HDFC Bank: The Behemoth of a Surging Nation

That the merger of HDFC Bank with its parent company, Housing Development Finance Corporation Limited, is setting records and catapulting India’s financial institutions into the global top hundred leagues is a cause for celebration for an economy of the size of India, the Poseidon sailing into the vast ocean of economic prosperity.

- Jennifer Paldano Goonewardane.

As Indian media announced the closure of India’s homegrown gargantuan mortgage lender HDFC Ltd at the end of June 2023 following a decision to merge with its banking arm, HDFC Bank, tipped as the largest transaction in India’s corporate history, there was a sense of nostalgia tinged with bittersweet memories of its genesis and meteoric rise to become a corporate powerhouse. HDFC Ltd revolutionized India’s domestic retail housing mortgage ecosystem at a time when there were no non-banking financial institutions (NBFI) in India offering the facility to Indians who were dreaming of owning a home before retirement, growing exponentially over the years by making housing affordable to the middle class. The entity was also the face of a rising global economic dynamo, signaling to the world how its domestic market possessed enormous potential for growth and gains. The merger announced in 2022 was a strategic move to create one of the world’s most valuable banks by amalgamating two asset-rich organizations—the reverse takeover of the parent company for $40 billion by HDFC Bank. Following the merger, HDFC Bank became a fully publicly owned entity, with shareholders of HDFC Ltd receiving 41 percent ownership in the HDFC Bank. HDFC Bank owns all subsidiaries of HDFC Ltd following the tie-up. This inorganic growth gives the newly merged entity a competitive advantage in size and market capitalization, two sizable pools of resources to make it an entity with a combined value of $172 billion and customer bases of 120 million, making it the fourth largest Bank in the world by market capitalization next to JPMorgan Chase and Company, Industrial and Commercial Bank of China Ltd and Bank of America.