Shivalik Small Finance Bank, an India-based lender that transitioned from an urban cooperative bank, has raised 100 crore rupee (US$11.42 million) in equity.

The round was led by SMBC Asia Rising Fund, the corporate venture capital arm of Sumitomo Mitsui Banking Corporation, with participation from Accel, Quona Capital, Lightspeed, and Sorin Investments.

Shivalik will use the funds to strengthen its technology stack, expand its workforce in areas such as product, engineering, and operations, and develop scalable banking-as-a-service solutions.

The bank operates in 11 Indian states, serving over 900,000 customers through 79 branches and 114 business correspondent outlets.

In the last fiscal year, Shivalik reported a business portfolio of over 6,000 crore rupee (US$685.74 million) and revenue of 423 crore rupee (US$48.32 million).

Founded in 1997 as Shivalik Mercantile Co-operative Bank, it became the first urban cooperative bank in India to transition to a small finance bank in 2021 under the Reserve Bank of India’s voluntary transition scheme.

🔗 Source: Shivalik Small Finance Bank

🧠 Food for thought

1️⃣ Small finance banks face sector-wide capital pressures amid growth ambitions

Shivalik’s INR 100 crore capital raise comes as the broader small finance bank sector grapples with significant financial headwinds.

Industry data shows SFB net profits dropped 43% year-on-year in the March 2025 quarter, with experts indicating that 3-4 small finance banks may need to raise capital within the next 6-12 months due to asset quality issues1.

The RBI is actively monitoring capital positions across the sector, suggesting some institutions need to strengthen their capital buffers1.

This context makes Shivalik’s successful funding round particularly notable, as it demonstrates investor confidence in the bank’s digital-first strategy and MSME focus despite broader sector challenges.

The participation of SMBC Asia Rising Fund alongside existing investors like Accel and Lightspeed suggests that well-positioned SFBs can still attract quality capital, even as weaker players struggle.

2️⃣ Digital adoption by MSMEs creates significant opportunity for targeted banking services

Shivalik’s focus on digitally-enabled MSME banking aligns with a major shift happening across semi-urban and rural India.