IndusInd Bank and micro-lender Bharat Inclusion said today that they have got approval from stock exchanges for their proposed merger, paving the way to file the draft scheme of amalgamation.
Private players IndusInd Bank Ltd (IBL) and Bharat Financial Inclusion Ltd (BFIL) said in separate stock exchange filings that NSE and BSE have given them no-objection for the merger following the feedback from the Securities and Exchange Board of India (Sebi).
"The no-objection is based on the draft scheme and other documents submitted by IBL. This is one of the important approvals, which would enable IBL to file the draft scheme of amalgamation, as approved by the boards of directors of both the entities on October 14, 2017, with the National Company Law Tribunal (NCLT), Mumbai," the bank said.
BFIL being the second largest micro-lender in the country, the mid-sized private sector lender is expected to gain access to the rural hinterlands of the country.
The merger, which will add 6.8 million customers to IndusInd Bank's over 10 million, will also help reduce cost of lending for micro borrowers as cheaper deposits can be used to fund their credit needs.
"The biggest gain for us is the rural network. It will also us help reduce cost of funds by 3-4 per cent," IndusInd Bank managing director and chief executive Ramesh Sobti had said in October 2017.
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The no-objection is based on draft scheme and other documents submitted by the company, BFIL said in the filing.
IndusInd Bank had received no-objection from the Reserve Bank on March 13, 2018 for this merger plan. Before this, the Competition Commission of India had given its approval for this proposed merger on December 19, 2017.
The bank will acquire BFIL through an all-stock transaction of BFIL through a composite scheme of arrangement.
As on March 31, 2018, IndusInd Bank has 1,400 branches, and 2,203 ATMs spread across 713 geographical locations of the country.
Catering mainly to the economically weaker sections of the society, BFIL has presence across 16 states covering one lakh villages.
IndusInd Bank's stock closed 0.24 per cent higher at Rs 1,901.65 on BSE, while Bharat Financial Inclusion ended 1.26 per cent up at Rs 1,158.35.