The private sector bank’s no-holds-barred quest to bump up deposits (and cut back on credit) has only hurt its profitability and put off investors.
When HDFC Bank announced its January-March quarter results of the 2023-24 fiscal year, it seemed to have pulled off the unthinkable. It had managed to shave five percentage points off its dangerously high credit-to-deposit ratio, bringing it down from 110% to 105%.
The bank had capped credit growth to a mere 1.6% on a quarter-on-quarter basis, growing deposits at a decent 7.6%. A thrust on deposit growth (along with slowing loan sanctions) helped bring down the ratio of its total loans to deposits.
This, by any yardstick, is a job well done. Correcting the key indicator of its liquidity—and, by …
Furquan leads the banking coverage at The Morning Context. A business journalist with eight years of experience and a best-selling author, in his earlier stints as a reporter with the Deccan Herald and a columnist at The Banker, he wrote on banking, financial markets and regulatory affairs. He has extensively covered India's debt market crisis, banking crisis and the fall of Yes Bank.
Editor, Banking
furquan@mailtmc.com
Delhi