The merger is subject to regulatory approvals from the RBI and other regulatory authorities.
As on date, HDFC has total assets of Rs 6.23 lakh crore while HDFC Bank has assets worth Rs 19.38 lakh crore.
As per an exchange filing the proposed transaction will help leverage and create meaningful value for various stakeholders. It is also expected to benefit from increased scale, comprehensive product offering, balance sheet resiliency and the ability to drive synergies across revenue opportunities, operating efficiencies and underwriting efficiencies.
HDFC Bank has a large customer base of 6.8 crore and a well-diversified low cost funding base for growing the long tenor loan book.
HDFC Bank, housing finance firm HDFC Ltd to merge
Mortgage lender HDFC on Monday announced that it will merge with HDFC Bank, with a share merger ratio of 42 shares of HDFC Bank to 25 shares of HDFC. The proposed transaction will enable HDFC Bank to build its housing loan portfolio and enhance its existing customer base.
“A combination of the Corporation and HDFC Bank is entirely complementary to, and enhances the value proposition of HDFC Bank”, HDFC said in a regulatory filing. “HDFC Bank would benefit from a larger balance sheet and networth which would allow underwriting of larger ticket loans and also enable a greater flow of credit into the Indian economy.”