IDFC to apply for banking license, shares gain 2%

IDFC shares were up 2 percent in early trade Wednesday, after the company’s board approved the proposal to apply to the RBI for a banking license.

Analysts say this is on expected lines and IDFC is one of the front runners for banking license.

“Mobilising priority sector loans (PSL) within 30-35 months may be a challenge for IDFC. In the past, the management had indicated their willingness on compliance with SLR/CRR requirements. Overall, it is best-placed for seeking a banking license among stocks under our coverage,” brokerage house Kotak Securities had said in a note to clients earlier this month.

Dealers attributed the gains in the stock to reasons of sentiment more than anything else.

RBI has asked for application of bank licenses after a long period of nine years. The final guidelines were announced by the central bank on February 22, 2013.

The central bank has set July 1st as the deadline for applications. According to reports, so far around 25 firms have expressed interest for banking license.

IDFC's fourth quarter profit after tax rose by 57 percent year-on-year to Rs 536 crore and net interest income grew by 10 percent Y-o-Y to Rs 643 crore.

The growth in PAT was attributed principal gains that stood at Rs 129 crore in January-March quarter as against Rs 29 crore in a year ago period.

Provisions against bad loans jumped 216 percent Q-o-Q and 97 percent Y-o-Y to Rs 165 crore during the quarter.

At 09:52 hours IST, it was quoting at Rs 145.45, up 1.75 percent on the Bombay Stock Exchange.