HDFC, India’s largest housing finance provider, has announced its merger with HDFC Bank, the country’s largest private sector lender. The merger, set to take effect from July 1, 2023, aims to create a combined entity that will provide enhanced value and customer experience. Under the merger, depositors of HDFC will have the option to withdraw their funds or renew their deposits with HDFC Bank at the interest rate being offered by the bank. However, those who renew their fixed deposits (FDs) with HDFC Bank may receive slightly lower interest rates than what they received with HDFC.

For existing HDFC home loan borrowers, the merger means that their home loan portfolio will be transferred to HDFC Bank. This move is in line with the benchmarking practices of banks, which link interest rates on floating-rate retail loans to an external benchmark, such as the RBI repo rate or other market-linked benchmarks.

HDFC Bank has assured customers that the merger will not have any impact on existing loan equated monthly installments (EMIs), which will remain unchanged. However, the applicable rate of interest on the loans will be linked to the External Benchmark Lending Rate (EBLR) instead of the Retail Prime Lending Rate (RPLR).

The merger is expected to enable HDFC Bank to offer mortgages as a core product seamlessly, leveraging the existing long-term mortgage relationship with customers to provide a range of credit and deposit products throughout the customer life-cycle.

For depositors who have fixed deposits with HDFC Limited, the merger will not change the terms of their deposits until maturity or renewal. The FD account number will remain the same, and the deposit receipts issued by HDFC Limited will continue to be valid until the maturity of the FD. Importantly, the FDs with HDFC Limited will also remain covered by the guarantee from the Deposit Insurance and Credit Guarantee Corporation (DICGC), up to a maximum limit of Rs 5 lakhs (principal and interest).

Existing customers of HDFC Bank will see their HDFC Limited deposits visible only in the HDFC Limited Customer Portal, while HDFC Bank fixed deposits will be visible in both the HDFC Bank NetBanking and MobileBanking platforms. Deposits booked through the HDFC Limited Customer Portal after June 30, 2023, will be visible in both the HDFC Limited Customer Portal and the HDFC Bank NetBanking and MobileBanking platforms.

To ensure a seamless transition for customers, HDFC Bank has clarified that customer login credentials will remain the same, and customers can continue to access the portal and avail of services without any changes. Overall, the merger between HDFC and HDFC Bank aims to bring together the complementary strengths of both organizations and enhance the overall customer experience in the banking and home financing sectors.