Ramesh Babu B, Managing Director & CEO, The Karur Vysya Bank | Photo credit: KSL
“In terms of how we can raise funds this quarter, both in terms of deposits and government bonds, there is a reduction of 16 basis points during the quarter,” said Ramesh Babu B, Managing Director & CEO, The Karur Vysya Bank, in an interaction with business line.
The company also shifted some of its MCLR-linked loans to more fixed-rate loan products such as gold loans, boosting returns. “Earlier, our fixed income portion of advances was around 8 percent, but by the end of this quarter, this has gone up to 23 percent,” Babu said. The bank has also internally capped gold lending at 35 percent in a conscious effort to reduce over-reliance on a single product, he added.
Key among all the drivers has been the cost of credit, he noted.
“On a book of ₹97,000 crore, our net NPA is around ₹200 to 300 crore. So, the need for provisioning has reduced due to various digital initiatives and proactive steps taken to monitor accounts and set up guardrails, he said.
On the advancement side, RAM (Retail, Agri and MSME) continues to account for the largest portion (over 80 percent) of the loan portfolio, with the focus on corporate loans limited to specific sectors.
Due to the improved supervision of accounts at office level, the KVB says it has not seen much stress in the SME segment. While our exposure to affected sectors such as textiles is also minimal, we also hear that the MSMEs that are part of our portfolio have generally managed the tariff situation well, he said.
The business portfolio is now about 14 percent, while previously it was 30 to 35 percent. We have identified a number of sectors within our risk appetite, such as commercial real estate, contractors and others, where this supports our pricing, he said.
On the deposit front, the MD and CEO said the bank has taken a more data-driven expansion approach. “Last year and the year before, we opened about 50 branches each, but this year we have significantly reduced the number of new openings. Instead of relying solely on the performance of the branches, we have mobilized about 1,300 foot on the street (FOS) employees focused solely on deposits,” he said.
KVB’s deposits increased 15.6 percent year-on-year in Q3 26, and its loan portfolio grew 17.2 percent year-on-year. The bank achieved a ROA of 2.05% for the quarter ending December 2025.
The MD and CEO also point to a changing landscape of the banking workforce. We have transferred most of the routine operations to the centralized operating unit in Coimbatore, with a workforce of 200 to 300 employees, and the branches are now focusing on sales and acquisitions as the service side of it is both digitalized and centralized.
Published on January 27, 2026
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