RBI examines HDFC-HDFC Bank merger proposal, says Governor Shaktikanta Das

“The sky today may be overcast with clouds, but we will use all our energies, resolve and resources to let the sunlight illuminate India’s future.” (Image: Reuters)

RBI Governor Shaktikanta Das said the regulator has received a proposal from Housing Development Finance Corp and HDFC Bank on the merger deal and it is being examined.

“We have received a proposal from HDFC and HDFC Bank with regard to the merger announcement they have made,” Das told the media after announcing the Monetary Policy Committee decision on April 8.

“The proposal has been received and that is under examination and we will, in terms of our various regulatory guidelines and other aspects, examine them and as and when a decision is taken, you will come to know about it,” he said.

In a surprise move on April 4, the HDFC twins announced the merger between HDFC and HDFC Bank. On completion of the deal, HDFC will acquire a 41 percent stake in HDFC Bank and all subsidiaries of the housing financier will be owned by the lender.

HDFC Chairman Deepak Parekh said the rationale behind the merger included several aspects like less onerous statutory liquidity requirement and cash reserve ratio (SLR and CCR requirements), a favourable interest rate regime, increased transparency in the realty sector, and giving mortgage customers access to a wider range of services.

Parekh said HDFC Bank in its proposal has asked the RBI to adopt a phased approach in meeting SLR and CRR requirements after its merger with HDFC. Further, HDFC Bank also requested the RBI to allow it to  “grandfather” certain assets and liabilities of HDFC. Grandfathering is essentially an exemption from a new regulation that may be introduced for a particular sector.