HDFC Bank has reportedly received approval from banking regulator RBI to merge with its parent company, HDFC Limited.

Considered to be the biggest deal in the history of Indian corporate, HDFC Bank agreed to acquire India’s biggest mortgage lender for USD 40 billion to create a financial services giant.

The proposal for the merger is subject to various regulatory and statutory approvals, including from the National Company Law Tribunal (NCLT), Competition Commission of India (CCI), and other relevant authorities along with the respective creditors and stakeholders of both companies.

Recently, the stipulated merger got approval from the NSE and BSE. The proposed organization will have a combined asset base of around USD 226.8 billion (Rs 18 lakh crore). The merger is expected to be completed by the second quarter or third quarter of the fiscal year 2024, subject to customary approvals.

Once the transaction is completed, HDFC Bank will be fully owned by public stakeholders, while current HDFC shareholders will own around 41% of the bank. Each HDFC stakeholder will receive 42 HDFC Bank shares for every 25 shares owned.

As per an observation letter from BSE, HDFC Bank has been told to reveal the details of all the legal actions taken by regulators like SEBI against the entities, its directors, and the promoter group, in its formal petition to be filed before NCLT.

The letter also mentioned that HDFC Bank should ensure that no changes are made to the draft scheme without the written consent of SEBI, except the ones mandated by the tribunals or regulators.

The merged entity is obliged to provide proposed equity shares issued for the scheme only in dematerialized form.

Post the merger, the combined balance sheet will reach around USD 225.26 billion (Rs 17.87 lakh crore) with a net worth of USD 41.61 billion (Rs 3.3 lakh crore) as per the balance sheet of December 2021.

Source credit:

https://www.moneycontrol.com/news/business/banks/hdfc-banks-receives-rbi-nod-for-merger-with-hdfc-8779091.html