HDFC, India's leading housing finance company, has approved the merger of the firm with HDFC Bank, the country's leading private sector bank. HDFC shareholders will get 42 shares of HDFC Bank for 25 shares.

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Addressing shareholders and analysts after the announcement, Keki Mistry, VC & CEO of HDFC, said “As a result of this, upon the scheme becoming effective, HDFC Bank will be 100 percent owned by public shareholders and existing shareholders of HDFC Limited will own around 41 percent of HDFC Bank.”

The merger process will be completed by the second or third quarter of FY24 and till this is complete, both the entities will continue to work independently. After that, however, what will the management structure look like?

Keki Mistry shed light on this.

“HDFC is merging into the bank. The CEO of the bank will continue to be the CEO of the bank. Personally speaking for myself, I am now sixty seven-and-a-half years old and this merger will probably take another year-and-a-half by which time I will be 69 and the retirement age for people in a bank is 70. As I mentioned, every single employee of HDFC including all our senior people will now occupy positions within the bank,” he said.

Mistry also explained why the merger could not be done earlier.

"There were regulatory barriers earlier for the HDFC-HDFC Bank merger. The RBI (Reserve Bank of India) had mandated that one entity may be engaged in a specific product line," he said.

Mistry was confident that the HDFC customer will be the biggest beneficiary of this merger as "cross-sell of banking products will now be possible".

Both HDFC and HDFC Bank stocks were locked in the upper circuit at 10 percent in early deals. HDFC shares were frozen at Rs 2,696 apiece on BSE and HDFC Bank at Rs 1,656.9.

Reacting to the announcement of HDFC merging with HDFC Bank, former chairman of SBI, Rajnish Kumar has said that the biggest advantage for HDFC will be that the cost of borrowing will come down. Rahul Arora of Nirmal Bang believes that this is also good for HDFC Bank's mortgage book.

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(Edited by : Abhishek Jha)

First Published:Apr 4, 2022 11:17 AM IST