Decoding IndusInd Bank and Bharat Financial Inclusion merger deal

India Infoline News Service | Mumbai | September 12, 2017 10:10 IST

IndusInd Bank and Bharat Financial Inclusion are exploring merger opportunities signalling further consolidation in the private banking space.

IndusInd Bank and Bharat Financial Inclusion are exploring merger opportunities signalling further consolidation in the private banking space. This has put an end to months of speculation of a deal between the two entities.
 
The transaction, if happens via a share swap is likely to create a combined entity with assets of about Rs 1.26 lakh crore and a customer base of about 1.7 crore. IndusInd Bank will get an opportunity to tap the rural market for deposits while also allowing the bank to expand the customer base for its loan products.
 
An additional benefit could be of an amplified proportion of priority sector loans (PSL). IndusInd could use the excess PSL portfolio to earn fee via the sale of PSL certificates, which is now permitted.
 
Bharat Financial Inclusion has cleaned up its books in the past few quarters, therefore IndusInd would have good quality assets, believe market experts. Swap ratio for the said agreement is yet to be announced.
 
Bharat Financial Inclusion IndusInd Bank Merged entity
MFI Book Rs 9,631 crore Rs 3,000 crore Rs 12,631 crore
Loan Book Rs 9,631 crore Rs 1,16,407 crore Rs 1,26,038 crore
MFI Book share in loan book 100% 2.2% 10%

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