The Board of Equitas Small Finance Bank is set to consider raising additional capital to support its growth plans and meet regulatory requirements. The bank, which commenced operations in 2017, has been expanding its presence in the small finance banking space, focusing on serving the unbanked and underbanked populations in India.
As part of its efforts to strengthen its capital base, the bank’s Board will discuss and consider various options for raising capital, including a potential initial public offering (IPO), preferential allotment, or a rights issue. The decision to raise additional capital is driven by the bank’s accelerating growth trajectory, which has resulted in a significant increase in its loan book and deposits.
Equitas Small Finance Bank has been witnessing rapid growth in its operations, with its loan book increasing by over 50% year-on-year. The bank’s deposits have also been growing at a fast pace, driven by its expanding branch network and digital banking channels. To sustain this growth momentum, the bank requires additional capital to meet the regulatory capital requirements and to support its business expansion plans.
The bank’s management believes that raising additional capital will enable it to maintain its growth trajectory, while also ensuring that it meets the regulatory requirements. The bank is required to maintain a minimum capital adequacy ratio of 15%, as prescribed by the Reserve Bank of India (RBI). By raising additional capital, the bank will be able to maintain a buffer over the regulatory requirement, providing it with the necessary headroom to pursue its growth plans.
The proposed capital raise is also expected to support the bank’s plans to expand its presence in new geographies, enhance its digital banking capabilities, and introduce new products and services. The bank has been investing heavily in technology to improve its operational efficiency and to enhance customer experience. The additional capital raised will enable the bank to accelerate its digital transformation journey and to stay ahead of the competition.
Overall, the proposed capital raise by Equitas Small Finance Bank is a strategic move to support its growth plans and to ensure that it remains well-capitalized to meet the regulatory requirements. The bank’s management is confident that the additional capital will enable it to sustain its growth momentum and to achieve its long-term objectives.