HDFC Bank calls reports of Rs 2.7-lakh-cr fundraise 'factually incorrect'

HDFC Bank said that reports of it raising funds to the tune of Rs 2.7 lakh crore for the merger are “speculative” and “factually incorrect”. It referred to an August 1 report that stated that HDFC Bank is likely to raise Rs 2.2 lakh crore from public deposits and corporate bonds, and Rs 50,000 crore from similar papers to meet the capital requirements of its merger with mortgager parent, Housing Development Finance Corp. Ltd, which will be required to be paid off on Day 1 of the merger.

“In this regard, the Bank clarifies that the said article published is factually incorrect and speculative. There is no such plan approved by the Bank. Further, as per the proposed composite scheme of amalgamation, the liabilities of HDFC Limited will be transferred to the Bank and will be serviced and repaid by the Bank as per the contracted maturity,” it said, adding that the bank is not required to pay off any amount of liability of HDFC Ltd on day one of the merger, unlike what was reported in the story. 

The clarification said that the report added that Indian banks are barred from having borrowings from other banks on their balance sheet, prompting HDFC Bank to raise funds to repay the parent. HDFC is a non-banking financial company (NBFC) which borrowed from lenders to lend to homebuyers. But such borrowings cannot remain on the balance sheet. The report quoted Ashutosh K Mishra, head of research- institutional equity at Ashika Stock Broking, who said that the amount needs to be entirely paid off.

HDFC Bank said that this too is speculative and factually incorrect.  

The lender said that the report’s inputs on HDFC Bank requiring to raise Rs 50,000 crore to fund its SLR and other requirements were also speculative and factually incorrect. 

April 4, HDFC Bank agreed to take over HDFC Ltd, in a deal valued at about $40 billion. 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.

Also read: HDFC-HDFC Bank merger gets PFRDA approval