World's Largest Banking Merger Since 2007 in India, CEO Says "Elephants Can Dance As Well" About Size

The board of directors of HDFC and HDFC bank on Monday have decided on the merger of the former with the latter. This will be the biggest merger in India's corporate history, and the largest banking sector merger and acquisition globally since 2007.

Housing Development Finance Corp. (HDFC) is the underwriter of homes for millions of Indians. Meanwhile, HDFC bank is India's largest private sector bank by market capitalization.

The companies have a joint-family arrangement. As per the terms of the merger, shareholders of HDFC will get 168 shares of HDFC Bank for every 100 shares of HDFC held.

HDFC chairman Deepak Parekh said that the merger makes the combined entity strong enough to counter competition and also makes mortgage offering in India more competitive.

HDFC Bank is a 28-year old banker offspring of HDFC. Besides the bank, HDFC is the holding company for HDFC Life, HDFC General Insurance, HDFC Mutual Fund, HDFC Credila, and HDFC Venture Capital. However, the bank has surpassed its parent HDFC in terms of assets size and valuation. The merger will scale HDFC Bank's market capitalization at $185 billion: the sixth-largest globally.

Regarding whether the merger will compromise HDFC Bank's flexibility, the bank CEO Sashidhar Jagdishan says, "Elephants can dance as well."