HDFC Bank , one of India's leading private sector banks, has announced plans for a significant corporate action that could benefit its shareholders. The bank is seeking approval for two key resolutions through a postal ballot: a 1:1 bonus share issue and an increase in its authorized share capital.

Bonus Share Issue

HDFC Bank's Board of Directors has proposed issuing bonus shares in a 1:1 ratio, meaning shareholders will receive one new equity share for every existing share held. The record date for this bonus issue has been set for August 27, 2025. This move is aimed at rewarding shareholders for their continued support and increasing the liquidity of the bank's shares in the market.

Increase in Authorized Share Capital

To accommodate the bonus issue and future requirements, HDFC Bank is also seeking to increase its authorized share capital. The proposal involves raising the authorized capital from ₹1,190.61 crore to ₹2,000.00 crore, divided into 2,000 crore equity shares of ₹1 each.

Key Details of the Proposal

Impact on Shareholders

If approved, this corporate action will effectively double the number of HDFC Bank shares held by each shareholder without affecting their overall stake in the company. The bonus shares will be issued in dematerialized form only, and will rank pari passu with the existing equity shares.

Adjustments to Employee Stock Options and ADSs

The bank has stated that appropriate adjustments will be made to outstanding stock options and restricted stock units granted under its employee stock option schemes. Similar adjustments will also be made to the bank's American Depository Shares (ADS) listed on the New York Stock Exchange.

Shareholder Approval Process

HDFC Bank is conducting the approval process through a postal ballot, with voting to be done electronically. The e-voting period will run from July 23, 2025, to August 21, 2025. Shareholders are encouraged to participate in this process to voice their opinion on these significant corporate actions.

Management's Perspective

The bank's management views this move as a way to make HDFC Bank shares more affordable and increase their liquidity in the market. It's seen as a strategic step to broaden the shareholder base and potentially enhance long-term shareholder value.

Investors and market analysts will be closely watching the outcome of this postal ballot, as it could have significant implications for HDFC Bank's stock performance and market positioning in the coming months.

The Board of Directors approved these proposals on July 19, 2025, citing the move as a reward for shareholders' continued support and to make shares more affordable while increasing liquidity. The bank must implement the bonus issue within two months of the July 19 board meeting date, subject to shareholder approval.

HDFC Bank , one of India's leading private sector lenders, is experiencing increased pressure in the home loan segment as public sector banks (PSUs) and housing finance companies (HFCs) aggressively reduce interest rates. This shift in the competitive landscape is impacting the growth of private banks in the lucrative home loan market.

Interest Rate Disparity

Public sector banks are now offering significantly lower interest rates on home loans compared to their private counterparts:

This stark difference in interest rates is making PSU banks more attractive to potential homebuyers, potentially affecting the market share of private lenders.

Impact on Private Banks' Performance

The intensified competition is reflected in the recent performance of private banks in the home loan segment:

• HDFC Bank reported a 7.00% year-on-year growth in home loans, but experienced flat sequential growth.
• ICICI Bank's mortgage portfolio growth slowed to 10.30%, down from 14.20% in the previous year.
• Axis Bank saw a year-on-year decline in its home loan portfolio.

HDFC Bank executives have attributed this slowdown to "irrational pricing" by competitors, highlighting the challenges faced by private banks in maintaining their market position.

PSU Banks Gain Ground

In contrast to the private sector's struggles, public sector banks have shown robust growth in their home loan portfolios:

• State Bank of India: 14.00% growth in the home loan book for the full year
• Bank of Baroda: 18.00% growth
• Punjab National Bank: 18.00% growth

These figures underscore the shifting dynamics in the home loan market, with PSU banks outpacing their private sector rivals.

Strategic Shifts

As competition intensifies and margins in the retail loan segment compress, some lenders are reportedly reconsidering their focus. There's a growing trend among certain banks to shift away from low-margin retail loans towards more profitable segments.

The current scenario presents both challenges and opportunities for banks across the sector. While PSU banks are capitalizing on their ability to offer lower rates, private banks may need to reassess their strategies to maintain their competitive edge in the home loan market.

As the situation evolves, it remains to be seen how private banks like HDFC Bank will adapt to these market pressures and whether they can regain their momentum in the home loan segment.