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HDFC-HDFC Bank merger gets 'no objection' from RBI after BSE, NSE nod

HDFC-HDFC Bank merger gets 'no objection' from RBI after BSE, NSE nod

Earlier on April 4, India's largest private lender HDFC Bank agreed to take over the biggest domestic mortgage lender in a deal valued at about $40 billion, creating a financial services titan.

The merger is expected to be completed by the second or third quarter of FY24, subject to regulatory approvals. The merger is expected to be completed by the second or third quarter of FY24, subject to regulatory approvals.

After Indian bourses BSE and NSE gave their approval for the proposed merger of HDFC with its banking subsidiary HDFC Bank, the Reserve Bank of India also notified of ‘no objection’ for the biggest transaction in India's corporate history.

"...In this regard, please note that 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," HDFC Bank informed the exchanges on Monday.

The company also added, "The scheme remains subject to various statutory and regulatory approvals inter alia 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 in the Scheme, as may be required."

Earlier on April 4, India's largest private lender HDFC Bank agreed to take over the biggest domestic mortgage lender in a deal valued at about $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.

The observation letter by the BSE 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.

Amalgamated company is advised that the proposed equity shares issued in terms of the scheme should mandatorily be in dematerialised form only, it said.

Following the merger the combined balance sheet will be Rs 17.87 lakh crore and the net worth will be Rs 3.3 lakh crore, as of December 2021 balance sheet.

As of April 1, 2022, the market capitalisation of HDFC Bank was Rs 8.36 lakh crore ($110 billion) and that of HDFC Rs 4.46 lakh crore ( $59 billion).

Post-merger HDFC Bank will be twice the size of ICICI Bank, which is the third-largest bank now.

(With inputs from agencies)