SBI Prepares to take on the Combined HDFC Bank

Following the merger, State Bank of India (SBI) is taking action to leverage the combined power of Housing Development Finance Corp. (HDFC) and HDFC Bank, according to chairman Dinesh Khara.

“SBI is the biggest provider of home loans in the nation. Our market share for house loans is 35.3 percent, and we are actively preparing to address the increasing competition in light of the HDFC-HDFC Bank merger “Khara spoke during the 67th annual general meeting of the bank.

In order to increase the combined company’s competitiveness and provide access to a captive customer base for product cross-selling, HDFC Bank and HDFC announced their agreement in April.

Subject to regulatory and other approvals, the merger, which is anticipated to completion in 18 months, will dramatically increase its advantage over rival private sector banks ICICI Bank and Axis Bank in terms of total loans.

Together with HDFC, HDFC Bank is currently in the home loan sector. According to the agreement, HDFC Bank sells mortgages, and HDFC approves and disburses. For the transactions, HDFC Bank receives a sourcing fee and has the option to acquire up to 70% of the fully disbursed loans.

The combined company’s loan book stood at 17.9 trillion as of December 31, far exceeding that of ICICI Bank ($8.14 trillion) and Axis Bank ($6.65 trillion). At the end of December, SBI held loans totaling 26.64 trillion yen.

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Mortgages will make up 5.9 trillion, or 33%, of the 17.9 trillion loan book as of the end of December, per the disclosures made as part of the merger announcement. As of December 31, SBI had 5.4 trillion in house loans in its portfolio.

SBI’s home loan portfolio had a value of $5.61 trillion as of the end of March, an increase of 11.5 percent from the year before. Home loans made by SBI currently make up 23.87 percent of all advances, up from approximately 1 trillion in 2011.

According to the bank’s most recent annual report, it disbursed housing loans and other loans with a similar purpose totaling almost 1.46 trillion in 2021–22.

The process of fully digitising a house loan is already well along. Yono and Online Customer Acquisition Solution/Retail Assets Acquisition Solution, two internally developed digital platforms, are heavily marketed as resources to maximise the home loan industry and grow our market share “In its annual report, SBI stated.

The bank is also boosting its digital strategy, which includes leveraging advanced analytics to broaden the app Yono’s scope and user base. Khara was quoted in SBI’s annual report as saying, “The bank will pursue mutually beneficial relationships with fintechs and non-banking financial enterprises to expand penetration and reach of the lender.

” SBI had over 68,000 business correspondents, over 65,000 automated teller machines, including 12,872 automated deposit and withdrawal machines, and 22,266 branches as of March.

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