Bank of Maharashtra Ltd (MAHABANK) Q2 FY22 Earnings Concall Transcript

Bank of Maharashtra Ltd (NSE:MAHABANK) Q2 FY22 Earnings Concall dated Oct. 17, 2022

Corporate Participants:

A S Rajeev — Managing Director and CEO

Asheesh Pandey — Executive Director

A B Vijayakumar — Executive Director

Analysts:

Ashok Ajmera — Ajcon Global Service Limited — Analyst

Mahesh MB — Kotak Securities — Analyst

Deepak Poddar — Sapphire Capital — Analyst

Praful Gandhi — Ambit Capital — Analyst

Mahrukh Adajania — Novama — Analyst

Sanjay Rudra — General Manager

Jai Mundhra — B&K Securities — Analyst

Suraj Das — B&K Securities — Analyst

Rohan Mandora — Equirus — Analyst

Rakesh Kumar — Systematix Shares — Analyst

Pushkar — — Analyst

Presentation:

Operator

Ladies and gentlemen, good day, and welcome to the Bank of Maharashtra Q2 FY’23 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded.

We have with us from the management, Shri A S Rajeev, Managing Director and CEO; Shri A B Vijayakumar, Executive Director; Shri Asheesh Pandey, Executive Director; and all General Managers of the Bank. I now hand the conference over to Shri A S Rajeev. Thank you, and over to you, sir.

A S Rajeev — Managing Director and CEO

Thank you, ma’am, and good afternoon to you all. I mean, Rajeev And today we — our Board of Directors approved the Q2 results. I think you might have seen that that we have already published in the SEBI sites as well our site also regarding the presentation of the Bank results. We feel that the results are very good in the present economic scenario. And as you know that, our growth rates are much above the industry growth rates, especially in case of advances. The industry has grown around 16% to 17%. Our growth rate is almost double, around 28% to 29%. And the deposit is in tune with industry growth rates.

Whatever — but the growth rate was at 30%, 31%, maximum 28%, 29%, but it was not reflected in pricing and the NII also grown in the same level. So the operating profit and the profitability of the bank also as good. Of course, the interest rate has increased so in our strategy we have changed for, more of like little bit of borrowing. And with excess SLR, we have used for borrowing and we have funded for the credit and has improved the CD ratio from 66% to. 77%.

So during this period, we have added around that 8 lakh new customers in SB and 50,000 current account holders and 37 branches we have opened now, reaching to 2,066, and our coverage is enlarged to almost around 510 districts all over India. Earlier two to three years back, the coverage was below 300 districts in India. And the growth rates of — MSME growth rate was 25%, agricultural 12%, retail 27%, RAM sector 22%, and corporate is aournd 38%. And the agriculture is slightly 12% mainly because we have sold-off some of the IBPCs, around INR2,200 crore in agri for increasing the NII.

So, financial results for the quarter. As a glance, the business has grown at 16%, deposit has grown at 8%, and CASA is increased by 13%. CD ratio improved to 76%, advances growth is 29%, NBA declined to 3.4% and net NBA reduced 0.68%. PCR, improved to 96%. Operating profit has grown by 4.43% on year-on year basis, which is slightly so while eeing the numbers but in reality, corresponding last Q2 in ’22, it was INR260 crore exceptional item of DHFL recovery. It was accounted under other income. Barring that exceptional item, the operating profit, if you see that, it is around 20%, 22% growth rate.

And Q-on-Q basis, Q1 of this year and Q2 of this year, operating profit has increased by 22%. And this operating profit growth is mainly on account of NII growth through the pricing, not under other income growth. Other income is almost in the same level, growth rate is a single-digit mainly because, as I already told that INR260 crores, corresponding last year it was booked other income. And second point was profit on sale of investments, last year the profit interest rate was favorable. This year rate was move northward and we could not able to get for profit on sale of investment, though it was a INR32 crore profit is booked. But our portfolio is fully protect and modified duration of the HFT as well AF is around 1.29%. So there is nothing to worry with the portfolio of investments. And has impacted the yield on investments also. It is around 6.3%. So net interest income has increased by 26% on a year-on year and 12% on quarter-to-quarter basis.

Net interest margin reached 3.55%. Cost-to-income ratio improved to 38.82% inspite of other income has not improved much because of the. reduction in the profitability — profit on-sale of investments. So return on assets improved to 0.92 and CRAR has improved to 16.71%, where tier- 1 is 13%. Return on security also improved to 18.32%.

So net profit for the current quarter is INR535 crores as against INR264 crores Q2 last year. Operating profit is INR1,462 crores. As against Q2, it is INR1,400 crores. Return of assets 0.92% as against 0.534% last Q2, and 0.81 for Q1 financial year ’23. So profitability is concerned, you might have seen that growing steadily for the past 12 quarter, not only profitability, business growth, business growth, which is one-time is having around 30% growth rate, continuously we are showing for the past eight quarters. And in the meantime, we can see that the asset quality is also under control. SMA-2 as well as this NPA addition slippages, all are under control.

So while coming to assets and liabilities, net advances has grown by around 31%, RAM sector has grown by 22%, retail advances 27%, MSME 25%. And bank, like last quarter we hold around — COVID-19 provision of INR1,200 crores as of September also and we have not worked any amount, and cushion available for the bank is around INR1,200 crores.

So these are the major highlights of the results of the current quarter. So we will — if it is okay, we will go for question-and-session and whatever other areas and our — regarding digital area where our Executive Director, Shri Pandey Ji will give you some brief about digital what we have now itself and forward what we have doing there. I’ll hand over the mike to Mr. Pandey.

Asheesh Pandey — Executive Director

Okay, in brief I will tell, if they can have a question-and-answer. Thank you. Welcome to all of you for this analyst meet and thanks for the good support and along with the bank. So coming to your digital initiatives. You know, certainly, very good question and very good insight as well. So, the business — the bank is sustaining the growth and the business parameters as you can see for last seven to eight quarters, and even today on the various performance, key performance indicators. So certainly this is also one thing that whether the press or the analyst people would like to know the sustainability through the digital because digital is the order of the day.

So in coming to that — I would like to say one more thing that not only for your own sustainability but even the ecosystem, wheather the central government or the state government or the local bodies, the ecosystem which is changing is also demanding, The development and the technology on digital side. Now in brief, your bank is actually concentrating on the three pillars in the technology front. One is the digital journey. I will brief also about that and the digital operations, and third is the digital compliance.

In this, what we are trying to cover is, those initiatives which are yielding to customer convenience, staff convenience, that is ease of doing business. And the 3rd is, cutting cost. So we are also reviewing the processes where the process can be made more technologically driven and where the time can be saved, customer convenient can be maintained, and also what we are looking, particularly probably you may all find one word digital compliance. That the compliance function which is from the regulator side, one of the major stakeholders of the banking industry, that it should happen within the journey itself. So these are the three pillars which your bank is focusing on.

Now if you see our website, for last five to six months, the RFPs were so many in between. So one is related to, you would have seen recently Robotic Process Automation where 50, the Board approved the RFP was floated and it is on the culmination stage. Next is also UPI, which is we wanted to scale up at a very large scale. So that is also now on the conclusion stage. Some five to six on cyber security because that is also very, very important today to take care of when you think of digital and technology. So five to six, already the purchase order proper after the RFP and CDC guidelines, the process was done and already the purchase order is issued.

Similarly, I can assure you that some, like Whatsapp banking, if you see. There is a presentation also which has been uploaded to our website and also in the stock exchanges. So if you see, the growth, particularly for last two quarters. So if you see the last two quarters, whether it is a WhatsApp banking or from the chatbotor from the mobile banking, or the ATM transactions and all, so it is moving. So yesterday also we have opened two digital banking units, Satara one in Aurangabad. But then not only related to 75, which is announced by Honorable FM in the budget, but then we are trying to have our own scale up in the days to come from, say 10 to 15 and then 25 to 50 in a year or so. So this I wanted to say that on — like TIN 2.0, it was also a press news. We are the thrid to integrate with the TIN srecently.

So like this, I can say that the team is not only working upon the new initiatives which is going to give the good fillip to the business, but also the good convenience to the customers, like — shortly, the bank is also poised for the video KYC where the bank opening accounts and all will happen. So in totality, like some of the RFPs where as per the Reserve Bank, like bureau integration and all, it was a between the four bureaus only where it is not only a selection but then into an integration with the bureau company, data aggregators and some scrutinized empanelled fintech companies. So in brief, this is the whole — let me tell the framework, thought process and the architecture of technological initiatives by the bank.

Yeah I think, EASE also you would like to know. We inched from operation nine to six and we were benchmarking again there. We improved a lot. Now EASE 5.0, as far the internally 5.0, there are three pillars. One is the common for all the banks. The second pillar is where the bank specific roadmap, so their bank has selected from 20 to 22, some projects, which is being faced with the Board and will be submitted to DFS. Already draft and all, like other banks, other banks are also doing in the same way. It has been also submitted to IBA. And the third is collaboration.

So let me also brief, your bank is also working on all these fronts. So not only the initiatives, but let me tell you, like digital journeys, digital operations, and digital compliance. So, like, three are the major stakeholders, government, customers, my own staff, and certainly the Reserve Bank of India regulator. So these three pillars which we are working is going to help us in sustaining and going-forward. We look in a, one, two year, three year tenure that whether it is our own business, maybe the retail or other or account opening CASA and liability — sorry asset and liability side, or with a third-party, it is also a RFP in our website which we can see. There also even in third-party which we are trying that we should start with the sourcing of end-to-end from 5% onwards and the increase it to 20%, 25% in two to three three years’ time. So this is the road-map of the bank.

A S Rajeev — Managing Director and CEO

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

Questions and Answers:

Operator

Thank you. We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Ashok Ajmera from Ajcon Global Service Limited. Please go-ahead.

Ashok Ajmera — Ajcon Global Service Limited — Analyst

Thank you, Ma’am. Thank you, sir, for giving this opportunity. And my heartiest complements to you once again, sir, to all of you, Mr. Rajeev, Vijay Kumar ji, and Ashish Pandey ji, along with your team of all general managers and performing people for the best performance. In fact, it is your bank — in bank of only INR3.5 lakh crore business, but on many of the parameters, I mean, you have excelled even better than the other top banks also. Your PCR coverage ratio is now 96%, your NIM is 3.55%, your gross NPA is under control, less than 3.5%, and net is less than 0.75%, that is 0.68%, so my compliments to you on all the fronts sir.

I just have a couple of questions or other observations and seeking some information also. Sir, now, of course, you had a small beat. So your growth is in percentage terms is very-high as compared to many other banks as far as especially the credit growth and overall business also goes. So now going orward, number one is that where do you see the growth coming forward. Number two is, with this kind of turmoil in the global market, the interest rates are hardening up and lot of uncertainties which have come up, even local interest rates have gone up, whether do you see the pressure coming up now into the coming quarters though the September quarter has been saved, even on the treasury front also you don’t have losses rather you have made some money only. So going forward, where do we see and how are we are cushioned to take care of those major blips or major happening. So, this is a number two.

And number three, sir. There was a report that on agriculture loan portfolio there is a tremendous pressure and on an average about 18%, 19% of the agriculture portfolio is going into the NPA, yours is around 14%, 14.5%. So what are your views on the agriculture loan front? And little bit on the education loan because the interest rate going up, the currency — dollar becoming — rupee becoming weak. Now the repayment pressures are there. So these are the couple of few questions in this round, and if time permits I will ask again and if the moderator allows me for some more questions, sir.

A S Rajeev — Managing Director and CEO

Yes, thank you for the compliments on that. Definitely, that we will continue our good performance. And regarding growth, the growth is happening around 28%, 29%. Out of that, you might have seen that the growth is averaging among all the sectors, especially in case of RAM sector. Housing loan is growing by around 22%, MSME or retail sector or — RAM sector is a major thrust we have given, 27% to 28% growth rate. And the current quarter, corporate sector also grown around 33% basically because earlier some limits and other things is sanctioned by the corporates. They have utilized because of the interest rate pressure. So, the corporate sector may not grow much in future because they have already utilized their limits and we are not much going aggressively in corporate sector. So at our Board direction, we are targeting mainly on RAM sector. That was the reason we are concentrated. Now yesterday also we have reduced our interest rates in case of housing loans and other retail sector to improve the quality of the credit and to increase the RAM sector.

The second point is regarding the turmoil or the interest rate increase in the market interest rate. Of course, it is true that market interet rate has interest rate has increased. But our position is — as of now it is comparatively good and you can compare with other banks that some of the banks, their CASA has come down by 2% to 3% during this time. We were able to sustain the CASA ratio at the level of June itself. For March, slightly has come down because you are aware that March and because of the budgetary allocations and other things, 1% — 1.25%, 1.5% because budgets allocation will come. This is a temporary nature. So average 55 — above 55% CASA we could able to continue this quarter also. And we are — we may be expecting that it’ll continue.

And term deposits we have not grown much, the reason — specific reason because of the cost of deposits. And term deposit, we are not — and we have not taken any bulk deposits with the differential or we able to manage the present level. Of course, we have gone for little borrowing. That borrowing is gone for [Technical Issues] and is a strategic move as directed by the Board. Our all Board members are highly qualified people and they have good experience in treasury and other areas like LIC also. And as per their direction, switched over from through borrowing, more we have gone through excess SLR and we have diverted, and through this diversion our CD ratio has gone up from 56% to 76%, and this will fetch additional 2% to 2.5% additional NII for as againes the average yeild of the investments. And in the meantime, we have reduced our modified duration of security is to 1.29 and our period of time, we will reduce to 1.10 so that there will not be any additional depreciation from the investment point ofview. As of now, we have around 5% to 6% or 6% to 7% of the excess SLR is there. That we can able to move further towards the increased CD ratio. That we are going to do in the second half of this year.

The third point is agriculture. As you are aware that it is correct that agriculture is slightly difficult and our portfolio earlier two years back it was more than 20% because of the divergent where we have, earlier our — more importance was given for CC or KCC. Now this year, the presentation also we have given, agriculture investment has grown by 50% to 55%, and the CC has not at all grown. So the strategy — is a strategy we have taken that KCC, agriculture investment and allied activities that’s more kind of — it’s an industrial area, MSME sector, food processing or rural godown. So that it is a good return also as well as there is — risk is not much risk like — monsoon issues may not be there like the KCCs.

So the fourth point is education. Our education loan has grown basically, mainly for outstation students and not for this — smaller loans is very less, and most of the loans are about INR20 lakhs, INR25 lakhs like that. These all are fully covered by mortages and very capable people, they have take the education loan and that is why ou can see that NBA under education loan is very small amount. So this portfolio is built up and this portfolio is built up through the department and verticals are there, education loan or housing loan that it is the job of the vertical has to see that, the NBA or slippage management of the particular ticket. So in going, in future also this is the area where we are more concentrating on, slippage management as well as SMA 2 and 2 management. And from the figure it shows — it is proved that our slippage management as well as SMA management is comparatively good. I think that if any other points…

Ashok Ajmera — Ajcon Global Service Limited — Analyst

No, thanks a lot, sir. I have just two small other questions. One is that loan acquired through assignment of INR2,294 crores where we say the tangible security coverage is 28.79%. So what kind of loan this has been acquired were 11% the originator is holding an 89% we are holding, and with a tangible security coverage of only 28.79%. So what is — I mean, what kind of loan these are?

And secondly, on income tax front have got a query of INR348 crore provided against INR201 crores in the last quarter and this is also net of the DTA write-back. If somebody can explain me that about INR348 crore, how did we arrive at this picture? So these two more questions if you can answer, sir.

A S Rajeev — Managing Director and CEO

So this first question what do you have raised and we have not acquired any loans according to — this actually, we are only sold up some IB pieces at the.. No, sir, Note number 13. Load acquired through assignment INR2,294 crore where the tangible security is only 28.79%. I don’t know, I may be wrong but I read this note.

Operator

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

Ashok Ajmera — Ajcon Global Service Limited — Analyst

No, no, my question is already on.

A S Rajeev — Managing Director and CEO

Okay. So this is I think pool purchase. So that we can explain that.

Ashok Ajmera — Ajcon Global Service Limited — Analyst

Yyes. Good evening, Mr. Ajmera. These are the — actually the pool buyout which we have done during the quarter and half year. Actually, these are the — some of the pools are united under the gold loan category also, and these are the mainly secured category only. But few of the loans — pool which you have acquired under the education loan and others which are unsecured in nature, those are appearing under that particular category. Earlier also we have acquired those type of assets and the repayment in those accounts are quite satisfactory and we are not facing any cognitive in these type of accounts.

Regarding income tax liability, I would like to share with you that we have not provided for any current income tax liability as that — as per the competition on income tax, there is no tax liability because we are having the carryforward losses. What are that INR348 crores? This is on account of DTA reversal. Se we were having that DTA on the losses, that roughly INR280 crores, that we have reversed. And you know that when we reverse the DTA, it will improve your CRE also. And rest is that because of reversal of provision, we have reversed the corresponding DTA. So there is no current income tax liability provision in respect of the overall income tax liability what we have shown.

Operator

Thank you. [Operator Instructions] I now request Mr. Mahesh MB from Kotak Securities to please proceed with your question.

Mahesh MB — Kotak Securities — Analyst

Good evening, sir. If you couls just kind of give us some color on what is the kind of corporate recoveries that you are expecting? Thanks. On the corporate NPL book, sorry.

Asheesh Pandey — Executive Director

See, corporate recoveries we are expecting more from now [Indecipherable] because lot of accounts are lined up because of this final bids [Technical Issues] and the entire process will be completed by the end of this month. And as regards to other NCLT accounts, there are DSKDL and then Island FS, all these accounts are also there. As such, our corporate NPA portfolio as it has come, it is very less remained now in NPA. But whatever is there in either NCLT for ready for transfer. So amount of around INR500 crores we expect in this current remaining Q2.

Mahesh MB — Kotak Securities — Analyst

Sorry, in terms of NARCL, you’re saying the full — and what is the status here, in the sense how much — or how much of the accounts are expected to be transfered now?

Asheesh Pandey — Executive Director

Actually, the 20 accounts are shortlisted amounting to INR3,000 crores, but the final bids — confirmed bids are received in case of two accounts at present. So immediately by the end of this month two accounts will get transfered, that will be — the actual recovery will be around INR160 crores. Of course, these are all written-off accounts, so it will go to P&L directly.

Mahesh MB — Kotak Securities — Analyst

And the other one you said — the combined total you said was INR500 crore impact on the P&L front, it it?

Asheesh Pandey — Executive Director

Yes, yes, yes, yes.

Mahesh MB — Kotak Securities — Analyst

Okay. Perfect, sir. And thanks.

Operator

Thank you. The next question is from the line of Deepak Poddar from Sapphire Capital. Please go ahead.

Deepak Poddar — Sapphire Capital — Analyst

Yeah. Thank you very much sir for the opportunity, and congratulation for the good set of numbers. Sir, I just wanted to understand more on the credit cost. Now your PCR is 96%, even your gross NPA is declining. But you’re — I think credit cost is still at 1.6%, right?. So how do we see that stabilizing going forward?

A S Rajeev — Managing Director and CEO

So this credit cost actually, INR587 crore credit provision we have made. Two components there. One is, new slippages as well as the existing NBA. So our. Net NPA ratio was — earlier it was 0.88% which has — for bringing down to 0.68%, additional provision of around INR250 crores to INR300 crore provision we have made. So once this net NPA is coming down, our ultimate aim is — it has to come below 0.5%. That is what we are expecting that. So once it come to this level, then further provision requirement from bringing down the net NPA the additional requirement will not be there. And in the meantime, we trying for further reduction of the slippages also. And SMA 2 also — SMA 1 and 2 also we are under close monitoring. So then this provision coverage — provision will come down. Once the real provision for additional in this year — this quarter it was INR597 crores and we are providing 100% provision we are making for this. That is the reason. In reality as per RBI norms it may not be required, only maybe INR100 crore, INR150 crores is sufficient. So we are giving 100% provision and bringing down this, that is why credit cost is hight. Real credit cost is not even, I think 0.4% to 0.5% may come in the present scenario. And in future also this 0.35% to 0.4% credit cost will continue.

Deepak Poddar — Sapphire Capital — Analyst

So understood it. So this INR250 crore to INR300 crores of additional provisioning, so you’re targeting to reduce the net NPA to below 0.5%. So this additional will continue only for a couple of next quarter, right? Then your net NPAs will fall below 0.5%.

A S Rajeev — Managing Director and CEO

Correct, correct, yes. Hello. Yes, yes.

Deepak Poddar — Sapphire Capital — Analyst

Okay. So from fourth quarter onwards is it safe to assume a credit cost of 0.5%. I mean, I mean if you subtract this INR300 crores, so the remaining is what, INR250 crore, INR300 crores, right?

A S Rajeev — Managing Director and CEO

Correct, correct. Another one or two quarter likely it will continue, then the credit cost will come below — definitely it will come below 1%.

Deepak Poddar — Sapphire Capital — Analyst

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

A S Rajeev — Managing Director and CEO

Yes, yes.

Deepak Poddar — Sapphire Capital — Analyst

Okay, that’s — yeah, that’s it from my side. All the very best, sir. Thank you so much.

Operator

Thank you. We’ll mvoe to the next question from the line of Praful Gandhi from Ambit Capital. Please go-ahead.

Praful Gandhi — Ambit Capital — Analyst

Yeah. Thank you. Congrats Sir on the results. Sir, my question is on the borrowing stand. Can you highlight what is the SLR currency you are holding [Indecipherable]

Asheesh Pandey — Executive Director

We are holding excess SLR of roughly INR15,00 crores and out of that we have taken the borrowing. And if you see the borrowing cost is roughly 3% to 5%. And if you want to take the term deposit at present, that would cost more than 6%. So we have taken a conscious decision and we have switched to the borrowing, and you know that these borrowings is against the SLR securities and taking on average 5% and giving 8%, it is giving the NIM more than 3%. So that was the consensus decision taken by the bank to increase the borrowings.

Praful Gandhi — Ambit Capital — Analyst

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

Asheesh Pandey — Executive Director

These are the — mostly these are the overnight borrowings and every day we have to — we are rolling over it.

Praful Gandhi — Ambit Capital — Analyst

So these INR18,000 crore is what — is the excess and you would also be dipping into some part of mandatory SLR on the revenvue side, are we doing that?

Asheesh Pandey — Executive Director

No, no. Mandatory SLR — we are taking borrowing against the excess SLR.

Praful Gandhi — Ambit Capital — Analyst

Understood. Sir, second question is on [Indecipherable] mentioned that the growth was divided by the utilization of — and going by it could slow down, so does that mean we are not santioning much of the proposals on the contraction.

A S Rajeev — Managing Director and CEO

Can you repeat?

Praful Gandhi — Ambit Capital — Analyst

Are we actively sanctioning corporate proposals or have we — or are we restraining ourselves from them?

A S Rajeev — Managing Director and CEO

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

Praful Gandhi — Ambit Capital — Analyst

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

Asheesh Pandey — Executive Director

Pharma, I think this is one of the segment and we are also looking to the sectors where there is a good exports which is well-supported with the country. So as of now if you see, like on the corporate side, we are looking at is on the good quality Infra so, then your second pharma, and some of the industries even in textile which are doing and having good exports. So I think this five, six sectors we are looking to in will continue to support this sector while continuing, you must be, you have heard our MD sir also that on the retail loan book we have reduced our rate of interest. So combining both, we would like to continue in the range of say 22% to, 25%, 24% range of the growth in the segment.

Praful Gandhi — Ambit Capital — Analyst

Understood. And sir just on the capex bit. So the proposal that we are seeing, are they more into the greenfield side or they still on the brown field side, which is where they capex is?

Asheesh Pandey — Executive Director

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

Praful Gandhi — Ambit Capital — Analyst

Okay. Thank you, sir, and all the best.

Operator

Thank you. The next question is from the line of Mahrukh Adajania from Novama [Phonetic] Please go-ahead.

Mahrukh Adajania — Novama — Analyst

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

A S Rajeev — Managing Director and CEO

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

Mahrukh Adajania — Novama — Analyst

Okay. So till 80% you will not have a big pressure on growing your deposit offering very high rates, right? bcause you still have leeway to liquidate your existing investments or borrow against them.

A S Rajeev — Managing Director and CEO

Yes.

Mahrukh Adajania — Novama — Analyst

So you are comfortable on deposits. I mean, when do you say — when do you think will the deposit tightness start hitting you?

Sanjay Rudra — General Manager

No, another 2% to 3% definitely we can go for increasing the CD ratio. And we have not raised any CDs or any bulk deposits or any differential rate. So what we — our strategy is to first build up the assets, then we will go for raising resources if it is required. As far as our — SLR is already. Excess SLR is INR17,00 crores to INR18,000 crore is there. So that is sufficient for us to reach that 80% CD ratio.

Asheesh Pandey — Executive Director

Actually, it is a trade off between the returns on either of the side, okay? Now, you are coming, you know directly like, whether what time we’ll be resorting on the high rates or nothing. It is actually not like. Let me put, the bank itself is now expanding. So almost some 60 to 70 branches bank has opened. And now going forward, we do have a plan of around 150 to 200 branches to open back. You know the new format of digital banking units, which yesterday you would have seen honorable PM. So we are feeling that we are entering into the new territories and there also we are targeting both on the retail side retail, retail means both on asset and liability side.

Now coming to the CASA, that is also adding me. So it is not — like only one sector or one location or one cluster which we have specific to adn then we may face issue. So we are also trying to compensate — because of the increase in rate what portion is moving from CASA to fixed deposit side or maybe do other banks side, but then we are trying to build up our own base on the capex. So like continuing the range of say 54%, 55% going forward as well, entering into the new territory. And then having the trade-off that which option is better, whether it’s from the investment side or from the loan book side, and where the profitability is protected.

Mahrukh Adajania — Novama — Analyst

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

A S Rajeev — Managing Director and CEO

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

Mahrukh Adajania — Novama — Analyst

Got it, sir. Got it got it. Okay. And sir, what about the quality of MSME loans? Any particular feedback you are only ECLG’s or on any segment of MSME?

Asheesh Pandey — Executive Director

Yes, MSME, we are containing our slippages in MSME, quality is improving, and this ECGL also is performing well. It’s not that, barring some few exceptions.

Mahrukh Adajania — Novama — Analyst

Got it. What would you total cumulative slippage from ECL, guess.

Jai Mundhra — B&K Securities — Analyst

[Speech Overlap]

A S Rajeev — Managing Director and CEO

That is you know — we are looking into the book both from the credit monitoring and from our credit risk side, both the departments are looking into it. So we have not seen as such any pressure coming in on the mid size or maybe the MSME where the ECLGS is given and some signs of stress. Yes, sometimes it moves to SMA zero, but then maybe the very good level of follow-up. So there is a roll forward sometime and roll back, but that’s more or less the position is same, but they’re not moving to slippages, more or less I think that is not an issue.

Mahrukh Adajania — Novama — Analyst

Okay, sir. Thank you so much. Thank you.

Operator

Thank you. The next question is from the line of Suraj Das from B&K Securities. Please go ahead.

Suraj Das — B&K Securities — Analyst

Hi, sir. Thanks for giving the opportunity. Couple of questions. First question is on the restructuring slide. So this INR4,845 crore restructuring number, is this inclusive of everything and in the previous CDR, SDR, and earlier MSME restructuring number as well? Because your, this restructuring 1.0 and 2.0, the some is not equal to INR4,845 crores.

A S Rajeev — Managing Director and CEO

Yeah, it includes all readjusted entirely.

Suraj Das — B&K Securities — Analyst

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

Asheesh Pandey — Executive Director

Restructuring is done only purely based on the natural calamity and that too at the district level. Some of centers wherever the restructuring has been done, but that is very marginal increase where in the agriculture sector. In corporate, few accounts where the DCCO as been extended and if the DCCO that extended for non-infra for the period of two ears and one year, more than one year and for infra more than two years, then it amounts to the restructured accounts, though it is a performing assets and it is only purely because of the extension of the DCCO.

Suraj Das — B&K Securities — Analyst

Okay, okay. I understood. And the second question would be, sir. If you can provide the loan mix by benchmark, how much would be your EBLR anfd how much MCLR and how much float fixed rate, and what will be the total quantum of ECLGS number.

A S Rajeev — Managing Director and CEO

Okay that we will provide that.

Asheesh Pandey — Executive Director

I’d like to clarify one answer to the three questions regarding the agricultural NPA and then the digital payer to the digital journey and compliance levels and let us question on agriculture. All put together, there is one good thing is happening across the country. Apart from the digital level is happening and the individual bank level, Government of India has initiated [Indecipherable] total, wherein 13 of the major government of India schemes are being uploaded that end-to-end — and the application to the process sanctioned disbursement everything going to be the digital. And KCC, now they are giving a top most priority where most of the problems are living there because of the — you can see credit culture or a waiver

Of loan happened in the past due to many political reasons or the increases of monsoon whatever you think. But going forward, the digitalization going to play a very big answer for all, bringing the most credit culture, ease of doing business and above all the TAD will also come down and there is some percentage of multiplication of loan is happening in the corp loan level by many banks and also corporate like is. All these things will go and there will be a healthy agricultural, I mean growth will be there in the country. This is what I would like to make a clarification. Suraj Das, have you completed your questions?

Suraj Das — B&K Securities — Analyst

Yes.

Operator

Thank you. We’ll move to the next question from the line of Rohan Mendola from Equirus. Please go ahead.

Rohan Mandora — Equirus — Analyst

Yes, sir, good evening. Thanks for the opportunity. So on the RAM portfolio, just wanted to understand the good growth that we’re seeing. So what is our origination channel here? Is it a DSA driven or RAM channel? And also, how pricing this loans vis-a-vis the market leader in terms of the market share. So that was the first question.

And the second is that you earlier said on the agri side we are targetting agru business. So the new proposals that we are getting in these agri businesses, are these fresh proposals or are they take over from other banks. And if so, like what kind of banks or other lenders are you targeting in this segment?

A S Rajeev — Managing Director and CEO

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

Sanjay Rudra — General Manager

Yeah, in case of agriculture sector, we are focusing for the investment credit and particularly food processing, then pack, grading, or cold storage, and there is no any take-over from the other banks. We have to find out the fresh candidates and fresh customers. We’re taking on-board in our bank.

Rohan Mandora — Equirus — Analyst

Okay. So this could be fresh entities or so so called because getting setup that we will be funding in this case. That was the correct understanding here?

Asheesh Pandey — Executive Director

Yeah.

Rohan Mandora — Equirus — Analyst

Okay, sure. And sir, just on the reply in terms of the origination channel. So I just wanted to check on that BAC side, like is it a predominant origination channel. And if so, are the payouts higher. And second, again in terms of the pricing that we talked about. So just want to understand the customer segment which is then targeted. Is it predominantely salary segment or is it across-the-board in terms of the customer demand and the RAM?

Asheesh Pandey — Executive Director

Yeah, I will tell that. DSA, we have the — DAS commissione is that far the industry level. We cannot have a lower DSA commission payout and higher DAS commission payout. So our DSA commision is at par with the industry level. As far as the rate of interest is concerned for the RAM sector — RAM segment, we have recently launched that the scheme for the defense we have given the best possible rate, that is 8%, as well as the salaried customer with wome PSU or good organizationsd, they are working. There also we have given the rate of interest. In addition to that, general rate of 8% has been given for civil score of 800 plus, the TSE score of 800 plus, so they are the very good assets which we can build. That is the target customer for us.

Rohan Mandora — Equirus — Analyst

And, then lastly on the corporate sanctions, are these consortium liked sanctions or are these all standalone sanction that the bank is giving in the A&W rated segment.

A S Rajeev — Managing Director and CEO

Maximum it is consortium only. I can say that almost 65%, 70% and the rest of the things maybe somewhere in one or two bankers and where earlier we also.

Rohan Mandora — Equirus — Analyst

Sure, sir. Thanks a lot.

Operator

Thank you. The next question is from the line of Rakesh Kumar from Systematix Shares. Please go ahead.

Rakesh Kumar — Systematix Shares — Analyst

Yeah. Hi, thanks a lot. So firstly this question on this excess SLR thing. So basically like you, we are lending the excess SLR as such using thourgh the RBI Borrowing window. But you said that I think that your borrowing cost is around 5%. So just wanted to understand under which window we are taking this borrowing from RBI at 5%.

Asheesh Pandey — Executive Director

We are taking through tariffs. And if you say when I was talking about average borrowing cost is 5%, I’m taking the half year ended. So initially that you’ll see the borrowing cost was 4% plus and now recently it has increased to 6%. So if you see overall the borrowing cost was 5%, and whereas the term deposit now it is crossing 6.50 or more. So we have taken this arbitary opportunity where we — we did not go for the bulk deposit and we resorted to the borrowings.

Rakesh Kumar — Systematix Shares — Analyst

Yes, sir. Understood that. So your incremental spread by lending excess SLR would not be 3%, correct?

Asheesh Pandey — Executive Director

There is a combined borrowing. All borrowing costs are up [Speech Overlap]

A S Rajeev — Managing Director and CEO

Borrowing it is not only across SLR, there are some SIBI borrowing, there or rather NST borrowing. That type of borrower also is there.

Asheesh Pandey — Executive Director

Recently, we have taken borrowing from SIBI, which is 4.17%. So we [Speech Overlap]

Rakesh Kumar — Systematix Shares — Analyst

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

A S Rajeev — Managing Director and CEO

Actually, he was actually talking about the six months spread. Number one. Number two, on a bouquet of the borrowings, not only the RBI specific.

Rakesh Kumar — Systematix Shares — Analyst

That is now understood. Secondly [Speech Overlap] Secondly on this — the tenure of the your borrowing, obviously it is 7 I thinl, but on a lending side what is the – like you know where you are using this borrowing that with excess SLR and what is the trend there?

A S Rajeev — Managing Director and CEO

There is a difference. Tenure is there. One month MCLR also is there. Some cases it is overnight also is there. And I think that the borrowing is not only overnight, it is the term repo also is there, correct? So term repo is up to 45 days is there. So it’s a combination of borrowing. Not only flully, I think overnight borrowing may not be more than INR2,000 crores, INR2,500 crores. And no other borrowing windows we have not utilized. That also kept outside actually.

Rakesh Kumar — Systematix Shares — Analyst

No, so basically you’re always — this the NDTL position, then your excess SLR position and then borrowing position and the lending position. All the all the asset liability, maturities will be matched. So first of all, like you know — if you guys tell us what is the average maturity period that you have or your NDTL and because if you’re NDTL entity keeps on rising, which will happen in the natural course of — natural course of process, then your excess SLR will actually come down, then your borrowings would come down, then you have to wind up those those loans which you have given against these borrowings which you have taken from RBI. So if you can give some clarity that what is the average maturity you are maintaining throughout so that you know — because the flow is coming from NDTL, so if you can help us understand that it will be helpful. Our CFO will give you that details, the statements of this borrowing as well as where it is utilized. He will provide you that. Sure, sir. Thanks a lot, sir. Thanks a lot.

Operator

Thank you. The next question is from the line of Pushkar from [Indecipherable] Please go ahead.

Pushkar — — Analyst

So, sir, my question is — I actually got disconnected in the middle. How much part of the book is fixed as floating and can you gave a number?

A S Rajeev — Managing Director and CEO

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

Pushkar — — Analyst

[Technical Issues]

Operator

Sorry to intrrupt. Pushkar, your voice is breaking up in between. Sir, your voice is breaking up in between.

Pushkar — — Analyst

Now?

Operator

No sir it is still not clear. I would request you to please email your queries, we’ll have to move to the next question which is from the line of Jai Mundhra from B&K Securities. Please go ahead.

Jai Mundhra — B&K Securities — Analyst

Yeah. Hi, sir. Good evening, and thanks for opportunity. Sir, if you can explain the formula for your interest rate. So, and this 30 basis point cut that you have effected one two days prior only, what have you changed in the formula and just the — I mean if you can first tell us the 590 repo and then what is the business spread or credit risk for mortgage and how that has changed in the last few days?

A B Vijayakumar — Executive Director

The interest tarrif is simple formula. One is the marginal cost of lending that is we are having mainly for the corporate and other borrowers — agricultureborrowers [Technical Issues] borrower it is repo linked, so it is 5.90 is the repo and it is linked to that rate. That’s why as the cost of the lending rate pricing is done, it is mainly depending upon the business trait and the credit risk. Traditional in cases of the mortgage loan is less than 0.5%, and if you see my cost of deposits, our cost of fund is in the range of 3.1 to 3.50. So comfortably I have a margin over that around 4.5%. If I remove my cost of the fund, other establishment costs and all, I am very comfortable for giving the 8% rate of interest to my borrowers because at the same time if you see the marginal cost of lending, one year my AMC one year MCLR is 7.80. So it’s still I have trait of 20% over my MCLR cost –MCLR pricing. So I don’t find any problem in giving this rate of interest and that too the segment specifically having the CIBIL score of more than 800 scores. So which are one of the best towards the delinquency I will say even is less than point 0.01%, so credit cost will be in the range of 0.01%. So this is two components are there. One is the profitability is one aspect and second the market competition is also there. If I have to compete in the market, then I have to offer the one of the best rate. And since our cost of deposit is very low. So bank is capable enough to offer that type of pricing.

Jai Mundhra — B&K Securities — Analyst

No, so sir, you have thought through but what I was trying to understand that in the last few days your cost of deposit would not have gone down that the incremental cost of deposit would not have gone down, so you would have reduced the credit risk premium or business risk premium. And. one of these two have to go down so as to Keep– so as to bring down the overall cost lower, so what have you changed. Have you changed the credit risk premium or have you changed the…

Sanjay Rudra — General Manager

It is purely Diwali dhamaka. It is a business strategy. So we have changed our business strategic which we call the BSL that we have changed and our rate has come down.

Jai Mundhra — B&K Securities — Analyst

And so how frequently can you change this. So, let’s say Diwali gets over the last…

Sanjay Rudra — General Manager

Yeah. This rate is valid till 31st January 2023. So entire Diwali, then Christmas. All these will be covered.

Jai Mundhra — B&K Securities — Analyst

And how frequently Kenny change sir — I mean in a calendar year or in a fiscal year?

Asheesh Pandey — Executive Director

Yeah, BSL is case-to-case basis. On portfolio level, we can take a decision, is the business strategy. So that call can be taken by bank at any point of time.

A S Rajeev — Managing Director and CEO

Yeah, Jai, just to supplement you because you wanted to know. It is not only related to one product. The bank is strategically is also viewing the customer relationship from one is to four, okay. Now suddenly the bank is growing various segments for the salary accounts and variuis others, you know the PPF and all, it is not in that presentation but then around 2 lakh we have targetted and more than 60% percent we have covered it. So what we are looking at this project not in isolation, say, debt to matching only everything from neck-to-neck but then it is a relationship. And like the CIBIL score of 800 and above, what Mr. Rudra has told. So like it is a total bouquet of services on which the rate is also offered and field below is approached with the customers and then look into the total wallet of the share.

Jai Mundhra — B&K Securities — Analyst

So I was just trying to understand.

Operator

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

A B Vijayakumar — Executive Director

I’m Vijaycumar, Executive Directo. On behalf of the Maha Bank parivar Bank of Maharashtra, we convey our sincere thanks to all the analysts who have participated this concall today. You are being a source of support to us for the quarter-after-quarter. You must-have observed that the Bank of Maharashtra has been doing extremely well in terms of the growth for the last three years and particularly for the last eight quarters, and with all your support and guidance and your analytical skill which helps to the market to push our prices also in the market. And on behalf of the Bank of Maharashtra, we convey our sincere thanks to you. Besides, we are concentrating in the growth. We also want to be number one in terms of the digital, compliance, integrity. This is what our focus. We want to be more ethical banking. And once again, I convey my sincere thanks on behalf of Bank of Maharashtra. Wish you Happy Diwali.

Operator

[Operator Closing Remarks]