HDFC Bank merged with HDFC on July 1. The largest merger in India’s corporate history made the Mumbai-based private sector lender the world’s seventh most valuable bank
The bigger balance sheet of HDFC Bank following its merger with parent Housing Development Financial Corporation (HDFC) will boost fund flow to the affordable housing segment, HDFC Bank chairman Atanu Chakraborty said on August 11.
It will also help the bank to fund agriculture and small and medium-sized business in a better way, he said.
“As a consequence of this merger, the larger balance sheet of the bank would offer to the national economy possibilities of higher credit growth, a larger bouquet of financial products and higher flows into affordable housing, agriculture, MSME etc,” Chakraborty said while addressing the bank’s annual general meeting in Mumbai.
HDFC Bank merged with HDFC on July 1 and the largest merger in India’s corporate history made the Mumbai-based private sector lender the world’s seventh most valuable bank.
After the merger, the loan book or advances of the merged entity jumped 38.77 percent to Rs 22.21 lakh crore as against 16 lakh crore as on March 31, the bank said in an investor presentation.
The merger gave HDFC Bank entry into India’s booming housing loan market, while for HDFC, the decision made sense on account of vanishing regulatory arbitrage available for non-banking finance companies.
The bank will also benefit from the addition of a market-leading home loan product, which can now be directly offered through its large network of branches, helping a greater number of people fulfil their aspirations to be homeowners, Chakraborty said.
The home loan business will also benefit from a low cost of funds that a bank traditionally enjoys, he added.
“It will also enable the bank to offer to its wider customer base a full suite of financial products like life insurance, general insurance, health insurance, and investment products like mutual funds by leveraging the strength of major entities like HDFC Ergo, HDFC Life and HDFC Mutual Fund, which now come into the bank’s fold as a result of the merger,” Chakraborty said.
He said HDFC Bank is well-placed to capitalise on this opportunity, both for financing private investments and consumer finance, aided by its low cost of funds, wide customer reach and a large and stable balance sheet.
“We feel privileged to be a part of this burgeoning economic environment and India’s growth story,” Chakraborty said.
On April 4, 2022, HDFC and HDFC Bank announced the decision to merge. The move came almost seven years after HDFC chairman Deepak Parekh said his firm could consider a merger with HDFC Bank provided circumstances were in favour.
In his speech, Chakraborty also talked about key changes in the board. Former HDFC CEO Keki Mistry has joined the board as a non-executive director. Executive director Kaizad Bharucha has been redesignated as deputy managing director, while Bhavesh Zaveri has joined as an executive director.
At 3.05 pm, the stock was trading at Rs1,617.45 on the National Stock Exchange, down 1.12 percent from the previous close.