HDFC-HDFC Bank merger: Bourses approves transfer of NCDs from HDFC Ltd to HDFC Bank
The final approval from Sebi will help pave the way for the merger of HDFC into HDFC Bank, which is expected to be finalised by the third quarter of this financial year.
- Apr 27, 2023,
- Updated Apr 27, 2023 2:00 PM IST
In the run-up to the much-awaited merger, HDFC Ltd on Wednesday said both stock exchanges, BSE and NSE, have cleared the transfer of non-convertible debentures (NCD) from the mortgage firm to HDFC Bank.
The bourses have granted their in-principle approval in letters issued on April 26, 2023, for the transfer of additional NCDs issued by HDFC Limited post receipt of the earlier approval on December 13, 2022, to HDFC Bank, the company said in a regulatory filing.
Now, the merger needs the final nod from the Securities and Exchange Board of India (Sebi), for the ultimate change in control of certain subsidiaries of HDFC Limited.
The final approval will help pave the way for the merger of HDFC into HDFC Bank, which is expected to be finalised by the third quarter of this financial year.
In April 2022, HDFC Bank agreed to take control of the biggest domestic mortgage lender, HDFC Ltd, in a deal valued at about $40 billion.
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 they hold. The merger is expected to see the rise of another financial services titan in the country. Post merger, the entity will have a combined asset base of around Rs 18 lakh crore.
On Monday, HDFC Bank said the Monetary Authority of Singapore (MAS) has given approval for the merger of HDFC Investments and HDFC Holdings with parent HDFC Ltd.
As part of a composite scheme of merger, Griha Pte, a wholly owned subsidiary of HDFC Investments and a foreign step-down subsidiary of HDFC Ltd, received approval for the merger with HDFC Bank.
In an email on April 24, 2023, MAS gave its nod for the acquisition of shares in Griha Pte by HDFC Bank. This would result in the bank acquiring 20 per cent or more of the issued share capital of Griha Pte.
Now, the proposed takeover is subject to receipt of final approvals from the Sebi in respect of the change in control of certain subsidiaries of HDFC Ltd.
RBI relief on PSL norms
Last week, the Reserve Bank of India (RBI) gave HDFC Bank three years to comply with the priority sector lending norms (PSL) following its merger with HDFC Ltd (HDFC). It has not given any relaxation on abiding by the cash reserve ratio and statutory liquidity ratio rules.
According to RBI norms, commercial banks need to extend 40 per cent of the adjusted net bank credit (ANBC) of the previous year towards the priority sector.
The RBI has allowed HDFC Bank to consider a third of the outstanding HDFC loans in the first year of the merger. The remaining two-thirds of the portfolio of HDFC will be considered over the next two years equally. Effectively, HDFC Bank has to comply with the first year’s target, one year after the effective date of the merger, the bank said in a regulatory filing.
(With PTI inputs)
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In the run-up to the much-awaited merger, HDFC Ltd on Wednesday said both stock exchanges, BSE and NSE, have cleared the transfer of non-convertible debentures (NCD) from the mortgage firm to HDFC Bank.
The bourses have granted their in-principle approval in letters issued on April 26, 2023, for the transfer of additional NCDs issued by HDFC Limited post receipt of the earlier approval on December 13, 2022, to HDFC Bank, the company said in a regulatory filing.
Now, the merger needs the final nod from the Securities and Exchange Board of India (Sebi), for the ultimate change in control of certain subsidiaries of HDFC Limited.
The final approval will help pave the way for the merger of HDFC into HDFC Bank, which is expected to be finalised by the third quarter of this financial year.
In April 2022, HDFC Bank agreed to take control of the biggest domestic mortgage lender, HDFC Ltd, in a deal valued at about $40 billion.
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 they hold. The merger is expected to see the rise of another financial services titan in the country. Post merger, the entity will have a combined asset base of around Rs 18 lakh crore.
On Monday, HDFC Bank said the Monetary Authority of Singapore (MAS) has given approval for the merger of HDFC Investments and HDFC Holdings with parent HDFC Ltd.
As part of a composite scheme of merger, Griha Pte, a wholly owned subsidiary of HDFC Investments and a foreign step-down subsidiary of HDFC Ltd, received approval for the merger with HDFC Bank.
In an email on April 24, 2023, MAS gave its nod for the acquisition of shares in Griha Pte by HDFC Bank. This would result in the bank acquiring 20 per cent or more of the issued share capital of Griha Pte.
Now, the proposed takeover is subject to receipt of final approvals from the Sebi in respect of the change in control of certain subsidiaries of HDFC Ltd.
RBI relief on PSL norms
Last week, the Reserve Bank of India (RBI) gave HDFC Bank three years to comply with the priority sector lending norms (PSL) following its merger with HDFC Ltd (HDFC). It has not given any relaxation on abiding by the cash reserve ratio and statutory liquidity ratio rules.
According to RBI norms, commercial banks need to extend 40 per cent of the adjusted net bank credit (ANBC) of the previous year towards the priority sector.
The RBI has allowed HDFC Bank to consider a third of the outstanding HDFC loans in the first year of the merger. The remaining two-thirds of the portfolio of HDFC will be considered over the next two years equally. Effectively, HDFC Bank has to comply with the first year’s target, one year after the effective date of the merger, the bank said in a regulatory filing.
(With PTI inputs)
Also read: 'India is starved of banking and NBFCs are needed for an economy of our size,' says Ajay Piramal
Watch: RVNL, Axis Bank, Maruti Suzuki, HUL, other stocks to watch on April 27, 2023