HDFC Ltd and HDFC Bank Merger happened on July 1, 2023
Highlights of the HDFC Ltd. and HDFC Bank Merger
- Following which shares of HDFC ceased to exist on bourses July 13.
- The HDFC, HDFC Bank merger created the fourth largest bank of the world after JP Morgan Chase & Co, Industrial and Commercial Bank of China Ltd (ICBC) and Bank of America Corp.
- After this merger, HDFC Securities, HDFC AMC, HDFC Ergo GIC, HDFC Capital Advisors and HDFC Life Insurancehave become the key subsidiaries of HDFC Bank.
- With a large balance sheet after the merger, HDFC Bank will become the second largest bank in the country after the state Bank of India (SBI).
- The merged entity will be led by HDFC Bank’s CEO Sashidhar Jagdishan
Background of the HDFC Ltd. and HDFC Bank Merger
- The merger deal of HDFC Bank and HDFC was announced on April 4 last year.
- According to the lender, the transaction was proposed to “create a large balance sheet and net worth that would allow greater flow of credit into the economy”.
- HDFC Limited offers home loans to the Low Income Group (LIG) and Middle Income Group (MIG) segments under the affordable housing initiatives of the government.
- Access to housing finance for this category would be improved further on account of low-cost funds available with HDFC Bank
Details Of The HDFC Ltd and HDFC Bank Merger
Benefits of the HDFC Ltd. and HDFC Bank Merger
- HDFC Bank boasts of more than 6,300 branches across the country catering to nearly 3,000 cities and towns.
- More than half of the bank’s branches are strategically located in semi-urban and rural areas. This will benefit the merged entity through product offerings surrounding affordable housing.
- The merger has resulted in a combined balance sheet of nearly Rs. 17.87 lakh crores. Post the merger, the combined entity’s net worth is estimated to be Rs. 3.3 lakh crores, thus making HDFC Bank nearly double the size of ICICI Bank.
- The merger will also enable the merged entity to carry out underwriting at a substantially larger scale.
- 70% of HDFC customers were not associated with HDFC Bank. With this merger, the bank will gain from significant cross-selling opportunities
- This merger will place the combined entity in a very strong place to be capable of countering competition and will further make the mortgage business more competitive
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HDFC Ltd and HDFC Bank merger FAQs
The HDFC Ltd. and HDFC Bank merger is the consolidation of HDFC Ltd., a leading housing finance company, with HDFC Bank, creating one of the largest financial entities globally, completed on July 1, 2023.
The merger between HDFC Ltd. and HDFC Bank was officially completed on July 1, 2023. Following the merger, shares of HDFC Ltd. ceased to exist on the stock exchanges on July 13, 2023.
The merger offers several benefits, including a larger balance sheet, enhanced credit flow, expanded distribution network, and increased cross-selling opportunities across banking and financial products like home loans and insurance.
The merger strengthens HDFC Bank’s ability to offer low-cost housing finance, particularly to Low Income Group (LIG) and Middle Income Group (MIG) customers, expanding access to affordable housing across India.
