As majority of the banking system players, including its private sector peers fight the scourge of bad loans and frauds, HDFC Bank said it is looking at expanding its market share. "Of course, we will get some benefit if the rest are focused on other issues other than growth. We do expect to grow well," managing director and chief executive Aditya Puri told reporters here.
The veteran banker further said typically, his bank's growth plans are not dependent on competition. Puri termed the ongoing troubles in the system as a period of transition, and that there is nothing to worry at the systemic level as most of the lenders are either well-capitalised or have the assurance of government support. It can be noted that the high quantum of NPAs have led 11 of the 21 state-run banks into tighter regulatory controls.
There are also fears of more banks coming under the prompt corrective action framework of the Reserve Bank, leading to worries about the system's ability to support credit demand. The bank's closest rivals ICICI Bank is fighting allegations of conflict of interest and lack of disclosure against its head Chanda Kochhar, while Axis Bank board cut short its chief Shikha Sharma after reports of regulatory concerns on her ability to reign in high NPAs. HDFC Bank, which is by far the best-managed large lender when it comes to NPAs, has only five accounts of over Rs 100 crore which are classified as dud loans, he told shareholders at the annual general meeting, adding the aggregate exposure to these accounts is only Rs 827 crore. Dampening the power sector players, who have been calling for a special dispensation in NPA recognition, Puri termed it as a bad idea that defies logic.
"NPA is an NPA. What is the regulator's role? The role is to define the NPAs in the system. You cannot say one sector's NPA is not NPA in the other sector. I don't think that makes any logic," he told reporters. He also supported the changes in the NPA asset recognition norms, saying it coupled with the bankruptcy laws, has changed the way borrowers think.
Puri said the bank will be starting a Rs 24,000 crore capital raising process "very soon" and exuded confidence of it sailing through on its key strengths--good capital buffers, and one of the best earnings ratios in the world. "Why should I have a problem in a country that is growing well and demand exceeds supply for financial services?" Puri quipped when asked for his views on credit demand outlook. Earlier, he said a growth rate of over 7.3 per cent is good for any economy and said as capacity utilisation levels increase, private sector investments will also pick up.
To a question whether the fresh capital raised will be deployed only for loan growth --as talks of privatising state-run lenders are on--Puri said the funds will be used for "growth prospects" without qualifying what that means. Informing the shareholders that the bank typically plans its capital needs three years in advance, he asked them not get "despondent" about domestic growth prospects as the economy has a lot good things having come out of the impacts of the demonetisation and GST.
But he was quick to add that HDFC Bank did not get impacted by the twin measures by government in quick succession that had impacted economic growth. Even though the migration to the newer Ind-AS system has been postponed, he said the bank will not be impacted by the new accounting norms when implemented. He also said the bank is not looking at expanding its overseas presence, even though all its foreign branches are profitable now. Puri reiterated that the farm loan waivers by various states have impacted recoveries on farm loans.