As the son grows older, he acquires the father's business: HDFC Chairman Deepak Parekh

In about 18 months, HDFC and its two subsidiaries, HDFC Investments and HDFC Holdings, would become part of HDFC Bank, creating a lender with a balance sheet of Rs 17.87 trillion and Rs 3.3 trillion net worth.

After the amalgamation announcement, HDFC chairman Deepak Parekh called it a "merger of equals".

"As the son grows older, he acquires the father's business," Parekh said at a press conference on Monday. "This is a friendly merger. We won't be thrown out. After 45 years in housing finance, we have to find a home for ourselves which we found in our own family company HDFC Bank."

Keki Mistry, vice-chairman and CEO of HDFC, has mentioned that every employee of HDFC, including all senior people, would occupy positions within the bank. He added that Sashidhar Jagdishan, HDFC Bank CEO, would continue to lead the merged entity.

"I am 67-and-a-half-year-old, and this merger will probably take another year-and-a-half. By that time, I will be 69, and the retirement age for people in a bank is 70,” Mistry said. He later said he can be on the board but doesn't wish to be a full-time executive.

Voicing a similar reason, Parekh said: "This (merger) process will take 12-18 months, and the Reserve Bank doesn't allow anyone above 75 to be on the bank board. I have already crossed that age."

On the merger, Parekh said only 30 percent of HDFC customers have a bank account with HDFC Bank. "So now, mortgage customers can access a range of financial services under the HDFC roof," he said, adding that the merger makes the combined entity strong enough to make offerings more competitive.

"Regulatory changes over the past three years have made mergers easier. NPA (non-performing asset) classification is now the same for NBFC/HFCs and banks. The upper layer of NBFCs will have tighter regulations similar to banks," Parekh said, adding these measures have considerably reduced the regulatory arbitrage for the merger.

"We have not worked out how much additional SLR, CRR we will have to set aside," he said.  Parekh said the bank had requested RBI for a phased-in approach regarding SLR, CRR, PSL and grandfathering of its balance sheet. This request, he said, has been sent to RBI via letter on April 1 and is under consideration.

"The regulator requires banks to hold either over 50 percent stake or under 30 percent stake in insurance subsidiaries. We hold a little under 50 percent in our insurance companies, will apply to the regulator to increase our stake in insurance companies to over 50 percent," he said.

He reiterated that both HDFC and HDFC Bank will continue operating independently until the merger date, and the job of each HDFC employee will be retained. All HDFC branches will be retained and may be converted into bank branches after the amalgamation.