Central bank approves HDFC Bank's request to set up step-down subsidiary

The Reserve Bank of India (RBI) on May 13 conveyed its approval to the HDFC Bank for setting up a step-down subsidiary through HDFC Securities Ltd, the lender said in a notification to exchanges.

This is for offering broking and clearing services in International Financial Services Centre (IFSC) at GIFT City, Gujarat on terms prescribed by the RBI, the bank said.

As per the plan, HDFC will acquire 41 percent stake in HDFC Bank. Every 25 shares held by HDFC shareholders will fetch them 42 shares of the bank. The merger created an entity that will have a market cap of Rs 12.8 lakh crore and a balance sheet of Rs 17.9 lakh crore. It will take around 15-18 months for HDFC group to get all necessary regulatory approvals for the merger.

HDFC twins have close to a dozen subsidiaries, including HDFC Credila and HDB Financial Services, that are in the lending business. Other subsidiaries of HDFC include HDFC Life, HDFC Pension, HDFC Mutual Fund, HDFC ergo, HDFC Property Fund and HDFC Edu

On May 9, Moneycontrol reported that HDFC Bank has sought the RBI’s permission to retain all its subsidiaries and those of parent HDFC in the current form after their merger takes effect, according to people familiar with the development.

(This is a developing story. Please check back for details)