HDFC Bank: The Best In Class
HDFC Bank continues to plow a deep groove in the lending business, showcasing how banking is conducted
Photo Credit : Ritesh Sharma
Over the years, HDFC Bank has made a mark for itself in the banking industry. Its assets have grown steadily and it shows no signs of stress in the balance sheet, despite the difficult last few years. This bank is leading the way, showing its peers how the business of banking ought to be conducted.
It boasts a balance sheet of Rs 10.63 lakh crore, a remarkable achievement. And consider this: this large bank has enviable NPAs of just 0.4 per cent, possibly the lowest in banking.
It has retained its focus on retail, and continues to do so. Over 70 per cent of its advances comprise retail loans, while retail deposits including time, savings and current accounts comprise 75 per cent of its deposits.
Over the years, it has focused on enhancing its digital capabilities and providing a more seamless experience for customers. Its annual report for 2017-18 states that over 85 per cent of its transactions occur through digital channels. With more than 4,787 branches, that is a tremendous achievement. It enables the bank to deepen penetration, at the same time lowering costs and improving profitability. “This has led to a larger distribution footprint and a superior customer experience, resulting in higher market share at low cost,” Chairperson Shyamala Gopinath professes in the Directors’ Report.
HDFC Bank has also been innovative in technology. In 2017, it was one of the first banks to introduce a humanoid (a human-like robot) at its welcome desk in Mumbai. It is now embarking on a journey to provide a more holistic technological experience to customers, which means it will enhance its technology-driven products, and further improve cross-functionality of services.
Recently, the bank introduced an AI-based chatbot EVA (Electronic Virtual Assistant) on all its digital platforms, helping customers find information in quick time, eliminating the need to talk to a customer-service agent. This bot also works with Google Assistant and Alexa. Further, the bank introduced transactions on Facebook messenger, enabling customers to book movie tickets, check stock prices, book cabs and hotels, and so on.
For its pre-approved banking customers, there is a 10-second loan, and for investors it has started a digital loan facility against securities and mutual funds, where customers can pledge shares online and obtain overdrafts.
The bank is also driving holistic growth of communities through its CSR activities in five distinct areas, ie, rural development, promotion of education, skill development, healthcare and hygiene, and financial literacy and inclusion. In rural development, through various NGOs it has covered 2.98 lakh houses impacting 870 villages.
On the social front, the bank has developed several technological solutions to manage the government schemes, PMAY and MNREGA, among others.
On the financial front, HDFC Bank consistently ranks number one among large banks, and has consistently bagged the BW Best Bank Award. Over the last five years, profits have increased consistently, more than doubling from Rs 8,478 crore in FY14 to Rs 17,487 crore in FY18.
In a recent interview, Managing Director Aditya Puri stated: “I see the bank becoming a financial experience for customers. I should be able to give him an experience that uses technology in a frictionless way, that too, across a much wider product range.”
On the other hand, the bank has consistently had a high return on capital, of 18.2 per cent in FY18, and has struck a 4.3 per cent net interest margin over the past two financial years. In the highly competitive business of banking, HDFC Bank shines a light on the hazy road of banking.