 "HDFC merger, hdfc bank merger")
The merger of India's largest housing finance company, the Housing Development Finance Corporation (HDFC), and the largest lender by market cap, HDFC Bank, will be effective from July 1. In a press conference on June 27, HDFC's chairman Deepak Parekh said that the board of these two companies will meet on June 30 to finalise the merger.
But HDFC's journey is a success story in its own right. Here's all you need to know about its foundation and journey so far
The shares of HDFC will delist on July 13, marking a major step in a journey that started over 45 years ago. Here is a brief on the foundation of HDFC and its journey so far.
Hasmukhbhai Parekh and his role
HDFC was founded in 1977 under the leadership of HT Parekh, also known as Hasmukhbhai. Born on March 10, 1911, Hasmukhbhai went on to study Banking and Finance at the London School of Economics.
After returning to India in 1936, Parekh began his career in finance with a stock broking firm Harkisandass Lukhmidass. He served the firm for over two decades.
More From This Section
In 1955, Hasmukhbhai played a key role in the foundation of the Industrial Credit and Investment Corporation of India, now known as ICICI Bank. In 1956, he was appointed the deputy general manager of the corporation. He retired from ICICI's board in 1976 as the chairman.
It was after his retirement that he went on to lay the foundation of HDFC.
Also Read: HDFC, HDFC Bank merger effective July 1; HDFC shares delisting on July 13
Also Read: HDFC, HDFC Bank merger effective July 1; HDFC shares delisting on July 13
Foundation of HDFC
When it was incorporated on October 17, 1977, HDFC became India's first specialised mortgage company. It was promoted as a development finance institution or DFI by ICICI, and the International Finance Corporation, Washington.
A DFI is a financial institution that provides risk capital for economic development projects on a non-commercial basis.
Hasmukhbhai was appointed as the chairman of HDFC
The next year, in 1978, HDFC launched its first public issue of equity shares worth Rs 10 crore. Later in 1987, it launched its first equity rights issue of Rs 5 crore. Interestingly, today it commands a market cap of over Rs 5 trillion.
Hasmukhbhai stayed at the company's helm until 1993, when his nephew, Deepak Parekh, was appointed chairman. Hasmukhbhai was appointed as the chairman emeritus. On Tuesday, Deepak Parekh announced that he would retire after the merger is completed.
HDFC and its various businesses
Today, HDFC has a presence in banking, asset management, venture capital, life and general insurance through its associate and subsidiary companies.
The bank, which currently has a market cap of over Rs 9.3 trillion, was founded and incorporated in August 1994. It commenced operations as a scheduled commercial bank in January 1995. Later that year, HDFC Bank listed on the Indian bourses.
In 2000, HDFC Asset Management Company launched its mutual fund schemes. In the same year, the Insurance Regulatory and Development Authority registered HDFC Standard Life Insurance as India's first private-sector life insurance company. Today it is called HDFC Life.
HDFC operates its general insurance with Munich-based Ergo Group.
Former subsidiaries and associates
In all these years, HDFC has also let go of some of its businesses. Earlier this year, it sold a majority stake in HDFC Credila Financial Services. It currently has a 9.99 per cent stake in one of India's largest lenders to under and post-graduate students.
In 2018, HDFC sold its online real estate platform HDFC Red to Quikr. The platform was launched in 2010 under HDFC Developers Limited.
The merger
On April 4, 2022, HDFC announced that it would merge with HDFC Bank in what is being seen as the biggest merger in India's corporate history. The merged entity is expected to have a combined asset base of around Rs 18 trillion.
Under the deal, each shareholder with 25 shares of HDFC will receive 42 shares of HDFC Bank. The shares of HDFC will be de-listed on July 13.
Addressing the media on Tuesday, Deepak Parekh said that the bank has assured that each and every employee of HDFC, except those nearing or above 60 years of age, will be absorbed and their salaries will not be reduced.
