Another private-sector lender is undergoing a reverse merger following the amalgamation of HDFC with HDFC Bank last Saturday.

The board of IDFC First Bank on Monday approved the amalgamation of IDFC into the lender. This process will see IDFC Financial Holding Company merging into IDFC Ltd, followed by the latter getting merged with the private sector bank.

Under the arrangement, shareholders of IDFC will get 155 shares of IDFC First Bank for every 100 shares held by them.

Currently, IDFC holds around 40 per cent of IDFC First Bank. This is being held through IDFC Financial Holding Company (IDFC FHCL).

IDFC FHCL is a non-operative financial holding company (NOFHC) registered with the Reserve Bank of India (RBI) as a non-deposit-taking NBFC. The RBI had mandated that equity investment in IDFC First Bank should be held only through IDFC FHCL.

Therefore, IDFC Ltd which is the promoter of IDFC First Bank had invested in the lender only through a NOFHC.

IDFC First Bank said that the merger will lead to simplification of the corporate structure of IDFC FHCL, IDFC Ltd and the bank by consolidating them into a single entity and will help streamline the regulatory compliances of these entities.

The merger is subject to the receipt of requisite approvals from the RBI, Sebi, the Competition Commission of India, the National Company Law Tribunal, BSE and the NSE.

On December 18, 2018, IDFC Bank and Capital First (a consumer and MSME financing institution) merged and subsequently was renamed IDFC First Bank.

“This is an important event for the bank and all the shareholders of the bank as well as IDFC Limited. We now embark on the next phase of our growth journey towards our long-term vision, and to create sustainable shareholder value in the years to come,’’ Sanjeeb Chaudhuri, chairperson of IDFC First Bank, said.