IDFC Limited announced on September 27 that its Board of Directors has approved the amalgamation of its subsidiaries, paving the way for significant structural changes within the organization. The Board’s decision includes merging IDFC Financial Holding Company Limited (IDFC FHCL) with IDFC Limited, followed by the merger of IDFC Limited with IDFC FIRST Bank Limited.
This strategic move comes after the National Company Law Tribunal (NCLT) in Chennai sanctioned the amalgamation scheme on September 25, 2024. The merger of IDFC FHCL with IDFC will take effect on September 30, while the subsequent merger of IDFC with IDFC FIRST Bank will officially commence on October 1.
As part of this merger, shareholders of IDFC Limited will receive 155 shares of IDFC FIRST Bank for every 100 shares they hold in IDFC. This share exchange ratio aims to streamline the corporate structure and enhance operational efficiency. Following the completion of these mergers, both IDFC and IDFC FHCL will be dissolved without undergoing a winding-up process.
The merger is expected to inject approximately ₹600 crore in cash and cash equivalents into IDFC FIRST Bank, positioning it to potentially pay dividends in the future. The CEO of IDFC FIRST Bank, V. Vaidyanathan, emphasized that this merger marks a significant milestone in simplifying the bank’s corporate structure, eliminating any holding company or promoter control.
Overall, this amalgamation is anticipated to create a more robust banking entity, aligning with other leading private sector banks in India and enhancing its capacity to leverage growth opportunities in the market.
