SMCB becomes first Urban Co-operative bank to transition to SFB

The bank will begin its banking operations under the name Shivalik Small Finance Bank from April 2021 onwards.

Jan 8, 2021 15:07 ISTModified On: Jan 8, 2021 15:07 IST
SMCB co-operative bank

Shivalik Mercantile Co-operative Bank- SMCB has become the first Co-operative bank of India to transition to a Small Finance Bank as the Reserve Bank of India approved the Commercial Banking License of the co-operative bank.

The bank will begin its banking operations under the name Shivalik Small Finance Bank from April 2021 onwards. In January 2020, SMCB had received an in-principal approval for the commercial banking license from RBI, which gave the co-operative bank 18 months time to commence the business.

How technology will help banking and financing?

According to the MD and CEO of Shivalik Mercantile Co-operative Bank, Suveer Kumar Gupta, an advanced technology platform that includes the ability to implement open banking will help in easily collaborating with the external ecosystem, including digital businesses, fintech, and non-banking financial service providers.

He added that the adoption of technology will also allow us to explore the previously under-explored customer segments. It will also expand across the country without any form of reliance on a physical branch network.

What is Small Finance Bank (SFB)?

They are the specific segment of banking which was created by the Reserve Bank of India under the guidance of the Indian government.

The objective of these banks is to promote financial inclusion by executing the basic banking activities to underserved and un-served sections which include small and marginal farmers, unorganized entities, and micro and small industries.

Like any other commercial bank, they can also undertake all the basic banking activities including taking deposits and lending.

Progress in SFBs loans and advances:

As per the Reserve Bank of India’s trends and progress in banking report, combined loans and advances of the existing Small Finance Banks rose by 29.7% from Rs. 69,856 crores in Financial Year 2019 to Rs. 90,576 crores in the year 2020. Deposits in the bank were also up by 48.1% from 55,686 crores in March 2019 to Rs. 82,488 crores in March 2020.

As a group, SFB booked a net profit of Rs. 1,968 crores in Financial Year 2020 as against the loss of Rs. 727 crores in the year 2019.

About Shivalik Small Finance Bank:

It operated through 31 branches and over 250 banking agents in Madhya Pradesh, Uttar Pradesh, Uttarakhand, and Delhi with 4,00,000 customers. The total deposit base of the bank, as of March 31, 2020, stood at Rs. 1,140 crores while total advances stood at Rs. 719 crores.

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