HDFC Bank has more than doubled its mid-corporate loan book to over Rs 90,000 crore in the past three years, arguably making it the largest player in the segment.
If the bank maintains its June quarter loan growth rate of 21 per cent in the ongoing quarter as well, which analysts see quite likely, the second largest lender will race past the Rs 1-lakh-crore milestone by the month-end itself.
Mid-corporates are those firms with an annual turnover of Rs 200 crore to Rs 1,000 crore.
Out of the Rs 4.07 lakh crore of its wholesale banking book, over Rs 90,000 crore was from the mid-corporate segment, which the bank tags as emerging corporate group, as per its June quarter balance sheet.
The mid-corporate loan book was just about Rs 45,000 crore in June 2016 and doubled to Rs 90,000 crore in June 2019, a senior bank official, who did not wish to be identified, said.
At the system level, around 15 per cent or Rs 9 lakh crore of the Rs 60 lakh crore wholesale loan book are mid-corporate loans.
What is significant is that it's not just the bulging loan book where HDFC Bank leads the industry, but also in terms of the geographical coverage of mid-corporate segment. In the latter segment, the bank has presence in 49 cities with 180 dedicated relationship managers servicing over 3,500 companies.
Three years ago, in the mid-corporate segment, the bank was present in 18 cities and the number of clients was around half of over 3,500 now.
The bank plans to add at least 10-15 cities more over the next couple of years, the official said, adding this has the bank leading the space by at least two times its immediate rival in terms of both the number of centres as also the clients.
Of the Rs 90,000 crore emerging corporate loan book, the official said around Rs 7,000 crore are the bank's exposure to the debt papers (mostly Commercial Papers and Non-Convertible Debentures) from these target companies, while 70 per cent of the book is working capital loans.
Nirav Shah, the country head for emerging corporate group at the bank, attributes the faster growth to the sharper focus and the holistic approach that the bank offers.
"Banking today is no longer just supplying credit. We don't believe in that either.
"We offer tailor-made solutions to each of our clients. Be it in helping them better manage cash, supply chains and logistics or even in book-keeping, forex advisory and hedging, we offer all these services for free. I think this is what has helped us grow faster than the industry," Shah, who has spent more than two decades at the bank, told PTI.
To put it pithily, he said that customers are looking for value additions, beyond mere loans today, "which we offer helping us become the most penetrated banker in this segment today".
When Shah, who also heads the infra finance and rural banking groups at the bank, took over the division in 2011, the emerging corporate book was a paltry Rs 15,000 crore and was part of the wholesale banking group.
The average ticket size of these loans are of Rs 40 crore having a tenor of five to seven years, Shah said.
Industrial credit for the system has been growing at 6-7 percent for the past many years, but for HDFC Bank this has been over 20 percent without fail, Shah said but refused to offer a guidance citing the management policy.
"All I can tell you is that we will grow much faster than the industry in every segment of our business, including mid-corporates," he said.
On the asset quality front, HDFC Bank is the only lender that has not been affected by the NPA (Non-Performing Assets) pain in all these years, Shah said.
In fact, the NPA ratio is substantially lower in the mid-corporate loan segment compared to 1.4 at the bank level in the June quarter.
"This is in spite of the fact that over 85 percent of these companies are privately held, and more than 90 percent of them are rated AA and below. I don't think there is a single AAA-rated client we have in this segment at all. But of course none of these 3,500 plus are B- and below," Shah said.