Kerala-based private sector lender CSB Bank’s initial public offering (IPO) opened today with a price band of Rs 193 to 195. They are looking to raise a little over Rs 400 crore in the market. It’s a mix of an offer for sale (OFS) and some fresh share sale as well.

CEO and managing director CVR Rajendran in an interview with CNBC-TV18 said CSB Bank will continue to focus on gold and it will remain one-third of the bank's portfolio. “The yields are good. We get around 11.5 percent as a portfolio yield on gold today and there is a possibility of increasing the price."

"Pricing power is there because today I do not fight head-on with public sector banks or older private sector banks. I fight with the NBFCs in the space. So there is good room for increase in the pricing,” he added.

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Rajendran said the bank is expanding in the MSME sector. “My SME portfolio is 35 percent of my asset book but only 10 percent of it is MSME,” he added.

Talking about capital requirement, he said, “We have enough capital. Our capital adequacy is 23 percent today. The Fairfax is valued at buying at Rs 2,400 and brought in Rs 1,208 crore for 51 percent stake. This is basically offer for sale. Only Rs 24 crore is the additional money which is going to come to me and considering 1/3rd of the book is only gold loan and corporate book is highly rated corporate, my capital adequacy requirements are very low.”

He further said that Fairfax will need to reduce stake by 9 percent over 5 years.

On growth front, Rajendran said, “What makes us attractive is my accelerate provisioning which we adopted today; we provide much more than the RBI’s requirement and provision coverage ratio is 80 percent.”

“Over a period the cost of deposit has come down from 7.8 to 5.8 percent today and yield has gone up very substantially; we are the fourth largest in the yield in the market. So about 10.6 percent is our yield on advances. So net interest margin which was around 2.1 percent has expanded to 3.4 percent over a period. Consistently quarter after quarter the way we are moving, I do not think we are asking more,” he further added.