Equitas Small Finance Bank Limited, headquartered in Chennai, Tamil Nadu, is one of India’s leading small finance banks, focusing on financial inclusion for underserved segments. As of April 6, 2025, the bank operates a network of over 900 banking outlets across 18 states and union territories. This article provides an in-depth analysis of Equitas Small Finance Bank’s business model, its financial performance for Q3 FY25 (October-December 2024), and available details on its promoters and shareholding pattern, based on data from regulatory filings and financial platforms.
Equitas Small Finance Bank Business Model
Equitas Small Finance Bank operates a differentiated banking model, targeting micro, small, and medium enterprises (MSMEs), low-income individuals, and underbanked regions. Established in 2007 as a microfinance entity under Equitas Holdings Limited, it transitioned into a small finance bank in 2016 after receiving a license from the Reserve Bank of India (RBI).
1. Lending Operations
The bank’s core business revolves around providing small-ticket loans, including:
- Microfinance Loans: Targeting self-employed individuals and women in rural and semi-urban areas, though this segment has reduced to 12% of advances by Q3 FY25.
- Vehicle Finance: Loans for commercial vehicles, a significant growth driver.
- MSME and SME Loans: Financing for small businesses, including loans against property (LAP).
- Housing Finance: Affordable housing loans for low- and middle-income groups.
Non-microfinance loans now constitute 88% of its portfolio, reflecting a strategic shift toward diversified lending.
2. Deposit Mobilization
Equitas emphasizes low-cost deposits through savings and current accounts (CASA), alongside term deposits. Its CASA ratio stood at 32% as of December 2024, up from 29% a year earlier, supported by 365 ATMs and digital banking channels. Total deposits grew to Rs 43,107 crore by March 31, 2025, per provisional data.
3. Digital and Operational Scale
The bank leverages technology for customer acquisition and service delivery, offering mobile banking, internet banking, and doorstep services. With 964 banking outlets and a workforce of over 20,000, it maintains a strong presence in Tamil Nadu (49% of advances), Maharashtra, and Karnataka.
Revenue Model and Risks
Revenue is driven by interest income from advances (Rs 37,986 crore as of March 31, 2025) and fee-based services like insurance and mutual fund distribution. Risks include high exposure to unsecured microfinance loans (GNPA at 14.75% in March 2025), interest rate fluctuations, and regulatory pressures on small finance banks. Competition from larger banks like HDFC Bank and peers like Ujjivan Small Finance Bank adds further challenges.
Q3 FY25 Earnings: Financial Performance
Equitas Small Finance Bank released its Q3 FY25 results (October-December 2024) on January 24, 2025, reflecting a mixed performance with revenue growth offset by profit declines due to asset quality pressures. The data below is sourced from consolidated financial statements reported on platforms like Moneycontrol and Business Standard.
Key Financial Highlights
- Revenue: Total income reached Rs 1,860.42 crore, up 18.2% year-on-year (YoY) from Rs 1,573.92 crore in Q3 FY24. Sequentially, it grew 3.7% from Rs 1,793.80 crore in Q2 FY25, driven by interest income.
- Net Profit: Net profit fell 67.18% YoY to Rs 66.30 crore from Rs 201.95 crore in Q3 FY24, though it rose 414.75% sequentially from Rs 12.88 crore in Q2 FY25. The YoY decline reflects higher provisions for stressed microfinance assets.
- Net Interest Income (NII): NII increased 8.2% YoY to Rs 828 crore from Rs 765 crore, supported by a 15.45% YoY advance growth to Rs 36,053 crore as of September 2024.
- Expenses: Operating expenses rose to Rs 678.14 crore from Rs 578.92 crore YoY, with employee costs at Rs 16.77 crore in Q2 FY25 data, likely higher in Q3. Provisions spiked due to microfinance slippages.
- Asset Quality: Gross NPA stood at 2.52% in Q4 FY24 (latest full-quarter data), with microfinance GNPA at 14.75% by March 2025, showing persistent stress despite QoQ improvement in collection efficiency.
- EPS: Earnings per share dropped to Rs 0.58, based on 113.93 crore outstanding shares.
Performance Drivers
- Advance Growth: Gross advances grew 10.63% YoY to Rs 37,986 crore by March 31, 2025, per provisional data, though disbursements fell 2.24% YoY to Rs 4,850 crore in Q2 FY25.
- Deposit Growth: Deposits rose 29.25% YoY to Rs 39,859 crore as of September 2024, with provisional data showing Rs 43,107 crore by March 2025, boosting liquidity.
- Cost Management: Cost of funds increased to 7.54% by March 2025 from 7.49% in Q3 FY24, reflecting tighter monetary conditions.
Challenges and Outlook
The sharp profit decline highlights microfinance portfolio stress, with gross slippages at 5.80% in Q2 FY25. However, sequential profit recovery and deposit growth signal resilience. The bank raised Rs 500 crore in Tier II bonds in December 2024, lifting its capital adequacy ratio above 20%. Management expects collection efficiency to improve in Q4 FY25, supported by tighter lending norms.
Promoter Details
Equitas Small Finance Bank has no identifiable individual promoters, a unique trait among listed entities, as it emerged from Equitas Holdings Limited, which merged into the bank in 2021.
- Historical Context: Originally a subsidiary of Equitas Holdings, the bank’s promoter entity dissolved post-merger, leaving no direct promoter group. Key executives like Vasudevan Pathangi Narasimhan (MD & CEO) and Balaji Nuthalapadi (Executive Director, appointed March 2025) drive operations.
- Governance: The board includes independent directors like Geeta Dutta Goel, Navin Puri, and S.A. Ramesh Rangan, ensuring professional oversight.
Promoter details are thus reflected solely through the shareholding pattern, with no individual or family ownership.
Shareholding Pattern
As of December 31, 2024, Equitas Small Finance Bank’s shareholding pattern reflects institutional and public ownership, per data from NSE India and Economic Times:
- Promoter Holding: 0.00%, unchanged from prior quarters, confirming the absence of a promoter group.
- Foreign Institutional Investors (FIIs): FIIs held 15.42%, down 1.50% from September 2024, indicating some foreign divestment.
- Domestic Institutional Investors (DIIs): DIIs owned 42.62%, a stable institutional base including mutual funds.
- Public/Retail Investors: The public held 41.96%, up 1.14% from September 2024, reflecting retail absorption of institutional sales.
Analysis
- The lack of promoter holding distinguishes Equitas from peers, with governance resting on institutional and professional management.
- High DII ownership (42.62%) signals confidence from domestic funds, while FII reduction suggests caution amid profit volatility.
- Retail holding growth aligns with its mid-cap status (market cap ~Rs 6,500 crore as of February 2025), contributing to stock price swings (52-week range: Rs 61.36–Rs 116.50).
Conclusion
Equitas Small Finance Bank’s business model focuses on financial inclusion through microfinance, vehicle finance, and MSME lending, supported by a growing deposit base and digital channels. Its Q3 FY25 earnings show an 18.2% revenue rise to Rs 1,860.42 crore but a 67.18% profit drop to Rs 66.30 crore, driven by microfinance stress. With no promoters, its 0% promoter stake contrasts with a strong 42.62% DII and 41.96% retail holding. As of April 6, 2025, the bank’s outlook depends on stabilizing asset quality and sustaining deposit growth, amid competition and regulatory headwinds. This analysis, based on data up to March 31, 2025, offers a factual overview for stakeholders and search engine visibility.
