| Instrument Type | Size of Issue (₹ crore) | Rating | Rating Action |
|---|---|---|---|
| Tier II bond (Unutilized) | 500 | IND AA-/Stable | Assigned |
| Tier II bond | 500 | IND AA-/Stable | Affirmed |
| Issuer rating | - | IND AA-/Stable | Affirmed |
| Certificate of deposit | 2,500 | IND A1+ | Affirmed |
Rating Details
India Ratings & Research, a Fitch Group Company, has assigned an 'IND AA-/Stable' rating to Equitas Small Finance Bank's unutilized Tier II bond of ₹500 crore. This rating signifies a high degree of safety regarding timely servicing of financial obligations and very low credit risk. The 'Stable' outlook indicates that the rating is unlikely to change in the near term.
Concurrently, the rating agency has affirmed the 'IND AA-/Stable' rating for the bank's existing Tier II bond of ₹500 crore. Tier II bonds are a crucial component of a bank's capital structure, contributing to its regulatory capital. The affirmation of this rating reflects the bank's continued strong financial health and its capacity to meet its long-term obligations.
Furthermore, Equitas Small Finance Bank's Issuer Rating has been affirmed at 'IND AA-/Stable'. An issuer rating provides an opinion on the overall creditworthiness of the entity, reflecting its ability to meet its financial commitments. The 'Stable' outlook on the issuer rating suggests that India Ratings expects the bank's fundamental credit profile to remain consistent.
In addition to the long-term ratings, the Certificate of Deposit (CD) program, with a size of ₹2,500 crore, has seen its rating affirmed at 'IND A1+'. This short-term rating indicates very strong capacity for timely payment of financial obligations and very low credit risk. Certificates of Deposit are short-term debt instruments issued by banks to raise funds, and a high rating on these instruments enhances the bank's ability to raise short-term liquidity efficiently.
Strategic Implications
These rating actions by India Ratings & Research are a positive development for Equitas Small Finance Bank. The 'IND AA-/Stable' ratings for its long-term instruments and issuer rating, coupled with the 'IND A1+' for its short-term instruments, reflect the bank's robust financial fundamentals, sound asset quality, and adequate capitalization. A stable and high credit rating is vital for financial institutions as it directly impacts their ability to raise capital at competitive rates, attract deposits, and maintain investor confidence.
The assignment of a rating to the unutilized Tier II bond provides the bank with flexibility to raise additional capital in the future, should the need arise, under favorable terms. The affirmations across key instruments and the issuer rating reinforce the market's perception of Equitas Small Finance Bank's credit strength and operational stability. This stability is crucial for a small finance bank, which plays a significant role in financial inclusion and serving underserved segments of the economy.
Regulatory Compliance
The intimation of these rating actions was made by Equitas Small Finance Bank to the stock exchanges on July 10, 2025, in compliance with Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. This ensures transparency and timely dissemination of material information to the public and stakeholders. The detailed letters from India Ratings & Research, dated July 09, 2025, were received by the bank on July 10, 2025.
The consistent and stable ratings from a reputable agency like India Ratings & Research underscore Equitas Small Finance Bank's commitment to maintaining a strong financial position and prudent risk management practices, which are essential for sustainable growth in the banking sector.
