India's leading depository participant and largest custodian of securities, Stock Holding Corporation of India (SHCIL), will be merged with state-owned lender IDBI Bank through a non-cash, share-swap deal, subject to approvals from regulators and other SHCIL stakeholders.
The merger will give 227 offices and access to 800,000 high net worth customers to IDBI Bank.
On Wednesday, the boards of both the companies cleared the merger proposal. The process is expected to be completed by March, 2013.
In a statement issued in Mumbai, IDBI Bank said that merchant bankers, chartered accountants, and valuers are being appointed to undertake due diligence and valuation of SHCIL for arriving at the swap ratio for the merger.
The assets and liabilities of SHCIL will move to IDBI after merger.
SHCIL operates through a wide network of 227 branches/offices with around 1,300 employees.
Since no other public sector bank is now offering custodial services, IDBI Bank will emerge as a major player in this segment of business in the country.
SHCIL counts among its shareholders various public sector financial institutions including IFCI, SU-UTI, LIC and GIC, among others, besides IDBI. These shareholders will get the shares of the IDBI Bank post merger.