After the Reserve Bank of India (RBI) rejected its proposal, ESAF Financial Holdings, the promoter of ESAF Small Finance Bank, has submitted a modified plan relating to reduction in its shareholding to meet regulatory guidelines.

According to the revised scheme of arrangement, Dia Vikas Capital, one of the identified shareholders, will hold less than 5% in the small finance bank.

The earlier proposal of keeping Dia Vikas Capital’s holding at 12.17% was rejected by the RBI.

In a regulatory filing, ESAF said that the new scheme will also ensure compliance of the RBI’s condition that Dia Vikas Capital’s shareholding in the promoter entity (ESAF Financial Holdings) will be less than 20% on fully diluted basis.

Under the new scheme, restructuring of the holding company’s shareholding will be implemented in two parts. Firstly, exit to identified shareholders will be provided by transferring to them proportionate equity shares of the bank together with a cash component, wherever applicable.

The second part will involve the transfer of such number of the bank’s shares to Dia Vikas Capital as would result in their direct shareholding in ESAF SFB being limited to 4.99%.

After the implementation of the scheme, the promoter entity’s shareholding in ESAF SFB will be reduced to around 45.58% from the current 52.87%.

The bank said it will submit the revised proposal, along with the promoter company’s application, to the banking regulator for consideration.

ESAF Bank managing director K Paul Thomas holds 6.05% in the bank. There will be no change in his holding post the implementation of the proposed change in shareholding.

According to the small finance bank licensing norms, promoters are required to reduce their shareholding to 26% within 12 years of commencing operations. In ESAF’s case, this deadline is by 2032.