IDBI merger: Swap ratio @ 142:100

IDBI bank is to be merged with Industrial Development Bank of India in the ratio of 142:100 (every 142 shares of bank for 100 shares of IDBI), with the government holding a majority stake in the merged entity.

IDBI's 2.5 per cent stake in the bank would be kept in a trust to bring value to shareholders of the erstwhile financial institution and the balance holding will be extinguished.

The government will hold 51.3 per cent stake in the merged entity, IDBI chairman and managing director M Damodaran said after separate board meetings of both the entities.

The appointed date for the merger has been fixed as October 1, 2004 and the process is expected to be completed by March 31 this year, he said.

He said IDBI Bank is already compliant with statutory liquidity ratio and cash reserve ratio norms while IDBI has been given a time frame to meet with the necessary guidelines.]

"We are in consultation with the Reserve Bank of India for a time frame for equity exposures and redefining the priority sector lending to capture the business model of IDBI," he said.

Damodaran said two strategic business units would be formed for the development financial business and for the IDBI Bank.