HDFC Bank is planning to raise about ₹2.7 lakh crore in total to meet capital requirements and other prerequisites stipulated by the regulator for its merger with parent Housing Development Finance Corporation (HDFC), Mint reported quoting two people directly familiar with the bank’s plan.
The report said that HDFC Bank is to raise at least ₹2.2 lakh crore from public deposits and corporate bonds, and an additional ₹50,000 crore from similar papers.
“ ₹2.2-2.3 trillion of HDFC Ltd’s borrowings are from various banks, which needs to be paid off on day one of the mergers. This will come from deposits and bonds. Apart from that, at least ₹50,000 crore would also be raised from deposits, which will go towards meeting statutory liquidity ratio (SLR) and capital adequacy requirements (CAR)," Mint reported quoting the first person saying so.
The RBI has given its nod for the proposed amalgamation of HDFC and HDFC Bank while the Securities and Exchange Board of India (Sebi), too, has given its in-principle approval for the merger of various HDFC Group entities as a part of the mega-merger.
The proposed merger of HDFC with HDFC Bank has raised SLR requirements as the balance sheet size of the merged entity will be much bigger than what the standalone bank now has, the Mint report said.
After the completion of the merger, HDFC Ltd will acquire a 41% stake in HDFC Bank, and all subsidiaries of the housing financier will be owned by the latter. It will take about 12-18 months for the ongoing merger process to be completed, the Mint report highlighted.