ESAF Small Finance Bank eyes ₹1 lakh cr total biz of by 2030

ESAF Small Finance Bank aims to achieve a total business—combining deposits and gross advances—of ₹1 lakh crore by 2030, up from the present ₹50,140 crore. In the meantime, the Thrissur‑based lender intends to seek RBI approval to convert into a universal bank.

In a conversation with businessline, K Paul Thomas, Managing Director & CEO, remarked: “Our goal is to hit ₹1 lakh crore in total business by 2030. It took roughly nine years to get to ₹50,000 crore. Historically our growth hovered near 40 %, then slipped to about 33 %, and dipped further during the Covid period. Assuming normal circumstances, we see a sustainable yearly growth of roughly 25 % (±2 %) as attainable.”

He noted that the bank swung from a net loss of ₹81 crore in Q1 FY26 (April‑June) to a net profit of ₹80 crore in Q1 FY27, attributing the turnaround to a faster loan‑diversification drive, less reliance on microfinance, and a stronger push on MARG advances (MSME, agriculture, retail and gold).

As of June 2026, gross advances stood at ₹23,216 crore, up from ₹18,224 crore a year earlier. Within this portfolio, MARG loans rose to 56 % (from 50 % in June 2025) and emerging household loans—small‑ticket credit to individuals, self‑help groups and tiny entrepreneurs—climbed to 32 % (from 14 %).

Microfinance advances, strained by bad weather, elections and state‑policy shifts in 2024‑25, fell to roughly 10 % of gross advances, down from 31 % a year earlier.

Plans for becoming a universal bank

Speaking about the move to a universal bank, the ESAF SFB chief said the lender requires two more years of steady profit to qualify, after posting losses in FY25 and FY26.

“Our net NPA is already under 1 %, and we aim to bring gross NPA below 3 % via recoveries and write‑offs. Operationally we feel largely prepared, and our business mix is steadily diversifying,” he added.

Explaining the motive behind the universal‑bank ambition, Thomas said staying a small finance bank carries no drawback, yet every institution ought to aspire for growth.

“Turning into a universal bank would boost customer perception and lift our brand. We have continually shown ourselves as a scheduled bank devoted to financial inclusion, rural uplift and serving underserved segments. As peer small‑finance banks move toward universal status, we plan to apply once eligible. An added advantage could be a cheaper deposit base, since customers may view universal banks more favorably,” he said.

Regarding deposit concentration—71 % of the bank’s total deposits of ₹26,924 crore (as of June 2026) come from Kerala—Thomas pointed out that the lender operates roughly 820 branches across 26 states, with only about 300 located in Kerala.

“Over the past four‑to‑five years we have constructed a pan‑India branch network. In addition, we run about 1,100 customer‑service centres via business partners and 35 institutional business‑correspondent (BC) partners. Although we have widened our geographic footprint, gathering deposits in new markets has proved difficult, especially after several quarters of losses. Historically we have depended heavily on deposits from non‑resident Keralites, and that remains a key liability source,” said the ESAF SFB chief.

Thomas anticipates that the share of Kerala‑based deposits in the total deposit base will fall gradually, aiming for around 50 % by 2030 versus the current 71 %. He stressed that, unlike asset accumulation, deposit growth is slower because earning trust in new markets is a gradual process.

Published on August 4, 2026