IDFC First Bank may merge with its parent firm -

IDFC First Bank may merge with its parent firm

Mumbai: The RBI has allowed IDFC to exit as the promoter of IDFC First Bank. The move could pave the way for a merger of the bank with its parent. Shares of IDFC were up 12% at Rs 59 in the stock exchange while IDFC First Bank also rose nearly 2%.
While granting the erstwhile infrastructure financier a bank licence in 2014, the RBI had required businesses that were not compatible with the banking licence to be housed under a holding company that will also own the bank. “We would like to inform you that the RBI has vide its letter dated July 20, 2021, clarified that after the expiry of a lock-in period of 5 years, IDFC can exit as promoter of IDFC First Bank,” the company said in a notice to the exchange. Last month the RBI allowed small finance banks to merge with their promoter entities on completing five years of operations. This resulted in Equitas holding and Ujjivan Financial to announce that they would initiate process for amalgamation process with their promoter entities.
According to an analyst the requirement of a holding company seems to be there only as long as there is an identifiable promoter and once the bank turns into a professionally managed entity the requirement will be eased.

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