The Reserve Bank of India (RBI) has approved a merger that will reshape the landscape of small finance banks in India. This merger, set to take effect on April 1, 2024, involves the consolidation of two banks to enhance operational efficiencies and broaden the customer base. Shareholders of the merged bank will receive shares of the acquiring bank based on an approved share swap ratio. Which banks are involved in this merger?

The correct answer is Ujjivan SFB and Equitas SFB.

In News

• The Reserve Bank of India (RBI) has approved the merger of Ujjivan Small Finance Bank (SFB) and Equitas Small Finance Bank (SFB), set to take effect on April 1, 2024.

Key Points

• The merger aims to create a stronger and more efficient small finance bank, benefiting from enhanced operational efficiencies and an expanded customer base.
• Shareholders of the bank being merged will receive shares of the acquiring bank based on an approved share swap ratio, providing them with a stake in the new entity.
• This merger is expected to provide the combined entity with better financial strength, operational scalability, and a broader range of services for customers.
• It highlights the consolidation trend in the small finance banking sector, aimed at improving competition and enhancing the quality of financial services for the underserved sectors.

Additional Information

• Small Finance Banks (SFBs)
  • Small Finance Banks are institutions that provide basic banking services with a focus on small businesses, micro-enterprises, and low-income individuals.
• Share Swap Ratio
  • In mergers, the share swap ratio is the rate at which the shareholders of the merging companies receive shares of the acquiring company based on their existing holdings.
• Reserve Bank of India (RBI)
  • The RBI is the central banking institution responsible for regulating and overseeing the banking system in India, including approval of mergers in the banking sector.