Equitas SFB CEO Assures No Trouble in Raising Deposits Despite Label Confusion
In an interview with Financial Express, PN Vasudevan, Managing Director and CEO of Equitas Small Finance Bank (SFB), addressed concerns surrounding the bank's ability to raise deposits and the implications of its "small finance bank" designation. Despite narrowly missing the asset quality criteria for a universal bank license, Vasudevan remains optimistic about Equitas' growth prospects and its role in the evolving banking landscape.
Vasudevan acknowledged that the "small finance bank" label has created some confusion among the public, leading to questions about the safety of investing in such institutions. He noted that, despite these concerns, Equitas SFB and other similar institutions have successfully attracted public deposits. This success is partly due to the higher interest rates offered by SFBs, which are typically 1-2% above those provided by larger banks.
Addressing the credit side of operations, Vasudevan highlighted a significant trend towards portfolio diversification among SFBs. Initially, many SFBs were primarily NBFC microfinance institutions with a high percentage of unsecured microfinance exposure. However, as these institutions have transitioned into banking, there has been a deliberate shift towards increasing secured loans and reducing the proportion of unsecured loans. While the Reserve Bank of India (RBI) does not impose a specific portfolio mix, Vasudevan emphasized the importance of balancing unsecured loan books to ensure stability and growth.
Vasudevan also underscored that the transition from being labeled as a "small finance bank" to potentially obtaining a universal bank license is crucial for Equitas. The bank's focus remains on continuing to build a robust deposit base and diversifying its loan portfolio to meet evolving market demands and regulatory standards.
