Equitas Small Finance Bank commences issuances of RuPay Debit Cards

         Equitas Small Finance Bank become the 99^th Direct Live Member on NPCI’s National Financial Switch. Last month, it started to issue RuPay Debit Cards to its SFB Account Holders. Initially, two variants of RuPay Debit Cards (Classic + Platinum) are being offered.

            Equitas YouTube Video 1

            In September 2016, Equitas Small Finance Bank has commenced its banking operations with 3 branches in Chennai.

            Equitas YouTube Video 2

            Equitas Holidings was one of the 10 companies to receive the ‘in-principle’ approval from Reserve Bank of India to set up. The in-principle approval given in September 2015  and the applicants had  18 months to comply with the requirements.

            The companies which received the ‘in-principle’, approval were Au Financiers (India) Ltd., Jaipur, Capital Local Area Bank Ltd., Jalandhar, Disha Microfin Pvt., Ahmedabad and Utkarsh Micro Finance Pvt. Varanasi, Equitas Holdings Pvt., Chennai, ESAF Microfinance and Investments Pvt., Chennai, Janalakshmi Financial Services Pvt., Bengaluru and Ujjivan Financial Services Pvt., Bengaluru. The RBI also granted permission for RGVN (North East) and Microfinance Ltd., Guwahati, and the Navi Mumbai-based Suryoday Micro Finance Pvt.

            Equitas Holdings  received the final approval from Reserve Bank of India, in June 2016.  Based on the final Reserve Bank of India, Equitas  top management  planned the initial roll-out in September or October 2016.

Equitas would  be the first bank after indepedence from Tamil Nadu and first private bank from Chennai.

            In the initial years, Equitas Small Finance Bank would incur an additional expenses of INR100 crores. The additional expenditure is towards onboarding employees and relocation of its branches.

In mid 2016,  Equitas had  around 9,000 employees of which only three are employed to get money, while balance are in lending and collection.

As the new SFB needs to focus on liability, it needs to add another 3,000 people. This alone would cost around Rs 80-90 crore every year.

The second major cost would be increase in rent as Equitas need to relocate around 400 branches.

Of the little over 580 branches of Equitas, currently around 410 will be converted into full-fledged SFB branches, while the balance will be specialised branches, which will focus on lending.

Almost 400 of these branches are located inside the lanes or on the second or third floors of a building, which will NOT work for a bank, as Bank branches  need to be on the ground floor and on the main roads.

Of the total branches around 50% of it are in South, in West around 30% and balance are in North.

The new  SFB will focus on four key strategies including offering existing range of credit products such as micro-finance, small enterprise loans, business banking loans for tiny to small commercial establishments, commercial vehicle finance and affordable housing finance.

Additionally, the SFB would be looking to offer a few cross sell products such as loan against gold, etc.

Equitas  plans to offers multiple channels to clients to access their accounts with the bank including digital channels such as net banking and mobile banking, offer third party products and services such as insurance, pension and 3-in-1 accounts to enhance the value to clients. The company invested around Rs 20-25 crore in IT infrastructure.

To enable physical support to its millions of customers, Equitas plans to have a net work of Business Correspondents (BC) at branch level taking banking services right to the doorstep of its clients.

Equitas hopes to improve its operational efficiency and risk management through technology-enabled operating procedures which would help in reducing cost to borrowers over time.

The Chennai-headquartered Small Finance Bank, in a statement, said by the end of fiscal FY16-17, it plans to have a network of 412 branches spread across 11 states.

Of these 412 branches, Equitas plans to have 50 per cent in South, 30 per cent in West and the remaining 20 per cent in North. About 25 per cent of bank branches will be located in rural, unbanked villages.

Currently, the bank has advances of about Rs. 6,500 crore, of which about 50 per cent is microfinance, about 25 per cent is used commercial vehicle finance and the remaining in micro and small enterprises and affordable housing finance.

           

PN Vasudevan, Managing Director & CEO, Equitas Small Finance Bank Limited, said: “It is our endeavour to bring a wave of freshness into banking through our focus on making normal banking transaction `Fun’ for the customers and through spreading fun and joy, we hope to impact about 5 per cent of Indian Households by 2025. “

Indian Bank Licenses on Tap - RBI releases Draft Guidelines for Licensing of Payments Banks and Small Banks

            To encourage more types of banks in India, Reserve Bank of India released the today, the Draft Guidelines for “Licensing of Payments Banks” and Draft Guidelines for “Licensing of Small Banks”.

            All interested parties and general public can go through the guidelines and views can be shared by emailing to cgmicdbodco@rbi.org.in. The views can be shared till August 28, 2014. After August 28, 2014, Reserve Bank will consolidate the feedback; comments and suggestions review them and issue the final guidelines.

The final guidelines will also lay down the process to submit the Applications for setting up Payment Banks or Small Banks.

            As the name indicate, payments banks and small banks are “niche” or “differentiated” banks; with the common objective of furthering financial inclusion.

The Small Banks will provide a whole suite of basic banking products, such as, deposits and supply of credit, but in a limited area of operation.

On the other hand, Payment Banks  will provide a limited range of products, such as, acceptance of demand deposits and remittances of funds, but will have a widespread network of access points particularly to remote areas, either through their own branch network or through Business Correspondents (BCs) or through networks provided by others. They will add value by adapting technological solutions to lower costs.

The entities eligible to set up a Payments Bank include existing non-bank Pre-paid Instrument Issuers (PPIs), Non-Banking Finance Companies (NBFCs), corporate BCs, mobile telephone companies, super-market chains, companies, real sector cooperatives, and public sector entities.

The entities eligible to set up a small bank include resident individuals with ten years of experience in banking and finance, companies and societies, NBFCs, Micro Finance Institutions and Local Area Banks.

The eligible entities should be “fit and proper” in order to be eligible to promote payments banks and small banks. The Reserve Bank would assess the ‘fit and proper’ status of the applicants on the basis of their past record of sound credentials and integrity; financial soundness and successful track record of at least five years in running their businesses.

The minimum paid up capital requirement of both payments banks and small banks is kept at Rs. 100 crore, of which the promoters’ initial minimum contribution will be at least 40 per cent, to be locked in for a period of five years.

Reserve Bank of India, will provide the ‘In principle approval’, for setting up Small Banks and Payment Banks within 90 days, from receipt of report from the Independent External Advisory Committee.