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HDFC’s shareholders clear merger with bank

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MUMBAI: Shareholders of HDFC have approved the merger of the housing finance company with its banking arm in an extraordinary general meeting (EGM) held on Friday. The outcome of the EGM held by HDFC Bank is likely to be disclosed on Saturday.
Over 99.9% of the votes were polled in favour of the merger. HDFC chairman Deepak Parekh told shareholders that HDFC Bank has written to the RBI for forbearance regarding investment in all subsidiaries. “Discussions are on with RBI and we are awaiting the final response,” said Parekh. He added that all investments, including shares in Yes Bank and Bandhan Bank, will be held by HDFC Bank.
“All employees of HDFC as of effective date will be transferred to HDFC Bank on terms not less favourable. Those over 60 will retire,” said Parekh. He added that he would not be part of the board of the bank as the maximum age limit for directors is 75 years. Also, agents of HDFC are proposed to be hired by the bank subject to regulatory approval.
“The merged entity is expected to have sufficient liquidity and alternatives to meet the regulatory requirements. Even if the RBI does not grant forbearance on priority sector, the targets will not be immediately applicable and HDFC Bank will have 12 months to meet the target in terms of the priority sector norms” said Parekh.

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He said that all the existing deposits of HDFC will continue to have the same terms and conditions, including date of maturity. “From a regulatory perspective, we anticipate the merger to be effective by June 2023,” said Parekh.
In the HDFC Bank EGM, the bank’s MD & CEO Sashidharan Jagdishan said that going by past practices and trends, it would take 8-10 months before an effective date is announced. HDFC Bank chairman Atanu Chakraborty said the company will absorb some HDFC board members subject to requirements laid down under the Banking Regulation (BR) Act, Companies Act and other statutes, and added that age, tenure and area of expertise are looked at by the BR Act.