IDFC First Bank is an Indian Private Sector Bank that is owned by IDFC, an integrated infrastructure finance company. The bank started operations on 1 October 2015, after receiving a universal banking licence from the Reserve Bank of India in July 2015. It is listed on BSE and NSE.

IDFC FIRST Bank was founded by the merger of Erstwhile IDFC Bank and Erstwhile Capital First on December 18, 2018.

IDFC Bank + Capital First = IDFC First Bank

Erstwhile IDFC BANK LTD.

IDFC Limited was set up in 1997 to finance infrastructure, focusing primarily on project finance and mobilization of capital for private sector infrastructure development. Whether it is financial intermediation for infrastructure projects and services, whether adding value through innovative products to the infrastructure value chain or asset maintenance of existing infrastructure projects, the company focused on supporting organisations to get the best return on investments. The Company’s ability to tap global as well as Indian financial resources made it the acknowledged experts in infrastructure finance. Dr. Rajiv Lall joined the company in 2005 and successfully expanded the business to Asset Management, Institutional Broking, and Infrastructure Debt Fund. He applied for a commercial banking license to the RBI in 2013. In 2014, the Reserve Bank of India (RBI) granted an in-principle approval to IDFC Limited to set up a new bank in the private sector. Following this, the IDFC Limited divested its infrastructure finance assets and liabilities to a new entity – IDFC Bank- through demerger. Thus, IDFC Bank was created by demerger of the infrastructure, lending business of IDFC to IDFC Bank in 2015.

The bank was launched through this demerger from IDFC Limited in November 2015. During the subsequent three years, the bank developed a strong and robust framework including strong IT capabilities for scaling up the banking operations. The Bank designed efficient treasury management system for its own proprietary trading, as well as for managing client operations. The bank started building Corporate banking businesses. Recognizing the change in the Indian landscape, emerging risk in infrastructure financing, and the low margins in corporate banking, the bank launched retail business for assets and liabilities and put together a strategy to retailize its loan book to diversify and to increase margins. Since retail required specialized skills, seasoning, and scale, the Bank was looking for inorganic opportunities for merger with a retail lending partner who already had scale, profitability and specialized skills.

Erstwhile CAPITAL FIRST LTD.

Mr. Vaidyanathan who had built ICICI Bank’s Retail Banking business from 2000-2009 and was then the MD and CEO of ICICI Prudential Life Insurance Company in 2009-10, He quit the group for an entrepreneurial foray to acquire a stake in an existing NBFC with the stated intent of converting the NBFC to a commercial bank financing small businesses. During 2010-12, he acquired a significant stake in a real-estate financing NBFC through personal leverage, and launched businesses of financing small entrepreneurs and consumers. The NBFC wound down existing businesses and instead started businesses of financing such segments within consumer and micro-entrepreneurs that not financed by existing banks, by using alternative and advanced technology led models. He built a prototype for such financing (Rs 12000-Rs. 30,000, ~$300- $500), built a loan book of Rs. 770 crores ($130m, March 2011) within a year, and presented the proof of concept to many global private equity players for a Leveraged Management Buyout. In 2012, he concluded India’s largest Leveraged Management Buyout, got fresh equity of Rs. 100 crores into the company and founded Capital First as a new entity with new shareholders, new board, new business lines, and fresh equity infusion.

Between March 31, 2010 to March 31, 2018, the Company’s Retail Assets under Management increased from Rs. 94 crores ($14m) to Rs. 29,625 crores ($4.3 b, Sep 2018). The company financed seven million customers for Rs. 60,000 crores ($8.5b) through new age technology models. The company turned around from losses of Rs. 30 crore and Rs. 32 crores in FY 09 and FY 10 respectively, to PAT of Rs. 327 crores ($ 4.7b) by 2018, representing a 5-year CAGR increase of 56%. The loan assets grew at a 5-year CAGR of 29%. The ROE steadily rose from losses in 2010 to 15% by 2018. The market capitalization of the company increased ten-fold from Rs. 780 crores in March 2012 at the time of the MBO to over Rs. 8,282 crores in January 2018 at the time of announcement of the merger. As per its stated strategy, the company was looking out for a banking license to convert to a bank.