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Possibility of dissociating insurance companies; Better lending to the infrastructure sector is possible


The Board of Housing Development Finance Corporation (HDFC), India’s leading housing finance company, this week approved the merger of the company and its subsidiaries with HDFC Bank. Speaking to CNBC-TV18, Deepak Parekh, chairman of HDFC, said he hoped to hear from RBI on the matter shortly as the merger requires central bank approval.

“If RBI asks us, it is possible to unbundle the insurance companies after the merger. We have not asked for a waiver on CRR/SLR and other regulatory requirements. We have asked RBI to grant us a delay stipulated,” he said.

“Banks today have a significant proportion of retail lending in the form of mortgages

With the arrival of our book in HDFC Bank, the duration of mortgage loans increases to 5.5 to 6 years, which is a considerable advantage for the bank’s shareholders,” he explained.

Parekh believes that the infrastructure sector needs loans to grow quickly in the short term.

“India needs big loans. Expect new cement and steel mills, which would require huge funds. If you have a bigger and stronger balance sheet, you can lend more for big projects and infrastructure A bigger balance sheet means the bank can lend more for infrastructure,” the HDFC chairman said.

Parekh believes that there is currently enough liquidity in the system and the RBI agrees that large NBFCs should become banks. This favors the merger decision.

“RBI’s indirect direction of large NBFCs becoming a bank was one of the reasons for the merger,” he said.

Deepak Parekh has confirmed that Keki Mistry will join the board of directors of the new entity.

“Keki Mistry is 67 years old. He will join the bank as a member of the board of directors,” he said.

(Edited by : Abhishek Jha)

First post: STI


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