HDFC Bank’s CEO Admits Post-Merger Challenges, But Stays Optimistic About Future Growth

HDFC Bank MD & CEO Sashidhar Jagdishan recently shared that things haven’t gone as planned after HDFC merged with its parent company in 2022. In a report by the Times of India on August 10, Jagdishan explained that the banking environment changed significantly after the merger decision in April 2022.

At the bank’s annual meeting, Jagdishan pointed out that their initial growth expectations were based on a stable economic situation. However, things changed when the Reserve Bank of India (RBI) began raising interest rates in May 2022 due to rising commodity prices caused by the Ukraine conflict. These rate hikes made it more expensive for banks to get deposits, which hit HDFC Bank hard as it needed to gather deposits to support both new growth and the assets it took over from HDFC.

Jagdishan also mentioned that customers’ preferences have shifted towards mutual funds, stocks, and real estate. Despite these challenges, he reaffirmed the bank’s commitment to expanding its network of branches, noting that India still has fewer branches compared to developed countries.

He emphasized the importance of growing deposits even if it means slowing down credit growth for a while. This strategy would help the bank benefit when the economic cycle improves. Jagdishan also stressed the value of physical bank branches, calling them essential for maintaining strong relationships with customers, just as they still are in cities like New York and London.