Commercial banks have greater opportunities for growth that are not always available to cooperative banks, said Suveer Kumar Gupta, Managing Director and CEO, Shivalik Small Finance Bank.

“As a cooperative bank, there are certain restrictions… more freedom is provided to commercial banks and somehow, it seemed more mainstream,” he said, while outlining Shivalik SFB’s plans to grow its business volume by five to six times in the next five years from about ₹2,000 crore at present.

Also see: Shivalik Bank receives commercial banking license

Shivalik SFB was the first urban co-operative bank to get approval from the Reserve Bank of India for transition to small finance bank and went live on April 26, 2021.

Seeking better brand value

In an interaction with BusinessLine , Gupta noted that cooperative banks were also facing challenges of trust and public image as some cooperative banks were not doing well.

“We had both customer faith and good trust but we wanted better brand value,” he said on the bank’s plan to apply for an SFB licence and said the ambition was to grow its business more.

Also see: UP-based Shivalik SFB commences operations

Gupta said Shivalik SFB is in talks with investors — both financial and strategic — to raise ₹100-150 crore, which should be completed by the last quarter of the fiscal year.

The capital raise will be for future growth, he said, adding Shivalik SFB is comfortably capitalised with a CAR of slightly above 18 per cent.

Since becoming an SFB, the lender continues its on small businesses in terms of business loans and other banking requirements.

“We do not do any unsecured lending except a small microfinance portfolio that forms 8-10 of our total lending book. More than 90 per cent of Shivalik SFB’s book is fully secured majorly by property collaterals, and gold, and bank deposits,” Gupta said, adding that the bank’s portfolio has picked up after the second wave of the Covid pandemic and is now at pre-Covid levels.

The bank’s advances grew by 3.2 per cent in the first half of the fiscal, which Gupta said bore a slight brunt of the second wave as loan disbursements were slow. However, asset quality did not see much of an impact due to its largely secured lending book.

Shivalik SFB’s deposit book stood at ₹1,400 crore as of September 30, 2021, compared to ₹1,168.94 crore as of March 31, 2021. Advances stood at ₹830 crore as of September 30, 2021, versus ₹748.73 crore.

It also plans to increase its touchpoints, including branches, from about 95 to 1,000 in the next five years.

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