HDFC Bank Looks Ahead To Expand Footprint To Semi-Urban, Rural Areas

HDFC Bank chairman Atanu Chakraborty expressed optimism over the bank’s healthy rebound globally in the services, trade and travel sectors at the private lender’s 28th annual general meeting today.

He, nevertheless, expressed apprehension that the pandemic-induced global supply chain issues continue on account of uneven recovery in certain countries, including China and India.

“How much impact monetary tightening will have on advanced economies is yet uncertain. We also witness economies in our neighbourhood, and the emerging ones have also been adversely impacted by trade imbalance. However, nascent recovery in China augurs well for trade. But the International Monetary Fund (IMF) has predicted a lower growth for the year22-23,” said Chakraborty.

India’s gross domestic product (GDP) showed a healthy growth of 8.7 per cent in the year 21-22.

He added: “The government has balanced the fiscal policy well. It ensured care for the needy, supported a massive vaccination programme, and yet pushed large scale capex in infrastructure. Monetary policy was also very balanced, and these ensured that there was no excessive money supply in the system that could stoke runaway inflation.”

Growth Drivers And Future Strategy

Chakraborty mentioned that they have identified retail assets, commercial and rural banking, corporate banking, government and institutional banking, wealth management, and payments as growth engines.

“Towards this end, we believe that there is a big opportunity to take the bank to several underbanked areas in the country. The bank would look at opportunities to further expand the current network of over 6,000 branches to help enhance its liability base, vital for pushing credit growth. This pace of growth also means we will add necessary manpower to cater to our growing customer base of over seven crores,” he said.

Inflation

Chakraborty said that with both the Reserve Bank of India (RBI) and the government undertaking measures to combat inflationary pressures, retail inflation is likely to moderate in the months ahead, providing further support to consumer demand.

“The medium-term outlook of the economy remains optimistic, and macro-economic fundamentals are still strong, putting India in a better position to weather any major global shocks. Therefore, I am not surprised at a projection of growth of around 7.3 per cent in 2022-23, in spite of global headwinds,” he said.

Way Forward

Chakraborty further said that since a large part of the GDP consists of domestic consumption, there will be a healthy growth path during the year. Low level of corporate taxation and a stabilised GST system that is now showing results in the form of higher tax revenues; large amount of spending on infrastructure through the Prime Minister’s (PM) Gati Shakti program will add to this growth, he said.

“It is also based on the following factors - PLI scheme is already showing results and manufacturing would further get a fillip on account of this as well on account of rebound in domestic consumption. This will also bring a larger chunk of global supply chain into the country and create a new and diverse set of demand drivers; services sector is rebounding sharply with IT sector on a sharp growth curve. We see recovery in trade, travel and hospitality,” he added.

He further said that while the previous global crisis had seen the Indian financial and banking sector severely impacted, reforms, and tighter regulation and introduction of technology have ensured that Indian financial sector today is in a position to fuel growth through credit expansion and bring innovations through fintechs.

“Digitalisation at a large scale and formalisation of the economy has made the financial sector more transparent, competitive, and also improved its reach. The capital market is vibrant and well-regulated, and the insurance sector has been opened up. These would, I strongly feel, underpin growth of Indian economy over the next few years,” he added.