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Informist, Wednesday, Nov. 6, 2024

 

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--Utkarsh Small Fin Bank MD: Expect reverse merger to be completed in a year 
--Utkarsh Small Fin Bk MD: To mull universal bank licence post-reverse merger 
--CONTEXT: Utkarsh Small Finance Bank MD Govind Singh at BS BFSI Summit 
--ESAF Small Fin Bk MD:To be eligible for universal bank licence in few qtrs 
--CONTEXT: ESAF Small Finance Bank MD K. Paul Thomas at BS BFSI Summit 
--ESAF Small Finance Bank MD: Not in a hurry to become a universal bank

 

MUMBAI – Leading small finance banks are not too keen to transition into universal banks immediately, senior executives of small finance banks said during a panel discussion at the Business Standard BFSI Summit Wednesday. Suryoday Small Finance Bank, Jana Small Finance Bank, Utkarsh Small Finance Bank, and ESAF Small Finance Bank took part in the discussion. They said they are not rushing to seek universal bank licences.  

 

"Not in a hurry to become universal bank," K. Paul Thomas, managing director and chief executive officer, ESAF Small Finance Bank, said in the panel discussion. He added that the bank would be eligible to become a universal bank in a few quarters. 

 

Govind Singh, managing director and chief executive officer, Utkarsh Small Finance Bank, also said they are considering the transition to a universal bank only after the reverse merger, which is expected to be completed in a year. 

 

Utkarsh Small Finance Bank is set to merge with its parent company, Utkarsh CoreInvest Ltd. Utkarsh CoreInvest is a non-banking finance company that is a non-deposit systematically important core investment company. The company carries out its business majorly through its shareholding in Utkarsh Small Finance Bank. The reverse merger aims to fulfil the regulatory requirements of the Reserve Bank of India on acquisition and holding of shares or voting rights in banking companies. 

 

In May, Ujjivan Small Finance Bank Managing Director Ittira Davis told Informist that they plan to diversify their portfolio to meet the Reserve Bank of India's conditions to transition into a universal bank.

 

In April, RBI issued guidelines for small finance banks to voluntarily convert to universal banks. Some key parameters stated by the regulator were that the small finance bank should report a net profit for the two previous financial years and have gross and net non-performing asset ratios below 3% and 1%, respectively, for the two previous financial years. The guidelines also mandated that the small finance bank must maintain a capital-to-risk-weighted assets ratio of 15%.

 

Of 11 small finance banks in the county, AU Small Finance Bank is the only bank which has applied for the universal bank licence.  End

 

Reported by Christina Titus

Edited by Tanima Banerjee

 

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