HDFC Ltd. 💘 HDFC Bank
HDFC Ltd., India’s largest housing finance company and HDFC Bank, India’s largest public sector bank announced their merger on the 4th of April this year.
The merger is to be completed in the span of the next 18 months, provided all regulatory approvals and conditions are achieved, which is likely to be completed by Q2 or Q3 of FY24.
This merger will enable HDFC Bank to build its housing loan portfolio and enhance its existing customer base as the credit providing capacity increases.
Post the merger, HDFC Bank will be 100 percent owned by public stakeholders.Â
HDFC Ltd.’s existing shareholders would own 41 percent of HDFC Bank.
Swap Ratio :The existing shareholders of HDFC Ltd. will get 42 shares of HDFC Bank for every 25 shares of the parent company.
Combined balance sheet → Rs. 17.87 trillion
Net worth → Rs 3.3 trillion
What does HDFC gain?
Increase in customer base
Low-cost and well-diversified funding
Better ability in selling housing finance products.
Greater liquidity.
Increase in options of products
Cross-selling of all sorts of products across urban, semi-urban and rural geographies.
How does HDFC Bank gain?
Improve the pace of credit growth in the economy
Increase in share prices
Increase in capital base
Better rates and returns
The only disadvantage being that HDFC Bank will have to bear the burden of high SLR and CRR.
It seems very clear that this merger might be India’s largest merger in the finance sector that would spur the growth of credit in the economy and benefit the customers through cross-selling of products and increase in options.
Wedding bells are ringing and we wish the heartiest congratulations on this engagement of HDFC Ltd and HDFC Bank.
Writer- Surabhi Mundada