HDFC Bank's MD & CEO Sashidhar Jagdishan on the Bank's Dilemma After Merging with Parent Company

Strategic Insights -

The banking landscape has undergone a significant transformation since HDFC Bank merged with its parent company in April 2022. HDFC Bank MD & CEO Sashidhar Jagdishan admitted that the bank's growth rate had not gone according to plan due to the change in the global economic situation. The Reserve Bank of India's (RBI) series of rate hikes, from a 40-basis point hike in May 2022 to a total of 250 basis points, has increased the cost of deposits for banks, affecting HDFC Bank's deposit growth. Jagdishan emphasized the bank's focus on branch expansion, citing the need to increase deposit growth to counterbalance credit growth.

Key Takeaways:

  • HDFC Bank's MD & CEO Sashidhar Jagdishan acknowledged that the bank's growth rate was affected by the change in the global economic situation.
  • The RBI's rate hikes, totaling 250 basis points, have increased the cost of deposits for banks, impacting HDFC Bank's deposit growth.
  • Jagdishan highlighted the bank's focus on branch expansion, aiming to increase deposit growth to counterbalance credit growth.
  • The bank plans to continue adding branches to focus on deposit growth, which would be higher than deposit growth.
  • Jagdishan emphasized that it is in the economic interest of the institution to prioritize deposit growth over credit growth, allowing the bank to benefit from the cycle moving upwards at an appropriate time.

Statistics:

  • The RBI hiked the repo rate by 40 basis points in May 2022 as a response to rising commodity prices.
  • The total rate hike by the RBI was 250 basis points.
  • HDFC Bank plans to continue expanding its branch network to focus on deposit growth.
  • Branch density in India is lower than in developed countries, such as the United States and the UK.
  • Jagdishan emphasized the importance of engaging with customers through brick and mortar outlets, stating that bank branches are still essential in major cities like New York and London.

Sources:

  • "HDFC Bank's MD & CEO Sashidhar Jagdishan on the Bank's Dilemma After Merging with Parent Company", TIMES NEWS NETWORK, Mumbai.