Ramesh Babu B, Managing Director & CEO, The Karur Vysya Bank
| Photo Credit:
KSL
As private sector bank Karur Vysya Bank touched record profitability this quarter, the bank says that strategic steps it took to manage the cost of deposits, yield on funds, and steps for better recovery helped them reach the milestone.
“With regard to the way in which we are able to raise funds this quarter, both in the deposit front as well as treasury front, there is a reduction of 16 basis points during the quarter,” Ramesh Babu B, Managing Director & CEO, The Karur Vysya Bank, said in an interaction with businessline.
The company also moved some of its MCLR-linked loans to more of fixed rate loan products, such as gold loans, thereby helping in the yield. “Earlier, our fixed rate portion of advances used to be around 8 per cent, but by the end of this quarter, it has come to 23 per cent,” Babu said. The bank has also internally capped gold loans at 35 per cent in a conscious effort to reduce over-dependence on a single product, he added.
The key among all drivers has been the credit cost, he noted.
“On a book of ₹97,000 crore, our net NPA is around ₹200 to 300 crore. So, the need for provisioning has come down because of various digital initiatives and proactive steps taken towards monitoring accounts and setting up guardrails, he said.
On the advances side, RAM (Retail, Agri and MSME) continues to be a bulk (over 80 per cent) of its loan book, with corporate credit focus being restricted to specific sectors.
With improved monitoring of accounts at the branch level, KVB says it has not seen much stress in the MSME segment. While our exposure to impacted sectors like textiles is also minimal, we also hear that by and large the MSMEs that are part of our portfolio have managed the tariffs situation well, he said.
The corporate portfolio is now at around 14 per cent from being at 30-35 per cent earlier. We have identified a few sectors, like commercial real estate, contractors, and others, within our risk appetite where it is supporting our pricing, he said.
On the deposit front, the MD and CEO said that the bank has taken a more data-driven expansion approach. “Last year and the year before, we opened around 50 branches each, but this year we have significantly reduced the number of new openings. Instead of relying on branch performance alone, we have mobilised about 1,300 feet on street (FOS) associates focused only on deposits,” he said.
KVB’s deposits were up by 15.6 per cent YoY for Q3FY26, and the loan book grew at 17.2 per cent y-o-y. The bank achieved ROA of 2.05% for the quarter ended December 2025.
The MD and CEO also points to a changing landscape of the workforce in the banks. We have transitioned most of the routine operations to the centralised operations unit at Coimbatore with a staff of 200–300, and branches are now focusing on sales and acquisitions as the service side of it has been both digitised and centralised.
Published on January 27, 2026
