All share and warrant holders of HDFC as of July 13 would be eligible for HDFC Bank shares.
July 12 has been set as the date for the transfer of non-convertible debentures (NCDs) of HDFC in the name of HDFC Bank. While commercial papers of HDFC will be transfered to HDFC Bank from July 7.
HDFC Bank will issue and allot eligible shareholders 42 new equity shares for every 25 equity shares held by shareholders of HDFC Ltd as on July 13.
“This is a defining event in our journey and I’m confident that our combined strength will enable us to create a holistic ecosystem of financial services,” said Sashi Jagdishan, CEO, HDFC Bank. “As we navigate the path ahead, we will embrace challenges as opportunities, learn from our experiences, and strive to be the benchmark of success and integrity in the financial services industry”.
From a market capitalisation of less than Rs. 500 crores as mortgage firm in the 80s, the HDFC and HDFC Bank merger will create world’s fourth biggest bank by market value behind JPMorgan, ICBC of China and Bank of America, according to Bloomberg calculations. The combined market cap of all HDFC listed entities currently is Rs. 16.63 lakh crores.”The larger net-worth would allow greater flow of credit into the economy. It will also enable underwriting of larger ticket loans, including infrastructure loans and contribute further to nation building and employment generation,” the two entities said a in a press release.All employees of HDFC will become HDFC Bank employees from today. Post merger, the key HDFC Bank subsidiaries include HDFC Securities Ltd., HDB Financial Services Ltd., HDFC Asset Management Co. Ltd, HDFC ERGO General Insurance Co. Ltd., HDFC Capital Advisors Ltd. and HDFC Life Insurance Co. Ltd.
The merger was announced about 15 months ago on April 4, 2022, ending two decades of speculation on their eventual union.
The NCLT approved the merger on March 17. The bank had received the first okay from Reserve Bank of India in July 2022 which was followed by other regulators like Securities and Exchange Board of India (Sebi), shareholders of HDFC and HDFC Bank, the Pension Fund Regulatory and Development Authority (PFRDA) and the Competition Commission of India (CCI).
The bank had made certain forbearance requests to the Reserve Bank of India (RBI) on meeting statutory liquidity ratio (SLR) and cash reserve ratio requirements (CRR) which were not allowed by the regulator.
According to HDFC Bank’s internal estimates, the merger would lead to SLR-CRR requirements of an additional Rs 70,000 crore, along with an incremental Rs 1.75 lakh crore to meet priority sector lending (PSL) norms.
The RBI has permitted the bank to meet priority sector lending requirements in a staggered fashion over three years, the bank said in an exchange notification.
PSL requirement on one-third of the outstanding loans of HDFC Bank will have to be met on the effective merger date. The remaining two-thirds of the portfolio will be considered over the next two years after the merger.
HDFC Bank will also be required to do a one-time mapping of all HDFC borrowers for benchmarks and spreads. All retail, MSME, and other floating rate loans sanctioned by HDFC would need to be linked to an appropriate benchmark within six months from the effective date.
Investments, including those of subsidiaries and associates of HDFC, are allowed to continue as investments of HDFC Bank.
Earlier this month HDFC reduced its stake in education loan company Credila to 10% selling 90% stake to Baring Private Equity and ChrysCapital for Rs 9060 crore to meet RBI norms.
