On April 4, HDFC Bank agreed to take over the biggest domestic mortgage lender in a deal valued at about USD 40 billion, creating a financial services titan.
The proposed entity will have a combined asset base of around 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 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.
“HDFC Bank has received a letter dated July 04, 2022 from the Reserve Bank of India (“RBI”) whereby the RBI has accorded it’s ‘no objection’ for the Scheme, subject to certain conditions as mentioned therein,” the lender said in a release.
However the statement by HDFC Bank on Monday did not mention the subject of certain relaxations that were requested by the lender from the RBI.
The scheme for amalgamation remains subject to various statutory and regulatory approvals including approvals from the Competition Commission of India, the National Company Law Tribunal and other applicable authorities, said HDFC Bank.
Last week, the merger proposal between the two entities received approval from stock exchanges. Both HDFC and HDFC Bank have got no-objection from both stock exchanges, clearing the path for the biggest such transaction in Indian corporate history. HDFC Bank is India’s largest private sector bank.
The BSE’s observation letter said the company is advised to disclose the details of all the actions taken by Sebi or any other regulator against any of the entities, its directors/promoters and promoter group, in the petition to be filed before NCLT.
The company shall ensure that no changes to the draft scheme except those mandated by the regulators or tribunals should be made without specific written consent of Sebi, it said.
In April, HDFC Bank had requested the RBI to provide relaxation on meeting regulatory norms on Statutory Liquidity Ratio, Cash Reserve Ratio and on priority sector lending.
HDFC Bank had also requested leeway on grandfathering of some loans after the completion of the merger with HDFC.
At the time, HDFC chairman Deepak Parekh said the RBI had taken the requests into consideration.