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A month and a half after the board of directors of IDFC nominated him as executive vice-chairman of its to-be-launched bank, Rajiv Lall has also become the latter entity’s managing director. This ends speculation over whether IDFC would appoint an external candidate as MD.
“I will be heading the new bank as MD and will step down as chairman of IDFC. Both IDFC and IDFC Bank will have separate non-executive chairpersons,” Lall said on the sidelines of the company's annual general meeting, here on Tuesday.
IDFC Bank will be a listed entity from day one of its operations and the existing shareholders of IDFC will be given an equivalent number of shares in the bank. The bank is expected to go on stream from October 2015.
The net worth of the new bank would be Rs 12,000 crore, Lall said, adding it would be the best capitalised bank. “Starting with a clean balance sheet and adequate capitali, we don't expect non-performing assets to be a drag on the future profitability,” he said.
He expected the demerger of IDFC and IDFC Bank to be completed by early next year.
Lall said IDFC would bring down foreign shareholding to below 50 per cent, in line with regulatory norms. Foreign ownership has been reduced to 51.7 per cent from 54.5 per cent a year before. “We are working on multiple tracks to bring the ownership of foreigners to below 50 per cent. This includes trying to find willing sellers in the foreign institutional investor community and match them with domestic buyers. We are also in the process of preparing for a capital raise, which will be a focus area,” he said.
IDFC will look at a qualified institutional placement or a follow-on public offer in the next few months. Lall said the process should get over by the end of September, most likely by issuance of additional capital to domestic investors.
Lall said Vikram Limaye would continue to be the MD & chief executive officer of IDFC.
Asked about the board of directors, Lall said there would be some overlap between the two but most members on the IDFC Bank board would be new names.
IDFC is also preparing for rearrangement of assets and liabilities to comply with Reserve bank regulations. This would take several months and would be a court-assisted process.
Under the new structure, IDFC will be the parent, under which a non-operating financial holding company (NOFHC) will be created. Under the NOFHFC, there will be four subsidiaries -- the new bank and three existing ones, IDFC Mutual Fund, IDFC Alternative and IDFC Securities.
IDFC Foundation will be the fifth subsidiary, directly under the parent.
The Reserve Bank had in April granted preliminary bank licences to IDFC and micro finance firm Bandhan.
