Small finance banks in India to grow loan book by 25-27% in FY25: CRISIL report

Crisil Ratings, in its latest report, has said that small finance banks (SFBs) are expected to grow their loan book by a robust 25-27% this fiscal year (FY25). However, it said the growth in loan books will be slightly lower than the previous fiscal growth of 28%.

It stated that growth will be sustained by segmental and geographic expansion supported by a robust and growing presence in semi-urban and rural markets with significant unmet demand. Noting the difficulty of mobilising deposits, SFBs will probably look into non-deposit alternatives to finance credit expansion. The SFBs continue to have healthy capital buffers to sustain growth.

Ajit Velonie, Senior Director of CRISIL Ratings, said, ‘Credit growth in new asset classes is 40% this fiscal year, while that in traditional segments will be 20%. With this, the portfolio mix will continue to shift; the share of new segments will cross 40% by March 2025, twice the March 2020 level. Most of this diversification is towards secured asset classes, resulting in the share of secured lending rising, albeit at a moderate pace.’