HDFC Bank awaits RBI reply on subsidiary stake forbearance: Deepak Parekh

MUMBAI: HDFC Bank is awaiting a response from the Reserve Bank of India (RBI) with regard to its request for moratorium on subsidiaries of parent Housing Development Finance Corp after the merger, said Deepak Parekh, chairman of the mortgage lender.

stating that Merger Some are subject to final approvals, Parekh said, adding that it would not be possible to indicate an exact date. However, it is expected Effective till June 2023They said.

In April, HDFC Bank had announced that it would acquire promoter and mortgage lending behemoth Housing Development Finance Corp (HDFC) in a deal that would make the bank more competitive and gain access to a captive customer base to sell its products. will allow. ,

“HDFC Bank has requested for forbearance in respect of investments in all subsidiaries including HDFC ERGO. Parekh told the meeting of equity shareholders of HDFC called by the National Company Law Tribunal (NCLT) on Friday that currently discussions are going on with RBI and we are waiting for RBI’s response.

On April 4, HDFC Chief Executive Keki Mistry had said that HDFC Bank has requested the RBI for phased compliance cash reserve ratio (CRR), statutory liquidity ratio (SLR) and priority sector lending requirements. He had said that the bank had requested the RBI to allow the lender to hold equity in subsidiaries and associate companies of HDFC.

Parekh said on Friday that necessary moratoriums on SLR and CRR have been sought by HDFC Bank and the merged entity is expected to have sufficient liquidity and options available to meet the necessary liquidity requirements.

“We are still in talks and waiting for RBI’s response,” he added. Whatever they don’t allow, we will find a solution to settle it or we may get a few years from RBI to divest some of our investments.”

He added that all investments of HDFC will be transferred to the bank after the merger in compliance with extant regulations.

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On priority sector lending requirements of the merged entity, Parekh said even if RBI grants no, compliance does not start immediately based on the combined financial statements on the first day of merger.

“This is because, as per the RBI circular, the calculation of achievement of priority sector targets and sub-targets shall be based on higher of average net banking credit or credit equivalent amount of off-balance sheet exposure as on the corresponding date of the previous year . HDFC Bank will have about 12 months to meet the requirements as of the effective date, Parekh said.

While HDFC had 3,897 employees, HDFC Bank had 162,992 employees as of October 31. Parekh said that on the effective date all employees of HDFC will be transferred to HDFC Bank on terms that are no less favorable than their present terms.

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