Equitas Small Finance Bank has become the fourth such financier eligible for voluntary transition into a universal lender, but is taking a measured approach after regulatory challenges faced by peers. According to reports from The Economic Times, the bank's managing director PN Vasudevan stated they believe they are eligible under the guidelines but don't want to rush through the application process. The RBI returned applications of peers Jana Small Finance Bank without citing reasons and underscored the need for Ujjivan Small Finance Bank to diversify its portfolio further. As Vasudevan explained, "It's better to apply a little slowly rather than applying quickly and not getting it. There is no need to rush because it's not like we are sitting on fire today and I have to quickly get it done. So, we will take our time and do it." AU Small Finance Bank remains the sole lender to receive approval for transition into a universal bank.
As reported by The Economic Times, Equitas became eligible to apply after the close of FY26 since it reported gross non-performing assets ratio below 3% and net NPA ratio below 1% for two consecutive financial years. The publicly listed Equitas has capital worth ₹1,144 crore and earned ₹103 crore net profit for FY26 against the preceding fiscal's ₹147 crore. The transition would provide easier lending and capital norms, removal of the 'small bank' tag for better branding, and lower risk perception among customers. According to chief executives, this upgrade would help in easier deposit mobilization and better branding positioning in the competitive banking sector.
According to The Economic Times, the transition would translate into a lower 40% priority sector lending target instead of 60%, while the requirement of having at least 50% of loan portfolio in loans less than ₹25 lakh would be removed. As small finance banks, these lenders currently need to maintain a minimum 15% capital adequacy ratio against 11.5% for universal banks. SFBs eligible for transition must be publicly listed with minimum audited net worth of ₹1,000 crore and earned profit for two consecutive financial years. The regulatory benefits include easier lending terms, relaxed capital norms, and enhanced operational flexibility for the institution.
As reported by The Economic Times, Vasudevan emphasized the bank is not chasing any deadline for this long-term aspiration, stating they will take their time to study it properly and apply at some point in time. The cautious approach reflects lessons learned from regulatory setbacks faced by peers, with the bank prioritizing thorough preparation over rushed applications. The transition would help in easier deposit mobilization and better branding positioning in the competitive banking sector, making it a strategic move for the institution's future growth and market positioning.
