Shares of Equitas Holdings (EHL) fell 17 percent on Monday after Securities and Exchange Board of India (Sebi) returned the draft scheme for listing its wholly-owned subsidiary Equitas Small Finance Bank (ESFB). The company is advised to re-submit the same after ensuring compliance with the provisions mentioned in the Sebi circular.

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The stock plunged as much as 16.9 percent to Rs 97.30 per share on the BSE. At 9:58 am, the stock was trading 15.88 percent lower at Rs 98.50 as compared to a 0.5 percent or 199 points fall in the BSE Sensex at 37,185.

Equitas will initiate necessary steps to list its shares through Initial Public Offer (IPO) which is expected to be completed by March 2020, the company said in a press filing.

Earlier, the company's request for approval of a scheme of arrangement to list the bank’s shares without an IPO was also returned by the regulator.

"Since Equitas Holdings, the holding company is listed and ESFB is a wholly-owned subsidiary, EHL approached the regulator with a reverse merger proposal. As the regulator did not consent to this proposal, the boards of EHL and ESFB had approved a scheme of arrangement wherein, ESFB would capitalise its free reserves and issue shares of ESFB to the shareholders of EHL without cash consideration, in proportion to their holding in EHL. This scheme of arrangement was subject to approval from SEBI, RBI, NCLT, shareholders, and creditors," the company said in a BSE filing.

Licensing conditions require SFBs, which have a capital base of over Rs 500 crore, to list within three years from the commencement of operations. Equitas Small Finance Bank was consequently to list on or before September 4, 2019.

The RBI last week refused to extend the SFB's listing deadline and barred it from opening new branches. The regulator also froze the pay of MD and CEO Vasudevan PN.

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