Equitas Small Finance Bank Limited has received listing approval for its ₹500 crore Lower Tier II Non-Convertible Debentures (NCDs). The securities, allotted on September 25, 2026, were listed on the BSE Limited on September 29, 2026.

The issuance comprises 50,000 rated, listed, unsecured, and subordinated bonds with a face value of ₹1 lakh each. These instruments are redeemable after ten years from the deemed date of allotment, maturing on September 25, 2036. The private placement strengthens the bank's capital base with long-term, subordinated debt carrying a fixed coupon of 9.95% per annum.

Instrument Structure and Terms

The debentures are classified as Lower Tier II Bonds, which qualify as Tier II capital for regulatory purposes. Key structural features include:

• Coupon Rate: Fixed at 9.95% per annum, payable annually.
• Tenure: 10 years from the date of allotment.
• Security: Unsecured, meaning no specific assets are pledged against the debt.
• Redemption: Bullet redemption at par (₹1 lakh per unit) plus accrued interest on maturity.

Credit Ratings and Interest Schedule

The bonds have received dual credit ratings with a stable outlook, reflecting strong investor confidence in the issuer's creditworthiness despite the unsecured nature of the instruments.

Interest payments are scheduled annually, with the first payment due on September 25, 2027. The record date for each interest payment falls 15 days prior to the due date. The principal amount is subject to full redemption upon maturity in 2036.

What the Numbers Show

The annual interest outflow for this tranche amounts to ₹49.75 crore (calculated as 9.95% of ₹500 crore), payable in equal installments of ₹9,950 per bondholder annually. The choice of a 10-year tenure aligns with the bank's need to match long-term asset liabilities while bolstering its Tier II capital adequacy ratio without diluting equity. The receipt of AA- ratings from both Care Ratings and India Ratings underscores the market's assessment of the bank's financial stability, facilitating the successful private placement without collateral requirements.

Equitas Small Finance Bank has seen its proposed GST demand for financial year 2022-23 reduce significantly to ₹23.95 crore from the initial ₹533.81 crore. This revision follows a personal hearing held on September 25, 2026, and subsequent communication from the GST authorities dated September 28, 2026.

The initial show cause notice, received on September 21, 2026, had demanded ₹533.81 crore under Section 73 of the Central Goods and Services Tax Act, 2017 and the Tamil Nadu Goods and Services Tax Act, 2017. The notice was issued by the Office of the Deputy Commissioner (ST), Central-III Zone, Commercial Taxes Department, Government of Tamil Nadu.

Revised assessment details

Following the bank's submissions regarding interest income from loans and advances, the authorities substantially reduced the exemption-related turnover proposed to be assessed. The revised aggregate amount comprises tax, interest, and penalty components as detailed below:

The revised computation reflects that certain specified receipts and reconciliation items remain subject to verification of supporting documents. The bank believes that even the remaining amount is eligible for exemption.

Bank's legal position and next steps

Equitas Small Finance Bank stated that it has substantive factual and legal grounds to contest the notice. The bank argues that interest or discount on deposits, loans, or advances is specifically exempt under Entry 27(a) of Notification No. 12/2017-Central Tax (Rate) dated June 28, 2017, except for interest involved in credit card services.

The bank noted that it has consistently applied this statutory treatment, and relevant assessments for prior years were completed without treating such exempt interest income as taxable turnover. The bank plans to produce further evidence and documents to the authorities to establish its position. Outcome of further progress will be informed in due course.

Nature of the dispute

The original show cause notice inter alia proposed tax regarding several issues beyond the primary interest income dispute. These included:

• Short payment of tax on outward supplies
• Difference in turnover described as suppressed turnover
• Short payment under reverse charge
• Credit notes and inter-State branch transfers
• Rate differences and excess Input Tax Credit (ITC)
• ITC identified as ineligible

The bank clarified that the notice remains at the adjudication stage. It does not constitute a final crystallised liability. The financial impact, if any, depends on the outcome of the proceedings and cannot presently be determined.