Equitas Small Finance Bank (ESFB) on Saturday mentioned the Reserve Bank of India (RBI) has permitted the Chennai-headquartered bank to apply to the banking regulator for approval of its scheme of amalgamation, that will facilitate the merger of the promoter entity Equitas Holdings (EHL) with the bank.
In accordance with the RBI little finance bank licensing recommendations and the RBI clarification issued on January 1, 2015, a promoter of little finance bank can exit or to cease to be a promoter right after the mandatory initial lock-in period of 5 years, based on the RBI’s regulatory and supervisory comfort and market place regulator Sebi regulations in this regard at that time.
In the case of ESFB, the mentioned initial promoter lock-in expires on September 4, 2021, and the bank had requested RBI if a scheme of amalgamation of the promoter and holding business, EHL, with the bank, resulting in exit of the promoter, could be submitted to RBI for approval, prior to the expiry of the mentioned 5 years.
Both the promoter entity EHL and Equitas Small Finance Bank are listed on the stock exchanges and EHL holds a 81.98 % stake in the bank.
“Accordingly, we would be initiating steps to finalise the scheme of amalgamation, submit to the boards of the bank and EHL for approval and take further action thereafter in accordance with applicable regulations and guidelines,” it mentioned.
ESEB, in a regulatory filing mentioned that RBI in a communication on July 9, 2021, has permitted the bank to apply to RBI, in search of approval for scheme of amalgamation. RBI had also conveyed that any ‘no-objection’, if and when provided on the scheme of amalgamation, would be without having prejudice to the powers of RBI to initiate action, if any, for violation of any licensing recommendations or any terms and situations of license, or any other applicable instruction.