Synopsis: ESAF Small Finance Bank Limitedpromoter ESAF Financial Holdings plans to reduce its stake from 52.87% to 45.58% in compliance with RBI ownership norms.
Known for providing inclusive banking services to underserved communities, this small finance bank is in focus as its promoter revises a Scheme of Arrangement to lower shareholding in compliance with RBI norms. The proposal now awaits approvals from the RBI and National Company Law Tribunal.
ESAF Small Finance Bank Limited’s stock, with a market capitalisation of Rs. 1,350 crores, fell to Rs. 25.91, hitting a low of up to 2 percent from its previous closing price of Rs. 26.44. Furthermore, the stock over the past year has given a negative return of 33.9 percent.
Change in Promoter stake
The company received a revised Scheme of Arrangement from its Promoter, ESAF Financial Holdings, which aims to comply with RBI regulations by reducing the Promoter’s stake from 52.87% to 45.58% and ensuring Dia Vikas Capital’s shareholding remains below 5%.
ESAF Financial Holdings Private Limited is a core investment company (CIC) holding 52.87% in ESAF Small Finance Bank. It was originally a microfinance firm before converting to a small finance bank promoter. The company is restructuring its shareholding to comply with RBI guidelines, reducing promoter shareholding while allowing strategic shareholders like Dia Vikas Capital to hold below prescribed limits.
The restructuring scheme aims to allow identified shareholders, excluding promoters, a full exit by canceling their equity in ESAF Financial Holdings and transferring proportionate shares in the bank. Dia Vikas Capital will have a partial exit, holding no more than 4.99% of the bank’s shares and less than 20% in the holding company after the scheme’s approval. The scheme requires approvals from the National Company Law Tribunal and RBI and ensures regulatory compliance regarding shareholding limits.
This arrangement does not affect employees or creditors and retains all company contracts and proceedings. Financial adjustments will be reflected in the company’s books per accounting standards. The company bears all costs related to the scheme, making it binding on shareholders once approved. The process facilitates compliance with regulatory shareholding caps while structuring equity for key investors and enhancing corporate governance.
Q2 Financial Highlights
loss after tax improved YoY to Rs. -116 Cr in Q2FY26, narrowing losses from Rs. -190 Cr in Q2FY25, a 39% reduction. QoQ, however, losses widened versus Rs. -81 Cr in Q1FY26 by 43%. Net Interest Income (NII) declined 33% YoY from Rs. 540 Cr to Rs. 364 Cr, and fell 4% QoQ from Rs. 378 Cr, indicating compression in core earnings.
Total deposits rose 6% YoY to Rs. 22,894 Cr in Q2FY26 and edged up 1% QoQ. CASA deposits also increased to Rs. 6,046 Cr, with the CASA ratio improving YoY from 24.6% to 26.4% and sequentially from 24.8%. The figures reflect steady deposit growth, but persistent pressure on margin and profitability.
Written By Fazal Ul Vahab C H
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