India’s Banking System Has A ‘Cold, Not Cancer’, Says Aditya Puri
HDFC Bank’s Aditya Puri on India’s banking system and the proverbial ‘ladoo’.
Indian banking may need some changes and improvement, but the system in itself is not in dire straits, according to Aditya Puri, the longest-serving head of an Indian private lender.
There’s no systematic issue with the Indian banking system, former managing director of HDFC Bank Ltd. told Quintillion Media's Sanjay Pugalia in an interview. A mere cold, he said referring to the nation's bad loan problem, is being portrayed as cancer.
The veteran banker said 70% of the country’s non-performing assets have already been provisioned for. Yet, people talk about the entire amount instead of the problematic 30%, according to Puri. Even state-run banks have a higher-than-required capital adequacy ratio of 12.5%, he said.
While the industry needs more professionalism and better credit assessment, it isn’t something that’s “difficult to mend”, he said.
Even for public banks in India, Puri said the problems and their solutions are common knowledge. These banks need to improve profitability, enter semi-urban and rural markets, thereby creating a “new middle class”, and are completely safe under government ownership, he said.
Finance Minister Nirmala Sitharaman and Prime Minister Narendra Modi are working on improving India’s financial code, according to Puri. However, "we will only see results once the government works with the proverbial 'laddoo' (outcome) of the reform in mind", he said.
On HDFC Bank’s High Growth
Puri retired from the country’s largest private bank by assets after a 26-year-stint, and has been succeeded by long-time colleague Sashidhar Jagdishan.
HDFC Bank maintained high growth in a decade when a number of financial frauds have rocked the nation only because of the 1.2 lakh people working in the company, Puri said.
Everyone in the system knows the strategy, policies and believes in the management’s vision, he said. “I’ve never asked anyone in the bank to clear someone’s loan... Jis din apan ne aath aane le liye, to baat khatam (the day I take even 50 paise, then it’s all over).”
Puri’s Future
After leaving the banking sector, Puri is interested in health and education, among other things. Asked if he has a specific interest, he said, “Why are you trying to limit my future prospects?”
What he is sure about, however, is that he has to find something to do.
Watch the full conversation here: