Mortgage lender Housing Development Finance Corporation (HDFC) on April 4 said that its board has approved the merger of its wholly owned subsidiaries HDFC Investment Ltd and HDFC Holdings Ltd with HDFC Bank Ltd. HDFC will acquire 41 per cent stake in HDFC Bank through a transformation. The merger with the stock exchanges as per HDFC Bank filings. HDFC Ltd Chairman Deepak Parekh said, “The merger will not have any impact on the employees of HDFC Ltd.
HDFC Ltd Chairman Deepak Parekh said, “It is an equal merger. We believe that the housing finance business is poised to grow rapidly due to government initiatives like implementation of RERA, infrastructure status to the housing sector, affordable housing for all. Over the years, various regulations for banks and NBFCs have been harmonized, enabling possible mergers. ,
“In addition, the resulting large balance sheet will allow underwriting of big ticket infrastructure loans, accelerate the pace of credit growth in the economy, promote affordable housing and increase the quantum of credit to the priority sector, including credit to the agriculture sector. ,” They said. said.
In the press conference, Deepak Parekh said that the process would take 12-18 months due to multiple approvals. Parekh said that RBI does not allow officers older than 75 years to join the board, I have crossed that age. Keki will have a year and a half, so he has time and can become the director of the board, whatever Shashi wants him to do. Parekh said Keki Mistry does not want to be a full-time executive but may be on the board.
HDFC has a net worth of Rs 6,23,420.03 crore, turnover Rs 35,681.74 crore and net assets Rs 1,15,400.48 crore as on December 31, 2021.
On the other hand, HDFC Bank has net assets of Rs 19,38,285.95 crore, turnover (including other income) for the nine months ended December 31, 2021 is Rs 1,16,177.23 crore and total assets are Rs 2,23,394.00 crore. , till December 31, 2021.
HDFC Bank said the proposed transaction will enable HDFC Bank to build its home loan portfolio and enhance its existing customer base. The private lender said the proposed transaction is based on leveraging the significant complementarities that exist between the parties.
The merger of HDFC-HDFC Bank has been in the news for some time now. In fact, in 2015, HDFC Chairman Deepak Parekh had said that his firm could consider a merger with HDFC Bank, provided the circumstances were favourable. But, the wait for the merger got prolonged as the parent shelved the idea, saying the regulatory environment was not conducive. Parekh had said that the merger makes sense provided there is no loss of value to the shareholders and given the business synergy between the two institutions. But, there is a question on the timing of the merger; Why did he choose to do it now? A major reason could be the emerging regulatory approach of the banking regulator to NBFCs. The advantage of being an NBFC as compared to the old times is almost absent now.
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