Gold loans may remain the mainstay for the next 18 months, but CSB Bank is focussing on diversifying into other retail portfolios and is open to portfolio buyouts. Pralay Mondal, MD & CEO of the bank, charts out his plan.


What is driving credit growth other than gold loans?

Gold loans have grown around 42 per cent, but we are also building other businesses gradually as it requires technological processes and distribution. Gold loans will remain the mainstay for another 18 months, but on a year-on-year basis, retail assets, SME and wholesale have started growing. We are starting to become a more all-round bank with various products coming in.

We also launched products like credit cards through partnerships, and fee income and transaction banking is doing very well. We are adding 100 more branches, 60 of them in North India and West India. Kerala and Tamil Nadu have always been our areas of strength, but even other southern States have started doing well. This is a national play with a larger distribution network, across products and services


Credit growth has been significantly outpacing deposit growth. How will you look to support it?

We have grown by around 30 per cent on assets, compared to the industry growth of 16.7 per cent and 21 per cent on deposits — faster than the 12-13 per cent system growth. While there is enough liquidity in the system right now, deposits are not coming easy to banks and a rate transmission is also happening. To that extent, one must put additional effort to get deposits, which we are doing, and we see no problem in funding our assets


What are these efforts?

We will compete with other banks, but not offer anything extraordinary on rates. We are putting in place a sales channel of 800-1,000 people to add accounts, customers, branches and businesses, because we want to build a compounding growth story. We are creating a separate sales structure for deposit building and customer acquisition. We are also looking to work with trusts, associations and clubs through the transaction banking team. For current accounts we are building products on the back of transaction banking and solutions. We are looking at working with certain government bodies, because government deposits are stable long-term and relationship-oriented. Unless you get new customers, you will not get CASA. Branches will be liability and CASA-focussed, supported by surrounding banking products.


Where do you see your cost of deposits?

Cost of deposits has gone up a little so far, but now it’s stabilising. From next quarter, we don’t see cost of deposits growing


What is your geographical expansion plan?

If we want to sustain deposit growth having just focussing on rural distribution won’t help. We need to be present in the areas where liability is available, albeit in our segment, where we can address and service customers well and they are happy with us. Metro and urban branches are important in the long run because, unless you’re there, you can’t be in payments, retail assets, fees and transaction banking businesses. As more products and services come in and the brand becomes more visible, we will move into premium household areas.


What additional products are you looking to add on the retail front?

We want to focus on businesses like CV/CE and a bit of passenger vehicles. We will get into home loans and LAP in a slightly bigger way. We’re also building credit cards through our partner OneCard and are launching education loans.


CRAR is around 26 per cent. Could you look at M&A to expand the retail portfolio?

Close to 50 per cent of the portfolio is gold loan, which requires almost no capital. We are not looking at an acquisition as such, but if there are any portfolios available we will look at the right price. We are not going out and exploring, because we are working hard in to build a larger bank.


Promoter Prem Watsa’s Fairfax has been in the news with respect to IDBI Bank. Has that impacted you?

We have so much work on our plate and are purely focussed on internal execution and building the bank organically.