Delhi: India’s largest private lender, HDFC Bank will now merge with the Housing Development Finance Corporation or HDFC Ltd to create a “financial services conglomerate”, the companies announced on Monday.

Deepak Parekh, Chairman of HDFC Ltd said that the merging will result in a larger balance sheet which will allow the underwriting of large ticket infrastructure loans, accelerate the pace of credit growth in the economy, boost affordable housing and increase the quantum of credit to the priority sector.

Through the merger, HDFC will acquire a 41 per cent stake in HDFC Bank.

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HDFC Bank with the merger is now expected to create the third-largest entity in India in terms of market capitalisation. 

“This is a merger of equals. Over the last few years, various regulations for banks and NBFCs have been harmonised, thereby enabling the potential merger,” Deepak Parekh, chairman of HDFC said in a press statement.

Various analysts have also suggested that the merger may lead to the creation of the biggest stock in terms of weight in the Nifty50 index which may easily surpass Reliance Industries’ current weight of 11.9 per cent. 

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As of March 31, HDFC Bank’s weight on the index was 8.4 per cent while that of HDFC was 5.66 per cent.

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