HDFC Bank hints at conflict of interest

HDFC Bank feels that it may face potential conflict of interest relating to its principal shareholder "" HDFC Ltd as long as the latter holds more than 20 per cent stake in the bank.

HDFC Bank in its papers submitted to the Securities Exchange Commission (SEC) recently said, "Although we have no agreements with HDFC Ltd or any other HDFC group companies, which restrict us from offering products and services that are offered by them. Our relationship with these companies may, however, cause us to arrive at mutually beneficial arrangements which could limit the extent to which we may compete with our promoter and HDFC group companies."

"As a result, any conflicts of interest between HDFC Ltd and us or any other HDFC group companies and us could adversely affect our business and the price of our equity shares and American depository shares," the paper mentioned.

HDFC Ltd holds around 24 per cent in HDFC Bank and the two have decided to cross-sell their products which does not result in clash of interest. This, however, according to the Bank does not rule out the possibility of potential conflict in interest.

Meanwhile, the bank has firmed up plans of grabbing a sizeable chunk of non-resident Indian (NRI) business and has initiated the process of opening representative offices in Singapore, Kenya and South Africa.

These offices would also be transformed into full-fledged branches but the decision would hinge on the quantum of business, these offices manages to generate. As of now, it will be tying up with an entity that will enable NRIs to remit funds to India.

Officials from the bank also said that it has also ruled out growth through the mergers and acquisitions route "" instead it intends to take the organic growth path. The bank also intends to corner a large portion of the semi-urban market and is in the process of establishing large presence in these areas.

According to the Bank, there aren't too many takeover candidates available that can provide synergy to our bank, hence the decision to grow organically.

It has also entered into talks with a few foreign players for allowing Indians to invest abroad. The HDFC Bank "" is also putting thrust on commercial vehicle, two-wheeler and auto financing. Its cards business "" which has touched half a million customer base "" is also on the top of the agenda.