small finance banks: Will bearish market conditions prove roadblock in AU SFB’s solid journey?

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The lending base of SFBs and private banks differs significantly. The Reserve Bank of India (RBI) has limited the amount of money that SFBs can lend; private banks have no such restrictions.

Synopsis

AU Small Finance Bank, Ujjivan Small Finance Bank, Equitas Small Finance Bank and Suryoday Small Finance Bank are the four small finance banks (SFBs) that are listed on the stock exchanges in India. Some players are experiencing internal governance challenges, and some have been severely impacted by the pandemic. AU Small Finance Bank is one of the companies that is standing out among its peers.

After the pandemic, nationwide lockdowns hampered profitability across sectors. AU Small Finance Bank was also hit but it was able to quickly rebound from the setbacks. Its asset quality has recovered and net interest margins (NIMs) are improving. The forthcoming monsoon lending season should help the bank to stay on the fast-track growth mode and maintain valuation even in bearish market conditions.AU Small Finance Bank, Ujjivan Small Finance

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