Even as other small finance banks (SFB) such as AU SFB and Ujjivan SFB have stated that they will apply to the Reserve Bank of India (RBI) for a universal banking license in the near to medium term, Suryoday SFB is in no hurry to apply for the same, R. Baskar Babu, MD & CEO told FE.
“We are not in a hurry (to apply for a universal bank license). One reason is given our scale, we do not really see varying gaps in terms of the segment we are currently operating in and as a universal bank what we can operate in”, he said.
He added that the SFB is not intending to operate in forex space and large corporate lending activities at its current loan book size of Rs 6,372 crore as of June end. The other limitation SFBs have currently is to park 75% of their advances in the priority sector loan (psl) segment whereas universal banks are mandated to park only 40% of overall loans in the priority sector. Babu said Suryoday SFB currently has excess PSL on its book in each loan segment and thus faces no challenges in complying with this aspect.
For two years the intention is to build a very strong small finance bank and do great financial inclusion, he said, adding that he would instead wait for larger SFBs to first traverse their path towards an universal bank license.
On asset side, the lender is aiming for a 30% year-on-year (YoY) growth in the current fiscal. The SFB is aiming to grow its commercial vehicle loan book to Rs 750 crore by March end from Rs 421 crore as of June end. Overall deposits, meanwhile, will grow between 35%-40% YoY, he said. As of June end, the SFB’s total deposits stood at Rs 5,722 crore. The SFB is also looking to form two “significant” partnerships with fintechs after the RBI came out with concrete guidelines on the first loss default guarantee (FLDG) model.
Going forward the SFB will also cover majority of its inclusive finance loans under the central government’s Credit Guarantee Fund for Micro Units (CGFMU) scheme. The SFB has an inclusive finance portfolio of Rs 3,810 crore as of June end and about Rs 2,000 crore of such loans are currently covered under the CGFMU scheme, he said.
Lastly, he said that the SFB will aim to reduce its gross and net non-performing asset ratio (GNPA, NNPA) to 2% and 0.5% by FY24 end from 3% and 1.6% as of June end, respectively.