The Finance Ministry has granted an exception to the IDFC First Bank to raise its shareholding above 30 percent in Niraj Kakad Constructions. The decision comes after the recommendations from the Reserve Bank of India in the matter.
In its notification, the Ministry of Finance said, “The provisions of sub section (2) of section 19 of the said Act shall not apply to the IDFC First Bank, in so far as they relate to its holding shares of an amount exceeding thirty percent of the paid-up capital of Niraj Kakad Constructions.”
IDFC First Bank: Why its an exception?
According to sub-section (2) of Section 19 of the Banking Regulation Act, 1949, a bank cannot have a shareholding of over 30 percent in any company. The restriction applies to all forms of direct or indirect ownership, such as pledges, mortgages or absolute ownership.
Earlier, in March 2020, the Reserve Bank permitted an exception for the State Bank of India to also raise its stake above 30 percent in the troubled Yes Bank. After the RBI-driven move to rescue Yes Bank, the State Bank raised its shareholding in Yes Bank to about 48 percent. Later on, SBI reduced its stake in Yes Bank to under 30 percent.
IDFC First Bank FY25 highlights
In its annual report, released on July 5, IDFC First Bank said that it has registered a 25 percent growth in its deposits in FY25. The bank said that its deposits in the fiscal year amounted to Rs 2.5 lakh crore.
Furthermore, the bank saw a 20 percent growth in its loans and advances in FY25. The bank said its total loans and advances stood at Rs 2.4 lakh crore in FY25. Additionally, the bank’s profit after tax (PAT) saw a 48 percent decline in the year as it generated Rs 1,525 crore PAT in FY25, against Rs 2,957 crore in the previous fiscal year.
