Utkarsh SFB’s reverse merger expected to get completed by October 2025, says MD and CEO

RBI's Deputy Governor J Swaminathan had recently highlighted SFBs’ high dependency on high-cost term and bulk deposits

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Varanasi-based Utkarsh Small Finance Bank is expecting its reverse merger to be completed by October 2025, Managing Director and Chief Executive Officer Govind Singh said. The bank has formally applied to the Reserve Bank of India (RBI) and after getting the banking regulator’s approval will further go ahead with the process to the National Company Law Tribunal (NCLT), Singh said on the sidelines of a press conference in Mumbai on October 3.

The reverse merger is proposed to fulfill the regulatory stipulation in the RBI’s guidelines on acquisition and holding of shares or voting rights in banking companies dated January 16, 2023, which requires the promoter to dilute their shareholding to 26 percent within 15 years from the date of commencement of banking business.

Utkarsh Small Finance Bank, Singh said, is also facing some pressure on its microfinance business alongside stress on the asset quality of the same.

“If you look at microfinance, there is some stress from what we have seen in that part. It is very difficult to say, you know, whether it may be two-three months’ time. But my sense is, you know, the only major challenge was over lending. In the short term, we are seeing some pressure on asset quality too,” Singh said. Utkarsh SFB’s MFI (micro business) loan book stood at Rs 715 crore in Q1FY25.

RBI Deputy Governor J Swaminathan had recently highlighted SFBs’ high dependency on high-cost term and bulk deposits.

On this, Singh said that the regulator has guided all SFBs to have a widespread deposit base. “RBI also guided us that banks are supposed to have a very widespread type of deposit base. So, initially all these SFBs were having NBFC structure. So, there was no liability per se. It was only term loans and other things. Gradually, we built on CASA and RTD and that type of thing. So, this is a journey. Now, I think if you see the wholesale deposit has come, as a person, has come down for all the banks, not only for us. It has come down for all the banks,” Singh said.

He further said that the SFBs are focusing more on the retail term deposit and current account and savings account.