The Reserve Bank of India on Monday gave its go-ahead to the first ever merger between two small finance banks.
As per the agreement between the two, shareholders of Fincare Small Finance Bank will receive 579 equity shares of AU Small Finance Bank for every 2,000 shares held.
The acquisition will give Jaipur-headquartered AU a foothold in southern India and pave its entry into microfinance business. Out of the 10 small finance banks that received license in 2015 from RBI, AU and Capital Small Finance Bank had no microfinance legacy.
While 49% of Fincare’s branches are based in south India, AU had merely 2%. The merged merged will have 2334 branches.
AU came into existence as a non-bank vehicle financier in 2003 before its conversion into a bank in April 2017. Its gross advances stood at Rs 67,624 crore at the end of December.