New Delhi: Indian banks watchdog Reserve Bank of India has granted SBI Funds Management (SBIMFL) to take up to 9.99 per cent of the paid-up share capital or voting rights of HDFC Bank, the bank notified in exchanges on May 17. It said that the central bank has advised SBIFM to obtain the stake within six months by November 15, 2023.

“Further, SBIFML must ensure that the aggregate holding in the Bank remains below 10 per cent of the paid-up share capital or voting rights of the Bank at all times,” the bank said in an exchange filing.

The nation’s largest private sector lender, HDFC Bank, said that the RBI on May 16, through a letter addressed to SBIFML granted its approval for acquiring up to 9.99 per cent voting rights of the HDFC Bank.

The approval made was in reference to the application drafted by SBIFML to RBI, it said.

After the deal succeeds, HDFC Bank will be acquired 100 per cent by public shareholders along with existing shareholders of HDFC which will own 41 per cent, as per stock exchange filings by the firms.

Each HDFC shareholder gets 42 shares of HDFC Bank for every 25 shares held.

Impact after transfer of ownership

The proposed transaction will enable HDFC Bank to structure its housing portfolio and move forward with its existing customer base. Until the last of this month, HDFC had total assets of Rs 6.23 Lakh crore, whereas, HDFC Bank’s assets were worth Rs 19.38 lakh crore.

“This is a merger of equals,” said Deepak Parekh, Chairman of HDFC Ltd. “We believe that the housing finance business is poised to grow in leaps and bounds due to the implementation of RERA, infrastructure status to the housing sector, and government initiatives like affordable housing for all, amongst others.”

HDFC Vice-Chairman and CEO Keki Mistry said that this merger will make HDFC Bank a large lender even by global standards. “It will make more room for FII holding in HDFC Bank.” The HDFC-HDFC Bank merger is expected to be completed by the second or third quarter of FY24.