KOCHI: One of the most interesting aspects of CSB Bank is its consistent ability to grow deposits at a pace that far outstrips advances, a feat that many banks, including those from Kerala, have struggled to achieve.
But a serious issue emerging here is the high credit-deposit ratio (CD ratio) of CSB Bank.
Though RBI has not yet opened up its mind on how high a bank’s CD ratio can go, there are views that RBI prefers the banks to rein in the CD below 80 per cent.
As of September end, 2024, with the deposits at Rs31,841 crore and advances at Rs26,871 crore, CSB Bank’s CD ratio stays at 84.39 per cent.
That said, CSB Bank has been able to bring down the CD ratio considerably, from a precarious 88.32 per cent a year ago.
SIB too is not comfortable on the CD front with the ratio having crossed 80 per cent as of September 30, 2024 up from 77.20 per cent a year ago.
The business updates released by CSB Bank reveal that while the bank’s advances grew by 19.59 per cent year on year, from Rs22,468 crore to Rs26,871 crore as of September end, 2024, the deposits outpaced advances to increase 25.17 per cent, from Rs25,439 crore to Rs31,841 crore.
SIB
At the same time, South Indian Bank (SIB), a peer of CSB Bank with similar standing, grown in the same town with almost the same age, has a different story to tell regarding deposit versus advances.
SIB’s advance base expanded from Rs74,947 crore to Rs84,741 crore as of September end, 2024, reflecting a year on year growth of 13.07 per cent.
In comparison, the bank’s deposit growth was confined to just 8.62 per cent during the period under review, from Rs97,085 crore to Rs1,05,455 crore.
Interestingly, this is the first time SIB’s deposit base has crossed the one-lakh-crore rupee mark, making it the second bank from the state to achieve this, following Federal Bank.
CSB gold loan
Equally interesting is the story of CSB Bank’s gold loan portfolio. Since there’s no regulation yet putting a percentage ceiling for gold loans in a bank’s loan portfolio, CSB Bank is not in violation of any rule here.
But for the past several years, gold loan has been ruling the roost for the bank with this segment accounting for close to half of its loan book.
Even for the quarter ending September, 30, 2024, while the total loans for CSB Bank amounted to Rs26,871 crore, gold loans contributed Rs12,005 crore accounting for 44.68 per cent.
