RBI reduces the lending target of a priority field for SFB

Kolkata: Small Finance Banks got a new life lease with Reserve Bank India F India, reducing their priority sector credit target, firing shares of people listed on Monday.

The heads of the lending organizations said that the concessions will allow them to work with more relief, especially the share of unsafe loans, pt ptomise to izing capital allocation to safe and high-value loan, which in turn helped them to improve the quality of wealth.

They expressed optimism that regulatory change would increase the attraction of small finance banks (SFBS) for investors and help raise fresh capital. Equitas Small Finance Bank’s stock price, BSE rose 4.5% on Monday. Closed at 67.40, though the Sensex fell 0.66% in response to a US attack on Iranian nuclear facilities. ESAF Small Finance Bank’s stock price rose 2. 5% to 32.2, while Jana SFB has seen its price 9.9% to 6 506.1.

“New regulation helps improve the quality of property, helps Optim allotment and increase profitability, while the priority continues to be meaningful,” said Sarvjit Singh Samra, Managing Director of Capital Small Finance Bank.

On Friday, the banking regulator was reduced by 75% before SFBS’s’ priority field credit (ANBC) or Bal F-Balance Sheet Exposure (CEOB), which is higher, before the SFBS ‘priority sector’ lending target.

SFB ANBC Or CEOB 40% of the priority will continue to be allotted under the sector, while 20% of the balance can be allocated to any one or more sub -sectors where the bank has a competitive advantage. “The shift is expected to strengthen the quality of the asset and increase the overall stability of SFBS’s loan portfolio,” said Ka Paul Thomas, Managing Director of Isaf Small Finance Bank. ESAF, with its half-loan portfolio, being insecure of 19,643 crore, was 6.9% of its total non-performing assets at the end of March. At the end of the last financial year, the total NPA of Suriod SFB was 7.2%. There are a total of 11 small finance banks, of which the total loan portfolio is 79 2.79 lakh crore.

Paul Thomas said earlier SFBA had to increase a significant share of unsecured loans and other small-ticket priority loans, which could rise high credit. He said that due to the low need for PSL, SFB. They can moderate their exposure to unsafe credit and focus more on secure advances like MSME loans, affordable housing, gold loans and other collateral-back products, “he said.

The immediate impact will be announced more priority field loans that these banks carry in their balance sheet. This will further sell the lending certificates of the priority sector to other banks. “This can help with increased revenue despite marginal sales through PSLC sales,” said Suriod SFB MD R Basker Babu.

The new standard is viewed as a strong capable for SFB with universal banking aspirations. Jana Managing Director Ajay Kanwal said, “As we work to achieve 60% priority field lending compliance, improved standards open space to enable more balanced and diverse asset mix-critical for universal banking operations,” said Jana’s Managing Director.