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HDFC 2.0 | The story of how HDFC has adapted to remain a frontrunner

Madan Sabnavis
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Did you know that probably the most successful bank in the past 25 years which has an almost unblemished record actually does not like to speak of itself? It does not celebrate any landmark and may not appear to be most employee-friendly organisation. But it is still a company people like to work for because it is extremely professional. This organisation is HDFC Bank which is run to near perfection and has been delivering shareholder value incessantly. You get to know about all this and more in the book titled HDFC Bank 2.0 by Tamal Bandyopadhyay.

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Tamal has a way of telling a story which makes you want to flip the pages one after the other, even when he talks of the13 people who started the bank a quarter century back and who may not be corporate celebrities. The bank is known by the face of Aditya Puri, whose photo is also on the cover page. Is this a biography of Aditya Puri or HDFC Bank? In a way, it is hard to tell, because while there is a section on the man and his style of work and some personal insights, the rest of the book is on the bank but with Puri's shadow looming on almost every section.

It is quite appropriate that this book (the second on HDFC Bank by the author) by Tamal comes out on the 25th anniversary of the bank, which may not have had formal celebrations internally. But this for sure is a good chronicle of everything that went in right from the time Deepak Parekh first approached Puri and then created the team. The last part of the ongoing story which surely will have further twists would be the thrust on digital banking and the move from conventional modes to digital. The digital bank now believes that it is a financial marketplace and everything can actually be done online or through various applications. This goes for getting loans in 10 seconds to shopping using various devices that embed discounts with merchants while making payments without the use of money. Curiously, Puri was a staunch defender of demonetisation.

So how is Aditya Puri as a leader? The fact that he has been at the helm speaks a lot of the faith of the board on the person. The bank has been the frontrunner in every innovation and though ICICI Bank may have been more aggressive, HDFC Bank has been more than steady, as the numbers show. His leadership style is to delegate but hold everyone responsible for the result. Hence while there is no interference with the heads of departments, there is serious rebuke when people slip. There is a clear carrot-and-stick policy. Most of the initial team members have left for better jobs, but Tamal quotes extensively to show that they had taken Aditya Puri into confidence and hence there was little friction.

Now coming to the bank, there has been quite a transformation in the business path which started off with corporate banking and moved to the retail space to capture smartly the market by also blending with parent HDFC when it came to taking on home loans with a business equation. Corporate banking focused on leveraging the supply chains of customers. The strategy then moved on to SMEs, which is the next big thing in Indian industry. Relentless pursuit of business, howsoever small, and never compromising on regulation and quality of assets has been the hallmark of the bank.

Any big-bang moves by the bank? Yes, there have been two very big mergers which have been detailed by Tamal, including all the action in the board. There are details of how Times Bank and Centurion Bank, which had earlier taken in Bank of Punjab, became part of HDFC Bank.

Any false steps? There have been times in its journey when the bank got on the wrong side of regulators. There was the famous IPO scam and the name Roopalben Panchal will ring a bell with most readers. The derivatives scam was uncovered by the RBI, and then there was the more recent advance remittance against imports scam of 2014. But this can also be seen as parts of business that can go amiss in any system, especially if it is as large as HDFC Bank. Otherwise, the bank has been one with the least blemishes, which is remarkable. There has never been a single controversy relating to the management, which speaks of the high governance standards pursued by the organisation.

Tamal's narration of anecdotes involving babies being brought to work in the initial days or the senior team eating at a roadside stall-which was a quirk of Puri - is quite interesting. Readers get to know about the seniors taking dogs for a walk in Lonavla! However, the questions that remain unanswered are: Who after Puri? Which brand is bigger, HDFC or HDFC Bank? Who built the bank - Puri or Parekh?

(The author is chief economist, CARE Ratings)