HDFC Bank-HDFC Merger: What Happens To HDFC Branches, Employees & Depositors Now?

Home loan major HDFC Ltd. will continue to operate as an independent entity on an "as is where is basis" until the effective date of the merger with HDFC Bank Ltd., said Chairman Deepak Parekh during a media conference on April 4. Earlier in the day, the two companies announced a plan to merger the home loan company into the bank.

"Until all the approvals are received, we will continue as two separate entities with no overlap," Parekh said. He noted that it was a regulatory requirement. The merger is expected to take 12-14 months to achieve regulatory approvals and close.

Once the merger is effective, all HDFC branches will be retained and mortgages will continue to be offered from these outlets, Parekh said. Over a period of time these branches will be converted to full service bank branches wherever possible, he said.

Parekh pointed to the "massive inflow" of 86,000 loan applications in the March 2022 as evidence of business growth.

"We need people. Human capital is extremely important. We are going to be welcoming each one of them into our fold. In fact, we need more if we are really going to ramp up distribution across our branches," said Sashidhar Jagdishan, managing director and chief executive of HDFC Bank.

HDFC also hold customer deposits and has a depositor base of 1.6 lakh. By virtue of being a non-bank, HDFC offers a higher deposit rate than banks. At present, HDFC's fixed deposit rates range from 6.25% to 6.70% for deposits ranging from 33 months to 99 months.

HDFC Bank's deposit rates range from 5.70-6.35%.

According to a person familiar with the matter, who spoke on condition of anonymity, the deposit rates are lower but not significantly so. The housing financier does not see this as a large challenge, this person added.