Suryoday Small Finance Bank has made a significant move in the credit card market by introducing secured credit cards backed by fixed deposits (FDs). This innovative offering aims to provide accessible credit solutions to a diverse range of customers, including first-time users, homemakers, and retirees.

Key Features of the New Credit Cards

The bank has launched two variants of the FD-backed credit cards:

1. RuPay Select
2. RuPay Platinum

Both cards come with attractive features designed to appeal to customers:

• Cashback Rewards: Cardholders can enjoy a 0.5% cashback on all transactions, with a cap of ₹3,000.00 per billing cycle.
• No Annual Fees: The cards are free from annual charges, making them more accessible to a wider range of customers.
• Minimum FD Requirements:
  • RuPay Platinum: ₹1,000.00
  • RuPay Select: ₹1,11,500.00
• Instant Virtual Issuance: Customers can start using their cards immediately upon approval.
• UPI Integration: The cards are integrated with UPI for seamless digital transactions.
• RuPay Lifestyle Offers: Cardholders can access various lifestyle benefits through the RuPay network.

Competitive FD Interest Rates

Suryoday Small Finance Bank is sweetening the deal by offering competitive interest rates on the fixed deposits that back these credit cards:

• Maximum FD Interest Rate: Up to 8.40%
• Industry Comparison: This rate is notably higher than the typical 6.50%-7.50% offered by other small finance banks.

Target Audience

The bank's strategy with these new credit cards is to cater to specific segments of the population:

1. First-time credit card users
2. Homemakers
3. Retirees

By offering secured credit cards backed by FDs, Suryoday Small Finance Bank is providing an opportunity for these groups to access formal credit, potentially helping them build or improve their credit profiles.

Market Implications

This move by Suryoday Small Finance Bank represents a strategic approach to expanding its customer base and product offerings. By combining the security of fixed deposits with the convenience of credit cards, the bank is positioning itself to attract customers who may be hesitant about traditional unsecured credit cards.

The integration of UPI and the partnership with RuPay also indicate the bank's focus on aligning with India's digital payment ecosystem, potentially increasing the cards' utility and appeal to tech-savvy customers.

As the credit card market in India continues to evolve, innovative products like these FD-backed cards could play a significant role in financial inclusion and credit accessibility for a broader segment of the population.

Suryoday Small Finance Bank has reported robust growth in both advances and deposits for the first quarter, while working towards stabilizing its asset quality.

Strong Growth in Advances and Deposits

The bank's gross advances stood at ₹10,846.00 crore, marking a significant year-on-year growth of 20.00%. On the liability side, the deposit base expanded to ₹11,312.00 crore, representing an impressive 39.00% increase compared to the previous year.

Improvement in Retail Deposits

Suryoday's retail deposits now constitute 82.00% of the total deposit base, up from 79.00% a year earlier. This growth has been driven by deposits garnered through digital channels, which have reached ₹1,000.00 crore with a daily run rate of ₹3.00 crore.

Asset Quality and Collection Efficiency

The bank's Gross Non-Performing Assets (GNPA) stood at 8.50%, while Net Non-Performing Assets (NNPA) were at 5.60%. However, the bank has a receivable of ₹584.00 crore under the Credit Guarantee Fund for Micro Units (CGFMU) scheme, which covers almost 100% of the GNPA along with existing provisions.

Collection efficiency in the inclusive finance segment has shown improvement, with the current bucket collection efficiency increasing from 97.50% to 98.40%.

Strategic Initiatives and Future Outlook

Baskar Babu Ramachandran, Managing Director and CEO, highlighted several strategic initiatives:

1. Shift from group lending to individual lending with strengthened underwriting processes
2. Prudent risk management practices with wider coverage of cyclical events
3. Focus on secured retail assets business
4. Expansion of digital deposit sourcing channels

The bank expects credit costs to be around 1.20% for the year and anticipates slippages to reduce by ₹50.00-70.00 crore in the next quarter.

Portfolio Mix and Future Plans

Suryoday maintains a 55-45 mix between secured and unsecured assets. The bank plans to continue focusing on Commercial Vehicle (CV) and mortgage segments for its retail asset secured business growth.

Conclusion

Despite facing challenges in the inclusive finance segment, Suryoday Small Finance Bank has demonstrated resilience and growth in the first quarter. The bank's focus on digital initiatives, secured lending, and improving asset quality positions it well for sustainable growth in the coming quarters.

Management expects to see a substantial reduction in NPA accretion by the third quarter, subject to current trends continuing. With these strategies in place, Suryoday Small Finance Bank aims to create long-term value for all stakeholders while staying true to its mission of financial inclusion.