Mumbai, Jan 8 (IANS): Bandhan Bank on Monday said its board of directors has approved merger of GRUH Finance Limited into the lender.

The merger would help the Kolkata-headquartered lender to achieve product and geographic diversification while improving penetration in its core customer segment.

On the other hand, the housing finance company would get access to a wider distribution network, a larger customer base and low cost deposit base of the bank.

The merger would be subject to regulatory and shareholder approvals.

"This merger would bring together two companies and teams that have a common mission of serving the under banked population of the country. We are excited about this merger as it gives us the opportunity to build a unique pan-India affordable housing franchise," the bank's MD and CEO Chandra Shekhar Ghosh said.

Post-merger, the shareholding of Bandhan Financial Holdings Limited (NOFHC) in the bank would reduce from 82.3 per cent to 61 per cent.

"The share exchange ratio accepted by the boards of two entities is 568 equity shares of face value of Rs 10 each of Bandhan Bank to be issued for every 1,000 equity shares of face value of Rs 2 each of GRUH," a statement said.

"Our strong presence in the west, combined with their deep penetration in the east and north-eastern regions of the country will enable the combined entity to better serve the financial needs of under-banked and rural customers," the housing finance company's MD and CEO Sudhin Choksey said.

Post-merger, based on pro-forma financials as of September 30, 2018, Bandhan Bank would have outstanding loan book AUM of Rs 50,036 crore. Loan book would consist of micro loans (58 per cent), retail home loans (28 per cent) and other loans (14 per cent).

Combined distribution network would comprise 4,182 banking outlets and 476 ATMs across 34 states and union territories of India. Merged entity would have more than 31,000 employees serving about 1.5 crore customers across the country.