HDFC Bank to merge with HDFC Ltd; how it will affect borrowers

India's largest private sector bank, HDFC Bank Ltd is all set to merge with its parent mortgage lender HDFC Ltd in the coming months. While both the stock exchanges BSE and NSE have already cleared the transfer of non-convertible debentures from the mortgage firm to HDFC Bank, the much-awaited merger is expected to take place in July 2023, said HDFC Bank’s chief financial officer Srinivasan Vaidyanathan. Notably, this comes almost a year after HDFC Bank agreed to take control of its domestic mortgage lender Housing Development Finance Corp. Ltd. in a deal valued at $40 million. After the merging is done, the bank will be completely owned by public shareholders, while HDFC Ltd's existing shareholders will own 41% of the bank.While the exact date of merging is yet to be confirmed, it is still uncertain about how it will impact the borrowers on both sides. In a report published by The Economic Times, it can be expected that the merging will largely impact the borrowers of HDFC Ltd while HDFC Bank customers will be hardly affected.How will the merging of HDFC Bank and HDFC Ltd affect borrowers?1. Considering that the home loan portfolio of HDFC Ltd will move completely to HDFC Bank, it will now have to adopt the rule of linking interest rates to an external benchmark within 6 months. As a result of this, borrowers will have transparency and accountability in the loan pricing system.2. In case of a drop in repo rate, while lending entities are usually slow in transferring the loan rates to borrowers, this will not be the case for the bank as RBI mandates banks to offer EBLR directly to the borrowers.3. In line with one of the biggest concerns about the terms and conditions in the existing home loans, the merging is unlikely to affect any of these as borrowers will continue to pay the EMI as per their current repayment plans.4. In case of home interest rates, HDFC Bank might be in a position to have large CASA (Current Account and Saving Account) deposits and thus can pass the benefits to the customers by reducing the interest rates of home loans. However, it is yet to be seen if the HDFC Bank will be following this route.Read all the Latest News, Trending News, Cricket News, Bollywood News,India News and Entertainment News here. Follow us on Facebook, Twitter and Instagram.