RBI approves HDFC Bank’s merger with parent HDFC

1 min read . Updated: 04 Jul 2022, 10:42 PM IST Shayan Ghosh

The merger, HDFC Bank said, is subject to various statutory and regulatory approvals, including approvals from the Competition Commission of India, the National Company Law Tribunal, other applicable authorities

The merger, HDFC Bank said, is subject to various statutory and regulatory approvals, including approvals from the Competition Commission of India, the National Company Law Tribunal, other applicable authorities

MUMBAI : India’s largest private lender HDFC Bank on Monday said the Reserve Bank of India (RBI) has approved its proposed merger with parent and mortgage lender Housing Development Finance Corp Ltd (HDFC).

“Please note that HDFC Bank has received a letter dated 4 July 2022 from the Reserve Bank of India (RBI) whereby the RBI has accorded its no objection for the scheme, subject to certain conditions as mentioned therein," it said in a regulatory filing.

The merger, HDFC Bank said, is subject to various statutory and regulatory approvals, including approvals from the Competition Commission of India, the National Company Law Tribunal, other applicable authorities and the respective shareholders and creditors of the companies involved.

HDFC Bank and HDFC had announced a deal in April, to make the merged entity more competitive, and allowing access to a captive customer base to cross-sell products. The merger, expected to close in 18 months subject to regulatory and other approvals, will significantly widen its lead over private sector peers ICICI Bank and Axis Bank, in terms of total loans.

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Currently, HDFC Bank is in the home loan business in conjunction with HDFC. As per the arrangement, HDFC Bank sells home loans, while HDFC approves and disburses. HDFC Bank gets a sourcing fee for the transactions and has the option to purchase up to 70% of the fully-disbursed loans. As of 31 December, the merged entity‘s loan book stood at ₹17.9 trillion, way ahead of ICICI Bank’s ₹8.14 trillion and Axis Bank’s ₹6.65 trillion.

ABOUT THE AUTHOR

Shayan Ghosh

Shayan Ghosh is a national writer at Mint reporting on traditional banks and shadow banks. He has over a decade of experience in financial journalism. Based in Mint’s Mumbai bureau since 2018, he tracks interest rate movements and its impact on companies and the broader economy. His interests also include the distressed debt market, especially as India’s bankruptcy law attempts recoveries of billions worth of toxic assets.