CSB Bank Ltd Management Discussions

GLOBAL ECONOMY

Global economic activity is projected to remain steady in CY 2026, reflecting a phase of balanced expansion despite ongoing uncertainties. The International Monetary Funds (IMF) World Economic Outlook (WEO) Update (April 2026) projects growth at 3.1% in CY 2026, followed by a slight increase to 3.2% in CY 2027, broadly in line with the estimated 3.4% growth recorded in CY 2025. This stability is underpinned by strong technology investments, continued fiscal and monetary support, and accommodative financial conditions. However, the escalating geopolitical risks, particularly US China trade tensions and conflicts in the Middle East, pose downside uncertainties to the global growth trajectory. Nevertheless, the global economy has consistently demonstrated its ability to absorb and overcome such challenges through prudent policy action, structural resilience and innovation led growth, thereby supporting sustained stability.

TRADE DYNAMICS AND ADVANCED ECONOMIES

Within this broadly stable environment, characterised by resilience despite heightened geopolitical and trade-related uncertainties, trade patterns are adjusting without significantly disrupting global momentum. The wave of tariffs announced in late CY 2025 has not triggered a sharp contraction in trade flows, aided by policy carve outs, corporate hedging strategies, and supply chain reconfigurations, although the risk of a more disruptive phase remains. These evolving dynamics are also shaping growth prospects across regions. In advanced economies, growth is expected to moderate to 1.8% in CY 2026 from 1.7% in CY 2025 as structural and cyclical headwinds such as aging demographics, underinvestment in infrastructure and R&D, and policy frictions including tighter immigration and rising protectionism continue to weigh on output, even as the ongoing AI investment cycle offers a partial offset through potential productivity gains.

EMERGING MARKETS AND DEVELOPING ECONOMIES

Emerging market economies have demonstrated relatively stronger resilience, supported by robust domestic consumption, sustained infrastructure investment, and favourable demographic profiles. Within this cohort, India continues to stand out as a key contributor to global growth, while Asia remains the principal engine of incremental global economic expansion.

INFLATION TRENDS AND GEOPOLITICAL TENSIONS

The inflation trajectory, which had been gradually moderating, was disrupted following the escalation of the US Iran conflict, started at the end of February 2026. Energy prices rose sharply as critical supply routes through the ‘Strait of Hormuz, which accounts for nearly 20% of global oil and gas flows, came under pressure. The resulting knock on effects extended to fertiliser prices, merchandise trade, maritime insurance, and logistics costs. For import dependent emerging economies, this reignited inflationary pressures at a time when central banks were only beginning to regain policy space for monetary easing. The inflation picture is uneven across regions. China remains in deflationary territory. India has witnessed a meaningful easing in inflation, supported by softer food and commodity prices along with tax rationalisation measures. In Latin America, inflation has moderated but remains above target levels in several economies. Reflecting these divergences, monetary policy settings vary across regions, with advanced economies cautiously lowering policy rates, while emerging markets remain focussed on balancing growth support with inflation control and currency stability.

OUTLOOK

The global outlook remains broadly stable, with the balance of risks moderately tilted to the downside. Principal vulnerabilities stem from trade fragmentation, heightened geopolitical uncertainty, fiscal constraints, and the potential for financial market corrections. However, the accelerated adoption of AI technologies provides a meaningful counterbalance, with growing potential to ease supply side constraints, enhance productivity across sectors, even as the benefits continue to emerge unevenly.

INDIAN ECONOMY

The Indian economy continues to demonstrate strong resilience and steady growth, with real GDP projected to expand by 7.7% in FY 2025 26, as per the provisional estimates. This sustained performance reflects the inherent strength of the countrys economic fundamentals and reinforces its trajectory towards the vision of Viksit Bharat 2047, driven by higher productivity, inclusiveness, and long term stability.

This performance is particularly notable given the volatility of the external environment. Easing inflation, improving labour market conditions, and strengthened external buffers have collectively reinforced macroeconomic stability, equipping the economy to navigate global headwinds without sacrificing growth momentum.

UNION BUDGET FY 2026 27 HIGHLIGHTS

The Union Budget FY 2026 27 set out a broad based growth agenda anchored in strengthening manufacturing capabilities, scaling up infrastructure investment and human capital development. Policy support for MSMEs and domestic value chains, alongside initiatives to attract private investment and accelerate the green transition, reflected a deliberate effort to build productive capacity while maintaining fiscal discipline. Tax reforms and regulatory simplification enhance the ease of doing business, reinforcing the conditions for sustained and inclusive economic growth.

CAPITAL MARKETS AND FOREIGN INVESTMENT TRENDS

Indias capital markets navigated a year of intermittent volatility, with the Nifty50 closing below 22,350 and the BSE Sensex ending under 72,000 on the last trading day of FY 2025 26. Markets came under pressure from global cues, particularly the escalation of the West Asia and its impact on oil prices. There was also pressure from the Reserve Bank of Indias (RBI) directive limiting lenders net open rupee positions in the forex market, which weighed on banking stocks.

Domestic institutional investors provided a consistent stabilising counterweight through the year. Retail participation deepened meaningfully, with demat accounts crossing 21.6 crore and mutual fund investors reaching 5.9 crore, with a growing share from smaller cities. The corporate bond market continued to expand steadily, and regulatory developments including the Securities Markets Code, 2025 strengthened the governance and efficiency of the broader capital market ecosystem.

Foreign investment momentum remained strong. FDI inflows rose sharply to $47 billion in CY 2025, driven primarily by services, spanning finance, IT, and R&D, and manufacturing sectors, supported by policy measures deepening Indias integration into global supply chains. The scale of inflows reflects growing international confidence in Indias policy stability, reform momentum and long term growth prospects.

MONETARY POLICY MEASURES

In its April 2026 meeting, the Reserve Bank of Indias Monetary Policy Committee opted to keep key policy rates unchanged, maintaining the repo rate at 5.25% and maintaining a neutral policy stance, reflecting a cautious approach amid heightened global and domestic uncertainties. This decision followed a cumulative easing of 100 basis points in FY 2025 26, undertaken to support domestic demand.

CPI inflation for FY 2025 26 is projected at 2.1%, supported by stable food prices, robust agricultural output and contained core inflation. External risks, particularly from energy price volatility arising from the West Asia conflict, warranted a cautious policy stance despite the benign domestic inflation environment.

CURRENCY AND EXTERNAL SECTOR DYNAMICS

The rupee came under significant pressure through FY 2025 26, with the $/ rate breaching the 95 mark by late March 2026, a sharp departure from the 83 84 range of recent years. The depreciation was driven by the escalation of the West Asia crisis, which pushed Brent crude above $100 per barrel and intensified global risk aversion. The trade deficit widened to $34.68 billion in January 2026, driven by a surge in gold imports and elevated energy costs. Foreign portfolio outflows added to currency pressure as investors moved towards the US dollar amid divergent global monetary policy trajectories.

EXTERNAL SECTOR AND FOREIGN EXCHANGE STABILITY

Forex reserves climbed to a record $728.5 billion as of February 27, 2026, providing coverage for approximately 12 months of imports and accounting for over 97% of total external debt. This buffer substantially strengthens Indias capacity to absorb external shocks and supports the central banks ability to manage currency volatility and maintain orderly market conditions.

SECTOR WISE PERFORMANCE

Indias growth trajectory in FY 2025 26 reflects broad based expansion across agriculture, industry, and services, with each sector playing a distinct yet complementary role in overall economic performance. The services sector continues to be the primary driver of growth, expanding by an estimated 9.1% in FY 2025 26 compared to 7.2% in FY 2024 25. This acceleration has been supported by sustained momentum in financial services, trade, transport, communication, and digitally delivered services.

At the same time, agriculture continues to lend stability to the growth cycle. The sector is projected to grow by 3.1% in FY 2025 26, supported by favourable monsoon conditions in the first half of the year. Allied activities, particularly livestock and fisheries, have maintained steady growth of around 5 6%, strengthening rural incomes and supporting diversification within the rural economy. Industrial activity is expected to strengthen moderately, with growth projected at 6.2% in FY 2025 26, slightly higher than 5.9% in FY 2024 25. Manufacturing and construction remain key contributors, supported by targeted government initiatives such as Production Linked Incentive (PLI) schemes across multiple sectors. These measures have encouraged investment, expanded production capacity and supported employment generation, while improvements in innovation and competitiveness continue to strengthen medium term growth prospects.

Indias AI readiness is reinforced by several structural advantages, including a large and youthful workforce with over 65% of the population below the age of 35, a robust digital public infrastructure, and a rapidly expanding startup ecosystem. Together, these factors provide a strong foundation for enabling AI driven innovation at scale.

GLOBAL BANKING INDUSTRY

The global banking industry recorded its strongest performance in over a decade in CY 2025. A higher for longer rate environment through the first half of the year expanded NIMs across major economies, driving total revenues to an estimated $6.8 trillion and net income to $1.5 trillion. The sectors average Return on Equity (ROE) rose to 13.5%, its highest in over a decade, further supported by global liquid wealth surpassing $250 trillion. These tailwinds are fading, and the industry faces a more complex operating environment. Core profit pools remain sizeable, but non bank financial intermediation (NBFI), spanning private credit, fintech platforms, and specialised wealth managers, has grown to account for nearly half of global financial assets. This is eroding the competitive ground that traditional banks have long held in lending and deposit mobilisation.

Compounding this, the shift towards monetary easing that began in late CY 2025 is compressing margins, prompting banks to recalibrate their business models. The strategic response is increasingly centred on building non interest income streams and deploying AI led efficiencies to protect profitability as the rate environment softens.

TECHNOLOGY AND THE RISE OF AI

Technology, particularly AI, is fundamentally reshaping how banks operate, compete, and deliver value. Industry estimates suggest that AI could reduce certain cost categories by up to 70%, with an overall cost base reduction of around 15 20%, improving operational efficiency and customer experience simultaneously. AI also carries significant disruptive potential. The emergence of agentic AI and automated financial decision making tools could fundamentally alter customer behaviour and erode traditional revenue streams in deposits and lending. Banks that fail to integrate these capabilities risk ceding ground to fintech firms and technology driven platforms that are building around AI from the outset.

CHANGING CUSTOMER BEHAVIOUR

Customer expectations in banking are changing rapidly. Consumers are increasingly digital and more selective in their choice of financial service providers. The traditional loyalty that banks once relied upon is eroding, with customers actively comparing options before committing to any provider. Against this, the demand for hyper personalised, mobile first banking experiences is accelerating. More than half of global consumers are already using AI based tools and expect banks to integrate such capabilities into their services. Alternate channels are now the primary point of engagement, though physical branches remain relevant for specific services.

OUTLOOK

The global banking industry is navigating a post peak transition in CY 2026, with structural shifts beginning to reshape the foundations of profitability. With central banks moving towards neutral policy rates, NIMs are expected to contract by 5 10% in CY 2026, bringing the rate driven earnings cycle that underpinned recent performance to a close.

The environment ahead is one of moderate growth, intensifying competition, and accelerated technological disruption. Financial performance remains resilient for now, but sustaining it will depend on structural transformation rather than the cyclical tailwinds that have supported earnings in recent years.

Banks that embrace technology-led transformation, align offerings with changing customer expectations, and diversify beyond rate-dependent business models are better placed to preserve margins and unlock new growth opportunities. Conversely, laggards face rising competitive pressure and profitability challenges.

INDIAN BANKING INDUSTRY

Indias banking sector has emerged as a stable and resilient pillar of the economy, having moved through a prolonged phase of structural stress to one defined by greater transparency, efficiency, and the capacity to support sustained economic growth. Regulatory reforms, improved governance, and rapid technological advancement have collectively strengthened trust in the financial system.

The Insolvency and Bankruptcy Code (IBC) has been central to this turnaround. As of CY 2025, recoveries exceeding

4.11 trillion from stressed assets underscore its efficacy, while streamlined processes at the National Company Law Tribunal (NCLT) have compressed resolution timelines to under 330 days for mid sized corporates. This structural cleanup is reflected in Gross Non Performing Assets (GNPA) falling to a decadal low of 2.3% in January 2026, a sharp reduction from the double digit stress levels of the past. Complementing this improvement is a strengthened Capital to Risk-Weighted Assets Ratio (CRAR) of 16.8%, which provides banks with enhanced balance-sheet resilience to support Indias infrastructure-led growth ambitions at scale.

The sector is simultaneously undergoing a structural shift towards AI native operations. Leading banks have moved beyond conventional automation to deploy agentic AI frameworks that execute ~70% of the routine credit underwriting processes. This has significantly compressed loan disbursement turnaround times from days to minutes, while enabling more nuanced risk assessment through alternative data streams such as GST filings, utility payments, and real time cash flow analytics. The Unified Payments Interface (UPI) reinforces this technological edge, cementing Indias position as a global leader in real time digital payments.

The strategic focus has shifted from financial inclusion to financial deepening. While the Pradhan Mantri Jan Dhan Yojana established the foundational access layer, the current thrust is driven by Digital Lending 2.0. Leveraging the Account Aggregator (AA) ecosystem, banks are extending collateral free credit to MSMEs, moving beyond the constraints of legacy distribution towards an embedded finance model.

Three strategic priorities are now shaping the direction of the banking sector. First, aggressive deposit mobilisation has become imperative to address the emerging credit deposit imbalance. Second, Indian banks are expanding their international footprint, with dedicated platforms in GIFT City (IFSC) positioning them to compete with established global financial centres such as Singapore and Dubai, particularly in dollar-denominated trade finance. Third, green financing has transitioned from a peripheral initiative to a core strategic focus, with over 2 trillion earmarked for renewable energy and electric mobility infrastructure in FY 2025 26, reflecting the sectors growing role in supporting sustainable development.

MAJOR BANKING METRICS

Credit and Deposit Growth

Indias banking system witnessed strong and broad based growth in both credit and deposits during the fortnight ended February 28, 2026. Total bank credit stood at 207.5 lakh crore as of February 28, 2026, registering a robust 14.5% year on year (YoY) growth, up from 11% in the corresponding period last year. Sequentially, credit grew 1.6%, supported by continued strength in retail and MSME lending, higher exposure to NBFCs, a pickup in infrastructure financing, and opportunistic corporate borrowing.

Aggregate deposits rose to 251.9 lakh crore, registering 13.0% YoY growth, compared with 10.3% a year earlier. Time deposits, which account for 87.2% of total deposits, grew 11.2% YoY to 219.7 lakh crore, while demand deposits recorded a sharp acceleration, rising 27.6% YoY.

Sequentially, deposits grew by 1.7%, slightly above the 1.6% credit growth. This led to a modest 10 basis point easing in the credit to deposit ratio to 82.4%, although it remains at elevated levels.

The credit to total assets ratio remained stable at 73.6%, while the share of government investments in total assets declined to 24.6% (69.5 lakh crore). The weighted average call rate (WACR) edged up to 5.09%, staying 16 basis points below the repo rate.

Taken together, these trends point to a gradual rebalancing within the system. The pickup in deposit growth, particularly the sharp rise in demand deposits, suggests improving liquidity conditions and better traction in low cost funding. The narrowing gap between credit and deposit growth is reducing incremental funding pressures. Alongside this, the shift away from government securities towards credit deployment reflects greater risk appetite and confidence in economic activity.

Overall, the banking system is strong, with improving stability providing a solid foundation for growth.

Asset Quality

Indias banking sector has undergone a significant structural transformation in asset quality over the past several years, culminating in a multi decade low in stress levels. GNPA fell to 2.1% as of September 2025 as a result of comprehensive balance-sheet clean-up and resolution efforts, rather than by cyclical tailwinds. This marks a sharp reversal from the 11.2% GNPA peak in FY 2017 18, a period defined by aggressive corporate lending and the enforcement of stricter Asset Quality Review (AQR) norms. The subsequent normalisation trajectory, however, was not without disruption. The COVID 19 shock threatened to reverse these gains, but policy interventions such as targeted restructuring frameworks and the Emergency Credit Line Guarantee Scheme (ECLGS) effectively mitigated systemic risk. This also averted a potential rise to 12 15% GNPA levels. In the post pandemic phase, asset quality has improved meaningfully, driven by institutional reforms and enhanced risk discipline. Net NPAs have compressed to 0.5%, reflecting strong provisioning buffers and conservative recognition practices. Slippage ratios have stabilised at 1.2%, while standard assets now comprise 98% of total advances, pointing to a high quality loan book system wide.

Public sector banks (PSBs) have led this recovery cycle with a pronounced turnaround, while private sector banks have shown steady progress with lower baseline stress. By March 2026, PSBs reported aggregate GNPA levels of below 2.8%, as private sector banks maintained GNPA ratios around 1. sustained improvement. This improvement has been driven by the resolution of legacy ‘twin balance sheet exposures. Write backs and recoveries from previously stressed accounts reflect both enhanced resolution efficiency and stronger provisioning coverage, reinforcing the structural strengthening of PSB balance sheets, with private sector banks benefiting from diversified portfolios and digital lending efficiencies.

Compressed tail risks have materially strengthened systemic stability. As of September 2025, credit costs normalised to sub 0.7% levels, enabling a structurally higher earnings profile, with return on assets (RoA) for the sector consistently above 1%. With cleaner balance sheets, stronger capital buffers, and improved underwriting standards, Indian banks are better placed than they have

Net Interest Margin

Indias banking sector faces pressure on NIMs in FY 2025 26 as the RBIs rate cycle has stabilised, with the repo rate holding at 5.25% since December 2025. NIMs are expected to contract by 10 to 20 basis points, settling in the range of 3.2 3.35% in FY 2025 26 compared to around 3.45% in FY 2024 25. Liquidity conditions tightened materially in FY 2025 26, with the system wide credit deposit (CD) ratio climbing to a historic high of 83% as of March 15, 2026. Credit expanded at 13.8% YoY, consistently outpacing deposit accretion at 10.8% YoY. The resulting gap intensified funding pressures across the banking system.

Banks responded by realigning their liability strategies, placing greater emphasis on strengthening Current Account Savings Account (CASA) ratios, which had softened to around 36.4%. This decline signals a deeper structural shift in depositor preferences. In a rising interest rate environment, customers increasingly redirected surplus funds toward higher yielding term deposits and market linked investment avenues, prioritising returns over liquidity.

The implementation of revised Liquidity Coverage Ratio (LCR) norms, effective April 1, 2026, marks a significant evolution in liquidity risk management. The revised norms . impose an incremental 2.5% run off factor on digitally accessible retail deposits, acknowledging that fund movements in a digital banking environment are faster and less predictable than traditional stress models assumed. The effect is more realistic stress assumptions and stronger systemic liquidity buffers.

Capital Adequacy

Public sector banks in India have continued to strengthen their financial position through FY 2025 26, with capital adequacy holding stable at 16.1% as of January 2026, while private sector banks maintained even higher levels around 18 19% driven by robust internal accruals. At this level, PSB capital adequacy stands comfortably above the RBIs minimum requirement of 11.5%, reflecting improved balance sheets and sustained internal capital generation.

PSBs have delivered record profitability, with aggregate profits expected to cross 2 lakh crore in FY 2025 26, a rise of over 25% from 1.78 lakh crore in FY 2024 25, as private sector banks target Rs. 2.5 3 lakh crore, supported by retail lending expansion. Stronger earnings, operational efficiencies, and continued capital support have underpinned this PSB performance.

With credit growth expected to remain steady at around 11 12%, PSBs are better placed to compete effectively and sustain their improved financial performance. Private sector banks, with their agility in digital lending and customer acquisition, are poised to capture higher margin retail segments amid this growth. Meanwhile, their superior cost to income ratios and diversified funding sources will enable them to maintain market share leadership in high growth areas like MSME and unsecured loans.

GOVERNMENT INITIATIVES AND REGULATORY REFORMS

Indias banking sector is undergoing a structural shift towards a more resilient, inclusive, and technology driven system. Digital innovations such as AI, open banking, and Banking as a Service (BaaS) are improving efficiency and customer experience. Cybersecurity has grown in importance alongside this digital expansion.

The Banking Laws (Amendment) Act, 2025 strengthens the banking sectors governance, transparency, and depositor protection framework. The Act standardised reporting practices under the RBI, enhanced audit quality in public sector banks, and improved customer convenience through a revised nomination framework, facilitating smoother asset transfer and reducing unclaimed deposits. Key changes also included revision of the substantial interest threshold, transfer of unclaimed funds to the Investor Education and Protection Fund, and alignment of reporting timelines with monthly and fortnightly cycles, supporting greater operational efficiency and system automation.

Government initiatives aimed at expanding credit access to MSMEs have complemented these reforms, supporting entrepreneurship and employment generation. Collectively, these measures have transitioned Indian banking from a

reach to one that is more resilient, inclusive, and responsive to the needs of a broad-based economy.

Pradhan Mantri Jan Dhan Yojana (PMJDY)

The Pradhan Mantri Jan Dhan Yojana (PMJDY) significantly expanded banking access, with over 54 crore accounts opened by CY 2025, reducing reliance on informal credit systems and enabling direct benefit transfers. Account dormancy, driven by low financial literacy and connectivity gaps, remains a challenge. The UPI has complemented this foundation, transforming digital payments and boosting economic activity, particularly in informal sectors.

EASE Reforms in Banking

The Enhanced Access and Service Excellence (EASE) reforms were launched in 2018 by the Government of India in collaboration with public sector banks (PSBs) and coordinated by the Indian Banks Association. The reforms target governance, risk management, asset quality, customer service, digital capabilities, and financial inclusion across public sector banks. Private sector banks have similarly advanced these areas through RBI mandated frameworks and self initiated transformations, often leading in digital innovation and customer centric metrics. Evolving from EASE 1.0 to EASE 7.0, the reforms have provided a structured roadmap for continuous improvement. Each phase has built on the last, enabling the sector to adapt to emerging challenges while driving transformation across digital customer experience, data and analytics, technology enabled capacity building, and human resource practices.

BUSINESS OVERVIEW

CSB Bank Limited (referred to as ‘CSB Bank or ‘the Bank) is one of Indias well established private sector banks with its headquarters in Thrissur, Kerala. With a legacy that began in 1920, the Bank has evolved while adapting to the changing dynamics of the financial sector. It operates a full service commercial bank serving retail customers, MSMEs, corporate clients, and NRIs.

In recent years, the Bank has undertaken several strategic initiatives to strengthen its business focus and enhance overall efficiency. These include reorganising operations into focussed business segments, upgrading internal processes and technological infrastructure, and investing in human resources through training and recognition programmes.

The Bank has also introduced new products and services, expanded its sales and marketing efforts, and reinforced its monitoring, governance, and risk management frameworks to support sustainable growth.

Retail Banking

CSB Bank offers a comprehensive suite of retail banking services catering to both domestic and non-resident Indian customers. The Banks retail product portfolio encompasses Current and Savings Accounts (CASA), a range of deposit schemes, retail loan products, foreign exchange and remittance services, as well as cobranded credit cards, enabling it to meet the diverse financial needs of its customers.

On the lending side, CSB Bank offers a diversified portfolio of retail and institutional credit products, including gold loans, housing loans, loans against property, and vehicle loans. In addition, the Bank provides overdraft facilities, MSME financing, agricultural loans, and microfinance, thereby offering comprehensive credit solutions across multiple customer segments and supporting a wide range of economic activities.

CSB Banks Retail Banking segment is entering a new phase as the Bank transitions from ‘Build phase to the ‘Scale phase under its SBS 2030 vision. The new technology platform removed the constraints associated with legacy systems that had previously limited flexibility and speed of deployment. This transformation enables the Bank to design and deliver customised products through digital journeys. These enhanced capabilities are expected to support the development of new focus areas such as trust, government, institutional, and other non-individual banking segments, while further strengthening the Banks current account franchise across a wide spectrum of organised entities.

A core focus of the retail strategy is deeper customer segmentation and the delivery of a differentiated stronger customer experience. Products and services will be aligned to the specific needs of each segment/customer, allowing the Bank to deliver relevant and personalised offerings. In an environment where product offerings across banks are increasingly comparable, customer experience emerges as a key differentiator. Accordingly, the Bank is strengthening the entire customer lifecycle, spanning acquisition, seamless onboarding, and sustained relationship management, to enhance engagement and long-term customer value. A strong liability franchise underpins the retail growth strategy. Customer acquisition remains a key priority, with the Bank building long term relationships by first strengthening deposit relationships and then expanding asset offerings within the same customer base. To support this, the Bank continues to focus on developing and introducing liability products tailored to specific customer segments such as women, senior citizens, NRIs, and different tiers within the customer pyramid. On the asset side, the Bank maintains a disciplined approach to growth with a strong emphasis on portfolio quality. Rising stress in unsecured lending across the broader financial sector prompted the Bank to moderate growth in unsecured lending to safeguard asset quality. New loan origination and management systems now provide stronger technological capabilities to support calibrated, data driven lending decisions.

Gold loans continue to constitute a significant component of the Banks retail portfolio and are expected to remain an important business segment. At the same time, the Bank is focussed on diversifying its asset mix to achieve a more balanced portfolio. SME-linked gold loans represent one such opportunity, where small business units leverage gold as collateral to meet short-term credit requirements. This product typically enables faster disbursement and simplified documentation compared to conventional business loans, making it an attractive financing option for small enterprises.

Beyond gold loans, the Bank is strengthening and deepening its presence across a diversified set of asset segments, including healthcare finance, vehicle finance, commercial equipment financing, mortgage loans, and loans against securities. Agricultural lending is also being revitalised as part of the Banks broader strategy to expand its footprint in rural and semi-urban markets. Personal loans and education loans continue to form part of the portfolio, though growth in these segments will be measured until the Bank builds a larger and more diversified asset base. Rural markets are expected to play an increasingly important role in the Banks retail growth strategy. The Bank plans to adopt a geo focussed approach by strengthening selected rural branches and enabling them to manage opportunities within their catchment areas more effectively. These branches will be supported by improved operational processes, stronger infrastructure, and enhanced collection capabilities, aimed at enhancing execution effectiveness and service delivery.

MSME Banking

MSMEs are central to Indias economic fabric, supporting supply chains, promoting entrepreneurship, and contributing meaningfully to output and exports. The Bank continues to deepen its focus on this segment, recognising the opportunity it represents for sustainable, inclusive growth. Across product offerings and service delivery, several initiatives are underway to ensure MSME customers receive efficient and tailored financial solutions. The Bank also continues to deepen engagement with MSME clients through a robust relationship management framework prioritising portfolio quality and long term customer relationships.

Wholesale Banking

To better support its strategic growth priorities, the Bank restructured its Wholesale Banking Segment. The reorganisation strengthens the Banks ability to serve a diverse range of corporate clients, spanning small and mid sized enterprises to large corporates and conglomerates. The approach is anchored around three key business verticals, enabling greater focus, improved risk management, and more effective client coverage. nce. Outstanding

• Corporate banking: Catering to large corporates and conglomerates across a broad spectrum of industries, with a comprehensive suite of solutions encompassing structured lending, working capital finance, transaction banking, cash management, and trade finance.

• Commercial banking: Focussed on small and mid-sized corporates, a segment that represents a significant and growing driver of private sector credit demand, supported through tailored credit structures and relationship-led coverage.

• Financial Institutions and Public Sector (FIPS):

Aimed at building wallet share through targeted cross-selling, liability mobilisation initiatives, and expansion of government-related business, including engagements with financial institutions and public sector entities.

Integrated Treasury

The Banks Treasury plays an important role in supporting the SBS 2030 growth strategy. Operating both as a profit centre and as the steward of regulatory and liquidity ratios, the treasury underpins the Banks operations through effective liquidity management, adherence to regulatory requirements, and the delivery of market linked financial solutions across business segments.

Strategic Role across Business Segments

The treasury works closely with various business verticals to support their operational and funding requirements.

• Wholesale and MSME banking: Provides structured funding solutions, liquidity support, and foreign exchange hedging products, helping clients manage financial risks and optimise funding structures.

• Retail banking: Supports deposit mobilisation and product innovation by ensuring appropriate funding and balancesheet support, enabling the Bank to offer competitive liability and asset products to retail customers.

Liquidity and Liability Management

Strong liquidity and a balanced liability profile are core treasury responsibilities, particularly as credit growth continues to outpace deposit mobilisation. The Bank adopts a diversified funding approach to manage liquidity across different time horizons:

• Short–term liquidity requirements are managed through repo transactions and interbank borrowings to address temporary mismatches.

• Medium–term funding needs are supported through the issuance of Certificates of Deposit (CDs), Foreign Currency borrowing and CDs of 1,475 and foreign currency borrowing of

4,173 crore formed a part of the strategic liquidity management.

• Long–term funding is secured through borrowings from international financial institutions and foreign banks. Partnerships with organisations such as the International Finance Corporation (IFC) provide longer tenor funding to strengthen liquidity stability.

Investment and Regulatory Portfolio Management

The treasury manages the Banks investment portfolio and maintains compliance with regulatory requirements such as the Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) prescribed by the RBI. To meet these obligations, the Bank maintains a diversified investment portfolio comprising:

Government of India dated securities

Treasury Bills

State Development Loans (SDLs)

Other RBI permitted instruments

The portfolio is actively managed to optimise returns, maintain adequate liquidity buffers, and meet regulatory norms. Beyond sovereign instruments, the treasury participates in commercial papers, bonds, debentures, mutual funds, Alternative Investment Funds (AIFs), pass through certificates, certificates of deposit, and equities, supporting short term liquidity management and generating trading income.

Foreign Exchange and Hedging Services

The treasury manages the Banks foreign exchange operations in accordance with regulatory guidelines issued by the RBI, the Foreign Exchange Dealers Association of India (FEDAI), and other relevant authorities. These activities support both compliance and revenue generation by providing:

Foreign exchange transactions for clients

Risk management and hedging solutions

Fee based forex services for businesses engaged in international trade

Support to Trade Finance and Non-Fund-Based Businesses

In line with the Banks expanding focus on MSME and wholesale banking, the treasury also supports non-fund-based and trade finance activities such as:

Managing foreign exchange risk for import export clients

Facilitating buyers credit and letter of credit (LC) confirmation services

Supporting foreign currency borrowings and cross border transactions

These services deepen the Banks value proposition for corporate and institutional clients while contributing to fee based income.

Liquidity Coverage Ratio (LCR) Management

The treasury maintains a strong Liquidity Coverage Ratio (LCR) through proactive asset liability management. Potential funding gaps are monitored continuously, with cost efficient instruments deployed to maintain liquidity buffers. Measures include:

Optimising the funding mix through wholesale deposits and market borrowings

Utilising currency swaps and certificate of deposit issuances

Regularly reviewing the liability structure to maintain efficiency and sustainability

OUTLOOK AND BUSINESS STRATEGY

CSB Banks outlook is anchored in its long term SBS 2030 vision, marking a clear transition from the Build phase to the Scale phase beginning FY 2026 27. With core banking modernisation and a strengthened digital stack now in place, the Bank is structurally positioned to scale meaningfully with higher operating leverage. The Scale phase will be driven by customer centric growth, product expansion and deeper ecosystem partnerships, and diverse geographic distribution, among others, with a sharpened focus on building a profitable customer franchise.

Growth prospects remain strong, underpinned by steady branch expansion with the addition of 40 60 new branches annually. Retail banking is expected to emerge as a key growth driver from FY 2026 27 onwards, supported by advanced technology platforms such as LOS and LMS. The Bank also aims to achieve a balanced advance portfolio by reducing reliance on gold loans to 25 30% over the remaining tenor of four years under SBS 2030, while scaling wholesale banking to around 30%, SME lending to 18 20%, and strengthening granular retail lending. Together, these initiatives are expected to deliver a more diversified and resilient balance sheet.

Financially, the Bank has articulated clear long term benchmarks, targeting return on assets in the range of 1.2 1.5% and return on equity of around 15%, with NIMs expected to stabilise between 3.75% and 3.9%. Near term continue, with the cost to income ratio expected at 60 65% through FY 2026 27. Operating leverage is expected to drive improvement in CIR towards 50% by FY 2029 30. Asset quality remains a key priority, reinforced by prudent underwriting and robust risk management practices. The Bank is targeting gross NPAs below 2% while maintaining credit costs within 40 50 basis points.

As foundational investments translate into performance, the Bank is well placed to deliver sustainable growth above average industry trends and establish itself as a scaled mid sized franchise over the medium term.

SWOT ANALYSIS

Strengths

• Long–standing legacy and strong brand trust:

Established in 1920, CSB Bank is one of the oldest private sector banks in Kerala. Over a century of operations, it has built enduring customer relationships and a strong reputation for reliability.

• Well established distribution network: The Bank operates a network of 862 branches and 833 ATMs/ CRMs across 18 states and 4 union territories, providing strong geographic reach.

• Strong capital adequacy and balance sheet strength: CSB Bank maintains a robust CRAR of 20.66% in FY 2025-26, much in excess of the industry average. The Bank also maintains a relatively low RWA to total exposure ratio, enabling efficient capital utilisation and supporting future growth.

• Established and profitable gold loan

Gold loans continue to be a core strength of the Bank, offering relatively higher yields, strong collateral coverage, lower credit risk and optimal capital consumption.

• Stable and loyal deposit base: The Bank benefits from a stable retail deposit franchise, with deposit renewal rates exceeding 80%. This reflects strong customer confidence and provides a reliable funding base for growth.

• Healthy asset quality and management: CSB Bank maintains healthy asset quality metrics, with Gross NPA at 1.66% and Net NPA at 0.40%. A Provision Coverage Ratio of 76.38% (excluding write offs), along with proactive/ accelerated provisioning practices above regulatory requirements, reflects a conservative approach to risk management. Credit costs in FY 2025 26 were well contained, remaining below 50 basis points in line with the Banks guidance.

• Strengthened leadership and governance framework: The Bank has strengthened its leadership team by bringing in seasoned professionals across key verticals. This strategic move reinforces the Banks commitment to organisational development, aligned with our vision, and is built on a solid foundation of compliance and governance frameworks.

• Technology–driven transformation initiatives: The Bank has made significant investments to modernise the core banking infrastructure and associated technology systems. These upgrades are expected to improve operational efficiency, support product innovation and enhance overall customer experience.

• Broader product offerings through strategic partnerships: Collaborations with leading insurance/ credit card companies and financial service providers have expanded the Banks product suite. These partnerships enable greater cross selling opportunities and allow the Bank to offer a more comprehensive range of customers.

Weaknesses

• Evolving presence in certain retail segments: The Banks participation in certain retail product segments, including credit cards and select consumer lending products, has developed more recently compared with peers. The retail product suite continues to evolve, with initiatives underway to strengthen and expand these offerings.

• Limited brand visibility: CSB Banks brand recall at the national level remains moderate, historically lower investments in large scale marketing and branding.

• Relatively smaller customer franchise and concentrated asset mix: Despite its long standing legacy, the Bank operates with a comparatively smaller customer base and a somewhat concentrated asset portfolio. Expanding the retail franchise and diversifying the asset mix remain priorities.

• Product mix largely centred on traditional banking offerings: While the Bank has made significant investments in technology and digital capabilities, a substantial portion of its product portfolio continues to be anchored in traditional banking services. Ongoing digital initiatives and product enhancements are expected to broaden offerings and strengthen the Banks competitive positioning over time.

Opportunities

• Growth potential in core business segments:

CSB Bank is well positioned to capitalise on the growth opportunities in gold loans, MSME banking and wholesale banking. The Banks revitalised retail business plans provide scope to scale and build a more diversified lending portfolio over the long term.

• Expansion of fee based financial services: Growth momentum in trade finance, supply chain finance, and transaction banking within the wholesale and MSME segments provides opportunities to strengthen non interest income streams. These services also deepen client relationships and enhance overall customer engagement.

• Technology–drivenbusinessenablement: Significant investments in technology infrastructure under the SBS 2030 strategy are now bearing fruit. Planned initiatives such as end to end digital onboarding, API enabled decision systems, and scorecard based lending models are expected to drive improvements in processing efficiency, elevate customer experience, and strengthen productivity across business units.

• Product diversification and businesssolutions to expansion: The development and introduction of new products, particularly in wholesale and transaction banking, is expected to enhance the Banks value proposition for corporate and institutional clients. This will also support deeper customer engagement and broaden revenue streams.

• Strategic branch expansion and wider market reach:

The Bank has been steadily expanding its network, adding 467 branches since FY 2020 21 across metro, urban semi urban, and rural locations. Apart from becoming a pan-India bank, this supports customer reflecting acquisition, strengthens local market presence, and aligns with broader financial inclusion initiatives.

• Strengthening of customer franchise and distribution capabilities: Through a disciplined expansion strategy, the Bank continues to strengthen its distribution network and customer base. This enables the Bank to improve market penetration while maintaining operational efficiency.

• Cross–selling opportunities through strategic partnerships: Alliances with strategic partners such as insurance, and credit cards, among others, enable the Bank to offer a wider range of financial solutions to customers. These collaborations support customer acquisition, fee based income and enhance customer retention through more comprehensive financial offerings.

• Long term portfolio diversification strategy: The Banks roadmap envisions a balanced portfolio mix by 2030. This mix supports sustainable growth while reducing concentration risks.

Threats

• Macroeconomic uncertainty and credit risk:

Changes in macroeconomic conditions, particularly those affecting the MSME and retail segments, could increase stress in borrower repayment capacity. This may result in higher delinquencies and pressure on asset quality.

• Margin pressures from funding costs: Elevated deposit costs and competitive pricing in the banking sector may continue to exert pressure on net interest margins in the near term. While the Bank is strengthening its CASA and retail deposit base, intense competition for deposits remains a structural challenge.

• Intensifying competition across business segments: The Bank operates in a highly competitive environment. It faces strong competition from peer banks in deposit mobilisation, NBFCs in the gold loan segment, and larger financial institutions across MSME and retail lending. This may impact growth opportunities, pricing, and market share.

• Increasing cybersecurity and technology risks:

With the expansion of digital banking channels, the risk of cyber threats, fraud, and data breaches has heightened across the financial sector.

• Talent acquisition and retention challenges: The financial services sector faces intense competition for skilled professionals. Attracting and retaining talent remains an ongoing priority, as employee attrition could affect operational continuity and strategic execution.

• Disruption from

The rapid growth of first banking platforms has intensified competition within the financial services industry.

• Liquidity management and deposit mobilisation:

Maintaining a stable funding base while supporting balance-sheet growth requires careful liquidity management. Industry-wide competition for deposits and evolving liquidity conditions may create challenges in sustaining funding stability.

• Evolving regulatory landscape: Changes in regulatory requirements and compliance standards may increase operational complexity and require ongoing investments in governance, systems and processes.

REVIEW OF PERFORMANCE

Total Business

Total business of the Bank stood at 84,605 crore as of March 31, 2026, compared to the previous years level of

68,703 crore, registering a growth of 23% on a YoY basis.

Total Assets

Total assets of the Bank stood at 57,727 crore as of March 31, 2026, compared to the previous years level of 47,836 crore, registering a growth of 21% on a YoY basis.

Total Deposits

Total deposits of the Bank stood at 44,246 crore as March 31, 2026, compared to the previous years level of

36,861 crore, registering a growth of 20% on a YoY basis.

Term Deposits

Term deposits of the Bank stood at 35,414 crore as of March 31, 2026, compared to the previous years level of

27,943 crore, registering a growth of 27% on a YoY basis.

CASA companies and digital

As of March 31, 2026, the CASA portfolio stood at

8,832 crore, compared to 8,918 crore as of March 31, 2025, reflecting a moderation of 1% on a YoY basis, amid evolving liability mobilisation dynamics.

CASA ratio stood at 19.96% at the end of FY 2025 26.

CASA Strategy

The retail banking landscape is evolving rapidly as customers increasingly diversify their financial portfolios. With greater access to digital platforms and rising financial awareness, individuals are allocating a larger share of their savings to investment instruments such as mutual funds, direct equity and fixed deposits. This shift in savings behaviour has moderated the pace of growth of traditional deposit balances across the banking sector. The Bank has responded with a focussed and calibrated strategy to strengthen its CASA franchise and build deeper, more profitable customer relationships. The approach is anchored in expanding the customer base, delivering segment specific propositions and enhancing customer engagement with the objective of increasing wallet share and relationship depth.

1. Expanding the Customer Base

Customer acquisition forms the central pillar of the Banks CASA strategy. The Bank strengthens its distribution footprint through its existing branch network as well as newly opened/to be opened branches in new and underserved locations, enabling deeper access to both retail and business customers. In parallel, a Direct Sales Channel has been established to accelerate CASA acquisition and improve market reach.

Digital onboarding capabilities simplify account opening and improve customer convenience. Tools such as Video KYC, call centre led acquisition and digital onboarding journeys are extending the Banks reach to customers more efficiently while ensuring adherence to regulatory compliance.

2. Segmentation–Led Product Strategy

The Bank is adopting a segmentation driven approach to product design, using its upgraded technology platform to develop tailored products for distinct customer groups.

Targeted offerings have been introduced for segments such as women, senior citizens, HNIs, salaried individuals, exporter importers, seafarers and high value business customers. The Bank is also deepening its focus on non individual customers by strengthening its current account franchise and providing services that support business banking needs.

The Bank is also expanding value added services such as cash management solutions and payment acceptance infrastructure, including Point of Sale (POS) terminals and QR code based payment solutions. These offerings improve product relevance for businesses and help deepen transactional relationships. Ongoing product innovation and regular launches tailored to targeted segments will remain central to CASA mobilisation efforts.

3. Strengthening Customer Engagement and Wallet

Share

Beyond acquisition, the Banks strategy focuses on building deeper relationships with existing customers and increasing wallet share. Structured onboarding processes through contact centres and branches ensure that new customers are effectively integrated into the Banks network from the outset.

Relationship Managers and Virtual Relationship Managers support customers with personalised service and financial solutions, enabling ongoing engagement and stronger service delivery. In parallel, the Bank continues to enhance its digital banking platforms to offer a wider range of functionalities and seamless customer journeys.

For business customers, 24/7 cash deposit machines have been introduced at many places to support transactional banking needs of business customers. The Bank is also facilitating access to investment products such as mutual funds and online broking accounts through its platforms. By integrating these offerings, the Bank aims to position the CASA account as the primary financial hub for customers, supporting both banking and investment requirements.

Advances

Total advances (gross) of the Bank stood at 40,359 crore as of March 31, 2026, compared to the previous years level of 31,842 crore, registering a growth of 27% on a YoY basis. The Gross CD ratio of the Bank stood at 91.22% in FY 2025 26 compared to 86.38% in FY 2024 25.

Retail Assets

The Bank maintains a diversified retail assets portfolio comprising products such as gold loans, personal loans, auto loans and credit cards.

Gold Loans

As of March 31, 2026, the Banks gross gold loan portfolio stood at 21,567 crore, compared to 14,094 crore as of March 31, 2025, reflecting a year on year growth of 53%. While the Bank has seen a notable increase in corporate and wholesale advances, gold loans remain a strong pillar of the Banks advances portfolio. The Bank has further strengthened this franchise by deepening its presence in rural and semi urban markets, historically dominated by unorganised players. The expansion of its branch network in these regions has enabled greater market penetration and supported the growth of the gold loan portfolio.

Other Retail Loans

As of March 31, 2026, the Banks gross retail assets portfolio (excluding gold loans) stood at 3,707 crore, compared to

5,047 crore as of March 31, 2025. The portfolio includes certain accounts that were reclassified from gold loans to loans against securities. Agriculture and MFI portfolios are excluded from these figures. The retail assets portfolio comprises personal loans, mortgage loans, two wheeler loans, vehicle loans, education loans and healthcare finance. The Banks strategy in retail assets focuses on strengthening existing product offerings by leveraging its branch network, identifying appropriate customer segments, and ensuring prudent risk management while expanding the portfolio.

Credit Cards

During the year, the Bank continued to issue its co-branded ‘CSB Edge Credit Card, enabling customers to make Credit Card payments via UPI rails. The Bank also plans to expand the CSB Edge programme with the launch of a Mastercard variant, further strengthening product reach and acceptance. Servicing of existing ‘CSB One Credit Card customers, targeted at the mass-affluent segment continued; however, no new cards were issued under this program during the year.

The credit card portfolio exhibited strong engagement, with an early activation rate of 97% post onboarding, among the highest in the industry, and average spends per active card of 16,000, reflecting healthy customer usage. Portfolio growth has been undertaken with a measured focus on asset quality, supported by continuous portfolio analytics, transaction monitoring for fraud prevention, and periodic recalibration of lending policies based on segment level risk performance.

Additionally, tools such as Equated Monthly Instalments (EMI), Credit Line Increase (CLI), and Credit Line Decrease (CLD) have been leveraged to align growth with appropriate risk controls.

Looking ahead, the Bank plans to introduce a Secured Credit Card aimed at customers with limited or no credit history, as well as higher risk segments. This initiative is expected to support financial inclusion while enabling controlled and prudent portfolio expansion.

Priority Sector Lending

Supporting inclusive economic growth remains a key priority for the Bank. Through its PSL initiatives, the Bank actively facilitates credit flow to segments such as agriculture, MSMEs, education, housing and social infrastructure, thereby supporting broad-based economic development and financial inclusion.

During the year, the Bank deepened its focus on extending credit to small and marginal farmers, micro enterprises, and economically weaker sections of society. Dedicated business verticals have been established to serve these segments, supported by specialised teams with relevant expertise. For FY 2025 26, the Banks quarterly average priority sector advances stood at 56.14% of Adjusted Net Bank Credit (ANBC), after accounting for PSLC transactions, exceeding the RBIs mandated target of 40%.

Financial Inclusion

Expanding access to formal financial services remains essential for ensuring inclusive and sustainable economic growth. By integrating underserved and previously unbanked populations into the formal banking system, these initiatives enable individuals and small businesses to participate more actively in economic life.

The Bank continues to implement several initiatives to expand financial access and strengthen financial awareness. These initiatives include ongoing engagement through Financial Literacy and Credit Counselling Centres (FLCCs) and the business correspondent network, enabling wider outreach and engagement. Collectively, these efforts support the extension of banking services in underserved regions and encourage responsible financial behaviour.

The Bank currently operates 65 rural branches and 7 FLCCs, which actively conduct financial literacy programmes and awareness initiatives at the grassroots level. During the year, the Bank reached out to approximately one lakh families through the provision of small value microfinance loans, supporting livelihoods and the economic empowerment of underserved communities.

Pradhan Mantri Jan Dhan Yojana (PMJDY)

As of March 31, 2026, the Bank maintained 5,995 Basic Savings Bank Deposit Accounts (BSBDAs) and 3,210 outstanding Kisan Credit Card (KCC) accounts. Of the total BSBDAs, 62,207 accounts were opened under the Pradhan Mantri Jan Dhan Yojana, reflecting the Banks continued efforts to expand access to basic banking services and strengthen financial inclusion.

PMJJBY, PMSBY, and APY

As of March 31, 2026, the Bank maintained 5,995 Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) accounts, 72,954 Pradhan Mantri Suraksha Bima Yojana (PMSBY) accounts, and 14,025 Atal Pension Yojana (APY) accounts, reflecting the Banks continued involvement in supporting social security and financial protection initiatives.

Business through Business Correspondent (BC) Model

Strengthening access to finance in rural and semi urban regions remains an important component of the Banks inclusive banking approach. The Bank develops sustainable and scalable models that expand financial services to bottom of the pyramid (BOP) customers while supporting local economic development.

The Bank uses the business correspondent (BC) model to deliver financial and non financial services to underserved communities. These initiatives are complemented by community based structures such as self help groups (SHGs) and Joint Liability Groups (JLGs). These help improve credit access, promote financial discipline and support livelihood generation at the grassroots level.

During FY 2025 26, the Bank extended credit to 17,961 women borrowers through micro lending programmes under the BC model. Through these initiatives, the Bank reached over 17,961 families, supported by 10 business correspondents operating across various regions. As of March 31, 2026, the total outstanding microfinance portfolio under the BC model stood at 206.41 crore, reflecting the Banks continued efforts to expand responsible lending and financial inclusion.

Corporate Lending

As of March 31, 2026, the Banks wholesale portfolio stood at 10,184.38 crore, compared to 7,486.74 crore as of March 31, 2025, reflecting a YoY growth of 36% and outpacing industry growth trends. A key objective of the Banks wholesale strategy is to build a diversified and granular portfolio while maintaining high credit quality. The Bank avoids concentration across sectors, corporates or products and maintains a strong credit profile, with over 77% of exposures rated A and above. The long term objective is a balanced mix across the three verticals to sustain diversified growth.

Alongside portfolio expansion, the Bank has strengthened its non-fund-based business, particularly in trade finance and transaction banking. Historically, the non-fund to fund ratio had lagged industry benchmarks; however, during the year, the Bank expanded its non-fund book, improving the ratio to around 30%. This shift has contributed to higher fee-based income and deeper engagement with corporate clients.

Technology is central to the Banks wholesale banking strategy. The business has embraced digitalisation across the entire customer lifecycle, including onboarding, service delivery and risk management.

• Onboarding: The Bank has implemented a digital Loan Origination System (LOS) to streamline credit processing and improve turnaround times. The platform will continue to evolve to support business scale and operational efficiency.

• Delivery mechanism: The Bank is developing a comprehensive digital stack alongside the upgraded core banking system, enabling digital servicing of corporate clients across fund based and non fund based transactions.

• Risk management: Digital risk monitoring tools such as the Early Warning System (EWS) are in use to identify early signs of stress in borrower accounts. Underwriting and monitoring is strengthened through an advanced Loan Management System (LMS).

Geographic diversification has supported the growth of the wholesale franchise. During the year, the Bank entered new markets such as Kolkata and Gujarat, which are active centres for corporate relationships and business growth. In parallel, the Bank has strengthened correspondent banking relationships to support trade finance and cross-border transactions, enhancing its ability to serve clients engaged in import-export activities and global trade.

Environmental, Social, and Governance (ESG) considerations are increasingly embedded within the Banks credit evaluation framework. The Bank recorded strong growth in lending to the renewable energy sector, reflecting its commitment to supporting sustainable and environmentally responsible businesses.

The wholesale banking franchise is being strengthened through the Banks 4P transformation framework, which provides a structured approach to capability building and client engagement.

• People: Strengthening teams with experienced professionals possessing strong sector expertise.

• Products: Expanding offerings in trade finance, foreign exchange and transaction banking to deepen client relationships.

• Policy: Refining credit underwriting standards to remain aligned with regulatory guidelines and maintain a high quality portfolio.

• Process: Using upgraded core banking systems and digital platforms to deliver efficient customer service.

Transaction Banking Group

The transaction banking landscape in India is witnessing rapid transformation, driven by increasing digital adoption, changing customer expectations, and heightened competitive intensity. The Banks Transaction Banking Group focuses on delivering technology enabled and customised solutions to clients across the retail, MSME, and wholesale banking segments.

The group provides supply chain finance, trade services, foreign exchange solutions, and cash management services, enabling the Bank to offer integrated financial solutions to its clients.

A key priority for the Transaction Banking Group is to strengthen the Banks product offerings across trade and forex, working capital solutions, and supply chain finance The group also aims to strengthen the Banks liability franchise by capturing client collections and payables, supporting growth in the liability book while delivering value to customers.

Key initiatives undertaken include:

Developing new products to address the evolving requirements of corporate clients.

Streamlining internal processes and policies to improve operational efficiency and service delivery.

Benchmarking product offerings against industry standards to introduce competitive solutions across trade finance, cash management services (CMS), and supply chain finance.

Enhanced collection solutions spanning virtual account services, NACH based collection services, escrow and RERA account propositions, and Bharat Bill Payment services.

Enhanced features on the Corporate Net Banking platform to support efficient payment processing for clients.

Through stronger digital capabilities, specialised expertise, and improved service delivery, the Bank aims to expand its share of Indias growing transaction banking market.

Trade Services and Forex Business

The Banks trade services and foreign exchange (forex) business offers a broad range of solutions. This includes letters of credit, bank guarantees, export and import finance, receivable purchase, outward and inward remittances, as well as forward contracts and other treasury products. These offerings support clients domestic and international trade requirements while managing currency and liquidity risks.

During the year, the Bank focussed on accelerating portfolio growth, enhancing revenue generation, and strengthening its product suite through new product introductions and process re engineering to improve operational efficiency and service delivery.

Cash Management Services

The Banks Transaction Banking Cash Management Services addresses the liquidity and cash management needs of businesses across sectors. Clients span retail, MSME, and wholesale banking segments, with solutions built on advanced digital banking capabilities. The Banks cash management solutions include:

Efficient management of client receivables and payables across multiple business segments.

Solutions such as eNACH, virtual account solutions, . payment based APIs, and escrow account services.

Digital solutions tailored for MSMEs, NBFCs, mid sized corporates, and large corporates, including customised virtual account structures, enhanced corporate net banking features for payments and direct debits, as well as UPI based collection solutions.

Fiduciary services, including escrow account management and RERA compliant account solutions.

The Bank co creates products with fintech and technology partners, banks, and exchange houses. These partnerships bring advanced technology capabilities that strengthen the Banks transaction banking offering.

Supply Chain Finance

Supply chain

MSMEs and SMEs that operate within the value chains of mid sized and large corporates. The Banks Supply Chain Finance team partners with these corporates to provide cash flow based lending solutions to their network of suppliers, distributors, and dealers. The Bank has invested in digital capabilities that enable paperless, convenient lending solutions for MSME customers. These platforms improve operational efficiency

supply chain.

The Bank plans to deepen its presence by focusing on mid sized and large corporates with credit ratings of A and above, financing their suppliers, distributors, and dealers to grow the supply chain finance business sustainably.

INR invoice and bill discounting, factoring

MSME Lending

The Banks MSME Banking business, managed under the Business Lending Group (BLG), plays an important role in diversifying the Banks asset portfolio while supporting the growth of small and medium enterprises across the country. As part of its long term strategy under SBS 2030, the Bank aims to increase the MSME portfolio to around 20% of the overall asset book by 2030.

During FY 2025 26, the Bank recorded strong growth in this segment. Gross SME advances (including MSME) stood at 4383 crore as of March 31, 2026. The Bank is committed to a focussed strategy of expanding MSME lending while maintaining prudent risk management and disciplined underwriting standards.

Strategic Focus Areas

The Banks MSME strategy focusses on a high quality and profitable portfolio while ensuring sustainable growth. Key priorities include:

• Portfolio diversification: Expanding MSME lending as a significant component of the Banks asset mix, with a long term target of around 20% contribution to the overall portfolio.

• Prudent growth approach: Strong growth notwithstanding, the Bank maintains a cautious approach given global economic uncertainties and sector specific risks.

• Lifecycle based profitability: Lending decisions consider the complete customer lifecycle, including opportunities for liabilities, foreign exchange services and other cross sell products to enhance overall profitability.

• Risk–based pricing discipline: Maintains pricing discipline with credit terms aligned to risk profile of the borrower, ensuring portfolio sustainability.

Product and Technology Initiatives

• Parametrised Products o Turbo product: An algorithm based and scorecard driven offering providing loans up to

5 crore with quicker decisioning. o GST/Smart OD products: GST and banking-based surrogate programme with limit up to

3 crore, less documentation and speedy approval.

• Loan Against Property (LAP) and working capital solutions: Structured lending supported by strong collateral coverage.

• Electronic Bank Guarantees (eBG): Digital issuance of bank guarantees for improved efficiency and faster processing.

• Supply chain Strengthening ecosystem based lending by supporting supplier and distributor networks.

• Other range of products: All types of working capital, term loans and trade products These offerings are supported by enhanced digital infrastructure, including:

Loan Origination Systems (LOS) for streamlined credit processing.

API based integrations for GST validation, bank

Early Warning Systems (EWS) for proactive monitoring of borrower performance.

Distribution and Market Approach

The Bank follows a focussed distribution strategy to serve MSME customers, while maintaining operational scalability. The focus is on metro, Tier 1 and 2 cities, along with industrial clusters in surrounding suburban regions. MSME manufacturing businesses concentrated in these clusters offer a large accessible customer base within an efficient credit and monitoring radius.

Risk Management Framework

Risk management remains a central pillar of the MSME strategy. The Bank has established several guardrails to ensure prudent lending:

• Multi layered credit checks, including review by relationship managers, credit managers and independent verification teams.

Dedicated verification units to validate documentation and borrower credentials.

Integration with digital tools for GST validation, bank statement analysis and financial data verification.

Strong emphasis on high quality collateral coverage and end use monitoring.

Alongside quantitative assessment, the Banks underwriting framework incorporates qualitative factors including promoter experience, business sustainability, management commitment and sector outlook. The Bank remains mindful of macroeconomic risks that may affect the MSME sector and closely monitors borrower cash and working capital cycles, with a cautious approach to sector selection.

INTEGRATED TREASURY OPERATIONS

During the year, the Bank enabled a full derivatives product suite within its treasury systems, providing a comprehensive range of treasury solutions to corporate and institutional clients. This enhancement enables the Bank to support clients with risk management and hedging products.

The Bank has maintained an average LCR of 118%, with occasional variations due to the nature of wholesale funding instruments such as large CD issuances or foreign currency borrowings. As these instruments mature or are rolled over, short term fluctuations in liquidity metrics may occur.

During the transformation phase, the Bank saw a moderation in NIM. This was primarily due to two structural factors:

• Asset–side shift: Expansion in wholesale banking, which generally carries lower yields compared with retail or gold loans.

• Liability–side dependence: Greater reliance on higher cost wholesale deposits as the retail franchise scales, influenced by shifts in current investment and savings behaviour.

These factors resulted in a decline in margins. However, the Bank has begun stabilising margins and expects them to remain stable in the near term.

Investment Portfolio Performance

The treasury manages the Banks investment portfolio, which contributes to both interest income and trading gains. As of March 31, 2026, the Banks total investment portfolio stood at Rs. 11,955 crore, compared to 11,389 crore as of March 31, 2025.

The performance of investment operations during FY 2025 26 included:

• Interest income from investments: 762.87 crore, compared to 621.74 crore in the previous financial year.

• Non–interest income from investment operations:

68.13 crore, compared to 100.29 crore in the previous year.

Interest Rate and Market Outlook

Funding costs showed volatility through the year. of Deposit rates in FY 2025 26 remained elevated owing to higher issuances by banks to meet funding requirements in the face of higher credit offtake. However, the RBI has been maintaining liquidity in the banking system through open market operations. The 10 year bond yield is expected to remain broadly in the range of 6.50% to 7.50% in FY 2026 27, owing to the geopolitical and macroeconomic shocks.

Asset–Liability Management

During the Build phase, the Banks asset liability duration gap has been higher than the industry average due to the reliance on shorter tenor wholesale funding. As the Bank strengthens its retail deposit base, the liability profile is expected to become more stable and longer tenor, gradually reducing the asset liability mismatch and strengthening balance sheet stability.

Trading and Market Operations

Integrated Treasury undertakes trading operations in government security, bonds, equities and currencies. Over the years Treasury has improved upon its capabilities to capitalise upon trading opportunities. The FY 2025 26 was a difficult year due to tariff and Iran-related uncertainties however the treasury was able to capitalise on opportunities. Treasury has also been successfully helping its clients to hedge and cover their FX and rate risks through a bouquet of products.

Product Expansion and Revenue Opportunities

The treasury is expanding into new product areas, particularly in derivatives and client hedging solutions. These offerings are expected to enhance fee based income streams over time.

Long–Term Vision for Treasury

Over the longer term, the treasury is expected to evolve significantly as the Banks client base expands. The transformation will be driven by:

Building specialised treasury teams across major financial markets in India.

Expanding capabilities in derivatives, foreign exchange and structured products.

Deploying advanced systems for real time cash flow monitoring and risk management.

Increasing client facing treasury services.

Developing internal risk taking capabilities to enhance profitability.

Scaling client base and transaction volumes.

The Bank continues to maintain strong regulatory buffers, including SLR levels of approximately 23 24% against the required 18%, along with adequate CRR balances, reflecting a prudent liquidity management approach.

Foreign Exchange Transactions

The Banks Integrated Treasury executes foreign exchange transactions across multiple currencies through advanced trading platforms. The treasury provides clients with competitive pricing across spot, forward and cross currency transactions, supporting businesses in managing their foreign exchange requirements.

Beyond forex, the treasury offers a range of solutions including trade finance support, forex deposit facilities and structured funding solutions. This is enabling corporate and business clients to manage their liquidity and currency exposures.

The Merchant Desk, operating within the Integrated Treasury, provides centralised cover operations for foreign exchange transactions originating from the Banks branch network. The desk offers specialised services to corporates, SMEs and MSMEs, managing forex exposures and hedging risks arising from international trade.

The treasury operates a Proprietary Trading Desk, which trades major global currencies. The desk identifies arbitrage opportunities between domestic and international markets, contributing to treasury income within a prudent risk management framework.

The Banks foreign exchange business continued to grow during FY 2025 26, with forex turnover increasing by 2.02% YoY. The Bank generated 27.92 crore in income from forex operations during the year. This income comprised

20.47 crore from foreign exchange profit and 7.45 crore from commissions earned on forex transactions.

BANCASSURANCE

The Bank continues to strengthen its wealth and protection offerings by providing investment and insurance solutions tailored to the needs of its customers. These offerings are delivered through technology enabled platforms and multiple customer engagement channels, ensuring convenience, accessibility and a consistent service experience.

An open architecture distribution model enables the Bank to partner with multiple product providers and offer customers a broader suite of financial solutions. This broadens choice enables the Bank to deliver offerings aligned with financial goals and risk profiles.

During the year, the Bancassurance business emerged as an important contributor to the Banks fee based income. Growth was supported by strong partnerships with insurance providers, targeted product propositions, the Banks expanding distribution reach, and the integration of digital capabilities across sales and servicing channels.

Life Insurance reflecting higher

Life insurance plays an important role in financial planning by providing protection to families while supporting long term financial goals. The Bank offers life insurance solutions spanning protection, long term savings, goal based planning, and tax efficient investment options.

The Bank partners with leading insurance providers such as Edelweiss Life Insurance Co. Limited, HDFC Life Insurance Co. Limited, ICICI Prudential Life Insurance Co. Limited, Axis Max Life Insurance Co. Limited and Ageas Federal Life Insurance Co. Limited. Through these partnerships, the Bank continues to provide customers with access to reliable insurance solutions aligned with their financial planning requirements.

Non–Life Insurance

The Bank partners with IndusInd General Insurance Co. Limited and Go Digit General Insurance Co. Limited to offer customers a diverse range of protection solutions. Products cover health, motor, home, personal accident, fire and critical illness, enabling customers to safeguard their assets and manage unforeseen risks. These offerings are provided on a non risk participation basis, allowing the Bank to distribute insurance products while maintaining service quality.

Health Insurance

The Bank offers health insurance solutions through its partnership with Aditya Birla Health Insurance Co. Limited, helping customers manage medical expenses and protect their financial well being.

Products are tailored to provide financial protection against unforeseen medical contingencies while supporting long term financial security.

Performance Highlights

The Bancassurance business delivered a strong performance during the year, with income from life, health and general insurance segments recording robust growth. Revenue from bancassurance operations increased by 31%, reflecting the Banks expanding distribution reach, strong partner ecosystem and growing customer adoption of insurance solutions.

FINANCIAL PERFORMANCE WITH RESPECT TO

OPERATIONAL PERFORMANCE

Financial Performance

During FY 2025 26, the Bank reported strong growth in business volumes, which was reflected in the increase in both interest income and operating revenue.

Interest income increased by 25.24% to 4,505 crore in FY 2025 26, compared to 3,597 crore in FY 2024 25. Interest expenses rose by 31.30% to 2,785 crore, as against 2,121 crore in the previous year, funding costs and business expansion during the period. The net interest income (NII) increased to 1,720 crore in FY 2025 26 from 1,476 crore in FY 2024 25 YoY growth of 16.54%. Non interest income witnessed a strong increase of 21.04%, rising from 972 crore in the previous year to

1,177 crore for the year ended March 31, 2026.

The Banks NIM declined by 37 basis points, from 4.13% in FY 2024-25 to 3.76% in FY 2025-26, primarily due to the increase in the cost of funds during the year. This was driven by a higher reliance on wholesale deposits, which carry relatively higher costs. Additionally, a shift in the asset mix towards wholesale banking, which yields lower returns compared to retail and gold loans, further impacted margins. Despite stable yields in core portfolios such as gold loans, overall margin compression was witnessed.

The Bank reported an operating profit of 1,085 crore, compared to 910 crore in the previous financial year, reflecting a growth of 19.24%. Operating revenue grew by 24.35% YoY to 5,682 crore, compared to 4,569 crore in FY 2024 25, driven by higher interest and non interest income.

Operating expenses increased by 17.79%, rising to 1,812 crore from 1,538 crore in the previous year. The increase was mainly due to higher staff costs and other operating expenses associated with business expansion, technology cost and branch growth.

The Bank recorded a net profit of 633 crore in FY 2025 26, compared to 594 crore in FY 2024 25, representing a growth of 6.63%.

The cost to income ratio stood at 62.53% for the year ended March 31, 2026, compared to 62.82% in FY 2024 25. Return on Assets (ROA) was 1.29%, compared to 1.53% in the previous financial year.

As of March 31, 2026, the Banks Earnings per Share (EPS) stood at 36.50, compared to 34.23 in the previous

249.24 as of March 31, 2025. The Banks Return on Equity (ROE) stood at 14.14%, compared to 15.44% in FY 2024 25.

Income

The Banks total income increased by 1,112.59 crore to

5,682 crore as of March 31, 2026. Net interest income increased by 244 crore to 1,720 crore in FY 2025 26, compared to 1,476 crore in FY 2024 25. Non interest income grew from 972 crore to 1,177 crore during FY 2025 26, primarily driven by growth in fee based income and profit on sale of investments worth 53 crore in Q1 FY 2025 26.

Expenditure

Interest expenditure increased from 2,121 crore in FY 2024 25 to 2,785 crore in FY 2025 26, reflecting the rise in deposit and borrowing costs during the year. Operating expenses also increased from 1,538 crore to

1,812 crore, mainly due to higher staff costs and other operating expenses associated with business expansion, technology cost and branch growth. The cost of deposits rose to 6.37% in FY 2025 26 from 6.15% in FY 2024 25 in line with the overall upward trend in 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 thereof or sector specific equivalent ratios, as applicable are given below:

Particulars	March 31, 2026	March 31, 2025	Change (%)
CRAR (%) Basel III	20.66	22.46	(8.01)
Earnings per Share (in )	36.50	34.23	6.63
Book Value per Share (in )	272.27	249.24	9.24
Net Interest Margin (%)	3.76	4.13	(8.98)
Cost Income Ratio (%)	62.53	62.82	(0.46)
Return on Assets (ROA) (%)	1.29	1.53	(160.4)
Return on Equity (ROE) (%)	14.14	15.44	(8.45)
Gross NPA (%)	1.66	1.57	6.04
Net NPA (%)	0.40	0.52	(22.93)
Interest Income as a % of Working Funds	8.94	9.00	(0.68)
Operating Income as a % of Working Funds	2.15	2.28	(5.44)

As of March 31, 2026, the capital adequacy ratio stood at 20.66%, compared to 22.46% as of March 31, 2025. The decline was primarily due to business growth leading to an increase in total risk weighted assets, partially offset by an increase in the capital fund from 4,588 crore to 5,027 crore.

(b) explanation thereof.

Return on net worth decreased to 14.14% from 15.44% in the previous financial year. The decline was mainly due to an

Disclosure of Accounting Policy

The Banks primary accounting policies are detailed in Schedule 17 of the financial these financial results, the Bank has followed the same accounting policies as those applied in the annual financial statements for the financial year ended March 31, 2026.

NPA MANAGEMENT

During FY 2025 26, the Bank continued to place strong emphasis on asset quality management, supported by disciplined underwriting standards, proactive monitoring frameworks and well-defined recovery mechanisms. These measures ensured that the overall loan book remained largely secured and resilient, despite operating in a challenging credit environment.

As of March 31, 2026, the Banks gross NPA stood at

669.78 crore. The gross and net NPA ratios were 1.66% and 0.40%, respectively, compared to 1.57% and 0.52% in the previous year. The Bank aims to maintain strong asset quality through disciplined credit practices and proactive recovery actions, and further aims to keep gross and net NPA well under control/below its acceptable level.

Asset Quality and Monitoring

The Bank prioritised asset quality through continuous monitoring of loan accounts and close follow-up with borrowers. Early identification of stress and timely intervention helped to prevent fresh delinquencies and contain slippages to a large extent. Focussed monitoring of SMA and early-warning signals enabled corrective actions well before accounts could deteriorate into NPAs.

Recovery and Collection Initiatives

A multi-pronged and structured recovery strategy was implemented during the year to strengthen recovery performance:

Close follow-up and borrower engagement to avoid slippage of stressed accounts into NPAs.

Upgradation of recently slipped NPAs through intensive borrower interaction, resolution plans and recovery actions.

Immediate initiation of legal recovery actions for secured accounts, including invocation of SARFAESI Act provisions, filing of suits and enforcement proceedings to accelerate recoveries.

Leveraging the Revenue Recovery (RR) mechanism, particularly in the state of Kerala, as an effective tool for recovery of dues.

Recovery and settlement drives (recovery melas) organised across geographies to encourage negotiated settlements and expedite recovery.

Digital repayment facilities offered across retail, gold and agriculture portfolios, enabling customers to conveniently clear overdue amounts and regularise accounts. statements. These initiatives helped to improve collection efficiency In preparing and curb incremental stress during the year. The Bank recovered 16.40 crore from prudentially written off (PWO) accounts, including interest recoveries of

41.66 crore, supporting overall asset quality.

Corporate and Large Borrower Accounts

For corporate accounts, the Bank actively participated in the resolution process through the Insolvency and Bankruptcy Code (IBC) framework. In addition, recoveries were pursued through sale of secured assets under the SARFAESI Act and proceedings before Debt Recovery Tribunals (DRTs), ensuring timely enforcement of security interests.

Portfolio Composition and Stability

The Banks loan portfolio continued to remain largely secured and well collateralised, particularly in the SME and gold loan segments. The gold loan portfolio, characterised by minimal slippages and low credit costs, remained a long-standing anchor product and significantly reinforced overall asset quality.

Provisioning and Risk Resilience

The Bank follows conservative provisioning practices, supported by contingency buffers and accelerated provisioning policies. The Provision Coverage Ratio (PCR) stood at 86.33% (Including PWO) for the FY 2025 26. Considering the risk appetite of the credit card portfolio, the Bank adopts an accelerated provisioning approach by recognising 50% provision immediately upon an account being classified as NPA and progressing to 100% provisioning within 90 days from the date of NPA classification.

Conservative provisioning practices supported by contingency buffers and accelerated provisioning policies provide resilience and facilitate a smooth transition to the Expected Credit Loss (ECL) framework in the future.

Way Forward

The Bank remains committed to:

Preventing fresh delinquencies through robust monitoring and earlywarning systems.

Strengthening recoveries across secured and unsecured portfolios.

Actively pursuing recoveries from prudentially written-off accounts.

Sustaining disciplined credit and provisioning practices.

The Bank aims to maintain strong asset quality through disciplined credit practices and proactive recovery actions. Internal benchmarks guiding this approach include keeping Gross NPA below 2%, Net NPA below 1%, and credit costs below 0.50%, consistent with the Banks long term aspirations under its SBS 2030 vision.

Through these focussed measures, the Bank aims to maintain a stable, high-quality loan portfolio and support sustainable growth in the years ahead.

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) and Operational Risk 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. Through effective and efficient use of processes, information, and technology, the Bank has 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 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. The Board articulates Risk management policies, procedures, aggregate risk limits, review mechanism, reporting and auditing systems. In line with the guidelines of RBI, the Board has constituted a Risk Management Committee (RMC). The Risk Management Committee has three Executive-level committees which provide support and inputs in discharging its functions viz. Credit Risk Management Committee (CRMC), Operational Risk Management Committee (ORMC) and Asset-Liability Management Committee (ALCO). 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 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 also has in place a framework for computing the Risk Adjusted Return on Capital (RAROC) which helps credit sanctioning authorities to assess the risk adjusted returns on proposals. 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 Bank has also established dedicated ESG resources as part of the Integrated Risk Management Department.

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 of credit risk. The Bank has various instruments for credit risk management, including Board approved loan policy & credit risk management policies, prudential exposure limits, risk rating system, risk-based pricing, RAROC and portfolio management. The Bank manages credit risk in its retail, SME and wholesale businesses. Wholesale and SME lending are 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 in place well-models for Credit Risk Assessment. A major part of the internal rating is carried out by internal rating models developed by CRISIL and hosted on CRISILs RAM platform. Apart from the CRISIL models, the Bank also has models which have been internally developed which are also hosted on the RAM platform. All the internal rating models have been externally validated by an independent consultant and concluded to be robust and performing well. Apart from this, the Bank also conducts validation of the internal rating models on an annual basis internally. 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 primarily adopts a committee approach for credit sanctions and has credit 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 and for total unsecured exposure, industry exposure limits, benchmark financial ratios, and hurdle rates. The Bank also has in place internal rating wise thresholds to control the quality of the portfolio. As part of its risk management strategy, the Bank continuously monitors and evaluates the impact of various economic developments in general. This financial year was turbulent for the major part due to various geopolitical tensions, first arising out of tariffs imposed by the US on exports to the US, and later on account of the West Asian crisis. Taking cognizance of volatile economic outlook, the Bank has specifically assessed the impact on its portfolio w.r.t. imposition of reciprocal tariffs by USA as well as of the West Asian crisis. Based on the assessments, various risk mitigation strategies have been rolled out to minimise the impact.

Market Risk

Market risk arises primarily from the Banks activities related to statutory reserve management and trading operations in interest rate instruments, equity markets and foreign exchange markets. To manage these exposures, the Bank has established a well defined market risk management framework supported by Board approved policies and structured operational practices.

The Bank employs analytical tools and risk measurement techniques to monitor and control market risk. These include stress testing, duration and modified duration analysis, PV01 (Price Value of a Basis Point), Value-at-Risk (VaR), and various exposure limits. Specific limits including position limits, stop loss limits, Net Overnight Open Position (NOOP) limits, Aggregate Gap Limits (AGL), and Individual Gap Limits (IGL) are in place to ensure that market exposures remain within approved risk thresholds. The Bank has established an independent Mid Office within the Integrated Treasury, functioning under the Market Risk Management Division. The Mid Office reports directly to the Head of Market Risk and serves as the primary risk control unit for treasury operations, ensuring continuous monitoring of market positions and adherence to approved risk limits.

Mitigation

The Bank mitigates market risk through policies, monitoring systems and independent oversight. The Mid Office within the Integrated Treasury scrutinises treasury deals and transactions from a market risk perspective and ensures compliance with approved limits and policies.

The Bank has implemented policies and procedures to ensure the smooth conduct of business activities exposed to market risk. These policies provide clear guidelines for identifying, measuring, controlling and monitoring market risk exposures arising from the banking book, trading book and off balance sheet positions.

The Market Risk Management Policy ensures that all market risk exposures remain within the risk tolerance limits approved by the Risk Management Committee (RMC) and the Board of Directors. To measure and monitor market risk, the Bank follows established risk measurement methodologies and regulatory approaches. Key practices include:

Computation of capital charge for market risk under the standardised duration approach.

Use of Value at Risk (VaR) to monitor risk in the Banks trading portfolio.

Daily calculation of VaR for trading positions to track potential market related losses.

Quarterly back testing of VaR models to validate their accuracy and effectiveness.

These practices support continuous assessment of market exposures, keeping treasury activities within defined risk limits and supporting efficient balance sheet management.

Liquidity and Interest Rate Risk

Liquidity represents the Banks ability to fund asset growth and meet both expected and unexpected financial obligations as they arise, without incurring excessive costs or losses. It arises when the Bank faces difficulty raising funds to support asset expansion, reduce liabilities or meet commitments on time.

The Bank monitors liquidity through quantitative tools and internal limits. Metrics include the Liquidity Coverage Ratio (LCR), structural liquidity statements, short term dynamic liquidity monitoring, liquidity ratio analysis and prudential limits for negative mismatches across different maturity buckets. Together, these maintain adequate liquidity buffers and support financial resilience under varying market conditions.

Interest rate risk refers to the potential adverse impact of changes in market interest rates on the Banks earnings and economic value. Changes in rates affect NII and the market value of equity by altering the economic value of interest sensitive assets, liabilities and off balance sheet exposures.

Interest rate risk in trading portfolios is monitored daily using risk measurement tools such as VaR and PV01. For the banking book, the Bank manages Interest Rate Risk in the Banking Book (IRRBB) through an Asset Liability Management (ALM) framework. This includes techniques such as gap analysis, duration based assessment, and economic value sensitivity analysis.

The Bank conducts stress testing and scenario analysis to evaluate the potential impact of adverse interest rate movements. Earnings at Risk (EaR) and Economic Value of Equity (EVE) help assess the potential impact of interest rate changes on profitability and balance sheet value. The RBI issued revised IRRBB guidelines on governance, measurement and management through its circular dated February 17, 2023, aligned with the Basel Committee on Banking Supervision (BCBS) framework. Pending the effective implementation date, banks are required to prepare for enhanced measurement and disclosure standards.

The Bank has taken proactive steps to align with the guidelines and currently reports the impact of changes in Economic Value of Equity (Delta EVE) and Delta NII for the banking book to the RBI on a quarterly basis.

Mitigation

The Bank mitigates liquidity and interest rate risks through structured policies, governance mechanisms and continuous monitoring.

• Comprehensive Asset-Liability Management (ALM) Policy: The Bank follows a well defined Asset Liability Management framework that governs the management of liquidity and interest rate risks. A robust monitoring system evaluates cash flow mismatches and key risk indicators, including Basel III regulatory metrics, under both normal and stressed conditions. Risk appetite thresholds and tolerance limits ensure disciplined risk control. An intraday liquidity monitoring framework enables the Bank to track and manage cash flows throughout the day.

• Governance and oversight: The Asset Liability Management Committee (ALCO) oversees liquidity and interest rate risk, regularly reviewing maturity gap profiles, monitoring stock ratio limits and evaluating the potential impact of interest rate changes on NII and EVE. A structured stress testing programme assesses vulnerabilities under various stress scenarios.

• Behavioural analysis and scenario assessment:

The Bank conducts behavioural studies to analyse the patterns of non contractual assets and liabilities as well as embedded options available to customers. These analyses support more accurate assessment of maturity profiles and better manage potential mismatches.

• Liquidity coverage and regulatory compliance: The liquidity coverage ratio assesses the Banks ability to meet short term liquidity obligations. This measure ensures that the Bank maintains an adequate stock of unencumbered High Quality Liquid Assets (HQLA) that can be readily converted into cash to meet liquidity requirements under a 30 day stress scenario. The RBI mandates a minimum LCR of 100%, and the Bank maintains its LCR above the regulatory threshold.

• Contingency Funding Plan (CFP): The Bank maintains a Contingency Funding Plan to ensure adequate financial resources are available to meet liabilities under stressed conditions. The CFP is periodically reviewed and updated to strengthen preparedness and enable timely responses to potential liquidity disruptions.

• Net Stable Funding Ratio (NSFR): The Bank monitors the Net Stable Funding Ratio, which indicates the stability of funding sources relative to the composition of assets and off balance sheet exposures. The RBI mandates a minimum NSFR of 100% from October 01, 2021. The Bank maintains this ratio above the prescribed regulatory minimum, ensuring a stable and sustainable funding profile.

Advanced Stress Testing Framework

The Bank has established a comprehensive Stress Testing Policy aligned with industry best practices. The framework incorporates both sensitivity analysis and scenario based assessments to evaluate the potential impact of adverse conditions on key financial parameters such as NII and the CRAR.

The stress testing methodology has been strengthened through refined models covering multiple risk dimensions, including credit concentration risk, operational risk, strategic risk, compliance risk, reputational risk, conduct risk and fraud risk. The framework also incorporates stress scenarios related to emerging risks such as natural disasters, cyber fraud incidents and extreme ‘Black Swan events.

The Bank conducts annual back testing of its stress testing models to validate assumptions and methodologies, supporting continuous improvement in anticipating and managing potential risk events.

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 Policy, among others, include timely incident reporting, ongoing review of systems and controls, enhancing risk awareness through Risk and 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. In addition to this, risk analysis of various frauds, thefts, robbery and burglary are also being carried out. 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 and 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 CareEdge. Further, awareness sessions on ESG are conducted for various stakeholders.

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. The Bank commits to ensuring 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. In order to assess the ESG impact, assessment templates and checklists have been introduced to carry out a due diligence process as per ESG Policy of the Bank from time to time.

Cyber Risk

Cyber risk is a critical concern for financial institutions, with the potential to cause significant financial, operational, and reputational damage. It encompasses risks arising from failures or breaches of information technology systems, including malicious cyber incidents such as ransomware attacks, hacking, and unauthorised access to sensitive data. The Banks growing reliance on digital channels such as internet banking, mobile banking, electronic platforms, and networked data storage, amplifies this exposure. Common forms of cyber threats include hacking attempts, data breaches, malware infections, and cyber extortion. Financial gain remains a primary motivator behind these sophisticated attacks, with cybercriminals continuously enhancing their capabilities by reinvesting illicit proceeds. The implications extend beyond costs and revenues to the Banks ability to innovate, maintain customer trust, and sustain long term growth. Cyber incidents can disrupt operations, trigger legal liabilities, compromise contractual obligations, and result in significant reputational damage. Data breaches, in particular, can erode customer confidence and damage the Banks brand value, underscoring the importance of safeguarding critical information assets.

Third party and supply chain risks have become significant contributors to the cyber risk landscape. External vendors and service providers, who often have access to sensitive systems and data, may not maintain security standards equivalent to those of the Bank. This creates potential vulnerabilities that cybercriminals can exploit as entry points into the organisation. A significant proportion of security breaches originate from such third party weaknesses.

Given the evolving nature of cyber threats, effective management requires a continuous, proactive approach encompassing robust assessment frameworks, ongoing monitoring, and stringent vendor risk management throughout the lifecycle of third party relationships.

Mitigation

The Bank has established a cybersecurity framework built on a multi layered defence architecture spanning endpoint protection, network security, and perimeter controls.

The Bank maintains a dedicated incident response team that promptly detects, assesses, and responds to cyber incidents. Continuous efforts to enhance cybersecurity awareness among employees and customers complement these technological controls, fostering a culture of vigilance.

Regular risk assessments of IT infrastructure and third party engagements are conducted to identify potential vulnerabilities. Identified gaps are addressed promptly. Cybersecurity governance is reinforced through quarterly reviews by senior management and the Board, focussing on security posture and corrective measures.

Drawing on guidance from the Bank for International Settlements (BIS), the Bank has incorporated capital planning measures for cybersecurity related financial risks. It estimates Pillar II capital requirements at approximately 1% of its operating income under minor stress scenarios.

Compliance Risk

Compliance risk is a critical area of focus for the Bank. It refers to the potential for legal or regulatory penalties, financial losses, or reputational damage arising from the Banks failure to adhere to applicable laws, regulations, standards, and codes of conduct.

Compliance obligations are broad and evolving, spanning primary legislation, regulatory authorities, supervisory guidelines, industry standards, and internal policies. These include statutory mandates, market conventions and codes of practice established by industry bodies, and the Banks own internal code of conduct.

The Banks Compliance Function is dedicated to ensuring strict adherence to all relevant legal and regulatory frameworks. This includes key legislations such as the Banking Regulation Act, the Reserve Bank of India Act, the Foreign Exchange Management Act, and the Prevention of Money Laundering Act. The Bank also adheres to guidelines from the RBI, IRDAI, Pension Fund Regulatory and Development Authority (PFRDA), and the Securities and Exchange Board of India (SEBI).

The Bank also aligns its practices with standards and codes prescribed by industry bodies such as the Indian Banks Association (IBA), Foreign Exchange Dealers Association of India (FEDAI), and Fixed Income Money Market and Derivatives Association of India (FIMMDA), alongside its internal policies and Fair Practices Code.

Mitigation

The Bank has implemented a proactive compliance control framework that ensures adherence to regulatory requirements while fostering a culture of accountability and ethical conduct. Measures include strong internal control systems, proactive compliance testing, technology and automation investment, continuous employee training, and active senior management oversight.

The Bank has deployed Comply360, a technology driven compliance monitoring solution aligned with RBI expectations. This platform has enhanced the dissemination of regulatory updates and tracking of their implementation. Comply360 has enabled a shift from reactive to proactive compliance management, reinforcing the Banks commitment to regulatory discipline and corporate governance.

COMPLIANCE WITH BASEL III FRAMEWORK

Maintaining strong capital adequacy and alignment with global regulatory standards remains a key priority for the Bank. The Bank has computed capital ratios quarterly under Basel frameworks, in line with Pillar I requirements. For credit risk, the Bank follows the standardised approach to determine capital charge, while market risk is assessed using the Standardised Duration Method. Prudent valuation adjustments for trading portfolio illiquidity are applied by deducting the impact of less liquid positions from Common Equity Tier 1 (CET 1) capital in the computation of the CRAR. Operational risk capital charge is calculated using the Basic Indicator Approach.

The Banks Internal Capital Adequacy Assessment Process (ICAAP) incorporates a broader spectrum of risks under Pillar II beyond minimum regulatory requirements. These include liquidity risk, credit concentration risk, cybersecurity risk, climate risk, and fraud risk, among others, ensuring a comprehensive evaluation of its capital adequacy.

The Bank has also established a robust stress testing framework that includes both sensitivity analysis and scenario based assessments. These tests cover key risk areas such as credit default risk, concentration risk, interest rate risk in the banking book, and market risk. The framework has also been extended to incorporate climate related financial risks, covering both physical and transition risk scenarios.

BUSINESS CONTINUITY MANAGEMENT

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 (BIA) is conducted to assess critical applications in the Bank. BCP enables the Bank to minimise business disruption during natural disasters, pandemics and technical disruptions.

Operational Risk Management framework has strengthened the Banks ability to withstand, respond to, and recover from operational disruptions, ensuring continuity of critical operations within defined tolerance levels and supporting overall operational resilience.

The Bank maintains a robust BCM to ensure the uninterrupted functioning of critical business operations during times of disruption, identified through comprehensive Business Impact Analysis (BIA). To execute the BCM effectively, the Bank has established a dedicated Crisis Management Committee comprising heads of major departments. They are responsible for exercising, maintaining, and invoking the BCM as per need. This Committee shall be activated in the event of a disruption, and will be responsible for decision making and oversight of recovery efforts and ensures that business functions resume normalcy with minimal delay. The Banks operational resilience strategy focusses on its ability to prevent, adapt to, respond to, recover, and learn from operational disruptions, including those arising from technology failures, cyber incidents, third-party dependencies, pandemics, natural disasters, or geopolitical events. The Bank has actively engaged in the structured mechanisms for Business Continuity Management, such as Business Impact Analysis (BIA), recovery strategies, disaster recovery (DR), crisis management, and regular testing, to support operational resilience objectives.

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 AUDIT FRAMEWORK

The Banks Internal Audit function is a key element of its governance and risk management framework. The Internal Audit Department (IAD), operating as the third line of defence, provides independent and objective assurance on the adequacy and effectiveness of internal controls, risk management practices, and governance processes. To ensure integrity and independence of the audit function, the Head of Internal Audit reports directly to the Audit Committee of the Board (ACB).

The Bank adopts a Risk Based Internal Audit (RBIA) approach in alignment with regulatory requirements and best practices. Audit plans are developed based on comprehensive risk assessments and approved by the ACB, covering business units, support and control functions, branches, and specialised areas. Offsite audits, supported by data analytics, are conducted to enhance control evaluation and early risk identification.

Audit engagements focus on assessing risk management practices, internal controls, and transaction level testing. Audit observations are supported by actionable recommendations to mitigate risks and strengthen the overall control environment. Audit reports provide valuable insights to Senior Management, supporting risk mitigation, fraud prevention, regulatory compliance, and asset protection.

Audit findings and remediation progress are regularly reviewed by the Audit Committee of Executives (ACE) and the Audit Committee of the Board (ACB), which provides necessary guidance for improvements in the control environment, and monitoring of timely implementation of corrective actions. The Committee also reviews the sustained remediation of identified weaknesses in critical processes and systems.

Concurrent audits conducted by external Chartered Accountant firms supplement the internal audit coverage in high risk areas such as treasury, credit sanction and post-sanction monitoring, loan documentation, asset recovery, trade operations, compliance, internal accounts and CPC liabilities, among others. In addition, thematic audits, regulatory return validations, validation/certification prior to submissions made to the regulator apart from the branch banking audits, gold loan audits, in house Video based Customer Identification Process (V CIP) Concurrent audits, are carried out to address risk areas, process gaps and drive corrective measures.

The Offsite Audit team within the IAD further enhances risk identification through the use of data analytics by accessing multiple data from sources, enabling proactive monitoring of emerging risks and revenue leakages. It also provides actionable recommendations for system and process enhancements.

Audits also extend to outsourced vendors (IT and Non IT), currency chests, asset recovery branches and service branch to ensure comprehensive coverage. Information Systems Audits are performed to evaluate the effectiveness of controls protecting the confidentiality, integrity, and availability of the Banks information systems. These audits review technology components including hardware, operating systems, applications, databases, middleware, networks, and data management practices. Governance frameworks, policies, and operating procedures are also assessed to ensure alignment with regulatory, industry, and internal standards. The audits aim to identify control gaps, vulnerabilities, and weaknesses that could expose systems to security, compliance, and operational risk, among others Based on the findings, recommendations are provided to strengthen IT/IS governance, enhance security controls, and improve overall control environment in the Bank.

The Banks Audit Policy provides for subjecting the Internal Audit function/framework to periodic external quality assurance review to assess the adequacy, effectiveness, and quality of the Internal Audit function, including its governance framework, methodologies, independence, and alignment with the regulatory expectations.

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 reviewed at the HO (Vigilance) and then submitted to the Chief Vigilance Officer for final approval and further course 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 initiates measures to recover losses, including filing of complaints with law enforcement agencies. The Vigilance Department analyses the root causes of fraud incidents and recommends corrective measures by publishing caution notes, memos and direction to departments/stakeholders, wherever necessary 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 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 directions are issued to stakeholders to initiate action as recommended against the said vendors, including removal of name from the Banks empanelled list 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 line with its SBS 2030 strategy, the Bank continues to strengthen its pan-India presence through a calibrated branch expansion approach that balances growth with long-term sustainability and profitability. The Banks branch expansion programme, initiated in FY 2021 22, has followed a measured and disciplined trajectory. During the earlier phase of expansion, between FY 2020 21 and FY 2022 24, the Bank opened around 420 branches in total, including 300 branches in the first three financial years, supporting rapid nationwide network growth. Following a detailed assessment of branch productivity, break-even timelines, and overall network efficiency, the pace of expansion was moderated to 76 branches in FY 2023 24, and further to 56 branches in FY 2024 25. In FY 2025 26, the Bank opened 35 branches, reflecting a clear shift from volume-led expansion to a return-oriented and efficiency-driven strategy.

As against the earlier expansion plan that was concentrated largely in Kerala and neighbouring southern markets, the Bank is now strengthening its presence across northern and western regions to build a more balanced national footprint. Expansion efforts focus on entry and growth in key states such as Madhya Pradesh, Rajasthan, Gujarat, Uttar Pradesh and Delhi, alongside a broader presence across northern, western, and southern India beyond the Banks traditional strongholds. Location selection is guided by each markets potential to strengthen the deposit franchise, ensuring that network expansion supports long-term strategic and profitability objectives. Through this calibrated approach, the Bank has doubled its branch network over the past five years, with a strong focus on strategic location selection, while ensuring that the expansion programme remains aligned with productivity, profitability, and longterm priorities under SBS 2030.

Employee Well being, Social Security, and Safety

Initiatives

Staff Loans

The Bank offers a range of benefits to its IBA staff, including access to loans at preferential interest rates. This includes housing loans and motor vehicle loans, with assured security and structured repayment mechanisms. The Bank also offers concessional interest rates on educational loans to support employees in financing their childrens higher education.

Home Loan

As part of its employee welfare initiatives and in line with industry best practices, the Bank provides home loans to its employees at subsidised interest rates.

POSH for Women

The Bank ensures a safe and respectful workplace for its female employees by providing protection against sexual harassment. This initiative is aligned with the provisions of the POSH Act enacted by the Government of India in 2013.

Health Insurance and Term Policies

The Bank offers comprehensive healthcare and insurance benefits to all employees, including medical reimbursement and cashless hospitalisation facilities. This is done through tie ups with multiple insurance providers and third party administrators (TPAs), with the insurance premium fully borne by the Bank.

For employees covered under the IBA framework, the Bank provides a health insurance scheme implemented in collaboration with National Insurance Company Limited. It offers coverage of 4 lakh for officers across all grades and

3 lakh for award staff, including clerical and subordinate employees.

The Bank also provides a group insurance scheme for IBA employees, offering death benefits of 2 lakh in case of accidental death and 1 lakh for death due to other causes. Certain group schemes provide only death cover, while the GSLI scheme includes a survival benefit, allowing employees to receive a payout upon separation from the Bank.

Officers in IBA Grade IV and above are covered under a Group Personal Accident Policy with a sum insured of

7.50 lakh, with the premium paid by the Bank. For other employees, the policy provides coverage equal to twice the annual CTC, subject to a maximum of 20 lakh, in the event of accidental death.

For CTC employees, the Group Medical Insurance scheme administered by Reliance General Insurance offers a graded sum insured ranging from 3 lakh to 4 lakh. This coverage extends to the employee, spouse, and up to four dependent children.

A voluntary parental medical insurance scheme is also available for CTC employees at competitive premium rates, borne by the employees. IBA and CTC employees may enhance their coverage through top up plans at their own cost. Coverage under all schemes extends to employees and their dependants.

All CTC employees are also entitled to an annual comprehensive health check up at no additional cost. This service is provided by EkinCare Health, which also acts as the TPA for the Group Medical Insurance in collaboration with Reliance General Insurance.

Furthermore, all employees are covered under a term insurance policy offered by Bajaj Allianz Life Insurance Co. Limited. Under this, they are provided life coverage of either twice the annual CTC or 10 lakh, whichever is higher, subject to a maximum limit of ten times the annual CTC.

Bereavement Leave

The Bank provides bereavement leave to employees in the event of the demise of their close relatives.

Health Checkup Leave

The Bank offers annual health checkup leave to all its employees as part of its commitment to employee well being.

Menstrual Leave

The Bank introduced 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 employees are required to work late due to circumstances beyond their control, the Bank provides transport facilities. This initiative helps reduce the impact of extended working hours and ensures employee safety.

Education Scholarship

The Bank awards scholarships to employees children who demonstrate academic excellence. In addition, employees are reimbursed for course fees and provided incentives for successfully completing examinations or courses conducted by the Indian Institute of Banking and Finance (IIBF), as determined by the respective business units.

National Pension Scheme

The Bank actively promotes the National Pension Scheme, a social security initiative of the Central Government, encouraging employees to contribute regularly towards their pension during their service period. Employees are also provided with an online platform to easily open their Permanent Retirement Account Number accounts under the scheme.

Employee Identity Cards

To streamline processes and ensure timely issuance of identification, the Bank has introduced new employee identity cards for all new joiners, replacing the earlier ID-cum-debit cards.

Talent Management and Career Development

Talent development remains at the core of CSB Banks HR strategy. The Bank has institutionalised career development programmes to ensure that employees have clear growth pathways and opportunities for progression. A key initiative in this area is the Emerging Talent Programme, introduced to identify high potential employees at early and mid management levels. Employees selected under this programme are provided with accelerated career paths, priority access to internal opportunities, and differentiated training interventions. They are also exposed to specialised learning programmes, including international training opportunities, which broaden their strategic perspective. The impact of this programme has been significant. In FY 2025 26, 622 employees were identified as emerging talent, with attrition within this group remaining below 6%. Additionally, around 11% of these employees were promoted to higher roles, demonstrating the effectiveness of the initiative in building leadership pipelines.

Employee Engagement and HR Business Partnering

A significant development has been the shift towards a structured HR Business Partnering model. Employee engagement is no longer limited to occasional interactions but driven through regular, scheduled touchpoints. These include one on one meetings, career discussions, and policy awareness sessions, designed to understand employee aspirations and concerns in a systematic manner. These interactions are supported by a structured feedback mechanism, where insights are converted into dashboards and shared with managers for action. This has enabled early identification of attrition risks, better recognition of high performers, and quicker resolution of local issues within branches or business units.

The impact of this approach is evident in improved outcomes. Overall attrition has declined by approximately 7.6%, while early attrition, particularly within the first six months, has reduced significantly from around 64.5% to 59.4%.

The Bank introduced a quarterly newsletter, ‘CSB Times to strengthen internal communication and cultural alignment. This serves as a medium for leadership communication, employee contributions, knowledge sharing, and interactive content. By combining information with engagement elements such as quizzes and employee stories, the initiative has been well received and has contributed to a stronger organisational culture.

Digital Transformation in HR

The implementation of Oracle Fusion HRMS has transformed HR operations. The system has enhanced efficiency across recruitment, payroll, confirmations, and leave management, while introducing automation into several previously manual processes.

Employee self service capabilities have been among the most impactful changes. Employees can now independently access information related to attendance, documentation, and HR policies, reducing reliance on HR personnel for routine queries. This has improved employee experience and enabled the HR team to manage higher volumes of work without increasing headcount. The function has become more scalable as a result.

HR Segmentation

The HR function, in collaboration with senior management, is restructuring business operations into vertical structures. This is in alignment with industry practices and greater use of technology, with the aim of enhancing customer experience and operational efficiency.

The restructuring targets reduced operational and credit risks alongside stronger customer service and responsiveness. As part of this initiative, Performance Score Cards have been introduced to evaluate individuals, units, and business functions. Clear job descriptions have been defined for 100% of unique roles, and 95.5% of employees are now covered under scorecard based performance assessments.

Employees, units and functions receive regular and objective feedback to ensure clarity of expectations and support timely improvements. PMS workshops have been conducted for supervisors to enable fair and objective performance evaluations. Performance Improvement Programmes and quarterly or mid year reviews have been implemented to further strengthen the performance management framework.

Industrial Relations

As of March 31, 2026, the Banks total employee strength stood at 8,187. Of these, 832 employees, comprising officers and award staff, were governed by the IBA pay structure, while 7,352 employees were employed under the CTC framework.

To strengthen capabilities and bring in specialised expertise, the Bank engages retired officers from nationalised banks in select functional areas. Additionally, 3 employees are currently engaged on a contractual basis.

The average age of the Banks workforce is 35 years.

Financial Year			Employees		Average Age (in Years)
	IBA	CTC	Contract Basis	Total
FY 2023 24	996	6,864	3	7,863	33.4
FY 2024 25	906	6,708	2	7,616	34
FY 2025–26	832	7,352	3	8,187	35

The Bank has 513 officers in Scale I to III under the IBA pay structure, all of whom are members of Officers Associations. Two officers associations and three trade unions represent the award staff, including clerks, sub staff, and part time sweepers. The Bank places strong emphasis on fostering cordial and harmonious industrial relations through regular engagement with these unions and associations, ensuring open communication, mutual trust, and constructive dialogue on employee related matters.

	By Order of the Board
	Sd/–
	Biswamohan Mahapatra
Place: Thrissur	Chairperson
Date: June 25, 2026	(DIN: 06990345)