Blitz Bureau
NEW DELHI: Advances of small finance banks (SFBs) are poised to cross Rs 2 lakh crore this fiscal — marking a growth of 16-17 per cent year-on-year (YoY), and surpassing last fiscal’s 13 per cent growth rate, a report said on October 28. The uptick will be driven by continued expansion in the non-microfinance segments, coupled with the calibrated recovery of the microfinance loan book from the growth seen last fiscal. Amid the healthy credit growth, building a granular and sustainable liability franchise remains crucial for SFBs, Crisil Ratings said in its report.
According to the report, the share of non-microfinance advances in SFB loans had already risen to 67 per cent as of March 2025, from 50 per cent as of March 2022. Within this, mortgage loans (housing loans and loans against property) had the largest share, having grown at an estimated 3-year compound annual growth rate (CAGR) of 38 per cent. This was followed by vehicle loans and micro, small and medium enterprise (MSME) loans, which grew at 3-year compounded annual growth rates (CAGRs) of 32 per cent and 31 per cent, respectively.
SFBs have also increased the share of gold loans, agricultural credit, loans against fixed deposits and wholesale funding in their loan portfolios over the past three fiscals. “This fiscal, credit growth in the non-microfinance segments is expected to be 23-25 per cent. While lower interest rates will support demand for affordable housing, policy spurs for MSMEs and tailwinds from the recent reduction in the goods and services tax on vehicle loans will be helpful, too,” said Aparna Kirubakaran, Director, Crisil Ratings.
