HDFC and HDFC both Bank held general meetings on Friday to seek shareholder approval for what is billed as the biggest merger in Indian corporate history at over US$40 billion.
Earlier, while announcing the amalgamation of the two entities, officials had said that the merger was likely to take 12-18 months.
PTI quoted Sasidharan Jagadeesan, chief executive and managing director of HDFC Bank, as saying, “We believe it will take around 8-10 months to announce the effective date considering the past practice and past trends.” Merger will help in expansion capital adequacy ratio 0.20-0.30 per cent of the merged entity, courtesy Swasth Capital Adequacy of HDFC Ltd., he said.
In view of the fact that bank deposits have to comply with the mandatory cash reserve ratio and statutory liquidity ratio In both the meetings, several shareholders showed keenness to understand whether the regulator would offer some forbearance to the merged entity on this aspect.
In the meeting of HDFC, its chairman Deepak Parekh said that HDFC Bank is associated with reserve Bank of India But asked shareholders not to worry.
“If moratoriums are not forthcoming, the merged entity is expected to have sufficient Liquidity and options available to meet the necessary funding requirements,” Parekh said.
HDFC Bank Chairman Atanu Chakraborty said that all subsidiaries of HDFC will become subsidiaries of the merged entity, but there are some which may not be part of the bank and will be disinvested.
It will seek approval from RBI and Insurance Watchdog Irdai (Insurance Regulatory and Development Authority of India) for merger of subsidiaries, he said.
On the issue of board composition of the merged entity, Chakraborty said that HDFC Bank will absorb certain members of the board of HDFC subject to the requirements prescribed under the Banking Regulation (BR) Act, Companies Act and other statutes, and that age, tenure and areas of specialization are looked after by the BR Act.
Parekh made it clear to the HDFC shareholders that he would not join the HDFC Bank board in view of the age mandate and said that Chakraborty would continue as the chairman of HDFC Bank.
Chakraborty said HDFC’s Renu Karnad will continue to be on the bank’s board as her appointment is for a period beyond the merger and the company secretary will also join the bank’s management team.
Jagadishan said that more than 3,500 HDFC employees will join the bank’s 1.61 lakh employees, and almost all 508 branches of HDFC will also be merged, except a few, which are close to the existing HDFC Bank branch. , which has to be rationalized.
Jagadishan said the bank has also sought regulatory approval to transfer fixed deposits of HDFC to the merged entity, and will pay interest as per the commitments.
Both the meetings were chaired by NCLT appointee Gautam Doshi, who said a copy of the result of the voting would be communicated to the National Company Law Tribunal by Saturday evening.
(With inputs from PTI)