HDFC Ltd has said that the process of merging HDFC and HDFC Bank is in the works, and the effective date is currently tentative and subject to change. This comes after its chairman Deepak Parekh said that the merger was expected to be completed on July 1, 2023.

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HDFC Ltd said that both the institutions are working towards completing all the necessary formalities for the completion of amalgamation. The Effective Date of the Scheme and ‘Record Date' are tentative and subject to completion of certain formalities including those which are beyond the control of HDFC or HDFC Bank.

Once the boards of HDFC and HDFC Bank decide on Effective Date and Record Date, the same would be intimated to stock exchanges.

Both companies will have separate board meetings on June 30 after office hours, which will be the last board meeting of HDFC Ltd. HDFC vice-chairman and CEO Keki Mistry said earlier that the stock delisting of the corporation would be effective from July 13.

"After the merger, HDFC branches will continue, but the board will say HDFC Bank. We are getting 75,000 applications a month, so hopefully, when all branches sell mortgages, numbers will increase," Parekh had said earlier.

"Every employee under the age of 60 will be absorbed and salaries will not be reduced. HDFC Bank will need our people because they don't have knowledge of mortgages," he added.

Post the announcement, the shares of both companies were trading 2 percent higher.

Last week, the BSE and National Stock Exchange (NSE) informed HDFC and HDFC Bank about the Securities and Exchange Board of India (SEBI) relaxing a rule with reference to warrant listing. The market regulator granted the firms exemption from applicability of Rule 19(2)(b) of Securities Contract (Regulations) Rules (SCRR), the companies said on Thursday.

Consequently, the warrants will continue trading in the name of HDFC Bank after the effective date and listing, the companies said. The exchange ratio for HDFC Bank warrants will be as per the scheme, which is till August 2023.

Termed as the biggest transaction in India's corporate history, HDFC Bank on April 4 last year agreed to take over the biggest domestic mortgage lender in a deal valued at about $40 billion. The proposed entity will have a combined asset base of around Rs 18 lakh crore. Once the deal is effective, HDFC Bank will be 100 percent owned by public shareholders, and existing shareholders of HDFC will own 41 percent of the bank.

What happens to mutual fund portfolios

Upon completion of the HDFC Bank -HDFC merger, a single entity would remain, and mutual fund managers of diversified equity schemes are expected to make the necessary adjustments to their respective portfolios, bringing down the maximum holding percentage equal to or less than 10 percent.

As per the norms specified by the capital markets regulator, Sebi, for diversified equity funds, the investment in equity shares or equity-related securities of a single company must not exceed 10 percent of the net assets of the scheme. This regulation does not apply to sector-specific or thematic funds.

First Published:Jun 27, 2023 2:42 PM IST