Shivalik Small Finance Bank Eyes M&A Path for Growth
Deal News | Mar 30, 2025 | EIN
Shivalik Small Finance Bank is actively exploring merger and acquisition (M&A) opportunities to expand its portfolio of secured loans in a strategic move to mitigate risks associated with unsecured lending. Rising stress in microfinance and unsecured lending, coupled with regulatory pressure from the Reserve Bank of India (RBI), has driven the bank to seek acquisition targets, including non-banking financial companies (NBFCs) focusing on secured business. The bank aims to finalize a merger candidate by the first quarter, considering options such as a housing finance company with assets under management between Rs 400-500 crore. Shivalik's gross loan portfolio amounts to Rs 2500 crore, with a significant concentration in secured lending. However, its focus on vulnerable sectors like MSMEs, agriculture, and microfinance presents challenges. The bank's strategy aligns with building a more robust and diversified balance sheet as it navigates the competitive landscape of small finance banking in India.
Sectors
- Finance and Banking
- Non-Banking Financial Companies (NBFCs)
- Investment and M&A
Geography
- India – The article focuses on Shivalik Small Finance Bank's operations and strategy within the Indian market.
Industry
- Finance and Banking – The industry involves the provision of financial services including lending and borrowing, which is relevant as Shivalik Small Finance Bank operates in this sector.
- Non-Banking Financial Companies (NBFCs) – NBFCs offer financial services similar to traditional banks. Shivalik is looking to acquire an NBFC to expand its secured lending operations.
- Investment and M&A – This sector involves mergers and acquisitions as a growth strategy, which is applicable as Shivalik explores M&A opportunities.
Financials
- Rs 400-500 crore – Assets under management of a potential housing finance acquisition target.
- Rs 2500 crore – Shivalik Small Finance Bank's gross loan portfolio as of December.
- 83% – Portion of Shivalik's loan portfolio that is secured.
- 2.31% – Shivalik Small Finance Bank's gross NPAs as of September 30, 2024.
Participants
| Name | Role | Type | Description |
|---|---|---|---|
| Shivalik Small Finance Bank | Target/Acquirer | Company | A small finance bank seeking to expand its secured loan portfolio through M&A opportunities. |
| Reserve Bank of India (RBI) | Regulatory Authority | Government | The central banking institution of India expressing concerns over the unsecured loan portfolios of small finance banks. |
| Infomerics Ratings | Rating Agency | Company | A credit rating agency providing assessments of the financial health of banks including Shivalik Small Finance Bank. |