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DSP Investment Managers To Acquire 9.99% Stake in Equitas Small Finance Bank

Following approval from the Reserve Bank of India, DSP Investment Managers Private Ltd (DSPIM) will purchase a roughly 10% interest in Equitas Small Finance Bank for an undisclosed amount

Following approval from the Reserve Bank of India, DSP Investment Managers Private Ltd (DSPIM) will purchase a roughly 10% interest in Equitas Small Finance Bank for an undisclosed amount. Equitas Small Finance Bank (SFB) shares rose more than 5% to 57 apiece on the Bombay Stock Exchange (BSE) after the firm announced that it has got the Reserve Bank of India’s (RBI) approval for the acquisition of a 9.99% stake in the company by DSP Investment Managers Private Ltd.

In a regulatory filing on the 17th of November, Equitas SFB stated that the bank was notified by the Reserve Bank of India (RBI) on November 16, 2022, stating that it had given DSP Investment Managers Private Ltd (DSPIM) permission to purchase up to 9.99 percent of bank’s paid-up equity capital through the schemes of DSP Mutual Fund (DSPMF).

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In order to comply with the promoter holding requirements in ESFB, the Board of Equitas SFB adopted a new merger plan in March between Equitas SFB and the promoter/holdco, Equitas Holdings Ltd (both listed firms).

The planned purchase of shares by DSPIM would follow the implementation of the Scheme of Amalgamation between Equitas Holdings Limited and the Bank. In order to comply with the promoter holding requirements in ESFB, the Board of Equitas SFB adopted a new merger plan in March between Equitas SFB and the promoter/holdco, Equitas Holdings Ltd (both listed firms).

The merger of Equitas Holdings and Equitas Small Finance Bank (SFB) received approval from Board in May of this year. The merger is intended to comply with the RBI’s licence requirements to reduce the holding company’s shareholding to 40% in five years after the bank’s commencement for business, which was done by September 4, 2021.

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As of September 30, 2022, Equitas Holdings owned 74.50 percent of its SFB subsidiary and its shares increased in value by 5.53% to Rs 53.40 per share on the BSE

As of September 30, 2022, Equitas Holdings owned 74.50 percent of its SFB subsidiary. Equitas SFB shares increased in value by 5.53% to Rs 53.40 per share on the BSE. The share price of Equitas Holdings increased by 5.66% to Rs 105.40.

Notably, the holdco (holding company) structure had been created on purpose to meet Reserve Bank of India (RBI) rules for promoter stakes in Equitas SFB. Furthermore, the RBI allowed promoters the option of leaving following the five-year lock-in period that followed the small finance bank’s creation. The holdco will cease to exist following the merger, and ESFB will possess 100% of the public shares.

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Due to an increase in loan disbursals, Equitas SFB saw a more than two-fold increase in net profit for the quarter ended in September 2022, at 116 crore, compared to Rs 41 crore the last year.

Due to an increase in loan disbursals, Equitas SFB saw a more than two-fold increase in net profit for the quarter ended in September 2022, at 116 crore, compared to Rs 41 crore the last year. The net interest income (NII) increased to Rs 610 crore from Rs 484 crore in the same period of FY22, while the net interest margin (NIM) stand at 9%.

The lender stated that its disbursements during the second quarter of FY23 increased by 22% compared to last year to 3,845 crore. Advances were Rs 22,779 crores in Q2 FY23, up 20% from the same quarter last year. Gross Non-Performing Assets (NPAs) decreased from 3.95% in the last quarter to 3.82% in the first quarter of FY23.

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