New Delhi: Housing Development Finance Corporation (HDFC) and HDFC Bank (HDBK.NS) which are said to be the biggest housing finance and the largest private retail bank in India are going to merge together on Saturday and going to create a new entity with a combined market capitalization of over Rs 14 lakh crores.
According to the sources, the top officials of both the groups will be having their last meeting on Friday to mortgage lender HDFC Limited as it will merge with HDFC Bank on July 1. HDFC Limited and HDFC Bank after the merger the branches of HDFC Limited would continue but they would carry the signboards of HDFC Bank.
What will happen to HDFC Limited employees?
There will be a very common question which comes into the minds of every person. What will happen to the employees of the merging entity. In this case we would surely think about the HDFC Limited employees.
Officials rule out retrenchment HDFC Bank was doing every other banking activity except the housing financing and on the other hand HDFC Limited, as the biggest lender in the housing finance space has mastery over it. An official said that HDFC Bank will need the employees of HDFC Limited as the Bank does not have experience of mortgage business.
Also, according to a statement by HDFC Chairman Deepak Parekh there will be no golden handshake and all the employees of the HDFC Limited will be absorbed into the HDFC Bank.
What will happen to shareholders?
As per the sources, a statement was issued by HDFC both HDFC Ltd and in that they mentioned the HDFC Bank will be working towards completing all the necessary formalities for completion of the proposed amalgamation as per the tentative dates. HDFC has earlier said that the tentative record date for determining shareholders of HDFC Limited who would be allotted equity shares of HDFC Bank as per the share exchange ratio, will be July 13, 2023.
All necessary approvals are in place
According to officials, the merger of HDFC Limited with HDFC Bank has received approvals from the country’s banking sector regulator Reserve Bank of India (RBI). The proposed merger has also approved necessary clearance from the country’s apex insurance regulatory body - the Insurance Regulatory and Development Authority of India (IRDAI).
In addition the merger has also been given go ahead by the federal anti-monopoly body Competition Commission of India (CCI) and National Company Law Tribunal as required under the respective laws.
Insurance sector regulator, the IRDAI has also approved the acquisition of insurance companies of HDFC Group such as HDFC Life Insurance Company and HDFC ERGO General Insurance Company by the mortgage company HDFC Ltd.
The IRDAI has also approved the subsequent transfer of the entire shareholding of the housing finance company HDFC Ltd in these two insurance companies of HDFC Group to HDFC Bank.
Creation of banking sector giant
Housing Finance Company HDFC Limited was set up by the industry veteran Deepak Parekh in 1997 and nearly two decades later he floated the HDFC Bank when the banking sector was opened for private players.
While HDFC Bank has more than 6,300 branches across the country, HDFC Limited has more than 460 offices. Post merger, all HDFC Limited branches would be converted into HDFC Bank branches and the new entity would have a vast network of nearly 6,700 branches and over 18,000 ATMs
