The merger of Housing Development Finance Corp (HDFC) into HDFC Bank is likely to be completed in the next 8-10 months, a top official said on Friday. “We believe going by past practice and going by past trends, it will take at least 8-10 months for the merger to be completed,” Sashidharan Jagdishan said at the bank’s shareholder meeting.
In April, HDFC announced that it will merge with subsidiary HDFC Bank. While the Reserve Bank of India (RBI) gave its ‘no objection’ to the merger in July, analysts had pointed out then there was a need for more clarity on the housing financier’s subsidiaries.
HDFC chairman Deepak Parekh said that the company is yet to hear from the RBI on the treatment of its subsidiaries after its merger with HDFC Bank.
The housing financier has submitted an action plan regarding each of its subsidiaries and associate companies to the RBI.
All of HDFC’s subsidiaries will become subsidiaries of the merged entity. But those that cannot be a part of the bank will be divested, HDFC Bank chairman Atanu Chakraborty said.
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The bank will take approval from the RBI and the Insurance Regulatory and Development Authority of India (Irdai) for the merger.
The status of HDFC’s general insurance joint venture HDFC ERGO General Insurance Co and education loan subsidiary HDFC Credila was of specific interest to investors.
The promoters of HDFC ERGO (HDFC and ERGO International) would discuss and decide on the listing of the same at an appropriate time. “There is no plan to list HDFC Credila in the next few years,” Parekh said.
HDFC Bank will also absorb some of the members on HDFC’s board subject to regulatory requirements. Parekh has made it clear to HDFC shareholders that he will not be joining the bank’s board due to the age mandate.
But HDFC MD Renu Karnad will join the bank’s board of directors and be on its management team, considering that her period of appointment extends beyond the merger.
All in all, 3,500 employees of HDFC will be joining the 161,000-strong staff of the bank. Almost all of HDFC’s 508 branches will be merged into the bank.
The bank has sought regulatory approval for the transfer of all of HDFC’s deposits to HDFC Bank.
“We value our association with our deposit agents and key partners who have been the backbone of our strength. It is understood from the bank (HDFC Bank) that it is their intent to continue these services post the merger,” Parekh said.
“Besides generating deposits, such agents and partners would also have an opportunity in HDFC Bank to be product-sourcing agents subject to regulatory guidelines and compliances,” he said. In recent times, lenders have had to scurry for deposits as systemic credit growth has doubled the growth in deposits.
(With inputs from PTI)