Bank of Maharashtra (MAHABANK) Earnings Call Transcript & Summary

Ladies and gentlemen, good evening, and welcome to the Bank of Maharashtra Q1 FY'24 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 Chief Executive Officer; 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.

Good afternoon to all, and I am Rajeev, along with me both executive directors and all of our general managers and top management teams is with you for any kind of clarification. To have our opening remarks, I would like to 2 minutes, I will -- regarding the financial results and important results at a glance. So first of all, thank you for joining us today for the financial results for the quarter ended 30th June. [indiscernible], the total business grew at 25% to INR 4 lakh 20,000 crores. And deposits grew by 25% to INR 2 lakh 44,000 crores and CASA stood at 51% of the total deposits. Advances increased by 25% to INR 1 lakh 75,600 crores. CD ratio is around 72%. Gross NPA and net NPA improved to 2.28% and 0.24%, respectively. Provision coverage ratio improved to 98%. As regards business figures is concerned, RAM sector, retail, agri, MSME stood at 58.25% and the balance 41% corporate sector, which the bank and we said that this will continue. Retail advances has grown by 25%. Agriculture is grown by 22% and MSME by 29%. While coming to the profitability, the net profit is up by 95% to reach INR 882 crores on year-on-year basis as against INR 452 crores for last year. Operating profit improved INR 1,863 crores as INR 1,202 crores corresponding quarter in FY'23. NII grew by 39% year-on-year basis as against INR 1,686 crores Q1 financial year '23. Fee-based income increased by 17% year-on-year basis. Noninterest income improved to INR 629 crores as against INR 317 crores for Q1 '23. The growth rate of noninterest income is high because corresponding last quarter, there was such a depreciation in investments was there in Q1 FY'23. The current year as against depreciates, it is around INR 45 crores profit on sale of investments. Cost-to-income ratio improved to 37% as against 40% corresponding last year. ROA improved to 1.33% as against 0.81% FY'23. 23.73% as against 16.75% for corresponding last year. Previous year, Basel III capital adequacy ratio improved to 18.07% as against 14.36% for Q1 FY'24. Slightly -- the capital adequacy ratio compared to [ mark ] it has come down by 10 basis points, mainly because of the operational rate and assets increased by around INR 2,200 crores for the current quarter, which is the computation is based upon the average of 3 years operational risk and increasing operating profit. So these are the major areas of the results. And then we're coming -- question-answer session, we will take it up. And before that, I will give this back to two minutes to our E. D., Mr. Pandeyji the digital transformation what has happened during the current quarter. How that we are bank our planning to go for the digital transformation. So that repetitive questions, we can able to reduce that.

Sure, sir. Thank you. Thank you. Thank you very much, sir. And welcome to all the analysts for this meet. As you have seen the our day presentation and the figures, everything is uploaded in the NSE and BSE, and also on the website. Now coming to specifically on the front because in the press meet and earlier in analyst meet as well. So there is certain times a question of the sustainability and the other things. So the bank is now putting up a lot of emphasis for almost last 2 years on the technology. So on the credit side, as I said, I would say, the 3 pillars are very important, which is the sourcing and underwriting and monitoring. So bank has gone ahead not and we have integrated model with which we have told last time also with the corporate and the CRISIL and the Pro 42 and the CIC -- all the four CICs. So bank has built the model on which it is working. And also similarly, on the liability side, so many of the things which the bank has already launched, including [indiscernible], but [indiscernible] then now digital [indiscernible] sort of thing which bank has opened in particularly. And our general manager calendar is posted, so they are having the 4 wings within them it is a. Generally, you will see all the banks put together. There are generally one team, which is looking on IT, IT infrastructure, MPC network can be the data center, et cetera. And another one is the digital. But the -- particularly what we observe that we need to understand the UI/UX customer-centricity. And the emphasis that actually it is converted to business. So we have now opened a digital zone headed by General Manager, under which there is a digital CPC. There is all digital [indiscernible] journeys and there is an audit -- digital audit, which is happening through the external experts. And there is a digital marketing team, which we'll be doing an approximately INR 5,000 crores of our business, which is envisaged through this model. So that is one thing. Now if you see on the website, so all our RFPs, which are happening and mostly which we have concluded. So on a control function side, like the entire audit software package we are concluding and the multifunction chaos and various other alternative machines, you would be seeing the bank has already concluded those sort of RFPs. Also, I would like to state, there was a press release already by our MD, sir, where it was emphasized that we have onboarded BCG for our digital transformation as on the consultant. In this, there are three 3 pillars. One is the digital journeys; second is the digital operations; and the third is the digital compliance. So probably, you will also analyze that digital compliance, you would never have heard that an outside consultant that to top 2 is coming in for distal compliance so that the compliance is inbuilt in the journey itself. So all the three, we have started working on that and that is taken as project Parivartan inside the bank and that is well taken off. Now coming to the four things like the collaborations. So bank is also collaborating with few. So bank is thinking to have almost 3% to 5% from the first year to come business -- additional -- incremental business should come from these sources and increasing to, say, 25% to 30% in the next 3 years' time. So I think this is the brief. And yes, one robotic process automation, which is actually no public sector bank as of now is very much on it, but then we have made already live. And I think by next quarter, when we are back so more than 25 to 30 processes will be live. And in this year, we envisage that we will be crossing almost more than 60 and mostly on the reconciliation and the customer journey side. So these are well bifurcated on the digital operation and journeys and on the compliance side. So this is the brief on the digital initiatives. And the budget which bank has taken is around INR 1,200 crores, which bank has taken on these digital initiatives total.

Thank you. And another two minutes. Our E. D. Vijayakumar will talk out regarding the [ staffing matter ] and the HR initiatives what we have taken during the first quarter because that is also very important, other aspects.

Thank you very much, sir. Friends, once again, welcome to this quick analyst meet of Bank of Maharashtra. The results are before you. You have been tracking our performance for the last 4 to 5 years. And we have been #1 in terms of the financial numbers out of 22 parameters last year, year-on-year. 16 parameters, we were #1 major parameters; another 3, we were #2; another three 3rd position. In fact, we almost captured the first three out of all public sector banks. When you compare with the private sector banks, we cover -- we compared with those banks which have more than 3 lakh business they are also out of 14 parameters were comparable -- compared out of announced 16 parameters, 7 parameters, we were #1. Others also with -- I mean, top 5 positions were there. Some of the areas we are not only benchmarking with our private banks in India, we would like to go along the benchmarking, the international in some of the areas is what overall view of -- what we have been thinking about internally to bench ourselves, compare ourselves other banks. Coming to the -- no, when the -- any industry that is a bit manufacturing service, the man began, the human capital is much more important than anything else. In our bank, we give a lot of importance to that. Whatever the financial results have been quarter-after-quarter we have been giving, it goes to the investment we make in HR, HR and we are consciously -- I mean, attending to all the issues level, particularly the optimum utilization of the HR, that was the objective, which we are -- which are -- most of the extent we have succeeded that will be compared with the data. We had a number of staff around that, 12,532. Now as on 30th June '23, it is 13,344. Aged then 12 of the I mean, total staff have been improved. And so to say that fair employee business, per branch business substantially increased. And when we compare with it because, of course, all the banks have to come out to the results, only second our public banks have come. But when we compare the last quarter, there also in those aspects primly business, fire branch, this is also our bank, Bank of Maharashtra has been #1. We have taken many initiatives to give a training, up skilling their skills and giving the maximum opportunity available in the -- within India and to some extent now, the executive is also being sent to abroad for both India and abroad through the reputed management like NIBM to get a feel of what is happening in the other side of the border. And that also gives input to us. This bank was -- our bank was operating within the Maharashtra, I mean, predominantly, more than 65 percentage of our branches were operating within Maharashtra about 3 years before. Now exactly 50% only operating Maharashtra. We are consolidating. We're improving our efficiency within the Maharashtra because it is the soul -- hard earned soul of our banks. But at the same time, our eye is on to expand our business outside the Maharashtra, where we are getting a good response. In the last 3 years, we opened more than 430 branches in our other banks, of which more than 95% is outside the state and which gives a lot of business. In fact, given numbers, 15% of the business came from those numbers INR 45,000 crores, this has come from these ports, I mean, 430 branches opened. Our idea what we want to have at least one branch in each district as of today in our country, 797 districts are there. And I mean every now and then every state is also expanding the dividing the existing districts and making it more when we started this idea of which it was only 680. Span of 2 years, it has come to 787. Of course, some of the areas like the Northeast and North and we have the challenges to open we are happy to announce that along with this journey, we opened [ 12 ] new zones when we opened 430 across the country and 1 exclusive zone in Northeast in Guwahati with a 25-plus branches out there. So our focus is on opening of branches where we get the opportunity to do distress and getting -- and at the same time, we are also focusing on our HR in all fronts. We have been giving much importance to the HR matter. Apart from that, we always say in our all internal meetings and also through any forum when you address business first, business first, business first, but compliance always. The compliance is very wide term, which includes corporate governance, risk management and audit system. So that those areas also we have been focusing because when there is a growth, there is always a question from all the stakeholders in clear analysts, whether it is sustainable or it will go we are aware of this, and we have been giving much importance there. I'm happy to share 1 or 2 information to you. Like this last quarter, there are 430 branches that are audited, out of which 430 was due for audit and around 300 were audited, 230 completed, I suppose, almost 10 percentage, 23 branches were spot [ litigation ] as secondary. It means, see, there is an internal system of auditing inspection internally by our own team, inspection team is there. When they go, they will make some observations. But we are insisting that those audit compliances as far as possible should be complied rectified then and there. So the culture of rectification during the audit itself is happening in our bank. This is one indication which I would like to share with you. Going forward, any specific information needed, which I would like to share with you to respond to you. Thank you very much for listening.

So now I think we can go for a question-answer question.

[Operator Instructions] We have a first question from the line of Jayesh Shah from OHM Portfolio Equity Research.

Congratulations, sir, for great results. I just wanted to understand on the provisions for doubtful debt because with the level of gross NPA and the net NPA that you had the provisioning figure should have come down and credit cost should come down. So however, it has not. So how do you expect this to pan out for the whole year? And have you really taken some extra provisioning in view of the RBI norms, which were specified last year, which are also in the draft situation.

Yes, what you have observed that provisioning we are keeping specifically with an approach to have a more provisioning to protect ourselves for future because our profitability is good as you understand that they also are growing. So our PCR is already 98.7 percentage. So the portfolio-wise were to first take the stance and that is why we are controlling this keeping the gross NPA and net NPA at lower level and some extra provisions for certain other things also, we are keeping that is for ECL and that is for some standard assets also. We are making additional provisions, though it is not required, but just to cover all these exigencies.

Yes. For myself [ CFO ] this time, INR 250 crores, we have made a provision in standard provision in anticipation of our ECL provision. So we will continue to build up the provision to meet out the future challenges. So that is the thing. And the NPA provision, you know that when you are making the net NPA 0.24%. So almost everything you have to provide. So that will continue. We want to keep the -- our net NPA between 0.24% to 0.25% that range we will continue to do. So yes, going forward, since that already provision we have done. So you'll see that provision respectively will come down going forward.

Okay. Can you give a guidance now based on this thing? Am I correct to expect that you don't need any other provisioning on your legacy assets and you would only need provisioning on your new loans that you have given?

Yes, yes. Yes.

So one should look at minimal credit cost going forward for the current year?

Yes.

Okay. Would you be able to give a number for the total year for the provision?

Provision would be roughly around...

So this is a number I think that the percent figures because the slippages, we expect that the slippages is maybe INR 500 crores, INR 600 crores per quarter. That means around [ INR 2,000 to INR 2,200 ] crores slippages for the year had happened because Advance is also growing. So corresponding later provision may be to care that because then that after adjusting this because most of the assets we have already written off, then the recovery will come under other income. So it will not be under reduction as well as the upgradation. So we suppose INR 2,000 crores, it is adding for a year reduction and recovery will be a small figure because assets have already written off, it will reflect in other income, so it is affecting the profitability. So whatever INR 2,000 crores, the provision INR 400 crores to INR 500 crores, provision will continue to be there quarter-wise flat.

I see. So if I understand you right, provisioning may still be around INR 2,000 crores and the recovery figure will come in the other income.

Yes, yes, yes.

Okay. And going forward, would we see NII growth of 20% plus since you have raised the funding and you are in a fairly comfortable position?

Yes, NII will be -- definitely, it will be double-digit growth will come.

Okay. Okay. And congrats once again for great numbers.

We have a next question from the line of Suraj Das from B&K Securities.

Congratulations a good set of numbers. Sir, just wanted to understand your outlook on NIMs. And specifically, I mean, this quarter, you have seen increase in year alone advances. So what is driving that point one? And if you can give a hint on your book bifurcation in terms of how much is MCLR linked, how much is repo-linked and how much is fixed rate loans? So that would be my first question.

So this is a NIM -- as of now, it is 3%, I think we may be able to range bound if I can say that 3.75% to 3.85% level, I think we may be able to continue that as far as NIM is concerned. And yield on advances, of course, it is slightly improved basically because the interest rates have increased last 1, 1.5 years. And the same interest rates, if we continue, definitely, the yield will continue to be the same level. And the board level decision also, we have the growth or we have envisaged only based upon the risk base the pricing is fixed. And that was added the yield improvement as well as NIM improvement. So the assets created in the -- during the period was based upon the risk-based pricing and which was reflected in the NII growth. Regarding the MCLR and this, I think it is 48%, 48% MCLR and the remaining is coming under ROA on that. Around 50-50 will come or here by a 5 basis point here, 5%, plus or minus.

And there is no fix rate lending. .

Yes. So Suraj actually, if you see MCLR rate has also happens now. So when the rate was increasing and suppose MCLR has also increased, that takes time of 6 months on 1 year as per, that whatever is given to companies say, 1 year MCLR, then it will be due in one quarter than another quarter and all. So that has also given a good impact.

Understood, sir. Understood. And sir, on this 48% MCLR, I mean, how -- where we are in the journey of reset? I mean, how much of this book has already been reset? Or how much is still pending? If you can give a color on that?

In MCLR, we have a different product under MCLR. We have result of the MCLR under the 1-year MCLR and 6 months and 3 months. This is a major MCLR products which we have. So 3 months MCLR gets reset within 3 months, 6 months until get reset in 6 months and 1 year within 1 year. So most of the loans, which were sanctioned almost 1 year back is already repriced. So our book presently running with the current MCLR mostly.

Going forward, actually, that is more than 1 year MCLR, whatever was sanctioned. And during the August 2, if you take January period, that whenever it will be coming from next again, that portion only will come. So mostly our non-asset.

Okay. Understood. Sir, second question, sir, on the asset mix on the retail credit. So I mean, if I see your other retail, which is something around INR 15,000 crores that has seen good growth over the last many quarters. If you can give some color on this book. I mean, is this largely gold loans and the staff loans? Or I mean, what are there in these other retail credit?

Other retail credit is largely on the gold loan side. The major growth has happened in the gold loan. In addition to that, recently, we have started giving the personal loan also on the digital platform. So some small, but this is the beginning. The personal loan that is there. And then third is the is the Aadhar Loan which we call basically the loan against the pension of people that is a major component. These are the 3 major components of personal loan. And in that, the gold loan is mainly increasing with a rapid growth of almost 40% on a year-on-year basis.

Okay. So gold loan would be how much, I mean, approx INR 10,000 crores or something like that or?

It's INR 7,000 crores proximity, if we had both the gold loan, it will be approximately INR 7,000 plus.

Okay. And sir, what are the yields here? I mean on this retail world loan?

The overall is around 9.8%.

Okay. Okay. Understood, sir. Sir, the next question is on the ECLGS I mean if you can give your ECLGS figure how much you disburse and sanctioned what are the NPA levels there? And do you see any impact on the new guidelines on the ECLGS to recognize these stress accounts of NPA that would be great.

ECLGS has originally sanctions around INR 3,200 crores when the scheme came in 2020 onwards till date this INR 3,200 crores has been sanctioned. What our observations on the ECLGS portfolio is that the portfolio is doing well. No major risk is observed till date but even if you can very well see our SMA numbers and even the delinquencies also is not very high in the MSME sector also. Two years back, it was slightly on a higher price but for the last 1 year, we have more or less we have controlled back in MSME stages also. So we don't find any risk on the ECLGS portfolio. And since the pricing was a lower rate of interest, so the customer has not defaulted on that largely. But yes, few accounts have slipped, that's the difference, but it is in a routine codes, but no major risk in the CDS portfolio. .

Okay. And you are recognizing all that stressed accounts as NPA in line with the recent guidelines, right?

Yes. What is our [ IMF account ] says, we follow that for recognizing the NPA.

Okay. And sir, one last question, if I can squeeze in, is on the ECL migration. So I mean what is your preliminary reading on the ECL migration? I mean how much let us say, a total provisioning -- additional provisioning requirement would be there. And if you have any continuing buffer or something that?

As you know, the bank is well capital -- has been already having the 97%, 98% of ECL. And for the last few years, bank is also preparing the [indiscernible] as balance sheet. ECL if I use the management overlay then approximately INR 2,000 crores to INR 2,500 crores of additional provision is required to meet the ECL guideline. And as you know that the bank is already holding INR 1,200-plus crores of COVID provisioning plus additional INR 250 crores of the ECL provision, which we made -- we have made for the current year. So INR 1,400 crores, INR 1,500 crores is already in the books of the bank.

Made this time.

Yes. And so INR 1,500 crores provision is already bank is having. And we need INR 2,000 to INR 2,500 crores. So bank don't foresee any challenging ECL going forward.

And RBI has also given a dispensation that it can be at over a period of 5 years. And looking to our profit that the business we are envisaging the profit is going to increase. So we don't find any problem. It may happen that without getting for 5 years, it may be adjusted in maybe [ in general 2 years ].

Okay. Okay. Understood, sir. Great. And sir, one last question. So on the modified dividend on the investment book, if I see that, I mean, this quarter, it has seen increase from 1.2 years to 1.8 years. I mean is this a one-off thing? Or I mean, this is a concept call taken by the ALCO or something like that? That will be my last question.

If you say concept call, if you see that the short-term maturity rate has gone up, and it's gearing to the 10-year defect we have taken benefit of that. And we started accumulating the few good yields and having the duration of 1 to 2 years. And that we have accumulating at good yields at a [ closing ] time that we will square it from the profit. And if it in the portfolio, it will improve the yield of the investment.

Mr. Das, does that answer your question?

Yes. Yes, ma'am.

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

Sir, my question is regarding the deposits. total deposits have increased to INR 2 lakh 44,365 crores as against INR 2 lakh INR 34,083 crores in the last quarter. As a result, our CASA ratio has been affected. So I wanted to understand how is the growth from the deposits? Is it from the fixed deposit side or bulk deposit?

There was the growth in the term deposit, but you see that we have not taken bulk deposit higher rate. So the we have taken CDs. I start to see this where the interest rate is below 7%. So you know that if you want to continue your cost of deposit to cost of fund, so instead of taking bulk deposit, we switch over to borrowing the interest rates, we are interest rate between 5.5% to 6.5%. And we have [ erased ] short-term or ultrashort-term cities, but because we are expecting that maybe after 2 months that debt will come down. So at that time, you can, again, take the deposit. And this is a good strategy in order to contain the cost, and you see that impact is that our NIM has [indiscernible]

I will supplement what our CFO sir has said, if you go through our cost of deposits, you will find that the entire quarter when rate has gone up, and we have taken some deposits on the term deposit side also, but we have managed our cost of deposits. Our cost of deposits have increased by only 10 basis points. So whatever the deposit we have taken to it may be in the form of the term deposit, but not at a very high cost deposits.

And my, sir, second question is regarding co-lending book. So what is the size of the co-lending book as on date or as on Q1 FY'24? And how many NBFCs we have tied up?

This is -- we have four tied up. It was INR 215 crores last year, March '22. Now INR 808 crores in co-lending -- I'm sorry, I'm corrected, is a [ tenfold ] I will repeat. Co-lending portfolio, March '22 was INR 147 crores. Now we are INR 371 crores, out of which retail is INR 13 crores.

Okay. And what is the target for increasing this book?

We always keep our option open. Wherever we get opportunity, we do it as of this -- last couple of quarters, it was initially started with a good bank, but we don't find any kind of good quarters nowadays. And there is no -- not much is happening in this segment. In at least last quarter, I can say.

Actually, the co-lending, I think there are two. So actually, we are onboarding now our software solution. So for that purpose, we are strengthening our systems and we are close to complete that software solution. But at the same time, we are in discussion with some 10 more people in that, so that we can take up the co-lending agreements with them. So we are also financing rates or terms and conditions with all this figure. But what we were actually looking to that to strengthen the co-lending. Still we have -- right now also we have on one of the good software, but then the Edge and Newgen is required. So you may see our website. So there also, we have came up with the co-lending fintech partners. We have in panels. Now in that dusty, have panel when we are concluding for the final implementation.

Okay. Also, sir, I wanted to understand as cost to income ratio is already, I think, around 37% in this quarter. So with this robotic process automation, as earlier said, that 25 to [ 30 ] processes will be automated. So to what extent this cost-to-income ratio can go down now?

See, if you see the cost to income, it is really very, very good. But actually, it is not only -- the impact is not only the RPA -- see, actually, RPA, there are 5 clear benefits from this robotic process ate. The first is certainly cost optimization. The second is the customer service. Because whenever you are manual, it takes maybe a number of days, and you may be having some errors. But when RPA comes, so actually, like we are Internet banking that the creation of the profile. Now we have done all the, it is hardly 1.5 hours it is done in the single day. So it is working that both in a particular one day. So the third is on the reconciliation side. So [ EGA lock ], which is actually very, very important for the bankers to reconcile. And it is very difficult times for the banks because you are having 3,000 to 10,000 ATMs and how to read that electronic [ Japan ] interlocks so that is also we have put into the robotic process automation. So now because your question was carrying two things: One is the implementation of RPA. So we are using it certainly for the cost optimization, but then the important 3 things is customer service. The third important thing is reconciliation. So we want to strengthen our compliances. Also, if you see the digital transactions which are happening and increasing 1.5 to 2x. Now it needs a reward reconciliation because for the safe transaction, you need to credit the customers' account immediately. But now coming to your cost to income, yes, we actually -- if you see our MD sir also gave the sort of -- I would not say guidance, but indications that we may be in the range of, say, 39% plus/minus 1%, something like that. So what I feel that, yes -- but then when we are opening a branch. So almost 150 to 180. And our MD sir also told that we are onboarding around, say, 2,000 people in various [ cagers ] in the bank to sustain and get a comfort to such sort of business, then certainly, we foresee that we may continue in the same range going forward.

Okay. And sir.

I request you to join back the queue sir. [Operator Instructions] We'll take the next question from the line of Rahil Shah from Crown Capital.

I just have 2 questions on, firstly, your views on AUM growth for FY'24. And another is ROA outlook. So if you can just help me with these numbers.

AUM growth is -- we are expecting that -- though the growth rate of deposits are slightly more in Q1, we -- it will normalize during the current year around 14% to 15% deposit growth and 20% to 22% advances growth as far is growth is concerned. And ROA is concerned, I think that ROA will be the same level, it can able to 1.3 to 1.4 level range bound ROA, we may be able to continue that.

Okay. Okay. Did you say 20%, 22% in advances?

Yes, it's 22% advances.

Right? And ROA will be in the same range, okay.

For a business of INR 5 lakh crores up to March '24.

We have a next question from the line of Prashant [indiscernible] from Whitestone Advisors.

I have two questions. My first question is, if you see our NPA was INR 435 crores in peak of financial '23. During Q1, we did a provision of INR 776 crores, which of INR 530 crores is for NPA. Still our indiscernible NPA did not come down in Q1. Still -- it is still INR 414 crores. Can you explain why?

See, our provision are required for Q1 for NPA, NNPA for that INR 539 crores, which has brought -- and it was as compared to March, it was INR 545 crores. And this time, it was INR 539 crores. So not much difference is there. And as we are already at the bottom of NNPA of 0.25%, so it is always wish to maintain that...

I think I'll explain. INR 250 crores contingent provision we have made and it is not impacted anywhere because ECL provision of around INR 250 crores contingent provision we have kept for the current quarter. So that is not considered for NBA purpose or capital [ deposit ] purpose. It is a part of creating ECL conversion for the next year like that, though we have around INR 1,250 crores provision or provision we held up. And another we [ more ] opinion that we have to create over a period of time at a [ INR 1,000 crore ] provision for ECL purpose. So that is why this difference has come.

Okay. Understood, sir. And my second question is for Q1, our credit cost was 1.23%. For rest of the quarter, let's say 1, 2, 3 -- sorry, 2, 3, 4, what will be the level?

I think it is continued to be around 1% will continue. If you see as per [ NRO term ], it would be below 0.5% because that we want to maintain that at 0.25%. It means that everything you have to provide with the [indiscernible]. So that's the third one that it will be 1% is correct. But as per [ NRO term ], it would be below 0.5%.

We have a next question from the line of Sushil Choksey from Indus Equity Advisors.

Congratulations to top management of Maharashtra and entire bank for a good performance and a successful Q3 during the quarter. My first question pertains to all the questions which I asked. Has the board taken to respective RBI, whether they grant you time or not to start making a buffer on ECL provision? And if so, how much have you made so far?

Yes, sir. Just now I told that. We have already -- profit provision is kept there that we may utilize for the ECL that is around INR 1,250 crores. In addition to that another INR 250 crores we have already made. So other INR 500 crores provision is already kept on the restructured area, where we have not utilized that -- we have kept adequate provision kept for as and when ECL comes, we may be able to switch over that. That is our expectation.

Sorry to interrupt sir, but you made a provision of between buffer and you said INR 1,750 crores. Is that the bank has made some kind of a calculation that provisionally this can be a ECL number with a 5-year or a 3-year window, whatever RBI provides or that calculation is not there?

This is based upon some rough estimates. So as a final guidelines is to come. And this is all based upon some kind of draft based upon that. I think there may be some definitely, there may be a good difference between the draft as well as the final guidelines. We are expecting that. So based upon the draft guidelines, only we have kept it. But however, we know that even if the final our cost guideline I don't think so not much impact is going to happen for the bank. That is the purpose.

Sir, do you estimate your ECL provision requirement to be in approximately range of INR 3,000 crores to INR 4,000 crores or more?

Yes, it would be INR 2,000 crores to INR 2,500 crores.

INR 2,500 approximately.

Sir, then you already almost achieved the number with where you have a 5-year window.?

Yes. You know that we are submitting the financial that pro forma financial India statement to RBI. So yes, we are aware of that, and we have been making competition though there may be some changes in RBI guidelines because under they have completed discussion paper. So the estimation we have done for additions to providing, so we are able to meet it. even from our existing provision.

And next question, what is the estimated cost fund likely to be for the year from the current level?

Estimated cost for?

Funds.

Cost of fund right now is at 4.06%.

Cost of fund it will hover between -- around 4%. Same range, 3.70%.

There is a pause also right now. So we foresee that we'll continue in the same range.

And yield on advances will remain at the current range? Or it may tick up a little higher?

More or less, it will remain the same change. It will depend upon what the RBI take the start in the first of the repo. So -- but our views that RBI's not going to do the high. So for the year, it will be [ rebound ].

Sir, as a year between various quarter questions, which I might have asked the management or whatever commentary I read in the newspaper or in the media, bank is working towards future enables and future ready, whether it's digital, human, the sauce and various other things. Some number was highlighted for digital spend for current year and the previous year also, I've heard that number. Based on the current estimates, have you revised the number upwards between human resource and digital or it is more or less same?

It is more the same. And I think in that way, only we are doing because if you take the last year and this year and compared to earlier years, so there is a good, I think, high call there. And it is not only related to the budget, but actually using it and properly using it through various channels and which is actually giving good results for the bank. So I believe that if you see the RFPs and for which it is growing intended to be used, then I think probably retains a well part of and I think well deployed sort of budget in IT. And similarly, like Scale 2 and 3. So various Scales the bank is recruiting, which is also in our social media and for us, I think, if you see 1 year period. And including the CTO sort of impositions which we are taking from the market. So I think both of them are going hand-in-hand. And it is all intended to support what the bank is trying to achieve for last, say, 1 year and going forward also for 1 year.

Sir, my last question is, at any point of time, to more from your -- as your enablers are all for future in your advances, how much is public sector and how much is private sector have you ever bifurcated in terms of advances total? Public sector, including state.

Yes, that already we have given it is around INR 15,000 crores -- INR16,000 crores, the government granted exposure is just continuing to release state and central.

Almost 10%.

No, I'm not on a government-backed schemes or anything. I'm saying in total advances.

Out of total advances of INR 1 lakh 75,000 crores, INR 16,000 crores is almost government guaranteed exclusive.

Sir, I'm not asking government guaranteed. I'm saying, let's say, whether it is REC, PFC, NHAI, Food Corporation, one side and the other side, the private sector. So have you aggregate the total? So if there is more of a private sector which speaks volume for your bank that you market oriented that's the reason I am asking.

That data is not immediately available.

No problem. I'll take a question [indiscernible]

Even in such cases that they are working at very fine margin. So last 2 or 3 years that we intend to keep our interest at a reasonable debt. So we have not invested much in that in [ PSUs ] instead of that we have lent to the state bank corporation backed by [ state government ] the returns are available and guarantees available. And it is also helping in when we are competing this area.

So only 1 data immediately available in the rate out of 1 lakh 75,000, INR15,000 -- almost INR 16,000 crores, government guaranteed.

Which we have given to state Government Corporation.

That's all the public sector, how much they will come to.

We have a next question from the line of Ashok Ajmera from Ajcon Global Services.

Aside from the beginning and my line got disconnected 4 times, so please excuse me if there is any reputation and give me some time, part my question. Sir, as the very outset are complements to you for the fantastic results and especially if you compare year-on-year, everything on, on and Vijayakumarji has already explained that the rank ranking on various parameters and even we have been writing about it. So complement for that sir to all of you. Sir, my first question is on the credit growth. Now in this quarter, it is absolutely muted 1 lakh 75,676 against INR 1 lakh, 75,120 crores hardly some INR 500 crores or so. But we are still maintaining our target of 22% or so, it means that around INR 13,000 crores to INR 14,000 crores per quarter now onwards the credit growth has to be. So how is this achievable? And are we looking in the same ratio of the corporate and the noncorporate credit? Or in order to accelerate it, we are going to change that a norm. This is my...

[indiscernible] Your question is complete?

Yes. Your question is complete.

This is one of the questions sir. And my second observation is on where we go on the external rating slide. There, the BB and below has gone up to INR 4,391 crores from -- as against INR 3,742 crores. Is it because of the revision in the credit rating because it cannot be because of the extended credit given now. So is it because of that, related to that is unrated also has gone up by almost about INR 1,000 crores. So some observation -- some color on that?

Okay. So the question number 2, I will take first. So actually, when you are saying a few of the accounts, so because as such, we cannot take the name, but let me tell you some 5 accounts are there. and one is a very good hospital like in names. So there are certain accounts, we got very good opportunity where the hospitals are still running and then part has to be done, but it is a very portend even if it's a guarantee. So there are some of the accounts which are unrated, but we got a very good opportunity and say, 8 to 9 accounts. So where we can -- we have underrated. So that is where you find those figures, which are coming it is not something which has downgrade debt or something like that. It is a [indiscernible] and it is a very good sanction. So on those bases, it has come. The second one which you asked the part 1 was the credit growth so quarter-to-quarter. So let me also brief you that even if you see around 25% growth from June '22 to June '23. If you take the March also, there is a growth, but then we have sold [indiscernible] INR 1,500 crores. So actually, still we are banking upon that. We are still having the sufficient both on the RAM. So RAM also, when we talked about in the corporate. So still we are maintaining 41% plus/minus 1 sort of. So we are in that range only. And the as if you see, we are continuing to range bond growth and which is almost same if we take quarter-to-quarter, which is 24.85% approximately.

Sanctioned already in pipeline, I mean the sanctioned amount undrawn?

Sorry, dependent cost -- there are certain projects, which takes time to complete. So it depends upon the completion.

INR 7,000 crores more than that. It will be around INR 8,000 approximately.

Okay, sir. My second question is on the SMA -- hello?

Yes, yes.

Am I audible?

Yes.

SMA-2 and 1, there also, our figure has gone up to -- SMA-2 has gone from INR 289 crores to INR 529 crores. And SMA-1 from INR 504 crores to INR 743 crores, if you see quarter-on-quarter, sequential. So how do we -- how are we -- I mean, [indiscernible] when already they have gone, whether this is because of is going to be a regular feature or there is some improvement in that.

Sir. If we take the overall percentage of the SMA level, the -- it is a little bit higher for the particular this first quarter. And the -- you are talking about SMA-1 and SMA-2. Hardly there is 1 or 2 accounts where the amount is a little bit higher, but all other accounts are in retail and MSME and that retail also, it is because of some difference between the EMI. So we are closely monitoring all the accounts. So it will be -- and we have also placed the loan tracking sale, and we have also launched the new application [indiscernible], which bought innovative 2023 award. So we are closely monitoring and definitely, there will be much improvement will happen.

And that June quarter is flat quarter, so sometime number is bound to increase, but definitely in further quarters, it will come down.

Sure, sir. My next question is...

I request you to join back the queue, sir. Mr. Ajmera, there are other participants...

It is such a long time, and you need to give me a sufficient time please?

Sir, you can tell us separately, we will reply.

All right, my last question is on the investment book. That modified duration has gone to 1.81 years, against 1.22. So is that -- I mean our little bit of INR 3,000 crores of the AFS book also has gone up. Can you give any reason for that? Have you gone into some -- what kind of investments?

Ajmera, that I have already applied since we have joined late. Again, I will repeat it. You know that in this quarter, the short-term yield has gone up and it was almost touching the 10-year reset. And bank has taken the advances and 1 to 3 years, many mature paper, we have coated not only the going forward, that at the time of sorting, we will be able to sell it and an good profit. So this is a delivered attempt to accumulate the security -- and of course, because of that, that [indiscernible] it below 2%, though our tolerance is 4.25%. But some time that you have to do, and it is -- it's a good strategy on the profits.

No, no, definitely, you have done well on the treasury front. I think treasury operations overall income is INR 352 crores as against INR 189 crores of loss. And even on the treasury book, the profit has been booked. So that's good just I just wanted to know the reason for [indiscernible].

Not only that [indiscernible] yields will also improve.

We have our next question from the line of Jai Mundhra from ICICI Securities.

Sir, I have a question on ECL provisioning only. So I think you had mentioned that the bank would need around INR 500 crores of ECL provisions. So just wanted to understand the math a little bit. Does this include the purely credit cost-related provisions? Or it includes some of the provisions pertaining to maybe investment book in terms of HTA, et cetera. Or this is the portion for credit provisions?

So it is an overall number, including your investment nonfund or credit. So whatever ECL provisions we are referring, it is overall number. All the assets together.

Right. No. So I understand, sir, but this is pertaining to the credit exposure, right, not limited. So let's say, can there be -- so you're saying that the investment book of a corporate, right, not for HTM, et cetera. So there may be some provisions which may come on HTM, which is not included. It's only the credit exposure.

I will explain that when you will land to the India. Most of you are still [ propel ] convert it to amortized cost. In amortized cost that there is no [ MPM ]. So you need not to make the ECL provisions. Yes, in respect of the fair value and [ FTPL ], you have to make [indiscernible]. So when we are talking about ECL project, we are taking both investment as well as that advances.

Okay. So even the noncredit -- let's say, credit in the sales, let's say, default kind of a provision, which is credit loss loan loss kind of a provision, you're also including some of the hit when you migrate on the treasury -- standard treasury book also. Is that the understanding?

Yes. Most of your esteemed portfolio would be [indiscernible]

Basically, on the basis some information yes, we are doing it. So what sort of draft we could carry the department and the bank has worked out. Which is [indiscernible].

But it is entire group.

Right. Okay. And sir, when in the draft paper says that SMA-2 is clearly a credit event, and there should be accelerated provisions on SMA-2, they have left open-ended that should SMA-1 treated as a credit event or no. So in your calculation, have you taken SMA-1 as a trigger point also? Or gone by SMA-2 as a trigger point?

The significant increase in the credit risk has been considered for calculation of ECL. So SMA-1 also the provisions, but that's the calculations is slightly different from the SMA-2 and the restructured book. Restructured is considered as a Stage 3 and SMA-2 is Stage 1. Accordingly, the provision is calculated

Yes. So as per the RBI guidelines, SMA-2 will be taken in whereas the earlier guidelines of the state, it has said that [ 38 party ] will be part of the Stage 2. So there is a difference. But having said that, our Stage 2 portfolio is very less. So the project provisions is less.

Yes. So that is what I'm wondering, sir, our SMA-2 portfolio or even SMA-1 portfolio is very, very miniscule number or is a very limited number. And the INR 2,500 crores, if I calculate, it is around 1.5% of our loan book. So -- and we have already provided more than adequate on our stock of loans. I believe this would be right back when you look at lifetime losses on the already NPA. So this INR 2,500 crores I was a bit struggling that how are you [indiscernible].

it is arising on account of two things. One is the restructured book, which is around INR 4,000 crores. So that is that we consider as on date, it has a normal provision of 10% maximum. But under the Phase III, it will have ECL competitions and provision is required for that. Second thing is the balance sheet items also has to be considered for provisions. And then standard asset project itself is add on ECL methodology. So all this taken together is the provision calculated around INR 2,000 crores to INR 2,500 crores.

One thing is that I would like to inform you that when we are making that provision stays 3 category impaired assets -- so we have huge management orders. So where about the requirement of provision the India is 40% to 60%. And in that 0% provision. So we have taken 100%. That benefit we will get when we'll led into [indiscernible]. Of course, there will be some increase in the provisions in the part of statement in Stage 2. So that will be offset by the -- whatever the provisions will be released under Stage 3.

So you have not taken into consideration the probable provision release from where you have already provided, let's say, 99%, 100%?

Okay. Yes.

Okay. Understood. And sir, this ECL provision that we have done in this quarter, is it a part of standard assets? I mean in the INR 981 crores of total provision, including income tax, where does it sit? It hold any asset or standard asset?

It is part of the standard provision.

And lastly, sir, the INR 1,200 crore provision that we carry, right? I think this will also include the provisions in restructured assets, right?

No.

Sorry. That is not part -- I mean this does not include the restructured provisions.

A restructured provision of INR 600 crores, which is separate from this INR 1,200 crores.

Okay. So that INR 600 crores is a separate number only? Is this INR 1,200 crores or contingent in net sales, right?

Yes, yes.

I would now like to hand the conference over to Shri, A. S. Rajeev, Managing Director and Chief Executive Officer, for closing comments. Over to you, sir.

So thank you so much and for all your support and all those who are joined this meeting. And whatever for the past 8 to 10 quarters or at least a 15 to 16 quarters, whatever the commitments which we have given and the direction or some kind of guidance, whatever we could be able to do that. And in future also, we will try to do that. And whatever the figures and whatever we have talked, very conservative minorly we have talked, but we will try to improve further whatever we have talked a side to improve further in coming quarters. Thank you so much.

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