Lack of communication on merger lead to fall in HDFC twin stocks, says HDFC chairman Deepak Parekh

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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[wealthdesk shortname=”HDFC” isinid=”INE001A01036″ bseid=”500010″ nseid=”HDFC” sector=”Finance – Housing” exchange=”nse”]HDFC chairman Deepak Parekh on Saturday said the lack of communication by the management on the benefits of the merger lead to the fall in the share prices of HDFC and HDFC Bank.

Speaking exclusively to CNBC-TV18, Parekh said he couldn’t talk more about the merger as neither HDFC nor HDFC Bank results were out when we announced the merger, “After Monday, we will go on a roadshow and talk about the merger and explain the rationale to investors.”

On April 4, India’s most valuable lender HDFC Bank agreed to take over the country’s largest mortgage lender in a #40 billion deal, creating a financial services titan in the largest transaction in the nation’s corporate history.

Also Read: Here’s why the Street punished the Axis Bank stock despite better-than-expected profit

Once the deal is effective, HDFC Bank will be 100 percent owned by public shareholders, and existing shareholders of HDFC will own 41 percent of the bank.

He said, “Until we hear from the RBI on our merger, there’s nothing more to communicate with the investors. Investors must have patience. We will have a good big bank and a successful organisation.”

Talking about merger concerns, Parekh said there is no going back on the deal, “We need the approvals and we are ready for whatever approvals come from the regulator.”

Also Read: IDFC First Bank reports net profit of Rs 342.7 crore on lower provisions, misses estimates

According to him, after the merger of HDFC and HDFC Bank, there will be more consolidation in the financial sector, “I can see more mergers in the financial sector across banking, insurance, and AMCs, and that is the way forward.”

Further, he said, “RBI is now making NBFC regulations at par with banks and there is no arbitrage left. RBI governor had said that large NBFCs will have to rethink their strategy and what they do. There is a thinking in the RBI that large NBFCs cannot survive (without change) and have to re-think their model.”

On India’s growth prospects, Parekh said the country will have a 7-7.5 percent growth rate for the next few years as growth indicators are all positive. The government’s privatization resolve is positive. The intensity of the government disinvestment programe has started and we will see more this year.”

Parekh expects a double-digit credit offtake in the next few years for the banking sector and thinks that retail non-performing assets (NPAs) are not going to be a problem.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow