HDFC Merger Latest Update: A major update has come out on the merger of private sector HDFC Bank with HDFC Limited. However, following the merger of HDFC Bank, SEBI has approved the proposed change of controlling stake in HDFC AMC to HDFC Limited.
Informed about the decision of RBI and SEBI
The largest private sector bank informed the stock markets about the decision of the Reserve Bank and SEBI. Accordingly, RBI has asked the bank to comply with regulatory norms related to CRR and SLR in case of merger. However, the central bank has talked about giving some concessions in the provisions related to lending to priority sectors.
The merger was announced a year ago
HDFC Bank’s merger with housing lender HDFC Ltd was announced in April last year. This merger of about $ 40 billion is being described as the biggest deal in the Indian corporate world. However, the proposed merger is yet to be approved. In this sequence, the bank had requested the Reserve Bank (RBI) to give some concessions on CRR and SLR.
Clarification is awaited on some points
HDFC Bank has said that it has received the opinion of the Reserve Bank on some points while clarity is awaited on some points. “HDFC Bank will continue to comply with regulatory stipulations relating to CRR, SLR and cash coverage ratio (SLR) with effect from the date of merger,” the bank said.
what is crr
CRR ie Cash Reserve Ratio (CRR) is the percentage of deposits that banks have to keep with the central bank. Banks do not get any interest from RBI on that amount. On the other hand, SLR is that part of the deposits which must be invested in government securities. According to HDFC Bank, RBI has also agreed to recognize investments in subsidiaries of HDFC as investment in HDFC Bank post merger.
Stock exchanges were informed on behalf of HDFC that SEBI has approved the proposal for transfer of controlling stake in HDFC AMC to HDFC Bank. HDFC AMC is the asset management arm of HDFC Limited. HDFC Bank, during a discussion with analysts last week, expressed hope that it would get regulatory approval on the merger process by July.
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