HDFC Bank Receives No Letter of Objection from RBI for Merger with HDFC

HDFC Bank has received approval from the Reserve Bank of India for the merger between the lender and Housing Development Finance Corporation.

“HDFC Bank has received a letter dated 04 July 2022 from the Reserve Bank of India (“RBI”) whereby the RBI has granted its “no objection” to the scheme, subject to certain conditions mentioned therein,” said said the lender in a release.

The merger program remains subject to various legal and regulatory approvals, including approvals from the Competition Commission of India, the National Company Law Tribunal and other relevant authorities, HDFC Bank said.

Last week, the proposed merger between the two entities received stock exchange approval.

HDFC and HDFC Bank received no objections from either exchange, paving the way for the largest such transaction in Indian corporate history. HDFC Bank is the largest private sector bank in India.

On April 4, HDFC Bank agreed to take over the nation’s largest mortgage lender in a deal valued at around $40 billion, creating a financial services titan.

The proposed entity will have a combined asset base of approximately Rs 18 lakh crore. The merger is expected to be completed by the second or third quarter of FY24, subject to regulatory approvals.

Once the deal becomes effective, HDFC Bank will be 100% owned by public shareholders, and existing HDFC shareholders will own 41% of the bank. Each HDFC shareholder will receive 42 HDFC Bank shares for every 25 shares held.

The BSE observation letter states that the company is advised to disclose details of any action taken by Sebi or any other regulator against any of the entities, its directors/promoters and its promoter group, in the petition to be filed with NCLT.

The company will ensure that no changes to the proposed plan, except those mandated by regulators or the courts, are made without Sebi’s specific written consent, he said.

HDFC Bank’s statement on Monday did not mention the subject of some relaxations which were requested by the lender from the RBI.

In April, HDFC Bank had asked the RBI to ease compliance with regulatory standards on statutory liquidity ratio, cash reserve ratio and lending to priority sectors.

HDFC Bank had also requested a grandfathering leeway on certain loans after the merger with HDFC was finalized.

At the time, HDFC chairman Deepak Parekh said the RBI had taken the demands into consideration.

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