Merger with HDFC to help tap home finance opportunity: HDFC Bank chairman

A more stable balance sheet because of the merger will enable HDFC Bank to step up exposures and facilitate higher credit growth in the economy, said the chairman

The merger with Housing Development Finance Corporation will enable the bank to tap the huge opportunity in the housing finance market with its strong distribution network and lower cost of funds, HDFC Bank chairman Atanu Chakraborty said on Saturday.

Speaking at the bank’s annual general meeting, the chairman said, “Housing finance is going to be a huge growth opportunity and one of the key drivers of India’s GDP over the next decade. With the advantage of lower cost of funds and the strong distribution network that we have built, among several other factors, there is huge merit in seizing this opportunity.”

A large and more stable balance sheet because of the merger will enable HDFC Bank to step up exposures and facilitate higher credit growth in the economy, Chakraborty added.

“We have made necessary applications to various authorities. The Board is closely monitoring the merger process for approval of various aspects of the merger, as required by the legal process,” he told the shareholders.

The HDFC-HDFC Bank merger, announced in April, will take 18 months to close, according to the company.

Earlier in July, the private lender said it has received banking sector regulator Reserve bank of India's approval for the proposed amalgamation. The stock exchanges have also communicated their no objection.

The chairman said HDFC Bank added over 9 million new customers during the last year, taking the bank’s customer base to just over 70 million.

“In spite of the challenges in the operating environment, the bank opened 734 new branches over the last year. As we endeavour that an increasing number of under-served areas have access to a bank, we are also conscious of the evolving needs of the modern consumer and are catering to future branches being equipped to be phygital (physical plus digital) relationship centres," he said, adding that the company had tied up with over 15,000 business correspondents primarily from the common service centres to ensure that financial services are delivered in the last mile.

This pace of growth also means we will add necessary manpower to cater to our growing customer base of over 70 million, he said.

Acknowledging that there are customer grievances at times, Chakraborty said the bank has a very sound system in place for addressing customer complaints.

“We continue to invest in our technology capability creation and have significantly strengthened our ability to serve our customers better,” he said.

The bank has identified retail assets, commercial and rural banking, corporate banking, government and institutional banking, wealth management, and payments as growth engines.

The private sector lender also proposes to harness the strong growth visible in semi-urban and rural areas of the country. “We do not see priority sector lending as a mere regulatory requirement, but as a profitable product(s) offering,” the chairman added.