Equitas Holdings Ltd, the promoter of Equitas Small Finance Bank (ESFB), is looking to merge with the bank. At present, Equitas Holdings Ltd has an 81.98 per cent stake in the niche lender.
In a regulatory filing to the bourses on Saturday, Equitas said according to the RBI’s small finance bank licensing norms released on November 27, 2014, and the subsequent clarification in January 2015, a promoter of a small finance bank (SFB) can exit or cease to be a promoter after the mandatory initial lock-in period of five years depending on the central bank’s regulatory and supervisory comfort and the Sebi’s regulations at that time.
“In the case of ESFB, our subsidiary for which the company is the promoter, the said initial promoter lock-in for the company expires on September 4, 2021. Hence, the bank had requested the RBI if a scheme of amalgamation of the company with the bank, resulting in the exit of the promoter, can be submitted to the RBI for approval, prior to the expiry of the said five years,” Equitas said in the filing.
It disclosed that the central bank through its communication on July 9 has permitted the bank to apply, seeking approval for the scheme of amalgamation.
Further, the RBI has also conveyed that any no-objection, if and when given on the proposed scheme, would be without prejudice to its powers to initiate action, if any, for violating any licensing guidelines or any terms and conditions of licence, or any other applicable instruction.
“Accordingly, we would be initiating steps to finalise the scheme of amalgamation, submit to the boards of the company and the bank for approval, and take further action thereafter in accordance with applicable regulations and guidelines,” Equitas Holdings added.
On Friday, shares of ESFB ended with gains of almost 2 per cent at Rs 65.10, while the Equitas Holdings share finished 2.44 per cent higher at Rs 115.35.
ESFB had posted a net profit of Rs 384.22 crore for the year ended March 2021 against Rs 243.63 crore in the previous year. In a recent update on its performance during the first quarter of this financial year, the small finance bank had disclosed a 15 per cent rise in gross advances to Rs 17,839 crore compared with the same period of the previous year.
