CSB Bank partners IIFL Finance for gold loan co-origination

The Fairfax backed private-sector lender has entered into a partnership with non-banking finance company, IIFL Finance (IIFL), for sourcing and managing retail gold loan assets.

IIFL Finance, acting as business correspondent of CSB Bank, will source new business from markets where CSB Bank does not have adequate branch network. IIFL Finance, with its branch network, would help CSB Bank penetrate the lower strata of customers and rural areas, where the bank currently does not have adequate reach. This arrangement would result in scaling up of the customer base, the bank said in a statement issued during market hours today, 27 October 2020.

Speaking on signing of the agreement, C.VR. Rajendran, the managing director (MD) and chief executive officer (CEO) of CSB Bank, said: "CSB Bank endeavours to serve individuals who are either under-banked or un-banked. Gold loan is the core business driver for the bank. IIFL Finance with its extensive branch network, robust technology and more than a decade's experience in gold loan business, is the ideal long-term partner, to help the bank penetrate the under-served segments of the customers in under covered geographies of the country."

Shares of CSB Bank were down 2.22% to Rs 225. Shares of IIFL Finance were down 0.06% to Rs 78.

CSB Bank is one of the oldest private sector banks in India, with its strong presence in Kerala, Tamil Nadu, Karnataka, and Maharashtra through 432 branches and an overall customer base of 1.5 million in SME, retail, and NRI segments.

IIFL Finance with over Rs 38,300 crore of assets under management (AUM) is present across India through an extensive network of 2,372 branches in over 600 cities across 25 states and cater to about 4 million customers. About 90% of its loans are retail in nature and more than 40% are priority sector lending compliant. Gold loans account for about 25% of IIFL's loan assets under management.

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