India’s largest housing finance company, HDFC Ltd, will merge with the largest private sector bank in the country, HDFC Bank, to create an entity with a combined balance sheet of £178.7 billion and net worth of £33 billion. While HDFC Bank will continue to be the second-largest lender in the country after State Bank of India, its size following the merger would be twice that of ICICI Bank, the third largest lender.
The closing of the deal is expected to be achieved within 18 months, subject to regulatory approvals and is likely to be completed by Q2 or Q3 of FY24. Sashi Jagdishan, CEO and MD, HDFC Bank, will be at the helm of the merged entity, and Keki Mistry, the current chief at HDFC, will join as a director on the board of the new company. Deepak Parekh, who has been associated with HDFC since 1978, will step down as chairman.
“After 45 years in housing finance, providing 9 million homes to Indians, we had to find a home for ourselves. We have found it within our own family and in our own bank,” Parekh said. “Over the last few years, various regulations for banks and NBFCs have been harmonised, thereby enabling the potential merger. Further, the resulting larger balance sheet would allow underwriting of large ticket infrastructure loans, accelerate the pace of credit growth in the economy, boost affordable housing and increase the quantum of credit to the priority sector, including credit to the agriculture sector,” he added.
Once the scheme becomes effective, the subsidiaries and associates of HDFC will become subsidiaries and associates of HDFC Bank. Shareholders of HDFC will receive 42 shares of HDFC Bank, each of face value of ₹1, for 25 shares held in HDFC Ltd (each of face value of ₹2).
