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Our Bureau

Mumbai , Aug.9

HDFC Bank on Monday said it has applied to the RBI for increasing its capital market exposure limits from the current five per cent.

The Finance Minister in his Budget speech had announced that banks with a strong risk management system could increase their capital market exposure limit. Mr Aditya Puri, HDFC Bank Managing Director, said the bank had applied for a review of the existing limit.

Speaking on capital market exposure of banks, Mr Puri said the bank's exposure was within the current limit of 5 per cent of loans outstanding at the end of the previous fiscal.

He added that the focus areas of the bank in capital market included lending to brokers against shares and for carrying out business activities for financial institutions and foreign funds. The default rate for the business in this area has been less than one per cent, he said.

Speaking to presspersons after opening a new branch of the bank in Mumbai, Mr Puri said the bank expected its annual earnings to grow at the rate of 25 to 30 per cent for the next three years. He said the thrust areas would include lending to small- and medium-sized businesses and the rural sector.

"The annual growth in earnings is expected to be to the tune of 25-30 per cent for the next three years, while the balance sheet size is likely to grow by 20-25 per cent," said Mr Puri.

The bank plans to to increase its network to 400 branches by the end of this fiscal. The new branch opened at Parel is the bank's 348th branch.

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