The merger of HDFC and HDFC Bank will be effective from July 1, 2023. Now, with this merger taking place, there are many questions doing rounds on the mind of those having Fixed Deposits with HDFC Ltd. So, what effects will the merger have on depositors and borrowers? Let’s find out
In case of customers who have Fixed Deposit with HDFC Limited, they will have to check whether their fixed deposits were done via auto-renewal or not.
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Since the merged entity, which will be known as HDFC bank may give depositors of the housing finance company the option to either withdraw their money or renew on maturity on HDFC bank rates, which will be more probably lower in interest rates.
Experts also say that after the merger, it will be safer for customers to renew their deposits as they will be insured under the Deposit Insurance and Credit Guarantee Corporation for a maximum upto five lakh which earlier was not available with HDFC Limited.
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On the other hand, according to experts, for home loan borrowers of HDFC their won’t be any immediate impact but as per RBI rules, the home loan interest rates has to be linked to a benchmark.
In case of HDFC bank, it’s external benchmark lending rate is linked to the repo rate and with HDFC it was benchmark prime lending rate. Hence, there is a possibility the home loan interest rate could be revised on loan reset period.
All banks are required to link interest rates on all floating rate retail loans on an external benchmark from october 2019.
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Since the benchmark is changing, home loan borrower of HDFC Limited will be merged with HDFC bank external rate and so on the rest period, customers will see how the overall interest rate is impacting and the benefit of having interest rate linked with repo rate is that the transmission is sooner.
So, with repo rate going down, there are high chances that your interest rates going down.
