Bank of Maharashtra (MAHABANK) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Bank of Maharashtra Q1 FY 2026 Earnings 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, Mr. Saxena.

Good afternoon, and thank you for joining this con call and hearing out from the bank how the quarter FY '25-'26 Q1 has been, and I'm happy to share that the quarter is among our -- I should say, a consistent quarter. Bank has been delivering this consistent performance for 3 to 4 years now, and this quarter also qualifies as yet another consistent performing quarter. Whatever guidance that we have kept for the business growth, total business, advances, deposit, CASA, RAM, so growth, asset quality, profitability and efficiency ratios, I think all the guidance numbers seem to be well within the range, if I should say, for all the parameters, 15, 16 parameters where we are sharing guidance for the FY, the bank's performance is in sync with the guidance number. The Q1, traditionally, we all know becomes a lean quarter for the business, lean quarter for growth, but the bank has been maintaining the trend. There is no spike up, down. This is a consistent growth story also, and there are some enablers, of course, I would like to a little bit talk about that. Lot of new things have been done around products, processes, how the products are competitive in the marketplace when our field functionaries are going and trying to fetch new business, trying to add more customers to the bank's business. Are the products supporting them? Are there products finding competitive edge for them? Are they in sync with what the best of the best offerings are there in the market? So we keep looking at our product profile. In fact, all basket of liability and asset products are mandatorily reviewed in the bank once in a year, and all my verticals who are managing these portfolios keep looking at because environment is dynamic. So in between the year also, if any change is mandated or they themselves want to give some differentiated proposition to the clients, they would keep doing that throughout the year. Beyond the product, we also see the process that we are following for onboarding customers. Customers once onboarded, whether on my digital channel or through the physical branch channel, are they conveniently able to bank with us, conveniently able to transact with us or there are any pain points to address. So we keep looking on beyond products and see that our processes, how they can be improved, how they can be made more seamless, give a better experience to the customers. This is very consciously done product processes, and the another differentiator, the bank is very consciously expanding into new geographies. We are a fast expanding bank. While you would have seen post the merger consolidations in 2020 in the industry, some of the large banks have gone for rationalization, and that typically was the logical step to do, and under that process, some branches had to be rationalized, but we are a differentiated bank, that for the last 3 years, we have been actually opening branches, reaching out to new geographies and ensuring that our presence makes us a Pan-India bank, which is some time back already achieved. The branch expansion is still going on, and for the next 5 years, we have a broad objective approved from our Board to open 1,000 branches in 5 years, and we have broken down this large objective to the next 3 years and we have carved out a list of 321 branches. So a Project 321 is running in the bank, and passionately, a vertical is driving this objective that they are opening branches. And if I tell you, the branches are opened in the potential growth centers of the country, and lot of data has been used around to identify which is the center Bank of Maharashtra should be opening its presence, and down to the PIN code level, the study has indicated to us that this is where the growth is happening in the district, and that's how you have to look at your expanding the presence. So we have this objective of opening 321 branches in the next 18 months. And a lot of planning has gone behind this. We have gone for recruitments to match the expanding needs. We have gone for recruitments in the specialized verticals. We have gone for taking care of specialized skill sets in the areas of improving the compliance, the governance, managing risk, the technology risk. So all these have been very consciously looked at and skill sets in these domains have been recruited in the bank, and they are actually put together. We are ensuring that the bank is not only growing, but growing in a sustainable manner. Because today, if you ask me, the regulator will not have a forbearance if you are found not growing a segment, not following the guidelines or the expectations from the regulator. So we are very mindful of what the expectations from regulators are. Not only that, even if a draft set of guidelines are released, we quickly have an in-house system to look at what are the prospective set of guidelines that may come and whether my current functioning is addressing those concerns that are being flagged by the regulator, and we start working on building the right setup if there is something found to be improved in our present set of working. So that's how we are growing, fast expanding. And we are very mindful that the growth that we are looking at, it is not only in the top line growth, which is important for us, any growth in the top line, correspondingly, how it impacts the bottom line and the various ratios, which we actually are leading in many of the parameters in the industry, in the growth parameters, in the financial ratios, profitability parameters, we lead the industry, and typically, we do a comparison every quarter. So March 2025, the full year performance, we looked at 25 metrics across growth, asset quality, NPA levels, profitability, ROA, ROE, NIM numbers, capital adequacy, CET1, so on and so forth, and out of 26 parameters, we were leading the industry in 18 parameters. So industry, we are not only comparing ourselves with the peers in the PSPs, all the PSPs and the large -- even new generation private banks form part of that comparison. We submit this analysis every quarter to our Board to also look at how the bank is performing. So it is not only growing, but growing sustainably and also growth is with profitability. So we are very mindful that the new business that we are acquiring, how it is impacting the bottom line, and very consciously, we have even taken calls to probably not onboard a new business where the bottom lines are not impacted favorably. We have taken a lot of initiatives, tried to differentiate ourselves, technology is one focus area, and we are decided to not only come up with a new version of our mobile banking application, which today we all understand is a powerful medium of transactions for clients. So mobile banking, it's not a new version. We have taken this project on fast track and probably 1 month from now, we will be revamping our existing mobile banking application and try to deliver a world-class kind of an experience through the new application that will be available. We feel that this will bring a lot of full traction to the core business. New clients in the Personal segment will be attracted. We have got the regulator permission for opening a GIFT IBU and that project is approved to the bank in less than 5 months from the regulator when we made our request for allowing us the license. And today, I think that is going to be one big enabler, GIFT City is getting lot of emphasis, lot of focus from the government also, and for the last 1.5, 2 years, lot of traction is seen and this should be the best time, the right time to see that we scale up our activities and operations, and within these 5 months, we have onboarded the -- recruitment has been done wherever we wanted to have some extra skill sets and the best resources try to identify available in the market and on board. The technology decision has been taken, which ideally takes 6 to 7 months' time, but we are also requesting our partner to help us start operations as soon as possible. And this, again, will be a game changer we feel because it will open up a lot of opportunities being the first global presence for the bank of 90 years, we will be able to participate in global syndications. We will be able to do ECB transactions for our good old corporate clients, and not only customer stickiness will enhance, we will be able to get new business opportunities for growth, and that GIFT IBU should be in the -- in this year itself because we envisage in Q2, we will start booking business there. That's how we are moving, and so this is all broadly from my side, maybe -- the performance presentation we have shared with the investors and maybe I'll take a pause and look at some questions or queries from your side.

[Operator Instructions] The first question comes from the line of Rohan M with Equirus Securities.

Congrats on a good set of numbers. Sir, I wanted to understand the NIM movement this quarter because we have done a good job on NIMs. So on the yields, what was the benefit that came from MCLR, how much was the impact from repo cut and what was the benefit of NIM mix change?

Yes, Rohan, if you see my last year guidance was to have a NIM of 3.75%. But if you see last year, Q1, Q2, Q3, Q4, we were already having 3.97%, 3.98%, 3.98%, and we closed the year with a 4% NIM, so -- but if you look at the guidance because this fact of rate cuts was well known and on expected lines. So NIM guidance last year, we have maintained -- despite doing 3.98%, 4% kind of number, my NIM guidance for this year is conservative again, 3.75%. If you look at NIM that we have achieved in the Q1, with the repo cut, my 40% of portfolio is linked to repo loans. Now I have to mandatorily pass the benefit which we have done immediately on the entire portfolio, and we were -- the calculations were there, we were expecting around 18 to 19 bps as per the entire RBI rate cut that had to be passed on the 40% loan book. But what has been other strategies that we have put in place, I will just like to mention those to see that my NIM contraction is not to that extent or how we can protect it. So if you see my cost of deposits, it has actually come down sequentially, and how it has happened is we have very consciously during the last 10, 12 months, we have not gone for high-cost bulk deposits. So very consciously, strategically, the bulk deposit when it is coming for renewal, we have not taken the renewal, and we have focused entirely on the low cost. My CASA share when we closed the year is 53%. The guidance we are keeping to maintain above 50%, and if you see my Q1 also, it is above 50%. So this is one big enabler. My average CASA has seen an improvement of 14 bps, 14% point year-on-year. So straightaway the 18 bps of reduction in repo loans have been offset with this -- the high CASA and very conscious strategy of not depending on high-cost bulk to fuel my growth. So that's how we have seen, whereas probably the industry may see that kind of contraction, but we have seen -- my NIM has come down to 3.95%. Also, we have still some leftover portfolio. My MCLR book is 55%. Now that 55% in the last 12 months, we had gone for MCLR raise 5, 10 bps, and over the 12 months, almost 35 bps of MCLR raise happened. So there is still one or 2 more quarters where some accounts resets will happen. So these 2 factors put together, low cost deposit, that kitty of more than 50% and consciously doing away with bulk, high-cost bulk, and this little bit of MCLR resetting remaining in accounts or happening in phases, this has actually cushioned my NIM contraction. And -- but still, I'm mindful of -- maybe we can see with the benign inflation number, retail inflation is 2-point something, and we may see further rate cuts. So my guidance, if you look at is 3.75% for the full year, and I feel the kind of consciousness in terms of doing business, growing fine, but growth with profitability, that kind of focus that we are having, this guidance we will definitely achieve for this year as well.

Sure, sir. This was helpful. But sir, on the yields also, despite the compression from repo, we have been able to maintain almost flattish Q-on-Q yield on advances. So does the MCLR movement explain the entire thing? Or is there also a component of loan mix change? Because this quarter, we have increased gold loans, we have almost doubled that, and we have run down agri and MSME portfolio by almost 7% Q-on-Q. So did that also have an impact on the managing yields?

So yield on advance has been 9.28%, which is a healthy yield, and I'll tell you a couple of things have worked to have this kind of profitability numbers. We are very consciously on the profitability and the pricing aspect in every transaction that we are doing. So we have a T-bill linked rate product with us, Board approved, and where we could have lent to central PSUs, AAA corporates and build up our top line. But whatever exposure we had that we actually consciously product is there. But today, we don't have any exposure in that. So the segments, we are -- not that we are not mindful of quality. It is all investment grade and is what we are looking at. But consciously, any business -- any new customer acquisition, if it is not impacting favorably the bottom line, we are not so willing to look at that. Sometimes out of sheer competition, we will match, but we also then try to look at how the relationship can be made profitable. If it is a vanilla credit, that relationship we are having, can we have some ancillary business from that corporate, some of their payment collection requirements, can that be routed through us, some fee-based income can come, some payroll business can come. So we are very mindful on the profitability with every customer. At transaction level, we have tried to drive this point in the field function is also essential part of my review now from this quarter, 17, 18. So we have acquired some software, which helps me to let the branch see how profitably they are operating. If they are growing fine, it's not only the top line in this FY that we are going to review, we will see that whether their growth at the branch, how the profitability has behaved. So bringing in that kind of consciousness in the field functionaries, I'm sure things will -- people will be more conscious at the ground level as well, in terms of how they look at offering concessions, special rates, can they compensate any finer rate with some ancillary business, so on and so forth. So this is how we are looking at this issue. Yes, with more rate cuts that can happen, my 40% loan book immediately gets repriced. We would -- we have kept, I think, conservative guidance despite even maintaining it for last 4 quarters, above 3.95%, we are keeping a guidance of 3.75%, which again is a very good number. We -- in fact, with 3.75%, we again lead the industry. The next number could be, if I'm not wrong, 3.5% or 3.6% -- 3.5%. So we -- that's how we differentiate ourselves in this NIM metric also.

Sure, sir. And sir, lastly, we have added duration in the investment book in 1Q. So just wanted to understand your thought process for doing so, given that yields have fallen.

Yes. So you know that when the RBI reduced the repo rate, but the market, they have not responded and rates have come. And we were knowing that going forward, RBI is further going to do these rate cuts. So we have purchased a longer-term duration security in fact an SDL also in order to maintain yield or to protect our yield. So that is the thing that it has impacted our duration. The whole idea is that protect the yield and going forward when the rate -- there will be rate cut, we can take the benefit of the market.

You want to add anything, Divesh, Pooja?

We have purchased when the yield was on the harder side, and now rates are coming down, cooling down. So there will be the good appreciation even return from the booking is good.

And as such, if you see that we are sitting on the appreciation of roughly INR 600 crores, and same with the case of STM. So going forward, you will see that some of the appreciation will come in the form of the -- to improve the profitability of the bank.

Next question comes from the line of Suraj Das with Sundaram Mutual Funds.

I think I will follow up with the previous question only of Rohan. I think last quarter, your 40% of the loan was linked to repo. Now I guess your transmission of the repo rate cut would be immediate, I mean, which would be T+1. So 40% of the portfolio seeing something like 75, 100 basis point rate cut, but still your yields are intact. So what is the -- I mean, mathematics, sir here, if you can just explain beyond the -- I mean, whatever you have mentioned because if you transmit 75 to 100 basis point on the 40% of the portfolio, it would be something like 30 to 40 basis point kind of a yield decline, but your yields are intact on a Q-o-Q basis.

So as I mentioned, in terms of pricing our loan offerings, we are very mindful of that. Our -- the emphasis is always that business is happening and profitable business is happening. Growth is with profitability. With that kind of a philosophy, today, when a proposal is brought to a committee of the Board or my committee or my ED's committee or CGM's committee or GM's committee in head office, I'm talking about, they're all mindful and very consciously looking at this aspect. It is not just growing the portfolio. We have kept our aspirations to become a bank of greater significance to grow in terms of our ranking among the 12 PSB's. But that's not a -- that's an aspiration, but we are not going mindlessly taking top line growth and not looking at how it is impacting the bottom line. We have also done a couple of things around -- see, beyond this CASA, maybe I can -- we have a look at these co-lending opportunities. So we started off the year with around 2 NBFCs where we had done some co-lending, and we have developed some in-house technology where the entire transaction of disbursements, collections, validating of payments and -- is taken care by technology in a seamless manner and we are through proper integrations with the IT of the NBFC. And today, we have 9 partnerships. Here, again, we are leveraging on their strength, their reach to areas, geographies where they are not -- we are not present in the segments, suppose it is gold, they have been doing this kind of activities for decades. They have their robust audit mechanism, robust recovery mechanism. And when I'm doing the business from the branch, same business gold loan versus when they are -- we are doing co-lending partnerships, we are able to charge 100 bps more there. So that kind of things are actually -- somebody mentioned, I think I skipped, the gold loan portfolio has grown, 58% of year-on-year growth in the gold book whereas we had put the focus in the last -- beginning of the year itself. So gold loan has grown. And we have taken care of the associated risk that are there in the business. Only after putting in place the entire system of safekeeping of flat jewelry, the valuation, the 2 critical components, once we have set that infra in place, we have gone ahead and done that business in large manner. And in co-lending, we are getting more better yield, better returns, better pricing, maybe you'd like...

So Suraj, you see that last year, we have raised MCLR 35 bps, and that increase in number I say will be applicable at the time of reset with that annual reset. So number of resets happened after the repo cut. So that's why despite the reduction in repo, increase in MCLR and such reset, it has protected our yield on loans.

Sure, sir. Understood, understood. That's very helpful. And sir, I mean, while your cost of deposit has come down, I think your cost of fund has not, that is also partly because your borrowings has increased, sir, is this opportunistic in nature? Or I mean because you -- I mean, it could be strategic also that you are replacing your bulk deposit with some of the borrowings this year. I mean if you can give some rationale there.

So Suraj sir, what you are saying cost of deposit has come down by 15 bps, where -- I mean that is -- I just mentioned and we discussed. Cost of funds also have come down 4 bps, not as sharp as the cost of deposit, but overall cost of funds have come down 4 bps, and yes, there was a conscious strategy to look at other options of refinance or raising resources, funds through infrastructure bonds, and those kind of enablers, approvals from the beginning of the year also, we have gone to Board and taken and appropriate time, we will keep doing these raises where to see that overall borrowings and cost of funds and things are remaining under control and our NIM is getting favorably impacted through such measures. We'll keep very mindful of those things to not -- or less depend or not depend at all on high-cost bulk and look at other options to raise resources.

To add, Suraj, if you see those, there may be higher cost in respect of the raising the alternate resources, but looking to the benefit involved in respect of the exemption from CRR and SLR cost and the ability to directly divert such fund to the advances where that margins on the higher side, it has improved -- it has a positive impact on our NIM.

[Operator Instructions] Next question comes from the line of Ashok Ajmera with Ajcon Global.

Compliment Nidhu sir, and the entire team of Bank of Maharashtra, first for coming out so fast with the result on the 15th, I think you are probability the first bank, which shows like your accounting, your corporate governance, and your entire CFO and team, deserves rich compliments for this team. Having said this, sir, you have also maintained the NIM in spite of the pressure of the rate cut like and not passing on the entire interest to the borrower, but still you maintained your NIM, rather it's a good NIM sir, compliments for the same also. Having said that, sir, this quarter, though a lean quarter and a muted quarter, but I think for the first time in last 3 years, we have gone into the negative business growth. I think the last was June '22, which is for the first time, I think, in what 12 quarters or so. Coupled with that my question is that you still maintain the trading guidance of 17%, which you had given for FY '26, deposit 14%, CASA above 15% in any case is there. So do you think that -- and looking at the performance of this quarter, you will be able to maintain the same guidance and achieve the numbers? Or you would like to revise the guidance on the business growth and the credit growth especially? This is the first question.

Right, Ajmeraji, thank you for complimenting my team. Yes, they are working really hard. Every vertical is putting in their best efforts and you would have seen traction in every of the segment of the bank. Bank, its business and other issues, other activities, how we are looking at ramping up our HR, how we are looking at ramping up our other infrastructure, which is going to support our growth, our expansion needs, new branch opening. So every vertical is doing that. Thank you. They deserve the compliment. As regards, I think there is some error in understanding. So this quarter also has seen a year-on-year growth of 15% in total business, which has gone up to INR 5.46 lakh crores, and we have added INR 70,000 crores so maybe somewhere -- total business, we are growing, Ajmeraji. There is no -- not a single parameter, in fact, business alone is, as I said, not important. You look at asset quality, you look at profitability metrics, ROA, ROE, you look at capital adequacy. You look at the stress numbers, you will see for the last 36 months, 48 months, if you plot a graph, it will be a consistent performance, there is no quarter -- single quarter where we will see spike up or down. So this quarter also in terms of business, it is there, and what is actually supporting I already explained, the new geographies that we are entering into, that also new branches are adding annually business to the bank kitty and 500 branches in last 3 years, 120 in the last whole year and this 321, this -- I think the pace of growth with the new branch, new geographies, new markets that we are going to enter, GIFT City IBU that alone holds a huge potential. So I think growth will not be a challenge at all. We will have to keep looking at which are the profitable opportunities and how to reach out to them and how to see in this era of competition how we can differentiate ourselves, sometimes through pricing, sometimes through quick decisioning, sometimes to just to differentiate ourselves by the reach out, how we reach out to the top-rated borrowers and how we fulfill their -- completely understand financial needs and deliver them. So that's how we will keep differentiating and growth guidance that we have kept total business to grow at, for this year also 15%. I see there will be no challenge in doing that. Advances within which will grow at 17%. Deposit, we have kept a guidance of 14%.

Point well taken sir. Sir, a few data points and some clarification and explanation. This quarter, we had little higher slippages of INR 727 crores, as compared to the last quarter. Then our SMA-2 numbers also have gone up to INR 171 crores as compared to INR 40 crores of the -- in the last quarter, which is little bit a cause of concern because the numbers have gone up substantially high. So on this too. And secondly, I would like to know something about the profitability, which has gone to the reserve of the AFS because there is a gap of INR 226 crores, I mean, there's an addition. If you look at the net worth of the June and the March, I think INR 226 crores. So what was the profit figure, which has gone to the reserves on account of the Treasury operations because Treasury otherwise also performed very well. If you look at the segment-wise, the Treasury profit for the quarter is INR 625 crores income as against INR 360 crores. So these are the few data points and some explanation.

Sure. So Divesh, you answer the treasury part, you answer SMA-2. I will just -- Ajmeraji, INR 727 crores of slippages, yes, within which if you look at, you asked me INR 343 crores. So 47% of that slippage has come from the agriculture segment and now what we have done is, what we have looked at, this is the trend we have seen in Q1 for past couple of years, 3 to 4 years, the agri segment because of the cyclical nature is finding a slippage in the Q1, but what -- since we are aware, we have very consciously looked at how fast, how quick these slippages, either, if not arrested, how can the accounts be upgraded. I'm happy to share last year, during these 15 days, we upgraded INR 100 crores, we have already upgraded INR 240 crores from this fresh slippage. And as I said, agri, which is a cyclical kind of thing, I don't see major concern emanating here because if you see the monsoon prediction, if you see how monsoon has already reached and I think the agri segment is going to have good prospect for this season as well. So with overall prospects favorable, I think the agri segment challenge that typically is seen in the Q1 is not going to impact much this year the way it would have done last year. I think, Divesh, you can...

Yes. So sir, treasury, there are 3 major components which have contributed, one is that domestic profit. So it has increased from Q1 of '25, 37 to 141. So we had some maturities where we booked that this particular quarter, and we also had this opportunity to book profit in mutual funds, which was not there in the Q1 of FY '25. So INR 104 crores added through domestic profit, additional Q-on-Q. ForEx also, as you know, there has been -- market has been a little active and we could book better ForEx profit from trading, and that has added to almost INR 40 crores. So -- and these are the major additions what you are talking about in terms of the Treasury income growth.

To supplement Diveshji, what you rightly said, in respect of AFS, further appreciation in this quarter, it has gone to the results directly, it will go to result, not to profitable and loss account, so that has also added to our capital.

So Ajmeraji, MD sir already gave some response on the agriculture slippages, but I will tell you that the agriculture season is this time good. There are some review, renewal delay happened into some of the zones. So definitely that review, renewal once done, and again that whatever slippages are there, we will definitely recover it. Coming to the SMA level, the observation you have taken from the SMA-2 INR 40 crores to INR 171 crores, but if you see the SMA-1, it's gone from the INR 214 crores to INR 114 crores. So it came down by INR 100 crores from SMA-1. So some accounts are shifted from the SMA-1 to SMA-2, and it will always happen, it will be rolled back, sometime it will roll forward also. So definitely, we will take care. If you see our slippages and the total stress on the book every year and every quarter, it is in improving stage.

One more thing Ajmeraji, between SMA-1 and SMA-2, if you see historically, this figure has been more or less equally divided. So some distortion here and there that happen, but it's not something which is alarming and team is on the job. Our slippages will remain under control.

Next question comes from the line of Akshay Badlani with HDFC Securities.

The first question is more on the strategic side. I think whenever we see our MSME NPAs, overall asset quality in the MSME book, it stands out compared to other PSU banks. So what are we doing separately? Or what are we doing differently compared to other PSU banks that are our underwriting has been superior for quite some time now when we compare it to other PSU banks?

So Akshay, we are very, very conscious on quality. As I said, in the beginning, we have aspirations to grow. We have numbers also in mind. But I don't mind if it takes 2 more quarters extra to reach that milestone of growth, but we are very conscious that the loan book that is getting generated, created, how it is -- we are actually making -- it is prime borrowers or what kind of segment we are lending to. So if you ask me not only in MSME, we have strengthened our underwriting benchmark standards. So bank has been growing fast. We have put -- even if I give you an example for a retail segmented loan, no underwriting, not a single loan under any scheme is permitted for an individual if the credit score is below 681. So we have linked our underwriting standard to TransUnion CIBIL and below 681 is their definition of a subprime. So we are not lending. We have restricted completely for the last 10, 12 months, even if it restricts my growth. But lot of things that we did around products, the processes, I think we have not seen that pain coming in. Our growth has only gone up. So the differentiator in MSME that we are trying to do and we have successfully done also is to reach out with quick decisioning, and I'm able to even because the ground realities are, if I'm able to convey my decision, customers can happily, we can negotiate and charge a premium to our good and fast and quick decisioning, 25 basis more I can charge. This is what philosophy we work with, and we do the reach out to the right segment borrowers and identify them, and we have put in place some cluster schemes where we give some special enablers with pricing or otherwise also. And the CMR scores, we have kept below which we don't underwrite in MSME also. So these kind of strengthening of underwriting benchmarks is ensuring that what enters in my system in the loan book is a borrower which is of some prime category kind of a borrower. So this is, again, going to help me not now only, there are no quick mortality numbers. But in times to come, 1 year, 2 year, we will see that my loan book, even if there is a cycle and the cycle has to reverse, the philosophy we have is, we should not be seeing the worst hit. If the system goes down, I'm not out of system, but I will be not the first to be hit because that's how we are building our loan book consciously of prime borrowers. So I think it partly -- it does answer your question, and the philosophy has been like this in the past also, but in 12 months, we have been more consciously strengthened our underwriting standards to make sure that what we are saying it is happening in a better measure.

Understood, sir. The second question is around the OpEx intensity. So I think this quarter, we have added around 850-plus employees and had mentioned in your opening remarks as well that we are focusing on recruiting -- new recruitments and higher equipment. My question is, where are exactly the way we are recruiting now, how has it changed vis-a-vis earlier how we used to recruit or from where, which segments we used to recruit? And secondly, like when I see the OpEx for this quarter, it's not reflective of the additions that we have made in the employees and branches. So is that impact going to kick in, in the next few quarters? Or is it something else?

Understood. I mean I will explain. So if you look at my cost to income. Cost to income is -- last year, it was 38-point something. We have closed this year, even this quarter is 37.57%. So guidance is to maintain cost to income below 40%. This parameter, again, is one of the parameters where we lead in the industry. And even if I'm maintaining it below 40%, I'll be best in the industry. And despite having 38%, 37% kind of cost to income, my guidance is kept to maintain below 40% knowing that when I'm going for this fast-paced recruitment, there is some likely increase in the employee cost, that will happen, and so I'll try to maintain below 40%. But if you see, it is not happening actually, and I will tell you the reason behind. So we have a robust recruitment plan for supporting this massive branch expansion, but the entire branches opening and recruitment is not happening on day 0. It is going to come in phases, and today, when I'm going to open my branches in, I'm saying, potential growth centers, we will see that these branches are turning around also fast. Today, once I do some OpEx around the new branch opening, and if I'm at the right location, incrementally what revenue that they will generate for me will be more than offsetting the cost that we'll be experiencing. And so the third thing, the third thing is we have opened 500 branches in the last 3 years. So the branches that were opened 3 years from now are all profitable as per our parameter, and that's how we will see that those which were opened 2 years from now, around 50% have already turned profitable. So we will see gradually what we opened in last 12 months, by the next 12 months, they are open. So that's how I think the point I'm trying to make. First of all, this big change of recruitment, big change of new branch opening is not happening overnight. It is coming in staggered phased manner. We have kept a defined time line, and recruitment is also matching that part, and at least for the last 12 months, I have seen my cost to income has not gone up, and my guidance of the FY '25-'26 is also to maintain it below 40%. I have a strong -- we strongly feel that we'll be able to maintain it.

Next question comes from the line of Abhishek Kothari with Aviva India.

Sir, you have a plan of QIP this year. Could you time line the same as to when would you be raising funds?

Sorry, sir, please repeat. Fund raising, equity, okay...

Fund raising sir, you have a Board approval of QIP. By when is it going to be likely, in which quarter?

Right, so pardon me, I did not get your question in the first place. But as of now, when -- see, last year, we did GoI dilution, we achieved 7%. We did an equity raise. Today, my CRAR stands at 20.5%. So it's a healthy CRAR that I'm maintaining. We have kept the guidance, these are the best times is what regulator says to maintain it at reasonably high levels to see that we are adequately cushioned to meet any cyclical downturn. That's what the regulator's overall guidance keep coming in, that these are the best times you should create cushions and buffers. So we have kept the guidance to maintain CRAR at around 18%. So there is no immediate case for me to go and raise capital, number one. Number two, last year, we came down from 86% to 79.6%. 7% dilution has brought me below 80%, optics have changed. So it is just a mere 4.6% if I have to meet the SEBI regulation, but what will happen, when we will do that and opportune time and opportune mode, we have taken no decisions on that part. We have done a lot of investor engagement, but that is, as a matter of our sacrosanct duty to the investors, last 12 months, we have been meeting investors, both domestic, foreign, covering all markets, those who are invested with us, but as of today, I have a Board approval, we have taken Board approval for raising INR 7,500 crores debt plus equity and -- but at the opportune time and opportune mode, we will look at this option also.

Okay. Okay. This quarter, you explained that your slippage ratio was slightly higher due to agri portfolio. So a normalized slippage ratio guidance for FY '26 as well as credit cost guidance.

So slippage is to -- guidance is to maintain it within 1% -- below 1% and credit cost 1%. And if you look at my PCR, provision coverage stands at 98.36%, and with this high level of PCR that we are maintaining, the aging provision pressure is not there, is hardly there, and so -- but the fine NNPA that we are maintaining, so my guidance of NNPA is 0.2% to 0.25%, but my NNPA number is 0.18% for the last 2 quarters, March as well as June this year. So this is the guidance that I'm keeping for both the metrics that you asked.

Next question comes from the line of Bhavik Shah with InCred Capital.

Congrats on very good numbers. Just a few questions. Sir, what would be our outstanding AFS reserve as on 30th June?

AFS reserve, if you see that it is -- which we have transferred to capital is around INR 497 crores.

Yes, that would be flow, right? What would be the outstanding amount?

That would be outstanding amount.

INR 490 crores?

Yes, yes.

Okay. And sir, have we transferred 5% of held to maturity, have we sold that? I guess we don't need approval to sell that, right?

Yes. So till date we have not exercised that option.

Okay. And sir, do you plan to do that over the course of the year?

Want to -- pardon?

Okay. You plan to do that over the course of the fiscal '26?

At a point in time we will take the decision because we are having appreciation in AFS. So we will see that if it is required or not depending upon the yield movement.

Okay. Understood, sir. And sir, last question, sir. Sir, within the staff cost, so what would be the employee provisioning this quarter versus last quarter? AS 15 provisioning.

AS 15 provisioning roughly INR 220 crores.

Okay. And sir, what was it last quarter?

Last quarter, I think INR 240 crores.

Next question comes from the line of Ashlesh Sonje with Kotak Securities.

First question is on your MCLR-linked loan book. Can you share what was the average yield on the MCLR-linked loan book in this quarter and previous quarter?

So MCLR, we have around 55%, which is a high number, that gives a definite advantage when we compare with other lenders in the industry, their MCLR share is not as high as ours, and again, a lot of scope to grow the retail book, but you can explain.

So MCLR-linked, if you see that the average yield on that 9.75% will come.

And sir, what was the number in the previous quarter?

Previous quarter, exactly, I'm not remembering, but it will be around 9.75% to 9.80%.

Can we find that out and tell in the meeting or we can share -- suppose the meeting is going to close, then it's fine. But Kotak Securities, please take a note that we share the number. What was the last quarter MCLR yield? And what is this quarter MCLR yield? We'll share you, sir. No problem, sir.

And secondly, what proportion of the MCLR-linked loan book is yet to be repriced to the higher rate?

So we kept this exercise at the -- because MCLR goes by calculation, and during the 10, 12 months, with every review that is taken monthly in the ALCO, this decision has been taken. CRO? You can add something.

Yes. See last 1 year we have...

Remaining to be repriced.

MCLR around 75 basis points and 5 basis points we have released that is -- one of the components of our MCLR is the cost of deposits and also the market dynamics. So we had to review the market dynamics and also try to take it -- how it will be done. One more thing, sir, our MCLR, if you see that 1-year linked MCLR is around 70%. So that is the main change to that. So considering this it will be based on the market dynamics and the cost of deposits we look at.

Just to add to what CRO has told. So this -- whatever rate we would have done, see the repricing of that particular is going to have on the reset date, which is an annual exercise. So there will be a couple of accounts and a couple of, I think, 1 or 2 more quarters where this repricing in the MCLR loan book is going to still happen. So that advantage actually has worked in some way to even ensure that we have not lost on our NIM number. The way the calculations had shown, NIM has come down from 4% to 3.95% only. So still some -- 1 or 2 more quarters, if that explains your -- or answers your question. We have a portfolio of MCLR yet to be repriced.

So you can say that 20% to 30%, it is yet to be repriced. As you see that from March '24, we started increasing the MCLR. So 20% to 30%, it has to be repriced.

Understood, sir. And sir, just lastly, your agri loan book is down 8% Q-o-Q and your gold loan books on the other hand have increased. Has there been any reclassification of gold loans from agri to retail? And along with that, can you explain why the MSME book is also down 7% Q-o-Q?

Fully agri, MSME.

This agri book, if you see that the ATL gold loan, that has decreased by near about 8%. That is because of that RBI guidelines for the -- not to take as a collateral amount less than INR 2 lakhs. So because of that, we have reclassified this agriculture to the retail gold loan. Because of that, there is a decrease of 8%.

However, if you see that recent RBI guidelines, where they have allowed that such a loan can be taken in agri after taking the voluntary declaration from the customer. So again, it will come back to our agri portfolio.

And sir, on the MSME book, that is down 7%.

MSME, that is the corporate, corporate has come to MSME, around INR 1,031 crores.

[Foreign Language] MSME is down. So MSME, I'll tell you, MSME, there is a -- I mentioned about co-lending partnerships. We have gone ahead and done some co-lending with the gold loan NBFCs also. And we -- in my co-lending book, a sizable amount of businesses also with the gold loan NBFCs, and this is all the lending to -- by them is to all the shopkeepers, small traders and the ones which are actually MSME, but because of the clarity in the regulatory guidelines, this co-lending portion, which was gold loan in NBFC -- with NBFC and getting classified as MSME advanced, we have reversed that. But I can share, this is also a matter of discussion like RBI has issued for up to INR 2 lakhs, this circular has already been released 2 days back, that if the MSME or the agri borrower has taken the loan for their agri or the MSME activity, that can be -- that will be a priority sector advance, PSL advance. So we will take a review of this reclassification. Up to INR 2 lakhs, we can now go ahead, we will do that, this is only a 2 days old guideline, I think 2 days -- 2 days old. So we will review this segment because now RBI has come out with this clarification, and whatever rightfully we had been doing because if you ask me in the co-lending, INR 3,500 crores kind of exposure we have with the gold loan various NBFCs. Now entire was MSME, which has moved to nonpriority retail. So we will, again, have a relook. CRO is examining these guidelines and the guidance will come from him and the business vertical will take the call, and we will reverse this as entitled by the RBI clarification, and I think that's all.

Sir just one last clarification. This gold loan and MSME, which you can now again classify, that would be -- both of them will be able to classify as PSL now from here on?

Absolutely. There's a limit, sir, limit is up to INR 2 lakhs. And if you ask me, the average ticket size of the gold loan NBFCs unlike public sector banks, they are funding to the small segment shopkeepers, which are MSME borrowers, micro segment. Their ticket size is INR 45,000 to INR 50,000. So comfortably, we'll be able to do that, but we will -- the CRO is examining and they will come back with the complete guidance and the vertical will do that. Regarding other than gold loan, this MSME and agri, both are for this year, for us, a focus segment. We have done some special initiative of creating separate verticals, in both of these 2 segments, agri as well as MSME. So there is a separate general manager heading independently these verticals, and they will -- they are having a lot of to-do list and a lot of strategy already implemented wherein we will be now targeting for MSME and agri advance investment credit and some large ticket, medium-ticket business, which will qualify for MSME as well as a agri loan. So we have given them enablers, some special schemes, wherein some special pricing offers are there, but of course, they need to -- the borrower need to be -- it's not available to one and all. They must have some level of credit rating, and they will be reaching out. Again, we have formed clusters and these clusters will be approached by my branches, zonal managers, also from head office team in a very focused manner, go and visit and talk to the clients there, in a cluster, textile cluster, who are -- if there are 100 units in 1 cluster, we will contact the top 10, 12 borrowers with this kind of special offerings and bring them in our fold. So that's a very conscious strategy that we have planned to grow MSME and agriculture this year, and I'm sure we will wait for 1 more quarter, and we will see that numbers really looking up.

Ladies and gentlemen, due to time constraints, we have reached the end of question-and-answer session. I would now like to hand the conference over to Shri Nidhu Saxena for closing comments.

So I think I -- we had a detailed discussion. I only to thank everyone to join the investor call and bank has been trying to not only perform, but to reach out with this performance consistently, not at every quarter close with our quarterly performance that we try to engage and talk to you, we are doing in between the quarters also. So there is a vertical again and bank today has positions of Chief General Manager and this vertical of capital raising is headed by a Chief General Manager. So we are consciously engaging with all the entire community at large in terms of who would -- who are the brokers who are going to cover my script, my company, and we will keep, of course, performing consistently to give the comfort that whenever we do plan for a capital raise at the opportune time using opportune mode that we continue to get the patronage and with our own merits and sustainable performance, we will come back to you at the right time when we do that exercise also. So thanks from my side for joining the call. Thank you.

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