Skip to main content

HDFC Bank asks parent to cut exposure to certain loans before merger

The largest private sector lender in India, HDFC Bank is said to have asked the parent Housing Development Corporation (HDFC) company to cut off a certain loan category that is not permitted for banks under the Reserve Bank of India (RBI) regulations.

This is mostly short -term loans that include certain company loans and loans to developers. It is estimated that the value of this loan will be around 20,000-25,000 crores in the current HDFC book, which will be extinguished for the next few quarters.

Even then, it is eswtimated that HDFC will have less than RS 10,000 Crore loans like that in their books before the merger.

The bank has asked HDFC to reduce the exposure of all loans that are not in accordance with RBI rules for banks. They have time to do it in the next 15 months beore the merger will take effect, “said someone who is familiar with the development.

The person refused to be named by quoting the sensitivity of the problem. HDFC Bank does not respond to the queue from moneycontrol about this problem.HDFC and HDFC Bank announced the decision to join April 4. As planned, HDFC will acquire 41 percent of shares in HDFC Bank through mergers.

Chairman of HDFC Deepak Parekh called him an equal merger. Every 25 shares held by HDFC shareholders will take 42 bank shares. The merger will create an entity that will have a market capitalization of RS 12.8 Lakh Crore and the RS Balance Sheet 17.9 Lakh Crores.The announcement was surprising to most analysts. The market supports the decision.

In an exclusive conversation with the media after the announcement, Parekh, a veteran banker who built iconic hypotek lenders for four decades, explained to Moneycontrol on April 5 why the company decided to join the bank and the challenges of cultural integration.HDFC is the largest hypotek lender in India, while HDFC Bank is the largest private lender in terms of assets. The bank, however, only has a relatively small presence in the housing loan market compared to rivals.

The combination of HDFC-HDFC banks is expected in the second or third quarter of FY24. HDFC also said the proposed transaction would allow HDFC Bank to build its housing loan portfolio and increase its customer base.

The merging of HDFC and HDFC banks has been a temporary news. In fact, in 2015, Parekh said his company could consider mergers with HDFC banks as long as they supported. But, waiting for a longer merger with parents put ideas in the backburner. Parekh said that the merger made sense as long as there was no loss of value for shareholders.

With parents finally joining a bank, the resulting entity will emerge as a power plant in the Indian banking industry.

HDFC is waiting for a guideline for the route for the future to merge Mega with HDFC Bank and requires shareholder confidence and support “more than before” at this intersection, Parekh said in the company’s annual report.

We have at length, have articulated the reasons for proposed mergers, who know the potential for future country growth, a macro environment that develops and changes in regulatory architecture,” he added.


Popular posts from this blog

SEBI restrains Poonawalla Fincorp MD, 7 others

The Securities and Exchange Board of India (SEBI) has barred Abhay Bhutada, director of Poonawalla Finance, and 7 others from accessing the stock exchange after alleged trading . In a 46-page interim order, SEBI said the eight entities had made total wrongful gains of Rs 13.58 crore through trading in shares of Magma Fincorp (now Poonawalla Fincorp) round the time it had been acquired by Rising Sun Holdings (RSHPL). All the Entities, viz: Entity nos. 1 to eight are restrained from buying, selling or dealing in securities, either directly or indirectly, in any manner whatsoever until further orders,” the market regulator said witin the interim ex-parte order. RSHPL had earlier this year acquired a controlling stake within the NBFC through an equity infusion of Rs 3,456 crore. Bhutada was director and CEO of Poonawalla Finance, a subsidiary of RSHPL. Bhutada allegedly passed on unpublished price sensitive information (UPSI) to some connected entities, consistent with SEBI’s interim order

What should you know about Redeeming Mutual Funds?

The world of mutual funds is really tricky if you are not focused.   It is not rocket science but you have to be dedicated so as to make the most of your investments.   Whether to invest in ELSS, SIP or other schemes; the choices is always yours. It is always better to go through the option before you make the decision. If you are thinking How to redeem mutual funds online then the good news is that the process is quite easy. And on the basis of the kind of mutual fund you hold, money can get credited to your bank account in a maximum of four to five working days after you submit a redemption request to that specific fund house. How can an investor redeem mutual fund units? A unit of a mutual fund can get redeemed on any business day. In the physical mode, investors might require to fill in the requisite transaction slip and it can be download from the fund house website or that of detach from the bottom of your account statement.   The redemption application could get submitted

Invest your money to get good returns

Money is everything which one needs to enjoy life. In everyone’s life, money can never be sufficient at any stage. Therefore every individual wants to save money and to invest that saved money to get high returns. Investing money on the right platform is not easy with an increase in companies of investment. There are many duplicate companies present in the market which promises to give high returns, and after investment, they cheat on you. One needs to check the company profile before investing the money. Every investor looks for an option where he gets high returns on low risk or moderate risk.   Each shareholder also wants that the company where he is going to invest, is flexible and transparent. Thus the company which satisfy all these points is only mutual fund. Mutual fund: A mutual fund is an investment company with a very reputed name in the share market. A mutual fund is known for its transparency, flexibility, returns and for interesting offers. There is a number of invest