Money & Banking

IDFC Bank to start with a ‘strong balance sheet’

Our Bureau Chennai | Updated on November 25, 2017 Published on July 29, 2014

Rajiv B Lall, Executive Chairman, IDFC

Will begin with a capital base of ₹12,000 crore, says Rajiv Lall

IDFC Bank “will be the best capitalised bank”, with a clean slate, when it starts operations in October 2015 on the strength of the ₹17,000-crore balance sheet of parent IDFC Ltd, according to Rajiv B Lall, Executive Chairman, IDFC.

At IDFC’s annual general meeting, Lall said it plans to start the bank with a capital base of nearly ₹12,000 crore, with the balance remaining with the parent entity. There will be enough set aside to protect the bank from the “worst case scenario of stressed assets”. So the bank will start with a clean sheet, he said.

The Bank will be a listed entity with shareholders getting the equivalent of one share or thereabouts in the bank for every share in IDFC.

Lall said the parent company will float a non-operating financial holding company with four subsidiaries: IDFC Bank and the existing business units IDFC Mutual Fund, IDFC Alternatives and IDFC Securities; while IDFC Foundation will come directly under the parent company.

Lall said he will step down from his post in IDFC to be the managing director of the bank, while the present managing director of IDFC Vikram Limaye will continue. Both the Bank and IDFC will each get a new chairperson, the board will also be different with some overlap, he said.

With a bank, IDFC, which has been in a niche but volatile area of infrastructure financing, can now diversify its business. The Bank will have a full service network focussed on the entire gamut of large industries to SMEs and retail business. It will launch its network simultaneously in large and small cities and towns, Lall said.

In line with RBI guidelines, IDFC hopes to bring down its foreign ownership, which is at 51.7 per cent, to less than 50 per cent by end-September. This will be through a “small capital raise for domestic investors” to dilute the foreign ownership by 3.4 per cent.

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Published on July 29, 2014
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