Bank of Maharashtra (MAHABANK) Earnings Call Transcript & Summary

Ladies and gentlemen, good evening, and welcome to the Q1 FY '25 Conference Call. [Operator Instructions] Please note that this conference is being recorded. We have with us from the management, Shri Nidhu Saxena, Managing Director and Chief Executive Officer; Shri Asheesh Pandey, Executive Director; Shri Rohit Rishi, Executive Director and all general managers of the bank. I now hand the conference over to Shri Nidhu Saxena. Thank you, and over to you, sir.

Thank you. Good afternoon, and thank you, everyone, for joining this con call. And we are here with the Q1 performance for FY '24, '25, and data by this time has reached, you must have also seen that. So broadly, I will just -- in my opening statement talk about few parameters and then straightaway, we can go for the queries and your questions-and-answers. So our total business has seen a Y-o-Y growth of 13.5% stood at INR 4.76 lakh crores. Advances grew by 19% at INR 2.09 lakh crores. Total deposits grew by 9% Y-o-Y, stood at 2.67%. CASA also has seen growth. Current grew by 10%. SD grew by 6%. Term deposits also have Y-o-Y growth of 12%. CASA share is 50%. Then come to the advances; advances, 19% growth, within which RAM segment also experienced a high double-digit growth and retail grew by 25%, agri by 15%, MSME 20%. Corporate book also has grown Y-o-Y 39%. My GNPA and NNPA numbers, we are maintaining at a very healthy level, and there is no challenge we are maintaining around that level only. Whatever guidance we have set for ourselves for this FY '24, '25 on all these parameters, I have discussed. So we are in line in sync with the guidance that we have kept for ourselves. Certain areas of concerns that we have identified, and which are, I consider also not specific to our bank. But in the system, we are seeing that the credit growth is outpacing the deposit growth and there is a stiff competition in this segment. And we are also trying to see that we get -- retain our share and get some additional share of deposits, which are my raw material to fund and fuel this growth in the credit, where we are seeing a lot of traction in each of our RAM and other segments. My slippage and the asset quality are well within my comfort zone. Yes, we are mindful of these parameters, none of the parameter should be slipping. And we are very confident and very happy that this is again a set of another good quarterly results that bank has come up, which is a performance now consistently coming for the last 13, 14, 15 quarters, and we are maintaining that trend without any deviation in any of the outlined parameters. My PCR stands at comfortable of 98.36%. CD ratio has improved to 78.17%, which I consider at a healthy level. There are some initiatives we are taking, especially for deposits, maybe I have a quick mention on those. So we enjoy a lot of government departments, ministries and entities banked with us for their current and savings deposits. So we are, as I last time spoke about relating a vertical new business acquisition, that vertical headed by a general manager has been given the complete machinery, and they are working, and I'm able to see some green shoots out of their efforts. So traction is seen, and we are now further going one level up ahead to see that we can strengthen this outreach. So my existing client base [Technical Difficulty].

Sir, your audio is coming a bit of like a magnetic sound.

Should I disconnect, connect, what do you suggest?

Sir, I can add -- we can do that. We'll disconnect and I'll call you back once again. Ladies and gentlemen, the line for the management is not clear. Please stay connected, while we reconnect the management line back. Ladies and gentlemen, thank you for patiently holding. The line for the management is reconnected. Sir, please go ahead.

Yes. Thank you. Sorry for that little interruption. Technology gives us a lot of challenges. So take this as that one of that challenge. Now coming back to where I -- we got disconnected. So as I said, some initiatives in the area of deposit, so very quick steps that we took to see that there is no flight of deposits from my bank to other players because, as I said, due to intense competition, some banks are giving allurements with higher rates of interest. So we also had worked out some special schemes as per my ALM requirements and gave them some better rates. So there is a retention of my deposit, no flight. Also, we were trying to focus through this enabler. Can we get more deposits, more customers added to us. So new CIF IDs that added with the scheme is what we are actually focusing on. Then as I said, we have some government relationship, departmental relationships. We are reaching out to them existing both new relationships and trying to understand from them how to deepen the relationship or what is that we can do to solve their -- any issues, while they are doing their basic banking needs. So things like we encounter that there is a requirement for integration, some -- they run some ERP and they have some APIs through which they can connect with us, and we can solve their transactional issues, bulk transactions can -- so a lot of technology can take care of their basic needs. So keeping that in mind, we have created a cell, and whenever there is a reach out from that new business vertical and requirements are coming, so they are being looked at our head office in a defined time line. And we are able to get the objective of getting this existing relationship, further deepened and new relationships, we are able to see some green shoots are getting established through this vertical. We are also looking at the very powerful channel in the digital efforts from any lender today is the mobile banking app. So we are upgrading our app for many features and rather there is a process wherein we will be revamping our entire mobile application and we will be through a lifestyle banking solution, which we'll be launching as the new version of our existing mobile app. So all these small initiatives also will be ultimately helping the bank in easily onboarding clients, making them active on our digital channels, my video KYC functions even on Sundays and holidays, which probably my sense tells me that it is a differentiator to Bank of Maharashtra that on the liability side, not many banks have taken initiatives. Digital journeys have been on the asset side, but my video KYC is working fine and I'm giving that option 24/7 on Sundays and holidays. So I'll -- wherever I am maintaining some relationship with some organization entities, I'm seeing that whether I can give this comfort of them opening the account on a Sunday, holiday at their convenience. So which is also going to help me. We are looking at a few more initiatives, which I can quickly talk about. We want to see that how that co-lending portfolio that we are holding, how it can be further strengthened. We are exploring. We have done some tie-ups and we are exploring more tie-ups with the high-rated NBFCs, whereas risk, governance and other things are well managed. The business is properly getting conducted. We would like to join such NBFCs. For my infra funding also, I'm trying to see the term lending institutions, can I partner with them and where they have the expertise to assess proposals in the renewable sector, in the infrastructure and I can participate and I'm getting certain leads that, yes, this is possible and there are projects where they have given the initial term loan CODs achieved now, or some operative account is required, some escrow mechanism is required. And we can -- that's how build our relationship with these term lending institutions in India and onboard our infra book also further. We have been also talking about verticalization. We have created a lot of verticals to centralize operations, centralize processing of loans and see that we get good underwriting done in the bank, and the centralized operations will help us have a clearer oversight on these critical functions of underwriting, monitoring of loans and seeing that my asset quality and the monitoring is done properly. So these verticals going forward, we are only going to strengthen, and then, yes, we have looked also at product level, so a lot of new products for the segments in the deposit like segmented products for Ultra HNI, HNI, NRI, some trust associations, clubs. We have existing offerings, but we are going to improvise and see that the products are found attractive and then the process of onboarding themselves is also completely happening seamlessly. We have also looked at our retail loan schemes. We have mostly revamped, most of our schemes make them more market friendly, while seeing that the risk that is there is properly addressed. So in the recovery, we have been doing consistently quite good. But like for write-off, our recovery for the full last year was INR 1,000 crores, but we keep a target of INR 1,250 crores to INR 1,500 crores this year. In the write-off book, I have a write-off book of INR 20,000 crores. And my total write-off plus NPAs INR 24,000 crores. So Board has approved an NDND scheme, where I can on very liberal terms do the OTS with these things. So up to INR 1 crore is what my Board has approved. INR 8,000 crores is the portfolio that is eligible under this NDND scheme. And out of my 6.22 lakhs NPAs, I have 6.18 lakhs NPA accounts, which are eligible in this scheme. So there will be a lot of small accounts, which we can clean up through this exercise. We are trying to see that how we can ramp it up. We have around 500-plus properties, which are with me through physical possession. So we'll do -- we have started the exercise. Maybe by September, we'll come with a mega auction of these properties where my success rate is always better. So 2025 is the success rate. If it's a physical possession property that I'm selling and trying to dispose of through auction. So we will do all these initiatives also to see that the more traction is coming in our balance sheet, and we get overall advantage. I think this is a broadly from my side. And since all the information presentation is there with you, we can open for your Q&A, please.

[Operator Instructions] Our first question is from the line of Rohan Mandora from Equirus Securities.

Congrats on a good set of numbers. Sir, my question is on Slide #24. If you look at the market risk-weighted assets, that's come down to INR 426 crores from INR 7,500 crores last quarter. Probably this would be on account of the recent change in regulation. Further, if you can help us understand what will happen on the investment work in this. And also because the yields have moved up sharply on yield on investments. So if you can explain how the recent circular is impacted on the investment portfolio, that's one? Second, yields on advances have declined by 18 basis points Q-on-Q. So is there any one-off here? Or what explains the decline? And third, if you can just share your observation on the agri portfolio, how is it behaving any delinquencies there?

So that yield part, there is a slight decline, but it has no other reasons, but if you recall the regulatory guidelines, that the penal interest, which is earlier was part of that is now not charged as the penal interest. It is towards the charges. And that is one of the reason, this change in the regulatory guideline, which has impacted this yield. It's a minor dip and has no specific reasons other than this. I think I'll ask my CFO to take the next -- the first question.

Regarding market, as you know, as per the new investment guidelines in respect of HTM, AFS, there is no market risk, credit risk will be applicable, that's why we could save INR 7,500 crore plus, and the market risk and there was an increase in credit risk by INR 1,600 crores. So this is the impact of changing the guideline. Talking about yield on investment. You know that as per new investment guidelines, the RBI now, they're not allowing shifting of the securities from HTM to AFS. And earlier the banks used to shift the high-yielding security from HTM to AFS and to sell to market as yielding security on the higher side. And definitely, when you are selling your high yielding security, your yield on investment will come down. Now because of new guidelines, the -- most of the banks -- all the banks including us, we have not shifted. So this has protected our yields. Of course, you will see that the interest income from treasury has increased, whereas the trading profit has come down.

As regards to agriculture advances, there is a growth you would have seen that 35% growth is there. Of course, this is the sector where the stress is high, NPA levels are high, but it is on reducing trend. Now this time, it is 7.88%. And whatever growth we are doing, it is now we are doing away with farm credit, and we are going more into the investment credit like cold storages and food processing units like that. So we are taking the balance view of this, and we are controlling the stress also.

Sure. Sir, just on the market risk weighted asset movement. So what you explained was, on the HTM and AFS credit risk was applicable even earlier and now after the change in regulation it is applicable on HTM and AFS?

Yes, credit risk applicable, but market risk should not be there. So that's why you will find that market risk in March '24, it was INR 7,540 crores. It has come down to INR 426 crores. It is only applicable in respect of the HFT portfolio.

Okay. Got it. And sir, lastly on this...

Yield is there, we have also splitted higher-yielding securities. It is also impacting positively the yield on investment.

Sure, sir. And sir, on term deposits, sir, I believe that a good amount of term deposits should be auto -- would be getting auto-renewed for us. So just wanted to understand what is the proportion of such deposits and at what rates do the auto renew vis-a-vis peak rates offered?

So yes, the trend is always towards the -- unlike the saving. TD is a price-sensitive issue. But 20, 25 basis, if market offers more, my client who has been banking with me for years may not -- they may -- all of them have exercised the auto renewal option and automatically at the due date, the renewal is happening for them and whatever the applicable rate is for the tenor, it is getting renewed, will apply in the fixed deposit. But the -- we are mindful of this. So we have to also see that our retail customers are getting adequate returns vis-a-vis the market, my scheme should be competitive. So for that reason, what we have done is, looking at my requirements, specific requirements as per my ALM, I have created buckets of 400 days, 666 days, 777 days. And we have offered them something more than which is applicable to the retail investor. So that becomes an incentive for them to and they are able to, on maturity, retain mostly it may get auto renewed or the customer can exercise the option of closing that FDR, and then moving it to these special schemes. And then, of course, there's a 20, 25 basis incentive to them, but I'm also fulfilling my ALM as per my need, I'm taking those -- I created those buckets as per my requirements.

Sure. Sir...

Sorry to interrupt. Mr. Mandora, may we request you to return to the question queue for follow-up. Our next question is from the line of Darshil Jhaveri from Crown Capital.

Sorry sir, I just joined the call a bit late, so maybe you've already spoken about it. But could you just give me the guidance for our current year, sir?

Guidance for?

For asset growth...

Okay. Okay. Yes, sure. We didn't [Technical Difficulty] don't worry. Guidance, it is total business. We are keeping a guidance for this year, 16% and my advances within which would be growing at the rate of 18% to 20%. Deposit, I know it's a very competitive. So guidance we have kept is 12% to 15%. CASA, we will maintain around 50% CASA share. My RAM verticals -- RAM to corporate will be 60% to 40% ratio and there'll be plus/minus 2 basis. And my interest income growth, 18% to 20%. NIM, we are -- for the last 2 quarters, we have achieved the NIM of 3.97%, but we are mindful of the impact, which may be created tomorrow if the rate cut is given. So our NIM guidance of 3.75% to 3.9%, we should be maintaining that. Noninterest income also is growing, and we'll keep a guidance of 15% to 20%. Cost to income, I'm 37%, 38% and I'll keep it below 40%. ROA, we are -- we have clocked 1.72%, but a guidance 1.5% to 1.6%, we are comfortable to maintain that. GNPA is below -- it is 1.85% around, and we will maintain it below 2%. NNPA between 0.2% to 0.25%. So these are broadly what the guidance I would like to share. My CRAR between 16% to 17%.

And sir, credit cost, sir?

So credit cost is 1%.

Okay. Okay. Fair enough, sir. And sir, just wanted to get maybe like an idea from you what kind of major time for roadblock or like a competitive intensity is there in deposits, or anything else that you would like to share that can -- on a background of business industry level, that is problematic to our bank?

So if it is the deposits you are trying to ask, so this point definitely was discussed. But I can very briefly tell, yes, this is a very intense competitive area. Now every lender and the system is also seeing that credit growth is outpacing the deposit growth in the system and I'm not out of it. And every bank is getting that same impact. So what we are trying to look at is I enjoy a lot of patronage from my clientele. So I'm trying to ring fenced that first of all and then we are taking a lot of initiatives around to deepen this relationship, taking care of their other banking needs. So that relationship is strengthened, and we ring fence ourselves that there is no takeover of this kind of business or my clients. Then over and above that, we are taking some proactive steps that we will -- we're moving to get new clients added, new customers added, whether in the Retail segment, whether in the Institutional segment, both require a different set of strategies. So my products are getting strengthened, we are improvising our products. We are introducing new products. We are looking at facilitating the onboarding process, making it more simpler, more easier. So I spoke about the initiative of video KYC working for me 7 days a week. So even on a Sunday and a holiday -- any holiday, the customer can take this option and onboard himself or herself. By opening the account, we are revamping our mobile banking application, which we know, and we consider that is a very powerful medium today, the most used channel among the digital channel is the mobile banking app. So that is getting strengthened and we are rather in the process of introducing an entire new lifestyle banking option, where I'm targeting by September, December, the first few set of services will be onboarded, and where we'll be able to showcase and give to our clients much, much easier, more and more number of services through that application.

Okay. Okay. Fair enough. All the best, sir.

The next question is from the line of Bunty Chawla from IDBI.

And congrats on a good set of numbers. As we have seen historically, there has been a strong improvement in agricultural NPA, which has supported us in terms of credit cost and improvement in the ROE. Now the scenario of around farm loan waiver, which is happening. And specifically, if I talk about the Maharashtra State, there has been announcement from the government that there should not be any CIBIL score for the farm loans. So how one should see the impact of this agri NPA going forward, and specifically credit costs and asset quality and ultimately, the ROE impact in next year and next to next year?

So a little bit my general manager recovery has spoken about the agriculture that we have migrated, deviated ourselves from doing KCC loans, farm loans to -- going forward towards investment credit. So to a certain extent, that takes care of my problems. Yes, these developments does have an impact on our recoveries also at times. But we are also trying to track and the monsoon predictions this year are towards normal or above normal rainfall. And all these things ultimately lead to better crop output, and we don't see major challenges coming out from this segment. And so far, whatever is there. For us, it is -- agri NPA has been continuously getting reduced. Things are well within control. And if this monsoon is favorable, I think going forward, we don't see a major challenge building up for any banks for that matter.

Agri -- on the incremental basis, agri and you have been focusing on the NPA and agri side on the investment portfolio. But already, we have done lending to that, so have we taken care in terms of 1% credit cost, which you have guided for? Have you taken some bit of increase in NPA, which we are seeing in the agri portfolio?

Yes. So you see that during this quarter, additional INR 300 crores of provision in the standard provisions we have made, that is for the agriculture. As you told that you know that agriculture is subject to natural calamities and wherever you talked about that. So we are also mindful of such things. And when the -- your balance sheet is strong, you can create such cushions also. So that already we have created cushion and this quarter, roughly INR 300 crores we created cushion in the balance sheet to take the unforeseen stocks.

And credit cost is higher today because we are providing almost everything. And you would have seen that our PCR is 98.38 and then entire thing is being provided and net NPA is 0.20. So that makes my credit cost more. Regulatory requirement, credit cost is absolutely below 30.4. So that will -- conservatively, we said 1 because we are keeping this trend of over providing everything to ring fence ourselves.

Okay, sir. Sir, lastly, on the infra book if we have seen there has been a good -- as a percentage of advances, there has been an increase from last 2 years. And now this infrastructure provisioning, which part -- which has been the circular from the RBI side. Any rough estimate we have done any calculation on the provisioning part on that on infrastructure?

As far as draft our guidelines, we have estimated that. It is coming down, margin of around INR 490 crore, okay. As far as the draft guidelines, this provision also be there, if it is implemental starting from 2025 to 2027. That is over a period of 3 years. So if I make it INR 490 crores over a period of 3 years, our impact is very less and alternatively we've also done some terms and analysis, whereas these additional provisioning, we can pass on to the increasing interest to the customer for maximum to 0.4% to 0.5%.

Sorry to interrupt sir. Have I heard rightly, INR 490 crores, you said?

Yes, INR 490 crores, and roughly our additional provision will be there, as per the RBI guide -- draft guideline, that provision also we can pass on to that over a period of 3 years starting from 2025 to '27 being -- as of these guidelines is implemented, okay? That's not -- currently it is a draft. So that is why you're getting this INR 490 crores, we can give a -- pass to the over a period of 3 years. So alternately, we also see that, yes, we have an option that we can give the additional provisioning to increase our interest rate to our customers, who are coming under the under-construction phase, that analysis -- based on our analysis, we have seen that we can increase the loan pricing by 0.4% to 0.5%.

Yes. Chawlaji, actually, if you see mostly though infrastructure and construction-related loan, where construction risk is there. There is always 2 set of rate of interest. One is the pre-COD and post-COD. So generally, the difference between the 2 somewhere lies between 0.5 approximately. And certainly, when it is a guideline sort of, then depending upon the competitiveness, depending upon the rating of the company and depending upon the other participants in the industry. So certainly, there is always a chance where you can pass on this. So that is the assessment, which the -- us in our banks and also the other banks, which they have done and discussed.

[Operator Instructions] The next question is from the line of Ashlesh Sonje from Kotak Securities.

Two questions from my side. Firstly, on the recoveries from return of accounts. Have you already started using the NDND scheme for your OTS and because your recovery from return of account is fairly high in this quarter at INR 470 crores.

Yes. Yes, this scheme is already there. We focus on the small accounts for recovering written off accounts. And this quarter, what you referred, this more recovery is also because of 1 account, which was actually previously recovered having some legal causes there. And that is why that is accounted this quarter. But averagely, our recovery is around 1,000, 1,500 we envisage in written-off accounts.

And what was the quantum of this 1 large recovery?

INR 200 crores.

Okay. Sir, secondly, what is the conversation that you are having currently with the RBI around the ECL provisions? Any clarity on the time line and calculation methodology?

So RBI -- should draft the guidelines, but still there -- it has to be finalized. And we have been submitting the half-yearly pro forma financial statement to RBI where we are crunching the ECL number. So looking to our profitabilities and the time mandate given by the RBI for amortizing the -- that ECL provision, we are quite comfortable.

Sir, the question is around the timeline for implementation. Any clarity on that?

Timeline -- implementation that it is up to RBI when they come with the final guidance. But at our side, we are keeping ourself ready, already we onboarded or equipped for this software and E&Y for the implementation and it'll take another 9 months to 12 months to start the things.

Perfect, sir. Just one last data keeping question. What is the amount of provisions that you are carrying on the restructured advances? On the outstanding provision?

Roughly, it is INR 250 crore.

The next question is from the line of Ashok Ajmera from Ajcon Global.

Congratulations, Nidhu sir and the entire team of Bank of Maharashtra for yet another good set of numbers, sir. Sir, I have got some data points and some observations. The data point is, sir, if you look at our balance sheet, the reserves and surplus is INR 1,483 crores as compared to the March INR 12,593 crores, so INR 1,490 crores our network has gone up, our reserves and surplus, whereas the profit is INR 1,293 crores. So this INR 197 crore, which has been added to the reserves and surplus, is on what account? Is it because of the change in that investment that the profit of the AFS book goes to -- mark-to-market goes through the reserve or any other region for this?

You rightly said, this is on account of the appreciation, which has gone to the reserves. As per the guidelines, whatever the AFS gives that will go to general reserves. So it has strengthened the reserve and surplus. And second point is that keep that appreciation, you cannot take back in trading account. That's why we will see that trading income is muted otherwise in the first quarter of the year.

Is that the entire INR 197 crores or it has element of some other items also?

Mostly it is that appreciation in the investment book.

Sir now coming on the credit and the business growth. The Bank of Maharashtra over last almost 3 years, 3.5 years, is known for its excellent performance or accelerated growth. The time was there when CASA was 55%, 56% the credit growth was 26%, 28%. And equally, the deposits were also good. But of course, I can understand that the bottom line -- I mean, the base also has gone up. So now we are coming slowly a little on the lower side. Like in this quarter, our credit growth is hardly 2.65% or something. So you have given the target of 18% to 20%. So how do we actually intend to grow our credit portfolio from here because if it is only 2.5% now, are we growing by 15.5% in the remaining 3 quarters [ planning ]? And how do we achieve that? This is on the credit side. And on the deposit side, we are declining on the overall deposit book as compared to the March, I think it has gone down by about INR 3,000 crores. So that is also equally a very, very important point, though, you have maintained the target of CASA 50%. That's a very welcome move. So on both these deposit and credit growth, the overall business growth, what are you are actually the plans and how do we increase the credit and under what segment, because the agri is already too much. And our MSME book is too low as -- I mean, especially the medium, if you leave the small and micro, your comment, sir.

So Ajmeraji, absolutely, there is no cause of concern is what we are looking at because maybe the Q1 is always a muted quarter, which is in the industry seen with -- muted a lot of activities, audit this, movement of the staff, annual transfer exercise. All these have some bearing and impact. We also had the general elections, and these things actually a little bit disruption gets created in the normal functioning. So Q1 is -- performance is no worry for me. If I look at the Y-o-Y also, so Y-o-Y growth that has been achieved and advances is 19%. So this quarter, June '23, also had similar challenges, June '24 at the same set of challenges. And we have done a Y-o-Y growth of 19% in credit. So it's not a major cause of worry for us. But yes, going forward, we have to look -- see, you rightly pointed out that for some 2.5, 3 years is what you said, I think, on 3, 3.5 years. We have been performing at certain level and we have been generating those numbers. We also, going forward, want to now become a bank of greater significance. So maybe if we have to grow in size, we will have to also open up to new opportunities, new areas and then we have to look at how we -- currently, maybe we were doing selective basis, we'll have to open up and maybe the kind of NIMs that we command, what do we do with that, whether we enter into new areas to grow in significance. So those kind of challenges will be there, which will -- we will keep debating and working out. But I don't foresee this Q1 muted performance where Q-on-Q YTD growth is what you pointed out is not a worry point for me. Replying to your other -- this thing RAM corporate, we have a guidance for ourselves 60-40. And this Q1, it was 61-39. So we are within that guidance, and we will see lot of -- we see a lot of traction coming for retail advances and we are growing there under each of the segments of RAM. There is no problem, yes, the private CapEx cycle, which we all have been discussing at several forums, those things have yet to be seen. And I think couple of quarters ahead. That also will come, and then we'll get more and more opportunities. Currently, we are trying to look at infra, renewable portfolios within Infra, LRD. These are areas where the government PLI is there, those sectors are our preferred sectors. So we are focusing on them. And as and when demand is coming from these sectors, we are there to participate as per our appetite and see that what we are able to gain for the bank. So going forward, growth will not be a challenge. And specifically, a lot of initiatives around products, the processes, our turnaround time in communicating decisions. If we are improving on those using -- using as much as possible technology, I see there will not be a challenge to become bank of greater significance. And we have -- we are also mindful that today, we want to see that when we grow, this growth is sustainable one, and we should not -- we should have a strengthening of our risk, governance and technology structure is strengthened to -- let me take care of the technology risk, the cyber risk. So we have -- keeping all these things in mind, we have recently gone for a specialist recruitment, where 195 officers will be onboarded in the risk management, the treasury, the ForEx, the risk and the technology. So this will all help me strengthen my risk and governance culture, compliance culture also strengthen my technology structure that is there. And [ ward ] myself -- properly guard myself on the technology risk that we are seeing in the -- this thing. So with all this, we are properly, I think, moving in the right direction and growth and the sustainable growth is what we are targeting.

Point well taken, sir. Sir, one point is on the -- we have a COVID reserve for a -- I think, for last almost 2 years, 1.5 years of INR 1,200 crores. Do you have any -- and even auditor also has pointed out in the measure -- in the emphasis that we have a COVID-related provision of INR 1,200 crores. Do you have any plans to -- though our provisioning is within control, but in order to show a better profitability as compared to other banks, do you have any plan to use this part of this COVID provision, which no more is required and no chances of as such of any contingency on account of COVID is there now, of this INR 1,200 crores, any plan for that? And my second thing more -- a little more information on the -- we have been talking about digital and tech front. But like earlier there used to be a report in our quarterly results also that how many cycles have we completed? What is the kind of budget, which was there? How much have we consumed, how much budget do we have? And where are we heading finally on the technology front. So these are the 2 things, sir.

So 2 parts. I think, sir, the part one is my silver jewelry, family silver or whatever we call which we'll keep see -- if you look at broadly the guidance, which is coming, the advisers, which are coming from the regulators, not only in India world over, that when the good times are there, you may create extra provisions for yourself. And so you can start plan -- you plan for bad times that may hit you later on. So we have been just following that strategy. Good times are there. So we are keeping extra provisions on that. And we don't intend to touch on those things because my operations and we should -- intention is that every quarter can we just add up to that. So we live with that same philosophy that good times you should plan and make the extra provisions more than what regulatory prescriptions for times when they change, when the times move towards the hard times. I think for the technology, I will ask my ED to respond, budget and other things. And anything you want to add Srivastavaji on the provisioning part, Ajmeraji...

To supplement MD sir, he rightly said, see these are our silver and we -- in this quarter, we have also added INR 300 crore in that silver. So the good -- when the -- and as MD sir told, when good days are there, you try to accumulate the things, so that can be consumed in bad days. So we are not seeing bad days for longer terms also. So we'll continue to accumulate such provisions in our books to strengthen the balance sheet.

Yes. Ajmera sir, coming to the second one on the digital front. And we always share that what is our budget and utilization. So last 3 years, this year, it is almost INR 1,000 crores approximately, which we are having. And if you see our -- on the technology front last 2.5, 3 years, if I take, then all over has 3 switches, which is one is the e-FD switch, we have already migrated. The second one is FI switch; we have already migrated. Now we will be in the position to onboard almost 9,000 BCs in a phased manner in next 6 month to 1-year period. So -- and with more than 100 services. So that FI switch recently only, I think some 15 places we have migrated. The third one, UPI, we are in line in that. Now coming to the BC, DR and near DR, all the 3 are not upgraded even shifted to the best-in-class. So that is the second point. The third is that, that most of the -- our cloud and the -- what we say Nakshatra 2.0 and for cybersecurity covers 2.0. So we have now invested a huge all these RFPs are on the closure side and moving to implementation side is still because as our MD sir has said, that we have plans to deepen the relationship and also to give a good onboarding convenience to the customers. So on that, 3, 4 things are very much required. One is the CRM solution. The another is the Lifestyle banking covering both mobile and this and the third is the Microsoft entire suite. So Microsoft, we are on the verge of my implementation, it is going on. The entire audit because when we talk about growth, certainly when we are asking about 28% to 29% growth and the other things, then we need to have a good the GRC mechanism. So our entire audit package is now launched almost 6 modules and now another 6 months' time. So we are going with the 19 modules in that target package. So coming to the, I think there's 4, 5 things, which are the major ones. This RFDs are almost closed, and we are in a process for the issuance of the purchase order and implementation as well. So I think the upgradation of the entire infrastructure, not only software, but even hardware. So we have refreshed -- and it is all on the implementation side. This is the position latest as of now.

Because the bank is...

The next question is from the line of Yuvraj Choudhary from Anand Rathi.

Congratulations on a good set of numbers. Sir, can I get some color on the agri book like how much would be the share of KCC loans? And how much of the agri book would be based out of the State of Maharashtra?

Agri book, as I already explained that we are now concentrating more on investment credit rather than farm credits. But still the percentage of growth is there. It is almost 35%, and we are growing in agri ancillaries at highest 38%.

And as far as KCC is concerned, concentration in Maharashtra is almost 60% and other than Maharashtra it is 40%.

But broadly, what was explained that from -- we are moving from production credit to investment credit. So focus is towards that.

The next question is from the line of Bhumika Jain from Desvelado Advisory.

Congratulations sir for a good set of numbers. My question was, firstly, whereas the cost of deposits increased by 10.3%. So what can be the reason for this?

Cost of deposit increased. If you see the cost of deposit has come down from INR 4.86 crores to INR 4.72 crores, it has come up. So as it is on account of that, we are having the higher average CASA -- whatever case the CASA, we got in March. So it was with us rather [indiscernible] up to 15 June, and it has helped in keeping our cost of deposit on the lower side.

Okay. Okay. My next question was also the capital adequacy ratio has also fallen. So what can be the factors contributing to that also the market cap. Firstly, the credit and operational risk has been increased. So that can be included in that, but market risk has fell from 7,500 to 426, that's a lot like more than 100%. So can you give the breakdown of that?

This year -- this quarter, we have not raised any capital fund. And in July, we have raised the fund, because of there is a dip in CRAR ratio, and yes, there is a increase in credit operational risk because you know that in operational risk the new year we have added. So your profit for 2024, we added while computing the operation risk, so it has increased [indiscernible]. Regarding market risk, as per the new investment guidelines in the split of the HTM and AFS market is not be applicable, and -- but the credits has increased. And since our advantage has also increased some credit has come from the advances side. So overall, if you see, despite not reaching the capital, we are able to maintain CRAR above 17%.

Okay, sir. Okay. Could you...

Capital adequacy, I'll just add to what my colleague told is not a concern at all because we are much above the regulatory prescribed, and my guidance is 16% to 17%, we are standing at 17.04% what we just mentioned in -- on July 4, we did a raise of INR 1,000 crores. That takes my CRAR to 17.7%.

Yes.

So we are comfortable madam in that.

Okay. Okay, sir. Also, I wanted to ask how do you plan to navigate and stay competitive given the rising competition in your industry, like you told me about this -- somethings like a few minutes back you told the video KYC thing. Video KYC thing is also available on the Sunday. So what other that point out that your company is makes you different from others?

Right. So see, there are 2 broad components. One is the asset side; one is the liability side. What we are looking at is the product that we offer in both the segments, asset and liability. So we are looking individually at the products, and which is the segment in the market where we want to reach out and whether my existing product is -- of making some value propositions for them or not. So we are looking at, first and foremost, the product improvisations. We also in the process are finding that there is a new sector, new segment, which is growing or there is a new segment -- there is a segment which is not well taken care of currently by the bank and can we introduce new products for them to reach out to them. So that also effort Ultra HNI, HNI clients we are trying to look at segments of NRI. So we will come up very quickly with new products. Products are there, but can we have some more tailor-made schemes that will appeal to them. And then second part with products. So products on the liability side, similarly, on the asset in the RAM, we have done a review of all our existing products in the retail, agri and MSME segments. So all the schematic products have been reviewed, and we have for the ease and convenience of our field functionaries and also helping them to explain these products to our clients, who come in with it or we reach out to them to explain. So master guidelines are given, and this guideline for whatever circulars that were issued on that particular scheme, they are all consolidated and just like RBI comes with a master guideline. And every July, they've reproduced whatever circulars, even no changes there, they will give. So all -- one guideline comes in one place. So that has been done. So small, small things, and there's a long list of these kind of initiatives. Ultimately, all aim to see that the client gets a good experience, get a value. And it's easy to onboard to our system. My field functionaries are properly empowered. They are able to easily market and spend their energies in new customer acquisition. So those kind of initiatives are there around products, around processes. So processes which are easy to onboard, there is no cumbersome. So that one small thought came that why this video KYC cannot work on a Sunday and holiday in cities where most of us are having no time in Mumbai, where we can get, so if we give him/her the option that on a Sunday, you can come and you can do the video KYC functioning and between 10 to 6, my video KYC officer is available, and they'll help the entire process of onboarding. So suppose one organization we have reached where there are -- in the payroll business is allotted to me, and I get 500 employees to be onboarded. So that's how we can use technology, we will make a link and send to them, and they can simply click the link as per their convenience, do the entire account opening process at their ease. And there is no manual intervention, branches not to reach out. The account completely starts functioning and we are able to send an account opening kit. So as granular things as the account essentials, our passbook, how does it look like, how our debit card, our -- does it give a smart look and the way the clients of today would want it. If we are reaching a particular segment. So we are even looking granularly to that levels that my account essentials, card, check book, paying slip and these things, whether they are all updated and customer onboarding is totally frictionless, seamless. So these kind of initiatives, both on liability and the asset side, using a lot of technology for all these things wherever possible. So while my ED has spoken about broadly the structure, the technology structure we are having DC, DR, near DR and all those. We are also looking at every spend on technology, how it is making life of my client easier. So with that, I'm sure the technology and the returns on my investment through technology is going to start coming in, in a better fashion.

Yes. Just to supplement, like you say, video KYC, we have already launched some 4, 5 digital journeys in the earlier quarters. And now we are again tested and now POC is also that we are about to launch another 4 or 5. So what happens, when you come to a digital journey, so like video KYC. So compliance is done basically within the journey itself, point #1. Point #2, my staff gets free because it is digitally done. So CKYC and all, it will be done. Third will be customer convenience. So similarly, I think in public sector space, Bank of Maharashtra is one where the robotic process automation, we have implemented 46. So 46 are light, in which 8 to 10 are straight away customer safety. So within the minutes, their resolution, reconciliation is done. And around 15 are under development. We are close to -- probably by September we'll be close to [ 60 ], so that is the second. And third, we are having the cluster approach growth for a targeted market approach, whether MSME or whether on the retail side. So these are the few and we have one digital business zone, which is having a target of INR 5,000 crores. Already, they have achieved INR 2,500 crores, they only do business digitally. So they don't involve the people in the field function.

Okay, sir. Also, the last question is that I want to know your company's moat like what thing you -- the Bank of Maharashtra is providing that your peers aren't?

So differentiator for the bank is what you are -- so yes, I think, see, it's a tricky question. I would take it because most of us look alike, but we are trying to still find differences. And yes, we have differences within -- and this video KYC is a small thing. We have a list of items that differentiate me from the 12 PFDs. And even we are looking at how we can differentiate or what any new generation private bank would do, can we not do it better than that. Not to replicate, not to just go ahead and see what they are doing and try to copy that, no. We can always better that and do that. So a lot of differentiators, we are working on it to -- when we go out and we -- when we talk for new business, my new business acquisition vertical does not just go and say that these are my products, these are services. We go in a very structured manner, well research that this appointment and this meeting with their prospective client, we understand whose they currently are banking with. So for what all their banking needs, which are the banks they are dealing with, and what is the problem points, pain points for them and whether I can simply go in that meeting and tell to the client that this is something which I understand is your pain point and can -- and this is what the solution I can give you. So we see that success rate, our hit rate to convert these calls into real business sitting in my balance sheet has also increased. And that's what they are very systematically working on and doing it. So we definitely are continuously working on creating differentiators for ourselves and then going to the market.

Okay, sir. Sir, [indiscernible] can you tell about the numbers...

Sorry to interrupt. We would be taking this as a last question. So I would now like to hand the conference over to the management for closing comments.

Okay. I think there was a good interaction, and we will keep -- we'll be keep coming and trying to see that we keep communicating with the strong fraternity at large and because we have our plans to showcase how the bank has been performing. We have our plans in place to go for some capital raising, we have our plans to become a bank of greater significance, and we would always need and request positive indications coming from this powerful community when you write for us, you write on us it impacts. So that's my closing comment. That's my request, and we will keep our engagements with you and not only necessarily that with every quarterly, hence in between, also, we will try to plan out and keep engaging with you all. Thank you for joining the call today.

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