Bank of Maharashtra Ltd (MAHABANK) Q3 FY23 Earnings Concall Transcript

Bank of Maharashtra Ltd (NSE: MAHABANK) Q3 FY23 earnings concall dated Jan. 16, 2023

Corporate Participants:

A.S. Rajeev — Managing Director and Chief Executive Officer

Asheesh Pandey — Executive Director

A.B. Vijayakumar — Executive Director

Analysts:

Ashok Ajmera — Ajcon Global Services Ltd — Analyst

Sunny Agarwal — SBICAPS Securities Limited — Analyst

M B Mahesh — Kotak Securities — Analyst

Sridhar Sivaram — ENAM Asset Management Company — Analyst

Jay Mundra — B&K Securities — Analyst

Deepak Poddar — Sapphire Capital — Analyst

Mangesh Kulkarni — Almondz Global Securities — Analyst

Ashfaque Ahmed — A Squared Financial Services — Analyst

Akash Jain — Ajcon Global Services Limited — Analyst

Franklin Moraes — Equentis Wealth Advisory — Analyst

Presentation:

Operator

Ladies and gentlemen, good day. And welcome to the Bank of Maharashtra Q3 and Nine M 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 Chief Executive Officer; Shri A.B. Vijayakumar, Execute 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 Chief Executive Officer

Thank you, ma’am. And good afternoon to all. Today we have adopted our reviewed results [Indecipherable]. And we would like to share results of the Q3 as well as the nine months ended 31/12/22 to all of you as you are the main — one of the main stakeholders of the Bank. And we would like to have your suggestions if any in future also whatever the corrections has to be made, that also we are ready to do that, just briefly explain the results of the Bank at a glance.

As you seen that interest rates in the system has increased by around the 200 basis point to 210 basis point during the nine months period, and [Technical Issues] to 60 basis point in case of deposits for the current quarter. Same way with the advances, lending rates also most of the banks are increased. We have also increased the lending rate. At present our MCLR rate is around 8.20% level. This it the median of the banking system. And we expect that the rates are slightly another as given by the — indication given by the RBI Governor two, three days back, there may be chances of that interest rates maybe in the — either in the same level or slightly it will increase by another 25 basis point. And then after there may be chances of reducing the interest rates, that is the indication is given.

That interest rate and economy in mind, and our results, this total business for the last quarter is increased by around 16 percentage to INR3,65,000 crore. And total deposits increased by 12% to INR2,08,000 crores. Gross advances increased by 22% to INR1,57,000 crores. And CD ratio is representing 75%. With an indication that by March we will be able to increase CD ratio by another one basis point to two basis point — 200 basis point, that is 77% to 78% level. Gross NPA declined to 2.94%. And net NPA reduced to 0.47%. Provision coverage ratio improved to 97%. And as regards profitability, the net profit is increased by 139% to INR775 crores, as against INR325 crore corresponding last quarter of previous year.

Operating profit is increased by 36% to INR1,580 crore as against INR1,062 crore last corresponding period. Net interest income has increased by 30% and net interest margin improved to 3.6%. Cost to income ratio is improved to 39.69%, it is below 40% for the past two, three quarters and we will able to continue the same level. ROA improved to 1.30% as against 0.60%. Return of equity is improved to 25% and CRAR improved to 17.53%, which is Tier 1 is 13.47%. As you are aware that the current CRAR — this current year’s profit is not added, if we add the current year’s profit, the CRAR may be around 19.21%.

So earlier COVID provisions whatever we have provided INR1,200 crores it as it is we have kept it, and it is not considered for either capital adequacy purpose or for provisioning purpose. So profitability for the nine months, net profit is INR1,762 crores as against INR796 crores corresponding nine months last year. Operating profit also shown a growth of 16% to reach to INR4,244 crores. Net interest income grown by 25% year-on-year. Fee-based income increased by 8% to INR927 crores. Cost to income ratio is 39.48% for nine months. Return on assets for full year is 1.02% for 9 months as against 0.52% for nine months ended 31/12/21. Return on equity is also improved to 18.50% as against 11% for the last year.

So during the last quarter we have added [Technical Issues] 1.2 million customers and 62 branches we have opened to reach to 540 districts as of now. And we have recruited around 1,200 employees as in the process — in the process because test and other things are over. This is basically for 2 3 this is basically for, keep it in mind, the new branches opening and retirement and other wastages. As well as SMA is concerned, SMA is well under control, below 2.5% of the total assets, including SMA 1 and 2. So these are the main highlights what we wanted to share with you. And regarding the digital area, I will request our ED sir what are the initiatives we have taken for past one quarter, earlier we have already shared with you. And regarding internal control and other areas where our other ED, Mr. Vijayakumar is there, he will share. [Technical Issues].

Operator

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

A.S. Rajeev — Managing Director and Chief Executive Officer

Yes, our digital area, there are good improvement during the last quarter, that will be shared by our — Mr. Pandey, he is looking after the digital area. And Shri Vijayakumar is looking after the entire internal control system of the Bank and other areas. So he will share the major points with you. Afterwards we will have the question-and-answer session. It’s okay madam?

Operator

Yes sir, this is fine. Thank you.

A.S. Rajeev — Managing Director and Chief Executive Officer

And over to Mr. Pandey.

Asheesh Pandey — Executive Director

Yes, thank you. Thank you sir. As you know already the brief, all our important stakeholders you have got on the Bank’s performance in the business. So we are venturing and towards the bettering ourselves quarter-to-quarter, we are just making all our efforts and endeavors in that line. Certainly the technological intervention and the digital is going to play a two key role as we said earlier and we emphasize always. The first is sustainability of the business growth that is quality as well as the percentage or maybe the amount wise. The second one important thing is, you know, the embedded compliance. So you keep on having a well compliant culture and other thing using the technology.

So as you see that the last quarter we gave and then this quarter also there is a slide on it, two slides are there, which shows the digital footprints. And the — so key growth if I say UPI BHIM users from 2.49 million to 2.53, so it is a consistent. And the transaction wise also from 326 Mio to 352 Mio. The digital transactions which were 96.34% moved to 96.66%. So similarly Internet banking users is around — moved from 21.73 lakhs to 23 lakhs, mobile banking 21.31 lakhs to 22.76 lakhs. WhatsApp is 2.35 lakhs to 3.15 lakhs. So QR Merchant also if we take 22.30 lakhs to 28.49 lakh transactions are happening.

So what we indicated last time also and we are very much cautious and also very much progressive on the IT and digital intervention. So UPI on some of the identified things where we wanted to be more hold and also we analyzed this cost is better when we moved from capex to — sorry opex to capex. So similarly, you would have seen the various — the RFPs, which are floated for last three months to four months time. So UPI already one of the best player in the market has come in, and we have started and we are trying to close this project by March.

The Robotic Process Automation, again one of the bank public sector 62 processes in which 48 are high complexities. So, already it is awarded, and one of the best of the — one of the best of the world, the player, which is now we can very well clear, UiPath has been empaneled and we have started, so we are planning five to six or seven processes delivery per month. So it is going to help me on three things. As we said, the first is the business which is the customer expectations and convenience, the more business. The second is the compliance and third, EASE to my staff on ease of banking.

So the third is data warehouse, we have already completed and the Bank is well complied and we are already actually it is working for last one, one and a half month we are using it for various our returns [Phonetic] in other banks. The Bank is on the private cloud, which is nakshatra. And three to four cybersecurity solutions are implemented and three to four are in process even now. So already Bank is on the asset, liability and the services side as planned and as I told three to five STP journeys going forward. And similarly the fintech onboarding is also poised for.

So when I say the upgradations, so the Bank has also having the advisors from IIT Mumbai and the other arounds. So we are having the upgradations of software, hardwares, the UPI switch already we have done it FI gateway. So in totality, we have started with the four COEs as of now. One Centre of Excellence in database, and other is on CBS, TCS, another is cybersecurity within [Indecipherable] and the analytics. And now we are thinking of on the recon side because it is very important to have some well-defined sort of frequencies within the day on the reconciliation and the others.

So with this I would only like to say that the — on the business side, how to have to start with say 3% to 5% of the business accruing from the digital side moving to around 15% to 20% for next two years to three years time, that is one. Secondly that cost to income certainly that’s how the expenses with the change to digital systems, change to IT interventions or Robotic Process Automation. So all those things how it can be further made cost cautious. And third is the customer expectation how to win it with the technology.

So these three, four [Indecipherable] key areas which are going to support the Bank in — to all the stakeholders because customer is the important stakeholder. So on a customer service and better journeys, the staff, certainly because it is the most important if ease of doing business is there and they are deployed for the more better prudent and productive ventures rather than the repetitive complexities. And the third is regulator. So more and more extra intervention which you make in the compliance will help the Bank to achieve as we progress with the business.

So with this, I leave it to.

A.B. Vijayakumar — Executive Director

Yeah, good evening to all of you. Welcome to this analyst meet. I am Vijayakumar, Executive Director. As you all know Bank of Maharashtra being the premier public sector bank, we have been doing extremely good in the last several quarters. At the same time, we are constantly working in line with the natural priority, upkeeping our technology and with the focus of customer-centric activities. While doing so, we are focusing on improving our control, internal control measures, compliances and risk management. In actual I would like to say from HR [Phonetic] side, we are transforming ourselves from government karmachari to karmayogi is what I would like to say at the initial. We will take-up question as and when it comes. Not only the business any other improvement because quite often the question comes the sustainability and that’s what I made — announced my remark on that point.

Thank you very much. Now we are ready to take on questions.

Questions and Answers:

Operator

Thank you very much sir. [Operator Instructions]. We have the first question from the line of Ashok Ajmera from Ajcon Global Services Limited. Please go ahead.

Ashok Ajmera — Ajcon Global Services Ltd — Analyst

Thank you for giving me this opportunity of asking the first question. I have few questions and observations and I request the moderator to please do not cut me unless I complete at least those two, three questions and some observations. Thank you very much.

Now I start. Sir my compliments to you sir, the MD and CEO, and both the EDs and the entire team of the top management of the Bank for the fantastic performance quarter after quarter. And this quarter your profit before tax is touching to almost INR1,000 crore for a quarter. On other parameters also, if you see the — I think one of the best net NPA figure in the entire public sector bank of 0.47%, even the gross NPAs are under very much control, slippages are under control. Your NIM is growing quarter after quarter I think 3.6% or something even in this quarter. And the asset quality has been improved to that extent of, I think one of the highest provision again of almost about 3

Operator

Ladies and gentlemen, Good day and welcome to the Bank of Maharashtra, Q3 and 9M FY23 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded.

We have others from the management. Shri. A.S. Rajiv, Managing Director and Chief Executive Officer; Shri. A.B. Vijay Kumar, Executive Director; Shri. Aashish Pandey, Executive Director and all general managers of the bank.

I now hand the conference over to Shri. A.S. Rajiv. Thank you, and over to you sir.

A.S. Rajeev — Managing Director and Chief Executive Officer

Thank you, ma’am. Good afternoon to all. Today, we have yet another review the results earning and we would like to share the results of the Q3 as well as the nine months 31/12/22 to all of you, as you are the main — one of the main stakeholders of the bank and we would like to have your suggestions if any in future also, whatever the corrections has to be made, that’s also we are ready to do that. Just I will briefly explain the results of the bank at a glance.

As you seen that interest rates in the system has increased by around 200 to 210 basis point during the nine months period and more particularly [Technical Issues] to 60 basis points in place of deposits for the current quarter. Same way advances lending rates also most of the banks are increased, we have also increased the lending rate at NCLR rate is around 8.30 level, it is the median of the banking system, and we expect that the rates are slightly another as given by the — indication given by the RBI Governor two, three days back, there may be chances of that interest rates may be either in the same level or slightly it’ll increase by another 25 basis point and thereafter there maybe chances of reducing the interest rates that is indication is given. The interest rate and economy in mind and our results, the startup business for the last quarter is increased by around 16 percentage to INR3,65,000 crores and total deposits increased by 12% to INR2,08,000 crores, gross advances increased by 22% to INR1,57,000 crores and CD ratio at present is 75% with an indication that by March, we will be able to increase CD ratio by another 1 to 2 basis point, 200 basis point that is 77% to 78% level.

Growth NPA declined to 2.94% and net NPA reduced 2.47%, provision coverage ratio improved to 97%, and as regards to profitability, the net profit is increased by 139% to INR775 crores as against to INR325 crores corresponding last quarter of previous year.

Operating profit is increased by 36% to INR1,580 crores as against INR1,162 crores last corresponding period. Net interest income is increased by 30% and net interest margin improved to 3.6%. Cost to income ratio is improved to INR39.69 which is below 40% for the past two to three quarter and we will able to continue the same level. ROA improved to 1.30% as against 0.60%. Return on equity is improved to 25% and CRIR improved to 17.53% which is Tier 1 is 13.47%. As you know, we have that current C area this current year’s profit is not added, if we add the current year’s profit, the CRIR maybe around 19.21%. So earlier, COVID provisions whatever we have provided INR1,200 crores, it as it is we have kept it and it is not considered for either capital adequacy purpose or for provisioning purpose.

So for profitability for the nine months, net profit is INR1,762 crores as against INR796 crores corresponding nine months last year. Operating profit also shown a growth of 16% to read through INR4,244 crores. Net interest income grown by 25% year-on-year. Fee-based income increased by [Technical Issues] to INR927 crores. Cost to income ratio is 39.48 for nine months. Return of [Indecipherable] were 1.02% for nine months at the range 0.524 nine months 31/12/21. Return of equity is also improved to 18.50% as against 11% for last year.

During the last quarter, we have added 1.2 million customers and 62 branches we have opened to reach to 540 districts as of now, and we have recruited around 1,200 employees as in the process, in the process, because just as other things are over, this is basically for creative minds, the new branches opening and retirement and other wastages. As regards SMA is concerned, SMA is under well, under control below 2.5% of the total assets, including SMA 1&2.

So, these are the main highlights what we wanted to share with you. And regarding the digital area, I will request our ED staff what are the initiatives we have taken for past one quarter, earlier we have already shared with you and regarding internal control and other areas where our other ED Mr. Vijay Kumar is there, he will share. [Technical Issues] how can you…

Operator

Sir, I’m sorry to interrupt, could you please repeat your last line. Sir, your voice broke.

A.S. Rajeev — Managing Director and Chief Executive Officer

Yes, digital area, there are good improvement during the last quarter that will be shared by our Mr. Pandey. He is looking after the digital area and Shri. Vijay Kumar is looking after their internal control system of the bank and other areas. So, he will share the major points with you. Afterwards, we will have the question answer session. It’s okay, madam.

Operator

Yes sir, this is fine. Thank you.

A.S. Rajeev — Managing Director and Chief Executive Officer

Over to Mr. Pandey.

Asheesh Pandey — Executive Director

Yes, thank you sir. As you know, already the brief — all our important stakeholders you have got on the bank’s performance in the business. So, we are inching towards the bettering ourselves quarter-to-quarter we are just making all our efforts and endeavors in that line. Certainly the technological intervention and the digital is going to play a two key role as we said earlier and we emphasize always. The first is sustainability of the business growth that is quality as well as the percentage or maybe the amount wise. The second one important thing is, the immediate compliance. So, you keep on having a well compliant culture and other thing using the technology. So, as you see that the last quarter we gave and then this quarter also there is a slide on it, two slides are there, which shows the digital footprints and the — so key growth if I save UPI, BHIM users from 2.49 million to 2.53 so it is a consistent and transaction wise also from 326 to 352. Digital transactions which were 96.34 moved to 96.66 percentage.

So similarly, internet banking users is around moved from 21.73 to 23, mobile banking 21.31 to 22.73, WhatsApp is 2.35 to 3.15 lakhs. So QR merchant also if we take 22.30 to 28.49 lakh transaction. So what we indicated last time also and we are very much cautious and also very much progressive on the IP and digital intervention, so UPI on some of the identified things where we wanted to be more hold and also we analyzed this cost is better when we move from capex to — sorry opex to capex. So, similarly, you would have seen the various — the RFPs which are floated for not three to four months’ time. So, UPI already one of the best player in the market has come in and we have started and we are trying to close this project by March, the robotic process automation again one of the bank public sector 62 processes in which 48 are high complexity. So already it is awarded and one of the best of the world, the player which is now we can very well clear player, UPI has been impaneled and we have started, so we are planning five to six or seven processes delivery per month, so it is going to help me on three things, as we said, the first is the business which is the customer expectations and convenience, the more business, the second is the compliance and third is ease to my staff on ease of banking.

So the third is data warehouse we have already completed and the bank is well complied and we are already actually it is working for last one, one and a half months we are using it for various returns, the bank is on the private cloud which is nakshatra and three to four cybersecurity solutions are implemented and three to four are in process even now. So already bank is on the asset liability and the services side has planned around three to five STP journeys going forward and similarly, the FinTech onboarding is also poised for. So when I say the upgradations, so the bank has also having the advisors from IIT, Mumbai and the other rounds so we are having the upgradations of software hardware is the UPI switch already EFT already we have done it five gateway. So, in totality, we have started with the four theories as of now, one Center of Excellence in database and what that is on CBS with TCS and other cyber security within spider and the analytics, and now we are thinking of on the record side because it is very important to have some well-defined frequencies within the day on the reconsideration and the other list.

So with this, I would only like to say that the business side how to have to start with say 3% to 5% of the business as growing from the digital side, moving to around 15% to 20% for next two to three years’ time, that is one. Secondly, cost to income certainly that how they expenses with the genes to digital systems, change to IT interventions or robotic process automation. So, all those things, how it can be further made to cost conscious and as the customer expectations have to be met with the technology. So these three four feeding hidden key areas which are going to support the rank in photo all the stakeholders because customers the important stakeholder, so on a customer service and better journeys, the staff certainly because it is the most important if ease of doing business is there and they are deployed for the more better prudent and productive ventures rather than the repetitive complexities. And the third is the regulator, so more and more digital intervention which you make into compliance will help the bank to achieve as we progress with the business.

So, with this, I leave it to…

A.B. Vijayakumar — Executive Director

Yeah, good evening to all of you. Welcome to this analyst meet. I am Vijay Kumar Executive Director. As you all know, Bank of Maharashtra being the premier public sector bank, we have been doing extremely good in the last several quarters. At the same time, we are constantly working in line with the national priority upkeeping our technology and with the focus of customer centric activities. While doing so, we are focusing on improving our internal control measures, appliances and risk management. In actual, I would like to say from HR side, we are transforming ourselves from government, government karma chary to karma yogi, this is what I would like to say the initial, we take up question as and when it comes not only the business, any other improvement because quite often the question comes the sustainability and that’s what I made a small remark on that point.

Thank you very much. Now we are ready to take on questions.

Operator

Thank you very much. [Operator Instructions] We have the first question from the line of Ashok Ajmera from Ajcon Global Service Limited. Please go ahead.

Ashok Ajmera — Ajcon Global Services Ltd — Analyst

Thank you for giving me this opportunity of asking the first question. I have a few questions in observations and I request the moderator to please do not cut me unless I complete at least those two three questions and some observations. Thank you very much. Now, I start my compliments to you the MD and CEO and both the EDs and the entire team of the top management of the bank for the fantastic performance quarter-after-quarter, and this quarter your profit before tax is stretching to almost INR1,000 crore for a quarter. On other parameters also if you see the — I think one of the best net NPA figure in the entire public sector bank of 0.47 even the gross NPAs are under very much control, slippages are under control, your name is growing quarter-after-quarter I think 3.6 or something even in this quarter and the asset quality has been improved to the extent of, I think one of the highest provision again of almost about 97%. So, my compliments to you sir. On all these parameters, I think your bank, if one do not consider the size among the public sector bank which also is now almost INR3,65,000 crores can be said as one of the best performing bank especially among the public sector bank and it can match with any other private sector bank also.

Sir I have just a few observations and some questions, I would have liked to have some clarity on the calculation of the net worth at various places, in the results also, in the balance sheet. So, the net worth of INR12,699 crores is said there in the results point number 711, very few add up the profit and everything, it doesn’t come to that level, it is rather higher. So, if you take the net worth of the equity of INR6,730 crores and the results without the profits of this year of INR5,577 crores, it becomes INR12,307 crores and if you take the profit of three quarters of INR1,762 crores it comes to INR14,069 crores, but if you look at the balance sheet, again there the reserves and surplus and capital if you add up it is INR15,644 crores, even again in your own note — so what I would like to — like if somebody who has done the calculation of just net worth of the bank at various places different things, if somebody can explain me or can send me the details a little later also I don’t mind about that?

Sir my second one is that the — the NSR marking a bit that I hope it is 100% provided for INR197 crores of the spending SR, note number 12.4 and I would also like to know on the accounts required, INR1,916 crores in this quarter with tangible security of only 24.91%. So, what kind of accounts these are because the accountability of the person from whom we bought these accounts is I think about 10% or 11% this year holding. So, I would like to have some clarity on this? And sir if I look at the segment wise results, then our treasury income has come down to INR34 crores of rather profit has come down INR34 crores as against INR105 crores in the last quarter and the wholesale book profit has gone to INR676 crores against INR487 crores while the retail banking it has again gone down to INR20 crores against INR326 crores. So, some explanation can be given that because of the provisioning or because of what — because corporate book has just increased now in this quarter two by 7%, but how much — why this anomaly in this segment — why is profitability, I would like to know — I would like to compliment on Casa which is of course going 52.5% which is not a less as compared to the other bank, but it has come down from 56.27% in the last quarter. So, any specific reason for that, if it can be explained and going forward, where do we see the CASA to be, because it is the one which is giving you the maximum yield and maximum profit. I would also like to appreciate here that while the yield on advances has gone up to 8.28% from 7.81%, which is almost 19 plus 28 almost about 50 basis point whereas the cost of funds have gone up only to 3.61% from 0.31% that is only 30 basis points. So, which is another good point for the bank. So, sir some of these issues and one on the provisions for taxation, whichever in spite of the profit going up detected provision has come down to INR223 crores from INR348 crores growth in the last quarter. If time permits later, I would like to discuss something about the advances and the credit growth going forward? Thank you, sir.

A.S. Rajeev — Managing Director and Chief Executive Officer

I think Ashok regarding this net worth, we will give you detailed things to you mainly because of revaluation reserves and other things maybe — it may be because among the area evaluate for example, book value of the share some of the areas revaluation reserves have to be reduced and in case of capital adequacy also we have to change the revaluation reserve of 45% only, but that may be the reason that our CFO will be in touch with you and give you [Technical Issues].

Regarding SR and other things, as per the valuation 100% provision we have made and there is no issue. Treasury yield is come down mainly because of the profit on sale of securities because of the increase in interest rates last quarter only small amount INR28 crores to INR30 crores was the treasury profit has come happen. And in case of other income, we have changed the accounting methodology also, earlier commission on guarantees or other things, earlier it was on cash basis this year onwards we have converted to accrual basis. So, other income has come down by around INR30 crores during the current year. So, usually accounting aspects. So, regarding CASA, CASA is around 52.5% of course, you are well aware that in the highly increasing interest rate scenario, there is a shift from deposits, term deposits shifting is there, but here CASA we will be able to contain the CASA, core CASA as it is at the rate of 52.5. So, generally 3% to 4% government deposits and other corporate deposits were there, generally because of the higher interest rate, government deposits and preferred because they have shifted to term deposit, but otherwise CASA as per 52% to 53% we will be able to continue coming going forward also.

Regarding taxation for the next two to three years bank may not provide any tax, but however, as a precaution, we have kept some DTA we have reversed and we have kept for some INR200 crores, INR300 crores, because we have more than INR15,000 crores to INR20,000 crores loss created for the past two years, it is continuing in the books. So, two to three years there is no taxation will not come, but we have kept some amount for taxation, but pass it for futuristic purpose. So, otherwise, this can be considered as a profit also. So, we will be in touch with you and we will give you our CFO, Mr. Shiva will give you detailed working on your net worth as well as other areas wherever regarding treasury also, we will be giving to you. Thank you.

Ashok Ajmera — Ajcon Global Services Ltd — Analyst

Thank you, sir. Thank you. I’ll come back again. Thank you.

Operator

Thank you. [Operator Instructions] We have the next question from the line of Sunny Agarwal from SBICAPS Securities Limited. Please go ahead.

Sunny Agarwal — SBICAPS Securities Limited — Analyst

Yeah, thanks for the opportunity. Sir, my first question pertains to the sector or corporate. From these sectors, we are seeing a healthy credit demand for us, and in the current rising interest rate scenario, where do we see our new panning out especially for the corporate on our corporate book? So that is a first question And my second question but into the customer base. So I believe we will be — we are adding few customer on current account and saving accounts right. So if you can throw some light on what kind of customer or salary account we are adding especially in hyper competitive environment, where everyone is chasing those CASA in the rising cost of the product scenario? Thank you.

A.S. Rajeev — Managing Director and Chief Executive Officer

So this question is regarding corporate NIM. NIM of the corporate on an average [Technical Issues] NIM we are getting from the corporate and we have now got…

Operator

Sorry to interrupt sir, can you please begin again? I mean, like your broke a little bit.

A.S. Rajeev — Managing Director and Chief Executive Officer

So first question is regarding NIM on corporate book, and corporate book NIM is around 2.75% to 3% NIM is on the corporate book. So that is comparatively good and we have not gone for any interest rate scenario any of the accounts we have not gone for cases. So, the average yield is good. And that in current account and SB account, mainly the salary accounts and other things we are getting statewide for example, one example I can tell you that we are having a tie up with some of the state governments and other things and there are salary accounts as well as there are loan accounts like housing loan accounts like that we are getting plus we are SMA accounts is a major area of our source that is we are having so many state governments and we are continuing to — our team is very strong, government departments team in Delhi as well as in Mumbai and different state heads of the states, our team is very strong, it is a strong force of around 250 to 300 people are working for that. So for this, that is a major area of benefits is coming from current accounts and SB. So these are mainly SMA accounts and corporate accounts as well as the salary accounts. Thank you.

Sunny Agarwal — SBICAPS Securities Limited — Analyst

Sir just so because of sector from where we are seeing a healthy grade demand or loan demand which are the industries which we are planning to lend over the next 12 to 18 months?

A.S. Rajeev — Managing Director and Chief Executive Officer

I think GM credit will give you that data.

Unidentified Speaker —

We are seeing good demand from all the sectors, be it infra or manufacturing. So there is no data proposals. Thank you.

Sunny Agarwal — SBICAPS Securities Limited — Analyst

Okay, thank you and all the best sir.

Operator

Thank you. We have the next question from the line of M B Mahesh from Kotak Securities. Please go ahead,

M B Mahesh — Kotak Securities — Analyst

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

A.S. Rajeev — Managing Director and Chief Executive Officer

Yes GM [Indecipherable] is back.

Unidentified Speaker —

Yes this NARCL, as you know, that shortlisting has been done for our bank 13 accounts are already shortlisted around INR2,700 crores. Now that guarantee issues also resolved because the government has given the approval about these guarantees of SR. And now that work of actual transferring the account to NARCL has been started, so we expect that within this week, the first account will be transferred to NARCL. And then the things will move.

M B Mahesh — Kotak Securities — Analyst

Okay, visibility of recoveries other than the NARCL?

Unidentified Speaker —

Recoveries, sir, as you already notice that we are at the lowest GMP and NPA, and now it’s a challenge to maintain that level below 3 and below 5.5. So recoveries in this quarter, we expect at least INR500 crores recovery and write-off account and almost equivalent reduction in the NPAs.

M B Mahesh — Kotak Securities — Analyst

Okay, perfect sir. Done. Thanks.

Operator

Thank you. We have the next question from the line of Sridhar Sivaram from ENAM Asset Management Company. Please go ahead.

Sridhar Sivaram — ENAM Asset Management Company — Analyst

So my question is on the credit cost and the provisioning for a bank which has 97% coverage and more than INR1,000 crores of provisioning. The first nine months credit cost is 1.6. And even for the third quarter, it is 1.4. So, some guidance on provisioning going forward, we’ve seen credit costs coming up for many of the other PSU banks, you maybe prudently continue to provide very high, but if you could help us with some guidance on how to look at it for the next year?

A.S. Rajeev — Managing Director and Chief Executive Officer

So credit cost we expect it will come down to 1% by next year. So, this is 1.5% this time basically, because whereas small amount is utilized for reducing the net NPA ratio of because they earlier last quarter it was 0.68 was there now it is come.47. So, now, for going forward, we have reached our target below 0.5. Now, in and around this net NPA will continue in the same level 0.4 to 0.5 level. So, there will not be any requirement for correct provisioning for reducing the net NPA. Otherwise our addition is coming only INR572 crore is the last quarter added and recoveries almost in the same level. So, there will not be any additional credit required credit provisioning requirement is not there actually, it is your max INR100 crores or INR90 crores something, small amount only will come. So, that will continue next year also but we expect that up to INR1,000 credit cost is always better to keep in mind.

Sridhar Sivaram — ENAM Asset Management Company — Analyst

INR100 crores, INR200 crores and 1% there is almost INR1,500 crores difference. So, you’re throwing numbers like 1% we want to keep. So, the range you’re talking is so wide. So, it will help us if you can give some reasonable number because you will do almost INR2,00,000 crores of say loan book next year, 1% would almost mean INR2,000 crores. So, should we expect around INR1,000 crores of credit cards next year, is that a reasonable number?

A.S. Rajeev — Managing Director and Chief Executive Officer

So that conservative only I’m telling that 1% maximum.

Sridhar Sivaram — ENAM Asset Management Company — Analyst

Okay, that seems like a very conservative number.

A.S. Rajeev — Managing Director and Chief Executive Officer

So, you can reduce the numbers there is no problem I am telling the outer limit.

Unidentified Speaker —

And you have to see that we are keeping net NPA ratio is 0.47 and to bring down the debt ratio, you are required to weigh projects more than that’s why sir has taken that into consideration.

Sridhar Sivaram — ENAM Asset Management Company — Analyst

Okay. My other question is you mentioned about tax also that you have substantial losses, which are carried forward and you don’t need to provide tax. So what sort of numbers should we model for next year? If you could help with some numbers that will help because both the provisioning and the tax numbers are — they are varying so much that it is very difficult to make any forward estimates. If could help us with some tax number what should we — what sort of — what percentage or what absolute number should we keep for tax is INR500 crores or INR1,000 crores reasonable number for the full year next year or some sort of guidance will help?

Unidentified Speaker —

Yeah, I’m CFO here, you’ll see that what our tax project we have made it is not the actual tax, it is duty reversal. So, we were having — we have created duty on the allotted provision. And when we have written off from that, we have reversed that DTA and DTA reversal or DTA will help us in improving CRS during third quarter and the profit cannot be added during the quarter. So one thing is that DTA we are using for improving the CRIR during the quarter. Secondly that we are holding to that INR10,000 crores losses and whatever was our profit projection for two years, we don’t expect that there will be any actual good tax revenues. Having said that, there may be some detailed reversal to improve the CRIR.

Sridhar Sivaram — ENAM Asset Management Company — Analyst

Should we expect about INR500 crores of DTA reversal coming in next year?

Unidentified Speaker —

It could be on lower side.

Sridhar Sivaram — ENAM Asset Management Company — Analyst

It could be on lower side. Okay. That’ll help sir. Thanks a lot.

Operator

Thank you. We have the next question from the line of Jay Mundra from B&K Securities. Please go ahead Mr. Mundra, I have unmuted your line kindly proceed with your question.

Sridhar Sivaram — ENAM Asset Management Company — Analyst

Yeah, hi. Can you hear me?

Operator

Yes sir, please go ahead.

Jay Mundra — B&K Securities — Analyst

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

Unidentified Speaker —

That we are expecting 15% wage revision and accordingly INR32 crores we have provided during this quarter for two months.

A.S. Rajeev — Managing Director and Chief Executive Officer

There is a 55%.

Jay Mundra — B&K Securities — Analyst

So, this INR32 crores is for two months right?

A.S. Rajeev — Managing Director and Chief Executive Officer

Yes, yes.

Jay Mundra — B&K Securities — Analyst

That’s INR16 crores per month, right, that is the math?

Unidentified Speaker —

Correct.

Jay Mundra — B&K Securities — Analyst

And secondly, so, this you said at 15% you provided right. And secondly, it looks like this standard assets provisioning has been negative in third quarter. Is it because restructuring loans are slipping or otherwise what would cause the standard asserts negative provisioning because you are growing your assets reasonably well?

Unidentified Speaker —

Some of the restructure that it has become the standard also. So, for that we need not to make the provision. And what it says is that some restructure have slipped, in that case, that restructuring will be written back, that is the case. Because in this event which have become a standard norm, it is no longer to provide restriction. So, accordingly we have written back the restriction provision.

Jay Mundra — B&K Securities — Analyst

Right. So, maybe the first restructuring these people the two years term has got over, right and that is how they are turning back into standard, standard? And secondly, on your loan mix by benchmark. So, how much is reporting, how much is table and how much is MCLR if you have that number for your loan book?

A.S. Rajeev — Managing Director and Chief Executive Officer

Out of the total loan book 43% is our original recording rate and remaining 57% is the NARCL linked grade.

Jay Mundra — B&K Securities — Analyst

And sir you would have something on gold etc. sector also right which is fixed rate or that is like negligible?

A.S. Rajeev — Managing Director and Chief Executive Officer

See, that is to repo.

Jay Mundra — B&K Securities — Analyst

Okay, gold loan also?

A.S. Rajeev — Managing Director and Chief Executive Officer

Yes. Actually, we do not have as such in the portfolio.

Jay Mundra — B&K Securities — Analyst

So, last questions are on your EBLR right. So, when you had started this EBLR, what was your reset timeline and can you change the reset timeline for a customer who is on repo rate? So, if someone who has taken a home loan at, let’s say, repo plus spread and his reset was initially what was the reset period was every month every quarter and has that been changed also?

A.S. Rajeev — Managing Director and Chief Executive Officer

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

Jay Mundra — B&K Securities — Analyst

But when would it be effective? So let’s say, RBA 7 December?

A.S. Rajeev — Managing Director and Chief Executive Officer

The same day it will be effective.

Jay Mundra — B&K Securities — Analyst

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

A.S. Rajeev — Managing Director and Chief Executive Officer

That is the basic consensus of the repo rates. As the repo changes, we have to pass on the benefit to the customer.

Jay Mundra — B&K Securities — Analyst

No, I understand that, what I was asking is does this changes overnight to every customer or let us say…?

A.S. Rajeev — Managing Director and Chief Executive Officer

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

Jay Mundra — B&K Securities — Analyst

Okay, understood sir. Yeah, that is all from my side. So, thank you and all the best.

Operator

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

Deepak Poddar — Sapphire Capital — Analyst

Thank you very much for the opportunity and a wonderful set of numbers. So many congratulations for that. So, I just wanted to know, now you — one point you mentioned was about INR500 crores of recovery you are expecting from return of account right in this quarter itself. So, ideally that that effectively means that you will have that — the neutral provisioning right I mean, we are currently doing INR500 crores per quarter and if we recover that amount or you’re trying to reduce the net NPA from that amount?

A.S. Rajeev — Managing Director and Chief Executive Officer

Yes, that recovery is in right of account, INR500 crores is definitely there, we expect in this Q4. With this, of course, it will be useful for both ways because that is direct profit as you know. So, how we use it for because the net NPA has reached 0.47 level. So, now it is I think the idealistic level which were to maintain over a period. So, a lot depends upon the slippages work accordingly, we’ll plan.

Deepak Poddar — Sapphire Capital — Analyst

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

A.S. Rajeev — Managing Director and Chief Executive Officer

Yes, a lot depends on what you said, we also expect, but we are always conservative.

Deepak Poddar — Sapphire Capital — Analyst

Yeah, of course, we should be conservative. I’m sure I understood that point and what sort of recovery we’re expecting next year FY24?

A.S. Rajeev — Managing Director and Chief Executive Officer

FY24. So, again, 13 accounts are lined up with NARCL. So, that will keep happening now in next year, bigger country also that is in infinity which is already NARCL only building. So like where some big accounts will come. So in the same line will keep our GNP and NNPN accordingly will at least see that my recovery and upgradation is our aim to be at least not more than but at least equal to the slippages.

Deepak Poddar — Sapphire Capital — Analyst

Equal to the slippages, okay understood. And my second question is around your growth, we were expecting around 24%, 25% growth this year straight and we are currently at 22% rate. So largely in line what we have been guiding?

A.S. Rajeev — Managing Director and Chief Executive Officer

Our target is 22% growth under advances and 13% under deposits.

Deepak Poddar — Sapphire Capital — Analyst

And then what sort of growth we’re looking next year?

A.S. Rajeev — Managing Director and Chief Executive Officer

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

Deepak Poddar — Sapphire Capital — Analyst

Fair enough. I got it. That’s it from my side, all the very best. Thank you.

Operator

Thank you. We have the next question from the line of Mangesh Kulkarni from Almondz Global Securities. Please go ahead. Mr. Kulkarni, I have unmuted your line, kindly proceed with your question.

Mangesh Kulkarni — Almondz Global Securities — Analyst

Yeah, thank you very much for giving me an opportunity. So, I just wanted to know, today’s media paper suggests that we are looking for fundraising and appointing the merchant bank and so what kind of timeline we are looking will it be in the first quarter or second quarter of FY24 or later on?

A.S. Rajeev — Managing Director and Chief Executive Officer

You have actually heard about the technology plant of the Bank of Maharashtra, recently we have come with the RFPs for selection the DRM and what we are planning that in first or second week of survey we will hit the market we intend to raise INR1,000 crores capital.

Mangesh Kulkarni — Almondz Global Securities — Analyst

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

Unidentified Speaker —

Yes, prudential write-off we have already told that INR500 crores we are expecting recovery in this quarter Q4.

Mangesh Kulkarni — Almondz Global Securities — Analyst

So, what is our total outstanding count content which is?

Unidentified Speaker —

Around INR18,000 crore that content.

Mangesh Kulkarni — Almondz Global Securities — Analyst

So, if you’re going forward also we will be looking similar run rate in every quarter around INR500 crores?

Unidentified Speaker —

We keep our aim like that only.

Mangesh Kulkarni — Almondz Global Securities — Analyst

And slippages also your guiding sleeve similar what equal to distinct like upgrading and recovery will be equal to the slippage decreases right.

Unidentified Speaker —

That is again right.

Mangesh Kulkarni — Almondz Global Securities — Analyst

Okay, thank you very much. All the best to you.

Operator

Thank you. We have the next question from the line of Ashfaque Ahmed from A Squared Financial Services. Please go ahead.

Ashfaque Ahmed — A Squared Financial Services — Analyst

So very good evening to everyone and congratulation MD, ED and all the vertical heads for an amazingly and a consistent result. So, I have two small questions, I have one is that especially with regard to your MSME and retail portfolio, because in the last around more than a year we have increased our footprint across India in a very calibrated way. So, what sort of boost in the MSME in retail credit, we are expecting because of the increase in our footprints across India is majority in the hinterlands also? And the second is that since we have increased our footprints with additional zonal offices, additional branches obviously see boost these business so and how do we see because of this the impact on the cost to income ratio? Thank you so much.

A.S. Rajeev — Managing Director and Chief Executive Officer

Yes, MSME and retail as of now for the past two years, we are growing at the level of 24% to 25% and MSME we are expecting around 20% to 22% growth rate in coming quarter also and retail around 23% to 24% is the growth we are expecting. And second point is regarding branches we have — calendar year we have opened 106 branches and another 150 branches permissions is already given and in the process. So before March another — this quarter another 50 to 60 branches we will open to end with 2,200 branches by March and the remaining branches we’ll be opening next year.

Ashfaque Ahmed — A Squared Financial Services — Analyst

Okay, sir. And on the cost to income ratio, how do we see that driving…?

A.S. Rajeev — Managing Director and Chief Executive Officer

I think 3,940, our aim is to keep around the 40% cost to income ratio that we’ll be able to do that.

Unidentified Speaker —

40% plus, minus 1%.

Ashfaque Ahmed — A Squared Financial Services — Analyst

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

Asheesh Pandey — Executive Director

Yeah, as far as you have asked no, I’m Ashish Pandey here. So, as you have asked them of MSME goes in retail. So, you had one more thing in my like, when we are increasing the branches. So, how will the growth — so MSME it is already explained and Rajiv very clearly to do that how we are going to do the growth from the MSME and retail and even the agriculture outside Maharashtra that gives new footprints. Now, you wanted the cost to income ratio, certainly you feel probably that with the increasing budget, there will be remote and the expenses, but let me tell you very clearly that we are trying to explain to you very clearly, we have not…

Ashfaque Ahmed — A Squared Financial Services — Analyst

Sir, your voice is not audible, please.

Asheesh Pandey — Executive Director

Yeah, so I think hub and spoke model. So where we have only one branch mainly and then we are having either BC and the CSP model to serve the customer. So, that is a very cost effective one. Secondly, the bank has also looked into processes we are reviewing it. So wherever with technology, we can reduce the cost. So that is also taking place across the various the functions in the bank. So, that is why cost to income 40% plus minus 1%. Now, your third question was the MSME and retail. So what you are like probably perceiving is that there is a huge benefit to actually balance transfer is going on, but actually we are perceiving differently if you see even the various credit rating agencies and various research reports see, the demand is very welcoming, if you take the housing itself and both vehicle loan particularly the EV segment the demand which is coming in is very, very quite huge. So, what we are doing that, the bank of Maharashtra has also fine tune it various policies, where the DSA appointment in these specific areas specific locations and also bank has identified along 15 clusters. So, I would not say the clustering scheme basically that is also in place, but then it’s specifically focused with mid corporate branches and the corporate finance branches, where we are targeting location wise and we are trying to get each location like maybe I should say, like the tiles maybe a cluster maybe a textile can be clustered around three to four cluster if you take textile which is really [Indecipherable] then engineering Coimbatore Is there a choke review again in the textile.

So, if you take the bank is very clearly like INR300 crores to INR400 crores aimed for these clusters specifically at each locations. So, not only is the balance transfer, balance transfer is yes, the bank is having very much competitive edge because of the interest rate. So, if you see that the interest rate of interest in the home is also one of the lowest. So, two, three projects are very competitive, so, we do have a competitive advantage, and the benefits are there, but then demand is also very much picking up which bank is cackling with the specific types with a specific approach, focus approach and the locational approach.

A.B. Vijayakumar — Executive Director

So I would like to add, Vijay Kumar here. Ahmed you asked this question that only the files are shift, yes, I do agree. But we are also in the market that we also have a product named [Indecipherable]. So, we tend to continue to focus on the customers who left a few years before, four or five years before we are bringing them by giving them on the market related demand attractive rate of interest and the terms. Our strength is now TAD improvement in TAD which we are focusing on focused approach we identified by the centers that we are givers for improving the particular cluster, through that also we are improving MSME. If you look at the MSME there are three attributes only micro small and medium, we have gone a very huge shift, a huge increase in the portfolio micro. All our bank, all our branch, brick and mortars are doing micro loans, which align with key national priorities be it be a Mudra or a PM standup India or even PM solidly. We are being focusing, so we are in align with the national priorities objective. That’s the reason why the MSME growth is now robust and we continue to focus on this.

Ashfaque Ahmed — A Squared Financial Services — Analyst

Agreed sir, perhaps my compliment to that is perhaps the best in the industry, I would say right now. And many congratulations on the [Technical Issues] for answering all these questions. Thank you so much.

Operator

Thank you. We have the next question from the line of Akash Jain from Ajcon Global Services Limited. Please go ahead.

Akash Jain — Ajcon Global Services Limited — Analyst

Congratulations sir on a very good set of numbers. My questions are regarding the co-lending book, what is the size of the current co-lending book and what is your target to increase it?

A.S. Rajeev — Managing Director and Chief Executive Officer

At present, total loan book size in co-lending is around INR500 crores, we have developed our software. So once that is stabilized, we’ll take it forward sir on much larger scale.

Akash Jain — Ajcon Global Services Limited — Analyst

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

A.S. Rajeev — Managing Director and Chief Executive Officer

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

Akash Jain — Ajcon Global Services Limited — Analyst

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

A.S. Rajeev — Managing Director and Chief Executive Officer

Now, the gold loan balance outstanding is around INR6,000 crores and gold loan is growing at an average level of around 30% to 40%.

Akash Jain — Ajcon Global Services Limited — Analyst

Okay. And what is the target for this book?

A.S. Rajeev — Managing Director and Chief Executive Officer

So, target is given to the franchise to reach by [Technical Issues], I think we will be able to reach to INR7,000 crores to INR7,500 crores by March.

Operator

Sorry to interrupt, sir we missed on the number can you please repeat it.

A.S. Rajeev — Managing Director and Chief Executive Officer

Yes, target to the franchise is given around INR7,500 crores by the March end. So, we might be able to do that for loan book.

Akash Jain — Ajcon Global Services Limited — Analyst

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

A.S. Rajeev — Managing Director and Chief Executive Officer

Yield is around the 7.90% to 8%.

Akash Jain — Ajcon Global Services Limited — Analyst

Okay. And also in last quarter we had talked about using the excess SLR. So, I think it was around INR18,000 crores as on last quarter. So, what is the excess SLR as of now and what has been utilized so far?

A.S. Rajeev — Managing Director and Chief Executive Officer

As of now, only 3% to 4% is excess SLR is there, balance we have already utilized that is why we have not raised much funds through deposits and thereby [Technical Issues] come stabilized. So, another INR5,000 crores to INR6,000 crores excess SLR we may be able to utilize through increasing the CD ratio.

Akash Jain — Ajcon Global Services Limited — Analyst

Okay. CD ratio we have talked about I think increasing to 80% so that number we are sticking together?

A.S. Rajeev — Managing Director and Chief Executive Officer

Now it is 75% another 3% to 4% we may be able to increase that.

Akash Jain — Ajcon Global Services Limited — Analyst

Okay. Thank you.

Operator

Thank you. We have the next follow up question from the line of Ashok Ajmera from Ajcon Global Services Limited. Please go ahead.

Ashok Ajmera — Ajcon Global Services Ltd — Analyst

Thank you for giving this opportunity again. Of course, a lot of clarity has come after the deliberations with my other colleagues, but I would touch again this raising the capital of INR1,000 crores through equity. Now, of course, our share prices are firming up and it has come to a very good level almost about I think 1.752 book or maybe it’s very maybe two times of the book, but whenever I see capital adequacy is already 17.5% and we are having a very good profitability. And in any case, it doesn’t help as far as your CD ratio is concerned, what is the basic purpose of raising this INR1,000 crore equity now just to take advantage of the raising share prices or anything else is there?

Asheesh Pandey — Executive Director

As per the SEBI guidelines, we have to reduce the government 70% to 75%. So partly for this purpose, we are coming with the issue of equity share capital and you know that we are having the growth of advances 20% to 25% we are planning for that we require the capital. So, for that we are going to raise the equity share capital.

Ashok Ajmera — Ajcon Global Services Ltd — Analyst

So from 90.97%, it…?

Asheesh Pandey — Executive Director

It will not remain 90.7% once you increase your advances by 20% to 21%. At the time you require the capital.

Ashok Ajmera — Ajcon Global Services Ltd — Analyst

Okay the government holding government…?

Asheesh Pandey — Executive Director

Government value is…

Ashok Ajmera — Ajcon Global Services Ltd — Analyst

Only about 3% or 4% I think just coming down with. My one question which was there last time also which was remained unanswered was that note number 12 the accounts acquired INR1,916 crores at 24.91% tangible security. I just wanted to know the quality of these accounts which are required with such a low percentage of the tangible security, what are these accounts and after having acquired, is there any stress or anything has been seen in last couple of months on these accounts?

Unidentified Speaker —

I will tell you — Good evening, Mr. Ajmera, I’m Sanjay Rudra. These accounts are basically related to the securitized asset which we have purchased from other NBFCs. These are basically putting into MFI, MFI loans are not considered as a secured asset in our book. So, yes we classify this asset under the unsecured category, mostly these are pertaining to that only and here when we are going for the full buyout, we go for the loss estimation also and as per our goods it is loss estimation given by most of the employees below 3%, but it is basically in the range of 1% to 1.5% we are observing on base for the last so many quarters. So, the NPA percentage in this book is very low and the returns are very good.

Ashok Ajmera — Ajcon Global Services Ltd — Analyst

Going forward are we continuing the same trend like it becomes to almost about I think this is INR1,916 crores is a good amount during the quarter. So, are we going to keep the same trend or you have reach to a certain level now and we don’t want much?

A.S. Rajeev — Managing Director and Chief Executive Officer

See I will explain here that see these are the MFI loans, which are the maximum duration of the loan is between one year to 15 months only, because they are given for 24 months, then there is a holding period is there. So, effectively it is coming in our book in a period of 12 months to 15 months. So, we are acquiring these goods, but the repayments are equally fast most of the loans are repaid within a period of 18 months. So, these are the acquisition, but outstandings are always much lower than what is acquired during the year.

Ashok Ajmera — Ajcon Global Services Ltd — Analyst

Thank you, sir. Now, since we have already as discussion was going on that we are already on the net NPA of fine for 7% and whether net to net the recovery from the account which are totally written off will come either as a reversal of provision or profit to the book. So, naturally do we really need to have any further provision? So, what do we have in mind about that ad hoc provision of INR1,200 crores which we have on the COVID account developing the COVID situations in future, do we have any plan to even make use some part of that even March for the whole year to so that no further provisioning as such a net-net is required in the March and we can have a bumper profit in the books, any idea on?

A.S. Rajeev — Managing Director and Chief Executive Officer

As of now, nothing is given by the [Indecipherable] at the board level they have discussed and the Reserve Bank of India level also then only the third wave started somewhere here and there, then they told that and we’ll wait and see yes. And but of course, finally it you have to come to the books as a profit and it will come to capital or profitability, it has to happen that.

Ashok Ajmera — Ajcon Global Services Ltd — Analyst

Now, this just a couple of — on credit side what is our position on direct lending for onward lending to the priority sector to NBFCs or have we reached to that particular level are we considering them still? Second, is our corporate book has again started growing well? Can you hear me?

A.S. Rajeev — Managing Director and Chief Executive Officer

We can hear, please carry on.

Ashok Ajmera — Ajcon Global Services Ltd — Analyst

Some color was given that I think the GM credit infrastructure in something, can we be a little more specific on that?

A.S. Rajeev — Managing Director and Chief Executive Officer

NBFC we have — board approved level is given up to 8% to 9% of the total advances we can go NBFCs but we have gone only 5% to 6% there is gap is there 3% to 4% of the total advances, but very cautiously we have gone for that and now presently we have gone for some of the accounts basically corporate is work for some of the pharma sector or some petroleum sector and some aviation, aviation means not this type of the aviation sector per se, it is no development of airports highly rated double and double accounts we have gone for that and some amount has gone to NBFC also INR2,000 crores to INR3,000 crores but keeping 5% to 6% of the total advances we have kept it for NBFCs.

Asheesh Pandey — Executive Director

Yeah Ashok particularly when picturing we are looking more as a banking focus, where exports request…

Operator

We request you to come closer to the speakerphone.

Asheesh Pandey — Executive Director

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

Ashok Ajmera — Ajcon Global Services Ltd — Analyst

What are your views on auto ancillary?

A.S. Rajeev — Managing Director and Chief Executive Officer

Yeah, auto ancillary to particularly EV side.

Ashok Ajmera — Ajcon Global Services Ltd — Analyst

We are open for that?

A.S. Rajeev — Managing Director and Chief Executive Officer

I think that growth rate was quarter-to-quarter it is around 40% to 45% what the current BLS export is doing well and the earlier bank has not having that much export area and medical devices, medical equipment that type of where we are at.

Asheesh Pandey — Executive Director

Even hospital sector, we are there [Multiple Speakers].

Ashok Ajmera — Ajcon Global Services Ltd — Analyst

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

A.S. Rajeev — Managing Director and Chief Executive Officer

Everything that is our first itself I told that to him that 10 basis point changes comes it was not changed any dynamics. So, another 25 or 50 basis point comes also it is not going to much impact.

Ashok Ajmera — Ajcon Global Services Ltd — Analyst

Thank you very much sir and all the best to you all. Very, very happy with your working in the results. Thank you.

Operator

Thank you. We have the next question from the line of Franklin Moraes from Equentis Wealth Advisory. Please go ahead.

Franklin Moraes — Equentis Wealth Advisory — Analyst

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

A.S. Rajeev — Managing Director and Chief Executive Officer

Total write-down books around INR18,000 crores.

Franklin Moraes — Equentis Wealth Advisory — Analyst

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

A.S. Rajeev — Managing Director and Chief Executive Officer

It is already written off in the books and it is not in the books actually, but recoverability is concerned legally it is recoverable and we are recovering also, this quarter we have recovered around INR200 crores and next quarter as our GM recoveries already told that expectation is around INR500 crores for recovery for next quarter.

Unidentified Speaker —

Make it more cleanly, see INR18,000 crores it is written off from the financial reserves we have published today. But these INR18,000 crores very much in the branches of our bank and our brand at the field level they are day in day out they are focusing on recovery and the target for recovery is also on the basis of the outstanding line in the branch book, but publishing the results it is not them.

Franklin Moraes — Equentis Wealth Advisory — Analyst

Also what part of this book would probably go under NARCL maybe in the next one year or two years?

A.S. Rajeev — Managing Director and Chief Executive Officer

It is around INR3,000 crores, INR2,700 crores.

Franklin Moraes — Equentis Wealth Advisory — Analyst

This is already transferred?

A.S. Rajeev — Managing Director and Chief Executive Officer

No the process will start now. First, we’ll transferred in this month it is expected to be now

Franklin Moraes — Equentis Wealth Advisory — Analyst

And what could be the maybe timeline for transferring of this INR3,000 crores?

A.S. Rajeev — Managing Director and Chief Executive Officer

So it is a shortlisted accounts. Now certain accounts will get finalized in a process and in a process it will happen. So, it keeps dynamic to at least always it keeps changing also with the circumstances. So, at present at least we expect the one account in the first quarter definitely will get transferred and then in the second.

Franklin Moraes — Equentis Wealth Advisory — Analyst

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

A.S. Rajeev — Managing Director and Chief Executive Officer

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

Franklin Moraes — Equentis Wealth Advisory — Analyst

Any quantum that is being targeted or maybe in the next six to nine months?

A.S. Rajeev — Managing Director and Chief Executive Officer

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

Franklin Moraes — Equentis Wealth Advisory — Analyst

Okay. And all the best. Thank you.

Operator

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

A.S. Rajeev — Managing Director and Chief Executive Officer

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

Operator

[Operator Closing Remarks]