Merger of HDFC and HDFC Bank secures the NCLT green light

Once the deal is effective, HDFC Bank will be 100 per cent owned by public shareholders, and existing shareholders of HDFC will own 41 per cent of the bank. (representative image)

The National Company Law Tribunal (NCLT) has cleared the way for the merger of HDFC and HDFC Bank, which is being billed to be the biggest merger in the history of Corporate India.

The country's largest housing finance company HDFC Ltd will merge with country's largest private lender HDFC Bank to create a banking behemoth.

HDFC Ltd had already received approval letters including from Reserve Bank of India, Securities and Exchange Board of India (Sebi), PFRDA and Competition Commission of India (CCI) as well as from India's stock exchanges BSE and NSE.

Earlier, the tribunal had given its nod for holding a shareholders’ meeting for obtaining approval for the proposed merger.

Meanwhile, shares of HDFC Ltd and HDFC Bank were trading over 1.7 percent higher at Rs 2,575.95 and 1,578.20 apiece, respectively on BSE today during late trading hours.

The HDFC-HDFC Bank merger is expected to be completed by the second or third quarter of FY24.

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.

HDFC and HDFC Bank merger has been in the news for a while. In fact, back in 2015, Parekh had said his firm could consider a merger with HDFC Bank provided circumstances were in favour.

Termed as the biggest transaction in India’s corporate history, HDFC Bank on April 4 last year, agreed to take over the biggest domestic mortgage lender 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.

Once the deal is effective, HDFC Bank will be 100 per cent owned by public shareholders, and existing shareholders of HDFC will own 41 per cent of the bank.

Every HDFC shareholder will get 42 shares of HDFC Bank for every 25 shares held.