HDFC Bank chief financial officer Srinivasan Vaidyanathan said the lender has the potential to grow customer penetration in the time deposit segment. As of now, 14-15% of the bank’s customers have time deposits, he said in a post-earnings analyst call on Saturday.    

The bank’s time deposits grew 22% year-on-year to Rs 9.1 trillion in the second quarter of the current financial year while total deposits grew 19% to Rs 16.7 trillion. Current account, savings account (CASA) deposits rose 15% while the CASA ratio declined to 45.4%.

Vaidyanathan said HDFC Bank offers interest rates in line with private sector peers, and is placed lower compared to some of the public sector banks. The overall pricing of time deposits depends on demand and at what price point the bank requires the funds, he said. The bank offers interest rate of 5.70% on deposits of Rs 5 crore maturing in nine months to one year while on deposits of less than Rs 2 crore, the rate for one-year deposit is 5.70%, according to information on its website.  

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Speaking on margins, he said since the economy is in a rising rate cycle, there is a lead-and-lag effect on lending and deposit rates. As more interest rates hikes are expected in coming months, there will be a continuation of this lead-and-lag effect, which will be beneficial for the margin. The bank posted core net interest margin at 4.1% on total assets and 4.3% based on interest earning assets as of September 30. Typically, the bank operates on a NIM of between 3.94% and 4.45%, he said.

Vaidyanathan also said the merger process between HDFC Bank and HDFC is slightly ahead of the schedule, adding that the management is closing monitoring the process. However, there are several processes that are needed to be completed after the extraordinary general meeting, as the bank will have to file a scheme petition with the National Company Law Tribunal (NCLT) after which the tribunal will get no-objections from various agencies, both central and state governments. It is a long-drawn process and could take 7-8 months, he said.

The tribunal has given permission to the lender to hold a shareholders’ meeting for obtaining approval for the proposed merger. The meeting will be held on November 25.