HDFC Bank Ltd. wants to use home lending as a gateway for the world’s sixth largest lender to attract more consumer finance customers with loans for everything from air conditioners to cars and TVs.
The Mumbai-based bank will convert around 530 offices previously specializing in mortgages into offices with full-fledged banking services in the coming months, Kaizad Bharucha said. The deputy managing director of HDFC Bank said his company could post the merger with HDFC Ltd. are now offering home loans in more than three times as many locations, and this is just the beginning.
“When he buys a house, he takes out consumer credit, meaning he takes out credit to buy his appliances,” Bharucha said in an interview. “He has nowhere to go,” Bharucha said.
This is an opportune time for HDFC Bank as demand from retail customers is increasing across India, the world’s most populous country. The country’s banks and shadow lenders are expanding into consumer finance as demand for retail credit has surged 22% over the past year. Intensifying competition has attracted companies like Jio Financial Services Ltd, a subsidiary of Mukesh Ambanis Reliance Industries Ltd, looking to get a piece of the action.
Bharucha added that his bank also aims to increase affordable housing lending and home finance. The company, owned by Life Insurance Corp of India and Singapore’s sovereign wealth fund GIC Pte. supported, make decisions about staffing and the technology needed for the ramp-up, he said.
About 70% of the former mortgage lender’s customers did not bank with HDFC Bank and only 2% of the bank’s customers previously obtained their home loans through it, the company said.
HDFC’s gross non-performing assets are among the lowest of its private sector peers, amounting to 1.13% of customer assets at the end of June.
“We’ve always set guard rails and we’re picky,” Bharucha said. “There is a way to be careful and grow – one doesn’t come at the expense of the other. And we have proven that over the years.”
