| CSB Bank Limited | ||||||
| Ratings reaffirmed at 'Crisil A/Stable/Crisil A1+' | ||||||
| Rating Action | ||||||
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| Note: None of the Directors on Crisil Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. | ||||||
| 1 crore = 10 million | ||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale Crisil Ratings has reaffirmed its ‘Crisil A/Stable/Crisil A1+’ ratings on the debt instruments of CSB Bank Limited (CSB Bank).
The ratings continue to reflect the healthy capitalisation levels along with commitment of support from Fairfax, in case of exigency. The rating also factors in the stable resource profile. These strengths are partially offset by the modest earnings profile, limited track record in the non-gold loan book and modest, albeit growing, scale of operations. |
Analytical Approach Crisil Ratings has considered the standalone business and financial risk profiles of CSB Bank |
Key Rating Drivers - Strengths Healthy capitalisation levels along with commitment of support from Fairfax, in case of exigency Capitalization remains healthy with a net worth of Rs 4,894 crore, Tier-1 capital ratio at 18.93%, and overall CAR at 20.66%, as of March 31, 2026. Fairfax, via its company, FIH Mauritius Investments Ltd holds 40% stake as on March 31, 2026, in the paid up capital of the Bank, which is subject to dilution schedule as mandated by Reserve Bank of India and relevant RBI guidelines. Crisil Ratings believes that CSB Bank's capital profile benefits from Fairfax's commitment as part of the terms of acquisition of its stake in the Bank that it will subscribe to additional capital if the RBI assesses that further capital is required for stable growth of the Bank, in future. Further, the bank also has sufficient headroom to shore up the capital ratios by raising additional Tier 1 and Tier II debt capital.
Stable resource profile The total deposits for the bank improved to Rs 44,246 crores as on March 31, 2026, as against Rs 36,861 crores as on March 31, 2025 clocking a 20% growth on an annual basis. However, current CASA share of the bank moderated to 19.96% as on March 31, 2026 as compared to 24.19% as on March 31, 2025 in-line with industry trends.
Being a community-linked bank previously, it has created a brand name among NRIs (non-resident Indians) in the South region, which has provided steady inflow and stability to its deposit base. The bank also benefits from a sticky and large NRI deposit base. Deposit renewal rate for fiscal 2026 stood at ~82%. The fixed deposits of less than Rs 1 crore account for ~41% of the total fixed deposits as on March 31, 2026 as against ~50% of the total fixed deposits as on March 31, 2025. The average cost of deposits also remains competitive at 6.37% for fiscal 2026
Bank has added 35 branches in fiscal 2026 – which are all outside Kerala. Incrementally, the bank is planning to continue to open branches outside of South India and increase its presence in other geographies within the country. The Bank also plans to open branches that will focus on catering to the specialized needs of HNIs and SMEs across the country. As the Bank now scales up outside Kerala, the ability to garner pace in deposit growth commensurate with advances growth will be a key imperative. |
Key Rating Drivers - Weaknesses Limited track record in the non-gold loan book with modest, albeit growing, scale of overall operations The bank’s scale of operation, as reflected in deposits and advances, stands at Rs 44,246 crore and Rs 40,359 crore respectively, as on March 31, 2026. While it has grown at 20.0% and 26.7% respectively in fiscal 2026, the scale remains small with it accounting for a share of around 0.17% of deposits and 0.19% advances in the banking system.
Though the concentration of the bank’s gross advances in Kerala and Tamil Nadu are gradually coming down, it continues to remain high at 43% as of March 31, 2026. Overall, the loan book continued to be marked by 53% share of gold loans followed by corporate loans share of 25%, retail loans of 11% and BLG loans (SME & LAP) of 11%, as of March 31, 2026. Going forward company plans to increase the scale of non-gold book across secured segments.
The gross NPA metrics for the bank stood at 1.66% as on March 31, 2026, as against GNPA of 1.57% as on March 31, 2025. The bank maintains a provision coverage ratio (PCR) of 86.3% translating into a net NPA of 0.40% as on March 31, 2026 (83.7% and 0.52% respectively as on March 31, 2025). Nevertheless, sustainability of asset quality metrics as the bank scales up its portfolio, especially in the non-gold loans book and ability of the bank to keep incremental slippages under control while scaling up its portfolio remains a key monitorable going forward.
Modest earnings profile The bank reported a profit after tax of Rs 633 crore in fiscal 2026 growing at 6.6% from Rs 594 crore in fiscal 2025. The return on assets has moderated to 1.29% in fiscal 2026 as compared to 1.53% for fiscal 2025, primarily due to decline in NIMs. Net Interest Margin (NIM) of the bank stood at 3.76% for fiscal 2026 as compared to 4.13% for fiscal 2025. Compression in NIMs observed were primarily due to increase in cost of funds.
Credit costs (as a percentage of average total assets) have remained rangebound at 0.48% in fiscal 2026 as against 0.29% in fiscal 2025. The operating expenses (as a percentage of average total assets) stood at 3.68% during fiscal 2026 as compared to 3.97% in fiscal 2025. The bank is likely to benefit from operating leverage in the medium term from investments made in recruiting additional manpower, and on the technology front. However, the sustainability in the improvement in the earnings profile hinges upon the control over cost of funding and credit costs, which remains a key monitorable going forward. |
Liquidity Strong The bank maintains a strong liquidity. The ALM (asset liability management) has no negative cumulative mismatch across buckets except for 31 days to 6 months bucket as on March 31, 2026. As on March 31, 2026, liquidity coverage ratio (average) for the bank stood at 109%. The bank's liquidity also benefits from access to systemic sources of funds such as the liquidity adjustment facility from the RBI, access to the call money market, FCY borrowings and refinance limits from development finance institutions. |
ESG Profile Crisil Ratings believes that CSB’s Environment, Social, and Governance (ESG) profile supports its already strong credit risk profile. The ESG profile for financial sector entities typically factors in governance as a key differentiator between them. The sector has reasonable social impact because of its substantial employee and customer base and can play a key role in promoting financial inclusion. While the sector does not have a direct adverse environmental impact, the lending decisions may have a bearing on the environment.
CSB has an ongoing focus on strengthening various aspects of its ESG profile.
CSB’s key ESG highlights:
There is growing importance of ESG among investors and lenders. CSB’s commitment to ESG will play a key role in enhancing stakeholder confidence, given shareholding by foreign portfolio investors and access to both domestic and foreign capital markets. |
Outlook Stable |
Rating sensitivity factors Upward factors
Downward factors
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About the Company CSB Bank is an old private sector bank with a history of over 100 years and operating out of 862 branches. The business is concentrated in Kerala (~31% branches as on March 31, 2026) with remaining spread mainly across Tamil Nadu, Andhra, Karnataka, and Maharashtra. Promoter entity FIH Mauritius Investments Ltd (FIHM), continues to hold 40% stake in the paid-up capital of the Bank as on March 31, 2026, which is subject to dilution schedule as mandated by Reserve Bank of India and relevant RBI guidelines. |
Key Financial Indicators
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Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
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| Annexure - Rating History for last 3 Years | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Annexure: List of instruments and names of regulators of the instruments As required by SEBI CRA Circular dated Feb 10, 2026, a list of activities or instruments falling under the purview of various FSRs, along with the names of respective FSRs, is being disclosed below:
* Includes securitisation transactions involving assignee payout, acquirer's payout. ~ The rated instrument may involve issuance of different instruments such as debt securities (listed or otherwise), bank loans, commercial paper (listed or otherwise), etc. The regulator of the instrument may accordingly be SEBI, RBI or MCA and can only be determined upon issuance. In PRs subsequent to issuance(s), Crisil Ratings Limited shall separately capture the rated quantum details along with names of respective regulators. ^ Includes bank facilities such as liquidity facility, second loss facility that are part of securitisation transactions. # There is no instrument being rated and hence, Regulator of the Instrument is not applicable. The rating scale and definitions are being followed as stipulated in SEBI Master Circular for CRAs. @ These ratings were assigned during regulatory regime prior to introduction of SEBI CRA Circular dated Feb 10, 2026 and the investor side regulators have accordingly been included.
Note: Kindly note that for activities or instruments falling under the purview of FSRs other than SEBI, the grievance/dispute redressal mechanisms and investor protection mechanisms provided by SEBI shall not be available. |
Criteria Details
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