Universal bank aspirants up secured play

Move seen as a step to comply with the transition norms that had called for a diversified portfolio

- AATHIRA VARIER

Small finance banks (SFBs) which are aspiring to become universal banks have increased the share of secured assets in the loan portfolio in order to comply with the transition norms of diversified portfolio.

The three SFBs, which are eligible to convert into universal banks — AU, Ujjivan and Jana — reported higher share of the secured book during the July-September earnings.

While AU has already received RBI’s in-principle approval to convert into a universal bank, the applications of Jana and Ujjivan are pending with the regulator.

Only these three banks have applied so far for the conversion. ‘The norms for voluntary conversion of SFBs to universal banks talked about diversified loan portfolio as an eligibility though no number was specified. Since most of the SFBs converted from microfinance institutions (MFIs), the share of unsecured loans is higher in their books.