Utkarsh and ESAF Small Finance Banks Plan for Equity Raise

As per the Moneycontrol report, 2 small finance banks: Utkarsh SFB, headquartered in Uttar Pradesh, and Kerala-based ESAF SFB  are set to begin their equity raising process. 

Utkarsh Bank’s Rights Issue Strategy

As per the news report, Utkarsh SFB has decided to raise ₹500-700 crore through a rights issue, shifting from its earlier plan of a qualified institutional placement. Discussions with investment bankers have been ongoing for some time, and the bank is now preparing to roll out the issue in the coming weeks.

The lender has been under financial pressure, reporting a net loss of ₹168 crore in Q3 FY25 and another ₹239 crore loss in Q1 FY26. Although it managed to close FY25 with a ₹24 crore profit, the overall trend reflects stress on profitability. Its gross NPA ratio rose to 11.42% in Q1 FY26 compared to 9.43% in FY25, underlining the seriousness of its asset quality challenges.

ESAF’s Fundraising Plans in Final Stages

As per the news reports, ESAF SFB is also working on its equity raising plan, with discussions in the final stages. The bank is expected to raise around ₹500 crore, likely through a rights issue, with the board approval anticipated soon.

The financial performance of ESAF has also been under strain. Its net loss widened to ₹521 crore in FY25, followed by another ₹81 crore loss in Q1 FY26. Asset quality remains a concern, with the gross NPA ratio increasing to 7.5% in Q1 FY26 from 6.87% in FY25. With a capital adequacy ratio of 18.4% in Q1.

Read More: ESAF Small Finance Bank Share Price Surges on ₹735 Crore Loan Sale to ARC!

Share Price Performance 

As of September 16, 2025, at 1:05 PM, ESAF Small Finance Bank and Utkarsh Small Finance Bank share price are trading at ₹30.07  per share and ₹21.61 per share, respectively.

Conclusion

The equity raising plans of Utkarsh and ESAF highlight the urgent need for fresh capital in India’s small finance banking space. Both institutions are dealing with weak asset quality and sustained losses, making capital infusion critical.

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