ESAF Small Finance Bank Limited has informed the Exchange regarding allotment of of Non-Convertible Debentures (Tier II Subordinated Bonds) on Private Placement basis.
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ESAF Small Finance Bank has allotted 6,500 unsecured, redeemable Basel II compliant Lower Tier II subordinated bonds (NCDs) aggregating to Rs. 65 crore on a private placement basis. Each bond has a face value of Rs. 1,00,000, carries a coupon of up to 11.10% per annum, and has a 6-year tenure maturing on July 17, 2031. The issue includes a green shoe option of up to Rs. 15 crore, and the NCDs are proposed to be listed on NSE's New Debt Market platform (NTRP). Approval was given by the bank's Management Committee on July 17, 2025.
This is a debt-based capital raise aimed at strengthening the bank's Tier II capital base under Basel II norms, which should improve its capital adequacy ratio. There is no equity dilution for shareholders, but the bank will bear an annual interest cost of up to 11.10% on this Rs. 65 crore, which is a relatively high borrowing cost that could modestly weigh on future profitability.