GIC-backed HDFC Bank eyes India consumer boom after home loan dominance

HDFC Bank wants to use home lending as a gateway for the world’s sixth-largest lender to capture more consumer finance customers with loans on everything from air-conditioners to cars and TVs.

The Mumbai-based bank is converting about 530 offices that previously specialised in mortgages into ones with fully-fledged banking services in the coming months, said Kaizad Bharucha, HDFC Bank’s deputy managing director. He said his company can now offer home loans at more than three times the locations following its merger with HDFC Ltd, and that is just the start. 

“When he takes a house, he takes a consumer finance loan, which means he’s taking a loan to buy his appliances,” Bharucha said in an interview. “He doesn’t have to go anywhere” else.

It is an opportune moment for HDFC Bank as demand from retail customers surges across India, the world’s most populous country. The nation’s banks and shadow lenders have been expanding into consumer finance as demand for loans from retail customers surged 22 per cent over the past year. The intensifying competition has drawn the likes of Jio Financial Services, a unit of Mukesh Ambani’s Reliance Industries, that is looking to get a slice of the action.

Bharucha added his bank also aims to boost loans for affordable housing and construction finance. The company, that is backed by Life Insurance Corp of India and Singapore’s sovereign wealth fund GIC, is making decisions on staffing and the technology needed for the ramp up, he said.

About 70 per cent of the erstwhile mortgage lender’s customers did not bank with HDFC Bank and only 2 per cent of the bank’s customers previously sourced their home loans from it, the company has said.  

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HDFC’s gross non-performing assets are among the lowest compared with its private-sector peers, and stood at 1.13 per cent as a ratio of customer assets at the end of June. 

“We’ve always put guardrails and been selective,” Bharucha said. “There is a way to be prudent and grow – it is not one at the cost of the other. And that is what we’ve demonstrated over the years.” BLOOMBERG