IDFC First Bank explained

IDFC FIRST Bank
Type:Private sector bank
Traded As:
Industry:Banking
Financial services
Revenue: (2024)[1]
Operating Income: (2024)
Net Income: (2024)
Assets: (2024)[2]
Equity: (2024)
Num Employees:20,222 (March 2020)
Ratio:13.28%
Location:Mumbai, Maharashtra, India
Parent:Infrastructure Development Finance Company
Subsid:
Predecessor:IDFC Bank
Capital First Ltd.
Rating:
  • CRISIL AA+/Stable[3]
  • Ind-Ra IND AA+/Stable[4]
  • CARE AA+/Stable (NCDs) [5]
  • Sustainalytics ESG Risk Rating Comprehensive 20.1 (2024) [6]
  • FTSE Emerging ESG Index 0.05% (2024)[7]
  • S&P Global Corporate Sustainability Assessment 48 (2023)[8]
  • MSCI ESG Rating A (2024)[9]

IDFC First Bank (stylised as IDFC FIRST Bank) is an Indian private sector bank formed by the merger of the banking arm of Infrastructure Development Finance Company and Capital First, which was an Indian non-bank financial institution.[10]

IDFC First Bank got privatized on 1st October 2024 by reverse merger with parent IDFC Ltd, a Government of India entity.[11]

History

IDFC Limited was set up in 1997 by Government of India to finance infrastructure projects in India. With time, the company diversified into asset management, institutional broking and investment banking. In 2014, the Reserve Bank of India granted in-principle approval to IDFC Limited to set up a new bank in the private sector. Following this, the IDFC Limited divested its infrastructure finance assets and liabilities to a new entity - IDFC Bank. The bank was launched through this demerger from IDFC Limited, and it was officially inaugurated by the Prime Minister of India Narendra Modi in October 2015.[12] [13]

IDFC Bank started operations on 1 October 2015.[14] [15]

In January 2018, IDFC Bank and non-banking financial company Capital First announced a merger,, resulting in a combined loan asset book of Rs 1.03 trillion under the newly formed IDFC First Bank.[16] Capital First was founded in 2012 by V. Vaidyanathan who acquired a stake in Future Capital Holdings and secured equity backing of Rs. 8.10 billion from Warburg Pincus.[17] [18] As per the September 2017 stock filing, Capital First had a retail loan portfolio of Rs 229.7 billion, serving three million customers across 228 locations. In the same quarter, the company reported a gross NPA ratio of 1.63% and a net NPA ratio of 1%.[19] In 2018, Capital First obtained an upgraded long-term credit rating of AAA. It was an Indian non-bank financial institution providing debt financing to small and medium-sized enterprises.[20]

Merger

Post the merger, Vaidyanathan took over as the MD and CEO of the merged entity. The Reserve Bank of India approved his appointment for a period of three years, effective from December 19, 2018.[21] 13.9 shares of IDFC Bank were issued for every share of Capital First as part of the merger scheme.[22] [23]

IDFC Bank had faced challenges due to bad loans from legacy infrastructure accounts. Its stock once traded 4.3% lower than its listing price, partly due to the breakup of the planned merger with the Shriram Group. While the bank has made efforts to improve its assets, it has not provided clear guidance on its liabilities. By September 2017, bank's deposits was totaled Rs 38,890 crore, with only 8.2% in current and savings accounts.[24]

As of 3 July 2023, the board of the bank had approved the merger with IDFC Limited. Shareholders of the latter will receive 155 shares of IDFC FIRST Bank for every 100 shares they currently own in IDFC Limited, as stated in a filing with the stock exchange.[25] [26] In the mid of October 2023, the bank obtained clearance from the Competition Commission of India for its merger.[27] [28] On 18 December 2023, the RBI issued 'no objection' for the bank to merge with IDFC. But the merger still needs approval from the National Company Law Tribunal.[29] [30]

On 17 May 2024, the NCLT convened via video conferencing to approve the merger proposal between IDFC First Bank and IDFC Limited. The proposal, endorsed by the bank's shareholders and NCD holders, involves two steps: IDFC FHCL merging with IDFC Limited, followed by IDFC Limited merging into IDFC First Bank.[31] [32]

On 1 October 2024, IDFC Limited merged with the bank.[33] As a result of the merger, 155 equity shares of the bank were allotted for every 100 equity shares of IDFC Limited held by each shareholder in the latter.[34]

Shareholding

Shareholder GroupPercentage
Promoters (including IDFC Limited's proposed investment)40.00
Foreign Institutional Investors (FIIs)24.48
Domestic Institutional Investors (DIIs)9.50
Public Shareholding26.02
Other2.22
As of September 2023, the promoter holding at the bank is 40.00 the institutional holding is at 24.48, the public holding is at 26.02.[35] But on 22 February 2023, IDFC Limited announced it intention to invest INR 2,200 crores in the bank. This will bring IDFC Limited's current holding in the bank up to 40 percent, from the current level of 36.38 percent.[36]

Also, on 22 February 2023, the bank issued 12,03,745 equity shares to its employees under the company ESOP plan.[37]

On September 12, 2023, US-based GQG Partners acquired an additional 5.1 crore shares, equivalent to a 0.76% stake, from V. Vaidyanathan in a block deal conducted on the stock exchange. As a result, GQG Partners' ownership in the bank rose to 3.36%.[38] [39]

The parent entity, IDFC Limited, retained the AMC, Institutional Broking, and Infrastructure Debt Fund businesses through IDFC Financial Holding Company Limited (NOFHC).[40]

In July 2024, Life Insurance Corporation raised its stake in the bank to 2.68% by purchasing shares of the lender at Rs 80.63 each, with a total acquisition cost of .[41]

Operations

The bank transformed from infrastructure to retail banking in four years since the merger, increasing the CASA ratio from 8.6% to 49.77% (March 31, 2023) and retail deposits from 27% to 76% of total deposits.[42] [43]

As of November 2022, the bank had 809 branches, 249 asset service centres, 925 ATMs, and 606 rural business correspondent centres across the country.[44] [45] [46]

Products and services

The bank provides products and services related to retail banking, wholesale banking and investment banking.[47] [48] [49] [50]

The bank became a member of the Open Network for Digital Commerce in September 2022. Subsequently, it began enrolling small merchants, who are existing customers with current accounts, onto a partner application registered with ONDC.[51] [52]

Environmental, social, and governance

Financials

The bank achieved a profit after tax (PAT) of crore in the financial year 2024, maintaining a capital adequacy ratio of 16.82%. The bank's retail loans showing a gross non-performing asset (NPA) ratio of 1.88% and a net NPA ratio of 0.60% as of March 31, 2024.[60] As of 30 September 2024, the overall gross NPA ratio is 1.92%, while the net NPA ratio is 0.48%.[61]

Milestones

Philanthropy

Under bank’s employee-funded Ghar Ghar Ration program, the bank employees will supply ration kits to 50,000 low income customers whose livelihoods has been impacted by the pandemic.[82] As many as 16,000 beneficiaries have been reached across Rajasthan, Madhya Pradesh, Maharashtra, Odisha, Gujarat, Karnataka, Haryana, Tamil Nadu, Andhra Pradesh, and Chhattisgarh under this program. The lender has also identified 250 vulnerable families who have lost an earning member of their family to COVID-19 with a cash relief support of ₹10,000 in a partnership with 'Give India'.[83]

Awards and recognitions

2019

2021

2022

2023

See also

Further reading

Notes and References

  1. Web site: IDFC First Bank .
  2. Web site: IDFC First Bank .
  3. Web site: 2023-06-05 . CRISIL upgrades IDFC First Bank's LT rating to 'AA+' . 2023-06-21 . Capital Market . en .
  4. Web site: 2023-12-12 . Ind-Ra affirms IDFC First Bank's debt instruments ratings with stable outlook . 2023-12-26 . Financial Express . en .
  5. Web site: 2023-10-03 . IDFC FIRST Bank Ltd Long Term Instruments - Non Convertible Debentures October 03, 2023 . 2024-02-01 . CARE Ratings . en .
  6. Web site: 2024-05-23. IDFC FIRST Bank Company ESG Rating May 23, 2024. 2024-09-16. Sustainalytics. en.
  7. Web site: 2024-09-13. FTSE Emerging ESG Index-Indicative Index Weight Data as at Closing on 13 September 2024 . 2024-09-16 . FTSE Russell. en.
  8. Web site: 2024-01-23. IDFC First Bank Limited ESG Score. 2024-09-16. S&P Global. en.
  9. Web site: 2024-09-16. MSCI ESG RATINGS IDFC First Bank Limited. 2024-09-16. MSCI. en.
  10. Web site: 2015-10-01 . 7 things to know about IDFC Bank | Business Standard News . 2016-10-15 . Business-standard.com.
  11. https://www.business-standard.com/companies/news/idfc-first-bank-announces-completion-of-idfc-ltd-merger-effective-oct-1-124092701325_1.html
  12. Web site: PTI . 2015-10-19 . Narendra Modi inaugurates IDFC Bank, talks of banking reforms . 2022-12-12 . mint . en.
  13. News: 2015-10-19 . PM inaugurates IDFC Bank | Business Standard News . 2016-10-15 . Business Standard India . Business-standard.com.
  14. News: Saha . Manojit . 2015-07-25 . IDFC Bank to start operations from Oct 1 | Business Standard News . Business Standard India . Business-standard.com . 2016-10-15.
  15. Web site: IDFC Bk to start ops with few branches by Oct 1: Rajiv Lall . Moneycontrol.com . 2015-04-12 . 2016-10-15.
  16. Book: Tadas, G. A. . Need for Setting Up of a New Development Bank (RIS-DP #254) . August 2020 . Research and Information System for Developing Countries . 2020 . . 7 . English.
  17. Web site: Kalbag . Chaitanya . 2012-07-03 . V. Vaidyanathan takes wing with a $17 million stake in a star NBFC . 2023-08-03 . Business Today . en.
  18. Web site: Sitaraman . Krishnan . Narayanan . Subhasri . Gupta . Leena . Rating Rationale - IDFC FIRST Bank Limited Reaffirmed . 2023-08-03 . www.crisil.com.
  19. News: Roy . Anup . 13 January 2018 . IDFC Bank to merge with Capital First, Vaidyanathan to succeed Lall . 29 October 2024 . Business Standard.
  20. Web site: R . Rajee . 25 September 2018 . Rating Rationale of Capital First Limited . 3 August 2023 . Brickwork Ratings.
  21. Web site: RBI approves appointment of V Vaidyanathan as MD, CEO of IDFC First Bank . 2022-12-12 . Moneycontrol . 18 January 2019 . en.
  22. Web site: sundarajan . Priya . 2018-01-13 . IDFC Bank to take over Capital First in share swap deal . 2022-12-12 . www.thehindubusinessline.com . en.
  23. News: Sinha . Shilpy . IDFC, Capital First completes merger process to form IDFC First Bank . The Economic Times . eonomictimes.com .
  24. News: Iyer . Aparna . 15 January 2018 . IDFC Bank, Capital First merger: will the shoe fit this time? . 29 October 2024 . Mint (newspaper).
  25. News: 2023-07-03 . India's IDFC to merge with IDFC First Bank in latest consolidation . en . Reuters . 2023-07-04.
  26. News: 2023-07-03 . IDFC to merge with IDFC First Bank . en-IN . The Hindu . 2023-07-04 . 0971-751X.
  27. Web site: Livemint . 2023-10-17 . IDFC gets CCI nod for merger with IDFC First Bank . 2023-10-25 . mint . en.
  28. Web site: 2023-10-10 . IDFC-IDFC First Bank merger proposal gets CCI nod; stock up 2% . 2023-10-25 . www.fortuneindia.com . en.
  29. Web site: Bhattacharya . Shubhayan . 2023-12-18 . IDFC First Bank Gets RBI Nod For Merger Of IDFC, IDFC Financial Holding With Self . 2023-12-26 . NDTV Profit . en.
  30. Web site: 2023-12-19 . IDFC First Bank shares surge 3% as RBI approves merger with IDFC, IDFC Financial Holding . 2023-12-26 . Moneycontrol . en.
  31. Web site: PTI . 2024-05-18 . Debt, equity holders approve merger of IDFC with IDFC First Bank . 2024-06-25 . BusinessLine . en.
  32. Web site: 2024-05-18 . Majority shareholders of IDFC First Bank approves amalgamation of IDFC Ltd with lender . 2024-06-25 . . en.
  33. Web site: 2024-09-27 . IDFC FIRST Bank announces completion of IDFC Ltd merger . 2024-10-15 . Financialexpress . en.
  34. Web site: Deshpande . Swapnil . 2024-09-27 . IDFC First Bank completes merger with IDFC Limited - CNBC TV18 . 2024-10-15 . CNBCTV18 . en.
  35. Web site: Latest Shareholding Pattern - IDFC First Bank Ltd. . 2023-02-23 . Trendlyne.com . en.
  36. Web site: Reporter . B. S. . 2023-02-01 . IDFC Ltd to invest Rs 2,200 crore in IDFC First Bank, up its stake to 40% . 2023-02-23 . www.business-standard.com . en.
  37. Web site: IDFC First Bank allots shares worth Rs 1.2 cr to employees as stock options . 2023-02-23 . Free Press Journal . en.
  38. Web site: IDFC First Bank rises 2% on Rs 479.5-cr block deal with GQG Partners . 2023-09-14 . Moneycontrol.
  39. Web site: US-based GQG Partners ups IDFC First Bank stake, acquires shares from CEO V. Vaidyanathan . 2023-09-14 . www.telegraphindia.com . en.
  40. Web site: Gopakumar . Gopika . 2021-07-21 . IDFC can exit as promoter of IDFC First Bank, clarifies RBI . 2022-12-12 . mint . en.
  41. News: 2024-07-04 . LIC raises stake in IDFC First Bank to 2.68% . 2024-10-29 . The Hindu . en-IN . 0971-751X.
  42. News: 2023-05-02 . IDFC FIRST Bank FY23 Profit After Tax Highest-Ever at Rs. 2,437 . en . Bloomberg.com . 2023-06-21.
  43. News: Shukla . Saloni . Rangan . MC Govardhana . IDFC First Bank's transformation to retail complete; NPA woes behind, says CEO V Vaidyanathan . The Economic Times . 2022-12-12.
  44. News: Market . Capital . 2022-11-05 . IDFC First Bank gets board approval to raise Rs 4,000 cr . Business Standard India . 2022-12-12.
  45. Web site: Korgaonkar . Deepak . 2023-06-15 . IDFC First Bank at over 6-yr high; zooms 47% in 2 months on stable outlook . 2023-06-21 . www.business-standard.com . en-US.
  46. Web site: Kayastha . Anshika . 2023-08-08 . Want to stay on the pitch for long, not hit sixes and fours: IDFC First Bank MD . 2023-09-03 . BusinessLine . en.
  47. Web site: Home loans are our biggest driver and they'll keep growing: V Vaidyanathan, MD & CEO, IDFC First Bank . 2022-12-12 . Financialexpress . 7 May 2022 . en.
  48. News: Kulkarni . Sneha . IDFC First Bank revises savings account interest rate: Earn up to 6% interest rates on this amount . The Economic Times . 2022-08-10.
  49. Web site: IDFC First Bank to give 7% interest on savings account opened through video KYC . 2022-08-10 . Financialexpress . 28 May 2020 . en.
  50. Web site: Interest rate on Savings account up to 6% p.a. IDFC FIRST Bank . 2022-08-10 . www.idfcfirstbank.com.
  51. Web site: Livemint . 2022-09-07 . IDFC First Bank joins ONDC . 2023-07-13 . mint . en.
  52. Web site: 2022-09-07 . IDFC First Bank joins ONDC — what does it mean for you? . 2023-07-13 . cnbctv18.com . en.
  53. Web site: CFI . 2013-08-23 . The Equator Principles: Banking on Sustainability . 2024-11-30 . CFI.co . en-US.
  54. Web site: Atre . Gauri . Asapur . Sagar . Fernandes . Ashish . August 2023 . Still Unprepared - India's Big Banks Move Slowly in the Face of Climate Crisis . Climate Risk Horizons.
  55. Web site: Velonie . Ajit . Sri Narayanan . Subha . Gupta . Leena . 9 October 2023 . CRISIL Rating Rationale IDFC FIRST Bank Limited . 2024-11-30 . CRISIL.
  56. Web site: Sharma . Saurabh . 2023-12-13 . BT500: 'Tragic to see rural India is most under-financed,' says IDFC First Bank MD & CEO V Vaidyanathan . 2024-11-30 . Business Today . en.
  57. Web site: 2016-07-25 . IDFC Bank buys Grama Vidiyal Micro . 2024-03-31 . BusinessLine . en.
  58. Web site: 2016-07-13 . IDFC Bank acquires Grama Microfinance . 2024-03-31 . The Indian Express . en.
  59. News: News Service . PTI . Press Trust of India . 25 October 2018 . IDFC Bank to be renamed as IDFC First Bank after merging with Capital First . 31 March 2024 . Business Standard.
  60. Web site: 2024-09-02 . IDFC FIRST Bank Achieves Lowest-Ever Gross NPA of 1.88% in FY24, says V Vaidyanathan . 2024-10-29 . Outlook Business . en.
  61. News: Singh . Navdeep . 2024-10-28 . IDFC First Bank shares nosedive 10%, hit 52-week low as Q2 profit plummets 73% . 2024-10-29 . The Economic Times . 0013-0389.
  62. Web site: IDFC: Reports, Company History, Directors Report, Chairman's Speech, Auditors Report of IDFC - NDTV . 2022-12-12 . www.ndtv.com . en.
  63. News: Reporter . B. S. . 2010-06-30 . IDFC sells shares worth Rs 2,654 cr . Business Standard India . 2022-12-12.
  64. Web site: 2013-06-10 . IDFC becomes first Indian institution to adopt Equator principles - Photos News, Firstpost . 2022-12-12 . Firstpost . en.
  65. News: RBI grants in-principle approval to IDFC, Bandhan for new bank licences . The Economic Times . 2022-12-12.
  66. News: K.R.Srivats . 2017-03-07 . IDFC Bank takes the lead, launches Aadhaar Pay . en . The Hindu Business Line . 2017-03-09.
  67. News: IDFC Bank launches aadhaar-linked cashless merchant solution – The Economic Times . The Economic Times . 2017-01-17.
  68. Web site: Capital First merges with IDFC Bank to create IDFC First Bank . 2022-12-12 . Moneycontrol . 18 December 2018 . en.
  69. News: IDFC FIRST Bank . 11 March 2020 . IDFC FIRST Bank names India's iconic personality Mr. Amitabh Bachchan as Brand Ambassador . Press Release . 21 March 2020.
  70. News: Mint . 19 January 2021 . IDFC First Bank to offer interest-free cash on credit cards . 21 January 2021.
  71. Kumar . Kishore . Prakash . Ajai . 2019-01-10 . Examination of sustainability reporting practices in Indian banking sector . Asian Journal of Sustainability and Social Responsibility . 4 . 1 . 2 . 10.1186/s41180-018-0022-2 . 2365-6417 . 256465929 . free . free . 10419/217379.
  72. Web site: IDFC FIRST Bank Limited . 2024-09-16 . unglobalcompact.org.
  73. Web site: Velonie . Ajit . Sri Narayanan . Subha . Gupta . Leena . 9 October 2023 . Rating Rationale IDFC FIRST Bank Limited CRISIL AA+/Stable assigned to Tier II Bonds (Under Basel III) . 16 September 2024 . CRISIL.
  74. News: Ray . Anulekha . 2022-11-09 . RBI CBDC: Digital Rupee pilot starts from November 1; SBI, HDFC, 7 other banks to participate in wholesale launch . The Economic Times . 2023-07-13 . 0013-0389.
  75. News: Farooqui . Javed . 2023-08-25 . BCCI awards title sponsorship rights to IDFC First for Rs 235 crore . The Economic Times . 2023-09-03 . 0013-0389.
  76. Web site: 2023-08-25 . IDFC FIRST Bank secures title rights for Team India's home internationals for Rs 4.2 crore per match . 2023-09-03 . cnbctv18.com . en.
  77. Web site: Sultana . Nasrin . How Does IDFC First Stack Up Among India's Top 10 Most Valued Banks . 2023-09-14 . Forbes India . en.
  78. Web site: Sonavane . Ravindra . IDFC First joins elite club of 10 most valuable listed banks in India . 2023-09-14 . Moneycontrol.
  79. News: 2023-12-07 . IDFC First Bank unveils UPI-based digital RuPay credit card . 2023-12-26 . The Hindu . en-IN . 0971-751X.
  80. Web site: Mishra . Arushi . 2024-02-06 . Infibeam Avenue partners with IDFC First Bank . 2024-02-29 . BusinessLine . en.
  81. News: 2024-05-23 . IDFC First Bank named 'class apart' in report . 2024-06-04 . . en-IN . 0971-751X.
  82. Web site: IDFC FIRST Bank launches Customer COVID relief Ghar Ghar Ration Program . 2022-12-12 . Financialexpress . 11 June 2021 . en.
  83. Web site: IDFC First Bank Employees to Fund Covid Relief for Customers . 2022-12-12 . Outlook Money . en.
  84. Web site: Best Private Bank – Digital Innovation & Services . 29 February 2024 . Asian Private Banker.
  85. Web site: marten . 2019-11-24 . IDFC FIRST Bank: Most Promising New Bank India 2019 . 2024-02-29 . CFI.co . en-US.
  86. Web site: Bandyopadhyay . Tamal . 2021 . INCLUSIVE FINANCE INDIA REPORT 2020 - An ACCESS Publication . 29 February 2024 . Water.org.
  87. Web site: 2021-04-01 . Most Trusted Brands Of India 2021 . 2024-02-29 . CNBCTV18 . en.
  88. Web site: 2021-06-15 . Best for HNW in India 2021 . 2024-02-29 . Asiamoney . en.
  89. Web site: 2023-10-16 . FE BEST BANKS AWARDS: Rajeev Chandrasekhar to grace FE awards event today . 2023-11-23 . Financialexpress . en.
  90. Web site: marten . 2022-10-26 . IDFC FIRST Bank: Best Sustainable Banking Strategy India 2022 . 2024-02-29 . CFI.co . en-US.
  91. Web site: www.ETBFSI.com . ET BFSI Awards 2022 . 2024-02-29 . ETBFSI.com . en.
  92. Web site: marten . 2023-11-22 . IDFC FIRST Bank: Outstanding Commitment to ESG Performance (India) 2023 . 2023-11-23 . CFI.co . en-US.

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