Top Small Finance Bank Stocks In India

Table of Contents

What are small finance Bank?

Small finance banks are a specific segment of banking that serves the unserved and underserved segments of society. These banks do not function as full-fledged commercial banks, and their services are confined to basic banking functions such as deposit acceptance and lending.

These banks serve a variety of clients, including micro and small enterprises, small and marginal farmers, and small business units. Small finance banks provide basic banking services to economic groups that are not served by larger banks. It helps in providing financial assistance to micro or small businesses, marginal or small farmers, and industries. Small businesses, the unorganised sector, low-income households, farmers, etc. are all included.

Small finance banks in unbanked and underbanked areas of the nation can be crucial in providing credit to micro and small businesses, agriculture, and banking services.

Here’s a list of the top small finance bank stocks in India:

Stock Name	Share Price	Market Cap
Suryoday Small Finance Bank Limited	₹96.35	₹1,022.8 Cr
AU Small Finance Bank Ltd	₹587.15	₹39,084.6 Cr
Equitas Small Finance Bank Limited (ESFBL)	₹48.50	₹6,080.3 Cr
Ujjivan Small Finance Bank	₹24.75	₹4,837.4 Cr

Suryoday Small Finance Bank

Suryoday Small Finance Bank Limited is one of the top small finance banks (SFBs) in India in terms of net interest margins, return on assets, yields, and deposit growth. In Fiscal 2020, it also had the lowest cost-to-income ratio among SFBs in India. The bank currently provides a range of asset and liability products and services aimed at consumers that use inclusive finance and general banking. Its offerings include an inclusive finance portfolio (which includes loans to JLG customers), loans for commercial vehicles, loans for affordable housing, loans for small businesses, unsecured loans for micro, small, and medium-sized businesses, secured loans for businesses, loans for financial intermediary groups, and other loans. Since it first started doing business, Suryoday Bank has concentrated on building a solid, long-lasting, and widely-accessible CASA (Current Account Savings Account) basis.

The bank provides various banking facilities, products, and services in addition to loan and deposit products in order to create noninterest income and meet the additional demands of its clients. Debit cards, internet banking, mobile banking, online bill payment services, the distribution of third-party life and general insurance products, and mutual fund products are only a few of the facilities, products, and services mentioned.

In all facets of its business, Suryoday Small Finance Bank Limited has taken advantage of technology. Digital technology is specifically used for both customer acquisition and customer lifecycle management. Employees in the unbanked and underbanked segments service consumers using tablets, which, according to the company, has increased customer convenience and enhanced operational effectiveness. Additionally, it has a strong back-end operating system that is supported by its document management and core banking systems.

Suryoday Small Finance Bank Limited was first established on November 10, 2008, in Chennai, Tamil Nadu, as Suryoday Micro Finance Private Limited. It was granted permission by the Reserve Bank of India (RBI) to form a non-banking finance company (NBFC) and launch microfinance operations within a year.

Suryoday Small Finance Bank Limited received an investment from HDFC Holdings Limited and HDFC Standard Life Insurance Company Limited within the subsequent three years. The bank received investments from Lok Capital II LLC and IFC over the following two years. The Bombay Stock Exchange (BSE) also gave it permission to list in the wholesale sector and start issuing debt securities.

It became a public limited company with 159 outlets and nearly half a million customers in 2015. The RBI gave it in-principle clearance to start a small finance bank (SFB) the same year it got an investment from DWM (International) Mauritius Ltd.

Suryoday Small Finance Bank Share Price	Mkt cap	P/E ratio	Div yield	52-wk high	52-wk low
₹96.35	₹1,022.8 Cr	–	–	193.05	77.00

( As of 12th October 2022)

AU Small Finance Bank Ltd

The company was initially established on January 10, 1996, as “L.N. Finco Gems Private Limited” as a private limited company under the Companies Act, 1956, with the RoC. The RoC issued a new certificate of incorporation for the company on May 24, 2005, in accordance with the name change to Au Financiers (India) Private Limited to reflect the company’s varied financial activity. By means of a special resolution adopted by the shareholders at the EGM held on January 10, 2013, the company was transformed into a public limited company, and its name was changed to “Au Financiers (India) Limited.” The RoC issued a new certificate of incorporation on January 11, 2013, as a result of the change to a public limited company. After the RBI’s letter dated October 7, 2015, the Company has been given the go-ahead to create an SFB. In its letter dated December 20, 2016, the RBI later gave the company the okay to create an SFB. The name of the company was changed to “AU Small Finance Bank Limited” and a new certificate of incorporation was issued by the RoC on April 13, 2017, in accordance with the company’s being created as an SFB.

Au Financiers began operating as a Small Finance Bank (SFB) on April 19, 2017, after obtaining the Small Finance Bank (SFB) licence in 2015. On November 1st of the same year, it received the status of a scheduled bank and was added to the Fortune India 500. It has prioritised solutions during its transition from an NBFC to a bank, based on the changing demands of its clients. The Bank emerged as a well-governed and trustworthy financial organisation, supported by the guiding principles of inclusion, progress for all, simplicity, action and urgency. As guardians of depositors’ wealth, the bank guaranteed the greatest degree of compliance throughout.

A variety of banking and financial services, including retail banking, wholesale banking, treasury operations, and other services, are offered by the company. The Treasury section comprises mostly investment portfolio interest, money market borrowing, and lending. Through a branch network and other delivery mechanisms, the retail banking segment provides services to retail consumers. The wholesale banking segment offers loans and transaction services to major corporations, emerging corporations, public sector entities, governmental entities, financial institutions, and medium-sized businesses. The business provides digital banking, personal banking, and business banking. It provides a variety of loans, including those for cars, houses, credit cards, personal loans, and gold.

In 2021, the bank changed its stance from “Chalo Aage Badhein” to “Badlaav Humse Hai.” The bank’s new motto, which is also its first integrated marketing campaign, is in line with its mission to push the limit. The brand campaign’s launch was accompanied by the introduction of the digital platforms AU 0101, Credit Card, and QR Code with Sound Box. The bank is making a strong effort to become a tech-led bank as customers’ demands are changing quickly and technology is dictating the rules. In April 2022, the bank marked five years as an SFB. The footprints increased from 403 touchpoints in 8 states and 2 Union Territories in 2017 to 972 touchpoints in 20 states and 2 Union Territories as of June 30, 2022.

Au Small Finance Bank Share Price	Mkt cap	P/E ratio	Div yield	52-wk high	52-wk low
INR 587.16	₹39,084.6 Cr	30.87	0.086%	732.98	462.50

( As of 12th October 2022)

Equitas Small Finance Bank Ltd

Originally known as V.A.P Finance Private Limited, Equitas Small Finance Bank Limited was established on June 21st, 1993. In August 2011, the company’s name was changed to Equitas Finance Private Limited. The company was purchased by Equitas Holdings Limited in 2011. After becoming a public limited company, the company’s name was then changed to Equitas Finance Limited in September 2015. Equitas Micro Finance Limited and Equitas Housing Finance Limited amalgamated with the Company pursuant to a Scheme of Amalgamation approved by the Hon’ble High Court of Judicature at Madras and upon fulfilment of all conditions specified under the said Scheme. The company was then renamed Equitas Small Finance Bank Limited (ESFBL).

Following the aforementioned merger, the microfinance and housing finance operations of the former EMFL and EHFL were transferred to the company as of September 2, 2016. On September 5, 2016, ESFBL began operating as a bank following receipt of the Reserve Bank of India’s final banking licence.

The Bank is involved in retail banking with a focus on microfinance, commercial vehicle finance, home loan against property finance, loan against corporate finance, and providing financing solutions for people and micro and small businesses (MSEs) that are underserved by formal financing channels while providing a comprehensive banking and digital platform for everyone. The Banking Outlet consists of branches that are primarily concerned with attracting and serving depositors as well as outlets that carry out loan activities for unbanked and underbanked customers. The bank installed 322 ATMs and cash recyclers at their banking locations to reduce wait times and improve customer service. Currently, the bank runs its operations from around 853 locations spread across 15 states and Union Territories (including the National Capital Territory) of the country.

The following approvals were given at the bank’s board meeting on March 23, 2020, to provide loans up to Rs 18000 crore in the regular course of business for the fiscal years 2020–21; these approvals are contingent upon shareholder approval; additionally, certificates of deposit (CoDs) may be issued in multiple tranches up to an amount not to exceed Rs 3000 crore. The total value of transactions made through retail online banking for FY 2020 was Rs 3802 crores. The bank released a public issue in the second half of 2020 through the book-building procedure, and it was listed on November 2nd of that same year.

Due to the cash-based or informal nature of their income, Equitas SFB focuses on those who have little access to traditional financial avenues. The bank has created products for clients with various profiles. On the liability side, the bank primarily accounts for savings, current, salary, and deposits from the general public and the mass-affluent. Debit cards, mutual funds, third-party insurance, and FASTags are other services provided by Equitas SFB.

Equitas Bank Share Price	Mkt cap	P/E ratio	Div yield	52-wk high	52-wk low
₹48.50	₹6,080.3 Cr	15.87	–	71.20	37.45

( As of 12th October 2022)

Ujjivan Small Finance Bank Ltd

In order to provide financial services to low-income populations in unbanked areas, UFSL launched its business as an NBFC in 2005. On November 11, 2016, the RBI granted UFSL in-principle approval to form a small finance bank, following which Ujjivan Small Finance Bank Limited was incorporated as a wholly-owned subsidiary.

After UFSL moved its lending and financing operations to the bank, the bank began operating on February 1, 2017. Ujjivan Small Finance Bank was subject to a few requirements upon receiving the small finance banking licence from the RBI. According to this licence, they were required to have 50% of the loans approved for less than Rs 25 lakh and to have at least 25% of their bank branches in rural or unbanked areas.

According to the CRISIL assessment, the bank today serves over 49 lakh customers from 24 states and union territories and has the most diverse portfolio. The lender made Rs 199 crore in profit on a 10.9% interest margin. The loan book shows Rs 12,864 Cr as of September 30, 2019, and the deposit base is Rs 10,130 Cr.

The bank currently offers numerous types of savings accounts, current accounts, and deposit accounts. The bank also provides third-party insurance product distribution, ATM/debit cards, Aadhaar enrolment, etc.

By September 30, 2019, it had 552 banking locations, 141 of which were in unbanked areas, serving 4.94 million people. Four asset centres were also run by them. According to data from September 2019, Ujjivan Small Finance Bank has a network of 441 ATMs, 18 ACRs, two 24/7 phone banking units situated in Pune and Bangalore, a mobile banking app, and other services.

India-based Ujjivan Small Finance Bank Limited is a small finance bank. Treasury, retail banking, and corporate/wholesale segments make up how the company runs. The Treasury section includes gains or losses on investment activities, money market borrowing and lending, net interest income from the company’s investment portfolio, and income from the sale of priority sector loan certificates (PSLC).

Through a branch network and other delivery mechanisms, the retail banking segment provides services to consumers. Consumer deposits and loans are both included in retail banking. Corporations and financial institutions can get loans from the wholesale banking sector. Its asset products include loans to its micro banking clients, including group and individual loans; loans for housing; loans for agriculture and related industries, loans for individuals; loans for vehicles, personal loans; and group loans for financial institutions. It provides a range of deposit accounts, including savings and current accounts.

Ujjivan Small Finance Bank Share Price	Mkt cap	P/E ratio	Div yield	52-wk high	52-wk low
₹24.75	₹4,837.4 Cr	202.63	–	26.45	13.50

( As of 12th October 2022)

Conclusion

The primary goal of establishing SFBs was to reduce banking costs and provide banking services to the country’s rural and semi-urban areas. This would be accomplished by implementing a strategy that offered consumers better rates on loans and savings. SFBs were established to support the country’s small businesses, which heavily rely on the high-interest, unorganized lending market for their funding requirements. SFBs are a significant step taken by the central bank towards financial inclusion and financial literacy among the general public.

Interested in how we think about the markets?

Watch/hear on YouTube:

Start investing through a platform that brings goal planning and investing to your fingertips. Visit Kuvera.in to discover Direct Plans and Fixed Deposits and start investing today.

#MutualFundSahiHai #KuveraSabseSahiHai!