 "Electric vehicles")
(This report has been updated)
ESAF Small Finance Bank (SFB) is focusing on financing solar rooftop and electric vehicles as a part of its strategy to drive asset growth in the clean energy segment which was started by the lender about a year back, said Paul K Thomas, MD & CEO of ESAF SFB in an interaction.
ESAF Small Finance Bank (SFB) is focusing on financing solar rooftop and electric vehicles as a part of its strategy to drive asset growth in the clean energy segment which was started by the lender about a year back, said Paul K Thomas, MD & CEO of ESAF SFB in an interaction.
“We are focusing on solar rooftop financing as well as electric vehicles, with particular attention to promoting electric vehicles, within the vehicle load segment,” Thomas told Business Standard.
Solar rooftop financing which is reported under the clean energy loans and electric two wheeler financing forms a part of the lender's total retail loans worth Rs 3201 crore. As of December 31, 2023, the electric two wheeler financing stood at Rs 7.77 crore from Rs 7.91 crore at the end of March 31, 2023. The solar rooftop financing of the bank stood at around Rs 2.42 crore at the end of Q3 FY24.
The financing under clean energy loans which started in January 2023 stood at around Rs 1.2 crore as of March 31, 2023.
Talking about the challenges the bank is facing, Thomas list climate change as one of the risks since most of its customers are engaged in the agriculture segment.
More From This Section
Climate risk impacts the availability of water and the income of farmers, making it a key risk factor for the lenders involved in agriculture loans and micro-lending. “It will have an impact on everyone. Especially banks like us that are focusing on agriculture, micro-entrepreneurs. Climate impact can be a significant risk for all of us,” Thomas said.
He also said that mobilisation of Current Account and Savings Account (Casa) deposits and getting the right talents are other major challenges faced by the SFBs. “Since 70 per cent of our branches are in rural and semi-urban areas and getting the right talents in this area is also another challenge as people want to move out of rural areas,” Thomas said.
For ESAF SFB, CASA deposits grew by 20 per cent year-on-year in the quarter ended on December 31, 2023 to Rs 3,563 crore whereas overall deposits grew by 40 per cent to Rs 18,860 crore.
ESAF SFB got 92 per cent of their deposits from small retail businesses and nearly 25 per cent of their overall deposits are NRI deposits.
The bank is planning to reduce its micro loan book by nearly 4 per cent every year. The MFI book is Rs 13,096 crore which accounts for nearly 72 per cent of the total AUM of Rs 18,149 crore.
During Q3 FY24, the asset quality of the lender worsened as climate change caused stress among customers affecting the micro loan segments. However, the trend is showing gradual reversal with the asset quality expected to be manageable by the end of next year.
