HDFC Bank will become the world’s fifth largest lender, complete process in 18 months

The merger between HDFC Ltd and HDFC Bank was announced on Monday. The merger was approved about eight years ago. According to a report, this process will be completed in 18 months and after this HDFC Bank will become the fifth largest lender in the world.

On Monday, the two giants of the country, HDFC Bank and HDFC Limited, were announced to be one. It is one of the biggest deals in the Indian financial sector. information about this merger was provided to the stock market. According to the report, some regulatory approvals are yet to be received in this matter, after which the deal will be completed in the next 18 months and after that a new company will be formed. With this, HDFC Bank will build a larger housing loan portfolio as well as increase its customer base. After this deal, HDFC Ltd will have 41 per cent stake in the bank. After the merger, the balance sheet of the new company will be Rs 17.87 lakh crore.

Second in terms of market cap

After the merger, the public will have 100% stake in HDFC Bank. The total assets of HDFC Ltd are Rs 6.23 lakh crore while that of HDFC Bank is Rs 19.38 lakh crore. HDFC Bank has 68 million customers. With the merger of the two companies, their market capitalization has become the highest after Reliance. The market capitalization of HDFC Limited is Rs 4.8 Lakh Crore and that of HDFC Bank is Rs 9.18 Lakh Crore. In this way, the market capitalization of both of them stood at Rs 13.98 lakh crore, while the market capitalization of TCS, which is currently second only to Reliance, is Rs 13.79 lakh crore.

There will be no effect on the employees

After the merger, 42 shares of HDFC Bank will be given for every 25 shares of HDFC Ltd. According to experts, the number of customers of HDFC Bank will increase after the merger. Because, about 70 percent of HDFC Limited’s customers are those who do not have an account with HDFC Bank. On the other hand, if 80 percent of HDFC Bank customers take a loan from another bank, then the bank will also get a benefit from it. HDFC Chairman Deepak Parekh said that after this merger, the balance sheet of the new company will increase as well as the number of home loan borrowers will also increase. He said that the stake in HDFC Life can be increased to 50 per cent, which is 48 per cent at present. No employee will be affected by this merger. “The merger is a coming together of equals,” Parekh said

Biggest merger in corporate history

After the merger of HDFC with HDFC Bank, its balance sheet will be double that of ICICI Bank. Rating agency S&P said in its report that this is the biggest merger in India’s corporate history. After this, HDFC Bank’s loan will increase by 42 percent to Rs 18 lakh crore and this will increase the bank’s market share from 11 to 15 percent.However, even after the merger, HDFC Bank will remain the second largest bank. SBI’s name is on the first number and ICICI Bank will be on the third number. Its merger will take at least 12 to 18 months for which IRDAI, Reserve Bank and other regulatory approvals will have to be taken. With this merger, the bank will be able to raise money at a better rate. Along with this, the digital and distribution network will also increase.

Got approval eight years ago

About 8 years ago, a notification from the Reserve Bank led to the merger of HDFC. At that time, the Reserve Bank had approved that banks could issue long-term bonds for affordable housing. The executives of both the companies had ruled out the possibility of any such merger. In July 2014, the Reserve Bank had said that there is no need for the bank to maintain the cash reserve ratio. Both the companies are doing separate business since 1994. HDFC Bank started operations in 1994 and from then till 2020, its MD was the CEO Aditya Puri. He holds the record of being MD & CEO for the longest time in Indian banking history. HDFC Bank used to give all the files of the home loan to HDFC Limited and get commission on it.

Following the announcement by HDFC chairman Deepak Parekh, HDFC Bank shares shot up by 9.97 per cent to Rs 1,656.45 on the BSE Monday. HDFC Ltd shares rose by 9.30 per cent to close at 2,678.90.

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Association for Democratic Reforms (ADR), in its report specified that various sectors of business houses donated maximum to bhartiya janta party .analysis of last year shows that Out of 5 National parties, BJP received the maximum donations of Rs. 720.407 cr from 2025 corporate donors followed by INC which received a total contribution of Rs.133.04 cr from 154 corporate donors, and NCP with Rs. 57.086 cr from 36 corporate donors.
During FY 2019-20, the voluntary contributions above Rs. 20,000 from corporate/business houses of INC, NCP and BJP are 96%, 95% and 92% respectively.
CPI declared no income from corporate donations for FY 2019-20.

Year-wise corporate donations to National Parties
National parties have received the maximum corporate donations of Rs 921.95 cr in the FY 2019-20 (during which the 17th Lok Sabha elections were held), followed by Rs 881.26 cr in the FY 2018-19 and Rs 573.18 cr in the FY 2014-15 (during which the 16th Lok Sabha elections were held).

Corporate donations received in FY 2019-20 constituted 24.62% of the total corporate donations received between FY 2012-13 and 2019-20.
Between FY 2012-13 and 2019-20, donations from corporates to National parties increased by 1024%, with a drop in the percentage of corporate donations in FY 2015-16.
Donations from corporates to National parties increased by 109% between FY 2017-18 and 2018-19.

Top corporate donors to National Parties
Prudent Electoral Trust was the top donor to two of the National parties namely BJP and INC in the FY 2019-20. The Trust donated 38 times in a single year to the two parties each, amounting to a total of Rs 247.75 cr.
BJP declared receiving Rs 216.75 cr and INC was the recipient of Rs 31.00 cr from Prudent Electoral Trust.
B.G. Shirke Construction Technology Pvt. Ltd. was the top donor to NCP in FY 2019-20.

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The MoUwas signed in the presence of Shri Gajendra Singh Shekhawat, Minister of Jal Shakti; Shri UP Singh, Secretary, Department of Water Resources, River Development and Ganga Rejuvenation;Shri Rajiv Ranjan Mishra, Director General,NMCG, Shri Rozy Agarwal, Executive Director (Finance) and other seniorsofficers of the Ministry and NMCG.

The MoUwas signed by Shri Ashok Kumar Singh, Executive Director, NMCG; Shri Rajeev Kshetrapal, Director, Indorama Industries, Delhi and Trust Member of Indorama Charitable Trust and Shri Uday Raj Singh, Project Director, SPMG, Govt. of Uttarakhand.

Rivers in India have always been considered sacred and the Ganga river in particular, is the identity and lifeline of India. Pilgrim sites and urban centers have developed along the river. These centers have drawn sustenance from the river and have been thriving over time. Ghats and Crematoria are part of the lifestyle of people and pilgrimages to visit the holy river Ganga play a vital role in strengthening the People-River Connect. Gangotri and Badrinath being part of the Char DhamYatra, are especially important. This MoU is a significant step for improving amenities and sanitation at these holy locations with the underlying spirit of partnership and of private corporates taking responsibility by contributing to the National Mission: Rejuvenation of the sacred river Ganga.

Speaking on the occasion, Shri Shekhawat, Minister of Jal Shakti, saidthis project is being taken up under the Government initiative of ‘HarKaamDeshKeNaam’. He said the Clean Ganga campaign has been taken up in Mission Mode since the Prime Minister Shri Narendra Modi led Government assumed office in 2014. Though the Mission is nearing 100% completion, the Namami Ganga Mission is an unending process. The Minister lauded the Indorama Group for financing the project and hoped this will inspire other entrepreneurs as part of their companies’ Corporate Social Responsibility (CSR) initiative. Shri Shekhawat said for the first time the novel Operation and Maintenance Clause has been inserted, which will take care of the project’s upkeep over a period of time. Clean Ganga Mission can succeed only when it becomes a people’s initiative, he added.

The detailed Project Report (DPR) has been developed by M/S WAPCOS, a Govt. of India Enterprise.
Work is expected to start by March 2020 and likely to be completed in 15 months. This MoU is effective for duration of 7 years.

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