Kerala-based private sector lender CSB Bank is sharpening its focus on building a balanced loan book across SME, wholesale, and retail segments, even as its gold loan portfolio continues to deliver strong growth.Managing Director and CEO Pralay Mondal said the bank’s real focus is expanding its presence across multiple customer segments while preparing to roll out new products. “Gold is a tactical play for us, but the real strategic play is building the wholesale, the SME, the retail and all of these other franchise,” he said.The bank reported 46% year-on-year jump in its gold loan book, which now constitutes 51% of its total loan portfolio.
CSB Bank has also completed a major technology transformation, including core banking upgrades, which positions it to launch new products and scale up operations. The impact of this shift is already visible, with wholesale and other non-gold segments starting to show traction.Speaking on the back of a strong third-quarter business update, Mondal addressed concerns about potential risks in the rapidly growing gold loan segment. He assured that the bank is not chasing growth by compromising on risk parameters. “We are not using pricing or the Loan-to-Value (LTV) as a component of growth,” he stated, revealing that the bank’s LTV has decreased to below 60%. This provides a substantial safety cushion, well within the regulatory cap of 75%.
Mondal added, “We do our kind of a sensitive analysis of 5%, 10%, 15%… if it falls, what happens… and we are taking our tenors down. So to that extent, all risk mitigations are in place. I don’t see any risk at all in our particular portfolio.”The CEO highlighted that the growth is not solely value-driven due to rising gold prices; there has also been a low single-digit increase in tonnage. However, he noted that customer base growth has been modest as the bank is strategically targeting segments with larger ticket sizes, which currently average between ₹3 to 4 lakhs.Mondal explained that many small and medium-sized enterprises (SMEs) are now replacing traditional business loans with secured gold loans for their working capital needs. “My original thesis that we will bring down gold below 20%… we are setting up a separate kind of a play on this new segment which is picking up, and that is something which we’ll focus very, very strongly, which is working capital loans where gold is a collateral,” he elaborated.Regarding competitive intensity, Mondal expressed no concern about potential pressure on yields, noting that CSB Bank’s rates are already more competitive than many non-banking financial companies (NBFCs) and other banks in the space.CSB Bank’s current market capitalisation is ₹9,609.38 crore. The stock is currently trading at ₹549.10 as of 9:22 am on the NSE and has gained 75% over the last year.Get live stock market updates on our blog
