HDFC to Merge with HDFC Bank in India’s Largest Corporate Deal; What this means for customers

India’s largest private lender, HDFC Bank, has announced it has agreed to take over the nation’s largest mortgage lender in a deal valued at around $40 billion. It will create a financial giant in what is seen as the biggest deal in Indian corporate history. The proposed entity will have a combined asset base of approximately Rs 18 lakh crore. The HDFC-HDFC Bank merger is expected to be completed by the second or third quarter of FY24, subject to regulatory approvals.

HDFC-HDFC Bank Merger: How Customers Will Be Affected

Customers of HDFC Ltd and HDFC Bank will enjoy the combined benefits of both organisations, including savings accounts, mortgages, life insurance, health insurance, general insurance, investment products, credit cards credit and personal loans.

“According to management, nearly 70% of HDFC Bank’s 68 million customers do not have home loans, and the merger will therefore provide an opportunity to cross-sell mortgages, while customers of HDFC Limited will be offered banking products. HDFCB’s cost advantage will make the home loan industry much more competitive amid growing bank dominance in the segment,” Emkay Global Financial Services said in a research note.

The HDFC-HDFC Bank merger will help expand the customer base and build a product portfolio in the home loan category. “HDFC Bank lending is expected to increase by 42% to around Rs 18 lakh crore and increase market share to around 15% from 11% currently,” said Manoj Dalmia, Founder and Director of Proficient Equities Limited. This means that new home loan customers can get loans at a lower interest rate than existing customers once the merger is complete. ended.

On the other hand, interest rates on deposits are not likely to be affected by existing customers since interest rates are kept unchanged until maturity. Most analysts, however, said that with the merger 12 to 18 months away, it is difficult to predict the exact impact on customers.

HDFC-HDFC Bank Merger Agreement

The move was unexpected and took everyone by surprise as markets gave in to the meltdown as it surged on Monday. According to most analysts, this decision will prove beneficial for everyone, from investor clients to the banking system as a whole.

Under the proposed deal, the share exchange ratio will be 42 shares each of HDFC Bank for every 25 shares held in HDFC Ltd. “…after considering the recommendation and report of the Audit Committee and the Committee of Independent Directors, the Board of Directors of HDFC Bank, at its meeting held on April 4, 2022, approved a composite merger plan of HDFC Investments and HDFC Holdings, in and with Housing Development Finance Corporation Limited (HDFC Ltd); and HDFC Ltd in HDFC Bank, together with their respective shareholders and creditors,” HDFC Bank said in a filing on Monday.

Read all the latest IPL 2022 news, breaking news and live updates here.

Luisa D. Fuller