You mentioned that CASA, NIM and cost-to-income were not achieved vs stated guidance. Do you foresee achieving the stated guidance in Q4 and overall FY26?
It may take time. Actually, I can't assure by March '26 because there is pressure on margin due to rate cut, and though we are diversifying revenue sources and cost settlement steps have been taken, it may take another 2 years to 3 years to take it below 50%. Mukul added: we are at 57.8% right now and because of margin pressure, Q1 it will be a gradual process - maybe 50 to 100 bps every year to bring down cost-to-income to 50%. Less than 50% will take three years.
Can you share guidance on yield on advances and cost of deposits in the next few quarters?
Current yield on advances is 8.15%. Hopefully, we will maintain this 8.15% in Q4. Mukul Dandige added cost should come down slightly. Cost income will come down.
PSU Bank is a flavor of the season. You have excellent franchise brand image - the 115 years put into the Bank's image. You now have insurance arm, are likely to spend a huge amount on technology. What will we do different from market and in brand image to make our Bank bigger and stronger, including the INR 10 lakh crore aspiration of '28?
Really, we are blessed that we are 114 years old public sector Bank with rich legacy and rich culture. We have 34,000+ employees with average age of 38 years, making a good combination of senior experienced persons and young persons. On visibility and brand image, we have taken several steps in Digital media and social media handles. Digital marketing officer is one new concept we have identified. Outside people understand Central Bank of India as a traditional public sector Bank but once we discuss the features and capability of technology, they understand. Going to media, giving interviews, meeting with investors are part of our strategy. We have lead Bank responsibilities at 53 districts. We have identified them as potential brand ambassadors and are organising two-to-three days training programs.
From your statement in the press as well as in commentary, private sector CAPEX is on a path of recovery compared to public sector. Can I take your replies as our lending today is more toward private sector compared to public sector entities?
We have a very good customer base and our own clientele banking with us for 5th generation, 4th generation. We are not a large player in corporate sector looking to the potential players like larger Bank. Our base size is very low. The growth which we aspire, looking to our potential in the Indian market, we are getting ample scope and ample proposals for financing and building our own book in those segments. There is absolutely no challenge in competing with private sector because we have our own client base and we are getting good proposal from those channels.
ROE is now around 1% (ROA) with target of 1%. Is this peak for a PSU Bank like yours? What are the three levers to sustain or improve ROE above 1% once recovery and credit costs stay in place?
ROE we have given guidance it would be above 1%. Profitability side which we are focusing on this time, INR 1,263 crore was the profit and net profit of the full year is going to be INR 4,000+ crore. CASA is our priority, RAM is our priority, technology adoption is our priority, cost reduction is priority. With all these initiatives and also Generali Insurance, from all these segments we have scope to get a good return on whatever we have invested. We will be able to maintain ROE 1% or above 1%.
There has been discussion about potentially raising foreign investment cap in PSU Bank from current 20%. Government has clarified it is not pursuing any increase at this time. We have seen $6.5 billion inflow in private banks by foreign institutions. How is Central Bank going to attract long-term investment from foreign capital under current ownership? Are we seeing any further increase in this cap?
In current quarter our capital is enough for growth and all these things depend upon several approvals and several things. I will not like to comment on this aspect.
Can you share what is the blended yield on your corporate loan book? And what gives you the hope that you can maintain yield on advances around the current level given the repo rate cut in December will reprice the EBLR book in the next quarter?
Blended yield on corporate loan I will give you offline. As far as yield on advances and our belief that we will be able to maintain - two things. One is because the CD ratio has improved. Definitely that should help us because we were at 66% when rate cut was announced and from 66% we have now graduated to 72%. Going forward we expect to be around 73%-74%. So that in itself would help us to ensure that our yield on advances remains more or less in this same line.
On the credit and deposit growth trajectory for FY26 - given quarter-on-quarter advance growth of 10.24% taking advances from INR 2,93,000 crores to INR 3,23,000 crores, shall we take it that the credit growth for FY26 will be robust and beyond the 15%-16% target given earlier? And on deposits - given muted deposit growth this quarter, you need to generate roughly INR 16,000 crore in Q4 to meet the 13% target. Can you throw light on these?
Ajmera ji, thank you for your encouraging words. On credit side, the growth you are observing is from a well laid down strategy with activation of every business unit. Earlier, our loan book was 72% RAM and 28% corporate. For RAM segment we started outreach program at more than 100+ places in November, and again in February more programs are scheduled. Towards corporate lending we started weekly Credit Approval Committee meetings and fortnightly MC/Board committee meetings. In the last nine months, Central Bank of India head office level delegation committees have sanctioned INR 1,17,000+ crore and a lot is still under disbursement. I am sure the target of INR 1,13,000 crore plus credit book, we are going to achieve. On deposits, we didn't go for any CD or higher interest rate to mobilise resources. 65% branches have more than 50% CASA ratio and our CASA is now at 47%, one of the highest. Term deposit growth was more than 18%. We have launched the 'Aagaz' campaign expecting INR 20,000 crore through this campaign in CASA side. With the available technological support including our Cent eeZ mobile app, we don't have any big challenge in mobilising required resources.
On profitability - net profit is just INR 50 crore above last quarter's INR 1,213 crore because provisions on the restructured book rose to INR 346 crore vs INR 113 crore, and standard asset provisions jumped from INR 30 crore to INR 150 crore. Will higher provisions continue next quarter, and is this buffer building? Also treasury did INR 302 crore and recovery from written-off was INR 1,109 crore - so other income offset some provisions.
Ajmera ji, INR 375 crore we have provided for ECL. For the first time, if DCCO extension happens because of that there will be a provision - so there we have a provision of around INR 50 crores. So these are the two major reasons. One is as per regulatory guidelines, one is we have proactively provided INR 375 crores for the proposed ECL transition. Provision-wise, because the slippage ratio has been contained, the credit cost has also been contained. Based on whatever is the impending requirement that we foresee, we are doing proactive provisioning.
On employee cost - INR 160 crore more than last quarter. Have you considered the impact of the revised Labor Code on gratuity?
Ajmera ji, there also we have proactively provided INR 150 crore additional. We have a liaison with Labor Code. Proactively, we have done this provision of additional INR 150 crore. There will be no impact on our personnel because as they are saying they are going to reduce it from five years to one year, we do not have that kind of structure in the Bank. Beyond 90 days, we are not engaging any casual labor. We have direct contractual agencies; we do not engage any casual labors directly. So we do not foresee any sizable or any impact at all.
You did INR 1,100 crore of recovery in Q3 FY26. What is the recovery number expected for Q4 FY26?
In Q4, madam, expected recovery and upgradation and recovery in technical write-off is INR 904 crore. Total recovery and upgradation expected in Q4 is INR 904 crore.
Just a clarification - you mentioned credit book target is INR 1,30,000 crore?
INR 1,13,000 crore corporate book; INR 1,25,000 crore corporate. Total credit target INR 3,40,000 crore.
On sequential growth in business - corporate loan book has witnessed substantial 20% Q-o-Q growth. Was this abnormal growth led by a particular sector, or broad-based?
It is broad-based actually. In corporate side, year-on-year growth is 23%. We have given sanction from head office in this year from different committees, INR 1,17,000 crore. Different committees like MC, CAC committee headed by MD, ED, and CGM committee have approved. From zonal level also, regional office level also, committees have contributed towards this corporate credit business. It is broad-based, not limited to any few players or entities. Demand for credit is majorly from renewable energy, LRD, infrastructure/road, and data centers - these are the emerging areas where we participated.
On RAM advances growth vs industry - Retail and Agriculture is outperforming while SME is lagging. Can you explain the drivers for each?
Yes, Retail we have grown by 20%-21%, looking to the opportunity in our Indian economy. Agriculture also we have grown by 15%. MSME we have grown by 16%. MSME is the segment which didn't match our aspiration. We have identified 225 MSME intensive branches in active clusters and designed cluster-specific products. Digital journeys for financing small value customers are also there. Outreach program is scheduled in the first week of February for MSME at 90+ centres in the country. With all these enablement, our growth in MSME sector would be better in Q4.
We have one of the best CASA franchises among PSU banks. With the delta between savings deposit rate and fresh term deposit rate reducing, our savings book should grow more strongly. But CASA growth has reduced this quarter. What is the reason?
CASA we have grown by 8.45% and CASA ratio also we have improved from previous quarter. 47.13% is there. Previous quarter it was 46.89%. Out of 4,567 branches, approximately 3,000 branches are maintaining CASA above 50%. Northern, central, eastern and northeastern side, CASA is ranging from 52% to 55%. Only southern and western side, CASA ratio is 38%. To build upon these capabilities we have launched 'Aagaz' campaign with products designed for pensioners, defense personnel, police personnel, housewives, RERA-specific current accounts. Technology is also playing an important role - every branch and marketing officer is having tab for pleasant onboarding, and our Cent eeZ super app provides almost all banking services on click basis. We are sure we will not only maintain but improve our CASA ratio in Q4.
With repricing of older term deposits expected from current quarter as the first rate cut happened in March 2025, what is the range at which the cost of deposits should settle in the upcoming 12 months?
The rate cut was announced from February 2025 and in phases, 125 bps of rate cuts have been announced by the Reserve Bank. Repo-based loans transmission happens instantly whereas time deposit rates take some lag effect. We expect that by June 2026 the transmission should happen because our maturity on an average monthly basis is around INR 18,000 crores to INR 19,000 crores of time deposits. So by June when rate transmission is complete, our cost of deposit should further come down to around 4.65%-4.70% range. With CASA campaign growth also adding as an additional lever, we will be able to bring down our cost of deposits.
Considering both drivers, can cost of deposit come down below 4.5%? Currently it resides around 4.85%. Say 4.7% is the rate we are penciling in with repricing.
It can be in the range of 4.5%-4.55%.
On overall provisioning - INR 375 crores is ECL. What was the INR 150 crores proactively that the company provided for? And overall yearly credit cost is below 1% and below guided range, but sequentially gone up from 0.22% to 0.38%. Do you expect it to come back to 0.22%?
INR 375 crores is ECL provision. INR 150 crores proactively we have provided for the terminal dues for the employees that we have done for this quarter. Our guidance for slippage ratio is less than 0.35% every quarter. If I have to keep my net NPA at the same level, even though as per IRAC norms I am required to provide 15% only, to keep net NPA at the same level I will have to provide for almost 100%. Depending upon the slippages, credit cost may vary, but it is within the range of the market guidance that we have given.
On NIM - 3% was the guidance for FY26, you are already at 2.96%, and some impact of overall rate cut would happen in Q4. Do you expect NIM to go above 3% or below 3%?
We are going to maintain 3% guidance which we have given to the market. 125 basis points was cut and as we have more than 60% loan book linked with repo this was transferred to the customer immediately. But deposit repricing comes with lag. By Q1 next year most of those deposits will be repriced. But even after that pressure on margin is there. For maintaining that NIM, we have already diversified - CASA mobilisation has started strategically, and RAM advances particularly MSME and agriculture where we have good margin. We are focusing on opening agri-intensive and MSME-intensive branches in clusters, focusing on high-yielding agriculture infra finance and godown construction side. With all these diversification, our NIM will be successfully maintained at least up to 3%.
On MSME - you said overall MSME growth has not been as much as you envisaged, but we are hearing that in Q3 towards the fag end in December, overall MSME demand has seen improvement. Has that been the case, and confidence on Q4 MSME?
MSME is not the kind of sector where there is a corporate-type seasonal demand. MSME is only how best we are able to finance, how best we are able to find out. With the outreach programs that we had started in start of Q3, now in Q4 also will continue. Along with that, improved product offerings are there. We definitely expect that the Q4 growth would be better. Kalyan Kumar added: We have identified 225 MSME intensive branches in active clusters and designed specific products which are very competitive. Apart from that, advisory services like handholding, providing training to entrepreneurs, and our own people posted in those branches are getting specialised training. In this quarter Q4 will have good performance under MSME.
Your borrowings have gone up quite sharply Q-o-Q. What is the reason for that and what is the cost of these incremental borrowings?
Even though securities are liquid securities in which we have invested, but since they are carrying better coupon, what we are doing is borrowing against those securities at around 5.15 to 5.20%. And those funds we are utilising towards funding. That is why our CD ratio has gone up to 72%.
There was a fairly large recovery from TWO accounts in this quarter. Was there any lumpy account here?
Yes. The major recovery has happened in some accounts, the highest being in Go Airlines with INR 515 crores. Thereafter we received INR 90.79 crores in ALM Industries, INR 80.37 crores in ALM Food Products, INR 52.32 crores in Al Nafees. Recovery in accounts above INR 1 crore is INR 890.56 crores. The remaining is in the below INR 1 crore category. INR 130 crore is below. Total is INR 1,021 crore.
You gave a number that roughly about INR 18,000 crore-INR 19,000 crore of term deposits get repriced. You said every quarter or every month?
Monthly. Because we have a INR 2,33,000 crore kind of time deposit book.
Your growth path is on a very positive track. You were expecting 72% CD ratio at March '26 whereas you have already reached it this quarter. What kind of ROE, NIM (already guided 3%), ROA can you achieve? And is RAM balance better compared to where we stand today as corporate book is growing?
ROE is 14.47%, up by 151 basis points, and certainly it will increase in this quarter also. ROA we will maintain above 1% as we have given guidance. Towards RAM side, it is our priority and Central Bank of India has strength in this segment. Based on learnings from PCA period and after that corporate lending, we are very selective such as AAA rated and due to lesser risk appetite. The guidance which we have given to RAM segment, 65:35 ratio +/-5%, we have achieved this quarter also. In next quarter, it would be maintained. CD ratio - current quarter we have reached 72%. As we aspire to improve advances and deposit, target advances are INR 3,40,000 crore and deposit INR 4,60,000 crore. CD ratio would be in the range of 73%-73.5%. We will reach easily.
Can I conclude that we are only climbing up on all aspects and we have hit the bottom in respect of margins, profits, and we look up only quarter-on-quarter?
Yes. Bottom line will be maintained because our composition of loan book is more than 60% repo-linked, so we are more impacted. In previous quarter there was a reduction of 59 basis points - the steepest impact. But we have initiated several steps - CASA campaign, designing products and structure, RAM focus, diversifying different resources, cost curtailment. With all these strategies, our profitability will see a marked improvement in coming quarter and coming year.
Central Bank Generali insurance arm is very visible. Has it started rewarding where our investment is concerned?
Such kind of business actually takes time to achieve breakeven. It is just first year and we have got INR 42 crore from insurance. A lot of hope is there because Generali being a global company having expertise in products, delivery and services, and Central Bank of India having countrywide presence and good trust of public and customers in our franchisee, and we are under obligation to provide all banking services and requirement of customers under one roof. This association is going to be complementary and coming years will certainly get good benefit out of this association.
With 19.5% credit growth and capital adequacy ratio now trading towards 16%, at what growth rate do we start consuming capital meaningfully? Should we expect any equity dilution for raising Tier 1 or Tier 2 capital in FY26 and FY27?
To meet our desired target in Q4, this capital is enough, sufficient to meet this growth target. Whatever we are aspiring, INR 3,40,000 crore is the credit advances target. Easily we will achieve. There is no need of going to market for either Tier 1 capital.
I have noticed that Gross NPA ratio in Agri and MSME sector remains elevated. Could you elaborate what is causing the stress within these sectors?
Agri and MSME both NPA is approximately 5%. If I compare with other players, it is not that much elevated. Looking to smaller ticket size and number of impacts by several factors playing in the catchment area, this is the stress. In agriculture, KCC is a major contributor towards slippage. In MSME segment, government-sponsored schemes like MUDRA and some other ticket size like general MSME scheme, we found some increased slippages. We have corrected it through policy modification. Central Bank of India has initiated integrated call centre. Feet-on-street things are there with technology propensity recovery models. We have implemented one technological solution - any proposal of retail, agriculture, MSME will first filter through this technology, GoNoGo app, and then only go to the loan origination system for processing. With all these technological interventions at entry level, credit underwriting level and monitoring level, end-to-end we have initiated several steps to keep our assets healthy.
On CD ratio improvement to around 72% - given tight systemic liquidity conditions and pressure on raising deposits, how much additional headroom does management see to increase CD ratio without raising marginal cost of funds? How is the Bank balancing growth with liability side sustainability?
The target which we have fixed for this Q4 quarter, our CD ratio would be approximately 73% to 74%. We don't find any major challenge towards resources side because our CD ratio is still 72%. Still scope is there. Liquidity coverage ratio is 203% - there are also sufficient leverage we have. The initiatives we have taken towards CASA mobilisation campaign Aagaz with structured approach towards product, process and technology and grooming people for taking it forward, so resources is not going to be a challenge. CD ratio will certainly improve in Q4 and approximately it would be 73% to 74%.
You mentioned we made INR 375 crore ECL provisioning in this quarter. What is the expected provision we could see in the next few quarters?
ECL estimate - we have one of the highest provision coverage ratio at 96.89%. The asset quality is good, credit underwriting is good, provision already done, net NPA only INR 1,414 crore. With that base we are prepared to enter into ECL. Provision till now we have done INR 1,525 crore including INR 375 crore in this quarter. Total estimation is INR 4,200 crore. INR 2,675 crore more approximately we have to make provision for achieving this target. By 1st April 2027 with the profitability we are going to make, very easily we will migrate to ECL. We will not have much challenge in achieving this target.