The Small Finance Banks (SFB)s has reported a 17% growth in FY2018 with assets under management (AUM) of Rs. 51,498 crore as on March 31, 2018 (26% AUM growth in FY2017). Though the pace of growth slowed down in the last two years, the primary reason was the focus SFBs on the migration process – from NBFCs to SFBs. As per a report released by ICRA on SFBS, all the SFBs were operational by June 2018 and most of the players (NBFCs) have managed the transition well with respect to the initial challenges identified earlier such as raising of capital, diversification of liability profile, identifying and converting branches as well as diversifying the product portfolio and recruiting staff.
Commenting further Supreeta Nijjar, Vice President, ICRA Ratingssays, “Apart from the migration process, SFBs growth was also affected by the demonetisation related impact on the microfinance sector. While microfinance dominates the asset mix of SFBs, focus on product diversification has led to a reduction in the share of microfinance to 51% as on March 31, 2018 from 61% as on March 31, 2017 with the SFBs establishing their presence in retail asset classes such as vehicle loans, loans against property (LAP) and housing finance. However, the share of microfinance for the erstwhile Non-Banking Finance Companies (NBFC-MFIs), which converted to SFBs, stood higher at 79% as on March 31, 2018 (84% as on March 31, 2017).”
