29-Jun-2023
2 mins read
The highly-anticipated merger of Housing Development Finance Corp. Ltd (HDFC) and HDFC Bank is set to become effective from July 1. This major financial event has significant implications for the Indian banking sector and HDFC’s extensive customer base. Here is everything you need to know about this mega-merger.
Key Dates and Details
Following a crucial board meeting on June 30, the merger will officially take effect on July 1. As a result, HDFC Ltd shares will cease trading from July 13. In the merger’s aftermath, HDFC Bank branches will gradually begin offering mortgage loans.
| Merger Effective Date | Last Trading Date for HDFC Ltd |
| 1st July 2023 | 13th July 2023 |
Share Distribution and Financial Impact
Post-merger, HDFC Ltd shareholders will secure a 41% stake in HDFC Bank. The agreed share swap ratio stands at 25:42, implying that for every 25 shares of HDFC Ltd, shareholders will receive 42 shares of HDFC Bank.
The combined balance sheet of the merged entity is projected to exceed Rs 18 lakh crores, with anticipated profits hovering around Rs 50,000 crores.
| HDFC Ltd Shareholders’ Stake in HDFC Bank | Share Swap Ratio (HDFC Ltd: HDFC Bank) |
| 41% | 25:42:00 |
Loan Portfolio of the Merged Entity
The merger is set to position HDFC Bank as the second-largest bank in India, trailing only the State Bank of India in terms of credit. Mortgage loans will constitute over 30% of the merged entity’s portfolio, with commercial and rural banking loans contributing about 25%. Retail loans will form over 20% of the portfolio, with the remaining 20% and 5% coming from corporate loans and other sources.
Benefits for Customers
Customers stand to gain significantly from this merger. HDFC Bank can offer HDFC’s housing products at more competitive prices, spurring private sector investment. This increased investment is expected to foster asset formation, enabling borrowers to build more assets.
Conclusion
In conclusion, this merger marks a pivotal moment in the Indian banking sector. With an extended suite of offerings and amplified financial prowess, the merged entity is well-positioned to serve its customers better than ever before. Stay tuned for more updates as this financial milestone unfolds.