ESAF small finance bank to raise Rs450 crore through debt and equity
Mumbai: ESAF small finance bank (SFB) will raise Rs450 crore during the current fiscal year through debt and equity, a top official of the bank said. The Kerala- based SFB will use the capital for growing its loan book and footprint.
“We will be raising Rs150 crore through bonds for our tier-II capital. Also, early next year we will be looking to raise about Rs300 crore through equity and are already in talks with investors including private equity firms,” K. Paul Thomas, founder, managing director and chief executive at ESAF SFB said on the sidelines of an event on Tuesday.
Additional capital is required for transforming ESAF into an SFB and for credit growth, he added.
ESAF received the final nod from the Reserve Bank of India (RBI) in March to roll out its banking operations. It has garnered deposits worth Rs1,114 crore so far.
The SFB’s loan book stood at Rs3,320 crore as of 30 September.
“Microfinance loans comprise 98% of its loan book and over the next five years we will bring it down to 20%,” A.G.Varughese, executive vice president at ESAF SFB said, adding that by the end of the current fiscal year, the bank expects its loan book and deposits to touch Rs5,000 crore and Rs2,500 crore. respectively.
An erstwhile microfinance institution, ESAF has transferred its microfinance loan book to the banking entity. “We also expect to service many of our microfinance customers who have graduated from micro credit to slightly higher ticket loans,” Thomas said.
The SFB will also launch new products like gold loans and loan products for small and medium enterprises and housing finance.
ESAF has 370 branches across India. “We will be expanding in the north east as well,” said Thomas.
The SFB has received RBI approval for setting up 165 new branches.
The bank will also convert its MFI branches to serve its bank customers. It has opened 59 new branches, of which 56 are in Kerala.
ESAF’s gross non-performing assets stood at 4.98% as of 30 September. The management expects the SFB to be listed by 2020.
As per the RBI norms, SFBs have to be listed on the stock exchange once they reach Rs500 crore of net worth. ESAF’s current net worth stands at Rs301 crore.