Equitas Small Finance Bank To Raise Up to Rs 500 Crore Through NCDs

Mumbai, 21 July 2025: In a strategic move to bolster its capital structure and fuel future growth, Equitas Small Finance Bank Ltd (NSE: EQUITASBNK, BSE: 543243) has announced a fundraising plan of up to ₹500 crore through the issuance of Rated, Listed, Unsecured, Redeemable, Fully Paid-Up, Subordinated Non-Convertible Debentures (NCDs). The issue includes a green shoe option of ₹250 crore. The proposal was approved during the Board meeting held earlier today.

Following the announcement of its ₹500 crore NCD issue with a ₹250 crore green shoe option, shares of Equitas Small Finance Bank Ltd saw a marginal dip of 0.38%, closing at ₹63.05 on the NSE. The stock opened at ₹63.00 and touched a high of ₹63.43 before slipping slightly. Despite the capital-raising plan aimed at strengthening its Tier II capital, investor sentiment remained cautious, likely due to recent earnings volatility. The stock remains well above its 52-week low of ₹52.52 but below the high of ₹90.49.

₹500 Cr NCD Issue Approved to Strengthen Tier II Capital and Meet Regulatory Needs

Equitas Small Finance Bank’s latest fundraising initiative is aimed at fortifying its Tier II capital base, in line with regulatory capital adequacy norms under the Basel II framework. The NCDs will be issued in a single series via private placement and will be classified as Lower Tier II Capital. The funds raised are intended to support the bank’s business expansion while maintaining a robust capital structure.

Key Issue Details

• Instrument: Subordinated, Unsecured, Redeemable, Fully Paid-Up Non-Convertible Debentures (NCDs)
• Total Issue Size: ₹500 crore
• Green Shoe Option: ₹250 crore
• Face Value: ₹1,00,000 per NCD
• Mode of Issue: Private Placement
• Proposed Listing: BSE Limited
• Security: Unsecured
• Tenure & Coupon: To be approved by the Board

Green Shoe Option of ₹250 Cr Provides Flexibility in Raising Additional Capital

The bank has incorporated a green shoe option worth ₹250 crore into the ₹500 crore issue, offering the flexibility to raise additional funds if needed. This structure allows the bank to issue up to 50,000 NCDs, each with a face value of ₹1,00,000. The base issue size is ₹250 crore, with the option to accept an additional ₹250 crore based on investor demand, thereby enhancing the total potential fund mobilisation.

NCDs to Be Listed on BSE; Terms Like Tenure and Coupon Rate to Be Finalised Later

The proposed NCDs are expected to be listed on BSE Limited. However, the bank has clarified that the final details regarding the tenure, coupon rate, and redemption terms will be decided by the Board and disclosed in due course. These debentures will not carry any special rights, privileges, or underlying asset backing, as they are unsecured in nature.

Capital Infusion Designed to Accelerate Business Growth and Lending Activities

The primary objective of this capital infusion is to enhance the bank’s capacity to extend credit and expand its lending portfolio. With strengthened Tier II capital, Equitas Small Finance Bank will be better positioned to scale its operations and meet the evolving financial needs of its customer base, particularly in underserved markets.

Quarterly Financial Overview Reflects Strong Growth Momentum

Equitas Small Finance Bank reported steady revenue growth from ₹1,044 crore in March 2022 to ₹1,869.4 crore in March 2025. Net profit rose consistently till March 2024, reaching ₹207.6 crore, before dropping sharply to ₹42.1 crore by March 2025 due to rising interest costs and narrowing margins. Operating profit margin declined from 33.43% to 18.94% over the same period. EPS (TTM) peaked at ₹7 in March 2024 but fell to ₹1.3 by March 2025, reflecting recent pressure on profitability.

REF: https://nsearchives.nseindia.com/corporate/EQUITASBNK_21072025134810_OutcomeofBoardMeeting.pdf

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