The Hindu Business Line : HDFC Bank plans to set up NBFC

The bank management, according to Mr Jagdish Capoor, Chairman, has examined the issue of establishing an NBFC in line with the current regulatory framework, subject to clearances by the board.

He was addressing a meeting organised by FICCI.

The proposed company will take advantage of the relatively different norms set by the banking regulator for non-banking finance outfits.

While the exact particulars of the proposal are not clear at this stage, it is pointed out that the NBFC will help the bank tap a completely fresh set of opportunities.

Meanwhile, HDFC Bank has no plans of an equity expansion at this stage, although its business has been improving over the years.

It has a balance sheet size of roughly Rs 51,000 crore, which, given the opportunities that are emerging, is expected to go up further. "We hope to maintain our earlier growth rate this year too," Mr Capoor said.

On another front, the bank has proposed to undertake a large branch expansion programme.

It now operates from 467 branches and extension units, which will be shortly increased to 500 or so.

Incidentally, the number of ATMs run by the bank has increased to nearly 1,150 - up from 900 or so at the end of 2004-05.

As for credit cards, the HDFC Bank chief said that 1.5 million cards have been distributed so far, which is likely to reach the two million mark in the near future.

Gross non-performing assets stand at 1.5 per cent, while net non-performing assets are at 0.2 per cent.

To scale up capital market exposure

HDFC Bank has decided to scale up its involvement in the capital market from five per cent of its advances to eight per cent in the coming days, according to Mr Jagdish Capoor, who added that the current limit set by the Reserve Bank of India had been exploited entirely.

"We requested the RBI to give us a special dispensation by raising the cap. The RBI recently acceded to the request," he said, referring to the bank's current exposure to the market.

HDFC Bank, which has proposed to construct its portfolio carefully, is expected to move very cautiously on this front, especially in the backdrop of the risks that are involved in the process.

The market, it is acknowledged, has been quite uncertain lately.

The bank would exercise extreme caution before it starts to participate aggressively in the market, Mr Capoor said.

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