Small-cap lender soars 11%, posts steepest gain in 16 months; here's why

ESAF Small Finance shares rose 11 per cent after its board approved the sale of non-performing and written-off loans to ARCs

Shares of ESAF Small Finance surged over 11 per cent on Thursday after its board approved the sale of ₹735 crore worth of non-performing and written-off loans to asset reconstruction companies (ARCs).

 

The small finance bank's stock rose as much as 11.4 per cent during the day to ₹34 per share, the biggest intraday gain since February 7, 2024. The stock pared gains to trade 8.9 per cent higher at ₹33.2 apiece, compared to a 0.10 per cent advance in Nifty 50 as of 9:36 AM. 

 

Shares of the company snapped a seven-day losing streak, having fallen over 11 per cent until Wednesday's session, from their recent peak of ₹33 apiece, touched earlier this month. The counter has fallen 21 per cent this year, compared to a 5 per cent advance in the benchmark Nifty 50. ESAF Small Finance has a total market capitalisation of ₹1,691.12 crore.  Track LIVE Stock Market Updates Here

ESAF Bank to sell ₹735 crore in NPAs

In an exchange filing on Wednesday, the lender said that its board has approved the sale of ₹735 crore worth of non-performing and written-off loans to ARCs. 

 

Of the ₹735 crore, ₹362.43 crore are non-performing loans, while ₹372.75 crore are technically written-off loans. The bank said it is carrying an overall provision of 90.15 per cent against these assets, it said in the statement. 

 

Previously, ARC acquired Ujjivan Small Finance Bank’s non-performing microfinance portfolio of ₹365.5 crore for ₹34.26 crore, translating into a recovery of just 9.39 per cent, or a haircut of over 90 per cent for the lender.

 

Major banks and microfinance-focused non-banking financial companies (NBFCs) have reported a sharp rise in delinquencies in this segment. As a result, several lenders have started selling off their stressed loan portfolios to asset reconstruction companies. 

ESAF Small Finance Bank Q4 results

ESAF Small Finance Bank reported a net loss of ₹183.19 crore for the quarter ended March 2025, compared with a net profit of ₹43.35 crore in the corresponding quarter of the previous year. Total operating income declined by 10.83 per cent to ₹893.44 crore in the March 2025 quarter, from ₹1,002.00 crore in the March 2024 quarter.

About ESAF SFB

The Bank received a license to carry on business as an SFB from the Reserve Bank of India (RBI) on November 18 2016, and commenced its banking operations from 10 March 2017. As per RBI approval, the bank became a Schedule Bank effective from November 12 2018, which was included in the Second Schedule to the Reserve Bank of India Act 1934. 

 

The Bank is one of the leading small finance banks in India, which provides micro retail and corporate banking, para banking activities such as debit card third-party financial product distribution, in addition to Treasury and permitted Foreign Exchange Business.