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Mumbai: Kotak Mahindra Bank Ltd has received final approval from the Reserve Bank of India (RBI) to complete its acquisition of Bengaluru-based ING Vysya Bank Ltd, which was announced on 20 November, the central bank said on its website.

The approval means that effective Wednesday all branches and automated teller machines (ATMs) of ING Vysya will function as branches and ATMs of Kotak Mahindra, RBI said.

Effective from Wednesday, Kotak Mahindra’s branches will rise to more than 1,250, with a majority of the branches in south and west of the country. More importantly, it gives Kotak Mahindra a foothold in South India, where it had a weak presence.

The approval for the merger also clears the way for the delisting of ING Vysya shares from the local stock exchanges, said Jaimin Bhatt, president and group chief financial officer (CFO) at Kotak Mahindra Bank.

“Delisting is a process which involves Sebi (Securities and Exchange Board of India) and the exchanges. The record date for the share swap will be announced in the next few days and it is likely to be no later than 20 February. The whole process will be completed in a week to 10 days from then," Bhatt said.

Record date is the cutoff date for shareholders to qualify for the swap of ING Vysya shares to Kotak Mahindra shares.

The $2.5 billion all-stock deal that was announced on 20 November creates India’s fourth largest private sector lender with 1.2 trillion of assets and 10 million customers. It entails the swap of 725 Kotak Mahindra shares for every 1,000 shares in ING Vysya.

Bhatt said Kotak Mahindra has already started changing the signages and other branding of branches and ATMs of ING Vysya and the same will be completed throughout the country before the end of April.

“As of today, all employees of ING Vysya have become Kotak employees, but the system transition in terms of employee records, codes and also technologies including core banking, financial systems and human resources will be completed in the next seven-nine months," Bhatt said.

The merger had faced some initial hiccups as the All India ING Vysya Bank Employees Union, a bank trade union that represents 25% of ING Vysya’s employees, opposed the merger demanding job security and a tripartite agreement between Kotak Mahindra Bank, ING Vysya Bank and employees.

Bhatt said the concerns of the employees have been addressed and the employees have been assured that Kotak Mahindra is committed to provide the same terms and conditions on remuneration, emoluments and perquisites that they were entitled to before the proposed merger.

Kotak Mahindra and ING Vysya also work on two different banking systems; while Kotak uses Infosys Ltd’s Finacle, ING was on US-based FIS Systems. Bhatt said a decision on which technology system to use has not been taken.

Kotak Mahindra gained 3.64% to close at 1,361 on Wednesday on BSE, while the exchange’s benchmark Sensex gained 1.08% to 28,260.14 points. The banking index, the Bankex, gained 2.37% to 21,360.45 points and ING Vysya Bank gained 4.38% to 976.65.

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