The proposed Rs 15,000-crore merger deal between Kotak Mahindra and ING Vysya has got the Competition Commission's approval.
According to the fair trade regulator, the merger, which would create the country's fourth largest private sector lender, is "not likely to have an appreciable adverse effect on competition in India".
In an order dated February 12 but released today, the Competition Commission of India (CCI) said that share of both entities in various relevant markets is "insignificant".
In this case, the regulator took into account multiple relevant markets including those for deposits, home loans, agricultural banking and card business. These were considered in accordance with the international best practices regarding the assessment of the mergers in the banking sector.
The CCI observed that the presence of large players in these markets would also "act as a competitive constraint to the parties".
It also said that since ING Vysya does not have significant market share in any of the relevant markets, "the proposed combination would not result in the removal of a significant competitor".
With regard to investment advisory services, securities depository services and portfolio management services, the CCI observed that the market shares of the parties are "insignificant in comparison to the other larger players present in the markets".
"There are large number of competitors, including banks and entities registered with the Securities and Exchange Board of India present in these markets," the CCI said.
As per the order, the merger scheme provides that for every 1,000 shares held by the shareholders of ING Vysya, 725 shares of Kotak will be allotted to the shareholders of ING Vysya.
Kotak offers a wide range of banking and financial services through its 641 branches located across India. The bank through its various subsidiaries, also provides life insurance, asset management, brokerage, investment banking and investment advisory services.
ING Vysya has 573 branches across India and offers retail banking, corporate banking and credit card services. In addition, ING Vysya provides portfolio management, investment advisory and securities depository services to its customers.
Kotak Mahindra had announced the buyout of ING Vysya Bank in an all-stock deal in November last year following which it had approached CCI for approval on the deal in December.