India's Best Banks: And It Never Looked Back

In the wake of the liberalisation of the Indian banking industry in 1994, the Housing Development Finance Corporation Limited (HDFC) became one of the first financial institutions in the private sector to get an ‘in principle’ approval from the RBI to set up a bank. The HDFC Bank began to bloom with India’s economic turnaround in the years that followed.

The bank was incorporated in August 1994 with a registered office in India’s commercial capital, Mumbai. HDFC Bank commenced operations as a scheduled commercial bank in January 1995. Driven by a mission to be a world-class Indian bank, it aims to build sound customer franchises across distinct businesses so as to be a preferred provider of banking services for target retail and wholesale customer segments, and to achieve a healthy growth in profitability, consistent with the bank’s risk appetite.

The challenges
The HDFC Bank is committed to the highest level of ethical standards, professional integrity, corporate governance and regulatory compliance. Its business philosophy is based on five core values, operational excellence, customer focus, product leadership, people and sustainability.

Prabhudas Liladhar’s thematic research points to the bank’s “robust revenue that is 33 per cent year-over-year (y-o-y)” and continued strong individual loan momentum that was 17 per cent y-o-y and decline in gross NPA,” which has led to profit after tax (PAT) of Rs 28.2 billion. To quote from the report, “While core book positioning strength remains intact, overall loan growth at 12 per cent for FY19 stood warm.” The same report states that net interest margin securities (NIMs) stood at 3.3 per cent, which is higher than estimated.

The bank’s annual report for 2017-18, says that the RBI had identified HDFC as a Domestic Systemically Important Bank (D-SIB).   The report says, “Your bank recorded an improvement in a majority of its key financial parameters. At Rs 17,486.8 crore, net profit went up by 20.2 per cent. Similarly, at Rs 40,094.9 crore, net interest income rose by almost 21 per cent. The core net interest margin remained stable at 4.3 per cent. Net Non-Performing Assets (NPAs) at 0.4 per cent is among the lowest in the industry. This was largely due to the bank’s prudent credit evaluation of the targeted customer profile and having a diversified loan book spread across customer segments, products, sectors and managing risk-return decisions with discipline.”  

The achievements
The HDFC Bank believes in a customised relationship with customers and an evolved modern experience for them. The bank strives to humanise conversations and transform the way customers interact with it, which sets the bank apart from other competitors. Another revolutionary step  has been the introduction of the AI-based chatbot EVA (Electronic Virtual Assistant) available on all digital platforms, including the website, mobile site, and SmartBuy.

The bank’s performance has earned much accolade for Managing Director Aditya Puri. “As for HDFC Bank’s position in the economy, we think we are very well placed,” says Puri. “We have one of the best brands. We are the only Indian brand in the Top 70 in the Millward Brown survey. Our balance sheet is not under stress in any way. We went into semi-urban and rural India well before anybody else and we are very proud of the fact that by March or June, we will be among the leaders in digital banking globally,” he says.