HDB Financial Services is the non-banking finance subsidiary of HDFC Bank. The company had seen loan growth of just 2.3 percent in the second quarter of the fiscal. But now the company is looking at rolling out the new products and are highly confident of higher growth. They have a lot of new products including gold loans microfinance, two-wheeler loans, second-hand car loans, and they are looking at fairly new products.
According to an HDB Financial Services spokesperson, the company had instituted loans for passenger new and used cars and two-wheelers. They had signed a Memorandum of Understanding (MoU) with the top two auto manufacturers in the country. In some industry segments such as commercial vehicle financing, the overall industry is going through a slowdown, which has impacted the demand from customers. Therefore, the second-quarter loan growth of the company was affected due to the lack of demand made by the customers. In the new segment of business loans, the company is being very selective to the customer and had extended the loans to the economically ascertained environment.
The company also follows a more conservative recognition policy on Non-Performing Assets (NPA), which has made the banking system and credit impairment provisions accordingly. Their profits will be higher if HDB’s recognition policy was in line with the one that is been followed by the Non-Banking Financial Companies (NBFCs).
In HDB Financial Services, their customized small business loans are tailored to focus on the funding required for one’s business. By launching the new financial products, the company ensures that its customers enjoy the perfect financial solution required to boost their business needs. Most of their small business loans are at attractive interest rates, with a flexible repayment period.
India Financials spotted that HDB (Housing Development Bank) Fin had reported a loss in the second quarter of FY 2020-21 on the back of large credit costs. But they mentioned that it remains well-capitalized and will have balance sheet support from the bank. The financials expect HDB to remain prudent on their delicate product categories such as self-employed unsecured loans, business loans, vehicle loans, etc., which forms a major part of the HDB’s business.
In a research note, Motilal Oswal commented that the growth of HDB’s advances has slowed, but their new product launches would result in some tremendous hike in the demand for HDB’s Financial Services.