Fincare Small Finance Bank is confident of being able to keep pace with its loan growth as it has a relatively small balance sheet and is opening new branches, which will help in mobilising more deposits, according to managing director and chief executive officer Rajeev Yadav.
The Bengaluru-based microfinance institution-turned small finance bank (SFB) has more than 1,100 branches across 21 states. It has around 100 branches in bigger cities.
“Typically for us, deposit growth and credit growth are roughly the same numbers. We try to raise deposits in line with the asset growth. Deposits are definitely more sought after at this point of time because of the higher credit growth of the banking industry. Because we have a small balance sheet and we are opening new branches and we offer attractive rates to customers, what we have generally found that we are able to keep pace with our asset growth. We are confident that we will be able to do that even right now,” Yadav told FE.
The bank has entered eastern India with its first branch in Kolkata. The lender, which generally adds around 150 branches every year, feels a “huge opportunity” exits for expansion post-Covid.
“When we do branch expansion in tier I and tier II cities or in villages, it typically starts with a more aggressive loan strategy. A higher level deposit mobilisation does not happen over a particular point of time. So, it depends upon which geographies we are launching our branches in. In the bigger cities, deposits are more than the loans. But, the moment we go to the semi-urban or rural areas, loan book becomes much larger than deposits,” Yadav said.
“In the third quarter this fiscal, at the conceptual level we were nearly at the pre-Covid level for the microfinance products. And for secured products, we were far better than what we had experienced during pre-Covid phase,” the MD said.
The bank had filed a draft red herring prospectus (DRHP) with Sebi in August last year for an initial public offering, and is awaiting approval.
As of March 31, 2022, microfinance loans accounted for around 76% of the SFB’s loan book, while the remaining was from secured products like SME loan (loans against property), overdraft facility for SME customers, affordable housing loan, two-wheeler loan and gold loan.
“Obviously, things have changed over the months and gradually the non-microfinance products are growing a little faster than the microfinance. So, the mix of other products are increasing in the balance sheet,” Yadav said. From the new geography perspective, the bank is now focused on the East and North.