The merger of HDFC and HDFC Bank is viewed positively by the stock exchanges

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HDFC Bank and parent company HDFC approached the merger process as the stock exchanges viewed their merger program positively. The companies received “observation letters” from the stock exchanges, BSE and NSE on July 2nd.

Both HDFC Bank and HDFC have received “no adverse observations” from BSE and “no objections” from the National Stock Exchange of India (NSE).

In their separate regulatory filing, HDFC Bank and HDFC said: “The Scheme is still subject to various legislative and regulatory approvals including, but not limited to, approvals from the Competition Commission of India, the Reserve Bank of India, the National Company Law Tribunal and the respective shareholders and creditors of the companies involved in the plan, if required.”

On April 4, HDFC Bank announced that parent company HDFC would merge with the bank to enable seamless home loan delivery and capitalize on HDFC Bank’s large base of over 68 million customers and, among other things, credit growth in the economy to accelerate.

The proposed merger is expected to create a large balance sheet and net worth that would allow for greater flow of credit into the economy. It will also enable the underwriting of larger ticketed loans, including infrastructure loans that the country badly needs.

Under the program, HDFC shareholders will receive 42 shares in HDFC Bank with a par value of Re 1 each for every 25 shares in HDFC with a par value of Re 2 each. In addition, HDFC’s interest in HDFC Bank will expire pursuant to the Scheme of Merger.

After the merger, HDFC Bank will be 100% owned by public shareholders and existing shareholders of HDFC will own 41% of the former.

With more than 68 million customers, 6,342 branches and a full range of credit, liability and distribution offerings, HDFC Bank is the leading private bank with deep relationships, insights and an understanding of its customers built over decades.

HDFC is India’s leading housing finance company and has unrivaled relationships, scale and deep underwriting expertise in the housing sector, built over multiple decades and economic cycles.

The merged entity will bring together the complementary strengths of the two organizations and enable a rewarding customer relationship. Post-merger, HDFC Bank’s customers will be seamlessly offered mortgages as a core product. HDFC Bank will also leverage the long-term mortgage relationship to offer diverse lending and deposit products enabled by better insights throughout the customer lifecycle, according to the regulatory filing filed April 4.

The merger is expected to be completed within 18 months.

Last week on Friday on the BSE, shares in HDFC Bank closed 1,353.65 a share, up 0.46%. HDFC ended at 2,210.65 a piece up 2.18%.

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