Mumbai: Karnataka-based Fincare Small Finance Bank, which commenced operations on Friday, is looking to build a strong small and medium enterprise (SME) and self-employed base for both assets and liabilities.
“Overall we want to have a strong SME and self-employed base for lending as well as deposit over a period of time," said Rajeev Yadav, managing director and chief executive officer of Fincare Small Finance Bank.
The bank is spread across seven states—Gujarat, Rajasthan, Madhya Pradesh, Maharashtra, Tamil Nadu, Andhra Pradesh and Karnataka.
The bank is looking aggressively to build a secured loan book in order to minimize risk. This will comprise 50% of total asset book over the next 2-3 years, according to a top executive. Currently, 93% of their book comprises of microfinance loans.
“The path to become more secured book has accelerated for all institutions (post demonetisation)... Among secured portfolio, 30% will comprise of loan against property and rest will be loan against gold, affordable housing etc.," said Rajeev Yadav, managing director and chief executive officer of Fincare Small Finance Bank.
In the first year of operations, the bank will have 50 branches across the states where it currently operates. The bank is offering 6% interest rate on savings account balance up to Rs1 lakh and 7% above it. Suryoday Small Finance Bank is offering highest interest on savings account at 7.25%, among its peers.
It plans to have a deposit base of Rs14,000 crore and assets of Rs20,000 crore by financial year 2022. Also, 100-500 business correspondents will be appointed by the end of financial year 2017-18, in order to meet 25% unbanked rural centre norms and expanding footprint.
According to Yadav, the bank will write off close to 5-7% due to demonetisation. The bank had a loan portfolio of Rs1,314 crore at the end of March and 9 lakh clients, according to data compiled by Microfinance Institutions Network (MFIN).
Except Janalakshmi Financial Services and RGVN Microfinance (North East) Ltd, all other small finance bank licence holders have started operations.