Applications filed for HDFC-HDFC Bank merger: Parekh

Applications have been filed with various authorities such as the Reserve Bank of India, SEBI, IRDAI, stock exchanges and the Competition Commission of India, which are under consideration by them, HDFC Chairman Deepak Parekh said with regard to the proposed merger of the mortgage financier with HDFC Bank.

“There is a sequence of approvals required prior to the National Company Law Tribunal convening a meeting of shareholders for approving the merger,” Parekh said at the 45th annual general meeting of HDFC on Thursday. 

Till the effective date of merger, HDFC will continue to carry on business in the normal course as an NBFC-HFC, he further said.

The boards of HDFC and HDFC Bank had, on April 4, approved a scheme of amalgamation, subject to requisite approvals.

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The boards of HDFC Investments and HDFC Holdings have also approved the merger of their respective companies with and into the corporation, Parekh said.

Responding to questions from shareholders, he said they have been advised by lawyers not to talk on the merger as it is not part of the agenda of the AGM. “It is a merger of a large size and could take about 12 to 15 months,” he said, stressing that till then, it will be business as usual.

He promised to discuss the pros and cons of the merger at a special meeting of shareholders, which would be called in due course.

Staff to be absorbed

He however, assured that all HDFC employees will be absorbed by the bank post merger. Keki Mistry, Vice-Chairman and CEO, HDFC Ltd, said there would be 1.5 lakh employees in the bank post the merger.

Responding to another question, Parekh said all HDFC Ltd liabilities such as fixed deposits and term loans will be serviced by the merged entity.

They have also requested the RBI to permit the subsidiaries of HDFC Ltd to operate as subsdiaries of HDFC Bank, post the merger.

On a question on listing of its general insurance arm-- HDFC Ergo General Insurance, Parekh said Munich Re is of the view that it is not advisable to do so at present.

‘Huge growth potential’

In his address to shareholders, Parekh also that the growth potential for housing in India remains immense and the demand for housing is unlikely to be impacted by interest rate increases.

“In fact, current interest rates on home loans are still below pre-pandemic levels. Further, a home loan is for a long tenor and during this period there are bound to be both upward and downward interest rate cycles,” he said.

During the quarter ended June 30, 2022, retail business of the corporation has continued to perform well, he further said. 

HDFC expects stable spreads and margins going ahead.

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