Customers be it bank account holders, mortgage customers or insurance customers will benefit the most from the synergy resulting from HDFC Limited and HDFC Bank Limited merger, Vibha Padalkar, Managing Director & Chief Executive Officer at HDFC Life tells Zee Business in an interview with Anurag Shah.
India’s largest private sector bank – HDFC Bank has announced a transformational merger with its non-banking finance company promoter HDFC Limited on Monday. Several analysts believe that the timing of the merger has caught everyone by surprise and it is a win-win for both entities.
Since HDFC Life is a subsidiary of the HDFC Bank, its interests will be aligned with the merger, Padalkar said. As people are getting older, the focus is shifting to retirement plans, insurance etc, she said.
According to BSE website, HDFC Life Insurance Company Ltd was trading at a low of 0.41 per cent at Rs 569.20 at 2:40 PM today.
HDFC Bank Ltd was trading at Rs 1616.25, which was down by approximately 2 per cent at 2:40 PM on April 5.
The share of HDFC Banks in HDFC Life will increase to 48 per cent post the completion of the transaction. However, according to RBI regulations, the prescribed share can be either be less than 30 per cent or more than 50 per cent. To comply with the RBI regulations, Padalkar said that HDFC Limited and HDFC Banks want to stretch the 48 per cent to 50 per cent.
Post-merger, HDFC Bank will be 100 per cent owned by public shareholders and existing shareholders of HDFC Ltd. will own 41 per cent stake in the bank. Since the shareholding of HDFC Limited is regarded as an FII investment, the extinguishing would lead to opening up of ~7-8 per cent headroom for FII investors into HDFC Bank.
As the gap between the expected share and RBI’s set share is too small, it will eventually be taken up to 50 per cent according to the regulatory norms, she added.
Cross-Selling as the advantage of the merger
One of the biggest advantages of the merger is cross-selling. Talking about the benefit HDFC LIfe will get from the network of HDFC bank, Padalkar said that the current growth is at 17 per cent – 20 per cent and will accelerate due to the merger.
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बैंक की सब्सिडियरी बनने से लाइफ इंश्योरेंस पर फोकस बढ़ेगा: विभा पडलकर, MD & CEO, HDFC लाइफ
— Zee Business (@ZeeBusiness) April 5, 2022