Equitas, Ujjivan Financial shares plunge up to 28% after RBI’s directive on small finance banks listing

Shares of Equitas Holdings plunged more than 28% in the early morning trade on Monday to hit the day’s low of Rs 92.35, while shares of Ujjivan Financial Services tanked over 20.5% to touch an intra-day low of Rs 177.35, after the Reserve Bank of India’s letter to the entities on listing of small finance banks. RBI has directed the two companies that the promoters of small finance banks must list their banking units separately within three years of operations. This is in accordance with the central bank’s licensing requirements for small finance banks.

As a result of the directive, both Ujjivan Financial Services and Equitas Holdings need to list their small finance banks by the time they complete three years of operations, which is by January 2020 for Ujjivan Financial and September 2019 for Equitas Holdings. Meanwhile, both the lenders – Ujjivan and Equitas – informed the stock exchanges told exchanges that the RBI had reiterated this rule along with maintaining promoter shareholding at 40% for a five-year period.

“The Bank and the Company are committed to considering all appropriate measures to ensure the timely compliance of the above directives of the RBI, while ensuring the long-term interests of the shareholders of the Company are maintained,” Ujjivan Financial Services said in filing on BSE.

On the other hand, Equitas Holdings also said that boards of the company and Equitas Small Finance Bank would consider further steps to get the shares of ESFBL listed within the prescribed timelines and also approach RBI for an approval to merge with the bank at appropriate time, post the lock-in period, in their board meetings scheduled on November 2, 2018, and November 1, 2018, respectively.

Shares of Ujiivan Financial were trading Rs 182.50, down 17.01% at 11 AM (IST), after touching an intra-day low of Rs 177.70 and high of 200.00, from their previous close. Besides, Equitas shares were trading at Rs 103.00, a decline of 20.28% from the previous close of Rs 129.20 on BSE.

Meanwhile, Sensex opened flat on Friday morning and soon plunged by about 180 points led by sell-offs across financial stock. The 30-share Sensex opened above 33,750 level, while the broader Nifty 50 plunged below the psychological 10,100-mark in the opening trade. Sensex, however, regained more than 330 points at around 11 AM from day’s lows of 33,332.10. The recovery in the index was led by shares of Tata Motors, Tata Steel, Bhati Airtel and Reliance Industries gaining up to 3% in the late morning trade.

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