Srei Seeks Merger with Bank

Srei, which has more than ?45,000 crore of consolidated assets under management, may explore the possibility of a merger with a bank if the Reserve Bank of India’s (RBI) policy permits. The merger will combine the reach and distribution capabilities of Srei with the bank’s low-cost funds. This will provide a long-term solution to the current liquidity conundrum for NBFCs and will help in expanding the reach of banking services.   According to Hemant Kanoria, Chairman, Srei, the RBI, in consultation with the government, should consider introducing a policy framework to facilitate mergers between NBFCs and banks. Srei has recently consolidated its entire lending business into Srei Equipment Finance Limited and is structurally prepared for a possible merger with a bank. The company plans to grow its equipment finance business and has decided to reduce its infrastructure project financing portfolio gradually in an effort to de-risk its balance sheet. Srei Infrastructure Finance Ltd, the parent of Srei Equipment Finance, now focusses only on fee-based businesses through infrastructure advisory, structuring and syndication solutions, investment banking advisory, insurance broking and fund management. It may be noted that the RBI had permitted the merger of NBFC Capital First and IDFC Bank in 2018. Talks are currently on for a possible merger between Clix Capital and Lakshmi Vilas Bank.