Mumbai: IndusInd Bank Ltd on Saturday informed the stock exchanges that its board has approved the merger between the bank and microfinance firm Bharat Financial Inclusion Ltd (BFIL). The share exchange ratio for the merger shall be 639 equity shares of the bank for every 1,000 equity shares of BFIL.
IndusInd said that a wholly owned subsidiary will be incorporated for facilitating the merger which will primarily be engaged as business correspondent by the bank.
“The wholly owned subsidiary will, upon incorporation and pursuant to the composite scheme, be inter alia engaged primarily in providing business correspondent services to the bank,” the exchange notification stated.
The merger will allow IndusInd to increase its customer base and deepen its reach in unbanked and underserved regions of the country IndusInd stated that merger will provide “access to business correspondent services to deepen the reach and widen the delivery mechanism of banking service while simultaneously ensuring compliance with RBI’s (Reserve Bank of India) regulatory framework.”
As per RBI’s priority sector lending norms, scheduled commercial banks in India are required to provide at least 40% of their credit to priority sectors which include agriculture, micro enterprises and weaker sections of the society.
The transaction is subject to approvals from the RBI, Securities and Exchange Board of India (Sebi), National Company Law Tribunal (NCLT), Competition Commission of India (CCI) and shareholders among others.
On 11 September, IndusInd and Bharat Financial had entered into an exclusivity agreement to evaluate the merger scheme.