Research Report

ICRA expects SFBs to report 18-20% growth in gross advances in FY2026 with secured products being primary growth drivers; adequate capital and liquidity support growth plans Uptick in delinquencies in microfinance segment and limited seasoning of secured products would keep asset quality volatile; ICRA expects GNPAs of 3.7-3.9% as of March 2026 RoA projected to moderate to 1.0-1.2% in FY2026 amid margin compression and elevated credit costs; some improvement expected in FY2027

• SFBs demonstrated a healthy portfolio growth of 17% year-on-year (YoY) in H1 FY2026 (21% in FY2025; 24% in FY2024) accompanied by a strategic shift in the portfolio mix. Given the asset quality challenges persisting in the microfinance segment, ICRA expects the portfolio growth of SFBs to moderate to 18-20% in FY2026, followed by an improvement to 22-25% in FY2027 with secured lending segments being the primary growth drivers.
• SFBs reported a ~120-bps increase in GNPAs to 3.6% as of March 2025, largely due to slippages in the microfinance segment; this inched up to 3.9% as of September 2025. ICRA expects the stress in the microfinance segment and limited seasoning of new products to keep the asset quality volatile and credit costs elevated in the near term.

Source: Financials/investor presentations of SFBs, ICRA Research; E – Estimated; P – Projected; Growth rate is on YoY basis