Small Finance Banks

Bad loans grow sequentially and annually

One major benefit of becoming a universal bank is that public perception will change

We achieved an 8 per cent growth in deposits on a quarter-on-quarter basis, maintaining a retail-centric focus, said Sarvjit Singh Samra, MD & CEO, Capital Small Finance Bank

Lender offers interest rate of 8.80% on fixed deposits for general citizens and 9.30% on FDs for senior citizens on select tenures

Manushree Saggar, Sector Head - Financial Sector Ratings, ICRA said the profitability for the SFBs to remain under pressure in H2 FY2025

RBI has given approval to HDFC Bank and its group companies to collectively acquire up to 9.5 per cent of paid-up share capital or voting rights in Kotak Mahindra Bank, AU Small Finance Bank

The company began microfinance activities in 2006 and was registered with the RBI as an NBFC-MFI in September 2013

RBI allows Small Finance Banks to offer pre-sanctioned credit lines via UPI, aiming to boost financial inclusion for underserved communities, including small businesses and micro-entrepreneurs

All said, growth prospects for SFBs remain buoyant, anchored by comfortable capitalisation and ever-increasing presence in underpenetrated markets

SFBs have a talent pool of senior managers with over 20 years of experience, ensuring robust succession planning for a professionally managed bank.

Industry leaders at the Business Standard BFSI Insight Summit discussed the growth potential of small finance banks and their possible evolution into universal banks to expand their public appeal

The boards are also expected to ensure a proper succession planning for top management

The RBI has been encouraging banks to strengthen governance standards to prevent financial instability and systemic risks

Swaminathan highlighted the role of governance in guiding SFBs towards sustainable growth with stability. He also emphasised the importance of sustainable business models

Small Finance Banks' (SFBs) loan growth will moderate to 25-27 per cent in FY25 against 28 per cent in FY24, a domestic rating agency said on Monday. Crisil Ratings said though a tad lower, the advances growth will be robust and driven by factors like segmental and geographical expansion by the entities. While capital buffers remain healthy, SFBs will face challenges in mobilising deposits and their costs and will explore alternative, non-deposit avenues to fund credit growth, the agency said. The asset growth will be driven by traditional microlending being the most popular and new ones like mortgages, small businesses or even unsecured loans. "Credit growth in new asset classes is seen at 40 per cent this fiscal, while that in traditional segments will be 20 per cent," its senior director Ajit Velonie said. He added that the share of new asset classes will cross 40 per cent by the end of March 2025 on the back of the faster growth and underlined that most of the asset ...

Provisions more than double on asset quality pressures

The enhanced guidelines must be issued to lending institutions to protect the interests of the microfinance sector and specifically its clients

The deposits of the SFBs posted a double-digit increase from the quarter ended in June 2024. Deposits of Equitas SFB grew by 35.40 per cent, Capital SFB by 10 per cent, and Suryoday SFB by 42 per cent

Highlighting the importance of small finance banks (SFBs) in fostering financial inclusion, former Financial Services Secretary D K Mittal said most of them would not clamour to become universal banks if some restrictions are eased by the Reserve Bank. To promote financial inclusion in the country, RBI, in 2014, issued the guidelines for licensing of small finance banks (SFBs) in the private sector. Following this, RBI granted licences to a dozen entities. As per the RBI guidelines, SFBs are required to open at least 25 per cent of their branches in unbanked rural centres and are mandated to provide 75 per cent of loans to the priority sector compared to 40 per cent for the commercial banks. Last month, the RBI invited applications from small finance banks meeting specified criteria, including a minimum net worth of Rs 1,000 crore, for becoming regular or universal banks. "While issuing guidelines for Small Finance Banks to become universal banks, it would be in the larger nationa

In April, the Reserve Bank of India (RBI) came out with guidelines for the voluntary conversion of SFBs to universal banks.