ESAF Small Finance Bank is eyeing a total business (total deposits plus gross advances) of ₹1 lakh crore by 2030 from the current ₹50,140 crore. Along the way, the Thrissur-headquartered bank plans to apply to the RBI for transitioning to a universal bank.

In an interaction with businessline,K Paul Thomas, Managing Director & CEO, said: “Our aspiration is to reach ₹1 lakh crore in total business by 2030. It took us around nine years to reach ₹50,000 crore. Historically, we grew at around 40 per cent, later moderated to around 33 per cent, and growth slowed further during Covid. Under normal conditions, we believe a sustainable annual growth rate of around 25 per cent (plus or minus 2 per cent) is achievable.”

Referring to the bottom line of the bank swinging from a net loss of 81 crore in Q1 (April-June) FY26 to net profit of ₹80 crore in Q1FY27, Thomas emphasised that this happened through acceleration of loan diversification strategy, reducing dependence on microfinance and stepping up focus on MARG (MSMEs, Agriculture, Retail and Gold) loans.

Within gross advances (of ₹23,216 crore as of June-end 2026 against ₹18,224 crore as of June-end 2025), MARG loans and emerging household loans (comprising small ticket loans provided to individuals, self-help groups, small entrepreneurs) components increased to 56 per cent (50 per cent as of June-end 2025) and 32 per cent (14 per cent), respectively.

Microfinance loans, which faced stress due to adverse weather conditions, elections and changes in policies at the State-level during the 2024-25 period, declined to about 10 per cent of gross advances from 31 per cent in the year-ago quarter.

On plans for transitioning to a universal bank, the ESAF SFB chief observed that the bank needs another two years of continuous profitability to become eligible, since it reported losses during FY25 and FY26.

“Our Net NPA (non-performing asset) is already below 1 per cent, and we expect to reduce our Gross NPA below 3 per cent through recoveries and write-offs. Operationally, we believe we are largely ready. Our business is becoming increasingly diversified,” he said.

On the reasons for aspiring to transform into a universal bank, Thomas noted that while there is no disadvantage in remaining a small finance bank, every institution should have aspirations.

“Becoming a universal bank would strengthen customer perception and enhance our brand. We have consistently demonstrated that we are a scheduled bank focused on financial inclusion, rural development and serving underserved communities. As other small finance banks transition into universal banks, we also intend to apply when eligible. Another benefit could be lower cost of deposits because customers may perceive universal banks differently,” he said.

On deposit concentration, whereby 71 per cent of the bank’s total deposits (of ₹26,924 crore as of June-end 2026) originated in Kerala, Thomas said the bank has about 820 branches spread across 26 states. Of this, only 300 are based in Kerala.

“Over the last four to five years, we built a nationwide branch network. We also have around 1,100 Customer Service Centres operated through business partners and 35 institutional business correspondent (BC) partners. While we expanded geographically, mobilising deposits in newer markets remained challenging, particularly after reporting losses for several quarters. Historically, we relied heavily on deposits from non-resident Keralites, and that continues to be a strong source of liabilities,” said the ESAF SFB chief.

Thomas expects the proportion of Kerala-based deposits in overall deposits to gradually decline, reaching around 50 per cent by 2030 from about 71 per cent now. He emphasised that unlike asset growth, deposit growth takes time because building customer trust in new markets is a gradual process.

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