HDFC Ltd chairman Deepak Parekh Friday said HDFC Bank is awaiting the Reserve Bank of India’s reply on its request for relaxation in investments in subsidiaries of the mortgage financier.
In April this year, HDFC Ltd had announced a merger with its banking subsidiary- HDFC Bank. “HDFC Bank has requested RBI for forbearance in respect of investments in all subsidiaries (of HDFC Ltd), including HDFC Ergo. Discussions are currently on with the RBI and we are awaiting the final response,” Parekh informed the equity shareholders in a meeting convened by National Company Law Tribunal (NCLT) .
He said all the investments of HDFC Ltd will be transferred to the private lender in compliance with existing regulations as determined by the RBI.
The lender has also sought necessary forbearance from RBI in respect of complying with the timelines for statutory liquidity ratio (SLR) and cash reserve ratio (CRR) requirements.
“In case, the forbearance is not forthcoming, the merged entity is expected to have sufficient liquidity and alternatives available to meet the necessary funding requirements,” Parekh said. On date of completion of the merger, he said it was difficult to indicate an exact time as certain approvals are still pending. He, however, expects the merger to be effective by June 2023.
During the post September quarter results call with analysts, HDFC Ltd’s vice chairman and chief executive officer Keki Mistry said the company had received approvals from various regulatory and statutory authorities, including Pension Fund Regulatory Authority of India (PFRDA), Insurance and Regulatory Development Authority of India (IRDAI), Securities and Exchange Board of India (SEBI), Competition Commission of India (CCI), Reserve Bank of India and stock exchanges.
On listing of the general insurance arm – HDFC ERGO, Parekh said both the promoters will discuss and decide at an appropriate time about its listing. The housing finance company is also not looking to list HDFC Credila, its education loan subsidiary, in the next few years.
He said post merger, all the employees of the housing finance company will be transferred to the bank on terms ‘not less favourable’ than which they were engaged by HDFC Ltd.
As on October 31, 2022, HDFC Ltd had 3,897 employees and HDFC Bank had 162,992 employees, he said.