Or you think basis your 99.5% collection efficiency, the slippages should ideally be around 2%, and hence, there is some scope? So yes, so that is the broader question.
Jai, if you can go on mute mode. You go on mute mode, a lot of disturbance at your end. Yes, yes. So see, the thing is this concept of slippages and et cetera, and their correlation with credit cost has to be very carefully understood here. It will define what is our 99.5%. 99.5% means 0.5% moves from zeroth bucket, that is current bucket to 0 to 30. I mean 99.5% is pinned -- collected from that current bucket, okay? Now from that bucket, that is 0 to 30, 31 to 60, some more customers slips. From 31 to 60 to 60 to 90, some more customers slips and so on. The -- when we look at slippage, there is also flow forward, flow backward. As long as -- and different businesses banks have different kind of product suite. For example, if you have a home loan, probably you'll never slip at all. If you went to a company that commercial vehicle, they will probably have a lot of slippage, they will have a lot of collection back, right, even after 90 DPD. So therefore, different -- depending on businesses, they all have different slippages, different collections. But the way to look at it is not only one metric. There are these 5 metrics you should track. And as far as we are concerned, the 5 metrics to track, which have helped us very well for a long time now, over a decade now, and this makes sense for as follows. Number one, what is the collection percentage? We told you the number is 99.5%. Number two, what is the SMA? We told you the number, like 0.74%, 0.75%. Number three, which is -- it could probably be in a band. 1% is also good enough, but we're running less than that. Number three, what is the gross NPA? Number four, what is the net NPA? Number five, what is the credit cost at our provisioning policy? So if these five things are met, then the rest is taken care of. And we are following this for a long, long time. And mind you, I specifically flagged credit cost because a bank or anybody can take more provisions and write-off more and claim to have low gross and net NPA. But no, no, no, we don't do that. We also show credit cost, and we guide the credit cost and then meet the credit cost.
We have a next question from the line of Suraj Das from Sundaram Mutual Fund.
Congratulation on a good set of numbers.
Thank you.
Few questions have already been answered. A couple of questions. So sir, if you can talk about more on the -- I heard that you talked about more on the -- in a detailed way on the branch vintage and all that thing. If you can also talk about on the customer acquisition run rate, what has been in your bank for last couple of quarters and vis-à-vis, I mean, what was the run rate for, let us say, a few years back on that? And also, nowadays, I mean, when I hear a lot of banks, I mean, people have all talk about going more penetration on the existing customer base. So on that front, I mean, what would be your product per retail customer? How has been that trend if you have any analysis or any thoughts there? So yes, that is the first question. I also have one more question.
No, no, wait, don't bunch questions. We can take one at a time. So now this thing about number of accounts and how the trend line of product per customer, et cetera, is. See, we are, let me say, a little underperforming on product per customer. We -- if any of your customers, you may notice that you're not getting aggressive calls from the bank, you don't get too many calls from the bank, saying that take this product, take that product. We are trying to tone down our team and call outs, et cetera, so that we don't disturb our customers too much. Of course, if you -- if any of you by chance may have, it's an exception to the rule. And if you -- any of them disturbed, I apologize for that, but generally 99% of the time, you will not get very many calls from the bank. So our approach -- so our product per customer is a little lesser and we find this an opportunity, actually. But you want to keep the current strategy of keeping the smell of a bank good and all that. Number two, the -- we -- if you take any of the big 4 or any of the established bank, not the big 4, any of the established banks who have been there for maybe 20, 30 years, they have 2 engines that fire for them every year. One is imagine a bank that's already sitting on INR 10 lakh crores of deposits. And imagine that INR 10 lakh crores, maybe about 10-odd percent will come anyway growth because Indian economy is growing. If you're a salaried customer, base salaries have gone up and some deposits come from existing customers anyway just by the growth of economy and growth of financial services. Then they raise a little more money through NTB. In our banks, since we don't have that base of 20, 30, 40 years, almost everything is coming through NTB. So we believe that as the years progress, let me wake up and say 27, 28, 29, 30, then hopefully, at that time, our deposit will be like INR 3 lakh or something like that. At that time, you will find that a certain amount of good balances will come from existing customers and NTB. So we are, let me say, flying on 1 point -- if other banks are running on 2 engines, we are probably running on only 1.2 engine because they are largely an NTB bank. But that's the way the price of being a new bank because you have to go and acquire and all that.
Sure. Understood, sir. But sir, you have any number -- I mean, on the customer acquisition side, what was the customer acquisition for last quarter?
We've not put it out specifically, so you can just skip it. It must be a few lakhs, lakh, 1.5 lakhs per month, something like that. We also acquire digitally, but somehow maybe 70,000, 80,000 customers a month or so. Earlier, we used to acquire more than that. But then later, we figured out that these customers are not keeping enough balances. At one point of time, we were acquiring 1.5 lakh, 1.6 lakh customers digitally. Then we figured out the customers are not keeping enough balances, then we put a specific condition in the process that please fund the money as part of the process itself. Then they dropped the number of volumes. It came down from 1.5 lakhs to 70,000, 80,000. But at least now we're getting better quality because customers are coming in, are coming with the money. That's on the digital side. Then maybe on the normal account opening side, maybe 70,000, 80,000 accounts per month, yes.
Understood.
So we are focusing more on quality customers. We are not like -- we are not amassing millions of customers and reporting millions of customers to the market, straight. Those things don't give us any joy. We are trying to get customers both digitally and physically meaningful relationships because we don't want to crowd our branches unnecessarily and as [indiscernible] experience for our customers, existing customers. That's a strategy that gives you a little bit of color.
Sure, sir. Understood. And one last question. Sir, if I see -- I mean, obviously, you have a proven track record on the asset quality side in the retail book. And if I see your retail, rural and SME loan, GNPA and net NPA is probably best in line in the industry and probably at par we are one of the best large peers. But at the same time, sir, I mean, do you have any other contingent provision per se in your book that is not included in the PCR calculation? And do you intend to build -- I mean, because few of them -- the larger peers, they have built contingent buffer over the last few quarters? In your plans, in your strategy, do you intend to build any kind of counter-cyclical contingent provision just to keep this retail asset quality, which is probably we are in the best time of asset quality and probably next 2, 3 years down the line when any retail cycle comes, do you have any plans for that creating any contingent provision buffer or something like that? Yes, that would be my last question.
First of all, no, that's also a good question, by the way. So we -- by the way, it's just not because of the benign time. I request, I point out to you to look at our -- the world, the timing was not benign also. Look at demonetization. Our NPA never can be disturbed. Look at ILFS crisis, whatever, so -- or GST implementation. So we've had good times, bad times, the quality has been good. But I do agree that if an extraordinary even like a COVID comes, right, when India goes into lockdown and there's no moratorium for customers and God knows, if those kind of situations happen, those things can happen and we should be very aware of that. We feel that barring those situations, we are really well covered. Now as far as the contingency concerns, we feel that what we have done is we have taken pretty -- our provisioning policy itself is basically starts at 90 DPD in a pretty conservative manner. And literally, depending on product category, either between 120 days to 150 days to 180 days is all provided for. So with that kind of a super-conservative provisioning policy, it's pretty unlikely that we'll have a problem. But we'll be careful. We will watch carefully.
Ladies and gentlemen, that was the last question for today. I now hand the conference over to the management for closing comments. Over to you, sir.
Oh my God, it is like 1 hour and 50 minutes -- sorry, okay, an hour and 20 minutes, sorry. So that's a lot more than expected. So maybe moderator, you can keep track of time next time for our sake. So thanks very much, everybody, friends, for being with us today. That's all I'd have to say.
Thank you, everyone. Have a great weekend.
Thank you.
On behalf of ICICI Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.
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