Deepak Parekh Reveals ICICI Bank Once Proposed Merger with HDFC

In a recent conversation, Deepak Parekh, the former Chairman of HDFC Ltd, shared an interesting story from the past. He revealed that Chanda Kochhar, who was then the CEO of ICICI Bank, had once approached him with a proposal to merge ICICI Bank with HDFC. This proposal came long before HDFC’s actual merger with its own banking subsidiary, HDFC Bank, which was completed in July 2023.

Why Deepak Parekh Rejected the ICICI-HDFC Merger Proposal

Parekh recalled that he had politely turned down Kochhar’s offer at that time. He said, “It wouldn’t have been fair or proper — considering our name, legacy, and structure.”

In his words during an appearance on Chanda Kochhar’s YouTube channel, he said:

“I remember you talking to me once. It’s never been discussed publicly, but I’ll share it now. You said ICICI created HDFC. ‘Why don’t you come back home?’ That was your offer.”

The HDFC-HDFC Bank Merger in 2023

Years after that proposal, HDFC Ltd eventually merged with HDFC Bank in a significant reverse merger that concluded in July 2023. According to Parekh, this decision was largely influenced by regulatory requirements. The Reserve Bank of India (RBI) had classified HDFC as a “systemically important non-banking financial company (NBFC),” which brought additional compliance burdens.

At the time of the merger, HDFC Ltd was managing assets worth over ₹5 lakh crore, much higher than the ₹50,000 crore threshold set by RBI for such classification.

Parekh said:

“RBI supported the merger. They pushed us towards it in a way and helped us during the process. But let me be clear — there were no concessions, no special reliefs, and no extra time given.”

Why Big Banks Are Important for India

Deepak Parekh believes that building larger banks is crucial for the future of India’s economy. He emphasized the need for consolidation and scale in the Indian banking sector. Drawing a comparison with China, he said:

“It’s good for the institution and good for the country. Look at the size of Chinese banks — we need banks in India that are bigger and stronger.”

He further said that Indian banks should grow through mergers and acquisitions. That, he said, is the only way to create financial institutions that can compete on a global level.

Concerns Over the Insurance Sector and Economic Challenges

Apart from banking, Parekh also talked about challenges in the wider economy. He pointed out that global disruptions in supply chains, changes in trade policies, and falling exports are major problems that business leaders in India are dealing with today.

He also raised concerns about the insurance sector. Calling insurance the “least understood” financial product in India, Parekh criticized how banks often mis-sell insurance policies just to earn high upfront commissions.