Ladies and gentlemen, good day and welcome to IndusInd Bank Limited Q1 FY 2022 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity to use our questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star and zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Sumant Kathpalia, Managing Director and CEO, IndusInd Bank. Thank you, and over to you, sir.
Good evening. Thank you for joining the call. I will start with some macro commentary and then go into bank specific details. With the second wave of COVID-19 pandemic gradually subsiding in quarter one and easing of mobility restrictions, a recovery in economic activity is taking shape, which would become more visible over the 2nd quarter of financial year 2022. Higher frequency data suggests that activity levels improved in June from the bottom made in May, and the recovery has continued in July. The adverse economic impact of the restrictions imposed this year is likely to be limited in comparison to the national lockdown last year.
A supportive policy environment characterized by an accommodative monetary policy and expansionary fiscal policy stance aimed at driving investments, roll-out of vaccinations, flexible and adaptive with business models, leveraging on technological innovations along with strong global economic recovery, have made a better setting in 2021 to deal with the ongoing once-in-a-century pandemic. We estimate India's real Gross Domestic Product growth could be around 9% this fiscal year. The outlook on growth, however, will be dependent on possibility of subsequent waves. We are also watchful of inflation scenarios in India and among major advanced economies and consequent implications to the monetary policies. Now coming back to the bank-specific commentary. In quarter one, during the quarter, we were focused on health and safety of our employees. We being part of essential services have to balance between customer convenience and safety of our employees.
We conducted vaccination drives and over 40,000 or 70% of our employees in the bank and our Micro Finance Institution subsidiary have received minimum one dose. We aim to cover entire employee base with both doses in the next few months. The learnings and the digital adaption from the first wave ensured seamless business continuity. Deposit mobilization continues apace. Our deposit growth was strong at 26% year-on-year and was entirely driven by retail deposits. Current Account Savings Account ratio also improved to 42.1%, with CASA growth of 33% year-on-year. Our cost of deposit at 4.97% has fallen below 5% mark for the first time in our history. We have further reduced our savings and fixed deposit rates by 50 basis points this quarter and should help lower the cost of deposits further.
Our dependency on certificate of deposits and market borrowings has come down and is absolutely negligible now. Cautious disbursements. Our loan growth was at 6% year-on-year. Our disbursements have begun a growth journey in Q4, however, got interrupted due to the second wave. We have already seen uptick in disbursements in vehicle and microfinance for the month of June. On the corporate side, the portfolio realignment is behind us and we have seen a growth of 10% year-on-year and 2% quarter-on-quarter within our underwriting framework. Scaling up of new initiatives. We remain focused on scaling up affluent, Non-Resident Indian, and merchant acquiring business.
Affluent touched a deposit base of INR 33,400 crore, growing at 7% quarter-on-quarter and an assets under management at INR 55,000 crore. NRI deposits are now at INR 27,500 crore, growing at 40% year-on-year. Our merchant acquisition through Bharat Financial kept pace despite the lockdown and scaled up to 200,000 merchants now. Asset quality. The collection gained momentum since June after a temporary blip in May due to a nationwide lockdown. Overall collection for June was at 96% for the month. This has further improved in the last few weeks with recovery in the activity levels. The impact of second wave so far on our portfolio has been lower than what it was in the first wave. Maintaining profitability of the franchise.
We maintained a strong pre-provision operating profit margin at 6% despite the weak operating environment. Our net interest income grew by 8% year-on-year in line with the loan growth. Fee income grew by 18% year-on-year. We also reduced costs quarter-on-quarter by 1%. This ensured maintaining a healthy operating margin. We have maintained comfortable provision coverage ratio at 72% and increased surplus contingency buffer by INR 450 crore to INR 2,050 crore or 1% of loans. Capital adequacy. Our capital adequacy improved to 17.57% from 17.38% last quarter. The falling risk density and improving return on equity ensured the capital consumption is optimum.
We have sought approval from shareholders for all forms of capital and borrowing. This is just an enabling resolution and there are no equity fundraising plans in the near future. We are comfortable with the Common Equity Tier ratio of 15.59% and a Capital to Risk-Weighted Assets Ratio of 17.57% as of June 21. Cash Reserve Ratio, including quarter one profits, is 17.89%. Before I go into the financial highlights for the quarter, I wanted to share my views on key business metrics of growth, asset quality, and digital evolution. Growth. Our growth in deposit at 26% has been strong for the past several quarters. This is as per our strategy of liabilities leading the asset growth. The growth is driven by retail deposits, and we remain committed to the PC5 ambition of retail as per liquidity coverage ratio of 45%-50%.
We have also lowered cost of deposits by 108 basis points since I took over and could see further decline with rate cuts announced in the quarter. Our loan growth was 6%. We took a cautious pause in retail disbursements in quarter one. The disbursements have already started improving in most of the segments we operate in. Corporate book too has started growing again after the debulking exercise. We thus see growth improving here on every quarter, and we will back ourselves to achieving the PC5 ambition of 16%-18% growth. This, of course, is subject to the subsequent COVID-19 waves and how economy performs, which could result in a few percentage points movements here or there. Now I'll come to the asset quality. Our portfolios of expertise, vehicles, microfinance, and diamonds contributing 45% of the book are performing better than the market, as disclosed in the investor presentation.
Corporate slippages have also been range-bound for the past few quarters. The unsecured retail, that is cards and personal loans, have also done well in the second wave. Our SMA-2 book was at 47 basis points as of June 2021. We are thus comfortable on the portfolio quality. We will nevertheless maintain relentless focus on collections. Our collections were impacted during the early part of the quarter due to accessibility issues, and customers started clearing overdues from June, particularly in high-touch segments like vehicles and microfinance.
As a result, we saw slippages of INR 2,772 crore, as well as upgrades of INR 845 crore during the quarter. The slippages net of upgrades were at 0.9% of loans. The mix of slippages is 38% for vehicles, 24% for MFI, 22% in other retails, and balance 15% in corporate. Our restructured book as of June is 2.7% as against 1.8% of loans in March.
With the incremental 0.9% of restructuring, only 0.4% was from fresh requests from under the May 5th circular issued by the Reserve Bank of India, and the balance of 0.5% was from the corporate account already under implementation as disclosed in the last quarter report. The restructuring is done for customers with good track record and would become viable post-restructuring. We thus don't expect large delinquencies from this book. The credit cost should even be smaller and well within the surplus provisions we carry given the strong collateralized nature of the book. Our ECLGS book remains small at INR 4,640 crores, of which ECLGS 1 is of INR 3,040 crores, ECLGS 2 is of INR 1,600 crores, and negligible from ECLGS 3 and ECLGS 4. We have been conservative in our coverage ratios and building surplus provisions.
Thus we don't see a major risk to our credit cost expectation for the year subject to any subsequent COVID-19 waves and materially negative outcomes in telecom. Digital launches. While Digital 1.0 was about seamless digital onboarding and servicing journeys and employee enablement, as we look into the future, there are two clear shifts that we see happening. Banking is becoming more and more frictionless and invisible. It is critical for the bank to be where the client is and embed itself in the customer's lifestyle. Customer experience and customer obsession will define competitive advantage in the long run. We need to move away from being product-centric to client-centric.
Towards that end, Bank has created a digital center of excellence and is taking a comprehensive view to deploy new age digital platform and build end-to-end digital client value proposition. This includes reinventing the experience layer by building end-to-end digital stacks with omni-channel capabilities across deposits, lending, payments, and wealth. Application programming interface orchestration and management through microservices-based stacks, which enable high degree of agility and ease and flexibility of integration with various partners, making the Bank ready for API banking and open banking or platform banking. A recent example of this is IndusEasyCredit by the Bank. Modernizing the core stack by moving to cloud-native microservices-based API-enabled core stack, which enable high degree of scalability and reliability.
Robust data engineering and data science framework, which as we move into cloud-based data management and working on advanced analytics and machine learning-led capability across use cases to drive client persona, specific engagement, risk management, pricing, and wallet share increase. Overall, this year we should see our vision on the Digital 2.0 being implemented. We have created a digital center of excellence, taking a comprehensive view to deploy new digital age platforms and build end-to-end digital value proposition. We are focused on five areas, namely, one, easy credit for unsecured retail loans, digital ecosystem for vehicles, particularly in the used car segment, merchant solutions, differentiated payments and finance solutions for individuals, small and medium enterprises trade and trade tech. We'll keep you updated on the progress of these five initiatives. Coming to individual businesses. Vehicle finance. Our all-vehicle finance categories have seen strong growth in quarter four.
However, the industry volume dropped in quarter one due to the lockdown. Within vehicle categories, commercial vehicles were affected the most, while passenger vehicles did reasonably well. The tractors and construction equipment have continued good traction throughout the pandemic period. The dealerships started opening up from June and are already seeing pickup in the demand. On the ground inquiries and discussions with manufacturers indicate that volumes are recovering. All the vehicle categories other than the Medium and Heavy Commercial Vehicle should see disbursements getting back to pre-COVID levels in this month itself. MHCV disbursements are likely to come back by the festive season later this quarter. Quarter one, a s such, is a seasonally weak quarter. We expect part of the lost growth to be recouped in the rest of the year. With focus on collections and lower disbursements, the overall loan book grew by 3% year-on-year.
Collections slowed down in the month of May, rebounded nicely to 97% in June. The collections were supported by higher economic activity and unlocking compared to the first lockdown. Our portfolio continues to perform better than the industry, as shown by the credit bureau disclosures. Fresh restructuring was implemented on INR 650 crore of the portfolio, which was much lower than the restructuring of INR 2,450 crore due to the first wave. The request for restructuring has started falling, fresh restructuring in the second quarter should be comfortably lower than what we saw in the first quarter. Of the total restructuring, overall around 80% has come from the MHCV and three-wheeler segments. As mentioned earlier, the contact-intensive segments such as luxury buses and auto rickshaws require support in this one-off crisis. Balance 20% is spread across all vehicle categories.
Vehicle finance has long vintage and strong collaterals, which should keep slippages from restructured book range bound and credit losses even lower than that, for which adequate contingent provisions are in place. As freight availability continues to improve every month, we expect collections and delinquencies to normalize by September, paving the way for fresh vehicle demand. The fuel price increase does put pressure on the freight earnings in the short term. The industry has always worked on a cost-plus margin and was able to pass on the increase in the input costs. Microfinance. Bharat Financial has maintained industry-leading performance. The second wave so far has been no different. We continue to work closely with our customers to ensure they normalize their financial incomes. Rural areas of the country did see higher COVID spread in the second wave. However, there was a marked change in the lockdown approach.
State governments across the country kept a minimum four to six hour open window every day for essential services and goods movement, which provided necessary support to our customers. Within Bharat Finance, we have vaccinated over 80% of the employee base with minimum one shot and expect full vaccination in the next few months. This should help us navigate the subsequent developments on COVID-19 with much more comfort. Better accessibility, higher activity levels, and working closely with our customers ensures stable collections in spite of the wide lockdown in May and intermittent lockdowns in June. Our collection efficiency as of June has been 89%. The collection has improved further in July so far to mid-90s. The slippages during the quarter were INR 674 crore or 2.6% of the portfolio due to accessibility issues during the early parts of the quarter.
As the accessibility and the collections improved, we saw customers clearing up dues resulting in upgrades of INR 443 crores or 1.7% of loans. The slippages thus net of upgrades were INR 232 crores or 0.9% of the loans [audio ditortion] . We have conservatively fully provided for the NPAs. Apart from this 0.9% net slippage, customers with INR 500 crores of portfolio or 2% of the book have invoked restructuring during the quarter, and we see implementation happening in quarter two, basis how COVID plans out. We have done negligible restructuring in the first wave due to availability of moratorium. Amongst the key states, collections in Bihar, Odisha, and Maharashtra were above the average, while Kerala, Karnataka, and West Bengal are coming up with a lag. We have also maintained traction on our new initiatives. We scaled up Bharat Money Stores from 51,000 to 75,000 during the quarter.
These stores provide financial transaction points at a walking distance within the village where we have presence. We have also scaled up merchant acquisition to 200,000 merchants from 170,000 merchants last quarter. With focus on collections continuing in parallel, we are cautiously looking at scaling up new customer acquisition. The credit demand in rural India remains strong. We are sourcing fresh customers in districts where collection efficiencies are strong. We remain watchful and expect to reach 50%-75% of the normal acquisition run rate in quarter two. The month of July has seen better disbursement and collection both compared to June. Other retail assets. This contributes to 17% of the overall loan book and includes secured and unsecured retail assets. The book performed significantly better in the second wave, validating our tweaks in the credit underwriting.
Slippages in the unsecured loan were at 2.8% as against around 8% in the first wave. Slippages from the secured loans were at 1.4%. The overall slippages from this segment were at around 2% of the loan book. Incremental restructuring in this book was immaterial. The collections have maintained good momentum, and June collection was around 95%. In credit cards, spends rebounded after a small dip in May. The June spend is at INR 1,838 crores, in fact, second highest in our history. We have tightened our origination criteria, and this has reflected in delinquency being less than half of what we had in the first wave. We have gained market share by number of credit card customers during the quarter. We see the traction continuing and don't see any impact due to the recent RBI actions on payment network providers.
On the secured assets like Loan Against Property and business banking, we have been cautious as the SME segment was subject to external shocks and with limited balance sheet strength. We are now comfortable picking up selectively and utilizing the Goods and Services Tax information and credit behavior during the COVID period. We expect this segment to now start growing each quarter after being stagnant for the past few quarters. Corporate Bank. The Corporate Bank has started growing again and with an underwriting realignment and sell-down of the large loans reaching completion.
Our large corporate book grew for the first time, showing 2% quarter-on-quarter growth after being on the rundown since I took over. The quality metrics in terms of improving rating profile, shorter duration, and granular exposure continue to drive our underwriting. Average rating profile of the corporate book has improved to 2.68 from 2.92 year-on-year, which is equivalent to A rating.
This is also reflected in the lower capital consumption. Our corporate fees too have started growing again after realignment towards the annuities-based fees. Transaction banking and trade-driven fees contribute more than the 2/3 of the corporate fees. Investment banking fees are moving towards pure advisory rather than balance sheet-driven. We are fortifying our product offering in advisory space through talent acquisition and partnership with the ecosystem. Investment banking fee for the quarter was at INR 67 crores. Slippages during the quarter were INR 421 crores. This included one real estate account of INR 270 crores. I had mentioned in the previous analyst call. There is a resolution under progress, and we expect full recovery in the current quarter. Slippages outside this were small and spread across multiple accounts. In quarter three, we had highlighted restructuring of INR 2,200 crores, which was invoked and under implementation.
Of this restructuring, INR 654 crore was completed as of March 2021. We completed additional INR 1,122 crore during the quarter. That completes restructuring on the corporate side as the deadline was June 30th. This backlog of restructuring contributed bulk of the increase in the restructuring during the quarter. We are very comfortable with the corporate restructured book given the resolution underway, and we expect very limited flows from restructuring to non-performing asset. The corporate banking franchise has responded well towards the realignment and now has started the growth journey. The bank has all the key ingredients in terms of quality of talent and products, key relationships, along with surplus liquidity to drive agenda of growth at reasonable risk. We have also enriched our corporate mobile app to enable our corporate clients to transact seamlessly and conveniently.
Through the app, our clients get one of the best trade services, including status and regularization of outstanding import and export transactions, initiate local and cross-border payments, and even upload their stock statements. We now offer our corporate clients a full capability of digital stack for account viewing and transaction initiation. Gems and jewelry. This part of my commentary has not changed since I took over and continues to be so in this quarter as well. The book grew 4% quarter-on-quarter, and there are no NPAs on restructuring in this book. The diamond demand from the U.S. and China has been buoyant with opening up of retail stores, and we see momentum coming back in other key markets as well. This helped pick up in the working cycle utilization and driving 4% quarter-on-quarter growth.
We do recognize in the long term, the competition for diamonds will be from the change in customers' spending habits. This is already reflected by the global credit demand from the diamond segment today at half of what it was 10 years back. Our approach in diamonds is to finance working capital for generations of pedigree manufacturers. This is not a long-term project finance business requiring visibility over the next 20, 30 years of demand. If demand weakens any year, our portfolios run down automatically with hardly any asset quality implications. Our growth aspirations are in line with the global demand diamond growth outlook. Overall, on the asset side, slippages and restructuring have been lower than the first wave, and we expect this to remain this way unless the pandemic returns. The collection efficiency continues to improve every week.
The vaccination drives from the country in general and our employees in particular should reduce intensity of subsequent waves. Large sections of our portfolio has already resumed growth journey and notably in secured retail, microfinance, corporate and segments of vehicle finance. MHCV segment should also come back within the festive season. We have lost couple of months' growth. A part of this should get recouped during the rest of the year. We as such, don't expect any material changes to our PC5 growth ambitions, as stated earlier. Coming to liabilities. We have been relentlessly focused on retail deposit mobilization and saw continued traction in Q1. Deposit grew 26% year-on-year, driven by 33% year-on-year growth in current and savings account. Almost entire growth in deposits came from retail deposits, as per LCR, growing from 57% year-on-year and 10% quarter-on-quarter.
With strong deposit flows ahead of loan growth, our certificate of deposit ratio improved to 79% from 83% quarter-on-quarter. Certificate of deposit are maintained below 3% of overall deposits. Our cost of deposit at 4.97 saw a reduction of 6 basis points during the quarter and 108 basis points cumulatively since I took over. We have cut our savings account and fixed deposit rates by 50 basis points and should further support improvement in the cost of deposits. Our affluent business continued strong performance. Our deposits from this segment grew 7% quarter-on-quarter to INR 33,400 crores. The business also achieved a fee of INR 70 crores despite the lockdowns. Our NRI business grew to INR 27,500 crores, up 7% quarter-on-quarter and 14% year-on-year. Our market share has improved to 2.52%. Our growth was achieved despite there were no NRI homecoming this year due to pandemic.
We have maintained our overall average LCR at 143% and are running surplus cash balances and excess investments of over INR 54,000 crore. With this significant liquidity, we must let go borrowings which are down 17% year-on-year and 4% quarter-on-quarter. The borrowing mix has improved towards long duration sources with finer pricing. On the liability side, we continue to scale up our retail deposit base along with reducing our cost of deposits. Share of retail deposits as per LCR is improved to 40% from 31% during the year. We remain confident of taking this in high 40s as per our PC5 ambition. Digital traction. Our digital sourcing mix remains strong across products, including 96% for savings accounts, 93% for fixed deposit, and 90% for insurance and investment business, and nearly 50% for personal loans and credit cards are originated digitally.
Digital transaction mix has also improved to 92% from 86% a year ago. Nearly 2/3 of our service requests are now processed digitally straight through. During this quarter, we refreshed IndusMobile app with cleaner interface and response time improvements. The new app has been appreciated by clients and 85% of the users who tried the new app have rated it 5-star on the App Store. As a result, bank overall mobile app rating has improved to 4.0. The mobile app user base has increased by 37% and transactions by more than double year-on-year. As mentioned earlier, we progress our agenda on Digital 2.0 with the first of the launches through IndusEasyCredit. This offers an end-to-end digital journey for instant personal loans and credit cards. This is a microservices-based cloud-native API stack which can be leveraged across sourcing channels.
The entire process from sourcing, underwriting, Know Your Customer, and disbursements happens in real time in a matter of few minutes. The cost of processing as a consequence per application is expected to reduce by 85%-90%. The microservice-based fabric gives us the agility to integrate ourselves with partners and ecosystem players with ease, making it ready for open banking and API banking. We expect to achieve the next milestone under Digital 2.0 with the launch of IndusMerchant Solution Stack. This will be a digital-first proposition for small merchants and retailers. It is a unified stack for small retailers bringing all their payment, lending, and banking needs under a single umbrella. IndusInd Bank regards data as a critical business source and we are continuously working to harness, augment, and organize data using advanced data management practices available.
We have invested significantly in our data warehousing and analytical capability to drive both greater user engagement as well as to drive decision-making in terms of identification of fraud, enabling real-time underwriting and driving contextual personalized engagement and campaigns. This is helping us to drive customer transactions, relationship value, traction with digital partners, as well as optimize risk cost. Overall, as mentioned earlier, we are working on five key digital initiatives for this year and should augment our growth journey. Before I go to the financial performance, I'd like to spend a minute on sustainability. Our Planning Cycle 5 Strategy revolves around improving sustainability of the organization. While traction on financial metrics is well covered, we have also progressed on the non-financial aspects. Broad areas that stand out in terms of our commitment to sustainability are focused on sustainable finance commitment and sustainable operations.
In sustainable finance commitment, around 42% of the bank's total lending book today constitutes as sustainable finance. This includes climate, green finance and social finance, supporting livelihood, healthcare, education, et cetera. We are committed to increasing capital allocation here and to reach this to 45% by 2023. This also goes through external assurance certificates provided by Big Four audit firms. We have robust environment and social risk management system, which assesses the Environmental, Social, and Governance risk in all corporate lending proposals. This also outlines a negative ESG list, which we will not finance. All medium and high-risk ESG risk lending proposals require an ESG committee approval. Regarding sustainable operations, the bank has committed to reduce its carbon footprint by 50% by financial year 2025 over the baseline of financial year 2020.
The bank has already during financial 2021, reduced its intensity carbon emissions by 23% over the baseline emission of financial year 2020. Bank has committed to empanelment of only ESG-compliant vendors. In existing vendors today, around 45% are compliant, and we are targeting 80% compliance. For a more inclusive organization and a diverse workforce, we're increasing women participation in the workforce from 18% to 22% and laying out several human resources initiatives to increase, encourage and support women at work. We have three green buildings already and have committed to all our pioneer branches will become green and plastic-free. As a result of these efforts, we are the only Indian bank to be included in the S&P DJSI Sustainability Yearbook for 2021. The yearbook showcases select organizations who have progressed well on sustainability aspects. It includes 21 Indian companies, and we are the only Indian bank amongst them.
IndusInd Bank was also ranked 57th out of 914 global banking services companies assessed by Refinitiv ESG rankings. The bank was rated 78 over 100 by Refinitiv ESG ratings for excellent ESG performance, commitment, effectiveness, and high degree of transparency in reporting material ESG data publicly. IndusInd Bank has also received the highest score among top Indian banks by market cap. For the sixth consecutive year, the bank retained its top position in Carbon Disclosure Project by securing highest Band A and being the only bank in India in the Band A rankings. Coming to the financial performance for the quarter. Quarter four witnessed a steady operating performance with NII up 8% year-on-year and operating profits at INR 3,185 crore, up 9% year-on-year. Our PPOP over loans was maintained at 6% in a tough operating environment. Our yield on advances was stable during the quarter.
However, yield on assets fell by 8 basis points due to higher surplus liquidity. Our cost of funds was stable at quarter-over-quarter. Our net interest margin for the quarter was at 4.06%. We carried incremental INR 12,000 crores of liquidity over the previous quarter, which impacted the NIMs. Other income grew by 18% year-over-year. Client fees were lower as expected in a seasonally weak first quarter and also due to the pandemic. Strong treasury income of INR 575 crore against INR 273 crore in the previous quarter absorbed this one-off impact on client fees. We contained the operating costs, which were down by 1% quarter-over-quarter. Our cost-to-income ratio improved slightly to 40.5%. Coming to provisions and some asset quality indicators. We continue to follow conservative provisioning approach. Our provisions for the quarter were at INR 1,844 crores. We have conservatively, fully provided for the unsecured microfinance loans.
Our gross non-performing asset increased marginally to 2.88% from 2.67% last quarter, and net NPA was at 0.84%. We have maintained strong PCR at 72% after factoring in slippages from the second wave. We have around INR 2,050 crore or 1% of the loans as surplus COVID provisions now counted in PCR. Total loan-related provisions are at 3.6% of loans or 123% of gross NPA. Our profit after tax continues to show a strong upward momentum, growing 10% quarter-on-quarter. Even though we have made provisions conservatively, profits for the quarter were at INR 1,016 crores.
Our CRAR improved to 17.57% from 17.38% with lower risk intensity quarter-on-quarter. Overall, I believe we are getting comfortable on liabilities each quarter. We expect deposit momentum to continue with focus on reducing cost of deposits while maintaining the retail acquisition run rates. On the asset side, we have seen areas of domain expertise continuing outperformance in a tough environment.
The corporate asset quality has held up well with changes in the underwriting policy. We expect the collections to return to normalcy by September and incremental restructuring to be range-bound. Most of our asset classes have already seen signs of growth, and we will back ourselves to achieve the PC5 growth ambition as economy recovers. We have been upfront in taking provisions and expect these to downtrend unless COVID resurfaces. The strength of our operating profit should now start reflecting in earnings and ROE. With this, we can now start the question and answer.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on your touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are required to use handsets while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. Participants, you may press star and one to ask a question. The first question is from the line of Suresh Ganapathy from Macquarie. Please go ahead.
Yeah. Sumant, just three quick questions. One is on this deposit growth and loan growth gap. Deposit growth is running at 25%-26% and loan growth is at 7% in Q2. We have seen a decline also in loan book. Of course, I understand it's the COVID-19 second wave impact and stuff, at some point in time, this gap needs to be corrected because you're now also running excess liquidity. Can we see, say, over the next 18 months, deposit growth coming down and loan growth really picking up so that we have a more, what I would say, steady state balance sheet?
Yeah, Suresh. Absolutely a valid question. We are also now seeing deposit growth coming. We've reduced our rates of deposit by 50 basis points in savings accounts and about 50 basis points in term deposit. Now we are as competitive as any other bank. Of course, we're not at 3.5% on a policy rate, we are at 4%. We will also get there. Number two, I think if you look at our portfolio, Suresh, we have 49% of our portfolio in businesses like vehicle finance, microfinance, and diamond. While diamond has done well and grown 4% quarter-on-quarter, it will grow at 16%-18% year-on-year. I think the microfinance business, we were very cautious in the quarter one because of the COVID. We were focused on collection.
I believe the demand is there, and we are already seeing growth in that area coming up this quarter. We are focused on existing customers, and we will be at 50%-75% of our normal acquisition run rate new to bank clients right now. On the vehicle finance book, I think we started seeing the growth in June. I think the April and May were very bad. Of course, June also had intermittent lockdowns. I think in July, except for one or two states, I think the business has started coming up, except in Micro, Small and Medium Business Banking, and you will see us getting back to the run rates which we had already delivered. I think so that's on the business. I think on the corporate bank side, I think we are seeing growth.
I think we will grow maybe a little bit higher than the industry, but we are seeing growth coming back. On the SME and the Micro, Small and Medium Enterprises side, we were cautious, but I think we've now accelerated now with the COVID playing out and the credit bureau's data updated. I think this is time for growth and we will see growth. Overall, we still feel that we will continue to be at 16%-18% CAGR and we are not taking our foot out of the pedal. I think we will continue to deliver a 16%-18% CAGR over the next two years, and we are committed to that growth. Also, our CD ratios will be around 85%-90%.
Okay. All that should help margins. Okay. The second question, or rather the last question is, your credit cost is for this quarter, for example, the way we calculate is around 3.5%, and your ROA has been around 1.1% for this particular quarter on an annualized basis we are talking about. What do you think would be the longer-term sustainable credit cost once all this COVID-19 thing normalizes and you reach a very steady state? Where do you think both credit cost as well as ROA is heading for you guys?
Suresh, you must see what we have done. I think this is very important. I thought it is better to upfront provisions. I took INR 450 crores of additional provisions. I did not use any earlier provisions. I kept the provisions ongoing. We maintained a provision of INR 2,050 crores. I continue to believe that that will help us in the long run. If you look at our credit cost last year, which was 3.7%, Suresh, 2% were business as usual cost and the balance 1.7% was the one off cost which we had to take. We had deferred taking that.
In my view, I think we should be less than 2% credit cost. I continue to believe a normalized run rate of credit cost should be 160 basis points- 190 basis points with the type of provisions which we carry. I think that is where we should settle down, ±5 basis points or 10 basis points here or there. I think we should be. That is the stable credit cost for the bank. I think we should be in the ROA upwards of 1.6%. If we have to be a bank to be reckoned with, 1.6%-1.7%, in my opinion.
Credit cost, your ROA is going to be 2.1%. I hope you've done the math. You're going to have the best ROA in the sector.
I don't think our credit cost can be more than that.
Okay.
Okay.
Yeah. Thank you.
Thank you. The next question is from the line of Kunal Shah from ICICI Securities. Please go ahead. Kunal Shah, may I request you to unmute your line from your side and go ahead with your question?
Yeah, sure. Thanks for taking my question. On overall, when we look at it, this balance uptake, that has been quite strong also even on a sequential basis. How much would that be in terms of the average balances, if we have to look at it?
Kunal, there is never a disconnect between the average and the end of day. There is never. It's maybe INR 1,000 crore or INR 1,500 crore here or there. There is never a difference on the Savings Account balance because it's not made up of bulky deposits now anymore. What we had, we've lost it already. Please understand our SA balances. That is why the LCR will show a movement. Otherwise, my LCR will not show a movement.
Yeah.
Have I answered your question?
Yeah. Sure. Yeah, got that. Secondly, in terms of the fee income.
Yeah.
If you have to look at it in terms of the overall disbursements, as you were highlighting in April and May would have been slow. Would it be fair to assume that the retail disbursements would have been down by almost 35%- 50%-odd on a sequential basis? How would that be if I were to look at it from that way?
It is not the right way to look at it. If I look at it, you have to go business by business. That is where you should see the disbursements. If you look at the disbursement, we had on the Consumer Finance Division, which is the vehicle finance, about a 45% decline in disbursements. If you look at MFI, we had about a 40%-50% decline in disbursements. If you look at our retail, our disbursements declined by almost 35%-40% during that time.
Yeah, sure. Just coming to this question in terms of the strength of the fee income, I think the way we have been highlighting that it's quite granular and very broad-based. When we look at the sequential decline, that is still like 20%-2 4% across most of the line items when we see, be it in terms of the loan fees and other, okay, one trade is holding on. Do we see that, okay, overall in terms of the fee now it should be relatively better than the balance sheet growth?
Right now, yes. I tell you, if you press the pedal on the microfinance, the fee is only 60 basis points-1 00 basis points. If you press the accelerator on Loan Against Property, which we are not doing, I think it's about 60 basis points-1 00 basis points. I think loan fee may not grow, but our ambition has always been that the fee growth should exceed the loan growth always. If you look at our fee, consumer banking fee constitutes to about 48%-49% of our fee. About 21% comes from corporate banking and another 31% comes from trading. I think that mix will have to change towards 52% coming from consumer banking. Around 21%-22%, corporate will remain between 21% and 22%. Trading income will go down as you see sequentially in quarters to about 22%-23%.
I think it's much more granular. It's much more now and here transaction based, and I think that's the fee which we like. To answer your question, fee growth should ideally be greater than the asset growth.
Sure. One last question in terms of the data point. If I heard you right, you said 2.8% slippages in the credit card or unsecured portfolio.
Yeah.
This is the asset growth because when I look at the increase in the credit card gross non-performing loan, that itself is 2.8%. Maybe that would be after the write-offs and all.
No.
You have to take to get that number.
No. What you have to look, Kunal, and you are right. I think card was clear. You have to take both the books. We have not written off anything in card. The overall portfolio, the slippages are at 2.8% between card and personal loan.
Okay.
You have to take PL into account. Yeah.
Sure. This INR 2,300, I understand INR 600 is MFI. How would be the further breakup of Sorry, if I have to look at it in terms of INR 2,300 in retail, what would be the breakup of that?
On the [crosstalk].
Retail slippages.
Oh, okay. [crosstalk] We have INR 2,762 crores of slippages, INR 2,342 crores in retail slippages. I think the way to look at retail slippages are as follows: INR 1,060 crores in vehicle finance, MFI is INR 674 crores, unsecured retail is INR 248 crores, and secured retail, including MSME, is INR 359 crores.
Okay, perfect. This is great.
Yeah.
Thanks a lot.
Thank you.
The next question is from the line of Prakhar Agarwal from Edelweiss. Please go ahead.
Yeah. Just a couple of questions. First, on the write-offs.
Sorry to interrupt you. May I request you to speak a little louder?
Is it better?
Yes, Prakhar.
Yeah. Just in terms of write-offs, if I were to look at write-offs, which segment is it coming from? We have mentioned that probably credit card, we have not written off anything.
No. Let me tell you what we've written off. I think we've written off INR 938 crores, out of which CFD, which is vehicle finance, is about INR 384 crores. Secured retail is INR 130 crores. Unsecured retail is INR 135 crores. Microfinance is INR 100 crores. Corporate is INR 188 crores.
Secondly, in terms of microfinance, if you could just tell me what is the SA book and SMA-2 book and how is the movement been in SA book?
Let me tell you, I can only tell you certain data, and I think it's not fair for me to give you. I think we have evaluated our book completely, and our Chief Risk Officer went and did the full valuation of the book. Right now, I think we have INR 500 crore in restructuring as of now. If you look at, I think you will see a normalized flow going forward after the restructuring happens in the book. I think it will get into the normalization phase unless and until we get the third COVID wave coming out. I think as long as the accessibility is there, most of our customers are paying customers and we do not expect any subsequent losses which are as an outlier in the industry.
I think what may happen is there may be some flow-through from the 90+, which is there, which is also not very high as of now. The X-plus and the 30+ book is a little bit high because people out there only pay one or two installments at a time. They cannot pay 10- 12 installments. The 30-book gets cured over a period of time, and that's not a number we disclose. I can give you the comfort that the 60+ book is well within what we want to achieve. As for a leading bureau, I think if you look at our Reverse Repo Rate, and it's in the investor presentation. I think as of May 2021, if 100 is the index, we are at 30 days past due, 43% of that index.
In 60 DPD, 36% of that index and in 90 DPD, 31% or 31 basis points of that index. If you just look at it, and these are disclosures which we've given in the investor presentation, which is as per the credit bureau data.
Okay. That credit bureau data is as of May. How is the thing moving June and July?
It's much better. In fact, June has been much better and July is much better. I told you our collection efficiency on microfinance is 89%, has moved to mid-90s now. There were three states which were actually affecting us and these were states like Kerala, West Bengal and this thing, Karnataka. Where I think 24% of our book was there, and we had a collection efficiency of around 83%-84% there. Overall, we are at 89% and if you take out these states, our collection efficiency was 92%-93%.
Perfect. Just one last question in terms of your MSME books. What we have been hearing is that probably the performance or the rebound in this sort of book has been relatively better off across the board. How is your sense in terms of dealing with them and secondly, in terms of your ECLGS, are you seeing some pressure points or probably you don't expect anything material out of ECLGS even though it is small in numbers?
On ECLGS, I told you that we've done a very small book of INR 4,646 crore. Yeah. The outstanding is INR 4,402. We have not seen any red alerts which have come from the ECLGS. I just saw about INR 20 crore or INR 25 crore which were in the SMA-1 or SMA-2 bucket. I don't remember that. That is all what I saw on the ECLGS book as of now. I have not seen anything. I don't know, Ramu, would you like to comment? I have not seen anything.
Yes, I think there's a moratorium of 12 months that would also come into play. Quarter two to quarter three, but we have not seen any trends on the operating main account because only 20% is ECLGS as of 80%. Those are not split. Otherwise, SMA would have been higher. We are closely tracking them. We'll see the quarter one, quarter three when we see it.
On the main account is performing well and we are not seeing any such stress coming out on the main account right now. That's what Ramu is saying. I hope you heard him. I didn't understand your first question. If you can just repeat that. I'm sorry.
I was just asking about your outlook on MSME. When we started with this cycle, probably there was lot of concerns on MSME part of the book. Wherein what other banks have also been highlighting that performance has been relatively better than what they initially anticipated. How has our experience been on that side of the book?
Let me tell you. Unsecured book on MSME, not advisable to do. Let me be very open and candid about it. I think the secured lending, you will see the commercial vehicle segment, you will see our business banking segment, you will see our LAP. I think we are doing very well in all these three segments. I think that part of the book is performing. Wherever it's secured, we are doing well. In our business, we have a very INR 400 crore or INR 500 crore of portfolio in the BBG segment, which are in the clean business loan segment. We've never grown that book. It has not done well.
Perfect. Just one last data-keeping point. If I look at your presentation, there is a small corporate risk which is going at INR 4,000 odd crore. Last quarter, it was somewhere close to around INR 5,300 odd crore. Is there any reclassification or what has caused such a decline in that particular segment?
Prakhar, there was some issue in reporting last quarter. We had got corrected it later on. The year-on-year numbers are comparable. If you check the last year same quarter, it should have been the same. There was an issue last quarter.
Perfect. Got it. Thank you so much.
Thank you so much, sir.
Thank you. The next question is from the line of Gaurav Jani from Prabhudas Lilladher . Please go ahead.
Yeah, thank you. Good evening, everyone. One data keeping question to start with. What was the NII reversal for this quarter?
I do not have. NPA reversal.
We don't.
We'll get back. I don't have that number right now. I'll get back to you, Gaurav. I don't have that number right now.
My next question is on the recoveries and upgrades. On the upgrade line, I can see some INR 27 crores + INR 208 crores, roughly INR 245 crores. Are these the loans that are restructured and hence upgraded?
No, restructured is different from upgrade. Out of this, a large part of upgrade came from the microfinance industry where I think what happened, we were not able to access the client at all in April and May. Mid-April to May. We have weekly installments. The five installments when it becomes due, it goes into the NPA bucket. It actually went into the NPA bucket. That is where it happened.
Okay. These are pure upgrades and [crosstalk] restructuring.
No, not at all. Restructured you cannot approve. Move it as an upgrade. How will you show it as an upgrade? I am not able to understand. We have shown NPA as NPA and restructured as restructured.
Okay, sure. On the recoveries, the INR 543 crore in the consumer side, which segment did it come from largely?
Okay. I'll tell you. CFD contributed INR 20. Sorry. Recovery?
No, it's largely because of the sale to Asset Reconstruction Company.
I'll tell you what happened. There's a sale to ARC of INR 400 crore and INR 189 crore of recovery. That's the number. Sale to ARC is actually INR 364 crore, and recovery has come across the board, smaller amount in MFI was INR 79 crore. Sale to ARC was INR 235 crore in CFD, and secured retail was INR 100 crore-INR 110 crore.
Okay, got it. Thanks. Sir, on this recoveries and upgrades front, how confident are you on slippages for this quarter? How confident are you that you'll be able to recover this in the next few quarters?
If you look at on commercial vehicle, my strength comes from what I am seeing of the data. The client slipped into a 90+ DPD. He does not want a restructuring. He wants to pay the installment. More than 25% of the book already is less than 60 DPD. It cannot pay all the installments right now. I think on vehicle finance, we are very comfortable. On MFI, we've seen recoveries as and when Kerala and Karnataka is opening up. We will see recoveries this quarter on this. On the card, we've pressed the accelerator, we've seen recoveries, and it will start coming up. I think [audio ditortion] , so I think it takes time for the recovery to happen because the SARFAESI notice takes about, say, 12-18 months for it to get resolved. I think we will start seeing recoveries very soon.
In my opinion, I think next two to three quarters, we will have a substantial portion of recovery coming up.
Sure. That's helpful. Any full year slippage guidance for FY 2022, will it be lower than 2021? Is it fair to assume that, or will it be on similar line?
I can't give guidance, Gaurav. That's not correct. I think on the portfolio guide, if you look at it, if the COVID third wave does not come through, we are well provided, and we believe that and we will get back to normalcy very soon if our collection starts happening. I think the month of July is a testimony of an open month and a successful month where if the city is open and if the districts are open, we're able to do collection. The issue is if the trucks don't ply on the road or buses don't ply on the road, there is no way the client can give you the money. The guy survives on everyday tariff. I think that's the issue which we face. Exactly the same in MFI.
On cards and PL, I think the collections are already coming back, and I see normalcy coming back very soon on that. We've already in COVID too were much better. I think it will only improve as we go forward.
Sure. Sir, last question. On the telecom exposure, what is the total provision that we have made? Do we intend to make more provisions on that account?
See, you have to look at, first of all, the telecom exposure is still under discussion. Having said that, I think that we have followed a very conservative policy all the time. If you look at our COVID provisions, and you call it COVID, you call it contingent, is INR 2,050 crores. Even if I take the worst case scenario today, I have an excess provision which I'm carrying forward in that book, and I think in addition, I have INR 150 crores of extra telecom provision which I provided. We will see how this provision goes off, and we will continue to create more conservative provisions if required. I do not expect that we will need provisions in the funded exposure side, not in the non-funded side as of now. I think I'm saying on behalf of the Reliance telecom exposure and what I've seen of it.
I think we would be very safe within our provision framework to manage that exposure within what we have created, and we will create going forward smaller amounts. Not this large amount, but smaller amount. We should be able to manage it. That's all I can tell you.
Okay. Got it. Sir, just one more data keeping question. On the restructured book, have we disclosed any separate provisions that we made on the restructured book, or it's part of the INR 2,050 crores?
It is part of the 2,050 provisions always.
Okay. Got it. Thanks a lot, sir. All the best.
Thank you. The next question is from the line of Adarsh Parasrampuria from CLSA. Please go ahead.
Yes, sir. One data keeping question. Can you just break out your existing restructured book as it stands today?
[audio ditortion] Hi, Adarsh. Yeah. If you look at the total restructured book, it is INR 5,650 crores. Within that, CFD is around INR 3,100 crores. Secured retail is around INR 330 crores. Unsecured retail is around INR 380 crores. MFI is INR 70 crores, and balance is corporate.
More than INR 5,000 crores of our restructuring is between corporate, which you know the two accounts or the three accounts we've told you already, and INR 3,089 is the restructured book on the CFD, where we are very comfortable.
Got it. Sumant, when I think about the book, and while we had some slippages in CVs and MFIs, it's better than some of the NBFCs. When you look at the overdue buckets that we've had, do you get a sense that if the trend that you are seeing in July, that continues in August and September in terms of collections, you get closer to normalized slippages into quarter or because there are higher SMA one, two buckets, you probably see a normalization only in the second half.
See, depends on business. I think if you look at vehicle finance, I think with the type of stress these people have gone through, I think you will see a major part of normalization in quarter two, but it can extend in certain segments like MHCV or tourist buses into quarter three. So part of it, a sub-segment of MHCV may get into quarter three and quarter four because I think tourist buses will take time to come back. Three-[audio ditortion] segment, which is a very different segment, may take time till quarter three or quarter four. They have to see a normalcy period before they start paying back because they work on their daily earners to a large extent, and that has to take some time to come back. That's number one.
On the MFI side, I think we have already said that there is a portion of the book which is there. I think it will come to a normalized run rate now, but I think there will be a restructuring of about INR 500 crore-INR 600 crore which will happen. Post that, the normalized run rates will start happening. Restructuring on MFI, we will take 70%-80% provision. We are not going to keep on a restructuring a very less provision. We will take it and keep it aside. I think that's what we will have to do, and I think that's already induced, and that will come in the restructuring. That's what it is. On the credit card as well as on LAP and all, I see the normal flows happening now going forward.
In fact, you should start seeing recovery as a consequence of that.
Okay. My last question, Sumant, is on margins. You did mention that CI and term costs have gone down, or you've cut it down by 50 basis points. Does that broadly allow you to get down to less risky segments and how the mix would be, or some of it would accrete to margins as we go along?
I think we've always said our margin, our net interest margins will be around 4.15%-4.25%. I continue to maintain that we will not exceed 4.25% because we have a corporate book which we want to grow and we want to balance our corporate book with the retail book. I can increase my margins to whatever. I think we've been consistently saying that we want to maintain our book at 4.15%-4.25%. That's number one. Number two, I think the cost of deposit is also a message which is being sent that the bank is now highly liquid and its ability to attract retail deposits have increased, and I think we are now in a stable environment on the granularization of liabilities.
I think it does not always translate into profitability. I think profitability is a measure of a lot of things, how your portfolios are built up, how do you want to balance your portfolio. I think we will continue. Like I said before, I think we must continue to maintain a PPOP of 6%, 5.8% to We've always said greater than 5%. We are at 6% right now. Our credit cost should get range bound at certain point to 160 basis points- 190 basis points. This type of business should not have a credit cost of more than 160 basis points- 190 basis points. That is why I'm very comfortable with the provisions which I am holding. I'm very comfortable in what I'm saying as a consequence. Don't please extrapolate the current credit cost into the four quarters because that's the wrong way to do it.
Yes, things can change if there is a COVID third wave or the economy goes down to a large extent, and that may not happen.
Got it. Thanks so much.
Thank you. The next question is from the line of Shagun Varma from Goldman Sachs. Please go ahead.
Yeah. Hi, good evening, everyone. This is Rahul here. Sumant, just a few questions. This question has been asked in different ways. I'm going to ask it my way. On the CV side, how much stress has been recognized, CV plus the bus segment that you're operating? You tried to answer in the previous question also. Just trying to think about a lot of slippages have been recognized in the last 50 quarters. Some segments have still not really come back in the last six months or so. How much stress has been recognized? How much more could we see absent, of course, this third wave?
Yes. There is no better person than Partha to tell you this. Partha, would you like to, on the CV segment, do you think there are more stress to follow or in the CV segment and specifically on the diesel segment, you can give a story.
Rahul, this is Partha talking now.
Hi, Rahul.
Hi, Partha.
Unless the third wave really impacts as big as first or the second wave, more particularly the second wave, I think the worst for CV is over, except for only one segment. The passenger vehicle segment alone, especially the long haul with the interstate buses and other things, which used to be the best of commercial vehicle segment, Virtually there has been no movement for the past one year. I am really keeping my fingers crossed how long it will continue. It might take another three months. It might take even longer. Even if the government gives permission for them to ride, people may be very reluctant to sit next to each other for some time. Except for that, I don't think there is any issue. That portfolio by itself is close to about anywhere about 5% of my total overall portfolio, which has been restructured.
There has been a substantial portion of them. They have been paying despite the fact that they have not been earning. These persons have deeper pockets. Except for this particular segment, I do not see any other segment getting affected in the longer term or the medium term. If we cross this quarter the same way as July, from next quarter onwards, I think there will be a complete reversal of whatever has happened so far.
Thanks, Partha. Just one more small follow-up. What's happening to the resale value of these passenger transportation segment?
Resale value is very difficult to mention there, Rahul. Primarily because, A, people have not surrendered nor the courts are allowing us to repossess. In today's context, there's not much vehicles which are available, nor new vehicles which are sold in this particular segment. I do not foresee any new passenger vehicle being sold by any one of the manufacturers for some time. This will still have a certain amount of market, and this is a specific trade in which a person vacate, some other person will come in and take over. It will be more of a loan takeover rather than a vehicle sale in this particular category, I suppose. Today it is too premature for us to gauge what will be the resale. Things will start firming up only by September.
Understood. Got it. Just since we are on CV, now whatever we know in terms of the economic backdrop, et cetera, what do you think, and of course, this segment hasn't really seen any meaningful optics on the new CV side. When do you think would be realistic for us to even think about some revival of CVs? Government infrastructure capital program has been continuing, but do you think that's going to be helpful? On the other side, dedicated freight corridor is coming up. Just trying to understand over the next 12-18 months or so, how do we think about the CV cycle in terms of the volumes?
This particular question probably requires a very long answer. We will speak sometime later, Rahul. Having said so, I'll give you a bird's eye view of whatever. See, in CV segment, we cannot paint everything in the same brush, in the sense that the tipper segment is doing extremely well. There is a huge amount of pent-up demand. Goods in particular. There are certain segments in the goods segment which are doing fairly well. The excess capacity in this segment has been long drawn, and it has been there for quite long. There is a certain amount of pent-up demand. What is slowing down is the COVID effect. As soon as the COVID effect pans out, I think reasonably I would say that from the quarter starting October, you'll see an uptick. January quarter should be fairly good.
The next year, according to me, should be a extremely good year for the commercial vehicle industry.
Got it. Thanks, Partha. Just two more questions to Sumant and the team. Sumant, you've done a good job. Bank has done a good job on the liability side. Our LCR exercise improved significantly. We started cutting base, et cetera. Now, of course, the market is what it is. When you think about the market share gains, volumes will of course grow at whatever rate. How should we think about the market share gain across different retail products over the next couple of years? How are you thinking about it?
I think if you look at I'll talk about the retail asset side of the business. We are on credit card, a very negligible player at 1.62%. At best, we will go to about 2.2%. I don't think we have any ambition to be more than that as a player. Our ambitions are to grow at best to INR 10,000 crore. We don't have that ambition to be a very large player on the credit card side or the unsecured side of the book. I think on the vehicle side of the business, you know that in commercial vehicles, we are at 12.5%-13% market share. It depends on which segment. On Medium and Heavy, we are at 12.6% market share.
On the LCV, we are now at about 13.5%, 14%, aiming to be 16% market share, and by the end of the year, going to 20% market share, maybe. I think that's a challenge which we are going after. I think that's a segment which is growing, the LCV segment. I think that's a segment which we want to grow. On the microfinance side of the business, we have always been 12%-13% market share. I think we will continue to be at 12%-13% market share. We will diversify microfinance into a very different model, which is of merchant acquiring business, which we have talked a little bit, but we can talk about it later.
I think there is a huge opportunity on the merchant acquiring side of the business where we believe that this business can make a very differentiated revenue model on its own. I think that's a business which we will take, but I think we will always be between 12%-13% market share on this one. On diamonds, we are 25% market share today. I think we will continue to grow the diamond business. I think this business, it doesn't grow on ASR. It grows on transactions. Please understand. It will have a growth of 16%-18%. It's not a 30%-40% [audio ditortion] business. It will never grow. It's a working capital turnover and a cyclical business, and we are fine with that. On BBG and MSME, we are at 2.8%.
We've always said we want to be at 6%-7% market share in PC5, and we will achieve towards that. On corporate, we are almost 1% market share and we'll continue to be at 1%-1.2% market share. That's our strategy. We will continue to focus on our domains. In a nutshell, we will continue to gain or maintain a market share in our domain. I think new areas of expertise, affordable housing and merchant acquiring business will see a rapid growth in these businesses. Credit card and all will continue as a business to support the bigger businesses of the bank.
Understood. Just one last question on the vehicle financing slippages. If I got it right, it's at INR 1,000 crores.
Yeah.
Can we get a breakdown between CVs and LCVs and the rest?
Yeah. Right now I don't have it, but you can talk to us independently, or we'll upload it in the investor site.
Got it. Thank you so much. Thanks for all the questions.
Okay. Thank you.
Thank you very much. Ladies and gentlemen, that would be the last question for today. I will now hand the conference over to Mr. Sumant Kathpalia for closing comments.
I think while closing, I just want to say that during our calls and during our meetings, we had said that we will have INR 2,000 crore of restructuring and we will move the Gross NPA ±20 basis points, 25 basis points. I think we've stuck to our guns on that. I think while, yes, I agree the asset growth has been a little bit slow, I think it was important for us to consolidate ourselves on the asset before pressing the accelerator. The type of businesses we are in, we have to be careful in when we press, I think there is a time for growth. I thought the time was quarter one. We unfortunately got stuck in COVID. What I see of quarter two, I think I'm very positive in the way I'm seeing it.
Of course, some parts of the vehicle finance business are the commercial and the medium and heavy commercial vehicles may take time, but the light commercial vehicles, the tipper segment and all have started coming up. The personal vehicle segment has started coming. Tractors were always doing well. I see growth happening in our business now, and I think we remain committed to what we said, 16%-18% CAGR. I remain committed to what we said on the credit cost. I think we are committed to write-offs. We've got extra provisions. We will be able to manage the funded exposure of Vodafone also. If it comes within that, we are well provided, I can assure you this much, to take care of that.
Of course, if the guarantees get invoked, we will review and see what has to happen, and we will be upfront in taking the provision and be very conservative in taking the provisions. We will not defer it to four quarters or six quarters. We will take it within that quarter or within one or two quarters. I can assure you of that. I think the bank is well set, the bank is well-positioned, and the bank is highly and has structurally corrected itself in the corporate side. Very well-positioned in the domain specialization and has new areas of domain coming up because of the digital business and capability which we are building in. I think I can only say the good times are here to stay now. I think we've seen the bad times, and I think the good times are back.
Thank you for your support, and if you have any questions, we'll be able to answer it, or you can contact Indrajeet or me at any point of time, and we'll fix a call to answer all your questions. Thank you.
Thank you very much. On behalf of IndusInd Bank Limited, that concludes this conference. Thank you for joining us. Thank you.