Hdfc Not To Trek Universal Path: Parekh

A lower cash reserve ratio (CRR) and a rush by financial institutions (FIs) led by ICICI and IDBI to transform into universal banks have not made the Housing Development Finance Corporation (HDFC) change its mind.

"We are quite happy the way we are. There is no compulsion or urgency and also no need for any merger. Both HDFC and HDFC Bank are growing at a fairly rapid pace," HDFC chairman Deepak Parekh said.

"There were different regulators for different financial intermediaries. It will take five years to get a single regulator for the entire financial sector," Parekh said. In effect, this means HDFC will not think of merging its subsidiaries and become a universal bank over the next five years.

The foreign institutional investment (FIIs) rule are different for different subsidiaries. The current FII holding in HDFC is 45.3 per cent with the board recently giving a go-ahead for raising it to 74 per cent.

On the question of any possible acquisitions by HDFC Bank, which it sitting on a pile of cash following its $172.5 million American depository share (ADS) issue, Parekh said: "The bank will pick up (another bank) if there is an opportunity and it should also be at the right price. The money from the ADS issue has already been deployed by the bank."

He also said that integration is a major problem in any merger. "There are major problems in the human resources integration, culture integration as well as integration of the IT platform," said Parekh. On the future of private sector banks, the HDFC chairman said that the sector may see more mergers and acquisitions.