‘Lockdown will not have major impact on HDFC Bank’

HDFC Bank is hopeful of an interest rate cut as well as forbearance in the asset classification for recognition of bad loans as businesses face losses due to the coronavirus pandemic.

Addressing reporters via teleconference on Monday, Aditya Puri, MD and CEO, HDFC Bank, said the lender does not expect any major impact from the current lockdown and coronavirus pandemic, and said it is more of a biological than a financial crisis.

“Once we solve the biological issue, this is not a crisis. We only want to watch out on that,” said Puri. He also said forbearance needs to be given across sectors and expressed hope that the Reserve Bank of India will look into the issue. He said the recognition of bad loans should not be rule-based but assessment-based. He also expressed hope that a repo rate cut will be announced.

HDFC Bank will be happy to step in for customers if they are facing a temporary cash flow issue, provided they have the capability to pay back later.

His comments come at a time when the global and domestic economy are facing huge losses due to the rapid spread of Coivd19, which has led to the temporary shutdown of several companies and factories.

Meanwhile, Puri also tried to ease concerns about the bank’s asset quality, especially unsecured, after some recent analyst reports raised questions.

“The total unsecured portfolio is 16 per cent, 6 per cent is cards and 10 per cent is personal loan. 75 per cent of personal loans are to salaried employees and of A-rated top-tier clients,” he stressed. As much as 80 per cent of the wholesale lending is to AA and above clients and the bank’s exposure is spread to 150 sectors, he further said, adding that 80 per cent of the small and medium enterprises are covered by additional collateral.

“I can’t give you guidance … you can’t expect bad results. When the lockdown is there, you could have a quarter with more muted growth, which would only be a reflection of the lockdown but not the true value of the growth potential we have put in,” he said.

When asked about the bank’s succession plan, he said that an announcement is likely to be made soon.

“The recommendations are with the search committee, and before April, an appropriate person who will take the bank to the future will be announced,” he said. Puri said he, as well as other probable candidates for the post, have been in isolation for the past one week due to Covid-19.

The HDFC Bank scrip fell to a 52-week low of ₹760 apiece on the BSE on Monday in intra-day trade. It later recovered partially and closed at ₹770.50 apiece.