tnnmumbai two days after announcing a plan to amalgamate parent hdfc with itself hdfc bank said that it is seeking board approval for raising rs 50000 crore through the issue of bonds reaffirming the banks rating moodys said that the deal would hit profitability in 23 years driven by higher funding costs and increased reliance on market borrowing in the near termin a letter to the exchanges hdfc bank said that it proposes to raise funds by issuing perpetual debt instruments part of additional tier i capital tier ii capital bonds and longterm bonds financing of infrastructure affordable housing up to the total amount of rs 50000 crore its biggest ever issuance over the next 12 months through private placement mode the board of directors would consider this proposal at its ensuing meeting to be held on april 16 2022 the lender saidaccording to analysts hdfc bank will need to raise funds to meet reserve requirements on the expanded balance sheet following the amalgamation of hdfcs business with its own the reserves include the funds that need to be parked with the rbi in the form of cash reserve ratio requirements and the money that has to be mandatorily invested in government securities as part of the statutory liquidity ratio requirementanalysts say that the bank would need to expand its government bond portfolio by around rs 80000 crore after the merger while a part of this is already owned by the mortgage company it will still need to make large investments also hdfc has a large fixed deposit programme where it offers rates better than banks on longterm fixed deposits nbfcs can offer better longterm rates on fds as they do not have the operational cost of managing branch and atm networks and also do not have the compliance costwhile hdfc does have enough liquidity in the form of bank deposits it may require to borrow longterm funds as part of its assetliability management so that the maturity of the borrowings matches that of the loans according to bankers home loans on average have a maturity of 78 years as a large number of loans are prepaid