Federal Bank Secures RBI Nod for ICICI AMC's 9.95% Stake

29 Dec 2023 , 10:35 AM

Federal Bank has obtained approval from the Reserve Bank of India (RBI) to allow ICICI Prudential Asset Management Company (ICICI AMC) to acquire up to 9.95% stake in the bank.

The approval from RBI, granted on December 28, 2023, is subject to specified conditions as outlined in a regulatory filing by Federal Bank. In addition to Federal Bank, ICICI AMC has also received approval from RBI to acquire a 9.95% stake in RBL Bank and Equitas Small Finance Bank.

Federal Bank’s MD&CEO, Shyam Srinivasan, emphasized the strategic importance of collaborating with fintech companies to expand customer reach. He expressed the bank’s intent to partner rather than compete with fintech firms, highlighting their significant role in client acquisition.

Fintech collaborations contribute substantially to the bank’s daily account openings, with around 60% facilitated digitally by fintechs, particularly for credit cards and personal loans.

The bank aims for organic growth while maintaining a balanced portfolio between secured and unsecured loans. Approximately 3% of the bank’s portfolio comprises unsecured loans, including credit cards, personal loans, and loans to MFIs.

Shyam Srinivasan confirmed the bank’s commitment to maintaining credit standards, emphasizing growth opportunities in the market, well-capitalized status, and no immediate capital requirements. The bank’s growth rate is reported at 18%, with total business reaching Rs 4.26 lakh crore by the end of September 2023.

Federal Bank’s strategic goal is to be among the top five private lenders in India in the coming years.

The bank is actively focusing on ‘green banking,’ involving exposure to projects based on renewable energy.

Plans are underway to expand the bank’s physical presence by opening an additional 250 branches from January 2024 to mid-2025, targeting Tier 2 and Tier 3 cities.

Federal Bank presently has 1408 branches nationwide, with a consistent annual opening of 100 to 150 branches.

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