HDFC Bank says there is no need to repay parent company debts on day one of merger
The liabilities of HDFC Ltd will transfer to HDFC Bank upon their merger and there is no need to pay these dues on the very first day of the merger, the lender said on Thursday.
The country’s largest private sector bank by balance sheet size is set to merge its parent mortgage lender Housing Development Finance Corporation Ltd (HDFC Ltd) into itself.
HDFC Bank said it has not approved any fundraising plans to pay these debts of HDFC Ltd.
“In accordance with the proposed composite merger plan, the liabilities of HDFC Limited will transfer to the bank and will be serviced and repaid by the bank according to the contractual maturity,” HDFC Bank said in a regulatory filing.
The bank is not required to repay the liability amount of HDFC Ltd on the first day of the mergers, unless coincidentally a particular liability falls due on the same date.
HDFC Bank has already received approval in principle from the Reserve Bank (RBI) for the merger with HDFC Ltd, among other approvals.
The parent-subsidiary merger is considered the biggest deal in Indian corporate history. In April this year, HDFC Bank and HDFC Ltd announced the merger proposal in which the lender will take over the mortgage lender for about $40 billion in about 18 months.
The information provided by the lender comes as a clarification in response to a news report, which said HDFC Bank is required to raise over Rs 2.2 trillion in order to repay HDFC Ltd’s liability when the merger between them comes into effect. .
HDFC Bank said the report was factually incorrect and speculative.
HDFC Bank’s stock traded at 1,427.65 rupees each on the BSE, down 0.38%.