Some tweaks likely to HDB Financial's business model: CEO Ramesh Ganesan
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MUMBAI: HDB Financial Services , the non-bank lending arm of private lender HDFC Bank , said it may have to tweak its customer acquisition strategy if the Reserve Bank of India's ( RBI ) proposed guidelines on eliminating overlapping business activities between banks and their subsidiaries are implemented in their current form."We might have to make some changes to our customer acquisition strategy in terms of micro-segments that we address that we might choose to stop addressing," CEO Ramesh Ganesan told ET in an interview. "But we don't see a fundamental shift in our business strategy of what we're doing. This is a business that gets done best in an NBFC model."A draft circular on 'Framework for Forms of Business' issued by RBI in October 2024 impacted the bank's valuation as it prohibited the subsidiary from undertaking core lending activities and discouraged banks and their NBFC units from duplicating similar business. Products offered by HDFC Bank such as gold loans, loans against property and two-wheeler loans are also offered by its parent bank which has raised concerns among investors about the growth potential of HDB Financial.Ganesan also said that HDB does not do any business that is uncommon from its parent. "We don't do any business that banks are prohibited from doing, we don't do any business that is potentially an arbitrage," Ganesan said.HDB Financial Services is set to open its Rs 12,500 crore IPO on June 25. The issue will be available for subscription till June 27. HDB Financial Services has set a price band of Rs 700-740 per share.The company has a secured and unsecured loan mix of 75:25, and the management said it plans to maintain those ratios."We think we'll broadly stay in the 75:25 range, that's our comfort zone," Ganesan said. "Different products have different cycles, and if there's a product which goes through a slow period, we should be able to invest capital in other businesses that we expect to grow faster."At the end of March 2025, the company had a total loan book of over Rs 1 lakh crore. Its three main business verticals include enterprise lending which forms 39% of the total loan book, followed by asset finance at 38% and consumer finance at 23%.At the end of March 2025, its profit after tax stood at Rs 2,180 crore while the gross non-performing asset ratio stood at 2.3%. It had 1,771 branches spread across 1,170 towns and cities.On the liability side, 41.3% of borrowings are from non-convertible debentures, 37.7% through term and working capital loans and the remaining from external commercial borrowings, subordinated debt and commercial paper.The non-bank lender also said that it will try and maintain a 75:25 ratio for its fixed and floating rate borrowings."We broadly try to manage our assets and liabilities in a manner that we are not carrying risks or taking bets on events that should happen so that it improves our balance sheet," Ganesan said. "What we try to do is make sure that our assets and liabilities are broadly matched in terms of interest rates. We take on only as much of floating-rate loans as we have floating-rate assets. So that if there is an interest rate movement, we are not adversely impacted."
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