Capital Small Finance Bank raises $4 million from Sidbi, others


Mumbai: Punjab-based small finance bank Capital Small Finance Bank Ltd has raised Rs24.35 crore (about $4 million) from Small Industries Development Bank of India (Sidbi) and existing investors in its latest round of fund-raising.

Capital Small Finance Bank was one of the 10 entities to receive Reserve Bank of India’s (RBI) in-principle approval to start small finance bank operations in September 2015. It was the first to start small finance bank operations in April 2016.

The latest round of funding values the small finance bank at Rs465 crore.

Sidbi has recently supported Capital Small Finance Bank by way of an equity investment of Rs22 crore, said a spokesperson for Sidbi in an email response.

“Sidbi perceives potential for SFBs (small finance banks) to emerge as effective new-age technology-driven entities providing financial services for micro and small enterprises and is accordingly extending necessary support to SFBs in their pursuit of providing an array of services to micro and small enterprises,” the spokesperson said.

“The equity investment has been made for business expansion and growth of the SFB, which has a mandate to predominantly serve the priority sector, including micro and small enterprises,” he added.

In March, Capital Small Finance Bank raised Rs64.67 crore from Pi Ventures LLP, HDFC Standard Life Insurance Co. Ltd and ICICI Prudential Life Insurance Co. Ltd.

“The bank plans to utilize the funds as growth capital. SFB licence has opened various pillars to growth, starting from removal of geographical restrictions on branch network expansion and now the bank can expand branch network pan India, inclusion in the second schedule to RBI Act 1934, grant of AD (authorized dealers)-II licence, to name a few landmarks which are going to boost the book size manifold, going forward,” a spokesperson for Capital Small Finance Bank said in an email.

As of 31 March, Capital Small Finance Bank operated 73 branches with 35 in rural areas, 27 in semi-urban areas and the rest in urban and metro areas. In 2016-17, it had advances of Rs1,369.6 crore, up 19.26% from a year ago, and a deposit base of Rs2,378.21 crore, up 31.09% from a year ago, according to its latest annual report.

The bank’s deposits grew by 31% to Rs2,378.21 crore, in fiscal 2017, while its net profit grew by 9.5% to Rs15.04 crore.

Most of the entities that have converted to small finance banks have raised funds in the last 12-18 months to fund launch of banking operations and to comply with RBI’s norms for foreign shareholding.

Larger SFBs such as AU Small Finance Bank Ltd, Equitas Holdings Ltd and Ujjivan Financial Services Ltd have opted for public listing.

In June, AU Small Finance Bank went public in a Rs1,900 crore initial public offering, while Equitas and Ujjivan went public in April last year by raising Rs2,078 crore and Rs885 crore, respectively, through their IPOs.

In September last year, another small finance bank licensee, Utkarsh Micro Finance Pvt. Ltd, raised Rs395 crore from RBL Bank Ltd, Sidbi and private equity fund Faering Capital among others