According to The Economic Times, Unity Small Finance Bank is planning to enter the housing finance business in the latter half of the year, focusing on affordable housing and micro-LAP (loan against property). The bank's board and management believe it is prudent to keep options open for future opportunities rather than pursue an acquisition at any cost. Centrum Group executive chairman Jaspal Bindra confirmed that the bank will not pursue prime lending in top-tier towns, with affordable housing continuing to be one option, while also exploring micro-LAP opportunities in the ₹2-5 lakh loan range. As reported by The Economic Times, Bindra noted that housing is a big asset class and the bank would like to participate in it one way or the other, whether through affordable housing business, micro-LAP, or related opportunities.
As reported by The Economic Times, the housing sale is expected to conclude by April or May 2026, after which the bank can begin its housing finance operations. Currently, Unity Bank holds a 28% capital adequacy ratio, which is considered surplus for the bank's immediate needs. The bank is two to three years away from a public listing, with listing requirements for small finance banks now set at eight years of operation, compared to the previous five-year requirement. According to The Economic Times, Bindra stated that the bank is two to three years away from listing, with the listing requirement for small finance banks changed from five to eight years of operation.
According to the report, Unity Bank currently has one-fourth of its loan assets in microfinance, which management is comfortable maintaining at 20% of the loan book as other businesses grow. The bank recently launched two new digital products in late 2025: two credit cards and one personal loan, along with beginning gold financing business on the digital platform. The bank's MSME segment remains a significant piece of its business portfolio. As reported by The Economic Times, Bindra highlighted that housing, MSME, supply chain financing, and commercial banking are big pieces for the bank, along with recently launched digital products including credit cards and personal loans.
As reported by The Economic Times, Unity Bank faces challenges in the microfinance segment due to three cycles in quick succession, with cycles occurring approximately every four to five years. The bank's management believes small finance banks can create their own niche, particularly in tier two, tier three, and tier four markets, where only 15-17% of MSMEs receive formal finance, with 80% still relying on family and friends for funding. Bindra noted that there is a huge opportunity in tier two, tier three, tier four markets, and the MSME segment, with only a fraction of all MSMEs getting formal finance.
According to the interview, the small finance banking sector has evolved significantly, with Jaspal Bindra noting that earlier concerns about riskiness have diminished as small finance banks have demonstrated strong performance. The regulatory landscape has changed, with the RBI now requiring small finance banks to list after eight years of operation, compared to the previous five-year requirement. The report also discusses broader banking sector consolidation trends and the role of corporate ownership in banking institutions. As reported by The Economic Times, Bindra emphasized that small finance banks can create their own niche, and there is a lot of space in tier two, tier three, tier four markets, with only 15-17% of MSMEs getting formal finance.
