RBI approves IDFC-IDFC First Bank Merger; Notifies GSL Directions 2023

Current Context: On 26th December 2023, The Reserve Bank of India (RBI) has approved the reverse merger of IDFC Ltd with its banking subsidiary IDFC First Bank.

• The boards of IDFC First Bank and IDFC had approved the reverse merger in July.
• As part of the composite scheme of amalgamation, IDFC Financial Holding Company (IDFC FHCL) would first merge with IDFC and then IDFC into IDFC First Bank Ltd.
• The scheme remains subject to other statutory and regulatory approvals, including from the National Company Law Tribunal and the respective shareholders and creditors of the companies involved under the applicable laws.
• Under the proposed reverse merger scheme, an IDFC shareholder will get 155 shares for every 100 shares she/he holds in the bank.
• Both stocks have a face value of Rs 10 each.
• Post the merger, the standalone book value per share of the bank will increase by 4.9 per cent, as calculated on the audited financials as of March 2023.
• As of June 2023, IDFC through its non-financial holding company, owned 39.93 per cent in IDFC First Bank.

Question:

Q.1 What is the proposed scheme for the IDFC-IDFC First Bank merger?
a. IDFC First Bank would first merge with IDFC and then IDFC into IDFC FHCL.
b. IDFC FHCL would first merge with IDFC First Bank and then IDFC First Bank into IDFC.
c. IDFC FHCL would first merge with IDFC and then IDFC into IDFC First Bank.
d. IDFC would first merge with IDFC FHCL and then IDFC FHCL into IDFC First Bank.