Strategic Positioning

Equitas SFB positions itself as the "Banker of Choice for Semi-Formal and Informal Segment of Customers." The bank highlights a total lending opportunity of ₹84 lakh crore in India, with SFBs currently accounting for 1.6% of total banking credit (~₹3.4 lakh crore as of March 31, 2026). The bank's strengths include a diversified product platform, decreasing landed cost of funds (12.7%), and limited MFI exposure (~10%) to reduce event-risk impact.

Asset Products and Performance

Portfolio Overview:

  • 88% of the portfolio is secured, backed by property/collateral/gold/vehicle
  • Product mix: Small Business Loans (SBL), Vehicle Finance (VF), Housing Finance (HF), MSE, NBFC, Gold Loans, Others
  • Yield on Gross Advances: Q4FY26 at 15.65% (stable from Q3FY26's 15.63%)

Small Business Loans (SBL):

  • Flagship secured product backed by residential property
  • Ticket sizes: ₹3 lakh to ₹50 lakh with tenures of 5-7 years
  • Delivered 27% CAGR between FY18-26
  • Credit costs stable at ~0.6% over past eight years
  • 500+ branches with per branch average advances of ~₹36 crores

Vehicle Finance (VF):

  • Focus on used commercial vehicles (UCV) and used cars
  • UCV: Average ticket size ~₹7.3 lakhs, yield 16-18%, LTV 75%
  • Used Cars: Average ticket size ~₹4.5 lakhs, yield 15-17%, LTV 70%
  • Credit costs historically 2.5-2.7%
  • 270+ branch network across key geographies

Housing Finance (HF):

  • Affordable housing focus for low- and middle-income households
  • 46% CAGR between FY20-26
  • Currently offered at 90 branches, planned expansion through 60 additional SBL branches in FY27
  • Credit costs historically ~0.6%

Other Products:

  • Microfinance: Exposure reduced from 46% (FY17) to ~10% (FY26)
  • MSE: Focus on organized segment, ~21% CAGR (FY20-FY26), ticket size ₹25 lakh to ₹5 crore
  • NBFC Financing: Selective term loans and working capital to well-rated NBFCs
  • Gold Loans: Strategic focus segment, planned expansion to ~700 additional asset branches

Branch Network and Geographic Distribution

  • Total branches: 630 (Asset + Liability)
  • Geographic diversification: Tamil Nadu concentration reduced from ~55% (FY17) to 45.29% (FY26)
  • ~90% of new branches in last 5 years outside Tamil Nadu
  • Predominantly serves Tier 2 & below cities (90%)

Liability Business

  • Deposit base scaled from ₹1.9k crore to ₹46.5k+ crore
  • Retail Deposits (Retail TD + CASA) form 68% of overall deposits
  • 88% of bulk TD in non-callable mode
  • Liquidity Coverage Ratio (LCR): 160.93% as of March 31, 2026
  • FCNR deposits crossed USD 29 million

Technology and Digital Strategy

Equitas 2.0 Mobile Banking App:

  • Cloud-native platform with enhanced security
  • Features include: Selfe SA/FD onboarding, Bharat Connect bill payments, EzyBID ASBA, integrated UPI, ENVI insurtech, Envest mutual funds
  • Targeted digital quotient: 90% for onboarding and servicing by FY28 (current: 69% onboarding, 20% servicing)

AI Initiatives:

  • 6 in-flight initiatives including branch-induced payments, cheque clearing, collections voice AI, loan processing automation
  • EquiTest: Home-grown app for automated test case generation

Cybersecurity:

  • Zero Trust Security architecture deployed
  • Time-to-Detect: 6.30 hrs (benchmark: 14.2 hrs)
  • Time-to-Remediate: 8.00 hrs (benchmark: 36.5 hrs)
  • Phishing success rate: 2.6% (benchmark: 4.8%)
  • No fructified cyber attacks or data breaches

Collection Strategy

  • Bounce rates reduced from ~33% to ~29% for SBL
  • Digital collections increased from 9% (2022) to ~40% (2024)
  • Maintaining ~60% digital payment collection over last 2 years
  • Scaling telecalling operations with AI bot calling and WhatsApp integration

Brand Building and Marketing

  • Sports partnerships: Chennai Super Kings (9 years), Gujarat Titans (5 years)
  • Hyper-local marketing strategy with branch-led activations
  • Purpose-led brand strategy focused on community banking
  • Digital acquisition through Selfe Suite (Savings Account, Fixed Deposit, Credit Card)

Financial Outlook

FY27 Expectations:

  • 20%+ growth in overall advances
  • MFI advances maintained at ~10% of overall advances
  • Exit ROA of ~1.5% in Q4FY27; full-year ROA of ~1.2%
  • Cost to Income expected to moderate in H2FY27
  • Credit costs expected to normalize with marginal increase

FY31 Outlook:

  • Business model and product mix to remain broadly stable
  • Advances expected to sustain 20%+ growth
  • Steady state ROA of ~1.5% (range of 1-1.8% across cycles)
  • Major investments in IT, compliance, and branch infrastructure largely complete

CSR Initiatives

  • Pavement Dwellers Rehabilitation: 6,517 cumulative beneficiaries
  • Women Empowerment: 727,019 women trained since inception (2008)
  • Children Scholarship: 43,274 cumulative beneficiaries
  • Health Camps: 54,375 camps conducted cumulatively

ESG Framework

  • Focus areas: Inclusion, Green Financing, Emissions, Operations
  • Partnership with IPC GmbH for climate risk assessment
  • CRISIL ESG score: 66/100 (Aspiring)
  • Independent Board Directors: 3 out of 9