IndusInd bank merger with BFIL

On December 11, 2018, according to NCLT, Bharat Financial Inclusion Ltd (BFIL) will go to meet to IndusInd bank on the issue of merger. The merger had received approval from the Competition Commission of India (CCI). This merger was on a card for a long time. Last year, in October, Induslnd Bank has decided to acquire the top micro-finance company BFIL. This merger is the trademark for many intermediary financial companies. All formalities have been done and soon in December, both entities are going to be merged.

The new entity will have 4,000 branches and 16 million consumers. This bank also received a 'No Objection' from the Reserve Bank of India (RBI) on March 13th of this year. IndusInd and BFIL had come into an agreement on 11 September to evaluate the merger scheme but even a week before both IndusInd and RBL were very close to each other in the race. IndusInd moved ahead by agreeing to offer a premium, promising to keep all BFIL employees on rolls for three years and offering 20% one-time “goodwill” payment to all BFIL employees. RBL was unable to match the IndusInd offer.

BFIL has not any main investor; near about 20 private equity funds own almost 70% of the firm. With no “owner”, the board should be sensitive to all three components (customers, the employees, and the shareholders) while signing off the merger. The availability of international, long-term investors helped BFIL in decision making but it is a time-consuming process.

By following these norms, the independent directors in banks and financial intermediaries which have no promote can be inspired from such merger. It was not an easy decision as it is going to change all the dynamics of the IndusInd Bank.