The fund-raising will serve the twin purpose of providing growth capital and meeting regulatory requirements set by the RBI.
Kerala-based ESAF Small Finance Bank has plans to raise up to Rs 350 crore for expansion through sale of shares. The small bank which is focusing on serving the not-served and under-served population has also plans to open 200 bank branches in the current fiscal, K Paul Thomas, founder and managing director of ESAF said.
“We are planning to raise between Rs 300 crore and Rs 350 crore from investors during this financial year to fund business growth. This will dilute the promoters’ stake as envisaged by RBI and we will also go for listing in three years, as our net worth will cross Rs 500 crore ,” Thomas told FE.
The bank has already appointed investor banker ICICI Securities for the fund-raising, he said.
The fund-raising will serve the twin purpose of providing growth capital and meeting regulatory requirements set by the RBI for the small finance bank, he said.
Founded in 1992 as a microfinance institution (MFI), ESAF was one among the 10 non-banking finance companies to receive approval from RBI to start banking operations in 2016. The MFI had received seed funding of $40,000 from the Grameen Bank in 1999 for expansion.It is the only institution in Kerala to receive a banking license from RBI after independence.
With a client base of 2.3 million, the bank has mobilised Rs 2,500 crore and Rs 4,100 crore loans and thus generating a total business of Rs 6,600 crore within one year of operation. Currently, the bank has 401 branches across 11 states, which will go up to 601 by March 2019. “From the total deposit base, the share of retail term deposit is nearly Rs 1,800 crore. The new focus would be on CASA and micro RD,” he said.
Thomas said that the number of bank branches will be increased by 200 in the current fiscal from the present 100 branches. The bank has mostly micro branches, including 309 branch offices of the micro finance institution.
The bank has strong presence in Kerala,Karnataka and Tamil Nadu and is looking at UP, Odisha and North East states for further expansion.
ESAF Micro-finance, which owes its success to the doorstep delivery of services, will replicate the same model for the bank. The bank envisages to appoint banking correspondents through its Esaf Swasraya Multistate Agro Cooperative Society and they will serve as human ATMs going to the doorsteps of customers for services.
“Financial inclusion means not only credit. The customers need financial products and other banking transactions. Transforming into a bank is a natural progression to serve our customers,” Thomas added.