Shivalik Small Finance Bank (SFB), the initial lender to transition to the model from a cooperative bank, expects to develop its loan book by about 49% more than the next 12 months to Rs 3,050 crore, MD & CEO Suveer Kumar Gupta told Shritama Bose. The bank’s collections have so far been unaffected by the Covid surge, but it will watch how items evolve from right here, he added. Edited excerpts:
As you make the transition from an urban cooperative bank to an SFB, what are your quick priorities?
We have currently begun operations as an SFB. Our quick priorities relate to particular elements of banking that are various for a cooperative bank and a industrial bank, foremost amongst them getting compliances. Our initial priority is to stabilise them. As far as the consumer-facing elements are concerned, there’s not considerably of a modify from how we delivered services as a cooperative bank. We have ensured that all our operations are handled seamlessly and the consumer does not face any troubles due to the fact of this transition. The second concentrate is on the digital side. We are a incredibly digitally focused bank and we program to obtain digital-only shoppers. This is specifically for millennials and young people today who are more comfy undertaking items digitally. We are also creating tech, which will aid us provide services to the underbanked, specifically in rural locations. We are coming up with an app developed with the rural masses in thoughts, which will be in Hindi. Physically, we would like to expand in locations exactly where our presence is currently higher — in the states of Uttar Pradesh, Uttarakhand, Madhya Pradesh, Rajasthan, Haryana, Punjab and Himachal Pradesh. We would also like to expand pan-India digitally by implies of video KYC.
Will you be adding more merchandise to your platform?
As of now, we offer you a comprehensive bouquet of retail banking merchandise, each on the deposit side as properly as the lending side. Our merchandise are specially suited to our target consumer base, which is the MSME (micro, compact and medium enterprises) sector — compact enterprises and industries as properly as nearby kirana shops. Becoming an SFB opens up more locations of banking to us. On the deposits side, we would be coming up with tax-saver FDs (fixed deposits) for senior citizens, and specialised deposits for millennials and girls. We would be soliciting government and institutional business enterprise for deposits. On the lending side, apart from providing all our loan merchandise digitally, we would expand on the agri side and do lending against e-warehouse receipts and also finance allied activities, such as dairy farming. As a industrial bank, we can also make use of refinance schemes. Our microfinance book is now at 10%, which we would like to develop to 15-20%. We’d also like to offer you loans against FDs and insurance coverage policies, each of which can be carried out digitally. We currently have a couple of fintech partnerships for loan sourcing and we will be seeking for more of these as properly as work with business enterprise correspondents.
What is your expense of funds proper now and how do you anticipate it to modify?
At the moment our expense of funds is in between 6 and 6.5% and we anticipate it to fall as more CASA (existing account savings account) becomes readily available to the bank in terms of government and institutional deposits. We will also have more possibilities to lend at a reduced price in terms of government-sponsored schemes and availability of refinance.
What sort of development in loans do you anticipate more than a one-year period?
We are at present at a loan book size of about Rs 2,050 crore and we are targeting to develop it to Rs 6,000 crore in the next 4 years. In the next one year, the book will develop by Rs 1,000 crore. We are organizing to add 40 extra consumer touch points, which will involve branches, ATMs and business enterprise correspondents.
Given the existing Covid surge, how considerably of a challenge are you facing in terms of repayments?
Last year, we had provided the moratorium to all our shoppers. Our strategy was to engage with shoppers and aid make certain very good credit behaviour. Where necessary, we also provided top rated-up loans to aid them tide via short-term issues. By the time it got lifted, 80% of our shoppers had began to repay. By March, our collections had been nearly back to pre-Covid levels. But the second wave has hit us in April and it is a small early now to say how items will turn out. At the moment our collection prices are fine, but it is challenging to say exactly where items will go from right here.