Govt spending to help boost credit growth: HDFC Bank

Mumbai: HDFC Bank on Tuesday said the recent rate cuts by the Reserve Bank coupled with the government's efforts to kickstart infrastructure investments, will help drive the sagging credit growth in the industry.

HDFC Bank Chairperson Shyamala Gopinath said the 75 basis point rate reduction by the RBI since January and the government's focus on infrastructure can help drive credit growth for the system

Credit growth slipped to 12.6 percent in financial year 2015 as against 13.4 percent in FY14, she added.

"Some traction in government-led infrastructure investments, partly by restarting stalled projects could help turnaround domestic credit growth," Gopinath said while addressing the 21st AGM of the second largest private sector lender here.

Gopinath, the former deputy governor of the RBI, also said there is a "limited" scope for further cuts by the apex bank.

She said the improvement in macro stability, visible in the shrinking current account gap and fiscal deficit under control, have created room for RBI to address growth concerns.

She identified balancing growth, profitability and asset quality in an increasingly competitive environment as a challenge for HDFC Bank going forward.

The bank's aims to be a "world-class bank" and will operate in an ethical manner, Gopinath assured shareholders.

Gopinath said the Rs 9,723-crore capital raising done by the bank earlier this year will be used for expanding the book and for compliance with the capital-intensive Basel-III regulations.
The chairperson said the opening of 611 branches resulted in an increase in operating expenses to Rs 13,987 crore in FY15 from Rs 12,042 crore a year ago. But despite this, the bank was able to narrow its cost to income ratio to 44.6 percent last fiscal year from 45.6 percent the previous year.