MICROCAPITAL BRIEF: Microfinance Institution Equitas Begins Accepting Deposits in Chennai, India, With Interest Rates Starting at 6%

Equitas Small Finance Bank Limited, a subsidiary of India’s Equitas Holdings Limited, recently began operations with three branches in Chennai, offering deposit accounts with interest rates of six to 7.5 percent per year. Equitas received a license to operate a “small finance bank (SFB)” from the Reserve Bank of India in September 2015 and aims to establish 412 special-purpose branches in 11 Indian states by the end of March 2017. One quarter of these are to be located in “rural, unbanked villages.”

The bank is paying 6-percent annual interest to clients with savings balances up to INR 100,000 (USD 1,500), 6.5 percent for portions above that threshold but under INR 5 million (USD 75,000), and 7 percent to 7.5 percent for portions above that tier.

As of September 2016, Equitas Holdings reports total assets of INR 65 billion (USD 976 million), 50 percent of which are microfinance loans and 25 percent of which are commercial auto loans, with the remainder divided among small and medium-sized enterprise (SME) and “affordable” housing loans. As of March 31 2016, the group reports 2.7 million clients and an annual profit of INR 10.6 billion (USD 160 million). As of the same date, Equitas reports return on assets of 3.6 percent and return on equity of 20 percent.

By Michelle Dold, Research Associate

About Equitas Holdings Limited

Equitas Holdings Limited, formerly known as Equitas Holdings Private Limited, is based in Chennai, India, and was founded in 2007. In September 2015, it received a “small finance bank (SFB)” license from the Reserve Bank of India, allowing it to accept deposits. The organization controls four subsidiaries: (1) Equitas Microfinance; (2) Equitas Vehicle Finance; (3) Equitas Housing Finance; and (4) Equitas Small Finance Bank. It is active in seven states and union territories in India: Gujarat, Karnataka, Madhya Pradesh, Maharashtra, Puducherry, Rajasthan and Tamil Nadu.

On April 5, 2016, Equitas Holdings raised INR 22 billion (USD 330 million) through an IPO. As of September 2016, Equitas Holdings reports total assets of INR 65 billion (USD 976 million), 50 percent of which are microfinance loans and 25 percent of which are commercial auto loans, with the remainder divided among small and medium-sized enterprise (SME) and “affordable” housing loans. As of March 31, 2016, the group reports 2.7 million clients and an annual profit of INR 10.6 billion (USD 160 million). As of the same date, Equitas reports return on assets of 3.6 percent and return on equity of 20 percent.

Sources and Additional Information:

[1] Equitas Press Release: Equitas Small Finance Bank: “Equitas, 1st Private Bank from Tamil Nadu Post-Independence Starts Operations

[2] MicroCapital Brief: “Indian Microfinance Lender Equitas Holdings Goes Public, Raising $330m

[3] MicroCapital Universe Profile: Equitas Holdings Limited

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