With a legacy spanning 96 years, Thrissur-based South Indian Bank is now focusing on supporting businesses in the communities around its branches, helping them grow through timely and adequate funding.
“Our core philosophy is to be a ‘through-cycle lender’- standing by family-owned businesses not just in good times, but also during challenging periods,” says P.R.Seshadri, the bank’s Managing Director and CEO.
He explains that while business cycles are inevitable, most banks tend to support clients only when times are favourable and retreat during downturns. “We want to be different. Once we understand a business’s long-term vision and commitment, we aim to be a partner through all phases—regardless of market cycles.”
Q: Can you elaborate on this approach?
Many small business owners excel at what they do, but may not have a strong grasp of financial management, particularly cash flow. Take, for example, businesses that rely on cotton as a key raw material. When cotton prices dip, they often rush to buy in bulk, locking up working capital. If prices fall further, they find themselves stuck—unable to convert that inventory into finished goods quickly.
That’s where we step in. Our role is to help them generate sustainable profits through sound business practices, rather than speculative buying. We’re not here to give advice for the sake of it, but to act as a trusted partner—someone who listens, understands and adds value.
This approach is not meant for everyone. We focus on genuine, hard-working entrepreneurs who are committed to building their businesses the right way. Being closely connected to local communities, we see ourselves not just as lenders, but as long-term advisors for small businesses.
What is your strategic vision for the next 1-3 years? Where do you see the growth coming from?
Our strategy is to engage with customers through conversations, understanding their needs either through branches, call centres or any platform where we can interact. We cater to all individuals, businesses and large corporates. In the past year, we have created 12 new systems and processes to help our employees engage better and offer suitable solutions. But it starts with customer engagement. Our goal is, if we can engage our customers and our employees have the tools to offer all our products, then we can understand their needs and fulfil them.
In this fiscal, we are reasonably confident to bring a significant growth in the MSME balance sheet. The growth in assets would be north of 12 per cent and with the change in the asset mix; the growth would be coming largely from MSME, retail and other such asset categories. Overall, we are targeting 12-13 per cent growth on advances and 11-12 per cent on deposits.
Do you think that managing margins is going to be a challenge with rates poised to trend down in the coming quarters?
In the interest rate easing scenario, the challenge primarily is on the margins as the cost of funding will only have a lagged effect of the repo rate cut. We will have to bring the cost of funding down because a significant portion of our loans have already been re-priced with a 100 basis point reduction. In case of deposits that we have already contracted at a particular rate, we cannot change it and we can only revise the rates for the deposits which are getting contracted on a going-forward basis.
The rates we offer on deposits are also driven by what others in the market are offering. So, the full rate cut benefit has not been passed on to depositors yet. There will be some pressure on yield in the near term until we can bring down our cost of funds. We have taken some steps to reduce our deposit rates. But the overall rate environment has dropped more than that. Yes, managing the margins is going to be a challenge.
What are your plans to take the pressure off from the margins and improve profitability?
The focus areas are going to be MSME and retail advances which are the high-yielding assets. The rate of growth of corporate advances will be much slower. The whole idea is to cycle out of the low-yielding advances and cycle into the high-yielding ones. We will get the MSME and retail to come in large enough quantities and then gradually wean ourselves off the low-yielding corporate book. As most of these loans are in the nature of very short-duration assets, we can manage this effectively.
So, the first order of business is to get retail and MSME to grow very considerably so that most of our growth challenges are addressed from those two engines. And then, we have the option as to how much of the corporate we retain and how much we give up. We will be managing the balance sheet dynamically.
On the liability side, our focus is going to be on low-cost funds. As the interest rate regime in the market drops, the difference between CA and SA and term deposits will also drop. The opportunity cost of not moving the money from CASA to TD will also not be as much. Our view is that the market will grow CA and SA faster this year than it did last year.
How do you view the new RBI norms on gold loans?
The new rules provide clarity on what can and can’t be done. For loans under ₹2.5 lakh, intensive credit underwriting is not mandatory. But beyond that full credit underwriting is now required.
This means, we need to verify the borrower’s repayment ability which adds more steps to the process. We are currently adjusting our systems and protocols to align with these changes.
How do you plan to take your digital initiatives forward?
We are redefining our digital strategy to operate as a distinct revenue-generating unit by tapping into opportunities from purely digital channels. Our vision is to forge strategic alliances with fintechs and digital ecosystems to accelerate our digital transformation journey. The core objective is to enhance the banking experience by addressing the limitations of traditional branch banking, while optimising costs and ensuring scalability.
In recent months, we have built three robust digital assets: a blog and the Fincredibles vlog channels in both English and Malayalam. These platforms have received an encouraging response and are playing a pivotal role in driving digital engagement and customer acquisition.
We have launched several digital-first products over the past year to deepen our market presence and streamline customer journeys, including Quick Personal Loan; Quick FD and GST Power.
On the co-lending front, we have partnered with several leading fintechs and NBFCs. We believe these collaborations will be instrumental in expanding our lending portfolio and scaling our digital capabilities.