### **Company Overview** Equitas Small Finance Bank (Equitas SFB) is one of the largest Small Finance Banks in India, operating as a **retail-focused financial institution** with a mission to drive **financial inclusion** for underbanked and unbanked populations. The bank serves individuals with limited access to formal finance—particularly micro and small entrepreneurs at the 'bottom of the pyramid'—alongside mass-affluent, affluent, and NRI customers. It also extends credit to MSMEs and NBFCs, combining a strong liabilities franchise with a diversified, secured lending portfolio. Founded in 2007 as a microfinance institution, Equitas received RBI's in-principle approval to operate as a Small Finance Bank in 2015 and commenced banking operations in 2016. Today, it operates across **18 Indian states** through **565 asset branches and 399 liability branches**, supported by a **pan-India physical and digital network**. --- ### **Strategic Transformation: From SFB to Mass Retail Bank** Equitas is undergoing a strategic evolution from a microfinance-originated SFB to a **mass retail bank**, aiming to become customers’ **primary financial institution**. This aligns with a broader goal to: - **Broaden its stable deposit base** - **Improve funding diversity** - **Offer competitive lending rates** - **Enhance cross-sell and retention** The shift is underpinned by investments in **technology, product innovation, customer segmentation, and brand visibility**—with a long-term vision of sustainable growth above industry averages by serving India’s vast informal economy. --- ### **Core Business Model** #### **Liability Franchise: Granular, Low-Cost Funding** - Focuses on mobilizing **mass and mass-affluent deposits**, including savings accounts, term deposits, and FCNR(B) accounts. - Strong **CASA ratio of 52.01% (FY22)** and 95% **non-callable bulk term deposits** support liquidity stability. - Over **80% of loans are below ₹25 lakh**, exceeding the 50% regulatory requirement, reinforcing its commitment to financial inclusion. - **Digital-first approach**: 100% digital onboarding (Selfe SA, digital FDs), mobile app (Selfe, Equitas 2.0), and super app ambitions. #### **Asset Portfolio: Diversified & Secured Lending** - Lending is concentrated in five key segments: 1. **Small Business Loans (SBL)** – 43% of portfolio, secured asset-backed loans for low-income entrepreneurs. 2. **Microfinance** – Reduced from 53% (2016) to 10% (2025), reflecting portfolio rebalancing. 3. **Vehicle Finance** – Focus on **used commercial & passenger vehicles**; loan book > ₹2,000 crores (used cars). 4. **Affordable Housing Finance** – Now profitable as of Q1 FY26; contributes ~10% to advances. 5. **MSE & NBFC Financing** – >90% meets PSL norms; supports NBFCs in microfinance, housing, and vehicle lending. - **Portfolio Quality Improvements**: - 90% of total advances are **secured**. - GNPA improved from 3.97% (FY23) to **2.19%**, with targeted recovery systems and LTV discipline (~45%). --- ### **Recent Strategic Initiatives (2023–2025)** #### **1. Digital Acceleration & Super App Vision** - **Equitas 2.0 Mobile App (Jan 2025)**: Designed to engage salaried professionals, younger customers, and NRIs. - **Super App Roadmap**: - Integration of **e-commerce, ticketing, entertainment, and lifestyle services**. - Goals: **Deepen engagement**, increase **app stickiness**, and build an **inclusive ecosystem**. - **Insta Banking**: 100% digital, paperless, biometric-authenticated processes for instant service delivery. - **Selfe Loan App**: Generated ~17,000 leads and ₹55 crore in disbursements—demonstrating digital lending traction. #### **2. Product & Segment Expansion** - **Elite Savings Program Expansion (Q3 FY26)**: - **Elite Lite** (mass affluent), **Elite Plus** (HNI) – extending reach from middle-income to UHNIs. - **New Products Launched**: - **Selfe Savings Account (SA)** and **Selfe FD**: Zero-touch onboarding via mobile app. - **Eva SA**: Women-centric savings account (branded with Smriti Mandhana). - **Enjoi SA**: For children. - **Equitas Explorer SA & FCNR(B)**: Tailored for seafarers and NRIs. - **Co-branded Credit Card (with HDFC Bank)**: Low-cost, high-reward card with wide merchant access. #### **3. Cross-Selling & Customer-Centric Strategy** - **Liability 2.0 Strategy**: Shift from product-centric to **customer-segment-centric** offerings to improve loyalty. - **Cross-Sell Center of Excellence**: Leverages **data analytics and CRM** to identify propensity-based sales opportunities. - **Asset Desk Managers**: Deployed in 20 liability-focused branches (Q3 FY26) to cross-sell loans to depositors; will expand to more branches. - **Recent Initiatives**: - Consolidation of **personal loan and credit card origination** on one platform. - Launch of **revamped CRM (Q2 FY25)** to boost service and retention. #### **4. Channel & Distribution Growth** - **Digital Channels**: - Digital savings account opening now live; digital recurring term deposits (RTD) to launch in **Q3 FY26**. - Partnerships with **Paynearby, Spice Money**, and **Niyo** to expand digital footprint, including micro-ATMs and neo-banking. - **Physical Expansion**: - 302 **rural Micro ATM centers** in Tamil Nadu and Maharashtra; transactions >215,000 (FY23). - Expansion into major **metro markets** to boost customer acquisition. - **Brand & Marketing**: - **IPL Partnerships**: Gujarat Titans (investor-driven markets) and Royal Challengers Bangalore (young, urban professionals). - Sponsorships, DTC campaigns, and virtual bank initiatives to reactivate dormant customers. #### **5. Technology & Infrastructure** - **IT Modernization**: - Cloud migration, big data & analytics, and **Enterprise Data Warehouse (EDW)** for real-time decision-making. - **Customer 360** initiative to unify customer data across platforms. - **Security & Compliance**: - Advanced cybersecurity: behavior-based threat detection, zero-deployment vulnerabilities. - Video KYC, API kits, and BaaS model (via **BankOpen**) to enable **banking-as-a-service**. --- ### **Competitive Advantages** 1. **Dual NBFC-Banking Advantage**: Operates like an NBFC in lending (flexible underwriting) while offering full banking services (deposits, cards, forex). 2. **Proprietary Risk Assessment**: Specialized models for informal-sector borrowers with low credit bureau presence. 3. **Digital Leadership**: Early adopter of **Video KYC, digital onboarding, BaaS, and API banking**. 4. **Phygital Network**: Combines extensive branch outreach with digitally-native services. 5. **Customer Stickiness**: Through **third-party offerings** (insurance, mutual funds), co-branded cards, and personalized products. --- ### **Key Risks & Mitigation** | Risk | Mitigation Strategy | |------|---------------------| | **Microfinance Stress** | Reducing exposure; growing **M-LAP (Micro Loan Against Property)** and secured SBL segment | | **Geographic Concentration (Tamil Nadu)** | Expanding branch network across 13+ states; entering new metros | | **Competition from Universal Banks** | Focus on **niche, secured, small-ticket loans** and **digital efficiency** | | **Delinquency in Used Vehicle Segment** | Focused on high-resale brands (Maruti, Hyundai, Toyota); 70% of used car loans in top 4 brands |