The Fourth-Largest Bank in The World Was Created

India’s largest private bank, HDFC, has completed its merger with the country’s largest mortgage bank, taking effect on July 1, subject to shareholder and regulatory approval. The new entity is on an equal footing with the world’s largest banks.

The newly created bank will be the fourth largest in the world in terms of market capitalization, ahead of JPMorgan Chase, the Industrial and Commercial Bank of China, and Bank of America.

HDFC Bank announced in April last year that it would buy its parent Housing Development Finance Corporation, India’s largest housing finance lender, in an all-stock deal worth $40 billion.

The value of the market capitalization of the newly created bank is about 172 billion dollars. In a presentation to investors, HDFC highlighted that this synergy includes access to lower funding costs, operational efficiency and expansion of the bank’s distribution network.

India’s Central Bank Has Not Raised Interest Rates

India’s central bank unexpectedly left its benchmark interest rate unchanged amid the uncertainty created by worldwide banking problems while announcing that interest rates would be raised again if needed.

The Reserve Bank of India’s six-member monetary policy committee voted unanimously on Thursday to keep the repo rate at 6.50 per cent. Only six of 33 economists polled by Bloomberg predicted the decision, while the rest expected a quarter-point increase.

The value of the bonds increased. The yield on five-year bonds fell by as much as 13 basis points to 7.02 per cent. The rupee rose along with equities.

The decision suggests the RBI wants to support Asia’s third-largest economy while taking time to assess the impact of a 250 basis point hike in overall rates – the most aggressive tightening cycle in a decade. The Indian economy is showing signs of “cooling off”.