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Business Economy


Small Finance Banks' AUM growth projected to more than half in FY2021

Mumbai, Sep 14 (UNI) The growth in "Assets under management" (AUM) of domestic small finance banks (SFBs) is projected to more than half to 10-15 per cent for FY2021 as compared to growth of 30 per cent in FY2020.
As per a report released by ICRA, the industry is expected to report losses at consolidated level in FY2021 driven by high operating costs and elevated credit costs of around 3.5-4 per cent. Further, SFBs may require equity infusion of around Rs. 5,000-6,000 crore for industry to achieve a CAGR of 15-20% till FY2023 and to absorb expected losses and maintain gearing levels at 7.0-8.0 times.

Giving further insights, Ms. Supreeta Nijjar, Vice President and Sector Head, Financial Sector Ratings, ICRA, says, “SFBs would need external capital not only to manage Covid 19 related credit costs and medium term growth but also to manage the regulations related to reducing promoter shareholding below 40%.
At present, 8 out of 10 SFBs are yet to comply with the requirement of bringing down promoter shareholding to 40% within 5 years of commencement of banking operations. Additionally, SFBs are required to list themselves on the stock exchanges within 3 years of reaching a net worth of Rs. 500 crore and some SFBs are approaching the three-year timeline in FY2021.”
UNI JM SY 1421
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