Varanasi-based Utkarsh Small Finance Bank is planning to enter the secured credit card business this financial year, Managing Director and Chief Executive Officer Govind Singh told Moneycontrol in an exclusive interview on November 8.
Stating that the credit card business is in the pilot phase, Singh noted that a lot of people are not able to get credit cards today, particularly in UP, Bihar, and Jharkhand.
Singh added that Utkarsh Small Finance Bank will continue to expand and improve its digital offerings and would not hesitate to forge partnerships with fintech companies to grow.
Edited excerpts:
What are your plans for the credit card business?
Recently, we have come up with our own credit card. Currently, we are in the pilot phase. But by this financial year, we will be coming up with secured credit cards. There is a lot of demand in geographies like Uttar Pradesh, Bihar, and Jharkhand, where a lot of people are not able to get credit cards.
We will focus more on secured cards rather than unsecured cards, slightly different from the industry.
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What is your guidance on CASA (current account and savings accounts)?
Our retail term deposits have grown by more than 50 percent year-on-year, but CASA is not growing that fast. It should be at around 22 percent or so by the end of March 2024.
What are the growth targets for FY24?
Our guidance remains the same. Our overall loan book will grow 31 percent and deposits will grow accordingly. Because, based on requirements, our CD (Credit-Deposit) ratio will always be below 100 percent. So, it should be at 97 percent or so. More importantly, in terms of ROA (return on assets) and ROE (Return on equity), we expect our ROE–ROA will be above 2 percent and ROE in the medium term will be in the range of 18-20 percent.
What is Utkarsh Small Finance Bank doing for the festive season?
We are doing a lot of things in terms of campaigning. We are not doing it across the country, but in places like UP and Bihar, and some places in Delhi-NCR, through the media. Recently, we did a marathon in Varanasi. We are seeing good traction in our core business, which is affordable housing. In October alone, we saw over 30 percent traction. So, I think we are seeing a good uptick in credit as well as overall collections in Q3FY24.
How are you doing on the digital banking front?
We are trying to do more automation in banking through digital banking. Recently we have started video KYC, which is very convenient from the customer angle, and we are seeing good traction. So, we are expanding the setup also.
Besides in the rural hinterland, I think the bigger pluses are like e-finance and e-KYC, because almost 95 percent plus onboarding is happening through digital means right now. And if you look at microfinance, every onboarding is happening digitally. All these things are helping us.
In some cases, we’ll also look at fintech partnerships. We have done some partnerships, but at the same time, we are also expanding and improving our direct digital offerings.
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Which segment will be your focus area next quarter?
Microfinance is our main focus segment along with MSMEs and affordable housing, and these three are the initial things that we have been focusing on.
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