Utkarsh Small Finance Bank Limited was incorporated on April 30, 2016, at Varanasi, Uttar Pradesh, as a Public Limited Company. It is a subsidiary of Utkarsh Core Invest Limited, which began operations as an NBFC in 2010, focusing on microfinance for unserved and underserved segments in Uttar Pradesh and Bihar, later converting to an NBFC-MFI.
The Promoter received RBI In-Principle Approval to establish an SFB on October 7, 2015, leading to the incorporation of Utkarsh Small Finance Bank Limited as a wholly-owned subsidiary. The Bank received final RBI approval on November 25, 2016, and commenced operations from January 23, 2017, after Utkarsh CoreInvest Limited transferred its microfinance business as a going concern. The Bank was included in the second schedule to the RBI Act as a Scheduled Commercial Bank on October 4, 2017.
Utkarsh Small Finance Bank is dedicated to providing banking and financial services, primarily focusing on underserved and unserved sections of the population. Its microfinance lending activities are concentrated in rural and semi-urban locations, while other services are distributed nationwide. As of March 31, 2025, the bank operates in 27 states/Union Territories (UTs), offering a diverse product portfolio including deposits, micro-banking loans, micro, small, and medium enterprise (MSME) loans, affordable housing loans, and corporate loans.
The bank's product offerings comprise asset products advanced to customers predominantly in unbanked and underbanked areas, and liability products in the form of deposits sourced across regions. Its operational segments include Corporate/Wholesale Banking (lending, deposits, and services to corporate clients), Retail Banking (lending, deposits, and services to retail customers via branches), Treasury, and Other Banking Operations.
As of the latest available data, Utkarsh Small Finance Bank has a market capitalization of ₹2,603 crore. The bank's 52-week high share price is Rs 55.20, and its 52-week low is Rs 21.18. Over the last 12 months, the share price has moved down by 55.16% on BSE.
Promoter holding in Utkarsh Small Finance Bank Ltd has decreased to 68.92% as of March 2025 from 69.02% as of June 2024. Analyst coverage indicates that 50% of analysts recommend a 'BUY' rating for Utkarsh Small Finance Bank Ltd, with an average target price of ₹29.
The bank reported challenging financial results for Q4 FY25. Net profit for Q4 FY25 fell by 98.14% year-on-year to ₹2.97 crore. However, on a quarterly growth basis, net profits saw a 101.77% jump from the previous quarter. Revenue for Q4 FY25 increased by 14.8% year-on-year to ₹1,166.73 crore, with a quarterly growth of 12.41%.
For the full fiscal year FY25, Profit After Tax stood at ₹24 crore, significantly lower than ₹498 crore in FY24. Despite the profit decline, the bank demonstrated resilience in core business metrics, reporting a 7.5% increase in its gross loan portfolio and a 23.4% rise in deposits for FY25. This growth was supported by a strategic focus on secured lending and retail term deposits, notwithstanding challenges in the JLG loan portfolio.
• Q4 FY25 Performance: Net Profit of ₹2.97 crore, Revenue of ₹1,166.73 crore
• FY25 Performance: Profit After Tax of ₹24 crore
• Gross Loan Portfolio: INR 19,666 crore (7.47% YoY growth)
• Total Deposits: INR 21,566 crore (23.42% YoY growth)
• Retail Term Deposits: INR 10,635 crore (33.5% YoY growth)
• Bulk Term Deposits: INR 6,238 crore (5.3% YoY growth)
• CASA Ratio: 21.8% (as of 31 March 2025)
• Collection Efficiency (Micro banking loans Q4 FY25): 99.1%
• Liquidity Coverage Ratio (LCR): 193% (as of 31 March 2025)
• Market Capitalization: ₹2,603 crore (as of latest data)
• Promoter Holding: 68.92% (Utkarsh Core Invest Limited)
Govind Singh, MD & CEO, Utkarsh Small Finance Bank, highlighted: "During FY25, we have seen good traction in our non-JLG loan portfolio, which grew by 45%. The share of secured loans in our portfolio is also consistently increasing and reached 43% as on Mar-25 vs 34% as on Mar-24. Along with healthy business growth, we are optimising our disbursement yields in secured lending products, i.e., housing & MSME loan products; disbursement yield increased by 80-180 bps over the same quarter last year."
He further noted that the JLG loan portfolio declined in FY25 due to a difficult operating environment following guard rail norms, which restricted credit supply. Consequently, the bank shifted its focus towards collections. Singh expressed optimism, stating, "Nevertheless, stress has peaked out in the JLG loan segment, and we saw improvement in JLG disbursements as well as X-bucket collection efficiency towards the end of FY25."
The bank is actively expanding its franchise, having opened over 200 new branches during FY25, bringing its total branch count to over 1,000 as of March 31, 2025. This expansion underscores the bank's commitment to deepening its presence in underserved markets and enhancing financial inclusion across India.
ICRA has downgraded its outlook on Utkarsh Small Finance Bank to negative from stable, citing significant deterioration in asset quality and earnings, leading to weakened solvency. However, the bank maintains adequate capitalization and is actively raising Tier I equity capital. While the share of retail deposits has improved, the bank's ability to enhance lower-cost CASA deposits remains a crucial factor for future stability.
The bank is navigating a challenging microfinance landscape marked by increased borrower leverage and tighter credit supply. Despite this, it achieved a notable 23% year-on-year growth in deposits, driven by strong retail engagement. Although operational challenges have resulted in a significant decrease in profit after tax and rising non-performing assets, management remains cautiously optimistic about improving collection efficiencies and disbursement trends in the upcoming quarters. The proactive measures taken to enhance asset quality, including exceeding regulatory provisioning norms, reflect a strong commitment to financial stability.
The bank's strategic focus on expanding secured lending, improving operational efficiency, and strengthening its deposit franchise positions it for potential recovery as the microfinance sector stabilizes and the regulatory environment normalizes.
