Suryoday Small Finance Bank raises ₹62 crore from Gaja Capital, Kotak Life, others

Suryoday Small Finance Bank Ltd has raised ₹62.14 crore in equity funding through a private placement offer from five of its existing investors including Gaja Capital, private insurer Kotak Mahindra Life Insurance Co. Ltd, said a senior official at the scheduled commercial bank in an exclusive interaction.

Three other investors that helped the Navi Mumbai based bank in raising funds include -- Impact investor Lok Capital, New York-based financial services firm Teachers Insurance and Annuity Association fund (TIAA), and Kolkata-based LNB Group’s investment arm Kiran Vyapar.

“Maintaining our capital adequacy is one of the key focus areas amid the ongoing crisis period. The latest capital raise would help us maintain that closer to 30%, while strengthening our balance sheet further. Beyond this, we have raised funds as a mark of confidence that our existing investors have on us,” R. Baskar Babu, managing director and chief executive officer of Suryoday Small Finance Bank told Mint over a phone call on Wednesday.

“This growth capital also comes in just as we started re-engineering our business processes and digitising them including for our microfinance vertical, so this is strong backing to pursue our plans,” he added.

Suryoday Small Finance Bank (SFB), which initially provided microfinance loans to women in urban and semi-urban areas under the Grameen Bank joint lending model, has diversified its product offerings to include retail loans such as home loans, commercial vehicle loans, secured and unsecured loans. The bank catered to about 14 lakh customers across 11 states and Union territories through its network of over 477 branches and doorstep centres.

As of March, the bank had a deposit base of over ₹2800 crore and a loan portfolio of over ₹3700 crore.

“Amid the ongoing crisis, digital has accelerated much faster than we anticipated. We are likely to end up writing 10% of our business from customers in May through digital means, which includes not just loan disbursals but also collections, as even micro-borrowers are preferring to repay through digital payment modes such as UPI,” said Babu.

The bank, according to Babu, is expected to return to near normal levels by October. “We have substantially improved our connectivity with the customers in the last 15 days and the business has started picking up. We presume that after June nearly 50-60% of the business will commence, even as reaching the normal business levels may take longer till October,” he said.

As of fiscal year ended 31 March, the bank reported a net profit of Rs. 111 crore on a total income of Rs. 578 crore, compared to a net profit of Rs. 86.6 crore on a total income of Rs. 599.46 crore in the preceding fiscal. The bank’s return on managed assets stood at 2.6% in fiscal year 2020, declining slightly from 2.98% in the last fiscal. In terms of asset quality, the bank’s gross non-performing assets or bad loans nearly doubled on a year-on-year basis to 2.8% in FY20 from 1.8% in FY19.