SMCB becomes first urban co-operative bank to transition to Small Finance Bank, to begin operations from April 2021

Shivalik Mercantile Co-operative Bank. (PC-ANI)

With the Reserve Bank of India (RBI) approving commercial banking licence for Shivalik Mercantile Co-operative Bank (SMCB), it has become India's first urban co-operative bank (UCB) to transition to a Small Finance Bank (SFB). SMCB will begin its banking operations from April 2021 onwards under the name Shivalik Small Finance Bank (SSFB).

Earlier in January 2020, the SMCB received an in-principal approval for the commercial banking licence from the banking regulator, which gave SMCB 18 months time to commence the business.

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"An advanced technology platform including the ability to implement open banking will help to easily collaborate with the external ecosystem, including fintechs, digital businesses and non-banking financial service providers," Business standard quoted SMCB MD and CEO Suveer Kumar Gupta's as saying in a statement.

"Technology adoption will allow us to explore previously under explored customer segments and expand across the country without reliance on a physical branch network," Gupta added.

SSFB currently operates in Uttar Pradesh, Madhya Pradesh, Delhi, and Uttarakhand with 400,000 customers through its 31 branches and over 250 banking agents. Until March 31, 2020, SSFB's 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.