Mumbai, April 1: The Reserve Bank of India (RBI) has asked IndusInd Bank to revise the swap ratio for the merger of IndusInd Enterprises & Finance (IEFL) with itself.
The shareholder-approved figure of 1:1 will change to 5:6 — five IndusInd Bank shares for six of IEFL — if the central bank’s formula is accepted.
IEFL, which holds 24.86 per cent of IndusInd Bank’s paid-up equity as one of its main promoters, is registered as a non-banking finance company. IndusInd International Holdings (IIHL), another co-promoter of the bank, controls 51 per cent of IEFL’s shares.
IndusInd Bank managing director Bhaskar Ghose said the RBI had slammed the door on a merger, but only wanted the exchange ratio to be modified. The central bank has already been requested to reconsider its decision since the difference between the two figures is small.
“At most, we will have to go ahead with the 5:6 proposed by the central bank. This will entail some more formalities and administrative clearances,” he added.
The promoters holding in the bank is currently around 49.86 per cent, a number that will fall to 41.30 per cent after IEFL is folded into it. Ghosh said it is possible that the promoters raise their stake to 49 per cent. This could be prompted by the policy that allows private bank promoters to winch up holding to 74 per cent.
Talking about future plans, Ghose said IndusInd is looking at using the expertise of IEFL to venture into equity trading. The bank has received several requests to begin dealing in shares from its NRI clients and shareholders. The corpus for this will be 2-2.5 per cent of advances.