523 HDFC branches to become HDFC Bank's in phases, take total to 8,344

32 committees; 6 months, 6 leaders ensured smooth integration

The 523 branches of Housing Development Finance Corporation (HDFC Ltd) will not start accepting deposits and handle cash like any other HDFC Bank branches immediately but those branches will become full service ones in phases, sources in the bank said.

Following the merger of HDFC and HDFC Bank, 523 branches of HDFC will be added to HDFC Bank’s 7821 branches (as of March 31, 2023), taking the total branch tally to 8344.

This is because the size of most of the HDFC branches are smaller than typical HDFC Bank branches. In fact, of the 523 HDFC branches, more than 450 are service centres.

“HDFC branches follow the hub-and-spoke model, under which one proper branch has many service centres that operate. All major approvals comes from the hub while most of the branches are only for customer interaction,” said a source. In Mumbai, for example, there are only three proper branches of HDFC, the rest are all service centres.

In addition, most of these service centres need to be equipped for handling cash, another source pointed out.

According to the Reserve Bank of India’s mandate, a banking outlet must offer services like encashment of cheque, cash withdrawal and accept deposits among others.

RBI had relaxed branch authorisation norms significantly as domestic commercial banks are spared from taking prior approval for opening branches in those 25 per cent the branches in an year are opened in unbanked rural centres.

According to an RBI definition, an ‘Unbanked Rural Centre’ (URC) is a rural (Tier-5 and 6) centre that has neither a CBS-enabled ‘Banking Outlet’ of a Scheduled Commercial Bank, a Small Finance Bank, a Payment Bank or a Regional Rural Bank nor a branch of Local Area Bank or licensed Co-operative Bank for carrying out customer-based banking transactions.

Integration was a key area that both organisations realised since the merger was announced in April 2022.

There were 32 integration committees that were set up led by three top executives from each organisation. From HDFC Bank, the leadership team comprised of deputy managing director Kaizad M Bharucha, executive director Bhavesh Javeri and V Chakrapani - Group Head - Internal Audit and Quality Initiatives.

From HDFC, managing director Renu Karnad, chief financial officer VS Rangan and company secretary Ajay Agarwal were in the leadership team which oversaw the integration process.

Sources said technology is a key challenge for the integration process given that the bank faced technology related issues in the past which attracted RBI’s wrath. HDFC Bank was not allowed to on-board new credit customers and barred from launching new digital initiatives following repeated outages.

While integration of most of the functions started around 5-6 months back, the process of technological integration started much earlier.

HDFC has 54 lakh live customers, slightly over 50 per cent of which are depositors. “To integrate those accounts with HDFC Bank systems was a key task,” said a source.

In fact, due to the technological integration, the effective date merger was pushed back despite having approval from the National Law Company Tribunal (NCLT) in March. On April 20, NCLT gave HDFC Bank another 90 days from April 27 so that necessary pending approvals can be obtained by HDFC Limited and HDFC Bank.

Sashidhar Jagdishan, MD & CEO of HDFC Bank had commented on the integration process in a letter to the employees after the merger.

“I also extend my heartfelt gratitude to each one of you for your hard work, dedication, and commitment during the 15 month integration process,” Jagdishan said in the letter.

Debadatta Chand now MD & CEO of Bank of Baroda

Debadatta Chand assumed charge as the managing director and chief executive officer of Bank of Baroda on Saturday. He takes over from Sanjiv Chadha, whose tenure ended on June 30. Meanwhile, the bank plans to sell up to 49 per cent stake in its arm BOB Financial Solutions. It has floated a Request for Proposal for a strategic investor, a bank official said.

MANOJIT SAHA & Agencies