The primary factors that led to the merging of HDFC and HDFC Bank are described

 

The primary factors that led to the merging of HDFC and HDFC Bank are described

The HDFC Group would be able to develop a highly competitive property loan portfolio under the banking platform thanks to the merging of the two industry titans.

It has been long anticipated that the largest private sector bank, HDFC Bank, and the mortgage player HDFC Ltd. will merge. While HDFC Ltd specialises in house loans, the bank provides both retail and wholesale products. The following are the primary factors behind the merger, according to HDFC Bank:

constructing a housing loan portfolio on the banking infrastructure

The HDFC Group would be able to develop a very competitive housing loan portfolio inside the banking platform thanks to the merging of the two industry titans. Currently, HDFC Bank makes money by reselling HDFC Ltd. mortgages. "The Expected Purchase shall enable HDFC Bank to build its residential loan portfolio and enhance its existing customer base," the bank claims.

access to affordable funding

Over 6.8 crore people are clients of HDFC Bank, the largest private sector bank in India. A well-diversified low-cost funding base, particularly current and savings accounts, or CASA, will be made available by the bank platform. The bank will be able to provide home products at higher prices.

making a substantial balance sheet

The acquisition will put the State Bank of India, the nation's largest bank with a balance sheet of Rs 45.34 lakh crore, closer with an overall proportion sheet of Rs 25.61 lakh crore. The HDFC Bank was already the second-largest bank in the country. The ICICI Bank's balance sheet as of March 31, 2021, was worth Rs. 17.74 lakh crore.

A larger its financial statements and wealth accumulation would enable the approval of larger ticket loans and also permit a greater flow of credit towards the Indian economy for the amalgamated banking business, the bank stated in its statement.

huge chance for cross-selling

To cross-sell the whole line of banking products, HDFC Ltd. has 445 dedicated offices and service centres spread out across the nation. The mortgage provider has a team that is qualified to handle solely house loans, giving the combined company an advantage in the market.

diminution of unsecured debt

The bank's exposure to unsecured loans will decrease as a result of the planned merger. Despite the low risk, the bank aggressively expanded its personal and credit card lending portfolios due to the greater yield. In addition to lowering the exposure to unsecured loans, the combined business will give opportunity to underwrite new loans.