Mumbai, January 5, 2026: Utkarsh Small Finance Bank (UTKARSHBNK) reported a contraction in its overall loan portfolio during the third quarter of FY26, even as the bank strengthened its deposit profile and liquidity position, reflecting a calibrated shift in balance sheet strategy.
Loan Portfolio Update
As of December 31, 2025, the bank’s gross loan portfolio stood at ₹18,306 crore, marking a 3.9 percent year-on-year decline and a 1.9 percent sequential dip. The moderation was primarily driven by a sharp contraction in the joint liability group (JLG) segment.The JLG loan portfolio fell to ₹6,419 crore, down 34.1 percent year-on-year and 15.7 percent quarter-on-quarter, indicating continued tightening in the micro-banking segment.
In contrast, the non-JLG loan portfolio expanded to ₹11,888 crore, registering a 27.5 percent year-on-year growth and a 7.7 percent increase over the previous quarter, highlighting the bank’s focus on secured and diversified lending segments.
Deposit Growth and Mix Improvement
The bank’s total deposits increased to ₹21,087 crore, reflecting a 4.5 percent year-on-year growth, although deposits declined 1.7 percent sequentially.A key positive was the improvement in the quality of deposits:
- CASA deposits rose to ₹4,611 crore, up 16.1 percent year-on-year and 2.9 percent quarter-on-quarter.
- Retail term deposits grew strongly to ₹12,586 crore, posting a 23.8 percent year-on-year increase and a 2.7 percent sequential rise.
- Bulk term deposits declined sharply to ₹3,890 crore, down 35.6 percent year-on-year and 17.4 percent quarter-on-quarter, underscoring a deliberate reduction in wholesale funding dependence.
Asset Quality and Liquidity Position
Operational metrics remained robust during the quarter. The X-bucket collection efficiency for the micro-banking loan portfolio stood at 99.1 percent in Q3 FY26, excluding pre-payments, indicating strong repayment behaviour.The bank’s liquidity coverage ratio was reported at 200 percent as of December 31, 2025, providing a substantial buffer against short-term liquidity stress.
About the Company
Utkarsh Small Finance Bank is a listed small finance bank in India, primarily engaged in providing banking and financial services to underserved and unserved segments, including micro and small enterprises, retail customers, and self-employed individuals, with a growing focus on secured and retail-oriented products.Source:
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