Interview - HDFC Bank eyes green shoots as Indian companies borrow again

By Devidutta Tripathy and Clara Ferreira-Marques

MUMBAI (Reuters) - HDFC Bank , India's largest lender by market value, said it is beginning to see "green shoots" in corporate loan growth, as companies begin to borrow and spend again after almost two years of reining in.

The combination of a more conservative stance among state-run banks - hit by bad loans - and a lack of demand as the economy slowed, has held back Indian business lending. But there are signs of a change.

HDFC Bank's long-time managing director, Aditya Puri, said he saw signs of a recovery among automobile, telecoms and consumer goods, and even small and medium companies.

"This is more working capital (demand) at the beginning, but we are starting to see term loan growth in the last month or two," he said.

Puri, whose conservative bank's profit and loan growth has outpaced rivals for a decade, says he expects Indian banking sector loan growth to come in at 12-14 percent this fiscal year to March, still a slowdown from over 20 percent six years ago.

His bank should be ahead of the market by 5 to 6 percentage points, he added.

To maintain growth in the face of a corporate slowdown, HDFC Bank, like others, has bet on lending to individuals, boosting unsecured products such as credit cards and personal loans.

The segment, targeted by heavyweight rivals such as ICICI and State Bank of India , is among the market's most competitive. But Puri brushed off any chance HDFC - famously conservative in its due diligence - could take on excess risk in the race for margins.

"There is no need to go up the risk ladder or down the margin ladder," he said, adding HDFC focuses on India's "middle and upper middle", a "very tight" population segment.

(Editing by Muralikumar Anantharaman)