Suryoday Small Finance Bank's board has approved a ₹500 crore fundraise, split into ₹300 crore of equity and ₹200 crore of debt, according to the announcement.
The move comes as India's Small Finance Banks look to reduce their reliance on unsecured microfinance loans, historically the core of the SFB model, offering small, uncollateralized loans to rural and semi-urban borrowers at high margins but high risk.
The RBI is strictly monitoring unsecured lending, and default risk in the microfinance sector remains a persistent concern, pushing SFBs toward a strategic pivot.
The stated direction for banks like Suryoday is to scale up secured retail products such as affordable housing loans, commercial vehicle financing, and gold loans, diluting the share of unsecured microfinance in their portfolios.
Building a secured loan book at scale requires substantial capital adequacy, which is the stated purpose behind the ₹500 crore raise — funding the transition from a high-risk micro-lender to a more diversified, secured retail bank.
