In a groundbreaking move, AU Small Finance Bank Ltd has officially announced its merger with Fincare Small Finance Bank, marking a significant milestone in the financial sector. This merger, the first of its kind, sets the stage for a remarkable transformation in the banking industry.
Under this amalgamation plan, shareholders of Fincare Small Finance Bank will receive 579 equity shares of AU Small Finance Bank Ltd for every 2,000 fully paid-up equity shares they currently hold. This strategic move is designed to create a synergy that benefits all stakeholders involved.
Both AU Small Finance Bank and Fincare Small Finance Bank were established with the primary objective of promoting financial inclusion. They provide accessible savings options and offer credit to small businesses, marginal farmers, micro and small industries, and other unorganized sector entities. These institutions were established in line with the Reserve Bank of India’s (RBI) policy in 2014, with AU Small Finance Bank commencing operations in April 2017, and Fincare Small Finance Bank, originally known as Disha Microfin before merging with Future Financial Services, starting operations in July 2017.
The success of this merger is contingent upon approval from the shareholders of both Fincare Small Finance Bank Ltd and AU Small Finance Bank Ltd, as well as regulatory bodies such as the Reserve Bank of India (RBI) and the Competition Commission of India (CCI). A regulatory filing by AU Small Finance Bank, released late on Sunday, outlined the necessary steps for the merger’s completion.
The appointed date for this scheme is set for February 1, 2024, or any other date mutually agreed upon by both companies and approved by the RBI.
As of September 30, AU Small Finance Bank boasted total assets worth ₹95,977 crore and a net worth of ₹11,763 crore, while Fincare Small Finance Bank reported total assets of ₹14,777 crore and a net worth of ₹1,539 crore. While AU Small Finance Bank’s shares are already listed on stock exchanges, Fincare Small Finance Bank recently received approval from the Securities and Exchange Board of India (SEBI) for its share sale plan.
The banks believe that this consolidation is founded on significant complementarities between the two small finance banks, especially in terms of branch network, product offerings, and customer segments. This merger, driven by revenue synergy, growth-oriented strategies, and a commitment to best practices in banking, technology, governance, and prudence, is expected to create a superior platform benefiting all stakeholders, including customers, employees, and shareholders over time.
As of September 30, promoters held 25.49% of AU Small Finance Bank, while Fincare Small Finance Bank had 78.58% promoter ownership as of March 31.
About AU Small Finance Bank:
AU Small Finance Bank, India’s foremost small finance institution, originated in 1996 under the name AU Financiers (India) Limited, initially specializing in vehicle finance. Its transformation into a small finance bank occurred on April 19, 2017. With a vast network exceeding 900 banking touchpoints nationwide, AU Small Finance Bank offers a comprehensive range of banking products and services, encompassing high-yield savings accounts, fixed deposits, debit and credit cards, retail loans, insurance solutions, and investment opportunities.
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