A promoter of small finance bank can exit or to cease to be a promoter after the mandatory initial lock-in period of five years.
Equitas Small Finance Bank (ESFB) on Saturday said 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 small finance bank licensing guidelines and the RBI clarification issued on January 1, 2015, a promoter of small finance bank can exit or to cease to be a promoter after the mandatory initial lock-in period of five years, depending on the RBI’s regulatory and supervisory comfort and market regulator Sebi regulations in this regard at that time.
In the case of ESFB, the said 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 company, EHL, with the bank, resulting in exit of the promoter, could be submitted to RBI for approval, prior to the expiry of the said five 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 said.
ESEB, in a regulatory filing said that RBI in a communication on July 9, 2021, has permitted the bank to apply to RBI, seeking approval for scheme of amalgamation. RBI had also conveyed that any ‘no-objection’, if and when given on the scheme of amalgamation, would be without prejudice to the powers of RBI to initiate action, if any, for violation of any licensing guidelines or any terms and conditions of license, or any other applicable instruction.