RBI approves Equitas Holdings to start small finance bank

New Delhi, July 1 (ANI): Equitas Holdings has received final approval from the Reserve Bank of India (RBI) to start small finance bank (SFB) under Section 22 of the banking regulation.

The shares of Equitas holdings spurt as much as 7.87 percent to hit intraday high of Rs. 191.70.

In June, the Madras High Court had approved the unification of Equitas Micro Finance and Equitas Housing Finance with Equitas Finance. It will be named as Equitas Small Finance Bank, which will carry on the business of small finance bank.

Equitas Holdings is one of the 10 entities that received in-principle approval from the RBI in September 2015 to set up a small finance bank. And till now, it has served about one percent of the Indian households.

"The new SFB is expected to start its operations and we are planning to launch the bank by September or October this year," said Equitas Holdings Managing Director P.N. Vasudevan.

He also stated that the new SFB would cost additional Rs. 100 crore a year, but the benefit will be through reduction in cost of funds.

However, there are approvals to be obtained from various departments of the RBI and other agencies. On receipt of these approvals, Equitas Small Finance Bank will start operations.

As the new SFB will focus on four key strategies, including offering existing range of credit products and small enterprise loans for small commercial establishments, commercial vehicle finance and affordable housing finance, it needs to add another 3,000 people. This alone would cost around Rs. 80-90 crore every year.