IDFC plans to treble headcount in next 11 months

Firm gets set to start banking operations from Oct 2015, bulk of recruitments to start in April

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IDFC plans to treble its headcount as it prepares to start banking operations from October 1, 2015. The diversified financial services firm’s current employee strength is 600, which will be increased to 1,500-2,000 by October next year, said Sunil Kakar, group chief financial officer, IDFC. He added that while the bulk of the recruitment would commence from April 2015, the process has already started.

“Recruitment is going on in full swing. The senior management personnel being hired will be heading different divisions of the bank,” said Vikram Limaye, managing director and CEO, IDFC.

The IDFC board has approved a proposal to demerge its financial undertaking into its wholly-owned step-down subsidiary, IDFC Bank. “This is a fairly long process, as it has to go through several approvals of various entities and regulators, including the court process, which is expected to take anywhere between six and nine months after it formally gets launched in the court. It is likely to get launched in the courts by January 2015,” said Limaye.

IDFC posted a 14 per cent drop in net profit to Rs 421 crore for the second quarter of FY15, owing to a sharp increase in provisioning and operating expenses. “We posted good set of results under very difficult set of circumstances. The environment continues to remain slow. There are no new projects from a development perspective. So, corporate credit growth for us as well as the banking sector is low,” said Limaye.

Compared to the same period a year ago, provisioning — including that for bad loans — went up 459 per cent to Rs 281 crore. “We will keep building provisions over the next 12 months, as we keep assessing the environment. Our objective is to make sure there are no significant negative surprises when we become a bank in terms of asset quality issues that remain open-ended,” Limaye added.

IDFC is hopeful that with the recovery in economy, its growth, too, will pick up. “Since we are focused largely on infrastructure, that part of the economy has been quite slow and continues to remain slow. Our hope is that it will pick up after some of the issues that we have been talking about in the past couple of years get sorted out. However, at this point of time, we cannot see very much activity,” said Limaye.

In the next 11 months before operationalisation of the bank, IDFC will be engaged in figuring out on how to mobilise priority-sector assets.

“Those we will book in the NBFC (non-banking financial company) for now,” Limaye added.

Once the approval for the demerger is in place, these assets will move as a part of the bank. “The effective date of the demerger will necessarily have to be when the bank actually gets the licence to begin operations. The effective date of operationalising the bank will be when we have the final licence from the RBI (Reserve Bank of India) to commence activities as a bank,” said Limaye. The bank will get listed on the day one of commencing of banking operations, he added.