Shares of Bandhan Bank and non-banking financial company Gruh Finance fell on Tuesday after both firms announced a merger through a share swap deal but left investors unhappy with the merger ratio. The Bandhan Bank stock lost 4.8% on Tuesday to close at `477.05, while shares of Gruh Finance crashed 16.39% to settle at Rs 256. On Monday, the lenders announced the merger with shareholders of Gruh Finance being entitled to 568 shares of Bandhan Bank for every 1,000 shares held. The transaction will help lower the promoter shareholding of Bandhan Bank from 82.28% to 61% in the merged entity. The promoter stake needs to be lowered to 40% to comply with RBI promoter shareholding guidelines. \u201cDiluting shareholding is just one benefit of the merger, the main purpose is to grow our business in the best way possible,\u201d Chandra Shekhar Ghosh, founder and CEO of Bandhan Bank, said on Monday. Bandhan Bank has a network of 938 branches, dominant in eastern India, while Gruh Finance has 194 branches in 11 states which are more prevalent in the west.\u201cWe have a strong presence in the east while Gruh Finance has a strong network in the west, it is good for both of us,\u201d added Ghosh. Read Also| RBI panel led by Bimal Jalan holds first meeting on reserves, report likely in April The combined balance sheet of amalgamated entity will be `69,300 crore and net worth will be `11,900 crore based on H1FY19 financials. \u201cThe biggest advantage for Bandhan Bank will be a sharp increase in the secured loans share to 32% versus 14% \u2014 (non-micro finance institution) as of H1FY19,\u201d said analysts at Motilal Oswal. Post merger, the share of the unsecured loan book of Bandhan Bank will drop to 57% against 86% as on the quarter ended September 30. \u201cFor our micro-credit loans, around 75% have tenures of less than one year, and for the rest the tenures are between one and two years. And for Gruh Finance, tenure of 83% loans is more than three years. Thus after the merger, the merged entity will have higher amount of long-term loans. It will ensure a more balanced loan book for Bandhan,\u201d said Ghosh. Bandhan Bank currently commands a market capitalisation of `56,902 crore, while Gruh Finance has a market cap of `18,757 crore, as on Tuesday.