Performance analysis of HDFC Bank and

study of priority sector lending NPAs

with risk practices adopted by bank

Group 3
Submitted To:
Prof. Rakesh Arrawatia

Submitted By:
Amit Kumar Nayak P42005
Vishwajeet p42053
Neepa p42135
Rohit Mukherjee p42097
Rushikesh p42149
Ganesh p42069
 About HDFC
Financial Non-financial
BALANCE SHEET SIZE CUSTOMER BASE

INR 20,68,535 Cr >70 Mn

NET PROFIT BANKING OUTLETS

36,961.3 Cr 21K +
GROSS NON-PERFORMING BANKING BRANCHES

6.3K +
ASSETS (NPAs)

1.17%
Employees
TOTAL ATMs + CASH DEPOSIT
AND WITHDRAWAL MACHINES* 140K +
18,130
*AS PER 2022 ANNUAL REPORT
 LOANS GROWTH DEPOSITS GROWTH

LOAN ADVANCES 2022 RS. Bn DEPOSITS IN 2022 Rs. Bn

13,805 15,592
 RoA over long term

Returns to shareholders over long term

 Reasons for increasing NPAs

Indian banking sector NPAs

14 Slowdown
in
12
economy
10 Irrational
Adverse
lending by
8 selection
Percantage

banks
6

4 REASONS
2
Weak Stalled
0 regulatory sector
2010 2012 2014 2016 2018 2020 2022
laws growth
Year Political
pressure
to lend to
big
Corporate
 How to Tackle Problem of NPAs Mission Indradhanush – 2015 to tackle NPAs
Recapitalization of
PSBs
Appointment

Resolving the Past Improving the

NPAs quality of lending Bank Board
Governance Bureau
reforms in
What are the various steps taken by regulator to tackle NPAs? PSBs

 The Debt Recovery Tribunals  5:25 rule – 2014 MISSION

(DRTs) – 1993  Joint Lenders Forum – 2014 INDRADH- Capitalizati-
 Credit Information Bureau – 2000  Mission Indradhanush – 2015 Framework ANUSH on
 Lok Adalats – 2001  Strategic debt restructuring (SDR) – of
 Compromise Settlement – 2001 2015 accountabi
 SARFAESI Act – 2002  Asset Quality Review – 2015 -lity
 ARC (Asset Reconstruction  Sustainable structuring of stressed
Companies) assets (S4A) – 2016
De-
 Corporate Debt Restructuring – 2005  Insolvency and Bankruptcy code Empower stressing
Act-2016 ment PSBs
 Pubic ARC vs. Private ARC – 2017
 Bad Banks – 2017
 4Rs-  Recognition, Recapitalization, Reform and Resolution

• A large credit database has been created with the Central

Repository of Information on Large Credits (CRILC) to
Recognition identify early signs of distress in a borrower such as habitual
late payments to a segment of lenders. It contains all loans
over Rs. 5 crores and has been shared with the bank

•The recapitalization measures which have been taken to provide

Recapitalization adequate capital for banks dealing with NPA crisis and increasing
regulatory requirements as BASEL - III norms- 

• Debt Recovery Tribunals) DRTs, (Asset Reconstruction

Resolution Companies) ARCs, (Strategic Debt Restructuring) SDR, (Joint

Lenders Forum) JLF among others. These efforts have helped
in the creation of.

• More robust credit risk management: with the regulatory

Resolution reforms like high provisioning for stressed assets, detailed
sectoral and individual analysis of the P/L statement and
financial safeguards against externalities.
  Agri Industry Services Personal Loans Interpretation
Agri 1     
Industry -0.76252 1   
 Strong Negative correlation B/W Industry NPAs and
Services 0.757981 -0.60886 1 
Personal Loans 0.282002 -0.70195 0.584298 1 Agri NPAs
 Strong Positive Correlation B/W Services and Agri
NPAs
Sector Wis e NPA of HDFC  Moderate Negative correlation B/W services and
Agri Industry Services Personal Loans Industry
5.00%  Strong Negative correlation B/W industry and
4.50%
personal loans
4.00%

3.50%
 There is a negative correlation b/w the portfolio of
3.00%

2.50%
Industry loans and Agri, Services and Personal
2.00%
Loans
1.50%
 One Possible explanation may be due to higher
1.00% instability of MSME industry, the same advances
0.50% are hedged in the other three sectors.
0.00%
FY15 FY16 FY17 FY18 FY19 FY20 FY21
Risk practices adopted by bank
Engagement with clients at a much higher degree as a part of the delivery
1 mechanism.
• This not only resolves banking pain points but adds value or brings another level of technology or digitization
and also allows them to pick up early warning signs.

2 Not succumb to the latest fad.

• Using Prudence in Lending by looking at the input and output risks to see what value the project provided
• For eg: HDFC Bank’s stance on most banks’ lending to the much-glorified infrastructure space, in the case of
the power sector, basics like fuel linkages and power purchase agreements were not in place. So no advances
were given.

3 Tailor-Made products for clients

• Client specific products by understanding their business and cash flow patterns, HDFC quickly evolved its
product offerings, which enabled them in maintaining good quality assets.
Thank you!