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RBI rejects Equitas' request to extend listing deadline; freezes CEO's salary, bars it from opening new branches

BusinessToday.In     September 7, 2019

The Reserve Bank of India has taken strict action against Equitas Small Finance Bank (ESFB) for not getting its shares listed on time. As per the RBI order, Equitas Small Finance Bank can no longer open new branches, and the RBI has also frozen the salary of the bank chief executive officer (CEO). The RBI, in a communication to the bank, said despite reminders through various correspondences, it failed to meet the norms laid out for small finance banks in the country.

The small finance bank was given three years' of time to get itself listed after it received the licence from the apex bank in July 2016. The RBI action comes after it declined ESFB's request for an extension of the deadline.

As per the RBI norms for licencing of SFBs, after a small finance bank reaches the net worth of Rs 500 crore, it it mandatory to list the bank in three years. "Listing of SFBs within three years of reaching a net worth of Rs 500 crore is mandatory as outlined in the guidelines and as communicated at the time of in-principle approval," the RBI letter said, ESFB's holding company told the stock exchanges.

The central bank has said it will impose further restrictions on ESFB if it fails to list its shares on time. The ESFB's holding company, Equitas Holdings, hold its shares. After getting listed on the stock exchanges in 2016, the company promoters had indicated to list the small finance bank but it has not been done so far. Meanwhile, Equitas Holdings has called a conference with investors and analysts on September 9 to discuss implications of the RBI communication for ESFB.

In June this year, the RBI had fined Kotak Mahindra Bank Ltd Rs 2 crore for not furnishing details about the shareholdings of its majority stakeholders and its plans for complying with stake dilution norms. "RBI concluded that the bank had failed to comply with the directions issued by RBI and decided to impose a monetary penalty on the bank," the Reserve Bank of India had said in a statement.

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