HDFC Bank-HDFC Merger: 3 Picks On Shares, Interest For Investors, Depositors And Borrowers

The merger of HDFC and HDFC Bank came into effect on July 1, 2023, and with it, HDFC ceased to exist, while HDFC Bank became a leading lender in India. The merger, first announced on April 4, 2022, has finally taken effect this month, and with this came changes for HDFC’s shareholders and customers, including depositors and borrowers.  

After the merger, HDFC Bank has become an entity offering all financial services starting from banking, insurance, and mutual funds through its various subsidiaries, which also includes HDFC Securities, HDFC Asset Management, HDFC ERGO General Insurance, HDFC Life Insurance, HDB Financial Services, and HDFC Capital Advisors.  

Sashidhar Jagdishan, managing director and CEO, HDFC Bank, through an mail to HDFC customers, said that the people serving in HDFC will remain the same in the branches and the documents and data will also continue to be the same as before. Also “our digital platforms and IVR numbers will remain the same and will continue to ensure a seamless banking experience,” he said in the email.  

What will change for HDFC’s customers is access to a bigger branch network now after the merger, along with a suite of financial services in one place, including bank accounts, loans, cards, investment, and insurance products and services.  

Let us see what they can take away from this merger.  

For Investors:  

•  The shareholders of HDFC will get shares of HDFC Bank in a ratio of 42 new equity shares of face value Re 1 each for every 25 equity shares of Rs. 2 each (face value) of HDFC. The record date for it is July 13, 2023.

•  The trading in the securities of HDFC is closed from July 1, 2023, and will remain so till July 13, 2023. During this time, the issuance and allotment to shareholders, who will receive HDFC Bank’s shares will be determined.

•  The merger would mean ‘increased scale, comprehensive product offering, balance sheet resiliency and ability to drive synergies across revenue opportunities, operating efficiencies, and underwriting efficiencies’, as per the news release of HDFC Bank on June 30, 2023.  

For Depositors:

•  For HDFC’s fixed deposit (FD) customers, there will be no change in their FD account number, rate of interest, interest computation methodology, tenure, maturity instructions, and the pay-outs. The FD receipt from HDFC will remain valid till maturity.

•  HDFC customers will have access to all the existing HDFC branches along with more than 7,500 HDFC Bank branches

•  For FDs having a renewal date after the merger, the renewal will be done according to HDFC Bank’s terms and conditions, and the interest rates applicable on the day of renewal will apply to the FD. Any existing recurring deposit (RD) with HDFC will continue as it was, before the merger. For opening a new RD, one would have to open a savings bank account with HDFC Bank.

For Borrowers:

•  For the loan borrowers from HDFC, the merger will not have any immediate impact on their loans. The loan account number, contractual terms of the loan agreement, repayment cycle, and equated monthly instalment (EMI) will remain the same. Interest rates will also remain the same, and whenever there is a change in future, it will be communicated to the borrowers.  

•  One can check the loan details on HDFC’s portal with the existing login ID and password or using an OTP. The loan account will be transferred to HDFC Bank after the merger, but HDFC’s portal will remain valid and its loan customers can continue to log in with their existing credentials. They can also access their loan details through the home loan section on the HDFC Bank website.

•  The point to note is the interest rate linking. In the case of HDFC, the interest rate was linked to the retail prime lending rate (RPLR), but after merging with HDFC Bank, the loan interest rates will be linked with the external benchmark lending rate (EBLR). After the merger, any change in rates will be based on EBLR.