Expect all approvals for bank ops in place by Sep '15: IDFC

Even the board of directors of IDFC Bank has also approved the ‘scheme’ at its meeting held on October 30, 2014. IDFC Bank is a recently incorporated company by IDFC Limited with a paid-up capital of Rs 5 lakhs and is currently not a listed entity.

In an interview to CNBC-TV18, Limaye said the bank is expected to get operational by October 1, 2015, and the demerger process is likely to take anywhere between six and nine months.

“We expect to file the scheme of arrangement with the court in January so we are in a good shape to get all approvals in place before the operations,” he said.

Speaking on the structure of the company post demerger, Limaye said IDFC Ltd, the listed entity, would be the promoter of the bank. As per the regulations for new banks, the promoter has to set it up through a non-operating financial holding company.

“So under IDFC, we will have 100 percent-owned non-operating financial holding company (NOFHC), which will need to own all the financially-regulated business of IDFC. Thus, the bank will be a subsidiary of the NOFHC, which in turn will hold 53 percent stake and the balance 47 percent will be owned directly by shareholders of IDFC,” he said, adding that the bank would be a listed entity from the day one of its operations.

Below is the transcript of Vikram Limaye’s interview with CNBC-TV18's Ekta Batra and Reema Tendulkar.Ekta: Could you give us a sense in terms of the de-merger scheme that was announced by IDFC. Could you take us through what the de-merger process will look like and by when will it be completed?A: As I have said before the bank is expected to get operationalised by October 1st, 2015 and the demerger process which is a court process is expected to take anywhere from 6-9 months. We expect to file the scheme of arrangement with the courts in January so that we are in good shape to get all the approvals in place before we operationalise in October. There are obviously a lot of other approvals that are required from all the regulators including Securities and exchange board of India (SEBI), Reserve Bank of India (RBI) and then the final license is granted by RBI.Once you have the court process completed approvals from various stake holders including creditors, all types of categories of bond holders, lenders etc and then the final license is given by RBI to commence banking operations. So, we expect all of that to be completed from January to September so that we can operationalise the bank in October.Reema: What will the structure of the company look like post the de-merger now?A: As we have said before IDFC Limited which is the listed entity today would be the promoter of the bank. As per the bank regulations for new banks the promoter of the bank has to set up the bank through a non operating financial holding company (NOFHC). So under IDFC we will have a 100 percent owned NOFHC. That NOFHC will need to own all the financially regulated businesses of IDFC. So the bank will be subsidiary of the NOFHC. We expect the NOFHC to hold 53 percent of the bank. The balance 47 percent will be owned directly by shareholders of IDFC.So as we have said for every share that a shareholder owns in IDFC he or she will get one share in the bank and the shareholding will therefore be, we expect, 53 percent owned by the NOFHC, 47 percent owned directly by the shareholders. All the other businesses that we have, the asset management business, alternatives business, investment banking, broking and the IDF NBFC that we now have approval to set up will also be subsidiaries of the NOFHC. In parallel from a structure perspective alongside the bank which is the way the banking regulations have been constructed.So that is what the structure will be. NOFHC will always be a 100 percent subsidiary of IDFC. I just want to add the bank will be listed on day one. So once we operationalise the bank in October 2015 it will be a listed entity. So you will have IDFC Limited as a listed entity and IDFC Bank also as a listed entity.