Jana Small Finance Bank is looking to grow its loan book by 25-30 per cent this fiscal, on the back of growth in affordable housing, MSME, and gold loans.

The bank, which commenced commercial operations in March 2018, witnessed an almost flat growth in its loan book in FY19. As on March 31, 2019, its loan book stood at 6,500 crore.

According to Ajay Kanwal, MD and CEO, the bank is likely to have a loan book of close to 8,500 crore by March 2020.

“Our growth was largely flattish last year as we were using a large part of our liabilities for repayment of term loans. But now that we have repaid a majority of our term loans, the focus will be on growing the loan book,” Kanwal told BusinessLine. Jana, which had borrowings of around 9,000 crore by way of term loans from various banks, currently has an outstanding of around 2,500 crore.

In the first year or two of commencing operations, SFBs were taking time to stabilise and learn the business of banking. They are now poised to grow their business. “The first two years were spent in setting up and upgrading branches, hiring right managers, and getting the processes right. While people expected SFBs to grow faster, the banks spent the first year or two in managing their licence and organising their business,” he pointed out.

Product offerings

Kanwal feels there is a huge untapped potential in lending to small businesses. MSME is likely to account for 10-15 per cent of its total loan book by 2020.

“Lending to small businesses presents a huge opportunity. There is a massive number of small enterprises that are underserved, and that is an area of focus for us,” he said.

Currently, group loans to SHGs and JLGs account for nearly 30 per cent of its loan book, and another 20 per cent comes from agricultural loans.

Expansion plans

The bank, which rolled out affordable housing products across four States, including Tamil Nadu, Karnataka, Maharashtra and Gujarat last year, is looking to expand into three more States by the end of this fiscal.

Affordable housing currently accounts for around 8 per cent of its total business. This is expected to increase to 10-15 per cent by March 2020.

“There is very good demand for affordable housing, so we will expand it to three more States by the end of this fiscal,” he said.

Gold loan would be another key area of focus for growing its loan book this year. The bank also plans to roll out two-wheeler and consumer durables loans by early next fiscal.

On the liabilities side also, the bank currently has deposits – fixed, recurring and CASA (current account and savings account) products. It plans to roll out insurance and investment products to complete its bouquet of offerings.

The bank currently has 250 branches, of which 200 are new, while the remaining 50 are through conversion of its old asset centres. During the current fiscal, the bank plans to upgrade the remaining asset centres to branches.

“Our main focus is to convert the 600-odd asset centres to bank branches, and we hope to complete 80-90 per cent by March 2020,” he said.