HDFC Bank Sees No Risks To The India Consumption Story, Yet
The quality of HDFC Bank’s credit card portfolio hasn’t yet been affected by the broader economic realities, and the stressed part is half the industry average. (Photographer: Dhiraj Singh/Bloomberg)

HDFC Bank Sees No Risks To The India Consumption Story, Yet

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HDFC Bank Ltd. feels that the India consumption story is still on and it will keep growing the unsecured lending business.

The quality of the private bank’s credit card portfolio hasn’t yet been affected by the broader economic realities, and the stressed part is half the industry average, said Parag Rao, country head-payments business and marketing, HDFC Bank.

“Even when the broader economy is in great shape, you will have some parts under stress. Consumption story is still on,” Rao told PTI.

Rao, however, did acknowledge that there is an auto slowdown in India, but that does not mean that the overall consumption story is down in the dumps. “High capex over the past six-seven years has resulted in plateauing of growth, which is not akin to a fall.”

Rao’s comments come at a time a fall in consumption, one of the primary drivers of the unsecured credit card segment, is being blamed for the deepening slowdown in the Indian economy.

About delinquency rates, Rao said HDFC Bank has always been assessing risks in a defined way and putting in adequate systems in place to ensure lowest delinquency rates.

The bank’s delinquency rates are half of the industrys average, he said, without quantifying it. An industry source said average overdue for over 30 days for the cards industry stands at 4-4.5 percent.

According to Rao, only a fourth of HDFC Bank’s credit card user base is new to the bank, while others are existing relationships. This ensures lower delinquency.

The bank, which launched a new proposition to the millennials over the weekend, is aiming to keep growing the unsecured book, Rao said. When asked if the bank has sufficient headroom to grow, he said it is comfortable from the board-approved, portfolio-level perspective to grow this business.

HDFC Bank has a portfolio of 1.27 crore card outstanding, according to Reserve Bank of India’s data for June. Its credit card outstanding in the quarter ended June stood at Rs 49,253 crore, growing both sequentially and year-on-year.

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