Fincare SFB bets on micro finance, gold loans, eyes 700 branches by March

Bank chief sees rising price of precious metal helping gold loan segment, but is cautious about volatility and possible softening of prices in near future

Among India’s youngest commercial banks, Fincare Small Finance Bank is targetting total branch network of more than 700 by the end of current 2019-20 financial year.

Besides, the Bank, which commenced banking operations in July 2017 after receiving the final license from the RBI in May 2017, is bullish on the gold loans and micro finance segments to drive its future growth.

Currently, the Bank has a branch network of 569, which it expects to breach the 700 mark by March 2020. “We will soon launch new products in the segments of gold loans, micro finance, mortgage and two-wheeler finance to reach out to a larger customer base,” Bank managing director and CEO Rajeev Yadav said here today.

At present, Fincare transacts gold loans across 200 branches pan India with total portfolio of nearly Rs 100 crore, which it expects to keep pace with the general growth rate of the Bank going forward, he later told Business Standard.

Replying to a query, he said the current spike in domestic gold prices was expected to boost the gold loans segment due to higher valuation. However, he added the caveat of the corresponding higher risk factor owing to price volatility and possible softening of gold prices in the near future.

 “The current spate of rising gold prices provides an additional opportunity and momentum for unlocking the value of gold. However, it also has consummate risk attached to it,” Yadav added.

Meanwhile, the lender today launched its second branch in Uttar Pradesh at Lucknow after Noida, which was launched in February 2019. Fincare plans to open six more branches in all majore cities in UP during the current fiscal to up its total branch network to eight by March 2020, he informed.

The new branches are proposed to be launched at Meerut, Agra, Kanpur, Varanasi, Allahabad and another in Lucknow as well. “UP is the biggest state and we are targetting the retail customers, including government employees,” he said.

Over the last 2 years, the Bengaluru-based Bank has expanded in the Northern states of Delhi, Rajasthan, Haryana, Chhattisgarh and UP. Yadav said the Bank was focussing on the financial inclusion matrix for growth and was bullish on the deposit segment in the North.

In 2018-19, the Bank had clocked gross loan portfolio of Rs 3,530 crore, posting 65% year-on-year growth, including 56% growth in microloans and 116% in other assets.

It logged Rs 2,043 crore in deposits, returning 181% year-on-year growth with 58% share in retail deposits. It posted about Rs 102 crore in profit after tax (PAT) in 2018-19, which the Bank is confident to better in the current fiscal. Fincare has gross and net non-performing assets (NPA) of 1.3 per cent and 0.3 per cent respectively, which Yadav said was among the best in industry.