Reportedly, a formal announcement pertaining to the merger is most likely to come this week.
Investment bankers have been hired to negotiate the deal making directly between the dominant shareholders of the two entities.
The merger would scale down Bandhan’s founder Chandra Shekhar Ghosh holding to just above 60 percent. HDFC’s stake in Gruh’s would come down to 10 percent from 58 percent.
Sources suggest that the deal process began when Kolkata-based Bandhan Bank approached the HDFC top executived exploring a merger with Gruh Finance. This resulted in direct talks between HDFC’s chairman Deepak Parekh and Bandhan’s Ghosh.
The deal holds major operational synergies as Gruh focuses on small centres with affordable housing demands. Bandhan is India’s one f the fastest emerging private sector banks with a thrust on micro loans.
Bandhan began its operations as micro finance company in 2001. It got its banking licence in 2014.