Private lender HDFC Bank has seen its wholesale loan book grow 22.8 per cent this financial year, from Rs 2.9 trillion in March 2018 to Rs 3.5 trillion at present.
“Our growth has mainly been on the transactional and working capital side, and we continue to have that as our core strength. However, a bank of our size cannot afford to be out-of-the-term loan space,” said Kaizad Bharucha, executive director, HDFC Bank, adding 30 per cent of the bank's wholesale book was by way of term loans. HDFC Bank’s wholesale loan growth has outpaced other lenders by a wide margin. Credit to the industry grew at 0.1 per cent, while advances to the services sector were up 7.4 per cent in the first half of 2018-19, according to RBI data. Many banks continue to face pressure on asset quality, liquidity constraints and lending restrictions because some state-owned banks are under the central bank’s prompt corrective action. The bank’s domestic loan mix comprised 55 per cent of retail assets and 45 per cent of wholesale advances. “We don’t really set any targets for the mix. While there is some capex, it’s not large enough yet to move the needle. India's GDP is also primarily consumption driven,” he said. While both NBFCs and the MSME sector are going through some pain, Bharucha says it is not fair to paint the entire sector as stressed. “It wasn't a credit issue with NBFCs, but a liquidity problem. In the future, more prudential financial management on the part of NBFCs would be welcome," he said.
The MSME portfolio will have certain levels of delinquency, and that has been the case even historically, but the pain points associated with the goods and services tax (GST) are over, said Bharucha. He said the GST regulation made the SME segment more bankable and gave the sector access to formal lines of credit as well as technology, which can benefit them and bring down costs.
HDFC Bank is leveraging its geographical reach, digital offerings, and its complete suite of products in order to reach out to both existing customers as well as new ones, including those who are new to banking.
"The level of customisation and efficiency we bring, entire gamut of products and services as well as value addition we offer, and our footprint bring our customers greater value," said Bharucha.
The bank also believes that the efficiencies brought both to the bank and its clients through digital innovations and offerings are instrumental in scripting the bank's growth story.