The merger of Housing Development Finance Corp (HDFC) with HDFC Bank will give the bank an increased scale, larger product base, balance sheet resilience and enhanced operational and underwriting efficiencies, the bank’s part-time chairman and independent director, Atanu Chakraborty, said in HDFC Bank’s FY23 annual report.
“The bank is now fully poised to take the benefits of the merger. The entities have formed an integration committee that has been working on various streams across businesses — IT, HR, risk management, operations, compliance, etc — to make the merger seamless and effective,” the chairman said, adding that the bank was putting in place a strategy to ensure it has adequate systems and processes in place to ensure adherence to regulatory regimes and a sound governance framework.
HDFC Bank, Chakraborty said, was the largest participant under the Emergency Credit Line Guarantee Scheme (ECLGS), disbursing over Rs 44,000 crore of loans and helped about 125,000 MSMEs in the process.
To open 1,500-2,000 branches in FY24: CEO
HDFC Bank will open 1,500-2,000 branches this fiscal. Of that, 675 will be in semi-urban and rural areas, MD & CEO Sashidhar Jagdishan said.
“Branch banking is the fulcrum of our customer relationships, and we believe that a physical branch is extremely important to customers, especially in semi-urban and rural locations. In FY23, we added a record 1,479 branches, a majority of which are in semi urban and rural (SURU) locations,” he said. New branches will act as a key to additional deposit mobilisation.
According to the proforma combined figures of HDFC and HDFC Bank shared by the bank in its Q1FY24 investor presentation, the merged entity will have gross advances amounting to Rs 22.45 trillion and gross deposits of `20.65 trillion. The bank will start reporting merged financials of HDFC and HDFC Bank from Q2FY24 onwards.
On the merger, the MD said in the annual report that only 2% of HDFC Bank customers sourced their home loans through the bank, while 5% do it from other institutions. “This itself is a huge opportunity.” With the merger being effective from July 1, HDFC Bank will have the ability to offer home loan customers a complete bouquet of the bank’s and subsidiaries’ products and services, he said.
Further, a bigger balance sheet post-merger will also enable HDFC Bank to take a larger exposure to infrastructure projects. “In light of all this, the pace at which we aim to grow – we could be creating a new HDFC Bank every 4 years,” the MD said.
While HDFC Bank will continue to further strengthen its core IT infrastructure, it will also prioritise hiring engineering talents with new-age tech skills. HDFC Bank is strategically positioning itself to capitalise on new opportunities which are poised to change banking and is making technology investments for the future, Jagdishan said.
Referring to a recent video of a senior bank senior official using abusive language against a sales team member, Jagdishan said he was “fully conscious” of the fact that there might be instances where some managers “might transgress our defined way of working”.
“We have the resolve to nip this in the bud, both by way of training/counselling and appropriate action, to ensure that the same is not attempted by anyone else. Having said that, we have some distance to traverse on
this front…”