IndusInd to buy Bharat Financial; merger to be over in 10 months

MUMBAI: In what could set a trend in the banking and microfinance sectors, private-sector lender IndusInd Bank announced on Saturday that it would acquire Bharat Financial Inclusion (BFIL, formerly known as SKS Microfinance), the second-largest microfinance firm in the India. 
The move -- the first ever merger of a microfinance firm into a bank in the country -- will help increase IndusInd Bank’s size and reach. IndusInd Bank informed the stock exchanges last month that it had entered exclusive talks with BFIL. 

The bank’s board at its meeting on Saturday approved a composite scheme of arrangement among BFIL, IndusInd Bank and a wholly owned subsidiary of the bank to be incorporated for the purpose of acquisition, the lender said in a regulatory filing to the stock exchanges on Saturday. “This merger is a natural progression of a long-standing relationship and mutual admiration between the two institutions,” stated Romesh Sobti, MD & CEO of IndusInd Bank. 

The merger is subject to the approval of the Reserve Bank of India, the Competition Commission of India, the Securities and Exchange Board of India among others, the statement noted. 
“The composite scheme will be filed with the designated stock exchanges as per the applicable provisions following the receipt of RBI approval,” it added.

The scheme contemplates merger of BFIL with IndusInd and simultaneous transfer of BFIL’s business correspondent operations into a wholly owned subsidiary of the bank, which will be incorporated after receipt of requisite regulatory approvals, according to a joint statement. Upon the scheme becoming effective, BFIL will stand merged into IndusInd and shareholders of BFIL will receive shares of the bank in exchange for shares held as per the approved swap ratio. BFIL has a customer base of 68 lakh and loan portfolio of Rs 7,709 crore. For FY17, the company recorded a profit of Rs 290 crore.