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The decision to rescue and revive YES Bank was jointly taken by public sector and private banks, along with the Reserve Bank of India, as it could have had implications for the entire financial sector, said HDFC Chairman Deepak Parekh on Thursday.
“YES Bank is a large private sector bank. The decision to not let it sink and the decision to revive it was taken by public sector banks and private banks together with the RBI,” said Parekh while responding to queries from shareholders at the HDFC annual general meeting on Thursday.
He noted that if a large bank falters in repayment of depositors or has liquidity problems, it can impact the entire financial sector, which gets a bad name and also impacts the confidence and trust of depositors.
A consortium of domestic banks and financial institutions, led by State Bank of India, had invested about ₹10,000 crore in YES Bank as part of the reconstruction scheme in March. HDFC had picked up 7.97 per cent stake in the lender.
He also said that the People’s Bank of China now holds 0.9 per cent stake in HDFC.
In his opening speech, he said that recovery will happen as long as there is no further lengthy and complete lockdown in the future.
He also noted that demand for two-wheelers and tractors has risen, even though passenger and commercial vehicle demand remains subdued.
“The inherent demand for home loans continues to remain strong and the combination of low interest rates, fiscal incentives and steady to some softening of real estate prices bodes well for new homebuyers,”Parekh further said, while expressing hope that some States will offer some sweeteners like a temporary stamp duty waiver to encourage more homebuyers.
“The commercial real estate sector has been impacted largely due to massive migration of labour,” he said, adding that there is a misconception that demand for the sector will diminish with more people working from home.
Capital raise
HDFC also has shareholder approval to raise ₹14,000 crore. Parekh said HDFC company should be ready to capitalise on inorganic growth opportunities or be able to fund expansion plans of subsidiary and associate companies.
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