• About   |
  • Write For Us   |
  • Contact Us   |
  • हिंदी
Friday, July 1, 2022
  • Login
  • Register
No Result
View All Result
The Second Angle
NEWSLETTER
  • Opinion
  • TSA Analysis
  • Explainers
  • Politics
  • Culture
  • People
  • Education
  • Healthcare
  • Environment
  • Technology
  • World
The Second Angle
  • Opinion
  • TSA Analysis
  • Explainers
  • Politics
  • Culture
  • People
  • Education
  • Healthcare
  • Environment
  • Technology
  • World
Home Economy

Why Has HDFC Limited And HDFC Bank Merged? What Are The Gains For Both?

The merger of HDFC Limited with HDFC Bank will create India's third-biggest financial entity in terms of market capitalization.

Ahzam by Ahzam
April 7, 2022
in Economy
Reading Time: 3 mins read
A A
Why Has HDFC Limited And HDFC Bank Merged? What Are The Gains For Both?
Share on FacebookShare on WhatsApp

One of the biggest deals in the financial sector was struck on Monday when HDFC Ltd. and HDFC Bank announced their merger. As per the transaction structure, HDFC Limited, India’s largest housing finance company with Rs 5.26 trillion in AUM and a market capitalization of Rs 4.44 trillion, will merge with HDFC Bank, India’s largest private sector bank by assets with a market capitalization of Rs 8.35 trillion. The decision was so sudden and secretive that only the 7 of the inner circle knew about it and the banners of the merger went for printing after midnight.

To better understand the merger and its urgency in the current scenario, you first have to be clear in distinguishing between HDFC Limited and HDFC Bank.

RelatedPosts

Want To Learn How to Read Your Credit Card Statement?

Want To Learn How to Read Your Credit Card Statement?

May 24, 2022
QR Code: Convenient and safe mode of digital payments

QR Code: Convenient and safe mode of digital payments

May 23, 2022

Difference between HDFC Limited and HDFC Bank?

Why Has HDFC Limited And HDFC Bank Merged? What Are The Gains For Both?
image source: jstinvestments

Housing Development Finance Company (HDFC) is the original company founded by HT Parekh in the 1970s. This is a “housing finance company” (HFC) that is registered with NHB (National Housing Bank) and regulated by the RBI. Because it is an HFC, it only offers home loans, mortgages, loans against property, loans to housing developers, and so on, and no other loan products. It is the country’s largest HFC, accounting for nearly 40% of the home loan market.

Why Has HDFC Limited And HDFC Bank Merged? What Are The Gains For Both?
image source: indiatimes

In contrast, HDFC Bank is a private bank regulated by the RBI, similar to ICICI Bank or Axis Bank. It holds a full banking license, allowing it to accept deposits, manage savings/current/deposit accounts, and provide a variety of loan products to consumers, SMEs, and corporations. It is a division of HDFC Ltd. HDFC Bank provides credit cards, personal loans, car loans, business loans, and other services, but does not provide home loans (to not compete with its parent).

A spike in the shares after the merger

Why Has HDFC Limited And HDFC Bank Merged? What Are The Gains For Both?
image source: businesstoday.in

According to the proposed agreement, HDFC Bank will be 100% owned by public shareholders, with existing HDFC Limited shareholders owning 41% of HDFC Bank. According to the share exchange ratio, HDFC shareholders will receive 42 equity shares of the combined company for every 25 equity shares held. On Monday, HDFC Bank shares rose 14 percent on the benchmark indices, while HDFC shares rose more than 16 percent on the NSE Nifty and BSE Sensex.

Why is this “a merger made in heaven”?

India wants to expand its banks to a global scale, which will benefit Indian banking, particularly private sector banks.

“The proposed transaction would result in a large balance sheet and net worth, allowing for a greater flow of credit into the economy.” It will also allow for the underwriting of larger ticket loans, such as infrastructure loans, which are in high demand in the country, according to the company.

While HDFC benefits from lower funding costs as a result of the merger, HDFC Bank gains entry into the high-potential housing segment, as well as improved, cross-sell opportunities. 70% of HDFC customers do not bank with HDFC Bank, and a similar proportion of HDFC Bank customers do not have a mortgage, implying a significant cross-sell opportunity within the existing customer base.

Why are the gains of HDFC Bank in this merger?

Following the merger, HDFC Bank customers will have seamless access to mortgages as a core product, and the long-term mortgage relationship will be used to offer a variety of credit and deposit products made possible by better insights across the customer lifecycle. 

ADVERTISEMENT

This will improve the value proposition and customer experience for all combined entity customers. HDFC Bank is a private sector bank with approximately 6.8 crore customers. The bank platform will provide a diverse low-cost funding base for the acquisition of a long-term loan book. HDFC Bank will benefit from a secure and long-term product portfolio, resulting in a strong asset portfolio mix for the bank. The merger of HDFC and HDFC Bank is entirely complimentary.

It is a “win-win situation” for both the entities 

While this will improve the company’s ability to cross-sell products to a larger customer base, it will also help them leverage distribution across urban, semi-urban, and rural geographies. The combined balance sheet of Rs 17.87 trillion and net worth of Rs 3.3 trillion will allow for larger-scale underwriting.

Also, Checkout: Aam Aadmi faces difficult times as the Ukraine war is about to drive up costs in India

Author

  • hdfc bank
    Ahzam

    View all posts

ShareSendTweet

Subscribe to our Push Notifications to get the news delivered to you directly before anyone else.

Unsubscribe
Ahzam

Ahzam

Related Posts

Want To Learn How to Read Your Credit Card Statement?
Business

Want To Learn How to Read Your Credit Card Statement?

May 24, 2022

A credit card statement can be defined as a document that provides a comprehensive summary of how the credit card...

Read more
QR Code: Convenient and safe mode of digital payments
Economy

QR Code: Convenient and safe mode of digital payments

May 23, 2022

In the retail world, QR codes may be utilized in various techniques. QR Codes may help merchants engage with e-commerce...

Read more
hdfc bank
Explainers

The Rupee Hit An All-Time Low Against The US Dollar | How Does It Impact You? | Is It A Bad Thing?

May 12, 2022

The rupee fell 51 paise to an all-time low of 77.41, breaking the previous low of 76.98 set in March.

Read more
What is Supply Shock Inflation, and Why Should you Care About it?
Explainers

What is Supply Shock Inflation, and Why Should you Care About it?

May 6, 2022

The rising inflation is a result of too many supply chain disruptions over the last two years, caused first by...

Read more
CRYPTO Getting Affected Due to Russia vs Ukraine War talks
Economy

CRYPTO Getting Affected Due to Russia vs Ukraine War talks

April 30, 2022

While the war between Russia and Ukraine is bringing the whole world's economy down, the future currencies are also facing...

Read more
hdfc bank
Economy

Price rises and inflation in India: What to expect in the future months, from food products to edible oil rates?

April 14, 2022

While oil marketing organizations have raised the cost of fuel and diesel by roughly Rs 10 per litre in the...

Read more
Load More
Next Post
Is Reservation in Education Required or not?

Is Reservation in Education Required or not?

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Facebook Twitter Instagram Telegram

About

The Second Angle

A platform providing diverse views on various issues, providing an in-depth understanding of important developments happening around us. It offers you true journalism amidst the cacophony. Discover the latest news, opinions, analysis and a lot more here.

Important Links

  • About
  • Career
  • Write for us | The Second Angle
  • Support Us
  • Privacy Policy
  • Terms
  • Contact Us
  • Newsletter
  • हिंदी

Subscribe to Our Newsletter

We don’t spam! Read our privacy policy for more info.

Check your inbox or spam folder to confirm your subscription.

© 2017-22. The Second Angle. All Rights Reserved.

No Result
View All Result
  • Opinion
  • TSA Analysis
  • Explainers
  • Politics
  • Culture
  • People
  • Education
  • Healthcare
  • Environment
  • Technology
  • World
  • Login
  • Sign Up

© 2017-22. The Second Angle. All Rights Reserved.

Welcome Back!

Login to your account below

Forgotten Password? Sign Up

Create New Account!

Fill the forms below to register

All fields are required. Log In

Retrieve your password

Please enter your username or email address to reset your password.

Log In
Manage Cookie Consent
To provide the best experiences, we use technologies like cookies to store and/or access device information. Consenting to these technologies will allow us to process data such as browsing behavior or unique IDs on this site. Not consenting or withdrawing consent, may adversely affect certain features and functions.
Functional Always active
The technical storage or access is strictly necessary for the legitimate purpose of enabling the use of a specific service explicitly requested by the subscriber or user, or for the sole purpose of carrying out the transmission of a communication over an electronic communications network.
Preferences
The technical storage or access is necessary for the legitimate purpose of storing preferences that are not requested by the subscriber or user.
Statistics
The technical storage or access that is used exclusively for statistical purposes. The technical storage or access that is used exclusively for anonymous statistical purposes. Without a subpoena, voluntary compliance on the part of your Internet Service Provider, or additional records from a third party, information stored or retrieved for this purpose alone cannot usually be used to identify you.
Marketing
The technical storage or access is required to create user profiles to send advertising, or to track the user on a website or across several websites for similar marketing purposes.
Manage options Manage services Manage vendors Read more about these purposes
View preferences
{title} {title} {title}
This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy and Cookie Policy.