Uncertainty is easing and demand is improving as businesses look to boost growth post-Covid-19, Arvind Kapil, the bank’s country head for retail assets, said in an interview. He said this is an opportunity to reverse the declining share of loans to this segment of the market, which was essential to maintain the asset quality.
Kapil said, “We are planning to double our retail assets book in a focused manner. “I can feel a strong demand at the grassroots level. I run the business and am giving you the experience of what I see.
Of the bank’s total loan book of Rs 11.5 trillion ($156 billion), Kapil is in charge of retail lending of Rs 3.7 trillion, which is expected to reach around Rs 8 trillion over the next two years.
If successful, it would mark a sharp change from its strategy a year ago, when the bank slashed its retail lending to protect its asset quality as millions lost jobs and businesses due to the pandemic. were closed.
HDFC Bank’s retail lending share fell to 47 per cent in March, from 55 per cent earlier in at least five years from 54 per cent. The bank, which is also the nation’s most valuable, has one of the lowest bad-loan ratios among peers, and now wants to focus on unsecured loans for salaried workers, vehicle loans and government business.
Kapil said, “We are taking a very aggressive approach to grow our retail loan book. “We want to accelerate those areas where we can maintain asset quality and offer the best return on assets.”
The Mumbai-based lender’s retail lending slowed by about 9.3 per cent in the June quarter to 14.4 per cent of its total book. This is much lower than its peers such as the state’s 16.5 percent and a 20 percent increase in that portfolio. Still, lenders saw a rise in bad loans in retail in the June quarter following an unexpected and more deadly new wave of the virus in India. Since then, debt collection has improved and for HDFC bank, are back to pre-pandemic levels, Kapil said.
“The results of doubling our business will be more visible at the beginning of the next financial year,” he said. “We will balance our top-line growth with our return on assets objective.”