Our Strategy
We believe the Indian banking sector is entering a new growth phase driven by digital innovation, financial inclusion, and changing customer expectations. At Karur Vysya Bank, we are building on our 110-year legacy with a strategy focused on cautious growth, maintaining exceptional asset quality, and advancing a comprehensive digital transformation. Our core priorities include strengthening our stable retail deposit base, implementing a robust risk management framework, and achieving sustainable profitability—highlighted by our historic net profit of ₹2,510 crore in FY 2025-26.
Central to our strategy is leveraging AI-driven automation, Open Finance, and India’s digital public infrastructure via cloud-native API management solutions. By integrating these systems directly into our core banking architecture, we have successfully digitized almost 100% of our loan processes, effectively reducing credit processing times from several days down to just a few minutes. This technological backbone allows us to scale retail and MSME lending seamlessly while proactively mitigating underwriting risks.
With a strong footprint of over 900 branches across urban, semi-urban, and rural areas, KVB is well-positioned to serve emerging customer segments. We continue to deepen our leadership in MSME, retail, and agricultural lending through specialized credit initiatives—such as our localized Business Banking Units, tailored agricultural loans, and green financing. Backed by excellent corporate governance, solid capital adequacy (18.76% under Basel III as of March 2026), and a customer-first approach, we are dedicated to creating long-term value for all stakeholders.
Deposit Growth Outpacing Credit Growth
Although deposits grew by a healthy 13.5% in FY 2025-26, credit growth at 15.9% continued to surpass deposit accretion, increasing funding pressure on the banking sector. At the same time, rising household investments in SIPs, mutual funds and other capital market instruments have shifted savings away from traditional bank deposits, especially low-cost CASA balances. Consequently, banks are increasingly turning to higher-cost funding options like term deposits and certificate of deposit to support their balance sheet growth. In this context, enhancing deposit mobilization is vital for sustaining credit growth, protecting margins, and maintaining liquidity.
Improvement in Asset Quality
The Indian banking sector has achieved a notable improvement in asset quality, with non-performing assets declining to some of their lowest levels in recent decades. Gross NPA levels have steadily decreased from 7.5% in FY 2020-21 to 2.0% in FY 2025-26, while Net NPAs have dropped to just 0.4%. This improvement is driven by strong underwriting standards, disciplined recoveries, regulatory oversight and balance sheet repair, all of which have enhanced sector resilience. Asset quality is expected to improve even further, with GNPA estimated to reach approximately 1.9% by FY 2026-27.
Against this backdrop, we have outperformed the broader sector, delivering a sharper improvement in asset quality. The Bank's GNPA ratio declined from 7.85% in FY 2020-21 to 0.75% in FY 2025-26, while NNPA fell to 0.19%. This reflects our disciplined approach to credit underwriting, proactive risk management, and sustained focus on portfolio quality.
Digital Banking and Open Finance Revolution
India's digital public infrastructure is evolving banking from a transaction-focused approach to a data-centric ecosystem. Initiatives like Account Aggregator frameworks, Open Finance, digital onboarding, and the phased deployment of the Digital Rupee facilitate secure, consent-based financial services. With over 600 regulated participants in Open Finance and more than 250 Mn linked accounts in the Account Aggregator system, banks now have unprecedented access to customer data, enabling more personalized products and quicker credit decisions.
Financial Inclusion and Credit Democratization
India's Digital Public Infrastructure (DPI) is accelerating financial inclusion on an unprecedented scale. With over 58 crore Jan Dhan accounts, and frameworks like the Unified Lending Interface (ULI) and Account Aggregator simplifying and lowering the cost of credit access, these platforms are broadening formal lending to rural, semi-urban, and underserved communities, opening up entirely new banking markets.
Regulatory Shifts
The banking industry's regulatory focus is shifting toward resilience, transparency, cybersecurity, climate risk, and consumer protection. Major trends include deploying climate-risk assessment tools, improving fraud compensation measures, tightening KYC procedures, adopting risk-based authentication and moving to Expected Credit Loss (ECL) provisioning. These changes are boosting trust and enhancing the long-term stability of the financial sector. KVB is well-placed to capitalize on a more regulated and transparent environment.