HDFC Bank has secured the Reserve Bank of India’s approval for its merger with its parent firm Housing Development Finance Corporation (HDFC).

The merger, first announced in April this year, is expected to close in the next 12 to 18 months.

In a stock exchange filing, the private sector banking major said that it “has received a letter dated 4 July 2022 from the Reserve Bank of India (RBI) whereby the RBI has accorded it’s ‘no objection’ for the Scheme, subject to certain conditions as mentioned therein.”

Details about the conditions set forth by the central bank were not divulged by the lender.

HDFC Bank also informed that the merger is still subject to various regulatory approvals including the authorisation from the Competition Commission of India, the National Company Law Tribunal,other applicable authorities and the respective shareholders and creditors of the firms.

The merger will create a INR13 trillion financial services behemoth, with HDFC Bank acting as the holding company.

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According to the Economic Times report, the bank had reached out to the central bank seeking flexibility in meeting certain regulatory conditions.

The bank has sought a phased-in approach to RBI’s Cash Reserve Ratio (CRR) and Statutory Liquid Ratio (SLR) and grandfathering of some assets and liabilities and in respect of some of its subsidiaries.

The lender had also expressed its desire to keep its stake in the insurance arm at the current level or build more stake to meet regulatory requirements.

As per the internal estimates, the merger will lead to a SLR-CRR requirement of around INR700bn.