HDFC stated on Monday that it will merge with HDFC Bank, with a share merger ratio of 42 HDFC Bank shares to 25 HDFC shares. HDFC Bank will be able to expand its housing loan portfolio and expand its existing customer base as a result of the proposed deal. Following the proposed merger, HDFC will control 41% of all transactions in the bank.
The combination must be approved by the RBI and other regulatory bodies.
HDFC has a total asset base of Rs 6.23 lakh crore, whereas HDFC Bank has a total asset base of Rs 19.38 lakh crore.
The proposed deal, according to an exchange filing, will help leverage and create substantial value for numerous stakeholders. Increased scale, a comprehensive product offering, balance sheet robustness, and the capacity to develop synergies across revenue prospects, operating efficiency, and underwriting efficiencies are also expected to benefit the company.
HDFC Bank has a client base of 6.8 crore people and a well-diversified low-cost funding base to help it develop its long-term loan book.
In a regulatory filing, HDFC stated, “A combination of the Corporation and HDFC Bank is perfectly complimentary to, and enhances the value proposition of HDFC Bank.” “A larger balance sheet and networth would help HDFC Bank, allowing for the underwriting of higher ticket loans and a stronger flow of credit into the Indian economy.”