RBI’s Blow to HDFC Twins Merger: No Rollover of HDFC Ltd’s Papers

Recently, the Reserve Bank of India (RBI) issued a clarification stating that HDFC

Bank, a private lender, will continue to retain the commercial papers provided by HDFC Ltd until their maturity.

In response to the HDFC twins merger, HDFC Bank demanded a clarification from the central bank regarding commercial papers on April 20, 2023. The RBI has provided clear instructions to HDFC Bank not to extend the maturity or re-issue commercial papers issued by HDFC Ltd after the effective merger date.

On Friday, HDFC Bank revealed in a regulatory filing the response it had received from the central bank. As per the filing, HDFC Bank had approached the RBI for seeking confirmation regarding the commercial papers issued by HDFC Limited.

Further, the filing mentioned, "Pursuant to the same, the RBI has, vide its email dated June 16, 2023, advised HDFC Bank that it may hold the commercial papers that were issued till date by HDFC Limited, till their maturity, and that it shall not roll over or reissue any commercial paper after the effective date of the Proposed

Amalgamation (“Effective Date")."

HDFC Bank stated that it intends on approaching the RBI regarding the finalized amounts of the liabilities held by HDFC Limited as of the Effective Date.

Following the letter sent by HDFC Bank on April 04 of last year, which informed the

RBI of the decision made by the Board of Directors of HDFC Bank Limited ("HDFC

Bank") to approve the Scheme under Sections 230 to 232 of the Companies Act, 2013, which deals with the merger of companies along with the applicable rules and regulations, the RBI issued the clarification. It was provided by the RBI in response to HDFC Bank's letter, which stated that the scheme was contingent on acquiring the required statutory and regulatory approvals.

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