With the convergence of media, computing and telecommunication, the world, including the world of banking, has changed. For HDFC Bank, the competitive landscape is not restricted to banks and non-banking finance companies. It now includes players such as those who offer prepaid wallets and online loan providers.

Aditya Puri, MD, in an interview to Business Line , throws light on this evolving scenario, credit growth, possibility of a lending rate cut, and why the strategic debt restructuring scheme will strike fear in the hearts of promoters about losing control of their companies. Excerpts:

What explains the aggression on the digital banking front?

Our digital banking is not a product. It is a philosophy. Our objective is to provide for all your financial requirements in a convenient manner, which means you deal with us when you want, how you want and where you want in the fastest time possible. One thing that is short today is time. So, turnaround time has to be the fastest. You have to get as broad a spectrum of services as you can get at the right price.

Price premium has gone away. Nobody wants to pay premium for a brand. Customers want the best but since they can check information (online), power has shifted to the customer…And what this (digital banking and online marketplace) also does is it eliminates barriers of geography. It also eliminates capital as the major constraint to a business in terms of entry. So, your competition also changes — loan.com, Paytm, Apple Pay, insurance and finance companies also become my competition.

How do you see the impending competition from small finance and payments banks?

More the merrier! I am at the forefront. I turned digital, I got into semi-urban and rural areas, I got the brand, system and people… We introduced 10-second loan for a certain category (of borrowers), all other loans are available in 30 minutes. Should I be worried or the new banks?

The RBI cut repo rate recently and many banks have cut their deposit and base rates. What about HDFC Bank?

We will also do so. Our ALCO (asset liability committee) will decide.

By how much will you cut your base rate? SBI has cut its base rate to 9.70 per cent whereas your base rate is at 9.85 per cent.

I don’t know what it will be, but it’s a competitive environment. So, if your rate is much higher, you won’t get business. So, everybody has to deal with the environment in the manner he feels fit, that includes me.

The RBI has announced the strategic debt restructuring scheme, whereby banks can throw the existing management (of a defaulting company) out. Do you think it is a good move?

I think it is a very good move. See, ultimately, overseas you have Chapter 11 (bankruptcy law). Kodak submitted itself to Chapter 11. What they do is impartially look at what business can sustain and what needs to be closed, and if the business is closed so much is the loss.

Now, when you created a Company’s Act and an artificial being called a company, the rules are that first the equity is wiped out…Here, first the banks take the hit; it is public money. So, I support it (SDR) wholeheartedly. They (promoters) must fear they are going to lose the company.

Have ‘acche din’ been heralded? What does this mean for your bank?

Yes...For our bank this means GDP is growing. Projects are coming. Semi-urban and rural areas are also growing… In the first two months, demand (credit) has been good. Commercial vehicle and car sales have gone up. Normally, if we take old indices, we grew about 2.5 times the GDP and 4-5 per cent market share gain.

Will you be close to your magic number of 25-30 per cent growth?

Now, GDP has grown from 7 per cent to 7.3 per cent. It is expected to grow to 7.6-8 per cent. The magic number was at a certain GDP growth rate, when it was growing at 8.5 per cent.

But many bankers are saying not much credit offtake might take place in FY16.

I disagree. We have no problem. Why credit offtake will not be there? As GDP grows… Let’s take this on facts. I am seeing my first two months and it is good. Commercial vehicles (sales) has gone up, car sales have gone up…Will GDP growth increase? Yes! Then bank funding should also grow.

Which sectors are expected to grow?

Our consumer is growing, rural, small business loans, loans to shopkeepers, and working capital are growing, some amount of funding for public sector, such as ONGC, NTPC, railways, etc., has started and is growing.

The only aspect which hasn’t grown is demand from the (emphasis) private sector. That will come …which is what I said last year … it was missing because it was consolidating.

Now, with government expenditure and projects that are coming through on rail, etc…if we reach 7.6-7.8 per cent (growth), it will be followed by private (investment), which is what would take next year into the 8 per cent or above levels.

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