RBI approves merger of AU Small Finance Bank and Fincare SFB, know details
Bank Merger AU Small Finance Bank and Fincare Small Finance Bank submitted a proposal to RBI in October 2023 last year for a bank merger. Now the Reserve Bank of India (RBI) has approved this merger. This merger will come into effect from April 1, 2024. In such a situation, the stocks of these two banks will also be merged.
The Reserve Bank of India (RBI) has approved the all-stock merger of AU Small Finance Bank and Fincare Small Finance Bank. This merger will involve an all-stock merger worth US$530 million.
RBI has issued a press release for this. According to this press release, this merger will be effective from April 1, 2024. This means that all branches of Fincare SFB will function as branches of AU SFB from April 1.
The central bank said the merger plan is one of the first such steps in the relatively new SFB sector. The Bank has been approved to exercise of the powers contained in sub-section (4) of Section 44A of the Banking Regulation Act 1949.
The merger between the two banks was announced in October of 2023 of last year. The bank wants RBI approval by the end of February.
According to the agreement, for every 2,000 shares that unlisted Fincare shareholders own, they will receive 579 shares of the listed AU SFB.
Following the merger, FSFB shareholders will own 9.9% of AUSFB. Following their approval by the RBI, the FSFB promoters also committed to injecting an additional Rs 700 crore of capital into the company. Investors in AUSFB were uneasy when the bank announced this deal.
Following this deal, Fincare had previously stated that it might conduct an IPO. Following this merger, AUSFB will have more than 15,000 workers overall, 10,000 of whom work in the MFI vertical.
