IDFC Limited and IDFC FIRST Bank Merger Overview
The eagerly anticipated merger between IDFC Limited and IDFC FIRST Bank is set to take significant steps forward with the finalized effective dates announced. Both companies have communicated to the stock exchanges that during a board meeting held on September 27, 2024, the Composite Scheme of Amalgamation was officially endorsed. This monumental merger involves the merger of IDFC Financial Holding Company Limited (IDFC FHCL) into IDFC Limited and subsequently, IDFC Limited into IDFC FIRST Bank Limited. The National Company Law Tribunal (NCLT) granted approval for the amalgamation on September 25, 2024.
Timeline and Approval Process
The groundwork for this merger was laid out as early as July 2023 when both boards greenlighted the reverse merger. By December 2023, the Reserve Bank of India had approved the merger, followed by successful endorsements from both debt and equity holders in May 2024. The Competition Commission of India (CCI) also provided its approval for the merger in October 2024, marking a crucial step in the process.
| Milestone | Date |
|---|---|
| Boards Approval | July 2023 |
| Reserve Bank of India Approval | December 2023 |
| Debt and Equity Holders’ Approval | May 2024 |
| NCLT Approval | September 25, 2024 |
| CCI Approval | October 2024 |
| IDFC FHCL Merger Effective | September 30, 2024 |
| IDFC Limited Merger Effective | October 1, 2024 |
Impact on Shareholders
The merger brings changes that will directly affect the shareholders. Under the terms established for the merger, shares of IDFC FIRST Bank will be allocated to shareholders of IDFC Limited at a specific fixed ratio. According to the stock exchange filings, the record date for identifying eligible shareholders is stated as October 10, 2024. For every 100 fully paid-up equity shares of face value ₹10 held by them, shareholders of IDFC Limited will receive 155 fully paid equity shares of IDFC FIRST Bank, which also holds a face value of ₹10.
Future Implications
Despite this major consolidation, it is noteworthy that there will be no alterations in the board of directors or management team at IDFC FIRST Bank post-merger. The amalgamation aims to streamline operations and strengthen financial footing, enhancing service offerings for current and prospective customers. IDFC Bank, which has been operational since 2014, previously merged with Capital First in 2018 to form what is now known as IDFC FIRST Bank. This new merger is anticipated to further elevate its stature in the banking industry and improve its competitive edge in the financial services sector.
