Shivalik Mercantile Co-operative Bank (SMCB) has become the first urban cooperative bank (UCB) in India to transition to a small finance bank (SFB). The guidelines for the voluntary transition scheme had come into being two years ago.

The 22-year-old Uttar Pradesh-based bank on Monday received a licence from the Reserve Bank of India (RBI) to convert to a SFB.

SMCB, which has over four lakh customers and business of Rs 1,800 crore as on 31 March 2020, aims to function as a SFB by April 2021.

The bank will look to raise funds through institutional investors and grow its deposits. It also plans to expand in affordable housing, small business and gold loan segments.

In January 2020, the RBI had given an in-principle approval to the bank to make the transition and an 18 month timeline was given to commence business as a SFB.

SMCB started in Saharanpur and soon started opening branches across the state of Uttar Pradesh. It achieved a multi-state status when it acquired a small bank in Madhya Pradesh’s Dhar in 2010.