Shivalik Mercantile Co-operative Bank. (PC-ANI)
The Reserve Bank of India (RBI) on April 26 said Shivalik Small Finance Bank has commenced operations as a small finance bank with effect from April 26, 2021. The Reserve Bank has issued a licence to the bank under Section 22 (1) of the Banking Regulation Act, 1949 to carry on the business of small finance bank in India, the RBI said.
Shivalik Mercantile Co-operative Bank Limited was granted in-principle approval for transition into a small finance bank on January 6, 2020, under the “Scheme on voluntary transition of Urban Co-operative Bank into a Small Finance Bank” issued on September 27, 2018.
Thus, it has become India's first urban co-operative bank (UCB) to transition to a Small Finance Bank (SFB). The in-principal approval gave SMCB 18 months' time to commence the business.
As per the scheme, the minimum net worth of the proposed SFB was set at Rs 100 crore and the minimum capital adequacy ratio of 15 percent from the date of commencement of business.
According to its annual report, Shivalik Mercantile Cooperative Bank’s net worth stood at Rs 77.21 crore and the capital adequacy ratio was at 13.07 percent as on March 2019.
Shivalik Mercantile Cooperative Bank is registered under the Multi-state Cooperative Societies Act 2002 and operates through 31 branches across Uttar Pradesh, Madhya Pradesh and Uttarakhand. It acquired two Madhya Pradesh-based cooperative banks in 2010 and 2012.
The 23-year old bank had total deposits of Rs 1,051 crore, while its loan book stood at Rs 715 crore at the end of March 2019. The bank has 486 employees and focuses on priority sector lending. The bank’s net non-performing assets (NPA) ratio stood at 1.19 percent as on March 30, 2019.
SSFB currently serves 400,000 customers through its 31 branches and over 250 banking agents. Until March 31, 2020, its total deposit base stood at Rs 1,140 crore and total advances stood at Rs 719 crore.
The RBI's Trends and Progress in Banking report recently said the combined loans and advances of existing SFBs rose by 29.7 percent from Rs 69,856 crore in FY19 to Rs 90,576 crore in FY20. Also, the deposits on the SFBs rose by 48.1 per cent from Rs 55,686 crore in March 2019 to Rs 82,488 crore in March 2020.
SFBs registered a net profit of Rs 1,968 crore in FY20 as against a loss of Rs 727 crore in FY19, while their capacity ratios were up from 16.7 percent in March 2019 to 20.2 percent in March 2020.