Growth in small finance banks (SFB) is expected to slow down by a few percentage points to 26% this fiscal, from 28% in previous fiscal, as these banks are likely to explore alternate non deposit avenues to fund credit growth, said a report by Crisil.
This estimates credit growth would vary across SFBs and will typically include mortgages, loans to MSMEs, vehicle loans and unsecured personal loans.
“Credit growth in new asset classes is seen at 40% this fiscal, while that in traditional segments will be around 20%. With this, the portfolio mix will continue to shift, the share of new segments would cross 40% by March 2025, twice the March 2020 level”, said Ajit Velonie, Senior Director, Crisil Ratings.
To optimise deposit mobilisation, the reliance on term deposits will continue, given the higher opportunity cost to maintain the current and savings account (CASA) balances for depositors in the current interest rate scenario.
“To optimise deposit mobilisation, the reliance on term deposits will continue, given the higher opportunity cost to maintain CASA balances for depositors in the current interest rate scenario”, said Subha Sri Narayanan, Director, Crisil Ratings. “We could also see SFBs resorting to obtaining more refinancing lines from AIFs, which apart from the diversification benefit, could offer cost savings”, he said.
Segmental and geographical expansion, underpinned by a strong and increasing presence in semi-urban and rural markets with large unmet demand, will continue to drive growth.
