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Private lender Bandhan Bank Ltd. in an analyst meet on Thursday said that its asset quality may deteriorate further in the current as well as the upcoming quarter of the financial year.

The lender told analysts that Gross Non-Performing Assets (GNPA) may rise to Rs 7,800 crore in the December quarter and Rs 8,000 crore in the March quarter.

The bank's Gross NPA during the September quarter stood at Rs 5,100 crore.

In percentage terms, Bandhan Bank's Gross NPA remained flat at 7.2 percent, compared to 7.3 percent during the June quarter.

For the second half of the current financial year, the bank expects provisions to be to the tune of Rs 2,400 crore. However, after adjusting for the Central Government's Credit Guarantee Fund for Micro Units (CGFMU), these provisions may come down to Rs 1,500 crore.

CGFMU is the trust fund set up by the Government of India and managed by the NCGTC as a Trustee, with the purpose of guaranteeing payment against default in micro loans extended to eligible borrowers by banks, NBFCs, MFIs and other intermediaries.

In the September 2022 quarter the bank made provisions worth Rs 1,280 crore as against Rs 5,614 crore in the year-ago quarter.

Brokerage Motilal Oswal has recommended a neutral rating on the lender with a price target of Rs 270. The firm expects Bandhan Bank's slippages to remain elevated in the next two quarters as stressed assets formed 78 percent of the SMA book.

Shares of Bandhan Bank ended 1.2 percent lower at Rs 235.55.