The bank had received observations from the regulator in respect of the flexible structuring for this particular account.
While advances at HDFC Bank grew 22% year-on-year (y-o-y) in the September quarter, investment in corporate debt saw a decline, Paresh Sukthankar, deputy managing director at the bank, told reporters. The agri book, which had seen repayment pressure in the June quarter, has stabilised, he added. Excerpts:
Could you tell us a little about the discussions around the project loan account that went into restructuring under 5:25 in February 2016? What kind of provisioning have you made for it?
The bank had received observations from the regulator in respect of the flexible structuring for this particular account. The scheme has been implemented through the JLF (joint lenders’ forum) more than 18 months back. Each bank has implemented it on a bilateral basis. We have made our submissions in respect of those observations and have been answering queries and we are still in the process of this regulatory dialogue in terms of our correspondence and discussions with the regulator. Till we reach finality, obviously we are not in a position to comment on what the potential outcome can be. On the other hand, the conduct of the account has been standard and as we speak, there are no overdues. So against this backdrop, and pending any finality that we obviously will have to abide by as per the regulatory decisions, at this point of time we should do what is most appropriate.
Last quarter you said that some of the CASA (current account savings account) deposits have flown into other financial assets. When do you expect them to bottom out and stabilise?
I think what we’ve seen this quarter is that the savings account growth has been maintained, but the current account growth had come off from where we were in June to now. So the CASA ratio is marginally lower, although it’s higher on a year-on-year basis. So we are still better than where we were in September of last year. Also, from June to now, the current account piece has come off a little. Some of this is also a function of current accounts which are related to IPOs (initial public offers) and so on, which were at that point of time open. So there is some volatility linked to that. Frankly, anything which is above 40%, we feel, is a positive vis-a-vis the pre-demonetisation period. In absolute growth rates, we’re still pretty healthy.
You had seen repayment pressure in the agri book last quarter. What’s the update on that?
The agri portfolio is more or less stable. We haven’t seen much of a movement from where we were. In the agri portfolio, since you have repayments based on crop season, you don’t see repayments happen every month or every quarter. It’s something that happens twice a year. So anyway, this was a quarter in which we would not have expected any real movement there.
Has your investment in corporate debt increased between September 2016 and September 2017?
For us, it would have come down a little because as our loan book has grown, we used to have at the same time last year a slightly higher book for investments in corporate paper. Of the total investments in corporate debt, I would say, about 60-70% would be in commercial paper. From where we were last year, our absolute CP outstandings would have come down because we’ve seen stronger traction on the actual lending book.
What share of your floating-rate book is linked to MCLR?
We have roughly 30% of our book as floating-rate. Almost 95-96% of our floating-rate loans are linked to MCLR
