IDFC Ltd’s merger with IDFC First Bank will be effective from 1 October.

The private lender earlier got the nod for the merger scheme from the Chennai bench of the National Company Law Tribunal (NCLT) on 25 September.

Post 1 October, IDFC Financial Holdings Ltd and IDFC Ltd will stand dissolved without being wound-up.

In July last year, IDFC First Bank and IDFC Ltd had approved a merger ratio of 155:100. Thus, 155 shares of IDFC First Bank will be exchanged for every 100 shares held in IDFC Ltd. The record date for this is 10 October.

The shares are expected to be credited to shareholders of IDFC Ltd on or before October 31, 2024, subject to regulatory processes and clearances, the bank said.

“There will be no change in the directors or management of IDFC First Bank pursuant to the amalgamation,” IDFC Ltd said in an exchange filing.

Post the amalgamation, there will be a simplified corporate structure at the bank with no holding company.

"The shareholding structure will be like other leading institutional Indian private sector banks with no promoter holding. The bank will continue to be professionally managed institution," the lender said.

As part of the merger, about Rs 600 crore of cash and cash equivalents will flow to IDFC First Bank.

IDFC First Bank will issue nearly 2,47,99,75,876 new equity shares to the shareholders of IDFC Ltd as per the agreed swap ratio.

“Due to losses posted by the bank in its early years largely due to legacy infrastructure and corporate loan accounts and due to write-off of goodwill due to prior transactions, the bank had accumulated losses,” IDFC First Bank said in an exchange filing. 

“This was restricting the bank in its ability to pay dividends to shareholders. Such accumulated losses will be set off against the Securities premium account of the bank as part of the merger scheme. This would now enable the bank to explore opportunities to pay dividend in future,” it added.