Post-merger balance sheet to enable HDFC Bank to invest more in infra
The merger of the original HDFC with HDFC Bank It will allow the larger combined entity to invest more in infrastructure and mortgage projects, Managing Director and CEO Sashidhar Jagdishan said in the bank’s annual report for fiscal year 23.
He said, “The larger balance sheet post merger will enable HDFC Bank to have greater exposure in infrastructure projects. This means that we can participate more meaningfully in India’s growth story and contribute to nation building. In light of all this, the pace at which we aim to grow – we can create a new HDFC Bank every 4 years.”
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A lifelong bond
The merger may not have been better timed, Jagdishan said, and said the feelings associated with the home purchase carry over to the home loan service provider and help build lifelong bonds with customers. Moreover, only 2 percent of HDFC Bank’s customers currently get their loans from the bank while 5 percent take them from other institutions, which in itself is a “huge opportunity”.
HDFC Bank will build these relationships with customers by offering a range of products and services of the bank and its subsidiaries through savings accounts, current accounts, personal loans, insurance, investments and home loans.
“A compelling value proposition to the customer, that probably doesn’t exist in the market at the scale that’s envisioned. It’s clearly a game-changer going forward.”
The growth drivers for the bank will be corporate and commercial banking (MSME) and rural banking, government and institutional business, wealth management, retail assets and payments, Jagdishan said, adding that the bank is currently the largest SME bank in the country.
digital transformation
The focus will be on digital transformation through new platforms and customer experiences, and greater efficiencies by enhancing core technologies while improving performance and resilience at scale.
While the bank has seen significant improvement in its resilience and uptime metrics (based on both internal and external public sources), it is “not perfect,” Jagdishan said, adding that the bank will continue to strengthen its core IT infrastructure.
In the past few years, HDFC Bank has often faced criticism for customer service technology issues and frequent technology outages, prompting the Reserve Bank of India to temporarily block the bank from issuing new credit cards and launching digital products in FY21. Limits on credit cards were lifted after eight months and those on new digital launches more than a year later.
“This journey needs to be accelerated every year. There is still a lot to be done and I am fully committed to improving our customer focus even further.
The bank will look to add 1,500-2,000 branches in FY24, of which 675 are in semi-urban and rural (SURU) locations. In fiscal year ’23, the bank added a record 1,479 branches, the majority of which were SURU branches.