HYDERABAD : Days after a rap from RBI, Equitas Small Finance Bank (ESFB) said it will take one of two routes to appease the banking regulator. The options include issuing shares through a scheme of arrangement to shareholders of the bank’s holding entity—Equitas Holdings Ltd—or an IPO by March, 2020, the bank informed analysts on Monday.
Last week, RBI rejected the bank’s request for more time to go public and imposed restrictions on branch expansion besides freezing remuneration of its MD and CEO PN Vasudevan. Following the developments, the listed entity Equitas Holdings fell as much as 10 per cent on BSE on Monday.
Licensing conditions for small finance banks with a capital base of over Rs 500 crore require them to list within three years of commencement of operations. Equitas SFB was to list on or before September, 4.
Since the holding company is listed, Equitas SFB approached the regulator with a reverse merger proposal, which was rejected.
As the regulator did not agree with the proposal, the boards of Equitas Holdings and Equitas SFB approved a scheme whereby the latter would capitalise its free reserves and issue shares to the former’s shareholders without cash consideration in proportion to their holding in EHL. This scheme of arrangement was subject to approval from Sebi, RBI, NCLT, shareholders and creditors.
Equitas SFB applied to Sebi for its approval, and an application will be filed at NCLT for further clearances. “In case the scheme of arrangement does not get approved, ESFB would be taking immediate steps for an IPO and get its shares listed as soon as possible,” it said in a statement to bourses last Saturday.
According to Vasudevan, the scheme of arrangement or the IPO will happen by March 2020.