Kotak Mahindra Bank's wholly owned subsidiaries — Sonata Finance Pvt. and BSS Microfinance Ltd. — have approved a merger scheme during their respective board meetings.
According to the merger scheme approved on Monday, Sonata Finance will merge into BSS Microfinance Ltd. as a going concern, the bank disclosed in a regulatory filing.
The merger is subject to approval from the respective shareholders and creditors of Sonata and BSS, as well as the National Company Law Tribunal and other relevant regulatory authorities, the bank added.
As of March 31, 2024, the combined net worth of Sonata and BSS is less than 2% of the bank's net worth. Sonata’s net worth was Rs 389 crore, while BSS's net worth was Rs 1,010 crore. Kotak Mahindra Bank had acquired Sonata Finance in February 2023.
The transaction between Sonata and BSS Microfinance is conducted at an arm's length price, based on a valuation report obtained from an independent registered valuer, the bank mentioned.
As per the merger scheme, BSS will issue and allot 1,931 shares of face value Rs 10 each for every 10,000 shares of face value Rs 10 each held in Sonata.
The scheme of amalgamation is strictly between the two unlisted subsidiaries of the bank, with Kotak Mahindra Bank not being a direct party to the scheme, it clarified.
The bank also stated that the amalgamation will not affect its shareholding pattern.
Both BSS and Sonata function as business correspondents for Kotak Mahindra Bank, offering microfinance, unsecured small loans, and small secured loans to women borrowers and individuals.
(With text inputs from PTI)
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