Ladies and gentlemen, good evening and welcome to the HDFC Bank Limited Q3 FY 2021 earnings conference call on the financial results presented by the management of HDFC Bank. 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. I now hand the conference over to Mr. Srinivasan Vaidyanathan, Chief Financial Officer, HDFC Bank. Thank you, and over to you, sir.
Okay. Thank you, Salford. Appreciate the participants calling in today. We'll start with some background on the market context and what we have seen and are seeing to provide a backdrop so that that's the backdrop on which we will talk about the results and some of the business dynamics. As you know, after recovering sharply in the months of August to October, the tailwind of the Festive Treats season provided good economic relief. The trend was good, suggesting that the overall economic activity remains in the positive territory, and there has not been a reversal in the recovery process. For instance, PMI manufacturing continued to strengthen in December, and GST collections rose to a record high of INR 1.15 trillion in the month of December 2020. Looking forward, we expect the economic recovery to gather pace in Q4.
We expect the rural economy to fare better than the urban centers and provide support to overall growth. Agriculture sector is likely to expand by 3.4% in FY 2021. Overall, the share of agriculture is estimated to rise to 16.3% of GDP in 2021 compared to 14.6% in 2019/2020, led by a healthy kharif output. That augurs well for us fitting in well with our SURU strategy. We expect GDP growth to turn marginally positive in Q3, 0.5%, and recover further in Q4, 1%, after witnessing a contraction of -24% in Q1 and -7.5% in Q2. For the full year, our house view is that we expect GDP growth of -7% to -7.5% for full year 2021, which is in line with our previous estimates. On the inflation, it cooled off sharply in the month of December, coming in at 4.6% versus 6.9% recorded in November.
Moderation of CPI inflation was largely driven by contraction in food prices. Core inflation remained firm at 5.5% as inflation in subcategories like health, education, and recreation picked up. The near-term inflation outlook has improved, and we expect CPI to print close to 4% in January. That's again, a house view. For February and March, we expect inflation to inch up somewhat as the base effect impact wears off. On an average, we expect inflation at 4.4%-4.7% in Q4 2021. We expect RBI to keep rates on hold till at least first half 2022 at 4% and keep its stance accommodating. Further, we anticipate a graded CRR cut rollback in Q1 2022. The liquidity surplus in December continued to remain high, average of INR 6.4 trillion. Given concerns around the high liquidity in the system, we expect RBI to use special OMOs to manage yield curve.
Some moderation in liquidity is expected in Q4 as the central bank slows down its intervention in the FX market and the government goes into collection mode in the last quarter of the year. The fiscal deficit, again, another important indicator in the macro, for April to November touched 135% of budget estimate as tax collections continued to remain under pressure. We expect the central fiscal deficit to rise to 7.6% of GDP in FY 2021 versus a target of 3.5% on the back of sharp revenue receipt shortfall, while expenditure is likely to be slightly above the target. The combined fiscal deficit for FY 2021 central plus state is likely to be 12.3% of GDP. During the quarter, in the equity capital market, the private issuers raised INR 24,000 crore as against INR 80,000 crore in the previous quarter. Retail participation in IPOs and rights have been strong.
The equity fundraising pipeline, both in public and private market, continues to be robust. During the quarter, we along with other syndicate members, executed a handful of deals. On the debt capital market, Indian debt capital markets continued to witness good activity in Q3. The total debt raised approximately INR 2.19 lakh crore was 25% higher than the corresponding quarter of previous year. For the nine months ended December 31, our bank was ranked number two arranger for INR bonds. On the CSC and SURU front, with a rapidly evolving rural economy, there is a need to have a robust digital and rural strategy. Our association with CSCs is helping us offer cost-effective services to semi-urban and rural parts of the country, which in turn is working as a stimulus in ushering the digital era through the creation and spreading of socially and financially inclusive banking model.
We have signed up approximately INR 1.6 lakh village-level entrepreneurs, of which INR 1.02 lakh are onboarded as business facilitators and 13,502 business correspondents. These business correspondents are not only executing financial transactions through the use of Aadhaar-enabled payment system, which works on biometric authentication, but have also enabled them to sell multiple products, including CASA, fixed deposits, loans, including gold loan, two-wheeler loan, car loan, tractors, and home loans. On the CSC business side, we have been able to keep the momentum and have seen good uptake in CASA accounts where more than INR 2.3 lakh accounts have got opened during the year so far. Now on the retail branch banking side.
During the quarter, our sustained efforts on new customer acquisition complemented with V-KYC led full KYC accounts and digitally powered smart accounts has enabled us to register growth of 20% in savings account acquisition and 15% in current account acquisition over the corresponding quarter of the previous year. On an overall basis, we have opened 2 million new liability relationships in the quarter, an increase of 18% over the same period in the previous year and 9% over the previous quarter. During the quarter, we have launched Next Best Action, an AI ML-led analytical tool for engagement with customers giving our staff sharper recommendations to follow through for conversion. This has improved conversions and maximized return on efforts of our colleagues in the branches.
Quick Loan Shoppe, which was launched from 1st of September onwards as an integral part of the branch's permanent in-house elements of merchandise and shopper activation with an aim to transform the branches into a financial solution supermarket, has helped increase retail assets throughput by way of higher customer inquiries and leads. With the launch of the video KYC, liability and personal loan customers are onboarded through V-KYC through digital channels. This facility is also being extended to auto loan, two-wheeler loan, and card customers in the future. On the payments business, Q3 showed an even better recovery compared to Q2 on both issuing, acquiring and consumer finance, which is the finance at point-of-sales business, albeit helped by a festive season which spanned both October and November. Card sales volumes is sequentially up 32% in Q3. Spends were up smartly, riding on the wave of enhanced customer engagement programs.
Further, opening up of markets post-lockdown, enhanced acceptance of electronic payment modes as an ecosystem trend and enhanced marketing spends by most luxury and high street consumption brands. Festive Treats lent a boost to consumption with its larger than last year format covering larger numbers of participating merchants across physical and online formats, as well as close to 15,000+ local and regional physical merchants offering a wide variety of discounts and offers. Smart, customized, and personalized digital marketing. Significant penetration of small ticket spends onto debit and credit, increased activation and engagement levels. December spends matched October, leading to optimism and growth prospects in 2021. Strategy will be to continue to keep customer engagement to enhance wallet share, thereby making bank cards as the primary source of electronic spends. We ran exclusive TV campaigns during the IPL and also increased our presence on digital and OTT platforms.
Festive Treats microsite attracted over 7 million unique visitors to the offers. On the merchant acquiring side, the similar recovery of spends were reflected in all acceptance form factors, which is the cards, UPI, net banking, et cetera. Enhanced merchant sign-up, deep customer engagement through one bank approach, bank staff visitations, value-added services, driving EMI at point of sale has helped in gaining counter share and float. Merchant acquisition volumes is sequentially up 20% in Q3. Lending across merchant types to take care of short-term working capital needs will be the core component of strategy going forward. On the retail assets front, retail advances continued a pointed recovery aided by the festive season, with disbursements surpassing pre-COVID run rates and chalking a 40% sequential growth. Given the solid foundation of our retail asset franchise, we are confident of sustaining this momentum and making strong gains in market share.
Arvind will have more color on this as we go later in this call. On the wholesale and SME segment, the performance of wholesale business across large, mid, and SME portfolios was at par with the pre-COVID trends. Bank continues to gain market share due to diligent adherence to sales process. We'll have Rahul cover this later as we go along. On the collections front, the bank entered Q3 with a cohesive strategy to manage the volume increases expected owing to the end of moratorium relief. The bank's primary goal was to stabilize the resolution rates within short order to progressively reduce the quantum of accounts flowing through into higher levels of delinquency. Jimmy Tata will talk more about credit and collection as we go along in this call. Now getting on to a few comments on the franchise balance sheet itself.
We have further built on the strength of the franchise and continue to be positioned well to reap the market opportunities. The recent customer relationships that we have built are performing well in accordance with our vintage models, which has enabled a robust buildup of deposits, thereby maintaining strong liquidity position. The bank's average LCR for the quarter was at 146%, which is INR 95,000 crores of surplus or approximately $13 billion considering 110 LCR as a floor. Capital adequacy ratio is at 18.9%. We have 7.8 percentage point more capital than the regulatory minimum of 11.075%. Our CET1 at 16.8% is 9.3 percentage points more than the regulatory minimum of 7.575%. The balance sheet is resilient. The floating and contingent provisions totaling to approximately INR 10,000 crores built over a period of time helps in de-risking the balance sheet. We continue to originate loans in accordance with our proven credit models.
We have handled diligently the restructuring requests, which we will cover more as we go along on credit. Getting to the results highlights for the quarter. Net revenues grew to INR 23,961 crore, driven by an advances growth of 15.6% and deposits growth of 19.1%. Net interest income for the quarter was at INR 16,318 crore, up 15.1% over previous year and grew by 3.4% over previous quarter. For the quarter, the core net interest margin was at 4.2%, prior year was also at 4.2%, prior quarter was at 4.1%. As mentioned earlier, the bank's average liquidity coverage ratio was at 146%, while the excess liquidity positions the bank to cater to potential demand in future, it impacts current NIM by around 15 basis points. This drag was offset by monetizing some of the investments in the form of trading gains as we have done in the past quarters.
Moving on to the details of other income. Total other income, INR 7,443 crore, was up 11.6% versus prior year and up 22% versus prior quarter. Fees and commission income constituting about two-thirds of other income was at INR 4,975 crore, grew by 9.9% compared to prior year and 26% compared to prior quarter. Retail constitutes approximately 94% and wholesale constitutes 6% of the fees and commission income. FX and derivatives income at INR 562 crore was higher by 7% compared to prior year of INR 526 crore and was almost flat to prior quarter. Trading income was at INR 1,109 crore for the quarter. This represents the ALCO strategy of monetizing some portion of the gains from excess liquidity investment, similar to prior quarter levels. Other miscellaneous income of INR 797 crore includes recoveries. On the expenses, operating expenses for the quarter were INR 8,575 crore, an increase of 8.6% over previous year.
Year-on-year, we added 282 branches and added 55 branches during the quarter. We have opened 231 branches during the nine months of this financial year. These levels of branch build accomplished on an average are slightly above one branch build per working day. By the end of this financial year, we expect to open approximately another 100 branches or so. Since last year, we added 1,008 ATMs, cash deposits, and withdrawal machines and 249 during the quarter. We have 13,502 business correspondents managed by Common Service Centres, including 1,532 opened during the quarter. During the nine months ended December 31, we have added 8,123 business correspondents. The staff count increased by 3,579 during the last 12 months and is at 117,560. Cost to income ratio for the quarter and year-to-date was at 36%.
Our expectation is that the spend levels will increase, driven by sales, promotional activities, discretionary spends and investments. Thus, the cost to income ratio will be reverting to recent historical trends of 38%-39% in the short run, while our goal remains to bring this down again in the medium to longer time period. Moving on to PPOP, the pre-provision operating profit at INR 15,186 crore grew by 17.3% over previous year. Coming to asset quality. As mentioned in the past quarter, the Supreme Court passed an interim order dated September 3, 2020, stating that those accounts that have not been declared NPA till August 31, 2020 should not be declared as NPA until further orders.
The bank has complied with the said directive and has not classified any account which was not NPA as of August 31, 2020, as per the RBI IRAC norms, and will not be classified as NPA till such time the Supreme Court rules finally on the matter. Similar to previous quarter, the bank, as a matter of prudence, used its analytical models to estimate potential NPA in an expedient manner on a pro forma basis and has provided for corresponding contingent provisions to us to save. The bank holds provisions as on December 31, 2020, against the potential impact of COVID-19 based on the information available at this point in time and the same are in excess of the RBI prescribed norms.
For the credit update that we will provide in the next few minutes, we will first mention the reported number and it will be followed by the pro forma number which is analytically arrived. If you consider the potential NPAs as just mentioned using analytical models, the pro forma annualized leakage ratio for the current quarter is at 1.86%, as against 2.31% in prior year and 1.98% in prior quarter. Year to date, nine months pro forma annualized leakage ratio is at 1.67%. The GNPA ratio reported was at 0.81% of gross advances. The impact to the NPA ratio by use of analytical model in determining the NPA, as I mentioned earlier, is about 57 basis points. Therefore, the pro forma GNPA ratio for the quarter was at 1.38%, as compared to 1.37% in the prior quarter and 1.42% prior year.
GNPA ratio for the quarter on a pro forma basis, excluding NPAs in the agricultural segment, was at 1.2%. Prior quarter and prior year levels are also at 1.2%. Net NPA ratio reported was at 0.09% of net advances. NNPA ratio for the quarter on a pro forma basis was at 0.40%, as compared to 0.35% in the preceding quarter and 0.48% in prior year. The restructuring under RBI resolution framework for COVID-19 was approximately 50 basis points of total advances. Now on to the provisions. Specific loan loss provisions reported were INR 691 crore.
If you were to follow a regular recognition process without any constraints of court directive, the specific loan loss provision would have been higher, resulting in the specific loan loss provision on a pro forma basis of INR 3,170 crore for the quarter as against INR 2,884 crore for prior year and INR 2,371 crore during the prior quarter. The total provisions reported were INR 3,414 crore, as against INR 3,704 crore during the prior quarter and INR 3,044 crore for the prior year. Total provisions in the current quarter included contingent provisions of approximately INR 2,400 crore. The contingent provision in the form of incremental specific loan loss provision is reflected here. These pro forma contingent provisions will be reversed to specific provision as and when final court order becomes available. The reported specific provision coverage ratio was at 88%, as against 84% in the prior quarter and 67% in the prior year.
There are no technical write-offs, so the Head Office and Banks books are fully integrated. At the end of the current quarter, contingent provisions towards loans were at approximately INR 8,600 crore. The bank's floating provisions remained at about INR 1,450 crore as of December 31, and general provisions were about INR 5,000 crore. As on December quarter end, total provisions comprising specific floating contingent and general, were 260% of reported gross non-performing loans or 148% of pro forma gross non-performing loans. This is in addition to the security held as collateral in several of the cases. Coming to credit cost ratios. The reported credit cost ratio is that the specific loan loss ratio was at 0.25% of advancing.
If you were to follow a regular recognition process without any constraints of court directive, the specific loan loss ratio would have been higher by 91 basis points, resulting in a specific loan loss ratio on a pro forma basis of 1.16 for the quarter, as against 1.22 for prior year and 0.91 for the prior quarter. As you are aware, recoveries are recorded as miscellaneous income. The recoveries amounted to 24 basis points of gross advances for the quarter, as against 35 basis points for prior year and 21 basis points for the prior quarter. After factoring in the contingent provisions, as previously mentioned, which has an impact of 91 basis points, the total credit cost for the current quarter was at 1.25%, as against 1.41% in prior quarter and 1.29% in the prior year.
The reported profit before tax at INR 11,772 crore, which is roughly INR 128 crore per day during the quarter, grew by 18.9% over prior year. Net profit for the quarter at INR 8,758 crores grew by 18.1% over prior year. Net profit for the nine months ended December 31 was at INR 22,930 crore, up by 18.6% over the corresponding nine months of prior year. Some balance sheet items. The balance sheet size as of December at INR 16,54,000 crore is an increase of 18.6% over the prior year December level. Total deposits amounted to INR 12,71,124 crore, an increase of 19.1% over prior year and up 3.4% over prior quarter, which is an addition of approximately INR 42,000 crores in the quarter and INR 2,04,000 crores since prior year. Retail constituted about 80% of total deposits and 100% of incremental contribution during the quarter.
With our persistent focus on granular deposits, CASA deposits grew by 29.6%, ending the quarter at INR 5,46,747 crore, with savings account deposits at INR 3,74,639 crore and current account deposits at INR 1,72,108 crore. CASA deposits also registered a robust sequential growth at 6.9%. Time deposit at INR 7,24,377 crore grew by 12.2% over previous year and 0.9% over prior quarter. CASA deposits comprise 43% of total deposits as of December end. Credit deposit ratio was at 85% for the current quarter as against 88% in prior year. Total advances were INR 10,82,324 crore, an increase of 15.6% over prior year and a sequential growth of 4.2%. This is an addition of approximately INR 44,000 crore in the quarter and INR 1,46,000 crore since prior year. Retail advances on a Basel basis grew by 5% year-on-year and sequentially grew by 4.3%.
Wholesale advances on a Basel basis grew by 26% year-on-year and 3.8% sequentially. Moving on to capital. With regard to capital adequacy, total capital adequacy ratio as per Basel III guidelines stood at 18.9% as against the regulatory minimum of 11.075%. Prior quarter was at 19.1% and prior year was at 18.5%. The Tier 1 capital adequacy ratio was at 17.6% in the current quarter as compared to 17.7% in the prior quarter and 17.1% in the prior year. CET1 capital stood at 16.8% in the current quarter compared to 16.2% in the prior year and 17% in the prior quarter. In the nine months ended December 31, the bank generated net capital of 40 basis points. To provide further context, during the financial year 2019/2020, the net capital generation was 140 basis points to the total capital ratio.
Now some highlights on HDB Financial Services under IBR, which was made for consolidation with the bank. Disbursement for Q3 were at last year level and sequentially up 23% over Q2 with business across product lines gaining traction. Total AUM reached INR 60,176 crore. Net interest income for the quarter was at INR 1,010 crore, a growth of 1.5% over Q3 last year, while sequential growth was at 9.3%. PPOP for Q3 was at INR 748 crore, growing 7.5% over previous year. Provisions for the quarter were at INR 118 crore, which included general provisions made during the quarter. For the quarter, HDB Financial Services has reported a small loss of INR 44 crore. For the nine months ended December 31, the profit reported was INR 218 crore. HDB Financial Services has given impact of Supreme Court order and passed NPAs at the end of August and held the status of these accounts as standard.
As on December 31, gross and net NPA were 2.7% and 1.7% respectively. If HDB Financial Services had classified borrowers' accounts as NPA after August 31, 2020, along with the IRACP recognition methodology, the pro forma GNPA ratio would have been higher at 5.9% as on December 31, as against 5.1% as on September 30, and 2.9% as on December 31 last year. No benefit of standstill is taken in the P&L as adequate general provisions have been made to neutralize the benefit. HDB Financial Services had adequate liquidity and LCR as on December 2020, which was at 285% LCR ratio. HDB Financial Services is also able to borrow at attractive rates coupled with the strong capital position of 19.5% and are well-positioned to maintain growth momentum built in Q3. Coming back to the bank, and particularly on the December 2nd RBI order.
We want to mention that progress is being made on the plan of action provided to the regulator. We have taken it positively as it will raise the standard. The regulator will institute a process to inspect the action plan and the progress. We shall give updates in the future. In summary, our teams across functions enthusiastically handled customer engagement in implementing our strategy regardless of the challenging atmosphere. This is reflected in deposit growth of 19%, advances growth of 15.6%, operating profit growth of 17%, profit after tax increase of 18%, delivering the return on asset slightly above 2% or so. With that, may I request Jimmy Tata to give a few comments on credit, and then we'll have some business highlights coming too.
Hi, good evening, everyone, thanks for coming again. I'll do what I usually do and just take you through segment-wise, wholesale and the semi, and then take a small break while Rahul would then step in and give you some brief on the business momentum. After which, go through retail, which would be followed by Arvind's views on the business again. On the wholesale portfolio, the wholesale portfolio is now reasonably large at around INR 5.8 lakh crores. It's been growing well. It continues to grow well in pretty much the same way as we've been reporting over the last two or three quarters. Most of the growth coming from well-rated public sector and private sector enterprises. Everything is pretty much steady state, there's not too much news to give you in that sense.
The gross incremental portfolio, I don't know if I need to explain our HDB ratings again. I think if you go back to the previous calls, we have the one to 10 HDB rating. It's a model that we keep sharpening and has served us very well for 25 years. One is the lowest risk, 10 is the worst risk. 4.37 was the gross incremental in a portfolio during the quarter, which corresponds well into the AA, AAA category. Around 68% of the portfolio is rated HDB 5 and above, which measures into a AA again. This is just for external reference. It's not that we benchmark it that way. We have around 67% of the externally-rated portfolio. Actually, no, I should phrase that again.
67% is externally rated at AA and above, and since I'm using the word above, maybe I'll just let you know that it's a 50/50 between AAA and AA by and large. The average rating of the portfolio itself remained very steady, and it's been that way for the last few quarters at around 4.4. The high 70%, I would say, is where the externally-rated book. At this point of time, it's 79, but it's usually in the high 70s of the externally-rated book is either AAA or AA rated. 90-plus % is A and above. Moving into what we usually mention on the unsecured book. The unsecured book always has a better rating than the average portfolio because we do take great caution in what is done in the unsecured space.
The weighted average of the unsecured portfolio today is an HDB 3.4, as opposed to the average of 4.4, and by the secured booking of 4.57, that's how the average gets determined. Things are pretty much as they were going well, we are confident and it seems in order. I think Srini commented on the NPA numbers and the pro forma NPA levels. Within the wholesale book, there is really not much distance between the actual and the pro forma NPAs because the book itself is quite steady and stable. Just take a minute to move into the SME book and let you know what is taking place there.
Over the last two, three quarters, given the injections of various benefits that have come in from the Reserve Bank and from the side of the government, be it the ECLGS or the various measures for agriculture and various other methods, we once again had a fairly good ability to manage. As we had mentioned earlier, cash flows into customer accounts, which we monitor very closely, had slipped in the months of April and May. From June onwards, quite happy to report that there has been a strong bounce back, and I'll come back to this in a minute. I'll just give you a better flavor of that there, but I'll leave this there for the moment. The 30+ since the month of September, which is when you can actually measure it, has again shown an improving trend month-on-month.
I could tell you that the FITL in the SME book is a 0.74% or 0.75% range, which effectively shows the inherent strength of this book. We would over the last few quarters have, you know, done a lot of analysis and tried to explain to you why we think it is strong, but I would think that this is one of the actually manifested demonstrations of the strength of that book, that not more than this much required to be put into FITL. We also have been doing stress tests on this book, as we mentioned to you some time ago. Initially in the early days, of course, we were very conservative about it, and we reported that 9% could end up being under stress. We revised that last quarter, if you remember, and it came down. It was much better than we had imagined.
It had come down to around three. There is again a small positive movement, and today around 2.3% odd is where we consider there may be vulnerability, which we watch rather closely. The utilization of facilities in the SME book has been steady over this entire period at around a low 70%. The number itself doesn't matter. It's the fact that it is steady that we look at because this is based on working capital limits, it is based on availability of drawing power, et cetera. That once again puts things in a good light, and it carries on the same way, so I'm not dwelling too much about it. It's pretty steady state. Industry classification and diversification, once again, very granular. Nobody except agricultural, which is once again as I mentioned, is directed lending, so you have to have a particular percentage in it, crosses 5%.
All other industries in this SME book are below a 5% level. I think if you go to industry number six or seven, it starts moving down to three and then to twos and much lower than that. There's a tremendous granularity in that. The delinquency trend quarter-on-quarter has also showed an improvement across all buckets. Be it the 7+ , the 15+ , 30, 60, whatever, there is an improvement across all buckets. There has been good recovery seen even in those areas. Coming to the few points then that we usually mention, which are some of our own individual metrics, our self-funding ratio. Once again, I must caveat, as I always do, this is not security. This is the bank's internal measure of the customer's wealth and liquidity in the SME space.
As we had mentioned to you in the early days of the pandemic, we were concerned, and we were watching whether this would stay to, maybe to our surprise. We're not surprised anymore about it because we've now determined the reasons as well. The self-funding actually grew from that point in time. I think the customers ended up with larger savings and larger balances in the bank than previously there. That remains in the 70s now for a considerable period of time. I mean, between 70%-80%. The collateral coverage, again, rather steady. Currently around 85%, and it's usually been in the 85ish-90% kind of a range. The other good thing which I alluded to right in the beginning, which I could report to you now is since the month of June, we have seen a very steady flow of receipts into our accounts.
This is something we monitor very closely. It's not just steady, it is actually growing. At this point in time, I think I would be able to say that it's around 14%-15% higher than the levels of the inflows in February because this, once again, I think, reflects the health of the portfolio and the superior customer selection that the group has had. The ability of these customers to bounce back in terms of business receipts to pre-COVID levels and actually cross back shows that the book is in reasonably good health. That, of course, is all that we do internally. We decided to do something a little more outward-looking, and we decided to plot the receipts in our customer accounts and the collections vis-a-vis the GST collections of the government. The plot shows two almost parallel lines.
Once again, this shows that the flow of funds into our accounts is mirroring the recovery in the economy as well, puts things into a good perspective for us. From the risk perspective, all I can say to conclude is we have our behavioral score, just like we have the HDB ratings in the wholesale, we have behavioral scores, which focus a lot on customer behavior beyond just the balance sheet and the metrics. These are also gravitating once again back into the pre-COVID days, all in all, comforting from our perspective. Just thought, Rahul, why don't you just speak a bit on the business side?
Sure. Hi, good evening. With commencement of the vaccination drive today, it finally feels that we are on the road to normalization. Well done, India, on that. Wholesale banking remains on very strong footing and had a satisfactory performance. Corporate banking and business banking continue to track better than originally anticipated before COVID. This was a quarter that not only saw strong quarter-on-quarter and year-on-year pickup, but also an extremely strong growth in averages in both customer assets and CASA in the range of 30%-35%. As per CSO data, advance estimates indicate mild positive growth in second half of current fiscal. Continued improvement across high-frequency indicators bode very well for sustained recovery. Data points for December improved and continue to show a positive year-on-year growth trend, even as the impact of festival-related holidays normalized.
Manufacturing PMI, as Srini just mentioned, recorded expansion for fifth consecutive month, remaining at a very high level of 56.4 in December. GST collections, record high 11.6% growth year-on-year in December. E-way bills for December were up 15.9% YOY. Power demand increased 5% YOY in December. Rail freight grew 8.5% in December. Weekly registrations for passenger vehicles remained robust, growing at a double-digit rate even in December, and so on. However, as a very large transaction bank, we look at our collections and the collections of large corporates that pass through our cash management system. The Q3 collections were higher 11% year-on-year, which is how strong it was. This is in a sharp contrast to first half of the year, when the collections were down 16.3%.
For the month of December only, as people continue to debate what happens post the festival season, collections this year were higher +20% year-on-year. Normalization was also reflected in, for example, in our wholesale SME book, where in the 12-month period, OD utilization moved to positive terrain over a year-ago level. The bank added new-to-bank customers in excess of 2,000 in the quarter, which was 30% higher than prior year December quarter. It was a quarter of highest ever disbursements that we have done. In light of this, here is our performance very briefly on business volumes. On customer assets, advances and investments put together. Corporate banking and mid-market group saw a mid-single-digit quarter-on-quarter growth. The year-on-year growth for corporate banking remained at a healthy approximately 40%. Business banking saw a high single-digit percentage quarter-on-quarter growth in its asset book and a high teens percentage year-on-year growth.
We continue to receive responsible share of customer CASA across all our customer segments. Our growth is a result of our adherence to our institutionalized sales process, philosophy of service to customers, and going deep into the rural geographies. We are not in a race to be number one or widen our lead. The market is large for all participants to grow. What aided growth, very importantly, was government's efforts towards macro stabilization. Amongst a slew of measures, just to name two, the 20% ECLGS scheme, its various modifications, 1.0 followed by 2.0, and changes in line with ground realities are all effected by the government has helped stabilize the MSME segment, provider of jobs in the country. Liquidity flow through the measures of government and RBI supported the parabanking and banking sectors tremendously. As we look to next fiscal, it won't be out of place to remain optimistic.
After a long time, we have the position where you can look a little bit longer, other than just a quarter or two quarters ahead. The first half will possibly continue to be aided by government-directed spends and CapEx in public sector activities. While I believe the odds have considerably improved for private sector participation in CapEx formation from the second half of the year. Always one wonders that while growth and NIM performance have given a strong earnings momentum in the wholesale bank, has it led to deterioration in book? Given the quality of the book, as Jimmy described, there is no unusual bad debt formation or restructuring to make a commentary on. Thank you.
Jimmy, on details please.
Sure.
Moving into the detail, I think last time I'd spoken to everyone about the demand resolution and created that metric for ourselves. I'd mentioned we were at a 95% level at that point in time. Just to reconfirm or in case there's new participants on the call, what we mean by demand resolution is what is demanded during the month and collected during the month. It was at around 95. We had predicted it would move to around 97 by December, and that has actually happened. Just to compare it with pre-COVID levels, this would be levels a little over 98%, so we are very close to it. We would be getting there. There has been a month-on-month improvement in all these months and in this as well as several other metrics. We do intend to get there shortly.
Looking at the check bounce trends, these have also been improving month-on-month since September when we naturally started measuring it again. There was no point during the moratorium. Those are also moving and once again gravitating very close to the pre-COVID levels all over again. Of course, these vary product by product, but on an average across the bank, that is how it is going. Let's not use that word average lightly. This is happening across products, so it's in every product and that's how the average is effectively being built. If we move into the collection resolution, by which we mean the resolution of the cases that have actually bounced. This also is improving month-on-month and therefore is a very encouraging trend. In fact, the bounce resolution has actually gone better than the pre-COVID numbers in the recent months.
If we look at the higher buckets, the resolution is not over and above the pre-COVID months like the bounce resolution is, but once again, getting there in a sense. All in all, the collection situation is improving as we move along, and we hope it stays that way, of course, and not much else to report in that particular direction. Agriculture has been a sector that has performed relatively well during this entire pandemic. It's holding up well. There are, in fact, a few signs we have observed recently that might lead us to say that things are getting better than the historical levels. At this moment of time, we'd like to continue doing some more research on those and wouldn't want to put them on the table. Let's just continuously say that things are holding up well in the agri front.
Recoveries, which means recoveries on written-off cases, doing rather well since the last few months, and we are now around the 15% over the pre-COVID levels when it comes to the month-on-month recovery as well. All in all, I would think reasonably good situation on the collection and recovery front for all of us. To just take a minute on one or two other things that have been a little peculiar to the quarter. One is the restructured assets. I had mentioned in the last call, if you recall, that the restructuring while it had gone live was a little damp and not very enthusiastic in terms of its response. I'd also mentioned that it was very early days and something could emerge going forward. That turned out to be true. Two things happened.
One is perhaps customers themselves felt that they should apply while the opportunity was there. I think what helped it beyond that was the regulatory environment changed in which it was permitted to do the restructuring on a mere request rather than to insist on a lot of documentation and justification for the same. What we did was we tried to approach customers dynamically because we did see this as an issue and we did want to be human about it. Whoever did apply and was basically eligible on absolutely basic grounds was offered the restructuring and therefore the restructuring numbers did go up towards the end of the quarter. A lot of this restructuring, therefore, just would want to draw one distinction for the benefit of everyone.
The restructuring that has been done is largely based on customer request because we did want to take a human approach to this. It is not reflective of the bank's view on what would happen to that particular asset or the portfolio. The pro forma NPA that Srini referred to and also gave the numbers for earlier on is what the bank's view is on what would happen in terms of any asset turning non-performing. I just thought I'd draw that distinction between how we handle the restructuring and the pro forma. They're two different things.
The restructuring is 0.5% of portfolio.
Yeah. You mentioned that. Also a small update on asset sales. We have always in the bank been looking at and we're also required to do it regulatory, but we do it anyway. We periodically examine the entire portfolio of bad assets and we decide whether it is worth disposing some assets or retaining them for recovery. Whether we write off or not, of course, as you all know, we do not stop recovery efforts. We do examine whether a sale could provide us a better return than our own recovery efforts in various assets as well as pools of assets. Whenever we do see that opportunity, we do sell the assets. Historically, as you would know in the Indian context, the market has actually really been strong for wholesale stressed assets and there hasn't been much of a market for retail stressed assets.
As you know, our wholesale stressed assets have not really been, fortunately, very large, and for that reason, there hasn't been that much of a sale. In the recent quarters, there has been a growing interest from various participants for retail assets as well. Hence, taking advantage of that, we have examined the portfolio, and since we did receive offers which we thought were commercially in our interest and viable, we have sold some assets in the retail space as well. All I would say is, of course, the entire financial impact of such assets would have been taken in the current quarter, as well, to the extent it had not been taken in previous quarters, but there would be no further impact in the future going on over there.
When we move into, Arvind, of course, will get into the business aspect of it, but from the risk dimensions of the product growth, I would just be able to say that we are now pretty much approaching pre-COVID levels in terms of the business momentum and in several products like the auto and two-wheeler space, we are actually ahead of those levels. Personal loans are more or less on an even keel with those times. It is a few products like business loans, et cetera, where things are not yet completely up to scratch. That is for two reasons. One is, of course, the market in this area might not be that elusive. Of course, we would also be cautious in certain segments where we wanted to exercise that level of caution. Of course, Arvind will speak more on the business momentum as things progress.
I think that's pretty much it from my side, except for let me just tell you a little bit. I think comparing industry delinquency at this point of time is not going to be very meaningful because of the Supreme Court judgment. We, of course, are trying to work out and communicate our own pro forma delinquencies, but there is no consistent methodology for that. It's probably not good to compare that. What I could give a small flavor on is the future portfolio because the assets that we are putting on in the current environment, if we just take one metric, and this is again for the external world to give a reference, it is not the metric that we use internally.
If we look at the bureau's scores of the new acquisitions, across all products, we are considerably higher than the average of the rest of the industry. If you take one of the most significant unsecured products, around 52% of our portfolio is above what is generally considered a very high cutoff score in the bureaus compared to a 35 for the rest of the market. If you take one of the largest secured products, those two numbers are a 42% for us and a 33% for the rest of the market with the same high bureau triggers that we are talking about. If you look at products considered a little more risky in the current environment like commercial vehicles, this actually becomes a 2x factor. It's virtually double the injection into our portfolio as compared to the rest of the market with these high-scored customers.
Not the way we would want to actually describe this, but probably from an external reference perspective, the best flavor that I could give at this point in time. That's a little bit on the new acquisition and the quality of the portfolio because you should know that what is being onboarded at this point of time is of the usual, if I may use the term HDFC Bank quality and I hand over to Arvind now so he can take it away.
Thanks, Jimmy. Okay, the retail assets umbrella of all 11 businesses, whether it's secured, it's unsecured, the retail working capital, the microfinance. I think in the last quarter when I covered the July to September, I mentioned that we had grown by the double-digit sequential growth. This quarter, October to December as well, we are mirroring a similar sequential double-digit growth in the disbursals. We have surpassed A, we surpassed the pre-COVID run rate this quarter, which you heard Jimmy just sharing with you guys in the retail assets as a whole. Another point to note is that on a December to December, if I compare 2020 and 2019 Decembers, we're running a double-digit growth on the incremental business for that month as well on the overall retail assets business.
We are observing bullish growth rates in the retail working capital, home loans, auto loans against property businesses, our secured arms as well as unsecured piece of the retail assets franchise. Let me also give you some ground-level feel on what's happening quickly, a quick snapshot. I think the retail working capital, we've seen a massive robust growth on a year-on-year basis. The SME side of the business has been ably assisted with our distribution strength, the bumper crop, a good agri uptake. The government credit line guarantee scheme added substantial value. We're also noticing a tier 2, tier 3 cities robust growth in the last quarter. The home loan business has also registered substantial growth as the market continues to be dominated, I think, more by end users in our observation. The stamp duty relaxation in certain states has given it a boost.
The interest rates also have fueled this growth for the quarter, and we're expecting this kind of growth over the next quarters as well. The gold loan franchise, as you guys have seen, are experiencing an unprecedented high year-on-year growth rates. Looking at that opportunity, we are also sizing up our physical distribution accordingly with the liability branches to grow this in the coming financial year and the quarter that we've entered. In the auto loan business, we've already started inching on the growth path. This December versus last December, we're on a growth path. We are hoping to strengthen this and consolidate this further this quarter itself. As a matter of fact, Jan itself, I think we should see a much higher growth rate in that. On the unsecured piece, we've noticed, like you heard Jimmy talking about showing some confidence on the book.
I'll probably give you a quick sense there that we've increased our sourcing from the internal customers of the bank, one. Second, there's also an increase in the government segment contribution by almost a double digits. Another important aspect there on the unsecured loans is the sourcing is tilting towards a slightly higher market share in the highest income segment. That kind of echoes with what you heard Jimmy talk about the quality of the portfolio, the confidence that probably we shared in that. In our microfinance business, I had mentioned that we have deliberately taken a more cautious and guarded path. However, I think our collections is in place. In January itself, we should resume the normal run rates of this business as well, and we are optimistic from here on.
Last quarter, I'd also mentioned about the digital endeavor, both on four-wheeler and two-wheeler loan side. We've had already a representation with the regulators for the same. We believe that the bank's retail asset franchise is on a solid foundation, and we see robust growth indicators on the ground for most of the businesses, almost all of them, and we like to consolidate with both physical and digital, keeping a three-year vision in mind. I think that's a quick sense on the optimism that I shared with you, and I continue with that optimism from here on for this year as well. Thank you.
Thank you, Arvind. With that, may I request Samson to open up the line for questions, please.
Sure, sir. Thank you. Ladies and gentlemen, we will now begin the question and answer session. The first question is from the line of Mahrukh Adajania from Elara. Please go ahead.
Yeah. Hi. Congratulations. My first question is on slippages. You indicated slippages of around INR 51 billion for the quarter, which is very similar to the previous quarter, even after four months of aging of moratorium loans. Is it fair to assume now that slippages have peaked? Because even with so much aging, the pro forma slippages are not really higher than what we saw in the previous quarter.
Mahrukh, the way to think about slippages is that this is a pro forma slippage, which is we know that there is a standstill as of August 31st. Even in last quarter, we did tell you that we did a pro forma including acceleration. That last quarter, we did do that. In this quarter also, we have done a pro forma through an analytical approach. While I'm not going to venture into giving a forecast of where we will end, we believe we are fairly reasonable in making these kind of approaches to get to the pro forma in terms of slippage.
Okay. Could you share the movement of NPLs, as in what was upgraded and what was written off and recovered during the quarter?
I believe you got the slippage is 1.86, which is, say, call it INR 4,900 and change. That is the slippage. The difference is between upgrades and recoveries and write-offs.
Okay. My other question is that how much would you have disbursed under ECLGS? What would be your incremental disbursements under ECLGS in the third quarter, and how much of it would be ECLGS 2?
Hi, Mahrukh. Jimmy here.
There were two ECLGS, as you know, and I'll just ask Rahul to give you the numbers if he has them. ECLGS one, the bank was pretty much a dominant player and leader in this because it was general, it was across the board, it was for all the MSMEs, and we actually had a very good output over there. ECLGS two, as you know, was for specific stressed sectors and a few other such constraints put out. Bank would usually, in its usual portfolio build, not have got the same level of exposure, fortunately, into stressed sectors, so we would not have had the same level of output. For numbers, Rahul, you got any too or?
Yeah. Mahrukh, just to give you a sense, at this point of time, as of yesterday, under ECLGS 1.0, we have disbursed INR 22,102.68 crores across 119,599 customers. In ECLGS 2.0, we have disbursed INR 579.16 crores across 58 customers. Thank you.
Okay. Thank you. That's very helpful. Just one last question on restructuring. Would there be any corporate restructuring under implementation which is not included in this 0.5?
No, I don't. There are a few corporate cases, but I would think they are included. I would check, ask Lincoln to check that and get back to you, Mahrukh. There are a few corporate cases, but I don't think there's anything more than what has been put out there.
Okay. Sorry, just one last question. In terms of interest reversals on pro forma slippages, would you have reversed interest also on these slippages or?
Yes, Mahrukh, it has been done.
Okay, thanks a lot.
Thank you.
The next question is from the line of Suresh Ganapathy from Macquarie. Please go ahead.
Hi. My question is just on the qualitative front, on the technology side. I know the last time it happened was because of a power outage, how confident you are that you can really handle higher and higher volumes? What are the qualitative changes that have been done, if you can just reflect upon that? When do you think you're going to call RBI for a review and by when this could get resolved? The second related question to this is that your inability to add credit card customers, does it necessarily affect account openings? Has there been some kind of a reduction in account openings because of that? Finally, the last question is a clarification from Jimmy Tata. You are saying that 1.38% is the pro forma GNPA and 0.5% is restructured asset.
Does this mean that this 1.38% pro forma NPA also includes part of this 0.5%, which can potentially go back because this is basically an analytical NPA number that you are giving? Yeah, thank you.
Taking the last piece first, Suresh. Hi.
Hi.
Yes, there would be some of it included, but I did mention earlier, and I would take pains to point out that the restructuring has been done very genuinely based on customer requests and what they wanted, and not on what the bank's view was in terms of the performance or ultimate slippage of the asset or not. The pro forma NPA is a separate methodology and calculation. The restructuring was based on customer request. That said, would some of the customers who requested for restructuring be included in the pro forma NPA? Yes, I would think so.
Okay. That's clear.
Definitely not all.
Okay.
Getting to the other two. The first one in terms of the technology upgrades and technology process, what we're trying to address. We have several action plans from strengthening of the disaster recovery or the recovery point and recovery time and automating the orchestration tool to get onto the DR side or architectural efficiencies, cloud strategy, et cetera. There are several strategies that we have. Some are long-term, like the cloud strategy. We should put that to the side because those are long-term. It could be 12- 18 months, right? Leave that to the side because that's not an immediate thing. That's more of a longer-term thing. The rest of the things that we have in the stage and the action plans we're working on, anywhere could take 10, 12 weeks from our side.
From then on, the further timeframe is not something that we manage. We will leave it to the regulator to handle in form of further inspection as I mentioned in my initial remarks, where they can inspect and institute the process how they will inspect and look at the action plans and the progress around it. That's not something that we can manage or we can tell you. Certainly, we'll keep you updated in the future as we go along and get to know more about that. In terms of the card accounts, as I alluded to, from a liability opening, account opening relationship point of view, 2 million accounts we opened in the quarter. It is not hindered, right? We have added rigorously on the liability relationship.
As you know, when we get the cards, more than two-thirds of the accounts are coming from the liability base.
From that sense, we haven't seen any kind of an impact on that sense on an immediate basis. To the extent that these are all temporary, we should get back and we know that the life cycle of a card to become little meaningful, is actually a two-year journey for a card to become meaningful in its life. When a card is acquired, there's a 30-day, 60-day, 90-day kind of a time frame by then, there is a program for activation and engagement. From then on, it takes another one year and nine months for the build-up to happen before it reaches the life cycle top. There are several intervention programs that happen in between, and so there is enough room for having various intervention programs to accelerate, right?
It depends on what sort of programs we implement at what time period, so that we can crunch this build-up life cycle to a shorter as we go along. At this time, to answer your question, whether we have seen, no, the 2 million accounts liability relationship we opened, is quite robust. Last quarter was 1.8, the quarter before 1.6, and this 2 million. All of last year, we are ending March 2020. All of that year was 6.5 million accounts. Liability relationship is what we opened. We are on a good track from that sense to start building. The initial relationship-building approach is robustly building.
Thank you, Srini.
Thank you.
Thank you. The next question is from the line of Kunal Shah from ICICI Securities. Please go ahead.
Yeah. Congratulations to the entire team for this set of numbers. Just wanted to get some sense in terms of the SMA pool, SMA 1 and 2, which would be sitting out there currently. If you can give it up for some of the specific segments for retail and also the SMA 1 and 2 pool for HDB Financial.
Hi, Kunal. Retail, firstly, the SMA 1 and 2 wouldn't be very applicable because you have the INR 5 crore cut-off for classification to start with. That said, we don't put SMA numbers out in the public domain, but they have always been and remain well ahead of industry.
The same for HDB too, shouldn't be a big deal there. That's not something, Kunal, that is a published number for us to talk about.
No, last time we just highlighted that it's been in a very narrow range of 1%-1.5% and not moving out there. Just a reading from RBI's FSR, okay, wherein it is actually moving up to almost 7.2%. How should we read it into, say particularly for our bank as well, and how representative would that number be?
We do not have a creep is all I can tell you.
Okay. Sure. Secondly, in terms of this collection efficiency, last time also we were highlighted that 95% was in September and would have improved to 97% in October, and that continues to be 97 in December as well because last time we just broke it up between the morat and the non-morat pool as well. Currently what number we are highlighting of 97-odd%, this is again the combined number which is there because last time in the non-morat it was 99% and morat it was 97% by October.
Two things there, Kunal. Firstly, collection efficiency is an extremely broad umbrella terminology. The 95% and 97% that we are referring to is what we are calling demand resolution, which as I said, was what is demanded during the month and what is collected during that same month out of that demand. Yes, this was at 95% the last time we spoke, and we had thought we would be able to move it to 97%, which as I mentioned earlier, is very close to the pre-COVID numbers as well, and we have managed to do that, yes.
Okay. Sure.
Have I managed to answer?
Yeah. Maybe last time we highlighted October also 97. Just trying to gauge in terms of October to December, was it flat or there was month-on-month improvement? Yeah.
I don't know. I don't recall exactly. It has progressively moved from 95 to 97 by December.
Okay. Sure.
It's progressively moving up. Kunal, let me answer you. It has been consistently improving. If that is the question you are asking, that's the answer.
Yeah. Okay. Nothing in terms of stabilizing from October to December. That's-
No, there is no plateau in this, if that's what your question is.
Sure. Yeah. Thanks. Lastly, we highlighted in terms of sale of retail distressed assets. How much was that overall pool and how is it coming? We said that maybe we are seeing a better recovery than the internal and escalation we are selling out. At what haircut would that portfolio be going out now? If you can just highlight, is it a significant one or what is the quantum?
The recovery that I mentioned and the sale are two completely different things. I'm not including the recovery under sale in what I was telling you. The recovery is what we have recovered through our own efforts on return of assets.
We have highlighted that wherever we see that, okay, sale proceeds are better than what we would have recovered internally, we generally approach it in that particular way, and we sold out some retail assets. Just wanted to get the sense in terms of what was the proportion that was sold out in this quarter and any provisioning that would have been made of that sale as well. Yeah.
As it relates to the assets that were sold, Kunal, any financial impact, P&L impact or the delinquency type of reporting impact, either in this quarter or in prior quarters, it has happened. There's nothing more on that from that sense. You know what I mean is that they are either declared NPA prior or in this is part of the pro forma in this. That's why I've told you 1.38 and it has gone out. There is nothing more on that front, if that's what you're asking.
Okay. No worries. Thank you.
From a recovery point of view, for your information, I alluded to the miscellaneous income carries any recovery, 24 basis points on the total portfolio. That is the recovery in this quarter. Last year, I think it was 30 basis points or so, and last quarter, I think it was 21 basis points or so. That's the kind of recovery rates at which we have recovered.
Okay. Nothing worth highlighting in terms of the quantum sold out, so not a significant one, I think.
No.
Okay. Thanks a lot and all the best.
Thank you.
Thank you.
Thank you. The next question is from the line of Jai Mundhra from B&K Securities. Please go ahead.
Hi, sir. Good evening. Sir, first question is on asset quality. The asset quality has panned out very well and probably you had hinted in your earlier interactions also. Probably you also hinted that some of that could be due to multiple dispensations given by RBI, maybe SIPC, moratorium, ECLGS, et cetera. Do you suspect that as these dispensations get unwinded, there could be some, let us say, impact on the slippages as we go into FY 2022? Do you think this should not have any meaningful impact? That is the question number one, sir.
Firstly, if you look at the series of measures taken, it was frankly very well done by the government. The first thing was a moratorium. What do you do when you have a hemorrhage? You tie a tourniquet and you stop the bleeding. I think that was step one. Step two was you start injecting. That was your ECLGS. You need a further injection to cure even further because some gangrene is spreading. You inject ECLGS 2. Lastly, and finally, if there is anything residual at all, you had your restructuring option, which was given to the customer and the entire power in all these measures, if you can see, was not left with the banks. It was put in the hands of the customer. He could ask for his ECLGS, he could ask for the restructuring, and it was done on his request.
That answers part A of what you were saying. Part B of what you were saying is that there is no unwind here because the real measures, see, what had to be unwound was unwound in August. Now we don't need to talk about it anymore because it's more than six months old. The rest of it is frankly not being unwound. It's permanent. The ECLGS injections are there for the benefit of the customer for time to come. The restructuring is there to the benefit of the customer for time to come. There is no unwind left. There may be time horizons within which you had to act on each of these measures. That's fine. The impact of those measures is lasting.
I don't see what you were perhaps alluding to as a fear that as these unwind, there will be stress pouring out from all corners. I don't see that.
Sure, sir. That's helpful. Secondly, sir, on HDB Financial, there is pro forma basis, the GNPA has moved from 5.2%-5.9% odd. Anything specific or any product that you would like to highlight where you are seeing relatively higher stress or any qualitative comment within a customer segment or within a product segment?
Not really. As you know, HDB operates in a segment that is of a higher risk customer segment than HDFC Bank's. That has always been the case. They also operate in a product range that is a little different from HDFC Bank, so it's never fair to compare. That said, there is nothing of any material note in terms of change between the quarters to report. No.
Sure, sir. The last question, sir. Correct me if I am wrong, but if I compare RBI data that they give on the sectoral basis, it looks like that the retail growth is even lower than the RBI reported retail growth. That has been there for the last two, three quarters. Could you provide some commentary around that? Thank you.
The growth in the bank?
Industry he's talking about.
We gave our numbers. Jai, we talked about the growth that we have.
We have always said and maybe from that respect will.
We have our policies and product programs, and we grow as much as we can within those policies and programs. We aren't really guided by how competition is growing from time to time, and we take guidance from our own programs. I don't have the numbers you are talking of with me. If at some point of time we grow slower than the market, at some point of time we grow faster than the market, what I can tell you is we grow within our program, which we consider to be the safe limits for growth.
Thank you.
Thank you so much.
Thank you. The next question is from the line of Shagun Varma from Goldman Sachs. Please go ahead.
Yeah. Hi, good evening. This is Rahul here. Actually, a couple of questions. First one is on this restructuring. Can I just try to understand here this 0.5% would largely be corporate and would we be done with it? I think there is an element of inter-creditor agreement also, right? Particularly for the larger cases, if at all we have got exposure there. Could there be some more loans that can show up in this number in the fourth quarter? That's question number one.
Well, Rahul, in this one, a lot of it is retail. That's one thing. The second thing is that whether we're done with it. Things in the pipeline where some documentation completion can happen subsequent to January 1st can happen. Will that be a big number, material number? No, it will be insignificant. We don't foresee big numbers coming through that process. What's your second question?
Thank you so much, Srini, for that. Second one is actually on the retail growth. Quarter-on-quarter, the book has grown, so definitely disbursements have grown much faster as Arvind was alluding to. Just trying to understand, can you give us some flavor about the growth in number of customers versus the balances? Which way the volumes would have moved in terms of number of customers? Because industry-wide the check bounce rate still is fairly elevated. Are we definitely benefiting from the market share consolidation which would reflect in value terms? Just trying to get some more color on that without getting into the numbers.
I don't have a particular customer count, but it will be broad-based in terms of growth rather than a concentrated growth.
Okay.
That would be fair, yes.
Okay. Just one data giving question. Srini, can we get the write-offs number for this quarter?
As we go along, I'll try to get it. I don't have it in front of me, Rahul.
Sure. Yeah, just the last question, Srini. The Reserve Bank of India had put out this draft paper for the NBFCs path forward. Just wanted to understand your preliminary views, if at all, from the bank side. Given the fact that we have got HDB Financials which could be affected by the new set of regulations. Any preliminary thoughts that you may have on these draft guidelines or draft paper rather?
It's still in a working paper form with views and suggestions and inputs to be given by 15th January, which was yesterday. It still remains to be seen how this shapes up and evolves. We'll have to wait and see how this evolves into a shape.
Okay. Got it. Thank you so much, Srini. That was really helpful. Thank you and good luck for future.
Yeah. I appreciate, Rahul. Thank you.
Thank you. The next question is from the line of Manish Ostwal from Nirmal Bang Securities. Please go ahead.
Yes, sir. Thank you for the opportunity. I have only one question. On HDB Financial, we have a gross NPA 5.9%. What is the total provisioning number because the way you said for the bank number on total provisioning for the pro forma gross NPA? What is the total provisioning you have done till date?
In this quarter, I think the provisioning was about INR 800 crores. That's what readily I have.
Balance sheet number. I'm looking it.
No, I don't have it in front of me. I'll have to get back to you on a balance sheet.
Okay. Thank you.
You know that HDB Financial Services closes their books on Indian GAAP basis. We take and consolidate on an Indian GAAP basis. Ind AS and Indian GAAP. They close on Ind AS and we consolidate on I GAAP. Two different basis we have and I don't have readily in front of me what that is. Yeah.
Thank you, sir. Thank you.
Thank you. The next question is from the line of Abhishek Murarka from IIFL. Please go ahead.
Hi, good evening, everyone. Congratulations for the quarter. Just a couple of questions. The first question is basically on net interest margin. If I see in the last three or four months, that's how far back the last RBI rate cuts or rate cuts was. Is there a base forming in terms of cost of funds, whereas there is pressure on yields. Do you think the NIMs are largely at a higher end of your bank? The second question would be on the unsecured growth. I know, I think you've alluded to it, but I just wanted to know on a gross basis, how much credit card do you issue, let's say, on a monthly or a quarterly basis? Just a ballpark will do over there. Thanks. These two questions.
Okay. First is relating to the net interest margin.
Yeah.
The bank has operated on a net interest margin between 4%-4.1% on the low side, 4.4%-4.5% on the high side. If you look at it over a period of time, that means if you look at it for the last three years, don't look at quarter-over-quarter, but look at annually, if you wish, look at three years, five years or 10 years for that matter. That's the kind of range the bank operates. At 4.1%-4.2%, you can call it as towards the lower end, right towards the left of the center. That is the kind of range this 4.1%-4.2% is, from where we are over a period of a longer cycle when you look at it.
Srini, the point is, in this part of the cycle, let's say in the medium term, not immediate, but we are growing faster on the corporate side and that is pressurizing yields. Whereas on the cost of fund side, you would be close to a bottom in terms of the ability to cut rates further. Do you see the bank hugging, let's say, the lower end of the bank for a while? Do you think you can grow retail fast enough incrementally and sort of get means back up?
There is no one particular target that we shoot for, but the way we manage in the ALCO is assets are priced based on our cost of funds. We run ALCO once in two weeks, and we price the products according to what we can do and what we want.
Okay.
The way the bank as a whole we have managed is to operate it within this broad band of four, 4.1- 4.4.5. Within that band is what we target to manage. What at the end of the day, the volumes come in, the demand comes in and shakes out, that's where it comes. Sometimes 10 basis points can go down, 10 basis points can go up. That shakes out as a part of the process. The way we follow is like this. We look at the assets are priced based on our cost of funds and according to the risk measurement that we have for different category and segment of customers we have.
Sure. Thanks. That helps. Regarding the credit card?
That's not something we have published, and so I don't want to put something new. That's not something unless it is there in the public forum, it is there. Otherwise, we'll not disclose that number here.
All good. Thank you.
Thank you.
Ladies and gentlemen, that was the last question. I now hand the conference over to Mr. Srinivasan Vaidyanathan for closing comments.
Okay. Thank you very much, Samford. Appreciate the participants dialing in. If you do have more questions, query, feel free to reach out to us in course of time. We shall be happy to engage with you on anything. Thank you. Appreciate it.
Thank you very much, sir. Ladies and gentlemen, on behalf of HDFC Bank, that concludes this conference. We thank you all for joining us and you may now disconnect your lines.