Analysis - IDFC First Bank

SYNERGIES OF MERGER MAKE IDFC FIRST BANK A GOOD BET

IDFC First Bank was founded by the merger of erstwhile IDFC Bank and the erstwhile Capital First on December 18, 2018. IDFC Bank was founded in 1997 to finance infrastructure, focusing primarily on project finance as well as mobilization of capital for private sector infrastructure development. IDFC Bank provided financial intermediation for infrastructure projects and services, value addition via innovative products to the infrastructure value chain or asset maintenance of existing infrastructure projects. Capital First has stayed consistent with the theme of financing self-employed entrepreneurs, MSMEs and consumers through the platform of technology and has grown the retail franchise. The company achieved a diversified portfolio across 600 industries and over 70 lakh customers. Retail loan assets stood at 91 percent of the overall loan assets. Capital First provided financing to select segments that are traditionally underserved by the existing financing system because due to their small ticket sizes, credit evaluation and collections are difficult and business is unviable due to high operating and credit costs. Capital First would have run into problems as institutional funding lines, which were the company’s main source of liabilities, could be constrained.