Utkarsh Small Finance Bank rises 4% on plans to sell off Rs 355-cr loans

Utkarsh Small Finance Bank shares advanced 3.7 per cent in Monday's trade on BSE, logging an intraday high at Rs 35.85 per share. However, around 10:30 AM, Utkarsh Small Finance Bank share price pared gains an was up 0.64 per cent at Rs 34.78 per share on BSE. In comparison, the BSE Sensex was down 0.04 per cent at 78,667.88. The market capitalisation of the company stood at Rs 3,831.11 crore. The 52-week high of the stock stood at Rs 68.23 per share and the 52-week low stood at Rs 34.5 per share.

 

The buying in the stock came after the small finance bank revealed plans to sell off Rs 355 crore worth of non-performing microfinance loans to asset reconstruction companies.

 

 

In its filing on Friday after market hours the bank set a reserve price of Rs 52 crore for the assets it is putting up for sale, which would translate into a recovery of 14.64 per cent. These loans are unsecured in nature and have been written off by the bank after being fully provided for.

 

Selling off microfinance loans refers to the practice of microfinance institutions (MFIs) or banks selling their portfolios of microloans to other financial institutions, investors, or asset management firms. Microfinance loans are typically small loans provided to individuals or small businesses in low-income or underserved areas, often for entrepreneurial purposes or basic needs, with the aim of fostering economic development. 

 

Earlier this week, IndusInd Bank also put on the block non-performing microfinance loans worth Rs 1,573 crore, amid mounting stress in the microfinance sector. The reserve price set by the bank for selling the assets is Rs 85 crore, which would translate into a recovery of 5.04 per cent.

 

Utkarsh Small Finance Bank, originally founded as Utkarsh Micro Finance in 2009, transitioned into a small finance bank in 2017, with a focus on promoting financial inclusion for underserved populations in rural and semi-urban areas. It offers a range of products, including savings and current accounts, fixed and recurring deposits, microloans, personal loans, business loans, and agricultural financing. 

 

The bank emphasises empowering low-income individuals and micro-entrepreneurs, particularly women, by providing accessible financial services that help improve livelihoods and support small businesses. Additionally, Utkarsh offers digital banking, insurance, and investment products. With its roots in microfinance, the bank continues to prioritize financial literacy and community development through various CSR initiatives. Its expansion across India and commitment to financial inclusion has earned it recognition for its role in enhancing economic development, particularly in rural and underserved regions.

 

In the past one year, Utkarsh Small Finance Bank shares have lost 35.8 per cent against Sensex's rise of 9 per cent.