Equitas steps up procedures to get small finance bank licence

Has started reducing FII shares, merging subsidiaries and establishing IT systems to comply with RBI regulations

Financial service provider Equitas Holdings, which is issuing Initial Public Offer (IPO) on April 5, has said it is in the process of completing procedures to get final licence for small finance bank from Reserve Bank of India, the banking regulator.

Speaking to reporters here in Chennai, P N Vasudevan, managing director, Equitas Holdings Ltd has said that the company is going through the procedures to get the final license and will start the operations within April 2017, within the 18 month period stipulated by the Reserve Bank of India (RBI) to start SFBs.

The company has to complete a few procedures, of which one is to reduce the shareholding of Foreign Institutional Investors (FIIs) to below 49%, another is the merge the three entities under the holding company into one and to bring IT system in place.

With the IPO, the shareholding of FIIs would come down to around 35%. The company has also received creditors' approval for the merger and it has been filed with the Madras High Court, where its petition for merger of the entities is pending and which is expected to come in one or two months. The merger scheme has been approved by the RBI and by the National Housing Bank (NHB) through letters in January, this year.

Setting up of the IT system in place for the SFB is going on and it has to be certified before getting the final license from RBI.

"According to RBI decision, we have 18 months, which ends by April, 2017, to start operations of the SFB. We will start within the stipulated timeframe," he added refusing to divulge a time line for the launch.

The company has around 539 branches, and not all might be transferred as SFB branches, he said. It currently has three entities - Equitas MicroFinance, Equitas Finance and Equitas Housing Finance.

He added that the Anchor book of around Rs 652 crore would be open on April 4, 2016, a day before the issue opening on April 5, 2016. The company is planning to raise around Rs 2,176, of which Rs 720 crore would be fresh capital while the rest would be through sales of shares by the existing investors, including International Finance Corporation (IFC), FMO, Aaviskaar Goodwell India Microfinance Development Company, Aquarius Investments Ltd, Helion Venture Partners and others.

Out of the Rs 720 crore raised from fresh equity, Rs 616 crore would be invested in the subsidiary businesses and the rest would be used for procedural costs and others, he added.

The company is one among the 10 applicants who has received in principle approval from the banking regulator to set up small finance banks under the "Guidelines for Licensing of Small Finance Banks in the private sector" (Guidelines) issued on November 27, 2014.