On Monday, HDFC Bank will merge with housing finance firm HDFC Ltd, the companies said.

As part of the deal, shareholders of HDFC Ltd will receive 42 shares of the bank for 25 shares held. Existing shareholders of HDFC Ltd will own 41 per cent of HDFC Bank. Shares held by the housing finance company in the lender will be extinguished, making HDFC Bank a full-fledged public company, Reuters reported.

The subsidiaries and associates of HDFC Ltd will shift to HDFC Bank, the companies said in a regulatory filing.

Deepak Parekh, Chairman of HDFC Limited, called the arrangement ‘a merger of equals’.

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“Over the last few years, various regulations for banks and NBFCs have been harmonized, thereby enabling the potential merger. Further, the resulting larger balance sheet would allow underwriting of large ticket infrastructure loans, accelerate the pace of credit growth in the economy, boost affordable housing and increase the quantum of credit to the priority sector, including credit to the agriculture sector,” said Parekh.

Rajnish Kumar, a former chairperson of the State Bank of India, media reported the combined entity would give an ‘advantage of cost efficiencies.