SMCB becomes India's first urban co-operative bank to transition to SFB

Shivalik Small Finance Bank (SSFB) will start its banking operations from April 2021. It has received the commercial banking license from banking regulator Reserve Bank of India (RBI). This will mark the transition of Shivalik Mercantile Co-operative Bank (SMCB) to a Small Finance Bank (SFB).

SMCB is the first urban co-operative bank (UCB) in India to transition to a SFB under the voluntary transition scheme. The bank had received an in-principal approval from the RBI for transitioning to a SFB in January 2020. The RBI had given an 18-month timeline to commence business.

Suveer Kumar Gupta, MD & CEO of Shivalik Mercantile Cooperative Bank, said in a statement that an advanced technology platform including the ability to implement open banking will help to easily collaborate with the external ecosystem, including fintechs, digital businesses and non-banking financial service providers.

SSFB operates through 31 branches and over 250 banking agents in Uttar Pradesh, Madhya Pradesh, Delhi, and Uttarakhand with 400,000 customers. As on March 31, 2020, the total deposit base of the bank stood at Rs 1,140 crore and total advances stood at Rs 719 crore.

Technology adoption will allow us to explore previously under explored customer segments and expand across the country without reliance on a physical branch network, Gupta added.

According to RBI’s Trends and Progress in Banking report, combined loans and advances of existing SFBs rose by 29.7 per cent from Rs 69,856 crore in FY19 to Rs 90,576 crore in FY20. Deposits were up by 48.1 per cent from Rs 55,686 crore in March 2019 to Rs 82,488 crore in March 2020.

SFB, as a group, booked a net profit of Rs 1,968 crore in FY20 as against loss of Rs 727 crore in FY19. Their capital adequacy ratio rose to 20.2 per cent in March 2020, up from 16.7 per cent in March 2019.