India’s largest private lender HDFC Bank said that it plans to double the amount of loans it makes to retail borrowers over the next few years. This decision comes amid an increase in consumer demand after the pandemic slowdown.
HDFC Bank head for retail assets Arvind Kapil stated that uncertainty is declining and demand improving as businesses seek to bolster growth, as mentioned in a report in Bloomberg. He said that this has paved the way to reverse the declining loans to this segment that was required to preserve asset quality.
“We are planning to double our retail assets book in a focused manner. I can sense a robust demand at ground level. I run businesses and I am giving you a feel of what I see,” said Kapil.
Out of HDFC’s Rs 11.5 lakh crore loan book, retail borrowing is worth Rs 3.7 lakh crore, and is expected to reach Rs 8 lakh crore in the next two years. A year ago, HDFC slowed down its retail lending to protect asset quality as COVID-19 led to business closures as well as loss of jobs for millions.
From an average of 54-55 per cent previously, HDFC Bank’s lending share fell to 47 per cent in March. It must also be mentioned that amid its peers, the lender has the lowest bad-loan ratio.
Kapil said that the lender is taking an ‘aggressive positioning’ to grow their retail loan book, with a plan to accelerate on segments where one can maintain the asset quality and offer the best return on assets.
HDFC’s retail loans grew 9.3 per cent, compared to State Bank of India’s 16.5 per cent and ICICI Bank’s 20 per cent. Lenders saw a spike in bad loans in retail due to the harsh second wave. Loan collections have improved since then and is back to pre-pandemic levels for HDFC Bank, said Kapil.
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