lnduslnd Bank said it will give effect to its take over of Bharat Financial Inclusion Limited — formerly known as SKS Microfinance Limited — on July 4.
The private sector bank said it received the approval of National Companies Law Tribunal or NCLT last Thursday.
With the merger, “all the assets and liabilities of Bharat Financial Inclusion shall become assets and liabilities of the Bank wilh effect from the appointed date January l, 2018,” it said.
BFIL, founded in 1997 by Vikram Akula, is considered the pioneer in organized micro-finance industry in India, and credited with giving the industry the recognition and shape that it received over the last decade.
IndusInd, which focuses more on commercial clients rather than retail clients, said it will transfer the ‘business correspondent’ undertaking of the micro-finance company to a wholly-owned subsidiary of the bank called IFIL.
“All the assets and liabilities originated by IFIL will be booked in the Balance Sheet ofthe Bank,” it added.
As part of the deal, the bank will issue and allot to those BFIL shareholders 639 shares of IndusInd Bank for every 1,000 shares held by them.
There is also a provision for preferential allotment of warrants to bank promoters, which will help the promoters maintain their shareholding within the combined entity.
The warrants will be issued at Rs.1,709 each, or Rs
The company said that the promoters will pay 25% of the price of share warrants on the effective date of the scheme.
AII the employees of BFIL will become part of lnduslnd family, the company added.
M R Rao, currently MD and CEO of BFIL, will become the MD & CEO of IFIL.
Pursuant to the effectiveness ofthe Scheme and subject to applicable laws, the name of IFIL shall be changed to “Bharat Financial Inclusion Limited”, it added.
Romesh Sobti, MD & CEO of IndusInd Bank said the move is part of the bank’s “transformational rural strategy” unveiled 3 years ago.
“We are delighted that the talent, capabilities and distribution of BFIL will enable the Bank to play a more meaningful role in rural India, fulfilling our ambition of building financial inclusiveness and sustainability in large swathes of unbanked and underbanked India.”
M.R. Rao, head of BFIL, said the merger will enable his 8.8 million microfinance customers to access savings, deposits and other banking products.