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The outcomes of the HDFC and HDFC Bank merger

On 1st July 2023, the world witnessed its largest banking deal in 15 years. India’s largest private sector bank- HDFC bank- overtook its parent company- HDFC. The transaction made HDFC Bank the world’s 4th largest bank in market capitalization. Found in 1977, the company is now valued at 14.37 Lakh Crore. The Deccan Herald highlighted the merger as the biggest merger in the history of India Inc. (corporate and government sector of the nation).

The outcome of the HDFC an HDFC Bank Merger

This article will explore how the merger between HDFC and HDFC Bank has impacted employees and customers, bringing about notable changes in their roles and experiences.

Through the merger, HDFC has acquired a significant 41% stake in HDFC Bank. This momentous merger has received the green light from various key stakeholders, including shareholders, the esteemed Reserve Bank of India (RBI), the Pension Fund Regulatory and Development Authority, and the Competition Commission of India.

As the dust settles on this transformative merger, HDFC Bank is a shining example of public ownership, with complete ownership transferred to public shareholders. Meanwhile, existing stakeholders of HDFC Ltd. have secured an impressive 41% ownership in the newly united entity, HDFC Bank. With this partnership, the stage is set for remarkable progress in expanding the company's balance sheet, fortifying its net worth, and igniting a dynamic surge in credit growth within the Indian economy.

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The reason for the merger:

The reverse merger happened months after it was announced in the annual 2021-22 report last year.

The report cited multiple reasons for the merger, one being the ample scope of growth that comes with the merger. Before the merger, only 2% of HDFC Bank’s customers financed their home loans through HDFC, and a mere 30% of employees of HDFC Ltd were customers with HDFC Bank. This was an excellent opportunity for the company’s CEO, Sashidar Jagdishan, mint explained. 

The harmonious merger of HDFC and HDFC Bank brings forth a powerful financial institution poised to offer an expansive array of products and services, harnessing the strengths of both entities to create a synergy aimed at benefitting customers.

The impact of the merger on the employees:

As per Deepak Parekh, the chairman of HDFC Ltd, Starting from 1st July 2023, all the employees of HDFC under the age of 60 will now be employed under HDFC bank. The number of employees in HDFC is relatively smaller than HDFC Bank; hence HDFC Bank’s workforce will increase by just 2.3%. Before the merger, HDFC Bank had a workforce of 173,222 employees.

Although there is no news on whether the employees will receive a salary hike, the salary will not be reduced, as confirmed by Deepak Parekh. 

The merger is seen as a complementary addition to HDFC Bank's product lineup, ensuring that there will be no redundancy in operations. However, it is expected that HDFC Bank will require the employees from HDFC Ltd currently involved in loan processing within the operations department to join the bank.

The impact of the merger on customers:

All old documents and methodology remain viable:

All the customers of HDFC Ltd with Fixed deposits (FD) of over five lacks will be insured under RBI’s Deposit Insurance Credit Guarantee Corporation (DICGC). Additionally, all the interest rates, maturity date, tenure of deposit, and other finance-related documents remain unchanged till the maturity of finance. 

All the Reserve Deposits (RD) and their monthly instalments will remain the same. The money will be debited through their linked accounts only. 

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Diversified assets and increased foreign investments:

The merger of HDFC and HDFC Bank is also set to bring many customer benefits. Firstly, it will mitigate the risk of relying solely on a single product, enhancing the overall diversity of assets within the combined entity. Additionally, the merger is expected to attract increased foreign investment, which will further strengthen the financial position and capabilities of the merged institution.

Seamless delivery of home loans:

The other key customer advantages lie in the seamless delivery of home loans, as the merged entity will be able to leverage the extensive customer base of over 68 million customers from HDFC Bank. This broader customer reach will allow for a more comprehensive offering of home loans, catering to the diverse needs and aspirations of a more extensive customer base.

Low-cost funding for a larger customer base:

Moreover, customers will gain access to HDFC Bank's low-cost funding, which will contribute to more competitive interest rates and favourable financing options. This and the expanded customer base will enhance affordability and convenience for individuals seeking home loans.


The merger between HDFC and HDFC Bank creates a powerful financial institution, benefiting customers with a broader range of products and services. It enhances asset diversity, attracts foreign investment, ensures seamless delivery of home loans, and provides access to low-cost funding. The merger solidifies HDFC Bank's position as the fourth-largest bank globally and brings numerous customer advantages, including stability, expanded offerings, and competitive rates. This transformative merger sets the stage for significant growth and opportunities in the banking industry.

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