Kerala-based small-finance bank ESAF Small Finance Bank plans to use the funds it plans to raise from the market to expand its portfolio by funding agriculture, medium and small-scale enterprises among other retail segments. The bank will come out with the IPO in the first half of the financial year starting April.
In March last year, the Securities and Exchange Board of India (SEBI) had approved the bank’s IPO application. However, the plan got delayed due to the pandemic.
Speaking to DH, Paul Thomas said, “We need capital to expand our portfolio and also list in the bourses as per the Reserve Bank of India’s requirement.” “The IPO will also help bring down the promoter shareholding to some extent,” he said.
“Currently, 87% of our loans are micro-loans but we would want to expand with the help of the funds raised from the IPO.”
As per RBI norms, promoter shareholding has to be brought to 40%. Currently, the promoter Paul Thomas holds 65% share in the bank. ESAF Small Finance Bank has to bring down the promoter shareholding to 40% by 2022.
Thomas went on to say that the first six months of 2020 were difficult months but after that, the bank continued to disburse Covid-care loans of Rs 550 crore. “We started in around May to disburse these funds,” he said.
So far as bad loans go, gross non-performing assets stand at Rs 95 crore which is 1.32% of the loans as of September 2020. The bank has given out loans worth Rs 8,250 crore.
Thomas adds that the bank’s loan collection has on an average been 94% even in the year of the coronavirus.
“Most people started paying up loans when the first moratorium was removed, but the rest also slowly started paying up,” says Thomas. Meanwhile, the liabilities which are deposits are at Rs 8,690 crore.
As part of its IPO, the bank will sell shares worth Rs 150 crore, while Bajaj Allianz and PI Ventures that are shareholders will sell shares worth Rs 26 crore. Bajaj Allianz holds 4.08% while PI Ventures holds 2.04% in the bank .