AU Small Finance Bank Ltd has said it will take into its fold peer lender Fincare Small Finance Bank in the first such merger between two such institutions.
“The scheme is subject to approval of the respective shareholders of the transferor company (Fincare Small Finance Bank Ltd) and transferee company (AU Small Finance Bank Ltd), the Reserve Bank of India (RBI) and the Competition Commission of India (CCI),” AU SFB said in a regulatory filing late on Sunday evening.
The statement said that the appointed date of the scheme shall be 1 February 2024, or a date as may be fixed mutually by both companies and approved by RBI.
Post this new development, shareholders of Fincare Small Finance Bank will get 579 equity shares of AU Small Finance Bank Ltd for every 2,000 fully paid-up equity shares they own. Reportedly, AU SFB was the only NBFC that got the licence to start an SFB whereas the remaining successful SFB candidates had a micro finance background. This merger brings a micro finance portfolio into AU SFB’s fold.
Following the transaction, it is expected that existing shareholders of Fincare SFB will maintain approximately 9.9% ownership in AU SFB, according to an official release.
The completion of this transaction is subject to several critical conditions, including approval from the shareholders of both Fincare SFB and AU SFB, regulatory endorsements from the Reserve Bank of India (RBI) and the Competition Commission of India (CCI), and a capital infusion of INR 700 crore by the promoters of Fincare SFB.
AU SFB has confirmed that all employees of Fincare SFB will be included in the AU SFB family after the merger.
Fincare SBF boasts of 54 lakh customers, with a substantial 93.6% of microfinance loans serving rural areas. The bank’s gross advances amount to INR 10,541 crore, with microfinance constituting 54%, micro-business loans at 19%, affordable housing loans at 14%, and gold loans at 10%.
