Upbeat about the merger of Gruh Finance with Bandhan Bank, Keki Mistry, Vice-Chairman, HDFC, said there is synergy between the two entities and the move will be beneficial to both companies. In an interview with BusinessLine , he said HDFC will continue to focus on its own set of priorities and that nothing will change after the merger. Excerpts:

How will the merger with Bandhan Bank help Gruh Finance?

We saw that there is a fair amount of synergy between the merger of Bandhan Bank and Gruh, as it creates a platform for rural and semi-urban lending. Also, we will benefit from the fact that Gruh now has access to lower cost funding from the bank, and access to a much larger lending platform compared to what it had by itself. Bandhan Bank will have access to Gruh’s operating systems, which have been time-tested over the years, as well as its expertise in housing loans. It will also benefit through the large presence in Western India, which Bandhan, by itself, did not have.

Will HDFC now focus on affordable housing and compete with Gruh?

We do affordable housing even now, and nothing will change after the merger. We will continue to do what we are doing, and that will be HDFC’s focus. During the half-year ended September 30, 2018, 37 per cent of the home loans approved by HDFC in number and 18 per cent of the loans in value terms were to the economically weaker section, or lower income group.

What is your view on the economy and growth prospects?

I am very optimistic about India’s growth for a variety of reasons. The reforms that have been taking place over the years, particularly in the last couple of years, are now beginning to take shape. In the real estate sector various reforms have been initiated, such as the RERA Act, a host of benefits of the credit-linked subsidy scheme, and fiscal incentives provided for housing loans.

Do you think there has been a revival of private investment and corporate credit demand?

Private investment started seeing a pick-up a few months ago. I haven’t seen the data for the last one or two months, but to my mind, there has been pick-up in private investments. When it comes to credit demand, I think there is a lot of demand for housing.

I don’t want to comment on numbers as we have results coming up, but the demand is definitely there.

Have the liquidity issues in the NBFC sector been addressed?

It has been significantly resolved, in my view. At HDFC, we never faced liquidity issue at all because we have very diversified sources of funding – we raise money through deposits, term loans, bonds, international funding, ECBs, and masala bonds. We just went to the Japanese market and raised $470 million. I think the liquidity issue in the system has broadly been addressed.

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