India’s largest private bank will merge with its largest mortgage lender to form a $237 billion financial giant, both companies said Monday, as low interest rates send demand for home loans soaring.
HDFC Bank will absorb its parent company, the Housing Development Finance Corporation (HDFC), in what will be one of the country’s biggest-ever merger deals.
The twin firms together manage assets worth 25.61 trillion rupees ($339 billion) and had a combined balance sheet of 17.87 trillion rupees at the end of last year.
“As the son grows older, he acquires his father’s business. That’s all (that is) happening here,” HDFC chairman Deepak Parekh told a media briefing.
He said the merger would help low- and middle-income homebuyers outside India’s cities access “affordable” housing loans.
India is enjoying a post-pandemic economic rebound and is growing faster than any other major economy.
Sustained low interest rates have led to a boom in home-loan demand among the country’s 1.4 billion people.
Shareholders will receive 42 shares of HDFC Bank for every 25 shares held in HDFC following the merger, which is pending shareholder and regulatory approval.
HDFC Bank is currently India’s largest private bank, with 68 million customers and 6,342 branches.
Shares in HDFC and its namesake banking subsidiary jumped 16.5 and 12.5 percent respectively on the Bombay exchange after the merger announcement.
