NEW DELHI: Shares of Equitas Holdings and Equitas Small Finance Bank (SFB) jumped as much as 9 percent each during early trade on Tuesday after announcing an amalgamation scheme.
The share exchange ratio would result in each shareholder of the transferor company, Equitas Holdings, getting 226 equity shares of the transferee company, Equitas SFB, for every 100 shares held by them in the holding company.
The amalgamation intends to comply with RBI norms on small finance banks, mandating the promoter to reduce the stake in the subsidiary to 40 percent within five years of commencement of operations by the SFB.
As of June 30, 2021, Equitas Holdings held an 81.75 percent stake in Equitas Small Finance Bank (ESFB).
Equitas holdings had a turnover of Rs 177.45 crore and total assets of Rs 1,787 crore as of March 31, 2021. Equitas SFB had a turnover of Rs 3,612.47 crore, while its total assets were worth over Rs 24,715.22 crore.
Sebi-registered merchant banker JM Financial provided a fair opinion on July 26, 2021, on the share exchange ratio for the company's shareholders, they said.
Even as we congratulate El Salvador on successfully passing laws for officially recognizing Bitcoin as legal tender, we’d be remiss not to address the situation back home. Since the controversial banking ban of 2018, issued by the RBI, India has made significant progress in the crypto space, including the repeal of that ban, thanks to a successful #IndiaWantsCrypto campaign. While yes, the rumors surrounding a possible crypto ban have remained largely unsubstantiated, it is becoming obvious that India needs to figure out a way to regulate cryptocurrencies.
Looking at the state of crypto today, there is no doubt that there are many opportunities from an economic stance. Over the last 5 years, we’ve seen cryptocurrencies reach a collective market cap of over $2 trillion. Looking into the future of global economies, estimates from the World Economic Forum (echoed by Niti Aayog) suggest that over 10% of global GDP will be stored on blockchain by 2025. India, in particular, stands to benefit significantly from cryptocurrencies.
This leads to a scenario with potentially two outcomes - either Indian entrepreneurs move abroad to pursue their innovative ideas on the blockchain and crypto sector (called brain drain), or India completely loses out on this inevitable boom and falls behind other countries in terms of tech and economy - both of which are highly unfavorable. Countries like the United States, Japan, Singapore, Thailand, New Zealand, and Israel to name a few, have already come up with regulations (like Japan’s Payment Services Act, amended 2016, and Singapore’s payment services act, 2020) and that promote entrepreneurship while taking precautionary measures to curtail risk on retail investors.
Even without clear regulations, the Indian crypto startup space is buzzing. With over 300 crypto startups generating tens of thousands of jobs and hundreds of millions of dollars as revenue through taxes, the Indian government should see the vast potential that it truly offers. This could very well mean that with favorable regulations, we could see thousands of startups in the crypto space, capturing a major chunk of this 2 trillion market, boosting the Indian economy tremendously.
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