Small Finance Banks: Know the biggest reason for the rise in Small Finance Banks today, jumped up to 4%

News Topical, Digital Desk : On Monday, in the first trading session of the week, small finance banks like Equitas SFB, Ujjivan SFB, AU SFB and Janan SFB saw a spectacular rise of up to 4%. This rise in the shares of these small finance banks is being seen after the change in Priority Sector Lending (PSL) rules by RBI. RBI has recently issued a circular saying that the PSL requirements for small finance banks have been reduced from 75% to 60% from the financial year 2026. This 60% will be based on either the adjusted net bank credit or the credit equivalent of off-balance sheet exposure (CEOBE), whichever is higher.

Under the PSL rule, banks are required to give a part of their total lending to certain sectors, such as agriculture, small industries, and weaker sections. This part is 40% for normal banks, but for small finance it was earlier 75%, which has now been reduced to 60%.

Adjusted Net Bank Credit: This is the amount of total loan given by the bank, in which some adjustments are made.
 

CEOBE: This is the off-balance sheet exposure, which helps foreign banks to meet PSL targets in India.

What does this mean? Brokerage firms like Morgan Stanley said that this move of RBI is a big positive change for small finance banks. This will help them diversify their portfolio and ease operations. This means that these banks will now be able to give more loans in the non-priority sector. According to Citi, this change will give structural relief to small finance banks and banks whose portfolio is already diversified will now be able to increase non-PSL loans further. This will increase the long-term growth potential of these banks. 

Stock Performance Equitas Small Finance Bank: Shares are trading 1% higher at ₹65.1, but are still 40% below their 52-week high. 

Jana Small Finance Bank: Shares are trading 1.5% higher, but are well below their post-listing high of ₹760. 

AU Small Finance Bank: After losing early gains, it is now trading at a stable level, but is close to its 52-week high. 

Ujjivan Small Finance Bank: After early gains, it is trading 1.3% higher at ₹48.82 and is near its 52-week high. 

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