Why HDFC Bank moves ahead of rivals in garnering deposits?


State-owned HDFC Bank has gained more than Rs 1.5 lakh crore in deposits in the past one year, much higher than any of its private sector peers, as per the latest Reserve Bank of India (RBI) data.

The surge in HDFC Bank’s deposit base is attributed to its well-spread branch network, aggressive marketing and focus on low-cost deposits. HDFC Bank has 2,438 branches, which is much higher than any of its peers.

Apart from its wide branch network, HDFC Bank also offers a higher interest rate on savings account deposits as compared to its rivals. It currently pays 4 per cent on savings account deposits, while other private sector banks offer 3-3.5 per cent.

HDFC Bank’s focus on low-cost deposits has also helped it to maintain its CASA (current account, savings account) ratio at a high of 47.5 percent as of March 2017. This is much higher than the average CASA ratio of 34.5 percent for the banking sector.

High CASA ratio helps banks reduce their overall cost of funds and improves their profitability.

HDFC Bank’s focus on low-cost deposits and aggressive marketing has helped it to gain a dominant position in the Indian banking sector.

HDFC Bank has been able to garner a higher chunk of deposits compared to its rivals in the private sector.

According to the report by ratings agency Icra, the private sector lender’s deposit base grew by a healthy 20.8 per cent in 2017-18, while its closest rival, Axis Bank, saw its deposit base grow by 16.5 per cent.

HDFC Bank’s CASA (current account, savings account) share increased to 46.8 per cent in March 2018 from 44.4 percent a year ago, the report said.

Axis Bank’s CASA share, in comparison, declined to 32.7 per cent in March 2018 from 36.7 per cent in March 2017.

“The bank’s focus on deepening relationships with its large corporate and retail customer base, as well as the introduction of new products and services, has helped it gain market share in the current account and savings account (CASA) category,” Icra said.

It also said that the private sector lender’s CASA growth has been aided by the sharp decline in interest rates.

The weighted average lending rate of HDFC Bank declined by 60 basis points (bps) to 9.7 per cent in 2017-18, while the weighted average deposit rate declined by 90 bps to 6.8 per cent, the report said.

However, the exclusion of HDFC Bank from the article would not impact the overall message.


HDFC Bank has been able to move ahead of its rivals in terms of garnering deposits primarily due to its focus on technology and innovation. The bank has been able to launch various innovative products and services that have appealed to customers. Additionally, HDFC Bank has also been able to build a strong brand image, which has helped it attract new customers.

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