Bank of Maharashtra (MAHABANK) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Bank of Maharashtra Q3 and 9M FY '23 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. We have with us from the management, Sri. A. S. Rajeev, Managing Director and Chief Executive Officer; Sri. A. B. Vijayakumar, Executive Director; Sri Asheesh Pandey, Executive Director; and all General Managers of the bank. I now hand the conference over to Sri. A. S. Rajeev. Thank you. And over to you, sir.

Thank you, ma'am, and good afternoon to all. Today, we have adopted our -- reviewed the results [ this ] morning, and we would like to share results of the Q3 as well as the 9 months ended 31/12/'22 to all of you as you are the main -- one of the main stakeholders of the bank. And we would like to have your suggestions, if any, in future also. Whatever the corrections have to be made, that also we are ready to do that. Just I'll briefly explain the results of the bank at a glance. As you've seen that interest rates in the system has increased by around 200 to 210 basis points during the 9 months period, and more particularly, 50 to 60 basis points in case of deposits for the current quarter. Same way the advances, lending rates, also, most of the banks are increased. We have also increased the lending rate. At present, our MCLR rate is around 8.30% or 8.20% level. And this is the median of the banking system. And we expect that the rates are slightly another -- as given by the -- the indication given by the RBI Governor 2, 3 days back, there may be chances of that interest rates may be either in the same level or slightly it will increase by another 25 basis points. And thereafter, there may be chances of reducing the interest rates. That is the indication that's given. Keeping that interest rates and economy in mind and our results, the total business for the last quarter has increased by around 16 percentage to INR 3,65,000 crores and total deposits increased by 12% to INR 2,08,000 crores. Gross advances increased by 22% to INR 1,57,000 crores. And CD ratio is -- at present is 75%, with an indication that by March we will be able to increase CD ratio by another 1 to 2 basis points -- 200 basis points, that is the 77 to 78 level. Gross NPA declined to 2.94% and net NPA reduced to 0.47%. Provision coverage ratio improved to 97%. And as we are in profitability, the net profit has increased by 139% to INR 775 crores as against INR 325 crores corresponding last quarter of previous year. Operating profit has increased by 36% to INR 1,580 crores as against INR 1,162 crores last corresponding period. Net interest income has increased by 30% and net interest margin improved 3.6%. Cost-to-income ratio has improved to 39.69%, which is below 40% for the past 2, 3 quarters, and we will able to continue the same level. ROA improved to 1.30% as against 0.60%. Return of equity has improved to 25% and CRAR improved to 17.53%, which is Tier 1 is 13.47%. As you're aware that the current CRAR, this current year's profit is not yet added. If we add the current year's profit, the CRAR may be around 19.21%. So earlier, COVID provisions, whatever, we have provided INR 1,200 crores, as it is we have kept it and it is not considered for either capital adequacy purpose or for provisioning purpose. So for profitability for the 9 months, net profit is INR 1,762 crores as against INR 796 crores corresponding 9 months last year. Operating profit also shown a growth of 16% to reach to INR 4,244 crores. Net interest income grown by 25% year-on-year. Fee-based income increased by 8% to INR 927 crores. Cost-to-income for -- cost-to-income ratio is 39.48% for 9 months. Return on assets for full year -- is 1.02% for 9 months as against 0.52% for 9 months ended 31/12/'21. Return of equity has also improved to 18.50% as against 11% for the last year. So during the last quarter, we have added 1.2 million customers and 62 branches we have opened to reach to 540 districts as of now. And we have recruited around 1,200 employees in the process -- in the process because just other things are over -- this is basically for, keep it in mind, the new branches opening and retirement and other wastages. As far as SMA is concerned, SMA is well under control, below 2.5% of the total assets, including SMA 1 and 2. So these are the main highlights what we wanted to share with you. And regarding the digital area, I will request our ED staff what are the initiatives we have taken for past 1 quarter. Earlier, we have already shared with you. And regarding internal control and other areas where -- our other ED, Mr. Vijayakumar, is there, he will share.

Sir, I'm sorry to interrupt. Could you please repeat your last line? Sir, your voice broke.

Yes. Our digital area, there are good improvement during the last quarter. That will be shared by our -- Mr. Pandey. He is looking after the digital area. And Sri. Vijayakumar is looking after the entire internal control system of the bank and other areas, so he will share the major points with you. Afterwards, we'll have the question answer session. It's okay, madam?

Yes, sir, this is fine. Thank you.

And over to Mr. Pandey.

Yes. Thank you. Thank you, sir. As already the brief, all our important stakeholders, you have got on the bank's performance in the business. So we are inching towards the bettering ourselves quarter-to-quarter. We are just making all our efforts and endeavors in that line. Certainly, the technological intervention and the digital is going to play 2 key role, as we said earlier and we emphasize always. The first is sustainability of the business growth, that is quality as well as the percentage or maybe the amount wise. The second one important thing is the embedded compliance. So you keep on having a well complied culture and other things using the technology. So as you see that the last quarter we gave and then this quarter also there is a slide on it, 2 slides are there, which shows the digital footprints and the -- so key growth, if I say, UPI/BHIM users from 2.49 million to 2.53 million. So it is consistent. And transaction wise also from 326 million to 352 million. Digital transactions, which were 96.34% moved to 96.66 percentage. So similarly, Internet banking users is around -- moved from 21.73 lakhs to 23 lakhs; mobile banking, 21.31 lakhs to 22.76 lakhs. WhatsApp is 2.35 lakhs to 3.15 lakhs. So QR merchant also we take, 22.30 lakhs to 28.49 lakhs transactions are happening. So what we indicated last time also and we are very much cautious and also very much progressive on the IT and digital interventions. So UPI on some of the identified things where we wanted to be more hold. And also, we analyze the cost is better when we move from CapEx to -- sorry, OpEx to CapEx. So similarly, you would have seen the various -- the RFPs which are floated for last 3 to 4 months' time. So UPI already one of the best player in the market has come in, and we have started and we are trying to close this project by March. The robotic process automation, again, one of the bank, public sector, 62 processes in which 48 are high complexities. So already, it is awarded and one of the best of the -- one of the best of the world, the player, which is -- now we can very well clear, UiPath has been intended. And we have started. So we are planning 5 to 6 or 7 processes delivery per month. So it is going to help me on 3 things. As we said, the first is the business, which is the customer expectations and convenience, the more business. The second is the compliance. And third is ease to my staff on ease of banking. So the third is data we have announced we have already completed, and the bank is well complied and we are already -- actually, it is working for -- last 1, 1.5 months we are using it for various our returns and other things. The bank is on the private cloud, which is Nakshatra. And 3 to 4 cybersecurity solutions are implemented and 3 to 4 are in process even now. So already bank is -- on the asset, liability and the services side has planned around 3 to 5 STP journeys going forward. And similarly, the fintech onboarding is also poised for. So when I say the upgradations, so the bank has also having the advisers from IIT Mumbai and the other around. So we are having the upgradations of software, hardware. UPI switch already -- NEFT already we have done it, FI Gateway. So in totality, we have started with the 4 COEs as of now, one center of excellence in database, another on CBS with TCS, another cybersecurity with Inspira Analytics. And now we are thinking of on the recon side because it is very important to have some well-defined sort of frequencies within the day under reconciliation and the other things. So with this, I would only like to say that the -- on the business side, how to have -- to start with, say, 3% to 5% of the business occurring from the digital side, moving to around 15% to 20% for next 2 to 3 years' time. That is one. Secondly, the cost-to-income, certainly, that how the expenses with the change to digital systems, change to IT interventions or robotic process, automation, so all those things, how it can be further made cost conscious. And third is the customer expectation how to be met with the technology. So these 3, 4 key areas which are going to support the bank in -- to all the stakeholders, because customer is the important stakeholder. So on a customer service and better journeys. The staff. Certainly, because it is the most important -- ease of doing business is there and they are deployed for the more better, prudent and productive branches rather than the repetitive complexities. And the third is the regulator. So more and more intervention you make in the compliance will enhance the bank to achieve as we progress with the business. So with this, I leave it to...

Yes. Good evening to all of you. Welcome to this analyst meet. I am Vijayakumar, Executive Director. As you all know, Bank of Maharashtra being the premier public sector bank, we have been doing extremely good in the last several quarters. At the same time, we are constantly working in line with the national priority, upkeeping our technology and with a focus of customer-centric activities. While doing so, we are focusing on improving and controlling internal control measures, compliances and risk management. In a nutshell, I would like to say from our side, we are transforming ourselves from government kamachari to karmayogi. This is what I would like to say at the initial. We'll take up questions as and when it comes, not only the business, any other improvements, because quite often the question comes the sustainability, and that's why I made some remarks on that point. Thank you very much. Now we are ready to take on the questions.

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

I have a few questions and observations, and I request the moderator to please do not cut me unless I complete at least those 2, 3 questions and some observations. Now I start. Sir -- my compliments to you, sir, the MD and CEO and both the EDs and the entire team of the top management of the bank for the fantastic performance quarter after quarter. And this quarter, your profit before tax is touching to almost INR 1,000 crores for a quarter. On other parameters also if you see the -- I think one of the best net NPA figure in, I think, the entire public sector bank of 0.47. Even the gross NPAs are under very much control. Slippages are under control. Your NIM is growing quarter after quarter. I think 3.6% or something even in this quarter. And the asset quality has been improved to that extent of, I think, one of the highest provision again of almost about -- how much? -- 97%. So my compliments to you, sir. On all these parameters, I think, your bank, if one do not consider the size among the public sector bank -- which also is now almost INR 3,65,000 crores can be said as one of the best performing bank among the -- especially among the public sector bank. And it can match with any other private sector bank also. Sir, I have a few -- just a few observations and some questions. I would have liked to have some clarity on the calculation of the net worth at various places, in the results also, in the balance sheet. So like the net worth of INR 12,699 crores is said there in the results, point #7, 11, where if you add up the profit and everything, it doesn't come to that level. It is rather higher. So if you take the net worth of -- the equity of INR 6,730 crores and the reserves without the profits of this year of INR 5,577 crores, it becomes INR 12,307 crores. And if you take the profit of 3 quarters of INR 1,762 crores, it comes to INR 14,069 crores. But if you look at the balance sheet, again, there the reserves and surplus and capital if you add up, it is INR 15,644 crores, even, again, in your own note. So what I would like to -- like if somebody who has done the calculation of this net worth of the bank at various places, different this thing, if somebody can explain me or can send me the details a little later, also I don't mind about that. Sir, my second one is that the -- there was -- there is a SR. And I am asking a bit that -- I hope it is 100% provided for, INR 197 crores of this pending SR, note #12 4. And I would also like to know on the accounts acquired, INR 1,916 crores in this quarter with a tangible security of only 24.91%. So what kind of account these are, because the accountability of the person from whom you bought this account is, I think, about 10% or 11%, which he is holding. So I would like to have some clarity on this. And sir, on the -- if I look at the segment-wise results, then our treasury income has come down to INR 34 crores -- rather profit has come down to INR 34 crores as against INR 105 crores in the last quarter. And the wholesale book profit has gone to INR 676 crores against INR 487 crores, while the retail banking, it has again gone down to INR 280 crores against INR 326 crores. So if some explanation can be given that -- because of the provisioning or because of what -- because corporate book has just increased now in this quarter by 7%. But how much -- why this anomaly in this segment-wise profitability I would like to know? I would like to compliment on CASA, which is, of course, going 52.5%, which is not less as compared to the other banks. But it has come down from 56.27% in the last quarter. So any specific reason for that if it can be explained? And going forward, where do we see the CASA to be, because it is the one which is giving you the maximum yield and maximum profit? I would also like to appreciate here that while the yield on advances has gone up to 8.28% from 7.81%, which is almost 19 plus 28 -- it's almost about 50 basis points, whereas the cost of funds have gone up only -- to 3.61% from 3.31%, that is only 30 basis points, which is another good point for the bank. So sir, some of these issues. And one on the provision for taxation, which has -- in spite of the profit going up, the taxes provision has come down to INR 223 crores from INR 348 crores in the last quarter. If time permits later, I would like to discuss something about the advances and the credit growth going forward.

I think as far as this -- regarding this network, we will give you the details, the workings to you. Mainly because of revaluation reserves and the other things maybe -- it may be -- because in some of the areas -- for example, share -- book value of the share. In some of the areas, revaluation reserves has to be reduced. And in case of capital adequacy also, we have to change that revaluation reserves, 55,000 only. So that maybe the reason. But our CFO will be in touch with you and give you -- regarding SR and other thing, as per the valuation, 100% provision we have made and there is no issue. Treasury yield has come down mainly because of the profit on sale of securities because of the increase in interest rates. Last quarter, only a small amount -- INR 20 crores to INR 30 crores was the -- treasury profit has come -- happened. And in case of other income, we have changed the accounting methodology also. Earlier -- commission on guarantees, under that thing, earlier it was on cash basis. This year onwards, we have converted to accrual basis. So the other income has come down by around INR 30 crores during the current year. And that is only accounting aspects. Regarding CASA, CASA is around 52.5%. Of course, you are well aware that in the highly increasing investment scenario, there is a shift from deposits -- term deposit shifting is there. But here, CASA we will be able -- we may be able to contain the CASA for CASA as it is at the rate of 52.5%. So generally, 3% to 4% government deposits and the corporate deposits are there generally because of the higher interest rates. Government deposits and corporate deposits we have shifted to term deposit. But otherwise, CASA rate as per 50% to 53% we will be able to continue in the coming -- going forward also. Regarding taxation for the next 2 to 3 years, the bank may not provide any tax. But however as a precaution, we have kept some DTA we have reversed and we have kept for some INR 200 crores, INR 300 crores because we have more than INR 15,000 crores to INR 20,000 crores loss created for the past 2 years, it is continuing in the books. So 2 to 3 years, taxation will not come. But we have kept some amount for taxation purpose for futuristic purpose. So otherwise, this can be considered as a profit also. So we will be in touch with you. And we will give you -- our CFO, Mr. Srivastava, will give you the detailed working on your net worth as well as other areas wherever -- regarding treasury also, we will be giving to you.

[Operator Instructions] We have the next question from the line of Sunny Agrawal from SBICAPS Securities Limited.

Sir, my first question pertains to the sector or corporates. From which sectors we are seeing a healthy credit demand for us? And in the current -- I mean rising interest rate scenario, where do we see NIM panning out, especially for the corporate on our corporate book? So that is the first question. And my second question pertains to the customer base. So I believe we will be -- we are adding a few customers on current account and saving account side. So if you can throw some light on what kind of customer or salary account we are adding, especially in a hypercompetitive environment where everyone is chasing those CASA in the rising cost of deposit scenario?

So this first question is regarding corporates NIM. NIM of the corporates on an average [indiscernible] percent NIM we are getting from the corporate. And we have not gone...

I'm sorry to interrupt, sir. Sir, can you please begin again? I mean, like your voice broke a little bit.

So first question is regarding NIM on corporate book, and corporate book NIM is -- around 2.75% to 3% NIM from the corporate book. And so that yield is comparatively good. And we have not gone for any lower invest rate scenario, any of the accounts, we have not got for cases. So the average yield is good. And so that in current account and SB account -- mainly the salary accounts and other things, we are getting state-wide -- for example -- one example I can tell you that we are having a tie-up with some of the state governments and other things, and their salary accounts as well as their loan accounts like your housing loan accounts like that we are getting. Plus, we are -- SME accounts is the major area of our source. That is, we are having so many state governments. And we are continuing to -- our team is very strong -- government department team in Delhi as well as in Mumbai and different states -- head of the states, we -- our team is very strong. It is a strong force of around -- 250 to 300 people are working for that -- so for this. That is a -- a major area of benefit is coming from current account and SB account. So these are mainly SME accounts and corporate accounts as well as the salary accounts.

Sir, just -- so which are the sectors from where we are seeing a healthy rate demand -- or loan demand? Which are the industries which we are planning to land over the next 12 to 18 months?

I think our GM Credit will give you that.

We are seeing good demand from all the sectors, be it infra, manufacturing. So there is no dearth of good proposals.

We have the next question from the line of M.B. Mahesh from Kotak Securities.

Sir, could you give us an update on the NARCL and also if there's been any further traction on recoveries and upgrades on the corporate side, sir?

Yes. Our GM Recovery will give you that.

Yes. This NARCL, as you know, that shortlisting has been done. From our bank, 13 accounts are already shortlisted, around INR 2,700 crores. Now that guarantee issue is also resolved because the government has given the approval about these guarantees of SR. And now that work of actual transferring the account to NARCL has been started. So we expect that within this week the first account will be transferred to NARCL. And then the things will move. And...

Yes. And visibility of recovery, sir, other than the...

Recovery, sir, as you already noticed that we are at the lowest GNPA and NNPA. Now it's a challenge to maintain that level, below 3% and below 5.5%. So recoveries in this quarter, we expect at least INR 500 crores recovery in write-off account and almost equivalent reduction in the NPAs.

We have the next question from the line of Sridhar Sivaram from Enam Asset Management Company.

Yes. Sir, my question is on the credit cost and the provisioning. For a bank which has 97% coverage and more than INR 1,000 crores of provisioning, the first 9 months credit cost is 1.6%. And even for the third quarter, it is 1 point almost 4. So some guidance on provisioning going forward? We've seen credit costs coming off for many of the other PSU banks. You've maybe prudently continued to provide very high. But if you could help us with some guidance on how to look at it for the next year?

So credit cost, we expect, sir, it come down to 1% by next year. So this is -- 1.4%, this come basically because for -- a small amount is utilized for reducing the net NPA ratio because earlier -- last quarter, it was -- 0.68% was there. Now it has come to 0.47%. So now for going forward, we have reached our target below 0.5%. Now in and around -- this NPA will continue in the same level, 0.4% to 0.5% level. So there will not be any requirement for credit provisioning for reducing the net NPA. Otherwise, our addition is coming -- only INR 572 crores is the last quarter added, and the recovery is almost in the same level. So there will not be any additional credit -- credit provisioning requirement is not there. Actually, it is all maximum INR 100 crore or INR 120 crores something, a small amount only will come. So that will continue next year also. But we expect that -- up to 1% credit cost is always -- is better to keep it in mind.

Sir, INR 100 crores, INR 200 crores and 1%, there's almost INR 1,500 crores difference. So you're throwing numbers like 1% we want to keep. So the range you are talking is so wide. So it will help us if you can give some reasonable number. Because you'll do almost INR 2 lakh crores of, say, loan book next year. 1% would almost mean almost INR 2,000 crores. So should we expect around INR 1,000 crores of credit cost next year? Is that a reasonable number?

So that -- as a conservative way only I'm telling that 1% maximum.

Okay. That seems like a very conservative number, sir.

You can reduce the number. There is no problem. I am telling the outer limit.

And you have to see that we are keeping that NPA ratio 0.47%. And to bring down that ratio, you are required to weigh projects more than [ maximum ]. So that's why sir has taken that into consideration.

Okay. My other question is you mentioned about tax also, that you have substantial losses which are carry forward and you don't need to provide tax. So what sort of number should we model for next year? If you could help with some number that will help, because both the provisioning and the tax numbers are -- they are varying so much that it is very difficult to make any forward estimates. So if you could help us with some tax number. What should we -- what sort of -- what percentage or what absolute number should we keep for tax? Is INR 500 crores or INR 1,000 crores a reasonable number for the full year next year? Or some sort of guidance will help.

Yes. I'm CFO here. You see that whatever tax budget we have made, it is not the actual tax level. It is DTA level, sir. So we were having -- we have created DTA on the -- this allowed provision when we have written off from that. So we have reversed that DTA. And this DTA -- reversal of DTA will help us in improving CRAR during third quarter. And the profit cannot be added during the quarter. So one thing is that DTA reversal we are using for improving the CRAR during the quarter. Secondly is that we are holding INR 10,000 crores losses. And whatever our profit projection for 2 years, we don't expect that there will be any actual tax liabilities. Having said that, there may be some DTA reversal to improve the CRAR. That's all.

But should we expect about INR 500 crores of DTA reversal coming in next year?

It would be lower side.

It could be on lower side. Okay. That will help, sir.

We have the next question from the line of Jai Mundhra from B&K Securities.

Yes. Can you hear me?

Yes, sir. Please go ahead.

Sir, on wage revision hike, have you started providing on the bipartite? And what is the salary growth that you are estimating?

CFO here. That we are expecting 15% wage revision. And accordingly, INR 32 crores we have provided during this quarter.

November and December.

For 2 months.

So this INR 32 crores is for 2 months, right?

Right. Yes, yes.

At INR 16 crores per month, right? That is the math.

Right.

Okay. And secondly -- so this -- you said at 15% you have provided, right?

Yes.

Okay. And secondly, sir, on -- it looks like that the standard assets provisioning has been negative in third quarter. Is it because restructuring loans are slipping? Or otherwise, what would cause the standard assets negative provisioning because you are growing your assets reasonably well?

Some of the restructure, it has become the standard also. So for that, we need not to make the provision. And what in terms of restructure has slipped, in that case the restructuring will be written back. That is the case. Which have become standard now, it is no longer to provide restructuring provision. So accordingly, we have written back the restructuring provision.

Right. So maybe the first restructuring, these people -- the 2 years term has got over, right? And that is how they are turning back into standard.

Yes. Yes.

Right. Okay. And secondly -- and sir, on your loan mix by benchmark, sir, how much is repo-linked, how much is T-Bill and how much is MCLR? If you have that number for your loan book.

Out of the total loan book, 43% is our available -- I mean, repo-linked rate and remaining 57% is the MCLR-linked rate.

And sir, you would have something on gold, et cetera, also, right, which is fixed rate? Or that is like negligible?

See, that is linked to repo.

Okay. Gold loan also?

Yes, yes. Yes, actually, fixed we do not have as such in the portfolio.

Right. Okay. Sir, last question. Sir, on your EBLR, right -- so when you had started this EBLR, what was your reset time line? And can you change the reset time line for a customer who is on repo rate? So if someone who has taken a home loan at, let's say, repo plus spread and his reset was -- initially, what was the reset period was every month, every quarter. And has that been changed also?

Repo-linked rates are linked to the repo only. So whenever there is a change in the repo, the rate of interest undergoes a change.

But when would it be effective? So let's say, RBI 7 December...

As we said before, the same day it will be affected.

Even from the beginning of this regime, right, you would have almost immediate basis?

That is the basic concept of the repo-linked rate, sir. As the repo changes, we have to pass on the benefit to the customer.

No, no, I understand that, sir. What I was asking is, does this changes overnight to every customer? Or let us say...

It is applicable to all customers who are linked to repo-based lending.

We have the next question from the line of Deepak Poddar from Sapphire Capital.

A wonderful set of numbers, so many congratulations for that. Sir, I just wanted to know -- now you -- one point you mentioned was about INR 500 crores of recovery you are expecting from a written-off account, right, in this quarter itself. So ideally -- that effectively means that you will have that -- I mean, the neutral provisioning, right? I mean we are currently doing INR 500 crores per quarter, and if we can kind of recover that amount -- or you're planning to reduce the net NPA from that amount?

Yes, that recovery is -- in write-off account INR 500 crores is definite there. We expect in this Q4. With this -- of course, it will be useful for both ways, because that is direct profit, as you know. So how we use it for -- because the net NPA as we have reached to 0.47% level, so now it is I think the idealist level which we have to maintain over a period. So a lot depends upon how the slippages work. Accordingly, we'll plan.

Okay. Okay. So that effectively means our credit cost can be much below 1%, right, as we go into fourth quarter?

Yes, a lot depends, sir. What you said, we also expect. But we always are conservative.

Yes, of course, we should be conservative. Sure, I understood that point. And what sort of recovery we are expecting next year, FY '24?

FY '24, sir, again the 13 accounts are lined up with NARCL. So that will keep happening now in next year. And the big accounts also that is in NCLT, which is already NARCL-only bidding. So likewise some big accounts will come. So in the same line, we'll keep our GNPA and NNPA. And accordingly, we'll -- if you see that, my recovery and upgradation is our aim to be at least not more than, but least equal to the slippages.

Equal to the slippages. Okay. Understood. And my second question is around your growth. I mean, we were expecting around 24%, 25% growth this year, right? And we are, I mean, currently at 22%, right? So largely in line what we have been guiding.

Yes, yes. Our target is 20% to 22% growth under advances and 12% to 13% under deposits.

Okay. And what sort of growth we're looking next year?

Next year also around the 18% to 20% we are expecting next year. Because when the balance sheet size is increasing, definitely 1% to 2% growth rate may come.

We have the next question from the line of Mangesh Kulkarni from Almondz Global Securities.

Sir, I just wanted to know -- today's media, paper suggests that we are looking for fundraising and appointing the merchant banking. So what kind of time line we are looking? Will it be in the first quarter or second quarter of FY '24 or later on?

You have rightly heard about the capital raising plan of the Bank of Maharashtra. Recently, we have come with the RFP for selection of BRNM. And what we are planning that in first or second week of [ April ], we will hit the market. We intend to raise INR 1,000 crores capital.

Okay, sir. And in terms of our prudentially written-off accounts, what will be the quantum on which we will be sitting? And what kind of recovery targets we are looking from that?

Yes. Prudential write-off, we have already told that INR 500 crores we are expecting recovery in this quarter, Q4.

So what is your total outstanding quantum which is there...

Around INR 18,000 crores that quantum is.

So going forward also we will be looking similar kind of run rate in every quarter, around INR 500 crores...

So we keep our aim like that only.

Okay, sir. And slippages also you are guiding similar what -- equal to or this thing -- like upgrade and recovery will be equal to the slippages, right?

That is again our aim.

We have the next question from the line of Ashfaque Ahmed from A Squared Financial Services.

Many congratulations, MD sir, ED sirs and the vertical Heads for an amazingly and a consistent result. So I have -- 2 small questions I have. One is that -- especially, with regard to your MSME and retail portfolio, because in the last -- around more than a year, we have increased our footprint across India in a very calibrated way. So what sort of boost in the MSME and retail credit we are expecting because of the increase in our footprint across India, means majority -- in the interlines also? And the second is that since we have increased our footprint with additional zonal offices, additional branches, obviously, to boost the business, so -- and how do we see because of this the impact on the cost-to-income ratio?

MSME and retail as of now for the past 2 years we are growing at the level of 24% to 25%. And MSME, we are expecting around 20% to 22% growth rate in coming quarter also. And retail, around 24% -- 23% to 24% is the growth rate we're expecting. And second point is regarding...

Cost-to-income ratios.

Branches, yes. Branches, we have -- current year, we have opened 106 branches, and another 150 branches permissions is already given and in the process. So before March, another -- this quarter, another 50 to 60 branches we'll open to end with 2,200 branches by March. And the remaining branches, we'll be opening next year.

Okay, sir. And on the cost-to-income ratio, sir, how do we see that guiding...

Cost-to-income ratio now, I think, 39%, 40% -- our aim is to keep around the 40% cost-to-income ratio. We will be able to do that.

40% plus/minus 1%.

Yes, yes, yes.

And sir, one small question, a very strategic question. Like if you see in the MSME and retail, the majority of the transactions that are happening on the ground is not because of the credit formation right now. It is because of the balance transfer that is happening, that is the customers are moving from one bank to another every 6 months. So how do we put ourselves -- means on -- what is our strategy so that we can grab the majority of the pie that is shifting from one bank to the another? Especially, in the MSME, it has been the trend of lately for the last around 1.5 years that even for 50, 25 bps the customers are moving from one bank to the another. So what is our strategy to maintain the MSME book, consistent MSME book? This is just strategic questions I have.

Yes, Ashfaque, as you have asked -- I am Asheesh Pandey here. So as you have asked about the MSME growth in retail. So you had one more thing in mind, like when we are increasing the branches, so how the growth. So MSME, it is already explained. And as far as -- and I told you that how we are going to do the growth from the MSME, retail. And even you agreed like outside Maharashtra with this new footprints. Now you wanted the cost-to-income ratio. Certainly, you feel probably that with the increase in branches, there will be more than the expenses. But let me tell you very clearly we are -- bank is expanding with the very clearly...

Sir -- your voice is not audible, sir. Please, sir.

Yes. So I think having a spoke model. So where we have only one branch mainly, and then we are having either BC and the CSP model to service customer. So that is a very cost effect one. Secondly, the bank has also looked the entire processes. We are reviewing it. So wherever with technology we can reduce the cost. So that is also taking place across various functions in the bank. So that is why cost-to-income 40% plus/minus 1%. Now your third question was the MSME and retail. So what you are like probably perceiving is that there is a huge...

[indiscernible], sir, actually.

Balance transfer. Am I audible?

Yes, sir.

Okay. Like balance transfer is going on. But actually we are perceiving differently, if you see even the various credit rating agencies and various research reports. See, the demand is very welcome. If you take the housing itself and both vehicle loan, particularly the EV segment, the demand which is coming in is very, very quite huge. So what we are doing is that the Bank of Maharashtra has also fine-tuned its various policies, where the DSA appointment in the specific areas, specific locations. And also, bank has identified along 15 clusters. So I would not say the cluster scheme basically. That is also in place. But then specifically focus with mid corporate branches and the corporate finance branches where we are targeting location-wise and we are trying with each location like maybe -- I should say, like the tiles maybe a cluster, maybe a textile can be clustered. There are 3 to 4 clusters if you take textiles, which Bhilwara, Tirupur. Then engineering, Coimbatore is there. Ichalkaranji again in the textile. So if you take -- the bank is very clearly like INR 300 crores to INR 400 crores eyeing for this cluster specifically at each location. So not only the balance transfer. Balance transfer, yes, the bank is having very -- much competitive edge because of the interest rate. So if you see the interest rate of interest, the home loan is also one of the lowest. So 2, 3 projects are very competitive. So we do have a competitive advantage and the balance transfer, but then demand is also very much picking up, which bank is catering with specific tie-ups, with specific approach, focused approach and the locational approach.

Yes, I would like to add -- Vijayakumar here - regarding MSME. You asked a specific question that only the files are shifting. Yes, I do agree. But we are also in the market and we also have a scheme called Ghar Wapsi. So we tend -- continue to focus on the customers who left a few years before -- I mean 4, 5 years before. We are bringing them by giving them a very market rated demand, attractive rate of interest in the terms. Our sense is now TAT -- improvement in TAT, which we're are focusing. And focused approach we have identified now major centers that we are giving a trust for improving in this particular cluster. Through that also we are improving MSME. If you look at the MSME, there are 3 MSMEs only: micro, small and medium. We have got a very -- I mean, huge shift -- huge increase in the portfolio of micro. All our banks -- all our branches, the brick-and-mortars, are doing by growth on -- aligning with the national priorities, be it be a Mudra or PM Stand Up India or even PM SVANidhi we have been focusing. So we are aligning with the national priorities' objective. And that is the reason why the MSMEs growth is now robust. And we continue to focus on this.

Perhaps -- my compliment: your TAT is perhaps the best in the industry, I would say, right now. And many congratulations, sir, for answering all the questions.

We have the next question from the line of Akash Jain from Ajcon Global Services Limited.

Congratulations, sir, on a very good set of numbers. My question, sir, regarding the co-lending book. What is the size of the current co-lending book? And what is the target to increase it?

Sir, at present, total loan book size -- co-lending is around INR 500 crores. We have developed our software. So once that is stabilized, we take it -- we'll take it forward, sir, on a much larger scale.

Okay. And have we are in talks with NBFCs to increase this book?

Yes, sir, we regularly have discussion with all the stakeholders in this regard, sir.

Okay. And also on the gold loan book, what is the size of the gold loan book? And what is the bank's strategy to increase it?

Now the gold loan balance outstanding is around INR 6,000 crores. And gold loan is growing at the level of around 30% to 40%.

Okay. And what is the target for this book?

So target is given to the branches to reach INR 8,000 crores in March. I think we may be able to reach INR 7,000 crores to INR 7,500 crores by March...

Sorry to interrupt. Sir, we missed on the number. Can you please repeat it?

Yes. Target to the branches is given around INR 7,500 crores by the March end. So we may be able to do that for gold loan book.

And what is the yield that we are getting on this book?

Yield is around the 7.90% to 8%.

Okay. And also in last quarter, we had talked about using the excess SLR. So I think it was around INR 18,000 crores as on last quarter. So what is the excess SLR as of now? And what has been utilized so far?

As of now, only 3% to 4% excess SLR is there. Balance we have already utilized. That is why we have not raised much funds through deposits, and thereby, [indiscernible] stabilized. So another INR 5,000 crores to INR 6,000 crores excess SLR we may be able to utilize through increasing the CD ratio.

Okay. And CD ratio we have talked about, I think, increasing to 80%. So that number we are sticking to...

Now it is 75%. Another 3% to 4%, we will be able to increase that.

We have the next follow-up question from the line of Ashok Ajmera from Ajcon Global Services Limited.

Thank you for giving this opportunity again. Of course, a lot of clarity has come after the deliberations with my other colleagues, analysts. But sir, I would touch again this raising the capital of INR 1,000 crores through equity. Sir, now, of course, our share prices are firming up and it has come to a very good level, almost about, I think, 1.75 to book, or maybe it may reach to maybe 2x of the book. But whenever capital adequacy is already 17.5% and we are having a very good profitability. And in any case, it doesn't help as far as your CD ratio is concerned. What is the basic purpose of raising this INR 1,000 crore as a equity now, just to take advantage of the rising, say, share prices? Or anything else is there?

That as per the SEBI guidelines, we have to reduce the government value to 75%. So partly for this purpose, we are coming with the issue of equity share capital. And you saw -- you know that we are having the growth of advances to 25% we are planning. For that -- here we require the capital. So for that, we are going to raise the equity share capital.

So from 90.7% -- say, 97%, it might just come to...

Sir, it will not remain 90.7% once you increase advances by 20% to 21%. So for the -- at the time, you require the capital.

Okay. The government holding will come down to...

Yes, government will come down by...

Only by 3% or 4%, I think.

Yes, yes.

It will come down with this. Okay, sir. Sir, my one question which was there last time also, which was remained unanswered, was that Note #12, the accounts acquired, INR 1,916 crores at 24.91 tangible security. I just wanted to know the quality of these accounts which are required with such a low percentage of the tangible security. What are these accounts? And after having acquired, is there any stress or anything that has been seen in the last couple of months on these accounts?

I will tell you. I'm Sanjay Rudra. These accounts are basically related to the securitized asset which we have purchased from other NBFCs. These are basically pertaining to MFI. MFI loans are not considered as a secured asset in our book. So we have classified these assets under the unsecured category. Mostly, these are pertaining to that only. And here, when we are going for the full buyout, we go for the loss estimation also. And as for our book, it is loss estimation given where most of the MFI is below 3%, but it is basically in the range of 1% to 1.5%, which we are observing as we did for the last so many quarters. So the NPA percentage in this book is very low and the returns are very good.

So going forward, are we continuing the same trend? Like it becomes to almost about -- I think this is -- INR 1,916 crores is a good amount during the quarter. So are we going to keep the same trend? Or we have reached to a certain level now and we don't want to increase much?

Yes. I will explain here that, see, these are the MFI loans, which is the maximum duration of the loan is between 1 year to 15 months only, because they are giving for 24 months. Then there is -- a holding period is there. So effectively, it is coming in our book for a period of 12 months to 15 months. So we are acquiring this too, but the repayments are equally fast. Most of the loans are repaid within a period of 18 months. So these are the acquisitions. But outstandings are always much lower than what is acquired during the year --quarter.

Now since we have already -- as the discussion was going on that we are already on the net NPA of 0.47% and whether net to net the recovery from the accounts which are totally written off will come either as a reversal of provision or as a profit to the book. So naturally -- I mean, do we need to have any further provision? So what do we have in mind about that ad-hoc provision of INR 1,200 crores which we have on the COVID account developing the COVID situations in future? So do we have any plan to even make use some part of that even in March for the whole year ending to -- so that no further provisioning as such net-net is required in the March and we can have a bumper profit in the books? Any idea on that? Any...

As of now, nothing is given by the Board. For this last quarter also at the Board level they have discussed, under Reserve Bank of India level also. Then only this third wave started somewhere here and there. Then they told that we will wait and see. And -- but of course, finally, it has to come to the books as a profit and it will come to capital or profitability. It has to happen that.

Sir, now this -- just a couple of -- on credit side, what is our position on direct lending for onward lending to the priority sector to NBFCs? Have we reached to that particular level? Are we considering them still? Second is our corporate book has again started growing well. So there was a -- excuse me. Hello? Can you hear me?

Sir, the voice is echoing.

Yes, yes, we can hear. Please carry on.

Some color was given that -- I think the GM Credit observed, infrastructure and something. Can we be a little more specific on that...

No, NBFC, we have a Board approved -- a level is given up to -- 8% to 9% of the total advances we can go NBFCs. But we have gone only 5% to 6%. There is -- a gap is there, 3% to 4% of the total advances. But very cautiously we have gone for that. And now presently, we have gone for some of the accounts, basically corporate is one, some of the pharma sector or some petroleum sector and some aviation. Aviation means not this type of aviation sector per se. It is for development of airports. As well as highly rated AA and above accounts we have gone for that. And some accounts -- some amount has gone to NBFC also, INR 2,000 crores to INR 3,000 crores. But keeping -- 5% to 6% of the total advances, we have kept it for NBFCs.

Yes. Ashok, particularly manufacturing we are looking more as a banking focus where exports are...

I would request you to come closer to the speaker phone when you're speaking.

Yes. Actually, we are looking more of a manufacturing sector in pharma or maybe a textile or maybe even the engineering goods. And what we are looking is that it should be an -- export more. So the bank is focusing to augment its even fee-based income. So that's the reason that we're focusing more on the ventures, particularly like the pharma, textile, maybe in some of the things which we have seen. The glass is doing very well, industry and some of the places. And particularly, in some of the locations, we have seen even the EPC is also doing somewhere better, slightly. So these are some of the sectors which we are looking apart from the infra. And as such the ForEx part, where import, export are more and where the good working capital. And the manufacturing sector is the focus.

What are your views on auto ancillary?

Yes, auto ancillary too, particularly EV side.

We are open for that...

And I think that our full growth rate was -- quarter-to-quarter, it is around 40% to 45% for the current year. Export is doing well. And earlier, bank was not having that much export area. And medical devices, medical equipments, that types of areas.

Even hospital sector, we are...

It is a wide range of areas, not a specific area.

Yes. A very wide range. My last question, sir, is on treasury again, that how -- now where do we stand? So you have already given the idea that as per the RBI -- I mean, what we can infer is there can be another 25 to maximum -- I think 25. Because 35 basis already came. 60 was expected total. So if that is -- if it comes, say, another 25 basis point, does it make any change in our dynamics, in our way of working? Or everything is fine, we are capable of taking care of that?

Yes, yes, everything -- that is what -- first itself, I told that 210 basis point change has come. It will not change any dynamics. So another 25 or 50 basis points comes also, it is not going to much impact.

We have the next question from the line of Franklin Moraes from Equentis Wealth Advisory.

Yes. So I joined a bit later in the queue. So sorry if this question has already been answered. I wanted to know what is your total write-off book?

The total write-off book is around INR 18,000 crores.

So this is which is already part of your book, but it has not yet gone out of the books, right?

No, it is already written off in the books. And it is not in the books actually. But recoverability is concerned, legally it is recoverable and we are recovering also. So this quarter, we have recovered around INR 200 crores. And next quarter, as our GM Recovery has already told, that the expectation is around INR 500 crores recovery for next quarter.

Sir, I'll make it more clear. I'll make [indiscernible]. See, INR 18,000 crores it is written off from the financial results we have published today. But this INR 18,000 crores is very much in the branches of our bank. And our branch at the field level, they are -- day in and day out, they are focusing on recovery. And the target for recovery is also on the basis of the outstanding line in the branch book. But publication of results, it is not there.

Okay. Also, what part of this book would probably go under NARCL maybe in the next 1 year or 2 years?

It is around INR 3,000 crores, INR 2,700 crores to be precise.

This is already transferred?

No, no, no. The process will start now. First will be transferred in this month. It is expected to be now. The process has started.

Okay. And what could be the maybe time line for transferring of this INR 3,000 crores?

No, it is -- see, it is shortlisted accounts. Now certain accounts will get finalized in a process. And in a process, it will happen. So it keeps -- a dynamic list always. It keeps changing also with the circumstances. So at present, at least we expect one account in the first quarter definitely will get transferred. And then in those 2...

Okay. And could you also share some insights in terms of what is happening at the NARCL level? Because last year is when they started, but so far we have not seen any accounts getting resolved.

Yes. See, in NARCL, actually, there was a delay because of that approval of bank guarantee, which are SRs are given which is backed by the government guarantee. That approval in NARCL was to be received. Now -- very recently in the last week only, the government has given the approval. So that process has now started. Now everything will happen fast. The account transfer will start happening now.

Any quantum that is being targeted maybe in the next 6 to 9 months?

See, for our bank concern, we expect at least in the first quarter one account is definitely -- this Q4 on account is definitely going to be transferred. Remaining accounts will follow in the next year.

Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to Sri A. S. Rajeev, Managing Director and Chief Executive Officer, for closing remarks. Over to you, sir.

So thank you so much for having 1 hour discussion of -- and afterwards, also any update -- anybody having any kind of queries or anything, we will be in touch with you. And our CFO will be open to give any clarification or any figures, whatever required. Thank you.

Thank you.

Thank you. On behalf of Bank of Maharashtra, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you, everyone. Have a great day.