News

Published: Mar 18, 2023
Updated: Mar 18, 2023

HDFC and HDFC Bank Merger Receives NCLT Approval, Stocks Jump high

The National Company Law Tribunal (NCLT) has given its approval for the merger of HDFC and HDFC Bank, allowing for a shareholders' meeting to obtain approval for the proposed merger. The merger is expected to be completed by the second or third quarter of FY24, and HDFC Ltd has already received approvals from various regulatory bodies. The proposed merger aims to create a large balance sheet and net worth that would allow a greater flow of credit into the economy, enabling underwriting of larger ticket loans, including infrastructure loans.

Scheme of Amalgamation and Post-Merger Shareholding

Under the scheme, HDFC shareholders will receive 42 shares of HDFC Bank for every 25 shares of HDFC, and HDFC's shareholding in HDFC Bank will be extinguished. Post- merger, HDFC Bank will be 100% owned by public shareholders, and existing shareholders of HDFC will own 41% of the former.

Complementary Strengths and Customer Relationship

HDFC Bank, the leading private sector bank with over 68 million customers, 6,342 branches, and a full suite of credit, liability, and distribution offerings, will bring together complementary strengths with HDFC, India's premier housing finance company with unrivalled relationships, scale, and deep underwriting expertise in the housing sector.

The combined entity will offer mortgages as a core product in a seamless manner, with HDFC Bank leveraging the long tenor mortgage relationship to offer varied credit and deposit products enabled through better insights throughout the customer life-cycle.

Closing Prices of HDFC Bank and HDFC Shares

On Friday, HDFC Bank shares closed at ₹1,572.55 apiece, up 1.36%, while HDFC finished at ₹2,577.45 apiece, up 1.81%. The merger is expected to bring about many benefits for both HDFC and HDFC Bank, as well as the Indian economy as a whole