Mumbai, Aug. 22: The board of directors of IndusInd Bank Ltd and IndusInd Enterprises & Finance Ltd (IEFL) have recommended a swap ratio of 1:1 for the amalgamation of IEFL with IndusInd Bank.
IEFL, as one of the promoters holds 24.86 per cent of the paid up equity capital of the bank and is registered with the Reserve Bank of India (RBI) as a non-banking finance company. Fifty one per cent of its equity is held by IndusInd International Holdings Ltd (IIHL) which is also a co-promoter of the bank. IIHL currently holds 25 per cent stake in the bankís capital.
The net worth of the bank post merger is expected to increase to Rs 618 crore as of March 31, 2002 and the capital adequacy ratio of the bank in the post-merger scenario will stand improved to 14.06 per cent as of March 31, 2002 against 12.51 per cent declared.
The merger is expected to broad-base the capital of the bank and it will result in promoters holding in the bank coming down to 41.32 per cent from 49.86 per cent. IEFL has about 39,000 shareholders, while the equity of the bank was spread over 1,08,000 shareholders.
The merger would come into effect after filing of high court order with the Registrar of Companies and is subject to RBIís and other applicable approvals.
IndusInd Bank will now focus on the retail segment, a press statement issued today said. The bank justified the merger by pointing out that following liberalisation, all business which have been or are being carried out by NBFCs, are now carried by commercial banks as well. It is felt that when the business of IEFL is combined with that of the bank, the amalgamated company would have better utilisation of resources.
IEFL has high capitalisation and its investment activity has synergies with the bankís treasury business and the merger would improve capitalisation and strengthen treasury business of the bank.