At a time when banks are consolidating their presence in the global space, private sector HDFC Bank has preferred to focus on its India operations.
?Although we have decided to open a branch in the Middle East region sometime in the near future, our endeavour would be to further strengthen our position in India post acquisition of Centurion Bank of Punjab, said Aditya Puri, managing director, HDFC Bank.
?Garnering the maximum business share in the domestic market is our prime focus,? he said.
The bank plans to open a branch in Bahrain. As for domestic business, Puri said he was also looking at opportunities in the merger and acquisition activities of Indian companies outside India.
?But for that, we need not have many branches across overseas locations as such deals and international products can be easily structured through the bank?s presence in any foreign country,? he said.
However, not looking at overseas expansion does not imply that the bank is averse to any acquisition.
It is just that the bank is seeking a higher value-proposition when compared with Indian operations.
?We do not want to grow at a lower rate with a lower margin and a much low profitability than that in India by branching out actively in foreign locations. We do not want to take risk in the overseas market in funding for short-term and lend the funds for a longer term, and do not wish to enter a foreign country merely to be a big player without reasonable skills?, said Puri.
He stated that while funding a credible overseas project backed by a reputed conglomerate like the house of Tatas, the banks? margins get depleted to the maximum extent in the current scenario. ?To increase the spreads in funding the overseas projects, the banks have no choice but to lend the money to the companies that have low risk ratings relatively. It?s a major challenge for the banks as far as funding the overseas mergers and acquisitions are concerned. We do not want to do that in the foreseeable future. We would go for the overseas funding only if the margins are reasonably good and the risk involved is acceptable to us,? he said.