MAHABANK closed FY26 at INR7,019cr net profit (+27%), NIM 3.91% vs 3.75% guidance.

What is the outstanding AFS reserve at the end of Q2?

It's around Rs. 340 crore on the gross basis.

There's almost 10.5% Q-on-Q increase in credit RWA this quarter, so if you can explain what is the reason for that?

The total RWA from the June to September 2025 has increased around Rs. 16,000 crore, out of which, the credit RWA has increased around Rs. 15,000 crore and market RWA has increased around Rs. 1,180 crore. If you see the credit RWA has increased because of gross advances have increased around Rs. 14,000 crore and there is some extra undrawn so, that has also increased around Rs. 7,000 crore. Likely, it is around Rs. 16,000 crore on credit RWA has increased.

If you could guide with respect to your growth that I am seeing in the RAM portfolio, retail has grown very nicely, but SME and Agri, the growth is lagging behind. So, any thoughts over there?

Overall share of RAM is 62:38 and our guidance has been to maintain it at 60:40 plus/minus 2%. We are doing a conscious rebalancing again in the two verticals. The idea behind is the loan book that we are creating, and it must be of good quality borrowers, prime borrowers. In the Agri portfolio, we are going from production credit to investment credit and trying to look at reaching out some mid-segment kind of clients. The overall guidance is 60:40 plus/minus 2%, we are already at 62%. If you see in the retail, there are a couple of products which are seeing a lot of traction. The home loans are growing at fast growth rate of 30%-31%, gold loans have grown at 47%, vehicle loans have grown at 49% and these are our own set of clients who have been banking with us. In the bank, today, there is no loan that is available for a client having CIBIL score less than 681, as per the definition of TransUnion CIBIL is a subprime segment. We have strengthened our underwriting benchmark, so, that is one of the reasons that industry growth is supporting in these retail segments. In the agriculture and MSME, while we grow the loan book, we are mindful of the pool of assets that we are going to create. We are focusing this time more on investment credit, some big ticket mid-segment kind of proposals where we will see a lot of ancillary business opportunities coming in cold storage, dhal mill, rice mill, so ticket size and portfolio will improve. We will get some tangible securities. The production, in the KCC, we have already created digital journeys, and we would want the underwriting for small ticket KCC loans to be end-to-end digitalized. To begin with two states, state of Maharashtra is the first where luckily, we have good exposure, and the land records in this state are fully digitalized.

Your Agri GNPA has increased quite a lot over the last one year, and the number is touching almost 10% now. Anything specific that is happening there or any particular state or anything there?

Agri NPA is a conscious strategy to recognize the issue and then go ahead and resolve it. Although what we have seen is the first half of the year and more particularly the first quarter, we would see some slippages in the Agri segment. We have seen some agriculture stress in some pockets, in some branches where we have seen incessant rains and flooding, and those kind of small, small issues. At the holistic level also, I have mentioned about we are rebalancing our Agri book and taking it towards the investment credit side. We were a little slow in doing the production KCC credit for some time. We had consciously decided to have the underwriting in one level above, not allow the branches, so, somehow the portfolio in terms of volume has not grown. Denominator actually reduced and the NPA stays there and you see the percentage slightly going up. The RBI guidelines on classifying your advances, gold loan advances and agriculture had gone some changes. That's how a lot of our agriculture classified gold loans, we had marked them as nonpriority to comply with the RBI guideline, as it was a substantial number. In real terms, nothing has happened in the agricultural NPA, but this rebalancing plus this RBI guidelines undergoing a change, which again, now up to Rs. 2 lakhs RBI has permitted. We are again able to reclassify that to the agriculture gold loans. Going forward, we do not see any major challenges. Our strategy may take a quarter or two when we are onboarding fresh advances, big ticket advances in the Agri segment, and we are able to build the denominator also. So, you will see the percentage also normalizing in the following quarter.

On ECL, any impact there on both the credit cost or the asset quality side as well as on the fee income side, because now I think fee will be amortized?

ECL calculations, once it was indicated as something as a forthcoming guideline so, the broad number is there with us, Rs. 2,500 crore. We had already started proactively providing for ECLs provisioning. I am holding in my balance sheet, Rs. 250 crore of ECL provision. If I give you a sense of it, it is Rs. 2,500 crore to be maintained from 1st April 2027 to 31st March 2031. There is a glided path available. The number is requiring me to provide Rs. 100 crore to Rs. 125 crore every quarter towards ECL, which is very well managed, and we see absolutely no challenge in making those provisions when the guidelines are coming into effect from 1st of April. Credit cost has seen a slight improvement in this particular quarter. Credit cost has actually come down from Q-on-Q, if you look at from 1.19% to 0.92%. Our new underwriting norms, which are put in place for the last 10, 12 months, wherein even in the individual segmented loans, we are not underwriting to the subprime category and for the MSME loans, we are benchmarking our underwriting to CMR ranks given by the TransUnion CIBIL. Anything which is below the investment grade, it is not considered in the bank, so only CMR 1, 2, 3, 4 and up to CMR 5, which are defined as investment grade, we have restricted. If I give you a sense data, home loans that have happened in this bank, this fantastic growth of 30%-31% after we have introduced that no home loans below 681. An outcome of the one simple step of no underwriting in the bank below 681 in the home loan segment, one product category. My 27% of home loan sanctions that have happened in the last 12 months are 800 and above CIBIL score category, 57% has happened in CIBIL score category, 750 and 800. You will see the major underwriting that is happening is in the prime and the super-prime categories, so that's how in times to come, quarters to come, we will see that the slippage number, which has shown slight improvement. We are on the right track of building a loan book which is of, good rated borrowers, prime category borrowers and the slippages, which is a guidance for us is to maintain below 1% we would be able to maintain it on a sustainable basis. On the fee income and ECL, the way we are growing the credit along with fund-based and non-fund-based so, the opportunities that we are creating for enhancing our fee-based processing charges, LCBD commission, then we have identified other areas of augmenting the fee income. We have gone for entering into new partnerships, we are joined with SBI Cards, where we are offering co-branded cards for clients. A couple of bancassurance is another area we have ramped up our partnerships in life and non-life. We are digitalizing the entire end-to-end policy issuance so that there is no chance left for any income leakage, revenue leakage and right selling practices, customers getting what they actually require.

You have COVID provision of Rs. 1,200 crore also. So, that Rs. 2,500 crore of ECL provision is after adjusting for this Rs. 1,200 crore or this, you can use towards this Rs. 2,500 crore?

It is not just Rs. 1,200 crore of COVID provisioning. Today, we have ad hoc provisioning in the balance sheet cushion, which is almost now Rs. 3,000 crore. This is a very conscious strategy going by what guidance comes from the regulator also from time to time that these are the good times for the industry and all the players, entities operating within it. We should be looking at building extra cushions and buffers in the balance sheet, so that's how we are doing it. I am holding today almost Rs. 3,000 crore and I can do it in one go, but that's not what is the right prescription to do. Rs. 2,500 crore as against that. We have already built Rs. 250 crore, and we may follow a glided path as is also allowed by the regulator to create the provisions.

First on gold loan. What will be your LTV in the Agri and non-Agri side?

LTV in gold loans, the RBI guidelines are 75% at all times, so, for agriculture, we have kept 85% LTV. We have some variance within this range in the nonpriority, but wherever we get higher LTV, we offer a lesser ROI to incentivize clients to come and pay a higher rate. If they want more loan, they have to pay me a higher pricing. The pricing is tweaked towards the higher LTV, which is our safety. But in agriculture segment, we are 85%. All our product variants are following the RBI LTV norm of minimum 75% at all times.

On your small and medium segment. In the segment, sequentially, the NPAs have gone up. So, what is the trend that we are seeing? Is there incremental pain that is in this segment? And also, these are numbers above Rs. 5 crore. So, if you can give some trends that we have observed in, say, below Rs. 5 crore?

The NPA in the lower segment, we are trying to address in a long-term basis. Mostly for like Mudra segment loans, we have created digital journeys end-to-end online. A customer can apply online through application, without reaching to our branch. The processing, the documentation and disbursement happens end-to-end online. We do for maintaining the quality part of it that the rules we are prescribing in this digital journey, BREs are decided by the bank to see that the beneficiaries are the right kind of beneficiaries that are entering into this loan book, my system once they follow this underwriting. Our experience is whatever physical mode that we have been erstwhile doing, legacy, the loan book that is getting created through digital sanctions. End-to-end digital journeys, the quality, the stress level, everything is far, far better. The low-ticket loans, in the Agri segment or in the micro MSME segment, we are all migrating to this digital journeys. We also have done a lot of co-lending partnerships; almost eight to nine co-lending partnerships we are having today. The RBI guidelines have undergone change and I have to make it compliant now with those things, but we have built a good book through co-lending, where we are getting a reasonable pricing and we are having this co-lending and the business that happens entirely digitalized. There is no intervention from the branch when they are dealing with the low ticket size.

Are you seeing some incremental stress in the MSME space, of late?

It is not something too alarming in the retail and MSME. If you ask me the stress which is there, so retail, more than 50% of book is home loans it is backed by mortgage. If there is an account which is experiencing stress and tomorrow, SMA-2, it will slip to a delinquent category, we can start the recovery action very fast and with the mortgage, I am able to recover my dues also. We are seeing quick upgrades also happening because since it's backed by mortgage and the value of security only appreciates. So, we are not seeing any stress in that retail element.

On the MSME particularly, sir, are you seeing any incremental stress?

MSME, in fact, if you see my absolute number, percentage terms, in the presentation, if that is accessible to you. MSME has the stress number, year-on-year if you see, September '2024 was 2.39%, it has come down to 1.73% now. If you see for our bank, the MSME portfolio is also behaving well. There's no issue.

Given the fact that the ECL provisions, the impact is Rs. 100 crore to Rs. 125 crore per quarter. So, what are we sensing in terms of a credit cost, like a sustainable credit cost guidance, if we could get? Also given the fact that our tax rate would get normalized also maybe to some extent in FY'26 or '27. So, what could be the normalized credit cost range that we are looking for?

Right, credit cost guidance has been to maintain it below 1%. If you see September '25, we have achieved 0.92% on a half yearly basis, it is marginally 2 basis points above, 1.02%. I think we are seeing that the steps we have taken to keep the credit cost in line, they are delivering the results and this guidance number going forward also, we would be maintaining to keep the credit cost below 1%. If you see in terms of IRAC norms, if you look at my NNPA, it is 0.18%. Now to maintain that kind of NNPA number. Whenever we are encountering slippages, so as against the IRAC norm of providing 15% on day one, we are providing 100% and that's how my credit cost also looks elevated. If I say from the IRAC perspective, it is ranging from 0.4% to 0.45% in real terms. If I look at as per the regulatory norms, my credit cost is 0.4%. But because of this maintaining the fine NNPA of 0.18%, I am providing 100% against the regulatory prescribed of 15%. And just to add, our PCR, if you see is 98.37% now. With 98.37%, I do not have the pressure of aging provisions. It's mostly book which is provided for. Minus two, it is also 90.37%. So, with that kind of high provisioning we are holding, the aging provision pressure is also not there.

Given the fact that you have given this target of 321 branches in the next 18 months, in which geographies are we seeing these incremental branches? Which geographies how much of it would be like non-Maharashtra, given the fact that we are looking to expand beyond Maharashtra as well?

Today, Maharashtra, is the highest contributing state to the nation's GDP, we all know is Maharashtra. We are adequately represented within Maharashtra. Our expansion is all beyond Maharashtra, outside Maharashtra. If you see 12 months from now, our branch ratio was 52% Maharashtra and the other side is non-Maharashtra, that ratio has changed to 42% now in Maharashtra, rest is all outside Maharashtra. The 1,000 branches that we have taken approval and this 321, it is all opening branches outside Maharashtra. Very consciously, we are planning our presence where two things are happening. One, there is an existing banking business potential already there, Second, the growth is also happening. The scientific work that we have done using lot of data points, they have down to the PIN code level. One center suppose has three PIN codes, the Kanpur city, if has three to four PIN codes, we have a recommendation from the external expert that this is a PIN code that you should be opening the branch. Where the city is expanding, that makes a lot of sense. and we are opening branches where the existing banking potential is there and potential for growth is also there. Our sense is that when you are going to be one another player in a mature market, it will be very difficult to get traction. But if you are going to open your shops in places where the opportunities are increasing, business is growing, you will find that there will be a scope for a new player to also garner reasonable business in the first year of operations. We have very clear laid down metrics that if it's a metro branch, that branch, how much of business in the next 12 months of opening is that they will be expected to garner, within which what should be the ratio of advances, what is deposits and we would expect a branch on their own to become a profit center head for us. If you see my new business verticals that I mentioned about, they are now in this year, given five focus states, which are, of course, Maharashtra, we have a strong traction edge, we are building on that relationship through more cross-selling to the institutional clients also. But outside Maharashtra replicating our experience and handling institutional business in five focus states.