September 14, 2017

IndusInd Bank enters into exclusivity agreement with BFIL

Induslnd bank

Private lender IndusInd Bank and Bharat Financial Inclusion Ltd (BFIL) have entered into an exclusivity agreement with to evaluate merger between the two companies.

“The company has entered into an exclusivity agreement with IndusInd Bank for agreeing to have an exclusive discussion with IndusInd Bank about the proposed potential strategic combination by way of amalgamation through a scheme of arrangement, or any other suitable structure,” Bharat Financial Inclusion said in a regulatory filing.

“The exclusivity agreement provides for a mutually agreed exclusivity period for due diligence and discussions to evaluate a potential strategic combination between the company and BFIL,” IndusInd Bank said.

Neither of them elaborated on the duration of the exclusivity period. IndusInd Bank said it is in talks with multiple entities for business expansion, including the widely speculated merger of Bharat Financial Inclusion, earlier this March.

In the statement issued to bourses that IndusInd and BFIL (formerly SKS Microfinance) are probable to announce a merger in an all-stock deal, the bank said the management has been permitted to evaluate strategic opportunities for business expansion. There have been a heap of deals between private sector lenders and MFIs as the former seek expansion of their network in the hinterland which will help them meet the priority sector lending mandates and offer cross—sell opportunities.

BFIL already has a business correspondent relationship with IndusInd in Karnataka for many years now. The then SKS faced difficulties four years ago as it first underwent a repayment crisis in its largest market of Andhra Pradesh and a corporate battle over leadership which ended with the exit of founder Vikram Akula.

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