CSB BANK’S fortunes started changing after FIH Mauritius Investments Ltd., a Fairfax Financial Holdings company owned by Canadian billionaire Prem Watsa, bought a majority stake in 2018 and infused ₹1,208 crore over two years. This was just after RBI allowed foreign non-banking financial entities to buy majority stake in banks provided they dilute it by 15% over next 15 years.

Now, under MD and CEO Pralay Mondal, India’s oldest private sector bank (124 years old) is on a mission to boost its non-gold portfolio and expand in the entire country. It is opening branches in Tamil Nadu, Karnataka and Andhra Pradesh as well as northern, western and eastern regions. At present, 37% branches are in Kerala. “We are becoming a pan-India bank,” says Mondal, adding as the bank expands its wholesale, small and medium enterprise (SME) and retail businesses, it will need a larger wallet share of the customer. “That is not possible without branches across the country,” he says.

Beyond Gold

CSB has been working on vision 2030 when gold is expected to account for 20% portfolio, retail 30%, SME 20% and wholesale 30%. Gold is 47% at present. “In Q4FY24, gold grew well. Tonnage growth was 7% and value growth 22% as gold prices went up. Growth will be similar this year. Gold gives you return on assets, which can be invested in technology and other products,” says Mondal.

Expanding the non-gold portfolio means it will have to offer other services at its 779 branches as well. CSB says it ran an experiment at 20 branches by dividing them into gold and non-gold categories. “That is working well. We will expand that significantly this year,” he said in a call with analysts in April.

Retail, Wholesale & SME

Strengthening leadership has been one of the top priorities of the bank. In January, it hired Manish Modi from IndusInd Bank to lead its wholesale business. It is building a team to turn around the wholesale business (which shrank in Q4FY24) over next two years. Mondal said during the Q4 call with analysts that the bank has started approaching some of India’s largest business houses. “I know we cannot do business with them with our size. However, we are trying to see how we can associate with them. Each of these large companies or conglomerates has small units. We are trying to see if we can work with some of these smaller companies,” he says.

Meanwhile, CSB’s SME business grew 28% in Q4FY24. Most banks in India are increasing focus on this untapped segment. HDFC Bank has expanded its SME payment solutions with four credit cards for business owners, entrepreneurs and freelancers while DBS Bank India aims to double its SME exposure in three years.

As CSB builds strong segments, it expects them to be complement each other so that it can leverage its universal banking licence. “The licence gives us the ability to do everything the top 6-10 banks are doing. Wholesale, SME, retail, banking are linked. For example, wholesale leads to supply chain, which leads to SMEs, which leads to vendor financing. Through supply chain, you can get current accounts. With retail, you have corporate salary accounts, and this goes back to wholesale again,” says Mondal.

The bank is also looking at wealth management. “Wealth management is 1-2% of the top end of banks. We will be there by FY30. In larger banks, top 20% customers contribute almost 80% revenue and 100% profits” says Mondal.

Technology will be the key to achieving ambitions. “We don’t want to improve incrementally. Instead, we want to transform the entire technology stack,” says Mondal.

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