Good morning, ladies and gentlemen. Welcome to HDFC Bank's Annual Analyst Meet 2022. We are ready to begin our first session. For that, I would like to invite Mr. Sashidhar Jagdishan, Managing Director and Chief Executive Officer, Mr. Kaizad Bharucha, Executive Director, and Mr. Srinivasan Vaidyanathan, Chief Financial Officer, to present overview of the bank.
Okay, thank you. Should we get started?
Yes.
Okay. We'll get started now. Good morning to all. We'll have Sashidhar open the conference and talk for some time and various topics that he will cover. At the end of the session after he's concluded, we'll have enough time for question and answer session across this room for however long we all want. With that, without much ado, Sashidhar , you want to get started?
Yeah. Thank you. Thank you all for coming over here. It's such a great pleasure to meet each one of you in person. Sometimes, you know, while Zoom calls are efficient, but it's always a pleasure to meet all of you in flesh and blood at least once in a way. I know ever since fourth of April, a lot of questions. We've been bombarded with a lot of questions as to what is the rationale for the merger. Before I get on to that, I think let us try and just go through as to what has happened over the last couple of years in a nutshell and where we are positioned both from an economy perspective and also as a bank perspective.
I think, I must say that when you start to travel, when you start to look at all the economies across the globe, I think India has navigated the pandemic rather well, rather admirably. I think all of you would agree. I'm not an expert, but I think when you compare with all the economic metrics, I think we have done reasonably well. That's number one. Number two is, in March, we were exiting very beautifully, both from an economy perspective and also as a bank, exiting COVID. I think, interest rates were reasonably benign. Inflation was benign. I think, we were probably on a roll as an economy, and we had at least projected a 9%+ GDP growth for FY 2023.
Unfortunately, as all of you would know, I think, the Ukraine-Russia, so-called special operation, was a spoilsport and you started to have a lot of these metrics go awry. Having said that, I think, even inflation probably peaked as we speak in September, in April. I think the kind of orchestration between both RBI and the Ministry of Finance or the government, I think has been admirable in terms of to see a gentle landing. We probably would expect the inflation which will come down and then go up to about peak in September and then go back to the pre-COVID levels by March of 2023 and that is our expectation with reasonable conservatism of the oil prices here.
I think that is something that we should be extremely happy about. Interest rates, I think the governor probably has explained it so beautifully in his remarks both at the MPC and also in subsequent interactions with the press. I think what we have seen of 140 basis points, maybe another 30-50 basis points is what we probably would expect. Having said that, whether it is the inflation numbers, whether it's the interest rates, whether it's the delta in the interest rates, I think the country has seen it over, if you look at the last 10-year history, I think we have seen all these levels before, and we have had a reasonably healthy growth rates of about 5% and 8% over the last 10 years.
Similarly here, too, I think our expectations of about 7.25%-7.5% of a GDP growth will still be one of the best, globally. Even if, for whatever reason, oil becomes a bit stubborn and moves to $115-$120, I think we still will see a reasonable amount of growth which will not be, visible in any parts of the world. To that extent, I think from a macro perspective, India is very resilient. We are in, despite whatever people may say in terms of, you know, some amount of shocks, I do believe that, yes, the people, the lower income, the low-middle and the lower middle income will get impacted, have got impacted with the kind of high inflation.
You will see some amount of their discretionary spends being postponed. Otherwise, the middle and the upper middle income, I think, where largely it's salary-based, we have seen a fair amount of wage inflation to absorb these kind of inflationary impact, I think should continue to be buoyant in terms of spends, in terms of their demands for credit, and that is what is going to be driving the economy. I think India has a lot of levers before I just close on the macro side. I think whether it's a China plus one strategy, whether it is the fact that in 8-10 months time, one should.
I think you will start to hear this from Kaizad and from Rakesh and Meera later on, the kind of CapEx, the government capital expenditure that is likely to be unveiled in about 8-10 months' time or even private CapEx. There are certain sectors which had prior to around February, March, you know, decent amount of people who probably would have put up an unreal private capital expenditure drawing plans. But they may be postponing this for a while, but still, there is a huge amount which is likely to come up once things become rather normal. In that context, I think we are probably India is a great destination to be in. We are privileged to be part of this country, and more so in financial services.
I think a $3 trillion economy going to a $5 in 7 and 8-12 years' time is something that is very much doable. We are a play on Indian economy. I think there's an echo.
There's an echo from that side.
Hello. I think we've always been a play on the Indian economy, 60% being consumption, whether it's retail or corporate consumption. I think we have been well-positioned that. We're also equally well-positioned on the term side or the capital expenditure side, and also on the government spending, where we are now with a renewed interest getting into the government business as well. As a company, I think we will be riding this wonderful wave of what India is likely to give us over the next five, 10 years. We will be the third largest economy in the world after the U.S. and Japan, so it's something that we're all eager to be well-positioned.
You know, when you look at even the other indicators, you look at the per capita GDP on a purchasing parity basis, I think at $7,000+, I think we are one of the, we are equivalent to probably where U.S. was in 1982. We are at an inflection point where the demand for consumer durables, the demand for financial products is gonna be on the rise. We're well-positioned on that from an economy perspective. This is where we are. In addition to that, I think what has changed and what is something that adds to our interest, and that is the reason why, and I'm sure a lot of people would be waiting to hear as to our thought process, our rationale of the merger.
I know we have not gone onto the media too often. While HDFC Limited has shared their side of the story, I think it's important that you sort of hear our side of the story as well. Let me just tell you a story. I think this is sometime in May of 2021. I think we had a strategy session in the bank just post the wave two. You know, we did sort of invite a lot of macro strategists in the meeting. One of the themes that the macro strategists covered was on the housing sector. All of you probably know this, that the housing sector has been languishing for a long time.
It was not for anything, it is purely from a self-discipline perspective from this builder-developer fraternity. I think, you know, all of us have been victims of that, where we realized that, you know, projects used to get hugely delayed. The delivery of homes used to get anywhere between 6-10 years. This was a kind of a melee which was there in the system. The people, really, citizens got a bit disenchanted about it. One of the best regulations that could come about during our post-75 years of independence was the RERA Act. I think that was a clinching, that was a game changer. All of us know that this particular act had a lot of teeth, and therefore you had some amount of a fear psychosis in this particular fraternity.
At the same time, in 2014, the Reserve Bank of India started the asset quality review of banks. You had the IL&FS issue, the asset quality reviews spilled over to the NBFCs as well. I think a combination of the asset quality review, a combination of what happened in RERA, I think strangulated these developers and the builder fraternity, where one needed to ensure that you had huge amount of financial discipline as one would expect any other entity to be. That was a game changer. That sort of changed the entire thought process, et cetera. The builders had nowhere to go. They had to drop their prices by about 20%-25%.
You started to see as we were entering COVID, apart from bankers, apart from capital markets, I think the only other sector which had a lot of buoyancy during the start of the pandemic was housing sales, and you started to see that going on an upsurge. By the time in March 2020 to June 2020, you started to see the financial balance sheets of developers become better. Two, the inventory levels came down from a 60-month to a 20-30 month. Three most important, the affordability. I think with wage inflation for over the last 8 years, the affordability of end consumer was huge. In a take-home pay of INR 100, the home loan EMI used to be about INR 50, and now it has come down to about INR 20-INR 22.
That is what the macro strategist has told us in our presentation. In addition to that, thanks to media, thanks to internet, thanks to communication, the aspiration levels of people to have a decent home really has gone up tremendously. No more is it restricted in the top 100 towns of the country. Now as you go down to the tier 3, tier 4, tier 5, tier 6, whether it is a Palanpur, whether it is Joginder Nagar, whether it is Manali, whether it is even, you know, even beyond, whether it is Haldwani, you will see the demand for good homes taking a kind of a geometric progression. You know, the estimate that people, the experts have put in is 2.5 billion home loans, 2.5 billion sq ft of home space.
That is the kind of demand that is there gonna be from the housing sector. This is gonna power Indian economy in addition to whatever I've just said over the next 5-7 years. When this was presented and when we realized that where are we in this particular space, it was a bit of a shocker because here we have one of the largest distribution. The macro is telling a lot of things which is gonna be powering Indian economy, and we've always waxed eloquent on having a great arrangement with HDFC Limited in terms of distribution of home loans. What happened? We were not there anymore. We were probably. You know, all along in these 27 years, we never realized it, A, because the sector was languishing, and we had lots of things to grow.
We had our plates full. Not that we didn't have our plates full, we still have our plates full. At mortgages, we have a runway over the next 20, 30 years, no problems at all from a growth perspective. When you see another sector which can overlay on whatever we are trying to do, and we're not there in its truest sense because there are a lot of others who are doing 3-4 times the distribution with a. It became a bit of a shocker for us. Our young CFO had presented in the same forum that, where do we stand on this? He made a lot of revelations, he and his team, to all of us. I'm not too sure whether the leadership team is aware, but he did.
Number one is we realized that out of our 70 million odd customers, only 2% of our customers had an HDFC home loan. That itself was a shocker because when you look at some of the presentations as we go by, you had credit card penetration, which was in the 20s. You had the unsecured penetration, which was in the 10s. You had vehicle loans in about 6%. But the home loan was just 2%. That is very surprising. Then he made another revelation. He said that, "Look, while 2% have taken loans, there are 5% of your customers who have taken loans, home loans from smattering of lot of other banks, and this cluster of 5% is equivalent to another HDFC retail bank." That was a shocker.
That sort of really made me sit to say that, "Look, what are we missing? Why is it that we're not really selling home loans the way that we are supposed to do considering the fact it's a very emotional product?" When you peel the onions and go down, then you realize the ground reality. If you take any product for us, we have, over a period of time, whatever products we have manufactured, whether it's unsecured, whether it's credit cards, whether it's vehicle loans. When I say vehicle, it means auto, two-wheeler, loan against property, and you name it, your merchant loans as the case may be.
We have a lot of analysis about a customer, and we have enabled our frontline staff with tools, thanks to analytics powered by AI and ML, where we will know the propensity of a product that a customer is likely to take. We also now have the ability to have the right narrative to even go behind this particular script. Now, when you have that kind of a tool enabled in front of you know, these are all youngsters age of 23-30 at the front end. They have a lot of confidence in engaging with a customer. You know, if someone comes in and says that I need a car or I need a home loan or a personal loan, the confidence at which he or she talks is immense. There is a.
You know, they would like to talk about something which they can suppose he has been searching for an auto loan on the web, and we get to know that. You know, the confidence that this 20- and 30-year-old has in front to talk to a customer saying that, "Sir, I believe you're searching for a car. We have an approved loan, a pre-approved sanction of a car loan for about INR 20-30 lakhs." As the case may be, look at the confidence that the youngster will have. We can get, take it in 10 seconds. We have, as one would see in the presentations in the future, you can see it in the website. We have a huge amount of pre-approved offers for all our manufactured products, and that is visible to the front end.
When it came to a home loan, unfortunately, because it's a different organization altogether, we don't have that visibility. The frontline people don't have that visibility. The customer walks in, he applies for a home loan, we just scan it and send it to HDFC Limited. In fact, average turnaround time is about 8-10 days. In fact, when we just returned from Himachal Pradesh, Uttarakhand, and I was very surprised in some of the locations it was even 15 days. There was a request whether you can cut it down to 6-7 days. This is ground reality.
When you have an average turnaround time of 8-10 days or even 15 days in this day and age and era, you know, people are not gonna really wait for this long unless, and until they love your brand so much. That explains why 5% of our customers took home loans from outside. That is reality. They have their own compulsions. There's no, there's no fault of anybody out here because then I'll explain to you and when you ask questions as to why is it that we did not resolve this. Because ultimately, you know, when you look at we have 6,300+ branches, there's just about. They had only 600 branches, so obviously the distance between the two is only limited.
You know, when you have such width in distribution from HDFC Limited, therefore the turnaround time would be longer. They had their own compulsions as to why they did not expand their distribution, and we'll talk about it. This is ground reality in the sense that, you know, the macro is screaming that housing sector is gonna be powering India's GDP over the next 5-7 years. You had one of the best products, which is HDFC home loan. We have not harnessed our customer base. We have not harnessed our channels, our distribution strength. This is something was quite counterintuitive for us.
We said that, "Look," and I remember this, the word that he used was, "We are gonna be missing out on an opportunity." That is what he presented to all of us way back in May 2021. There were two things. Number one, we go back to HDFC Limited and then probably ask as to how we can repair this, or we have to think of something else. Now, the other aspect was, can we merge? I remember the last time we did this exercise was in 2014, and we had the model, and it did not make economic sense at that point in time. I'll explain that to you as well. He used the same model from May 2021 and probably worked on it along with his team.
Sometime around October, he came back to me to say that, "Look, you know, contrary to your expectation that you were not too sure whether it'll work, but it seems to be ticking all the right boxes." I was a bit surprised. We were all a bit surprised saying that, "How is that possible?" Obviously, a lot of things have changed from 2014, and what were they? In 2014, the balance sheet of HDFC Limited was about INR 300,000 crore. Out of which INR 2.25 lakh crore was retail, and the INR 75,000 crore was non-retail. On a INR 300,000 crore balance sheet, the regulatory threshold for SLR and CRR was about 26%-27%. 26% probably. You take, say, approximately 30% on 3 lakh.
Somewhere between 80,000-90,000 crore INR was the requirement of SLR and CRR. Now, what is the way? We had to raise incremental funds and then put it in G-Secs for about 80,000-90,000 crore INR. At that point in time, the bank's capability or capacity was about 60,000-70,000 crore INR of liabilities in a year. Just imagine to do another 80,000-90,000 crore INR of taking liabilities and putting in government securities. This was a tall order. Also, the priority sector requirements. A 300,000 crore INR adjusted for whatever, 40% was the requirement. You had a lot of exemptions. Net of that, again, it came to about 80,000-90,000 crore INR. Another 80,000-90,000 crore INR had to raise deposits and put it either in PSL assets or in rural infrastructure development funds.
Combined basis, the requirement was 80 + 80, about roughly INR 160,000 crore of liabilities that we had to raise and put it into either government securities or in priority sector assets. This is a tall order for an engine which is doing INR 60,000-70,000 crore of liabilities. I think respectfully, both in leadership teams, I think said it is not making sense, so let us, shelve it till it made economic sense, till the regulations change. We moved on. A lot of you know, kept on asking, and I think we sort of, did explain this eight years ago. And now, in the last eight years, a lot of things have changed. The regulatory threshold itself has come down from 26% to 22%.
Two is large NBFCs, thanks to the IL&FS issues, the Dewan Housing issues, I think the regulator rightfully put in the liquidity coverage requirements on large NBFCs. Eight years ago, HDFC Limited had INR 4,000 crore of government securities. Now they have INR 40,000-50,000 crore of government securities. Right from October 2017, the bank ourselves have been maintaining excess SLR beyond our requirements. That is something that we have consistently been doing. When you really look at the requirement today, they have a 5.5 lakh crore balance sheet or a 4 lakh crore liability. When you look at the requirement of SLR and CRR, net of all the exemptions that they can, it's roughly about 70,000-odd crore. Today, there is an excess with them. There is an excess with us.
We believe that at no point in time do we need to raise incremental liabilities to be put in government securities because we have excesses out here. This is the one part of it, which is very clear. Comes the priority sector. When you look at the priority sector requirements, that has not changed. That's still about 40% of the total balance sheet, which is roughly around INR 150,000 crore, Srini? Yeah. Yeah, here it is. It's INR 125,000 crore. Now, you know, there have been a lot of innovations in the last eight years.
One of the best innovations that one could think of is the priority sector lending certificates, where people with excesses sell their priority sector for a fee, and it's a screen-based trading, and people with shortfall buy it for a cost. At least now you don't have the kind of a drag to raise incremental liabilities further to put it in priority sector. At least 50% of that, because the market is about INR 6 lakh crore and it's growing about 10%-15%. At least 50% of what we are likely to need will be out of the priority sector certificates. The balance 50%, which is about INR 80,000 or 90,000 crore, which is our share, is something that we have 33 months from today.
18 months for the approval is the approximate time, and then another 30 months from the date of the effective date of approval. We have enough time to sort of generate liabilities in any form and then put it either in priority sector assets or even in rural infrastructure development bonds. When you look at the entire, what is required now from a regulatory perspective is much, much, much smaller than what we felt 8 years ago. The last but the most important thing is on the purchase consideration itself. HDFC Limited 8 years ago used to be priced 6 times book. Their share price was about 1.3 times that of HDFC Bank. Today it is about 0.8 times that of HDFC Bank. The purchase consideration has come off significantly.
They are about 3.5 times, very similar to that of HDFC Bank. What happened was, what happens is when you take the $40 billion as a net capital into net assets into your balance sheet on the merger, there will be a day zero dip in return on capital or return on equity. But you have within, because the purchase consideration is much lesser now, the ROEs within the 4-5 years time comes back to your pre-merger ROEs. That is what we realize at the normal growth rate that we're talking about. The return on asset is one of the few housing finance companies which had a return on asset of 2%+. From an ROA perspective, it's not dilutive at all.
From an EPS and a book value share, because there's going to be a cancellation of the 21% that he's holding in us, which is now inhibited with a holdco discount, it'll suddenly be accretive for from an earnings per share and a book value per share. When you see all these metrics, when you see. What are we trying to see? There's a macro which is screaming that this is going to be a sector you cannot miss. You have to be there. It's a great opportunity overlaying on otherwise, whatever we have, we have been doing for 27 years. Two, the micro, all the micro indicators suggest that the task of raising liabilities is to that extent much lesser. The financial parameters are positive, so why don't we then start and talk to them?
This is sometime in October or November of 2021, we made the first pitch. You know, concrete to belief, we batted on the front foot. Normally, for 25 years, we were always on the back foot to say that, "Hey, we are not too keen," or whether we're not too sure about it. This time around, we went on the front foot saying that we want this merger. This is sometime in October. We came back after mulling it over by about February end or so. I think we said that, "Look, I think if you are keen, let's execute it as quickly as possible." That's how, you know, March and April, I think, we really concluded on a lot of these things.
Here is, you know, our side of the story, where we believe that it's a scale opportunity for us. Here is a one in a lifetime opportunity for the organization to double every five years. That's the kind of an opportunity we're looking out for. Overlaying on all the underlying. If the organization had a visibility of 30, 20, 30 years of runway, I think you will be surprised that we will have a runway of 50 to 100 years. This is gonna be a durable organization. Look at the benefits that's gonna accrue for this. Number one, a home loan is a very emotional and a sticky product. Anyone who is wanting a home loan for self-consumption is going to ensure that they would not like to default. That's the mindset.
He or she is likely to maintain better balances to ensure that when the EMIs come in, it does not bounce. You look at the track record, the 2% of the home loans which were sold in HDFC home loan, the 2% of the 70 million base which were sold, HDFC home loan had balances which is about 5-7 times the normal average balances. That's the kind of liability potential that is there when you cross-sell a home loan. The second one, for every home loan, people would want new furnitures, new kitchenettes, new consumer durables. We are the largest consumer durable bank outside of Bajaj Finance, and here is an opportunity for us to bundle this product along with every home loan that we sell.
Look at the bundling opportunity that'll emanate out of this particular one particular product. The third one. For 27 years, I think the bank, its credit architecture has excelled in its unsecured lending. When you look at whether it's corporate, whether it is SME, whether it is retail, we have one of the best well-executed unsecured portfolios ever, even including globally as well. Our proportion is 35% of our total advances is unsecured. Now, whether it is the leadership team out here, whether it is the board, whether it's regulator, all of us will have a little bit of a jitter when it comes to, oh, is it's a bit high risk and it is large. Whilst we are very comfortable all this while, but there will be always this inhibition in our minds.
Just imagine how this would change the game when you have this proportion. It'll come down to a 20-25%, and that is the kind of runway that we have. We will have even an unsecured, because it's our marquee product. We have done it so well. Look at the opportunity that it'll have, multiple opportunities when you sell a home loan. A, growth, B, liability franchise, cross-selling opportunity, and a further runway for our unsecured products as well. So when you started to think through, I think here is an opportunity, and I normally don't sort of provide any guidance. You know, today on the effective date, we will be $6-$7 billion of profits that get accrued on an annual basis.
In five years' time, you look at the math, you work out in terms of the reasonable growth of between 18% and 22%, anywhere between that, you will come to a $14 billion-$15 billion of profits. That's the kind of scale we're talking about. This is gonna be a scale opportunity. I think, let me pause out here. This is our rationale on this. I think the bank has adequate enough avenues. Growth is not gonna be an issue at all. It's gonna be pouring out of our ears. I think the only limiting factor is gonna be liabilities, and I will explain to you the strategy as to what we're trying to do on the liabilities part of it. As of now, let me pause out here and take any questions.
Hi, thank you for the story. That was really interesting. Thanks. One first question is on the.
Mic. If you have a mic, please. Yeah.
You said that the bank will double balance sheet every five years.
Yeah.
which will be on a merged basis as well.
Yeah.
Right? Of course, you will explain on the liability front, but you know, growing so fast on a merged balance sheet, will you be able to garner so much liability?
Yeah, good question. As you can see that particular chart out here, you know. This is not new for us. Time and again, right from 2012, all of you have been asking whether we'll be in a position to grow, even when we did the Centurion merger. When you look at our track record over the last, you know, whether it was between 2012 and 2017 or 2017 to 2022, we have grown more than 2.4 times, which means that we have probably doubled in less than five years. Okay. Size is not a matter at all for us. It's not, because we have the runway.
Let's face it, we are just eleven and a half percent of the total banking system. Even after merger, we'll be about fifteen percent of the system. It's not about the size, it's about, A, do you have the distribution? We have the distribution. B, we have multiple channels. We have an alternate banking channel, which is going to be covering the various other aspects of it. It's going to be a kind of an octopus kind of approach, hub and spoke, which will ensure that wherever the branches are not there, you will have the business correspondents and the business facilitators trying to get it. We have. You know, the other aspect of it is the capital. We have enough capital now. We have capital enough for growth. We don't need capital all the way until 2030, probably.
All our franchises, whether it's corporate, whether it's SME, whether it is retail, all of them are firing on all fronts. Our asset quality, our book is extremely good. You're right. One of the most important aspects of the levers for growth is liabilities. What are we trying to do? We are gonna be virtually creating something very titanic, and that is, we're gonna be adding about 1,500-2,000 branches a year for the next 3 years. It's gonna be a tall order, but we are virtually going to be doubling our distribution from now to then. It's important. You know, here is an opportunity, and why not? When you really look at it, the branch is an extremely important fulcrum for garnering deposits.
When you look at the, you know, the vintage of our branches, of our 6,300 branches, and when you see the 0-5 the vintages which are 0-5, 5-10, 10-15, and greater than 15. If branches in the 0-5 are generating X amount of liabilities, in a 5-10, it'll be 3X. In greater than 10, it'll be 10X, and greater than 15, it'll be probably 25X. That is what it shows up here. We have a fair amount of vintage which is less than five years. 60% of our branches are in the less than ten years.
Look at as it migrates to the higher vintage, look at the kind of potential that's gonna be there in terms of deposit mobilization. One of the most important aspects of it is that we will be trying to ensure that we add more and more distribution points. You will fundamentally have another question, and I'm trying to preempt that in this age of digital era, is it appropriate to add branches? Frankly, India's demography is different than anyone else, anywhere else. You know, we are today, the average distance of a branch is about 6-7 kilometers even within our own. All of us in this room, we all agree that we don't travel 5-7 kilometers to go to a branch. It's quite a tall order. We want the concentration to come down.
You have enough room to expand. In fact, there is a huge amount of a liability part available in the semi-urban and rural. We have reorganized our branch banking recently to tap into that, to have a separate Vishesh on the rural semi-urban. Because ultimately, if you look at the credit deposit ratio, it's 30% there, which means that there's a huge amount of liability part. We didn't wanna confuse with the overall branch banking, we wanted to have a separate Vishesh, and that is the reason why we're gonna be focusing on liabilities through this new carving out of the organization within branch banking. The second aspect of it, apart from expanding our distribution, we are gonna be. When you look at the 70 million customer base, our penetration levels on time deposits is very limited.
It's just about 14 odd %. Now, you may wonder as to why is it that we have not done it. See, when you look at our track record all these years, we have had enough funding just to take care of our growth. You take an FY 2021, we grew incrementally INR 100,000+ crores of assets. We had INR 100,000+ crores of granular liabilities during that period. In FY 2022, we grew INR 200,000 crores of assets, and we had INR 200,000 crores of granular liabilities. The bank and the engine and the machinery has the ability to raise liabilities to the extent that it requires. No problems. Now, I know this is important. This is something very important from a leadership perspective.
This is one of the things that we discussed very intensely within our own asset liability committee meetings. You will be surprised that we will be pushing up this liability engine now. We will try and demonstrate. It may not be now, but maybe in the coming quarters, you will start to already see the liabilities growing faster than the assets. That is the kind of objective which is on us. It's. See, when you have growth staring at us, when you have growth opportunities pouring out of our ears, we will do whatever that is required. We are, after all, an execution engine. We have done it admirably over the last 27 years, and I don't see any reason why we will not be able to raise incremental liabilities to fund this kind of a growth.
Does it automatically mean that in a tight interest rate environment, you would see HDFC Bank taking the lead in hiking savings rate or?
No, no, no. Number one, we have never sort of been on an outlier on rates. I think we have managed this by being on par with some of the larger banks, and we will continue to do so. It's not about, you know, raising that extra rate to get that deposit. That's not. We're not gonna do that. We can afford to do that as well, and let me explain that later. The reality is that, you know, our sales process at the front end has not been used to asking for liabilities, asking for time deposits. It's a new ask. It's gonna be part of the scorecard, hopefully.
You know, the moment you have the leadership team, you know, driving each of the leadership teams, whether it is the branch, whether it's on our virtual relationship management programs, whether it's on the alternate channels, whether it's the MSME businesses doing the self-funding, whether it's corporate side now raising liabilities to fund their assets. You know, the moment it becomes a part of a focus, a key objective, willy-nilly, nine out of 10 times we have always met it. This is gonna be a challenge. This is gonna be our execution responsibility on part of the leadership team, and that is what we're gonna be doing that. We are not gonna be changing rates. We are not gonna be spoiling rates. We are gonna be just using the same rate structure that is there in the market.
Sure, it will go up, but so will the yields. We will be focusing on just ensuring that our sales process ensures that we start to ask and have the penetration move from 14% to a larger number. Mind you, look at the kind of scale that'll happen. A 1% swing from 14% to 15%, you know, will generate $5 billion-$6 billion of additional liabilities. That's the kind of swing we are talking about.
When you start to go down to the, at the grassroots level, when you start to have, you know, people with the kind of a metric to say that, "Look, you need to have a target from 14 to 16 to 18 to 20 as a case maybe over the next three years," frankly, it's no sweat, and we are very confident that we'll be able to absorb the growth.
You wouldn't have any CASA ratio in mind, right? It may be an outcome.
See, I mean, if your CASA ratio. You know. If you look at our long-term average all these years, our CASA ratio has been in a range of 40%-41%. In the recent past, we've been about 45%-47%. It's an aberration. It's an outlier. Why? While the CASA has grown about 24%-25%, your time deposits have grown only 7%. Why? Because we did not need it. We were comfortable with the kind of growth to absorb the kind of growth. Therefore, you had an unusually high CASA ratio. In reality, when you go down to the, to a long-term average, it's about 40%-41%. Pushing term liabilities granular time. We are not talking about, you know, a million-dollar kind of a.
We are wanting 0.5 lakh, 10 lakhs, 15 lakhs, 20 lakhs deposits. These are granular deposits which are not rate sensitive. Even if it comes down to a 40%-41%, it'll still be well within. You may say that it'll sort of increase your cost of funds. Look at HDFC Limited has a, I think, about 580 basis points cost of funds. We have about 360 basis points, 3.6% cost of funds. There is a 220 basis point cost differential that'll accrue to us over a period of time as and when the liabilities mature. I think, there it is 220 basis points.
Even if I were to shave off some, what people have to understand is that 2+ percentage ROA will be a 3+ percentage ROA. I'm okay even if you shave off 120 basis point, but look at the opportunity. Hey, it's scale, and it's gonna be positive ROA accretive. That's the kind of differential that we're talking about. It's gonna be a win-win for us. We are not too overtly concerned if we are pushing term liabilities to sort of get us the liabilities going forward.
Got it. Thanks so much, and thank you for the waterfall on priority sector.
Right.
Because I think that's a conclusion. I just have one last question. How would you measure customer service?
It is an important one. I mean, I think, let me sort of. One of the priorities of the organization, you know, as I said, we are an organization which is an execution engine. I think growth is not an issue at all. You know, when you start to meet our leadership team today, you'll be amazed the kind of, you know, all of them would be sort of demonstrating, and I have no visibility of that. Each one of them, you know, you'll be surprised with the kind of potential and the runway that they're gonna be laying out in front of you. I think it's a lot of energy, and this leadership energy travels all the way four levels below, and that is something.
It's an amazing engine which we have all inherited. I think kudos to the founding team of 27 years who have really built this, of course, with Mr. Puri at the helm to create this kind of an institution and engine. Having said that, one of the four or five priorities that we have is on culture. When I go down, and it's a reality that I keep going down, a lot of these people also go down. I don't need to teach them strategy at all. They'll teach you, too. The youngsters will teach you, too, of what's required for growth. They're amazing people. There's a lot of energy out there. What we are focusing on is culture, the employee culture.
Out of 141,000 people, there is 127,000 people who are the army. Effectively, 13,000-14,000 people are there. The supervisory architecture right from us going down to probably the branch manager, et cetera. They are the supervisors. One of the things that we are tasking them is on employee culture. That is, you create a kind of an environment where you handle people at the ground level. You don't sort of use toxic language. You don't use. You're not firing and hiring people just because he or she has not met performance. It's gonna be a tough one.
It will take a lot of time, but that is the kind of culture we're now trying to nurture all along where people are saying, if there is a problem, handle them, you know, sit with them. It's proven that if a supervisor sits with the youngster for two full working days and demonstrate how to do his or her job, it's a sea change for that individual for his entire life. It has happened to me. It has happened to me as a junior way back, and I believe that all of us have a responsibility if we become successful, that we need to have a similar kind of a thought process to our juniors, nurture, care, handhold. That is a theme that we're working on. We're not there, but we will be relentless at that. Giving respect to the individuals is extremely important.
When I say individuals, it means the army of the youngsters. Why? When you give respect, you get respect twice over. This is just for us, even to the consumers, for the customers. That is the second aspect which we are driving this relentlessly. We're not perfect. We're not there at all as yet. We still have complaints that is coming to me, coming to all of us. When you see the annual report, surely this time around, I'm sure the complaints have come down by 20%-30%. It's not something that we are still happy with. We want to be, you know, go down to a level where we can say that, "Hey, we are rid of that particular kind of, where we need to." So what are we trying to do? Here, what does the customer want? The customer wants respect.
What does respect translate to in terms of speed of reaction? Whether it's a query, whether it's an instruction, whether it is a financial need, whether it's a complaint, how diligent and how speedily do we go back to the customer? This is all we wanna measure. As I said, we are putting our best foot forward on this across all. I think as and when we have a lot of metrics. We have a Net Promoter Score, which I'm sure we will be publishing in our annual report this time around, I hope. Otherwise, it will be on the website for sure. Or maybe during the course of the presentation today, when you're dealing with our marketing team and our branch banking team, I think that'll come up, and that the leadership team out there does it very passionately.
It is something that we go back to the detractors. Every customer who's not happy, there is now almost a 99% turnaround in terms of the seniors going and talking to these detractors to say, "Sir, what have you done wrong?" It is, in really nearly always, something that we have goofed up. We have a lot to do. We have a lot to do in terms of process changes. We have a lot of things that we're doing in terms of how to make instruction self-service. A lot of things are there when you start to talk to the technology teams and digital teams and the branch teams and a lot of other teams. Every aspect of it, we are trying to see how we can minimize touch, minimize paper.
You know, we are running with a theme called zero touch, zero paper, and when you know, you'll be amazed to know the person driving that will be the head of operations out here. When you hear his presentation, I'm sure you'll be amazed to know how come, you know, where we are trying to move people to the front end, have lesser people at the back end. This is the theme that we're talking about. It will have a huge impact on customer service. It's something that's a journey we have commenced. We are relentless about it. It's all about culture. It's all about focus.
I think, I'm very hopeful that, over the next three years, we should see a dramatic change in the way a consumer perceives us as a bank. I know there's a perception that we are more sales-focused, sales-oriented, but we are now trying to shrug that off. We want to be more a service-first culture organization, and that is what we are aiming towards over the next many years. Yeah.
Thank you.
Hi.
Yeah. Sorry.
Hi. Hi, Sashidhar , and thanks for the presentation. A few questions. First, you mentioned that your market share in deposits going up from 14%-15%, it's not a big deal. When you look at from a
Not a market share. That's the penetration.
Penetration. Irrespective of the market share, when you look at the total liabilities of the incremental liabilities in the system, you would require almost 20%-25% of the incremental liabilities when you do the merged numbers, right? It's a big task for a franchise like us. How do you... From a management bandwidth perspective, obviously, there would be for few products that may lose, maybe from a focus perspective, right? Considering the liability will be the key focus area from the management perspective. How do you look at this entire situation playing out? That's the first part. Second part is, your overall, where you are likely to grow branches, it will have some impact on your cost-to-income ratio. By when do you see those ratios stabilizing?
Yeah.
The third one is the net worth. After the merger, your net worth within a year's time will be bigger than the largest bank in the country, largely, right? It puts a lot of pressure on you indirectly, a kind of pressure on you to participate more on the corporate lending business. How do you see the mix shaping up from a next four to five years perspective?
Sure. When you look at in terms of market share gain, and I think you are seeing this in front of you, whether you take a 1-year horizon, whether you take a 2-year horizon, whether you take a 3-year horizon, whether you take a 5-year horizon, I think silently we have demonstrated that the gains that we have had over these various time zones have been much more than the cumulative of all your three top peers put together. I think that tells us that when you need to you know, when there is an opportunity out here, when you are trying to put your machinery in place to garner that, gaining market share faster than anyone else is not an issue thus far. This sort of demonstrates that we have executed.
Obviously, beyond that, all I can tell you is that after all, we are an execution engine, and we will continue to sort of drive this, because it's gonna meet our objectives. The second question, sorry.
Cost to income.
Cost to income. You know, prior to COVID, we were around the 38%-39% cost to income. During COVID, we pulled back retail, which is a large cost center, so it went down to a 36%-37%. We're now coming out of COVID. You will start to see it where retail is now starting to increase its disbursements. So all the associated costs, whether it is on the acquisition side, whether it's on the risk side, whether it's on the credit side, all of them will start to fire. So you will start to go back to normalized levels of 38%-39%, even without any further investments. We are very clear that our investments in technology, our investments in distribution, our investments in people is going to be continuing over a period of time.
Even if it were to shave off a little bit of our profitability in the near term, so be it. We're okay. You'll be surprised that the operating leverage will continue is kicking in, will continue to kick in. All things remaining same, you will start to see over the next 3-5 years the cost to earnings coming back ex-mortgages. I'm not even talking about mortgages. It'll come down to the mid-levels, mid-30s%. You know that HDFC Limited has run its shops so beautifully. It has probably globally one of the best cost of operations, less than 10%. When you do a pure math, our cost to earnings will be somewhere around the 32%. When the operating leverage starts to kick in, it'll go to less than 30%.
Despite increase in investments in distribution, in technology and people, you will start to see the cost to earnings going down because the jaws are gonna open. As I said, when I'm trying to say that this is gonna be a scale game, your revenues are gonna be virtually exponential. Your cost is not gonna go to that extent. You will see the jaws opening, and you will start to see the so-called cost to earnings coming down dramatically to less than 30%.
The net worth considering you will be the leader. I know it's a problem.
Yeah. I mean, you know, he'll be the most happiest. He is singing away. Kaizad normally does not sing, but he will. He will. He'll be the most happiest because he has now, as it is, out of limits, and that's a positive. I'm sorry I missed that particular opportunity. The opportunity. You know, I want to address this once for all. You know, people, the corporate business is as profitable as the SME business or the retail business. You know, it's a 2%+ ROA with an 18%-20% ROE. Otherwise, they don't do this business.
The only difference is, in a corporate business, the spreads are small, the cost is also small, the credit cost is also small, so you will have a 2+% ROA. In a retail business or an SME business, the spreads are larger, the cost is larger, the credit cost is larger through the life cycle. It's a 2+%. When you do the DuPont analysis, it's a 2+% ROA. We don't run businesses which are less than a 2+% or which does not give the 18%-20% ROE in its full capacity. I want to get that right. If for whatever reason in the last two years when we have expanded our wholesale or the corporate book to 56%, where it used to be always about 40. Yeah, look at this.
You know, you always had the corporate around the 45-46%. You know, we had a once in a lifetime opportunity to be the preferred banker on the corporate side, which Kaizad and team will sort of talk about in their presentations. You know, we grabbed it with both our hands. Why should we? Just because if the NII, the net interest margin, the weighted average will go down vis-à-vis a previous year, so it sort of slows down NII growth or this. It's just optics. It's a timing difference. Ultimately, it's a 2+% ROA, which is there. I mean, that's what matters. We are not apologetic at all about the proportion of corporate growing.
Having said that, at some point in time, I know retail will start to kick in, and the more the sort of mix changes, you will start to get all these things. You're right. With that kind of a network, the ability for the corporate franchise to even spearhead growth and be well-positioned, especially, when the government capital expenditure is unveiled, say 8-9 months, 8-10 months, hopefully, you know, and you probably will hear from Kaizad and Rakesh when they start to talk about what are the plans that the government has. You'll be amazed. We will have a wonderful runway on that aspect.
Just two last questions. One is on this, affordable, your priority sector, which you plan to grow organically of around INR 80,000-90,000 crores. By the time the first PSLC post-merger will kick in for you, what would be the strategy to garner that? Which all products would you be focusing on?
See, one of the things that is a focus area, obviously today what are we trying to do? We have our. If you look at the total priority sector, none of the institutions have actually defaulted on overall priority sector. We have managed it. Out of the 40%, I think we are now in the early 30s in terms of our core priority sector origination. The very fact that when you look at the CRB presentations, you'll be surprised to say that the kind of granular focus they're gonna be having. They're gonna be having in terms of going back, going to each and every village, each and every district. That is where priority sector is gonna be. We're gonna have a separate focus on that.
When you hear the retail part of it and the branch banking part of it, you will also be surprised that by end of this month, all our branches will be able to sell gold loans. This is another avenue of growth and other avenue of priority sector as well. See, ultimately, when you are trying to look at marginal customers where our credit architecture is not so comfortable, I know our Chief Credit Officer has been trying to text me to say that we have not sort of picked it up, but it's just a matter of time. You will start to see that. We are not talking about anything overnight.
Over the next three years, we are putting all levers to ensure that whether it is in the form of small and marginal farmer agri, whether it is the credit is not comfortable, then give a gold loan where the end user is agriculture. This is gonna be another big lever for us. Last but not least, the home loan itself. When you sell a home loan in a Palanpur or a Joginder Nagar or a Haldwani where the ticket size is less than INR 25 lakhs or INR 35 lakhs is the case, maybe all that classifies and qualifies the priority sector. Our objective over the next three years is while growth, you will see a lot of growth coming in from outside of metropolitan locations which will qualify as priority sector, even for home loans. We will have enough to sell.
It's not that we will be entirely self-sufficient. We will have to sort of buy PSL, but the cost, which we are now estimating about 1-1.5% of our total priority sector requirements may come down because we'll be selling those excess PSL as well. We're not too... See, we have done it. This is part of embedded in the business model even today. Today also we are not self-sufficient completely. There is a kind of a cost that is already embedded in the part of the business model. Going forward also, I mean, whilst we are putting in all levers to try and see how we can do core priority sector, but it's something that we will manage and we are anticipating in our growth.
When I said that we're gonna be doubling in about five years' time, the cost of priority sector, we have factored that in as well.
Last question is, by how soon do you expect that the HDFC team will be able to do the home loan business from all our branches? Currently, obviously, there is an overlap of maybe around 2,000 branches, if I'm not wrong.
Yeah.
For 6,500 branches for them to do the business in rest of 4,500 branches.
We have to respect the regulatory approvals. The first set of approvals should come in by September or October. Around the Competition Commission of India is extremely important, we will do that. When you start to hear our head of retail assets, we are in conversation with HDFC Limited to slowly start to, you know, the ideologies to converge, the policies to converge. You know, it's not so great. I mean, for example, today they may not provide, or they may not take collateral outside of municipality limits. Look, here we run loan against property across all our branches, and we have that kind of an expertise. We're not asking to go down the risk ladder at all. All we
Now, thanks to Digital India, today, and I sort of saw it in front of it in a BC, in a place called Chumthru, about 40 kilometers or 50 kilometers outside of Palanpur. You go to that BC point, and you're surprised to see that when you try and see this is the land, is it vacant or hypothecated? You can get that this is hypothecated to PNB. This is the kind of ability that India has. We have all our land records, which is more or less digitized. Even if it's not digitized, it's a registered mortgage in the Tehsildar's records. In the last couple of trips that I've gone, along with HDFC Limited, they are reasonably sanguine that these are all doable.
They would like to now, you know, go back to the drawing board to think and change. The objective is once we get the fundamental approvals in place, especially the Competition Commission, you will start to see opening up of our distribution more and more. Now, it's about 2,000 branches we are selling. We will start to ensure that we have more and more branches. Hopefully, by the time the merger gets consummated, I think we will start to have all our branches firing with all the policies converged, et cetera.
Thanks. Thank you.
All the best. Yeah.
Okay. One follow-up question.
Yeah.
The first question actually is on the slide, which had pre-approved loan.
Yeah.
There was a number which was INR 32 trillion.
Yeah.
Sorry, is that the industry size or?
It's the potential.
Yeah.
This is the internal customer base of pre-approved offers where it gets refreshed by our credit and credit analytics team. You can get to know more about it when you have your session with Jimmy Tata and company. These are offers to our existing customers. Effectively, if Vishal is one of the esteemed customers who is a part of that, he will get a loan in 10 seconds flat. That's the opportunity. It's all about how we marry these particular offers with our sales process. I know there's. You know, as we start to improve upon our analytics, the fact that we try and, you know, zero in on when there is a need of a product, when we are able to identify the moment of truth, I think you will start to see a lot of unleashing.
That's an opportunity for the frontline people to be able to sell, whether it's the branch, whether it's the virtual relationship management team, whether it's the lot of other frontline team who can sort of harness this data in front of their CRM systems.
In fact, going forward.
Yeah.
That's the opportunity where you have.
Yeah.
That's the opportunity where you have going forward that you have also the mortgage product added in there as a pre-approved. For example, Vishal should be having a pre-approved mortgage offer. This includes that. But this is based on income? Because this is like 2x of current industry size of these four products.
Yes, Vishal. It's a lot of attractive opportunity that is there. It's a massive opportunity. Just the moment you start to marry that with, need-based selling or when there's a need for the customer, just imagine the power. That's the potential which is there.
Great. That's great. The other question is on the tech and digital channels.
Yeah.
While clearly the focus would be on physical, you know, expansion, I'm sure, you know, I think you also, you know, we have discussed this in past also that how digital offering is now become a me-too offering and almost all banks have caught up. All right? Now, for example, to keep gaining market share, especially from the metro and urban areas, you will still need a top-notch digital offering. There was a delay or lag in the upgrade. Now, when do we start seeing, you know, like HDFC Bank being once again number one on digital, you know, channels?
Thank you for that. Yeah. Number one is let me just correct this impression that there's nothing wrong with our technology. I think we, over 27 years, we've always done a lot of global first. The events that have caused us to have a different impression on you all is not necessarily technology. You can, but we probably sort of humbly accept whatever was the verdict given, and we've used that opportunity to reimagine our technology rails. Number one. Number two is, I think in 2015, when we launched the digital 1.0, I think the kind of products that we have launched is unfathomable even today.
Today, like the ten-second personal loans or the ten-second auto loans or the ten-second two-wheeler loans or do your own loan against securities or your instant, you know, merchant loans or loan against property as well. A lot of other things. Today, you know, when you look at the cost to earnings, at that point in time, we were about 49%. Today, when you look at the kind of digital disbursements that have come in through these kind of, you know, pre-qualified, pre-approved loans, it's one of the reasons why that has brought down the cost to earnings from a 49% to a 39% until March of 2020. We have been ahead of curve on that one.
Yes, you know, the kind of incidents that have happened in November 2018, a day in December 2019, the data center issue in November 2020, obviously, has had an impact from a reputation perspective. We've used that opportunity to lay the rails differently now. We are moving, you can have, you know, the head of technology sort of wax eloquent on that, but in a very simple layman's terms, we have been using, we created two factories. One is the Enterprise Factory, whose main job was to try and have the applications move out of create microservices out of the monolithic architecture, put them in containers, and then put them in cloud so that the scalability and resiliency of the architecture is now gonna be not an issue going forward.
We will never have issues on scale. We will never have issues on, you know, a certain aspect of the application coming down because you will have redundancies and you will have failover mechanisms on an active-active basis. It's an important one. It's not visible to you all, but that's a rail that we had to put in place, which is a strategy that we said that we would start off from the core layer. We have now Digital Factory, which is now gonna be coming out with products on the engagement layer. Between July and September, you will get the actual dates from our team. You will be surprised by the kind of products that we will be launching, unleashing. Even now, as late as last week or two weeks ago, we launched something called the Xpress Loans, which is there, which is a global first.
I mean, you know, you walk into a dealer and you get a 30, an auto loan, new-to-bank customer, not just existing. While we have 10-second loans, but even a non pre-approved customer getting a loan in 30 minutes at a leading dealership has created a flutter in this industry because it's a global first. You know, it's not easy, but you had to do a lot of engineering in the background to be able to offer that. You will now start to see right from July to September, various launches, whether it is the fact that we have partnered with Adobe on all our journeys, about 30-odd journeys. That is what I believe.
I'm sure when you have the further presentations down, they will tell you what are the kind of journeys which will be game changing, whether it's on the liability side, whether it's on the asset side, whether it's on the investment side, hopefully. You will start. We have launched. People don't know about it. We have launched something, an application, which is a SmartHub application for the merchants. It's called the SmartHub Vyapar, probably. I think that's the name that is given out there. We've already done about 3 and a, how many, million?
INR 1 million
You, Parag, will probably sort of mention that. Silently, we have done about 300,000 odd, if my memory serves right, or 350,000 merchants. Now, what does it do? This is equivalent to an Alipay, an offline online/offline mode. Wherein here you are the center of the application, you're the payment facilitator, the form factors are agnostic. Whether it's a card, whether it's an UPI, whether it's a QR code, whether it's tap and pay, you are there. You can allow customers to do any forms of payment. You have an application provider who sort of provides value-added services like accounting services for the merchant, which is also extremely important now in this age in terms of providing for GSP accounting, et cetera. Look at it.
The merchant has a lot of catchments. You go to a small town, you have a main street, you have a loyal about 5,000-10,000 customers who are always coming to that center street in that particular small town for their weekly purchases. Now, you can use this particular application to be able to engage with these customers and households through various form factors, including WhatsApp, they can order, they can deliver, and they can take the payments there and so on. They can market their product. That's the kind of application which is gaining ground. As I said, this is one. We are now 3 million customer merchants. We will be 20 million merchants in about 3 years' time.
Even if Parag does not have this vision now, he has the vision now. Have to do that. A lot of launches that will happen. The most important is gonna be our payment hub. It's gonna be, I believe, something that we'll be all proud of. It'll be better than a Google Pay and a PhonePe. It'll be self-fulfilling. It'll be ensuring that we will be able to expose all our banking APIs on that. It will be also, you know, a payment app with a ability to do mobile banking. It's a failover from, you know, even if the mobile is down, mobile app is down, you can continue to use that. This is gonna be a game changer. I don't wanna talk too much about it. I will let the technology and digital teams talk about this.
When it gets launched between July and September, I think we will get back our mojo, as you are saying.
Thank you. All the best.
2-3 questions on PSL. First, the PSLC purchase that we have done on the net basis till FY 2021, the number has increased to around INR 82,000 crore. It is one of the highest number as a percentage to ANBC, like, in the peer group. That is one, that how it is going to pan out when we have a merger with HDFC Limited, and where would it help, whether it would help in small marginal farmer section or maybe some other section. That is one. Second, if you look at RIDF bond that we have, that is also kind of around INR 99,000 crore number.
Total cost on P&L is close to 100 basis points of PPOP. How things are going to pan out post-merger? Thanks.
No, see, that's one of the key areas of focus for us. Okay? Now, as I mentioned in the previous conversation out here, it is a cost that we will have to factor it in if we are not able to meet our own organic priority sector. Now, we are putting in all our levers to ensure that we are, you know, trying to see how to meet our priority sector on our own. There will be. I mean, let's be realistic about it. Sometimes the small and marginal farmer or the weaker section will take some time, because there is a lot of risk involved in doing that. If you start to bundle this with the gold loans part of it, maybe to some extent it'll alleviate, and we will have to see this slowly grow by.
In our business model, as it is today, there is a certain cost which is embedded in the, in our profitability. You know, the amount, unfortunately, is smaller, because what happens is when you do organic priority sector, the ROAs are even as high as 3%. A 3% ROA on a priority sector, core priority sector, offset by a certain amount of cost, which is ranging between 1%-2% of the total requirements, I think is something that we'll have to embed this and we'll have to keep on minimizing that going forward. There is no bank in this country other than small rural banks, regional rural banks, which has, you know, a small balance sheet have been able to achieve the sub-limits of a small and marginal farmer or weaker section.
I think we believe that as we start to use our distribution for gold loans, ensure that the end user is agriculture, we can start to minimize this gap going forward. We'll have excesses in the general priority sector because our home loans, especially in semi-urban, rural, will all qualify for priority sector. That's something that you need to factor it in.
And-
Yeah, why don't you say?
No. I think while you know we've talked about. Am I audible?
Yeah.
I think once we've talked about the fact that, you know, there is PSLC. PSLC is one of the various avenues available. We have charted out quite a few more. It's going to be a matter of execution, but are there opportunities? Most certainly. Let me give you one or two out of the bag. If you look at what is available in co-lending, given our tie-ups with a vast segment of NBFCs, the whole co-lending model based on our credit standards helps me access the small and marginal, and micro institutions where I need to fill that up, as well as on the agri side. The co-lending is one model.
The second model that we have, again, out over there is because of the higher network that we would have, we would be able, and the higher priority sector, we would be able to meet that by doing lending for NBFCs who are allowed to further lend on the agri side. That again helps us meet the PSL part of it. There is what we do PTCs, and there is also securitization. There is a host of avenues that we have chalked out. Yes, PSLC is the single largest. No walking away from that and therefore we present that. There are other avenues which we will work on and which we've already worked upon, and we have to get scale in that, which will help meet the core PSL requirements. It's just not one. There is a bouquet available.
Thank you. Just one related question. Like, you know, like key providers of PSLC right now in the system are RRBs, PSU banks, you know, in some of the segments, and then we have, you know, this, you know, SFBs. And other banks, you know, having a market share, you know, close to 90% or more, and if the 90% of the system starts, you know, growing faster, then 10% of the system, you know, cannot provide that kind of, PSLC required. Our idea is, you know, like by all the financial institutions or whatever instruments they do and the allocation based on that, we will still have some deficit there. Again, on the larger scale, like on the larger picture, larger canvas, it is not just about HDFC Bank.
Like, you know, there would be a good amount of deficit that a system will still have. That is a larger-
No, you're right. I'm not sort of disputing that when the economy opens, because a lot of the bank's balance sheets have cleaned up, they would now like to grow. That's reality. I guess, you know, when you look at the overall, we'll be the largest provider of PSLCs in the market because we will be having, you know, the growth that we're talking about over the next five years is gonna come in even from our priority sector as well. Our home loans in semi-urban, rural will all qualify for that. I have again mentioned this. I may fall short on the small and marginal farmer and weaker section, which is where if you don't meet, you will have to put it in our RIDF.
We have factored that as a cost in our, in our projections, which is something that is already embedded even today. The overall requirement will be minimized because we will have so much of other PSL to sell, whether it's micro-enterprises, whether it is on home loans, affordable home loans, will all sort of give you a positive fee, which will reduce the operating costs that we're talking about. Having said that, this is a challenge, but this is our execution capability. I mean, how with like liabilities, this is another focus area for us to see how we minimize the, you know, reliance on outside of the core acquisition of priority sector. We'll have to see this, but I will not give you a false picture to say that we will be completely self-sufficient. We will have a gap.
It is already baked in. Already baked in today, it'll be baked in even tomorrow. When I say that there is gonna be a scale bank, when I talked about a number where we're gonna be doubling in five years, it is after factoring this kind of an operating cost.
On some of the.
Hi. A few over here.
Some of the categories.
Yeah.
The other thing is at times, you know, sometimes you generate in a particular category excess general PSL. We also are providers of selling that. That helps reduce my cost in then buying those specific subcategories.
Yeah.
Hi. Hi, Shashi. Morning.
Hi.
A slightly bigger picture question in terms of the merger itself again. Typically, when organizations such as yours so huge, we get into a merger scenario, the typical reaction is to slow down, take a pause, understand what are the challenges, and ensure you get out of this, more stronger, than you enter. I'm keen to understand your thought process as to how, why you've decided to, you know, accelerate and chose to, you know, continue on the same growth momentum. Thank you.
You're saying, just repeat the last one, whether our bandwidth will be impacted because of this merger?
The choice was to either take a pause, you know, understand all the risks associated with the merger and then get out of the merger 2, 3 years down the line with a much stronger balance sheet and instead we've chosen to continue with our growth momentum at this moment.
Okay. Couple of things. Number one, I explained to you that here is a macro opportunity which is staring in front of you, which can power not only the economy, but even from a durability of growth. See, when you look at the growth thus far of the bank over 27 years, we have been on the shorter duration of the curve. Our average duration of our assets and liabilities has been about 1.2-1.3 years. With home loans, you know, so you're catching your tail every 18 months to grow at about 18%-22% year on year on year. Not that it's not possible, but it's a kind of, you know. Just imagine the moment you extend your duration, it sort of brings you a fair amount of ease.
You know, you're able to breathe, you'll be able to grow. Number one. Here, if that's gonna be powering India's economy over the next 5, 7 years, it'll be stupid for us to miss this opportunity. Because I, as I explained to you, there was a inhibition in our extant arrangement. You know, there was a limitation on HDFC Limited to expand its duration, and let me explain to you on their behalf. Housing or home loans is an oligopoly market with an intense competition. You had a very thin spread on home loans, which all of you know. When you have this kind of a dynamics, you need to ensure that the two other legs of the stool had to be absolutely efficient. You have to give credit to HDFC Limited for running one of the best operations.
You have the lowest cost of operations. Nowhere, no financial company, no housing finance company globally runs this kind of cost of operations at less than 10%. You look at the asset quality it runs. I'm talking about pure mortgages, okay? You have one of the best asset quality ever than anyone else. You know, I know a lot of you and probably may have had this question that is it a 2%+ ROA? You'll be surprised. He's one of the few housing finance companies to run this. I may be wrong. Maybe there are some, but he has executed extremely well. Now why? Why has he executed? Look at it. He had to maintain the two legs of the stool very tight. One was the cost of operations.
Therefore, he limited himself to 35 hubs and 600-odd branches, which is necessary for him to maintain the low cost of operations. He had to ensure that he chooses the collateral in terms of at least the top 100 towns. It could be Delhi, Mumbai, Jaipur, Chandigarh, et cetera. You know, he never sort of opened up beyond municipality limits. There was a reason. There was a finite capacity on a large NBFC in terms of funding. There is a compulsion on profitability, where he had to maintain tighter cost of operations. That is why he had, etc. Now, here is an opportunity which is staring in front of us, wherein now when you open it up, this explains as to why only one-third of our branches were selling home loans.
You know, where our branch distribution is already sunk, so the marginal cost that'll happen only because of home loans is gonna be much lesser. As I said, with 220 basis points of cost differential, cost of fund differential, even if I were to increase this distribution cost, this credit cost or the sales cost to, you know, the pre-credit verification cost, as you call it, we're all right, because we still have a massive amount of a differential that'll accrue to this. Now, why would anyone, any organization miss out this opportunity? Mind you, let me preempt one of the questions. You may say that why is it that you did not do it on your own? Why couldn't you build your own home loan book?
See, mind you know, if we did not merge, since economics said that it's better to merge, if we did not do it, a large NBFC such as HDFC would have had to integrate with someone else, with another bank. Which means that we would have lost the brand, and the brand of HDFC Bank is extremely important for us. It is no point just trying to say thank you and start your own. We could have done that, but it was not making sense. Here is a company which has excelled in 42 years, which is something, a product which is well reputed. We just want to lift and shift here and then distribute it. That is the objective.
Here is a once-in-a-lifetime opportunity for the organization to scale it without, with all the metrics remaining intact, as I had just mentioned.
Thank you.
Yeah. Sashidhar over here.
Yeah.
Two questions. One basically that HDFC Bank and HDFC Limited both have been on the road to meet investors, shareholders as such. Any dissent that you saw from the investors?
No.
If yes.
No.
How do you plan to address?
No. Yes, we started off very late. As you know, the announcement was the fourth of April. We had a shut period until the seventeenth. It's only after that that we started to meet investors. You know, we prefer to do one-on-one. We've covered about, out of the 10 geographies, 2 geographies thus far. I think when you explain the rationale, our story about the merger, I think it's been positive thus far.
Second question is about the regulator.
Yeah.
What basically could be the plan B if basically the regulator doesn't allow you to increase the stake in insurance to 50%?
No.
Similarly, for HDB Financial Services, I think you have seek permission to keep
Yeah.
as a separate subsidiary.
Couple of things. One of the asks. The merger of this scale, obviously before we announced, had the blessings of the regulator, the Ministry of Finance and the in principle. I mean, it's not that they're gonna give you in writing. They're saying yes. And even the Prime Minister's office. That's number one. Number two is the ask that we have asked the regulator is that we want a simple A plus B merger, where HDFC Bank will be the holding company. Number two is one of the ask is that like you have in a lot of other banks, large, PSU banks and two other private sector banks where they've allowed the subsidiaries to be the subsidiaries of these banks, we have said that allow similar kind of a structure even for below the bank.
When you talk about specifics when it comes to the investment in HDFC Life and HDFC ERGO, our preference and our ask is that can you allow us to go to that extra 50, you know, the 2.5% in HDFC Life.
2.2.
0.2% in HDFC ERGO so that we cross the 50+. You will wonder why. I think whether you like it or not, one of the biggest beneficiaries of this particular merger are going to be the subsidiaries as well, whether it's HDFC AMC, whether it is, HDFC Life, whether it is HDFC ERGO. Now, I'm still saying we will patronize open architecture. But having said that, hitherto, we were just a distributor. Now we will be a parent-child relationship, so there will be a little bit of a soft corner for these child entities. The opportunity that these entities will have in harnessing our distribution heft, our customer heft, is gonna be unimaginable. Our preference would be that. But in the worst-case scenario, the cabinet pressure were to say that, "No, you're to drop it to 30%," we are all right.
We still will, you know, would want to juice out even at 30% the subsidiaries, opportunity in this kind of a new entity. Last is on HDB Financial Services and HDB Credit Card. Obviously, we await directions from the regulator. We are open. It's a financial investment for both, and if there is a need for us to have a glide path downwards, we are gonna happily do that. If at all we are directed to do it, we will set it up in our own statement. We're not overly concerned. I think we'll monetize that and sort of reuse it for reinvestments, which is a huge amount of opportunity that is there. Now that we are a large holding company, we'll have a lot of opportunities to invest in technology companies below.
We're quite excited about any possibilities that may arise out of that.
Thanks.
Sure. Just extending on that question, what would be the plan if RBI doesn't accept the way the structure has been in the current form?
No. See, the
No.
The structure that we have applied for is a simple A plus B structure, which is the structure that has been asked by the regulator to apply. I know where you're coming in from. You are talking about whether it'll become a non-holding, what is it called?
Non-operating.
Non-operating.
Non-operating holding company.
Holding company structure. No, that is not. It is while it may have found its literature in the discussion paper of working group, as of now, since the tax neutrality is not resolved, the regulator is very clear, "Keep it simple. Keep just A plus B with HDFC Bank becoming the holdco." That is it. We are gonna be an operating company as well, and there's no confusion about it. That is how we have applied because that's how we've been asked to apply.
Okay. In case it is allowed, like, they say that, "Okay, only HDFC's mortgage business can be done with HDFC Bank and others have to be a separate entity," then.
No. That is not. As I said, again, I'm trying to reiterate that. That is not the structure that we applied. That is the structure that we've been asked. The way we have applied is the way the regulator has asked us to do it.
Okay.
There is no ambiguity on that at all. If at all the tax neutrality status changes, then obviously it will not be just for HDFC Bank, it'll be for the-
System
... system, banking system as such, all the other entities. When that happens, we will think about a structure, I mean, which is, you know, makes sense.
Sure. The other question is with respect to the group entities, what are the synergies that you would say? You said, you definitely said that the relationship would change now, but in terms of the fee income distribution and all.
Yeah
What is the kind of uptake which we can see from there besides the home loans?
See, look, you know, like any parent-child relationship, you will have a soft corner. You will provide access, not that you're not gonna provide access to others. But obviously, you know, the power of the combined entities now is something that is important for us to harness. Because ultimately, their value goes up and comes in the value in the sum of parts. It's. We have a direct betting on that at this juncture. Until now, we were just a mere distributor. In the last couple of trips that I've had, I've carried the AMC, the Life, the Ergo and HDFC Limited, and the opportunity is eye-popping. You know, in terms of our own distribution, whether it's this distribution, whether it's the ultimate banking channel distribution, whether it's the engagement, virtual relationship management platform that we're talking about.
The fact that now we had not thought about it, but then even, I'm sure, you know, this is. I do not know whether our technology and digital teams will be thinking, but now it's something that they can consume the APIs of all the group entities and the power of that combined entity can be unleashed even in our digital platforms. The opportunities are galore. Obviously, you know, the bonus of all this merger is the fact that We as an entity will continue to get fee income, probably higher fee income. They will also have an underlying run, a larger and a stronger run on their underlying sales, which would sort of lead to higher value, which will sort of be uploaded through the sum of parts to us.
Sure. Thanks.
Hi. My question is on the wholesale side, this side.
Okay.
Yeah. Last couple of years, you've seen strong growth on that front, probably also on the commercial banking side. Where would you be in terms of the wallet share of some of your top customers, and how much more do you think to go in terms of opportunity?
Kaizad?
Okay. I think the presentation that comes up soon after this will give you more insight, so I won't take away the thunder of Nirav's when he presents. I think we do map the wallet share, the growth in the wallet share, and we do believe that we are in most of our relationships amongst the top two banks. It's not only a question of the funding that we provide, it's also the entire gamut and bouquet of services, including your entire trade and transaction banking and treasury products. With the higher net worth that we would have, it will give us an opportunity in certain groups to increase and step up our engagement, and that would also bring in a much more diversity of our offerings within the group.
On the wholesale side, I think, you know, this provides us with tremendous growth path, and that is something that we've already kind of mapped. As the merger comes through, we will be able to quickly grab those opportunities, which, you know, today are there, but we are limited because of certain limits or restrictions that we have to work with. We are waiting keenly to see how that unfolds.
I mean, some of the growth that we've seen in last, say, 24-36 months would also be a function of the fact that competition probably was not growing and you had a classic funding advantage as well, so you could cherry-pick at your risk. Is there a cap that would come at some point in time?
No, if I got your question right, you know, how do we deal with competition? I think, you know, if you go back and see 27 years of HDFC Bank, the first 5 was only wholesale bank. We didn't have a retail bank till 1999, 2000. Thereafter, I think we've dealt with competition, whether it has been the aggression of a few PSU banks or sometimes other private sector banks. I think we've learned to deal with competition, and that really is not something that alters our journey. This is something that is inbuilt into the journeys that we have had. We don't see that as a challenge. But yes, we have to respond to that. We have to align to that, which we continuously do as we, you know, go to achieve.
As the slide over there showed, if, Srini, we could go to the slide of market share, I think the numbers themselves, you know, reflect what we have done over the last 1, 3 and 5 years. If you see HDFC Bank's market share on the advances as against top three peers combined, I think that data speaks for itself in terms of competition and the opportunity that is there. We feel confident that we should be able to continue that journey.
Yeah. Just finally on the fees bit, the wholesale fees probably has reduced to single digits of the total pie. While we say that, entire wholesale growth is not just balance sheet driven, how does one kind of explain this dichotomy?
No. It's not. If you see, you know, as Shashi was explaining earlier, in wholesale, whereas, you know, you will have a lower NII compared to retail, the cost of wholesale as well as the credit costs, and add to that what wholesale brings, and you'll see it in the next presentation, the complete transaction banking income, the complete cash management income, the complete cross-sell on salaries and the complete FX income that brings with the corporate lending is a fairly good piece of the overall and therefore leading to a better ROA.
That is very much there, and I think we had a slide which showed out over there that, you know, in the two years when we slowed down retail, we were able to step up wholesale and while we did that, your ROA has yet continued to be at a bank-wide level at 2%. It's not, it's not just pure lending. That's not been our philosophy. We don't go and lend to any customer and say, "Okay, that's how we will grow the asset book," because let's say at times I have the benefit of more competitively priced liability. That's never been our model.
Our model is how do we ensure that we have the complete banking products and solutions to the corporate, which very simplistically means I will not only be a provider of funds, but I will be a provider of the entire banking services, which includes your complete trade non-fund, FX, cash, dividend, tax, salary, and I can bore you with the list. But that is what we do, and that's how we manage life cycle of each and every customer on the wholesale side, whether he's an SME, whether he's an emerging corporate or he's a corporate banking customer. That's been our entire model, and that's what keeps the engagement going. That's what gives you to improve, as someone else asked, the share of wallet. That's what helps you get in more products to your existing, corporates.
Let's understand, the quality of the corporates that we deal with, they themselves grow every year between 15%-20%. Apart from that, you have the other opportunities which we will cover later on. We do see fees, commission, FX as important components of the wholesale banking ladder.
One thing I want to add for you is that when you mentioned about the fees being composition is in single digit.
Yeah.
You're not including FX because we report FX outside of fees. Which is a significant component in wholesale, so that's something that you want to take into account. The other aspect that Kaizad alluded to is the benefits that come on various other activities. They're all in the interest income itself, right? Every other activity provides earnings on the interest in the form of a float or in the form of balances that are there or by any other manner that's coming in the interest line. Thanks.
The corporate business is a feeder to the retail business because as you mentioned, we are the largest salary banker.
Right.
when you look at the advantages of the salary business, whether, you know, large part of the pre-approved offers will all be in the salary business, et cetera. It's a huge, you know, feeder to that business, and so it sort of feeds on itself.
One thing that we don't have it here today, but at some point in time we will start talking, is the self-funding in the wholesale corporate bank. That self-funding is quite high, 70%-80%. That is the balances that come from those organizations, plus the retail customers providing the liability balances to the bank. You have to look at it holistically. That relationship brings what sort of liabilities for the bank in total. Sure. Thank you. All right, ladies and gentlemen, this one will be the last final question.
Yeah. Mahesh.
Sashidhar , just two questions. One, at a time when we see, you know, the concept of manufacturing versus distribution, how important is the investments that you think you would have in your subsidiaries once this merger is completed? Or let me phrase it another way. How important is it for you to own these subsidiaries?
See, frankly, if you ask me on this one, you look at the existing extant structure. The extant structure was a nice holdco for the subsidiaries, but it was not able to provide that opening for them to really you know, to sort of have a larger distribution. They had to rely on an associate company called HDFC Bank. The moment it now comes in, the fact, the reality is that HDFC Life is listed, HDFC AMC is listed, and I know that a similar kind of a holdco discount will sort of flow through in value.
All things remaining same, the fact that now, as I mentioned earlier on, we'll be exposing the subsidiaries to a larger distribution head, larger customer access with of course, within the four corners of data security and data privacy norms, I think is a massive opportunity which we have not even tapped thus far. As I've again, the cost of repetition, I would love to have it anything beyond 50% because then we can juice out the sum of parts likely higher. Even if we were to say that go down to 30%, so be it. Still, the 30% on the value that we will now bring to the subsidiary companies is gonna be much larger than what it is today.
I'm not gonna probably push ourselves to increase any further investment other than the small one just to tip over to the 50% mark. If for whatever reason the regulator says that, "No, the law of the land says that you've got to pare it down to 30%," so be it. We are okay.
Perfect. My second question is, in the past, HDFC has kind of liked to work on an ecosystem of its own. You've seen your PayZapp, your SmartBuy, and so on and so forth. In an era where we have these open ecosystems kind of building, how comfortable are you today to explore that part of it as compared to what you have done in the past?
Just give me an example.
The PayZapp and your SmartBuy.
Yeah. Right
Really are ecosystems where you want the customer to come to your place to work. Whereas we have seen in the market at least, customers preferring to kind of open up with the bank on the website of the merchant. We've seen in the past that you've always enjoyed having that control on the customer.
See, there are two parts to it. Number one is, you know, banking as a service, where we expose our APIs on platforms where there's a large number of footfalls is something that we would like to harbor. It's got to be a new channel. It's something that we have started out with some of the tech companies like Paytm. We're doing a lot of experiments there. Why not? What is it? You're just having an access. They're all distributors. You're having a larger access of customers, and it's another channel. Why not have that access? That's part one.
Part two is the kind of technology that now we are going to be building on. It's going to be a completely new stack, and the tech and digital team will sort of talk about it on what we're now trying to create on the PayZapp or whatever is the name that they'll come out with. It's akin to where, like a Disney. I mean, I'm sure, and this is something that I sort of resonated beautifully. Earlier on, Netflix was a distributor. It used to distribute Disney products. Now, Disney later on, I believe, realized that, "Hey, we are the content provider, we should also be the distribution." We are probably in that kind of a space today. We have the content, we have all the necessary products to be exposed to our customers. We manufacture all of them out here.
We are saying that why should I have to rely on a third party for content? We have the content, we will distribute it. This is another separate, you know, ecosystem that we are creating. This is gonna be a very important aspect of this. This is gonna be the differentiator vis-à-vis what a Google Pay or a PhonePe is gonna do, because we are gonna be manufacturing. They're gonna be partnering with third-party financiers, whereas we are gonna have our own products manufactured too, which is akin to what Disney is doing now. This is a thought process.
Having said that, as I mentioned, we have a separate strategy on banking as a service, where we will be exposing a lot of our APIs, trying to see whether we can have the incremental advantage by the so-called, you know, riding on the, I think, the OCEN rails on the AA rails, hopefully by then, which will sort of give us some additional information about the customer from that bigger platform. We're gonna have this as two separate strategies. We are okay to have the PayZapp as an independent ecosystem, exactly what I talked about from a Disney kind of example, and we will have the banking as a service as a new channel, which we will sort of test it out with a lot of our partnerships.
As we see the distribution increases, why not?
Thank you. I guess that was the last.
Just to summarize, I mean, thank you so much for coming over here. I think here, you know, HDFC Bank, which has executed so well over 27 years, is now at an inflection point where scale is not. It's gonna be a scale game. Growth is not an opportunity. It's gonna be pouring out our ears. The only limiting factor is liabilities, and we have an execution strategy to ensure that our liabilities are enough to cover the kind of growth that's gonna come in. We are virtually now, as I said, even ex mortgages, all our segments, whether it's corporate, whether it's the SME segment, whether it's, has started to fire.
Surely some of the products you will see a bit of a lag basis because of the fact that, like the auto and vehicle loans, there's a semiconductor issues. The underlying sales are down, so you will see that a little bit tepid. Even otherwise, you know, from a year-on-year perspective, since the duration are short, as we start to increase our disbursements, which will be higher than the repayments, then you will start to see the book grow. The mix will change into the normalized levels that we have seen in the past. It will take some time. We are not apologetic to have a higher corporate mix as well. As I said, it's a high ROA and a high ROE product, so why should I be so worried about it at all?
The priority for us is to ensure that we have a wholesome growth over the next several years. We will be expanding our distribution. You will see a lot of things that are happening, whether it is in the branch channel itself in terms of expanding our distribution, the fact that you have an alternative banking channel, which you will start to talk about it in terms of SBL, in terms of how we're gonna be covering different parts of the country through the hub and spoke model, or whether it's the engagement layer, that is the virtual relationship management program. Be it the branch relationship management program within the private banking, be it the virtual relationship management program, you will see the differential that, you know, people keep talking about fintech. It's a cold channel. The fintechs are cold. We are gonna be human.
We're gonna be human. We're gonna have a lot of engagement. We're gonna be giving respect to the customers. Ultimately, that's gonna be a differentiating factor out there. Our, the growth engines, the SME business, there's a huge amount of opportunity. Of course, we will do it only if it makes economic sense. We'll not go down the risk ladder. We're not gonna go down the pricing ladder, both for corporate and SME as well. The opportunity to grow is huge. The housing, the home loan merger announcement, as and when it gets consummated, is gonna just overlay the growth duration. We had a runway of 20-30 years now. I think we will have a runway of 50-100 years. The durability or the quality of growth is gonna be very good because your durations are gonna be extended.
As the cost of operations is gonna be lower, the cost of credit is gonna be lower, the scale at which we are gonna be growing because just imagine when one of the slides it said that 2%. That today it's an emotional product. You know, going from a 2 to a 7 virtually doubles the bank. 7 to 12 further. The opportunity doubles an emotional product, a sticky product, and product that is so easy to sell at the front end, which is multiple avenues, you know, whether it is liability franchise, whether it's the cross bundling of consumer durable loans, whether it is the fact that your runway for unfixed loans just increases, is gonna be a heady factor. We are extremely excited about the future.
Yes, it, as always, the only risk that we run is an execution risk. That is our responsibility, and that is something that we have demonstrated for 27 years. We believe we can do it over the next many years. The institution is absolutely geared. It is exciting in terms of what the scale it provides. Thank you very much for this conversation with you all. Thank you.
Thank you, sirs. Ladies and gentlemen, we have reached the end of first session. Now we will have a short break of 15 minutes. Thank you so much. Ladies and gentlemen, we are starting with the next session. For that, I would like to request Mr. Nirav Shah, Group Head, Corporate Banking and PSUs, Mr. Jimmy Tata, Chief Credit Officer to present the corporate cluster.
Good morning, everyone. What I'm gonna cover very quickly for you all is the corporate landscape. What was HDFC Bank corporate bank doing during this particular time in terms of the corporate ecosystem and what more to expect out of the corporate bank as we move into the future years. First thing is, and let me start from the basic, what was happening in corporate India. One, as all of you all know, a lot of balance sheets got deleveraged. As we came out of the first wave of COVID, we saw EBITDA margins moving up. While values were going up, the capacity utilizations were coming down. There was ample liquidity in the system, interest rates were low, and corporates decided to deleverage their balance sheet.
There were certain sectors and companies across sectors where we witnessed deleverage of balance sheet. During this particular period, we saw unprecedented levels of foreclosure. While there were deleveraging on one side, there were a set of corporates who believed that they should shore up liquidity, and some of them ended up taking or drawing on their working capital lines just to keep liquidity. What were the opportunities for us? On one side, when we saw interest rates coming down, we realized that there is a great opportunity for us to refinance some of the existing debt sitting across corporate balance sheets. That was one avenue. Second was there were a set of companies who wanted to draw working capital lines and keep themselves liquid.
Nobody knew what is going to happen through the pandemic, so we participated on the working capital side. Third thing that we did was in terms of ensuring that we increase our disbursement run rate. Between working capital utilizations, refinance and participating in CapEx, which was limited to a few sectors, we ensured that between maturities, between foreclosures, but our disbursement kept pace and we offered a balance sheet growth. The other factor that happened was in terms of the digital adoption. We realized companies started working from home and pandemic acted like a catalyst. At this particular point in time, and we would cover corporate volumes, 94% of transactions were processed untouched by human hand on the transaction banking collections and payments.
We saw adoption of our TradeOnNet platform and 87% of transactions on international trade were again processed through a straight-through processing mode. Through this digital adoption, we saw an increased traction in our customer engagement on transaction banking. Over the last few months, there have been two things. One is the government expenditure. That part of the GDP has picked up. There has been monetization of certain assets. We have seen early draws on the PLI scheme. We are seeing in terms of certain green shoots in terms of CapEx across some of the other sectors. We have seen monetization and InvIT structures coming in, where the credit risk on project side is out. There are stable cash flows and better debt equity mix for the bank to participate.
We saw some CapEx coming back through all these schemes. The last thing is, post the tension between Ukraine and Russia, we saw disruptions on the supply chain side. This is something that corporate India is worried at this particular point in time what they wanted to stitch up their supply chain better. In Q3 of FY 2022, we launched our new supply chain platform. This has helped us to actually provide assistance to the entire supply chain of our clients. Whatever we did, what did it translate into? If you look at credit growth, large corporate credit growth, March 2022 year-on-year was 0.9%. HDFC Bank ended up having a credit growth of 15.7%.
We were 16, 17 times. We grew faster than the market. If we look at it over the last two years of pandemic, we have had a CAGR of 22%. The good part about our credit book at this particular point in time, it is very well diversified across tenors. We are also very well represented through various industries. Plus, we have a large part of our loan book which is linked to a benchmark, and it is floating rate. In terms of our ability to pass on rate hike is that much superior. The growth in the book was both in the public sector space as well as on the private large corporates. Today 62% of the book is large domestic companies, 38% is public sector.
If we look at it in terms of growth, public sector last year grew 13%. Private sector grew 17%. In terms of the quality of the book continues to remain pristine. Our weighted average internal rating for the PSU book is 2.84, which means, when I translate it into an external rating, all of y'all would be able to relate, it would be a AAA portfolio. Our internal rating on large Indian companies is 3.83, which means, it's a rating that would be somewhere between a AA to a AA+, is the effective rating of our book. In fact, when we look at it in terms of the portfolio, today 93.5% of our book is rated A, AA, and AAA.
If I was to just look at double As and triple As, it would be somewhere around 87%. Actually 49% of the book today is rated triple A. In terms of we have spread across industries. If we look at it in terms of where did the growth come from, some of the industries which witnessed credit growth came from agri, food, beverages, in terms of infrastructure spends, in terms of telecom and services. Some of the sectors where the deleverage story was more pronounced was in metals, mining, minerals, chemicals, fertilizers, pharma. But our portfolio is spread well across industries. In terms of what is it that Corporate Bank does. We are today present across the entire corporate ecosystem, and we touch various parts of a corporate.
We are a financial supermarket. Whether it is in terms of servicing the corporate needs when it comes to funding, both through working capital and term, in terms of the cross-border transactions and facilitating through both imports and exports. In terms of managing the domestic supply chain, whether it is in terms of funding of vendors or customers, or whether it is in terms of handling of transaction volumes, both collections and payments. In terms of how do we leverage our relationship with the customer and add value to corporate employees in terms of salary engagements, in terms of how do we participate and aid government with tax collection through all kinds of statutory dues that we collect. Effectively at the end of it, how do we distribute the earned profits by way of dividend to the shareholders.
We are present across entire product suite when it comes to corporate clients. Just to touch upon a few aspects, and there were a few questions in terms of the corporate bank profit margins in terms of the NIM. We actually represent and bring together one HDFC Bank to the client. If we look at it, today we have salary engagement on the corporate side with more than 2,000 companies. There are 44 lakh employees in these 2,000+ companies who maintain their salary account with HDFC Bank. There has been a growth of 14% in the number of salary accounts. These 44 lakh employees today as of March had INR 54,100 crores of savings account balance sitting here.
Now, this is what, you know, being a preferred bank to a corporate and leveraging, and then on these set of accounts, there would be cross-sell on the retail asset side that gets built in. I spoke in terms of the trade offering. If you look at it, we are present across both domestic and international trade finance, whether it is through our supply chain financing program, whether it is pre-shipment, post-shipment credit, whether it is buyer's credit. The good part is that we work very closely with our treasury, and there would be opportunities and advisory that goes out to clients in terms of what is the best way to structure your borrowing. If you look at it, U.S. interest rates started going up faster. Indian rates were still lower.
The forward rates were very high, and there were clients who actually decided to move their borrowing from foreign currency to rupees. Given the way we work closely with treasury, there were opportunities and solutions that we could offer to our corporate clients. If we look at, in terms of letters of credit, today a large part of our letter of credit assistance to clients goes towards cross-border trade, 82%. What it offers us is the ability to then finance those transactions, plus cross-sell effects and help customers hedge their exposures. If we look at bank guarantees, it's the story the other way around. Over 93% of guarantees are issued for domestic purposes, and this is where we believe the risk of guarantee transactions is lower.
Now, if I look at in terms of the entire gamut of trade, whether it is import, whether export, whether funded or sent on collection, we have seen a huge 48% jump in terms of the trade transactions we handle. Does this happen through magic? No. There have been products, there have been solutions that we have offered to our corporate clients. If we look at in terms of the IDPMS and the EDPMS reconciliation that we provide, we pick up data from the DGFT side in terms of, say, a physical import that has taken place. We populate it on our TradeOnNet website, and a customer links his payment to an actual import. There is a reconciliation and a reporting that goes out.
Now, these are the kind of value-added services which get extended to our clients, and that is where we see an increase in our trade engagement and improvement in wallet share. In fact, a lot of our transactions today are processed untouched by human hands. There is no need for a customer to send a physical paper when it comes to international trade to our trade desk. What did it translate into? When I compare volumes for FY 2021 with FY 2022, we have seen that there has been a total increase of 16% in the total transactions. When we look at it, how many of these transactions were processed digitally, there was a 26% increase.
While we saw total transactions going up from 141,000 to 164,000, if we look at it out of 164,000 transactions, 142,000 transactions, 87% of these transactions are digital. This is what is creating stickiness, this is what is providing solutions, and this is something that is going to create a scalable model for us on the trade side. This is an area which is of a lot of focus for us. If we look at it over the last six months, and I mentioned that we came up with our new platform in Q3 of FY 2022, and we've already seen substantial engagement and increase in our volumes.
Now, whether it is in terms of factoring both purchase and sales side, whether it is bill discounting, whether it is invoice discounting, whether it is supplier finance, you look at it, there is the model provides us ability to do a lot of things digitally, including credit underwriting, including documentation, including booking of transactions. There is a lot that would be very different. This allows us, and there is a slide later in the presentation wherein we'll cover the corporate supply chain landscape, and it also offers us ability to do even deep tier financing. So there is a lot that can be done on this particular platform. This is a beginning. This is a platform where I can improve my yields without taking any incremental credit risk or measured credit risk.
It is something that a corporate may be cash rich, but this particular product is going to find benefit to all. The next thing, and this is where we have always been, market leaders. We are today one of the largest movers of cash in the country. Over the last 1 year, we saw 24% increase in our volumes on cash management side for corporate bank clients. We saw 35% increase in value. Both volume and value comes across several sectors. Historically, over the last 5 years, we've seen that as you keep increasing your cash management collections and payment volumes, it translates into float. For a corporate, he would typically not leave idle current account balances. Your float is nothing but the time difference between your collections and payments.
The more you handle transactions, both in volume and value, is where you're going to see incremental float. Second is it also helps us in managing our portfolio a lot better. We get deep insight into what is happening across various sectors, what is happening in a particular company. So whether it is right from a check bounce rate to our average value of a transaction tells us a lot of things about a corporate that you otherwise would miss out. We have also, over the last year and a half, increased our traction through digital integration through APIs, and 558 digital and API integrations done. If we look at it in terms of the total collection space on the corporate bank side, 92% of collections today are completely digital, untouched by human hands. 97% of payments are digital.
If we look at it overall, 94% of transactions, what I had mentioned earlier, are processed untouched by human hands. Given everything is digitized, our cost of running these kind of transactions runs into low single digits. What do we do? I mentioned in terms of tax, and this is just the beginning, and we do believe there will be substantial growth in volumes here as well. From March 2022, we ended up handling INR 225,800 crore of taxes. I was just doing a little Google search, and I was told that the total direct and indirect taxes, including corporate and individual in the country last year was INR 2,700,000 crore. Now, this is just the corporate bank customers contributing in terms of tax collection.
Now with the e-freight coming in, customs duty coming in, more customers coming in, we do believe that the scope for further growth in our wallet share on this particular product exists. Now all of this, what we said, what does it translate into? Now why are we handling these kind of volumes? If you look at it vis-à-vis 2021 versus 2022, my CASA ratio in wholesale book has come up to 50%. If I look at it in terms of contribution of income, you look at in terms of fee, commission, FX, cross-sell. If you look at it, the contribution from some of these products has substantially gone up. Which means that the quality of the liability book has improved with the transaction banking that we handle, and we are able to leverage our asset volumes well for cross-sell.
Coming to in terms of. If you look at it, we track our portfolio in terms of how well are we leveraging capital. At this particular point in time, you would look at it that there is only 8% of the total portfolio which is high capital consuming at this particular point in time. Out of this, there is 1% where capital consumption is high, but return is high. There is 7% where the return is lower for the capital that we consume. There are strategies around each of these clients, whether it is in terms of reducing the capital usage or increasing the cross-sell so that each exposure starts contributing substantially to the revenue and shareholder wealth.
Coming to our future thought process, let me start by covering the entire digital space. We have embarked on an architecture redesign wherein we will move away from the legacy system and move to a cloud native, resilient, agile, scalable API platform. In terms of, we are redesigning both the corporate and the RM journeys as we move along. We are trying to leverage on the analytical tools that are available with us in terms of improving our processes as well as our ability to take a larger share of wallet. Let me start off with the employee experience. Here there is a single platform that is provided to a relationship manager that would cover end-to-end workflow.
He'll be able to connect and collaborate a lot better with various other divisions of the bank with whom he needs to work, who he or she needs to work. They'll be able to deliver a much better solution to the clients. We would be able to use analytics in terms of increasing not only our share of wallet, but identify opportunities for upsell and cross-sell. Now, this would also result into bringing in better insight. Say, for example, there is something in terms of the pricing engine that we are looking at. Here just, you know, it's commonsensical that there is, say, there are two pharma companies rated similar, one in Hyderabad, one in Ahmedabad. If the Hyderabad company is borrowing at a particular rate, should the Ahmedabad company be borrowing at a different rate?
If in a particular tenor, if there is something that is being done at a particular rating, someone with a lower rating should be getting a premium price over that. There are a lot of insights that we are able to bring in to price our products sharper in the market. When it comes to customer experience, whether it is in terms of underwriting, whether it is in terms of the self-service modes that we would offer, whether it is our ENet platform, whether it is from TradeOnNet, in terms of how do we add value, how do we integrate with the ERP system of the client, and how do we serve customer better. On the transaction banking side, I spoke about the supply chain platform that we have come up with. We have also integrated with TReDS.
We would also see a lot more self-service modules coming in to serve corporate customers better. On the ecosystem banking, there will be dynamic discounting, there will be deep tier finance, and deep tier finance is funding even tier two. I would cover it a little later in terms of exploring how a blockchain can be used. I think what is important is whatever we have put out on the digital side, what is it that our customers feel about us? If you look at some of the testimonials and I'll just highlight a few points that this is technology is flexible, ease of implementation, integration with the ERP system, and ability to digitize everything. These are the things and feedback that comes in from the customer.
It's a continuous process wherein we look at seeing how we can improve ourselves. Coming to the supply chain landscape, what I mentioned about, and this is going to be a big area of growth for us. If we look at it, there is a corporate at the center, you have supplier, and then you have supplier to supplier. So you're going into the tier one vendor and the tier two vendor on the other side. On the other side, you have, depending on the business model, you can have the two PCC manufacturers. Now, post GST, you are having a lot of warehouses. On the other side, you have the dealer distributor network, you have retailers.
Now, whether through the supply chain finance platform or through partnerships with various other verticals within the bank, we do believe that we have solutions to cater to the entire ecosystem. Now, there would be primarily banks who are our competitors here, and we are looking at competing better through some of the partnerships, whether it is with fintech, whether it is with other verticals of the bank. If you look at it in terms of the risk profile, a lot of it is predicated on the corporate cash flow on the vendor side. It is partially mitigated through long-term contracts. Where you have the customer risk with the use of technology picking up with the consent the GST invoice details, a lot more can be done without running incremental risk. Therefore, the opportunity space on this side is very large.
In terms of a vision that we share at this point in time is to become one of the largest and the most preferred banks to multinational companies in India. At this particular point in time, last year we had 693 clients here. We initiated relationship with 59 more clients through last year. If you look at this particular space, most MNCs in India have an asset-light model. So here your asset opportunity will be limited, but opportunity when it comes to liabilities in terms of cross-sell, in terms of FX, is huge. At this particular point in time, we have an identified list of 2,000 multinational companies that work in India. Now, these are divided by country of origin. These are divided by business lines. These are divided by head office geographies.
We've started engaging with these set of clients directly through Chamber of Commerce, through their consulates. We do believe the potential of initiating engagement and playing a pivotal role in their businesses in India exists. This can be a very, very big driver for us. While we spoke about multinational clients, what about new-to-bank clients for Corporate Bank? We just do a simple search, and you can, a lot of this data may not be available through one single public source, but there would be, as per our database, there are 2,237 companies in India with turnover in excess of INR 1,000 crores, which is the threshold for Corporate Bank to deal. Out of this, 1,066+ companies are currently dealing with us on the asset side.
If we look at it and we applied certain filters, we said, companies rated with a minimum rating of A-. We looked at it in terms of a bureau scrub. They should not be having any SMA reporting. When we look at this particular addressable base for us, there are still 617 corporates who do not deal with us at this point in time. When I look at what is the total debt across these 617 companies, that is INR 11 lakh crore of debt, out of which 80% is long-term, 20% is short-term. Now, I may not want to deal with all the 617. All 617 may not deal with us, but this is an opportunity space that exists where we would be able to bring in new-to-bank clients.
When you look at what is not with you and compare it with the size of your book at this particular point in time, this offers great growth opportunities. In terms of PLI scheme, I'm sure I'm not going to give you a lecture on PLI scheme. I'll limit myself only to cover in terms of the opportunity that exists. There are 14 sectors, 16 schemes, a total outlay by the government of INR 203,000 crore on the PLI side. Out of the 14 sectors, 12 sectors, they have given the approved list of applicants. Across these sectors, there are 600 companies who have already received approval. In terms of the CapEx that these guys have committed is to the tune of INR 234,000 crore.
Now for us, we have in our segment of INR 1,000 crores plus, we have identified set of companies who are participating in PLI. Some of them happen to be our existing clients, some of them are our target relationships. Some of them have crystallized their CapEx plans in terms of, the division between, debt and equity. Some of them are still working things out. This gives us an opportunity not only to participate on the debt side, but work along with the investment banking teams on equity side, mandates as well. This is going to be the other opportunity for us to fuel growth. In terms of just to summarize, what is it that corporate bank is bringing to the table and where do we see the future coming in?
The first thing is in terms of increasing our share of wallet in our existing to-bank clients. Two is in terms of bringing in new products to your existing customer base. For this particular initiative, we've embarked on a journey which we internally call perform to potential. What is this? If you look at two companies in the same industry, say you pick up industry of your choice, say automobiles. Would two companies in automobile space have a very different business model or similar? If you have a better engagement with one of the automobile companies, means you have understood the pain point of that particular industry, that particular company better. Can you then replicate it? Same is true as you move from one industry to the other.
How are you taking your learnings from a particular company and replicating it to other companies across the country? We do believe that through this particular initiative, we would be able to substantially increase not only our wallet share, but bring in new products to our existing clients. Second, I covered in terms of the new to bank opportunity, so not dwelling further, but that is going to be a growth driver. Third is in terms of participating in opportunities that the economy will provide us. Whether it is the production-linked incentives, whether it is going to be the asset monetization plan of the government. As I mentioned, supply chain integration is going to be a big driver. One, it is going to help us create value. Two, bring in higher yields.
Three, in terms of companies can become cash rich, companies can look at alternate avenues, but supply chain is a product that is here to stay. We're looking at serving the customers through new products. There are quite a few exciting products that we would come up with on the international trade side, which would add value to our customers and help us gain market share on that side. I've already covered in terms of the MNCs, how what is the opportunity size and what kind of contribution in terms of liability effects cross-sell that they can bring in. All of this is being done through digitally integrating better with our clients, and there would be services.
From a regular cash management, can we move into a cash management with invoice-level reconciliation for our clients? That's something that the fintech partnerships will provide. We do believe that growth in corporate bank opportunities are far too many. It is in terms of selecting the right set of clients, not moving away from the core principles that we've over the years built corporate bank on, and in terms of improving the quality of earnings through better engagement with the clients. That's something that we're looking at delivering from the corporate bank. Thank you. Yeah. If there are any questions for Jimmy or me.
We will take only two questions. Anyone have any questions? I have one.
Hi. Maybe not directly related, but, if you can, give us the idea of what is the outstanding share of infra bonds on our balance sheet right now, and how do you see the appetite for that particular product in the market? Thank you.
Numbers, I think, please, talk to Srini or Bhavin and they'll give you all the numbers. We manage infrastructure in a very different way, right from maybe the smallest construction equipment up to the largest product. Infra bonds, more of a financing issue, I'd ask you to speak to Srini on that one.
Opportunity that you guys mentioned about INR 11 lakh crores that 600+ corporates that you-
Yeah.
What would be? Because traditionally, HDFC per se stayed away from the long-term financing per se and more towards the working capital loans, if I'm not wrong. Would this large chunk be towards the infrastructure kind of a segment considering 80% is the long-term financing into that particular
No.
Good.
Yeah. Let me put it this way. At this particular point in time, and if I even just to be a little conservative, even if I take 5-year plus as long term, today 40% of our book is with door-to-door tenor over 5 years. There would be certain installments that would be paid even on the way, but if I just pure cut it by door-to-door tenor, it is 40%. Second, if there is a lot of strategy that has gone behind, and if I cut this particular data by corporate rating, a large part of my 5-year plus is in companies which are rated very highly. As you keep moving down the rating chain, that particular amount just starts becoming smaller and smaller.
Third thing is, in terms of infrastructure, there are various ways in which we participate. There can be a debt finance where the project risk is complete. There are infrastructure projects where cash flows are determined, you are not really running the risk. When assets monetization happens, more you will see that because of those inward structures, there are restrictions in terms of the kind of debt that is taken, there. There are certain long tenor loans that we would have given which may not be really project risk, but may be a balance sheet risk because there are enough and more cash flows to support even if a particular project was not to go through. We will always remain cautious in terms of what we do.
In this particular country can you really avoid funding the project? Answer is no. Can you do it diligently? Answer is yes, and that is what we will endeavor to do. Jimmy, anything else you want to add?
If I can give a minute's flavor on just to allay, I think the fear is misplaced. Long term firstly does not mean infrastructure, and I think Nirav alluded to that. A large part of our long term is actually out to corporates, manufacturing companies and the government and public sector companies. I think a very, very significant part of our long term exposure is out in what I call Navratna quality. They may not all be Navratnas, but Navratna quality public sector undertakings. So it is safe over there. The mix and I think as the bank grows, there is a need to participate more and more out of just a niche of working capital and to be across the entire spectrum of lending.
More than that, I think the bank also, as it becomes something of considerable size, is important to have duration in your book. If you do it safely and you do it right, and we have to this point succeeded in doing that quite well, we have managed to create duration in the book, and we have not assumed a higher level of risk. I think the risk scores you just heard from Nirav, the PSU and the corporate scores overall, they're very, very low. You heard it being a shade under four for the entire book and shade under three for the PSUs. To give you some color, you've got to be a shade under five to exhaust double A. That's the quality of the book, including the long-term exposures that are held at this point.
Just the last question on the corporate bond market. Over the last 3-4 years, we have seen India has developed significantly on the corporate bond market, right? Prior to COVID, we were building a lot of capabilities to build on this opportunity. Can you just give us some flavor what has happened over the last 3 years wherein our corporate book was growing, how we have capitalized this entire journey of corporate bond markets, and how do we see ourselves 5 years down the line? Thank you.
Let me take it in two parts. One is in terms of participating. We work very closely with our treasury and the investment banking team in terms of helping corporates place their debentures. That's one area where we do a lot of work jointly with IB and treasury. Second is in terms of you saw a spurt in both issuance of commercial papers and debentures. But if you see the market over the last two months, the issuances have completely dried out. At this particular point in time, if for us it's a customer asset, we would look at a customer asset from the point of view that part of my overall strategy, where does this fit in?
Do I really need to participate on the investment side? No, my participation is not very large at this particular point in time. If there is an opportunity that can be leveraged well, we would look at it. It's from time to time, client to client, the strategy would vary. At this particular point in time, even the primary market for issuance has dried up, and we are not doing much on the corporate bonds. Interest rates are going up, so it does not even make too much sense to-
If I can just, you know, if you look at how the corporate banks behaved throughout the last 3-4 years, and if you look at the TLTRO period, you'd have seen us very, very active over there because that was a time companies were shoring up liquidity and raising a lot.
Participating in bonds actually brings additional risks. If you have a good enough business franchise, what does a bond do effectively? It kind of commoditizes the finance, so it brings a very standard. You're not able to really fine-tune what you want. Of course, it brings market risks into the equation. If you're not going to be able to price those risks in, you're probably better off with an advance. It's something that we look at from a case-to-case opportunistic perspective. We're not really looking to participate in a bond market for the sake of participating. When we find the good transactions, we definitely pick them up, and we pick them up with good large appetite. It's not necessarily a must-have for us that we must have bonds. We don't really have to have bonds.
We would like to be a good part of the corporate's business, both on the working capital as well as the long-term side, and we would much rather structure products that are for that company, for that moment, for that time, for that event.
When we do a back-of-the-envelope calculation, your corporate yields basically work out to somewhere about 6-6.5%. Is that the right working basically, because basically you are doing more of AAA corporate, you are gaining market share as well, that's the strategy that you adopted?
Sir, I don't know.
I don't have your envelope, but
I don't know the back of the envelope working, and I would leave it to Pinchpoint to provide you details that is out in public domain. I would let me try and explain to you in terms of you cannot look at yield as an absolute number. The way I would look at yield is how much of my book is floating versus fixed. Again, in terms of floating, whether it is linked to MCLR, whether it is linked to repo, whether it is linked to T-bill. What is going to be my ability to transfer rate hike to somebody else? I can give out a fixed rate loan to someone wherein I can get a much higher yield, but the book ends up taking interest rate risk.
The second way of looking at it is I can, as you keep going longer on tenor, your yield keeps on going up. I can have entire book long term and give you a much higher yield. In that case, you are compromising in terms of the credit risk. I can go down in terms of quality of corporate, and as you keep going down the rating chain, you keep getting an increase in yield. Would I want to balance the book well? It's a combination of fixed versus floating. It's a combination of rating. It's a combination of tenor, and you need to look at it in that particular way.
We do believe that we would not want to do anything stupid just to increase yield and compromise on something that has been so beautifully built. It's a pristine corporate bank book that has been created over the years. What you require in corporate bank relationship is continuity. Today, when I look at the life of the bank, 27 years, and corporate bank was the first division that the bank started. Sashidhar mentioned about it. One thing is consistency. We have stayed on course in the market for all 27 years. There has never been a year that we exited. Now, it takes years of relationship and engagement to actually build relationship. It takes a couple of years of effort to break into a large company.
It takes another 2 years to cross-sell products. If you are inconsistent in your strategy in terms of at one point in time, just go aggressive, pull back, go back, customers and the corporate customers don't like it. What we've built is step by step in a manner that we never have to jerk our relationship. That's the level of confidence we would bring in when it comes to the book composition and yield is an impact or a factor that comes in from the book that you've created.
Certainly it will be on the lower side because, you know, that's the drag that you see on the margins front as well, right?
That is the right-
I don't know how many times he put it out before, but today he did put out the repo. You can bring yield, but at what risk do you bring in the yield? That's exactly what came out. I don't know how many corporate banks have that repo.
We would have one of the best risk-adjusted return on capital in the banking industry, part one. Part two is the process that we bring in. Now, some of the income that we generate may not fit within corporate bank, may sit outside. Effectively, it is not about each division being a bank by itself. It is one bank. What is it that you are contributing and taking the power of one bank to the plan.
Secondly, on the fee side, we have done a lot of lending over past 3-4 years.
This is the last question. For our next session, I would like to invite Rahul Shukla, Group Head, Commercial Banking and Rural Banking, along with Mr. Jimmy Tata, to present commercial and rural banking.
Does this work? Huh?
Kidhar dikhana padega. Bluetooth kis taraf hai? Kahin bhi karenge.
Okay. No, I'll stand. I need my partner-
Mm-hmm.
Jimmy Tata, without whom I'm very nervous. Hi.
Hi.
Hi. We're going to talk about, you know, commercial and rural banking. In fact, we're just one year old, as a group, and we celebrated, you know, our one-year birthday on first May. It was, you know, Shashi's vision that he created, and we're gonna try and, you know, basically explain what this animal is. There are several groups in the bank, you know, which are all together. You have the emerging corporate group, which is, you know, companies with turnover between INR 250 crore and INR 1,000 crore. You've got business banking, which is our wholesale SME business from INR 7.5 crore to about INR 250 crore turnover. You've got EEG, Emerging Enterprise Group, which is a retail SME, which is INR 7.5 crore and below.
Rural banking group, where we actually, you know, finance farmers for crop financing and other needs. Transportation finance group, which is, you know, commercial vehicle, some HEM projects, tractors and commercial equipment, et cetera. We have healthcare finance. The question that you would ask is that, you know, what is this hodgepodge together and why is it together? That is the number one question. You know, when I was told, I also asked myself, you know, the same question. The reason is that if you take a look at it, where do we distribute these products? It's all semi-urban and rural, largely. We have, you know, commonality of, you know, where we are distributing these products. That's number one. Number two, if you look at this, you know, entire product set, this is the PSL engine of the bank.
When bank is, you know, basically focused on growing PSL, you know, this is all grows up together. The third thing I would tell you, it's a very important but a fine point. You have a retail customer and you have mature corporate who have, you know, needs that they have. Here, the life cycle is transitioning. Today, the retail SME is tomorrow's wholesale SME, who's tomorrow's ECG and who's tomorrow's large corporate. To give you one sense, if you take a look at consulting studies, by the end of this decade, there would be 10,000 SME customers who are gonna become mid corporate, and they would have differing needs as they go through the life cycle. There would be at least 1,000 customers from mid corporate who will become large corporate.
Our job is to basically, you know, keep changing. It is supposed to be, you know, like, we are not an expert bowler or batsman or batter as they call it. We are supposed to be, you know, basically that Hindi word harfanmula, you know, all-rounder. We are supposed to be able to get all parts of the bank and, you know, go out and sell this. This is what the group is. Now, when you think about it, you know, what are we supposed to deliver? We are supposed to deliver 25%-30% growth rate. This is quite simple. The second is earnings, which is again NIM and ROA.
I think last year, you know, when we did our ROA was, I think about 3.7% or so. You should always expect an ROA of, you know, basically significantly above, you know, the 3% number. The third is, you know, enabler for the bank, which is about 65%-70% of the bank's PSL today is generated by this group, and about 65%-70% of the portfolio itself is, you know, PSL today. We build all those products. I don't need to, you know, talk about it. You guys are all banking analysts, so you kind of know, you know, basically the standard banking products that are, you know, we go out and deliver. Look at what we do, just highlights.
We can talk about fees, we can talk about liabilities, but last year, we grew our average assets by about 26%. That's a huge number on the back of 11%, you know, year prior. We increased our revenue by 26% on the back of, you know, a year prior, which was about 18%, right? You know, I mean, these numbers are, you know, pretty healthy. Total customer base about 11 lakhs. We continue to add, you know, new to bank customers. We have a GNPA ex-Agri of 1.15%, which continues to come down, right? Now, you can look at this number and say, "Oh, great performance." As an analyst, your question simply will be, is the market large enough, you know, for me to continue to grow?
The second question, grow with the same quality that I have. The second question is, do I have the strategy to, you know, go out and grow? In the next few slides, I will simply cover, you know, basically these two questions. Is the market big enough? Do I have the strategy and, you know, everything in place to be able to continue to grow? This is, let's take the MSME size, right? You know, this is the MSME, you know, market, size. Not our creation. It's TransUnion, CIBIL, BCG, Jefferies, you know, in a research report that came out. This is the total demand for credit in this space is about INR 50 lakh crore. Today, NBFCs and banks service only INR 20 lakh crore. There is INR 10 lakh crore where proprietors are borrowing, you know, against basically their assets, et cetera.
There's a 20 lakh crore, which is a credit gap. Now this 20 lakh crore, the total number of entities you would know, obviously is about 6.5 crore, but 5 crore of these are not in the formal banking system, and they are borrowing 20 lakh crore from the informal market. Now, if you think about it, basically slowly and progressively, that 20 lakh crore is moving to the 10 lakh crore and the 10 lakh crore is moving to 20 lakh crore. It is an enormous opportunity. You know, India is basically known for its IT prowess, but you know, it basically creates about 50 lakh jobs. Startups may be 1 lakh of jobs. But out of 6.5 crore entities. You know, the micro entities is 6.25 crore.
I always say in our country, the chhota baniya remains a chhota baniya, never becomes a bada baniya. If you look at all the government policy focus today, the push is that, you know, to take the micro and make him small or make her small, and in the process, when you do it, you have to create just one new job, and that's 6.25 crore jobs. In a country where jobs are needed, the entire politicians, you know, basically focus is on MSME for a reason. Because if you create that 6.25 crore jobs minimum, and if you take, you know, 4 members in a family, you are lifting the spending power of 25 crore people.
Make no mistake, you know, when I sit and do CRB, I think, you know, I'm basically doing, you know, the future of banking. Just said in jest, but that is how large this opportunity is. Let's look at, you know, what we've done. No numbers, but you know, you see some growth rates, right? During the pandemic, you know, 26% CAGR over there, and last year, 44%. This is just the SME book, the retail SME and the wholesale SME. Now, if you think about it, see here. Well, you can't see this. You know, you always talk in terms of slopes, and this slope is, you know, basically wider. During the pandemic, you know, more and more customers in more places are coming and joining hands with HDFC Bank. Why? Why is, you know, the question.
Why aren't they going to, you know, basically any other bank? Now, when you buy a laptop today in Croma, I am 100% certain that you are asking them to set up the laptop instead of bringing it home and doing it yourself. When you think about a bank with a digital and a physical, you know, basically platform, customers want both. The branch, you know, basically comes in over there. The second thing, if you go to Andhra Pradesh today, you know, renewal of customer limits hasn't happened for six months. Six months, right? You know, this is the state of the banking system. In HDFC Bank, you know, it will take long, and long means, you know, five days, right? Renewal of, you know, credit limits. That is, you know, what happens.
The third thing is that during the pandemic, the guy said, "Either I can remain with my good old bank because that was opened by my great-grandfather, or I have to look after my business. I have to do LCs and I have to do transactions and I have to just continue to run my business." That is why that acceleration has happened. Because of that acceleration, the number of customers who have come to us, now we are playing the network effect because a promoter in Guwahati would have his son married to, you know, basically the daughter of a promoter in Belgaum. All that, you know, starts connecting immediately because your base is so large today that a lot of these are not just branch referrals, but also promoter referring, you know, promoter.
What, ladies and gentlemen, has made us the number one MSME bank in the country. Whichever way you look at it, you look at, you know, basically TransUnion's report or you look at any other data, today our bank is the number one bank. Not, you know, number one MSME private sector bank. You know, when I say this, it's number one MSME bank, period, and one of the lowest GNPA in the MSME segment. Look at this next slide. This is RBI data. It's pretty simple. March 2020, we had a 12% market share. March 2021, we had a 14.6% market share of MSME lending. March 2022, we had an 18.4% market share. Now, you can always ask the question, you know, how will you grow? We continue to grow.
You also should see that 16.6% market share in micro and small segment. For anybody who has a concern about, you know, basically this type of PSL, you know, your concerns are addressed right here, which is what you know where the bank is. The next question is in terms of just the geographical presence. Today, we do business in about 600 districts. 600 districts, this is a number that we have targeted. Over a four-year period, we have grown from 450 districts, and we are fairly, you know, sort of evenly divided across. It's not that, you know, we basically go out and, you know, do something more in a particular segment or anywhere else.
You think about our customer base, you know, that is distributed across urban, metro as well as, you know, rural segment. It is distributed across micro, small and medium enterprises. One fact when you think about whether I will be able to grow 6,338 branches of HDFC Bank. 5,331 do, you know, MSME business. Out of that, only 2,300 branches have a MSME book, which is more than 25% of that branch's asset book. I have 3,000 more branches where we can focus and build it amongst our known customer base. That is what differentiates, you know, basically the GNPA from us, you know, compared to everybody else. This is, you know, the GNPA slide. You know, we've taken out the numbers.
This is from TransUnion CIBIL. This piece is HDFC Bank. If you think about it, this is you know I don't know whether they take write-offs or not, but they have a number of I think you know about 1.4%, which reduced you know compared to September 2021 by about 1.2%. You look at the entire private sector banking system, excluding HDFC Bank, that is about 7.8%. Go above to NBFCs, that's 10%, and this is you know about 20%. That is you know what the difference is.
When you control and when you think about bringing CRB where the yields could be, you know, basically between corporate and retail, the only thing that you need to do is basically keep controlling the GNPA and suddenly it becomes a cash cow for a bank. That is what, you know, basically my simple remit is, which you know Jimmy and I try and, you know, together execute on a daily basis.
Allow me one second please, if you can. I wanna point, it's not just where that line is. Look how rock steady it has been through one of the worst calamities the country has faced. I think this is the strength of the bank. This is the strength of good selection. Without doubt, it is the strength of our sales and marketing engine that can just bring in quality so that you don't have to approve things that are not good.
Sorry, Raj. Right. The next piece is agri. This is a topical point. This is something that the bank needs. This is something that the banking system needs. Between 2021 and December 2021, between March and December, our market share increased from 6.13% to 6.4%. That is, you know, basically what it is. Our target market share by FY 2024 is about 9%. Now, to give you a sense, if you take a look at, you know, just the KCC portfolio size, the Kisan Credit Card, because we do a lot of other rural also in this group. If you think about it, all private sector banks put together, if you exclude HDFC Bank, that size of lending is INR 80,000 crore. Against that, HDFC Bank is about INR 65,000 crore.
There's INR 80,000 crore of everybody else. There's INR 65,000 crore of, you know, HDFC Bank, and that is what you know basically the difference is. Now, the second question, you know, that will always come is, what is the GNPA? We started disclosing, you know, the GNPA. I can go back and tell you that if you look at the GNPA over the last one-year period from March 2021 to March 2022 or from December 2021 to December 2020, right? You know, that particular period, HDFC Bank has significantly reduced its GNPA through its efforts, selection, collection, so on and so forth. In the entire system, the GNPA has re-increased quite dramatically. It is a complete differentiator. We are building this book, you know, very thoughtfully.
There are many different pieces that we have to build and that is, you know, this is how we are doing it. Number one is geography penetration. We will be in 2 lakh villages. We said it last year when we were at about 98,000, you know, villages. We started a tracking and planning, you know, in terms of expanding our footprint. By March, we were in 1 lakh 30,000 villages. Next year, you know, I mean by March of next year, we'll be at 1 lakh 65,000 and we will be at 2 lakh villages. This is a presence which is unparalleled in the private banking space and a lot of nationalized banking space as well. Two lakh is not a lot of villages.
This country has 640,000 villages, so we're still playing in about, you know, 30% or so. The nature of, you know, this lending is changing as we, you know, go about. Number one is, you know, diversification of crops. You know that there is a water crisis, groundwater crisis in the country because 90% of water usage is basically in agriculture and 80% of that water usage is wheat, rice and sugarcane. We have to move to allied, you know, in terms of horticulture, different types of products, fruits, vegetables and other activities of agriculture, piggery, fishery, you know, so on and so forth, which is what, you know, we are doing and we are steadily increasing, you know, basically our share. Focus on government schemes. One of them is the Agriculture Infrastructure Fund.
I must tell you, we are known for ECLGS as the largest disburser of ECLGS. In AIF, when the government ran a contest between first February and fifteenth of March, we were only second to Punjab National Bank in terms of, you know, going out and lending against, you know, this particular scheme, which is what, you know, the bank is very focused on because there are great schemes. There are about 40 different schemes. You just have to follow, you know, the government and all of these are transitioning us away from water guzzling crops to cash crops or value-added crops where the farmer's income, you know, increases. Instead of making, you know, INR 25,000 per annum on an acre, that farmer, you know, goes to about INR 3 lakh, you know, per annum. We simply have to be non-judgmental and follow the schemes.
The schemes are brilliant. We have to focus on small and marginal farmers, which is a regulatory target, which is again, we are doing it. We've grown 37% last year. We are planning to grow this about 100%, but it's a need that, you know, we have to go out and do. The next segment is transportation. To give you a sense, we are number one. When you take a look at, you know, all vehicle finance, you take any NBFC, you take any bank. In this year, we are number one, larger than the largest, and we do more financing for many OEMs than their own captive, you know, finance NBFCs. MHCV market share, March 2021 to 2022, 28%. Commercial equipment, 17%. That's 8% LCV, SCV.
Tractor market share is, I think, about 8%-9%. You do that. Now, the next question is, can we grow, right? Is this business cyclical? When the economy is doing well, you grow and then, you know, you go down. Our attempt is to change the nature of this business that we continue to grow irrespective of the economy and irrespective of, you know, the market share. Now, the next question is, how do you do that? It's so easy to say. You know, there are 3.5 lakh, you know, commercial vehicles that were sold last year. Now you can focus on all the new equipment and keep financing it. There are 2 lakh, you know, basically, commercial vehicle which traded in the used commercial vehicle market. That's a huge segment.
I don't say go out and buy everything, but the guy who's buying a Daimler truck or a Volvo truck or a Tata refurbished truck knows what he's doing or knows what she's doing because those, you know, come at a premium and you get a guarantee for about six months. Truck चल गई तो चल गई उसके बाद. You know, दस साल तक चलता है. That is how it runs. We have to go out and take a look at that. But more importantly, you know, this entire space of equipment is only INR 3 lakh crore. But the working capital that is used by the transporters together with that is INR 7 lakh crore market, right? I'm only scratching the surface on that.
If I start, you know, pushing because you are the largest, you have the largest number of transporters, you have a great, you know, basically GNPA, you know, track record, et cetera, then suddenly you have, you know, future-proofed it. Not future-proofed it, growth-proofed it. Whether the economy is growing or slowing, you will continue to grow. That is, you know, what we are doing in the entire, you know, logistics ecosystem. The next is healthcare. Today, you know, go out in every district, there are new hospitals coming. UP before elections announced, hospitals and medical colleges in 14 districts and now they're going to cover all the districts, which is what is happening. There is a scheme as well of the government. We all know there's a lot of, you know, basically flows around that. We are very focused on that.
Currently, the book size is small because hospitals have made so much cash flow during COVID that they paid down. The bank, you know, intends to continue to leverage its 3 lakh, 2 lakh doctors. That is about 25% of, you know, the doctors who bank with us. 6,000 plus hospitals, 14,000 labs and 17,000 chemists, and we will, you know, basically build upon, you know, this particular area. The market size is very large. Now, how will we execute? What is our strategy? This is our strategy. Growth, PSL and income, right? You know, this is pretty simply put. How are we going to do it? On the left-hand side, geography expansion is a key tenet. We have to go, you know, deeper and deeper into the country.
There is a market share gain because, you know, there is a large set of banking system which is not able to service, you know, the customers. 6 months, you know, for renewal of facilities and so on and so forth. There are other, you know, basically large, you know, private sector banks who don't want to go deep into, you know, the country. If I go out and take a look at my travel schedule in the last, you know, 2 months or 3 months, I have gone to Darbhanga. I have gone to Pudukkottai. These are places you would not even hear of. That is where, you know, today business is. The third is, you know, customer acquisition. We have to continue at a small, large clip. Government sponsored schemes. I'm a great believer in that. Deeper village penetration.
I basically ask my team that on 130,000 villages that we are. That's all that we need to do. Nothing else. That is deeper village penetration. Logistics ecosystem and healthcare we talked about. Rural we talked about. High cash, crop cluster we do it. How do we do, you know, basically in terms of origination? We look at branch. We have direct sourcing. We use, you know, VRM. Today we sell, you know, tractors through Sampath's team. We use CSC, and we do digital sourcing also. In terms of, you know, what is our people strategy? Number one is succession planning, that tomorrow I am not there, who's my successor? That is known. If any one of them is not there, you know, who's their successor?
You just keep going down deeper and deeper because this business is run by supervisors and you have to get it right. The second is deep managerial bench that comes with, you know, basically making people supervisors in remote locations. They don't overnight become, you know, great managers. You have to just, you know, nurture that. The third is, you know, regular tour training, and the fourth is, you know, just focus on productivity as to how many files are being done. This is our geographical expansion target. In the mid-market business, ECG, you know, from 135 cities, we are going to go to 250 cities by the end of March 2023.
In terms of MSME presence from 573 districts, you know, as of March 31, we will hit, you know, 650. It's a stretch target, but we are going, making a go at it. In terms of villages from 1.35 lakhs, you know, we will go to 1.65 lakhs. How have our customers dealt with it? You know, we don't talk much about it, but, you know, we have a digital system which basically works, and it works because the customer is able to meet, you know, their entire needs. There are many customers who gush. I think that those are planted, you know, gushing by RMs who basically say that, "Oh, you know, we cannot exist without your platform," and all that. So I discount it, but you keep hearing again and again.
Even if I discount it, what I hear from Northeast, you know, Kohima to Kachchh, everybody says that HDFC Bank is a good luck bank. Now, when the MSME guy, you know, starts believing in it, no, he will never go. Never go. Today, the common, you know, myth or otherwise in that community is that HDFC Bank. We do, you know, basically a platform which is complete. Today, almost, you know, above 75% of logins are, you know, happening digitally. Our goal is that by, you know, June 30, 50% of disbursements happen, you know, digitally. Then we continue to work on our digital engine for credit approval because the future at the lower end will be completely, you know, straight through processing in terms of digital. These are our goals.
Everybody wants, you know, basically a forward-looking, you know, statement. The bank doesn't give it, but look, we have a target one plus one plus one, and one plus one. The same target. But the meaning of all this one plus one is different. This year, whatever was our book on March 31st, built over 26 years, we're gonna do the same amount in rupee crores of disbursements during the year. We are tracking it, you know, April, May, June, et cetera, and it is distributed across districts. This is what we are going to do. Next year, whatever was our customer base, we are going to double the count of customers because 11 lakh is what? Out of 6.5 crore. We want to do that. Now, why is that coming later?
That is coming later because we have, you know, system enhancements getting in place. I said 5 crore people still don't bank in the formal banking system. We have to have a system that is able to take care of about 2 to 2.5 crore customers. Today, any bank's MSME system, you know, 5% better, 5% lower and all that, we don't want to play around with all that . You have to build a system that can tackle, you know, that amount of volumes. The third is, you know, basically doubling of revenue, not between '24 and '25, but from FY 2022 to FY 2025. This is, you know, basically our third goal. After FY 2025, the game of MSME is going to completely change.
The way the business is done or we understand that is going to, you know, get a dramatic shift. While we do, you know, basically all these, you know, volumes, you know, Jimmy Tata, just stand a little bit. Bhavesh, you can also stand a little bit. I want to thank, you know, my ops partner and my credit partner because dhanda toh hum le ayenge lekin unko approve karna hai aur unko process karna hai. Toh unke liye ek taali toh banta hai because this is what, you know, the bank is doing. Thank you. Now we open up for questions. Yeah, ma'am.
Even in the early days, like 15, most of the SME and MSME growth for a lot of private sector banks was from PSU market share acquisition. Could you give any flavor in FY 22 and FY 21, what were the new to bank customers in the MSME segment and what was the acquisition?
The way I understand this question is that new to bank versus new to credit. You know, did I go and, you know, take basically a customer who's new to credit, not in the banking system, right? Now, everybody talks about this, you know, question. Sorry, you know, but I just find this, you know, question to be superfluous and not relevant. The reason I do that is that today you are a PSU bank customer. I don't have a strategy to go out and take you. The PSU bank customer, you know, wants a 20% enhancement because he's got a large order. Go to, you know, a bank. The processing time will be 60-90 days. They will require more collateral. In my system, within one hour in the computer system, without telling anybody, they can, you know, seek that enhancement.
They can go bid for the order and they can get that order. Even the customers who are moving to us, you know, from other banks, they just don't move, you know, unless they are very, you know, basically, distressed with the service level, which also happens. They would move, you know, with some enhancement because they have enhancing needs. These are guys all growing. I mentioned to you that by the turn of this decade, there are 10,000 SME customers who are going to become, you know, mid corporate. There are 1,000 mid corporate customers who are going to go and become, you know, large corporate. Now, when you think about it, they have continuing credit needs and that is what we need to, you know, go out and service.
5 crore customers in the MSME space today are not in the banking system who will progressively every year keep coming. We have to be prepared for that. The way I look at it when I say, you know, "I will double the number of towns that I do business with." Right? That is not that, you know, this is PSU customer I will acquire, this is ICICI Bank customer or Axis Bank customer. That thought doesn't even cross my mind. I look at, you know, why is my market share in Tripura, you know, why am I number eight bank over there? That's a question to ask. I have a 23% market share in Gujarat and I'm the number one bank in MSME. I'm number one in Rajasthan.
You take a road trip, you know, from Porbandar to Veraval, that stretch. There are a lot of fishermen, lot of fishing nets. Who's financing that? We are not. Suddenly you find pockets where you know your market share is low. You got to go out and, you know, provide your digital facilities. You got to go out and provide financing, but you don't provide financing by, you know, basically only cutting rates. When the 44% growth happened last year, right? You can think that, you know, what happened to my NIM? My NIM went down by one basis point. The book grew 44% and the NIM went down one basis point.
At this point of time, what I am looking at is between March thirty-first and September thirtieth, that the yield of the entire book, you know, the rupee book goes up by fifty basis points. So that's how we look at this market. It's a very dynamic market. Everybody, you know, basically whoever is a promoter, they have, you know, some what do you call it? Ahankaar. You know, little bit ego. Because everybody is, you know, basically build great businesses around everywhere. We just have to go and be supportive, be humble, and keep growing, and that's how we will continue to grow.
Thank you.
Last question. Yeah.
Hi. This one is for Jimmy. As you become the largest player in these respective micro markets.
No, no, not become. We are the largest.
Right.
Correct that.
Correct.
Correct that, because then you guys will go out and write research report you, as you become. What do you mean as you become here? Abhi itna bada presentation kiya, itna bhashan diya uske baad bhi aapko samajh nahi aaya. Aap likhoge kya?
As you are already the largest player.
Yes.
in these markets.
Rahul is Rahul.
How do you address scale related risks on asset quality?
What related risk, sorry?
Scale related risk.
Just Jimmy, hold on.
When you become the market.
Jimmy, hold on. I'll give you some metric, right? So you think, so what are the goals of GNPA that we are driving? Healthcare finance and ECLGS less than 0.5%. MSME business, retail and, you know, wholesale 1% GNPA. You look at transportation finance, we are higher I think 1.2 or 1.25%. We are driving it to 1%. We can't, you know, do better than 1%. When you talk about rural banking, our goal ultimately is to reach a GNPA of about 4%. Right? That is, you know, the roadmap. You can always evaluate us on that roadmap as, you know, the bank goes and continues to publish. Now, if you think about March 31 last year, kitna tha hamara GNPA CRB mein? Every quarter we've had a reduction.
The bank is on basically that glide path to be best in class in terms of GNPA performance and the number of customers, 6.5 crore versus 11 lakhs. I can still continue to grow. There are good quality businesses without diluting my GNPA standards. Thank you.
Let me give you some comfort on this. If you look at the businesses encompassing CRB, we're probably the largest CTG financer in the country today. We are among the largest agricultural financiers in the country today. We're the largest MSME financier. We didn't become this last year. We have been large enough for several years. How do we manage it at scale? By doing exactly what we did when we didn't have the scale. We have a better and larger and more energetic marketing structure going out. You saw the penetration, and you saw one of the points he made. He said, "I need to do two disbursements in a village and I'm at home." It's not impossible to manage it if you actually have that kind of an infrastructure. The infrastructure is large. We have a tradition behind this.
We didn't do it in 2008. We haven't done it through COVID. Not a single person is let go. Everybody is given an increment and a bonus. Everybody is kept enthused, so when the tide turns, they'll run. What is the benefit of that running? Forget the growth for the bank. From a credit perspective, since you asked a credit question, the influx and the through the door quantum and quality that comes matches your policy. When that happens, you're in a position to let it out through the door. You're also in a position to pre-approve a whole bunch of it, and several of these products are pre-approved as well. You actually manage to keep that quality doing exactly the same thing you were doing five years ago. We haven't changed policies. We haven't changed processes.
We have only changed the amount of investment that we have put into drawing in quality business. Did I manage to answer it? Yeah.
All right. Thank you. Very good afternoon, ladies and gentlemen. Thanks, Rahul. Jimmy is our strong anchor. I think let's begin the retail assets. I'm gonna make an effort to. One second, let me just check this. Yeah. My aim is to cover broadly these three aspects. I'll give you a quick sense on what's our level of readiness as far as these set of businesses are concerned. The reason I've put the Xpress Digital Car Loans, which is an industry first, we believe, across the world probably, but it's a fairly, solidly innovative. I've also taken the liberty of taking customer feedback, and in auto industry, it's the dealers. You can't. It's best that you hear from their mouth. It's a minute or two of video there I've got for you to give you a sense.
I'd also heard somebody make a point on how ready are we, future ready are we on the digital side. At least for retail lending, I'm gonna give you a quick sense of what quality of products we've taken out so that you have what's our strength area in terms of coming up with indigenous products. A quick sense on what our fundamental strategy in retail assets is important to do it because we balance it off with three tenets, very clearly on the foundation on which we grow. A quick sense of how indigenous strength retail lending has in the bank for all of you to kind of build confidence on why we believe we are on a more sure footed from here on.
Okay, the fundamental assumptions, in simplistic terms, what we've launched for the auto loan industry, and we believe it's the first in the industry is, most people in auto loans today, it's all physical documentation. You have to go to the dealership. Most people walk out of the dealership today without closing finance. At best, there's a talk of approval which happens, but there's virtually 1% or so which gets disbursed in the industry. What we've really done, and we're pitching to the market, is that a customer could actually walk into a dealership. He could also walk into any of my thousands of branches. He may be an account holder, he may not be an account holder. But if he walks in and he says, "I want a car loan," both these entities will give you a sense.
Of course, the online journey, the most important. You could be sitting at home 24/7 and go on Google and say, "I want a car financing which I can disburse in my space sitting at home." All these three options, which were not possible earlier, as I talk to you, is gone live. I could walk into a dealership and I could walk out with a loan disbursed to the dealer. I could walk into my branch. I could be any of my public sector banks or any other private bank account holder, but I could take a car loan from HDFC Bank. In 30 minutes, with your video KYC done, you will leave with a complete disbursal done to your dealer and the car of your choice.
The fundamental is that while 90% of the car buying was there was less than 2% which actually happened end to end. This was really the assumption on which we started working, and it took us almost two years to get this done. We really used the COVID period to get this thing absolutely wired up and so that we are ready to go live with this. Initially, we're looking at around close to 30% of the business walking in this over the next 2-3 months or six months period. The aim is that a bulk of the business in auto goes through this. It'll build in multiple level of efficiencies, and more importantly, it's creating a massive customer delight. It achieves three things.
One is end-to-end digital learning, one is seamless across various touch points, and it's 24 hours by 7. You could be on your Google, which I'll show you, and actually how the journey spans out. I'll just take a minute or two on this so that this is not a me-too product. This is design thinking in action. If I have to make my customer journey transformative, there is no like-for-like example for us to replicate. It had to be built brick by brick, keeping everything simple, and of course, our systems and technology to make sure that we really wire this up and connect the dots for it to, when the rubber hits the road, it kind of really flies at all touch points. Is the video before this or after?
These are the fundamental major assumptions which I shared with you, that 90% of the car buying journey begins online, but can't continue online to the dispersal stage. 40% of annual auto credit products grow in semi-urban and rural. As the bank, you've been hearing since morning that are building our trust on the semi-urban rural. Imagine if you got to expand your vehicle sales across the network. If you don't have the seamless journey option, even in an assisted mode, by the way, it can be a very big strength. You just have to land up just one time. Otherwise, imagine you go land up one time, he's not ready with his documentation, you go again. It becomes to and fro.
The same thing which you do in a metro, if you have to replicate it across 50 kilometers, 60 kilometers, you can well imagine how important this product is. Even in an assisted model, you can actually on a mobile app, close it end-to-end. This needs massive strength of credit at the back end for us to pull it off. 50% of incremental space, again, semi-urban, rural, as per most of the reports, 80% of manufacturers build dedicated channels. They are building an online platform. But unless the financing world connects to this for disbursal, most of the online platforms for the car sales can't be executed because the bulk of them happens to be car financing. The minute we get activated, we receive overwhelming response from the leading manufacturers on the way we're moving forward.
As we move into phase two, we'll get more seamless. I think maybe it's a good time right now that I take you through the video first. If I can request you for the video. These are the channel partners who actually have seen the demo and get a first-hand feel.
Just taking an update regarding the Xpress Loans which HDFC Bank has launched, and it's a very good innovation from HDFC Bank. I just told them, take advantage of this. The more faster you do it, the better sales you'll have. In this world, the customer doesn't need any verification or even the KYC will be done on the video call. I think this will be a very good venture.
I think this new product that HDFC has launched, Xpress Car Loan, is a fabulous product, and this is one more feather added to HDFC's cap. First in India, I think first in the world, where such a loan is being happening without any manual intervention and end-to-end digital.
Yesterday, I was reviewing one of my GM sales, and he showed me a presentation on how HDFC Bank does an auto loan disbursement within 20-30 minutes. I was really so shocked and, in fact, very happy that this process of a very short cut, first time heard in the industry, would help us to increase our sales.
HDFC have come up with a super fast sanctioning refinance for our customers. Super fast, I mean to say in 30-40 minutes without any intervention. Just give some small details and the bank will process digitally their finance, which is absolutely fantastic.
When we ourselves experienced Xpress Car Loan from HDFC Bank, which is the end-to-end digital with their online approval, KYC disbursement capability, we believe now financing experience will also be in our control. With HDFC Bank, we can extend the best IMC car buying experience to our customers.
HDFC has come out with a product where HDFC can disburse a loan within 30 minutes. I think I must compliment the entire team of HDFC for bringing such an innovation to the auto retail industry.
Recently, I got to know about the Xpress Car Loan facility, which has been initiated by HDFC Bank. When I got to know about it felt that it's going to be a very interesting product as they propose that it's going to take only 30 minutes to disburse a loan to the customer. In the past week, I got to know that a couple of files were disbursed through this process, and it was lightning fast.
Team was excited to see this kind of end-to-end digital process for the first time. Without any documents, customers are getting approval and digital disbursement, even KYC on video call.
Okay, moving on to the retail assets, fundamental strategy. Let me just quickly give you a sense on how do we build this business consistently over years, and I'm confident to take it from here on consistently at probably a 20%+ growth rate. It's extremely important that we run with these top three, which you see is an uncompromised tenet on which we run this business. One is absolute solid, consistent, good quality portfolio. Then best-in-class yields and margin across industries, and consistently operating at prudent pricing. On the distribution side, if you actually go out in the market, we have a substantially large open market acquisition across a set of retail asset products. We almost have the first right of refusal at most touch points.
One of the biggest strengths, which I just gave you a quick sense of the new product that we launched, and I'll probably end it with a couple of just a summary of what all products we've launched, which are completely indigenous. They're not me too. They're absolutely bang on real. This has opened a completely new floodgate. They were started with keeping the customer at the center, work backwards virtually like a fintech probably would do it. If I were to start own fintech company, probably it wouldn't be any different than what we've done in the bank. These are all indigenous products. There's virtually nothing that we had a benchmark to. We started a journey with the 10 seconds, and then I'll cover that later.
One of the important aspect I put the point number 6 is because I think it's gonna be a substantial amount of growth, at least from a private bank like our perspective, is the government focus. We are putting in a massive amount of effort. The way we're doing rural and semi-urban as a key strategy with our carpet bombing of geography. We are adding the strength of the government business in a big way. I think that's a big forte for the public sector, and I think just the way you've seen private banks creating a huge arbitrage of business opportunity with public sector since the time they were launched in India, I see this as a very big opportunity for the next 2 decades, let alone the next 3 years to 5 years.
Of course, the world over is talking about when your debt to GDP is in the range of 80%-90%, they actually go the next five years much better than the previous five years. You've seen that in most developing countries. Keeping that as the background and keeping these fundamentally as your foundation, because none of them we ever would want to compromise. Whether we do digital, we do indigenous, we will never compromise the pristine quality, because the aim is not just digital in itself. The aim is not just top line in itself. We like to be the most known to be the most sensibly priced. We like to be the most sensibly activating our growth in a mature and sensible manner, but of course, in a fairly robust growth manner, the way I see it. Quick sense of couple of products.
On the unsecured side, as I mentioned to you, I think government is gonna be a massive growth engine for the unsecured business with very sensible delinquency levels and consistent. We've even seen during COVID, and we'll ask Jimmy to probably give a sense, even through the toughest of phases, I think, unsecured has really held the ground very solidly, and we seem to be garnering even more confidence on our credit quality. I just covered the Xpress digital car loans. It's an industry first, 24 hours by 7. It's not just for existing customers, not just for account holders. We're taking this on further, and that's the differentiator. We're taking it on to any account holders, and it can become a major acquisition tool as well. Consolidating gold loan branch. This is an important one.
On the gold loans, you heard the managing director in the morning. We are in a conscious manner, substantially increasing our gold loan distribution by around 3-4 times. We expect that kind of an area to really, in the second part of the financial year, to pick up massive robust growth, visibly more than normal years. I think the digital end-to-end personal loans, which is only for existing customers on the 10-second side, we are working on an end-to-end solutions for new to bank customers, probably launched by the third quarter for this financial year, which itself could be a very fast-moving and create another strength of acquisition tool across. Yes, expanding geographies across retail assets is a continuous journey for us. Expanding boundaries with speed across, expanding reach in semi-urban and rural areas.
If you see most of our products, including a complex product like auto loans, which has interdependencies. It's not like personal loan to you, bank to your account. This is a far more complex which we had to crack. We are building an infrastructure and actually the rubber is hitting the road. I think we're confident, like I shared with you on substantially enhancing our productivity with all this, because you can quickly move on to the next case. We are expecting our sales productivities to kick in. If you look at process reengineering and enhancing analytics capability, our aim is to constantly challenge ourselves and reduce our processing tasks, because we do believe these consumer businesses will need speed to be challenged at all times for us to move forward and enhance the customer experience.
There are aggressive plans in place to grow the bank's home loan portfolios. Three fundamental tenets that I see for building on the home loan businesses as things pan out and yes, mergers announced. We see HDFC Bank bringing to the table the corporate salary account holders trend, which it has a huge untapped potential or other potential which could be unleashed as we progress from here on. The government segment with the bank's already embedded strengths, connecting the dots could be a big sales turnover kicker. If you look at enhancing the DSA networks, these are another areas. If you look at most of our retail lending products, we've got a massive strength of partners working with us for two decades. These are strengths which can be leveraged fundamentally for an enhanced home loan experience from here on.
Yes, we are investing in this segment in a bigger way this year. We're gonna be moving solidly step by step to make it a success. Boosting our analytics skill sets on the home loan is gonna be another area. For most of the retail asset products, we have a very strong analytics backing our pre-approved and account holders. I think we're building that kind of strength onto the home loan side. As the regulatory approvals come in, we're hoping that this will add massive strength. Our existing strengths get passed on even to the home loan side. The digital loans origination at the front end of the loans against property is already built in. We're experiencing a very good side of that's the mortgage side that I'm talking about. Most private banks actually have.
If you see their portfolios, we have a huge upside here, compared to most of the private banks, which are hugely relying on this piece versus, from where we are coming. I see a fantastic growth rate, opportunity for the bank with this, and our strength added to this, like I'm bit by bit connecting for you. Just a quick summary before I end, because I think it's very important to remember, along with the Xpress Loans that I shared with you, that retail lending in this bank has constantly innovated. We started with a 10 seconds loan. Even today, we do a massive amount of business on the 10 seconds loan. We started with personal loans. Today, we have business loans, and across the bank, we have this property generating amount of strength. We could also take...
Imagine the top of opportunity, even subsequent once the regulatory approvals come in, you could actually add that strength even to the home loan side, and we could look at that, and ease the comfort for the customers. If you look at the strengths of our pre-approved offers straight through processes, I think this has been one of the most encouraging foundations which has opened our innovation doors across various levels. That first product actually forced us to rethink ourselves, and we went to the regulators to design something which was digital loans against shares. So we didn't invent loans against share, but we made it digital. We used to take 7 days. It takes 3 minutes. And if you look at 81% of the cases get dispersed today digitally.
If you look at, you know, whether it's online or instant available for both depositories, NSDL and CDSL as we talk and no documentation required. If you look at for mutual funds, we didn't invent the loans against mutual fund, but we made it digital in the industry. This again, they didn't have any pre product design in the market. This was done absolutely bottoms up, and this is how it shaped up. Almost 90% of the cases get dispersed digitally today. Unsecured journey, which I said is coming soon, probably by the third quarter, we are confident that we should be able to bring it on the table and create a new set of excitement on it, just the way we've done it, along with our marketing and the entire bank. Thank you so much. Over to any questions if you guys have.
Would your segment be similar or more?
See, I think government, like I said in my opening remarks, when government offers this, it's predominantly even on retail. If you actually see penetration levels, it's predominantly public sector. The minute you launch and open up a non-account holder personal loan, when we are launching non-account holder auto loans. I mean, some of these products, public sector banks, even the bank you mentioned, doesn't have it. I think we're gonna be constantly working towards trying to make it, even if it's not end-to-end, customer goal oriented digital. Even if it offers in an assisted mode, imagine somebody comes to you and just closes the whole disbursal before he leaves.
It just changes the experience, and we are hoping that should enhance massive strength on the government side for us, because your government business also is directly correlated to your liabilities on the government side. If you look at the public sector banks, the headstart they have, they have a substantially higher penetration on the liability side. As a bank, we are beefing that up in a big way. We are beefing the government in a big way. We're beefing the rural and semi-urban in a big way. The retail assets actually will have to have products which could probably move with speed, with closure, and move on to the next case. Actually, the penetration levels could substantially increase. That's why the opportunity is very big. If you see as a subset, the growth there is a substantially high percentage, which we already see.
My narrow answer to your question is yes. The competition here would be public sector banks, not just State Bank. There are many large public sector banks well entrenched in many government and PSUs on the retail side. Yes, that is the competition.
Got it. Thank you.
Yeah. You need the mic.
Arvind here. I had a question on the DSA sales of mortgages. When you were doing it for HDFC Limited, was that activated and how large is it vis-à-vis a bank channel, right? Because we are only discussing about branches doing mortgages. Because for a secured product, DSAs can be a very large part of what you can sell in mortgages.
Yes. The answer is it is activated in a very small manner, but it's not activated in a full-grown manner. The opportunity is like substantially leaps beyond what it's just barely scratching the surface level.
How does the profitability compare? Because eventually those loans can get transferred out because it's coming through an agent, plus you have to pay a fee. Just saying that a DSA mortgage versus what the branch originates, how different they could be.
I think they would be as different as you do it for personal loans or you do it for anything else. The monetary fee is proportionate to the kind of risk that they bring in. If you look at the bank, we've always focused the right mix between internal channels and external channels. Obviously internal channels are more profitable. I think if you reach above the size and scale we have to reach, I think A plus B plus C, all possible channels, including your telecalling channels, branch channels, we're gonna be activating all possible on the scale level.
Thanks. That's it.
Hi. Just on the gold loan piece. You mentioned in your presentation that you are planning to increase it to almost 3x the number of locations than what you currently have, right? The dynamics of this business are very, very different. Doing it into metros at around whatever, 2,000 locations versus taking it to semi-urban and rural locations, the cost levels are different, the customer segmentation is very different. So how do you plan to achieve and what kind of a targets that you have related to this business? That's the first question.
I got you.
Related question to this business, would your customer base be similar to that of some of the NBFC gold loan NBFCs that are currently there in the market? Lastly, would this be a bundled product? Because in the past we had few products like gold loan plus unsecured personal loan kind of products. Would you be launching such kind of products into rural and semi-urban location? If you can give some sense on the product profitability and how it helps you to achieve the PSL as well. Thank you.
Okay, a quick sense for you. I think we're gonna leverage our branch distribution, and we're working around leveraging our existing infrastructure for gold. That's the strategic call we've taken. Let's say we were 1,100-odd branches, we're going three times and we probably continue this growth rate through all our branches over the next 2 years to 3 years. That's the strategic call that we have taken. I think the idea of we doing gold loans is, yes, to also create some amount of secured strength even in the agri side, because India, you're well aware of the kind of gold that is there.
To answer your question, yes, there will be possible gold products which will combine and bring in more secured feature and more sensible credit background to a couple of these as we evolve from here on. I think on the idea of scalability, we are not looking at very small ticket size with those loans. If you look at the hardcore Muthoot and, you know, these kind of companies, our positioning will be to better quality customers. The idea is not to do the absolute bottom of the pyramid for now, but we'll evaluate and we're open to evaluating that as well. Right now, the plan is to do much higher ticket size. Our ticket size is substantially higher, and that's what our focus area is.
Because we see a lot of customer feedback coming in that they want a gold loan against gold. That's also one of the reasons to service. To strengthen your service offering at all the branches was also the idea of creating this product.
Are we operating in the segment like 13%-15% kind of a yield in this product? I'm not looking at the specific number, but I'm just trying to understand the customer positioning that you have versus-
We have pricing, which is pretty much on the website, but pricing is different for.
Yeah.
Internal customers. Pricing is a subject which is dependent on your risk profiles, and we have that kind of pricing, and it's public domain. But we are not pricing ourselves, we're pricing ourselves for the larger regular customer. That's the whole idea because we believe that a lot of feedback came to us that I think a lot of customers across our branches have this need. That is one of the reasons to strengthen our service offering. As you heard the FD talk about, you know, strengthening our ability to service customers. That's one of the reasons we expanded.
Okay. As we go deeper and deeper, the turnaround time would be slightly higher versus that of metros.
We're working on digital options there as well with some of the fintechs. We might partner with some fintechs very soon to kind of give it strength on the gold side and subject to regulatory approvals as well. That also means that not-
Got it. Thanks. All the best.
Gold, if I can just to answer your core issue, yes, it is different. Gold is a product that involves considerable operating risk and very low credit risk. Gold loans are a product that we measure the NPAs in crores. We don't measure it in percentages. That's the kind of quality that we have achieved through the operating setup that we have put in. To answer you a little more directly, yes, we are always ahead of the branch expansion curve in terms of this infrastructure to be set up. We would ensure we have the right infra in place, the right vendors in place, and obviously the right trained staff in place to do it. Because once you get that operating risk right, you're fine.
Your customer profile, I would assume, would be. There'd be an overlap with the existing NBFC players, no doubt about it. There would be an overlap, but we have noticed a slight differentiation in the credit quality because we have started monitoring bureau stats and those type of things for our customers, and we have noticed them to be a little different. As we go deeper and deeper, I definitely don't want to promise that. You should take that answer home as yes, it would probably be the same customer, but frankly, that doesn't matter. You get your operating risk in order, you're not gonna lose money in gold loans.
All right. Thank you so much, Mr. Kapil.
Thank you.
Mr. Tata.
This session is actually two sessions. The first part will be about the payments business, the bank's payment business, and second, we'll talk about our digital and the technology, full play for the bank. Okay. I have my colleagues both Ramesh and Anju here. So I'll take you through the payment. So we'll structure it this way. I put together some thoughts and our plans in a sense in terms of the strategy about the payment business. We'll talk about that first, and just sort of end with question and answer. I have a few digital initiatives also embedded in this and I'll talk about them. But since we're doing immediately after that, the tech and the digital, we have a suite of some demos also planned. Okay. So we've clubbed and kept the demo session as one on the...
Some of the things which I'll also show will be covered by the digital tech team. Okay. Here on with it. What I'll try to take you through is our thought process. First of all, I'll tell you how we are placing the payment business, where we are, what we do, how big we are, our dominant presence. Okay. Talk a little about how the payment business and why the payment business is so important to the bank, what does it really bring to the bank beyond the traditional, you know, fee income, interest income, et cetera, et cetera. Okay. Take you through the elements of our strategy.
The strategy is not just about what products we're gonna launch, but fundamentally how we look at payments holistically, how we see that as a deep engagement product category for customers, how it links back closely to the larger retail and wholesale bank strategy, and then therefore, how we look at payment business as a holistic value creator for customers and for the bank. That's. Those are the elements of the strategy. Then I'll take you through a couple of the initiatives which we're planning to do over the next two or three quarters. Okay. Just to give you a high-level view of where we stand. The payment business is three parts of the whole, if you may call it so.
One part, what we call the issuing business, which is all about making payments to customers, by customers, to corporates, to institutions. These are the instruments which we issue or the issuing instruments to consumers like you and me, to corporates, SMEs, what have you, et cetera, all that, whereby you make payments. Without even getting into the kind of form factors, multiple form factors. Again, we're clearly number one on both numbers and in terms of our spend. We've got the full range. We have a full suite issuing bank. We cover the entire range of payment channels. Okay. The second part, a very important part of the consumer payment business is what we call the network and the receipt business. Okay.
That's what we traditionally call the acceptance business. It's two parts, building the core network and receiving payments. All of what you traditionally call the physical POS or the online payment gateway business or the QR business, et cetera, is about establishing a network of being able to take money from point A to point B. We're connecting the entire ecosystem, and therefore, an extremely important infrastructure play in the payment space. Of course, giving the ability to merchants. Merchants, I'm talking of them generically. Could be a small grocer, it could be a small SME, and could be an institution, could be consumers like you and me, to be able to make any form of payment. Therefore, what we offer is a full suite of online, offline and remote acceptance solutions.
Once again, clearly number one there. In fact, our acquiring business in terms of dominance is in fact even larger than the acceptance business. Close to 45%-50% market share, depending on what you look at. If you take on a weighted average, card acceptance, if you take UPI, which is the new kid on the block, and if you take the commercial banking and the corporate institutional payment channels all put together, we have a roughly weighted average share of about anywhere between 25%-30% of the money movement which happens in the Indian economy. That's the network which we've created, and that's the kind of money movement which we have. Riding on top of that acceptance lies our complete issuing business.
The third leg of the payment business is lending at the point of sale or the EMI business, as you call it. The ability to convert what you purchase into equated monthly installments or what we call the consumer finance or the consumer durables business. This is a business which is spun off the entire payment business. We ride on the core clearing network business which we've created on the acceptance side. Here, aside of Bajaj, which is the largest NBFC in that space, we're the largest bank in the consumer finance space. Three core form factors, card-based lending, and of course, digital lending or what people used to call paper finance lending. Here we're clearly number two.
We also have a suite of products which happen post-purchase, and then when you take together during purchase and post-purchase kind of funding of consumer purchases, et cetera, clearly make for a very significant play. Look at the payment business value to the bank. I'm not going to read out what it is, but like I said, one key part of the value which we bring to the bank is the P&L, the core metrics, the MDRs, the interchanges, the gross interest income, the fee income thereon and so on and so forth, which build to the direct payment. That's the direct value of the business. Okay?
Increasingly and more so, the way we look at the payment business is the kind of throughput value which we bring to the rest part of the business. How much of liability business does it sort of entice and bring forward to the customer, whether it's through the acceptance side or the issuing side. How much of deep engagement that we do. For example, one perspective in the way we look at the issuing business is amongst all financial service products, cards or issuing payments is probably the only business which drives frequency of contact with a financial service product once, twice, three times a day. There's hardly any other financial product which drives that. Okay?
Increased frequency is clearly demonstrated leads to deepening of the relationship, deepening as reflected in in either cross-sell holding, product holding, or increased frequency and engagement in terms of the liability business. Okay? That's the kind of tertiary effect which sort of issuance, the issuance does. That's one of the key impacts. You know, we talk of brand image, obviously. The issuing business, credit cards, co-branded cards, what have you, and multiple tools are seen as the heroes of the financial service business. These are what you see on full page papers and therefore bring about a very strong positive rub off on the brand image, which we think.
The other very key portion of that is the role of the payment businesses, whether it's for a consumer like you and me, whether it's for an institution or a corporate where we have our commercial solutions, whether it's. That begets sustainability of the book build up and profitability. Okay. Some of these metrics will indicate the kind of book build up, the kind of spend which we built on our portfolio and in doing the merchant acceptance. Begetting from this very clearly shifting gears to. What are we trying to say? 5-6 years back, the competition landscape or the landscape which we looked at in the for the payment business was traditional banks. There were a couple of main banks.
They were all in the card business, or some of them were in the acceptance business. Over the last five, six years, very clearly the nature of competition has clearly changed. You have multiple more entities coming in, payments being the entry point for many business models of the non-banking players which have come into the space. I won't mention it to you, but for example, you've got a host of mobile app players which are strong in their own respective domain, okay, could be food delivery, could be travel, could be what have you, et cetera. Payments become a key fulcrum entry point to their business, okay. Hence you see proliferation of players wanting to be payment players as well.
A lot of that rides on the network which banks have also created, but a lot of them also talk about a lot of innovation in payment, in the payment space and each one of these players. What has this created? This has therefore created on one side, one way of looking at it is that's intense competition. From one competition, you've created six different new players. That's right, if you look at it from that perspective. On the right-hand side, we've actually mentioned the kind of new opportunities which have been created going beyond just the traditional card issuing or a POS placement kind of business, et cetera. Okay. These are the areas which we're talking about. For example, I'll just talk about a couple of them. Small ticket lending.
I'll just pick up one of them, and I'll talk about NTC file increases. What do I mean by that? Small ticket lending, BNPL, small low line limit cards. People who want to do an EMI on a ticket size as low as INR 4,000. These were traditionally not lending areas for the, you know, the card business. Okay? With the emergence of a significant amount of consumption, which is happening with a much higher frequency than what used to happen, that's point number one, with the amount of consumption which is happening in smaller towns, deeper geographies, et cetera, there's been clearly a need to ensure that even for small ticket purchases can we offer lending solutions, thereby ensuring that many more customers get onto the electronic bandwidth. Okay?
Small ticket lending, it's spawned off products like BNPL, and probably talk about it in the Q&A session. Payment products, both credit and debit, clearly lend to that business because you've got lines underwritten, you've got people, et cetera. How do you get people to use that product? That's created another opportunity beyond the traditional card payment. The NTC file. What do you mean by NTC file? These are new to credit, the thin files, you know, the minus one kind of new customers. Significant amount of customers who are using UPI, for example, who probably use only cash, are now getting onto the credit bandwidth. What does that mean? One is it means your new sourcing model channels to build, to reach out to many of these NTC customers. What does that also mean?
It means a different look at the way you build your scorecard, the way you look at credit and underwriting these kind of models, and therefore brought about a significant change in the way you underwrite, in the way you sort of score these customers, in the way you give the kind of lines which you give, the way you kind of look at risk management. Okay, that's brought about another change in the kind of business models and the way you look at risk underwriting, acquisition customer mix. These are the variables which have sort of significantly changed. You see differences in behavior in NTC versus people with credit lines. Okay? That's once again brought about platformification, just to talk another third piece, you know, and a lot of that is embedded in our strategy. Platformification.
From moving from point product sale solution to ensuring that one box plug and play five different product solutions offered on one platform. That's the way a lot of our strategy which has evolved, driven by the fact that earlier, when you were my competition and you also had a very similar suite, now I've got all of you on this table offering different parts of the payment ecosystem. You're offering BNPL, you're offering a digital QR solution, you're offering a prepaid card disguised as a credit card. You're offering something else. Platformification is one longer-term sustainable way to say, "Hey, come to me. I'm one service player. I've got the full suite of products. I've got all of that which you offer, okay?
At different stages in your life cycle, I can offer you any one of these products at any point of time. Platformification is our strategic direction to say, "I'm a full suite player. I have the full suite of products. Come to one, the largest players in the financial services space with the best brand, and how can I grow?" I just sort of talked about 3, but I'll mention all of these, and these are part of our strategy as we go forward. The issuing strategy, as I talked about, 6 core pillars, which we've sort of built upon it, covering acquisition, covering digital innovation, covering very strong product best-in-class products, and of course, expanding of form factors, comprehensive portfolio management.
The reason why I talk about 6, and like I said, the way we look at the issuing business, and maybe I'm repeating myself, is a holistic approach to payments is what builds for a very strong, sustainable and profitable franchise. It's not just about saying that, "Hey, I've got 10 or 15 or 25 million cards." It's what you do after that, which is important. Step number 1 is important. To get to those kind of acquisition numbers, you need to have the best-in-class products. You need to have a best-in-class onboarding experience, okay? And that's where that's one part of, but subsequently, of course, and I keep on saying, with a lot of hindsight and 20 years experience, which I said acquisition and onboarding numbers is 2% of the game.
The 98% of the game of running a profitable business starts only after you acquire the customer and clock in those headline kind of numbers. Okay. All of that we do subsequently is about getting on the customer, getting him active, getting him to spend, getting him to spend again and again and again throughout the 24/7, managing his delinquencies, for example. The same cycle once again starts in the acceptance business. Okay. These six key factors build for our holistic overall strategy in this business. Embedded, if you see in, for example, top-notch products and sales and embedded as you see in terms of platformification, okay.
We talked about things like partnerships, et cetera, et cetera, and I'll leave some of those questions to you. Platformification, partnerships, building on larger ecosystem players like PayZapp, which we have, and I'll talk about PayZapp and SmartBuy, which we're building in our deep portfolio engagement, strategy, which we built into our larger acquisition, issuing strategy. Coming to the acquiring strategy, once again, we have again six key players. If you see the pillars are more or less similar, and we've adopted a similar strategy on both. As we are a very large player, dominate 40-45% share in the card acceptance business and about 15-16, 14-15% share in the UPI, in the P2M space, et cetera. We believe, once again, scale is the driver of a huge large, it's a network effect.
Partnerships, significant amount of partnerships. For a minute, let me dwell upon the why of partnerships. Partnerships bring us two key benefits. One is very simple. I'm the largest player in the payment space, and I have significant domain knowledge and strength built up over the last 20 years. Okay? Why do I partner? I partner with like-minded or people who have. For two key reasons. One is, can they get the bank in a joint manner, okay, entry into new customer segments or deeper penetration into segments where the bank may not be as strong by jointly working together. That's number one, okay? Jointly working together means the partners bring together their respective strengths. Can we offer a much more significant value than what's available in the market? That's one core reason for why we do partnerships.
The second core reason why we do partnerships is very clearly it's a new to bank acquisition strategy for the bank. You've seen the various other presentations and probably the other liability presentations which you've seen is that when you've got a 65 million customer franchise, okay, and say with the impending merger, there's going to be another multiple of customers really coming. All of these are HDFC Bank customers now, broadly speaking. Okay? My penetration of the credit cards into the HDFC Bank base is around about 25 odd%. On the acceptance side, it will be close to around 20%-22%. Which means we've got significant headroom to grow on the bank's internal base by itself.
We build the channels and the distribution channels and the outreach multiple channels to sort of penetrate the bank base. Having said this, that customer bank base is only a subset of the larger ecosystem. The new to bank, the open market, as you typically call, how would you do it? Either I do it myself or I use partnerships to do it. Partnerships bring in a very defined and focused way of targeting on select new to bank segments and categories where we can do together.
One of the areas where we, for example, work together with a partner is how can we look at a partner's database, pre-approve, look at their metrics, look at the additional data which the partner brings on board, pre-approve them, put them into what you call a very safe and secure data room exercise, protocol. Also pre-approve them, and when you go to those markets, say, on the partner's website, you can actually offer him a pre-approved card. Just giving you one of the key activities typically we can do. That makes our sourcing easier than going just beyond an influencer. I just wanted to dwell on partnership because I know this will face some of the questions.
On the consumer finance strategy and the affordability strategy, once again, like I said, we rely very clearly on the large merchant acquiring footprint which we've created both online and offline. All of the merchants who are dealers in consumer durables, white goods, brown goods and many other lifestyle products which require financing at the point of purchase are merchants of mine. Already enjoy the acquiring relationship, the liability relationship, okay, and then I put on top of it the consumer financing relationship, which I can do for his customers. We bundle that with what you call inventory financing, and that makes for a very large dealer ecosystem, which we now do, where we're actually talking two core businesses, the acquiring business, the consumer finance business.
We've got this large set of credit cards and debit cards on which we've enabled what we call the Card EMI. That makes for a very large virtuous ecosystem. That is the core pillar. That is the benefit, for example, which we talk about how the consumer finance business, very important from a consumption perspective, and also extremely important by leveraging the assets which we built into the business. Fundamentally, once again, riding on the distribution which we've already created and expanding the distribution. Dealers and brand partnerships where you've got a significant amount of customer footfall happening. Very strong product and sales management to ensure that you've got cutting-edge point of sale financing products available. Okay. Of course, deep portfolio management which you ensure. Typically, an asset business is a one-time annuity business, if you may call so.
You disperse, you don't connect with the customer throughout the life cycle of the product until and unless he either closes his loan or it goes delinquent, typically. Consumer finance being a smaller ticket and a smaller tenure kind of business, repeat purchase drives a lot of stickiness. There's significant amount of portfolio management which you can sort of drive into the business. These are the strategies which we've sort of built up across the three. I'll pause here for a minute to let it sink, and then I'll take you through two or three key digital initiatives. Just two or three. There are many which are going on, but two or three which I'll take you through.
To take you through at the level as to why are we doing these two, three digital initiatives. We have demos for some of them, and the demos we'll be take through when we go through the digital and the tech space. Okay. PayZapp 2.0. I know a lot of questions will be there, especially in the Q&A session. What are we talking? This is a complete comprehensive mobile commerce payment app which we've created. There is a version of PayZapp 1.0, which is currently out in the marketplace. We launched that in about 2016. The whole idea of that is to actually create what you call a holistic payment app ecosystem. What do I mean by that?
Can a customer in one app get multiple modes of payment which he can use mobile through? Can he use wallet cards? At which, at that point of time, there was no UPI, but now can he use UPI, can he use wallets? At the same time, offer him a holistic shopping experience by bringing in our other property, which is SmartBuy into that. Therefore saying all payment forms, and can you offer him the entire suite on a commerce platform, m-commerce platform of the multiple kind of merchants and offers which we do. These merchants are people who are part of my merchant acceptance business. That was the whole purpose. PayZapp 2.0 is around the corner. We'll talk about some timelines subsequently. It is around the corner.
We want to make it even more powerful. It will be like I said, it will deliver two, three key objectives for the bank. One is, like I said, it's going to become a very strong customer acquisition tool for me. We've got plans. We currently have 3 million active users on PayZapp over total base of approximately 15 million customers. 3 million are active on a monthly basis. The idea is to do multiples of that acquisition. PayZapp will become a very strong customer acquisition channel for us. Number one, PayZapp will become a very strong portfolio tool for us. Many of us, mobile being a very large transaction platform for all of us.
By offering the entire suite of payment tools and UPI on top of it, and of course, all the merchants which bring to the offers within thing, we offer a very strong portfolio tool, to be able to ensure that all the payment needs of the customer are taken care from home and on one thing. We offer multiple needs for payment. So PayZapp will be accepted in far more number of merchant acceptance outlets beyond just in-store. You talk of in-app, you talk of money transfer, you talk of QR, you talk of tap and pay. The entire suite of payment options is what we're sort of building it in. We leverage our entire merchant acceptance network.
The plan is and this is an interoperable instrument, so this will be available in 25 million odd merchants, PayZapp, as and when we launch. We talk a little about stack. It's a completely new revamped stack. It's cloud native from day one. It's containerized. It's completely based on API integration, hence product changes, merchant integration, partner integration becomes an extremely simple exercise. It's deeply integrated with the bank system, and so therefore, there's a lot of fungibility between the kind of bank instrument which we'll offer. PayZapp by the way, the final objective of PayZapp will also be, it'll be a very strong cross-sell platform.
Once you onboard a person onto PayZapp and make him start the payment habit, he will get a lot of his pre-approved loans, get a lot of his other pre-approved offers inside PayZapp. It becomes one large ecosystem in which we sort of operate it. Okay. Like I said, the demo will take you through a demo of the product. The launch is around the corner. We'll talk about that a little later. These are some metrics which we have on our current PayZapp. This is PayZapp 1.0. Okay. This is what we are actually doing currently right now. We're talking of 3 million active users, which are currently there. The kind of ticket sizes we do. We've shown the kind of spend mix which we today have on the current.
PayZapp 2.0 aims to multiply all of these key metrics, as in when we launch this product. This is one important strategic digital initiative which we have in the payment business. The second is a completely full-stack digital, purely digital card stack. Today, we have a conventional stack which is live on VisionPLUS, and that's the card business which you see. Increasingly, there is a clear need to have a completely virtual card issued on the fly, do it yourself card, change it as you do, customize to the power of one kind of stack. We're in the process of building a complete stack of this thing.
Going forward, we'll clearly have a suite of a range of digital only digital virtual cards available typically on the fly, again, mobile-based. This is a stack which is sort of being constructed as we speak. This is the second large initiative we have on the card space. With the advent of card controls, which came in an RBI initiative, which ensured that you needed customer consent to enable a lot of card payments. We actually created a digital platform wherein a lot of do it yourself servicing could be done by customers. Okay. We have a lot of live services already happening. This is all do it yourself. You know, customers no longer need to call even a call center or even go to.
All of this is available as a PWA. This is also on the app. These services are already live, and you have a lot of the card engagement products and services which are going to come. Fundamentally, what we're saying, all that we really talked about saying, if I've got a card, can I enable and control my card? Can I do a lot of self-servicing on the card? This is a platform which we already launched. We've got a significant amount of customers already onboarded onto this platform. Okay? This is another what we call a portfolio management software tool. Okay? This is the third initiative, important initiative which we talked about. Okay.
The last initiative which I'm going to talk about, at least in this thing, there are multiple others, is about SmartHub Vyapar. This is our merchant on an app platform. Once again, this is the platformization approach which we now use. This is what we call Vyapar 2.0. Okay? Our earlier version of SmartHub was just an app which enabled QR. So it was like we called a point service. We offered a POS machine, we offered a QR, we offered an app. Okay. Vyapar 2.0 takes on to the platformization strategy. Fundamentally, it talks of four pillars embedded in this app. Okay. You're talking of all payments in a box, which means all payment forms which a merchant would want to accept payment from. Okay. That's deeply integrated.
We have banking in a box. He's my merchant. He has my accounts. Can he avail of inside the same app multiple banking products and services, banking liability products and services? That's already bundled in. Lending in a box, which means as a merchant, because of, let's say, funds, you know, because of his cash flows and the kind of visibility to I have to his transactions and the money is coming into his current account, I can pre-approve him for multiple types of loans. In a one click, can he avail of his pre-approved offers inside the same SmartHub app. Of course, value-added services. What do you mean by value-added services? These are services which are not necessarily direct banking services, but these are important productivity tools which help him increase his business. What do I mean?
Can I offer him a simple digital khata solution? Please remember, a merchant does not just electronic transactions, but also cash. He has a problem of being able to reconcile all his transactions at the end of the day. Can I offer him a, through a partner, a digital khata which helps him in one view, you know, consolidate all his, all his transactions? Can I offer him the capability to extend his product suite using WhatsApp or Facebook by taking pictures, sending it to you with a payment link and say, "Here is the product. Tap on it. You can pay remotely." Merchant loyalty solutions. Can I. Within this room of my customers, there are 20 customers who have been loyal to me for the last three years. I want to offer them something specific. Can I help them do that? On and so forth.
These are what we call value-added services which help in business productivity. These four are bundled inside the SmartHub Vyapar 2.0. Okay. We have the 2.0 actually already live in the marketplace, if you may call it a very large COG. Okay. And we've been getting good results. I'll show you in the next slide some of the results which we've already seen in terms of SmartHub app. We also have a demo of that which Anjani will take us through when we go through a lot of the digital slides. This is what we had. I've just given you a simple comparison of 1.0 versus the 2.0, which is sort of like I said in a COG kind of phase.
We see across key metrics, typical merchant acquiring metrics, where we've seen a significant lift in the process. The 2.0 is in a soft COG state because we're testing it out. We're seeing the response of merchants to the kind of features, their adaptation, how we sort of improve on the metrics. Very encouraging results. As you see on SmartHub 2.0, we've already got more than 600,000 merchants already onboarded. A lot of them were 1.0, whom we migrated to 2.0, and many of them are new. We've got wonderful results, which we've sort of shown on that, and our idea is to sort of scale it up. Shashi in the morning talked about our vision of 20 million merchants.
We have close to 3 million acceptance points as we speak today. Over the next 3 years in our journey to the 20 million story, SmartHub, which targets small and micro merchants, which typically use apps, okay, will be a very significant driver and contribution to this 20 million merchants. This is our merchant acceptance platform or merchant acceptance in a box, and our solution to all these. These are some of the results we will be talking about. I leave it here at this point in time and say pause for questions and answers. There are a lot of questions which also will come through in the tech and digital thing and the demos, but I'll leave it right there. In to summarize it all, fundamentally what we're saying is our payment business is about scale.
That's point number one. We have scale, and we'll continue building on scale. Our payment business is strategically important for the bank because beyond, like I said, commercial, P&L, which it delivers, it brings in new customers, it brings in stickiness of spend, it brings in liability balances. It gives me the core data for me to be able to underwrite and therefore be able to lend to such customers. I'm cutting across all of that. These are three core values which we sort of clearly build on. That's also the reason why we see much more value beyond just the P&L into the payment business and we continue remaining invested, and our aim is to continue to being dominant in this space. I'll pause here and then leave it for question and answer. Yeah.
Do you think with fintechs ramping up their focus on the acquiring side, this business could start facing some headwinds? In that, you know, context, the new platform that you're launching, SmartHub, you talked about, what kind of tools you are unveiling to sort of, you know, maintain your market leadership position? That's one. Second is you show the data on the P2M market share side. Can you just talk about how does this convert into the lending opportunities and what kind of, you know, conversion that you've seen so far?
Yes, acceptance. The acceptance space within the payments has become a favorite place for many fintechs and non-financial players in this space, with the objective of sort of wanting to own the merchant. Our understanding and our take on this space is very simple. Merchants do a particular type of business and the merchants, that business is reflected in what we call MCC, Merchant Category. As an acceptance player, I'm impervious to what kind of business a merchant does. My role as a bank or my role as an acceptance player is to facilitate and help you to either receive payments or make payments and connect you to a network which transfers money from point A to point B. Payments is my business. My business, the bank's core business is also liability.
Underlying that payment network is the need to have a liability account or accounts, okay, which is what we call a current account. That's something which I provide because that's my core business. When I take these two and I look at the data flow and the value which I drive onto that network and the balances that it builds up, I'm clearly able to underwrite you and offer you short-term loans, midterm loans, working capital loans, so on and so forth, et cetera. That too is the core business of the bank. Therefore, what we call our sandwich strategy approach to merchants is in the heart, right, lies in the core of the bank space. Okay. Which other entity can sort of do that way? Okay.
At best, you can get someone who can do the payment business, and as you know, the payment layer is already a very thin margin business. Does it build for a sustainable, profitable scale P&L? I'm not too sure. Okay. When you look at it all together, I'm very clear, okay? My job is to be a full suite acquirer. My job is to be a full suite bank, which will offer him the components of the sandwich strategy. My job is to ensure that I become the sole preferred merchant acquirer because I can offer you, example, the SmartHub type of platform solution, which gives you all the capabilities of payments and trade, et cetera. Okay. Therefore, obviate the need for him to go to multiple service providers. Okay.
This is the app strategy, the SmartHub strategy, which targets all the small and medium merchants because there the bulk of the transactions are moving from cash to UPI, and that's where the bulk of UPI is. UPI is in early stages. In cards, we have a 40-45% market share. In UPI, we've just about started. That's a growing market share. We have close to about 14-15% market share in the P2M space. We see that growing as our SmartHub strategy sort of keeps on going. If you see some of the metrics which we continue to want to sort of maintain, we're confident that we would be able to match our UPI P2M market share also similar to what card has.
That is our strategy. Okay. I clearly say that my role as a merchant acquirer, I'm providing the full suite. Okay. There will be competition. There's no problem with competition. Competition has actually helped in expanding the merchant acceptance opportunity. Okay. We welcome competition, but we'll take it on. We've become the market leaders in the card space, notwithstanding the same competition. We'll take on the competition even in this space. I hope that answers your question.
Yeah. Hi.
Yes.
I just have one question.
Oh, sorry.
Yeah. Hi.
Right.
This is probably a short-term and a regulatory question, so it's not a strategic question as such.
Okay.
There's a lot of talk on MDR regulation. Nothing's come so far. It's been a talk since December. What is your stance? I mean, do you think MDRs will be regulated or...
Okay.
Because nothing's come up.
Let me say, UPI was regulated sometime back. Debit was regulated sometime back. Credit has not yet been regulated. Will it happen or not? I don't know. I don't know whether it'll happen. Having said all of that, I think, we've clearly adapted to this intervention, regulatory intervention in pricing on the debit and the UPI space. As I mentioned right at the beginning of my talk, okay, we've got a two-prong strategy to this. One is build scale. Build scale, at immense scale. You know, crazy scale. That's the sort of mantra in the payment space. Okay?
Second is ensure that you're a holistic payment service provider, which means payments, the full suite of payments, and also significant benefit which you get to the bank either by way of liability and assets, helps ensure that you de-risk from one third of the business. I talked about the sandwich strategy. If I get my liability and asset strategy right, which sides below and above, then payments can be an entry strategy even with thin margins into this business. That's the way we look at, say, the acceptance business in this whole space. MDR is only one part of it. I mean to tell you if I get a merchant today, you saw some of the metrics in terms of the floats, which my average merchant gives me.
If I take a merchant today, give him a holistic payment solution, get his liability and current accounts and the kind of floats which I get, the average floats which I get, and I do a semblance of lending on that ecosystem is profitable to me from day one, okay? That helps me de-risk on a larger basis on a full portfolio basis from any shocks which we will get onto the MDR fee income now. I mean, will it happen? I don't know. I don't know. Are we ready? Are we prepared in terms of our strategy just in case some of these headwinds do happen? Answer is yes.
Got it. Thanks.
Praghai. Question from the back. This side to your right. Okay. It's a simple question in the sense that.
Yeah.
You have such a large market share on both acceptance side as well as on the acquiring side. What aids the bank from providing a full-fledged mobile-based solution in the market? You've seen customers move on to the QR side quite easily using the mobile.
Mm-hmm.
Whereas cards have still struggled on the mobile side. What aids a full-fledged digital experience that can be given to the customer?
Okay. Simple question, simple answer. PayZapp and Turbo when you put it together, and when I bundle that with our mobile banking option, which also Anjani will take you through, will provide that mobile ecosystem wherein you can seamlessly use either UPI or credit card or debit or prepaid, et cetera, as a simple one tap or QR based or in-app payment solution. Okay. These are the three solutions which we sort of have to address the need which you talked about. I hope that's clear.
Perfect.
Yeah.
On the ecosystem, on the acceptance side also it's quite easy. You can run on the UPI QR code platform.
SmartHub is interoperable. It's completely interoperable. Okay? It accepts all card payments through what we call the SMA instrument. It enables remote payments. It accepts UPI interoperable. It accepts all wallets. UPI, it can be used on any QR deployed in the marketplace, not just the bank's QR. Okay? It's a completely interoperable solution, and that's the reason why we say it can actually replace the multiple QR which today retailers, when you walk into a small retailer, you'll actually see four or five different QRs. The point is that SmartHub can be used on any of the QRs and therefore he actually doesn't require five, six different apps to use. Okay? In that sense, that's what I mean by saying it's a complete merchant acceptance mobile platform for him to accept any form of payment.
Mm-hmm.
Okay? That's been the design. That's been the core design philosophy. Because I'm an acquirer, I'm agnostic to any payment form which the merchant wants to accept payment from.
Thanks. It works on other networks as in the sense that
Yeah, yeah.
when I come through Visa.
Completely interoperable. Yeah, yeah. Absolutely. Interoperable in all forms. In all forms.
Thanks.
Yeah. Yeah.
Yeah, just one question.
Yeah.
At the UPI beneficiary side, you know, our market share is lower than, you know, other peer bank on the private bank. Below ICICI Bank, Axis Bank. What is the strategy? What is the plan that we have on the UPI beneficiary side?
You're talking of the P2P?
Yes.
The P2P side.
Yeah. Our market share, you know, is below, you know, key large banks. It has been the case like, you know, for a pretty long time, though we have a quite large customer base. Why that we are not able to, you know, we are able to engage with them?
Okay. One, as you know, the entire P2P space, there's no revenue, there's no sort of legitimate payment form, but you need to offer P2P as a payment form, legitimate payment form, because that's a very strong accepted form, okay? Having said that, our core strategy going forward to gain our share, I talked to you about our strategy to gain share in the P2M space, which is SmartHub. In the P2P space, one of the biggest missing links in PayZapp 1.0 was UPI. Is it PayZapp or not? But we didn't sort of include it in that, okay? PayZapp 2.0 will have UPI as the foremost and actually the primary payment option in that space. PayZapp is primarily a payment app. The payment app which will enable P2M and P2P, okay.
PayZapp will be at the fulcrum of our large drive into increasing our P2P. In fact, PayZapp will have its own UPI handle. It clearly generates it, okay. Our plan on PayZapp will be multiple fold of what we already have in PayZapp 1.0. We do believe that close to about 50%-60% of the payment throughput through PayZapp 2.0 will actually be on UPI. Therefore, that's one key driver of strategy of increasing our P2P market share in that space. Okay. The second is obviously in our new mobile banking site, which we are in the process of locking once again.
The user experience of using P2P once again, which has to be most simplest, et cetera, is once again one of the key features in the new mobile app, okay. That too will be a large driver of P2P. Both PayZapp and the new mobile banking app put together will be our answer to the P2P focus on building this thing. On P2P I've already talked about our increase in market share will be driven by a lot by our startup strategy. Ready? Okay. Thank you very much. Of course, if there are any questions you can take offline. I think we need to move to the next session, which is the digital and the technology session. Okay. Should we start off this thing?
I'll just kick off the first two slides and then sort of hand it over to Ramesh and Anjani. We'll also take you through a larger digital and technology strategy, and of course, take you through some of the actual demos which I talked about even in my presentation. This is 6-point agenda, which we wanted to sort of take you through. This slide fundamentally talks about two key things. In that, digital, the way we looked at digital. Actually digital or digitization, our digitization journey for the bank actually started more than 10 years back. And if you see the domains mentioned, whether it's card payments, we talked about the UPI fronts here. You're talking of the credit debit card transactions here.
You're talking of the mobile transactions, talking of corporate banking, customer wholesale transactions, digital, which we're doing. A lot of these were what we call at the hub of digitization, et cetera, or straight-through processing, as we call it. All of this leads to one key thing, is actually screaming about scale. Scale is one very large when it comes to a lot of the digital transactions which we're talking about. At an aggregate level today, 93% of the banking transactions, which, as a bank, we do across businesses, are actually digital. I've given you a flavor of some of the domains where, and the numbers which we're really sort of talking about. But what does it mean behind it?
Going beyond the numbers, it actually means that to sustain and drive these transactions on a minute-by-minute, day-by-day, week-by-week basis, you actually got to build an extremely strong and powerful, sustainable, scalable, resilient, fail-free, digital infrastructure, electronic infrastructure at the bottom end, et cetera. Scale is one of the key things, and that's the differentiator in the bank's transformation journey. Okay. The fact is that I don't have the luxury of starting from zero or ground zero. Okay. We've got a thriving, very significantly large business. The previous presentation talked about us doing anywhere between a 30%-50% market share of a particular domain. Okay. We have similar kind of market shares across all the areas where we do a lot of the digital transactions. Okay. Even if you talk in terms of corporate banking. Okay. That's the scale of transactions which we drive.
All of these scales, all of these transactions are digital. Built in under that is an entire edifice and point which we sort of built. This is just to give you a flavor of the size and scale of our digital and technology infrastructure and management, which we sort of built, and therein lies our transformation strategy. Okay. Another area which we talked about where we are talking about digitally sourced retail assets and liabilities. This is all about new acquisition. The previous was about stock business happening, transactions happening on a day-to-day basis. This is about the kind of new acquisition we need to do. We've just given you some percentage numbers, which means these percentages are percentage of the total business of that particular domain being done digitally, starting in from personal loans, two-wheelers, credit cards.
On the liability side, we have a significant amount. Okay. You'll see various different percentages of digital happening. Okay. Once again, as you know, the scale which we operate in across all of these businesses, even a 67% on a savings account, that means that much kind of scale which we drive through our digital infrastructure. Once again, as I said, this is very key. Therefore, what clearly differentiates us is our digital and technology transformation is about working on a scale, a global scale. Okay. We talked about scale being important in the payment business. In as much so it's a challenge to the digital transformation is that when you have already scaled, it brings a different kind of flavor to the kind of point solutions that you build.
It brings a different kind of flavor to the infrastructure which you build, which helps you continue being a market leader over the next 5-10 years. It brings a completely different flavor to the kind of technical expertise. It brings a different flavor to the kind of vendors and partners that you need to operate with. It brings a completely different flavor to the kind of robustness and scalability of solutions which you sort of build into your technology and digital. It's a sort of a completely different nature. So that's the point I wanted to make about scale. The second point is once again extremely important. You would have heard of this assisted, unassisted, and urban rural in some other presentations. But what do you mean by that? Okay, you and me are urban customers, metro customers.
We have maybe our equivalent sitting in a top 50 or a top 100 town, etc. What's the nature or the difference in the nature of digital transactions that I do? We are used to a lot of unassisted, and we would love to do everything on my app, okay? That's not India. The larger portion of India needs what we call assisted digital journeys, okay? Therefore, it means. Once again, when I club this assisted and unassisted along with this talk about scale, you're really talking about global scale point digital solutions which help you do unassisted on one side. You also need global scale looking to help you do assisted kind of journey.
That brings a different type of complexity in the kind of build and the user journeys and the customer interfaces that you want to sort of build, okay. The reason why I'm mentioning for you is that I'm trying to paint a backdrop as to what our digital transformation and our technology objectives which we've set out for ourselves are, on what dimensions are sort of building up. Okay? The first two also bring a significant amount of what you may call environmental and operational risk on which your networks are exposed. Five years back, the dimensions of risks and of operational risk and fraud risk and security risks were sort of limited.
They have multiplied over the last 2-4 years in terms of multiple different kinds of cyberattacks, cyber fraud, multiple different types of human fraud, multiple different types of operational risk, IT tech glitch risk, so on and so forth, et cetera. The kind of technology that you build in, the kind of partners that you do, the kind of monitoring networks and system solutions, that you build become extremely risky. Just to give you an example of the kind of scale, if as a bank we do 4 crore UPI transactions a day, you need a significantly large proactive fraud network to be able to monitor those 4 crore transactions which happen in a day.
The capability to flag off red flag a lot of these core transactions and figure out what's going to happen, block them, intimate the customer, so on and so forth. That just give you one dimension of the nature and risk of when all of these parameters sort of come together, okay, and do it. The reason, like I said, was to paint a backdrop of the task which we give and the kind of strategy which we built around transformation around the background in which the way we work. Within all of this, 93% of the bank transactions are already processed digitally. So we've built a very strong edifice.
Anjani and Ramesh and team have actually built and run this interface, and they'll also take you through our core strategy of how we're going to build up further. The motto or the objective is to see that at current scale, what's the kind of transformation that we're driving, and how do we prepare ourself over the next 5 to 10 years with the tech and digital infrastructure which is up to there, where we'll even build much more scale on top of it. At the same time ensure that customer experience and customer delight is one of the key drivers of our strategy, and at the same time, the last pillar of ensuring that we're a bank, safe, secure transactions under the ambit of security are sort of taken care of.
I'll hand it over to Ramesh right now who'll take it on from here. Ramesh.
Right. Am I audible? Am I audible now? Yeah? Okay. I think, now comes a key role from a tech perspective, because obviously this is one of the center stage, right? I mean, everybody wants to know what's the HDFC Bank technology strategy most discussed, debated, you know. Obviously, you know, what we wanted to first give you a little flavor is what does the back end look like? This slide is actually talking about, you know, what's the kind of volumes that we look at. Like, lot of times we talk about Big Techs, Fintechs. You know, banks have not been there. That's the reality, right? We cannot get away from that because banks are built on legacy platforms. Suddenly what perhaps from the shift happened over last 3-4 years.
It's very imperative that the technology becomes center stage and it's a very transformational technology platform that has to come. Just to give you a little flavor, you just see the kind of volume, the 7x growth on UPI switch, there's a 3x growth on core banking, about 444 crore transactions on ATM switch. These are absolutely mind-boggling. These are like Google size numbers, right? It's nothing less than that. We see the trend of the volumes, they're absolutely going crazy. Similarly about, you know, if you look at it, how we are tackling, we do about 1,400 APIs today across the banking ecosystem. We do about, you know, 70%, you know, published partner APIs. We are. This is very telling stats. 90,000 concurrency.
There are times when, you know, you can get up at 3:00 A.M. in the morning and you would find thousands of NetBanking users. That is the reality. That's the scale at which we're operating. Obviously, you know, it's but the transition is not easy. When you start something new, it's easy. You start, you day zero build cloud native container, straightaway get into Kubernetes, bang on. Right? Here, it's a very different challenge. You have to first take off all your legacy. You have to put a bridge to the new technology and then kind of ensure there's a migration. That's why this is far more complex than what we deem to do. A lot of times we don't see this coming to the front end. I just wanted to give a little sense of how this backend looks like.
Okay. Now, how do we do this transformation? When you're looking at the whole digital banking, how do the shifts come through? Right? I think the key is, at the end of the day, to differentiate customer experience. Clearly design frictionless journeys. Sorry about it, but anyway. I think the frictionless aspect is very critical. I don't know how many of you go through journeys in the. When you open an account or you go through an acquisition journey, a lot of times you'll find the third-party API ecosystem, for example, not coming through. Let's say you connect to a multi-bureau, you don't get the response. You go to an Aadhaar, you don't get the response. You have to predict. When you say frictionless, can I fetch it in an async basis?
When I come to the fourth screen, I'm already ready. I've already sent the app API, waited for it. By the time the customer comes in, I'm already ready because it might take a little bit of a latency. Or can I take the maximum number of, you know, data entry points on my first two screens in a way that the customer doesn't feel, you know, inconvenienced. It's a frictionless journey, and the customer experience is very critical. Of course, the second thing is digitization of branches. Ashish spoke about it in the morning. 1,500 branches, we are going to look at it in a very different sense. The way we look at branches, digital branches, the world has changed. You don't need an MPLS network. You don't need a kind of wire going and following.
Those are old days. You don't need a switch and a router to put a branch. You just need one, you know, new age client that can just go onto cloud proxy, right? That's how we look at our digital banking. In fact, that's what we would push more and more as we go along. In fact, the new set of branches, you will not see digitization in the classical way. That's why I'm talking about how we are thinking the shift in the technology. The fundamental principles are changing. Create new customer digital experience, that's a simple one. Then the rapid innovation. We have to innovate. This has been a very key aspect. The second aspect I just want to touch, plug-and-play integration with new age fintech. Today, every fintech wants to integrate in hours actually. Nobody wants to wait for two, three days, three.
Two or three weeks to integrate. This is again difficult because the banking ecosystem is very different. To give you a background, a savings account API can have 10 different flavors because there could be proprietary flag, there could be a kind of a joint account flag, and a lot of those things have to be accounted for. So it's not easy in that sense. That's why the kind of API gateway you put in the front, the kind of REST API catalog you can put, they have to be very different actually. Then of course, data and platform. Data is very critical. In fact, the bank is clearly moving towards a cloud-enabled data, and I will talk about that. You know, we are kind of moving towards an Azure data lake.
The reason we are doing this, we believe that the centralized data warehouse days are gone. Today, every data point has to be API-defined actually. When you run an acquisition API, the data also has to follow it as an API because that gives you the decision point. The AI and ML capabilities that we talk about cannot be back-ended. You can't run data scientists and give, you know, take out analysis at the backend. You want that analysis to go right at the frontend. It's been a very different kind of a data lake architecture, we'll talk through that. Of course, a lot of stuff focused on resilient and secure systems. Zero trust access. Very interesting plays happening.
A lot of times people are asking, "Is it secure to go on cloud?" I mean, the paradigm has changed. If you see just few years back, the questions, "Are you secure by going to cloud?" Why? Because today the cloud security providers have shifted the scale. In fact, the bank just put up a, one of the fastest landing tools. Just to give you a background, today we are connected to Google, AWS, and to Microsoft, and we are one of the few banks which have all three linkages as hybrid cloud actually at a completely containerized. It's a very new concept called landing zone. The ingress and the egress is completely controlled by the bank, and we encrypt the data in the cloud using our own keys and on our own, on our own premises. Very interesting construct. Very few industry leaders globally have done that.
We give the choice. What does it do? It gives the choice to the vendor partner or to our technology players to develop on any cloud, but at the same time be very secure about it. These kind of paradigm shifts are happening from a security angle. Clearly that's what we look for. The last point is also very critical. We have to look at new talent. Tech talent today, banks were largely tech enablers, and you would agree with that. We were buying products and we're trying to make them put in. Those days are gone. You need people who can design cloud architecture, need people who can code, who can kind of architect, and that's why this talent is very different.
When we talk about we're doing some very interesting stuff, as we go to the next slides, I will cover that. There's a complete shift in the way we think our strategic pillars are coming through. If you see from differentiate customer experience, innovation at scale, data and platform orchestration to resilient systems to talent. If you look at all of these pillars, we have to put the strategy accordingly to the, for the digital transformation. I'll cover that as to what we are doing there. What are we doing here? Like I spoke about today. Clearly on the strengthening the tech foundation, I spoke about this cloudification journey. Actually it's a very interesting concept that I spoke about. We've also built in a very interesting API gateway.
Google Apigee is a company that Google bought over a few years back, and we have partnered with them on the Apigee gateway. In fact, all our APIs are published through them on the frontend. On the infrastructure security, we have started moving our data centers from on-prem to cloud, but we're also modernizing our existing data centers. We have just put in a very interesting AI ML-based security. All our security logs today go into an AI ML-based cloud service product called Securonix. Very interesting product. And most of the pattern detections happens based on AI ML-based. We've done a lot of work on resiliency in terms of our disaster recovery. This is the last piece. I think while we do the first three, see, banking architecture is still an active-passive architecture. What does it mean?
See, banks have been built over monolithic databases. You can write in one place, you can copy and take it to another place, but you cannot run that place. You cannot keep that active. That was the banking technology. If you look at Oracle, SQL, you know, your Postgres, some of these databases are on what is called active-passive. World is moving to active-active design. If you look at the new age, you know, database providers, Yugabyte, the CockroachDB, the Spanner, they're changing the paradigm. What does it mean? It means I can run a core banking instance in Mumbai, and I can run a core banking instance in Bangalore, and both can be write-write. It's a very fundamental shift from a technology perspective. That's where we are now moving towards, and I'll talk about what we are doing.
This is the way we are thinking from an infrastructure perspective. While we do all of this, tech for tech is critical. We have to utilize. Banks, like I said, were guilty of just putting tech together. Doesn't work any longer. If you were to compete with the fintech, you were to compete with the Big Tech, you need your own tech thought process. That's where we are focusing. For example, clearly a lot of focus on testing automation, a lot of focus on unified service management platform. Low-code, no-code. In fact, we are completely revamping a lot of internal bank applications. We are saying, "Why should even you do coding on intranet?" Today, Power Apps, ServiceNow, all of this available.
Our own technology units adoption of using technology is going to be very, very significant, and some of this we have already started shifting actually. We did a very interesting stuff of building a Power Automate platform and a ServiceNow platform, which is used for all our internal applications for rapid development rather than kind of going back to the base code actually. This is how we are looking at the whole, you know, core technology transformation. Now, that still doesn't solve. This is actually the holy grail of the technology. I call this holy grail because a lot of banks are not attempting this and not emulating us. In fact, this is the most difficult part for them. What we are saying is that, can you really re-architect core technology? What does it mean? Like I spoke about it.
This is the big thing. Can you change core banking? Right? Can you change core? We know core banking is 35-year-old, 40-year-old. That's the reality. Most of them are what is called as either a Java-based and a monolithic RDBMS-based architecture. This is not easy. What we are trying to do here is we work on a concept called hollowing the core under a program called Enterprise Factory. It's a very interesting program where we're moving to largely a cloud-based database. In fact, we're working with couple of value startups. Most of them are kind of, you know, cloud-ready databases coming with event-driven kind of architecture, and we'll talk about this little bit more.
What we intend to do is we cannot just take out the existing core and say, "Oh, we'll put a new core tomorrow." It's a four-year project if you had to do something like that, because just the data migration takes a lot of time. What we are trying to do is start hollowing. One by one, start pulling. Payments, for example, today, if payments can run from two different locations, just imagine the resiliency factor goes in a very different direction. In fact, that's the first thing we are. From our core, we'll actually be pulling out payments, and we'll be writing them onto new age databases. Working with a very interesting startup in India, and we are working with a couple of value technology providers to do this. It's very significantly different strategy. Then we look at customer master.
You know, one of the biggest problems in the core banking is addresses and customer master live differently. Credit cards has its own database, retail assets has its own database, liabilities has its own customer record, and it's a mess, right? We are actually pulling it out and making it a tokenized, centralized customer master. This is another very interesting project that we've just started. Again, part of the same startup project that we started doing. Complete redesign of the workflow. The teller journey at the branch and accounting journey at the operations, all of that we are changing. That is a phase three. We're going to hollow every 12. In fact, each of these programs are 12-month, 15-month, 21-month kind of a program in parallel actually, and we are hollowing the core actually.
It's a very ambitious, very different program from any of the, you know, large banks. Some banks are doing it, but we are probably one of the few banks in India to have started this initiative. Then, of course, the other part is writing our own mobile apps. Like you said, the future of the technology will be fought in the mobile arena. That is the reality. So PayZapp is payment strategy, but that doesn't mean anything. A lot of people have said super app, and I'm con-- I'm kind of consciously trying to bring this concept. We believe we need a little distributed architecture. We need the PayZapps that will, that'll have a lot of payment functionality, but we need our own mobile app. The way we are looking at our mobile is complete re-architecting.
We're actually again building it in partnership with people like Google actually, and we will talk about it. There's a lot of work that's happening in the kind of language that's going behind the mobile, the kind of front-end interfaces we build. Why is it important? See, today, a mobile release cannot be a 3-month release. Today, unfortunately, that's the reality. We have take 3 to 4 months to do one release on mobile. We're not able to turn on a back end and say, "Okay, let the functionality go up." That is the kind of platform technology that is shifting. In fact, our mobile rewrite program has started. We do this out of, again, a factory in Bangalore with a very different fresh tech set of talent actually. We don't
You know, it's more people who've kind of come from the tech industry. They've started building this out. These two programs are very, very ambitious tech transformation program for us. Centrally, they'll allow us to own the mobile asset platform and also own the core asset. Here we will actually own the IP actually. That's the fundamental difference. Now if you apply the tech strategy, this is a very important slide. See, we don't have one-size-fits-all strategy from a digital segmentation perspective. What do I mean by that?
See, the way we are thinking is each of the segments, so if you see each of the bank segments, we are saying day-to-day bank in retail, the whole thought process or the focus is that we will simplify customer journey. We'll bring deep insights through data through amplification and AIML. We want to, like Parag said, focus on assisted and unassisted. We don't want to leave unassisted because a large part of India needs unassisted. It could even be vernacular journey. I mean, non-English based journeys. But we have to go there, actually. We can't just be, you know, away from that. Then unified. You spoke about. Somebody spoke about unified experience on UPI, right? That was the point that was clarified both for debit and for the UPI rails, right?
Of course, enhancing customer experience and all. The kind of UI, UX we put, it's a very, you know, archaic. The modern fintech UI, UX thought process is very different. You will see our new set of assets coming with a very different UX experiences, especially on the retail side, because it's largely kind of, catering to the youth, to the millennials, and to different kind of users. On the MSME, we are largely looking at, you know, getting to leverage the supply. This is very critical. What do I mean by leveraging supply chains? In fact, we just launched a CUG campaign for a program called the Dukandar Dhamaka. I don't know if Rahul covered it. Where we are actually going back to this manufacturing supply chain, the FMCG guy, picking the data from there and then cross-selling the working capital loan there.
It's a very interesting digital journey. You pre-qualify, but the pre-qualification is coming through the supply chain data from the FMCG side, not from a self-generated. It's a completely online experience. You could open a complete current account OD based loan end-to-end digital. That's something that we are doing on that. Like I said, very critical to leverage this with. I mean, lot of FMCGs have their own apps, their own ERPs. How do you mix up the data and use that data to do online acquisition? That's where we are going on the MSME side. Native journey, local markets. Lot of this would not be English-driven journeys, and we have to understand that because the dukandar at the rural level doesn't understand an English journey.
That's another area that we are very, very focused. You'll see a lot of multilingual applications start coming through. 360-degree of proprietor and retail. The intersection between proprietor and retail. Again, demand. A small, you know, retailer or a merchant in the rural area doesn't differentiate between a MSME and a retail account. He needs a one view. We see a lot of intersection, a lot of our assets. You know, Vyapar is a good example, like Parag spoke about. It's not just a merchant account. In fact, phase three has even merchants' personal accounts coming through in the same interface because that intersection is happening. People are not wanting to go to multiple platforms. Corporate, a lot of focus on deepening the ERP embedding. You know, that's today's banking as a service.
A lot of APIs are being published on the payment gateway, whether it is corporate transfer APIs, whether it is FX confirmations and so on and so forth. Digitizing trade is a holy grail. I think that there's a lot of work. In fact, we are completely revamping our trade platform. Lot of again image reading capabilities. Can you read trade documents? Again, working with Google to re-architect this very interesting project. The entire trade flow is being disrupted and completely digitized. We are again a lot of you know ability to integrate open credit markets in the corporate area. Another interesting a lot of alternate credit rating agencies, research publications, they're coming in line actually, and we see a lot of digitization happening in those areas. Wealth, we are clearly you know going deeper customer analytics. Self-service capability.
Wealth has been largely a relationship-led. What we are doing, launching a new app. In fact, it's a largely analytics-driven app and self-service because a lot of wealth requirement today are on deep cut, and nobody wants to look at an Excel sheet and an IRR. You really want to cut the data on your own and build up your wealth portfolio on a daily basis, right? Why can't your apps be able to provide that kind of an analytics? Why should it be a click-through? Let the customer cut and slice and dice his data, right? That's why we are going on the wealth side. Of course, enhance wealth RM capability through data analytics. RMs need to be themselves empowered. It's not just self-service. The RMs have to be empowered.
We're going to relaunch a complete wealth app in the next couple of months. Anjani will kind of talk about it, but clearly that's another thing on the anvil. Of course, the rural and government initiatives really are a very important part, fueling the Bharat growth story. Focus on assisted journey, multilingual capabilities and deepening of digital distribution. We see every business correspondent. Imagine if I can put three PC to do a digital branch. We can use the same concept to digitize a branch correspondent or a banking correspondent entity, right? If you can just take your PC, make it secure, plug it into the cloud, enable it to be proxy, and connect to the banking system, every BC point can be a branch. That's how we are going about on the rural and government banking mission.
Clearly a lot of segmented reimagination. It's not a one-size-fits-all kind of strategy that we're trying to go to. This is where I will stop, and I will let Anjani come in because, you know, my part in that sense covered, and he will kind of take you through, you know, this slide and then couple of demos from here on.
Thank you, Ramesh. We have a series of initiatives in digital and technology, which is going to see the light of day over the next four quarters. As Parag mentioned earlier, our landscape is complex. We do technology at scale, and what Ramesh mentioned, that we are building infrastructure to handle that kind of technology. I'm gonna share with you some of the examples of customer experience that we are creating with this kind of infrastructure and scale on which we are working. Arvind, in the first half of the day, mentioned about Xpress Car Loan. Xpress Car Loan is a good example of a journey from where we have removed friction. What do we mean by that? Just wanted to share with you. How many of the people here have actually bought from IKEA furniture? You ordered IKEA at home? Great.
I ordered a table from IKEA. It came, and I had to assemble it myself. My wife would not do that. She wants to go and see a table and pick it up. That's what Parag mentioned. We have to take care of both assisted and unassisted. There are people in this country who would like to undertake the full journey themselves, and there are some people who would still need help. All the journeys that we are building, and some of the examples that I'm going to share with you, works on both modes, assisted as well as unassisted. This is an example of Xpress Car Loan. How will a customer find out how to take car loan from HDFC Bank? There are multiple ways to do that, and I just want to share a couple of ways here.
You could go onto Google and type car loans. You will get a lot of examples over there, you know, car loans from bank A, from bank B, from bank C. One of the ways is that you will go through. Maybe you'll see a loan application there from HDFC Bank. You'll say apply for loan, and you've reached a form. It's on your mobile phone, an express car loan form. I give my mobile number here and give my date of birth. You verify with an OTP. This is what I'm doing. All of a sudden, I see five steps appearing in front of me. It says personal and employment details. Please share that. Receive in-principle loan approval based on this. Add car and dealer details, what car you want to buy and from which dealer.
You complete your KYC and complete your application process. It's as simple as that. I, as a customer who is used to buying IKEA furniture, start the journey myself. I fill up my details. I'm a salaried employee working with a company as a senior manager. I've been working for five years, three months. I'm an IT developer. I get about INR 50,000 monthly income, and I have an existing EMI also of INR 20,000. I fill this detail and submit it and do a continue here, and this is where magic happens. This is in-principle loan approval that appears on your mobile device. Lot of backend work has gone in. We've heard of 10-seconds loan, which was meant for a bank customer. This is meant for a bank customer as well as a non-bank customer.
There could be somebody who's coming from outside, who's not been with HDFC Bank, and that person is going to see this experience as well. Then you add the car details. I'm gonna buy a certain make car. I give my make as well as my dealer details and continue. Then I reach this place where it says do a KYC because I'm not an HDFC Bank customer, so I have to do a KYC. How do I do a KYC? Now government has made it easy. There is a video KYC option which is available. I will continue with KYC through a video KYC, which takes about 2-3 minutes. There is a bank officer who will appear on the other side on a mobile phone.
You need a pen, a white paper so that you can sign and show your signature. These things, once they are ready, I start and do a KYC with a bank officer. He'll ask a few questions, look at my Aadhaar, et cetera. I set up a EMI mandate because if you take a loan, I also have to receive a loan in a certain account, and there I give my account details, which could be with either I have an HDFC Bank account or I will have another bank account which I can give the details for here. Once I give the details of this bank account, I get a loan immediately, which is available here for me. This is the entire journey of taking a car loan. This takes about 30 minutes. Just imagine how a customer is gonna feel.
I walk into a dealership anywhere in the country. I choose a car of my choice. When I need a loan for that car, today you would see that in a dealership, in the corner there is a table. There are four, five tables, a lot of bankers and NBFCs sitting there to offer loan. That is not needed anymore. We can have a QR code in every dealership in the country. You can just scan that QR code. This application appears, and a car loan can be taken in a matter of few minutes directly by any citizen in this country. That's the kind of experience that has been created. We have removed a lot of friction. Friction on underwriting, friction on doing a KYC. Those have been taken care of. Now imagine this kind of an experience if this is extended.
This is just one journey that we saw here, but this experience can be extended across all the acquisition journeys of the banks. This was taking a car loan, but there are multiple products available. What we are doing now is taking every journey in the banks and automating it and digitizing it in the same manner so that a person can take it on their own or you can take it in an assisted manner. This is where we've partnered with a company called Adobe that has created this platform called Forms for building these applications. On this particular form, we've already automated about 8 onboarding journeys which are already live, and we are going to add another 20-plus journeys there over the course of next few quarters. That's how we are going.
I want to show you one example of how Adobe, which is a platform which even nudges you. What is the difference? Why is it that we've chosen, as HDFC Bank, Adobe? Because this is a low-code platform. It does not require so much of code writing to create this experience that you saw just now. It can be done in a little easier manner. It can be done by marketing people themselves who want to, you know, optimize the journey. If I want to run a journey during Christmas, it becomes red with a Santa Claus branded complete journey over there. If I want to run during Diwali, I can just customize that same journey and run it during Diwali season as well. Now, all this customization can be done by marketing staff also, but the journey requires a little bit of technical acumen.
It will need some APIs to come in. Once that is ready, it becomes a good platform for building all future journeys for the bank, and that is why we've chosen. The other important thing is that in any digital journey, the conversion factor is very important. 100 people start the journey, but do all 100 people take that product? Answer is no. This varies from 2%-7%. In a very good journey, 7% people will convert, and in a poor journey, it could be 2%. Now, this is where Adobe comes into play. It gives you the visibility across the channel, across the funnel. How many people dropped out at stage one? How many went to stage two and dropped off? How many went to stage three and dropped off? All these people can be remarketed.
Some people who actually did an underwriting, got an offer, but did not complete the journey, we can just send out a campaign automatically on their, you know, WhatsApp or SMS saying, "Hey, you didn't complete the journey. Click here to start." When a customer clicks there, you start from where you left. These are the kind of capabilities that have been built in Adobe as a platform, and that's where we are building some of these new journeys. Just to show you as an example here. In Adobe, this is an example of taking a personal loan. I'm a customer of the bank, but I don't have a liabilities account. Instead, I have a card from the bank. How do I take a personal loan from bank here?
I go and fill up my mobile number, I give my date of birth, I enter my OTP here, which comes in, and this is all on mobile phone happening as we go. I choose the loan amount. I choose the tenure. Let's say 24 months. This is the amount of loan that I will get net of disbursal. You see here, was I assisted by a bank employee? If I go into a bank branch and somebody is helping me, this will be set to yes, and there will be a code which will appear here for the bank employee. If I'm doing it myself, I'm an IKEA guy. I want, I take pride in doing things myself. I can just go to the website and take this entire journey myself. I didn't do anything so far.
You see here it says, "Be assured you are getting the lowest EMI on your personal loan." The system knows that I'm hesitating in moving forward, so it nudges me to tell me what to do going ahead. Here then I take this nudge and continue. I go down. I proceed. When I'm taking the loan, this is also an opportunity to protect. It says that, "Do you want to insure?" I say, "Protect my loan." I see two options here from HDFC ERGO and HDFC Life. I take these two options here. I put a nominee name. I agree to terms and conditions. Proceed with the insurances. I get to see here the total loan amount, what is the interest rate, how much is the deduction. Everything is available here transparently.
I say, we need a bank account to give you this loan. I'm not a... I told you earlier that I don't have an HDFC Bank account as a customer. I'm giving my bank account details here so that the money from this transaction will come here, and then I proceed. When I proceed, it just tests that my bank account details are correct or not. I give my email details and all here, and then I apply for a loan. This is the full term sheet in front of me. It says what is the amount that I want to take, and this is all happening on a mobile phone. I have to give two mandates here. One is to give a security mandate so that, you know, we understand that you are taking a loan of so much amount from the bank.
This security mandate is given in the following manner. The details come here. It says that you are taking INR 2 lakh loan. I agree to the terms and conditions, and then I also give a NACH mandate for debiting my account every month with the EMI. That I proceed, and then I authenticate myself with an OTP, and this amount will be credited to my account. This is how easy it is to take a loan. I gave another bank account, and the money moved there right then and there while I was doing this transaction. These are the kind of journeys that we are creating, where it becomes frictionless.
Even when you approach a bank officer in a bank branch or in the field, the bank officer can also take us through the same journey on their mobile phone and just say that I have been assisted by somebody here. What is the impact? Once we've started showing these kind of journeys in the market to our customers, this is the kind of impact that we are seeing. When we switched on savings account, what we called as Insta Savings journey, we started seeing that the acquisition which was happening digitally has gone up 4x. The digital acquisition increases significantly with this kind of a journey which we just saw here. Likewise, in personal loan and credit cards, we've just switched it on a few weeks ago, and we are seeing good, encouraging results here as well.
The way we progress slowly from here on and automating the next set of 25 journeys, this is the kind of impact that we expect to see going forward. You know, Parag spoke about PayZapp, and this is a platform which we are refreshing right now. Just wanted to share with you a few of the experiences on this platform, what we are doing and how we are engaging with our customer. This is a platform that will help us acquire new customers. It will engage with those customers, and it also helps us monetize and upsell for future. What is the kind of experience that we are looking at? I am a person in India who downloads PayZapp as an app. What is the experience that I'm going to see here?
The journey will start something like this. When we download an app, we will see that it is an umbrella payments app. It gives us smart statements, and it also provides the rewards for us as a customer. Let's get started. I'm going to give my mobile number here. This is a dual mobile SIM phone that I'm using, so I'm gonna agree to terms and conditions and proceed. It says PayZapp wants to send me messages. I allow that. I have two SIMs, Airtel and Jio. I choose the Airtel SIM. The moment I give my mobile number and allow this to happen, it says, "Hi, Siddharth. Nice to meet you." It recognizes me because I'm a bank customer here. I could have been a non-bank customer also. I'll take you through that journey.
The moment it re-recognizes me, it shows me my ATM card and asks me to fill the last four digits of the card details here, which I am going to fill in. The moment I give the last four digits and verify my account, it is checking at the back end how many cards do I have. Here comes the cards. I have three cards from HDFC Bank. One is a RuPay, the other one is Visa, then another one is Visa here. One debit card, credit card. But I'm a customer who also has a non-HDFC Bank account. In that case, what do I do on PayZapp? I go and add another card here. I give my card details here from the other bank that I'm having and proceed. Oh, it's a PNB card here. So it appears here. I give my OTP details, which comes.
There you see my PNB card is also added on PayZapp. That's the simple experience of adding multiple cards and accounts also can be added here. I can add my bank account. Any of the banks available in the country where I have my account can be added. Here, I'm going to add an HDFC Bank account. This is the bank account which I'm adding. I get a PayZapp prepaid card along with it, which comes in for me. This I set with my login and lock screen. Here is my PayZapp, which is set up. That was the initial setup that you saw just now. Now, I can do send money, I can make bill payments, I get a smart passbook, and I can do many things with my account here.
Not just that, going forward, I'll see a lot of my offers as well available in the shop section. I'll just show you an experience. If I go to a shop where I want to pay with PayZapp, I've linked my card, so it's a wallet account. All the cards from my wallet have now gone into PayZapp, including my PNB card as well, which I don't need to carry anymore physically. I go here and I'm at a shop where I want to pay. I scan the QR code, which is available at that shop. Says how much is the amount. Let's put INR 500. I want to pay using my account because I have added a lot of cards there, so I want to pay using my account. I choose my account here from HDFC Bank and say pay. I give my PIN.
That is there. The processing is happening. I paid to Apna Kirana for 500 INR. Now, all these transactions, I can go home, I can view balances going forward. My balance in this account is INR 3,00,200. This is available here. Likewise, I can do multiple transactions going forward. I just wanna show you. This was the ETB user onboarding and how a transaction is going to happen. Let's see one of the payments here, which is very important. I want to pay to one of my contacts. I go here, say send money. I type the name of my friend whom I want to send money. It's Nirmal. I type the amount that I want to pay and give my PIN. This is paid to Nirmal, and Nirmal is not a part of PayZapp today.
Nirmal could be with PhonePe, with Google Pay, could be with any other payments app. I'll be able to transfer money. Remember, how did I know that Nirmal was with another app? Because Nirmal was identified by the mobile number in something called a mapper today. UPI is introducing the concept of mapper, where you are identified by your mobile number, and if I put my mobile number on a particular PSP app, that money will come to me on that particular PSP app. This is what I want to do on PayZapp also. I want to say that create my mobile number, which is this number on PayZapp. Now my UPI number is going into the mapper as mobile number at PayZapp. This is my handle. Now anybody sends me mobile number.
Anybody wants to send me money using my mobile number from Google Pay, PhonePe, Paytm, anywhere, it'll land up in my PayZapp wallet here. That's the kind of experience that we are creating on PayZapp. We'll see one experience of how to buy from PayZapp using an app experience or just. If I go on shop. I go to redBus, which is one of the shops available on PayZapp. I choose from where do I want to go. I want to go from Chennai to Bangalore on fourteenth of May. These are the options which are available. I choose the option which I like. Here I get an option of pay with net banking, credit card. It's available with PayZapp as well. INR 840 I have to pay.
I do a pay now, and here it is available that INR 840 I can pay using any of these devices. Look at the experience here. I wanna pay. You swipe to pay. I have just swiped the account on PayZapp, and this is completely done. It's authenticated, authorized. It's a very safe transaction to go through. This is the kind of experience our customers are gonna get on PayZapp. You will get offers. You'll get marketplaces where you can go and do shopping, and you can pay using PayZapp here. When I go to a mobile site where I want to do any kind of a transaction, let's say I go to a simple website, where I want to shop here. I will go here, choose by the product that I'm interested in.
I add it into the catalog and during checkout, I'm gonna see the option of you see here Paytm, you have PayZapp is available as well. Since I'm going through PayZapp, this is the checked option. I can place an order, but I'm buying from PayZapp for the first time here on that website, so I have to proceed securely. I put my OTP here and link the account for the first time. The account is linked on that website that I can pay through PayZapp, and then I can go and pay. I will get an OTP here to do the transaction, and I confirm to pay. This is how I paid on at BigBasket using PayZapp as well. These are various kinds of use cases which are possible here through PayZapp.
There was a question on how are we creating an open ecosystem because the world is opening up. We have created PayZapp as an issuing wallet where anybody can link any kind of card account on this particular wallet. You can walk into any store, whether it is a physical store or it is an online store. You'll be able to go and transact at that store using this particular wallet. To begin with, we will also have the capability of tap and pay. I don't need a physical card. I can just put all my cards into this particular wallet and I can go into an NFC-enabled store and just pay by tapping the phone as well. Those are the kind of transactions that we are enabling here.
There are a host of transactions, which are possible, but in the interest of time, I'm just gonna pause here and give a short demo of the acquiring side as well, which was SmartBuy. Because there was a question that a lot of merchants are getting acquired, how are we doing it? What is it that we are adding new? I'll just take a few minutes to share with you what is the kind of acquiring work which we are doing. This is SmartHub app. As Parag mentioned and in the morning Sashidhar also alluded to, that we want to acquire 20 million merchants. We have acquired 3 million so far. If we have to acquire 20 million merchants, the approach has to be very different. It has to be as simple as acquiring a simple customer on PayZapp.
It has to be as simple as that. Think of it, I'm a small shopkeeper in rural hinterland of Bihar. I want to become a merchant who can accept money from my customers. How do I do that? Either somebody has to come and open an account for me, which is, you know, time-taking, laborious process or what is the other option here? The other option is SmartHub, and that's what I want to share here. How does SmartHub work to make me a merchant? I'm a shopkeeper. I have a current account with a bank, but I am not a merchant, I can't accept. What's the kind of journey that I'm gonna see? This is an app, SmartHub app. I choose my language. I go here. I say I want to register. I enter my mobile number.
I'm registering here. I enter my PAN card details. Gives me terms and conditions, which I say Continue. Give my OTP for verification. OTP is verified. Step one is complete. Step two is I set a MPIN for my account that I've just now created. I'm gonna set an MPIN here and confirm it. I enable my touch ID as well. I say Okay. The MPIN is set up on my app itself. This is checking for eligibility if I can become a merchant or not. There are lots of checks which is happening at the back end. I can accept all payments on the app, SMS pay for home delivery as well. Here are the accounts that I have. I have a Novelty Superstore account. I choose one of these accounts for accepting money into that account, and I say Yes, go ahead.
Here it says I'm almost done. The business category, what do I do? Let's say I'm an apparel store. I choose that. I give my GSTN number, email ID, I give my amount. Here again, were you helped by an HDFC employee? This is again an assisted and an unassisted mode. It'll work in both. We choose the terms and conditions, as a shopkeeper. I move ahead and do a complete thing. The sign-up is complete, and I have become a merchant who has a QR code with a mobile number. I am ready to accept money from my customer who might be have wanting to pay me through UPI, through any of the cards, accounts. I'm able to accept money on my mobile phone itself. I don't need anything separately. I wanna go and collect.
How do I collect? I get my first customer who's walking in. That customer wants to pay me through Bharat QR. I go and enter the mobile number of that customer, say INR 1,000, give the description and say Initiate payment. I get a QR code. My customer from their phone is gonna scan this particular QR code and make a payment of INR 1,000 from that phone to this phone. It comes to me. So the moment this money comes to me, I go into my dashboard, I see that I have got INR 1,000 of sales, which is available here. Now, the next customer who comes to me wants to pay not through Bharat QR, but through UPI. There the customer has actually taken the product and gone home.
I want to send the UPI collect message to that customer saying that, "Please pay me." I give the mobile number, I give my INR 1,500 account. I want to share this link with my customer through WhatsApp or through an email, through anything. Now, this INR 1,500 collect call has landed up on the WhatsApp message of the customer. When I go back to the dashboard, you see here this is still INR 1,000. It's not INR 2,500 because my customer has not paid me that so far. When I go here, I see that that first transaction of INR 1,000 is in green. That means I've received that money. This one is in yellow. I have not received that money.
When my customer initiates the payment from there using UPI and pays, this becomes green, and that is the time when this balance will become INR 2,500 for me. I, as a merchant, this gives me the ability to grow my business. I can become a merchant immediately on my mobile phone and start accepting any forms of payment. Not only that, it allows me to do a relationship management with my customers. I have got 1,000 people who always come to my store to take certain things and go back. I don't have to chase for payment. I will send them the collect request, they will send me the payment, and all the accounting happens here. What is different here? We are a bank. If we are doing this, we heard that a lot of fintechs are also trying to do this.
Let's see how we add more value to the same merchant. Now, I told you that I'm a shopkeeper in Bihar. I want certain amount of working capital loan. I have a card, but I need more money on that card. What do I do? I go here in that same app, and I choose a loan of INR 2 lakh to INR 15 lakh, you know, more than one-year payment options. I want to see what are the options. HDFC Bank gives me Dukandar Overdraft, FlexiPay. These are the options available. Business loan, Insta Loan, Jumbo Loan, multiple options with different terms and conditions. Now here, let's say I choose this INR 12 lakh loan, I wanna apply for it. The moment I proceed, you have seen that Adobe form, right? From where we were taking loan. Now, that form appears here inside that same mobile app.
Now, on this app, as a merchant, I'm going to give my details. This is my mobile number, the OTP, the whole journey that we saw of taking a loan. The moment I confirm it here, I get a INR 8 lakh loan transferred into my account through the same SmartHub app. I did not have to speak to anyone. I did not go and meet a banker, didn't go to any branch. This is possible because we are a full suite bank, so we can bring in not just payments, we bring in full banking as a service. Everything is available here on that same app for the merchant. Acquiring side, all merchants will be able to do this by downloading an app and becoming a merchant themselves.
If they love IKEA furniture, if they are like my wife who wants to order from a local carpenter, then that is also possible. We can have bankers around their feet on street, salesmen who can go and help them become merchants very, very quickly. On the issuing side, we have PayZapp that has got an ambition of becoming the payment app for the country. On both sides, these come together to create a complete ecosystem, and there are lot more possibilities there. We can create different solutions like instant settlement.
Because on issuing side, this is our account, and on the acquiring side is also our account. Nothing stops us from doing an instant settlement, which will give an amazing experience to customers, even through credit card, debit card, any of the products, not just through UPI. These are the possibilities which open up once we start getting scale here. This is what we are doing across all our retail products and across SME and corporate to go ahead with. I'll just pause here and if you want to take any questions. I'm audible now. A very good afternoon, everyone. My name is Arvind Vohra.
I look after Retail Branch Banking and I along with my friends Sampath and Smita will talk about how we have been working around building the customer franchise, how we manage the life cycle, and I guess some of the interesting questions that came up Shashi's way on retail liability. We'll talk about three things fundamentally. What is our strategy? Our strategy is very simple. What has that strategy delivered and what is our ambition? Yeah. Each of our strategic elements, I'll try and focus only on very simple aspect of what is the real competitive advantage that we're trying to build. I know there were a lot of questions in the morning, physical versus digital and so on and so forth, and we're gonna address all of them proactively.
Any questions, most welcome as we sort of build on the presentation. First of all, the presentation is all about simple strategy, immaculate execution, and big ambition. The key element of our strategy is when we look at our branches, we just don't look at branches putting up. When I like 4 years back, we used to discuss that how do we set up new branches. We talk about, you know, every cluster head can set up one or two, and so on so forth. We have built a very scientific approach, a distribution planning tool through which we plan what kind of branch we build, right? There's not one kind of branch. I'll say multi-format distribution science that you're building into it. The complete science of how a distribution-oriented company would do, a retail company would do, right?
When I say retail company fundamentally means the, you know, the Croma's and the trends and so on and so forth. Then you figure out where you're gonna get the maximum revenue per sq ft, EBITDA per sq ft, and also build the brand value and the competitive advantage. What is our approach of managing customer lifecycle? You know, in the morning we were discussing about raising liabilities. I actually have a slightly different view of this word. Liabilities are not raised, they come. Assets are raised. Assets are sourced. Liability is very difficult, you know, to say that, okay, you give me INR 5 lakh. Why? For what reason, right? You give it because you have trust. You give it because there's neighborhood trust. You give it because, you know, your processes are simple. You're happy with the service, right?
You are predictively understanding customer needs and solving them, right? We'll talk about that. Some of this is really the reason that our strategy has worked, right, and that's something that I'm gonna talk about. Analytics-driven conversations. Why? Why they are important? That we can predict customer needs proactively rather than even asking for it, right? Service-first culture, that's the fundamental. Enabling phygital transformation. When we think of branch and digital, we sometimes think of two things. It's physical versus digital is a global debate that's going on. Our view is that both are gonna be important and both are gonna converge into each other. It's gonna be about digital rendering in a physical world, right? Bringing this humanization impact while dealing with digitization. Both are gonna be important.
I'm sure we understand the emotive value of any brand, any relationship, and that's the real anchor of our phygital transformation. Some of the growth segments, rural employee banking, I'll talk about. We no longer call our salary team as salary. We call it employee banking, and there are reasons for repricing it that way, and government, something that Smita will talk about. What have we delivered? 2x retail CASA in last 3 years and 1.9x retail CASA TD in last 3 years. Now 3 years back, if somebody told you, "Whatever HDFC Bank has achieved in 24 years, we're gonna achieve exactly the same thing in 3 years from now, in 2019." Right? Today, what we want to tell you is that we've achieved that.
This is the retail deposit side of the picture. This is not the overall deposit of the bank because the corporate deposit was a part of that, and that's a different segment with different challenges and opportunities there, something we've covered in the morning. Retail deposits, we have doubled in last three years, right? From about INR 5 lakh 50 thousand to over INR 10 lakh 50 thousand 75 thousand, which means that whatever bank did in 24 years, we achieved that in last three years. Our bet today is exactly the same. We are gonna further double it in 3.5 years, give and take few months. I'm sure you'll pardon us for that, right? Message is, we have a credible strategy in place.
We have doubled in last 3 years, maybe two months, because it's 1.9x on CASA TD, right? We're gonna double in the next 3.5 years, as simple as that. We go into each of these elements of strategy, some videos, so that you get a really poignant view of what is really happening. There's no animation in the whole presentation. Try to keep it very simple. Strategies are simple, as long as we sort of talk about them in a simple manner. Before we talk about liabilities, let's talk about our customer franchise. You know, any fintech, any services player, be it telecom, be it banking, be it financial services, insurance, what is the core fundamental strength, competitive advantage of any company?
The customer base that you have and how happy is the customer base. Simple. Number of customers you have, number of customers you're acquiring, and how happy you're keeping them. What are you getting out of them? Isn't it? Look at our growth. 4.4 million customers we used to acquire in a year, 3 years back. Last year we acquired 8.28. Our next ambition now is to acquire 1 million a month. I think that should be happening roughly about 15 months from now. Could be 2 months, few months earlier, could be few months later. 1 million a month means 12 million a year. That's the next milestone. We're not going to stop there. Look at the impact on values.
If our unit growth have grown up by 1.9x, the new customer acquisition value has grown by 2.1x. Because the natural question will come to your mind is that, "Hey, you're acquiring customers, what are you doing with them? What are they giving to you?" Right? Last year, we acquired the new customer acquisition value of a whopping INR 71,950 crore. That's the liability side book of 60% of banks in this country. Our ambition there is to. When we take it to 12 million, we are talking about 101 lakh crore new acquisition value alone. That is just one of the funnels. You ask this question, where is this liability going to come from?
It's going to come from this new acquisition value, it's come from a change in base, it's going to come from our partnerships. I'll talk about all the funnels. This is one of them. This is fundamental because this is where the customer is born. This is where the seed is. When the seed will grow, we'll have the fruits, and we'll have all kinds of fruits. We'll have apples, oranges, and everything. All the retail assets is what I mean, and all the business banking assets is what I mean. Because the strategy is to talk in combination, not talk in silo. We don't acquire liability customers by going, "Hey, I want your liability relations." That's not how liability sales happens, right? How do we do? What is the competitive advantage?
Before I get there on the life cycle part, let me talk to you about what our distribution strategy is. This is the map you see, branches that we have set up. 50% rural, this is all there. What you have not seen so far is the right side of it. When we see branches, okay, for HDFC Bank, please stop thinking brick and mortar. My humble request to each one of you. When we think virtual branches, it's a sales and service set up with digital rendering of the services. What is non-digital is only the humanization part. So you see at the bottom, digitization plus humanization, superior customer experience. This is our strategy of the branch. The word is a branch. For us, it's nothing like a branch or office. Actually, office is the wrong name for it. The right name is, it's my consumer-facing store.
I have two stores as a bank. I have website, net banking, which is my digital store, and I have a physical store, which may have walls, right? But there my rendering is digital as well, right? We're gonna talk about that. Plus, we are looking at small formats. Even in this expansion plan, that 250 that you see, a lot of that is physical format, first of all. I'll explain by that. Gold, all of them gold loan-enabled. Rural salience, because that's where the big opportunity is. The other format that we worked upon is smart banking lobbies and digital banking units, right? We are setting up 4 pilots right now, and what we're putting in the digital banking units is a. Like you, all of us have heard about ATMs, right? Automated teller machines.
We are putting up ACMs, automated care machines, which will have service, care, because, you know, finally, care is the fundamental aspect before you get into pay, save, invest, and insure, right? All banks talk about that. Finally, the care will take a precedent, then everything else will flow from there. We're putting up an ACM, we're putting up tabs with walkout working journeys and so on and so forth, something that I'll talk to in my, coming slide. Then the BCs, which is what Smita will touch upon. Hub and spoke with the branches and the, and the DBUs and so on and so forth, right? Strategy here is digitization plus humanization, combination of the two helping us deliver a competitive advantage in the way we're doing it.
This is the science which is multi-formatted science, identified through a very scientific basis, not just the bureau data or the per capita data or the RBA deposit size, but we look at delinquencies, we look at fastest return where we'll get. We look at places of interest. Every cluster head would typically have a Google Map. You see this district in Rajasthan, where the three colors that you see is high, medium, low potential. You will actually zoom into this.
You click this, one of the high potential pin codes, you get into places of interest information, where it'll tell you that in Google Maps, when you do Uber and Ola, we know that, you know, it shows where is the university, where is the community, where is the traffic, high and low traffic, and so on and so forth. We use that analysis to find out what exact micro market I should have a branch or a Smart Banking Lobby or a digital banking unit. That's the level of granularity of science we're building it into, right? We just opened a branch in Keylong. We were skeptical about opening branches. INR 500 crore market, first private sector bank to enter. When Sashidhar traveled there, he inaugurated it, right? Two years' time, we'll easily build up an INR 50 crore franchise.
Deputy commissioner came along with Sashidhar to inaugurate it because they're just so happy. They have all cash crops like mushroom and broccoli, which are sold at good prices, right? They have a good highway now connecting them. This INR 50 crore would not come if you're not present in that district, right? The litmus test is, we have a benchmark of 2-3 years of breaking even. Because of the science, we are breaking even within 12-24 months, more than 55% of branches. Some of them are breaking even, by the way, in 9-10 months as well, right? It's all happening because the science is granular of, you know, what we set up. The second part of our strategy is how we manage the customer life cycle.
You know, when we look at a branch, again, first the request that I made is don't look at a brick and mortar. Look at it as. Second request is, don't look at it as inbound. Branch is not at all meant for only inbound. In fact, that's the least it is meant for because we don't want people to come in for transactions. That should happen digitally. We want people, if at all they come in, they come in for financial conversation, the value that we add to them, right? Branch is a sales and service setup that looks at a catchment, looks at every important customer to be mapped, right? When I say every important customer, we have these ten segments: education, healthcare, localized industries, merchant and traders, rural. So every branch will, would map customers with 300, 400, 500 customers. Tag them.
There are conversion plans being made, potential being dimensioned. Then when we approach them, we don't approach them for liability. Typically, a BM will approach customer, map it, understand its needs, then he'll get an RTFX guy, Retail Trade & Forex guy, which is also part of retail branch banking, maybe an EGBVG guy, right? Or credit card guy. Then they will offer holistic set of solutions to that customer because you are giving the customer the fundamental value proposition of HDFC Bank value. Then the customer relationship starts, and typically the relationship will start with that. It comes as a process of our demonstrating our complete end-to-end value proposition to him. Doing attachment scoping, need-based customer conversations. Welcome, immerse, nourish, right? Every customer, we call him within 7 days. We're putting processes of a 30-day and 90-day engagements, right?
When we do that, we are doing it through analytics now, which is what we call next best action. What is next best action, really, and how does it help in the life cycle? In the morning, I think we were doing a lot of discussion on analytics and underwriting and credit side, and we talked about humongous number of pre-approved offers, right? Do you think any pre-approved offer means that the customer may actually need this? What do you think? For example, we may have a pre-approval offer for a personal loan. I'm just exaggerating to make a point. Mr. Mukesh Ambani may have a pre-approval offer for a personal loan. Do you think he needs it? Yes or no? Answer is intuitive, isn't it, right? What this does is, this brings us the intersection of creditworthiness, which is one lens, propensity, and intent. It meshes them together.
Ravi Santhanam, our CMO, and his analytics team is my partner in crime, and of course, Sampath and all of us work together to do this. When you combine these three things, creditworthiness, propensity, and intent. Propensity means you're looking at surrogates that he or she may need that product. Intent is the customer was searching for an auto loan day before yesterday, and a call goes to him in 24 hours. "Hey, if that's what you're looking at, could we look at?" And we have examples where customer, "Hey, how did you know that I'm looking for an auto loan?" The customer is surprised. We call that initiative Immediate MBA. MBA is a big brand right now, and we have layers of it. Incredible MBA, Immediate MBA, where some of these intersections happen, which is helping us drive the productivity.
You see some numbers there, where how the productivity is getting driven. Okay, let me show you a sample of this. I hope this works. This is the kind of screen the RM looks at, both Sampath virtual RM and my branch RM, you know. It's not limited to just product and service products. It starts with service. I'm going to talk about the service-first culture. If a customer hasn't made a nomination in his account, do you think we'll help the customer by advising him, "Please do nomination"? Because we all know in this country how many, how much money in the death accounts, you know, finally get paid back to the RBI, no claimants. Not just in banking, but mutual fund industry, every industry that we talk about. Painful thing to see, right?
Whether it's form 15G, 15H, GKYC, nomination details, all of them are part of, you know, the service MBA is what we call it. Along with service MBA, you have credit cards and other propositions. You also have, for example, this is the kind of a screen that a RM will look like. He's not only looking at the intervention, where a personal loan could be an option because of these 7 times higher chances, but it will also give him the narrative and the causation. That is the level of granularity we advise our RM.
If this does not work, there's a feedback loop back to my analytics team, in Ravi's team and Sunil Mathur's team, which looks at that feedback loop, and that feedback loop itself from the RM improves the AI engine, so that the engine keeps becoming better and better as we go through. We believe that we are building a serious comparative advantage here, mixing up the credit part, the propensity part, and the intent part. Not just on this, you know, we looked at the new acquisition value. I don't know if many of you would know who tracks the banks, that the change in base, the book size. There's the NAV new acquisition part, and then there's the change in base part, right? People, different banks, they have different names for it.
The change in base typically never moves. It goes up by 2% or goes down by 2%. Typically remains flattish for most banks. For us, it was also the same three years back. We have put through analytics enablers, predictive loss of relationship, attrited loss of relationship, self-transfer, this thing. It looks at surrogates, you know, loan rejection, low balance. You know, we have seen that if we reject a loan of somebody, our balances and relationship starts to drop. What is the kind of intervention we do there? That is a predictive loss of relationship. We have self-transfers. Self-transfer and vendor outflow mitigation. Somebody's transferring to his family or friends or to his other, you know, same within same bank to a different bank, from HDFC to ICICI or PNB or whatever that may be.
How do we engage with that customer using narrative so that we mitigate that flow? Right. We, for last two years consistently, while year one could be contributed to the COVID-led inflows also, but last year also, 4.8 million customer conversation, 91% engagement, 48% of these customers built balances where we had conversations, right? And an incremental value of almost INR 16,000 crore by the end of the year. It's a two-month cycle on which we operate. You see some of the sample of this as well, there is a self-transfer case, and customer has a loan outside HDFC Bank, so it gives us two opportunities to talk about. Shift his loan back, right? If you take it, take it over, but also get the opportunity to build liabilities balance, right?
All that I'm trying to say is that liabilities is an outcome. Good health is an outcome of this thing. There's no tablet that you take and balances start to grow. It's this holistic approach, and maybe a little bit ambiguous and complex, but if you master it, then it becomes a competitive advantage. That's what we have tried to build, and that's the engines that she was referring to in the morning. Is the relationship management architecture. Sampath will talk about the virtual side. Largest relationship program in the country, right? 13.5 million is as part of our relationship management architecture. We have not only Imperia, Preferred, Classic as our key program. At the top end now we are adding 5 crore plus relationships Infiniti.
For 10-year bond rural, we are looking at differentiated programs. Do you think in rural people will understand what this word Imperia means? Yeah. Yes or no? Intuitive, isn't it? That's why this vertical that we set up, that's the kind of discussion with our product team they are doing. Maybe they'll understand Vishesh. You'll understand Vishesh, but it's not just about the name. It's about the kind of elements you pack into from a segment perspective, agri input, soil testing stuff, right? Those kind of things which is relevant for that segment. You saw a segment-focused approach, those 10 segments which have further 83 segments on my catchment scoping slide. That is going to be getting married with segment-focused propositions, right?
That's also something I saw, something that, you know, both me and Ravi, my partner in crime, we have been, you know, exposed in big way in the consumer marketing companies that we work with. That's another thing that we're bringing to, you know, banking. Virtual RMs, strategic program for us, expanding our reach, really giving us a multiplier effect. Fundamentally, service first is the most important anchor of our relationship management architecture. Because if you have the right service, if you are proactive, right? Everything flows on top of it. In absence of that, nothing is as important. Just a brief glimpse of how we are making our relationship management architecture, the key DNA, really, as a service first, you know, culture, a minute video on this.
As Sashidhar said, we are on this journey. I must share with you, our MD, Sashidhar , is driving this with lot of inspiration. When I started this journey, you know, we started with things like as simple as how do we get bankers to smile? You know, they're too cold, I mean, sometimes, especially in a customer-facing scenario. While it is professional here, but I think why can't we be as good as Oberoi Hotels & Resorts, you know, from a hospitality point of view. At the end of the day we are a service industry. We sell trust, isn't it? Trust is a function of our financials and the capital adequacy and all that stuff, but it's also about how we, what's our body language.
We started from there, the last one year, I must share with you, Sashidhar reads every single customer email from A to Z. Something that I thought I used to be good at, but he's broken, I think, some new records. He will read, send it to Sampath, Smita, me, many of us, be it asset, be it any product category. I think we really have, you know, he's really championing this cause. We genuinely believe in this journey. We implemented the Infinite Smiles program also. It's the same Net Promoter Score thing that you would have heard about, and we implement that as Smile Score. Every branch, every virtual team, another part of the bank, they get what we call a Smile Score. Important part is not in improving that score.
I mean, it's an outcome. Important part is whosoever is a detractor, every detractor in the bank by the respective team is called back, engaged with, and then we measure the score again, which is called the resolution effectiveness, right? The last time, I think two years back, prior to COVID, when I interacted with you, some of you asked me the score. We still would not like to share our internal scores. What I will discuss is this is an external benchmarking by Prism. This is about the NPS, and this is for savings right now. Something seems to be moving positively for us. We do believe we have more work in this.
I think the vision that we've expressed here is that our benchmark is not just financial services, but we really want to be best, not just best in class, but best across industries and across brands. There's an external benchmarking that tells us how we are moving. This is about phygital transformation that we spoke about. The branches will become paperless. Are becoming paperless, right? Three years back, we used to have some 67 registers with some entries within. That has come down to more than half. Next 6 months, we want to wipe out every single register for making notes and noting down. Every single branch, whether urban, rural, deep rural, is enabled through two or three biometric devices. Obviously, customer consent is mandatory, so it is voluntary use. I'll still underscore that.
Important that every branch is enabled with that. We're bringing in eSign for legal documentation, automating all branch journeys. We built a base service process, right? All the platforms that we spoke about. The Digi self-care, which means that if there's a pay, save, invest, insure journey, the simple block there is also care. Within care, if you want to raise a service complaint, feedback about anything, within mobile app, within WhatsApp banking, with a simple QR code or by walking into branch, you know, one could do that very simply. We've reimagined our CRM. There's a mobile on-the-go CRM that we have given to all our teams. Obviously, virtual teams operate out of a fixed space.
All the rest teams that operate out of that, it gives them convenience of, you know, working out of, anywhere working, it becomes convenient, makes teams, a lot more, efficient. Walk-out working journey. It essentially means that, when you come to my physical or phygital store or a digital store, which is website, by the time you go out of that, your process should be done. Let me give you an example. Address change journey. We had a process in our net banking two years back, where you go to there, fill a form, not so simple, a little bit complex, fill it up, it goes to the back end, somebody checks it, and within a matter of two days, we process it. Right? Now we put up a simple walkout working journey.
We'll just use your Aadhaar authentication process and puts the same address. Two advantages. One, it makes it real-time because by the time customer is going out of the branch, it is done. What is the second advantage? Second advantage is I don't need the guy at the back end checking things and so on and so forth. So my cost goes away, right? We'll just play a small video what happened when we rolled out the address change journey. Can we play the video?
Hi, I'm Rashida Sharma, and I've been a customer of HDFC Bank for more than a decade now. I visited the branch today, Zirakpur HDFC branch, because I had to get my address changed on my savings account. The manager of the branch, Mr. Varun Kapoor, and the concerned staff, they helped me and I could change my address, update it on real-time basis using the WOW journey app. I am really thankful. I am so elated that I could do it, like, within a second. Thank you so much.
The important thing was that while she was walking out the door, the address was changed in the system. No tap, nothing. You know, like you had an ad, fill it, shut it, forget it. Just get done with it. That is the walkout working journey. This walkout working journey right now available as standalone journeys, right? The same thing is going to come in form of a QR code. The same thing will be in the net banking that, Anjani spoke about. The same thing will be part of our WhatsApp banking, right? Very soon in 3-6 months time, you'll see all branches having QR codes, some of the ATMs having QR codes, some of our corporate centers having QR codes. All this journey will be available there, right?
You know, if you have to go to Rome, does one road go to Rome, right? There are 5 roads go to Rome. Anybody's preference, whatever roads they want to take. Somebody wants to come to the branch, somebody wants to just do it, you know, from a QR and so on and so forth. That's what we're going to be doing and make it really, really simple if we have to, you know, achieve that vision, that we spoke about. I'm going to just breeze through this Insta account journeys. The way we have this, and the number that, Parag mentioned, 67%, that is the total number of accounts.
Right now we have 56% if you take only full KYC accounts, because from business point of view, that's what we track full KYC account because that shows the level of involvement that the customer sort of has with us. We're going to be having a similar journey on Insta Current Account, integrated journey. All the AutoCircle, et cetera, we are seeing, you know, we spoke about that if you don't have the savings account with the bank, you can still go through that journey. We can always give the option of opening a savings account through this Insta account, isn't it? If you do that, imagine the multiplier effect of the power of these platforms that we are building. Here you're going auto loan and an AutoCircle or a Vyapar SmartHub, right?
Our current account journey that we're building here will get integrated into Vyapar as well. This is the crisscross of mesh that we create that, you know, whichever platform you go to, you know, we help customer to serve him in the best possible manner, you know, get his liabilities relationship, as well. This is something we have to work out. Anju, that's an action area that we have to do. We'll catch up on that. Business Express. There is a retail customer, there is a corporate customer. We already have the ENet and CBX at the top end. This is a simple app, whether it is for, you know, GST payments, for tracking payable, simple cash flow management thing, or just making bulk salary payments, right?
You start a new startup, you want to make bulk salary payments, right? So this is the app and platform for that. This should also be out in next 4-6 months, as part of our physical transformation of the complete retail part. I touched upon this lifecycle, life-centric insight-based propositions. All the segments that we spoke about, you know, these are all based on some or the other customer insight, right? My Account, My Choice. Can anybody guess what is the book size of My Account, My Choice? I had it in the presentation, then I realized it's going to be in the website. We don't want our competitors to know about it, so don't tell them. But can you guess what is our My Account?
My Account, My Choice is all about, you know, customer choosing an account number that he likes, may add up to a numerology number of nine or his daughter's birthday being part of this number or whatever, right? We rolled it out, I think some percent, we were looking after product, and today our book size is INR 25,000 crore. Can you imagine? 30% of that is existing customers, 70% that is all new customers. Even existing customers, if somebody had an affinity for a number nine or his daughter's birthday in his savings account number, do you think his customer lifetime value will be more or less? Think about it. You'll get the answer. You'll figure out where is our competitive advantage, and we are sharing our book in a little bit open manner here, right?
Why we have delivered this 3.2x growth in last three years, and why we are extremely confident that we'll do 2x growth in next 3.5 years, right? Super Premium savings account, where lifestyle is the insight. Super Premium kids account, right? All of these have 5x the normal ATS because there we have tied up with a BYJU'S for easy education or a Jamboree tie-up where people who want to go abroad, you know, we give them counseling sessions through that. Even FD, which is very commoditized category. But what's the insight? The insight is safety, right? But if I add in a term cover little bit of that or a HospiCash, which beyond the health insurance the customer may have, we give him, like, INR 1,000 on his unfortunate incident of hospitalization.
What are we addressing? It's not just packaging of some two commodities together. It's addressing the insight of safety, right? Switch to save and insure. This is just a glimpse. All the segments we spoke about, we're working on a doctor's product, we're working on other product. Segment-led go-to-market and segment-led life-centric insight-focused proposition. It is these two things sort of coming together to. Rural, we briefly touched upon it. The opportunity is massive, as you see on the left side. Our shares are just about 9% on deposits and 18% on credit. The opportunity is about INR 26 lakh crore of deposit and INR 15 lakh crore of credit. We have six key levers of our rural growth pillars, right? Distribution expansion is one. A unique and a focused rural relationship architecture, right?
Really be able to engage the Pradhan Ji and the Sarpanch and the Mukhiyas and so on and so forth in a differentiated manner. Because a corporate has also required a different way to treat rural seniors would require a different way. Curated rural proposition. Should we have a customized set of surrogates for rural credit? How do we evolve the propositions? We are looking at a rural opinion leader program. There are 67 agricultural universities in the country, and we are looking at partnering with each one of them, one per state.
Looking at how do we, one, work with the agriculture universities for their salaries and payment collection and so on and so forth, but using them in our financial inclusion team, in their other agri or other rural ecosystem valuation programs that they do, and take them along with us. Because they can really provide life-centric value addition to this, rural audience. Some innovations on shopper activation, bank on wheels and, Sarpanch Samman Samarohs and stuff like that, so that we break out that differentially. This is something that we want to grow 2x in next 18-20 months, right? We believe that this is imminently possible. This is the, I think, second last slide.
Retail deposits, we have grown consistently to more than 2x the industry growth on everything that you look at. Again, this is retail deposits. Current, if the industry is growing at 13%, we have grown at 24%. From savings, 28%. Even on term deposits, while at bank level we may have a 7, 8, 9% growth, but the retail has grown by 21%. If I compare to peer banks, we have done much worse on the bulk deposits, which are rate sensitive, but we have done much better on the granular deposit. But still at 15% penetration, the runway of growth is massive.
Retail CASA is 2x in three years, total deposits is roughly about INR 10.6 lakh crore book, 1.9x in three years. Growing market shares, not just the growth, the growth dispersion. 90% of the districts where bank has a presence, we have grown our market share. 90% districts. Right. It's not that the growth is coming from 1, 2 or 3 places, right? That validates that how well this the engine that we have built and improved further with superior customer experience, superior building a service first approach and a phygital approach is sort of helping us. I think these are some of our ambitions. 12 million new annualized run rate in next 12, 15, 18 months.
Be the best customer experience brand. Continuously grow 2x or more than 2x the industry growth rate. Double the rural business in 24-30 months. Analytics-led focus. The MBA that we spoke about and the further layers of whether it is incredible MBA and the immediate MBA. Phygital transformation of branches, and branches no longer will remain branches. They'll be phygital hotspots in multiple formats, SBL, DBUs and phygital hotspots. Yes, we're going to deliver 2x deposit franchise growth, which is an outcome of all of this, rather than trying to do it directly, in next 3.5 years. Yeah. I guess that's all from my side. We'll take up questions once Sampath and Smita have gone through their sessions. Next presentation. Smita. Do you want to keep it?
Good evening, everyone. I'm Smita. I will present you our strategy, where we are and what we are going to do in government and institutional business, and how we are setting alternate banking channels and partnerships for the bank to support our existing infrastructure and networks. I have an audio visual presentation. I will present it.
The opportunity across the government and institutional segment is enormous. We have only just scratched the surface. Our strategy focuses on three pillars. The first is central government, state government and local bodies. The second is the institutional business encompassing educational institutions, trusts, NGOs, residential societies, religious bodies, healthcare, clubs and associations. The third is expanding reach by leveraging alternate banking channels and partners to increase the reach and distribution of HDFC Bank pan-India. With flows of over INR 39 lakh crores budgeted for FY 2022/2023 for various schemes and payouts, Government of India has unlocked a large revenue pool by allowing private sector banks to conduct business for centrally sponsored schemes and central sector schemes. This flow is augmented by the Finance Commission fund flows that have a five-year horizon. Highlights of government business. HDFC Bank is a leading bank in managing government fund flows.
Of the total INR 16 lakh crore of fund flow from the center to the states, about 26% flow through HDFC Bank pipes. This share will only grow further. We target retaining 8%-10% of these funds by acquisition of vendors and beneficiaries using Suksham and beneficiary accounts. The single nodal agency is a new construct introduced in September 2021 by the Government of India. HDFC Bank is recognized by the Ministry of Finance as one of the top 5 banks processing payouts, including DBT transfers through the Public Financial Management System, PFMS, under the aegis of the single nodal agency construct.
Of the 150 central sponsored schemes, the bank focuses on top 35 schemes that accounts for 86% of the total budget allocation. The bank is targeting 20% market share in these top 35 schemes in the current financial year. Public Financial Management System, PFMS. The bank aims to exponentially increase its share across the number of registered agencies from 2% to 10% in the current financial year. This will lead to a 3 times increase in volumes over the next 18-24 months. HDFC Bank is empaneled as agency banker to the Government of India. HDFC Bank is the market leader for direct tax collection with 25% market share. It also holds a significant share of GST collections.
At 14%, the bank aims to maintain its current market share for direct taxes and achieve 20% market share for GST and customs duty collections in the next 12-18 months. New business opportunities have opened for private sector banks under various central and state government business. Pension opportunities. The target for the pension book is INR 15,000-20,000 crore in the next three years. Opportunities on eNAM ecosystem. HDFC Bank was integrated in the government's National Agricultural Market, eNAM portal in November 2021. The bank seeks to garner 10% market share in the next 12-18 months, focusing on all constituents across the agricultural value chain. State government opportunities. The total opportunity identified across states is INR 575,000 crore.
The bank's goal is to secure a market share of 10%-15% in the next 2-3 years. Our value proposition. HDFC Bank leverages its wide branch network along with alternate and digital banking channels, as well as partnership networks for conducting its government business. Technology plays a pivotal role in acquiring business, given the volumes and values of government collections and disbursements. HDFC Bank Collect Now is a robust solution for collection and payouts. The comprehensive solution is offered to government and institutional customers to manage their businesses effectively. HDFC Bank, through technology service providers, facilitates plug-and-play solutions. Few examples of plug-and-play solutions are technology for agricultural procurement. As direct payments become the norm for agricultural procurements, the bank has been at the forefront in facilitating latest technology to state agricultural boards.
We aim to take this forward in 10-12 states in the next 12-18 months. The e-tendering and e-auction platform is live in 6 states with INR 8.5 lakh crores of EMD collections, and we are looking to expand our footprint across 12-15 states in the next 18 months. Government Project Monitoring System. This solution helps governments to reduce time and cost overruns. Currently, over 5,000 projects are being monitored across 10 live setups in 5 states. The bank is looking to leverage this solution for business across the rest of the states in the next 15-18 months. SLI and CSR initiatives. The disbursements done by the Inclusive Banking, Sustainable Livelihood Initiative and Agri teams are showcased as part of a commitment to participate in the nation's development and act as enablers to acquire business. Institutional business opportunity.
India has more than 75 lakh institutions with flows of INR 17 lakh crores. The education and healthcare segments account for close to 85% of the total pool. Other segments include religious institutions, housing societies, trust or NGOs and clubs, which account for the residual 15%. Education. Approach to drive growth. The bank intends to adopt an ecosystem-based approach to harness the opportunity offered by the education industry. Examples include comprehensive solution with key features for managing fee collection, salary payments, payroll management, et cetera. Partnerships with EdTechs adopting an API banking approach to target growing segment. RegTech, the new mantra across religious institutions. India is a country with 30 lakh religious institutions. These are estimated to receive donations of approximately INR 23,000 crores per year from the public. This also includes 36,000 temples managed by 23 state governments' endowment departments.
Leveraging digital solutions integrated with the bank to collect donations, the bank seeks to achieve 10% market share in the next 15-18 months. Aiding convenience across housing societies. We estimate urban India has approximately 6 lakh housing societies in India that offer a revenue pool of INR 72,000 crore. The bank facilitates a wide variety of solutions, including collection of maintenance fee, event booking along with viewing notices, managing vendors and payments to them, et cetera. Our mission is to tap the opportunities through various initiatives and double the government and institutional book in the next 24 months.
Technology and digital headwinds shaping the country give us conviction that it is the right time to build distribution in pockets of opportunities and support the existing network across all geographies. The adoption of technology, penetration of mobile and internet in the country opens avenues to capitalize an untapped fertile ground with large pool of opportunities by digitally connecting the last mile. We have tied up with marquee partners that have a vast agent network. Distribution structure for a new vertical will work in an octopus framework. Existing branch is at the core, which is supported by 5-8 agents centers from the partner tie-up, covering a radius of 10-20 kilometers, acting as HDFC Bank's distribution arms. The authorized agents centers are capacitated with the digital infra, including laptop, printer, webcam, et cetera.
The bank supports these fixed point delivery centers with branding, creating visibility and integrating product APIs to function as an HDFC Bank mini branch and cross-sell all our banking products. The bank rides on the partner network to connect and offers liability, assets, payment products, EMI collection, cash deposit, and withdrawal through these centers. Digitally assisted and unassisted journeys are in play with a combination of fintech and lead APIs, which delivers a seamless and quick user experience securely. We have taken a platform approach and more than 44 APIs power the customer journey from origin to the source system where the business is booked. Building alternative channel brings in several benefits. A, nil infrastructure cost to the bank with minimal manpower requirement. B, low cost of acquisition for every incremental business. C, replacement of loss-making branches and migration of small value transaction.
D, expansion of market for bank and increasing collection capability in deep geographies. There is a parallel contribution on the societal side, lending our hand in nation building and participating in government's key agenda of financial inclusion and women empowerment. The channel has already done more than 2.15 million products with consistent delivery of 1 lakh products per month. We are on a trajectory to scale up to 5 lakh products per month in the next 12-18 months.
I would just like to add two things here, how we are different or how we are doing things differently compared to others. If you've seen the government business, our main proposition is digital solutions to all the government departments. As government is moving towards digitization and focusing, I mean, Digital India, we are able to gather a lot of market share. In almost every state today, we are present, and we would have given at least one digital solution out there, and we are only going to scale it up. That was point number one. On the alternate banking channels, I'm sure you are aware of banking correspondents and banking facilitators, which every bank has been doing historically.
What differentiates us is that usually they were open to do Jan Dhan accounts and domestic remittance, which were a huge market for everyone. Here in our case, we have integrated all our product APIs with our agent outlets, and we are able to give all the products, banking products, whether it be our liability, assets or payment products to our agent network. Combined with our existing branch network, with all these partnerships, we are obviously poised to you know, double, triple the business as Sashidhar was talking and Arvind also mentioned in his presentation. After Sampath,
Hi, good evening, friends. All good?
Yes, sir.
I take care of third-party products, non-resident business, and the virtual channel. My colleagues from the morning have been putting up a host of presentations. I'm a little inferior that I'm gonna only do three slides presentation. I beg pardon for that. Can we have the slides. I think they are searching the three slides. I think that's the one. That's it. Thank you. Let me give you a small heads-up on what our strengths are there on the third-party products. As you're all aware, after 2019, post the regulatory changes, as a bank, we are not supposed to do advisory, so we are a hardcore distribution strength.
Across 6,300 branches, we distribute mutual funds and the insurance product across an open architecture, which Sashidhar was talking in the morning. Our strengths are we have about 12% market share in the private sector insurance. If you take LIC also together as a whole, we have about 8% market share. Which says that the volumes that we or the premiums that we mobilize year on year is as good as the third or the fourth largest insurance company all put together. That's a strength. On non-life, it is an annuity product. It's an annual contract. We are a little laggard. We are at about 1.9% of the private sector. We have plans and strategies to take it to the next levels.
On mutual funds, we have about 5.07% of the total assets under management. We roughly about INR 85,000-90,000 crores of assets under management. I think Rakesh will cover in depth on how the distribution is spread across. So what are key metrics? In premium mobilization, we are number two. Number one, everybody knows it's SBI. On fee income, we are the largest. Overall, largest contributor to all the insurance partners. Bancassurance we are the pioneers. We have a very strong methodology, which, I think, you would have seen in the past, but I just want to reiterate that it's not the first step of selling to a customer that we finish. What rules our strength is what processes that we undertake to ensure that the sale is the right sale.
These are the products where it's very, very imperative that the sale has to be a right sale. If you do any mis-sell, if there is any mis-sell that happens, not only the customer gets irritated, but he also loses out our relationship across all the corners of the bank. We are the only bank who do something called the pre-verification call. Before even the application gets logged into the respective insurer manufacturer, there is a central team which calls on the recorded line and confirms to the customer saying that this is the product he has taken, whether it's a par product, non-par, ULIP, and so on and so forth. Post the confirmation is the login done.
If even a small error on the phone that, "No, your form doesn't get logged in." That testimony is defined by the proof of the pudding that my complaints in the insurance is the most negligible one, which has been disclosed in the website as well as to the regulators. That is one of the biggest strengths we do. The second strength is with the artificial intelligence and with the partners', underwriting and actuarial skill sets, we have created a concept called the pre-approved sum assured. So every customer with us will have what we feel based on his transaction, his profile, on his age and so on and so forth. We feel how much should be the coverage either on the life part or the medical or even the general part that the customer should have.
That narrative, like how Arvind was saying, and thanks to the marketing team which had constructed this. On the CRM, on the next best action, this is one of the priorities where the RM communicates the same thing, and the narratives are the same. We are not doing any orderly scripts on the narrative. Narrative is the same on customers' pre-approved sum assured. We have been doing a very good job on that. Now with more integration, we will increase the base. We'll be increasing and covering a lot more customers in that base. On any complaint that comes in across any third-party products, we have an L1, L2 level, where we have an external ombudsman. Before doing any denial, it is ratified by the external ombudsman.
That's kind of a robust methodology we have when we do about third-party products. On mutual funds, to just give you a small thought process, we don't have any complaints in mutual funds. It's a 98% digital journey for customers in the mutual funds. We are a very, very open architecture that way. We have recommendation done by the central research team. I think you might know my team members who participate in the research. They put out the recommendation, and across the length and breadth of the country, and 25,000 more certified staff, they talk the same language. There's nothing that is positioned to a customer which is not a part of a recommendation. In case the customer wants to participate, it's available on the net banking with certain declaration that he is doing it on his own.
This is a channel which I would love to talk about. We have the virtual relationship channel. Six years back, we thought that why should I force a customer in how I want to reach him. Let him decide how he wants to reach him. In that perspective, we created a virtual channel. I don't know whether I should say fortunately or unfortunately, but COVID hit us in the month of March. Everything became digital, everything became phone-based, everything became team-based, Zoom-based, and whatever you wanna call. We started participating, enjoying that journey by reaching out to the customer in his necessary time through phone. Believe me, our guys were essential services, so we were allowed to walk into the office and connect with the customers.
That's where we started experiencing that this is a very strong mode of reaching out to the customers. What do we do there? We didn't do anything. We don't do sales. We've only checked in the initial stages how the customer was. Is there anything the bank could do? Are there any financial services that he wants to, it is those steps, and that was provided to him. Simple steps, nothing much. Like how Arvind said, liability cannot be sold, it has to be garnered. So we took that route saying that in four and a half minutes, I'm not in a position to contact a customer and talk to him about liabilities. The maximum I can tell him is, "We respect you as a customer, and here are the product suites which we think are pre-approved for you.
Pick and choose what you want." That's where we were very successful, and the kind of units that we generate are quite phenomenal. We touch base close to about 25 million customers. We have an average revenue growth of about 16%-18%. It's a low-cost channel. Initially because of the infrastructure CapEx cost, it would look something blown up. I think it's on a longer run, it will become a single-digit cost center. This is one thing which I really feel so proud. I think the entire board and Sashidhar have given us this mandate. We changed our phone banking name into Virtual Care, and seriously we care.
What we have done, when we wanted to revamp the channel, we reached out to some brilliant consultants who give presentations like this, you know? We asked them, "What are the global standards?" They said, "85% of the customers are serviced in 20 seconds." We did small little good things that we know on the ground, and we went wrong. We did 92% of the customers in 9 seconds. The same consultant took our numbers, and now I think they are going outside and presenting how we do things. That's one thing which we clearly said that when a customer reaches out to me, their touchpoint to reach out to the bank is a decision of the customer, whether he goes to a branch, mobile, net, web, or phone. I need to service him.
When I'm talking about service, what Arvind alluded to is I need to bring a smile on the customer face when he keeps the phone. That's why we try to reach out. If you see certain numbers here, the resolution TAT is 99.90%. We faltered in 0.07%. We are rectifying it. It's a continuous process. The closure is at about 99.79% because certain times there are external dependencies also for the closure. I think our email team has also become quite robust. The first set of people who started working from home since the twenty-third of March when the COVID hit us was the email management team.
They were quite integrated, and they were completely supportive of the cause that they have to respond within the set TAT of 24 hours, and customers have been appreciating all that. We used to have a model where when the customer reaches out to phone banking, we had an opportunity to cross-sell. We changed that. We said that the larger portion of the phone banking will only be service. People who are not being able to be contacted on the outbound because of the regulatory environment, when they come in, there'll be a very small dedicated team which will also have a serve-to-buy concept. I will service him. I will give him the offer. He can go to any channel to pick up what he wants from the bank.
That has been a very successful story so far, and we'll keep improvising on such initiatives to ensure that we believe very strongly it's a customer-centric approach that we have. I always keep telling my team members all those strategies which were shown to you across all departments. I finally conclude to myself that the bank is run on the ground, and I have only two capital to invest. One is the customer and one is my staff. If I keep my staff very happy, he will keep the customer very happy. We keep the environment. Our intra team have worked very hard to create a very eco-friendly environment because we are all call centers, so-called call centers. The environment should be happy. Just imagine six and a half hours on the phone. We changed certain sequencing. Nothing is manual.
Everything is automated because we didn't want to have a data leakage, so we've put everything on a dialogue. We kept all manual out of the relationship managers' touchpoints. Like how we are working on one of the new technology initiatives called Sprinklr that give a lot of more flavor to these guys and create more efficient KPs. With that, I'll stop my bit. In case you guys have any questions to ask, we'll be more than happy to answer.
Yes.
Can we have second session? No, I'm okay, sir. No questions? Thank you very much. Arvind, on to you.
Good evening. Good evening, everyone. Just wanted to take a glimpse of wealth. As you heard Shashi say in the morning, wealth, private banking is one of our 10 pillars of growth identified by Shashi. So is digital. The entire digital channel is the other. These are the two pillars of growth identified by Shashi, and we'll cover between me and Ravi, we'll cover the two, how are we executing these two principles. The two pillars of growth, per se. All is well. Last year has been a good year for us. We actually got recognized by 3 leading magazines. One is the Financial Times, the other is Euromoney, third is Asiamoney. They all recognized us for the work we have done on wealth. Specifically, just to take you through what active AUM we manage.
We manage close to an active AUM between MS and alternative, about close to INR 1 lakh crore. This is the first time we are disclosing some of these numbers in public domain. This is just to give you a picture of what we manage per se. Our AUM growth is about 23%. We enjoy a market share of close to 5%. The average yield on our AUM is about 62 basis points. On the wealth side, which is far more actively managed, we have a INR 69,000 crore AUM. The net inflows last year were close to INR 10,000 crore. We manage close to 1 lakh+ customers with a 50% ARR. We'll take you through the details as we go along.
In terms of the growth in AUM, in the last three years, we have seen our AUM grow from INR 63,000 crore to INR 93,000 crore, which is especially the mutual fund AUM. INR 6,000 crore is our alternative AUM. On the net flows, we've seen a remarkable growth. We've nearly doubled our net sales every year in the last two years. The wealth customers have grown from 73,000 to about 110,000. Wealth households are about from 23,000 to about 41,000. This will keep growing. Our stated objective is to cover every potential wealth customer. Every potential client of the bank should be a wealth customer. That is our stated objective, and we will do that. We are just taking you and giving you some perspective.
There's a lot of discussion that happens in most of forums about ultra HNW vis-à-vis the HNW affluent and mass affluent, and why our focus continues to be HNW affluent and mass affluent. If you look at this is a McKinsey slide, actually. We have taken it and it is a McKinsey research. 83%-85% of the market is basically between the HNW affluent and mass affluent across Asia. I want to pause here. This is the kind of market we are talking about across Asia, where 83%-85% of the market is largely between HNW affluent and mass affluent, and growing. The incremental revenue, if you see, from a revenue perspective also, 90% of the revenue, incremental revenue comes from this segment, which is one of the reasons why it is one of our pillars of...
What are we doing here? We have focused on B 30 cities. We'll take you through the rationale of why we are doing B 30 cities. We have increased our RM strength to about 600 RMs. The FY 2022 number, exiting number 542, we are currently about 600, going to about 1,000 by FY 2023. We are doing in-house skill building completely because, given the kind of RM strength we are looking at to build over this FY 2023, 2024, 2025, we don't think we will have, you know, available professionals. Most of the skilling is being done internally. As a part of the MD mandate, we were looking to reach out to 100% of our managed customers, within a period of 36 months. We are following a portfolio management approach.
We'll show you why we are following that approach. We have done a potential analysis of our customer base, and basically through both the AI, ML route, we are getting to a potential, then getting to penetration in that potential. We are also doing quarterly portfolio review and rebalancing for our managed clients. On the technology side, we are moving from InvestTrack, which used to be our earlier application to a Finacle plus Valify application. Some of you, if you are our customers who have experienced this particular application, the reports are coming which are far more detailed in nature. You will see this complete DIY reports being available by this quarter because this is under implementation per se.
As Sampath mentioned, 98% of all this is completely digital, and there's a fair bit of analytics and AI involvement here. We continue to commit ourselves to a very open architecture. Most of the stuff is non-proprietary in nature. We are also committed to doing a right client, right product offering. We spoke, as Sampath also spoke about that, as a part of our practice, that we will have a right client, right product offering. This also, the recommendations are further, the Fama-French model. I'll take you through what we are doing on the recommendation side. Just from a geography expansion, this is the first part of our pillar. We have moved from to about 831 locations per se, where we are offering wealth services today.
Which basically comprises of hubs of 79 and the spokes of 759. People are based in 80 locations physically, but they travel across to cover another 759 locations. The mandate from the board, from MD is to cover about 1,000 locations, and we are committed to doing that as well. We are working with Arvind's team. We are working at cluster level planning, cluster level engagement. It is getting into that level of granular execution. MD spoke in the morning about our focus on granular execution. We are going to cluster level execution as far as this is concerned. Obviously, we spoke about the intensive training which is involved in training our people as well. This is a number which is shared by a lot of wealth firms.
Leave you to guess what people share, but this is our growth in ARR. We started with 39% ARR. We are currently at 50%. This is essentially comprising trail income coming from our mutual fund alternatives and our broking clients. We moved to an ARR base just to get away and prove you, to you that the transactional nature of the business was already continuing in various other wealth outfits. We have moved away from the transaction to a relationship-based model completely. The moment we move to a relationship-based model, you can see the jump in net sales we have seen. INR 10,000 crore of net sales is what some of the wealth top wealth firms have recorded in last year as well. Now, coming to what we are doing on the digital side, we will give you some data points here.
16% is what our current AUM to GDP ratio is. 63% is the global average. These are some data points. I'll leave it. You know, these are publicly available data points. Far more important is that we are wanting to invoke through our digital platform, our 6,000 branches, get into Tier 2 cities, do end-to-end digital onboarding, have intuitive UI/UX, goal-based investing, model portfolios, and understand the customer closely from a risk profiling perspective. How will our wealth app look like? Anjani would have mentioned this to you in his presentation on what we are doing. Essentially, it is a five-step journey. We are engaging to acquire. On a pre-login space here, the app is going to be available next quarter.
On a pre-login stage here, there's no disclosure of any information required by the customer at all. Whatever suggestions on wealth is concerned is completely available pro bono till you actually desire to transact. We literally the entire thing. We are not going to call a customer and say, "You know, why don't you log in, give your phone number, then log in, and then I'm going to chase you." We are not going to do that at all. We have taken that call that we are not going to do that. We are making this information completely available. Our intention is that if our product proposition is very good, customers will come to us. We can see that in the physical world, why shouldn't it happen in the virtual world as well?
Traditional world as well. We can see most of our customers, we currently manage about 41,000 families. We can see that customers coming back and buying more from us. I'm sure this is going to happen in the digital channel as well. There's complete digital onboarding, which involves risk profiling, goal-based investing and a customer-centric experience. Some of the, you know, images which are shared here is exactly how the wealth app will look like. We are in the testing phase at this point of time. Hopefully, you will see this come from us in quarter two. In terms of our, we spoke about the right client, right product approach. Sampath mentioned about the Fama-French model . We have taken one more step.
We have actually gone ahead and for all our third-party products, we have developed a model framework which we are getting audited by a third party completely, an auditor, saying that whatever is our model process of selection, is it right for the customer or not? We're evaluating even the scoring model and getting it audited because ultimately we are custodian for our clients, per se. Second thing we are doing is, in terms of allocations, we continue to follow the open architecture, the service first approach. I think MD spoke about that in the morning. We're moving to a service first approach. Each client has also a service RM. An RM which the client can reach out to at 24/7, literally. We spoke about the fact that it is a holistic offering per se.
We wanted to give you this is again information which has not been publicly disclosed at all, but we'll give you this information at this stage. We've managed close to about INR 36 lakh crores in our total Demat balances, out of which a customer that transacts at least once a year is 8 lakh. That AUM is INR 8 lakh 52 thousand crores. Out of that, 89% do transact at least once a year. Just to correct myself here, 8 lakh 52 thousand is a retail customer base, which holds with us, out of which 89% do transact at least once a year in their folios. By the same metric at which other wealth firms quote AUM, if we were to quote AUM, you can estimate what kind of AUM we are talking about.
These are distributor trends. A lot of discussion happens on direct versus distributor model. Our B30 focus continues to be here because you can see the wealth continues to be in the distributor nature. The distributor penetration in B30 is still strong, which is why we are focused on the B30 locations per se. The AUM continues to grow. As you know, the AUM currently in the non-advisory, non-direct model is about INR 21 odd lakh crore, out of which 78% continues to be investor in your distributor AUM as such. That's it. Thank you. I'll hand over to Ravi to take it.
I used to work in telecom, and then I used to think that people using mobile phones in meetings giving us a lot of revenues, right? At the end of the day, telecom revenues is all when you use mobile phones. Earlier, when data was not there, used to not have anybody using mobile phones, maximum is text, and text was very expensive. When data came into being, then we said, "Wow, even in a closed room, we can get money." Now, when I come into banking, I realize in the same closed room, we can still make money. That's what I'm going to tell you, how we are going to make money in a closed room in addition to what we do. I'll give a slightly different perspective. Everybody looked at it from a bank's perspective.
You heard Sashidhar. You heard a lot of people talk about the entire breadth of the bank. I'll give you a consumer perspective of what a retail customer is looking for. How many of you think of a bank if you don't do this profession when you get up in the morning? At least one person nodded saying, "I don't think of a bank." Anybody think of a bank or your bank when you get up in the morning on the right side of the bed, left side of the bed? You think of three things day in and day out. I want to pay somebody. Isn't it part of your life every day? I need money. This is also part of our life. Somebody has to give me loan, somebody has to give me some credit. I have money. What do I do with this money?
These are the three things which a consumer is looking for. I want to make day-to-day payments. I need money. Can you help me with money? I have money. Can you help me invest? You saw a lot of conversations around all these three things. Whether Parag talked about payments and what we want to do on the payments and how we want to get into payments as a sector, as a very specific area, is because this is what consumers are looking for. You get there, you will get a lot more. Arvind talked about retail assets. Rahul talked about the CRB and the corporate. They all want money. They all want services. How do we get there? Wealth, I have money. Rakesh Singh talked about what we do with the wealth business. All these things are built on two foundations for us.
The one foundation is relationship management. You just don't go and ask anybody money, right? You just don't go and tell anyone, "Manage my money." You just don't go and transfer money to somebody. You do it only when you have a relationship. That's what Arvind, Sampath and Smita all talked about in terms of what is the relationship that we build with our customers that enable us to create the second pillar, which is the experience pillar, which Anjani talked about, in terms of how do we create an experience, both physical, digital, phygital, all these kinds of models, to make sure what consumers are looking for from a bank is done. I am part of digital marketing team. What is it this marketing in a nutshell do? Our job is to create traffic, quality traffic. People need to come into our branches.
People need to come into our digital properties. We need to make sure our properties are inviting enough that you want to come in and see what's there. That's the first pillar of what we do. Once you come in. If you come into my house, and if I call all of you people in, should I just ask you, "Hi, hello, how are you?" Or should I just say, "Hello, XYZ, what is it?" Should we not have a personalized conversation? The next step is who all is walking into your property, how much of a personalized conversation that you can have. I will explain to you how do we do that in this. Why do you want to have this personalized conversation?
To build relationships and also to make sure the consumers know what you have as offer, to nudge them to see what is on offer in your shop. I'm sure all of you go and buy dresses. Assume that you're going and buying a dress for a marriage. First time you go into the same shop, say Manyavar. You finish looking at something, and they say, "I'll come back again." When you go back, if that person starts the conversation from the time you left, last time you came, you saw this, there is something new, just come in, you will enjoy that visit. If you have to start all over again, I don't think you'll love it. That's exactly the conversation that we need to do to make sure we nurture our customers to start evaluating our various financial products.
The last step that we do is how do we convert these conversations? How do we convert these experiences into meaningful long-term happy relationships? The first thing is about brand. People walk into HDFC Bank. We reach out to them at many places. How does the brand behave? If you look at it, what is top-box consideration from a marketing perspective? We go and ask consumers. These are all third-party surveys. We go and ask consumers, "In the next six months, if you have to buy a banking product or service, who would you consider? Give me the names. Unaided. Whatever name comes to the top of your mind, let us know." HDFC Bank's top box consideration was 11 in April 2021, and you can see the number. It's around 21 now. 9 percentage point increase.
In our parlance, this is a lead indicator for market share gains that's going to happen. Top two-box considerations, you can see almost 55% of the market is saying HDFC Bank as either number one or number two. Whatever payment product they are looking for, whatever lending product people are looking for, whatever wealth management product people are looking for, that's the power of the 27 years of work that has happened in this space. This is purely 27 years of hardcore relationship building and experience that we have created is giving us this kind of stuff. It's a sum total of all the interactions and experiences that we have created. How much traffic is actually coming? I'll take only one example. I'll give you more numbers later. What's the kind of visits that we have in our website?
8 crore people walk into our website alone in a month. Imagine the number of people walking into our shop to look at something. What we need to do? Make these 8 crore people have personalized conversations with us. If you look at it, there's a small line below, which is the search engine optimization. Meaning how many people are looking for HDFC Bank on their own on the website in the internet world. That's why I said I'm so happy that all of you are in your laptops and mobile phones. They're searching for a product, for a service, and that's the kind of numbers. That's the kind of percentage of traffic that we get, and that's the power of brand, which relates to so much traffic coming in.
I'm going to show you some more numbers on what we do with this traffic a little bit later. Arvind talked about passionately on MBA. We have an advanced analytic engine. We have a cloud-based engine called SparkBeyond, which we have implemented. We are one of the few banks in the world which has implemented a complete analytics solution on the cloud. What does it do? We have all the transactions, and this is one of the famous things that I keep hearing from a lot of people. Banking is all about trust. Would you all agree? You all put in your money. I see a lot of youngsters here, but when you go and ask today, nobody believes in India, anybody has taken their money and run away. Except for cooperative banks, maybe. The rest of the places, your money has never been taken out.
You always got the money back. Today, people are saying, "You know so much about me. You know how much I earn. You know where I spend. You know. You have my credit card details. You know which shop I spend on what. How can you not use all those stuff to make the conversation that you are having with me relevant?" That's the only question they're asking. If you're not having relevant conversations, they don't trust you. Why? Because in a human relationship, trust happens only when both of us have relevant conversations. Every time you talk something which is absolutely which we have never talked about and is unrelated, would I ever trust you? I'll never trust you as a human being because you don't know anything about me. Same way, a brand has to create that trust by having meaningful conversations.
We have first-party data as a bank. We have everything about you. We have 13 channels in which consumers interact with us. Whether it is the VRM channel or phone banking channel, which Sampath talked about, the branch channel, which Arvind or all the digital channels. Today, our AI engine on a daily basis takes all the feedback from all the channels, all the customer interactions, puts it together along with the transaction behavior, and then predicts what is the intent that the customer has. Arvind talked about multiple NBAs that we have created. When we do this context does it for all the physical channels also, which is there in the CRM for our agents and our relationship managers to have a conversation with the customer. It's also done on the digital channels across all our properties. What do we do?
Once the customer, in love with our brand, comes into our property, we personalize the conversation. You ask them to explore the financial products. We have a lot of data. Our journeys which Anjani showcased, they're all on the basis of new age platforms. These platforms skew data in terms of how many customers are walking in, what are they doing in each of these properties, which step they are likely to drop off, why, all these things. With this, we have a pre-approved product. We sell that directly to the customer. Customer walks out. There is zero human touch, which means in your financial language, low C2I. If we are not able to give that product because we don't have a pre-approved offer, we give it to the underwriting team for them to do a manual underwriting.
There is a phenomenal effort which is going on to convert this manual underwriting into what we call as decisioning on the fly. You saw that happen in the auto loans. If you come, and today you give all the data to us, we are in a position to take a credit decision on the fly, which means today, whatever has got a higher cost of acquisition, as we invest and make sure the decisioning on the fly capability happens, we will have a far lower cost of acquisition, and we will reap the ROI benefits. How do you know this works? These are the numbers. If you look at the unassisted digital contribution penetration here, first one, two journeys, we started at 28%. Today, we are at 48%. Absolute numbers have increased. Number of people coming on their own and taking these products have increased.
This is on two journeys, which is limit enhancement and upgrade on cards. What happens to the sale of the credit card? We launched the journey in March. Compared to March, in May, we have gone in unassisted contribution up by 84%. Because of the phenomenal journeys that have been built, people who walk in, come in, go through the process, take the cards and go away. In the case of personal loan and business loan, we have a 71% lift in 2 months flat. As we add more journeys, this channel is going to grow in leaps and bounds because that's the consumer behavior. There's a huge amount of technology from the marketing side, from the digital side, which goes behind all this stuff. We have invested heavily.
We will continue to invest, and we'll make sure that every instance of a consumer interaction that happens with the bank gets into our analytical models that enables us to predict what is the intent of the customer, bring them onto our properties. Get them have a personalized conversation with us and make sure we have journeys in which they actually go through and take the product, which results in lower cost of acquisition. What happens when we use growth hack? We call this process growth hacking because data is available, right? I have a team of people, all youngsters, who are very, very good in data and consumer insights. We just look at this data on a daily basis and see the kind of growth rates we have in terms of conversion rates.
From a 3% when we started on a loan on card, we already moved up to 7%. 7% visits to conversion ratio is phenomenal. It's phenomenal for a loan. If I have to look at visitor to conversion ratio, it is 24%. People take multiple visits to come in and do it because it's easy to go ahead and do the journey. When we go back to customers and look at why they are dropping off after looking at their EMI, we come to know when we converse with the customers, they tell us, "I'm thinking how to pay this back. What is it that I need to do? Because I'm going to take the money. Money will come instantaneously. From next month, I have to pay INR 20,000 every month.
What is it that I need to compromise on?" That's where the nudges that we have helps in terms of how do we actually convince. That small push to do it. We have phenomenal amount of A/B testing. We create multiple experiences. Anjani talked about an experience for Christmas and an experience for Diwali. We can create an experience for every individual customer. That's the power of technology we have. 90% of our website visits today are personalized. Out of the 80 million that you saw, 90% is personalized. The 10% we can't personalize because we can't identify who the person is, because people keep removing the cookies and come back. We are already live with 10 journeys. Another 17 is going to be done in this year, including NTB, which is the decisioning on the fly on credit cards and PL.
Auto loan is already done, and you will see us come out. What's the big opportunity in terms of the universe that we see? I only talked about one example of our website, which has 8 crore visitors. We also have mobile banking and net banking logged in sections. We get 12 crore visitors a month there. Imagine between these two properties, we have 20 crore people walking into our store. These 20 crore people, when they are walking in, what we need to do is to invest in technology to personalize the conversation. Just to give you some more numbers, 5.5 million is the customer visits on website purely for personal loan. 1.1 is for savings account. There's a small gap. 5.5 million customers are coming to our website looking for personal loan.
3.5 million customers are coming for credit card. Looking for credit card. 1% conversion, you do the math. You people are good at math. 2% conversion, you do the math. We have to just nurture these customers because not everybody is going to buy the product of the day when they are going to look at it. That's the power of what we have today. This is the kind of traffic we have. How much we are going to go ahead and make sure the experience that we create for all these people is so damn easy that they can just go ahead and complete the transaction. We strongly believe we will continue to build digital end-to-end fulfillment, which Anjani and everybody talked about. We will growth hack.
We will look at each and every drop-off, and we will have automated ways of engaging with them. We call it growth hacking in our stream. We'll grow our iconic brands, HDFC Bank, and with the merger, we see much more possibilities going further. Digital discoverability in the website or in the internet world, we'll continue to invest, and we'll continue to invest in the bedrock of advanced analytics to help us make ourselves an experience business. My last words, we strongly believe if your business is not an experience business, you are not in business anymore. Our job collectively is to make sure the banking that we do becomes a phenomenally great consumer experience business. Thank you.
Thank you, sir. This comes to an end of today's session. Now, I would like to invite Ms. Madhu Chhibber, Head of Corporate Communications, for closing remarks.
Good evening, everyone. Once again, my name is Madhu Chhibber, and I look after corporate communications. Thank you all for having joined us today for our annual analyst meet. I hope we've been able to share our vision and roadmap from ranging from business strategy to technology to customer centricity, you know, what Rahul was speaking about, to organization culture, what we spoke about in the morning, to various other things. I think the day gave us all an opportunity to meet in person after a very long time, interact, and most importantly, hear from you. We value the time that you've committed to the event, and thank you once again. In case there are any further questions that you would like to ask, I'd, you know, encourage you to stay in touch with our investor relations team.
I won't stand between us and tea anymore, and request you to join us for a cup of tea before we end the day. Thank you.