South Indian Bank has requested permission from the Reserve Bank of India (RBI) to restart its co-branded credit cards vertical, according to PR Seshadri, the bank’s Managing Director and CEO. The RBI had previously barred the bank from issuing co-branded credit cards on March 14.
In December, the bank submitted a letter to the RBI after completing all necessary corrective actions. Seshadri mentioned that the bank is ready to take additional steps if required, pending the RBI’s review of their submission.
CASA Ratio and Customer Behavior
Seshadri also discussed the bank’s CASA (Current Account and Savings Account) ratio, which has seen a reduction, a trend observed across the industry. However, the bank’s drop in CASA was less than many of its peers. He explained that a portion of the bulk current account balances is being moved to time deposits due to the higher interest rates being offered by banks.
Many customers are shifting their funds from CASA to bulk deposits to take advantage of better returns. To counter this, the bank plans to increase its current and savings accounts and enhance transactional flows. Seshadri expects the growth in transactional accounts to be between Rs 1,500 crore and Rs 2,000 crore by the end of the fiscal year, and anticipates an 8-10% growth in CASA balances.
Cautious Approach to Personal Loans
Regarding personal loans, Seshadri mentioned that the bank is taking a cautious approach. While other banks are more aggressive in offering personal loans to their customers, South Indian Bank is being more selective. The bank is carefully reviewing its portfolio and ensuring that decisions align with acceptable outcomes. Seshadri noted that once the environment improves, the bank may adopt a more aggressive stance.
Slippages, Recoveries and NPA
On the issue of non-performing assets (NPA), Seshadri shared that slippages and recoveries were similar in the current quarter, leading to a decrease in net NPAs. However, recoveries from unsecured loans have been lower. The bank is targeting recoveries of Rs 1,400 crore to Rs 1,500 crore for the financial year. So far, recoveries have reached Rs 1,025 crore, with an expected Rs 475 crore to be recovered in the next quarter.
RBI Review and Future Plans
The bank is awaiting the RBI’s review of its corrective actions. Based on the RBI’s feedback, South Indian Bank is prepared to take any further steps needed. The bank has assured that it has not inconvenienced its customers during this process and remains focused on customer satisfaction.
