HDFC giants' merger is a joint-family deal made for a changing India

As the two HDFC elephants start their dance, they must be careful - not just of other banks, but of fintech rivals trying to set the tune for both lenders and borrowers.

After 45 years in business, the underwriter of homes for millions of Indians is moving in with its 28-year-old banker offspring. The joint-family arrangement makes sense for both Housing Development Finance Corp. and HDFC Bank Ltd. Mortgages will get more competitive as lenders come under pressure to peg interest rates to benchmarks not in their control, such as the central bank’s repo rate. Besides, since India’s 2018 mini-Lehman moment, regulators have frowned upon too-big-to-fail monoline financiers lacking access to cheap and assured banking liquidity. 

The announcement that HDFC Bank will make an all-stock offer for 100% of parent HDFC has