HDFC Bank sees banking M&As hitting its prospects

HDFC Bank is against the idea of consolidation in the banking industry. It feels such an exercise would adversely affect operations and profit levels.

The bank, in its prospectus filed with the Securities Exchange Commission (SEC) stated: "Consolidation in the banking industry could adversely affect us."

It further stated: "The Indian banking industry may experience greater consolidation. Recently, the government has indicated its desire to consolidate certain public sector banks. In addition, there may be mergers and consolidations among private banks. Although the Ministry of Finance of the government of India has indicated that it may liberalise the rules for foreign investment in private sector banks, the RBI has recently proposed guidelines which could restrict such investments".

It, however, expressed concern over liberalisation in the banking sector and said: "...Nevertheless, it is possible that the rules for foreign investment in private sector banks may be liberalised in the future, thus enabling consolidations between foreign banks and private sector banks. Therefore, we may face more competition from larger banks as a result of any such consolidation."