New Delhi, Nov 26 (PTI) HDFC Bank on Friday said its board has approved the appointment of former RBI executive director Lily Vadera as independent director. The board of directors of the bank approved the appointment of Lily Vadera as an additional independent director of the bank for a period of five years effective from November 26, 2021, subject to the approval of the shareholders, HDFC Bank said in a regulatory filing.
Vadera, 61, has 33 years of experience in central banking. She retired as Executive Director from the Reserve Bank of India in October 2020.
As an ED of the RBI, she was in-charge of the Department of Regulation (DoR) where she dealt with the regulatory framework for various entities in the financial sector, covering all categories of banks and non-banking finance companies.
She was instrumental in putting in place a framework for a regulatory Sandbox to provide an enabling environment for fintech players to foster innovation in financial services and played a significant role in the amalgamation of banks in stress, the bank said.
She also represented RBI and played an important role as a member of the Insolvency Law Committee set up by the Ministry of Corporate Affairs. PTI KPM MR MR
In August, the lender had said it would recoup its share over the next three to four quarters.
HDFC Bank is looking to tap into the customer base of Chennai-headquartered Equitas Small Finance Bank (SFB) with two co-branded credit cards launched on Tuesday. The target is to issue the cards to 20% of Equitas SFB’s customer base over the next 12-18 months.
The two categories of cards on offer will be the Excite credit card, with a credit limit between Rs 25,000 and Rs 2 lakh, and the Elegance credit card, with a credit limit of over `2 lakh.
Murali Vaidyanathan, senior president and country head – branch banking liabilities, products & wealth – Equitas SFB, said close to five lakh customers will be eligible for the cards. “At a product penetration level, at least two in every 10 customers should have our co-branded card one year or 18 months from now — that is the approach within the qualified base with which we are moving forward. That means we are talking 20-25% penetration of the qualified base which incrementally gets added every month,” he said.
The underwriting for the co-branded cards will be done by HDFC Bank using the processes and algorithms it uses for its other customers. The outstanding amounts will also be reflected on HDFC Bank’s books.
Parag Rao, group head – payments, consumer finance, digital banking & IT, HDFC Bank, said the bank intends to address the under-penetration of electronic payment instruments in India and expand the market in association with Equitas SFB, whose roots lie in microfinance. “We’ve decided that competition and working with competition actually is a merit rather than a demerit and therein comes our strategy of partnerships with other banks,” Rao said.
He said, “Our job, beyond just looking at businesses at HDFC Bank, as market leader is to expand the market and we do believe partnerships and alliances wherein two like-minded entities come together for a co-created product to offer it to a certain set of customers will only deepen the market.”
HDFC Bank leads the credit card market in terms of the number of cards in force, with 1.5 crore cards outstanding at September-end as per data from the Reserve Bank of India. The bank’s incremental issuances took a hit between December 2020 and August 2021 due to a regulatory embargo on new credit card issuances during the period. Rival ICICI Bank took pole position in new issuances during the eight-month period. HDFC Bank is now working to claw its way back to the top. In August, the lender had said it would recoup its share over the next three to four quarters.
The co-branded cards will be issued by Visa. TR Ramachandran, group country head – India, Sri Lanka and Bangladesh, Visa, said credit card penetration in the country stands at about 6% in terms of the number of cards and only 3-4% in terms of individuals owning credit cards.
“There is a large nascent market for everyday digital payments more so on the credit side, because credit is also becoming a day-to-day feature rather than only for luxury and discretionary items, which means grocery, transport, everyday spends particularly —as the line between online and offline payments blurs,” Ramachandran said.
The cards will be issued through application programming interface (API) banking. As a result, there will be no data flow from Equitas SFB into the HDFC Bank system, Vaidyanathan said. “We will let the rule engine decide. We’ll pre-qualify accounts on first sight and then start selling it to our consumers,” he said.
Thereafter, based on Cibil ranking, Equitas will start identifying new-to-bank customers. “HDFC Bank handles only the card side of the issue and they will have the details relevant to the card with them and nothing from liabilities or transactions will be reflected or seen on that side,” Vaidyanathan said.
New Delhi [India], October 19 (ANI): Delhi Police Cyber Cell on Tuesday arrested 12 people, including three HDFC bank employees, for allegedly attempting to make an unauthorised withdrawal from a very high-value NRI account.
KPS Malhotra, Deputy Superintendent of Police (DCP) (Cyber Cell), informed that as many as 66 attempts of unauthorised online transactions were made by the group on the high-value account.
“The accused had fraudulently obtained cheque book which has been recovered. Mobile phone number identical to that of account holder’s US-based phone number was also procured by the fraudsters,” the DSP stated.
“On the basis of technical evidence, footprints, and human intelligence, multiple geolocations were identified. In all, raids were conducted at 20 locations across Delhi, Haryana and Uttar Pradesh,” he further informed.
Out of the 12 accused held by the police, three are HDFC bank employees, who were involved in issuing the cheque book, updating the mobile phone number and removing the debt freeze of the account.
The matter came to light after HDFC bank filed a complaint with the Cyber Cell alleging several unauthorised attempts of withdrawal noticed in one NRI account.
“There are many unauthorised internet banking attempts noticed in one NRI bank account. Further, there have been attempts to withdraw cash from the same account, using the fraudulently obtained cheque book. Attempts were also made to get update mobile phone number in the KYC of the same bank account by replacing the already registered US mobile phone number with similar/identical Indian mobile phone number,” HDFC bank’s complaint alleged.
The police informed that in earlier instances, there were attempts of withdrawal of money from this account, and two cases were registered for the same at Uttar Pradesh’s Ghaziabad, and Punjab’s Mohali.
Further raids are in progress and investigation in the case is being carried out. (ANI)
Mumbai: Citi has opened a 90-day positive catalyst watch on HDFC Bank. The stock has underperformed both Nifty and Bank Nifty this year on concerns over growth, RBI restrictions and retail asset quality stress in the wake of COVID.
Citi said most of these concerns should get addressed starting from the second quarter of FY22. The brokerage has raised target price to Rs 1,900 from Rs 1,800 and retained a buy rating on HDFC Bank shares.
“New credit card issuance should accelerate as RBI has lifted the restrictions. We expect high yielding retail and SME loan growth to improve leading to higher NIM and credit costs to decline, driving healthy earnings and strong RoA (return on assets),” said Citi.
The brokerage has raised earnings estimates for FY22 by 2% and by 3% for FY23 to factor in better net interest margin and lower credit costs.
“We expect HDFC Bank to deliver strong earnings growth of around 24% CAGR (compounded annual growth rate) over FY21-23 and average return on equity of 18%. The stock trades at 3.4 times one year forward price to adjusted book, in line with its 5-yr/10-yr mean valuations,” said Citi.
Private lender HDFC Bank is expected to more than double its technology spends as it improves digital capabilities in line with global peers. The bank could also see rise in cost to income ratio by 3-4% as it looks to compete with tech companies.
“Currently technology spends as a % of opex is around 8-9%, this in our view, will double to 18-20% if management is going to significantly increase investments and is in line with some global peers,” said Suresh Ganapathy, associate director, Macquarie Capital. “Cost/Income ratio may go up from current 36% to 39-40%.”
Ganpathi added that the focus is to decouple monolithic legacy backend systems; improve digital capabilities and UI/UX (user interface), partner with Fintechs and enhance customer offerings.
Analysts are viewing the bank’s renewed focus on technology as a positive step in maintaining and possible improving their market leadership across payments, cards and various lines of businesses. Hiring also will be accordingly tailored to get more tech people giving them a conducive open working environment.
As per Macquarie’s sensitivity analysis, increase in tech expenditure and eventually cost-income ratio can impact its FY22-24E (estimated) earnings estimate by nearly 8%.
HDFC Bank recently partnered with India’s largest fintech company PayTM for payments, lending and point of sale solutions and are likely to get into more such partnerships with many Fintechs in future.
“The bank continues to be a leader in giving EMI-based products at the point of purchase outlets,” Ganapathy said. “When it comes to credit, the bank will be calling the shots and apart from their own strict underwriting criteria, the bank will also use additional surrogate data provided by the Fintechs.”
Private lender HDFC Bank is expected to more than double its technology spends as it improves digital capabilities in line with global peers. The bank could also see rise in cost to income ratio by 3-4% as it looks to compete with tech companies.
“Currently technology spends as a % of opex is around 8-9%, this in our view, will double to 18-20% if management is going to significantly increase investments and is in line with some global peers,” said Suresh Ganapathy, associate director, Macquarie Capital. “Cost/Income ratio may go up from current 36% to 39-40%.”
Ganpathi added that the focus is to decouple monolithic legacy backend systems; improve digital capabilities and UI/UX (user interface), partner with Fintechs and enhance customer offerings.
Analysts are viewing the bank’s renewed focus on technology as a positive step in maintaining and possible improving their market leadership across payments, cards and various lines of businesses. Hiring also will be accordingly tailored to get more tech people giving them a conducive open working environment.
As per Macquarie’s sensitivity analysis, increase in tech expenditure and eventually cost-income ratio can impact its FY22-24E (estimated) earnings estimate by nearly 8%.
HDFC Bank recently partnered with India’s largest fintech company PayTM for payments, lending and point of sale solutions and are likely to get into more such partnerships with many Fintechs in future.
“The bank continues to be a leader in giving EMI-based products at the point of purchase outlets,” Ganapathy said. “When it comes to credit, the bank will be calling the shots and apart from their own strict underwriting criteria, the bank will also use additional surrogate data provided by the Fintechs.”
Private lender HDFC Bank is expected to more than double its technology spends as it improves digital capabilities in line with global peers. The bank could also see rise in cost to income ratio by 3-4% as it looks to compete with tech companies.
“Currently technology spends as a % of opex is around 8-9%, this in our view, will double to 18-20% if management is going to significantly increase investments and is in line with some global peers,” said Suresh Ganapathy, associate director, Macquarie Capital. “Cost/Income ratio may go up from current 36% to 39-40%.”
Ganpathi added that the focus is to decouple monolithic legacy backend systems; improve digital capabilities and UI/UX (user interface), partner with Fintechs and enhance customer offerings.
Analysts are viewing the bank’s renewed focus on technology as a positive step in maintaining and possible improving their market leadership across payments, cards and various lines of businesses. Hiring also will be accordingly tailored to get more tech people giving them a conducive open working environment.
As per Macquarie’s sensitivity analysis, increase in tech expenditure and eventually cost-income ratio can impact its FY22-24E (estimated) earnings estimate by nearly 8%.
HDFC Bank recently partnered with India’s largest fintech company PayTM for payments, lending and point of sale solutions and are likely to get into more such partnerships with many Fintechs in future.
“The bank continues to be a leader in giving EMI-based products at the point of purchase outlets,” Ganapathy said. “When it comes to credit, the bank will be calling the shots and apart from their own strict underwriting criteria, the bank will also use additional surrogate data provided by the Fintechs.”
HDFC Bank expects to increase its credit card issuance to half a million per month by February 2022 riding on its expanded liability base, new partnerships and wider product suite as it looks to make up for the lost nine months in which it was restricted in issuing new cards by the Reserve Bank of India (RBI).
Parag Rao, group head, payments, consumer finance, digital banking and IT, HDFC Bank said the bank expects to get to the pre-ban run rate of 300,000 per month in the next two months and increase it to 500,000 by February in largely driven by new deposit customers added to the bank’s franchise in the last nine months.
“Over the years our business has grown largely on the back of our liability customers and we expect that to continue. Over the last nine months we have added 400,000 accounts every month, this in addition to the 60 million customer base we have will be the main drivers of our growth and we have enough headroom to grow. We already have a pipeline of pre-approved cards based on customer profiles that have been monitored since the ban,” Rao said.
80% of the bank’s new cards are issued to new customers currently and Rao does not expect this ratio to drop much dispute new commercial partnerships the bank plans to launch.
On December 3 last year, RBI barred HDFC Bank from issuing new credit cards and introducing new digital products after multiple glitches linked to digital banking, cards and payments on the bank’s platform were reported in the past two years.
The ban was lifted on August 17 but not before impacting the bank’s market share as number of outstanding credit cards dropped from 15.4 million in November 2020 to 14.8 million in June 2021, even as its closest competitors gained at its expense.
Even as the credit card ban was lifted the RBI still has some restrictions on the bank for new launches of digital business generating activities planned under Digital 2.0. It is unclear how those restrictions will impact the bank.
Despite the loss of market share in credit cards, HDFC Bank remains the largest issuer of credit cards in India ahead of SBI Card (12 million) and ICICI Bank (11 million) latest available RBI data as of June 2021 showed.
Rao said the bank used the last nine months in relooking at its value proporsition, engaging with existing customers more deeply and building new strategic alliances which will be announced starting from the festive season next month.
HDFC Bank has lined 20 initiatives including co-branded cards with tie-ups with travel, fintech, consumption, hospitality and mobility companies among others. These alliances will be unveiled over the next nine months.
Rao said depsite the ban the bank has been able to retain its market share in terms of card spends and spends on its cards are still 1.5 times higher than the nearest competitor.
The bank will use more digital data for underwriting and is also in the process to create a multichannel social media and phone-based hub to address customer greviances.
The bank also plans to increase its footprint in merchant acquiring and point of sale businesses to 200 million from 2.3 million currently, Rao said.
The lender continues to face technical glitches, even as Reserve Bank of India’s (RBI’s) is conducting a special audit of banks’ IT infrastructure.
HDFC Bank on Tuesday said that it was looking into resolving internet and mobile banking issues faced by some customers, according to a tweet by the bank. The bank’s response came after some of its customers reported issues in accessing net banking and mobile banking services yet again.
HDFC Bank tweeted, “Some customers are facing intermittent issues accessing our NetBanking/MobileBanking App. We are looking into it on priority for resolution. We apologize for the inconvenience and request you to try again after sometime. Thank you.”
The lender continues to face technical glitches, even as Reserve Bank of India’s (RBI’s) is conducting a special audit of banks’ IT infrastructure. Last year in December, RBI had temporarily barred HDFC Bank from launching new digital banking initiatives and issuing new credit cards after taking a serious view of service outages at the lender over the last two years.
Later, RBI had appointed an external IT firm for carrying out a special audit of its digital infrastructure. RBI governor Shaktikanta Das had said that the regulator had some concerns about certain deficiencies and it was necessary that HDFC Bank strengthens its IT system before expanding further. Earlier, HDFC Bank’s managing director and chief executive officer Shashidhar Jagdishan had apologised to customers and promised to work on the deficiencies.
Jagdishan said the bank had two outages — in November 2018 and and December 2019 — and it has taken help of external expertise, and had substantially implemented the inputs to strengthen IT infrastructure and systems. Unexpectedly another incident happened on November 21, 2020, and the primary reason for the same was the power outage in the bank’s primary data centre, Jagdishan had said.
Growth in home loans was seen in both the affordable housing segment as well as high-end properties, HDFC said.
Housing Development Finance Corporation (HDFC) has reported a strong 27% year-on year (y-o-y) increase in its adjusted net profit before tax to Rs 2,908 crore in Q3FY21. Strong home sales and an equally healthy growth in housing loans helped the mortgage player post a stellar set of numbers for the December quarter.
Individual disbursements during the quarter rose by 26% against a 32% year-on-year increase in loan approvals. Earnings were driven by an increase in net interest income (NII), which saw a robust growth of 26% y-o-y and 12% quarter-on-quarter (q-o-q) at Rs 4,068 crore.
The strong demand for housing appears to be sustainable and not a case of suppressed demand. The lender said the month of December witnessed the highest-ever levels in terms of receipts, approvals and disbursements.
Keki Mistry, CEO of HDFC Limited, said: “We continued seeing strong growth in demand for housing loans and the growth was better than what we expected in October, when we were fairly optimistic. Our individual loan approvals were up 32% compared to what it was in the quarter ended December 2019. While loan approvals were higher by 32%, disbursements rose 26%.”
The increase in housing demand has not only sustained but has picked up pace even sequentially for the mortgage major. During the December quarter, 91% of individual disbursements were for property deals entered over the past four months, which suggest that demand is expected to remain strong in the coming quarters too. HDFC’s net interest margins increased 20 basis points sequentially and 10 basis points y-o-y to 3.4%. The spread on the individual loan book was 1.94% and the same on the non-individual book was 3.14%.
Analysts reacted positively to the performance, with some brokerages even upgrading earnings estimates for the coming fiscal. CLSA has raised FY22/23 earnings estimates of HDFC by 4-5% on higher margins. Morgan Stanely said HDFC’s retail disbursements and revenue momentum have been strong this quarter. Similarly, Credit Suisse noted that individual growth has remained strong for the lender and the asset quality has been stable with healthy provisioning.
The collection efficiency for individual loans in the month of December stood at 97.6%, compared with 96.3% in September. The loans on the assets under management basis grew 9% y-o-y to Rs 5,52,167 crore, against Rs 5,05,401 crore in Q3FY20. Individual loans comprised 76% of the AUM as on December. The individual loan disbursements grew at 26% over the corresponding quarter of the previous year. Growth in home loans was seen in both the affordable housing segment as well as high-end properties, HDFC said.
In its report, Motilal Oswal Institutional Equities said, “The provisions at Rs 5,900 crore were much higher than our estimate of Rs 4,000 crore.” The report said it expects HDFC to report core return on assets (RoA) of 2% and 13% return on equity (RoE) over FY22-23 earnings. A report by Emkay said HDFC has registered a healthy growth and maintained stable asset quality. “HDFC managed to maintain healthy growth momentum of around 16% y-o-y on an improvement in housing demand across geographies,” Emkay said.
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