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HDFC Bank to add 1,500-2,000 branches every year for 5 years – Times of India

NEW DELHI: HDFC Bank proposes to double its community of branches within the subsequent three to 5 years by including 1,500 to 2,000 branches yearly, which might akin to including a brand new HDFC Bank every 5 years, mentioned its managing director and CEO Sashidhar Jagdishan.
Outlining justification for merger of HDFC with the HDFC Bank in his letter to shareholders within the annual report 2021-22, Jagdishan mentioned: “The proposed merger adds an entirely different dimension to the future. We believe that the runway is huge, and we can potentially add an HDFC Bank every five years.”
He additional mentioned that the financial institution proposes to almost double its community of branches within the subsequent three to 5 years by opening 1,500 to 2,000 branches every year. Currently it has over 6,000 branches throughout India.
“The density of branches for the population of this country is way below that of OECD countries. This is where our branch banking strategy comes in. Today we have 6,000-plus branches across India, and we plan to nearly double our network in the next three to five years by opening 1,500 to 2,000 branches every year,” he mentioned.
In early April this year, the Housing Development Finance Corporation (HDFC) and its subsidiary HDFC Bank had introduced a transformational merger, which is predicted to be accomplished in about 15 to 18 months.
Christening the merger because the ‘Power of One’, Jagdishan mentioned the financial institution seems to be ahead to the exceptional set of expertise, deep product information and experience, the processes, and system that the lender will add to the prevailing ones.
HDFC Bank can not afford to miss this chance, Jagdishan mentioned, including that house loans are emotional merchandise and produce with them a bunch of accelerated advantages for the financial institution.
“Today the environment for buying a home has changed. RERA has ensured greater transparency in the process. Price corrections in the property market have seen inventories come down. Also, rising incomes mean that home loan EMIs have come down as a percentage of a person’s income,” the official mentioned.
He mentioned with the penetration of telecom, web and tv companies, the need to personal higher houses has elevated throughout the nation.
“All this means that housing is going to be a huge growth opportunity and one of the key drivers of India’s GDP over the next decade.”
Putting forth the statistics, Jagdishan mentioned that solely 2 per cent of its clients supply their house loans from it, whereas 5 per cent do it from different establishments. “The latter is equivalent to the size of our retail book. Home loan customers typically keep deposits that are 5 to 7 times that of other retail customers. And about 70 per cent of HDFC Ltd’s customers do not bank with us.”
All these give HDFC Bank the concept concerning the measurement of the chance, he mentioned, including that the lengthy tenor nature of house loans supplies resilience to the steadiness sheet. The financial institution is one of the biggest shopper sturdy financiers within the nation.
“We can easily bundle this with a home loan, as with every home loan, there is a propensity of a customer to take new consumer durables. It is this kind of bundling that will increase margins. With the advantage of a lower cost of funds and the phenomenal distribution muscle that we have built, it is imperative that we seize this opportunity,” he mentioned.
Reasoning the timing of merger, he mentioned there are different beneficial elements too similar to narrowing down of the regulatory arbitrage between banks and NBFCs over the previous couple of years, with the reserve necessities coming down to about 22 per cent from 26 per cent.
“Both institutions are well-capitalised and have surplus liquidity and a strong portfolio of investments in government securities. The increase in priority sector lending that we need to do, due to the merger, is possible now with our own increased focus on MSMEs, the affordable housing loans that we can do and the well-developed PSL certificate market.
“All which means on the day of the merger there will not be any want to elevate additional funds to meet reserve necessities. The addition of the house mortgages portfolio on our steadiness sheet makes it extra diversified and strong.(*5*)The proposed merger provides a wholly totally different dimension to the longer term.”
On the capital elevate plans, the lender mentioned it proposes to elevate an quantity not exceeding Rs 50,000 crore by issuing lengthy-time period bonds on a non-public placement foundation.
It will search shareholders’ approval within the ensuing annual normal assembly scheduled for July 16, 2022 for the fundraise plan.
In fiscal year ended March 2022, HDFC Bank reported almost 19 per cent development in its internet revenue at Rs 36,961 crore. Its steadiness sheet grew by 18.4 per cent to Rs 20,68,535 crore.
On the asset high quality entrance, financial institution’s gross non-performing belongings stood at 1.17 per cent of the gross advances as of March 31, 2022.

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