Equitas Small Finance Bank (SFB) has raised Rs 550 crore via the QIP route. The Merger Committee of the Board of Directors of Equitas Small Finance Bank approved the allotment of 10.26 crore equity shares of face value Rs 10 each to eligible Qualified Institutional Buyers at an issue price of Rs 53.59 per equity share (including a premium of Rs 43.59), the bank said in a statement.

In an interview with CNBC-TV18, PN Vasudevan, MD & CEO of Equitas Small Fin Bank, said that a scheme of merger has been approved by the boards of Equitas Holding (promoter company) and Equitas SFB. He explained that as part of the merger scheme, it is required to dilute promoter holding to less than 75 percent and the public shareholding in the bank is supposed to be 25 percent. He expects the merger to get completed in the next 9-12 months- between December of this year and March of 2023.

Vasudevan said, “Both the boards have already approved a scheme of merger and as part of that merger scheme, we are required to dilute the promoter holding to less than 75 percent, the public shareholding in the bank is supposed to be 25 percent. Prior to the QIP, the public shareholding was about 18 percent, so we diluted about 7.50 or 8 percent to ensure that the public holding becomes 25 percent."

Vasudevan also explained that the bank will be applying to the Securities and Exchange Board of India (SEBI) to get approval for the merger. He also highlighted that post SEBI and Reserve Bank of India’s (RBI) approval, the bank will go to NCLT and thereafter take shareholders' approval.

"We will, now, be able to apply to SEBI and hopefully, we should get the approval for the merger after which, RBI approval and NCLT approvals are required to be completed,” he said.

Vasudevan believes the bank will return to normal levels of growth soon. He also added that portfolio quality has remained strong throughout.

He said, “Pre-COVID our annual growth rate used to be around 35 percent. Now, during the last two years, our growth rate has been around 13 to 15 percent. The pandemic is more or less behind us and I believe we should get back to normal levels of growth, going forward.”

On capital adequacy ratio post the fund raise, he said that it will improve from 21.5 percent to 25.5 percent.

He explained, "Earlier capital adequacy ratio was around 21.50 percent now it should go around 25.50 to 26 percent and that gives us a good headroom for growth."

On provision coverage ratio, Vasudevan said, “In our case, we have a provision coverage ratio (PCR) of around 46 percent and if you look at our portfolio of mix, we don't have much of unsecured microfinance book- it's only about 18 percent of the book. 82 percent of the book is secured and that is, I think, a big difference when you compare maybe with some of the other peer banks."

Watch the video for the full interview.

First Published:Feb 21, 2022 10:57 AM IST