The Reserve Bank of India has allowed Equitas Small Finance Bank to open new branches and lifted a freeze on its chief executive’s salary after the lender went public to meet regulatory norms.
The small finance bank said in a stock-exchange filing that the RBI on Monday lifted the restrictions it had imposed on September 6, 2019.
The RBI had imposed the restrictions after the lender missed the deadline to list its shares on stock exchanges, a key licensing condition. The RBI had also frozen the salary of Equitas SFB’s managing director and CEO, Vasudevan PN.
The Chennai-based lender got listed on the stock exchanges last week and began trading on the BSE at Rs 31 apiece compared with the initial public offering price of Rs 33 per share. On Monday, the bank's shares gained 1.2% to end at Rs 45.25 apiece.
The RBI’s bank licensing norms mandate small finance banks to publicly list within three years from the date of touching a net worth of Rs 500 crore. For Equitas SFB, the due date was September 4, 2019.
Equitas Holdings Ltd, the small finance bank’s parent, had last year sought an extension from the RBI to list the lender. However, the central bank rejected the request.
Equitas SFB had filed a draft prospectus to float its IPO in December last year and received regulatory clearance in early March.
Equitas Holdings’ stake diluted to about 82% after the IPO from 95.49% earlier. As per the RBI’s bank licensing conditions, Equitas Holdings is required to pare its stake in the small finance bank to 40% by September 2021.
Equitas SFB is the largest small finance bank by banking outlets, and second-largest by assets and deposits. It will use the fresh net proceeds from the IPO to augment its Tier-1 capital base to meet its future capital requirements for expansion and meeting regulatory requirements.