Shareholders of IDFC Ltd have approved the scheme of arrangement among the company and IDFC Bank Ltd, taking it a step closer to the launch of banking business.

Already, the RBI has given its clearance to the scheme of arrangement proposed by the company. IDFC Ltd was one of the two applicants (other being Bandhan Financial Services Private Ltd) who were given in-principle approval to establish banks on April 2, 2014.

In a communication to the stock exchanges today, IDFC Ltd said a Court Convened meeting of the shareholders of the company was held on April 9 at Chennai in compliance with the orders of the High Court of Madras. At the meeting, the shareholders unanimously gave their nod to the scheme of arrangement among IDFC Ltd and IDFC Bank Ltd and their respective shareholders/creditors.

The board of directors of IDFC Ltd (transferor company) had on October 30, 2014 given its approval to demerge its financing undertaking into its wholly owned step down subsidiary IDFC Bank Ltd (transferee company) as part of the scheme of arrangement under the Companies Act. After the scheme became effective and after securing all relevant approvals, the shares of IDFC Bank would be listed on the BSE and NSE, the board said. The board of IDFC Bank, which was incorporated by IDFC Ltd with a paid up capital of Rs 5 lakh and was not listed then, also approved the scheme.

It was announced at that time that IDFC Bank Ltd would issue 1 equity share of Rs 10 each fully paid up of IDFC Bank Ltd for every one share of Rs 10 each held in IDFC Ltd "as a consideration for the demerger of financing undertaking of IDFC Ltd into IDFC Bank Ltd". The shareholders of IDFC Ltd would retain their shares in IDFC Ltd.

After the demerger was completed, the equity shareholding in the new banking entity would be split in a 53:47 ratio between the IDFC Financial Holding Company Ltd, a 100 per cent subsidiary of IDFC Ltd and the shareholders of IDFC Ltd (as on the record date), the statement had said.

After hiving off the financing business into a new bank, IDFC Ltd said it would retain all other undertakings and businesses including windmill operations, shares in IDFC FHCL and other entities and holding of intellectual property rights.

It was on April 2 last year that the country’s apex bank Reserve Bank of India (RBI) decided to issue “in-principle” approval to IDFC Limited and Bandhan Financial Services Private Limited to establish banks. The RBI said that the approval given would be valid for a period of 18 months. The applicants would have to meet with all requirements as may be stipulated by the RBI. Once the apex bank was satisfied that the selected applicants had complied with all conditions laid down by it, it would consider their case for granting a licence for launching banking business. Till a regular licence was issued, RBI said that the `applicants would be barred from doing banking business’.

In media interview today, Rajiv Lall, CEO & MD of IDFC Ltd, indicated that the new bank would commence operations by October 1.

The shares of IDFC Ltd gained Rs 3.90 to Rs 176.20, with a trading volume of 1,01,99,504 lakh shares, on the NSE. The stock had gained about 70 per cent from its 52 week low of Rs 107.30 on May 8 last year. It had touched a 52 week high of Rs 188 on March 4 this year.

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