We drive business along ROA number and basically keep it at that level: Rahul Shyam Shukla, HDFC Bank

economictimes.indiatimes.com:

Rahul Shyam Shukla, Head — Commercial & Rural, HDFC Bank, says “agricultural lending is a higher NPA segment because it goes through weather pattern considerations, hailstorms, rains, less rains, more rains, floods, etc. If you are maintaining a GNPA somewhere between 4% and 5% and you have priced it correctly, then you are all right.”

On Guidance for Commercial & Rural
The guidance we always give is that, look, you should expect 25 to 30% growth rate.

You should also expect a pre-tax ROA of greater than 3%. And that is a pretty healthy number in this particular division.

And that is what, you know, me and my team continue to work day in and day out because as we expand our footprint, which is the reason for our success and the reason that we continue to basically showcase the growth rate and customer additions, that is important. And to maintain that particular growth rate, our ROA, is a pretty satisfying number from banks' perspective.

Once this kind of growth happens, the questions asked are how good is the portfolio, how are you taking care, what are the underwriting practices? First, I want to understand how much is NPA in this particular portfolio, the average one and also the underwriting practices because it is important to keep checks and balances as well. It cannot be at the cost of growth.
I have always stated that if you think about SME business, your GNPA should be in the ballpark of around 1%.

Now, this is where we are and basically the overall nationalized banking system, the private sector bank system is significantly higher and you can get the data from the bureau but this is where we are.

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