- Equitas Holdings, the promoter of Equitas Small Finance Bank (SFB) has been permitted to apply for amalgamation of the promoter into itself.
- The licensing guidelines of RBI states that a promoter of SFB can exit or cease to be a promoter after the mandatory initial lock-in period of five years (initial promoter lock-in) which again depends on RBI’s regulatory and supervisory comfort and SEBI regulations at that time.
- Thus in the case of Equitas Small Finance Bank (the bank), their subsidiary for which the company is the promoter, the said initial promoter lock-in for the company would be expiring on September 4, 2021 and accordingly the bank requested the Regulator whether a request for amalgamation of the company with the bank paving way for the promoter to exit can be submitted to them prior to the expiry of the said five years and thus smoothly go for amalgamation after the said five year period expires.
- RBI while permitting the bank to apply for approval of amalgamation has also informed 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.
- In line with the above, Equitas Holdings has confirmed that they would be initiating steps to finalise the scheme of amalgamation, submit to the boards of the company and the bank for approval, and take further action thereafter in accordance with applicable regulations and guidelines.
As per the SFB licensing guidelines of RBI, a promoter of SFB can exit or to cease to be a promoter after the mandatory initial lock-in period of five years.