HDFC Bank’s Rahul Shukla confident about bank’s portfolio

The country’s largest private sector lender, HDFC Bank, is optimistic about credit demand from India Inc in the new fiscal and said there is already capex-led credit demand in mid-sized corporates and small and medium enterprises.

“The economy will show a synchronous recovery with a pick-up in domestic demand in consumption and investment and external demand in the following 12 months. There are strong expectations of private sector capex revival in the second half,” said Rahul Shukla, Group Head, Wholesale Banking, HDFC Bank.

In an interaction with BusinessLine , he said that even today, there is private sector capex leading to credit demand in sectors such as food processing, textiles, industrial chemicals, iron and steel in some parts of country, packaging, auto components and electrical appliances.

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Noting that the capital expenditure is front loaded by the government, Shukla said the infrastructure cycle is robust for banks to participate.

Upward trend

“Today, you can’t think of a central public sector enterprise that has not increased its capex plans significantly. This push is showing its impact on the economy,” he said.

Shukla also noted that various macro indicators, including PMI data, goods and services tax collections, e-way bills and passenger vehicle sales, are showing an upward trend.

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“Due to a normal revival of nominal GDP growth in 2021-22, along with a strong push to infrastructure and industrial growth (through PLI and rising commodity prices), loan growth could rise,” he said, adding that a revival of growth through capex, strong balance sheets of the largest banks, creation of a bad bank and low interest-rate environment could lead to a secular revival of loan growth.

Data released by the Reserve Bank of India revealed that bank credit rose by 6.63 per cent to ₹107.75 lakh crore in the fortnight ended February 26, 2021.

Balanced advances

Meanwhile, when asked about HDFC Bank’s wholesale strategy going forward, Shukla said the lender has largely maintained balanced advances of 50:50 retail and wholesale.

“That is our model. It is balanced. There are times when retail is slow and wholesale picks up and there are times when wholesale will be slow and retail picks up,” he said.

Shukla also expressed confidence about the bank’s portfolio and said it will continue to perform well during the current phase.

“It has been tested through the pandemic and has given us greater confidence in our approach to doing business,” he stressed.

As on December 31, 2020, HDFC Bank had reported a 5.2 per cent growth in domestic retail loans and 25.5 per cent increase in domestic wholesale loans. The domestic loan mix as per Basel 2 classification between retail:wholesale was 48:52.

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