Equitas Small Finance Bank plans to increase advances from ₹45,000 crore to ₹1.2 trillion over five years, with management considering a potential move to universal banking, subject to regulatory approval and strategic readiness.
Equitas Small Finance Bank is aiming to lift advances from ₹45,000 crore to ₹1.2 trillion over the next five years, a target that would almost triple its loan book and reflects management’s confidence that the lender can sustain about 20% annual growth. In a recent interview, managing director and chief executive P N Vasudevan said the bank’s cost of funds has already fallen sharply since it began operating in 2017, and he expects that trend to continue as the franchise expands and becomes cheaper to finance.
Vasudevan said the bank is also preparing for a possible move to universal banking, although he stressed that Equitas is not in a hurry. He said the lender believes it already meets the Reserve Bank of India’s quantitative thresholds for conversion, including the asset-quality standards, but added that regulatory comfort and other factors would still matter. The bank has been in touch with the central bank and may file an application within a year, he said.
The remarks come after the RBI returned universal banking applications from Ujjivan Small Finance Bank and Jana Small Finance Bank, a reminder that meeting numerical criteria alone does not guarantee approval. Vasudevan said Equitas had spent years diversifying away from its microfinance roots, which he argued leaves it better placed than it was several years ago and reduces the need to rush into a formal application.
He said the loan mix is already broad, with small business loans the largest category, followed by vehicle finance, affordable housing, microfinance, MSME and NBFC lending, and gold loans. Over time, he expects the portfolio to stay diversified, with only modest changes as personal loans and credit cards grow and gold loans take a slightly larger share.
Vasudevan also said the bank is far less exposed to unsecured lending than it once was. He pointed to the sector-wide microfinance stress in 2024, saying Equitas had been hurt when that book was larger, but that the segment has since been cut to 10% of advances. He argued that a more secured balance sheet should allow the bank to grow without credit costs becoming a major constraint.
On the question of what universal banking would change, he said the main advantages would be a broader depositor perception, lower capital requirements and a more flexible lending structure. Even so, he said Equitas could continue to expand as a small finance bank if needed and that conversion would be pursued only when management felt fully comfortable.
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