|
|
| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| BOND | 100.00 | ACUITE BBB+ | Stable | Assigned | - |
| Total Outstanding | 100.00 | - | - |
| Total Withdrawn | 0.00 | - | - |
|
Rating Rationale |
|
Acuité has assigned the long-term rating of ‘ACUITE BBB+’ (read as ACUITE Triple B plus) on the Proposed Tier-2 bonds (under Basel-2) of Rs. 100.00 crore of slice Small Finance Bank Limited (Erstwhile North East Small Finance Bank Limited). The outlook is 'Stable'.
Rationale for rating. The rating takes into account the bank’s sustained improvement in asset quality, strengthening capital base, and material progress in profitability. It also factors in the steady expansion of deposits and advances, which provide comfort on the liability side. slice Small Finance Bank Limited has shown a marked improvement in operating and financial performance between FY24 and FY25, with further traction visible in 9M FY26. The bank’s operating income expanded from Rs.127.43 Cr. in FY24 to Rs.403.27 Cr. in FY25, supported by strong growth in deposits and advances. In 9M FY26, the bank reported its first profitable phase with PAT of Rs.27.97 Cr. as on Dec 31,2025, operating income of Rs.738.91 Cr, and cost-to-income ratio improving to 83%. Deposits rose to Rs.4,349.08 Cr. and advances to Rs.4,158.66 Cr, reflecting steady scale-up of franchise. Margins also improved sharply, while NNPA further declined to 3.98%. Going forward, the ability to maintain profitability on a sustained basis and strengthen provisioning buffers wil remain key monitorables. |
| About the company |
|
slice Small Finance Bank Limited (erstwhile North East Small Finance Bank Limited) was incorporated in July 2016 as a wholly owned subsidiary of RGVN (North East) Microfinance Limited and commenced operations as a Small Finance Bank in October 2017, the bank is registered and headquartered in Guwahati, Assam. The institution traces its origin to Rashtriya Gramin Vikas Nidhi (RGVN), a society that commenced microfinance operations in 1995 with initial corpus support from IDBI, IFCI, NABARD and Dorabji Tata Trust, along with operational support from SIDBI. In 2008, RGVN (North East) Microfinance Limited was incorporated and subsequently obtained an NBFC licence in August 2010 and NBFC-MFI certification from RBI in 2014. The entity received in-principle approval from RBI to set up a Small Finance Bank in 2015. The bank was granted Scheduled Commercial Bank status in FY2019. On October 3, 2023, RBI issued its No Objection Certificate for the amalgamation of the slice group (Garagepreneurs Internet Pvt. Ltd., Quadrillion Finance Pvt. Ltd. and Intergalactory Foundry Private Limited) with the bank. The merger was consummated on October 27, 2024, pursuant to which all assets and liabilities of the slice group were transferred to the bank. Further, RGVN (North East) Microfinance Limited, the erstwhile holding company, was reverse merged into the bank on the same date. Post-merger, Mr. Rajan Bajaj is the largest shareholder, with other significant shareholders including Gunosy Capital, Blume Ventures, Tiger Global and Insight Partners.
|
| Unsupported Rating |
| Not Applicable. |
| Analytical Approach |
| Acuité has considered the standalone business and financial risk profile of slice Small Finance Bank Limited to arrive at the rating. |
| Key Rating Drivers |
| Strength |
| Improvement in Asset Quality and Margins
Asset quality has shown sustained improvement, with NNPA moderating from 8.36% in FY24 to 3.98% in 9M FY26. Margins have also expanded sharply, with NIM improving from 4.49% in FY24 to 14.43% in FY25, driven by better yield management and deposit mix. These factors, along with the turnaround to profitability in FY26, indicate a structurally positive shift in the bank’s financial profile. Improving Operating Performance slice Smal Finance Bank limited has demonstrated a significant scale-up in operations between FY24 and FY25, with operating income rising more than threefold to Rs.403.27 Cr. This momentum has continued into 9M FY26, where operating income nearly doubled again to Rs.738.91 Cr. The improvement reflects strong traction in both net interest income and non-interest income, supported by rapid expansion in the loan book and deposit base. Strengthened Capital Position and Franchise Growth The bank’s net worth has improved substantially from Rs.60.91 Cr. in FY24 to Rs.552.85 Cr. in FY25 and further to Rs.845.34 Cr. in 9M FY26, aided by capital infusion and internal accruals. Deposits have scaled up from Rs.1,519.57 Cr. in FY24 to Rs.4,349.08 Cr. in 9M FY26, while advances grew from Rs.802.43 Cr. to Rs.4,158.66 Cr. over the same period. This reflects a strengthening liability franchise and steady growth in lending operations, providing comfort on the bank’s ability to support future expansion. |
| Weakness |
| Low Provision Coverage
While asset quality has improved with NNPA declining to 3.98% in 9M FY26, the provision coverage ratio remains modest at ~28%. This indicates limited buffers against potential credit losses. Strengthening provisioning levels will be essential to enhance resilience, especially given the rapid pace of loan growth. Nascent Profitability Track Record The bank has only recently turned profitable in FY26 after reporting losses in FY24 and FY25. Although the turnaround is encouraging, the ability to sustain profitability across cycles and demonstrate consistent earnings remains untested. Establishing a stable track record of profitability wil be a key monitorable for future rating actions. High Operating Cost Structure Despite improvement in efficiency, the bank’s cost-to-income ratio remains elevated at 83.43% in 9M FY26 compared to peer levels of 60–65%. The sharp rise in operating expenses from Rs.173.98 Cr. in FY25 to Rs.616.47 Cr. in 9M FY26 reflects the ongoing investments in branch expansion, technology, and manpower. Sustained moderation in operating costs will be critical for long-term profitability. |
| ESG Factors Relevant for Rating |
|
Strong governance is central to the long-term sustainability of banks. Key governance factors include board effectiveness, independence, diversity, shareholder rights, KMP compensation policies and adherence to ethical business practices. Social considerations for financial institutions largely revolve around data privacy, security of financial instruments, responsible lending, and effective employee management—given the sector’s people-intensive nature. Community engagement and financial inclusion initiatives also remain significant social pillars.
Environmental risks for banks are relatively low; however, energy efficiency and electronic-waste management carry moderate materiality. slice Small Finance Bank Limited maintains adequate governance and ethical standards, supported by clear policies on corruption mitigation, whistle-blower protection and related-party transactions. The Bank has implemented a structured cyber-security framework and conducts periodic assessments and awareness initiatives to ensure strong data protection and operational resilience. |
| Rating Sensitivity |
|
| Liquidity Position |
| Adequate |
| The adequate liquidity is driven by no negative cumulative mismatches in the near term as per the asset liability management profile of slice Small Finance Bank Limited. Further, Total investments stood at Rs. 1202.33 Cr. and cash and cash equivalents at Rs. 277.32 Cr. as on December 31, 2025. |
| Outlook - Stable |
| |
| Other Factors affecting Rating |
| None. |
| Key Financials - Standalone / Originator | ||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||
| Status of non-cooperation with previous CRA (if applicable): |
| None. |
| Any other information |
| None. |
| Applicable Criteria |
|
• Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm • Banks And Financial Institutions: https://www.acuite.in/view-rating-criteria-45.htm • Default Recognition: https://www.acuite.in/view-rating-criteria-52.htm • Hybrid Instruments Issued By NBFCs & HFCs: https://www.acuite.in/view-rating-criteria-56.htm |
| Note on complexity levels of the rated instrument |
Rating History : |
| Not Applicable. |
|
|
|||||||||||||||||||||||||||
|
| |
|
Contacts |
About Acuité Ratings & Research |
