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A clutch of small finance banks, which are preparing to launch their initial public offerings (IPOs), are hoping to get an extension in their listing deadline.
Sources close to the development said that at least some small finance banks have approached the Reserve Bank of India on the issue.
“The Covid-19 pandemic and lockdown disrupted a lot of plans, and almost everyone has been working for the last few months to get business back on track. SFBs are working on their listing plans, but are hoping that the RBI may extend the deadline for them,” said a person familiar with the development.
RBI guidelines
The Reserve Bank of India (RBI) guidelines require small finance banks to list within three years of their net worth reaching ₹500 crore.
Of the 10 entities that had started SFB operations, only three, including AU,Ujjivan and Equitas, have been listed so far.
Others like Suryoday SFB, Jana SFB and ESAF SFB are working on their IPO plans.
Suryoday SFB recently received SEBI approval to float an IPO.
Similarly, Ajay Kanwal, Managing Director and CEO, Jana SFB, had recently said that the lender was working on plans to list. The IPO could be targeted for March 2021.
“The banks, which have fleshed out their IPO plans, are likely to go ahead with it, while others are hoping to get an extension,” said another source, pointing out that this is a regulatory compliance that must be met by all small finance banks.
Another expert noted that the recent report of the Internal Working Group of the Reserve Bank of India to Review Extant Ownership Guidelines and Corporate Structure for Indian Private Sector Banks had also highlighted the issue.
IWG recommendations
The IWG, in its recommendations, had said that SFBs and payments banks may be listed within ‘six years from the date of reaching net worth equivalent to prevalent entry capital requirement prescribed for universal banks’ or ‘10 years from the date of commencement of operations’, whichever is earlier.
“The RBI has sought comments of stakeholders and members of the public by January 15, and it is hoped that they would review the deadlines,” said the source.
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