When Deepak Parekh declined ICICI Bank’s offer to takeover HDFC

The veteran banker added that he politely declined the offer, saying, “It will not be fair or proper with our name and the bank and all.” The much-publicised reverse merger was finally completed on July 1, 2023, in an all-stock deal valued at $60 billion, making it the largest merger in the history of corporate India. This catapulted HDFC Bank as the largest private sector lender with assets almost double of ICICI Bank.  But post-merger, ICICI Bank has outperformed HDFC Bank in key financial metrics like profit growth and net interest margin.

Parekh described the HDFC-HDFC Bank merger as a move driven by regulatory compulsions rather than business ambition after the Reserve Bank classified non-banking financial companies like HDFC—then managing assets exceeding `5 trillion—as systemically important, crossing the regulatory threshold of `50,000 crore. This had taken away all the benefits that being an NBFC would have had.

However, he was quick to note that “the RBI supported us and they pushed us into it to some extent but they helped us. But let me add, there were no concessions, no relief, no time, nothing.” Parekh also said the deal had been executed with extreme confidentiality. “It was kept a secret. No one knew about it—when it hit the press in the morning (of April 5, 2022), that’s when everyone found out. The government was aware of because the RBI was in touch with them, and we kept it so close—just lawyers, due diligence, accountants,” he said.

Reflecting on the conclusion of the merger, Parekh called it “a 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 too need to have bigger, larger banks.” He also batted for consolidation in the banking sector to build globally competitive institutions. “Our banks must grow through acquisitions.”