Chennai, March 21
Equitas Small Finance Bank Ltd (ESFBL) on Monday announced that its Board of Directors has approved a Scheme of Amalgamation between Equitas Holdings Ltd (EHL) and ESFBL and their respective shareholders.
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According to the scheme of arrangement, shareholders of Equitas Holdings will receive 231 fully-paid equity shares of ESFBL for every 100 shares held by them in Equitas Holdings. The consideration for the Scheme will be discharged on an arm’s length basis.
EHL is a non-deposit taking, systemically important core investment company. EHL operates two subsidiaries - ESFBL and Equitas Technologies Pvt Ltd (ETPL), which is engaged in the business of freight aggregation. While ESFBL is engaged in retail banking business with focus on micro finance, commercial vehicle finance, home finance, loan against property finance among others. ESFBL’s turnover as of December, 2021 stood at ₹2,563.44 crore while EHL’s turnover as of September, 2021 stood at ₹10.33 crore.
On the rationale for its amalgamation, ESFBL said, as per the RBI guidelines for Licensing of ‘Small Finance Banks’, the equity shares of ESFBL should be listed on recognised stock exchange(s) in India within a time period of three years from the date the net worth of ESFBL reaches ₹500 crore (i.e., by September 04, 2019, since ESFBL commenced banking operations with a net worth of more than ₹500 crore).
The guidelines also mandate promoters to reduce stake below 40 per cent within a period of five years from the date of commencement of business of the bank (i.e., up to September 04, 2021).
“The directive of the RBI as mentioned under Clause l.a was complied with by ESFBL by way of Initial Public Offering and listing of its shares on the Stock Exchanges with effect from November 2, 2020,” ESFBL said.
“The Scheme seeks to achieve compliance with the directive of the RBI as mentioned under Clause l.b by EHL in a manner that is in the best interests of and without being prejudicial to EHL, ESFBL, their respective shareholders or any other stakeholders,” it added.
The lender added that the Scheme is subject to approval from the RBI, approval/ no-objection confirmation from Stock Exchanges, approval of respective requisite majorities of the public shareholders and creditors of EHL and ESFBL as the NCLT may direct, the sanction of the NCLT and such other statutory and regulatory approvals, permissions and sanctions of regulatory and other authorities, as may be necessary.