IDFC First Bank Merger Approved, Now Bank will be merged with IDFC Ltd

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IDFC First Bank has announced that the majority shareholders of the bank have approved the amalgamation of IDFC Ltd with the bank. The approval was given at a meeting convened by the Chennai bench of the National Company Law Tribunal (NCLT) on May 17, 2024. The resolution approving the scheme was passed by an overwhelming majority of 99.95 percent of the equity shareholders, representing more than three-fourths in value of the equity shareholders of the bank.

The amalgamation of IDFC Ltd with IDFC First Bank is subject to approvals from the NCLT and other statutory and regulatory authorities. The Reserve Bank of India (RBI) has already given its no objection certificate (NOC) for the amalgamation.

Benefits of the Amalgamation

The merger of IDFC Ltd with IDFC First Bank is expected to lead to the simplification of the corporate structure of IDFC Financial Holding Company, IDFC Ltd, and IDFC First Bank by consolidating them into a single entity. This consolidation will help streamline the regulatory compliances of these entities.

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Additionally, after the merger, the book value per share of IDFC First Bank is expected to increase by 4.9 percent, as calculated on audited financials as of March 31, 2023.

Financial Performance of IDFC First Bank

In the fourth quarter ended March 2024, IDFC First Bank reported a 10 percent decline in net profit at Rs 724 crore. This decline was primarily due to a substantial increase in provisions. The bank’s total income rose to Rs 9,861 crore from Rs 7,822 crore a year ago. Interest income also grew during the period under review. On the asset quality side, the bank’s gross Non-Performing Assets (NPAs) reduced to 1.88 percent of gross advances as of March 31, 2024, from 2.51 percent by the end of March 2023.

Conclusion

The majority shareholders of IDFC First Bank have approved the amalgamation of IDFC Ltd with the bank. This merger is expected to simplify the corporate structure and streamline regulatory compliances. The amalgamation is subject to approvals from the NCLT and other regulatory authorities. In the fourth quarter of the fiscal year 2023-2024, IDFC First Bank reported a decline in net profit due to increased provisions, but its total income and interest income showed growth.

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