Equitas dips 10% as RBI denies listing extension for its small finance bank

Shares of Equitas Holding crashed 10 per cent to trade at Rs 104.4 apiece on the BSE on Monday, after Reserve Bank of India (RBI) denied to extend deadline for its subsidiary Equitas Small Finance Bank (ESFB), to get listed at the bourses. 

"As the regulator did not consent to this (extension of the deaadline) proposal, the Boards of EHL and ESFB had approved a Scheme of Arrangement wherein, ESFB would capitalize its free reserves and issue shares of ESFB to the shareholders of EHL without cash consideration, in proportion to their holding in EHL. This Scheme of Arrangement was subject to approval from SEBI, RBI, NCLT, Shareholders and creditors," Equitas Holdings (EHL) said in an exchange filing. READ FILING HERE

As per the rules of the RBI, small finance banks, having a capital base of over Rs 500 crore, have to list within three years from commencement of operations. ESFB, therefore, had to get listed on or before September 4, 2019. Subsequent to the deadline being lapsed, an extension was requested, which was denied by the central bank. EHL had also approached SEBI with a reverse merger proposal but the regulator turned down the request. 

EHL is the promoter and holding company of ESFB and is a listed company. 

"ESFB had applied to SEBI for their approval of this Scheme. Post such an approval, application to NCLT is required to be made for the remaining approvals. In case the Scheme of Arrangement does not get approved, ESFB would be taking immediate steps for an IPO and get its shares listed as soon as possible," the company added.

Besides declining an extension, the RBI has curtailed ESFB from opening new branches, with immediate effect, till further advice. The RBI, further said, it has also frozon the remuneration of the MD & CEO of ESFB, at the existing level, till further advice.

"The RBI can put further restrictions if the bank fails to make satisfactory progress towards listing of its shares," the central bank added in its statement. READ FULL STATEMENT HERE

At 9:45 am, EHL was trading 6 per cent lower at Rs 109.05 per share, as against a 0.3 per cent decline in the benchmark S&P BSE Sensex. A total of 5.38 million shares have changed hands on the NSE and BSE till the time of writing of this report.