India’s largest private bank leads the way to double personal loans


HDFC Bank Ltd, India’s largest private lender, plans to double the amount of loans it provides to retail borrowers over the next two years as consumer demand intensifies after a pandemic-induced slowdown .
Uncertainty is diminishing and demand is improving as companies seek to support growth after Covid-19, said Arvind Kapil, the bank’s national head of retail assets, in an interview. This is an opportunity to reverse the declining share of lending to that segment of the market that was necessary to preserve asset quality, he said.
“We plan to double our portfolio of retail assets on a targeted basis,” Kapil said. “I feel a strong demand at ground level. I run businesses and give you an idea of ​​what I see.
Of the 11.5 trillion rupees ($ 156 billion) total of the bank’s loan portfolio, Kapil is responsible for retail borrowing worth 3.7 trillion rupees, which is expected to reach nearly 8 trillion. rupees over the next two years.
Mixture change
If successful, it would mark a sharp turnaround from its strategy a year ago when the bank slowed its retail lending to protect the quality of its assets as the pandemic resulted in millions of job losses and business closures.
HDFC Bank’s share of retail lending as part of its total fell to 47% in March, the lowest in at least five years, from an average of 54% to 55% previously. The bank, which is also the most valuable in the country, has the lowest bad debt ratio among its peers and now wants to focus on unsecured loans for salaried workers, auto loans and government affairs.
“We are taking a fairly aggressive stance to develop our portfolio of retail loans,” said Kapil. “We want to accelerate in the segments where we can maintain the quality of the assets and offer the best return on the assets. ”
Sour pile
The Mumbai-based lender’s retail loans grew about 9.3% slower than the 14.4% of its overall portfolio in the June quarter. This is significantly lower than its peers like the 16.5% growth of State Bank of India and 20% of ICICI Bank in this portfolio. Yet lenders also saw an increase in bad debts in retail loans during the June quarter after an unexpected and deadlier new wave of the virus ravaged India. Since then, loan recoveries have improved and, for HDFC Bank, have returned to pre-pandemic levels, Kapil said.
“The results of doubling our activity will be more visible at the start of next fiscal year,” he said. “We will balance our top line growth with our return on assets target. ”
–With help from Anirban Nag.

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