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The country's largest housing finance company HDFC Limited will merge with the country's largest private bank HDFC. HDFC Bank said that the process of amalgamation will start after the approval of several regulators, which will require the approval of the Reserve Bank, Securities and Exchange Board of India (SEBI).
Under the proposed deal, for every 25 equity shares of HDFC Ltd, 42 equity shares of HDFC Bank will be held at the stock exchange ratio.
"After considering the recommendations and reports of the Audit Committee and the Committee of Independent Directors, the Board of Directors of HDFC Bank in its meeting held on April 4, 2022, has merged HDFC Investments and HDFC Holdings with Housing Limited," the filing said. The merger plan has been approved.
Analysts believe the merger could be the result of a recommendation by the Reserve Bank of India in November 2020 that large, well-managed shadow lenders with an asset size of more than Rs 500 billion can be considered for conversion into banks.
"This is a merger of equals," said Deepak Parekh, chairman of the Housing Development Finance Corporation Limited. In addition, the resulting larger balance sheet would allow for high-value infrastructure loans, accelerate the pace of credit growth in the economy, boost affordable housing, and increase the amount of credit for the priority sector, including credit for the agricultural sector," he added.
“HDFC Limited's product and market leadership in the home finance business and HDFC Bank's distribution and customer leadership enables the combined entity to offer a comprehensive suite of financial products to Indians generally and the proposed transaction is a big step to make the vision a reality. housing for all as envisioned by our government,” said Atanu Chakraborty, Chairman of HDFC Bank.
"The resulting larger balance sheet would allow for the underwriting of large infrastructure loans, accelerate the pace of credit growth in the economy, boost affordable housing, and increase the amount of credit for the priority sector…" said the president of HDFC Ltd, Deepak Parekh. (HDFC Bank merge)
At Friday's close, HDFC Bank had a market value of Rs 8.34 trillion ($110.06 billion), while HDFC Ltd was worth Rs 4.44 trillion ($58.59 billion).
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