The RBI’s no objection certificate for the merger of HDFC Ltd with HDFC Bank indicates no holding company is required but more clarity is needed on subsidiaries and other conditions, Macquarie Research has said.

HDFC Bank had on July 4 said it has received a no-objection certificate from the RBI for the proposed composite scheme of amalgamation of HDFC Investments and HDFC Holdings with and into HDFC Ltd and HDFC Ltd with and into HDFC Bank.

“This implies that RBI is fine merging the above-mentioned companies into HDFC Bank without needing to set up a holding company. The structure is kept simple removing a major overhang, in our view,” Macquarie said in a note on Tuesday.

Merger likely in 12-15 months

Noting that the RBI’s approval is subject to certain conditions, it said clarity is required on their stakes in subsidiaries, exemptions and timeline extensions related to priority sector requirements, CRR, and SLR.

“We expect clarity to emerge in the July 16 earnings call,” it said.

Until now, stock exchanges and the RBI have approved the merger. More approvals will be required and HDFC Chairman Deepak Parekh has indicated a 12-15 month timeline for the merger to be completed.

On Tuesday, the HDFC Bank scrip was up 1.6 per cent in intraday trade on the BSE, while HDFC Ltd shares were up 1.26 per cent. However, by the end of the day, HDFC Bank scrip closed 0.25 per cent lower on BSE while HDFC Ltd scrip closed 0.59 per cent lower.