Pandemic helped all banks in improving digital transactions: CSB Bank CEO

CVR Rajendran, managing director, and chief executive officer of CSB Bank talks to Shine Jacob about the company's digital roadmap to touch 95 per cent mark, Covid-19 loans, the status of slippages

From 27 per cent share of digital transactions in 2018, Fairfax-backed CSB Bank has increased its digital share to 80 per cent. It plans 200 new branches in the current financial year. C V R Rajendran, managing director, and chief executive officer of CSB Bank, talks to Shine Jacob about the company's digital roadmap to touch 95 per-cent mark.

Edited excerpts of the interview.

As part of the RBI regulatory package for the second wave, how much restructuring have you done?

SME is a segment that used to give some kind of a worry. This time, SME is doing reasonably well and most of the installments are collected. Restructuring done has been practically nil in the first quarter.

How much have you disbursed as Covid-19 loans ?

So far we have disbursed 342 loans totaling Rs 137 crore. We have not rejected any customer requests. As a proportion of the eligible portfolio, it is very low and shows the resilience of our SME and retail loan book. We are yet to get requests on ECLGS 4 which covers the medical segment.

What is the status of slippages?

Other than gold, everything is in line. As far as gold loans are concerned, NPA is not a cause for worry as recovery is only a matter of time as we have adequate security coverage. This optimism is grounded on past trends. For example, when the Supreme Court embargo was there, proforma NPA on gold loans went up to Rs 135 crore but in March we could contain the overall NPA in gold loan book to Rs 48 crore. As we are now getting the tail winds of increasing gold prices and fast track reverting of the economy to normalcy, we expect the collections to be smooth in the coming months.

When we announce an auction, immediately there is a political movement and social media campaigns and auctions are not permitted. Wherever there is a public resistance, we have not gone ahead with the auctions and have decided to wait for some more time. We have to look at the long-term business and our reputation. Also, in Kerala where we have a significant portion of the gold loan business, every alternative day is a bank holiday for the public and this is not helping in recovery. Within these constraints, we have been able to persuade customers to remit money, and daily collections are fast-reaching normalcy. We are also counting on the newly opened branches to do the heavy lifting as they don’t have the challenge of recovering gold loans and can focus entirely on new business acquisition.

Rise in digital transactions from 27 per cent in 2018 to 73 per cent by end of March 2021 is a major jump that you have achieved. What is your roadmap in this regard?

Progress is very good but I have to concede that compared to the industry it is not up to the mark. There are private banks that are doing 95 per cent of transactions through digital channels. We are at about 80 per cent now and need to go up another 15 per cent. The pandemic has helped all the banks a little bit in terms of improving digital transactions.

We are introducing 200 cash accepting machines in the branches now. Once they are installed, quite a few transactions will move out from branches and we are trying to persuade the remaining customers too to go digital.

What are your plans to expand pan-India?

We have opened 10 branches in the year 2019-20 and 101 branches in the year 2020-21. So far during the current year, we have opened 8 branches and 61 branches are in the pipeline. A total of 100 branches will be active during the first half and another 100 in the second half.

Our core business comes only from the South even now. We have opened around 30 branches in Tamil Nadu, 30 branches in Andhra Pradesh- Telangana and 17 in Karnataka. The South is growing faster as we have a better feel of the market and easy brand recall. Other than South, we have opened a large number of branches in Maharashtra, two each in Gujarat and Madhya Pradesh, and quite a few branches in Delhi. The opening is happening in all states, the only thing is it is going slow in some parts. We will keep our eyes and ears open for inorganic growth too. If there is an opportunity, we will consider it.

CSB is also out of the Indian Bank Association wage agreement. What was the thought behind that?

We have already given a call to our unions to come and discuss with us. We may not introduce the IBA package again but we will certainly consider some kind of an increase for the performing people. We have introduced a bonus scheme for performing people and we are trying to formalize it now in consultation with Unions. If both of us co-operate, cost efficiency can be attained much faster, by increasing the productivity without cutting the wage. I am not interested in cutting the wage.