Equitas Small Finance Bank reported a provisional 26.70% year-on-year increase in gross advances to 47,653 crore rupees for Q1, driven by quarterly disbursements of 6,804 crore rupees. Total deposits rose 10.44% to 48,976 crore rupees, while the bank's cost of funds edged up to 7.05%.
CHENNAI — Expanding its credit retail footprint across key emerging markets, Equitas Small Finance Bank Limited has announced a provisional 26.70% year-on-year increase in its gross advances. Released via official stock exchange filings on Thursday, July 2, 2026, the bank's operational update for the first quarter of the 2026–27 fiscal year shows gross advances climbing to 47,653 crore rupees, up from 37,610 crore rupees during the same period last year. The credit expansion reflects strong consumer lending demand, though a marginal increase in the overall cost of funds highlights persistent sector-wide funding headwinds.
Robust Disbursements Anchor Credit Expansion
The provisional operational results demonstrate steady lending momentum despite sequential seasonal shifts. The lender’s gross advances portfolio grew by 3.22% on a quarter-on-quarter basis from the 46,165 crore rupees recorded at the close of March 2026. This growth was driven by robust disbursements during the quarter, which reached approximately 6,804 crore rupees. This figure represents a 93.77% increase over the first quarter of the previous fiscal year, though it marks a minor sequential decline of 7.39% compared to the high-base fourth quarter of fiscal 2026.
The loan portfolio mix continues to transition through targeted structural changes:
Micro Finance & Micro Loans: This segment expanded to 6,019 crore rupees, marking an increase of 70.19% year-on-year and a 4.57% sequential growth from March 2026.
Non-Micro Finance Portfolio: Comprising commercial, vehicle, and housing retail credit, this category reached 41,634 crore rupees, increasing 22.19% year-on-year and 3.03% quarter-on-quarter.
Portfolio Adjustments: The total gross advances figure as of June 30, 2026, includes an Inter-Bank Participation Certificate (IBPC), securitized, and assigned loan portfolio valued at 2,126 crore rupees.
The bank noted that its microfinance segment includes agricultural asset purchases acquired from other regulated entities under a Direct Assignment (DA) framework in the third quarter of fiscal 2026. With the DA outstanding standing at 837 crore rupees, the bank's baseline advance growth normalized to a 24.48% year-on-year increase and a 3.86% quarter-on-quarter increase. Unsecured microloans accounted for 13% of the total loan mix including the DA, and 11% when excluding it, with more traditional loan structures making up the remaining 87% to 89% balance.
Deposit Mobilization and Cost of Funds Pressure
While loan expansion maintained an upward trajectory, deposit mobilization faced localized competitive pressures across the banking landscape. Equitas Small Finance Bank recorded total deposits of 48,976 crore rupees for the quarter ended June 30, 2026. This reflects a 10.44% increase year-on-year compared to 44,345 crore rupees in June 2025, and a 5.25% sequential expansion from 46,533 crore rupees at the end of March 2026.
The bank's low-cost funding engine, consisting of Current Account and Savings Account (CASA) balances, reached 12,307 crore rupees. This provisional figure represents a modest 0.89% quarter-on-quarter growth from 12,198 crore rupees. On a year-on-year basis, the raw CASA balance appeared down by 5.47% from the 13,019 crore rupees reported in June 2025. However, the bank clarified that the June 2025 base was temporarily elevated by high-value Applications Supported by Blocked Amount (ASBA) accounts totaling 959 crore rupees. Adjusting for those temporary operational balances, the bank's underlying organic CASA grew by approximately 2% year-on-year.
Funding and Credit Balance Matrix
| Financial Parameter | June 30, 2025 (Unaudited) | March 31, 2026 (Audited) | June 30, 2026 (Provisional) | YoY Growth (%) |
| Gross Advances | ₹37,610 Cr | ₹46,165 Cr | ₹47,653 Cr | 26.70% |
| Total Deposits | ₹44,345 Cr | ₹46,533 Cr | ₹48,976 Cr | 10.44% |
| CASA Balances | ₹13,019 Cr | ₹12,198 Cr | ₹12,307 Cr | (5.47%) |
| CASA Ratio (%) | 29% | 26% | 25% | N/A |
| Cost of Funds (%) | 7.49% | 6.94% | 7.05% | N/A |
The shifting funding mix impacted the bank's margin metrics. The overall CASA ratio declined to 25% in the June 2026 quarter, down from 26% in March 2026 and 29% in June 2025. Concurrently, the competitive deposit environment pushed the bank's provisional cost of funds up to 7.05%, compared to 6.94% in the previous quarter, though it remains below the 7.49% cost of funds recorded in June 2025.
Credit-to-Deposit Ratio Analysis
As a result of advances growing faster than deposits, the bank's Credit-to-Deposit (CD) ratio remained elevated. The provisional CD ratio for the June 2026 quarter was recorded at 92.96%, a minor decline from the 93.65% registered in March 2026, but higher than the 79.91% seen in June 2025.
When adjusted by reducing refinance borrowings from total advances, the modified CD ratio settled at a more conservative 81.28%, down from 83.40% in March 2026 and up from 76.48% in June 2025. The management indicated that all reported figures remain provisional and are subject to final technical write-offs, independent reviews by joint statutory auditors, and formal approvals from the Audit Committee and Board of Directors.
Official Sources Section
The accounting data, structural metrics, and operational growth rates referenced in this report are compiled from the regulatory disclosure filed by Equitas Small Finance Bank Limited on July 2, 2026. The notification was submitted to compliance desks under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, and is officially listed with BSE Limited and the National Stock Exchange of India Limited (NSE).
Quote Section
According to official compliance filings signed by N. Ramanathan, the Company Secretary for Equitas Small Finance Bank Limited:
"Please note that the numbers mentioned above, as on June 30, 2026 are provisional numbers and are subject to review by the Joint Statutory Auditors of the Bank and approval by the Audit Committee and Board of Directors of the Bank."
Why It Matters
The widening gap between loan demand and low-cost deposit generation remains a key trend for India’s banking sector. For retail depositors, this dynamic is likely to keep interest rates on fixed deposits competitive as banks work to support their lending portfolios. For stock market investors, Equitas’ 26.70% expansion in gross advances highlights strong core revenue generation, though the sequential rise in the cost of funds underscores the importance of close margin management over the coming quarters.
Key Facts at a Glance
Credit Expansion: Gross advances climbed 26.70% year-on-year to reach 47,653 crore rupees.
Disbursement Surge: Quarterly loan originations grew 93.77% year-on-year to approximately 6,804 crore rupees.
Microfinance Growth: Microfinance and microloan books increased 70.19% year-on-year, totaling 6,019 crore rupees.
Deposit Inflow: Total deposits reached 48,976 crore rupees, representing a 10.44% increase over June 2025.
Cost of Capital: The quarterly cost of funds increased sequentially by 11 basis points to 7.05%.
Frequently Asked Questions (FAQ)
Why did the bank's CASA balance appear to drop on a year-on-year basis?
The June 30, 2025, base included high-value ASBA accounts worth 959 crore rupees. Excluding these temporary institutional balances, the bank's underlying organic CASA grew by approximately 2% year-on-year.
What is driving the substantial increase in the bank's microfinance portfolio?
The microfinance book grew 70.19% year-on-year, supported by organic loan originations and the purchase of agricultural assets from other regulated entities under a Direct Assignment model.
Are these financial figures final for the first quarter?
No. The disclosed metrics are provisional operational updates. They remain subject to standard technical adjustments and a formal review by the bank’s joint statutory auditors.
Source: Equitas Small Finance Bank Investor Relations Announcements via BSE & NSE.
