MUMBAI: The Mumbai bench of The National Company Law Tribunal (NCLT) on Friday approved the merger of the country’s largest mortgage lender Housing Development Finance Corporation (HDFC) with the largest private lender HDFC Bank, paving way for a financial giant with a balance sheet of Rs 18 lakh crore.
After the merger, HDFC Bank will remain the second-largest bank in India but it will be twice the size of its rival ICICI Bank. HDFC has already received approvals from the Reserve Bank of India, the Securities and Exchange Board of India (Sebi), the Pension Fund Regulatory & Development Authority (PFRDA) and the Competition Commission of India (CCI).
It has also received a no-objection certificate from both stock exchanges. The merger of HDFC twins, as they are popularly known, the merger is expected to be completed by the second or third quarter of the financial year 2023-24. “We wish to inform you that the NCLT has, vide its Order of today i.e. March 17, 2023, sanctioned the Scheme,” said HDFC Bank in filing to the Bombay Stock exchange.
In the previous NCLT hearing last month, the counsel of the two companies said that the merger had been approved by shareholders with an overwhelming majority and no objections were received by on the proposed merger.
The merger viewed as the largest in Indian corporate history is valued at over $40 billion. HDFC and HDFC Bank had announced in April last year that their respective boards have approved an all-stock amalgamation of the former into the latter, subject to regulatory approvals, thus creating a banking behemoth.
The merger will result in significant market-share gains for HDFC Bank, given HDFC is the largest financier of mortgages in India. After the complete deal and merger, existing shareholders of HDFC will own 41 per cent of the HDFC bank. Meanwhile, HDFC Ltd has informed the exchanges its board will consider the issuance of unsecured redeemable non-convertible debentures in tranches.