RBI declines ESFB’s plea for new branches, freezes CEO’s remuneration at existing level
The Reserve Bank of India (RBI) on Friday turned down a proposal by Equitas Holdings to open new branches for its subsidiary Equitas Small Finance Bank (ESFB). The Central Bank also ordered freezing of the small finance bank's chief executive’s remuneration at the existing level. This was after Equitas Holdings, which holds the shares of Equitas Bank failed to meet the deadline for getting its shares listed.
According to a regulatory filing that cited an RBI communication to the small finance bank on Friday, the central bank told Equitas that its “request for extension of timeline for listing of the share of ESFB cannot be acceded to". Also, ESFB was not permitted to open new branches and further restrictions may be imposed if the bank fails to make satisfactory progress towards the listing of its shares. The RBI had put a pre-condition while giving EB a final licence from the RBI in July 2016 that it would get itself listed within three years.
A letter by the RBI in this regard read, “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 also turned down EB’s request for acceding listing of shares and warned that it may impose further restrictions if the EB still fails to make satisfactory progress towards listing its shares.