HDFC-ICICI Merger Was Once on the Table, Reveals Deepak Parekh

In a podcast hosted by former ICICI chief Chanda Kochhar, former HDFC chairman Deepak Parekh revealed that she had once proposed a merger between ICICI Bank and HDFC.

During a conversation with Kochhar on her YouTube channel, Parekh recalled, “I remember you talking to me once. I remember it very clearly. It's never been talked about in public, but I'm willing to share it now. You said that ICICI started HDFC. 'Why don't you come back home?' That was your offer."

However, Parekh had declined the offer, saying it “would not be fair” or “proper with our name and the bank and all.”

Parekh noted that the incident dated back to a time even before HDFC merged with HDFC Bank.

Describing the eventual merger of HDFC with HDFC Bank as a move driven by regulatory compulsions rather than business ambition, Parekh called it “a sad day and a happy day.”

He explained that the merger was good for the institution. “It is good for the company to have large banks. Look at how large Chinese banks are. We have to be bigger, larger in India.”

Explaining the reason for the merger, Parekh said the Reserve Bank of India had classified large NBFCs like HDFC — which then held assets exceeding Rs 5 lakh crore, well above the Rs 50,000 crore threshold — as systemically important.

"RBI supported us, and they pushed us into it to some extent, and they helped us," Parekh said. However, he added that there were "no concessions, no relief, no time, nothing."

Parekh recalled that the deal was executed with utmost confidentiality. “It was kept a secret. No one knew about it — when it hit the press in the morning, that’s when everyone found out. The government was aware because RBI was in touch with them, and we kept it so close — just lawyers, due diligence, accountants,” he said.

HDFC Bank had announced its plan to acquire mortgage lender HDFC in a $40-billion deal. The merger, which came into effect in July 2023, resulted in the creation of one of the largest financial institutions in Indian history.

Parekh vouched for the growth of Indian banks through acquisitions so they can become stronger.