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HDFC struggles to keep pace with SBI & ICICI, though the sector is set to boom

“The good retail penetration achieved by the bank in a short span of time speaks for itself,” asserts Rajesh Mokashi, Executive Director, Credit Analysis & Research Ltd, India on the road map for HDFC Bank. Despite such a context, it would be worthwhile to delve on the agony of being HDFC bank, which is in fact the agony of being an also- ran in the Indian retail banking space.

Let’s take a look at what numbers have to say in terms of retail advances (retail banking segment). On the face of it, one can easily predict ICICI bank as the leader, but one has to ultimately fall back on numbers in order to get a grasp of the yawning gap that exists in the retail banking space. While ICICI has a super colossal Rs.1276.89 billion, the second largest player in terms of retail advances, State Bank of India (SBI) bank stands at Rs.735.96 billion. Then we have HDFC Bank, with retail advances worth Rs.283.2 billon. A similar situation is with respect to the ATMs set up to serve the customers. While ICICI has 3300 ATMs, SBI has a mind boggling 6,473 ATMs (an anomaly, but that’s an offshoot of its 200-year old legacy), HDFC Bank is again the laggard with just 1605 ATMs across India. Quite palpably, the numbers show a huge gap, but they only tell one part of the story.

HDFC bank is today seen as one of the most aggressive players in the retail banking milieu. As Mokashi goes on to add, “HDFC Bank is amongst the new set of private sector banks which started operations in the early 90’s. It is a technology savvy bank and is a fairly aggressive player in the retail banking space.” For FY’ 2007, the banks retail advances grew at 33.4 % as compared to ICICI Bank’s 39% and SBI’s 20.53% growth. HDFC Bank’s core strategy speaks the same. According to Neeraj Jha, Head, Corporate Communication, “Our core strategy has been our focus on multi-product branch model, drive customer acquisition and cross-sell…”

Even if one takes a look at the Indian retail banking space as a whole, one could realise that HDFC Bank’s position is not that bad, as the segment has pretty much to offer more to every player. The Indian retail banking space is in fact quite huge and penetration levels are quite low. Indeed, therefore, when it comes to making moolah, HDFC can sit pretty comfortably at the number three position. But with regard to making it to the number 1 or number 2 position, the number 3, yet again, faces an uphill battle...
Edit bureau: Bikram Keshari Jena


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Source : IIPM Editorial, 2008

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