RBI has now given its final decision on the HDFC Bank's request for some forbearances.
The complete merger hangover for HDFC and its subsidiaries is now over
A short thread🧵on the RBI decisions and its impact on HDFC Bank and its subsidiaries
Lets go👇
The complete merger hangover for HDFC and its subsidiaries is now over
A short thread🧵on the RBI decisions and its impact on HDFC Bank and its subsidiaries
Lets go👇
1. Forbearance on CRR+SLR for 7 lakh crore book of HDFC Limited
For Banks:_
CRR requirement-4.5%
SLR requirement-18.0%
HDFC's book doesn't have these provisions.
For Banks:_
CRR requirement-4.5%
SLR requirement-18.0%
HDFC's book doesn't have these provisions.
HDFC Bank had asked the RBI to give them a glide path of 2 years to maintain these requirements.
RBI has now said:-
HDFC Bank will not get any glide path and the requirements will have to be maintained from Day 1.
RBI has now said:-
HDFC Bank will not get any glide path and the requirements will have to be maintained from Day 1.
Effect?:-
HDFC Bank will have to cough up more than 1 lakh crore for SLR+CRR privision.
This can hit the RoE in the near term
The Bank has already started building a big book
news18.com
HDFC Bank will have to cough up more than 1 lakh crore for SLR+CRR privision.
This can hit the RoE in the near term
The Bank has already started building a big book
news18.com
PSL Requirements:-
Banks have obligations for Priority Sector Lending(PSL) which NBFCs do not have.
RBI has given forbearance to the combined entity
HDFC Bank will get about 3 years to completely comply with these norms.
This is positive for the Bank
Banks have obligations for Priority Sector Lending(PSL) which NBFCs do not have.
RBI has given forbearance to the combined entity
HDFC Bank will get about 3 years to completely comply with these norms.
This is positive for the Bank
What would happen to HDFC Ltd subsidiaries?
RBI now says HDFC Bank can continue to hold stake in all subsidiaries
HDFC Bank can even increase its stake in
1. HDFC Life
2. HDFC Credila.
Now HDFC Bank will have almost subsidiaries within itself just like ICICI Bank
RBI now says HDFC Bank can continue to hold stake in all subsidiaries
HDFC Bank can even increase its stake in
1. HDFC Life
2. HDFC Credila.
Now HDFC Bank will have almost subsidiaries within itself just like ICICI Bank
The Hangover for subsidiaries gets removed.
A large part of the de-rating of HDFC Life was due to the uncertainty of the merger.
This goes way now
A large part of the de-rating of HDFC Life was due to the uncertainty of the merger.
This goes way now
External Benchmarking of loans for HDFC Ltd's book
RBI allows HDFC Bank 6 months to properly to this
RBI allows HDFC Bank 6 months to properly to this
So does the merger hangover goes away?
Finally, all the merger hangovers are now out of the way:-
🏦HDFC Bank will have to cough up 1 lakh crores for the merger by the way of CRR and SLR
🏦HDFC Bank will be allowed to keep its subsidiaries
Finally, all the merger hangovers are now out of the way:-
🏦HDFC Bank will have to cough up 1 lakh crores for the merger by the way of CRR and SLR
🏦HDFC Bank will be allowed to keep its subsidiaries
🏦The Bank has been given time to meet the PSL Norms
🏦The Bank has been given time in benchmarking of the loans of HDFC Ltd
🏦The Bank has been given time in benchmarking of the loans of HDFC Ltd
So what is our view on the merger?
This is a monumental moment in Banking.
HDFC Bank will become a behemoth now.
There are many challenges ahead for the Bank....equally scale will mean there is a big opportunity too
But the opportunities outweigh the challenges!
😁
This is a monumental moment in Banking.
HDFC Bank will become a behemoth now.
There are many challenges ahead for the Bank....equally scale will mean there is a big opportunity too
But the opportunities outweigh the challenges!
😁
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