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 The Reserve Bank of India has allowed HDFC Bank Ltd and Housing Development Finance Corporation select regulatory relief to smooth out the merger between the two organisations, set to conclude by July this year.

The central bank has permitted the bank to meet priority sector lending requirements in a staggered fashion over three years, the bank said in an exchange notification.

These requirements, which include lending to weaker segments of the economy, are linked to an organisation's loan book.

However, post the merger, HDFC Bank will need to comply with requirements to hold a certain level of cash reserve ratio, statutory liquidity ratio and liquidity coverage ratio on the entire merged balance sheet, right from the beginning.

Earlier this week, Reuters reported that the bank and the housing financier had raised adequate liquidity to meet these requirements from the start.