HDFC merger gets RBI nod, private banks’ shares will rise – Times of India

MUMBAI: In a move to increase the share of the private sector in Indian banking, the Reserve Bank of India (reserve Bank of India) has given his ‘No Objection’ Merger of HDFC With HDFC Bank. communication comes at a time when private lender-led HDFC bank — has reported first quarter business figures that show they have grown faster than the industry.
The private lender said on Monday that the RBI has given its no-objection on the merger plan, which includes the amalgamation of HDFC Investments and HDFC Holdings into HDFC and the subsequent merger of HDFC with HDFC Bank. HDFC Bank’s loan book stood at Rs 13.9 lakh crore at the end of the first quarter, up 21.5 per cent from Rs 11.5 lakh crore in the corresponding quarter of the previous year. Bank Deposit It grew by 19.3% to Rs 16 lakh crore in the same period.
Among other private banks, IndusInd Bank registers 18% year-on-year (YoY) growth advances 2.4 lakh crore at the end of Q1FY23 and 13% growth in deposits to Rs 2.9 lakh crore (see graphic). IDFC Frist Bank stated that its funded assets, which include Loan And investments, grew 21% YoY to Rs 1.4 lakh crore in Q1FY23, while deposits grew 20.6% to over Rs 1 lakh crore during the same period. Among smaller lenders, AU Small Finance Bank said its advances rose 42% to Rs 49,366 crore, while deposits rose 48% to Rs 54,631 crore.
Over the past five years, private banks have increased their market share of bank loans by 10 percentage points to nearly 40%. Growth will get a big boost in FY23 if HDFC merges with HDFC Bank during the current financial year. After RBI approval, the scheme needs to be approved by Competition Commission of India, National Company Law Tribunal and other authorities and shareholders. HDFC has a loan book of over Rs 5 lakh crore and the merger will add 4 percentage points to the market share of HDFC Bank and private banks.
According to RBI data, bank deposits stood at Rs 165.6 lakh crore as of June 2022, a growth of 8.3% over the previous 12 months. For the same period, advances grew 13% to Rs 121.5 lakh crore. Private banks that have reported their numbers so far have said their advances have increased by over 13%.
HDFC Bank has been aggressively raising its deposits ahead of the amalgamation to meet the reserve requirements of the merged entity. The bank said that its retail deposits grew by about 18.5% as on June 30, 2021 and by about 3.5% as on March 31, 2022, while in bulk deposits by about 22.5% as compared to June 30 last year and by about March 31 this year by about Rs. increased by 0.5%. ,
But public sector banks (PSBs) are expected to give tough competition to private banks in deposits and advances. In FY22, PSBs were still busy finalizing consolidation, which resulted in the merger of 10 banks into four. While these banks lost market share in FY22 as they rationalized branches and focused on consolidation, they are now looking to expand their business and most CEOs have given rigid targets to their managers.