The Competition Commission of India (CCI) granted approval to Housing Development Finance Corporation (HDFC) to acquire a certain additional shareholding in HDFC ERGO General Insurance Company Limited (HDFC ERGO). “The proposed combination pertains to the acquisition by HDFC Limited of certain additional shareholding of HDFC ERGO on a spot delivery basis such that HDFC Limited (after the Proposed Transaction) and the surviving amalgamated entity, i.e., HDFC Bank Limited (HDFC Bank) will hold over 50 per cent of the shareholding of HDFC ERGO in compliance with Indian banking laws,” CCI said in a statement.
The approvals will help pave the way for the merger of HDFC into HDFC Bank, which is expected to be finalised by the third quarter of the financial year.
Earlier in April, the Reserve Bank of India had allowed HDFC Bank or HDFC Limited to increase the shareholding in HDFC Life and HDFC ERGO to more than 50 percent prior to the effective date of the merger, the bank had said in a regulatory filing. The RBI has also allowed HDFC Bank to calculate the adjusted net bank credit considering one-third of the outstanding loans of HDFC Limited as on the effective date of the merger for the first year. The remaining two-thirds of the portfolio of HDFC Limited can be considered over a period of next two years equally, the bank said.
HDFC Limited is a public limited company incorporated under the Companies Act, 1956 and its shares are listed on the NSE and BSE. It is a housing finance company registered with the National Housing Bank and the Reserve Bank of India. It is primarily engaged in the business of providing finance to individuals, corporates and developers for the purchase, construction, development and repair of houses, apartments and commercial properties.
HDFC ERGO, meanwhile, is registered with the Insurance Regulatory and Development Authority of India for providing general insurance products in India.