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August 8, 2022

HDFC reaches out to NCLT for merger with HDFC Bank

Indian mortgage lender Housing Development Finance Corporation (HDFC) has filed an application with the National Company Law Tribunal (NCLT) for the merger of HDFC Investments and HDFC Holdings with HDFC Bank.

The merger is part of an earlier announcement for the business combination of private sector lender HDFC Bank with its parent HDFC. 

In an exchange filing, HDFC said that the merger is yet to receive the green light from various statutory and regulatory authorities including from the Competition Commission of India and the respective shareholders and creditors of the companies involved in the merger as may be required.

Notably, the mega-merger has already secured approval from the Reserve Bank of India and the Pension Fund Regulatory and Development Authority (PFRDA). 

The deal, which was first announced in April this year, is anticipated to create a financial services behemoth with a combined balance sheet of INR17.87tn.

According to the terms of the agreement, shareholders of HDFC will receive 42 shares of HDFC Bank for 25 shares of HDFC.

Upon completion, which is expected to happen in the next 18 months, HDFC Bank will be 100% owned by public shareholders and the mortgage lender’s existing shareholders will control a 41% stake in the bank.

Last month, the Economic Times reported that HDFC is set to shore up its foreign loans to $1bn from $750m.  The increased capacity will be used to offer home loans to customers looking to buy affordable homes. 

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