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HDFC Bank to double its network in next 3-5 yrs, to open up to 2,000 branches every year

HDFC Bank plans to double its network in the next 3-5 years. To take the initiative ahead, the bank will open up to 2,000 branches every year.Premium
HDFC Bank plans to double its network in the next 3-5 years. To take the initiative ahead, the bank will open up to 2,000 branches every year.

  • The MD and CEO highlighted that the branch will be digital from a customer onboarding and transaction/servicing perspective. It will provide the emotional connection and relationship management necessary for offering financial solutions to customers.

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HDFC Bank MD and CEO, Sashidhar Jagdishan said the proposed merger with HDFC is an opportunity that the bank cannot afford to miss. Following the merger, the CEO announced HDFC Bank's plan to double its network in the next 3-5 years. To take the initiative ahead, the bank will open up to 2,000 branches every year.

Talking about the merger with HDFC, the HDFC Bank CEO said, "We look forward to the phenomenal set of talent, deep product knowledge and expertise, the processes, and systems that HDFC Ltd will add to the Bank’s existing ones."

"Quite simply, this is an opportunity we cannot afford to miss," Jagdishan added.

The HDFC merger brings in robust growth opportunities for HDFC Bank in the housing loans segment.

According to HDFC Bank CEO, only 2% of our customers source their home loans through us, while 5% do it from other institutions. The latter is equivalent to the size of our retail book. Home loan customers typically keep deposits that are 5 to 7 times that of other retail customers.

"And about 70% of HDFC Ltd.’s customers do not bank with us," the CEO said.

Thereby, the CEO added, "all these give us an idea about the size of the opportunity. The long tenor nature of home loans provides resiliency to the balance sheet."

He also said, "we can easily bundle this with a home loan, as with every home loan, there is a propensity of a customer to take new consumer durables. It is this kind of bundling that will increase margins. With the advantage of a lower cost of funds and the phenomenal distribution muscle that we have built, it is imperative that we seize this opportunity."

Also, the enhanced capital position of the Bank post the merger, as per the CEO, means that HDFC Bank can take bigger exposures to leading corporates and power the country’s infrastructure buildout.

Among the key focus area for the Bank to absorb this growth opportunity is to secure enhanced liabilities to fund future growth, as per Jagdishan.

"The branch network has been a key deposit mobilisation engine during its 27 years of growth, leading in customer acquisition, customer retention and advertising the solidity of the Bank and hence garnering liabilities by becoming the primary banking partner for our customers," Jagdishan said.

That said, Jagdishan adds, "Today we have 6,000+ branches across India, and we plan to nearly double our network in the next three to five years by opening 1,500 to 2,000 branches every year."

He highlighted that the branch will be digital from a customer onboarding and transaction/servicing perspective. It will provide the emotional connection and relationship management necessary for offering financial solutions to customers.

Further, these branches will be small in size and will be phygital relationship centres. He said, this will enable us to go after the catchment more aggressively and build the required liability franchise that we are known for, and we are confident that we would execute well.

On April 4, HDFC Bank announced that parent HDFC will merge with the bank to enable seamless delivery of home loans and leverage on the large base of over 68 million customers of HDFC Bank and inter alia improve the pace of credit growth in the economy. The proposed transaction is to create a large balance sheet and net worth that would allow a greater flow of credit into the economy. It will also enable the underwriting of larger ticket loans, including infrastructure loans, an urgent need of the country.

The merger is expected to be achieved within 18 months subject to completion of regulatory approvals and other customary closing conditions.

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