HDFC Bank receives green signal from RBI for merger with HDFC

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HDFC Bank receives green signal from RBI for merger with HDFC

New Delhi: Two days after getting the green light from BSE Limited and National Stock Exchange Ltd, HDFC Bank received the green signal from the Reserve Bank of India for a merger with mortgage lender HDFC. HDFC Bank announced on Monday that the RBI had granted no objections to the bank’s merger with the mortgage lender.

“HDFC Bank has received a letter dated 04 July 2022 from the Reserve Bank of India (“RBI”) whereby the RBI has granted its “no objection” to the scheme, subject to certain conditions mentioned therein”, the India’s largest private lender says in an exchange deposit.

The merger agreement is yet to receive various statutory and regulatory approvals, including approvals from the Competition Commission of India (ICC), the National Company Law Tribunal and the respective shareholders and creditors of the companies involved in the scheme.

Merger HDFC Bank-HDFC

HDFC Bank on April 4 had announced that parent company HDFC would merge with the bank to enable seamless home loan delivery and leverage across the lender’s broad base of more than 68 million customers. After the merger of the entities, HDFC Bank will become one of the largest banks in the world.

The market capitalization of the bank could approach Rs 15.12 lakh crore after the merger, which is expected to be completed by the second or third quarter of fiscal 2024.

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A few days ago, the bank’s managing director and CEO, Sashidhar Jagdishan, said the decision to merge HDFC with its subsidiary HDFC Bank was made to exploit the advantage of lower cost of funds and the muscle of phenomenal distribution built over the years.

He added that HDFC Bank already had a huge opportunity with the under-penetration of banking services in the country and that the proposed merger adds an entirely different dimension in the future.

“We believe the avenue is huge and that we can potentially add an HDFC bank every five years. We are excited about the future and confident that we will continue to enjoy the support and trust of all of our stakeholders, so that we are embarking on this exciting new journey,” Jagdishan said in the bank’s 2021-22 annual report.

With over 6,000 branches across the country at present, HDFC Bank plans to nearly double its network in the next three to five years by opening 1,500 to 2,000 branches each year. The branch will be digital from a customer and transaction/service onboarding perspective.

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