The Hindu Business Line : HDFC Bank turns to SMEs, smaller towns

HDFC Bank is planning to expand lending to small-scale and middle-market businesses in smaller cities as larger corporates increasingly tap equity markets for funds, its Managing Director, Mr Aditya Puri, said.

Speaking to Business Line, Mr Puri said that a noticeable trend was that larger corporates were sourcing funds from the equity market or borrowing at rates not profitable to banks. However, his bank hoped to tackle this by revamping its services for the agriculture and food-processing sectors.

"Almost one-third of our lending is to the middle market and small business such as shop keepers, restaurant owners, drycleaners, hospitals and dispensaries. This small-scale business will grow. Lot of this lending by definition is from outside the major cities," he said.

To expand this segment of its business, HDFC has opened branches in mandi areas, such as Chomu in Rajasthan and Unze in Gujarat. The next mandi branch will be opened in Vashi, Navi Mumbai. The bank has also launched Kisan Credit Cards in Punjab and will soon be extending this service to other parts of the country.

The bank has over 40 per cent of its branches in semi-urban or under-banked areas — that is, with less than one branch for 15,000 people, Mr Puri said.

Another area of growth for the bank is lending to supply-chains, which is currently over Rs 3,000 crore. "We lend to small suppliers at about 50 basis points more than what we lend to a large company. This enables them to get timely credit," Mr Puri said.

The latest issue of the Asian Bankers Journal ranks HDFC Bank at No. 7 in the list of strongest banks, the highest for an Indian bank. The banks were ranked on several factors such as size, balance-sheet growth, risk profile, profitability and asset quality. HDFC Bank also saw one of the highest loan growths among Indian banks, at 44.1 per cent, the magazine said.

For its retail customers, the bank has introduced a gold loan in Kerala and plans to extend this to other cities. The bank is also planning to offer a two-way price on its retail gold coins, which it started recently. This means if a customer buys the gold coin from the bank, the bank will buy it back at any point of time. This will give liquidity to the product, Mr Puri said.

"We will be approaching the RBI for permission on this, because now the regulation does not allow it," he said.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page