Majority shareholders of IDFC First Bank approves amalgamation of IDFC Ltd with lender

The majority shareholders of IDFC First Bank have approved the amalgamation of IDFC Ltd with the bank at a meeting convened by the Chennai bench of the National Company Law Tribunal (NCLT), the lender informed the stock exchanges on May 17.

"We wish to inform that the resolution approving the Scheme was passed by overwhelming majority of 99.95 percent of the equity shareholders representing more than three-fourth in value of the equity shareholders of the Bank voting through remote e-voting and e-voting during the meeting, in terms of the provisions of Sections 230-232 of the Companies Act, 2013," the bank said.

On December 27, IDFC Ltd said the Reserve Bank of India (RBI) has given no objection certificate (NOC) for the amalgamation of IDFC Limited, IDFC FHCL, and IDFC First Bank. The boards of IDFC Financial Holding Co Ltd, IDFC Ltd, and IDFC First Bank had approved the merger in July 2023.

Under the proposed reverse merger scheme, IDFC shareholders will get 155 shares for every 100 shares held in the bank. IDFC Ltd and IDFC First Bank shares have a face value of Rs 10 each.

As a result of the proposed merger, the standalone book value per share of the bank would increase by 4.9 percent, as calculated on audited financials as of March 31, 2023, said the lender.

The merger will lead to simplification of the corporate structure of IDFC FHCL, IDFC Limited and IDFC First Bank by consolidating them into a single entity and will help streamline the regulatory compliances of the aforesaid entities. The merger will help create an institution with diversified public and institutional shareholders, like other large private sector banks, with no promoter holding, the IDFC First Bank said in a stock exchange filing.

IDFC First Bank saw its net profit decline to Rs 724.35 crore for the Q4FY24 as against Rs 802.62 crore in the year-ago period. The bank reported an interest income of Rs 8,219.21 crore in the January-March quarter, which was higher than Rs 6,424.35 crore reported in the year ago period. It was up by 28 percent on the year-on-year (YoY) basis.

Asset quality for the lender improved this quarter, with the gross non-performing asset ratio falling 16 basis points quarter-on-quarter (QoQ). Its gross NPA stood at 1.88 percent QoQ, an improvement from 2.04 percent in the December quarter. The lender's net NPA ratio marginally improved to 0.60 percent compared to 0.68 percent in the previous quarter.