Utkarsh Small Finance Bank (USFBL) has raised Tier II capital worth ₹195 crore to enhance capital adequacy and support business growth. USFBL has raised Tier II capital after a gap of almost two years. The money raised is expected to increase capital adequacy ratio (CAR) by more than 300 basis points. The CAR stood at 22.19 % at end of March 2020.
ICRA has rated this Tier II issuance as (ICRA) A, and highlighted the bank’s experienced management team, strong investor base at the holding company and adequate systems and processes in the bank. ICRA further mentioned, an improvement in the net interest margin and the comfortable asset quality in the rating rationale. The profit after tax (PAT) almost doubled to ₹186.74 crore in financial year 2019-20 from ₹93.9 crore achieved in financial year 2018-19. The gross NPA ratio is 0.71% and net NPA ratio is 0.18% as of March 31.
USFBL, a scheduled commercial bank started its banking operations in January 2017 post receiving the small finance bank licence from Reserve Bank of India. Prior to that, its holding company was operating as a micro finance institution under NBFC–MFI licence. Headquartered at Varanasi in the state of Uttar Pradesh, USFBL is present in 173 districts across 15 states & 2 union territories through 508 banking outlets.