Former HDFC chairman Deepak Parekh revealed on Friday that Chanda Kochhar—who was then a CFO at ICICI Bank—had once proposed a merger with HDFC, years before the latter's reverse merger with its own banking arm.
The two retired financial giants had been speaking on Kochhar's podcast, 'Journey Unscripted with Chanda Kochhar'.
When asked about the origin of HDFC Bank and its big reverse merger, Parekh spoke of Kochhar's merger idea, which had not been discussed publicly at the time.
“I remember you talking to me once. I remember it very clearly ... You said that ICICI started HDFC. 'Why don't you come back home?' That was your offer," Parekh recalled.
He mentioned that he had declined that offer at the time, saying that it wouldn't be proper.
“I thought it won't be fair; it won't be proper with our name, and the bank, and all,” he said.
The protracted reverse merger between HDFC Ltd and HDFC Bank was finally completed in July 2023. He stated that regulatory pressure had been an important reason behind the big move—which primarily came from the Reserve Bank of India (RBI), which had at the time classified HDFC as a systemically important Non-Banking Financial Company (NBFC).
While the mandated NBFC threshold was ₹50,000 crores at the time, HDFC had been managing assets exceeding ₹5 trillion.
“RBI supported us and they pushed us into it to some extent and they helped us. However no concessions, no relief, no time, nothing," Parekh noted.
The extremely confidential merger (valued at about $40 billion)—known only to the government, RBI, certain lawyers, due diligence and accountants—was finally announced to the press on April 4, 2022, which Parekh explained had been the first time that “everyone found out”.
Reflecting on the deal that created one of the largest financial institutions in the country worth $172 billion, he called it “sad day and a happy day”.
"It's good for the institution. It's good for the country to have large banks. Look at how large Chinese banks are. We have to be bigger, larger in India."
Years later, HDFC's non-banking arm HDB Financial Services is set to go public, in what will be the biggest IPO so far in 2025, owing to similar regulatory pressure in NBFCs—primarily from the RBI.
The IPO will open for subscription on June 25 and close on June 27.