• In one of the largest deal of Indian financial sector (provided that it is approved by RBI) Board of Directors of HDFC Limited (HDFC) and HDFC Bank Limited (HDFC Bank) announced a scheme of amalgamation of: (i) HDFC Investments Limited and HDFC Holdings Limited, with and into HDFC Limited; and (ii) HDFC Limited with and into HDFC Bank.
  • Shareholders of HDFC Limited will receive 42 shares of HDFC Bank (each of face value of Re.1), for 25 shares held in HDFC Limited (each of face value of Rs.2), and the equity share held by HDFC Limited in HDFC Bank will be extinguished as per the Scheme.
  • As a result of this scheme HDFC Bank will be 100% owned by public shareholders and existing shareholders of HDFC Limited will own 41% of HDFC Bank.


HDFC Bank Limited:

  • Headquartered in Mumbai, India, HDFC Bank Limited is a banking and financial services company. It is India’s largest private sector bank by assets.
  • HDFC Bank has more than 68 million customers, 6,342 branches and a full suite of credit, liability and distribution offerings with deep relationships, insights and understanding of its customers built over multiple decades.


HDFC Limited:

  • HDFC Ltd is a housing finance company based in Mumbai, India. HDFC Ltd offers a range of loan products. It has undertaken several consultancy assignments in housing finance in various countries across Asia, Africa and East Europe.
  • HDFC has a distribution network of 651 interconnected offices and 3 representative offices in Dubai, London and Singapore.



  • The combined asset book of HDFC and HDFC bank will make, combined entity second largest bank after SBI, with the asset book almost double the size of third largest bank, ICICI.
  • Combined entity will bring complementary strengths of both entities with product leadership of HDFC and distribution and customer leadership of HDFC bank to cross sale a complete suite of financial products.
  • Sources of funds of HDFC were drying up as number of Indian lenders had reached ceiling on how much they could lend to HDFC. Post-merger the combined entity will be able to borrow more due to support of HDFC bank.
  • HDFC will get access to cheaper capital of HDFC bank, made up of large current account saving account (CASA) balance.
  • Since last few years, especially after IL&FS crisis, RBI has introduced stringent norms for NBFCs to make them work like banks, like regulation for increased reserves and liquidity requirements. This made operations for NBFCs like HDFC more challenging and made sense for a merger with HDFC Bank. In fact this trend of conversion of large NBFCs to Bank should only continue in future.
  • Market cheered the strategic rational of deal as both HDFC and HDFC bank shares registered gains of close to 10% on announcement of deal, however later on the share prices have fallen substantially due to concerns about RBI approvals to merger and general correction in market.




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This material captures the information based on information available in the public domain, public announcements and sources believed to be reliable. Analysis contained herein is based on publicly available information and appropriate assumptions. This material is intended merely to highlight market developments and is not intended to be comprehensive and does not constitute strategic, investment, legal or tax advice. In no event Vora Management Consultancy Private Limited be liable for any use by any party or for any decision made or action taken by any party in reliance upon, or for any inaccuracies or errors in, or omissions from, the information contained herein and such information may not be relied upon by you for evaluating any transaction. 

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