From 3 Punjab Districts To ₹16,000 Crore Loan Target, Capital Small Finance Bank Eyes Universal Bank Leap

Capital Small Finance Bank, formerly a local player in three Punjab districts, has transformed into a major lender with ambitions of becoming a universal bank. The bank's MD and CEO, Sarupjit Singh Samra, discusses its growth strategy and FY29 targets with The Free Press Journal's Sheryll D'Souza.

The bank began as a small entity in 2013, expanding to 47 branches across five districts after converting into a small finance bank in 2016. Today, Capital Small Finance Bank boasts 219 branches in five states and two Union Territories, with assets worth around Rs 19,700 crore - a significant leap from its initial Rs 2,950 crore.

Despite this expansion, the bank remains focused on the middle-income group, defined as families earning between Rs 5 lakh and Rs 50 lakh. This strategy has proven successful, with a deposit rollover ratio of over 90 percent, indicating strong customer loyalty.

Looking ahead, Capital Small Finance Bank aims to reach a loan book of over Rs 16,000 crore by FY29. The bank is confident in achieving this target, citing its successful expansion strategy and secure lending practices. The majority of its loan portfolio is secured, and the bank assesses borrowers' repayment capacity and use of funds, not merely relying on collateral.

The bank believes its branch-led model, while increasing costs, is offset by the benefits of personalized service and competitive pricing. Digitalisation has also helped reduce costs, with 90 percent of transactions now conducted digitally. The bank plans to add around 35-40 branches annually, aiming to reach 300 branches by March 2029.

Capital Small Finance Bank sees itself eventually becoming a universal bank. The bank meets most regulatory requirements and has a net NPA of 1.14 percent, just above the threshold for conversion. The bank continues to expand into contiguous markets, including Uttar Pradesh, to build a meaningful presence.

Key financial targets for FY29 include a return on assets of over 1.6 percent and a return on equity of more than 15 percent. The bank is also targeting an average credit-to-deposit ratio of 83 percent, giving it room to grow further towards the mid-to-high 80s.