Capital Small Finance Bank will shortly apply to the Reserve Bank of India (RBI) for an authorised dealer category – I (AD-I) licence, managing director Sarvjit Singh Samra said. “We are in the process of applying to the RBI for an AD-I licence. We will be applying very shortly. We already have an AD-II licence. We hope to operate under the AD-I licence in a quarter or two,” he said.
In 2022, the central bank made all small finance banks eligible for authorised dealer category – I licence after at least two years of operation as an authorised dealer category – II, subject to compliance with certain norms.
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Authorised dealers category-I banks can buy and sell foreign exchange for specified purposes.
The Jalandhar-based bank began operations as India’s first small finance bank in 2016 after conversion from Capital Local Area Bank. The small finance bank specialises in secured loans.
Currently, 37% of the bank’s loan book has exposure to the agriculture segment, 26% to the micro, small and medium enterprises segment, and 23% to the mortgage loan segment. The bank also provides automobile loans, pre-owned vehicle loans and gold loans. It recently launched affordable housing loans, and is targeting disbursals of around Rs 500 crore for the product.
Currently, the small financier’s gross loan portfolio is Rs 5,500 crore. Going ahead, the bank plans to grow its loan book at a compound annual growth rate of 24-30%.
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Total deposits stand at Rs 6,500 crore. Of that, 42% comprises current account savings account (CASA) deposits. Around 98% of the bank’s overall deposit base comprises retail deposits.
Its return on assets rose to 1.44% as on December 31, from 0.94% a year ago. The gross non-performing asset ratio deteriorated to 2.96% as on December 31, from 2.41% a year ago.
“There are three levers that would drive our growth. First is the credit-deposit ratio. Currently, we have been able to increase our credit-deposit ratio to around 70-80%, from 58-60% when we began operations,” Samra said. “Second is to optimise the costs. If we keep adding 40-50 branches on a yearly basis, the percentage of matured branches will always be on the positive side. The third aspect is to increase our fee income.”