IDFC First Bank Successfully Completes Merger with IDFC Limited

Mumbai : IDFC First Bank held a board meeting today and announced the successful completion of its merger with IDFC Limited. This announcement comes after receiving all necessary approvals from shareholders and regulators, and the merger will take effect on October 1, 2024.

As a result of the merger, for every 100 equity shares of IDFC Limited, 155 equity shares of the bank will be allocated. This allocation applies to shareholders holding IDFC Limited shares as of the record date, October 10, 2024. It is anticipated that, subject to regulatory processes and approvals, shares will be credited to IDFC Limited shareholders by October 31, 2024, or earlier.

### Benefits of the Merger:

- **Simplified Corporate Structure**: Post-merger, the bank will have a straightforward corporate structure without a holding company.
  
- **Simplified Shareholding Structure**: The shareholding structure will resemble that of other top private banks in India, without any promoter stake. The bank will continue to operate as a professionally managed institution.

- **Cash and Cash Equivalents**: Approximately ₹600 crore in cash and cash equivalents will be transferred to the bank under the merger.

- **Reduction in Outstanding Shares**: IDFC Limited's 2,64,64,38,348 equity shares held in IDFC First Bank will be canceled. In return, the bank will issue 2,47,99,75,876 new equity shares to IDFC Limited shareholders based on the agreed swap ratio. Consequently, the bank's paid-up share capital will decrease by 16,64,62,472 equity shares, reducing the post-merger paid-up capital from 7,48,27,31,991 shares to 7,31,62,69,519 shares.

- **Eligibility for Dividend Payments**: The bank faced losses in its initial years due to various issues, including infrastructure corporate loans and goodwill write-offs, which limited its ability to pay dividends. Under the merger plan, the accumulated losses will be adjusted from the bank’s securities premium account, enabling the bank to consider dividend payments in the future.

- **Streamlined Regulatory Compliance**: The merger will simplify and streamline regulatory obligations.

### Future Outlook

India is rapidly progressing, and numerous opportunities are expected to arise in the coming decades. With a robust brand and improved capabilities, alongside a simplified shareholding and corporate structure, the bank is well-positioned to capitalize on significant opportunities provided by India. As a universal bank, it offers a range of services to its customers, preparing it for growth in this dynamic environment.

Speaking about the merger, Mr. Vaidyanathan, MD and CEO of IDFC First Bank, stated:

"The merger announcement between IDFC First Bank and IDFC Limited today symbolizes two years of hard work. I express my gratitude to IDFC Limited for engaging in critical discussions to simplify the entire structure and facilitate this merger. I also thank all regulatory authorities for their guidance and support in successfully completing this merger.

IDFC First Bank will now have a simplified corporate structure without any promoter holding. Like global corporations such as Bank of America, JP Morgan, HDFC Bank, and ICICI Bank, which operate without promoter stakes, IDFC First Bank can establish itself as a sustainable institution. In this context, the merger represents a significant achievement for the bank.

By 2047, the Indian economy is projected to grow from $3.5 trillion to $30-35 trillion, which is expected to create substantial opportunities across all banking sectors. Specifically, the Indian credit market is anticipated to grow fifteenfold in the next 20 years. As a small, early-stage bank, IDFC First Bank is well-positioned to capitalize on this growth.

In addition to credit growth, opportunities are also expected to increase in trade finance, foreign exchange, transaction banking, and cash management, as well as significant growth in India's wealth management industry. IDFC First Bank has established a strong presence in this sector, with assets under management (AUM) exceeding ₹18,000 crore and annual growth of over 50% in recent years.

Over the past five years, IDFC First Bank has demonstrated an excellent work culture, an ethical approach to banking, a focus on digitization and technology, and a strong commitment to societal betterment. We believe these key factors will help position IDFC First Bank as a world-class bank in the future."