CSB Bank expects 10% impact from RBI’s LCR norms, says CFO

The draft circular applies to all commercial banks, excluding payment banks, regional rural banks, and local area banks, and is proposed to take effect from April 1, 2025.

Trade

• Watchlist
• Portfolio
• Message
• Set Alert

 

 

Choose Stock Exchange: BSE LIVE NSE LIVE

26 Aug, 2025 12:21

Volume

Todays L/H

More

×

CSB Bank is expecting the Reserve Bank of India's (RBI) new draft rules on liquidity coverage ratio (LCR) to have a 10 percent impact on its LCR, the bank’s Chief Financial Officer (CFO) Satish Gundewar said. The RBI's LCR framework requires banks to maintain a stock of high-quality liquid assets (HQLA) to cover expected net cash outflows over the next 30 days.

“Our average LCR was at 118 percent. The guidelines will apply to the industry and to us also and ballpark, we see 10 percent impact on the LCR but we have a lot of time to take corrective measures and we have three quarters to work on that,” Gundewar said.

After reviewing the LCR framework for banks in India, the RBI decided that banks should assign an extra five percent runoff rate for retail deposits made via internet and mobile banking.

This change is in line with the increased use of online banking.

The RBI's new draft rules will prove a burden during times of severe liquidity stress or when many people withdraw their funds -- both moves that can significantly affect a bank's total capital and its ability to finance such outflows.

The draft circular applies to all commercial banks, excluding payment banks, regional rural banks, and local area banks, and is proposed to take effect from April 1, 2025.

Q1 performance

CSB Bank reported a net profit of Rs 113 crore in the first quarter of fiscal year 2024-25, a 14 percent drop from Rs 132 crore last year. The drop in profit was due to worsening asset quality. The total income increased to Rs 1,004 crore from Rs 803 crore a year ago. Interest income grew to Rs 832 crore during the period under review, from Rs 683 crore a year ago.

The bank's asset quality worsened as gross non-performing assets (GNPAs) rose to 1.69 percent of gross advances from 1.27 percent at the end of the first quarter of the previous fiscal. Net NPAs also increased to 0.68 percent of the advances, from 0.32 percent at the end of the first quarter last year. Gundewar, in a post-results analysts call, said that GNPA has peaked out in this fiscal and the bank is expecting to deliver better Q2FY25 performance. Net interest margin of the bank stood at 4.36 percent, compared to 5.4 percent last year.

The lender’s capital adequacy ratio for the quarter stood at 23.61 percent.

Shares of the lender closed for trading at Rs 344.60 apiece on BSE, down 3.85 percent.