The Competition Commission of India (CCI) has given its nod to the merger of Fincare Small Finance Bank Limited (Fincare) and AU Small Finance Bank Limited (AU), creating one of the largest small finance banks in the country. The merger, which was announced in October 2023, is expected to be completed by March 2024, subject to the approval of the Reserve Bank of India (RBI).
According to the proposed combination, Fincare will be amalgamated into and with AU, with AU being the surviving entity. The shareholders of Fincare will be allotted shares in the merged entity, post the merger. The swap ratio for the merger is 1:1.05, which means that for every 100 shares of Fincare, the shareholders will get 105 shares of AU.
The merged entity will have a combined customer base of over 20 million, a network of more than 1,500 branches, and a loan book of over Rs 50,000 crore. The merger will also bring synergies in terms of product offerings, geographical reach, operational efficiency and digital capabilities.
The CCI, in its letter dated January 23, 2024, said that it had considered and approved the proposed combination involving amalgamation of Fincare into and with AU in its meeting held on the same day. The CCI noted that the proposed combination is not likely to have an appreciable adverse effect on competition in India.
The CCI approval is a major milestone for the merger, which has already received the approval of the boards and shareholders of both the banks. The merger is now awaiting the final approval of the RBI, which is expected to be granted soon.