HDFC Bank's retail loans organisational rejig signals its growth calculus

livemint.com:

Two decades back, the merger of a development financial institution and a bank--ICICI and ICICI Bank--faced significant challenges, expected given the size of the entities involved . Strict regulatory demands, including the cash reserve ratio (CRR) and statutory liquidity requirements (SLR), posed complications and the banking regulator was not willing to grant any forbearances. The economic landscape and corporate finances were also undergoing recovery.

Now, in a reminiscent situation, newly-minted banking behemoth HDFC Bank also has similar issues to grapple with but appears to be fairly well positioned as of now to execute its merger with the erstwhile mortgage lender, HDFC. It is not just the latest quarterly numbers and the growth in both advances and deposits but the organisational rejig which it has undertaken this week that underlines the growth plans ahead. HDFC Bank has divided its retail loan operations into mortgage and non-mortgage categories, with designated group leaders for each.

This move is strategic given the bank's sizable home loan portfolio post-merger and its team's deep understanding of the Indian mortgage market. With many banks now eyeing this stable segment, backed by strong collateral and minimal bad assets, the timing seems right. At the start of this year, over 90% of the bank's 80 million-plus customers hadn't availed of a home loan, presenting a potential profit avenue.

Similarly, many previous HDFC home loan customers, now under the umbrella of the merged entity, hadn't maintained a prior banking association with HDFC Bank. This again is a huge opportunity which when tapped could bolster the low-cost deposit base of the lender. For the quarter ended September 30, the bank reported a 115 %