Money & Banking

ESAF Small Finance Bank plans ₹200-crore capital mop-up

KR Srivats New Delhi | Updated on January 15, 2018

K Paul Thomas, MD & CEO, ESAF Small Finance Bank

Funds will be used to grow business and manage capital adequacy, says MD

ESAF Small Finance Bank, a recent entrant in the small finance bank space, plans to raise ₹200 crore via Tier-II bonds, its Founder, Managing Director and CEO K Paul Thomas said.

Currently, this small finance bank, which was launched on March 17, has a net worth of ₹284 crore.

“We want to raise Tier-II capital to fund business growth and manage capital adequacy also. There is headroom for us on the Tier-II front. It will be an institutional placement,” Thomas told BusinessLine here.

Thomas also said that ESAF Small Finance Bank was eyeing total business mix of about ₹10,000 crore this fiscal.

Plans are afoot to open by end-March 2018 as many as 150 retail branches.

The new branches will be spread across the country, including the North-East.

Since its launch in March, the bank has opened 15 retail branches (full-service). “Five more branches will be opened next week, including three in un-banked rural locations in Tamil Nadu,” he said.

Retail branches are also likely to be opened in metros, including Delhi and Mumbai.

All the existing 285 microfinance branches have now been converted into ultra small branches.

The number of such branches are proposed to be increased to 360 by the end of this fiscal.

Of the 10 applicants who received RBI’s in-principle approval in September 2015, as many as seven have obtained final licences and commenced operations.

Small finance banks are allowed to accept deposits from customers.

As against payments banks, the small finance banks are allowed to lend money to people.

Eyes listing

Thomas said that ESAF is looking at listing on the bourses in 2020. “If everything goes well, we should be in a position to go for listing in 2020. By then, we should also be able to reach ₹500 crore net owned funds mark,” he added.

Core investment company

Thomas said that ESAF’s micro-finance portfolio has now been completely transferred to the small finance bank.

“The old micro-finance company — ESAF Microfinance and Investments — has become a holding company and the small finance bank has become its subsidiary.

“We will now convert this holding company into a core investment company as per RBI requirement,” he said.

Published on April 20, 2017

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