Ladies and gentlemen, good day and welcome to Jammu and Kashmir Bank Q2 FY 2027 earnings conference call hosted by Emkay Global Financial Services Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Avinash Singh from Emkay Global Financial Services Limited. Thank you, and over to you, Mr. Singh.
Thank you, Siddharth. Good afternoon, everyone. I would like to welcome the management and thank them for this opportunity. We have with us today Mr. Amitava Chatterjee, Managing Director and CEO, and his management team. I shall now hand over the call to Mr. Amitava Chatterjee for his opening remarks. Over to you, sir.
Thank you, Avinash. A very good afternoon, and a warm welcome to all the investors, analysts, and other stakeholders joining us today for the J&K Bank September 2026 earnings call. Before we discuss the results, let me introduce my fellow colleagues from the bank's senior management who are accompanying me on this call. Executive Director, Mr. Sudhir Gupta. Chief General Managers, Mr. Imtiyaz Ahmad Bhat, Mr. Ashutosh Sareen, and Mr. Rajesh Malla Tikoo . Deposit and Liability Management Head, Mr. Peer Masood Ahmad. RAM Banking Head, Mr. Sanjay Gupta. Corporate Banking Head, Mr. Suresh Kumar Chowdhary . Impaired Assets Portfolio Management Head, Mr. Tariq Ali. Chief Risk Officer, Mr. Altaf Hussain Kira. And our Treasury Head, Mr. Ajay Kohli.
The geopolitical uncertainties which persisted in the first quarter of the current financial year have continued to mar the global economy in Q2 following the re-escalation of conflict in West Asia, which has driven energy prices sharply higher, leading to inflationary concerns and increased volatility across financial markets. However, despite these persistent geopolitical challenges, the Indian economy has posted a robust growth of 7.8% during Q1, driven by domestic consumption and investments. This resilient performance has led to a sharp upward revision of India's GDP growth forecast for 2026/2027 by IMF to 7% from 6.4% earlier. The resilience in the domestic economy is also reflected in bank business momentum, with the bank's total business growing by 19.4% YoY to INR 3.10 lakh crore as on 30th September 2026. The YoY growth across both deposits and advances has been healthy at 16.3% and 23.7% respectively.
The profitability has also improved after a subdued performance in the first quarter, with the net profit for the quarter being recorded at INR 546 crore, a sequential jump of almost 29% and a double-digit YoY growth as well. On the credit side, an alignment with the bank's strategic positioning as a retail-focused bank as emphasized during the Q1 call, the bank has recorded a sequential growth of 7.62% in agriculture advances and 3.90% in retail advances, underscoring the tangible progress made in execution. The entire net incremental growth during the quarter has been contributed by retail, agriculture, and MSME loans, that is RAM. This growth has been contributed by both Jammu, Kashmir, Ladakh, and rest of India in almost equal proportions to the share in the bank's outstanding RAM loans.
On a YTD basis, more than 60% of the bank's net incremental credit has been contributed by RAM portfolio. Within RAM, bank has registered a YoY growth of around 17% in agriculture advances with a double-digit YTD growth for the first half year. Auto loans continue to be the best-performing segment among retail loans with a YoY growth of over 25%, doing well both in Jammu, Kashmir, Ladakh, as well as rest of India. Housing loans in rest of India division also continue to grow at a healthy pace, recording a double-digit YoY growth. On the deposit front also, the bank has already achieved a YTD growth of around 7% against our guidance of 10% for the financial year, with the growth in term deposits continuing to outpace the growth in CASA, in line with the continuing industry trends.
However, the gap between the growth in term deposits and CASA deposits has narrowed down in this quarter, as the bank has been able to record positive CASA inflows during the quarter after a sharp outflow in Q1. As a result, bank has been able to broadly maintain its CASA ratio at the same level of around 42%, being recorded at 41.97% as on 30th September 2026. Now coming to profitability. The bank has recorded an operating profit of INR 789 crore for this quarter, registering a 27% YoY growth and a 12% Q-on-Q growth. Even on a half-year basis, the bank has recorded a YoY growth of over 15% in operating profit, being recorded at INR 1,492 crore for the first half year of the current fiscal. While operating income for this quarter has grown by over 6% sequentially and 14.5% YoY.
The increase in operating expenditure continues to be controlled at just 2% Q-on-Q and 6.5% YoY, contributing towards improved profitability for the quarter. As a result, cost to income ratio of the bank for this quarter has also moderated substantially on both sequential and YoY basis, being recorded at 66.57% for the quarter. Yield on advances has remained broadly flat on a sequential basis, being recorded at 8.55% for the quarter. However, the increasing contribution of RAM segment to our incremental credit portfolio, coupled with the recent repo rate hike, is expected to support an improvement in the yield from the third quarter onwards. The sharp outflow of CASA deposits during Q1 continued to weigh on our liability profile, contributing to an increase in the cost of deposits in this quarter to 4.85%.
However, with the surplus liquidity in the banking system, easing bulk deposit rates, combined with the positive CASA inflows in Q2, and the reduction in term deposit rates by our bank in this quarter, we expect moderation in the cost of deposits going forward. Presently, the NIM has witnessed compression being recorded at 3.22% for the half year, but with expected improvement across both yield and cost, the NIM should improve considerably. Notwithstanding the prevailing macroeconomic uncertainties, the bank has witnessed a notable moderation in slippages during the current fiscal. The annual gross slippage ratio of just 0.4% for the half year, as gross slippages in terms of absolute amount have halved compared to the corresponding period last year. This reflects the resilience of our portfolio and the continued effectiveness of our underwriting and monitoring mechanisms.
The asset quality metrics also continue to consistently improve, reaching decadal best numbers with GNPA and NNPA as on 30/09/2026 being recorded at 2.23% and 0.51% respectively, with PCR improving from 90.53% as on 30th June 2026 to 91.76% as on 30th September 2026. Capital adequacy ratio has been recorded at 16.57% as on 30th September 2026 with CET1 of 13.88%. The bank is already in the process of raising both equity and debt capital to the tune of INR 1,000 crore and INR 500 crore respectively and will raise the capital at an opportune time to support its future growth. On the back of improved profitability, ROA has jumped by 20 basis points Q-on-Q, while ROE has jumped by more than 250 basis points Q-on-Q and has been recorded at 1.07% and 13.68% respectively for the quarter. Based on the midterm review, we have reassessed our guidance as indicated in the last call.
The revised guidance for 2026/2027 would be a credit growth of 14%+, deposit growth of 12%+, CASA to be 42%+. There should be a considerable improvement in NIM, ROA to be around 1.20%, and GNPA to be below 2%. Thank you all for the time today, for giving me a patient hearing. We can start with the questions now.
Thank you. We will now begin the question- and- answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Yuvraj Choudhary from Anand Rathi. Please go ahead.
Thank you for the opportunity and congratulations on a good quarter. Sir, I have a couple of questions. Firstly, CASA growth has lagged overall deposit growth, a trend we have seen across the industry. What are the steps are we taking to improve our CASA mix? That is first question.
Okay. You want me to answer the first question first, right?
Yuvraj, while there was a flight of CASA during the first quarter, as I already mentioned, we could recover a fair bit of it in the last month of second quarter. If you ask me about the steps, there are not one or two steps. There are several steps that we have taken to restore CASA. Like for example, we are entering into MoU s with multiple organizations, companies for salary package within Jammu and Kashmir, as well as outside Jammu and Kashmir to open salary accounts, and we have been permitted by several organizations. In fact, in the last quarter itself, I guess there would be not less than 20 such occasions. Apart from that, there is a strong flavor of UPI payments within the state, within the state of Jammu and Kashmir, where most of the merchants have either our POS machines or QR codes.
At a point of time, maybe we were not very concerned about this, but now there is a very strong monitoring of all these POS machines as well as QR codes that have been allotted to the merchants. And we are following up with their transactions being routed through our bank. This is another. Apart from that, we are in the process of signing a fresh MoU with the government of Jammu and Kashmir for their salary accounts. And this time around, we expect the MoU to be for five years, and most likely we are going to sign it tomorrow. All these things put together, I guess, we are working on CASA. And apart from that, all the zones have shown a remarkable improvement in opening of CASA accounts, especially savings accounts, including rest of India, which I think is a very positive sign.
Like I said, there has been a positive contribution from rest of India as well in the CASA segment. All these things put together, I believe that we can improve our CASA to a fair extent. At least we will not lose the ratio. But one thing which we need to understand, unlike other banks, if our CASA ratio has gone down, we have not lost those deposits. They have got converted into term deposits with our bank only. If you look at the growth in term deposits, vis-à-vis whatever we have, percentage of whatever we have lost in CASA, we have been able to maintain these deposits with us. Unlike earlier, we have now a very stable base. If you look at the average deposits and average advances compared to the quarter-end deposits and advances, they are almost the same.
That has actually stabilized the business position.
Thank you, sir. That was helpful. Sir, second question would be, sir, our credit cost has remained negligible as our net slippages has been negative. Firstly, any outlook on the credit cost for the current year? And secondly, our expectation on credit cost on an ongoing basis post ECL implementation.
See, I will not, at the moment, want to comment on the impact or the credit cost on account of ECL implementation because we are in the final stages of arriving at the model, and probably by the end of next quarter, we will be in a position to comment on that. As far as the credit cost on a general basis, I do not see any reason why we will be increasing the credit cost. Whatever credit cost at the moment we witness in our bank's numbers, they are all the aging provisions only. As I mentioned, if you compare the half year of 2025-2026 and compare it to 2026-2027, the slippages have come down to half. Last year, this point, the slippages were INR 550 crore. Compared to that, it is INR 234 crore only for this first half year.
As I mentioned, we have managed to keep the book very, very healthy.
Got it, sir. That's helpful. Thank you, sir.
Thank you.
Thank you. A reminder to all the participants that you may press star and one to ask a question. The next question comes from the line of Deepak Poddar from Sapphire Capital. Please go ahead.
Yeah. Am I audible, sir?
Yes, Deepak, you are audible.
Yeah. Thank you very much, sir, for this opportunity. Sir, just first I wanted to understand on ROA. Now we are talking about 1.2%, right? And earlier I think we were talking in the range of 1.25%-1.3%. So what are the reasons and factors you see because of which you have downgraded your ROA outlook?
If you ask me, honestly, it's not downgradation. I am trying to be a little bit conservative and deliver more than what I predict. There are quite a bit of other income which is in pipeline for the bank at the moment. But as you know that few things like recovery in written-off accounts and other things like similar things, they are sometimes not predictable. You may get it within, say, next 15 days, or you may not get it in the next two months. So it's not a revision, downward revision. What we have done is based on what we had in the first quarter. We have now revised it so that we do not fall back on that. I mean, we are able to achieve it and maybe I said 1.20%+ . I did not say 1.20%.
It is not downward revision. It is a little bit of a conservative approach that I think we have taken.
Okay. In the first half itself, I think if you have to see our ROA is close to 1%, right?
More than 1% now.
Yeah. To do that 1.2%.
Okay. 1%.
To do 1.2%, you have to do 1.4% kind of ROA in the second half, right?
Yes. That is very much visible at the moment.
Okay, understood. Why we are saying, I mean, 14% kind of a credit growth in the second quarter, I think we are at about what? 24%, 25% kind of advances growth, right?
If you look at the credit growth that happened in our bank last year, third quarter and fourth quarter, that was much better than the first two quarters.
Okay.
Comparatively, if you look at the differential, I am keeping it conservatively at 14%. But again, if you had noticed my statement, it is 14%+ , so it will be definitely more than 14%. Again, as I also mentioned, the focus more is on the retail. Retail growth is not as fast as the corporate growth and obviously the retail growth focus is because of the advantage of yield on retail advances. At least for the next quarter, we will be continuing our focus on the retail advances growth. Again, we have kept a conservative number at 14%, but it will definitely be much more than that. But I don't expect it to be 25% because last year, third quarter and fourth quarter were very good. Compared to that, the differential will be slightly lower.
Okay. Understood. Given our PCR is already at 91%-92%, right? I mean, last two quarters, I think the credit cost of provisioning they have been doing in the range of INR 70 crore-INR 85 crore, right? Per quarter. Do you expect this trend rate to maintain going forward?
It should be.
Okay. So no incremental credit cost you expect going forward.
No, I do not expect any incremental credit cost. The SMAs have been in control. Sequentially also we have been coming down. So obviously the concern is ECL and we have been working in a very focused way on that.
Mm-hmm. Okay, I got it. That's very helpful, sir. That's okay from my side. Wish you all the best. Thank you.
Thank you, Deepak.
A reminder to all the participants that you may press star and one to ask a question. The next question comes from the line of Hiten B. from JMMS. Please go ahead.
Yeah. Hi, sir. Hello?
Hello. Yeah, I can hear you. Please go ahead.
Yeah. Hi, sir. Thank you for the opportunity. If I heard you correctly, you mentioned that loan growth target is 14%. Is it correct, sir?
Yeah. The target for the year, which we had earlier set at a lower rate, we have revised it a little bit higher now at 14%, but I said 14%+ . My aim is to reach to around 18%, provided that we continue with the retail growth.
Can you break down this guidance into how much can be retail?
60 and 40. 60% retail and 40% corporate.
Okay. And so we have some compression in NIMs. So what kind of NIMs should we expect in your guidance?
See, we had seen the downward cycle last year and also a factor which is very easily forgotten is the factor that this part of the geography went through a lull for almost a year because of what happened previously because of pandemic. So there was a pressure on NIM because last year we had to resort to increase in business through some sort of high-cost deposits and as well as some competitive rates in advances. So that cycle is gone. We are back to growing in retail. The incremental growth in advances for this quarter has essentially come from retail. 60% of the total growth for this year already has been from retail. And the rate cycle has reversed. We also expect some more rate hikes in the coming future.
So obviously, I do not want to give a number to the NIMs because in the past it has not been taken very pleasantly by others. But yes, I am very sure it is going up significantly in the next and the next quarter.
So the ROA improvement which you are expecting, will it largely come from NIMs or is there any other lever?
If you look at this quarter's numbers also, we have had a substantial increase in other income. I had already mentioned this at the beginning of the year that we are targeting substantial improvement in other income. In fact, I cannot give you a very detailed breakup of all the components of other income, but I can say that almost all the components of other income has shown improvement from quarter one to quarter two. That itself gives a very positive signal that we are going to have a fair bit of other income coming up this financial year, next two quarters. Apart from that, as I said, the yield is definitely going to go up and the pressure that we had as a bank, Jammu and Kashmir Bank, on taking high cost deposits, that is also over.
We do not need to take any high-cost deposits for the remaining part of the year. All these things coupled together, I am 100% sure the NIM is going to go up. I am not predicting a number, but it is going to go up substantially.
Okay. Thank you. That's it from my side.
Thank you. A reminder to all the participants that you may press star and one to ask a question. The next question comes from the line of Amansingh Sahajsinghani from ICICI Securities. Please go ahead.
Hi, sir. Thank you for the opportunity and congrats on the good set of numbers.
Thank you.
Coming back to the ROA guidance of 1.2%, our H1 ROA is 1% and we are guiding for full year of 1.2%. So H2 ROA you are expecting at 1.4%. You said there will be some improvement in other income and NIM will also go up, but there seems to be limited levers on the credit cost side to go down further. I wanted to understand on that front again that what are the levers that we understand for ROA to go up to 1.4% in H2?
As I mentioned, now see, this bank has had a very good past, say eight to 10 quarters on account of the recovery in written-off accounts. Recovery in written-off accounts at the moment is pipeline which is very, very, I would say, hot pipeline, is substantial at the moment. As it has not materialized or matured as yet, I am not giving the numbers, but it is very good. Apart from that, we have also gotten approval for a special OTS scheme for old NPAs as well as written-off accounts. That also is likely to contribute a considerable amount of profit by way of TWO recovery as well as reversal of provisions of NPA accounts recovery. These two are almost certain to happen. Apart from that, I said the cross-selling income is likely to improve. We have added two more insurance companies in the industry.
Other than that, our treasury has started showing good recovery and they have also posted good income this quarter. I expect the treasury also to support Forex income. Apart from that, there has been a very strong focus of the bank at the moment on non-fund-based business, which also has shown considerable improvement, almost 30%-40% improvement from quarter to quarter. All these things, again, I said, put together, it is going to add to the profit of the bank to a large extent, and that will definitely help me post a 1.40% ROA for the second half. It may be better than that. I am optimistic of being better than that.
Right, sir. What I could understand is the 1.4% ROA in the H2 is on the back of strong TWO recovery that may not be durable in FY 2028. So how do we think about the ROA in FY 2028, a durable one which would be steady?
See, it is a statement that you made. I didn't make it. I didn't say that it is not durable. The pipeline is not so small that it will not last for the next one year. That is one. Second, we have built up a very strong other income backup now with what I mentioned of non-fund-based business, of Forex business, of third-party insurance products selling business, all these things. Apart from that, the improvement in yields in the advances with the interest on advances going up. All these things put together, I do not see that it is sort of, as you mentioned, it's a one-off factor. It is not a one-off factor. It is going to continue. I mentioned what is right for this financial year. If you ask me about the next financial year, I will wait for two quarters to respond to you.
But you foresee the TWO recoveries for FY 2028 to be-
I had already mentioned.
To be durable.
Already mentioned in the beginning of the year that we still have sufficient pipeline for two years, this year and the next.
Right, sir. Sir, last data-gating question is, how much of our book is linked to EBLR and MCLR, if you can link that out.
31% is MCLR and 65% is repo links.
Sure, sir. Thank you, sir.
Thank you. A reminder to all the participants, please restrict yourself to two questions. The next question comes from the line of Gaurav Agrawal from Nine One Capital. Please go ahead.
Hello, sir. Good afternoon. Congratulations on good results. Sir, just one question on the employee cost side, which has been very, very good for us. Sequentially as well as YoY, it has been flat. So how do you see that trend for this number on absolute basis for the next three quarters? Also, sir, if you take this forward, visibility around it for FY 2028.
Thank you, Gaurav. First of all, I expect the employee cost to remain flat. Perhaps will come down slightly for the next two quarters. I f you look at very slight, but a slight dip from quarter one to quarter two, and it is going to continue because we have retirements.
However, for 2027, 2028, we will be back to this level again because we are also adding employees, which will take place by the end of the third quarter or maybe beginning of the fourth quarter. The impact won't be visible this year. Slight increase, which will take the employee cost to the level now what we are having. Maybe slightly less, but almost similar. Employee cost will not go up.
Great, sir. Great. Okay. Thank you so much.
Thank you. The next question comes from the line of Shruti Agrawal from Narnolia Financial Services Limited . Please go ahead.
Hello. Just one question. What will be the NIM growth trajectory going forward, and what are the key drivers expected?
I just mentioned that I do not want to mention a particular number for NIM. But see, 25 basis points improvement has already happened on repo, and I said 65% of my portfolio is linked to repo, which is already passed on. The next is we are in the process in the bank at the moment. We had been resorting to some high-cost deposits, which we have shed now, and we are no longer required to take any high-cost deposits going forward. So putting together, I believe, and also the expectation of the repo may be going slightly higher in the near future. I believe that there will be substantial improvement in NIMs.
Okay. Thank you, sir.
Thank you. The next question comes from the line of Parth Gutka from 360 ONE Capital . Please go ahead.
Yeah. Hi, sir. Can you let me know what are the yields within the retail and the agri segment, average yield on the portfolio?
You want to know the quantum of agri and retail?
No, not the quantum, sir. The average yield on the portfolio.
Yield. See, our retail yield is around 10%. Agriculture is 9.5%. Agriculture is 9.5%, and retail is 10%.
Okay. What are the yields within the corporate portfolio, rest of India and within Jammu and Kashmir?
There is hardly any large size corporate advances in Jammu and Kashmir. So largely MSME, and even MSME is around 9% yield. The corporate yield in rest of India is around 7.2%.
Okay, fair enough. My next question is, considering we already had one repo rate hike, when does this rate hike get passed on to the customer, on the immediate next day or-
Same day. It is the same day.
Okay. Fair enough, sir. Thank you.
Thank you. The next question comes from the line of [inaudible] from Share India. Please go ahead.
Sir, my question is regarding this regulation paper of IRDAI. As you are saying that their income might increase, so how much impact will it be on the insurance commission due to this regulation paper of the IRDAI?
Yes. I agree with your statement. I think some mics are on. The reason why I said that we will be able to jack up our income from third-party product selling is because we have added two more insurance companies for life, that is SBI Life as well as HDFC Life. I expect the volumes to actually compensate for the commission difference that is going to come. So whatever the reduction in commission likely to happen because of the new IRDAI guidelines is going to be compensated by the volumes. As you know, Jammu and Kashmir is a highly underinsured, low penetration as far as life and general insurance is concerned. So the potential is very high. We have not actually realized the potential so far, and that is what is happening now. Going forward, I expect the volumes to go up substantially.
Okay. Thank you, sir.
Thank you. A reminder to all the participants that you may press star and one to ask a question. The next question comes from the line of Jai Prakash Mundhra from ICICI Securities. Please go ahead.
Yeah. Hi, sir. Good evening. I have few questions. First is, sir, what is the breakup of this miscellaneous, and specifically how much is the recovery from TWO accounts in this quarter?
This quarter recovery from TWO is only INR 25 crore.
Okay. Sir, then this other miscellaneous income of around INR 150 crore, what does it all include?
Just a second. I will give you. There is INR 41 crore from card business, around loan processing charges of around INR 18 crore, INR 19 crore. Penalty charges INR 12.89 crore. Check return charges INR 4.57 crore. SMS charges INR 6.42 crore. CGTMSE fee INR 4.79 crore. Like that.
Okay. This treasury income, sir, does it include any equity, stake sale, PNB MetLife or NSE or any one of nature or is it only pure bond related?
It is not yet. The transaction is completed, but the transaction happened after 30th of September. That is also which is going to add to the bank's profit for the next quarter. That is not included.
Okay. What is the rough quantum, sir, from all of that transaction?
Plus INR 100 crore.
Right. This INR 92 crore is only for the bond portfolio, is it?
It also includes some revaluation of unlisted stocks.
Okay. Where you have gained?
Yes. It is a combination of both, and the net result was a gain.
Okay. All right. And sir, do you have the AFS figure available for sale results? The change in Q1 versus Q2?
Can you repeat it? AFS. It's negative. Negative INR 62 crore.
Hello.
It's negative INR 62 crore.
Okay. What was this last quarter, sir?
Last quarter was zero.
Okay. Sure. Secondly, sir, on bulk deposit, what was the need for bulk deposit and what is the quantum right now in absolute rupee crores in bulk deposit or high cost deposit?
It was in the first quarter that we took some certificate of deposits, which was slightly at a high cost, around 8%. That was the need at that point of time. We had loan commitments which were already there. At that point of time, it was the need. Out of that, most of it is already shed. It is no longer in the books now.
Right. What is the quantum of bulk deposit outstanding, sir, which are high cost?
It will be around INR 3,000 crore, sir. H igh cost is only less than INR 3,000 crore.
Okay. So not substantial.
It is almost [audio distortion]
Right. Okay. So the benefit may come in subsequent quarter, right? Maybe immediately in Q3.
It is definitely going to come in the third quarter and the fourth quarter.
Right. And sir, there is another in personal loan, which is housing, auto, and then there is an other. I believe it includes some salary account, personal loan, and secured personal loan. But if you can quantify.
Just give me a moment. I had the details. Just a second. So it is housing loan, then the J&K Bank MoU personal consumption loans. Then car finance.
No, sir. The MoU loans is how much, sir?
That is INR 13,400 crore.
It has not grown, is it? I mean, I remember it was-
It has gone down.
Yeah. Okay. What is the reason, sir? Why it has declined when it is almost secured by state government types and high yielding?
In fact, there are two variants. Including the two variants, it is almost INR 16,000 crore. More than INR 16,000 crore. Last year it had contracted for two reasons. One, we were revamping our product to make it more attractive. The second was, there was some correction that we needed to make on the employees where NMI EMI ratio was unfavorable. So we corrected that. You also might remember that we had a problem of high SMA zeros in that segment. All that was corrected last year. So last year there was a slight dip in that. This year we have again come back and to be specific, this year by first half year, we have surpassed the total amount that we had lent last year full year.
Okay. Sir, what have you done to rectify this EMI to salary ratio? Have you elongated the duration or what else can a bank do if you want to fix the further ratio?
We had one EMI we prepaid. We had got one EMI prepaid by the employees, which resulted in alignment. Also alignment with the salary rates.
Right. Okay. I got a little bit. Maybe I will take this offline, sir. This is very interesting. Secondly, sir, are you ready for ECL? It looks like that you are falling behind. You have one of the highest SMA in the industry, and you are saying that you do not have any assessment of the ECL, which is going to be implemented.
See, base figure assessment is not what I want to mention at the moment. That is why I am not saying. Otherwise, we have a fair assessment of the ECL requirement, and the model is almost ready. It will be public, at least it will go to the board by the December board meeting. We will be ready. I mean, we are not calling back on it. We are ready.
And sir, because you have the highest SMA, 5% is SMA 1 plus 2. If I include SMA 0, then the number is in double- digit. It looks like that it can jeopardize. And right now you have almost negligible credit cost. You have not provided anything prudentially when there was a time. And you are not giving any number as to what could be the transitional hit or maybe the recurring hit. So it looks like-
I have already mentioned, based on the assessment that we have done so far, our ECL hit will not be more than the average industry hits. It will be less than that.
Sir, average industry rate is around 50- 60 basis points. Depending on what is the average PSU bank will be around less than 100 basis points of capital. But some of the banks are also carrying prudential buffer, which I don't know if you are carrying or no.
We have a little bit of buffer. Around INR 300 crore buffer we are carrying.
Okay. But sir, any range if you can also give that this is the transitional hit.
Why do you want to know?
Because you-
I will give that range in the month of December. I will give you the exact number.
Thank you, Mr. Mundhra. Please wait on the queue for more questions. The next question comes from the line of Kayur Asher from PNB MetLife India Insurance. Please go ahead.
Yeah. Thank you for the opportunity, sir, and congrats on a good set of numbers. Sir, can you guide further on the capital raise plans that you would have during the rest of the year? You mentioned about both equity and debt raise plans potentially. So, specifically, any guidance on when we plan to come up with these and also curious on what would be the target level, considering the reported capital numbers are already looking good.
See, there are multiple factors for which we intend to raise capital. I am not going into that. But if you ask me the quantum, I can mention that it is going to be INR 1,000 crore of equity and INR 500 crore of debt. Timings, I think the debt will be quite this quarter. As I mentioned that the equity will be slightly dependent on the time when it is most conducive for our bank. We already have approval in place. We are almost ready with all the initial preparedness. We are already prepared for it. We will just wait for a conducive time to go for it.
Understood. Yeah. This is helpful. Thank you.
A reminder to all the participants that you may press star and one to ask a question. Ladies and gentlemen, that was the last question for today. As there are no further questions, we have reached the end of question- and- answer session. I now hand the conference over to management for closing comments.
Thank you. Thank you, Avinash, and thank you all to the participants for joining in today. For any other further questions or queries, you can contact our investor relations desk. Thank you.
Thank you. On behalf of Emkay Global Financial Services Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.