Bank of Maharashtra (MAHABANK) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Bank of Maharashtra Q2 FY '23 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. We have with us from the management, Shri. A.S. Rajeev, Managing Director and CEO; Shri. A.B. Vijayakumar, Executive Director; Shri Asheesh Pandey, Executive Director; and all general managers of the bank. I now hand the conference over to Shri. A.S. Rajeev. Thank you, and over to you, sir.

Thank you, Madam. And good afternoon to you all. I'm Rajeev, and today, we -- our Board of Directors approved the Q2 results. I think you might have seen that we have already published in the SEBI sites as well as our site also regarding the presentation of the bank results. We feel that the results are very good in the present economic scenario. And as you are aware that our growth rates are much above the industry growth rates, especially in case of Advances, and the industry has grown around 15% to 16% -- 15% to 17%. Our growth rate is almost doubled, around 28% to 29%. And the Deposit is in tune with industry growth rates. Whatever -- but the growth rate was 30%, 31%, maximum 28% to 29%, but it was not reflected in pricing and the NII also grown at the same level. So the operating profit and the profitability of the bank also was good. Of course, the interest rate slightly is increased. So we have our strategy without change for more of like [indiscernible] borrowing. And with the excess SLR, we have used to for borrowing and we have funded for the credit. And it has improved the CD ratio from 66% to 77%. So during this period, we have added around 8 lakh new customers in SB and around 50,000 current account holders and 37 branches we have opened, now reaching to 266. And our coverages are last to almost around 510 districts all over India. Earlier -- I said as earlier, 2 to 3 years back, the coverage was below 300 districts in India. And the growth rates of MSME growth rate was 25%; Agriculture, 12%; Retail, 27%; RAM sector, 22%; and Corporate is around 38%. And the Agriculture is slightly 12% mainly because we have sold off some of the IBPCs around INR 2,200 crores Agri for [indiscernible] the NII. So financial results for the quarter at a glance, the business has grown at 16%. Deposit has grown at 8%, and CASA has increased by 13%. CD ratio improved to 76%. Advances growth is 29%. NPA declined to 3.4%. And net NPA reduced to 0.68%. PCR improved to 96%. Operating profit has grown by 4.43% on a year-on-year basis, which is likely so while seeing the numbers. But in reality, corresponding last Q2 in '22, it was INR 260 crore exceptional item of DHFL recovery. It was accounted under Other Income. Barring that exceptional item, the operating profit, if you see that it is around 20%, 22% growth rate. And Q-on-Q basis, Q1 of this year and Q2 of this year, operating profit is increased by 22%. And this operating profit growth is mainly on account of NII growth through the pricing, not under Other Income growth. Other Income is almost in the same level. Growth rate is single digit, mainly because as I already told that INR 260 crores corresponding last year, it was booked under the Other Income. And second point was profit on sale of investments last year, the profit interest rate was favorable. This year, interest rate was moved northward and we could not be able to get for profit on sale of investment or it was INR 32 crore profit is booked. But our portfolio is fully protected and modified duration of the HFT as well as IFRS is around 1.29%. So there is no -- nothing to worry with the portfolio of the investments. And this has impacted the yield on Investments also, it is around 6.3%. So net interest income is increased by 26% on a year-on-year and 12% on a quarter-to-quarter basis. Net interest margin reached 3.55%. Cost-to-income ratio improved to 38.82%, in spite of Other Income is not improved much because of the reduction in the profitability, profit on sale of investments. So return on assets improved to 0.92% and CRAR is improved to 16.71% where Tier 1 is 13%. Return on Equity also has improved to 18.32%. So net profit for the current quarter, it is INR 535 crores as a INR 264 crores Q2 last year. Operating profit INR 1,462 crores as against Q2 which is INR 1,400 crores. Return of Assets, 0.92% as against 0.53% for last Q2 and 0.81% for Q1 financial year '23. So profitability is concerned, you might have seen that growing steadily for the past 12 quarters. Not only profitability, business growth, this is the one time is having around 30% growth rate continuously, we are showing for the past 8 quarters. And in the meantime, you can see that the asset quality is also under control. SMA 2 as well as the NPA addition, slippages, all are under control. So while coming to assets and liabilities Net Advances has grown by around 31%. RAM sector has grown by 22%; Retail Advances, 27%, MSME 25%. And bank holds, like last quarter, we hold around COVID-19 provision of INR 1,200 crores as of September also, and we have not reversed any amount and cushion available for the bank is around INR 1,200 crores. So these are the major highlights of the results of the current quarter. So we will -- if it is okay, we will go for a question-answer session and whatever other areas and our -- regarding digital area where our Executive Director, amount and cushion available for the bank is around INR 1,200 crores. Amount and cushion available for the bank is around INR 1,200 crores. So these are the major highlights of the results of the current quarter. So we will -- if it is okay, we will go for a question-answer session and whatever other areas and our -- regarding digital area where our Executive Director, amount and cushion available for the bank is around INR 1,200 crores. So these are the major highlights of the results of the current quarter. So we will -- if it is okay, we will go for a question-answer session and whatever other areas and our -- regarding digital area where our Executive Director, amount and cushion available for the bank is around INR 1,200 crores. So these are the major highlights of the results of the current quarter. So we will -- if it is okay, we will go for a question-answer session and whatever other areas and our -- regarding digital area where our Executive Director, Shri. Pandey Ji will give you some brief of digital, what we have -- now itself. And what the forward what we have do that. I'll hand over the mic to Mr. Pandey.

Okay. I brief I will tell if they can have a question and an answer. Thank you. Welcome to all of you for this analyst meet and thanks for the good support and along with the bank. So coming to your digital initiatives, certainly a very good question and very good insight as well. So if you know like the business, the bank is sustaining the growth in the business parameters, as you can see for last 7 to 8 quarters. And even today, on the various performance, key performance indicators. So certainly, this is also 1 thing that whether the press or the analysts people would like to know the sustainability through the digital because digital is the order of the day. So when coming to that, the -- I would like to say one more thing that not only for your own sustainability, but even the ecosystem, whether the central government or the state government or the local bodies, the ecosystem, which is changing is also demanding the development on the technology and digital side. Now in brief, -- your bank is actually concentrating on the 3 pillars in the technology front. The 1 is the digital journeys. I will brief also about that and the digital operations; and third is the digital compliance. In this, what we are trying to cover is those initiatives, which are yielding to customer convenience, staff convenience, that is ease of doing business. And the third is the cutting my cost. So we are also reviewing the processes where the process can be made more technologically driven and where the time can be saved, customer convenience can be maintained. And also what we are looking, particularly, probably you may all find 1 word, digital compliance, that the compliance function, which is from the regulator side, one of the major stakeholder of the banking industry, that it should happen within the journey itself. So these are the 3 pillars which your bank is focusing on. Now if you see our website for last 5 to 6 months, the RFPs were so many in between. So 1 is that related to -- you would have seen recently robotic process automation, we are 50. The Board approved, the RFP was floated and it is on the culmination stage. The next is also UPI, which is we wanted to scale up at a very large scale. So that is also now under conclusion stage. Some 5 to 6 on cybersecurity because that is also very, very important today to take care of when you think of digital and technology. So 5 to 6 already the purchase are the proper after the RFP and CVC guidelines. The process was done and already the purchase order is issued. Similarly, I can assure you that some -- like WhatsApp Banking, if you see, there is a presentation also, which has been uploaded to our website and also in the stock exchanges. So if you see the growth, particularly for last 2 quarters. So if you see the last 2 quarters, whether it is WhatsApp Banking or from the chat board or from the mobile banking or the ATM transactions and all. So it is moving. So yesterday also, we have opened 2 digital banking units, 1 in Satara and 1 in Aurangabad, but then not only related to 75, which is announced by Honorable. FM in the budget, but then we are trying to have our own scale up in the days to come from, say, 10 to 15 and then 25 to 15 in a year or so. So this is what I wanted to say that on like TIN 2.0, it was also a press news, we are the third bank to integrate with the TIN recently. So like this, I can say that the TIN is not only working up on the new initiatives, which is going to give the good flip to the business. but also the good convenience to the customers. Like shortly, the bank is also poised for the video KYC where the bank opening accounts and all will happen. So in totality, like some of the RFPs were as per the reserve bank, like bureau integration and all, it was a close between the 4 bureaus only where it is not only a selection, but then into an integration with the bureau company, data aggregators and some scrutinized in-panel fintech companies. So in brief, this is the whole, let me tell the framework, thought process and the architecture of technological initiatives by the bank. Yes. I think EASE also, you would like to know, we inched up from position 9 to 6, and we were benchmarking again there. We improved a lot. Now EASE 5.0 as far as -- the internally EASE 5.0, there are 3 pillars. One is the common for all the 12 banks. The second pillar is we have the bank specific road map. So their bank has selected from '20 to '22 some projects, which is being paced with the Board and will be submitted to DFS, already draft and all like other banks. Other banks are also doing in the same way. It has been also submitted to IBA. And the third is collaboration. So let me also brief your bank is also working on all this front. So not only the initiatives, but let me tell you, like digital journeys, digital operations and digital compliance. So like 3 of the major stakeholders, government, customers, my own staff and certainly, the Reserve Bank of India regulator. So these 3 pillars, which we are working is going to help us in sustaining and going forward. We look in a 1-, 2-year, 3-year tenure that whether it is our own business, maybe the retail or other or account opening CASA and liability -- sorry, asset and liability side or whether third party. It is also an RFP in our website, which we can see. They're also even in third party, which we are trying that we should start with a sourcing of end-to-end from 5% onwards and increase it to 20%, 25% in 2 to 3 years' time. So this is the road map of the bank.

Okay. Thank you, Mr. Pandey Ji. And now if we can start the question answers, if any questions. Then in the meantime, we will discuss any of the queries regarding digital or any of the areas wherever it is as and when it is required. Over to Madam. Thank you.

[Operator Instructions] The first question is from the line of Ashok Ajmera from Ajcon Global Services Limited.

And my heartiest compliments to you, once again, sir, to all of you, Mr. Rajeev, Vijayakumar Ji, and Asheesh Pandey Ji, along with your team of the all general managers and performing people for the best performance. In fact, it is your bank -- is a bank of only INR 3.5 lakh crores business, but many of -- on many of the parameters, I mean, you have excelled even better than the other top banks also. Your PCR coverage ratio is now 96%. Your NIM is 3.55%. Your gross NPA is under control, less than 3.5%. And net is less than 0.75%, that is 0.68%. So my compliments to you on all the fronts, sir. I just have a couple of questions or other observations and seeking some information also. Sir, now, of course, you had a small base. So your growth is -- in percentage terms is very high as compared to many other banks as far as especially the credit goes and overall business also goes. So now going forward, number one is that where do you see the growth coming forward? Number two is, with this kind of turmoil in the global market, the interest rates are hardening up and a lot of uncertainties, which have come up, even local interest rates, they have gone up, whether do you see the pressure coming up now into the coming quarters, though the September quarter has been saved. Even on the treasury front, also, you don't have losses, rather, you have made some money only. So going forward, where do we see and how are we cushioned to take care of those major blips or major happening. So this is number two. And number third, sir, there was a report that on agriculture loan portfolio, there is a tremendous pressure. And on an average, about, I think, 18%, 19% of the agriculture portfolio is getting -- going into the NPA, yours is around 14%, 14.5%. So what are your views on the agriculture loan front? And a little bit on the education loan because the interest rate going up, the currency dollar becoming -- rupee becoming weak. Now the repayment pressures are there. So these are the couple of few questions in this round. And if time permits, I will ask again. And if the moderator allows me for some more questions, sir.

Yes. Thank you for your compliments. And definitely that we will continue our good performance. And regarding growth, the growth is happening around 28%, 29%. Out of that, you might have seen that the growth is averaging among all the sectors, especially in case of RAM sector. Housing loan is growing by around 22%. MSME or retail sector -- our RAM sector is the major thrust, we have given 27% to 28% growth rate. And the current quarter, corporate sector also grown around 33%, basically because there are some limits and are things sanctioned by the corporates, they have utilized because of the interest rate pressure. So the corporate sector may not grow much in future because that they have already utilized the limits, and we are not much going aggressively in corporate sector. So at our Board direction, we are targeting mainly on RAM sector. That was the reason we are concentrated now. Yesterday also, we have reduced our interest rates in case of housing loans and the retail sector to improve the quality of the credit and to increase the RAM sector. The second point is regarding the turmoil of the interest rate, increase in the market interest rate. Of course, it is to that market interest rates is increased. But our position is, as of now, it is comparatively good and you can compare with other banks that -- some of the banks there, CASA has come down by 2% to 3% during this time. We would be able to sustain the CASA ratio at the level of June itself. For March, slightly has come down because you are aware that March and because of the budgetary allocations and other things, 1%, 1.25%, 1.5% because budgets allocation, credits will come. This is a temporary nature. So average 55% -- above 55% CASA, we could able to continue this quarter also. And we are -- we may be expecting that it will continue. And term deposits, we have not grown much, the recent specific reason because of the cost of deposits. And term deposits, we have not -- and we have not taken any but deposits with a differential or we're able to manage the present level. Of course, we have gone for a little borrowing. That borrowing has gone for [indiscernible] excess SLRs. And is the strategic move as directed by the Board. Overall Board members are highly qualified people, and they have good experience in treasury and other areas like LIC also. And they -- as per their direction, we have switched over from through borrowing more we have gone through excess SLR and we have diverted. And through this diversion, our CD ratio has gone up from 66% to 76%. And this will fetch additional 2% to 2.5% additional NIM for us against the average yields of the investments. And in the meantime, we have reduced our modified duration of securities to 1.29. And over a period of time, we will reduce to 1.10, so that there will not be any additional depreciation from the investment point of view. As of now, we have around 5% to 6% or 6% to 7% of the excess SLR is there, that we can able to move further towards the increasing CD ratio, that we are going to do in the second half of this year. The third point is Agriculture. As you are aware that it is correct that Agriculture is slightly difficult. And our portfolio, earlier 2 years back, it was more than 20% because of the divergence where we have earlier more importance was given for CC or KCC. Now this year, the presentation also we have given Agriculture investment has grown by 50% to 55%, and the CC has not at all grown. So we -- the strategy is a strategy we have taken that KCC to agriculture investment and allied activities that more kind of -- it's an industrial area, MSME sector, food processing or rural godowns are there. It is a good return also as well as there is risk is -- not much like monsoon issues are -- may not be there like KCCs. So the fourth point is education. Our education loan has grown basically mainly for outstation students, that not for these -- smaller loans is very less. And most of the loans are about INR 20 lakhs, INR 25 lakhs, like that. These all are fully covered by mortgages, and it is very capable people, they have taken the education loan. And that is why our -- you can see that NPA under education loan is very small amount. So this portfolio is built up. And this portfolio is built up through the department and verticals are there, educational loan or housing loan that it is a job of the vertical has to see that the NPA or slippage management of the particular vertical. So in going -- in future also, this is the area where we are more concentrating on, slippage management as well as SMA 1 and 2 management. As from the figure, it shows it has proved that our slippage space management as well as SMA management is comparatively good. I think that -- if any other points..

Sir, I have just 2 small other questions. One is that loan acquired through assignment of INR 2,294 crores where we say the tangible security coverage is 28.79%. So what kind of loan this has been acquired, where 11% the originator is holding and 89% we are holding? So -- and with a tangible security coverage of only 28.79%. So what is the -- I mean, this -- what kind of loan are? And secondly, on income tax front, I have got a query of INR 348 crores provided against INR 201 crores in the last quarter. And this is also net of the DTA and write-back. If somebody can explain me that about INR 348 crores, how did we arrive at this picture? So these 2 more questions if you can answer, sir.

So this first question, what you have read and we have not acquired any loans according to -- this actually, we have only sold off some IBPCs at...

So sir, report number -- note #13, loan acquired through assignment, INR 2,294 crores where the tangible security is only 28.79%. I don't know, I may be wrong, but I read this note ...

We would request to please come back in the queue...

No, no, this -- my question is already on.

Okay. So this [indiscernible]. So that, you can explain that.

Yes. These are the -- actually the full buyout which we have done during the quarter and half year. And actually, these are the -- some of the pools are united under the gold loan category also, and these are the mainly secured category only. But a few of the loans, pool, which you have acquired under the education loan and others, which are unsecured in nature, those are appearing under that particular category. Earlier also, we have acquired those type of assets and the repayment in those accounts are quite satisfactory. And we are not facing any problem in this type of accounts.

Regarding income tax liability, I would like to share with you that we have not provided for any current income tax liability as that -- as per the competition on cap, there is no tech update because we are having the carryforward losses. What is that INR 348 crores. This is on account of DTA reversal. So we were having that DTA on the losses that roughly INR 280 crores, that we have raised. And you know that when we reverse the DTA, it will improve your CRAR also. And rest is that because of reversal of provision, we have revised the corresponding DTA. So there is no current income tax liability provision in respect of the overall income liability what we have shown.

[Operator Instructions] I now request Mr. Mahesh M.B. from Kotak Securities.

Just if you could just kind of give us some color on what is the kind of corporate recoveries that you are expecting? On the corporate NPL book, sorry.

See, corporate recoveries, we are expecting more from our NARCL transfer because a lot of accounts are lined up because of this final bids [indiscernible] finalized and the entire process will be completed by the end of this month. And as regards to other NCLT accounts, there are DSKDL and then IL&FS, all these accounts are also there. As such, our corporate NPA portfolio as it is up, it is very less remained now in NPA category. But whatever is there in -- either NCLT and for -- ready for transfer of NARCL. So amount of around INR 500 crores we expect in this current remaining Q2 last [indiscernible].

Sorry, in terms of NARCL, you're saying the full -- I mean what is the status in the sense, how much of the accounts are expected to be transferred now?

Actually, the 20 accounts are shortlisted amounting to INR 3,000 crores. But the final bids, confirmed bids are received in case of 2 accounts at present. So immediately by the end of this month, 2 accounts will be transferred, that will be -- the actual recovery will be around INR 160 crores. Balance, of course, these are all written-off accounts, so it will go to P&L directly.

And the other one, you said the combined total, you said was INR 500 crore impact at the P&L front, is it?

Yes, yes, yes.

The next question is from the line of Deepak Poddar from Sapphire Capital.

Congratulations for the good set of numbers. So I just wanted to understand more on the credit cost. Now your PCR is 96%, even your gross NPA is declining. But your, I think, credit cost is still at 1.6%, right? So how do we see that stabilizing going forward, yes?

So this credit cost actually, INR 587 crore credit provision we have made. This is 2 components there. One is new slippages as well as the existing NPAs. So our net NPA ratio was, earlier it was 0.88%. It's just for bringing down to 0.68%, additional provision of around INR 250 crore to INR 300 crore provision we have made. So once this net NPA is coming down, our estimate there is it has to come below 0.5%. That is what we are expecting that. So once it has come to this level, then further provision requirement for bringing down the net NPA, the additional requirement will not be there. And in the meantime, formally we are trying for further reduction of the slippages also. And SMA 2 also -- SMA 1 and 2 also we are under close monetary. So then this provision coverage -- provision will come down. Once the real provision for addition is this year, this quarter, it was INR 597 crores. And we are providing 100% provision we are making for this. That is the reason. In reality, as per RBI norms, it may not be required, only maybe INR 100 crores, INR 150 crores is sufficient. So we are giving 100% provision and bringing down this, that is why credit cost is high. Real credit cost is not even, I think, 0.4% to 0.5% may come in the present scenario. And in future also, is 0.35% to 0.4% credit cost will continue.

So I understood that. So this INR 250 crores to INR 300 crores of additional provisioning -- so you're targeting to reduce a net NPA to below 0.5%. So this additional provision will continue only for a couple of next quarters, right, then your net NPA will fall below 0.5%.

Correct. Correct. Yes.

Hello?

Yes, yes.

Okay. So from fourth quarter onwards, is it safe to assume a credit cost of 0.5%, I mean, if you subtract this INR 300 crores, so the remaining is about INR 250 crores, INR 300 crores, right?

Correct, correct. Another 1 or 2 quarters, it is likely it will continue, then the credit cost will come below -- definitely, it will come below 1% definitely.

Below 1%, right? That would be a stabilized level of your credit cost.

Yes, yes, yes.

We move to the next question from the line of Prabal Gandhi from AMBIT Capital.

Sir, my question is on the borrowing side. Can you highlight what is the SLR currently that's building the balance sheet?

We are holding excess SLR of roughly INR 18,000 crores. And out of that, we have taken the borrowing. And if you see the borrowing cost is roughly 5%. And if you want to take the term deposit at present, that would cost more than 6%. So we have taken a conscious decision and we have switched to the borrowing. And you know that these borrowing is against the SLR securities. And taking on average 5%, giving 8%, it is giving the NIM more than 3%. So that was the conscious decision taken by the bank to increase the borrowing.

And these borrowings are overnight so it has to be rolled over? Or what is the tenure of these borrowings?

These are the -- mostly -- these are the overnight borrowings. And every day, we have to -- we are rolling it.

Okay. And so out of -- so the INR 18,000 crores is the excess SLR and you would also be dipping into some part of the mandatory SLR under [indiscernible]. Are we doing that?

No, no, no. Mandatory SLR, this is the -- we are taking borrowing against the excess SLR.

Understood. Sir, second question is on order fund. So [indiscernible] mentioned that the growth was driven by the utilization of [indiscernible] and going ahead it could slow down. So does that mean we are not sanctioning much on -- much of the proposals on the corporate side? Are we actively sanctioning corporate proposals? Or have we -- or are we restraining ourselves from them?

No, no, it was not said in that reference. This quarter, our corporate credit growth is in the range of around 35% to 36%. So that is quite a high growth rate. Corporate, we are targeting to grow by 20%, 22%. It will be a year-on-year basis, we will continue to grow. It is not that we are not targeting the Corporate also. But if you want to have a proper mix of RAM and Corporate, which is our target to maintain at around 40% to 43% of the Corporate and remaining in the RAM sector. So that way we are growing, and we'll continue to grow on the corporate side also.

And sir, which are the segments within the corporate that you have used most confident on currently?

Certainly, pharma, I think this is one of the segment. And we are also looking to the sectors where there is a good exports, which is well supported with the countries. So as of now, if you see it like on the corporate side, we are actually looking at is the -- on the good quality infra also, then your second, pharma. And some of the industries, even in textile, which are doing and having good exports. So I think these 5, 6 sectors we are looking to and will continue to support this sector while continuing you must you have heard our MD [Foreign Language] also that on the retail loan book, we have reduced our rate of interest. So combining both we would like to continue in the range of, say, 20% to 25%, 24% range of the growth in the segment.

Understood. And sir, just on the CapEx bit, so -- so the proposals that we are seeing, are they more into the greenfield side or they are still on the brownfield side, which is where the CapEx has been driven?

Yes, it is continuing both on that because there are certain -- as you see today, the EV also is coming very well as an economic green projects. So we are having both on the retail side also. And if you see the CapEx on the corporate side. So not only the brownfield or the greenfield, but what we are looking at is the prospect of that particular segment or the industry and where actually they are selling. And you may see actually, our, this presentation. So if you see AA and A. If you see there is a good increase, that itself gives a good clue that the bank is very much selective on choosing the client and going forward. So what we are looking at, yes, industry analysis and all it is there with the bank. But that even within that, we are having some more parameters to look into and then expect into those lines, whether it can be greenfield or maybe a brownfield.

The next question is from the line of [ Mahrukh Adajania ] from [indiscernible].

Sir, my question is on the CD ratio. So it's 76%. How far -- how much higher can it go from here? What is your comfort level? Because at the end of the day, CD ratio depends on management comfort level. But what I have seen historically is that state banks are comfortable with 76%, 77% CD ratios, whereas private banks probably because they have a higher Tier 1 are comfortable with 85%, 86%, maybe even 87%. So where do you stand on your opinion on the CD ratio? That's my first question, and then I'll have more questions.

I think we can go up to 80% CD ratio now.

Okay. So until [ 84% ], you will not have a big pressure on growing your deposits or offering very high rates, right? Because you still have leeway to liquidate your existing investments or borrow against them.

Yes.

So you are comfortable on deposits. You want to -- I mean, when do you -- when do you think will the deposit tightness start hitting you?

No, another 2% to 3%, definitely, we can go for increasing the CD ratio. And we have not raised any CDs or any bulk deposits or any differential rates. So what we -- our strategy is to first build up assets, then we will go for raising resources if it is required. As far as our -- excess SLR is already there, excess SLR of INR 17,000 rest INR 18,000 crores is there. So that is sufficient for us to reach that 80% CD ratio.

And actually, it is the trade-off between the returns on the either of the side, okay? Now we are coming directly like whether what time we'll be resorting on the high rates or nothing. It is actually not like that, let me put, the bank itself is now expanding. So almost some 60 to 70 branches bank has opened. And now going forward, we do have a plan of around 150 to 200 branches to open, like the new format of digital banking units, which yesterday, you would have seen, Honorable. PM. So we are feeling that we are entering into the new territories. And there also, we are targeting both on the retail side, retail means both on asset and liability side. Now coming to the CASA, that is also adding weight. So it is not like on only 1 sector or 1 location or a 1 cluster, which we are specific to and then we may face issue. So we are also trying to compensate because of the increase in rate, what portion is moving from CASA to fixed deposit side or maybe to other bank side. But then we are trying to build up our own base on the [ CASA ] side. So like continuing the range of, say, 54%, 55%, 56%, going forward as well, entering into the new territories. And then having the trend of that which option is better, whether it is from the investment side or the from the loan book side and where the profitability is protected.

Sure. And so given that your LDR can expand from here. Your margins could continue to improve in the next few quarters?

The margin now itself, I think we have reached to -- 3.55%. I think it is comparatively one of the best in margins. It may be difficult to increase too much because 3.5% -- it will be around 3.5%. It may be here and there, maybe 10 to 15 basis points it may change.

Got it, sir. Got it. Got it. Okay. And sir, what about the quality of MSME loans? Any particular feedback you have on ECLGS or on any segment of MSME?

Yes. MSME, we are containing our slippages in MSME. Quality is improving. And this ECGL also is performing well. It's not bad barring some few exceptions.

What was your total cumulative slippage from ECL, yes?

Total slippage itself is INR 594 crores...

[indiscernible] specific, there we have given. So actually, her point is that what is your feel wherever you have given ECLGS. If I'm not wrong, that is a feel she...

Yes.

Actually, that is we are looking into the book, both from the credit monitoring and from our risk credit side, both the departments are looking into it. So we have not seen as such any pressure coming in on the corporate side or maybe the MSME where the ECLGS is given and some signs of stress. Yes, sometimes it moves to SMA 0, but then maybe the very good regular follow-up. So there is a roll forward, sometime it rollback, but that more or less, the position is same, but then not moving to slippages more or less, I think that is not an issue.

The next question is from the line of Suraj Das from B&K Securities.

Couple of questions. First question is on the restructuring slide. So this INR 4,845 crores restructuring number, is this inclusive of everything. I mean, the previous CDR, SDR and LDR MSME restructuring number as well because your -- the restructuring of 1.0 and 2.0, the sum is not equal to INR 4,845 crores.

Yes, it includes all restructured group, entire restructure group.

Okay. And sir, there -- if I see the agriculture and corporate restructuring has increased on a Q-o-Q basis. So sir, I mean, if you can explain the rationale behind it? -- why this number have increased?

Yes. Margin -- absolutely we can say, actually, it's -- restructuring is done only purely based on the natural calamity and that too at a district level. Some of the centers wherever the restructuring has been done, but that is a very marginal increase in there in the agriculture sector. In corporate, few accounts where the DCCO has been extended. And if the DCCOs are extended for non-infra for a period of 2 years and 1 year -- more than 1 year and for infra more than 2 years, then it amounts to restructured accounts though it is a performing asset, and it is only purely because of the extension of the DCCO.

Okay. Okay. Understood. And the second question would be, sir, if you can provide the loan mix by benchmark, how much would be your EBLR linked, how much MCLR and how much fixed rate? And what would be the total quantum of ECLGS number?

Okay. That we will provide that.

What I'd like to clarify 1 answer to the 3 questions. Regarding the agriculture NPA and then the digital trade -- the digital journey and compliances level and let us question on restructuring agriculture. All put together, there is one good thing is happening across the country. Apart from the digital level is happening at the individual bank level, Government of India has initiated JanSamarth Portal, wherein 13 of the major government [ operated ] schemes have been uploaded, that end-to-end, from the application to the process, sanction, disbursement and close everything going to be the digital. And KCCs now, they are giving a topmost priority, where most of the problems are living, I mean there because of the, you can say, credit culture or labor uproar that happened in the past, due to many political reasons or increase of monsoon, whatever you say. But going forward, the digitalization is going to play a very big answer for all, bringing the most credit culture, ease of doing business. And above all, the TAD will also come down, and there is some percentage of multiplication of loan is happening in the crop loan level by these mini banks and also corporate societies. All these things will go, and there will be a healthy agricultural, I mean, growth will be there in the country. This is what I would like to make clarification.

Suraj Das, have you completed your questions?

Yes.

We move to the next question from the line of Rohan Mandora from Equirus.

Sir, on the RAM portfolio, just wanted to understand the good that we are seeing. So what is the origination channel here? Is it [indiscernible] channel? And also, how are we pricing these loans vis-à-vis the market leaders in terms of the market share than others? So that was the first question. And the second is that you agreed to the fact that on the agri side, we are targeting agri businesses here. So the new proposals that we are getting in the agri businesses, are these fresh proposals or are they takeover from other banks? And if so, like what kind of banks or other lenders are you targeting in this segment?

First -- the first is in pricing, he was saying RAM pricing.

[indiscernible] channel and pricing, yes. [indiscernible] and pricing.

Yes. Channel, we use all the channels for mobilization of the RAM sector, whether it is the DSA we have in place. Branch, definitely, we have the branch. Aggregator model also we follow. So there are various models which we follow for channelizing the business. But as far as the rate of interest is concerned for the RAM sector, if you see that recently, we have reduced our housing loan rate to the lowest in the industry, that we are at present at 8%. And for personal loan also, we have reduced to 8.90%. This is also the lowest in the industry. Both these are the rate revisions have been done. In spite of the increasing rate rising scenario, we have reduced the rate only to attract good quality of assets, good quality of customers, which we can onboard. That is our target for raising the RAM sector advances. -- we could just have somebody wants...

Yes, yes. In case of agriculture sector, we are focusing for the investment credit and particularly food processing, then pack house, grading or cold storages. And there is not any takeover from the other banks where I find out the fresh candidates and fresh customers we are taking onboard in our bank.

Okay. So this could be fresh entries or so which are getting set up that we will be funding in this case. That would be correct understanding here?

Yes.

Okay, sure. And on the first reply in terms of the origination channel. So just want to check on the DSA side, like is it a predominant origination channel? And if so, are the payouts higher? And second, again, in terms of the pricing that we talked about. So just want to understand the customer segment, which is being targeted, is it predominantly salary segment? Or is it across the board in terms of the customer payment in the RAM?

Yes, I will tell that -- yes, yes, yes. DSA, we have the DSA commission is at par with the industry level. We cannot have a lower DSA commission payout and higher DSA commission payout. So we -- our DSA commission is at par with the industry level. As far as the rate of interest is concerned for the RAM segment, our -- we have recently launched that scheme for the defense, we have given the best possible rate, that is the 8%. And as well as the salaried customer with some PSU or good organizations where they are working, there also, we have given the rate of interest. In addition to that, general rate of 8% has been given for CIBIL score of 800-plus, [ PSU ] score of 800-plus, so they're the very good assets, which we can build, that is the target customer for us.

And then lastly, on the corporate sanctions, are these consortium-linked sanction? Or are these overall stand-alone function that the bank is giving in the A&W rated segment?

Maximum, it is a consortium only. I can say that almost 65%, 70%. And the rest of the things may be, somewhere 1 or 2 bankers and where we are sold.

The next question is from the line of Rakesh Kumar from Systematix Shares.

So Firstly, just a question on this excess SLR thing. So basically, like we are lending the excess SLR as such, using through the RBI borrowing window. First, you said, sir, I think that our borrowing cost is around 5%. So just wanted to understand which -- under which window we are taking this borrowing from RBI as 5%?

We have taken through [indiscernible]. And if you see when I'm talking about average borrowing cost is 5%, I'm taking the half year ended. So initially that you see the borrowing cost was 4% plus. And now recently, it has increased to 6%. So if you see overall, the borrowing cost was 5%. And whereas that term deposit, now it is crossing 6.50% or more. So we have taken this big opportunity where we did not go for the full deposit and we resorted to the borrowing.

Understood that. So your incremental spread by lending excess SLR would not be 3%, correct? As you said on the call just now.

Combined borrowing, all borrowing costs...

[indiscernible] borrowing means it is not only excess SLR. There are some SIDBI borrowing, there are other NSP borrowing, that type of borrowing also is there.

Recently, we have taken borrowing from SIDBI, which is 4.17%. So we are taking [indiscernible].

But you just mentioned in your response to some other question that you're taking from RBI at this rate and you are maintaining a spread of 3%, so I was a little surprised.

Actually, he was actually talking about the 6 months spread, number one. Number two, on bouquet of the borrowings, not only the RBI specific to the comment.

[indiscernible] sort of you can consider it.

Correct. Correct. Now it is understood, sir. Secondly, on this -- the tenure of the -- your borrowing, obviously, it is like it's an overnight thing. But on the lending side, what is the -- like where you are using this borrowing through the excess SLRs like -- and what is the tenure there?

That is a different tenure. There is 1 month MCLR also is there. Some cases, it is overnight also is there. And I think that the borrowing is not only overnight. It is a term repo also is that, correct? So term repo is up to 45 days is there. So it's a combination of borrowing, not only fully I think overnight borrowing might not be more than INR 2,000 crores, INR 2,500 crores. And in no other borrowing windows, we have not utilized, that also kept outside actually.

No. So basically, your always -- this NDTL position, then your excess SLR position and then borrowing position and the lending position, all the asset liability maturities should be matched. So first of all, like if you can tell us what is the average maturity period that you have for your NDTL -- and because if your NDTL keeps on rising, which will happen in the natural course of process, then your excess SLR will actually come down. Then your borrowings should come down, then you have to wind up those loans which you have given against these borrowings which you have taken from the RBI. So if you can give some clarity that what is the average maturity you are maintaining throughout so that because the flow is coming from NDTL. So if you can help us understand that, that would be helpful.

Our CFO will give you the details, the ALM statements of this borrowing as well as where it is utilized. He will provide you that.

The next question is from the line of Pushkar from Joindre.

Sir, my question is I actually got disconnected in the middle. How much part of the book is fixed and floating when you give a number?

Fixed and floating rate of interest in credit book.

We don't have any fixed rate of interest. Our entire portfolio is floating. They are linked to either repo linked or the MCLR-based lending, which we are doing. We don't have any fixed rate...

[indiscernible]

Pushkar, your voice is breaking up in between.

Hello?

Sir, your voice is breaking up in between.

[indiscernible]

No, sir, it's still not clear. I would request you to please e-mail your queries. We'll have to move to the next question, which is from the line of [ Jay Mundra ] from B&K Securities.

Sir, if you can explain the formula for your interest rate, so -- and this 30 basis point cut that you have effected 1, 2 days prior only. What have you changed in the formula? And just the -- I mean, if you can first tell us the 590 repo and then what is the business spread or credit risk for mortgage and how that has changed in the last few days?

See, the interest rate has a simple formula. One is the marginal cost of lending that is we're having mainly for the corporate and other borrowers, agriculture borrowers. But for [indiscernible] borrower, we -- it is a repo-linked. So it is 5.9% is the repo and it is linked to that rate. As far as the cost of the lending rate pricing is done, it is mainly depending upon the business spread and the credit risk. Credit risk in case of the mortgage loan is less than 5%. And if you see my cost of deposits, our cost of fund is in the range of 3.31% to 3.50%. So comfortably, I have a margin over that around 4.5%. If I remove my cost of the fund, other establishment costs and all, I am very comfortable for giving the 8% rate of interest to my borrower because at the same time, if you see the marginal cost of lending, 1 year my -- 1 year MCLR is 7.80%. So still I have a spate of 20% over my MCLR cost, MCLR pricing. So I don't find any problem in giving this rate of interest. And that too is the segment specifically having the CIBIL score of more than 800 scores. So which are one of the best where the delinquency, I will say, even is less than 0.01%. So credit cost will be in the range of 0.01%. So this is -- 2 components are there. One is the profitability is one aspect and sit in the market competition is also there. If I have to compete in the market, then I have to offer one of the best rates. And since our cost of deposit is very low, so bank is capable enough to offer that type of pricing.

No. So, of course, sir, you have thought through, but what I was trying to understand that in the last few days, your cost of deposit would not have gone down, right? The incremental cost of deposit would not have gone down. So you would have reduced the credit risk premium or business risk premium. And 1 of these 2 helps to go down, so as to keep so as to bring down the overall cost lower. So what have you changed? Have you changed the credit risk premium? Or have you changed the...

Diwali Dhamaka. It is a business strategy. So we have changed our business strategic spread, which we call the BSS, that we have changed and our rates have come down.

And So how frequently can you change this, sir? So let's say, Diwali gets over, over the last...

Yes, yes. It's -- this rate is valid until 31st January 2023. The entire Diwali, then Christmas, all this will be covered.

And how frequently can you change, sir, for -- I mean, in a calendar year or in a fiscal year?

Yes, BSS is case-to-case basis. On portfolio level, we can take a decision. It's a business strategic spread. So it can be -- that call can be taken by banks at any point of time.

Yes. [indiscernible], just to supplement you because you wanted to know. It is not only related to 1 product. The bank strategically is also viewing a customer relationship from 1:4, okay. Now certainly, the bank is growing up various segments for the salary accounts and many others you know the PPF and all, which is not in that presentation. But then around INR 2 lakhs, we have targeted and more than 60% we have covered it. So what we are looking at this project, not in isolation, per se, that matching only everything from neck and neck. But then it is a relationship. And like the CIBIL score of 800 and above what Mr. Rudra has told. So like it is in a total bouquet of services on which the rate is also offered and team field below is approached with the customers and then look into the total wallet of the share.

Right. So I was just trying to understand the...

Sorry to interrupt sir, we will have to restrict your question here. For further questions, you may please e-mail your queries. Due to time constraint, that was the last question for today. I would now like to hand the conference over to Shri. A.S. Rajeev for closing comments.

I'm Vijayakumar here, Executive Director. On behalf of the [ Mahabank ] Parivar, Bank of Maharashtra, we convey our sincere thanks to all the analysts who have participated in this con call today. You have been a source of support to us for the quarter after quarter. you must have observed that Bank of Maharashtra has been doing extremely well in terms of the growth over the last 3 years and particularly for the last 8 quarters. And with always support and guidance and your analytical skill, which helps to the market to push our prices also in the market. And on behalf of the Bank of Maharashtra, we convey our since thanks to you. Besides we are concentrating in the growth, we also want to be #1 in terms of the digital, compliance, integrity. This is what now our focus. We want to be more ethical banking. And once again, I convey my sincere thanks on behalf of the Bank of Maharashtra. Wish you Happy Diwali.

Thank you very much. On behalf of Bank of Maharashtra, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.