HDFC Bank mid-corporate loan book doubles to over Rs 90,000 cr in 3 years, set to hit Rs 1-lakh cr in Sept

HDFC Bank, which is also the second largest private lender, has more than doubled its mid-corporate loan book to over Rs 90,000 crore in the past three years, and is expected to race past the Rs 1-lakh-crore milestone by the month-end itself, said a news agency report, adding if it maintains its June quarter loan growth rate of 21 per cent in the ongoing quarter as well. Notably, mid-corporates comprise those firms which have an annual turnover of Rs 200 crore to Rs 1,000 crore. 

Out of the Rs 4.07 lakh crore of its wholesale banking book, over Rs 90,000 crore was from the mid-corporate segment, which the bank tags as emerging corporate group, as per the PTI which cited its June quarter balance sheet. The mid-corporate loan book was just about Rs 45,000 crore in June 2016, and it doubled to Rs 90,000 crore in June 2019, a senior bank official, who did not wish to be identified, reportedly said. 

According to the report, around 15 per cent or Rs 9 lakh crore of the Rs 60 lakh crore wholesale loan book are mid-corporate loans at the system level. The HDFC Bank is leading the industry not only in the bulging loan book, but also in terms of the geographical coverage of mid-corporate segment, wherein, it has presence in 49 cities with 180 dedicated relationship managers servicing over 3,500 companies. 

Three years ago, in the mid-corporate segment, the HDFC Bank was present merely in 18 cities, and the number of its clients was around half of over 3,500 now. Over the next couple of years, the bank plans to add at least 10-15 cities more, the official told PTI, adding this has the bank leading the space by at least two times its immediate rival in terms of both the number of centres as also the clients. 

Of the Rs 90,000 crore emerging corporate loan book, around Rs 7,000 crore are the bank's exposure to the debt papers (mostly Commercial Papers and Non-Convertible Debentures) from these target companies, the official reportedly said, adding that 70 per cent of the book is working capital loans. 

The country head for emerging corporate group at the bank, Nirav Shah, attributes the faster growth to the sharper focus and the holistic approach that the bank offers, adding "Banking today is no longer just supplying credit. We don't believe in that either." 

He told PTI, "We offer tailor-made solutions to each of our clients. Be it in helping them better manage cash, supply chains and logistics or even in book-keeping, forex advisory and hedging, we offer all these services for free. I think this is what has helped us grow faster than the industry." 

Shah, who has spent more than two decades at the bank, was quoted as saying that customers are looking for value additions, beyond mere loans today, "which we offer helping us become the most penetrated banker in this segment today". 

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Notably, industrial credit for the system has been growing at 6-7 percent for the past many years, but for HDFC Bank this has been over 20 percent without fail, Shah said but refused to offer a guidance citing the management policy.