IDFC can now exit as promoter of IDFC First Bank

The Reserve Bank of India has allowed IDFC Limited to exit IDFC First Bank as promoter. It comes after the 5-year lock-in period expired.

In a regulatory filing, IDFC said, “We would like to inform you that the Reserve Bank of India (“RBI”) has, vide its letter No. DOR..HOL.No.SUO‐75590/16.01.146/2021‐22 dated July 20, 2021, clarified that after the expiry of lock‐in period of 5 years, IDFC Limited can exit as the promoter of IDFC FIRST Bank Limited.”

IDFC was granted a banking licence in 2014. The RBI mandate asked IDFC to create a non-operative financial holding company to house the bank and other financial services of the parent company, ensuring the banking business was completely insulated from other activities of the firm.

The parent company was asked to hold a minimum 40 per cent stake in the bank, locked in for 5 years.

The bank commenced operations in October 2015. In 2018, IDFC Bank and Capital First merged to become IDFC First Bank.

This could lead to a potential reversal of the merger between IDFC Limited and IDFC First Bank Limited.

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