High provisioning, NPA hit SFBs profitability

Many had to keep aside a substantially large amount of money as provisions due to non-recovery of loans

Newly-opened small finance banks (SFB) had a rough start, as many of them saw a decline in profitability and losses in the second quarter of the present financial year, due to stressed microcredit accounts.

Many SFBs had to keep aside a substantially high amount of money as provisions due to non-recovery of loans. On account of to the twin impact of demonetisation and rumours of debt waiver, the industry saw non-performing assets increase to more than 5-6 per cent, against about one per cent prior to demonetisation.

Ujjivan Financial Services, the holding firm for Ujjivan Small Finance Bank posted a net loss of Rs 12