New Delhi:IDFC Bank Ltd on Wednesday announced that the Reserve Bank of India (RBI) has approved the proposed merger of Capital First with the bank.

The deal announced on 13 January still remains subject to approval from shareholders of the two companies and the National Company Law Tribunal, the bank said in a BSE filing.

At 11.18am, IDFC Bank shares were up 3.66% to Rs39.65, while Capital First shares gained 2.33% to Rs545.40.

“The Reserve Bank of India has, via its letter dated 4 June conveyed its ‘no objection’ for the voluntary amalgamation of Capital First, Capital First Home Finance Ltd and Capital First Securities Ltd with IDFC Bank," said the bank.

The deal will allow IDFC Bank to grow its retail book, which it has been unable to do in the last two-and-a-half years.

Post the merger, V. Vaidyanathan, chairman and managing director of Capital First, will succeed Rajiv Lal as the MD and chief executive officer of the combined entity, Mint reported. Lal will take on the role of the non-executive chairman of IDFC Bank, subject to regulatory approvals.

As per the agreement, IDFC Bank will issue 139 shares for every 10 shares of Capital First. The assets under management of the combined entity are pegged at Rs88,000 crore.