How Does HDFC-HDFC Bank Merger Impact Depositors And Home Loan Borrowers?

The merged business, which will be branded as HDFC Bank, is anticipated to provide the home financing company's depositors the choice of either withdrawing their money or renewing deposits.

Written by: India.com Business Desk Edited by: Abhijeet Sen

Updated: June 27, 2023, 4:39 PM IST

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New Delhi: The merger of HDFC Bank, the biggest private sector bank in the country, and HDFC Ltd., a mortgage lender, is expected to be implemented by July 1, according to Deepak Parekh, chairman of Housing Development Finance Corporation Ltd. (HDFC). The $40-billion merger between the two HDFC twins is expected to be effective next month, that is, July 1.

India’s Second-Largest Financial Institution To Be

The merger is expected to create a financial institution that will be India’s second-largest, only after the State Bank Of India which is India’s largest commercial bank by far.

“The merger is expected to be complete by July 1. Both HDFC Bank and HDFC Ltd. will have separate board meetings on June 30. Each branch will start selling mortgages. We hope that the housing portfolio will be higher as the branches of HDFC Bank will do more,” Deepak Parekh was quoted as saying by Moneycontrol on the impact of the merger of the twins..

Impact of the HDFC-HDFC Bank Merger On FD Holders

An individual who has fixed deposits (FDs) with HDFC Ltd. should confirm if their FD investments are made via auto-renewal or not beforehand. The merged business, which will be branded as HDFC Bank, is anticipated to provide the home financing company’s depositors with the choice of either withdrawing their money or renewing deposits, as per a report in the Mint.

“The deposit holders of HDFC Ltd. would be impacted by the combination of HDFC Bank and HDFC Ltd. The mortgage company’s depositors may be given the choice by the bank to withdraw their money or have their deposits renewed at the prevailing interest rate at that time,” Vinit Khandare, CEO and Founder, MyFundBazaar, was quoted as saying in the report on the impact of the merger.

Impact of the HDFC-HDFC Bank Merger On Home Loan Borrowers

Once the merger of HDFC and HDFC Bank takes place, the interest rates on your home loan accounts are expected to be revised. The customers of HDFC Bank are expected to get access to the home loan solutions of HDFC Ltd.

“The existing home loan borrowers will not face any challenges as the loans will be shifted to this merged entity and will continue as before. Also, the fixed deposits will now be of the merged entity or bank,” Milan Sharma, Founder, 35North Ventures, was quoted as saying as by the Mint.