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RBI approval for merger of IDBI Bank, Capital First

The Reserve Bank of India has given its approval for the merger of IDBI Bank and Capital First. RBI has conveyed its ‘no objection’ to the deal, Capital First said in a statement to the exchanges. The merger, announced in January, will create a bank with a portfolio diversified across large corporate lending, small and medium enterprise loans and retail credit. The merger provides for the parent company IDFC’s stake in the merged entity to be at 38%. IDFC will be required to buy 2% from the market or other route since the merged bank is not intending to raise any fresh equity. V. Vaidyanathan, CMD of Capital First, is likely to the MD and CEO of the merged bank, while Rajiv Lall, who is currently the MD and CEO of the bank would become the chairman. The bank will then have an asset under management of Rs 88,000 crore, a distribution network comprising 194 branches, 353 dedicated banking correspondent outlets and over 9100 micro ATM points. The merger is yet to receive approvals from shareholders, the National Company Law Tribunal and creditors of the companies involved.

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