Equitas Small Finance Bank has been allowed by the Reserve Bank of India (RBI) to apply for amalgamation of the promoter entity into itself.

Equitas Holding Ltd, the promoter entity, holds 82% stake in Equitas Small Finance Bank. Both Equitas Holding Ltd and Equitas Small Finance Bank are listed on the stock exchanges.

As per the RBI guidelines, a promoter of Small Finance Bank (SFB) can exit or to cease to be a promoter after the mandatory initial lock-in period of five years (initial promoter lock-in) depending on RBI's regulatory and supervisory comfort and SEBI regulations at that time.

"In case of Equitas Small Finance Bank, our subsidiary for which the company is the promoter, the said initial promoter lock-in for the company expires on September 4, 2021," Equitas Holding Ltd said in a regulatory filing.

The bank had thus requested RBI if a scheme of amalgamation of the company with the bank, resulting in exit of the promoter, can be submitted for approval, prior to the expiry of the said five years, to take effect after the initial promoter lock-in expires, it said.

"RBI vide its communication dated July 9, 2021, to the bank has permitted the bank to apply to RBI seeking approval for scheme of amalgamation," Equitas Holdings said.

RBI has also conveyed that any ''no objection'', if and when given on the scheme of amalgamation, would be without prejudice to the powers of RBI to initiate action if licensing guidelines are violated.

"Accordingly, we would be initiating steps to finalise the scheme of amalgamation, submit to the boards of the company and the bank for approval, and take further action thereafter in accordance with applicable regulations and guidelines," Equitas Holdings said.