ESAF Small Finance Bank Limited

About  ESAF Small Finance Bank Limited

Incorporated in 2016, ESAF Small Finance Bank focuses on the unbanked and under-banked customer segments and operates in rural and semi-urban areas. It primarily focuses on offering asset products.  

Asset products include micro loans, retail loans such as gold, mortgage, vehicle loans, MSME (Micro, Small and Medium Enterprises) loans; loans to financial institutions and agriculture loans. On the other hand, liability products include current accounts, savings accounts, term deposits and recurring deposits. It also offers foreign currency exchange and safety lockers. It distributes third-party life and general insurance policies and Government pension products.

The bank offers services across India through a network of 700 banking outlets. But most of its business is concentrated in South India in Kerala and Tamil Nadu. As of 30 June 2023, over 62% of the banking network is in South India, while 73% of gross advances are from customers in South India.   

The bank’s correspondent entities are responsible for sourcing and servicing customers for microfinance loans and other micro-loans, which it does not do by itself. In FY21, FY22 and FY23, they sourced or serviced 84%, 83% and 75% of the company’s total advances.

Between FY21 and FY23, it saw a CAGR rise of 24% in its AUM (Advances Under Management), 20% in its interest earned and 42% in its profit. Moreover, a CRISIL report expects SFB’s (Small Finance Bank) AUM to grow at a CAGR of 22% to 24% between 30 June 2023 and 31 March 2025 on account of the huge market opportunity in rural segment, presence of informal credit channels and geographic diversification, which could be beneficial for the company.

And now, ESAF Small Finance Bank Limited is coming out with its initial public offer (IPO). The IPO will be an offer for sale as well as a fresh issue. The money raised through the fresh issue will be utilised to augment the bank’s capital base, increase business by lending and to ensure compliance with regulatory requirements on capital adequacy prescribed by the RBI. Its shares will be listed on the NSE and the BSE.

Here are key details about the ESAF Small Finance Bank Limited IPO:

Financial snapshot

Here’s a quick look at ESAF Small Finance Bank Limited IPO’s strengths, weakness, opportunities and risks (SWOT analysis)

Strengths and opportunities

1. A better understanding of the microloan segment because even though the bank was incorporated in 2016, the ESAF foundation has been active since 1995 when it started its micro loan activities. 
2. Focus on rural and semi-urban banking as rural centres have lower financial inclusion, which is why there is less competition and more opportunity.
3. Growing retail deposits portfolio wherein its total deposits grew at a CAGR of 27% between FY21 and FY23.
4. Customer centric products and processes allowed it to be awarded the ‘Kerala Bank of the Year 2019’ award, the ‘Banking Gold’ SKOCH award and the ‘Special Jury Award for Serving MSMEs’ among others. 
5. Technology-driven model offering various digital platforms such as internet banking portal, a mobile banking platform, SMS alerts, bill payments and RuPay branded ATM cum debit cards along with account opening and loan underwriting processes and a digitalised central credit-processing unit for micro loans.

Risks and threats

1. A significant portion of its AUM comes from micro loans representing 84%, 81% and 75% of its AUM in FY21, FY22 and FY23, respectively. Micro loans and some of its retail loans are unsecured, meaning that they’re not supported by collateral, which made up 75% of the total advances (loans) in FY23.
2. Subject to various sanctions, penalties and inspections by the Reserve Bank of India. 
3. Faces challenges related to the rural-focused business such as high cost of reaching customers, potential customers’ lack of financial and product awareness, vulnerability of household’s income and local developments.
4. Employee attrition rate of 13%, 20% and 24% in FY21, FY22 and FY23, respectively.
5. Does not have a presence in Jammu and Kashmir, Himachal Pradesh, and Manipur, three of the top five most underpenetrated states for microfinance loans as of 30 June 2023. 

ESAF Small Finance Bank Limited IPO details

|ESAF Small Finance Bank Limited IPO date

According to the offer document filed by the company with the SEBI, the ESAF Small Finance Bank IPO’s opening date – in other words, the ESAF Small Finance Bank IPO launch date – will be 3rd November 2023. The ESAF Small Finance Bank IPO closing date is 7th November 2023. After this, investors will be updated about the allotment status on 10th November 2023.

Investors, who have been allotted shares, can expect them to be credited to their demat account on 15th November 2023. The ESAF Small Finance Bank IPO listing date is 16th November 2023. The listing date is the date on which the shares of a company get listed on the bourses – NSE and BSE. 

|ESAF Small Finance Bank Limited IPO Price Band

The IPO is an offer for sale as well as a fresh issue. The ESAF Small Finance Bank IPO price band has been set between ₹ 57 and ₹ 60 per share. Interested investors can choose a price within this band to apply for the IPO. 

The ESAF Small Finance Bank IPO listing price will be determined on 16th November 2023. The listing price is the price at which a company’s shares debut on the stock exchanges.

|ESAF Small Finance Bank IPO size 

The ESAF Small Finance Bank IPO details have been declared. The ESAF Small Finance Bank IPO lot size is set at 250 shares and an investor can apply for a minimum of 1 lot. Meanwhile, the ESAF Small Finance Bank IPO issue size is approx ₹463 crore. 

How to pre-apply for the ESAF Small Finance Bank Limited IPO?

You can pre-apply for the ESAF Small Finance Bank Limited IPO on Upstox. The pre-application for this IPO, which means pre-apply open date, usually begins a day before the IPO opens for subscription. 

Follow these steps to pre-apply for the IPO: 

1. Login to your Upstox account, using your six-digit PIN
2. After successfully logging in, click on ‘Discover’
3. On the Discover tab, you will find the ‘Invest in IPO’ section
4. Under the Invest in IPO section, look for the ‘ESAF Small Finance Bank Limited IPO’ tab and click on it
5. Now fill in all the required information, like ‘bid price’ and ‘lot size’
6. Confirm and click on ‘Pre-Apply’
7. Accept the mandate on your UPI app

How to apply for the ESAF Small Finance Bank Limited IPO?

If you are interested in this investment opportunity but unsure how to apply for the ESAF Small Finance Bank Limited IPO, here we are listing out the steps for you. 

When the public issue opens for subscription, one can follow this step-by-step guide on how to apply for the ESAF Small Finance Bank Limited IPO on Upstox: 

1. Login to your Upstox account, using your six-digit PIN
2. After successfully logging in, click on ‘Discover’
3. On the Discover tab, you will find the ‘Invest in IPO’ section
4. Under the Invest in IPO section, look for the ‘ESAF Small Finance Bank Limited IPO’ tab and click on it
5. Now fill in all the required information, like ‘bid price’ and ‘lot size’
6. Confirm and click on ‘Apply’
7. Accept the mandate on your UPI app

How to check the ESAF Small Finance Bank Limited IPO allotment status?

When the allotment process is completed, you can check the status of your application on the Upstox app. Share allotment is generally done around five to six days after an IPO closes. 

Here’s a step-by-step guide on how to check the ESAF Small Finance Bank Limited IPO allotment status:

1. Login to your Upstox account, using your six-digit PIN
2. After successfully logging in, click on ‘Discover’
3. On the Discover page, you will find the ‘Invest in IPO’ section
4. Under the Invest in IPO section, you will find the ‘View all’ option
5. Once you click on ‘View all’, you will be directed to the ‘IPO’ tab
6. In the ‘IPO’ tab, click on ‘My applications’ 
7. In ‘My applications’, under the History section, your ESAF Small Finance Bank Limited IPO allotment status will be mentioned

Check Allotment Status

Open a demat account with Upstox to apply for the ESAF Small Finance Bank Limited IPO

To apply for the ESAF Small Finance Bank Limited IPO, you need to mandatorily have a demat account. A demat account helps you hold the shares you buy in a dematerialised format. If you don’t have a demat account yet, you can open one with Upstox by visiting our website or by downloading the app.

Here is a step-by-step guide on how to open a demat account with Upstox:

1. Click here to visit the demat account opening page on the Upstox website. 
2. Enter your phone number and other essential details to begin opening a demat account.
3. Upload the scanned copies of your PAN, Aadhaar card, a cancelled cheque, and your bank statement as needed. 
4. Complete the e-verification using the OTP sent to your registered mobile number. 

This is all it takes to open a demat account with Upstox. Easy and quick, right? 

Open Demat Account

Upstox – trading app to apply for the ESAF Small Finance Bank Limited IPO

Applying for IPOs with Upstox is extremely easy. The user-friendly interface and top-notch security make Upstox one of the leading trading apps in India.

You can apply for the ESAF Small Finance Bank Limited IPO on Upstox, provided you have a demat account. As mentioned in the previous section, you can simply follow the steps to open a demat account with Upstox. The biggest advantage is that when you apply for an IPO using your Upstox account, the brokerage charges are zero.

In fact, courtesy of its robust features and minimal charges, Upstox is among the most preferred trading apps. Lakhs of Indians trust Upstox as it is a reliable trading platform that makes IPO applications easy.