India needs stronger support for the small finance banking sector, with former Reserve Bank of India Governor C Rangarajan calling for incentives to encourage the creation of more such institutions.
Speaking at the inauguration of Equitas Small Finance Bank’s new corporate office, Equitas Towers, in Chennai, Rangarajan said the country currently has only around 11 small finance banks and that the existing framework may not provide enough motivation for more banks to enter the segment.
“I would appeal to the Reserve Bank of India to look at how to incentivise the setting up of small finance banks,” he said.
Rangarajan also highlighted Equitas as a potential example for the sector, noting that the bank has exceeded several regulatory requirements. He said small finance banks that demonstrate strong performance should receive due consideration when applying for a universal banking licence.
“I am sure that Equitas Bank will also make an application at the appropriate time. And if a universal bank license is given to them, it is not a bad idea,” he added.
He observed that most small finance banks eventually aim to become universal banks. Rangarajan also criticised the merger of Regional Rural Banks, saying their reduction to essentially one bank per State has weakened their local and regional character.
Equitas began as a microfinance company before becoming a small finance bank in 2016. It completed 10 years as an SFB and was listed as a public entity in 2020.
At the event, Vasudevan PN, Founder and MD of Equitas Small Finance Bank, recalled the organisation’s journey from struggling to find office space on rent in its early days to moving into the multi-storied Equitas Towers. He also thanked Murugappa Group-owned Cholamandalam Finance and its senior executives, where he began his career before starting Equitas.
As of June 2026, Equitas SFB reported gross advances of ₹47,641 crore, up 27% year-on-year, while deposits increased 10% to ₹48,976 crore. For Q1FY27, quarterly PAT stood at ₹184 crore, compared with a loss of ₹224 crore in Q1FY26.
N Rangachary, MA Alagappan and M. Anandan were among the other key guests at the event.
Equitas SFB also launched When Organisations Win – Governance, Trust and the Values of Equitas Small Finance Bank, authored by Sangeeta Shankaran Sumesh, covering the bank’s governance journey.
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