HDFC twins merger: What does HDFC-HDFC Bank merger mean for depositors and borrowers?

HDFC-HDFC Bank merger: For FD depositors 

A person having fixed deposits (FD) with HDFC Ltd should first check whether their FD investment is done via auto-renewal or not. The merged entity, which will be known as HDFC Bank, is likely to offer the depositors of the housing finance company an option to either withdraw their money or renew deposits. 

HDFC offers interest rates ranging from 6.56% to 7.21% for 12 months to 120 months. These rates are effective from 21 June. HDFC Bank offers an interest rate of 3% to 7.25% on FDs maturing in 7 days to 10 years. These rates are effective from 29 May. 

“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,” said Vinit Khandare, CEO and Founder, MyFundBazaar.

“I believe that from the customer’s point of view, the merger will mean that they will have now access to more product range. The products of HDFC Bank like credit cards and cms solutions , personal loan car loans business loans, etc will be now available to HDFC Ltd customers,” said Milan Sharma, Founder, 35North Ventures. 

HDFC-HDFC Bank merger:Depositors will get insurance for fixed deposits

After the merger, once customers renew their deposits, it will be safer because they will be insured under the Deposits Insurance and Credit Guarantee Corporation (DICGC) for a maximum of up to ₹5 lakh.

HDFC-HDFC Bank merger: For home loan borrowers

HDFC bank customers will now have access to home loan solutions products 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 /bank,” said Milan Sharma. 

Thus, once the merger goes through it may happen that the interest rate on your home loan will undergo revision. All banks are required to link interest rates on all floating-rate retail loans to an external benchmark with effect from October 2019. 

HDFC is currently offering home loan interest rates starting from 8.50%* p.a. as per the HDFC Ltd website.

HDFC-HDFC Bank merger: For shareholders

Shareholders will get shares of HDFC Bank share in the swap ratio as decided in this merger.

HDFC-HDFC Bank merger: What will happen to MF investors

At least 60 equity mutual fund schemes will see their combined exposure to HDFC Bank and HDFC overshoot the 10% cap, Reuters reported on 15 June.

As per the rules of the Securities and Exchange Board of India (SEBI), a mutual fund scheme cannot invest more than 10% in a single security. However, exchange-traded funds and funds that invest in particular sectors are exempt.

Last year, in April, HDFC Bank announced that parent HDFC will merge with the bank

Updated: 27 Jun 2023, 03:01 PM IST