7 things to know about IDFC Bank

“No one likes bankers as there is a widespread perception that bankers are product pushers and less of solution providers. This is where IDFC Bank will like to stand out in services and offering,” Rajiv Lall, executive vice-chairman & managing director of IDFC Bank, the new kid in the financial market, had earlier said.

The new private-sector lender launched its operations on Thursday with 23 branches for corporate and rural customers.

Starting with a predominant share of corporate banking business, IDFC’s banking subsidiary expects to grow the business of Bharat banking, a rural banking unit, to Rs 15,000 crore in five years. The bank’s aim is to grow the client base from the current 400 corporate customers to 15 million in this period. The bulk of these customers are expected to come from business and personal banking and Bharat banking.

Business Standard lists 7 things you should know about the new bank.

1. Ready-assets advantage

The biggest advantage of IDFC Bank will be that after demerger of IDFC (holding company, IDFC FHCL) and IDFC Bank, all assets and liabilities related to banking operations have been transferred to IDFC Bank. The bank says it will be profitable from day one, backed by the accumulated profit of Rs 1,800 crore on the books of IDFC.

2. Small business units

The personal and business banking unit of the bank, focusing on retail, small and medium enterprises (SMEs) and self-employed professionals, will start operations in January 2016. 

3. Base rate

To begin with, IDFC Bank will have a base rate of 9.5 per cent and deliver at least a Rs 1,000 crore of profits this year, Lall had told CNBC-TV18 in an interview.

4. Stressed assets

The net non-performing assets (NPAs) will be between 2 per cent and 3 per cent at the time of the start of the bank’s operations, but the total stressed assets — NPAs plus restructured assets — will be close to 15 per cent.

5. Growth target & customer acquisition

The bank is aiming at 10-15 per cent net profit growth and will rely on technology for customer acquisition, rather than opening branches across the country. 

6. Books of account

IDFC Bank will have a balance sheet of Rs 75,000-80,000 crore initially. Out of this, the loan book, mostly infrastructure advances, will be in the region of Rs 55,000 crore, while the balance will be comprised of bonds, corporate bonds and investments. 

7. Shareholding 

IDFC shareholders (those who bought shares before October 1) will get one equity share in IDFC Bank for every equity share held in IDFC. IDFC Financial Holding Company (a 100 per cent subsidiary of IDFC) will hold a 53 per cent equity share in IDFC Bank, while 47 per cent will be held by shareholders of IDFC. IDFC Bank shares are likely to be listed by November 6, post which the new shares can be traded by investors. The shares of IDFC Ltd slid on BSE on Thursday.By 2 pm, the stock had declined 56 per cent (Rs 80) from its previous close and was trading at Rs 61.40 a share.