HDFC to complete its merger with HDFC Bank by July

Once the deal comes into force, HDFC Bank will be 100 percent owned by public shareholders, and existing shareholders of HDFC will own 41 per cent of the bank.

India's largest private sector lender HDFC Bank will complete its reverse merger with the parent Housing Development Finance Corporation Ltd (HDFC) by July this year, said HDFC Bank Chief Financial Officer Srinivasan Vaidyanathan.

Vaidyanathan, after announcing the bank’s January-March 2023 quarterly results, in a post-results analyst call said that because of the change of regulators, they have gone to the Insurance Regulatory and Development Authority of India (IRDAI) for its approval.

"We think it is June or possibly in July, which is where we think the timeframe is as we speak, given where we are on various things," said Vaidyanathan.

HDFC Ltd had received approval letters including from Reserve Bank of India, Securities and Exchange Board of India (SEBI) Pension Fund Regulatory and Development Authority (PFRDA) and Competition Commission of India as well as from India's stock exchanges BSE and the National Stock Exchange.

Also read: Merger of HDFC and HDFC Bank secures the NCLT green light

“We've made the application to the Securities and Exchange Board of India as it relates to the change in promoter and giving notices to mutual fund orders, so we've gone to SEBI to get their permission. We've also gone to IRDAI because of a change of promoter on the insurance side and we are waiting for their nod," Vaidyanathan said.

After seeking approvals from all the regulators, Vaidyanathan said, “we will circle back with the RBI (Reserve Bank of India) to take it to the final stages”.

The merger

The merger of HDFC and HDFC Bank has been in the news for a while. In fact, back in 2015, Deepak Parekh, the chairman of the country’s leading mortgage company, had said his firm could consider a merger with HDFC Bank provided circumstances were in favour.

Also read: HDFC-HDFC Bank merger to lead to bigger growth opportunity; will not take executive role, says Keki Mistry

Termed as the biggest transaction in India’s corporate history, HDFC Bank on April 4 last year agreed to take over the biggest housing finance company in a deal valued at about $40 billion, creating a financial services titan. The proposed entity will have a combined asset base of around Rs 18 lakh crore.

On March 10, in an exclusive interview with Moneycontrol, HDFC vice chairman and CEO Keki Mistry said that the merger will lead to bigger growth opportunities for the combined entity.

“Gradually, the objective is to expand housing loans from more and more branches of the bank. The growth opportunity on housing loans will be bigger in HDFC Bank (the combined entity) than HDFC,” said Mistry.

Once the deal comes into force, HDFC Bank will be 100 percent owned by public shareholders, and existing shareholders of HDFC will own 41 per cent of the bank.