Sonata Finance Private Ltd. and BSS Microfinance Ltd., two of the bank’s wholly-owned subsidiaries, agreed an amalgamation plan at their respective board meetings, according to a statement from Kotak Mahindra Bank on Monday.
Kotak Mahindra Bank stated in a regulatory filing that Sonata would merge with BSS Microfinance Ltd as a going concern in accordance with the scheme of amalgamation that was authorised on Monday.
According to the statement, the plan would need to be approved by the relevant National Company Law Tribunal (NCLT), other regulatory bodies, and the owners and creditors of Sonata and BSS.
As of March 31, 2024, Sonata and BSS’s combined net value was less than 2% of the bank’s total net worth, according to the statement.
The valuation study from an independent registered valuer supported the arm’s length pricing at which Sonata and BSS Microfinance conducted their transaction, according to the statement.
According to the amalgamation plan, BSS will issue and assign shares to Sonata shareholders in the following ratio: 1,931 shares with a face value of Rs. 10 each in BSS for every 10,000 shares with a face value of Rs. 10 each that they now own in Sonata.
The bank is not a party to the amalgamation plan, which is between its two unlisted companies, according to the statement.
It stated that the bank’s shareholding arrangement would remain unchanged as a result of this combination.
Serving as the bank’s business correspondents, Sonata and BSS offer microfinance, small-ticket unsecured loans, and small-value secured loans to women borrowers and persons on the lender’s behalf.
As of March 31, 2024, Sonata’s net worth was Rs 389 crore, whereas BSS’s was Rs 1,010 crore.
In February 2023, Kotak Mahindra Bank announced that Sonata Finance would be acquired.