ESAF Small Finance Bank reported a 24.34% year-on-year increase in total deposits, reaching ₹28,466 crore as of September 30, 2026. The Kerala-based lender also witnessed gross advances expand by 25.05% YoY to ₹23,931 crore, reflecting robust demand across its retail and micro-loan segments.

The bank disclosed these provisional figures in a filing to stock exchanges on October 1, 2026. The data remains subject to limited review by the statutory auditors. The growth trajectory highlights the institution's continued focus on expanding its balance sheet amid a competitive small finance banking landscape.

Deposit mobilization trends

Total deposits surged from ₹22,894 crore in the corresponding period last year. Term deposits accounted for the bulk of this inflow, growing 29.52% YoY to ₹21,821 crore. CASA deposits, however, grew at a slower pace of 9.91% YoY, standing at ₹6,645 crore. Consequently, the CASA ratio declined to 23.34% from 26.41% a year earlier, indicating a shift towards higher-cost term funding.

Advance book expansion

Gross advances rose significantly, with retail and other loans leading the charge by expanding 33.21% YoY to ₹15,600 crore. Micro loans grew more moderately at 12.19% YoY to ₹8,331 crore. The bank noted that technical write-offs of NPAs amounting to ₹625 crore during the quarter impacted reported growth. Excluding these write-offs, gross advances would have stood at ₹24,556 crore, implying a higher underlying growth rate of 28.32% YoY.

Advances including IBPC (Inter-Bank Participation Certificate) increased by 30.54% YoY to ₹24,981 crore. The MARG segment (MSME, Agri, Retail & Gold Loan) demonstrated strong momentum, growing 38% YoY to ₹13,938 crore. Secured advances now constitute 65.19% of gross advances, up from 61.20% in the previous year, suggesting a strategic pivot towards lower-risk lending.

What the numbers show

A divergence exists between deposit and advance growth rates when adjusted for accounting actions. While reported gross advances grew 25.05%, the exclusion of ₹625 crore in technical write-offs reveals an underlying growth of 28.32%. This suggests that the bank's core lending appetite remained stronger than headline figures indicate. Furthermore, the CASA ratio contraction of approximately 300 basis points alongside a 29.52% surge in term deposits signals rising cost of funds, which may pressure net interest margins unless asset yields rise proportionally.

Network and business scale

The bank's total business, including IBPC, expanded to ₹53,447 crore from ₹42,031 crore in the prior year. Disbursements remained stable at ₹16,608 crore in FY27 compared to ₹16,607 crore in FY26. As of September 30, 2026, ESAF Small Finance Bank operated through 831 branches, 722 ATMs, and 1,060 customer service centres across 24 states and two union territories.

ESAF Small Finance Bank has approved the raising of up to ₹500 crore through the private placement of Unsecured, Redeemable Non-Convertible Debentures (NCDs). The Board of Directors granted this approval during its meeting held on September 23, 2026, to bolster the bank's regulatory capital base.

The issuance involves Basel II compliant Lower Tier II subordinated bonds. The proposal was considered and approved in line with the bank’s business plan for Financial Year 2026-27, aiming to strengthen capital adequacy without diluting equity ownership.

Issuance Details and Terms

The Board authorized the Management Committee to determine the specific terms and conditions of the issue. The key parameters disclosed in the regulatory filing are outlined below:

The tenure, coupon rate, and redemption schedule will be finalized in the relevant Transaction Documents executed for the debentures. The securities are proposed to be listed on the debt markets of the National Stock Exchange or BSE Limited.

Regulatory Compliance and Limits

The proposed issuance remains within the overall borrowing limits approved by shareholders at the 10th Annual General Meeting held on August 14, 2026. This aligns with Section 180(1)(c) of the Companies Act, 2013, and adheres to the limits for private placement of debt securities under Section 42 of the same Act.

The bank intends to comply with the Securities and Exchange Board of India (Issue and Listing of Non-Convertible Securities) Regulations, 2021, alongside the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The disclosure was made under Regulations 30 and 51 of the SEBI Listing Regulations.

Governance and Disclosure

The Board Meeting commenced at 2:00 pm and concluded at 5:00 pm. Ranjith Raj P, Company Secretary and Compliance Officer, signed the disclosure dated September 23, 2026. The intimation regarding the outcome is available on the bank’s investor relations website for public reference.