HDFC Bank MD & CEO Sashidhar Jagdishan was cited in a report on August 10 as stating that the bank faced a hostile banking environment after the merger in 2022.
In April 2022, Jagdishan’s lender chose to combine with parent company HDFC, which considerably altered the financial market. However, he stood by his choice. Jagdishan made a statement during the bank’s annual general meeting, pointing out that changes in customer choices and tighter liquidity conditions had affected their early growth projections and changed the state of the world economy.
According to Jagdishan, the bank had originally factored in growth rates based on a stable liquidity environment before deciding to join. This changed, though, when the Reserve Bank of India (RBI) declared that it would begin raising repo rates in May 2022, initially by 40 basis points, in reaction to rising commodity prices that followed the invasion of Ukraine. Along with the RBI’s efforts to reduce excess liquidity, these rate increases totaling 250 basis points raised deposit costs for banks, which had a major impact on HDFC Bank since it needed to raise deposits for both incremental growth and to cover HDFC’s precious assets.
Jagdishan noted shifts in consumer preferences, highlighting a move towards mutual funds, equities, and real estate. In response, he reaffirmed the bank’s commitment to expanding its branch network. He emphasized that branch density in India remains lower than in developed countries and stressed the ongoing necessity to increase branches to enhance deposit growth.
“It is economically beneficial for the institution to ensure that deposit growth significantly exceeds credit growth, even if it means slowing down credit growth temporarily. This approach allows us to capitalize on the upward cycle when the time is right,” Jagdishan said.
He also addressed the bank’s emphasis on physical branches, highlighting their role in customer engagement. “Branches are a valuable platform for interacting with customers. You will still find bank branches in New York and London,” he said.
