Fino Payments Bank is keen on initiating the reverse merger with its holding company Fino Paytech Ltd by June when the Reserve Bank of India (RBI) mandated five-year holding period of promoters comes to an end, the company’s Managing Director and Chief Executive Officer Rishi Gupta told Moneycontrol in an exclusive interaction on March 3.
“We have been very clear on this (revere merger) from day 1 during our IPO process and subsequently. We see that there are a lot of benefits that are going to come from the reverse merger of the holding company with the bank. Our regulatory five-year holding period ends on 30th June, 2022,” Gupta said.
“We will start the process around that time for the reverse merger…it should take about a year or so for the entire process to complete; however, I cannot control the timeline as it is under regulatory purview,” Gupta added.
As per RBI norms, since a payments bank cannot undertake lending activities, it is not mandatory for it to have a diversified ownership structure. Therefore, no maximum shareholding limit for promoters is prescribed. However, the promoters of the payments bank should hold at least 40 percent of its paid-up equity capital for the first five years from the commencement of its business.
Fino Payments Bank was launched in 2017 and will complete five years of business by June 30. As of December 31, Fino Paytech held a 75% equity stake in Fino Payments Bank, while public shareholders held the rest.
“If the payments bank is set up as a joint venture with equity partnership with a scheduled commercial bank, the scheduled commercial banks can take equity stake in a payments bank to the extent permitted under Section 19 (2) of the Banking Regulation Act, 1949. When the payments bank reaches the net worth of Rs 500 crore and therefore becomes systemically important, diversified ownership and listing will be mandatory within three years of reaching that net worth. However, payments banks having a net worth of below Rs 500 crore could also get their shares listed voluntarily, subject to fulfillment of the requirements of the capital markets regulator,” RBI said in its Payments Bank Licensing Guidelines.
Earlier, the central bank had allowed reverse mergers of Equitas Small Finance Bank and Ujjivan Small Finance Bank with their respective holding companies.