The mega merger between HDFC and HDFC Bank could lead to consolidation in the banking and NBFC sectors, analysts said.

Existing players may have to look at inorganic opportunities for growth as the economy recovers quickly from the pandemic.

The merger of the HDFC giants comes days after Axis Bank snapped up Citi’s consumer finance business in India for Rs 12,325 crore.

``Both NBFCs and commercial banks will have to examine the inorganic route as the economy recovers sharply. More such merger announcements cannot be ruled out in the coming months,’’ an analyst said.

He said the lenders needed to become more agile amid competition from fintech players and even large PSU banks who have in the past gone through merger process.

According to a recent report from ICICI Securities, the banking sector has been underperforming against the overall market largely because of concerns over subdued credit growth, risk aversion and uncertainty on accumulated stressed assets.

The analysts at ICICI Securities said the pandemic led disruptions had halted the gradual progress on credit growth and delayed a swift recovery by posing asset quality challenges — although the various measures of the RBI have limited the pressures on asset quality.

“Starting from 2021-22, bank credit growth has started showing signs of a gradual recovery, led by the retail segment. The corporate sector is now in a better position in terms of a revival in the capex cycle,” ICICI Securities said.