RBI approves merger of Fincare Small Finance Bank with AU Small Finance Bank

The Reserve Bank of India approved the first-ever merger of two small finance banks on Monday.

According to the agreement, Fincare Small Finance Bank shareholders would get 579 equity shares in AU Small Finance Bank for every 2,000 shares owned.

The acquisition will provide AU, headquartered in Jaipur, with a foothold in southern India and allow it to enter the microfinance market. Out of the 10 small finance banks licensed by the RBI in 2015, AU and Capital Small Finance Bank had no microfinance legacy.

While 49% of Fincare’s branches are located in south India, AU had only 2%. The merger entity will have 2334 branches.

AU began as a non-bank vehicle financier in 2003 before being converted into a bank in April 2017. Its gross advances totalled Rs.67,624 crore at the end of December.