The merger of India's largest mortgage lender Housing Development Finance Corporation (HDFC) with private sector lender HDFC Bank will be good for the economy and it is expected to get the required regulatory approvals in 15 to 18 months, HDFC Chairman Deepak Parekh said on Monday.
Addressing a joint press conference with top executives of HDFC Bank, Parekh said a number of regulatory approvals are required to complete the process of merger of HDFC and HDFC Bank. "It will take about 15 to 18 months. We are quite hopeful that we will get the approvals from the regulators," Parekh said.
The Board of Directors of HDFC Ltd and HDFC Bank on Monday approved a proposal for the merger of the two leading financial institutions of the country.
As per the terms of the deal, shareholders of HDFC Ltd will receive 42 shares of HDFC Bank for 25 shares held. Existing shareholders of HDFC Ltd will own 41 percent of HDFC Bank.
"The share exchange ratio for the amalgamation of the Corporation with and into HDFC Bank shall be 42 equity shares (credited as fully paid up) of face value of Re 1 (Rupee One) each of HDFC Bank for every 25 fully paid up equity shares of face value of Rs 2 (Rupees Two) each of the Corporation," HDFC said in a regulatory filing to the stock exchanges.
Parekh said the deal would require approvals from various regulatory bodies, including the Reserve Bank of India, the Insurance Regulatory and Development Authority, the Competition Commission of India, apart from the shareholders of the two companies.
"Only upon attaining all approvals by RBI, SEBI and such other regulatory approvals, the merger will become effective. HDFC will merge with HDFC Bank, and shareholders of HDFC will receive shares of HDFC Bank in exchange of the shares held in HDFC at the approved share exchange ratio," Parekh said.
As per the deal, HDFC Limited's shareholding in HDFC Bank will be extinguished as per the scheme of amalgamation upon the scheme becoming effective.
Post-the merger, HDFC Bank will be 100 percent owned by public shareholders and existing shareholders of HDFC Limited will own 41 percent of HDFC Bank.
As per the Scheme, the appointed date for the amalgamation of HDFC limited with and into HDFC Bank shall be the effective date of the Scheme. Further, the appointed date for amalgamation of HDFC Investments Limited and HDFC Holdings Limited with and into HDFC Limited shall be the end of the day immediately preceding the effective date of the Scheme.
(With ANI inputs)
