HDFC Ltd merger with HDFC Bank

(HDFC Ltd merger with HDFC Bank, why HDFC ltd and HDFC bank merger, share sharing formula, benefit of merger to both entity, effect of merger on depositors and borrowers)

HDFC twins are all set for merger. HDFC ltd, the 45 year old Housing finance company and 28 year old banking offspring HDFC Bank are all set for their merger to be held on First day of July , 2023.

On 4th April 2022, The Board of Housing Finance Firm Housing Development Finance Corporation Limited (HDFC Ltd) approved the proposal to merge its subsidiaries and associates with HDFC Bank. As per the announcements made by entities, HDFC Ltd and HDFC Bank will merge. One entity will be dissolved as HDFC Ltd. After this announcement Share Prices of HDFC Bank Ltd and Housing Development Finance Corporation Limited gained respectively.

History of HDFC ltd and HDFC Bank:

HDFC Ltd.:

It was founded in 1977 with the support from India’s business community, as the first specialised mortgage company in India and main company among HDFC group of companies.

Housing Development Finance Corporation Limited (HDFC) is an Indian private sector mortgage lender based in Mumbai was founded in 1977 as the first specialist mortgage company in India. Apart from being the biggest housing finance company in India. In 2000, HDFC Asset Management Company launched its mutual fund schemes and in the same year, IRDA granted registration to HDFC Standard Life Insurance, as the first private sector life insurance company in India. Currently it operates in India, Kuwait, Oman, Qatar, Saudi Arabia, Singapore, United Arab Emirates and United Kingdom.

HDFC Bank:

HDFC Bank is an Indian banking and financial services company headquartered in Mumbai was incorporated in 1994.

HDFC Bank is India’s largest private sector bank by assets and world’s 11th largest bank by market capitalisation as of April 2023 and it is the third largest company by market capitalisation on the Indian stock exchanges. As of 31 March 2023, the bank was having 7,821 branches across 3,203 cities.

Why HDFC ltd and HDFC Bank merger?:

Since the 2018 Infrastructure Leasing and Financial Services (IL&FS) crisis RBI pushing (NBFCs) to work as a bank, thus this merger became necessary to HDFC ltd and give an advantage over the competition.

The main reasons for merger are the low-interest rate that is prevailing has made the environment for such a move and the CRR and SLR requirements have also been lowered by RBI. Additionally, the high liquidity in the system is also one of the contributing factors.

By merger HDFC Bank will get help to build its housing loan portfolio. By adding to this HDFC Bank gets a strong base in the real estate market which provides a secured asset class with low risk.

Share sharing formula:

42 shares of the HDFC Bank are going to be given for every 25 shares of the HDFC Ltd.

For more information click on official website of HDFC Bank.

Benefit of Merger to both entity:

The merger of HDFC Ltd and HDFC Bank Ltd will be beneficial for both entities. This merger may reduce the proportion of unsecured loans provided by HDFC Bank. The combination of both entities provides strength to HDFC Bank by adding to the dominating position of HDFC Ltd in the housing finance sector.

The merger of HDFC Bank and HDFC will position the new entity as the second-largest company in India in terms of market capitalization, following Reliance Industries. The merger will establish HDFC Bank as twice the size of it’s nearest private sector compitater ICICI Bank in terms of market capitalization.

Cross-selling opportunities :

Both entities stated that there is a lot of scope to cross-sell products to customers of both.

  1. Opportunity to offer Deposit and third party products to HDFC ltd customers:

Once the amalgamation is complete, all HDFC Ltd. customers will become HDFC Bank customers. Therefore, HDFC Ltd. customers can be offered a wide range of HDFC Bank product offerings such as savings accounts, fixed deposits, credit cards, personal loans and other loans, remittances, and other services along with third-party products such as mutual funds, life insurance, general insurance, gold, etc.

2. Opportunity to offer home loan facility to HDFC Bank customers:

Currently more 50% of HDFC bank customers are not having home loan exposure and with the expertise of the staff of HDFC Ltd., HDFC Bank will be able to offer home loans to their customers and process of home loan sanction and disbursement will also be speed up.

Effect of merger on Depositers and Borrowers of both entity:

As the NBFC normally offered higher rate of interest on deposit therefore if a depositer renews the FD with HDFC Bank he will get lower than what he got with HDFC Ltd, Although existing customer will get existing deposit rate till maturity. But there will be more safety in HDFC Bank of deposits and interest under the DIGC (Deposits Insurance and Credit Guarantee).
Further after merger customer of HDFC ltd will also get reach to an additional vide range of products of HDFC bank which are beneficial in various aspects.

In terms of loans there will be no impact on the term and condition of the loan which was taken from HDFC Ltd but after merger terms and conditions for loan will be applied as per HDFC Bank and the rate of interest on home loans may be revised.

HDFC Ltd. currently has a limited number of branches compared to the HDFC Bank nationwide network. So, post amalgamation, HDFC Ltd. customers would benefit to access the huge HDFC Bank branch network for any services.


Merger of two entities always proposed for betterment of both, it may be successful or fail some times. Merger of HDFC bank and HDFC ltd will be beneficial for both entity, depositors, borrowers and share holders. As per Bloomberg merged entity of HDFC bank will be fourth largest bank of world after J P Morgen chess and Co, Industrial and commercial bank of china, Bank of America.


Q1. When did merger of HDFC ltd and HDFC bank comes to effect.

1st July 2023

Q2. What is share sharing formula of merger.

42 shares of the HDFC Bank are going to be given for every 25 shares of the HDFC Ltd.

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