NCLT clears HDFC Bank's merger with HDFC, here's what changes for consumers

HDFC Bank is the largest private lender and second largest player in the sector after government-owned State Bank of India. Housing and Development Finance Corporation (HDFC) is a major home financing provider along with insurance, venture capital and asset management offerings.

A merger of the two initiated last year, has finally secured the National Company Law Tribunal's approval, after a nod by the Reserve Bank of India and shareholders.

Combining advantages to gain an edge

• The amalgamation between the lender and its parent firm was formulated with an eye on a lower inventory in real estate and a rising capability to pay EMIs among Indians.

• Only 70 per cent HDFC customers banking with it, and only 2 per cent of HDFC Bank clients approaching it for home loans, are also deciding factors behind the merger.

• The merged entity will have access to a Rs 25.61 lakh crore balance sheet, allowing it to provide low-cost funding for more than 6.8 crore customers.

Enhanced offerings for consumers

• HDFC Bank's products will be able to reach more clients from 445 offices of HDFC Limited across India.

• As a unified entity, HDFC will also be at a lower risk from unsecured loans, and will be able to underwrite bigger loans.

• The merger has been cleared by the stock exchanges and India's competition watchdog but will be completed after June.

• It will involve the transfer of the mutual fund business from HDFC to HDFC Bank, and consent from unit-holders to transfer ownership of HDFC asset management.