Suryoday rasing Rs 100 crore through rights issue

Suryoday Small Finance Bank, which started operations on Monday, is in the process of raising Rs 100 crore through a rights issue to its investors, hoping to take its net worth to Rs 450 crore.

Once an SFB reaches net worth of Rs 500 crore, it is mandatory to list within three years, which the bank hopes can be done by 2020. Suryoday is offering a steep 7.25 per cent interest on savings accounts with deposits of more than Rs one lakh.

For savings account deposits up to Rs 1 lakh, the rate of interest would be 6.25 per cent.

Besides, the bank would offer steep interest rate on its deposits -- nine per cent for one to two year deposits and 9.75 per cent for the same in case of senior citizens. The deposits will have a unique feature of getting interest credited on a monthly basis.

Suryoday is the only small finance bank from Maharashtra, but has a presence in seven states already, as it was a microfinance firm.

According to the bank's chief executive officer R Bhaskar Babu, the bank will focus more on human interaction with their customers than overtly depending on technology to garner business.

The bank's representatives would visit customers every alternate day and will collect deposits as well as installments. The bank will also adapt flexible approach on collections, keeping in mind the cash flow issues of its clients.

The bank would mainly disburse loans under Rs 1 lakh but for housing loans it would give loans of Rs 5 lakh or so. There is no restriction on how much loans the bank can give and how much deposit it can accept. However, any SFB's 75 per cent of its credit should go into priority sector and half of the loan portfolio must be within Rs 25 lakh range.