In the first such merger between two such banks, AU Small Finance Bank Ltd announced the acquisition of peer lender Fincare Small Finance Bank. Fincare Small Finance Bank shareholders will receive 579 equity shares of AU Small Finance Bank Ltd for every 2,000 fully paid-up equity shares held under the amalgamation plan.
These banks were established in 2014 as part of an RBI policy to promote financial inclusion by providing small business units, small and marginal farmers, micro and small businesses, and other unorganized sector organizations with a savings and credit outlet. While AU Small Finance Bank launched in April 2017, Disha Microfin (which later merged with Future Financial Services to form Fincare SFB) launched in July 2017.
"The scheme is subject to approval by the respective shareholders of the transferor company (Fincare Small Finance Bank Ltd) and transferee company (AU Small Finance Bank Ltd), as well as the RBI and the Competition Commission of India (CCI)," AU Small Finance Bank Ltd. stated in a regulatory filing late last week. The scheme's start date, according to the statement, would be 1 February 2024, or a date mutually agreed upon by both enterprises and approved by the RBI.
As of 30 September, AU Small Finance Bank had total assets of 95,977 crore and net worth of 11,763 crore, while Fincare Small Finance Bank had total assets of 14,777 crore and net worth of 1,539 crore. While AU SFB shares are traded on public exchanges, the Securities and Exchange Board of India (SEBI) authorized Fincare SFB's request for a share sale last month.
According to the statement, the banks think the merger is founded on leveraging the significant complementarities that exist between both small finance banks, particularly relating to branch network, product offerings, and customer segments.
"This revenue synergy-led and growth-oriented amalgamation, adopting best practises of banking, technology, governance and prudence from both banks, is expected to result in a superior platform benefitting from efficiencies of size and scope over time for all stakeholders such as customers, employees, and shareholders," according to a release issued by the banks. Promoters owned 25.49% of AU Small Finance Bank and 78.58% of Fincare as of September 30.
