NCLT approves merger of HDFC and HDFC Bank

The National Company Law Tribunal (NCLT) on Friday approved the merger of HDFC with HDFC Bank.

With this, the biggest merger in the history of India Inc has moved one step closer as the only pending approvals are from the Reserve Bank, which though has given the in-principal approval to the $D40 billion mega amalgamation.

Other regulators namely the Insurance Regulatory and Development Authority and the Pension Fund Regulatory and Development Authority have already given their approvals for this deal. The deal has also been okayed by the exchanges BSE and NSE last December.

HDFC expects the merger process to be effective from the third quarter of the next financial year as the RBI approvals are a lengthy process.

"The amalgamation would create meaningful value for various stakeholders, including respective shareholders, customers, and employees, as the combined business would benefit from increased scale, comprehensive product offering, balance sheet resiliency and the ability to drive synergies across revenue opportunities, operating efficiencies and underwriting efficiencies, amongst others," the tribunal led by Kuldip Kumar Kareer and Shyam Babu Gautam said in their 23-page order.

Shareholders of both companies approved the merger on February 28. The merger, viewed as the largest in Indian corporate history is valued at over $40 billion. Both HDFC and HDFC Bank held general meetings in November to seek shareholder approvals for the merger.

At the time of announcing the merger on April 4 this year, the entities had said the merger will take 12-18 months. "We believe going by the past practice and going by past trends, it will take about 8-10 months time before an effective date is announced," HDFC Bank's chief executive and managing director Sashidharan Jagdishan said at the meeting.

HDFC Bank's chairman Atanu Chakraborty said all of HDFC's subsidiaries will become subsidiaries of the merged entity, but there are some which cannot be a part of the bank and will be divested.

The bank has also sought regulatory approvals for transferring the fixed deposits of HDFC into the merged entity, and will pay interest as per the commitments, Jagdishan said.

The merged entity will have a combined asset base of around Rs 18 lakh crore. The merger is expected to be completed by the second or third quarter of FY24.

Shares of both HDFC Bank and HDFC are off their respective session lows and are trading with gains of 1.5 percent each.