HDFC is set to fold into HDFC Bank in an epic move that will propel the bank closer to SBI in size and way ahead of private peers ICICI Bank and Axis Bank. Setting to rest any speculation on leadership at HDFC Bank, HDFC's Keki Mistry says CEO Sashidhar Jagdishan will continue.

What the likely hurdles?

The first likely hurdle is to get permission for Cash Reserve Ratio (CRR), and Statutory Liquidity Ratio (SLR). The HDFC management did say that they would like more time. However, the entire liability - all the sources of funds of HDFC qualify for keeping CRR once they come into the bank that is if they are bringing in Rs 3.50 lakh crore with them, 3 percent of that will have to be kept as idle cash.

The other problem is the priority sector. HDFC has a lot of investments in affordable housing. So, as the book becomes large, HDFC Bank has to keep more money in all the categories.

Finally, the combined HDFC Bank entity may have to cut its stake in the insurance company. The HDFC management was quoted as saying that they can even increase their stake, but that is not everyone's interpretation.

Watch the accompanying video of CNBC-TV18’s Latha Venkatesh for more details

First Published:Apr 4, 2022 5:43 PM IST