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Coronavirus pandemic | RBI may ease listing deadline for small finance banks: Report

India Ratings pointed out that SFBs will face asset quality issues in the short-term due to COVID-19 related disruptions

April 21, 2020 / 03:12 PM IST

The Reserve Bank of India (RBI) may relax listing deadline for small finance banks (SFBs) amid the novel coronavirus, or COVID-19, pandemic, experts told the Business Standard.

On the possibility that the COVID-19 ripple effect on the economy could be felt for a few months, RBI may extend the deadline for listing by such banks by a couple of quarters, experts told the paper.

Moneycontrol could not independently verify the report.

As per current license conditions by the regulator, SFBs are required to be listed within three years of reaching Rs 500 crore of net worth.

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Six SBFs had planned IPOs worth a cumulative Rs 6,000 crore, including offer for sale (OFS) for present promoters, over the next six to nine months based on possible valuation gains.

These are Equitas (which began operations in September 2016), Utkarsh (January 2017), Suryoday (January 2017), Fincare (July 2017), ESAF (March 2017) and Jana (March 2018). They will now have to reconsider based on financial conditions once the countrywide lockdown lifts and taking into account the economic impact of COVID-19.

An India Ratings (Ind-Ra) report pointed out that SFBs will face asset quality issues in the short-term due to COVID-19 related disruptions.

Ind-Ra Director Jindal Haria also pointed out that managing deposits might also become challenging as many SFBs have exposures to microfinance institutions (MFIs), and have granted a two-month moratorium period to MSMEs and individuals.

“They do have access to refinance institutions and as banks to the additional tools to raise non-deposit liabilities to manage their asset-liability management,” Haria noted.

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first published: Apr 21, 2020 03:12 pm