HDFC Bank readies home loan strategy after the merger

The bank is in the process of opening savings accounts for all erstwhile home loan customers of HDFC Ltd. By getting equated monthly instalments (EMIs) to flow from these savings accounts, the bank will then be able to offer other liability and loan products to these customers.

“We want to ensure we have savings accounts of all newly acquired month on month home loan customers. Every two months from now we want to build the customer relationship to a full banking relationship offering all banking conveniences. We have already within the first two months of the merger enhanced the product basket," said Arvind Kapil, head of retail assets, HDFC Bank.

Kapil said 70% of HDFC customers did not have savings accounts with HDFC Bank.

“Most builders are echoing a positive sentiment at the ground level. The festive demand should be at an all time high for both housing and auto loans. Auto dealers are talking of a couple of new launches during the festive time," said Kapil. The business this festive season will be certainly a notch higher than last year, he added.

As a second step, HDFC Bank is in the process of substantially reducing the turnaround time for home loan customers.

The bank is re-engineering its processes and will look at testing the stability of this turnaround time over the next three months.

Kapil added that the bank has strengthened its home loan disbursals to self-employed customers and has expanded its banking surrogate product, in which a loan is given based on the credit profile of the customer based on the statement for the last 18 months from any bank. The bank is also looking to launch an overdraft product soon.

For the festival season this year, he explained, the bank is bullish on both home loans and auto loans.

“We are not expecting an untoward spike in personal loans. Industry is cautious on unsecured lending. We will also be a lot more cautious," Kapil said.

However, the bank is planning to be cautious on the personal loan segment, which constitutes nearly 27% of the HDFC Bank’s total loan portfolio worth ₹16.3 trillion.

“We are expecting a 20% growth in personal loans. We are not expecting an untoward spike in personal loans. The industry is cautious on unsecured lending. We will also be a lot more cautious," he said.

In July, largest home loan financier HDFC merged with HDFC Bank, with the boards of both clearing the plan first presented in April last year.

The total business of the merged entity stood at ₹41 trillion at the end of March. The combined loan book is estimated to be around ₹22.45 trillion, with home loans constituting 35% of the total loan portfolio.