Country’s largest private sector bank by balance sheet size set to merge its parent mortgage lender
(HDFC Limited) with itself.
HDFC Bank said that it has not approved any plan of HDFC Ltd to raise funds for payment of such liabilities.
“As per the proposed overall scheme of amalgamation, the liabilities of HDFC Ltd shall be transferred to the Bank and shall be serviced and repaid by the Bank as per the contractual maturity,” HDFC Bank said in a regulatory filing.
The Bank is not required to pay any amount of the liability of HDFC Ltd. on the first day of the merger, unless incidentally a particular liability matures on the same date.
HDFC Bank has already received in-principle approval from the Reserve Bank of India (RBI) for merger with HDFC Ltd.
The parent-subsidiary merger is seen as the biggest transaction in India’s corporate history.
In April this year, HDFC Bank and HDFC Ltd announced a merger proposal in which the lender will acquire the mortgage lender for approximately USD 40 billion in about 18 months.
The information provided by the lender comes as a clarification in response to a news report, which said that HDFC Bank needs to raise over Rs 2.2 trillion to pay off HDFC Ltd’s liability, when the merger between them. becomes effective.
HDFC Bank said the news report is factually incorrect and speculative.
Shares of HDFC Bank were trading 0.38 per cent lower at Rs 1,427.65 on the BSE.