Unlock The History of The Merger of HDFC and HDFC Bank
Deepak Parekh, the chairman of HDFC, announced at a press conference on June 27 that the board of these two businesses would meet on June 30 to finalize the merger, which will start on July 1st.
The Housing Development Finance Corporation (HDFC), the largest housing finance company in India, and HDFC Bank, the largest lender based on market capitalization, will merge as of July 1. Deepak Parekh, the chairman of HDFC, announced at a press conference on June 27 that the two companies’ boards would meet on June 30 to finalize the merger.
But HDFC’s story is a success in and of itself. Here is everything you need to know about how it started and where it is going now.
On July 13, HDFC shares will be taken off the stock market. This will be a big change in a long journey that started more than 45 years ago. Here is a brief summary of how HDFC started and what has happened in recent years.
Under the direction of HT Parekh, also known as Hasmukhbhai, HDFC was established in 1977. Hasmukhbhai was born on March 10, 1911. He went to the London School of Economics to get a degree in banking and finance.
Parekh started his career in finance with the stock brokerage firm Harkisandass Lukhmidass after moving back to India in 1936. He worked for the company for more than 20 years.
Hasmukhbhai was an important part of starting the Industrial Credit and Investment Corporation of India, or ICICI Bank, in 1955. He was chosen to be the corporation’s deputy general manager in 1956. As chairman, he left the ICICI board in 1976.
Later on, after he had retired, he helped to establish HDFC.
As soon as HDFC was established on October 17, 1977, it was the first specialized mortgage company in India. It was advertised as a development finance institution, or DFI, by ICICI and the International Finance Corporation, Washington.
A DFI is a type of financial institution that offers non-commercial risk capital for economic development projects.
The following year, in 1978, HDFC issued its first batch of equity shares to the public for a total of Rs 10 crore. Later in 1987, it started its first Rs. 5 crore equity rights issue. It’s interesting that it has a market cap of more than Rs 5 trillion today.
When his nephew Deepak Parekh was named chairman in 1993, Hasmukhbhai continued to lead the business up until that point. As chairman emeritus, Hasmukhbhai was chosen. Deepak Parekh made the announcement on Tuesday that he would step down once the merger is complete.
Through its associate and subsidiary companies, HDFC now has a presence in banking, asset management, venture capital, life insurance, and general insurance.
The bank was established and incorporated in August 1994, and it currently has a market capitalization of over Rs 9.3 trillion. In January 1995, it started operating as a regular commercial bank. That same year, HDFC Bank went public on the Indian stock exchanges.
The mutual fund schemes of HDFC Asset Management Company were introduced in 2000. As India’s first private-sector life insurance company, HDFC Standard Life Insurance was registered by the Insurance Regulatory and Development Authority in the same year. It now goes by the name HDFC Life.
Ergo Group, based in Munich, manages the general insurance business for HDFC.
HDFC has also terminated a few of its businesses over the years. It sold the majority of its shares in HDFC Credila Financial Services earlier this year. In one of India’s largest lenders to undergraduate and graduate students, it currently holds a 9.99 percent stake.
2018 saw HDFC sell Quikr the rights to its online real estate platform HDFC Red. HDFC Developers Limited, which launched the platform in 2010, was responsible.
The merger between HDFC and HDFC Bank, which was announced on April 4, 2022, is thought to be the largest corporate merger in India’s history. The combined asset base of the merged company is predicted to be around Rs 18 trillion.
Each shareholder who owns 25 shares of HDFC will receive 42 shares of HDFC Bank under the terms of the agreement. On July 13, HDFC’s shares will be taken off the market.
Speaking to the media on Tuesday, Deepak Parekh said the bank has guaranteed that every single HDFC employee, with the exception of those who are approaching or are over 60 years old, will be retained and their salaries won’t be decreased.