Credit and finance for MSMEs: Noida-based lender Shivalik Small Finance Bank on Wednesday announced that it has raised an equity round of Rs 111 crores led by venture capital firms Accel and Quona Capital. Bharti AXA Life Insurance also participated in the round. The company said it plans to deploy the funding to enhance its tech stack, strengthen its team, and deepen partnerships “as it moves to become the go-to bank for Indian MSMEs.”
“We are on a promising track of growth focused on tech-driven innovations and strategic partnerships in the financial services space. This investment will help us accelerate our growth as we look to leverage digital banking adoption by small business and retail customers,” Anshul Swami, Managing Director and CEO of Shivalik Small Finance Bank in a statement.
Shivalik Small Finance Bank is the first small finance bank (SFB) in India that transitioned from an urban cooperative bank with 23 years of operations in offering retail banking products and services, it said in a statement. Shivalik has more than 5.6 lakh unique customers and operates through 46 branches and 21 exclusive business correspondent branches in northern India.
The bank intends to tap MSMEs and underserved retail customers in non-metros through partnerships. Swami said they are building a comprehensive library of API modules across customer onboarding, e-KYC, savings accounts, deposits, lending, payments and cards that can help bank’s partners to work with them to offer innovative banking solutions.
“Technology is increasingly becoming the financial services front-end for all Indians and is a key driver of financial inclusion.,” said Rachit Parekh, Principal at Accel. “Banks like Shivalik, that understand this shift, have demonstrated financial prudence, and are investing in technology.”
The fundraising by Shivalik comes amid the easing of the challenge related to securing credit faced by SFBs. According to a CareEdge Ratings’ Q2 FY23 report, raising capital had remained a key challenge for SFBs with the deferment of a number of initial public offerings (IPOs) in FY22 and Q1 FY23 largely because of an unfavourable equity market scenario and moderate performance of SFBs during FY22.
However, with a majority of SFBs already absorbing credit cost and growth coming back to the sector, capital mobilization has gained momentum. The report noted that SFBs raised equity and Tier II capital aggregating to Rs 3,275 crore during the second quarter ended September in the current fiscal as against nil in Q1 FY23. Many more SFBs also reviving their capital raising plans including IPOs. As of FY22, the total business of SFBs in India stood at Rs 2.79 lakh crore with deposits of Rs 1.44 lakh crore, it added.