A meeting has been convened on April 9, 2015 of its equity shareholders for the new arrangement. "IDFC Ltd proposes to realign its businesses to comply with the corporate structure requirements of the RBI New Banking Guidelines and demerge its financing undertaking to IDFC Bank.
"...proposes to demerge the financing undertaking to IDFC Bank to achieve its objective of setting up a banking business," IDFC Ltd said in a BSE notification on Wednesday.
The demerger is in accordance with RBI conditions which requires IDFC Ltd to transfer the relevant business activities to the proposed bank (IDFC Bank).
IDFC Bank is envisaged to be a wholly owned subsidiary of IDFC Financial Holding Company Ltd (IDFC FHCL), which is turn, is envisaged to be a wholly owned subsidiary of IDFC Ltd.
The RBI guidelines mandates that a non-operative financial holding company will, for a period of five years, need to hold a minimum of 40 percent of the shareholding of the bank.
"Accordingly, IDFC FHCL will hold for a period of five years a minimum of 40 per cent of the shareholding of the Transferee Company (IDFC Bank), as well as exposure in the form of debentures, loans, advances and shares of the other regulated financial services entities being IDFC Asset Management Company Ltd, IDFC AMC Trustee Company Ltd, IDFC Securities Ltd, IDFC Alternatives Ltd, IDFC Trustee Company Ltd, IDFC Finance Ltd and IDFC Infra Debt Fund Ltd (IDFC FHCL Subsidiaries)," it added.
The residual undertaking and all the assets, liabilities and obligations shall continue to belong to and be vested in and be managed by the transferor company (IDFC Ltd).
The residual undertaking means the undertakings, businesses, activities and operations of IDFC Ltd other than the financing undertaking and including without limitation the windmill operations, the holding of shares in IDFC FHCL and in certain other entities, goodwill, intellectual property rights such as trade names, trademarks, service marks, copyrights, domain names, applications for trade names and copyrights.

The guidelines specifically mandates that all new banks are to be set up through a non-operative financial holding company.
In April 2014, RBI granted new banking licenses to two private sector entities --IDFC Ltd and Bandhan Financial Services.
IDFC Bank Ltd headquartered in Chennai, was established as a public limited company to carry out business of banking pursuant to approval granted by Reserve Bank in April 2014. Over the last two decades, RBI licensed 12 banks in the private sector in two phases.
Ten banks were licensed on the basis of guidelines issued in January 1993 and two more licences were issued in April 2014.

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