HDFC Bank wants to ride India consumer boom after home loan dominance

By Preeti Singh and Saikat Das
 

HDFC Bank Ltd. wants to use home lending as a gateway for the world’s sixth largest lender to capture more consumer finance customers with loans on everything from air conditioners to cars and TVs.
 

The Mumbai-based bank is converting about 530 offices that previously specialized in mortgages into ones with fully-fledged banking services in the coming months, said Kaizad Bharucha. The HDFC Bank deputy managing director said his firm can now offer home loans at more than three times the locations following its merger with HDFC Ltd. and that’s just the start. 

“When he takes a house, he takes a consumer finance loan, which means he’s taking a loan to buy his appliances,” Bharucha said in an interview. “He doesn’t have to go anywhere” else, Bharucha said.

It’s an opportune moment for HDFC Bank as demand from retail customers surges across India, the world’s most populous country. The nation’s banks and shadow lenders have been expanding into consumer finance as demand for loans from retail customers surged 22 per cent over the past year. The intensifying competition has drawn the likes of Jio Financial Services Ltd., a unit of Mukesh Ambani’s Reliance Industries Ltd., that’s looking to get a slice of the action.

Bharucha added his bank also aims to boost loans for affordable housing and construction finance. The firm, that’s backed by Life Insurance Corp of India and Singapore’s sovereign wealth fund GIC Pte., is making decisions on staffing and the technology needed for the ramp up, he said.

About 70 per cent of the erstwhile mortgage lender’s customers did not bank with HDFC Bank and only 2 per cent of the bank’s customers previously sourced their home loans from it, the firm has said.  

HDFC’s gross nonperforming assets are among the lowest compared to its private-sector peers and stood at 1.13 per cent as a ratio of customer assets at the end of June. 

“We’ve always put guard rails and been selective,” Bharucha said. “There is a way to be prudent and grow — it is not one at the cost of the other. And that is what we’ve demonstrated over the years.”