HDFC-HDFC Bank merger gets NCLT approval
HDFC Bank‘s size, which is already India’s largest private sector lender, would grow as a result of the merger between HDFC Bank and its parent firm, HDFC Ltd. The $40 billion purchase, which would create a financial services behemoth with a combined asset base of approximately $242 billion, has been approved by the National Company Law Tribunal (NCLT). The Central Bank of India (RBI), the Insurance Regulatory and Development Authority of India (Irdai), and the Pension Fund Regulatory and Development Authority have all given their in-principle approval to the planned merger (PFRDA). The merger has received approval from the stockholders of both companies, the stock exchanges, the competition watchdogs, and other parties.
After the agreement is in place, existing HDFC shareholders will own 41% of the bank, making public shareholders the sole owners of HDFC Bank. For every 25 HDFC shares owned, each shareholder will receive 42 HDFC Bank shares. Depending on regulatory permissions, the merger is anticipated to be finished by the second or third quarter of FY24. With the merger, HDFC Bank will be twice as big as ICICI Bank, the third-largest lender in India right now. As of the December 2021 balance sheet, the total balance sheet will be $242 billion, and the net worth will be $45 billion. The stockholders of both companies stand to gain significantly from the combination. The strong brand and large customer base of HDFC Ltd will benefit HDFC Bank, and HDFC Ltd will gain from the distribution network and reliable technology of HDFC Bank.
The agreement will also allow HDFC Bank to increase its market share in the mortgage lending industry. The largest domestic mortgage lender in India is HDFC Ltd, and the bank will benefit greatly from its knowledge of this market. Also, the merger will improve India’s financial system’s resilience and stability. The combined company will be able to provide customers with a greater selection of financial goods and services and will be better prepared to withstand market and economic changes. In India’s corporate history, the approval of the HDFC-HDFC Bank merger represents a crucial turning point. It is anticipated that the establishment of a financial services colossus with a market valuation of over $170 billion will have significant effects on the Indian economy and financial industry. In conclusion, the HDFC-HDFC Bank merger is a game-changing development that will alter the Indian financial services industry. In addition to improving the stability and resilience of the financial system and enabling HDFC Bank to increase its footprint in the mortgage lending market, the merger is anticipated to produce significant value for the shareholders of both businesses. Investors and analysts will be eagerly monitoring the merger’s completion because it has the potential to significantly advance economic growth in India.