Interview | Gold loans will continue to be our focus; won't do unsecured loans: CSB Bank MD and CEO CVR Rajendran

Kerala-based CSB Bank posted an all-time high net profit of Rs 218.40 crore for the fiscal ended March 2021 as against Rs 12.72 crore in FY20. The bank also saw an improvement in its asset quality with the gross non-performing assets (NPAs) falling to 2.68 percent of the gross advances as of March 31, 2021, from 3.54 percent by end of March 2020.

In an interview with Moneycontrol, CSB Bank’s Managing Director and CEO CVR Rajendran spoke about the company’s gold loan focus and the challenges ahead.

Edited excerpts:

You have been with the bank since 2016. Could you elaborate on your stint so far?

Overall, businesswise, I am happy. My outlook has always been to change this bank as a professional entity. It has been an uphill battle dealing with fiery trade unions and their unwarranted protests and demonstrations in Kerala. This has led to disruptions and affected the smooth day-to-day functioning. However, the situation has improved now and the Board has been very supportive throughout.

CSB’s Q4 earning numbers were good. What has worked for the bank?

We are now focused on safe lending. Earlier, we were cleaning up the portfolio. Over a period, we exited some of the portfolios including loans to gold retailers and manufacturers, resorts and hotels, plantations, etc. We now have identified certain segments to lend which are recession proof. For instance, we are focusing on gold loans. Food and food processing is another segment we like. There is a lot of focus on agriculture loans too.

What’s the strategy for gold loans?

We see a lot of potential for gold loans. Currently, it contributes 40 percent of the portfolio. Our gold loan portfolio now stands at Rs 6,131 crore and we have seen a growth of 61 percent in this portfolio on a year-on-year basis. We will continue to focus on this segment.

But you have a lot of competition in Kerala on gold loans.

Yes. There is competition from local NBFCs (non-banking finance companies) focused on gold loans and even from public sector banks. But, there is a lot of potential in this segment.

Have you seen restructuring requests from customers in the last round?

We have seen only very few requests. All requests put together, it will be only around Rs 65 crore. That is not significant.

Now the RBI has announced a new round of measures to counter the COVID second wave. How do you look at it?

The RBI has permitted restructuring of individual borrowers and small businesses having aggregate exposure of up to Rs 25 crore. We have many customers below Rs 25 crore loan size. All categories put together, the total quantum of such loans will be around Rs 3,500 crore in CSB. Of this, we will have to see how many customers will want to restructure under the new window. Many of these borrowers may not require a loan restructuring.

What is the impact on the ground due to COVID second wave?

There is not much impact on big companies. All the big companies are growing. Only those who do not have sustainable income sources are suffering. We do not support unsecured businesses. We have stayed away from hotel and tourism, resorts, etc.

Your present term as CEO is ending in December 2022. Are you willing to continue if reappointed?

Yes, if the bank requires my service, I am willing to continue.

What is the plan for branch expansion?

There will be a lot of focus on retail loans. We may open around 200 branches this year, most of which will come outside Kerala. Only in a few places in Kerala where we do not have a presence, we will open branches.

What is the next big challenge for the bank?

Client acquisition has been slow over years. That’s because people didn’t have the right marketing attitude. This area needs attention. This attitude has changed and we are hiring people from other private banks to speed up client acquisition.

Will you require to raise capital now?

No. We will not need fresh capital at least in the near term.