RBI gives IDFC permission to exit IDFC FIRST Bank as lock-in period ends

IDFC said on Wednesday that it had received permission from the (RBI) to exit the Bank as promoters.

IDFC is the owner of the holding company IDFC Financial Holding Company, which in turn holds 36.56 per cent stake in the bank. IDFC’s exit from the bank will indicate that the holding company could reverse merge with the bank, in line with what two small recently announced. If the holding company merges with the bank, then IDFC may have to sell its mutual funds business as well, analysts say.

The bank management was not immediately available for comment on the development.

IDFC announced receiving the RBI’s approval in a notification to the exchanges. The 36.56 per cent holding of IDFC is valued at Rs 11,618 crore at the current market price.

IDFC Bank received the licence from the RBI in 2014, and was floated in 2015. So, the five-year period came to an end in October 2020. The bank merged with Capital FIRST in 2018 to become Bank.

The initial licensing condition to IDFC was that the promoters must have a minimum of 40 per cent stake locked in for five years.

Recently, two small — Ujjivan SFB and Equitas SFB — said they would reverse merge their respective holding companies with themselves as the five-year lock-in period expired for the promoter holding companies.

However, IDFC said in its notification that it received permission to exit the bank altogether.

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