Diversification of products supports aggressive marketing of HDFC

Housing Development Finance Corporation Bank of Sri Lanka (HDFC) was established in 1984 under the National Housing Act as a building society and thereafter incorporated as a government corporation under the HDFC Act No 7 of 1997. In 2003 HDFC became a licensed specialized bank subject to regulation by the Central Bank of Sri Lanka (CBSL). Currently HDFC has 453,507 active customers who have obtained facilities for their housing and other building requirements. Following are the excerpts of an interview held with General Manager & Chief Executive Officer NimalMamaduwa, who was appointed recently.

Q -What are your plans for HDFC?

Nimal - HDFC is the leading financial organization in Sri Lanka in terms of housing and development lending. We have an active customer base of 453,507 catered through the 33 branch offices. Mainly I am looking at strengthening the diversification program, which was started in 2011. Before the end of 2013 HDFC will launch micro finance and SME loans, especially for building houses with the option to have a small boutique constructed on a side and be used as the borrowers' livelihood. In addition to this, remittances are another area where we wish to expand with the commitment of micro finance business. There is potential for small guesthouses in the rural to be financed under the same scheme. HDFC also offers deposit products to senior citizens with attractive interest returns and plans to introduce some special products for women and youth shortly. We are also considering the leasing sector as well. Why would you choose micro financing compared to general areas followed by other lenders?

Nimal - I believe that microfinance is one way of fighting poverty in rural areas. By providing loans to emerging entrepreneurs to start or expand businesses, financial institutions such as ours plays a key role for the betterment of our society at large, helping these societies to become more resilient and better able to provide for their families in times of economic difficulty. We at HDFC bank plan to play a major role in this area. Along with providing more flexible micro finance loans, the bank plans to offer savings and insurance to help these clients. Micro financing can also help create new employment opportunities, which has a beneficial impact on the local economy. We are therefore of the view that small businesses are the future and that the benefits for the country are going to come from that vehicle. HDFC as a responsi- ble bank wishes to engage in the development plans outlined by Government as in the past. There is also an urgent need to rebuild the livelihood of people in the northern area and HDFC will actively engage in housing related finance in the Northern Province with the assistance of the Central Bank refinance schemes. What are the areas added with the diversification starting in 2011?

Nimal-We kicked off the diversification with gold loans. This is seen as a service that can be used in emergencies.HDFC gold loans are different from what other financial institutions offer. With gold being deposited at HDFC we offer loans and the repayment can be on flexible partial payment terms. Apart from that a uniquely designed investment plan for the children - Thilina Rakawaranaya, children's savings account currently has a higher interest rate above ordinary savings accounts, which can be initiated with only a minimum deposit of Rs.500, where on attaining 18 years of age, your child will be entitled to a special housing loan with extra benefits. These are just some of the unique benefits that are offered by us that has always set us apart from other banks. Will you be looking at branch expansions also? Nimal- During this year we may not go for Branch expansion. We need to consolidate ourselves and strengthen our balance sheet. We have carefully planned out our strategies to increase volumes in terms of credit growth which had been curtailed in the year 2012. We have planned an aggressive credit growth during 2013, supported with low cost fund mobilisation. Recovery of NPL Advances is another priority for this year and we have taken steps to strengthen the recovery process. Once we complete these tasks during the current year, we will be carefully planning for branch expansion in 2014 onwards subject to regulatory approval. Any other plans for business expansion Nimal - HDFC Bank is one of the financialinstitutions to accommodate loans against EPF balances. We believe that this sector has enormous potential for growth. We are planning to tap this sector and will provide them facilities within a day. HDFC was recognized at the recently concluded ACCA Sustainability Reporting Award. How would you see this development?

Nimal-HDFC Bank won the Association of Chartered Certified Accountants (ACCA) Sustainability Reporting Award 2012 for the 3rd consecutive year. The ACCA Sustainability Reporting Award has been kept at the apex of the most recognized corporate recognition schemes in the world, especially in the growing field of sustainability reporting and disclosure. HDFC is the first bank to achieve this prestigious award in the same category in succession for the last 03 years it was held. These awards received also tend to subtly spell out the direction the bank has laid for its future performance. HDFC Bank's breakthrough publishing its first ever GRI complied integrated Annual Report in the Banking industry showcases a clear vision of the Bank's overall performance to all stake holders.