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Equitas Small Finance Bank Mulls NCD Issue to Bolster Capital Base and Fuel Lending Growth

Updated: July 14, 2025 12:33

Image Source: NDTV Profit
Equitas Small Finance Bank Ltd has announced that its board will meet on July 26, 2025, to consider a proposal for raising capital through the issuance of redeemable unsecured Non-Convertible Debentures (NCDs). The move comes as the bank seeks to diversify its funding sources and support its expanding credit portfolio amid rising demand for retail and MSME loans.
 
Key Highlights:
  • The proposed NCDs will be issued on a private placement basis, subject to shareholder and regulatory approvals.
  • The bank aims to strengthen its Tier-II capital and improve its debt maturity profile without diluting equity.
  • Capital raised will be used to enhance lending capacity, refinance existing liabilities, and meet general corporate requirements.
Strategic Context:
  • Equitas recently approved a ₹1,250 crore fundraise via Qualified Institutional Placement (QIP), indicating a multi-pronged capital strategy.
  • The bank reported a capital adequacy ratio of 23.1% and liquidity coverage ratio of 120%, reflecting strong buffers to absorb credit expansion.
  • With net interest income rising 5% YoY to ₹829.5 crore in Q4 FY25, the bank is positioning itself for deeper penetration in underserved segments.
Market Outlook:
  • Analysts view the NCD proposal as a prudent step to optimize the bank’s capital structure and reduce cost of funds.
  • Shares of Equitas Small Finance Bank closed at ₹90.15 on July 15, down 1.4%, with expectations of a rebound post board approval.
Sources: Upstox, Business Standard, CNBCTV18, Angel One, Moneycontrol (July 2025)

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