CSB Bank Ltd Management Discussions

GLOBAL ECONOMY

In CY 2025, the global economy continues to remain resilient despite navigating persistent headwinds. According to the World Economic Outlook 2025 published by the International Monetary Fund (IMF), global growth is expected to moderate to 2.8%. While this represents a slowdown compared to pre-Covid averages, it signals continued economic expansion. This moderation in growth is largely attributed to elevated trade barriers, ongoing policy uncertainty, and subdued consumer sentiment, particularly in advanced economies.

IMPOSITION OF TARIFFS

In the second quarter of CY 2025, the United States (US) implemented a series of protectionist measures under the Trump Administration, the country levied new tariffs on a range of imports, including automobiles, auto components, steel, and aluminium. This escalation continued on April 5, 2025, with the announcement of an additional 10% tariff on most imports from nearly all countries, imposed over and above existing duties.

In response, key trading partners, including China and the European Union, have imposed retaliatory tariffs on US exports. Although the US government has declared a temporary 90 day suspension on several reciprocal measures to enable negotiations, key sector-specific tariffs, particularly on steel, aluminium, and the automotive sector, remain firmly in place. Moreover, a broad-based 10% baseline tariff applies to all non-exempt merchandise entering the US market. Tensions between the US and China have escalated since early April 2025, with both countries imposing punitive tariffs exceeding 100% on each others goods. The outlook remains uncertain, especially if suspended reciprocal tariffs are reinstated in the absence of meaningful progress on trade negotiations during the temporary pause.

REGIONAL ECONOMIC POSITIONING United States

The US economy is now expected to grow at a slower rate of 1.8% in CY 2025, primarily reflecting the impact of tight monetary policy and escalating trade disruptions. Inflation is projected to remain elevated at around 3%, with the newly imposed tariffs adding roughly one percentage point. Domestic consumption is showing signs of contraction, while the manufacturing sector faces rising input costs, exacerbated by ongoing global supply chain bottlenecks.

China

Chinas economic growth is forecasted to slow down to 4% in CY 2025, reflecting weakening forecasted external slowdown, internal deleveraging, and a structural shift towards a consumption-led model. Inflation is expected to remain subdued, with the possibility of deflation underscoring continued weakness in demand. Risks of renewed credit stress are increasing, especially within the still-vulnerable property sector.

Euro Area

GDP growth in the Euro area is projected at a modest 0.8% in CY 2025, reflecting ongoing economic headwinds. Sluggish domestic consumption and weakening external demand continue to weigh on growth momentum. Increasing political instability across several member states, coupled with persistent energy security concerns, continues to erode investor confidence, particularly in key economies such as Germany and France. These factors are expected to significantly hinder the regions recovery.

EMERGING MARKETS AND DEVELOPING ECONOMIES (EMDEs)

Growth in emerging markets and developing economies is slowing, with significant deceleration observed in countries such as Mexico, South Africa, and Argentina, as well as larger economies like China and Brazil, and others, including Hungary, Colombia, and Turkiye. High debt levels and depreciating currencies are fuelling inflation and constraining policy flexibility. Simultaneously, tighter global financial conditions and declining investor confidence are intensifying economic vulnerabilities across these economies.

INFLATIONARY TRENDS

While these geopolitical tensions and protectionist measures have captured global attention, underlying shifts in the global economy suggest a deeper, long-term transformation. According to the World Economic Outlook 2025, global inflation is projected to continue its downward trajectory, easing from 6.8% in CY 2023 to 5.9% in CY 2024, and further to 4.5% in CY 2025. This steady disinflation is driven by several factors, including the resolution of earlier supply chain disruptions, declining prices for food and energy, and the ongoing effects of tight monetary policies, particularly in advanced economies. These economies are expected to reach their inflation targets sooner than EMDEs, where inflation is expected to remain elevated for a longer period.

OUTLOOK

Despite persistent challenges in the global economy, the current period presents an opportunity to strengthen economic resilience and consider more sustainable development pathways. Recent responses indicate that recovery is achievable through coordinated action and structural reforms.

Advancing a stable and transparent trade regime, expediting debt resolution processes, and addressing underlying structural imbalances are critical to fostering a more balanced and inclusive recovery. Clear monetary policy guidance, targeted application of macroprudential tools, and adherence to credible fiscal frameworks will be essential in bolstering financial stability and supporting sustainable long-term growth.

International coordination may play a significant role in managing the path forward. Through collaborative approaches, aligned strategies, and effective policy execution, economies can rebuild buffers and contribute to a broader regional and global recovery.

INDIAN ECONOMY

The Indian economy is projected to grow at 6.5% in FY 2024-25, according to the second advance estimates from the National Statistics Office, released on February 28, 2025. Indias strong growth rate highlights the resilience of its domestic economic framework, which has remained stable amid a challenging global environment. The countrys effective navigation of external risks, including persistent trade tensions and tariff-related disruptions, reflects the strength and impact of its strategic policy measures.

INDIAS ECONOMIC STABILITY

The stability of Indias economy continues to be driven by resilient domestic consumption, with rural demand playing a pivotal role in insulating against external shocks. Strong agricultural output, supported by targeted government interventions, has bolstered rural consumption, providing a stable base for continued economic growth momentum. Macroeconomic fundamentals are further supported by ongoing structural reforms, rapid digital adoption, and substantial infrastructure investment. These elements contribute to long-term growth prospects and economic resilience. However, further reforms are needed to attract higher levels of investment and enhance the global competitiveness of the manufacturing sector.

E - Estimates

UNION BUDGET 2025-26 HIGHLIGHTS

The Union Budget 2025-26 outlines nine strategic priorities to drive inclusive and sustainable growth, including the modernisation of agriculture and farmer support, strengthening manufacturing for job creation, and promoting smart urban development. It emphasises energy security through resource diversification and green growth through sustainable practices. The Budget also focusses on empowering youth via education and skills, advancing financial sector reforms for broader inclusion, accelerating infrastructure and investment, and ensuring last-mile delivery of public services. These priorities form a comprehensive roadmap for building a resilient, future- ready economy that addresses present needs while positioning India for long-term growth.

ROBUST FDI AND A SHIFT IN EQUITY MARKET DYNAMICS

Indias financial and external sectors demonstrated considerable strength in FY 2024-25, despite a challenging global backdrop. Foreign direct investment (FDI) remained robust, with gross inflows rising 12.4% year-on-year (YoY) to $67.7 billion between April 2024 and January 2025. However, net FDI declined sharply to $1.4 billion, due to increased repatriation of earnings and a surge in outward FDI by Indian firms, reflecting growing global ambition among domestic enterprises.

A landmark shift occurred in Indias capital markets as Domestic Institutional Investors (DIIs), for the first time, surpassed Foreign Institutional Investors (FIIs) in equity holdings. As of March 2025, DIIs held 16.91% ofIndian equities, marginally ahead of FIIs at 16.84%. This transition highlights the growing maturity and confidence of domestic capital. In CY 2025, DIIs invested over 2.1 lakh crore, while FIIs withdrew more than 1.07 lakh crore, amid global uncertainty and risk aversion. The steady inflow through mutual fund systematic investment plans (SIPs) emphasised the stabilising role of retail domestic savings in the equity market.

MONETARY POLICY MEASURES

In response to evolving macroeconomic conditions, the Reserve Bank of India (RBI) adopted a measured and supportive monetary stance, cutting the repo rate by 25 basis points in both February and April 2025, bringing it down to 6.00%. With inflation on a downward trajectory and external growth risks intensifying, the central bank shifted to an accommodative stance, signalling continued support for economic recovery.

To address tight liquidity conditions earlier in the year, the RBI executed its largest Open Market Operations (OMO) in four years, infusing liquidity through government securities worth 1 lakh crore in March 2025, followed by 80,000 crore in April 2025. These interventions helped reverse a liquidity deficit observed in January 2025, pushing the system into surplus by April 2025. Complementing these efforts, the RBI also conducted a $10 billion Dollar/Rupee swap auction, reinforcing its commitment to rupee stability and helping to manage imported inflationary pressures.

EXCHANGE RATE DYNAMICS

Despite a turbulent global environment, the Indian rupee remained relatively stable through FY 2024-25, beginning the year at around 83.43 per US dollar in April 2024 and closing at approximately 85.44 by March 2025, reflecting a modest annual depreciation of 2.4%. This performance was notable in comparison to other emerging market currencies, many of which experienced sharper declines. The rupees relative stability was underpinned by strong foreign portfolio inflows, a weakening US dollar, and timely interventions by the RBI. Indias substantial foreign exchange reserves further bolstered investor confidence and helped cushion external shocks, reinforcing the rupees resilience amid global volatility.

EXTERNAL SECTOR PERFORMANCE

Indias external position continued to improve, with foreign exchange reserves rising to $676.3 billion as of March 31, 2025 up from $648.6 billion a year earlier. This was driven by RBIs proactive market operations and valuation gains on foreign assets. The higher reserve levels provided a critical buffer against global uncertainties, ensuring ample import cover and enhancing Indias financial stability.

SECTOR-WISE PERFORMANCE

Indias services sector remains a key driver of economic growth, with a strong expansion of 7.2% projected for FY 2024-25, supported by sustained momentum in financial services, healthcare, hospitality, and public administration. A revival in consumer spending and a steady uptick in tourism have further bolstered sectoral demand. Although the IT industry faced certain headwinds, it recorded moderate growth, reaffirming its vital contribution to employment generation and overall economic performance. The services sectors dynamic contribution remains central not only to GDP expansion but also to job creation and income growth, cementing its position as the backbone of the Indian economy.

In parallel, the agriculture sector is on track for a notable recovery, with growth expected to climb to 3.8% in FY 2024-25, a significant improvement from the 1.4% expansion seen in FY 2023-24. This recovery has been driven by a favourable monsoon, resilient rural consumption, and targeted government initiatives such as the Kisan Credit Card scheme and the e-National Agriculture Market (eNAM) platform. A significant budgetary allocation of 1.52 trillion

is directed towards enhancing access to agricultural credit, expanding digital marketplaces, and promoting sustainable farming practices. Efforts are also being made to enhance productivity, support farmer welfare, and develop allied sectors, including horticulture and livestock. While this growth aligns with historical trends, it signals a period of stabilisation rather than transformation.

The manufacturing sector is projected to grow by 6.2% in FY 2024-25, moderating from a high base of 9.5% in FY 2023-24, indicating a slowdown in momentum. Similarly, the Index of Industrial Production (IIP) is projected to decelerate slightly to 2.9%, compared to 5.7% in the prior year. The slowdown reflects a mix of softer global demand and domestic constraints, including muted growth in output and new orders, as well as limited inventory accumulation. External factors, such as increasingly protectionist industrial policies among trading partners and weather-related disruptions, notably an above-normal monsoon, have further impacted mining, construction, and related manufacturing activities. Despite these headwinds, the sector remains resilient, buoyed by Indias strong macroeconomic fundamentals, prudent fiscal policies, and continued investment in infrastructure.

Indias digital transformation has significantly reshaped its economy, positioning it as the worlds third most integrated digital economy, although it ranks 12^th among G20 nations in terms of individual user adoption. As per the 2024 State of Indias Digital Economy Report, the digital economy is expected to grow at nearly twice the pace of the overall economy, contributing approximately 20% of GDP by 2029-30, surpassing both agriculture and manufacturing. This growth will initially be driven by digital platforms and intermediaries, followed by deeper integration across traditional sectors. As digital tools become ubiquitous, the role of core Information Communication & Technology (ICT) industries will decline, signalling a more mature digital ecosystem.

OUTLOOK

Indias projected GDP growth of 6.5% in both FY 2025-26 and FY 2026-27 represents meaningful progress towards the Viksit Bharat @ 2047 vision, which aspires to transform the nation into a fully developed economy by the centenary of its independence. This long-term roadmap focusses on inclusive growth, technological progress, and broad-based prosperity. Indias sustained economic momentum underpins its ambition to become a $ 30 trillion economy by 2047. This trajectory sets the stage for broad-based national development and a future of opportunity and well-being for all citizens. This growth trajectory, however, is tempered by emerging risks, including a potential global slowdown, particularly in major economies such as the US and China,which could dampen external demand. Domestically, a delay in the private corporate capital expenditure cycle may hinder investment momentum. Additionally, depreciation pressures on the Chinese Renminbi could exert stress on Indias net goods trade balance, posing additional headwinds.

Amid this uncertain global landscape, new opportunities are emerging, with the growing adoption of the ‘China + 1 strategy by multinational corporations underscoring Indias rising importance in global manufacturing and supply chains. If leveraged effectively, these shifts could unlock transformative gains in investment, exports, and job creation, firmly establishing India as an indispensable contributor to global economic momentum in the decade ahead.

GLOBAL BANKING INDUSTRY

The global banking industry is a core component of the world economy, supporting payments, credit, savings, and investment for individuals, businesses, and governments. The global financial services market is valued at $35.85 trillion in CY 2025 and is projected to grow to $47.34 trillion by CY 2029. Within this landscape, banks play a vital role in fostering economic stability, facilitating credit creation, and supporting trade and investment.

Banks are making substantial strides in digital transformation, driven by a dynamic operating environment and annual technology spends exceeding $600 billion. These advancements are reshaping customer engagement, operational efficiency, and competitive dynamics. Despite global uncertainties and evolving regulations, banks have remained resilient, consistently achieving double-digit returns on equity. Banks are now moving beyond traditional finance, playing a growing role in advancing financial inclusion and supporting the transition to a low-carbon, sustainable economy. As the financial landscape continues to evolve, banks stand as both stabilisers and enablers of long-term global growth.

Over the past two years, the global banking sector has delivered its strongest performance since the 2007-09 financial crisis, supported by strong profitability, healthy capital buffers, and stable liquidity positions. In 2023 alone, banks worldwide generated $7 trillion in revenue and $1.1 trillion in net income, achieving a Return on Tangible Equity (ROTE) of 11.7%. Capital adequacy has strengthened, with Common Equity Tier 1 capital rising to 12.8% of risk-weighted assets and a healthy liquidity coverage ratio of 77.2%. In terms of absolute profit, the banking sector has outperformed all other global industries. Yet, despite the sectors strong recovery, investor sentiment remains cautious. The banking sector ranks last among all industries on price-to-book multiples, reflecting doubtsabout its ability to create long-term value. This paradox, marked by strong short-term performance but muted market confidence, reflects a combination of broader macroeconomic pressures and sector-specific challenges. While banks invest more heavily in technology than any other sector, productivity gains have been inconsistent. Evolving regulatory requirements across jurisdictions continue to necessitate substantial investments in capital and compliance. Moreover, some of the most profitable niches in banking such as payments, private credit, and wealth management are increasingly under pressure from specialised competitors and agile fintech disruptors. The sectors recent performance gains have largely been fuelled by a favourable interest rate environment, prompting concerns about their sustainability amid potential shifts in the macroeconomic landscape. While recent returns have improved, the long-term performance over the past decade remains modest. The key challenge is whether banks can convert this cyclical upswing into lasting structural strength by harnessing digital innovation and strategic agility to rebuild investor confidence and drive long-term value creation.

INDIAN BANKING INDUSTRY

Indias banking sector is one of the largest and most dynamic in the world, backed by resilient, well-capitalised, and prudently regulated institutions, as noted by the Reserve Bank of India (RBI). In recent years, it has undergone a significant transformation driven by innovative banking models like payment banks and small finance banks. These new formats have expanded outreach and improved service delivery, bringing financial services to previously underserved populations.

Overall bank credit growth has recently slowed due to tighter liquidity, regulatory constraints, and weak private investment, although retail lending remains relatively resilient. Non-Banking Financial Companies (NBFCs) are also experiencing slower credit growth, particularly in retail segments, amid concerns over asset quality and borrower overleveraging.

This transformation has been further propelled by strong policy support for financial inclusion. Flagship initiatives like the Pradhan Mantri Jan Dhan Yojana have integrated millions into the formal banking system, while India Post Payments Bank has expanded access to banking services across remote regions. These efforts have deepened financial access and laid the foundation for a more inclusive, digitally integrated banking ecosystem.

Digital lending is a standout growth area, propelled by rising technology adoption, smartphone penetration,and innovative business models. The sector increasingly leverages AI, machine learning, and data analytics to enhance efficiency and customer experience. Emerging trends like open banking, Banking-as-a-Service (BaaS), and wealth tech are reshaping the competitive landscape, creating new opportunities for growth and innovation.

MAJOR BANKING METRICS Credit and Deposit Growth

As of January 10, 2025, bank deposits in India registered a significant YoY growth of 10.83%, reaching a total of 221.50 trillion. This reflects a steady improvement in the banking sectors ability to mobilise funds. The rise in deposits indicates a growing confidence among the public in the banking system and may also suggest increased savings amid evolving economic conditions.

However, despite an improvement in deposit growth, credit expansion continues to outpace it. Between January 2024 and January 2025, credit extended by scheduled commercial banks grew by 11.47% year-on-year, reaching 178.01 trillion. The persistent trend of credit growth surpassing deposit growth has raised concerns among financial analysts and policymakers, particularly in terms of liquidity management.

According to India Ratings and Research, this imbalance has pushed the loan-to-deposit ratio to 77.2% as of August 2024: a key indicator of liquidity within the banking sector. A high loan-to-deposit ratio suggests that banks are lending a larger portion of their deposits, which can strain their ability to meet withdrawal demands, requiring them to seek additional funding. The rating agency expects this divergence between credit and deposit growth to continue into FY 2025-26, with a possible rebalancing not anticipated before FY 2026-27.

This ongoing mismatch between credit demand and deposit accumulation presents both opportunities and challenges for the banking sector. While strong credit growth reflects healthy demand from businesses and individuals, supporting economic activity, the comparatively slower pace of deposit growth may limit banks ability to maintain lending momentum without encountering liquidity pressures. As a result, banks may need to explore alternative funding sources or adjust interest rates to attract more deposits and ensure stability in their operations.

ASSET QUALITY

Between CY 2018 and CY 2024, Indian public sector banks saw a major improvement in asset quality, with Gross NonPerforming Assets (GNPAs) falling sharply from 14.98% in CY 2018 to around 2.6% in CY 2024. This turnaround was driven by multiple factors. The Reserve Bank of Indias Asset Quality Review (AQR), initiated in April 2015, enforced stricter norms for recognising non-performing assets (NPAs), prompting banks to clean up their balance sheets. In parallel, the governments 4R strategy: Recognition, Resolution, Recapitalisation, and Reforms, offered a comprehensive framework to tackle the NPA crisis and reinforce the banking sector. The turnaround was further supported by the introduction of the Insolvency and Bankruptcy Code (2016), proactive provisioning by banks, and enhanced operational efficiency.

However, while the overall credit environment improved, stress emerged in the microfinance sector during CY 2024. Prolonged heatwaves disrupted rural incomes, reducing borrowers repayment capacity. The situation was further exacerbated by rumours of loan waivers, which undermined repayment discipline. Additionally, borrower overindebtedness rose, with 5.8% of them holding loans from four or more lenders, up from 3.6% in CY 2021. The RBIs Financial Stability Report flagged these trends as signs of rising vulnerability in the sector.

IMPROVEMENT IN ASSET QUALITY FOR THE BANKING SECTOR (%)NET INTEREST MARGIN

Indias recent policy rate cuts are expected to exert mild pressure on banks net interest margins (NIMs), though this may be partially offset by the RBIs efforts to ease liquidity. The sectors NIM, while still healthy at 3.45% in FY 2024-25, has declined from 3.6% in the previous year, largely due to rising deposit costs amid tight liquidity conditions.

Looking ahead, net interest margins (NIMs) are expected to decline by approximately 10 basis points by FY 2025-26, driven by the 25 basis points repo rate cut in February 2025 and the potential for further monetary easing. Beyond monetary policy, elevated funding costs, fuelled by intense competition for deposits and a shift towards higher-yield term deposits, continue to pressure margins. At the same time, the expansion of lending is driving growth in risk- weighted assets, thereby increasing capital requirements and further straining profitability. While RBIs liquiditysupport has provided some cushion, persistent tightness in funding conditions may lead to a steeper-than-expected decline in NIMs. Looking ahead, margin trends will depend not only on interest rate shifts but also on banks ability to manage funding costs and maintain capital adequacy in a challenging environment.

CAPITAL ADEQUACY

Public sector banks (PSBs) in India have demonstrated significant improvement in financial strength during FY 2024-25. As of September 2024, their Capital to Risk (Weighted) Assets Ratio (CRAR) stood at 15.43%, well above the RBIs minimum requirement of 11.5%. This improvement reflects both strengthened capital buffers and a notable rise in profitability, with PSBs reporting a record profit of 1.78 lakh crore, a 26% increase over the previous year. This financial turnaround has been supported by a sharp reduction in NPAs, with the net NPA ratio declining to 0.59% by December 2024, indicating a marked improvement in asset quality. At the same time, the Provision Coverage Ratio (PCR) rose to 93.36% by June 2024, compared to 46.04% in March 2015, underscoring the enhanced resilience of PSBs against potential credit losses.

Despite recent gains, PSBs continue to trail the private sector and the overall banking sector average CRAR of 16.6% as of September 2024, primarily due to legacy high N PAs and historically slower capital accumulation. However, ongoing reforms, improved recoveries, and stronger earnings are narrowing the gap and positioning PSBs for more competitive performance going forward.

GOVERNMENT INITIATIVES AND REGULATORY REFORMS

Banking sector reforms in India are steadily aligning with the long-term vision of a more resilient, inclusive, and technology-driven financial system. A key focus has been on digital transformation, with growing adoption of AI, open banking, and Banking-as-a-Service (BaaS) to enhance operational efficiency and improve customer experience. In parallel, cybersecurity has emerged as a critical focus area, with banks and regulators investing in robust measures to address rising digital threats and ensure transaction security.

On the lending front, tighter norms and improved credit appraisal mechanisms have contributed to a significant decline in NPAs, now at a 12-year low. This reflects more disciplined risk management process across the system. To foster innovation and entrepreneurship, the government has reinforced credit guarantee mechanisms; most notably by expanding the Credit Guarantee Scheme for Startups (CGSS), which now provides collateral-free loans of up to 20 crore with enhanced coverage. Reforms have also focussed on improving compliance and accessibility, with

Know Your Customer (KYC) procedures becoming increasingly streamlined and digitised. The RBI has introduced simplified norms and operationalised a unified Central KYC Registry to enhance both efficiency and security. Alongside higher FDI limits in insurance and focussed support for MSMEs and rural borrowers, these reforms are strengthening financial inclusion, enhancing transparency, and promoting long-term stability in the sector.

Pradhan Mantri Jan Dhan Yojana (PMJDY)

Financial inclusion has remained a top priority for the Department of Financial Services (DFS), with initiatives such as the Pradhan Mantri Jan Dhan Yojana (PMJDY), Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY), Pradhan Mantri Suraksha Bima Yojana (PMSBY), MUDRA, Stand Up India, and Atal Pension Yojana (APY) making significant strides. Till 2024, over 50 crore bank accounts have been opened under the Pradhan Mantri Jan Dhan Yojana, while more than 33 crore individuals have been insured through the Pradhan Mantri Suraksha Bima Yojana and the Pradhan Mantri Jeevan Jyoti Bima Yojana. Additionally, the MUDRA scheme has sanctioned loans exceeding 24 lakh crore, significantly enhancing financial inclusion for marginalised communities.

EASE Reforms

The Enhanced Access and Service Excellence (EASE) reforms are a comprehensive set of initiatives launched in 2018 by the Government of India and PSBs, coordinated by the Indian Banks Association (IBA). Their aim is to strengthen PSBs by improving governance, risk management, asset quality, customer service, digital capabilities, and financial inclusion through clearly defined action points and themes. Guided by the IBA, the EASE reforms have progressed from EASE 1.0 to EASE 7.0, creating a structured and forwardlooking framework for PSBs. These reforms have catalysed significant changes in the banking sector, with a special focus on enhancing digital customer experiences, adopting analytics-driven business strategies, fostering technology- enabled capability building, and improving HR operations.

BUSINESS OVERVIEW

CSB Bank Limited (referred to as ‘CSB Bank or ‘the Bank), headquartered in Thrissur, Kerala, is one of Indias oldest private sector banks, with a rich legacy dating back to 1920. Bank commenced its operations in 1921 and has since evolved into a full-service commercial bank offering a wide range of banking and financial services to retail, MSME, corporate, and NRI customers.

CSB Banks core platform is built on the advanced Oracle Flexcube system, supporting efficient management of key banking operations, including CASA, fixed deposits, customer handling, and transaction processing. This is supported by a comprehensive payments environment covering RTGS, NEFT, and IMPS. The platform is designed with a modular, scalable architecture, following a ‘hollow the core approach, wherein high-volume services such as lending and UPI are handled outside the core system. Furthermore, to enhance our digital presence, the Bank has implemented an omnichannel digital platform (OBDX) which includes retail Net Banking and retail mobile banking. This ensures high performance and flexibility. The core is integrated with over 50 surround systems, which includes the risk, compliance, regulatory and fraud management systems, which increases the security posture of the Bank. All these technologies have created a wholesome ecosystem to deliver a seamless, safe, digital-first banking experience for customers and employees alike.

Retail Banking

CSB Bank delivers an extensive array of retail banking services to both domestic and NRI customers, including CASA accounts, diverse deposit options, loans, forex services, and credit cards. Its product portfolio addresses a wide range of customer needs, spanning personal and business banking, and includes offerings such as gold loans, vehicle loans (for two-wheelers and motor vehicles), housing loans, loans against property, overdrafts, MSME financing, agricultural loans, and microfinance. As part of its technology migration, the Bank is expanding its portfolio with new offerings, such as faster disbursing of personal loans, enhancing its competitiveness in the market. The Banks branch-in-branch strategy is a focussed initiative aimed at optimising branch space, expanding service offerings, and repositioning the brand beyond its traditional identity as a gold loan-focussed institution. The approach involves creating a distinct section within the same branch premises dedicated exclusively to gold loan services. By physically segregating these services, the Bank aims to diversify the customer experience and reduce any customer apprehensions associated with gold loans. Building on the initial success of this model, the Bank plans to expand the concept vertically by utilising additional floors or adjacent spaces rather than opening new branches. Strategically, this model enables better space utilisation, cost efficiency, enhanced customer segmentation, and improved service delivery without compromising on the overall customer experience.

Aligned with its broader technology transformation and growth objectives, the Bank plans to further scale its branch-in-branch model. The goal is to transform each branch into a multi-functional hub, customised to serve specific local segments such as MSMEs, rural customers, and high-net-worth individuals. This innovation supports the Banks broader plan to add around 50 branches annually across diverse regions of India, including the North, West, and East. Overall, the branch-in-branch approach reflects its commitment to building a tech-enabled, full-service banking institution that efficiently serves a variety of customer needs while evolving its market perception.

The Banks strategy focusses on growing its retail portfolio by attracting a wider customer base across segments such as home, personal, and auto loans as well as credit cards. The recently upgraded technology platform will further enable the Bank to tap into profitable, underserved segments through comprehensive asset offerings, including wealth management. This enhancement will improve customer service and cross-selling opportunities, and build a more profitable customer base. The Bank is focussing on internal customer acquisition and cross-selling, to build a more efficient and profitable franchise with better customer wallet share. This approach will continue until the liability side of the business is fully strengthened.

In addition to its direct customer engagement, the Bank collaborates with manufacturers, offering loans for autos, commercial equipment, properties, and healthcare businesses. These strategic partnerships allow it to provide niche and value-added services, enhancing its competitive position. The Banks focus on holistic customer lifecycle management, spanning acquisition, onboarding, and relationship management, positions it for long-term growth. Over the medium to long term, the Bank anticipates that its growth will be closely linked to the expansion of its liabilities business, supporting sustained progress. With its core technology transformation set to reach a key milestone in FY 2025-26, the Bank is well-positioned to strengthen execution, enabling quicker product launches, sharper customer segmentation, and more personalised offerings. By FY 2026-27, with technology migration complete and new products in place, CSB Bank is now well positioned to build and enhance it product suite and digital processes. This marks the transition from the final leg of the ‘Build phase to the beginning of the ‘Scale phase in the Banks SBS 2030 roadmap. Its nimble operations in new markets give it an advantage over larger competitors, allowing for quick process changes, adoption of new technologies, and a strong response to customer needs. As the customer acquisition engine and modular branch strategies come into play, the Bank aims to grow faster than the system average, without compromising on work strength with quality.

MSME Banking

With the Indian economy emerging as one of the worlds leading economies, major impetus is being given to strengthen the MSME sector. The sector has gained significant importance due to its contribution to GDP, exports, and the overall growth and development of the country.

We are working relentlessly to make the Bank emerge as preferred partner for MSMEs. The Bank is implementing multiple initiatives to ensure best in class product and services are delivered to Customers. The Banks MSME franchise continues to focus on improving client-level profitability by working closely with customers through a robust relationship management structure that emphasises portfolio hygiene and wallet share.

Wholesale Banking

The Bank has recently re-organised its Wholesale Banking Segment (WSB) to better align with its growth priorities. This restructuring aims to cater to a spectrum of corporate clients, ranging from small and mid-size corporates to large corporates and conglomerates. The Bank has revamped its wholesale banking offerings through a segment-wise coverage model, with a primary focus on three key areas, Corporate Banking, Commercial Banking and Financial Institutions and Public Sector (FIPS).

Corporate Banking

The Corporate Banking Segment caters to corporate clients, primarily large corporates and conglomerates. Niche team of experienced bankers are spread across key locations of the country to bring in relationship-driven, knowledge- based banking practices to this highly demanding client segment. The Bank also takes active participation in funding capex requirements of its customers by extending term loans and project finance. The product offerings are suitably structured, taking into account the clients risk profile and specific needs specified by them.

Commercial Banking

The Bank launched this segment to bring focussed coverage approach to small and mid-corporates which form the key element of private credit demand. Through a regional structure, the Bank has a set of experienced relationship bankers, product specialists and service delivery executives to bring in the best of bank offerings to this fast-paced growing segment and gain incremental market share.

Financial Institutions and Public Sector (FIPS)

Having attained sustained success in the financial institution group with wide coverage across leading NBFCs, the Bank shall endeavour to deepen the wallet share with increased focus on cross sell and liability. In order to provide growth impetus and create visibility, the Bank has also started to focus on the government business which can help achieve balance sheet scale across lending and deposit franchise.

Integrated Treasury

The Treasury at the Bank plays a strategically pivotal role in driving the institutions transformational growth under its SBS 2030 roadmap. Functioning as both a profit centre and a regulatory ratio manager, the treasury acts as a critical enabler across the Banks business ecosystem, including wholesale, MSME, and retail banking segments, by ensuring robust liquidity management, regulatory compliance, and innovative financial solutions.

Key Strategic Functions and Contributions

The treasury serves as a backbone for business operations, aligning its strategies with the unique needs of various banking segments:

• Wholesale and MSME Banking: It designs and delivers tailored solutions such as structured funding mechanisms, liquidity support, and forex hedging products to meet complex client requirements and drive business growth.

• Retail Banking: It supports liability generation and product innovation by providing backend funding solutions, enabling seamless customer offerings and deposit mobilisation.

Liability and Liquidity Management

Effective liquidity and liability management remains centre to the treasurys operations, particularly in an environment where credit growth often outpaces deposit mobilisation. The Bank follows a multi-pronged approach to address this challenge:

• Short-Term Needs: Managed through repo transactions and interbank borrowings to address immediate liquidity mismatches.

• Medium-Term Requirements: Addressed by issuing certificates of deposit (CDs), with outstanding CDs increasing from 1,000 crore to 1,760 crore, reflecting growing reliance on market-based funding.

• Long-Term Funding: Secured through partnerships with global entities such as the IFC and foreign banks, which provide three-year tenor borrowings to ensure sustained liquidity.

Regulatory and Investment Portfolio Management

The treasury is responsible for the efficient management of statutory reserves and asset-liability balances in line with regulatory mandates. The Bank ensures compliance with the RBIs Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) requirements through a diversified portfolio comprising:

• Government of India dated securities

• Treasury bills

• State development loans (SDLs)

• Other RBI-permitted instruments

This actively managed portfolio is optimised to enhance yield and capture value from market movements. In addition to sovereign instruments, the treasury invests and trades in commercial papers, bonds, debentures, mutual funds, Alternative Investment Funds (AIFs), pass-through certificates, certificates of deposit, and equities aiming to manage shortterm liquidity efficiently while boosting trading profits.

Foreign Exchange and Hedging Solutions

The treasury handles the Banks foreign exchange transactions in adherence to regulatory frameworks laid down by the RBI, the Foreign Exchange Dealers Association of India (FEDAI), and other authorities. These operations not only ensure compliance but also contribute to fee-based income and client-centric forex services. The division is actively developing new hedging products to meet evolving customer needs.

Support to Non-Fund Based and Trade Finance Operations

In line with the Banks growing focus on MSME and wholesale banking, the treasury also plays a key role in supporting non-fund based and trade finance transactions. This includes managing forex risk for import/export clients, offering buyers credit and LC confirmation services, and assisting in foreign currency borrowings. These efforts enhance CSB Banks positioning as a trusted counterparty for corporates and public sector clients, while also reinforcing its annuity income streams.

Proactive Liquidity Coverage Ratio (LCR) Management

To maintain a strong Liquidity Coverage Ratio (LCR), the treasury team strategically manages both assets and liabilities. It anticipates potential funding gaps and deploys cost-effective instruments, including wholesale deposits, currency swaps, and CD issuances to optimise the funding mix and reduce the overall cost of liabilities. The team also conducts continuous reviews of the Banks liability structure to maintain efficiency and sustainability.

Technology and Infrastructure Modernisation

Recognising the importance of technology in enhancing treasury efficiency and risk management, the Bank has made significant investments in upgrading its IT infrastructure. This modernisation enables better integration, analytics, real-time monitoring, and control, aligning the treasurys operations with global best practices.

OUTLOOK AND BUSINESS STRATEGY

Marking a key milestone in its strategic journey, the Bank is set to transition by completing the ‘Build phase in FY 2025-26 to the ‘Scale phase in FY 2026-27, as outlined in its SBS 2030 strategy. The current year is shaped by a comprehensive technology overhaul, featuring the rollout of a next-generation core banking platform and a fully integrated digital stack. This will substantially enhance product agility, customer experience, and operational efficiency across retail, MSME, and wholesale segments.

The technology upgrade will also cover risk, compliance, and customer-facing systems, equipping the Bank for scalable and future-ready execution. Following stabilisation, the retail asset business is expected to grow significantly, driven by a structured customer acquisition strategy tailored to suit different branch formats and customer segments. The segment is expected to benefit from broader spectrum of products, including LAP, commercial vehicle and consumption loans, and creating enough cross-selling opportunities across the customer lifecycle. A seasoned leadership team is driving the design and execution of this portfolio.

In parallel, wholesale banking is expected to deliver robust growth through a restructured vertical-led model, covering large corporate, mid-market, and NBFCs/PSUs. The focus is on deepening share of wallet, enhancing trade and CMS offerings, and progressively reducing earlier NBFC concentration. MSME lending will continue to demonstrate consistent growth, while gold loans are projected to grow steadily with a prudent approach to risk.

Branch expansion will follow a calibrated approach, prioritising productivity and deeper customer reach through models like ‘branch-in-branch and efficient use of vertical space. On the liabilities front, efforts are centred on improving customer engagement and mobilising granular deposits. Fee income performance has remained strong, with contributions emanating majorly from core banking activities and is now comparable to leading industry benchmarks. Despite temporary pressure on net interest margins due to deposit cost dynamics, the Bank targets sustainable balance sheet growth alongside a progressive reduction in cost-to-income ratio towards FY 2029-30. The Bank maintains stable asset quality, a strong capital position, and limited exposure to unsecured lending. With a strengthened leadership team, focus on governance, and an embedded performance-driven culture, the Bank is well positioned to enter its scale phase and pursue its long-term goal of a balanced and diversified portfolio mix by 2030. The strategic ambition is to evolve into a full-service, mid-sized private sector Bank with a strong presence across retail, MSME, wholesale, and gold segments.

SWOT ANALYSIS

Strengths

• Legacy and Trust: Established in 1920, CSB Bank is the oldest private sector bank in Kerala. With over 100 years of banking excellence, the Bank has built deep- rooted trust and loyalty among customers.

• Extensive Pan-India Presence: The Bank operates through a well-established network of 829 branches and 791 ATMs/CRMs across 16 States and 4 Union Territories, ensuring nationwide accessibility. It has also carved a strong presence in key MSME clusters, aligning with its strategic focus on the MSME segment.

• Robust Capital Position: The Bank has a healthy Capital to Risk-Weighted Assets Ratio (CRAR) of 22.46%, which is among the best in the industry, offering substantial headroom for future expansion. Additionally, the Bank maintains one of the lowest RWA- to-total-assets ratios, reinforcing capital efficiency.

• Strong Gold Loan Portfolio : Gold loans continues to be a strong pillar supporting the ‘Build phase of the Bank while offering high yields, lower credit risk, reduced capital consumption, and strong collateral backing, contributing positively to the Banks profitability and asset quality.

• Stable Resource Profile: The Bank enjoys a stable retail deposit base with a renewal rate exceeding 88%, reflecting strong customer confidence and consistent funding support.

• Sound Asset Quality: CSB Bank maintains healthy asset quality with a Gross NPA of 1.57% and Net NPA of 0.52%, supported by a Provision Coverage Ratio of 67.19% (excluding write-offs). The Banks proactive provisioning policy, above the regulatory norms, underscores its prudent risk management approach. Notably, the credit cost for FY 2024-25 remained at 0.29%.

• Experienced Leadership: A revitalised leadership team strengthening the Banks strategic direction and governance.

• Technology-led Transformation: The Bank has made significant investments in upgrading its CORE banking platform and the surrounding systems thereby enhancing operational efficiency and customer experience.

• Expanded Product Suite through Strategic Tie-ups: Collaborations with leading insurance companies and financial service providers have broadened CSB Banks product offerings and created robust cross-selling opportunities.

Weaknesses

• Delayed Entry into Certain Retail Segments: The Bank entered the market relatively late with key retail offerings such as credit cards and select consumer products. This delayed rollout has resulted in a relatively limited product suite compared to peers, though the focus on newer offerings are enhanced recently.

• Limited Brand Visibility and Marketing Spend: CSB Banks brand recall remains limited, largely due to comparatively lower investment in marketing and branding activities. While digital campaigns have recently been initiated, they are still in the early stages and lack the scale of peer institutions.

• Smaller Customer Franchise and Narrow Asset Mix: Despite a rich legacy of over 100 years, the Bank maintains a relatively small customer base and a concentrated asset profile, indicating untapped potential in retail expansion and portfolio diversification.

• Geographic Presence: Though the Bank has made significant strides in pan-India expansion, the market reach and scalability is slightly on the lower side when compared to larger private sector banks. The availability of the full product suite post migration, especially in the retail segment, will help the Bank in scaling up the business across branches.

• Reliance on Traditional Product Offerings:

Despite recent investments in technology, the Banks core product suite continues to be dominated by traditional banking services, which will change going forward. However, this could impact the competitive positioning in an increasingly digital and fintech- driven marketplace in the near term till the new digital offerings rolled out.

Opportunities

• High-Growth Potential in Core Segments: The Banks strong positioning in gold loans, MSME and wholesale banking (WSB) segments aligns with robust market demand, offering significant avenues for expansion. Simultaneously, recently revamped retail verticals present an opportunity to establish scale and build long-term growth momentum.

• Financial Services Expansion: Increasing traction in trade finance, supply chain finance and transaction banking within the wholesale and MSME segments further opens up fee-based revenue streams and enhances client stickiness.

• Technological Investments Enabling Growth: As

CSB Bank enters the advanced stage of the ‘Build Phase of its SBS 2030 strategy, ongoing investment in modernising its technology infrastructure is expected to enhance operational agility, customer experience and competitive edge. End-to-end digital onboarding, API-driven decision-making, and scorecard-based lending models are expected to further boost processing speed and increase productivity across business units.

• Product Diversification and Vertical Expansion:

The introduction of new products in high-potential areas such as wholesale and transaction banking is set to strengthen the Banks value proposition and drive deeper client engagement across corporate and institutional segments.

• Aggressive Network Expansion with Inclusion Focus:

Since FY 2020-21, the Bank has opened 433 new branches, with a strategic focus on metro, semi-urban and rural areas. This geographic expansion supports both business growth and participation in financial inclusion initiatives driven by government policy.

• Building Customer Franchise/Branch Infrastructure: Leveraging a disciplined execution model, CSB Bank is effectively expanding its customer base and physical footprint, even amid a challenging liquidity environment, reinforcing its resilience and market adaptability.

• Enhanced Cross-Selling and Fee Income via Partnerships: Strategic alliances with insurance and wealth management providers enable the Bank to broaden its product suite, drive non-interest income, and improve customer retention through holistic financial offerings.

• Balanced Portfolio Roadmap by 2030: With a longterm plan to achieve a balanced mix across Wholesale (30%), Retail (30%), Gold (20%), and MSME (20%) segments, the Bank is well-positioned to unlock growth in currently underserved sectors while managing risk through diversification.

Threats

• Macroeconomic and Credit Risk Exposure: Volatility in macroeconomic conditions, particularly affecting the MSME and retail sectors, could result in increased delinquencies and a rise in NPAs, posing a risk to asset quality.

• Pressure on Net Interest Margins (NIMs): The impact of the higher cost of deposits that prevailed during the financial year under review may continue to exert downward pressure on the Banks NIMs for some more time. Although efforts are underway to improve CASA and retail deposit share, intense pricing competition from other banks continues to pose a challenge.

• High Competition across Segments: CSB Bank faces aggressive competition across all major business lines, from peer banks in deposit mobilisation, NBFCs in the gold loan segment, and larger banks in the MSME and retail spaces. This competitive intensity could impact both margins and market share.

• Cybersecurity Risks: With increasing digitalisation, the Bank is exposed to heightened cybersecurity threats, including fraud and data breaches. As attackers grow more sophisticated, the risk of financial and reputational damage increases. While a strong Information Security Management framework, led by the Chief Information

Security Officer (CISO), is in place, maintaining resilience remains a continuous challenge.

• Talent Retention in a Competitive Landscape:

The Bank may face operational disruptions if high- performing employees are drawn to more attractive opportunities in the market. Although a performance- driven recognition and reward system has been implemented to manage attrition, attracting and retaining talent remains a strategic risk.

• Disruption from Fintech and Digital-First Competitors: The rapid rise of digital-native fintech companies and neobanks presents a structural challenge to CSB Banks more traditional banking model. Delays or gaps in digital transformation could result in customer attrition and lost opportunities.

• Liquidity and Deposit Management Challenges:

Sustaining a healthy liquidity profile while supporting ambitious asset growth targets remains a complex balancing act. Pressure on deposit mobilisation amid market wide tightness could affect the Banks funding stability.

• Regulatory and Compliance Burden: Continuous evolution in regulatory frameworks increases operational complexity and costs.

REVIEW OF PERFORMANCE Total Business

Total business of the Bank stood at 68,703 crore as on March 31, 2025 compared to the previous years level of 54,291 crore, registering a growth of 27% on a YoY basis.

Total Assets

Total assets of the Bank stood at 47,836 crore as on March 31, 2025 compared to the previous years level of 36,056 crore, registering a growth of 33% on a YoY basis.

Term Deposits

Term deposits of the Bank stood at 27,943 crore as on March 31, 2025, compared to the previous years level of 21,634 crores, registering a growth of 29% on a YoY basis.

Total Deposits

Total deposits of the Bank stood at 36,861 crore as on March 31, 2025, compared to the previous years level of 29,719 crores, registering a growth of 24% on a YoY basis.

CASA

• During the period under review, the CASA portfolio stood at 8,918 crore, up from 8,085 crore as of March 31, 2024 registering a growth of 10.30% on a YOY basis.

• CASA ratio stood at 24.19% at the end of FY 2024-25.

CASA Strategy

There is a significant shift in how individuals manage their finances. They have moved away from traditional savings accounts towards more diverse investment options such as mutual funds, direct equity and fixed deposits. This change has been driven by a desire for higher returns, increased awareness about investment opportunities and ease of investments through digital channels. Higher return on Fixed Investment products like FDs have also led to a shift from savings to investments. As a result, banks have experienced a decline in their current account savings account (CASA) ratios, which are important for their profitability as they represent lower-cost sources of funds.

In order to boost our CASA mix, we are continuously reworking on our strategies.

Our strategy is based on three pillars:

a. Increasing the Base of Customers: We are focussed on increasing our customer base. The Bank is increasing its footprint by opening new branches in locations hitherto not covered. Similarly, a Direct Sales Channel has been established to acquire more CASA customers. Video KYC and call centres are also being used for acquisition.

b. Segmented Product Offerings: We are continuously studying the market and offering competitive products for every meaningful segment. We have launched targeted products for women, senior citizens, High Net Worth Individuals (HNIs), exporter-importers, seafarers, salaried individuals, and high-end business customers. Our endeavour is to continuously upgrade our product offerings to cover more targeted base. The Bank has also started services like cash management and payment products such as Point of Sale (POS) terminals and QR codes, which are helping us acquire more customers.

c. Customer Engagement: A key strategy for us is to engage our existing customers for increasing wallet share. A proper onboarding is being done through our contact centre and branches. Relationship Managers and Virtual Relationship Managers have been put in place to provide exceptional service levels to customers. Digital Banking Channels are being upgraded, offering more functionalities. 24/7 cash deposit machines have been put for the convenience of business accounts. We are also facilitating investment products like Mutual Funds and Online Broking accounts, so that our CASA account becomes the primary account for the customers.

Through these initiatives, we are continuously striving to build our CASA base. A lot more innovations will be done in coming quarters to make us one of the most preferred banks for the targeted segment.

Advances

Total advances (gross) of the Bank stood at 31,842 crore as of March 31, 2025 compared to the previous years level of 24,572 crore, registering a growth of 30% on a Y-o-Y basis. The Gross CD ratio of the Bank stood at 86.38% in FY 2024-25 compared to 82.68% in FY 2023-24.

Retail Assets

The Banks retail assets portfolio comprises a diverse mix of products, including gold loans, personal loans, auto loans, and credit cards.

Gold Loans

As of March 31, 2025, the Banks gross gold loan portfolio amounted to 14,094 crore, up from 10,407 crore as of March 31, 2024, marking a Y-o-Y growth of 35%. Gold loans is a strong pillar of the Banks advance portfolio. During the FY 2024-25 the Bank reclassified a portion of its gold loan portfolio under ‘Loan Against Security basis the customer segment, loan purpose and alignment with the prevailing guidelines. The Bank has penetrated deeper into rural and semi-urban markets, traditionally dominated by unorganised players, through an increased branch network. This has proven effective in enhancing its portfolio.

Other Retail Loans

As of March 31,2025, the Banks gross retail assets portfolio (other than gold) totalled to 5,047 crore, compared to 3,526 crore as of March 31, 2024, which includes certain portfolio reclassified from Gold loan to Loan against securities. Above excludes portfolio under Agriculture & MFI business. This portfolio mainly consists of personal loans, mortgage loans, two-wheeler loans, vehicle loans, education loans and healthcare finance. Retail assets advances witnessed a growth on an annual basis. The core strategy in retail assets involves enhancing existing product offerings by leveraging current branches while identifying suitable target segments and managing associated risks effectively. In FY 2024-25, emphasis was placed on recovery of some of the stressed assets and cautious growth on low risk assets business.

Credit Cards

The Banks Credit Card portfolio stood at 499.77 crore as of FY 2024-25 with a Card-in-Force (CIF) of 1,68,705. During the financial year, a total of 85,298 new credit cards were issued. The activation rates for the card portfolio stood at 93% which is one of the highest in the industry, whereas the spends per card for the portfolio is 18,624 which demonstrates a highly engaged customer base.

The CSB Edge Credit Card offers the convenience of managing UPI spends on Credit Card rails, whereas the CSB One Card is an offering for the mass affluent segment. Further, the Bank remains cautious while growing this book and continues to focus on building a good quality portfolio with regular portfolio analysis, close monitoring of transactions for fraud prevention and updates the lending policy periodically based on in-depth review of risk performance across segments.

Additionally, portfolio building tools like EMI, Credit line increase (CLI) and Credit line decrease (CLD) have been deployed to ensure book growth comes with appropriate risk mitigants.

As part of our continued expansion strategy, the Bank is set to launch a Secured Credit Card, aimed at customers with limited or no credit history, as well as those in higher- risk segments. This product will support financial inclusion while ensuring credit risk remains controlled, helping to grow the portfolio responsibly.

Priority Sector Loans (PSLs)

The Bank has a major role in priority sector lending (PSL) aimed at fostering the comprehensive development of the economy. This involves extending credit to vital sectors such as agriculture, MSMEs, education, housing, and social infrastructure, among others. This constitutes a fundamental aspect of the Banks operations. It has also implemented various initiatives with a renewed focus on lending to small and marginal farmers, micro-enterprises, and the economically weaker sections of the society. Dedicated verticals have been established to cater to these segments, supported by experienced and specialised teams. For FY 2024-25, the quarterly average priority sector advance stood at 48.97% of the adjusted net bank credit, after factoring PSLCs sell/buy, surpassing the RBIs prescribed target of 40%. Additionally, the Bank successfully achieved sub-targets under agriculture, small and marginal farmers, weaker sections, and microenterprises.

Financial Inclusion

Financial inclusion is a key focus for the Government. It aims to provide financial services to the vast, previously underserved population of the country to unleash its growth potential. The National Mission for Financial Inclusion (NMFI) was launched to offer universal banking services to every unbanked household. This initiative is guided by principles such as banking the unbanked, securing the unsecured, funding the unfunded, and serving underserved areas.

The implementation of financial inclusion schemes is a national priority, with banks playing a pivotal role in aligning with the Governments objectives. The RBI has formalised a National Strategy for Financial Inclusion to advance these goals across the nation. It encompasses universal access to Financial Services, offering a diverse range of Financial Services, Efficient Coordination, Customer Protection and Redressal, Financial Literacy and Education, and access to Livelihood and Skill Development.

The Bank has introduced initiatives such as Financial Literacy and Credit Counseling Centres (FLCCs) and the expansion of banking services through business correspondents. They have thus facilitated avenues for encouraging savings among the underserved population and providing new lending opportunities. The Bank, with its 62 rural branches and 7 FLCCs, actively strengthens financial literacy endeavours at the grassroots level. Additionally, as part of its financial inclusion efforts, the Bank reached out to approximately 3.4 lakh families, extending small-value credit through microfinance loans, thereby contributing to the empowerment of underserved communities.

Pradhan Mantri Jan Dhan Yojana (PMJDY)

As of March 31, 2025, the Bank had 1,19,974 Basic Savings Bank Deposit Accounts (BSBDAs) and 3,000 outstanding Kisan Credit Card (KCC) accounts. Among the BSBDA accounts opened, 65,721 were initiated under the Pradhan Mantri Jan Dhan Yojana.

PMJJBY, PMSBY, and APY

On April 8, 2015, the Honourable Prime Minister launched three social security schemes: Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY), Pradhan Mantri Suraksha Bima Yojana (PMSBY) and Atal Pension Yojana (APY). As of March 31, 2025, the Bank had 5,951 PMJJBY accounts and 77,985 PMSBY accounts, and 9,342 APY accounts outstanding.

Business through Business Correspondent (BC) Model

In its pursuit of sustainable inclusive growth in rural and semi-urban areas, the Bank prioritises strategic partnerships to establish viable business models while ensuring access to finance for bottom-of-the-pyramid (BOP) customers. With this objective, it has devised sustainable livelihood programmes offering both financial and nonfinancial services through business correspondents, aiming to empower financially excluded individuals. This approach fosters socioeconomic development at the grassroots level, leveraging community-based initiatives such as selfhelp groups (SHGs) and joint liability groups (JLGs). Throughout FY 2024-25, the Bank provided credit to 38,604 women borrowers through micro-lending programmes facilitated by the business correspondents model. Through this initiative, the Bank has reached out to over 32,970 families, supported by 18 business correspondents operating across various regions. As of March 31, 2025, the total outstanding business in microfinance under the business correspondent model stood at 317 crore.

Corporate Lending

As of March 31, 2025, the Banks Wholesale portfolio expanded to 7,486.74 crore, reflecting a year-on-year growth of 21% from 6,187.81 crore as of March 31, 2024, significantly outpacing industry growth trends. Notably, the core Wholesale Banking book registered a robust 41% year-on-year increase, reaching 7,266 crore. This strong performance was driven by strategic initiatives aimed at scaling the Corporate and Commercial Banking segments, while maintaining a stable Financial Institutions portfolio. The Bank also undertook a deliberate shift away from low- yielding segments and reduced its exposure to direct loan assignments. These measures enabled a sharper focus on building a new franchise anchored in a direct client coverage model, supported by a dedicated team and a comprehensive suite of product offerings.

As the Bank continues to expand its wholesale banking business, the focus will be on achieving scale with profitability and sustainability. Environmental, Social, and Governance (ESG) criteria will play a crucial role in the Banks lending practices, ensuring responsible decisionmaking.

Looking ahead, CSB Banks strategy emphasises building value through a customer-centric approach backed by technology. During the year, the Bank has invested in dedicated delivery channels to enhance customer service, including the establishment of specialised corporate service branches for high-value clients. This revamp of the operations team aims to provide differentiated and prioritised service offerings, ensuring superior service delivery and customer satisfaction.

The Bank also streamlined and enhanced the quality of its business credit underwriting, disbursement processes, and operations to improve TAT and overall customer experience. The wholesale banking has embraced digital journey at all stages of the customer journey: onboarding, delivery, and risk management.

• Onboarding: The Bank has already adopted digital loan origination system and will evolve the platform to enhance efficiency keeping in mind scale of the business.

• Delivery Mechanism: Besides revamped credit underwriting, the Bank is working on developing a full stack of digital services that will be ready alongside the implementation of the core banking software. This will enable digital delivery of services to corporate clients, including both fund and non-fund transactions.

• Risk Management: The Bank is already using digital modes for risk management through its early warning system (EWS). This system is currently in use and will be further enhanced over time. Going forward, the Bank will be undertaking all underwiring through an advanced version of Loan Management System.

Looking ahead in FY 2025-26, key deliverables from wholesale banking would be:

• Enhanced market share across corporate, commercial, and financial institutions clients.

• Expanding Wholesale Banking Franchise in new geographies with setting up of teams.

• Incremental mainstreaming of the Bank among target clients, with a focus on increasing wallet share across loan, trade, foreign exchange, and transaction banking services.

• New offerings with Project Financing in select segments along with syndication to enhance client coverage with risk distribution.

• Introduce product specialisation with a focus on Knowledge Banking enabling customised funding solutions for select segments.

• Technology-enabled service delivery with dedicated team for effective client experience.

Following a risk-adjusted return philosophy, the Bank emphasises on the growth of Large and mid-size corporate assets in wholesale banking. It remains dedicated to enhancing efficiency and refining processes to deliver an enhanced client experience and foster mutually beneficial relationships. The entire cornerstone of the reformed wholesale banking offering is centered on the 4P approach:

> People: Enhance human resources with high calibre professionals.

> Products: Continued focus on trade, forex, and transaction banking to mainstream CSBs offerings.

> Policy: Evolve credit underwriting to remain continuously aligned with regulatory guidelines and build a robust, compliant portfolio.

> Process: Deliver best-in-class customer service using the Banks most updated Core Banking version.

Transaction Banking Group

The transaction banking landscape in India is undergoing significant transformation, marked by rapid digital adoption, evolving customer expectations, and intensifying competition. Transaction Banking Group is focussed on providing knowledge-based customised solutions backed by technology to clients across retail, MSME and wholesale banking segments.

The businesses of supply chain finance, trade services and forex and cash management services are part of the transaction banking group.

The enhancement of the Banks product proposition across trade and forex, working capital, liability book building (by capturing client collections and payables), and supply chain finance is the primary goal of the Transaction Banking Group.

Trade Services and Forex Business

The Banks trade services and forex business encompasses various services, including letters of credit, bank guarantees, export finance, import finance, INR invoice/bill discounting, factoring/receivable purchase, outward and inward remittances, forwards and other treasury products. The year focussed on driving significant growth in portfolio development, revenue maximisation, new product development and process re-engineering. Key takeaways from FY 2024-25 are:

1. Engagements initiated with multilateral agencies/ banks for facilitating cross border trade finance. Tie-ups done with EXIM Bank, Asian Development

Bank and International Finance Corporation for cross border trade finance facilitation.

2. Discussions with cross border banks to expand the correspondent bank network.

3. The Bank has integrated its systems with NeSLs Digital Document Execution (DDE) platform to issue e-BGs.

Cash Management Services

Transaction banking cash management services has a comprehensive product suite that caters to the liquidity and cash management requirements of businesses across sectors to a spectrum of Retail, MSME and Wholesale clients. It offers latest digital banking solutions to meet multiple client requirements.

Cash management solutions offered are:

• Managing receivables and payables of clients across segments.

• Customised and innovative solutions for efficient banking such as eNACH, virtual account solutions, payment-based API, and escrow accounts, among others.

• Digital solutions for MSME, NBFCs, mid corporates and large corporates such as customised virtual account solutions, enhanced corporate net-banking features for payments, direct debits, and UPI collections, among others.

• Fiduciary services such as escrow account solutions and RERA account management.

We also offer innovative digital solutions by designing, developing and co-creating products with fintech/ technology partners, banks and exchange houses hereby leveraging their state-of-the-art technology.

Supply Chain Finance

Most MSME/SME are part of an ecosystem of Mid and Large corporates. Supply chain finance team works with these corporate clients to offer cash flow-based lending solutions to the MSME/SME. Such solutions improve the financial position of these MSME/SME by providing the desired liquidity to run their business effectively.

The Bank has already invested in digital capabilities for this business which is aimed at providing lending solutions - paperless and convenient for these MSMEs. The Bank over the next few years aims to gain market share in this business.

In terms of target market, the Bank looks at Mid and Large Corporates rated A & above for financing their entire ecosystem of suppliers & distributors/dealers.

Transaction Banking Initiatives

• Developing products focussing on targeting corporate clients.

• Streamlining processes and internal policies.

• Benchmarking product propositions with the market to introduce products to cater to the corporates for trade finance, CMS and supply chain.

• Variety of collection products introduced/enhanced like virtual account services, NACH collection services, Escrow/RERA propositions and Bharat Bill Payment services.

• Introduced enhanced features in Corporate Net Banking platform for seamless payments.

The Bank will pursue growth strategy which leverages favourable market trends across trade finance, cash management, payments, and supply chain finance segments. By investing in digital capabilities, developing specialised expertise, and reimagining service delivery, the Bank aims to capture a growing share of Indias expanding transaction banking market.

MSME Lending

The Bank continues to adhere to its commitment to fulfil needs of MSMEs across various sectors and geographies. With a vision to become one of the preferred partners for MSMEs, the Bank has undertaken various strategic initiatives such as streamlining its products, processes, and systems to ensure high-quality services are delivered to customers in a timely manner.

The Bank is working towards offering lending as well as robust transaction banking products, including various trade and forex solutions curated for MSMEs.

Broadly, the Banks MSME strategy and initiatives revolve around the following pillars of the organisation:

• Product, proposition and process improvement

• Optimise resources and improve productivity

• Coverage and channel optimisation

• Enable technology as a tool to help business Product, proposition and process improvement

• The Bank launched ‘CSB SME Turbo Loan, a scorecard- based loan product upto 5 crore for MSMEs. This product programme offers overdraft and term loan facility basis simplified scorecard assessment and offers flexibility in terms of upfront assessment of credit facility, helping clients plan business better. The product is simple and processed with faster TAT.

• Focus on trade and forex products to meet customer requirements by aligning transaction banking team.

• Our knowledge series event ‘In Focus powered by CRISIL for MSMEs continues in various parts of the country, offering cutting-edge analysis on critical sectors of economy. Our panel of experts are also helping MSME entrepreneurs take informed decisions required to grow business. We are connecting with Trade bodies and industry associations through this project and build up relation for creating sourcing funnel.

• The Bank has launched Spot-On product, a prescreening tool for faster login process pertaining to credit proposals and reduce sourcing time.

• Credit rating tool launched for MSMEs upto 5 crore and dedicated rating tool for manufacturers, traders and services.

Optimise resources and improve productivity

• The Bank is focussing on building strong training culture for resources. ‘SMEgnition Training Programme powered by CRISIL continues to enable team with right skill and knowledge to provide banking solutions to MSMEs.

• Curated leadership programmes and train the trainer programmes conducted for better team management, stakeholder management and nurturing future leaders.

Coverage and Channel optimisation

• The Bank continues to expand in new geographies for better coverage and penetration.

• We expanded in Jaipur, Rajasthan and Vijaywada, Andhra Pradesh this year and would continue to add new locations in existing States and deploy additional manpower in existing location.

• The Bank continues to focus on strengthening branch channel. Through its specialised MSME branches, Bank is offering comprehensive range of banking services and products.

Enable technology as a tool to help business

• The Bank continues to invest on digital capabilities to offer seamless banking services to MSME clients.

• Our Corporate LOS (CLOS) for MSME proposals and Retail LOS (RLOS) for Loan Against Property enables seamless movement from Login to Sanction.

• We are also planning other digital solutions for faster credit delivery to MSMEs.

• We are working on process automation to improve sourcing.

The Gross SME advances of the Bank (Including MSME)

stood at 4,241 Crores as on March 31, 2025, as compared

to 3,200 crores as on March 31, 2024, clocking a growth

of 32.5% during FY 2024-25.

INTEGRATED TREASURY OPERATIONS

In alignment with this strategic direction, the Treasury Department supports the Bank by effectively managing its resources, mitigating risks, and fostering sustainable growth. the Treasury has implemented several strategies:

• Foreign Currency Borrowings: CSB Bank raised $400 million in FY 2024-25 in floating-rate borrowings linked to the Secured Overnight Financing Rate (SOFR), anticipating a reduction in global rates. This move has already reduced the Banks borrowing costs by 50-60 basis points.

• Managing Interest Rate Cycles: The Treasury is also selectively converting floating-rate liabilities into fixed rate assets and advising business units to structure fixed-rate loans in anticipation of softening interest rate cycles.

• Bond Portfolio Duration: The Treasury strategically increased the duration of its bond portfolio, opting for longer-term bonds at higher rates. This helps protect against the risk of reinvestment at lower rates, providing a buffer as interest rates decline.

As of March 31, 2025, the Banks total investments stood at 11,389 crore, compared to 7,689 crore as of March 31, 2024. The interest income from investment operations increased to 621.74 crore during FY 2024-25, compared to 423.99 crore in the previous financial year. Additionally, the Bank realised a non-interest income of 100.29 crore from investment operations, as compared to 40.49 crore in the previous year.

Foreign Exchange Transactions

The Integrated Treasury is equipped with sophisticated trading platforms to handle all kind of forex transactions in various currencies. Treasury has been providing competitive pricing in crosses, spot and forward transactions to the clients in all the major currencies. Apart from that, it provides trade finance solutions, forex deposit facilities and funding to our clients.

The Merchant Desk within the Integrated Treasury is fully equipped to provide centralised cover operations for forex requirements originating from branches. Additionally, the desk offers services to corporates, SMEs, and MSMEs to effectively manage their forex exposures. The Proprietary Trading Desk engages in trading operations in major currencies and capitalises on arbitrage opportunities between domestic and overseas markets, thereby enhancing the Banks revenue.

Forex turnover of the Bank registered a growth of 86% in FY 2024-25, compared to previous year. The Bank generated an income of 25.31 crore from forex operations during the FY 2024-25, registering a growth of 32% compared to previous year. This comprised 21.26 crore foreign exchange profit and 4.05 crore from commissions earned from forex transactions.

BANCASSURANCE

The Bank offers comprehensive investment and protection solutions to cater the diverse needs of the customer segment adopting tech-enabled delivery mechanisms across all customer touchpoints. The Banks strategic adoption of an open architecture model has enabled it to fortify its presence in core channels and develop novel avenues for offering an extensive range of products. This visionary approach empowers the Bank to provide its customers with unparalleled choice and flexibility. During the year, the Bancassurance business made significant contributions to the Banks fee income, driven by robust partnerships, contextual product launches, exceptional distribution strength and innovative digital initiatives.

Life Insurance

Life insurance constitutes a vital component of financial planning, ensuring the fiscal security of loved ones while facilitating the attainment of various financial objectives throughout lifes journey. The Bank offers an extensive suite of life insurance products, expertly crafted to address diverse needs, including risk coverage, longterm savings, goal-based planning, and tax benefits. Key partnerships with esteemed insurance providers, including Edelweiss Life Insurance Co. Limited, HDFC Life Insurance Co. Limited, ICICI Prudential Life Insurance Co. Limited, and Axis Max Life Insurance Co. Limited, underscore the Banks commitment to delivering exceptional value to its clientele.

Non-Life Insurance

The Bank partners with reputable entities in the non-life insurance sector, including Reliance General Insurance Co. Limited and Go Digit General Insurance Co. Limited. This synergy enables the Bank to offer a broad spectrum of insurance products, catering to an array of needs, including home, health, motor, personal accident, fire, and critical illness insurance, all on a non-risk participation basis.

Health Insurance

In recognition of the increasing importance of financial planning for health, the Bank has prioritised the retail health market through its strategic partnership with Aditya Birla Health Insurance Co. Limited. This alliance facilitates the provision of a comprehensive range of health insurance products, meticulously designed to safeguard the wellbeing of the Banks valued customers.

Performance Highlights

The Bancassurance business witnessed a highly successful year, with a significant increase in income from Life, Health, and General Insurance for the financial year with a remarkable growth of 32% in revenue over the previous financial year.

FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

Financial Performance

During FY 2024-25, the Interest income rose to 3,597.14 crore as against 2,927.54 crore in FY 2023-24, reflecting a growth of 23%. Interest expenses increased by 46% and stood at 2,121 crore as against the previous years figure of 1,451.13 crore. Both interest income and interest expense increased in line with business growth and the rise in interest rates. Net Interest Income (NII) stood at 1,476.18 Crore in FY 2024-25 as against 1,476.41 Crore in FY 2023-24. Non-interest income increased by 66% from 316.01 crore to 972 crore for the year ended March 31, 2025. For the year ended March 31, 2025, the Banks Net Interest Margin (NIM) declined by 96 basis points, from 5.09% in FY 2023-24 to 4.13%, primarily due to a rise in the cost of funds.

The Bank reported an operating profit of 910 crore compared to 779.92 crore in the previous fiscal, reporting an increase of 17%. The Banks operating revenue registered a year-on-year (YoY) growth of 30.11%, reaching 4,569.20 crore in FY 2024-25, compared to 3,511.83 crore in the previous year, mainly on account of increase in interest and non-interest income. The operating expenses rose to 1,537.99 crore from 1,280.78 crore, reflecting a 20.08% increase, mainly on account of increase in staff cost and other operating expense in line with increase in business and branches.

The Bank recorded a net profit of 593.80 crore in FY 2024-25 as against 566.82 crore in FY 2023-24, recording a growth of 5%.

The Banks cost income ratio stood at 62.82% for the year ended March 31, 2025, as against 62.15% in FY 2023-24. The ROA was 1.53% at the end of the fiscal under review as against 1.79% in FY 2023-24.

The Earnings Per Share (EPS) and Book Value of share as of March 31, 2025, stood at 34.23 and 249.24, respectively as against 32.67 and 209.11 as of March 31, 2024. The Banks ROE stood at 15.44% compared to 17.37% for FY 2023-24.

Income

The Banks total income increased by 1,057.37 crore and stood at 4,569.20 crore as of March 31, 2025. Its net interest income marginally decreased to 1,476.18 crore from 1,476.41. The non-interest income grew from 584.29 crore to 972.05 crore in FY 2024-25 due to increase in profit on sale of investment and fee-based incomes.

Expenditure

The interest expenditure increased from 1,451.13 crore in FY 2023-24 to 2,120.97 crore in FY 2024-25 due to increase in deposit and borrowing cost. Operating expenses increased from 1,280.78 crore in FY 2023-24 to 1,537.99 crore in FY 2024-25 due to increase in staff cost and other operating expenses in line with increase in business and branches. Cost of deposits increased to 6.15% in FY 2024-25 from 5.35% in FY 2023-24 in line with the increasing trend of interest rates.

Key Financial Ratios

(a) Details of significant changes (i.e. change of 25% or more as compared to the previous financial year) in key financial ratios, along with detailed explanations there of or sector-specific equivalent ratios, as applicable are given below:

Particulars	March 31, 2025	March 31, 2024	Change (%)
Capital Adequacy Ratio (CRAR) (%) - Basel III	22.46	24.47	(8.21)
Earnings Per Share (in )	34.23	32.67	4.78
Book Value Per Share (in )	249.24	209.11	19.19
Net Interest Margin (%)	4.13	5.09	(18.86)
Cost Income Ratio (%)	62.82	62.15	1.08
Return on Assets (ROA %)	1.53	1.79	(16.76)
Return on Equity (ROE %)	15.44	17.37	(11.11)
Gross NPA (%)	1.57	1.47	6.80
Net NPA (%)	0.52	0.51	1.96
Interest Income as a % of Working Funds	9.00	9.22	(2.39)
Operating Income as a % of Working Funds	2.28	2.46	(7.32)

There are no significant changes compared to previous year other than decrease in Net Interest Margin which was mainly on account of increase in cost of funds.

As of March 31, 2025, the Capital Adequacy Ratio stood at 22.46%, compared to 24.47% as of March 31, 2024, primarily due to growth in business which resulted in increase in total risk weighted assets, offset by an increase in the capital fund from 3,853 crore to 4,588 crore.

(b) Details of any change in Return on Net worth as compared to the immediately previous financial year along with a detailed explanation thereof.

Return on net worth decreased to 15.44% from 17.37% in the previous year on account of increase in average net worth of the Bank in comparison with net profit.

Disclosure of Accounting Policy

The primary accounting policy of the Bank is detailed in Schedule 18 of the financial statements. The Bank adhered to the identical accounting policies during the preparation of these financial results as those employed in the annual financial statements for the fiscal year ending on March 31, 2025, except classification, measurement and valuation of the Banks investments which are carried out in accordance with RBI Master Direction - Classification, Valuation and Operation of Investment Portfolio of Commercial Banks (Directions), 2023 dated September 12, 2023 (‘the RBI Investment Master Directions) effective April 01, 2024.

NPA MANAGEMENT

Indian banks have demonstrated significant improvements across all key functions, particularly in the recovery of bad loans. Through close monitoring and effective follow-up mechanisms, the Bank has successfully prevented accounts from slipping into fresh delinquencies to a large extent. Furthermore, enhanced collection efforts and various recovery strategies such as focussing on upgradation of recently slipped NPAs, initiating legal actions such as SARFAESI, filing of suit, initiating RR mechanism (in the state of Kerala), conducting various recovery mela for settlement of the accounts have paved the way for substantial recovery and reversal of provisions.

The proactive approach to recovery, encompassing various legal actions and continuous engagement with concerned parties, has significantly reduced the bad loan portfolio of banks. Leveraging legal provisions such as the SARFAESI Act the Bank has initiated immediate legal actions upon accounts turning NPA, particularly for secured accounts. Additionally, effective utilisation of government mechanisms, such as the RR mechanism in the state of Kerala, has facilitated good recovery, especially under small and unsecured accounts. Revenue authorities in Kerala collaborated with the banks to expedite settlement processes.

The Bank initiated settlement opportunities which further contributed to early resolution of bad loan accounts.

The Bank is also offering digital platform to customers for hassle free repayment of overdue amount of their loan account, this functionality covers all the accounts under Retail, Gold and Agri product as of now.

The collection vertical of the Bank focussed on preventing the accounts slipping into NPA and the recovery vertical strives for upgradation/effecting recovery from the bad loan segment in a time-bound manner. As a result of the focussed recovery actions, the Bank has recovered a substantial amount from the old NPA accounts during the financial year.

Through various mechanisms, including DRTs and action under the IBC, the Bank has achieved significant cash recovery and upgradation of NPAs during the year. As of March 31, 2025, the Banks gross NPA level stood at 498.46 crore as against 361.07 crores as of March 31, 2024.

The migration provision increased during the last quarter of the year, which was as part of the planned provisioning. There were slippages in our unsecured book comprising mainly of credit card, MFI, PL wherein we took upfront 50% provisioning as against the requirement of 25%. Additionally, for the deterioration in the value of security in few accounts, a prudent provisioning has been made by the Bank.

The gross and net NPA ratios as of March 31, 2025, stood at 1.57% and 0.52% as compared to the previous years at 1.47% and 0.51%, respectively, with the provision coverage ratio of 83.71%. There was a marginal increase in the NPA levels due to the slippages in single group corporate accounts and the unsecured book as stated above which we expect to get cured during the current financial year. Notably, during the period under review, the Bank recovered 45.72 crore from prudentially written off (PWO) portfolios, with an interest recovery amounting to 30.67 crore.

Going forward, the Bank remains committed to arresting fresh delinquencies to the barest minimum possible, through vigilant monitoring and timely recovery measures. It will particularly focus on recovery in PWO accounts, all secured and unsecured advances.

The Bank is following accelerated norms for provisioning which is much more than the regulatory guidelines. Moreover, considering the unsecured exposure in the credit card segment and with an intention to mitigate the risk, the Bank is providing 100% provision after 90 days of NPA classification.

The Bank endeavours to keep the gross NPA below 2%, net NPA below 1%, and credit cost below 0.40%. In the realm of corporate accounts, there exists a potential for non performing accounts to return to a performing status, although this is more difficult with retail accounts. The Banks gold business demonstrates minimal slippages and low credit costs, effectively balancing out its high operating costs.

RISK MANAGEMENT

Effective and proactive management of risks is essential for sustainable business growth since banking is exposed to a wide range of risks. The Banks Risk Management framework is founded on a clear understanding of various risks, robust risk assessment and measurement procedures and practices and continuous monitoring.

The Bank has an integrated Risk Management Department, independent of business functions, covering Credit Risk, Market Risk, Asset-Liability Management (ALM), Operational Risk Management and Information Security Management. The Banks Risk Management practices have been aligned with the best industry practices and are adaptable to a dynamic environment. An effective risk management system ensures long-term financial security and stability. The overall responsibility of setting risk appetite and effective risk management vests with the Board of Directors and it oversees all the risks assumed by the Bank. Through effective and efficient use of processes, information, and technology, the Bank have developed a multifaceted risk management strategy that identifies, assesses, monitors, and manages risks (credit risk, market risk, liquidity risk, interest rate risk, and operational risk). The Board articulates Risk management policies, procedures, aggregate risk limits, review mechanism, reporting and auditing systems. In tune with the guidelines of RBI, the Board has constituted a Risk Management Committee (RMC). The Risk Management Committee has four Executive-level committees which provide support and inputs in discharging its functions viz. Credit Risk Management Committee (CRMC), Operational Risk Management Committee (ORMC), Asset-Liability Management Committee (ALCO) and Information Security Committee.

The Integrated Risk Management Department is headed by Chief Risk Officer who provides overall leadership for risk management framework, independent risk management function and risk governance processes, including risk measurement, risk monitoring, risk control or mitigation and risk reporting. The Bank has a well-experienced risk management team with specialised knowledge in various areas to handle the risk management functions.

The objective of risk management is to have an optimum balance between risk and return. The Risk Management functions of the Bank focus on taking a risk by choice rather than by chance. The Bank has aligned its business strategies to a Risk Appetite Framework to maximise return on capital. A risk-related pricing structure has thus been made operative to handle loan pricing and to evaluate returns vis-a-vis the risks assumed. The Bank has put in place a robust Risk Appetite Framework and has various business tolerance levels in sync with Business plans. The framework ensures business heads operate within the guardrails of risk management. The major risks are credit and market risks, including the interest rate and liquidity, information and cybersecurity, and other operational risks. The Bank has established robust policies, procedures, methodologies, and frameworks to manage material risks systematically.

The Banks risk philosophy focusses on developing and maintaining a healthy portfolio within its risk appetite and regulatory framework. The Bank has policies and procedures to measure, assess, monitor, and manage risks systematically across all its portfolios. The Bank is committed to creating an environment of increased risk awareness at all levels. It also aims at constantly upgrading risk controls and security measures, including cybersecurity measures, climate-related financial risks to ensure avoidance or mitigation of various risks.

Credit Risk

Credit risk is the possibility of losses associated with diminution in the credit quality of borrowers or counterparties and the possibility that a borrower or counterparty will fail to meet its obligations in accordance with agreed terms and losses resulting from reduction in portfolio value arising from actual or perceived deterioration in credit quality. Credit risk is not confined to the risk that borrowers are unable to pay; it also includes the risk of payments being delayed, which can also cause problems for the Bank. Credit Risk is managed through a Board-approved framework that sets out policies, procedures and reporting in line with best practices.

Mitigation

The Credit Risk Management Committee (CRMC) oversees the credit risk function in the Bank. In line with its asset quality management objective, the Bank strives to maintain a strong asset quality through disciplined credit risk management.

The Bank has a comprehensive credit risk architecture, well- defined credit appraisal mechanism and risk assessment practices for identification, measurement and monitoring credit risk. The Bank has various instruments for credit risk management, including credit risk management policies, credit approval committee, prudential exposure limits, risk rating system, risk-based pricing, and portfolio management. The Bank manages credit risk in its retail and wholesale businesses. Wholesale lending is managed on an individual as well as portfolio basis. In contrast, given the granularity of individual exposures, retail lending is managed largely on a portfolio basis across various products and customer segments.

The Bank has laid down well-defined internal rating/ scoring models for Credit Risk Assessment. The major part of the internal rating is carried out by expert rating models developed by CRISIL and has implemented CRISIL RAM during the year. The upgrade will enable the Bank to smoothen the rating process and adopt the best industry practices.

Segment-wise and borrower category-wise exposure limits are fixed and monitored by the Bank to address concentration risk. The Bank has a standardized and well- defined approval process for all advances and adopts a committee approach for credit sanctions, and has approval committees at various levels.

The Bank has various credit risk mitigation measures such as exposure limits for single and group borrowers, exposure limits for sensitive sectors, benchmark financial ratios, and hurdle rates.

As part of the risk management strategy, the Bank has assessed the impact of various developments in the Middle East, including the Red Sea conflict between Hamas and Israel and subsequent actions, as well as the ongoing Russia-Ukraine conflict and change of power in USA. Based on the assessments, various risk mitigation strategies have been rolled out to minimise the impact.

Market Risk

Market risk arises mainly from the Banks statutory reserve management and trading activity in interest rate instruments, equity and forex markets. The Bank has a well- developed framework comprising Board-approved policies and established practices for managing market risk.

To measure and control market risk, interest rate risk, equity price risk and forex risk, the Bank uses various tools like stress testing, Duration, Modified duration, PV01, Value at Risk (VaR), position limits, stop-loss limits, Net Overnight Open Position (NOOP) limits, Aggregate Gap Limit (AGL), and Individual Gap Limit (IGL). The Bank has established an independent Mid-Office at Integrated Treasury, as part of Market Risk Management Division, which reports directly to the Head of Market Risk and functions as the risk control unit for the treasury activities.

Mitigation

The Mid Office scrutinizes the treasury deals and transactions from the market risk perspectives. The Bank has put vibrant policies for the smooth conduct of businesses exposed to market risk and effective management of all market risk exposures.

The policies and practices also monitor and control liquidity risk arising out of its banking book, trading book, and off- balance sheet exposures.

The Market Risk Management Policy of the Bank sets out the broad outlines of the processes by which the market risks carried by the Bank shall be managed i.e. identified, measured, controlled and monitored such that, the risk taken is within the risk tolerance limits ultimately specified by the Risk Management Committee of the Bank (RMC) and the Board.

The capital charge for market risk is currently computed under the Standardized Duration Approach. Value-at-Risk (VaR) is used to monitor the Banks trading portfolio risk. VaR of trading portfolio is computed on a daily basis. Additionally, back-testing of VaR is done on a quarterly basis.

Liquidity & Interest Rate Risk

Liquidity represents a banks ability to fund asset growth and meet expected or unexpected financial obligations at a reasonable cost, without incurring excessive losses. Liquidity risk arises when a bank faces difficulty in financing asset expansion, reducing liabilities, or fulfilling commitments as they fall due. It is monitored through various metrics, including Liquidity Coverage Ratio (LCR), Structural Liquidity Statements, Short-Term Dynamic Liquidity Monitoring, Liquidity Ratio Analysis, and prudential limits for negative gaps across different time buckets.

Interest rate risk, on the other hand, refers to the potential negative impact of market interest rate fluctuations on investment values. It affects earnings through changes in Net Interest Income (NII) and impacts the market value of equity by altering the economic worth of interest-sensitive assets, liabilities, and off-balance sheet exposures. Interest rate risk in trading portfolios is measured daily using tools such as Value at Risk (VaR) and PV01. To mitigate Interest Rate Risk in the Banking Book (IRRBB), the Bank adopts a robust Asset-Liability Management (ALM) strategy, employing gap analysis, duration-based approaches, and economic value sensitivity assessments. Regulatory frameworks, such as Basel guidelines and the Reserve Bank of Indias directives, mandate banks to maintain prudential risk controls, including stress testing and scenario analyses. The monitoring tools include measures like Earnings-at- Risk (EaR) and Economic Value of Equity (EVE), ensuring resilience against adverse interest rate movements.

The RBI, vide its circular dated February 17, 2023, has issued revised guidelines on the governance, measurement, and management of IRRBB, which are aligned with the revised framework issued by the Basel Committee on Banking Supervision (BCBS). Pending the announcement of the effective date of the operative guidelines on IRRBB, banks are advised to be prepared to measure, monitor, and disclose their exposure to interest rate risk in the banking book as per the new guidelines. Our Bank has initiated proactive steps to fall in line with regulatory requirements on this count and submits impact of Delta EVE & Delta NII on banking book to RBI on a quarterly basis.

Mitigation

• Comprehensive Asset Liability Management (ALM) Policy: The Bank has a well-structured ALM framework that governs liquidity and interest rate risk management. A robust monitoring system ensures timely assessment of cash flow mismatches and key risk ratios, including Basel III metrics, under both normal and stressful conditions. Approved risk appetite thresholds and tolerance limits provide a structured approach to risk control. Additionally, an extensive intraday liquidity monitoring framework ensures effective oversight of cash flows throughout the day.

• Governance & Oversight: The Asset-Liability

Management Committee (ALCO) plays a critical role in ensuring adherence to liquidity and interest rate risk parameters. It oversees maturity gaps, stock ratio limits, and evaluates potential impacts on NII and economic value of equity. A structured stress testing programme complements these efforts, offering insights into liquidity and interest rate risk vulnerabilities under various scenarios.

• Behaviour Analysis & Scenario Assessments: The Bank conducts studies to analyse the behavioural patterns of non-contractual assets and liabilities, as well as embedded options accessible to customers. These insights aid in managing maturity mismatches more effectively.

• Liquidity Coverage & Regulatory Compliance:

Liquidity Coverage Ratio (LCR), an internationally recognised standard to assess an organisations ability to meet its payment obligations, is used to measure a banks liquidity position. LCR level ensures that a bank has adequate stock of unencumbered High- Quality Liquid Assets (HQLA) that can be converted into cash quickly and immediately to meet the liquidity needs under a 30-day liquidity stress scenario. As per Basel III regulations, the Reserve Bank of India (RBI) mandates a minimum LCR of 100% since January 1, 2019, and the Bank maintains LCR on a daily basis at a level higher than regulatory minimum.

• Contingency Funding Plan: The Bank maintains a well-defined Contingency Funding Plan (CFP), ensuring sufficient financial resources to meet liabilities as they arise. To enhance preparedness, the CFP undergoes regular reviews and updates, ensuring the Bank remains well-positioned to address liquidity challenges effectively.

• Net Stable Funding Ratio: RBI has also mandated a minimum Net Stable Funding Ratio (NSFR) of 100% from October 1, 2021. NSFR indicates that the Bank maintains a stable funding profile regarding the composition of its assets and off-balance sheet activities. The Bank is committed to maintain NSFR at levels well above the regulatory minimum.

Advanced Stress Testing Framework

A professionally vetted Stress Testing Policy is in place, aligned with industry standards. It includes sensitivity and scenario analyses to assess potential impacts on NII and Capital Adequacy Ratio (CRAR). Enhancements in the methodology includes, refined stress models for Credit Concentration Risk, Operational Risk, Strategic Risk, Compliance Risk, Reputational Risk, Conduct Risk, and Fraud Risk, and new scenarios on natural calamities, cyber frauds and Black Swan events. Annual back-testing ensures the accuracy and reliability of the Stress Testing Model.

Operational Risk

The Bank has a well-defined Operational Risk Management framework for effective management of Operational Risk in the organisation, whose implementation is supervised by the Operational Risk Management Committee (ORMC) and reviewed by the Risk Management Committee (RMC) of the Board. The policies have been aligned with industry best practices by engaging external consultants.

Mitigation

In conformity with RBI guidelines, the Bank has implemented a robust Operational Risk Management Policy. This policy provides the framework to identify, assess, monitor, control, and report operational risks arising from the failure of internal processes, people, systems and external events. Key elements of the Banks Operational Risk Management, among others, include timely incident reporting, ongoing review of Systems and Controls, enhancing risk awareness through Risk & Control Self-Assessment (RCSA), and monitoring of Key Risk Indicators (KRIs) and aligning Risk Management activities with business strategy. The Bank created a repository of Internal Loss Data as part of Operational Risk Management and carried out Root Cause Analysis.

The Bank has a detailed Business Continuity Management (BCM) policy along with BCM framework and BCP document which ensure continuity of operations at the branches and offices during disruptions. Business Impact Analysis is conducted to assess critical applications in the Bank. BCP enables the Bank to minimise business disruption during the times of natural disasters, such as the floods in Kerala in 2018, Chennai in 2023 and Flash floods in some parts of Kerala and Chennai in 2024 and the disruption caused by the COVID-19 pandemic.

As part of the Change Management framework, all new/ modified products/processes are screened through the Product/Process Evaluation Committee (PEC), from Compliance, Legal, Information Technology/Security, Accounts, Inspection & Audit and Risk point of view.

Climate Risk

Climate change risk has become a crucial challenge to the financial industry. The Bank is committed to reducing the impact of climate change risk. It is consciously working towards sustainable development of its banking operations to achieve economic growth while maintaining the quality of environmental and social ecosystems.

Further, the Bank has laid down a policy on Environmental, Social and Governance (ESG), which broadly covers the growing demands for sustainable solutions from businesses due to the rapid depletion of natural resources, following the ‘The National Guidelines on Responsible Business Conduct, 2018 (NGRBC).

The Bank has undertaken a materiality assessment on ESG awareness among all stakeholders with the assistance of Care Edge.

Mitigation

As a policy matter, to reduce the greenhouse effect, the Bank does not finance borrowers for setting up new units producing/consuming Ozone Depleting Substances (ODS) and small/medium scale units engaged in the manufacturing of aerosol units using Chlorofluorocarbons (CFC) which enables a reduction in the greenhouse effect.

In order to address the likely impact of climate-related financial risk vs. market risk and liquidity risk, the Bank has put in place models to ascertain the stress arising out of Physical and Transition risks and the Pillar 2 capital that would be set apart shall be the capital required under baseline stress conditions.

The Bank commits to ensure that funds will not be used to finance a set of activities and/or end use for all project and corporate loans under the scope of the ESG Policy through an exclusion list which is part of the policy document and assessment tools, viz. Rapid Environmental Assessment (REA) checklist. Further, the Bank has introduced an industry-wise ESG checklist for borrowers and ESG risk vetting is carried out for proposals above 50 crore exposure.

Cyber Risk

Cyber risk can be defined as the risk of financial loss, disruption or reputational damage to an organisation resulting from the failure of its IT systems. These episodes include malicious cyber incidents (cyber-attacks) where the threat actor intends to harm (e.g. ransom ware attacks, hacking incidents, or employee data theft).

It pertains to online business activity such as Internet Banking, Mobile Banking, Electronic Systems and storage of sensitive information over computer networks. Common categories of Cyber Risk include inter-alia, Hacker Attacks, Data Breach, Virus/Malware transmission and Cyber Extortion. Financial gain continues to be a primary driver of the most sophisticated criminal offences. It presents evolving challenges as criminal networks reinvest their revenue into developing more advanced capabilities.

Cyber Risk can drive up costs and impact revenue. It can harm an organisations ability to innovate and gain and maintain customers. Cyber risk poses commercial losses and public relations problems, disruption of operations and the possibility of extortion. Cyber-attacks also expose an organisation to negligence claims, the inability to meet contractual obligations and a damaging loss of trust among customers. A data breach will affect the Banks brand name and influence the customers confidence in the Bank. Protecting key information assets is critical to the sustainability and competitiveness of business today. Financial institutions like banks are taking the front foot regarding their cyber preparedness.

Third-party risk and supply chain risk are also adding to cyber risk. Third-party risk is the potential threat to employee and customer data, financial information and operations from the organisations supply chain and other outside parties that provide products and services and have access to privileged systems. This is especially significant since often, these external parties do not have the same security standards and protection as our Bank holds and, as a result, are used as a conduit into the organisation. Cybercriminals have become highly sophisticated and specific when targeting banks and their users. They often work to identify weak links that will enable access to highly confidential data, such as financials and customer data. Repeatedly organisations are breached due to the security weaknesses introduced by third parties that possess sensitive information or are granted access to systems. Managing this risk is a crucial component of protecting companies data and must be a continuous, real-time process that includes review, monitoring, and management of vendors throughout the entirety of the relationship.

Mitigation

To safeguard the Bank from cyber threats and supply chain attacks, the Bank has set up the cybersecurity framework and follows multi-layered architecture for cyber defence mechanisms starting from endpoint security to perimeter security. The Bank has a strong incidence response team to detect and respond to cyber incidents. The Bank is continuously creating cybersecurity awareness among employees and customers. Risk assessment of IT assets and the third-party is done regularly and gaps identified are fixed in a time-bound manner. Senior management and Board-level meetings are conducted every quarter to analyse the Banks security posture and mitigate the identified gaps. Based on research reports by BIS for addressing cybersecurity-related financial risk, the Bank shall estimate the Pillar 2 capital requirements equivalent to around 1% of the Banks operating income under minor stress conditions.

Compliance Risk

Compliance risk is the risk of legal or regulatory sanctions, material financial loss, or loss of reputation which a bank may suffer due to its failure to comply with laws, regulations, rules, related self-regulatory organisation standards, and codes of conduct applicable to its banking activities. Compliance laws, rules and standards have various sources, including primary legislation, regulations and standards issued by legislators and supervisors, market conventions, codes of practice promoted by industry associations, and internal codes of conduct applicable to the staff members of the Bank.

The Compliance Function envisages strict observance of all statutory provisions contained in various legislations such as the Banking Regulation Act, Reserve Bank of India Act, Foreign Exchange Management Act, and Prevention of Money Laundering Act, as well as to ensure observance of the regulatory guidelines issued from time to time by RBI, IRDA, PFRDA, and SEBI, among others, as well as the standards and codes prescribed by IBA, FEDAI, FIMMDA, the Banks internal policies and fair practices code, among others.

Mitigation

The Bank mitigates the compliance risk through the following measures:

• Strong internal controls

• Proactive compliance testing

• Investing in technology and automation

• Employee training and awareness

• Strong governance and oversight

In compliance to the RBI guidelines, the Bank has introduced a technology-based compliance monitoring

solution - Comply360. This solution has streamlined the dissemination and monitoring of the implementation of regulatory guidelines. Comply360 is helping the Bank to move to a proactive compliance framework from the traditional reactionary approach.

COMPLIANCE WITH BASEL II AND BASEL III FRAMEWORK

Since April 01, 2013, the Bank has consistently computed capital ratios on a quarterly basis in accordance with both Basel II and Basel III norms. Adherence to regulatory guidelines under Pillar I of Basel II and III norms has been a priority for the Bank.

For credit risk, the Bank has computed the capital charge using the Standardised Approach, and market risk capital charge through the Standardised Duration Method. To address illiquidity in the trading portfolio, adjustments to the current valuation of less liquid positions are deducted from the Common Equity Tier-1 (CET-1) Capital. This is done while calculating the CRAR for regulatory purposes. Operational risk capital charge is calculated based on the Basic Indicator Approach.

In line with prudent risk management practices, the Banks Internal Capital Adequacy Assessment Process (ICAAP) policy incorporates additional considerations for liquidity risk, credit concentration risk, cybersecurity risk, climate risk, and fraud risk, among others, in Pillar II capital computations.

The Bank has also established a robust stress testing framework, comprising sensitivity and scenario tests. This covers various risk areas such as default risk, credit concentration risk, interest rate risk in the banking book, and market risk. In addition to this, stress testing policy is supplemented to include climate-related financial risks based on physical and transition risks.

BUSINESS CONTINUITY PLAN

The Bank maintains a robust BCP plan to ensure the uninterrupted functioning of critical business operations during times of disruption, identified through comprehensive business impact analysis (BIA).

To execute the BCP effectively, the Bank has established a dedicated Crisis Management Committee comprising heads of major departments. They are responsible for exercising, maintaining, and invoking the BCP as per need. This Committee shall be activated in the event of a disruption, responsible for decision-making and oversight of recovery efforts and ensures that business functions resume normalcy with minimal delay.

During the pandemic, the Bank demonstrated seamless operations thanks to its well-prepared BCP, which includes designated locations and resources for critical applications. The Bank also provides secure work-from- home facilities

for essential teams. Regular DR drills are conducted for the core banking system (CBS) and other critical systems to ensure their readiness during emergencies. Furthermore, periodic testing of recovery speed for critical applications from alternate locations is undertaken to ensure optimum operational resilience.

INTERNAL CONTROL AND INTERNAL AUDIT

The Internal Audit Department (IAD) plays a pivotal role in the Banks internal control system, serving as the third line of defence. Reporting directly to the Audit Committee of the Board (ACB), the Head of Internal Audit ensures independent assurance regarding the effectiveness of risk management and internal controls.

To strengthen its governance arrangements and align the same with the regulatory guidelines on the Risk-Based Internal Audit (RBIA) framework, internal audits are conducted based on risk assessments. This covers various units, businesses, support and control functions, branches and gold loans as per the approved audit plan by the ACB. Further, Offsite Audit is also carried out to evaluate the effectiveness of the controls.

The internal audits emphasise on the importance of efficient risk management and controls, including suitable transaction testing. Recommendations are provided to mitigate current risks and safeguard the Bank against potential threats.

The Audit reports prepared by the Internal Audit Department helps managing/mitigating risks, preventing fraud and ensuring regulatory compliance and adherence to internal policies and procedures. The independent and objective assessments conducted by the Internal Audit Department assures the protection of the Banks assets and provide insights on risk and control environment to the top management. The Audit Committee of Executives (ACE) and the Audit Committee of the Board review the outcomes of audit reports to address key issues and weaknesses identified by implementing appropriate remedies and solutions.

The audit findings support the top management and the Audit Committee of Executives to identify and address any weaknesses or gaps and find out appropriate remedy/ solution. The ACB provides guidance on enhancing control environment and monitoring the implementation of recommendations to mitigate identified gaps effectively. The ACE/ACB also reviews the timely remediation of weaknesses in the internal controls and systems for critical processes identified as part of various audits and sustenance thereof.

Concurrent audits by experienced Chartered Accountants firm complement the internal audit function, scrutinizing critical functions and high-risk areas. These include

Treasury, Compliance, and Credit monitoring. Additionally, Thematic Audits, Gold Loan Audits, Risk-Based Internal Audit of Branches, V-CIP Audits and validation of regulatory submissions are conducted to assess gaps in processes and facilitate corrective actions. The Offsite Audit Team within the Internal Audit Department helps proactively identify and address potential risks using various data sources and analytics.

Activities of outsourced vendors and currency chests of the Bank are also subjected to audits at periodic intervals. Information System Audits are conducted to assess the practices for maintaining integrity, confidentiality, and availability of the Banks information assets. This process involves evaluating hardware, software, data and processes, applications and governance practices to identify weaknesses or vulnerabilities in order to improve technology, information security and technology operations effectiveness.

VIGILANCE FUNCTION

The Vigilance Department of the Bank serves as a crucial entity in mitigating incidents of fraud within the organisation. It encompasses both preventive vigilance measures and the investigation of vigilance-related matters.

Information on malpractices, frauds, or suspected frauds is sourced through internal and external channels. Internal sources include staff complaints, preventive vigilance audits, internally reported incidents, whistleblower channel, and reports from senior officials visits to branches. External sources include media reports, information from law enforcement agencies, other banks, and regulatory authorities.

The Vigilance Department conducts thorough investigations into reported incidents. Investigation reports are then submitted to the Chief Vigilance Officer for further action, with a consolidated monthly report also presented to the MD & CEO. Post-investigation, due process as stipulated by RBI, is followed to classify an incident as fraud. Consequently, files are transferred to ORMD to report fraud to the RBI. Additionally, the Bank initiates action against the perpetrators and takes steps to recover losses, including filing complaints with law enforcement agencies. The Vigilance Department analyses the root causes of fraud incidents and recommends corrective measures to enhance systems and controls, thereby preventing similar occurrences in the future.

In cases where lapses are attributed to the Banks staff, explanations are sought from the employees, and disciplinary proceedings may be initiated, wherever necessary. Similarly, if the involvement of third-party vendors such as gold appraisers, Chartered Accountants,

valuers, and legal advisors, among others, is observed during the investigation, requisite explanations are called from the respective vendors. If explanations submitted by vendors are not justifiable or reasonable then appropriate actions recommended against the said vendors, including removal of name from the Banks empaneled list panel and onward reporting to IBA.

The Chief Vigilance Officer oversees all vigilance activities. The Vigilance Department actively promotes awareness of fraud prevention measures, contributing to the overall integrity and security of the Banks operations. The Vigilance Department has implemented an effective fraud prevention mechanism through regular preventive vigilance audits. Identified deficiencies are promptly communicated to the respective branches and zonal offices to address and rectify them, thereby preventing the recurrence of similar irregularities. Additionally, the Vigilance Department issues caution advisories on a regular basis, outlining the modus operandi of various frauds prevalent in the banking industry, including those observed within the Bank. These advisories serve to educate branches and offices, empowering them to identify and prevent similar fraudulent attempts in the future.

Branch and ATM Network Expansion

In alignment with its mission to enhance accessibility and deepen its pan-India presence, the Bank has continued expansion of its branch and ATM/CRM network during the FY 2024-25. In this period, 56 new branches and 72 ATMs/CRMs were opened, underscoring the Banks commitment to expanding its customer outreach and improving service delivery across diverse geographies. Out of these 56 branches, a significant portion were opened outside Kerala, primarily in Andhra Pradesh, Maharashtra and regions of Northern/Western/Southern parts of India. The Bank is actively planning to open another set of 50 to 60 branches nationwide in FY 2025-26. These branches will be strategically located to focus on CASA, gold loans, agriculture, and SME/MSME services.

As of March 31, 2025, the Bank has:

> 829 branches (excluding service and asset recovery branches)

> 791 ATMs/CRMs, strategically located across 16 states and 4 union territories of which 38 are offsite ATMs.

To enrich customer experience further, the Bank has introduced:

• Card-less cash withdrawal at CSB ATMs/CRMs- offering enhanced convenience and security

• Voice-assisted navigation, Braille keypads, and ramps, ensuring accessibility for differently abled customers. These efforts reflect the Banks dedication to inclusivity, innovation, and the delivery of high-quality banking services through both digital and physical touchpoints.

• One-Time Combination Locks implemented across its ATM network to enhance operational security. The new kiosks have been thoughtfully designed with an updated aesthetic, colour-coded themes, and ambient interiors to promote customer pride and increase footfall.

CURRENCY CHEST OPERATIONS

The Bank has two currency chests at Market Road, Ernakulam in Kerala and Singanellur, Coimbatore in Tamil Nadu. Chest plays a pivotal role in clean note policy of RBI in supply of good notes supporting the branches and for ATMs . Chests in coordination with attached branches facilitate coin distribution and exchange of soiled and mutilated notes from customers and public.

TECHNOLOGY

Technology is at the heart of the Banks transformation under the SBS 2030 strategy. As a key enabler of service delivery, innovation, and customer experience, the Bank has launched a comprehensive digital and IT transformation to create a resilient, scalable, and future-ready banking ecosystem.

Building a Robust Technology Core

A key priority for CSB Bank has been to create a modern foundational IT stack. Key accomplishments include:

• Infrastructure Modernisation: The Bank has operationalised four contemporary data centres, two each in Mumbai and Chennai, to ensure high availability, resiliency, security, and continuity of operations.

• Core Banking System: The Banks new Oracle Flexcube Core Banking System forms the digital core for managing CASA, fixed deposits, customer service, limits, and charges, among others.

• Integrated Payment Solutions: The Bank has implemented Oracle Banking Payments (OBPM) to support RTGS, NEFT, and IMPS payments, ensuring seamless and reliable transaction processing across channels.

• Enterprise Systems: The Bank has rolled out new enterprise-wide platforms, including a modern HRMS, compliance management system, and Oracle General Ledger to support internal efficiency and governance.

The Bank went live with the new Core Banking System on May 12, 2025, a synchronised rollout that also included mobile and internet banking, trade finance, and virtual account management systems. This milestone marked the culmination of years of planning and execution under the IT strategy approved by the Board in 2022.

In total, over 120 systems have been modernised or introduced, with 50 going live in a synchronised rollout alongside core banking.

Scalable Architecture through ‘Hollow the Core

To enhance agility and future-readiness, the Bank has adopted a ‘Hollow the Core strategy, developing high- volume, rapidly evolving systems outside the core banking platform to maintain modularity, flexibility, and performance without overburdening the core. Key elements of this surround architecture include:

• Specialised lending platforms for gold loans, personal loans, home loans, education loans, and loans against property.

• Customer-facing services, including digital onboarding, UPI, BBPS, WhatsApp banking, sovereign gold bonds, and GST integration.

• Risk and compliance systems such as fraud and risk management, Aadhaar vault, CKYC, PFMS, e-mandates, and identity/access management.

• Operational automation through a newly implemented procure-to-pay system and modern platforms for ATM, clearing, trade finance, and treasury operations. The lending systems have been built outside of the core platform to ensure performance stability, especially given the high transaction volume expected with UPI and digital services. This approach enables the core banking platform to function more efficiently while allowing the surround systems to evolve rapidly.

Intelligent Workflow Automation and ServiceNow Integration

CSB Bank has successfully implemented the ServiceNow automation platform, leveraging its flexibility and agility to develop critical workflows. These include:

• Corporate and MSME onboarding journeys

• Retail customer onboarding

• Automation of multiple operational workflows

• Automation of IT workflows

Notably, the Bank became the first bank in India to implement ServiceNows Financial Services Operations solution, a capability widely used across Western markets. This positions the Bank as a frontrunner in operational efficiency and gives it a competitive edge by enabling advanced, modern customer solutions while streamlining staff workflows.

Open API and Integration Ecosystem

The Bank has made strategic investments in a robust Application Programming Interface (API) and Enterprise Service Bus (ESB) ecosystem:

• The ESB forms a strong integration backbone that ensures consistency and scalability across systems.

• The API ecosystem enables seamless partner integration, allowing them to be consumed and offered for broader collaboration.

To facilitate co-innovation, the Bank has launched a developer portal, allowing partners to securely access credentials and develop the APIs they need. This initiative reflects the Banks partnership-first philosophy, empowering fintechs and third parties to build solutions without heavy upfront investment.

The platform is already live, with successful partnerships in place, such as the Jupiter RuPay Edge Card in the credit card segment. The Bank is also exploring additional collaborations in lending and customer onboarding to expand shared capabilities.

Digital-Human Balance in Customer Interactions

The Banks customer service strategy balances digital convenience with human interaction:

• Outbound Contact Centre (OCC) and Virtual Relationship Managers (RMs) are now live, providing customers with real-time human support, personalised guidance, and product information.

• Branch technologies have also been upgraded to enhance in-person service experiences.

This hybrid approach ensures customers can engage with the Bank on their own terms whether through intuitive digital channels or personal, human-led assistance.

Empowered Digital Experiences for Customers and Employees

• The Banks enhanced mobile and internet banking platforms offer a seamless, unified experience across channels.

• The new myCSB App and myCSB.co.in portal provide employees with a single, integrated interface covering all services from onboarding to offboarding.

• Digital platforms are actively used for customer acquisition, cross-selling, and delivering hyper- personalised offers, supporting stronger engagement and business growth.

Data and Analytics for Smarter Banking

CSB Bank has implemented a centralised data strategy to fuel intelligent, data-driven decision-making:

• Unified Data Repository: All systems feed into a centralised data warehouse, providing a consolidated view of customers and operations.

• AI/ML-Driven Insights: Advanced models analyse customer behaviour, preferences, and external data to deliver personalised recommendations and improve risk management.

• Governance and Security: Rigorous data governance frameworks are in place, with robust encryption and masking protocols to ensure privacy and compliance. The analytics layer applies real-time data streaming and AI/ML-based models to enable use cases such as product cross-selling, competitive benchmarking, and behavioural offers. This infrastructure empowers the Bank to proactively deliver targeted and compelling product bundles to customers.

Outlook

With its technology transformation now live, including core banking upgrades, the Bank is stepping into a new era. Strategic investments in modern infrastructure,automation, data intelligence, and digital channels are positioning the Bank as a next-generation institution: agile, customer-focussed, and future-ready.

Cybersecurity Framework

As per the Cybersecurity Frameworks, the Bank implemented the following measures.

• The Bank has developed a robust Cybersecurity Policy and Cyber Crisis Management Plan, addressing risks from cyber threats and outlining mitigation strategies. These policies are reviewed by the Committee/Board annually.

• The Bank has identified inherent risks, and established appropriate controls to adhere to the cybersecurity framework effectively.

• It has also deployed various security solutions to bolster the security posture. This includes on-premise Security Information and Event Management (SIEM) using Splunk; anti-phishing, anti-malware, and antirogue services; a PIM solution; Intrusion Detection and Prevention System (IDPS); Data Leakage Prevention (DLP) system; file integrity and deep server security; Endpoint Detection and Response (EDR); Distributed Denial of Service (DDoS) mitigation appliance; refreshed internal and external firewalls at DC and DR with next-generation firewalls; implementation of link load balancers for internet leased lines at DC and DR; upgrade of link load balancer for replication links at DC and DR; implementation of email security with Barracuda Gateway and anti-APT solution; DDI solution (DNS, DHCP, and IPAM); API gateway security solution; hard disk encryption to prevent data leakage; Database Activity Monitoring (DAM); and data classification.

• The Bank conducts Vulnerability Assessment and Penetration Testing (VAPT) and Information Security Audits annually by external agencies to identify and mitigate vulnerabilities in IT applications. Source code audits of critical applications are also performed, and internal teams conduct regularly vulnerability assessments.

• It also frequently conducts red team exercises, including tabletop exercises related to ransomware, by external agencies to evaluate its security posture and incident response capabilities.

• The Banks security preparedness is assessed by its participation in cyber drills organised by IDRBT.

• The Bank has obtained cyber insurance to mitigate residual risks associated with cyber threats.

• The Bank has implemented on-premise SIEM, with logs collected from critical systems to identify andcorrelate cyber-attacks. Security Operations Centre (SOC) monitors critical alerts and initiates appropriate actions to address them promptly.

• The Bank also routes public-facing applications traffic through Web Application Firewall to quarantine any malicious traffic.

• The Bank conducts continuous education and awareness programmes for staff and customers through various channels such as SMS, e-mails, newsletters, and phishing exercises. It also conducts role-based cybersecurity training programmes. Its senior executives and directors have attended cybersecurity programmes conducted by IDRBT.

• The Banks security posture undergoes assessment by external rating agencies such as Bitsight and STORMs, both of which have awarded it an excellent rating based on their evaluations.

• The Banks security controls are aligned with the Centre for Internet Security (CIS) controls, ensuring compliance with industry standards and best practices in cybersecurity.

DIGITAL PENETRATION AND CUSTOMER ENGAGEMENT

In an era where digital transformation is redefining the banking landscape, the Bank continues to prioritise innovation and customer centricity at the core of its strategic initiatives. The Banks digital banking portfolio has played a pivotal role in enhancing customer experience and strengthening brand loyalty-both of which are critical for sustainable growth in a highly competitive environment. In FY 2024-25, the Bank significantly advanced its digital banking capabilities, delivering secure, seamless, and cost- effective 24x7 banking solutions. This strategic thrust has led to a notable increase in the adoption of digital channels. As of March 2025, digital transactions have registered a year-on-year growth of 29.26%, underscoring a growing customer preference for digital modes of transaction and reinforcing operational efficiencies through reduced costs. Key enhancements to the Banks digital infrastructure included:

• Integration with Bharat BillPay via Bharat Connect, streamlining bill payments.

• Biometric authentication implementation, enhancing transaction security.

• Deployment of Protect.ais advanced security solutions, strengthening the digital safety framework.

Further strengthening its technological foundation, the Bank is collaborating with Oracle across several critical functions, including database administration, core banking via Flexcube, Oracle Financial Services Analytical Applications (OFSAA), and Oracle General

Ledger. Substantial progress has been made in the rollout of a robust Loan Origination System (LOS) and Loan Management System (LMS), covering retail assets and other key business verticals.

With a strategic focus on future-readiness, the Bank is advancing towards a cloud-resilient and SaaS-oriented architecture. The systems are being designed to be flexible across on-premises, hybrid, and private cloud environments-ensuring compliance with evolving regulatory frameworks. In parallel, the Bank continues to make substantial investments in cybersecurity safeguarding digital trust.

The Banks forward-looking architecture includes the implementation of an Enterprise Service Bus (ESB) to enable seamless integration of digital services and ensure a unified and intuitive customer interface. This foundational approach aims to create scalable digital experiences, aligning with customer expectations and market dynamics.

ONLINE BROKING SERVICES

The Bank offers demat and trading facilities to its customers through a 3-in-1 tie-up with IIFL Securities Limited and Yes Securities (India) Limited (YSL). This arrangement allows customers to maintain their current/savings accounts with the Bank while availing demat and trading account services from a third-party provider. Fund transfers from customers current/savings accounts to their trading accounts are facilitated through the Banks net banking platform using API integration. Conversely, transfers from the trading account to the customers bank account with Bank are handled by the brokerage firm upon customer instruction. Additionally, the Banks branches generate leads that are forwarded to brokerage firms for customer onboarding under a referral arrangement.

COMPLIANCE FUNCTION

In line with the guidelines set forth by the RBI and Basel Committee on Banking Supervision, the Bank has established a comprehensive compliance function to ensure adherence to statutory provisions, regulatory guidelines, and internal policies. The compliance function is vital for managing compliance risk, which encompasses the potential legal, financial, and reputational consequences arising from non-compliance with applicable laws and regulations.

At the core of the compliance function is a robust Compliance Department, dedicated to upholding statutory provisions such as the Banking Regulation Act, Reserve Bank of India Act, Foreign Exchange Management Act, and others. It ensures adherence to regulatory guidelines by regulatory authorities like RBI, SEBI, IRDAI, besides guidelines issued by other bodies like IBA, NPCI, and FEDAI,

among others, and internal policies and procedures. It also handles the queries raised by Law Enforcement Agencies handling Anti-Money Laundering-related compliance. Recognising the critical importance of compliance, the Bank has designed a comprehensive bank-wide compliance programme to identify, evaluate, and address the relevant risks involved.

A strong compliance culture is fostered throughout the organisation to uphold the Banks reputation and build trust with stakeholders. Demonstrating a strong compliance culture is deemed to be of utmost importance to maintain the Banks reputation and earn the trust of customers, investors, and regulators. Being the Second Line of defense, compliance function ensures that the First line is suitably equipped to handle the compliance requirements and obligations. Such a culture is essential to ensure the safe and sound functioning of the Bank. Its effectiveness directly impacts the Banks risk profile. CSB Banks Board of Directors holds ultimate responsibility for overseeing the effective management of the Banks compliance function and compliance risk.

The Compliance Department is an independent function that identifies, assesses, advises, monitors, tests and reports on the Banks compliance risk. The Department is suitably headed by a Chief Compliance Officer (CCO) and supported by adequate staff. The Bank has further appointed Compliance officers across departments to ensure effective compliance and report to the Chief Compliance Officer. These officers serve as the primary liaison between the Bank and regulators, assisting the top management in navigating the compliance risks. Compliance risk is assessed during annual compliance risk assessments and using other testing inputs with appropriate software in place for effective monitoring and

reporting. The Compliance department has implemented an appropriate IT system in FY 2024-25 to disseminate, track and close the regulatory guidelines. The Department also conducts regular training sessions on compliance functions for its officers. Member awareness is also enhanced through general e-learning modules, targeted online training, circulars, and FAQs, among others. Staff members are encouraged to participate in subject awareness quiz programmes and certification courses in KYC/AML/CFT.

CUSTOMER SERVICE

In a competitive, customer-centric landscape, especially in service-driven sectors like banking, customer satisfaction is crucial for long-term growth. CSB Bank recognises that satisfied customers not only drive positive word-of- mouth but are also key to both acquiring new clients and retaining existing ones. To this end, the Bank is committed to delivering prompt and effective resolution of customer complaints across all available channels. The Bank strives to exceed customer expectations by fostering a culture of reliability, focussing on consistent, dependable service rather than overpromising.

Enhancing Customer Service Infrastructure

To reinforce its customer-first approach, the Bank has established a dedicated division focussed on process engineering and service governance. A separate sales department has also been formed to work in close coordination with branches to ramp up customer acquisition; an area identified for further expansion.

Leveraging Technology for Better Service Delivery

Ongoing technology adoption is transforming the Banks service delivery, enabling faster product rollout, round-the- clock accessibility, and seamless multi-channel customerengagement. The Customer Grievance Redressal System supports this approach by offering multiple resolution channels, including branches, a 24x7 call centre, and the Banks online Complaint Management System.

Governance and Oversight of Customer Service

In accordance with RBI guidelines, the Bank has constituted a Customer Service Committee of the Board to review, guide, and implement improvements in customer service. An Executive-Level Committee on Customer Service, with representation from key customer segments, ensures that customer feedback is actively captured and addressed. The Board of Directors periodically reviews the committees performance to maintain a strong focus on enhancing the overall customer experience.

Feedback, Measurement, and Training

Customer feedback is gathered through satisfaction surveys, which are used to identify service gaps and initiate improvements in areas such as service delivery, infrastructure, and customer awareness. The Bank has also introduced an NPS system to gauge customer loyalty and service perception.

Frontline staff at branches are sensitised and trained regularly to instil a strong customer service ethos. At the branch level, the Branch Head and Cluster Head hold primary responsibility for complaint resolution. Senior officers act as Zonal Nodal Officers, coordinating closely with branches and departments to ensure prompt issue resolution. Complaints requiring escalation are handled by the Branch Service Department at the Head Office, where the Head of Branch Service serves as the Nodal Officer for customer grievances.

Internal Ombudsman Framework

In compliance with the RBIs Internal Ombudsman Scheme, the Bank has appointed an Internal Ombudsman (IO) to review all complaints that are either partially or fully rejected. These complaints are mandatorily referred to the IO before the final response is issued to the customer, thereby ensuring fair and impartial handling of grievances.

Statistics of customer complaints (excluding ATM-related issues) for FY 2024-25

	March 31, 2025	March 31, 2024
a) Number of complaints pending at the beginning of the year	41	39
b) Number of complaints received during the year	19,233	19,008
c) Number of complaints redressed during the year	19,225	19,006
d) Number of complaints pending at the end of the year	49	41

The resolution rate of customer complaints increased to 99.99% in FY 2024-25, from 99.78% in FY 2023-24.

HUMAN RESOURCES - OVERVIEW

At CSB Bank, our people philosophy extends beyond workforce strategies to fostering an organisational culture that empowers and nurtures talent. Which is why ‘Human Capital is a key pillar of SBS 2030-the Banks mission to drive transformation and sustainable growth.

Talent development remains at the heart of our people strategy. We believe that to exceptional deliver customer experiences, we must first prioritise our internal customers-our employees. Towards this end, the Bank has institutionalised Career Development Programmes across employee segments.

Introduced in 2023, the Emerging Talent Programme aims at the identification and development of high potential employees. Under this talent management initiative, employees in junior and middle management are identified basis their past performance and potential. Various interventions were carried out to expedite career growth and enable them to take up higher/more critical roles.

In FY 2024-25, 437 employees were identified as Emerging Talent. Attrition in this group was significantly lower at 12%. Further, 20% of the population was elevated to a higher role.

The Bank has also instituted Career Progression Plans in Gold and Liability business verticals. Under these plans, job role-wise performance levels are defined and employees meeting the same are elevated to the next grade centrally. These career ladders promote transparency to employees about their career growth and development.

To bolster employee engagement, we have strengthened our Employee Connect Framework - the Business Partnering team has conducted 5,300+ unique employees one on ones in FY 2024-25. Feedback gathered from employees is converted into actionable dashboards and structured connect summaries are cascaded to relevant stakeholders. In FY 2024-25 the Bank also revamped its reward and recognition framework, Rise & Recognise. Over 400 employees were felicitated across three categories, one of which was the newly launched MD & CEO Value Champion category.

To ensure our interventions are boosting engagement levels, we run Annual Employee Engagement surveys. In the FY 2024-25 edition, the Bank achieved higher than industry participation of 91%. Structured BU-wise results cascades were carried out to drive last-mile communication and action planning.

CSB Banks transformation journey, backed by over a century of legacy, is rooted in reimagining traditional practices while embracing innovation and digitisation. We remain steadfast in our mission to create a future-ready, engaged, and high- performing workforce.

A big step towards this has been the migration to our new HRMS, Oracle Fusion. As key milestone in our Build phase, this transformation strengthens our ability to scale while creating a seamless, technology-driven employee experience through automation and process optimisation. Key processes like recruitment, confirmation, leave approvals amongst others were automated and milestone-based digital journeys were introduced for career development, performance improvement plan (PIP) and succession planning.

Human Resource Policies

HR policies are essential guidelines that define how various aspects of the workplace should be managed, ensuring compliance with employment laws, and fostering a positive work environment. These policies cover a wide range of human resources processes within the Bank, ensuring clarity and consistency in employee rights and responsibilities. The Social Media Code of Conduct policy educates employees on the appropriate use of social media platforms. It emphasises on the importance of maintaining professionalism and confidentiality online. The Banks total employee count at the end of FY 2024-25, stood at 7,616 reflecting a decrease of 3.14% compared to 7,863 in FY 2023-24.

	No. of Employees Recruited in FY 2024-25
Financial Year	Operations	Sales	No. of Branches, including Service and Recovery Branches
2024-25	308	3,164	833

The total hiring for FY 2024-25 is as follows:

Sr No. Cadre	No. of New Recruits
1 Officers (Including RSM/ASM/RE)	1,531
2 Others (BDE/BSEs, RMEs, CREs/CROs (Customer Relationship Officer), GLOs)	1,941
Total	3,472

Well-being, Social Security, and Safety Aspects for Employees of Human Resources Management

Staff Loans

The Bank extends several benefits to its IBA staff, including access to staff loans at preferential interest rates. These loans, such as housing loans and motor vehicle loans, are provided with the assurance of security and prompt repayment. Additionally, employees are offered concessional interest rates for educational loans to support their childrens higher education endeavours.

Home Loan

The Bank has introduced Home Loan for its employees at subsidised rates, as one of the good practices from the industry.

POSH for Women

Female employees are provided with protection against sexual harassment in the workplace. This is in alignment with the regulations stipulated by the POSH Act enacted by the Government of India in 2013.

Health Insurance and Term Policies

The Bank provides comprehensive facilities to all employees, including medical reimbursement and cashless hospitalisation, through collaborations with various insurance companies and TPAs. The insurance premium is fully covered by the Bank. For IBA employees, the scheme facilitated by the IBA in collaboration with National Insurance Co. Limited. has been effectively implemented. Officers of all grades are covered for a sum insured of 4 lakh and all award staff are covered for a sum insured of 3 lakh. The Bank provides a group insurance scheme for IBA employees, offering a death cover of 2 lakh for accidental death and 1 lakh for other causes. One of the group schemes offers only death cover, while the GSLI scheme provides a survival benefit where employees are reimbursed with a certain sum upon exiting the organisation. Officers in IBA Grade IV and above are covered under a Group Personal Accident Policy for a sum insured of 7.50 lakh, with the premium amount borne by the Bank. Additionally, the Group Personal Accident Policy for all employees excluding Grade IV and above offers a sum insured of two times the annual CTC, capped at 20 lakh in the event of accidental death.

The CTC Employees Group Medical Insurance is administered by Reliance General Insurance, offering a graded sum insured of 3 lakh to 4 lakh covering employee + spouse + 4 dependent children. Apart from themedical insurance cover provided to employees by the Bank at its cost, it has introduced a Voluntary Parental Medical Insurance cover for all CTC employees, with premiums at an attractive rate borne by the employees.

Both IBA and CTC employees have the option to opt for a top-up of the sum insured if desired, with the premium amount for such portions collected from the employees. The scheme covers the employees and their dependants.

All CTC employees, regardless of their age, are also provided with a comprehensive annual health check-up package at no additional cost. This offer has been extended to the Bank by EkinCare Health, which is also the Third-Party Administrator (TPA) for the Group Medical Insurance with Reliance General Insurance Co. Ltd.

Additionally, all employees of the Bank are covered under a term policy offered by Bajaj Allianz Life Insurance Co. Ltd. with a life cover of 2 times the CTC or 10 lakh, whichever is higher. This is subject to a maximum of 10 times the annual CTC.

Bereavement Leave

The Bank has Bereavement Leave for employees in the event of the demise of their close relatives.

Health Checkup Leave

The Bank has in place annual health checkup leave for all its employees.

Menstrual Leave

On International Womens Day, the Bank has menstrual leave to support women employees. This special leave can be availed once a month by all women employees, in addition to their regular leave entitlements.

Late-Sitting Policy

In situations where late sitting becomes necessary due to circumstances beyond an individuals control, the Bank provides transport facilities. This helps mitigate the impact of late working hours.

Education Scholarship

The Bank provides scholarships to the children of its employees who excel in their studies. Additionally, employees are awarded course fees and incentives for passing various examinations or courses conducted by the Indian Institute of Banking and Finance (IIBF), as determined by respective business units.

National Pension Scheme

The Bank actively promotes the NPS, a social security initiative by the Central Government, encouraging individuals to invest in a pension account regularlythroughout their employment. Employees are provided with an online platform to promptly open their Permanent Retirement Account Number (PRAN) accounts under this scheme.

Employee Identity Cards

As part of streamlining processes and ensuring new joiners receive their identification cards promptly, the Bank has introduced new employee ID cards, replacing the previous ID-cum-debit cards.

Learning and Development

During FY 2024-25, the learning and development function remained closely aligned with the Banks strategic priorities. A significant focus was placed on establishing processes to measure the ROI from learning initiatives.

CSBILD successfully trained 100% of employees through various programmes in FY 2024-25, totalling 2,15,567 hours, with an average of 30 hours per employee.

CSBILD retained its ISO 9001:2015 certification, reinforcing its commitment to excellence.

The Institute of Learning & Development (ILD) in Thrissur ensured compliance with RBIs certification mandates for critical roles. The Bank also achieved 100% completion of the POSH training for all employees, including senior management, and for capacity building, we achieved 96% certifications.

To streamline the induction process for new hires, the DORM (Demonstrate, Observe, Release, Monitor) framework introduced in FY 2023-24 was continued in the current year. Virtual learning solutions enabled employees to participate remotely in training sessions.

Several learning programmes were introduced and continued, including:

• Neev NXT for onboarding new BMs

• DISHA for skill development led by branch heads

• Gold Certification Programme (GCP), which provided industry-recognised certification through external partnerships

• Leadership training was enhanced to strengthen decision-making and team management.

Flexcube CBS Migration Training

As part of the Banks core banking transformation, CSB migrated to the advanced Oracle Flexcube platform-an initiative that demanded meticulous planning, robust training, and seamless execution. The Learning & Development team led this strategic shift by designing and delivering a structured training journey tailored to diverse roles across branches. The programme included hands-onpractice sessions, video tutorials, workbooks to ensure operational readiness from Day 1. The training not only equipped staff to navigate the new system confidently but also enabled a smooth go-live experience across regions. This initiative stands as a hallmark achievement for CSBILD. Throughout the year, CSBILD achieved its highest employee coverage through online virtual classes and e-learning methodologies.

To strengthen learning strategies, the Bank ensured 100% completion of compliance training and expanded self- paced learning modules via HR 360. Training initiatives were aligned with regulatory mandates. Industry collaboration with institutions such as NIBM, IIBF, and IDRBT further enriched learning opportunities.

HR Segmentation

The organisation has embarked on a journey to enhance customer experience while maintaining the quality and efficiency of existing processes. To achieve this goal, HR, in collaboration with senior management, is restructuring existing businesses into vertical structures, aligning with industry trends and leveraging technology.

This transformation aims to boost efficiency, reduce operational and credit risks, enhance customer service, and improve responsiveness. The new structure includes the implementation of Performance Score Cards forassessing individuals, units, and business/functions. Clear job descriptions are available for 85% of unique job roles, and 81% of employees are covered under scorecard-based performance evaluations.

Regular and objective feedback is provided to employees/ units/functions to ensure clarity on expectations and facilitate necessary changes for accelerated growth. PMS workshops have been conducted for supervisors to enable fair and objective appraisals. Performance improvement programmes (PIPs) and quarterly/mid-year reviews have been implemented to strengthen performance management processes.

The Banks HR vertical is dedicated to aligning all efforts with its objectives, aiming to deliver a winning solution for all stakeholders.

Industrial Relations

As of March 31, 2025, the Bank had a total of 7,616 employees. Out of these, 906 employees, including officers and award staff, operated under the IBA pay structure, while 6,708 employees operate under the CTC basis. To enhance the skill set and expertise within the Bank, retired officers from nationalised banks are deployed in identified areas. The number of employees deployed on a contract basis is 2. The average age of the Banks employees is 34 years.

	Total Number of Employees
Financial Year	IBA	CTC	Contract Basis	Total	Average Age (in Years)
2022-23	1,124	5,706	11	6,841	33.10
2023-24	996	6,864	3	7,863	33.4
2024-25	906	6,708	2	7,616	34

The Bank has 552 officers in Scale I to III under the IBA pay structure, all of whom are affiliated with Officers Associations. There are two Officers Associations and three trade unions representing award staff members (clerks, sub staff, and parttime sweepers) of the Bank. It prioritises maintaining cordial and harmonious industrial relations with these unions and associations through regular engagement.

	By Order of the Board
	Sd/-
	Biswamohan Mahapatra
Place: Thrissur	Chairperson
Date: June 24, 2025	(DIN: 06990345)