RBI declines Equitas’ request to extend listing deadline for small finance bank
RBI told Equitas that ‘its request for extension of timeline for listing of share of ESFB cannot be acceded to’. In September last year, the Reserve Bank of India (RBI) had barred Bandhan Bank from opening new branches without its approval.Updated: Sep 07, 2019 12:39 IST
The Reserve Bank of India (RBI) has turned down a proposal by Equitas Holdings seeking extension of the listing deadline for its subsidiary Equitas Small Finance Bank (ESFB) and ordered freezing of the small finance bank’s chief executive’s remuneration at the existing level.
According to a regulatory filing that cited an RBI communication to the small finance bank on Friday, the central bank told Equitas that its “request for extension of timeline for listing of share of ESFB cannot be acceded to”. Also, ESFB was not permitted to open new branches and further restrictions may be imposed if the bank fails to make satisfactory progress towards listing of its shares.
“Listing of small finance banks (SFBs) within three years of reaching net worth of Rs 500 crore is mandatory as outlined in the guidelines for licensing of SFBs and as communicated to the bank at the time of granting of ‘in-principle’ approval and granting of license, thereafter,” said the RBI letter.
Earlier this year, the company said it would list the bank without an initial public offering (IPO) by giving its existing shareholders a direct 47% stake in the small finance bank. Since the announcement of this scheme, the stock has lost 8%.
In September last year, the Reserve Bank of India (RBI) had barred Bandhan Bank from opening new branches without its approval and ordered the bank to freeze the salary of its chief executive Chandra Shekhar Ghosh over its failure to meet shareholding norms. According to RBI’s bank licencing guidelines, the bank’s promoter, Bandhan Financial Holdings Ltd, had to reduce its stake from 82% to 40% within three years of commencing business. In January, the Kolkata-based bank announced the acquisition of Gruh Finance Ltd, the affordable housing finance arm of Housing Development Finance Corp. (HDFC), in a share swap deal to lower the promoter holding of Bandhan Financial Holdings in the bank.
First Published: Sep 07, 2019 12:39 IST