Capital Small Finance Bank MSME book rises 51% in Q2FY27

Capital Small Finance Bank’s micro, small and medium enterprise (MSME), trading and other business-loan book grew 51% year on year to Rs 2,765 crore in Q2FY27. The segment accounted for 28.4% of gross advances, overtaking agriculture’s 26.4% share, while total gross advances rose 23.4% to Rs 9,755 crore.

How quickly did Capital Small Finance Bank’s MSME book grow?

Capital Small Finance Bank’s MSME, trading and other business-loan book grew 51% year on year and 13% quarter on quarter in Q2FY27. Segment advances reached Rs 2,765 crore, compared with Rs 1,835 crore in Q2FY26 and Rs 2,452 crore in Q1FY27. The portfolio includes working-capital, project-financing and machinery loans.

The segment added Rs 930 crore from Q2FY26, compared with a Rs 194 crore increase in agricultural loans and a Rs 85 crore increase in housing loans. Loan against property (LAP) rose by Rs 204 crore, corporate loans by Rs 315 crore and consumption and other loans by Rs 120 crore over the same year-earlier period.

How has Capital Small Finance Bank’s loan mix changed?

Capital Small Finance Bank’s MSME and other business-loan share increased to 28.4% in Q2FY27 from 23.2% in Q2FY26, a 5.2-percentage-point change. Agriculture’s share fell to 26.4% from 30.1% over that period, placing MSME and other business loans ahead of agriculture among the disclosed portfolio categories as of September 2026.

The longer-term data show the same direction. MSME and other business loans represented 19.0% of advances in FY24, 21.0% in FY25 and 25.4% in FY26, before reaching 28.4% in Q2FY27. Agriculture moved from 37.0% in FY24 to 32.5% in FY25, 28.2% in FY26 and 26.4% in Q2FY27.

Capital Small Finance Bank reported mortgage loans, comprising housing and LAP, at 24.2% of advances in Q2FY27, compared with 26.3% in Q2FY26. Corporate loans accounted for 14.2%, unchanged from Q1FY27, and consumption and other loans represented 6.8%, compared with 6.9% a year earlier. Corporate loans included Rs 24 crore towards a non-banking financial company microfinance institution as of September 2026.

What does Capital Small Finance Bank’s advance growth show?

Capital Small Finance Bank’s gross loan book rose to Rs 9,755 crore in Q2FY27 from Rs 7,907 crore in Q2FY26, a 23.4% increase, and from Rs 9,074 crore in Q1FY27, a 7.5% increase. The bank reported a 22% compound annual growth rate from FY16 to FY26, when gross advances increased from Rs 1,148 crore to Rs 8,687 crore.

Quarterly disbursements rose 36% year on year to Rs 1,095 crore in Q2FY27 from Rs 805 crore in Q2FY26. In H1FY27, disbursements were Rs 2,104 crore, compared with Rs 1,671 crore in H1FY26, a 26% increase. Capital Small Finance Bank identified the MSME and business segment as the quarter’s growth driver.

Advances outside Capital Small Finance Bank’s home state accounted for 26% of the loan book in Q2FY27, up from 23% in Q2FY26. The bank operated 222 branches across five states and two Union Territories. Deposits increased 16% year on year to Rs 10,831 crore, while quarterly profit after tax rose 31% to Rs 46 crore.

How secured is Capital Small Finance Bank’s portfolio?

Capital Small Finance Bank reported that 97.0% of advances were secured in Q2FY27, compared with 99.2% in Q2FY26 and 97.7% at FY26. It also reported that 77% of the portfolio was collateralised by immovable property, fixed deposits or gold as of September 2026.

The average ticket size for the granular loan book was Rs 19.5 lakh in Q2FY27. The disclosed average ticket size was Rs 29.3 lakh in MSME and other business loans, Rs 13.4 lakh in agricultural loans and Rs 16 lakh in housing loans. Corporate loans had an average ticket size of Rs 29.392 crore.

Capital Small Finance Bank reported net portfolio performance asset (NPPA), as labelled in its presentation, of 0.62% for MSME, trading and other business loans in Q2FY27. This was lower than 1.20% in Q2FY26 and 0.69% in Q1FY27. The segment’s interest yield was 10.54%, compared with 12.47% for agriculture and 12.25% for LAP.

What do Capital Small Finance Bank’s asset-quality figures show?

Capital Small Finance Bank reported gross non-performing assets (GNPA) of 2.36% and net non-performing assets (NNPA) of 1.12% in Q2FY27. These compared with 2.70% and 1.38%, respectively, in Q2FY26, and 2.47% and 1.14% in Q1FY27, while gross advances increased 23.4% year on year.

Closing non-performing assets rose in absolute terms to Rs 230.6 crore in Q2FY27 from Rs 213.3 crore in Q2FY26 and Rs 224.4 crore in Q1FY27. Additions declined to Rs 22 crore from Rs 31.1 crore a year earlier and Rs 24.8 crore in the preceding quarter. Upgradations and recoveries were Rs 15.6 crore in Q2FY27, compared with Rs 22.1 crore in Q2FY26.

Credit cost was 0.18% in Q2FY27, compared with 0.20% in Q2FY26, while the provision coverage ratio was 53.19% versus 54.51% in Q1FY27. Capital Small Finance Bank reported write-offs of Rs 30 lakh in Q2FY27. Its special mention account 1 and 2 total was 3.31%, compared with 4.42% in Q2FY26.

Conclusion

Capital Small Finance Bank’s Q2FY27 disclosure shows a changed advance mix: MSME, trading and other business loans grew faster than the total book and became the largest disclosed category by share. Agriculture remained a substantial 26.4% of advances, while the MSME and business share reached 28.4% and 97.0% of the overall book was secured.

The next reported period will show whether the MSME and business segment remains Capital Small Finance Bank’s stated growth driver as disbursements develop. Asset-quality movements in the segment, where NPPA was 0.62%, and the continued expansion of advances outside the home state, which reached 26% in Q2FY27, are also disclosed measures to watch.