Small finance banks seek equity investment to fund non-MFI portfolio

According to the Reserve Bank of India guidelines, SFBs need to be listed within three years after reaching a net worth of Rs 500 crore

As small finance banks (SFBs) venture beyond microfinance, a number of them are raising funds through equity investments. At present, for a majority of SFBs, more than 80 per cent of the portfolio is from microfinance. This financial year, the SFBs are looking to substantially expand their presence in areas such as personal finance, medium small and micro enterprises (MSME), affordable housing and two-wheeler loans.
 
For example, Mumbai-based Suryoday Small Finance Bank this month raised Rs 248 crore from three promoters and some existing and two new investors. The new investors include development of finance institution DEG, a subsidiary