Utkarsh Small Finance Bank has brought investor focus back after the board approved a ₹950 crore rights issue aimed at shoring up capital in light of recent losses. The bank is expected to finalise key details such as issue price, entitlement ratio, and record date in its next board meeting scheduled for October 8, 2025.
The board of Utkarsh Small Finance Bank has given the green signal to raise ₹950 crore through a rights issue. This move comes at a critical time, as the bank has reported net losses in 2 of the past 3 quarters.
In Q3 FY25, it posted a loss of ₹168 crore, followed by a marginal profit of ₹3 crore in Q4. However, the bank again slipped into a loss of ₹239 crore in the June quarter of FY26.
As of the June quarter end, the bank's net worth dropped by 8% from ₹2,975 crore to ₹2,739 crore. Adding to the concerns, the net interest margin tightened by 50 basis points QoQ.
Simultaneously, credit costs jumped 380 basis points to 8.5%, signalling stress in asset quality. Gross NPA spiked by 200 basis points to 11.4%, while net NPA rose marginally to 5% from 4.8% in March.
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Utkarsh SFB witnessed a decline in its total loan book by 2.2% QoQ and deposits also fell by 0.4%. In line with these trends, collection efficiency slipped to 82% from the prior 86%, reflecting stress in borrower repayments. These metrics underline the bank's current operational challenges amid an adverse credit cycle.
On October 3, 2025, Utkarsh Small Finance Bank share price opened at ₹22.13 on NSE, above the previous close of ₹21.77. During the day, it surged to ₹22.57 and dipped to ₹22.00. The stock is trading at ₹22.21 as of 10:03 AM. The stock registered a significant gain of 2.02%.
Over the past week, it has moved up by 6.27%, over the past month, it has moved up by 3.59%, and over the past 3 months, it has declined by 8.07%.
The ₹950 crore rights issue by Utkarsh Small Finance Bank represents a strategic step to strengthen its capital base amidst mounting losses, rising NPAs, and pressure on margins. The upcoming October 8, 2025 board meeting is crucial for determining the financial structure of the rights issue as the bank looks to stabilise its balance sheet.
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Published on: Oct 3, 2025, 12:32 PM IST
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