The move follows RBI’s refusal to let EHL carry out a reverse merger with ESFB in order to fulfill the requirement of listing by September 4.
Equitas Holdings (EHL) has come up with a scheme of arrangement for subsidiary Equitas Small Finance Bank (ESFB) wherein the latter will capitalise its free reserves and issue shares of ESFB to the shareholders of EHL without cash consideration, in proportion to their holding in EHL.
The move follows the Reserve Bank of India’s (RBI’s) refusal to let EHL carry out a reverse merger with ESFB in order to fulfill the requirement of listing by September 4. EHL is a listed company and it holds 100% shares of ESFB.
Licensing conditions for small finance banks (SFBs) require those among them which have a capital base of over Rs 500 crore to list within three years from commencement of operations. ESFB was consequently required to list on or before September 4, 2019.
In a communication to the stock exchanges, EHL said the new scheme of arrangement is subject to approval from the Sebi, RBI, National Company Law Tribunal (NCLT), shareholders and creditors.
“ESFB had applied to Sebi for their approval of this scheme. Post such an approval, application to NCLT is required to be made for the remaining approvals. 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,” EHL said in the notification.
On Friday, FE had reported that the RBI has refused to extend ESFB’s deadline for listing. The banking regulator said the bank cannot open new branches till further orders as it is in violation of listing norms.
Remunerations of MD and CEO of the bank stand frozen at existing levels. The RBI’s response came in as reply to EHL’s request to extend the deadline for listing ESFB. “Your request for extension of timeline for listing of share of ESFB cannot be acceded to,” said RBI in a letter.