Reserve Bank of India allowed IDFC Ltd to exit as the promoter of IDFC First Bank as the five-year lock-in period expired on 30 September 2020
Shares of IDFC Ltd gained as much as 18.67% after the company said that the Reserve Bank of India (RBI) has allowed it to exit as the promoter of IDFC First Bank as the five-year lock-in period expires.
At 03.15 pm, IDFC was trading at ₹59.25 up 12.32% from its previous close, while the benchmark index, Sensex gained 1.22% to 52,836.91.
The five-year lock-in period ended on 30 September 2020. IDFC currently owns a 100% stake in IDFC Financial Holding Co., which, in turn, holds 100% in IDFC Asset Management and 36.56% in IDFC First Bank.
In April 2014, RBI had granted IDFC a banking licence pursuant to the February 2013 universal bank licensing guidelines. These guidelines mandated that IDFC should create a non-operative financial holding company (NOFHC) structure to house the bank and other financial services units of the parent company to ensure that the banking business was completely ring-fenced from other activities of the firm.
The IDFC Bank was created by the demerger of the infrastructure lending business of IDFC to IDFC Bank in 2015.
IDFC was also mandated to hold a minimum of 40% stake in the bank, locked in for the first five years, and thereafter reduce it to 15% over ten years.
According to reports, the RBI's latest internal working group recommendations propose that the cap on promoters' stake, in the long run, may be raised from 15% to 26% of the paid-up voting equity share capital of private banks.
IDFC reported a standalone net profit of ₹25.85 crore for the quarter ended 31 March 2021 against a net loss of ₹70.43 crore in Q4FY20. Total income was at ₹30.89 crore for the March 2021 quarter.