With the mega-merger between BSE-S0003013″ class=”autobacklink-topic” target=”_blank” data-name=”Housing Development Finance Corporation” >Housing Development Finance Corporation (HDFC) and HDFC Bank, Deepak Parekh – former chairman of HDFC, announced his retirement in an emotional letter, saying it is time for him to ‘’hang up his boots.” The merger took place on July 1, making HDFC the fourth largest bank in the world.
However, an offer letter dated July 19, 1978 has surfaced online which reveals Parekh salary details when he joined HDFC 45 years ago! Parekh joined his uncle’s firm HDFC Limited as a Deputy General Manager in 1978. According to the offer letter, Parekh was offered a basic salary of ₹3,500 plus ₹500 as a fixed Dearness Allowance. He was also entitled to 15 per cent Housing Rent Allowance and a City Compensatory Allowance at 10 per cent.
The 78-year old was also entitled to Corporation’s Provident Fund, gratuity, medical benefits and leave travel facilities as per rules. HDFC was also willing to reimburse the expense of his residential telephone, as per the letter.
With a 45-year career with HDFC, Parekh has left behind a once-in-a-century legacy that in the country’s financial services sector. After the merger, Parekh will not be serving on the bank’s board, owing to rules by the Reserve Bank of India (RBI) on age limits.
Parekh has been responsible for taking five companies public and stitched together at least seven M&A deals. Under Parekh, HDFC has provided more than NINE million Indians with home loans and grew its loan book to ₹7.24 lakh crores. The mortage lender now commands more than a third of the overall home loan market.
“It is my time to hang my boots with both anticipation and hope for the future. While this will be my last communication to shareholders of HDFC, rest assured we now stride tall into a very exciting future of growth and prosperity. The HDFC experience is invaluable. Our history cannot be erased and our legacy will be taken forward,” Parekh said in his retirement letter.
The mega banking merger between HDFC and HDFC Bank which took place on July 1 is completed and July 13 has been set as the record date for the merger. Hence, July 14 onwards HDFC shares shall stop trading. All HDFC Ltd shareholders shall get 42 shares of HDFC bank, for every 25 shares held in HDFC Ltd. Post the merger, HDFC bank will continue being the second largest bank in India, after State Bank of India (SBI), along with being the country’s biggest private bank.
Following the merger, HDFC Bank’s capital increased to ₹1,190.61 crore, with the flexibility to adjust the share capital. HDFC Investments and HDFC Holdings were amalgamated with and into HDFC Limited without being wound up, as confirmed by HDFC Bank in a regulatory filing.
The joint market cap of HDFC Bank will be ₹14,73,953 crore with the merger, which is higher than that of Tata Consultancy Services or TCS at ₹12,07,669.91 crore. So, in terms of market capitalisation, HDFC Bank will become second most valuable Indian company after Reliance Industries Ltd. Reliance will continue to dominate Indian stock market with its current market capital of ₹17,25,704.60 crore. However, after merger, HDFC Bank would be a close number two in terms of market cap.
On July 5, shares of HDFC Bank settled 3.20 per cent lower at ₹1,673.30 compared to a previous close of ₹1,728.65 apiece on the BSE.
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