The Reserve Bank of India (RBI) has asked Chennai-headquartered Equitas Holdings Ltd and Bengaluru-headquartered Ujjivan Financial Services Ltd to comply with its small bank licence norms that require them to list banking subsidiaries within three years of start of operations.
At the same time, the promoter companies need to maintain the promoter shareholding in the banks at least 40 per cent, for a period of five years from the date of commencement of business of their SFBs.
Both the small finance banks (SFBs) have been advised to comply with all the requirements of the RBI Guidelines for Licensing of Small Finance Banks dated November 27, 2014.
As per the RBI guidelines, Equitas SFB has to be listed by September 4, 2019 and the promoter has to maintain their shareholding in the bank at least 40 per cent, for a period of five years from its date of commencement of business, i.e., by September 4, 2021.
Ujjivan SFB has to list by January 31, 2020 and the promoter has to maintain its shareholding in the bank at least 40 per cent, for a period of five years from the bank’s date of commencement of business, i.e., until January 31, 2022.
Equitas Holdings Ltd and Ujjivan Financial Services were trading down 19.5 per cent and 15.5 per cent, respectively, at the time of writing this story. Market players say these companies are attracting holding company discount.
Equitas Holdings said it will approach the RBI for an approval to merge with the bank at appropriate time, post the lock-in period of five-years.
Ujjivan Financial Services said subsequent to the listing of its bank and closer to January 2022, the company will approach RBI to consider its merger with the bank.