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IndusInd Bank offers 639 shares for every 1000 of Bharat Finance

Announcement follows an exclusivity agreement signed by both sides around a month ago.

, ET Bureau|
Updated: Oct 14, 2017, 04.45 PM IST
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Indusind Bank approves merger with Bharat Finance Ltd
The IndusInd Bank board has approved the acquisition of Bharat Financial Inclusion, India's second largest micro finance company in a all share deal.

IndusInd Bank will offer 639 shares for every 1000 shares of Bharat Financial in a deal that will be effective from January 1, said that bank in a stock exchange filing.

"(The) combined business (will) create meaningful value for stakeholders through increased scale, wider product diversification, lower funding cost, stronger balance sheer and ability to drive synergies across revenue opportunities, operating efficiencies and underwriting efficiencies," the bank said in the notice.

The scheme of the merger also includes a preferential allotment of shares to the promoters of the bank through warrants.

Saturday's announcement follows an exclusivity agreement signed by both sides around a month ago.

Bharat Financial formerly SKS Microfinance, has gross loan portfolio of Rs 9631 crore as on June.

It serves 52 lakh customers, through 1275 branches across 324 districts. It has 14666 employees all of which will be absorbed by IndusInd Bank.IndusInd Bank.

IndusInd Bank has also steadily increased its exposure to microfinance companies in the last few years. Such loans now make about 2.18% of the bank's loan book.

In a results press conference on Thursday bank MD Romesh Sobti said the bank has a strong faith in the micro finance business.

"Inorganic or organic does not make a difference. We have stuck around even if many people have run away. We have shown faith in the industry. Now after some turbulence we are back to normal levels of disbursements. This is a livelihood creating business and we like livelihood creating businesses," Sobti said while explaining the rationale for the deal.

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