RBI Approves AU Small Finance Bank's Acquisition Of Fincare Small Finance Bank

The Reserve Bank of India (RBI) has approved the first-ever merger between two small finance banks. Under the agreement, Fincare Small Finance Bank shareholders will receive 579 equity shares of AU Small Finance Bank for every 2,000 shares held. This acquisition will allow AU, based in Jaipur, to expand its reach into southern India and enter the microfinance business. Out of the 10 small finance banks granted licenses by RBI in 2015, only AU and Capital Small Finance Bank had no microfinance legacy. While Fincare has 49 per cent of its branches in south India, AU has only 2 per cent. The merged entity will have 2,334 branches.

AU came into existence as a non-bank vehicle financier in 2003. In April 2017 it converted to a bank. Its gross advances stood at Rs 67,624 crore at the end of December.