HDFC Bank to Absorb HDFC in Merger, effective July 1st
The boards of Housing Development Finance Corporation (HDFC) and HDFC Bank have approved the merger of the two entities, with the effective date set for July 1, 2023.
The boards of Housing Development Finance Corporation (HDFC) and HDFC Bank have approved the merger of the two entities, with the effective date set for July 1, 2023. The decision comes after the National Company Law Tribunal (NCLT) in Mumbai gave its clearance to the merger on March 17. HDFC, a mortgage lender, will acquire a 41 percent stake in HDFC Bank through the amalgamation.
According to a regulatory filing by HDFC, the certified order of the NCLT sanctioning the scheme will be filed with the Registrar of Companies on the effective date. The record date, which is the date for determining the shareholders of HDFC who will be issued and allotted shares of HDFC Bank, has been fixed for July 13. Additionally, the record date has been set for the continuation of warrants of HDFC in the name of HDFC Bank.
HDFC Bank's Managing Director and CEO, Sashidhar Jagdishan, expressed his confidence in the merger, stating that it is a defining event for the bank and that the combined strength of the two entities will enable the creation of a holistic ecosystem of financial services. Jagdishan also welcomed the talented team of HDFC Ltd into the HDFC Bank family.
The merger, which was initially announced on April 4, 2022, is expected to lead to significant growth opportunities for the combined entity. In an interview, HDFC's Vice Chairman and CEO, Keki Mistry, highlighted that the objective is to expand housing loans from more branches of the bank. He believes that the growth opportunity for housing loans will be bigger in HDFC Bank than in HDFC alone.
Once the merger is finalized, HDFC Bank will be fully owned by public shareholders, while existing shareholders of HDFC will own a 41 percent stake in the bank. This merger marks a significant milestone in the journey of both HDFC and HDFC Bank, as they come together to leverage their strengths and enhance their offerings in the financial services sector.