IDFC To Issue Fresh Shares To Meet New Banking Norms

As per new banking norms, the aggregate non-resident shareholding in the new bank shall not exceed 49 % for the first five years after which it will be as per the extant policy. Moreover, no non-resident shareholder, directly or indirectly, individually or in groups, will be permitted to hold 5% or more of the paid up capital of the bank. After the expiry of five years from the date of licensing of the bank, the foreign shareholding would be as per the extant policy. Currently, foreign shareholding in private sector banks is allowed up to a ceiling of 74% of the paid up capital with prior approval of RBI.

At present, the foreign shareholding in IDFC is 52.61% of total share capital. If calculated on back of envelope, IDFC need to issue a minimum (approx) Rs 1507 crore of fresh shares to domestic investors at CMP to trim down foreign shareholding and bring down to 49% of total share capital.

Meanwhile, the company’s board has nominated Dr Rajiv B Lall as executive vice chairman of the banking company, as and when that is set up and informed that Shardul S. Shroff has resigned as independent director of the firm with effect from June 3, 2014.

In today's trading session the stock showed decrease of 3.2% in its stock priced over previous close. At CMP of Rs 135.2 per share, the stock is trading at 1.52x of its book value.