Former HDFC chairman Deepak Parekh has revealed that former ICICI Bank chief Chanda Kochhar once proposed a merger between ICICI and HDFC, well before HDFC’s reverse merger with its own banking arm.
During a conversation with Kochhar on her YouTube channel, Parekh recounted, "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."
Parekh said he declined the offer at the time, saying it "won't be fair" or "proper with our name and the bank and all."
Parekh described the eventual HDFC-HDFC Bank merger, completed in July 2023, as a move driven by regulatory compulsions rather than business ambition. The Reserve Bank of India had classified large NBFCs like HDFC, which then held assets exceeding ₹5 lakh crore, as systemically important — well above the ₹50,000-crore threshold.
"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 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, 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.
Reflecting on the conclusion of the merger, Parekh called it "a sad day and a happy day." He added, "It's good for the institution. It's good for the country to have large banks. Look at how large Chinese banks are. We have to be bigger, larger in India."
On April 4, 2022, HDFC Bank announced its plan to acquire mortgage lender HDFC in a deal valued at about $40 billion, creating one of the largest financial institutions in Indian history. The merger gave rise to a banking entity worth $172 billion, affecting tens of millions of customers and shareholders across both companies, along with their group insurance and asset management operations.
Parekh said Indian banks must grow through acquisitions in order to become stronger in the future.
He also listed key concerns for chief executives, including continuing uncertainty in supply chains, trade policies, and export conditions.
On the insurance front, Parekh described it as the "least understood product" and criticised "mis-selling by banks" which, he said, was driven by the lure of high upfront commissions.
While HDFC Bank, in April this year, crossed the ₹15 lakh crore market capitalisation mark — an elite milestone — a quieter shift has been unfolding in the private banking space. ICICI Bank has steadily pulled ahead of HDFC Bank on several key performance metrics.
ICICI Bank is now seen as a frontrunner among private sector lenders in India. HDFC Bank, meanwhile, has been navigating the after-effects of the 2023 merger, which have affected its growth path.
In FY25, ICICI Bank recorded profit growth of 15%, while HDFC Bank’s profits rose by 11%. Both banks registered similar net interest income (NII) growth, but ICICI had a stronger net interest margin (NIM) of 4.41% compared with HDFC Bank’s NIM of 3.65%.
ICICI Bank also reported 14% growth in both advances and deposits for FY25. HDFC Bank, however, saw its advances grow at nearly half the pace of its deposits.
The merger added a substantial loan portfolio to HDFC Bank but did not bring in a matching level of deposits. This resulted in a spike in the loan-to-deposit ratio (LDR) to over 100% post-merger. Although HDFC Bank reduced this figure to 96.5% by the end of FY25, it still faces pressure to either increase deposits or slow down lending.
By contrast, ICICI Bank's LDR stood at a healthier 82.4% as of March 2025.
Due to the elevated LDR, HDFC Bank deliberately slowed down its credit expansion during FY25 to maintain balance. The bank’s management believes that improving systemic liquidity will help raise deposits going forward.
A high LDR suggests a bank is lending a large proportion of its deposits, which can become a risk if too many depositors withdraw funds at once and liquidity tightens.
During a conversation with Kochhar on her YouTube channel, Parekh recounted, "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."
Parekh said he declined the offer at the time, saying it "won't be fair" or "proper with our name and the bank and all."
Parekh described the eventual HDFC-HDFC Bank merger, completed in July 2023, as a move driven by regulatory compulsions rather than business ambition. The Reserve Bank of India had classified large NBFCs like HDFC, which then held assets exceeding ₹5 lakh crore, as systemically important — well above the ₹50,000-crore threshold.
"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 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, 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.
Reflecting on the conclusion of the merger, Parekh called it "a sad day and a happy day." He added, "It's good for the institution. It's good for the country to have large banks. Look at how large Chinese banks are. We have to be bigger, larger in India."
On April 4, 2022, HDFC Bank announced its plan to acquire mortgage lender HDFC in a deal valued at about $40 billion, creating one of the largest financial institutions in Indian history. The merger gave rise to a banking entity worth $172 billion, affecting tens of millions of customers and shareholders across both companies, along with their group insurance and asset management operations.
Parekh said Indian banks must grow through acquisitions in order to become stronger in the future.
He also listed key concerns for chief executives, including continuing uncertainty in supply chains, trade policies, and export conditions.
On the insurance front, Parekh described it as the "least understood product" and criticised "mis-selling by banks" which, he said, was driven by the lure of high upfront commissions.
While HDFC Bank, in April this year, crossed the ₹15 lakh crore market capitalisation mark — an elite milestone — a quieter shift has been unfolding in the private banking space. ICICI Bank has steadily pulled ahead of HDFC Bank on several key performance metrics.
ICICI Bank is now seen as a frontrunner among private sector lenders in India. HDFC Bank, meanwhile, has been navigating the after-effects of the 2023 merger, which have affected its growth path.
In FY25, ICICI Bank recorded profit growth of 15%, while HDFC Bank’s profits rose by 11%. Both banks registered similar net interest income (NII) growth, but ICICI had a stronger net interest margin (NIM) of 4.41% compared with HDFC Bank’s NIM of 3.65%.
ICICI Bank also reported 14% growth in both advances and deposits for FY25. HDFC Bank, however, saw its advances grow at nearly half the pace of its deposits.
The merger added a substantial loan portfolio to HDFC Bank but did not bring in a matching level of deposits. This resulted in a spike in the loan-to-deposit ratio (LDR) to over 100% post-merger. Although HDFC Bank reduced this figure to 96.5% by the end of FY25, it still faces pressure to either increase deposits or slow down lending.
By contrast, ICICI Bank's LDR stood at a healthier 82.4% as of March 2025.
Due to the elevated LDR, HDFC Bank deliberately slowed down its credit expansion during FY25 to maintain balance. The bank’s management believes that improving systemic liquidity will help raise deposits going forward.
A high LDR suggests a bank is lending a large proportion of its deposits, which can become a risk if too many depositors withdraw funds at once and liquidity tightens.
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