Utkarsh Small Finance Bank Raises ₹950 Crore Through Innovative Rights Issue Using New SEBI Route

Utkarsh Small Finance Bank Limited is undertaking a significant capital raise of ₹950 crore through a rights issue of its equity shares. This is a landmark transaction as it pioneers the use of a specific investor route, where rights are renounced to promoters, a mechanism recently introduced by SEBI through its amendments. This innovative structure represents a new approach to fundraising in the Indian market. Utkarsh Small Finance Bank is primarily engaged in providing banking and financial services, with a strong emphasis on microfinance for rural and semi-urban populations. The law firm INDUSLAW, with partners Kaushik Mukherjee and Lokesh Shah leading the transaction and tax advisory respectively, provided counsel to the bank on this complex deal.

Impact: The ₹950 crore infusion is expected to substantially bolster Utkarsh Small Finance Bank's capital base, enabling it to expand its lending capacity and strengthen its financial resilience. This move is particularly beneficial for its microfinance operations, supporting financial inclusion in underserved regions. The innovative fundraising method could also set a precedent for other financial institutions seeking flexible capital generation strategies. Rating: 8/10

Difficult Terms: Rights Issue: An offer made by a company to its existing shareholders to buy additional shares in proportion to their current holdings, usually at a discounted price. SEBI: Securities and Exchange Board of India, the statutory body responsible for regulating the securities market in India. Renounces to the Promoters: In a rights issue, shareholders can choose to subscribe to their rights or 'renounce' them (sell them). This specific mechanism allows for the rights to be transferred in a way that is directed towards or benefits the company's promoters or specific investors identified by them.