PFRDA approves HDFC's constitution change ahead of merger with HDFC Bank; directs uninterrupted services to NPS subscribers

Regulator PFRDA has approved change in constitution of HDFC Ltd ahead of its merger with its banking subsidiary HDFC Bank, and directed that services to NPS subscribers associated with the corporation should not be affected.

Earlier in April this year, the boards of Housing Development Finance Corporation (HDFC Ltd) and HDFC Bank had approved a composite Scheme of Amalgamation of the two entities, subject to various regulatory approvals.

As part of the scheme, the wholly-owned subsidiaries of HDFC Ltd -- HDFC Investments Ltd and HDFC Holdings Ltd -- are to be amalgamated into HDFC Ltd. Subsequently, HDFC Ltd is to be amalgamated with HDFC Bank.

"We wish to inform you that HDFC Limited has today i.E. On July 8, 2022, received an approval from PFRDA regarding change in its status/constitution pursuant to the Scheme in accordance with the PFRDA (Point of Presence) Regulations, 2018, subject to a condition that the services to NPS subscribers associated with HDFC Limited will not be affected due to the Scheme," HDFC said in a regulatory filing on Friday.

The mortgage lender said the amalgamation scheme remains subject to various statutory and regulatory approvals, including from the Competition Commission of India (CCI), National Company Law Tribunal (NCLT) and the respective shareholders and creditors of the companies involved in the scheme.

Points of Presence (PoPs) are banks and non-banking financial companies registered with the Pension Fund Regulatory and Development Authority (PRFDA) for registration and servicing of subscribers under the National Pension System (NPS) administered by the Authority.

The registered PoPs have authorised branches called POP-service providers (PoP-SPs) to act as collection points and extend services to customers.

They carry out functions such as subscriber's registration, processing subscriber contributions, change in personal details, change in investment scheme/fund manager, processing subscriber shifting from one model to the other, issuing printed account statement, processing of withdrawal/exit request on superannuation, among others.

Earlier this week, HDFC Bank had said the Reserve Bank of India (RBI) has approved the merger proposal of its parent HDFC Ltd with itself.

Besides, both the entities have received no-objection from both stock exchanges NSE and BSE.

The HDFC-HDFC Bank merger is seen as the biggest transaction in India's corporate history.

On April 4, India's largest private lender HDFC Bank had agreed to take over the biggest domestic mortgage lender in a deal valued at about USD 40 billion, clearing the way for creation of a financial services titan in the country.

The proposed entity will have a combined asset base of around Rs 18 lakh crore. The merger is expected to be completed by the second or third quarter of FY24, subject to regulatory approvals.

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

With PTI Inputs