Equitas Small Finance Bank Ltd - Stock Valuation and Financial Performance

The Bank was originally incorporated as V.A.P. Finance Private Limited on June 21, 1993 at Madras, Tamil Nadu as a private limited company under the Companies Act, 1956, and was granted the certificate of incorporation by the Registrar of Companies, Tamil Nadu at Chennai (RoC). The Bank became a deemed public limited company under section 43A of Companies Act, 1956 on March 5, 1994 and the name of the Bank was changed to V.A.P. Finance Limited and the certificate of incorporation of the Bank was endorsed by the RoC to that effect. The Bank thereafter became a private limited company under section 31(1) of the Companies Act, 1956 and a fresh certificate of incorporation dated March 30, 2011 was granted by the RoC consequent upon change of name from V.A.P. Finance Limited to V.A.P. Finance Private Limited. A fresh certificate of incorporation dated August 12, 2011 was granted by the RoC consequent upon change of name from V.A.P. Finance Private Limited to Equitas Finance Private Limited. A fresh certificate of incorporation was granted by the RoC on September 29, 2015 consequent upon change of name from Equitas Finance Private Limited to Equitas Finance Limited pursuant to conversion of the Bank into a public limited company. The Bank’s Promoter, EHL was granted the RBI In-Principle and RBI Final Approval on October 7, 2015 and June 30, 2016 respectively; to establish a small finance bank (SFB). Subsequently, the Bank was converted into an SFB. A fresh certificate of incorporation dated September 2, 2016 was granted by the RoC consequent upon change of name of the Bank from Equitas Finance Limited to Equitas Small Finance Bank Limited. The Bank was included in the second schedule to the RBI Act pursuant to a notification dated December 23, 2016 issued by the RBI and published in the Gazette of India dated February 4-February 10, 2017.

The bank was the largest Small Finance Bank (SFB) in India in terms of number of banking outlets, and the second largest SFB in India in terms of assets under management and total deposits in Fiscal 2019. The bank offers a range of banking products and services to customers with a focus on serving the financially unserved and underserved customer segments in India. The bank’s strength lies in promoting financial inclusion within these segments, with its group beginning operations in 2007 as an NBFC providing microfinance loans through EMFL. The bank has been providing housing finance since 2011 through EHFL. The bank has also been providing vehicle finance and MSE finance through the Erstwhile NBFC that received its asset finance license in 2012, primarily to economically disadvantaged households. While its business model has transitioned over the years, the provision of sustainable credit to unserved and underserved segments has remained its core focus.

Business area of the bank

The bank’s focus customer segments include individuals with limited access to formal financing channels on account of their informal, variable and cash-based income profile. The bank offers a range of financial products and services that address the specific requirements of these customer segments by taking into account their income profile, nature of business and type of security available. The bank’s asset products are suited to a range of customers with varying profiles. These include provision of small business loans comprising LAPs, housing loans, and agriculture loans to micro-entrepreneurs, microfinance to JLGs predominantly comprising women, used and new commercial vehicle loans to drivers and micro-entrepreneurs typically engaged in logistics, MSE loans to proprietorships, and corporate loans. On the liability side, its target customers comprise mass and mass-affluent individuals to whom it offers current accounts, salary accounts, savings accounts, and a variety of deposit accounts. In addition, the bank also provides non-credit offerings comprising ATM-cum-debit cards, third party insurance, mutual fund products, and issuance of FASTags.

Awards, accreditations and recognitions:

• 2016: The Bank was awarded the Marketing Excellence Award in BFSI sector at the Global Marketing Excellence Awards, 2016.
• 2017: The Bank was awarded the Marketing Excellence Award, 2017 in the BFSI sector by the Times Network National Awards For Marketing Excellence, 2017.
• 2017: The Bank was awarded the Disability Matters Asia – Pacific Market Place Award, 2017 by Disability Matters.
• 2017: The Bank was awarded the India’s Best Bank Award, 2017-18 by the Financial Express in SFB category.
• 2017: The Bank was selected as one of the 67 Innovative Practices and Policies by the Zero Project.
• 2018: The Bank was awarded the ABP News Brand Excellence Award, 2018 in banking, financial services and insurance (BFSI) sector.
• 2018: The Bank was awarded the Skoch Order of Merit for qualifying amongst the top ranking banking and finance projects in India for Equitas Ecosystem.

Major events and milestones:

• 1993: Incorporation as V.A.P. Finance Private Limited.
• 2015: EHL received the RBI In-Principle Approval.
• 2016: Amalgamation of EMFL and EHFL with the Bank pursuant to the Amalgamation Scheme.
• 2016: Commencement of operations of the Bank as an SFB.
• 2016: EHL received the RBI Final Approval.
• 2018: Commencement of MSE Financing products by the Bank.
• 2018: New CV financing portfolio of the Bank crossed Rs 5,000 million.
• 2018: Advances including IBPCs crossed Rs 100,000 million.
• 2019: Total deposits of the Bank crossed Rs 100,000 million.
• 2019: Crossed 15,000 employees.