HDFC Chairman Deepak Parekh in his address to shareholders said that he expects regulatory approval for the proposed merger between HDFC and HDFC Bank.
Parekh said after 45 glorious years of providing homes to crores of customers, the time is right for HDFC to find a new home.
In April, HDFC and HDFC Bank announced a plan for an all-stock deal merger, for which all the regulatory approvals are expected in 15-18 months.
HDFC Bank has requested the Reserve Bank of India (RBI) for more time to meet several regulatory requirements like cash reserve ratio, statutory liquidity ratio, and priority sector lending targets.
“At this juncture, we are awaiting regulatory guidance on the path forward. We remain respectful of all our regulators and are confident that the outcome will be judicious and fair at a systemic level. My only ask of our stakeholders is for your patience as we navigate through the complexities of this transaction. More than ever before, we need your trust and support,” Parekh said in the letter to shareholders.
He said that the optimum path to scale up housing finance is to be housed within a banking structure. The pool of resources for lending will be significantly larger and at lower costs.
“From a regulatory perspective, it is prudent for all large providers of housing finance to operate on a level playing field, with the same rules. Globally too, the scale of mortgage assets is exponentially larger in banks compared to non-banking financial entities,” he said.
In his address, he also touched about the India’s housing finance market. He said the country should be able to double its home loans to around $600 billion in the next five years.
“This would coincide with the period when India attains its much-aspired goal of being a $5 lakh crore economy. Despite the doubling of housing loans, India’s mortgage penetration would still remain low at an estimated 13 per cent of the GDP,” he said.
The chairman of HDFC said in order to take India’s mortgage to GDP ratio to cross 20 per cent, housing loans in India will have an exponential growth trajectory for decades to come.