HDFC Bank Limited (HDFCBANK) Earnings Call Transcript & Summary

Flagship event for us for the year. I think the gentlemen on the dias do not need any introduction. However, we will start the curtain raiser with opening remarks by Mr. Sashi Jagdishan, MD and CEO; and Mr. Srini Vaidyanathan, CFO of the bank. Thanks, and over to you, sir.

Good morning to all of you. What a pleasure. I see a lot of familiar faces, and it's such a pleasure to meet some of you after such a long time. Thank you for coming, all of you. They're in a lot of our -- the minds of yours and many other people at world at large as to what is the rationale of the merger. Two is, what do we see on the macro side? What do we see on even ex mortgages? What is our kind of runway that we have? So let me try uncover some of these. I know some of you probably would have seen our presentation two days ago to the sell-side analysts, and I'm sure most of you would have either seen it or probably absorbed some portion of it. So sorry, this may be a repetition, but just indulge me in that. So the first is -- a lot of questions have been asked about India macro in my interactions with a lot of investors, both in India and even outside India, over the last 20, 30 days. And our house view is slightly more optimistic, even of the situation that we are in from a macro perspective. I think if you really look at it, most -- it's like carrying coals to Newcastle, you guys are probably much more aware of the macro than I do, but still my summary, thought process, let me just express that. One is, I think the -- both between RBI and between the government, I think they have orchestrated it extremely well to ensure that there's a very gentle landing of the inflationary situation -- inflation situation. We peaked in April. I think with all the measures that we've taken both on the monetary policy now and what we are planning to do that the governor has spelled out, say, a certified 100 basis points over the next 3, 4 quarters, and the fiscal measures like dropping off the excise duties on some of the petroleum products or clamping on some of the export duties so that we can have more on the domestic consumption side, reduce the input costs. I think we should sort of see the inflation go from May to September a bit and then glide down to the pre-COVID levels side [ May 20 ] -- by March '23. This gives you a huge amount of comfort as to where we stand as against where some of the other countries are. Typically we sort of reference to the United States that the gap between interest rates and inflation is too large. I think by March of '23, the way the expectations are -- I know there are a lot of assumptions in oil. I think if you go by what the experts have put in, I think it's roughly around $100 at the moment. So obviously, all things remaining same as long as the Ukraine-Russia war does not sort of deteriorate into something which is southwards and that creates a bit of a crisis on both from a sociopolitical, geopolitical and also from an oil perspective. If oil does not go to $150 and $175, I think we seem to be reasonably sanguine that our interest rate should not be more than 7,500 basis points. Our inflation should be going back to the pre COVID levels around the 5%, 5.5%. Growth rate should be around 7.2%, 7.5%. This is a summary that we have from an in-house view. So we believe that when you look at -- compare this across the globe, we are probably one of the best economies, resilient enough to take on anyone else. We'll be the fastest growing economy. I know Mr. [indiscernible], I believe someone sent me what Jamie [indiscernible] sort of spoke about it yesterday, were he feels there's a hurricane on the horizon. But that's his perspective when he looks at quantitative tightening and the gap between interest rates and inflation in U.S., and they have a rather bleak view of how the Ukraine war is likely to take shape. So as I said, that's the only risk factor that we need to factor it in. But I think India is reasonably resilient, and they have balances very well from a multiple perspective, including having a forward contract with Russia in terms of the oil purchases. So from a macro perspective, I think we seem to be sanguine, and we believe that we are probably at an inflection point in terms of where the country's economy is going to be. We are very bullish, a [ 3 trillion ] going to a [ 5 trillion ] and [ 7 trillion ] over the next 8 to 10 years is a distinct possibility. We will be the third largest economy, and therefore, we are quite excited because as HDFC Bank, which is a play on the Indian economy, I think we are well positioned to ride on that kind of a growth. So this is -- you will see that what is giving you that kind of confidence. Number one, you look at the per capita income itself. I mean, that's dramatically changed over the years. Today on a purchase parity basis, I think we are at about -- there it is in terms -- in the slides, $7,000-plus. We probably are many more times as to what it was when U.S. in 1982 was [ exploring ]. I think we are at that inflection point, so that gives a lot of excitement. Two, the kind of capital expenditure -- or the infrastructure spending that the government is likely to do -- and you will probably hear it, I don't know whether Rakesh is going to talk about it or he has spoken about it in the sell side, they will be -- they are in regular engagement with the government across multiple sectors. And the theme of the government now is how to make projects bankable. That's a completely different thought process as against what was there in the past. And we believe in 8 to 10 months' time, this is what we are expecting. You will see a lot of projects getting unveiled that will only sort of carry the heft in terms of the growth into the future. The third aspect is the China Plus One strategy. The kind of -- some of the groups that we have been engaging, both from a company perspective and also from a personal perspective, where we believe that our large groups are going to be spending a huge amount of investments, whether it's in semiconductors, whether it's in chips of the solar cells, whether it's in batteries, whether it's in renewable, whether it's green hydrogen. And I know a lot of you probably are interacting with some of these groups, and you probably have a better view of that, but this is from our own call reports, and that's quite exciting about it. So these are -- when you look at this, this is something that gave us the confidence that when we keep telling you that India is very underserved and underpenetrated for banking services. So we have a massive [ runway ]. We've been seeing this for a long time. We are just about 11.5% of the system from an advances perspective. We believe that the runway is pretty long for us to continue the kind of growth that we have seen over the last 27 years. On top of it, we found an opportunity last year. And that is on the housing sector. Housing sector has been languishing long time. And you guys probably know this much more than I do, it is a sector which has been -- which has a malaise its own creation, own -- in terms of project delivery, in terms of the diversion funds. I think this is a fraternity which sort of had a lot of [ wins ], I think, which got corrected in many ways, in last 8 years. One of them is the RERA Act, which sort of flee -- which -- yes it's here, which sort of changed the ballgame altogether, it brought in a huge amount of discipline into the sector. Two is the asset quality review for -- which happened in 2014 for banks. And then post the ILFS and DHFL issue, the same asset quality review that happened for the NBFCs strangulated the funding to such an extent that only people with a financial discipline were able to get the funds. There could be outliers as we speak today, but largely, I think this sector has come into a better shape than what it was 8 years ago. As we entered COVID, apart from a lot of other -- a couple of other sectors like capital markets, where a lot of funds are sloshing, the bankers -- this is the -- housing sector started to have a u-turn because the builders are forced to bring down the price by about 20%, 25%. You started to see sales, you started to see the inventory levels come down dramatically from a 60, 50-month inventory to a now 25, 30-month inventory. Also, I mean, when you look at the trends of affordability, when I say affordability, if you say on a INR 100 take-home pay, if the home loan EMI was about 50-odd percent approximately, say, 8 years ago, now it's come down to 20%, 23%, thanks to levels of increase in per capita, also the wage inflation over the last 8 years. So this is a massive change. And to couple, to sort of look at the behavioral change and the aspirational change that has happened over these years, thanks to telecommunication, internet, media, television, people have started to, even in smaller towns, are aspiring for better hopes. So we started to see the aspiration levels go up, not just in the top 10, top 20 cities accounts, we also started to see a large portion of this in smaller, the Tier 3, Tier 4, Tier 5, Tier 6, Tier 7 cities as well. So this -- and some of the macro strategies [ own ] the housing sector, most of you know them, have estimated a demand of 2.5 billion square foot of housing space over the next 5 to 7 years. It's a maximum amount of opportunity that's going to be there. It's going to be powering Indian economy. And with it, you will have the collateral benefits of steel and cement also getting powered with it. When Srini presented to us in May of 2021, it was compelling for me to look up, for all of us to say that, "Hey, it's an opportunity that we cannot miss." And then he juxtapose this with a certain amount of data, which whilst I may have unconsciously known it, I was a bit shocked. When you -- he said that, "Look, ultimately, we tried ourselves in our distribution heft with 6,000-plus branches, 70 million customer base. We are the largest retail asset bank in the country, ex mortgages." And when you come to the home loan distribution, we were probably [ 1x ] and your larger banks at a 3x. So that is something very puzzling. We didn't realize that -- see until now, we never sort of looked at it seriously. We had our plates full. Anyway, the sector was languishing so we didn't have to really focus too much. And the home loan growth was not so bad as well. It was growing at about 24.5% compounded CAGR. So we did not sort of -- it didn't strike us that there is an opportunity we're missing until he made this presentation to us. And that sort of made us think deeply to say that what is it that we are missing? I mean, why is it that we are not -- our distribution and home loans is not as good or if not better than some of the other banks, which have a smaller distribution? So we had to go down to the pillion, and go down to the front line to understand what is happening. Obviously, we always [ vexed ] our eloquence on the kind of arrangement that we had with HDFC Limited, where, and just to recap that, we said that we will distribute -- because we did not want brand confusion in the market, we said that why create another home loan product. There is a company, which has excelled in this product for 40-odd years. I mean, this is now going back to 2003, 20-odd years. Why would we want to duplicate that? We can sort of distribute their product and get a fee. And we can have an option to buy back, and there's a wonderful arrangement. I mean, on paper, it's a great arrangement, and we have no regrets about that, to buy back what we distribute at least 70% of what we distribute back as a AAA securitized paper or a loan assignment, as the case may be, for which we [ pay our ] annuity through the life of the loan. Frankly, this is wonderful because the economics that we agreed upon was much better than [ setting ] it up. But then, that is just one part of it. And we probably said that, "Okay, whilst we were setting up the bank, the retail bank, this is also one product offering, and you'll start to see a growth." As I mentioned, since this was something that never struck us because the sector was languishing for a long time, we went on with the flow. And -- we realized that, look, there's something which is missing in this kind of environment, macro environment, where we are seeing a kind of a dramatic change, and we will see a dramatic change in the future. So when we went down to the ground level, we realized that, look, after all, it's an agency arrangement. This product is not our manufactured product, it is someone else's product. So the frontline staff had no visibility as to whether this particular customer who's going to come in with an application, whether he or she will be given a loan or not. Because all that we were doing is take the applications, scan the documents and send it to HDFC Limited. Now, the average turnaround time was about 8 to 10 days. And as you know, they had only about 600 branches as against our 6,000 branches. So branches, which are far away from their house, the turnaround time was about 10 to 15 days. Now obviously, you all know, we all are -- we have all bought home loans. We realize that -- look, some of us who are loyalists will not mind maybe 8 to 10 days or 10 to 15 days. But in this world of an intense competition -- it's an oligopoly market, with an intense competition, there are -- it's -- 8 to 10 days is a long time, or 10 to 15 days is a long time. Obviously, we started to see people used to move on, and that's exactly what happened because that's what gave me the second shocker. So -- he also presented the second set of numbers, which again surprised us negatively. He said that whilst we are theoretically open to sell home loans in about 6,000-odd branches, in reality, only 1/3 of the branches are selling home loans, which sort of really puzzled. But I could now understand as we went deeper. And then he made another one, saying that whilst you pride in terms of customer acquisition, we've been ramping up customer acquisitions in the recent past, the 70 million customer base, only 2% have been sold HDFC home loan. That was even a shocker when you compare with the kind of, what shall I say, penetrations we have in other manufactured products. The reality is that the frontline people are youngsters, they are in the age of 23-30. They are the large ones who are manning the branches. When you -- when they want to -- again, psychologically, when they want to engage with the customer, they need a lot of -- they will do only where they're very confident of. We have enabled the frontline team with tools like customer relationship management system, which have a lot of insights or the [ hotter ] scope of a customer in front of them. With our vast analytics refined over a period of time, today, we have the ability to tell what is the propensity of a product that a customer is going to take with the narrative, with the scripting, which is near personalized. We are still not there. We're working on that. I'm sure when you hear our tech and digital teams in -- during the course of the day, you will see that what are the kind of partnerships we are doing with a lot of other great partners, globally, like Adobe, a lot of other people in terms of getting even refined analytics into our stable. But that's the possibility that is there when you talk about our manufactured products. So today, if someone is searching the web for a new car, we have the ability to tell the customer, "Sir, I believe you're looking out for a car. The -- we have an offer for you. You have a preapproved sanctioned limit of INR 35 lakhs or INR 30 lakhs or INR 20 lakhs, as a case may be, and you can take it in 10 seconds whenever you decide -- and we have -- because we are one of the largest distributor of auto loans, we have a great relationship with, say, top 700 dealers across the country. We can arrange for a test drive. We can also have your existing car valued, we can exchange, and we will give you a loan in 10 seconds." And that's kind of a very powerful narrative when it comes to that. And that's all that stability that we have to our frontline staff. But when it came to home loans, we never had that. because it's a different company. We never have the ability to know whether that particular customer is going to be sanctioned or not. So you look at the confidence. The person, the youngster at the front end will never proactively sell a home loan because he doesn't want to on a space because what if that particular application gets rejected for anything. It could -- it may not be for credit. It could be for collateral, it may be for the builder. So these are some of the things that is ground reality, which we probably did not sort of go deeper because there was no necessity to do so until now. This was our May to -- or June [ 2021 ]. And therefore, he's trying -- his saying was, "Look, I think there's an opportunity, and we are going to miss an opportunity." The icing on the cake was when he presented then the next data point. He said, "Whilst only 2% have taken a home loan, two things I will tell you. The 2% who have taken a home loan, actually is giving you an average liability balance, which is 5x to 7x more than a normal average customer." Now that's massive because -- and it's quite intuitive because the home loan customers, especially in a country like India, especially where they're going to be staying in that house, is very emotional to that particular person. He or she will ensure that balances are built so that the cheques don't bounce, so the EMIs don't bounce. It's a normal thought process. So naturally, one could figure out as to why the average balances were 5x to 7x than that of a normal balance. But that's massive, that's an opportunity. Then he went on to the second data point, the last data point. He said, "Whilst you may think only 2% has penetrated with our HDFC home loan, there is a 5% which have taken home loans from a smatching of other banks. And that 5% is equivalent to another HDFC retail bank." And that made me sit with -- saying that "Wow, whilst we have ceded control, we've ceded an opportunity." My mind was just racing to say that there's a massive opportunity waiting for us to be tapped. Now -- so he ended the presentation with saying that here is an opportunity that we should not miss. So the first time I was kicking myself to say that, "Yes, how did we miss this?" And obviously, these things may be elementary, but it didn't sort of strike my mind, and this is the time that I took notice of this. There were two things that I could have done, either we go back to HDFC management and say that how can you correct it, or I requested it, let's do one thing. I know that in 2014, we did a kind of -- we developed a model to see whether we can -- see whether the merger makes economic sense. So he dusted off that model along with [ steel ], and they worked on it. And I had reasonable confidence that it's going to be the same answer. No. Around October of '21, I think he came back and said that you'll be surprised, we would like to present something to you. And all the boxes that we said did not make sense, now seemed to make sense. So obviously, we've sort of deep dived and challenged ourselves on that to see what has changed and why is it different than what it was 8 years ago. Because let's face it, this is -- someone said, "The marriage was an obvious but not an obvious kind of subject matter." So for 20 years, all of you have been listening to this. We've all been talking about this. And we've always said -- we were always on the back foot, saying that it doesn't make sense or we're not ready or the regulations have been changed. This is it. So obviously, in these 8 years, a lot of things have changed. Going back to 2014, when we last did this, HDFC approximately, if my memory serves right, had about a INR 300,000 crore balance sheet when we did the work at that time. I think INR 70,000 crore, INR 75,000 crore was non-retail and about INR 2.25 lakh crores was retail mortgages, the total INR 300,000 crores, with a corresponding funding on the -- with deposits and also with interbank loans and some bonds also there, but not so much at bonds, more on the interbank and more on [ bank borrowings ] and more on deposits. At INR 300,000 crore balance sheet approximately, the regulatory threshold for reserve requirement was around 26%, 27% -- 26%. Just take 30 for simplicity, on a INR 33 lakh crore, again INR 90,000 crore. So between INR 80,000 crore to INR 90,000 crore was the reserve requirements that one had to maintain if it becomes a pack, which meant that we had to raise incremental funding and then put it in [ government ] securities to the extent of about INR 80,000 crores then. That's part one. Part two was, the same INR 300,000 crores on the asset side would be subjected to priority sector. That at 40% of INR 33 lakh crores was INR 120,000 crores. There were certain exemptions of -- which were there. So it came down to a further about INR 80,000 crores, INR 90,000 crores. So effectively, we had to raise incremental funding of about INR 150,000 crore and then put it in government securities and priority sector assets or rural infrastructure development bonds. So this is a -- the ask. When you compare with that, the bank, at that point in time, had a capacity to raise INR 60,000 crores to INR 70,000 crores of liabilities per annum. That is all it had the capacity. So just imagine, an engine, which is generating INR 60,000 crores to INR 70,000 crores, how do I do INR 150,000 crores, which is a tall order? Respectfully, I think we -- all of us, both the leadership teams, decided that we'll wait for further changes in regulations over a period of time. So that is how we buried the subject. After 8 years, a lot of things have changed. And that is where we were surprised. I think ever since the ILFS issue and the DHFL issue, I think the regulations on large NBFCs have undergone a series of changes. The first thing, I think, they realize is liquidity is so important for NBFCs after the ILFS crisis and the DHFL and during the period, how all of us, including you, looked at NBFCs, including our credit teams, we were all worried about their liquidity, et cetera. So what did the regulations do? I think they started to slap liquidity coverage ratio or the NBFCs, especially the large NBFCs, as a part of the convergence of large NBFCs into the banking [ loans ]. There were a lot of other changes in terms of the NPA recognition, in terms of the daily stamping as its behind. So HDFC Limited, always up the curve. 8 years ago, they had INR 4,000 crores of government securities. Now, when you look at it, they have a INR 40,000 crores to INR 50,000 crores on an average. Maybe later as we go into the future, it will be more. But INR 40,000 crores to INR 50,000 crores of government securities in their books now. Since October of 2017, when we started to change track in terms of our philosophy on liquidity, we have been keeping excess liquidity reserves in the form of high-quality liquid assets, including government securities. We also [ round ] about INR 20,000 crores, INR 30,000 crores, INR 40,000 crores -- INR 20,000 crores, INR 30,000 crores, on an average, excess government securities over and above what we require. So when you look at the requirement today, one, the 26% has come down to 22%. So they have a liability today of -- at least in December, they had about INR 4.4 lakh crores, say, INR 4.5 lakh crores. At 22% less of exemptions, it came to about roughly INR 70,000 crores to INR 80,000 crores is the [ ask]. Is it -- yes, here, INR 70,000 crores at CRR, so roughly about INR 80,000 crores, INR 85,000 crores. When you look at the excesses that we are holding between INR 40,000 crores, INR 50,000 crores or INR 20,000 crores, INR 30,000 crores, the ask that is there now to raise incremental liabilities and put it in government securities, it comes down dramatically. It's just -- the balance is -- who knows? I mean our hunch, the way we are going, I think by the time the effective date happens, we may not need any incremental funding [indiscernible]. So that's a massive change from what it was 8 years ago. Even on priority sector, there's been a wonderful innovation that has happened over the last 8 years, called the priority sector lending certificates. It's a brilliant innovation, where people with excess priority sector can sell for a fee. And people who are shocked, can buy for a cost. These are all screen-based trading. So effectively, you don't need any incremental funding to meet your directed lending requirements. The market is INR 600,000 crores today. It's growing at about 10% to 15%. So we have been patronizing this. We will continue to patronize this. Our estimate is that if the requirement is about, whatever, INR 175,000 crores of priority sector, 50% of that can be achieved through the priority sector lending certificates for our cost, which hovers around 1.5%, 2%. And the balance, we will have it put it up in either RIDF or in priority sector assets, which means that we have to raise liabilities and then put it into that, which is the INR 80,000 cores, INR 90,000 crores. Mind you, we have -- when you look at the total priority sector requirements of 40%, that's just total -- that's not a problem. None of the institutions, hardly few institutions would be not meeting that, most of us meet it. Combination of our core organic priority sector, which is at a 3-plus percentage [ ROE ], or we buy priority sector, either in the form of interbank participation certificates from other banks or priority sector certificates, the lending certificates that I just spoke about. So this INR 80,000 crores, INR 90,000 crores is the -- what we have 33 months from now to raise the incremental liabilities and start building this. When I say 33 months, how did you arrive at that? We believe the approval could take about 18 months. And then another 15 months of 33 months to meet -- maybe December 24 is when we need to ensure that we have liabilities that put it in either RIDF or a part of it in priority sector parts. So that's a reasonably long window that we have. We have a larger runway. So we believe we can sort of manage without too much of an effort. So these two were a big change, where effectively from INR 150,000 crores of incremental liabilities to put it into various regulatory requirements for an engine which is doing INR 60,000 crores to INR 70,000 crores on a per annum basis to moving to just INR 80,000 to INR 90,000 crores, where now the engine, which is the HDFC Bank engine, is doing a INR 200,000 crores of annual liabilities without too much of sweat. And that, too, at -- not at full capacity. When I say not at full capacity, you'll see the time deposit growth is just about 7%. We have said that we will manage our funding only to the extent that we require. So can we push the engine to do more? Absolutely, and that is one of our strategies. So the picture changes -- changed dramatically. The icing on the cake for us to really go on the front foot was on the pricing itself. HDFC Limited, 8 years ago, was priced at 6x book. We were at 3.5x. Now after 8 years -- which means that they were 1.3x our share price. Now we are 0.8x. They are 3.5x book, 0.8x out of HDFC Bank. It's here. So the purchase consideration has come down dramatically, which means that the clinching one is that we are going to take $40 billion of net assets -- there's going to be capital coming in. So the denominator is going to go up. We will see a depression in the ROE, the return on equity, on day 0. However, within the 4 to 5 years, you are going back to the pre-merger ROE basis of natural growth rates, nothing extraordinary. This was a completely different picture as against what we saw 8 years ago when we did not have the shorter horizon to see when we would get back the pre-merger ROE. This was the icing. So when you look at the macro, which is screaming, saying that you don't correct yourself, you will miss out as a great opportunity overlaying on your otherwise banking opportunity in the housing sector. Two is the convergence of all the metrics, which were not in favor 8 years ago, is now there. So why not go and talk to them, to say, "Well, why not?" And that is how, for the first time in 25 years, we batted on the front foot, saying that we need the merger. This was around November '21 or -- November '21. And I think they came back to us -- or rather we sat together under one roof in end of February. And we agreed that, yes, it makes sense. And therefore, we started to close this out as quickly it's possible, which culminated in the fourth of April announcement. So what are we trying to see here? We are seeing that whilst we have a great runway in terms of the bank well positioned, post-COVID, whether it's -- where we have navigated reasonably well during this 2-year period, we are now -- all our segments are firing from all its sites in terms of growth. Yes, the clouds being only on the Ukraine, Russia, in fact, and probably any -- I hope we don't have a COVID 4 or COVID 5, et cetera. Other than that, I think India's macro is going to be on a roll. We are a player in the Indian economy. We are well positioned for growth. We have a visibility of a 20, 30 year runway in terms of whatever we have been doing for 27 years, consistently growing. And then there is another macro overlay of the housing sector, which we believe will take us to a different level of growth. We can virtually have a durable growth in terms of better duration, in terms of -- so that we don't catch our own tail every 18 to 24 months. We have a massive opportunity to see the ROAs going even beyond because there's a cost-of-funds opportunity. The HDFC's cost-of-fund opportunity -- the cost of funds is about 580 basis points or so. We are at about 360 basis points. So there is a 220 basis point differential. Even if you were to shave off [ 120 ] basis points, just hypothetically speaking, which is not going to be the case. But hypothetically, you want to put in more investments in terms of more credit officers, more distribution and also in technology or in raising more liabilities because we will want to raise more -- and that is a key factor. We are now looking at a product, which is a 2-plus percentage ROE, which itself is very good, to a 3-plus percentage ROE. So it's going to be a -- and when you multiply that with -- even with a certain leverage of 9 or 10, it's a wonderful 18% to 20% ROE business. So why not? So we will be virtually doubling our bank every 5 years when you take -- when you look at it, where we use your models without too much of sweat. We are not saying that we're going to be aggressive. But just the fact that here is a product, which is a very emotional product, which is a very sticky product and this is an easy product for our frontline to say because it is very close to everyone's heart. So the narrative to a customer is going to be very good. And we are -- and this is a franchise which is supposed to be the best in India. The opportunity to -- look at the multiple opportunities that's going to be. Number one, as I mentioned to you, the liability franchise, which is part and parcel of this cross-sell, is going to be 5x to 7x more. So it's going to be kind of a double advantage. Look at the third advantage. We are the largest consumer durable finance company outside of Bajaj Finance now. Whenever a customer wants a home loan, the opportunity to cross-sell a consumer durable is inherently very high. So the bundling opportunity with the home loan is something that will take us to the new level, whether it's new furniture, new kitchen, at new consumer durable. It's a massive cross-sell opportunity. That also is a high ROA product. The last but not the least is the fact that today, in 27 years, our credit architecture has excelled in the unsecured bit. The unsecured lending, on an overall basis, including corporate, SME and retail, is about 35% of the total. I think, from a retail perspective, it says about 41%. When you overlay that with housing, when it comes down into the total business mix, it comes out 22%. Whether it's the leadership team, whether it's a regulator, whether it's the credit teams or all of them, even though we have executed this very well, there's always this niggling doubt, are we having a high concentration of unsecured? It's natural. You will ask this. We ask ourselves. Our credit team keeps worried. I mean, you can -- when you speak, [indiscernible] years [indiscernible] when he talks about high concentration on unsecured. But anyway, this will give a huge amount of relief for all, seeing that the runway is there. It's a high-ROA, high-ROE and a low credit cost product. So we're proud of this. We just imagine the kind of a multiplicative impact when you talk about just one product being put to the customer. So that is why we believe that here is a once-in-a-lifetime opportunity to take the bank which, on the data merger, could be churning a $6 billion to $7 billion of profit on an annual basis to go to a $14 billion to $15 billion in 5 years' time. That's the kind of massive growth that we're talking about. It's virtually going to double the bank every 5 years. Look at -- when you look at the product penetration, when you look at credit cards, our penetration is about 20% or in the 20s. Our unsecured loans is somewhere in the 13%. Vehicle loans are 6%. Mortgage is less than 2%. Just by focusing on an emotional product, a product which is easy to sell because that's what every Indian wants. And the fact that we have a distribution which is not really harnessed, the taking of vision from a 2% to 7% to 12% because you add every 5%, which is what creating another HDFC Bank, is going to take the bank into a new level. So this is the reason why -- the rationale or the thought process behind this. We're quite excited. There are a lot of others we -- you probably will be meeting, look at our distribution, et cetera. And one of the key limiting factors here, let me upfront tell you, is on the liabilities. Growth is not going to be -- growth is going to be pouring out over the years. I mean, that -- and growth is something that is within our control, the asset growth. What is going to be limiting is our liability engine. So we have to have a strategy to ensure that we are able to absorb this kind of growth. We are now in 3,000 towns and 6,300 branches. The branch distribution has been in the forefront of deposit mobilization. We have 60% of our branches -- when you look at the branch distribution of 6,300 branches, there are various branches which are 0 to 5 bucket, 5 years bucket, 5 to 10 years bucket, 10 to 15 years and greater than 15 years. If the 0- to 5-year bucket gives you x amount of liabilities per branch in a year, the 5 to 10 gives you 3x, the 10 to 15 gives you 10x, the greater-than-15 gives you 25x. So we have 60% of our branches, which are now less than 15 years or 10 years -- 10 years. So as it matures the ability to generate more liabilities, is something that keeps happening. And that is a positive. Two, we are quite excited about those growth opportunities. So what are we going to do? We're going to be doing something very, very tough, but it's my key objective. It's a vision. It's a direction. We're going to be opening 1,500 to 2,000 branches a year because we don't want to miss this opportunity. So we're virtually going to be doubling our network or near doubling our network in 3 years' time. It's -- we've done 730 branches this year, which itself is the highest in our 27-year history, during the COVID period. So we're going to take the tall order of saying that, look, I think if that is a goal, let us put our [ might ] behind because today, the team has excelled. They can turn around. We had a branch open in one of the remotest parts of the country called -- in Himachal, there's a Kyelang district -- sorry [ Spiti Valley ] in Kyelang. It's a remote part of the country. You -- to get your technology, to get your branch, we did it in 16 days. So if you can, if you want to, we can execute. So that's the kind of targets that we have, giving to our teams, combined, to ensure that we start to churn branches more. You may say that, look, in this age, how do you need branches? It's not, our branches it save [ itselves outfit ]. And I will explain to you. India is still different demography than anyone else. It's going to be digital. You will have 2 sections. You will have the unassisted section, where customers can come in and do their transactions, do their products, buy on their own, or we can have an assisted section. It's going to be digital, but we will have the differentiation between a digital world and HDFC Bank, is that we will be having an engagement. We will have -- with a human factor, we will have -- there will be an empathy factor out there. The Gen Z may be on mobiles, they don't want to meet anyone, they want to be in their own room, they don't want to even talk to the parents, they want to do their own stuff, they want to do everything on their own, it's reality. But as they mature, as they move from this Gen Z to the 30s, to the 40s, their lifestyle changes, their lifestyle requirements will take a change. They will need to be engaged. And that is a differentiation that banks -- a large bank like us will bring to the table, different from a fintech. Ultimately, people want to be respected. You give respect, you get respect. Newton's third law of motion, every action has an equal and opposite reaction. So the moment you give respect -- they are not asking for anything different or difficult, it's just saying that give respect in terms of speed of reaction and you get 2x over the [ move ]. Our objective is to move the primary banking. Selling a product is just not the main point, the annuity and valuations and whatever your value, whatever models you have is how my annuity comes. And annuity comes in when you move the primary banking to us. So the cross-sell, when we say that it's going to build balances, that is the duty. It's not the 3-year or 5-year loan that's going to give me earnings, no. It's the kind of the banking relationship that is going to be there for a perpetual period, that is where the valuations come from. And that is exactly what we want. We are not perfect, but we -- this is what we have put in our rails, whether it is distribution, whether it's multiple other -- we have an alternative banking channel, which is going to be an alternate to capture India, et cetera. So when you look at the India pyramid, you have villages, you have blocks, you have districts, you have states and you have the country. We have 6,300 branches. We are in 3,000 towns, we will be double in about 3 years' time. But we still have the average distance in a branch just about 5 to 7 kilometers. It's 7 kilometers, it will come down to maybe 4 to 5 kilometers in 3 years' time. But that's still a large distance. Just imagine, visualize, you and I walking or going 5 kilometers to do banking. We need to own the catchment. We need to own the -- we need to have a higher density, and that's reality. And we are not looking at big branches. We are looking at small digital banking units with a personal banker who will be -- or a relationship manager, who will be able to engage with the customers. So what are we trying to do to fix the gap in the meantime? We're going to have an alternative. We have now almost about 15,000 BCs, and we have a lot of partnerships with India Post, Airtel Payments Bank, StoreKing, Money Pal, which will all come together now. We are now in the fast stages of identifying all this. So we will be expanding. So it's a kind of an octopus kind of a structure. The branch out here. And you will have various BCs, who will be digitally distributing our products. And to take care of the engagement, all our branches, as I said, will have an assisted personal bank relationship, where they can keep on engaging with the customers. But we are going -- we, as you know, we experimented this 3 years ago. We now have a full fledge, which is going to be increasing our virtual relationship management program. Thanks to COVID, people, you and I, have started to engage virtually far more efficiently than in person. We are okay. I mean, prior to COVID, we always would think, "Why a video con? I mean, I don't like videos, et cetera." I mean, we never engaged. Today, we meet investors virtually now. It's very efficient. But of course, the joy of meeting in person is different. So engagement is going to -- is a way of giving respect to the customer. And that is the thing. 50% of our customers at any point in time will have the engagement model, which means that we -- our objective is to move the primary banking. So a combination of acquisition, combination of spreading the acquisition through the alternate banking channels, combination of acquisition, which you will start to see when the technology team will unveil what they're planning to launch between June and September. That's going to be a game changer. And I'm not even factoring that in because your customer acquisition is just 10 million today, per annum, will rise. Apart from our own physical distribution, the technology platform, I don't want to even have a guess that should be -- I was quite excited with reading what [ Yolo ] has done. It's a remarkable feat. And if -- we believe we can also do this or even better. I think if a large bank like an SBI can do that, why should we not be able to do that. And that is what you'll see this -- when we unveiled some of our digital products, that's going to be coming out, whether it's June, September. I don't want to push anybody, I don't want to create another crisis, whenever they are ready, whenever they test it as within the RBI parameters, let them launch. But when they launch, I think it will surprise the world at large. That's going to be a positive. And to overlay on that is the relationship management. So I think we are on a roll. We have a massive opportunity, the durability of the organization to continue to power and extend banking to different parts of [Foreign Language] India to the various -- look at the segment, we're just 70 million today, we may be 100 million in 3 years' time or slightly more. The segment itself is 500 million opportunity. And I'm not even taking how -- when you look at the 1.5 billion population, is the first part. The second part, which is another 500 million, is moving with the per capita increasing. So you will see migrations happening. The runway is very large, even there. I'm not even talking about the second segment, where we will be participating through our subsidiaries or on our own in the future. I'm not even taking that in count. So this is going to be a 50- to 100-year durable organization, where we have seen a certain amount of consistent growth. We will continue to see similar kinds of growth, if not better, is what I believe. And it's all about our execution now. So we are quite excited about this. So I will pause out here. I think you will probably see the management have the kind of depth that we have. Each one of them are excellent leaders, par excellence than anyone else in the industry. You will enjoy their presentations. As I said, it's a great leadership team. you will see the might of this organization, and I will pause out here for any questions. Thank you.

Just wanted to get a context of like 1 plus 1 becoming more than 2 post the merger, right? So in some of the numbers that you presented, you said that -- so 2% of your customers have mortgage from HDFC Limited, whereas 5% have mortgages in total. So basically, the penetration is only 40% of like guys who won mortgages bank with you and have taken from a group company. And -- so you also mentioned that 6% of your customers have auto loans from you. So if you can give some data in terms of how many customers may have auto loans from someone else? So just to get the context of to what extent this 40% penetration can go up. Also, in terms of -- not all your branches distribute mortgage products because HDFC does not have a footprint there, right? So -- again, going back to, say, auto loans are some -- well-penetrated product. So the branches which distribute both mortgages and PV loans versus bunches which distribute only PV loans and don't do mortgages, so the first cohort will account for what percentage of your, say, auto loan book? [indiscernible] that's the context. Then -- so one more question in terms of [indiscernible], suppose on 31st of March '22, and if you look at your numbers, plus HDFC Limited's numbers, so at what level of SLR would the combined entity be, assuming that both of them are treated as one entity and are subject to same reserve requirements? And what will be the LCR number, just to get a context of -- because to get a context of how much is already achieved and how much is yet to be achieved?

So let me answer the last one first because that's easy and that's something that he had put it up on the slide. Our estimate is that we -- when we do merge, as he says out, we need about INR 85,000 crores, but in SLR and CRR. But in the two organizations, we'll be more or less near that. So incremental effort -- I know the effective date is 18 months away. So there are a lot of things that we can do. Like for example, the reality is we've used the 31st March to a part of a quasi-high-quality liquid assets. If you see the March numbers of our own HDFC Bank growth rate on the corporate side, there is a massive run-up in terms of opportunities. So we have grown rather quickly in the last quarter which utilize some of the high-quality liquid assets, and we put it in the corporate assets, which is in the 30-, 60-, 90-day bucket. So it's as good as -- we said that why not get the 25 basis points is the short-term opportunity. It's all right to get done, but that will come back. So when you look at the requirement as of March and when you extrapolate the growth and we try and see what it will be, say, in September of '23, which is probably the expected date of the -- where the merger approvals could come, we believe that the incremental effort could be either very negligible or even 0. So this particular INR 85,000 as again because he's now currently having a INR 45,000 to -- INR 40,000, INR 50,000 crores. I do not know what is the 31st March numbers of government securities at HDFC Limited, but I vividly remember it's somewhere around INR 40,000 crore to INR 50,000 crores. We ourselves have, as I mentioned, within a unsecurity. So let's look at unsecured loans. All our 6,300 branches, which is our marquee product, sells unsecured loans across -- and in all our 6,000 branches sells it which is not the case when it comes to about home loans. So we have to now really engineer a lot of things. Now that the 2 leadership teams have come together. So the ideologies are now converged. So we will now look at what is necessary to change without compromising on our -- on the risk part of it to see how to ensure that all the -- each 6,300 branches start to sell home loans. And you may wonder what are these. Simple things. Normally, HDFC Limited likes to give a home loan, if the property collateral is in probably the metropolitan locations or some of the top urban centers like Chandigarh, Jaipur, et cetera, et cetera, urban saleable property. When it comes to the semi-urban and rural, which is good, I mean, the Tier 3 to Tier 6 towns, say, Palanpur, say, Haldwani, say, Roorkee, say, Rishikesh, Dharamshala, McLeod. McLeod, leave it, it's a small hill town. That's okay, leave that. There could be complications in terms of title for McLeod or whether even in -- which is a place, Mussoorie, et cetera. Leave aside all that. I'm saying that they may be restricting themselves only to town limit. See, normally, these towns as you go to Tier 3 to Tier 6, the radius is very small. You and I or the segment that we are talking about, maybe the upper middle income, the middle income also would like to stay on the outskirts, outside the town limits because you have good quality life. They don't want to be in the hustle, bustle of that small town. It's a small town. They won't be there. So these are some of the changes that we have to do. And you may say that, is it safe? Absolutely. Digital India has done wonders. Today, when you travel 50 kilometers away from Palanpur, you will be able to know whether a particular plot is registered mortgage or not digitally. You get on to the CSC e-governance website, you check out, you will know whether this particular property is mortgaged to a bank or not. That's the kind of visibility that is there and that is all that we need. We talk about hypothecation here. You have it in the Tehsildars records or registered mortgage, which is digitized. I mean, some states have to do it. But even if it's not there, it's there in the Tehsildars records. So it's all about how you are able to change these things so that I'm able to open up. So branch in a Roorkee can start to say, why not here? I mean, maybe doing that. Roorkee is given. I'm talking about smaller town, so Palanpur or [indiscernible] or you name it. So these are some of the changes that will happen so that I can ramp this up into 6,300 branches. There is a third part of it is on -- you have a 2% and you have lost 5%. What about auto loans? We do have a fair amount of people who take loans from outside. You may wonder why. Reality. The reality is that we are in intense competition. You have sometimes the BAC far faster than some of us all together. What do we -- what are we trying to do? We are trying to ensure that how we can try using our AI platform, try and see using analytics to see when that particular person has that thought that I need a home loan or I need to have a car or I need to renovate my home. That moment of truth is something that we need to prepone which means that we need to know that. We need to get it to the minds of the customer. So that's where our digital heft will help, our technology heft. We are doing a lot on data. We probably have done a fair amount of analytics. We are very advanced, but I think we can do better. I'm not too sure whether these are presentations which are there today. But there are a lot of things that are going on in the background to be able to get to know, so we call it the need-based selling, where I'm able to try and see whether I can contact the customer when he has the thought and not as a post facto. So we still have, today, even with the kind of growth, even though we are the largest retail asset bank in the country to the ex mortgages, we still have a fair amount of our customers moving out: a, it could be credit fees. We are not comfortable with the credit. Leave aside that. They're not -- I'm talking about even where they are approved. We do have. Why? It's possible we have not been able to reach out to them faster than the -- all the associates in the system. And mind you, if you think that the competition is not intense, it has always been intense. It's a myth that we never had intense competition. Competition was intense. It continues to be intense. It will be even more intense. So we have to continue our story, and we have demonstrated that. I mean, you look at our -- despite the intensity, look at the kind of gains that we have had. You -- if you take a 5-year horizon, a 3-year horizon, a 2-year horizon, a 1-year horizon, the gains that we've had, whether it's on assets or liabilities, with all this intensity is such that it's greater or much more than the combined peer banks put together. So we are in an environment where we will continue to see intensity of competition, but we will continue to power despite that. So the only -- it's a great question that what do we have to do? It's an -- again an execution capability, the way we leverage on our technology, the way we leverage on data, the way we leverage on analytics, the way we leverage on AI/ML layer to power all this, to be able to give us information way ahead of time to say that, hey, go and meet the customer much before he is committed or he's pregnant to take it from another institution, et cetera. This is one of our biggest objectives. This is exactly what our focus area is, but it's a reality today that we do lose. It's not. But the opportunity for us, I mean, today, when you look at what we have, you will be amazed to know the potential. Today, we know so much about our customers that we are -- we have preapproved a massive amount of customers with offers where one -- we can give a 10-second loan. It's equaling to a 5x our current retail book. I think it's almost about INR 32 lakh crore. I mean that is the kind of year it is. Yes. Look at the kind of offers on the retail side, 77 million preapproved offers which aggregates to INR 32 lakh crore. I mean, virtually 5 to 6x the retail book that we have. That's the potential. So just imagine, if we refine our methodologies, our analytics, the ability to go and tap into the customer when he or she needs it, it is thinking about it. That will be the [ ASIC]. And that is what our job is, and that is exactly what we are trying to do. People look at platforms which is equally important. But the amount of work that we do in the background to be able to come to this kind of a precision, to this kind of advantage is something that is going to take us to a new level. I'm not even hazarding a guess as to how, but that's going to be one of our key objectives.

So just the first question that given the fact that the -- as for the house view, the macro looks good and everything else that we have talked about. Some of the balance sheet doubling in 5 years, which comes to slightly less than 15% of CAGR basis. So why that? If you peel the onion on that, what's the thought behind that number? Because...

That's the most conservative thought I felt because, see, one of the most asked questions by your fraternity and by your fraternity across -- outside of India, is that on such a large scale, we'll be able to grow. So if you look at our track record as it is here, we have been virtually doing 2.4x the balance sheet, which is almost equivalent to a much faster growth rate, an 18% to 20% CAGR whether you take 2012 to 2017 or 2017 to 2022. So we have that potential. So to -- what we're trying to say is even with a very conservative estimate, the power of the bank to continue to grow even on this kind of a scale is possible -- imminently possible because we have demonstrated a much faster track record in the past. I mean, is it there in terms of the growth rates, 2.4 to 2.5x is -- no, not this one. The other one where we have grown.

So let me just ask the other way. So barring the caveats around the war escalating, the COVID coming in, this number looks like probably if I look in the back...

Yes, yes. See the point is -- this is just a kind of -- to tell you, I mean, you may say it's 15%, okay? The point is at a larger scale to do at 15% to 20% is a massive effort because what we're going to be adding is going to be many banks. So you need to appreciate that it's not just pure Excel spreadsheet that you're extrapolating, it's a lot of effort at the ground level, as I've said. It -- you are -- you have to generate liabilities, you have to ensure that you maintain your credit quality, et cetera. So all we wanted to convey that is, is that at a very modest growth rate at such a high level, just imagine the scale that this organization will generate every 5 years. But does it mean that we can do faster, absolutely. I don't want to commit to that. But I'm just trying to showcase that if we can do these compounded growth rates, doubling the balance sheet every 5 years of creating a new HDFC Bank every 5 years. And you try and do it base on your historical trend, it's going to be much faster.

Great. And just one last question, and this is around the mortgage a couple of things that you shared. So if, let's say, the ROA is going to go from 2% to 3%, but the ROE number is 20%. So that's a 6x leverage odd, which -- but I...

The reason for that is -- good question. When we are adequately capitalized today. Today, the reason for that is our growth rates ever since we raised capital in July 2018, was actually less than the sustainable growth rate. We have not consumed capital. We've actually added capital. We've added about 200-plus basis points of capital ratio from July of 2018 instead of consuming 60 to 70 basis points of capital because of various factors. The economy was sliding even before COVID struck us. And COVID itself sort of was a kind of a tumultuous event. HDFC Limited also has a larger capital ratio. They have been monetizing their assets, and they have a large capital base. The good part is we don't need probably capital all the way to 2030. I mean that's my rough estimate. Srini probably -- would probably have a better pulse of that. So here, I'm talking about -- you're right, at a 3% ROE, one should have a higher percent, but that's for the leverage. And the leverage will happen how you consume capital. So because you have excess capital, you will have that slightly lower because you will -- even if you now grow, you will be consuming 60, 70 basis points. The leverage, which is roughly about 9x today, it will take time to go to a 10 to 11, et cetera. So it's all about how I consume capital. And therefore, my point is if you exclude the excess that is there, you are a 20-plus percent ROE company.

So I'll receive the floor -- one more. Sorry for just holding it back, but if I assume there are already mortgage-heavy peers who do a lot of mortgage inside of banking structure. And if I just -- if there's anything differentiated, I would love to know. But if I plug in the same math in their ROAs, which are doing this kind of a number with 10x leverage and actually generating 20% ROAs in a mortgage book. The aggregate ROAs are not supporting that. So -- why...

No. You have answered.

Yes. I don't know about the others, but you do have to look at the cost to income of the mortgage business. Anybody who's got very heavy mortgages, what is their cost to income, but cost to income of HDFC Limited which has got quite heavy mortgage. You can see what that cost to income is. It is all about efficiently executing.

See, I think you probably have -- I'm not sure, but I guess this -- the entire fraternity probably has been tracking HDFC Limited for almost 40, 42 years. Let's face it. They have -- there is a certain amount of excellence that they have done. Cost of repetition, the spreads are low in this mortgage business in India because it's been an intense competition. But I think he's the only company, not just in India, but globally, whether they've managed the cost of operations at this kind of levels of less than 10% and the asset quality to be probably far, far superior than anyone else. Whilst you know this, you have probably -- he -- it's visible for you from your side, when you talk to them, it's visible from our side as well because we are a mirror of what we -- we have our sales force. We have similar -- probably a higher cost structure. We still have a 2-plus percentage already on the book that we buy from HDFC Limited. So it is -- I know this was a kind of a surprise to all of you saying that is it a 2-plus percentage? It is a 2-plus percentage ROE. That is why it's in a very attractive franchise. That is why it is impossible not to ignore this. That is why it doesn't -- it isn't sort of -- it's stupid on our part to miss out an opportunity to merge. It does not make sense even to build your own book because the quality of franchise that I'll be talking -- I'll be taking over. Also, there's a brand impact. Because ultimately, whether you like it or not, because of the convergence of the regulations at some point in time, being wholesale funded, he will have to merge with some bank. It may not be us. If it doesn't -- if it's not HDFC bank, we will lose the brand. We will not be an HDFC Bank anymore. It's an important -- it's a very huge consideration. And that is the reason why it made sense for us to go and bat on the front foot of this particular aspect.

Just taking up 2 points that was spoken about already. One is the aggressive branch addition plan that you were talking about, right? I'm assuming a large part of it, as you highlighted, some examples are going to be outside the urban locations in remote places. And there, if you're adding a branch, you will not just source deposits, you'll be lending as well which means you have to set up credit, you have to set up collections, everything. So when you're talking about 1,500 to 2,000 branch additions in a year, what does that translate into employee count? How many employees are going to be there?

No -- good question. So we are not going to be apologetic. We're going to use this opportunity to invest in technology, invest in distribution, invest in people. But x mortgages, leave aside this particular event of a merger, even otherwise, whilst you may see -- see, look, the cost to earnings prior to COVID, we had brought it down from 49% to 39%. During COVID, retail, we clamped down retail because there was so much of uncertainty. So therefore, retail is a high cost, a lot of variable costs, which is linked to disburse. Therefore, you started to see the cost earnings go down to 36% odd. Now when you're going -- coming back out of COVID, you will see this go back towards 38%, 39% in -- with additional investment in branches, et cetera. So I'm happy even if the cost, I mean, deteriorates to a 40%, it's all right. But the reality is that the operating leverage will start to kick in because ultimately, it's a scale game, it's a revenue gain. So the jaws will widen, and you will start to see in 3 to 5 years' time, the cost to earnings coming back x mortgages, x merger into the mid-20s within mid-30s, which means that if on the merger, hypothetically and pro forma basis, we get a cost to earnings of 32%, their 9% and our 38%, 39%, we will be less than 30% in 3 to 5 years' time after the merger. So that's the kind of an operating leverage we are going to see. So we will continue the investments. Our jaws will widen, and you will start to see efficiencies coming in. So that's given, that is something we'll be on trying and that is our key focus here.

So I don't think, given the scale at which you're talking about additions, any one of us would be expecting a reduction in cost-to-income ratio. So the point was basically to understand, when you do lending in these remote locations via opening branches, what type of physical manpower scale that's required?

So even that, that will also go. You will see increase in manpower because we ultimately -- with every addition in branch, you will see us start to have roughly about 6 to 8 or 8 to 10 people per branch addition. You have to estimate that. But these are all the army, largely, whether it's on the acquisition side, whether it's on the credit side, you will need manpower -- or collection side. You would need it. And -- but at the same time, as I said, the space at which our operating expenses will grow will be slower than your revenue growth.

Sure. The second bit is on the mortgage. The chart that's been talked about the 2% and the 5%. So the 7% of your customer base having mortgage loans, if you add the 2% and 5%. If you compare it with other banks, what does the number look like?

I wouldn't know that. I mean this is the first time -- I don't have the...

So if you look at the entire industry, that has about some.

But see, look at this. My point is -- we are talking about an industry which is going to be on an upswing. We're talking about a sector which is going to be -- which is so lowly penetrated, we're going to see a huge change. We're talking about growth, not just coming in from the top 100 towns where we're going to see in Tier 3 to Tier 6 cities where we are well positioned. Today, we are missing out that opportunity. Today, we are not even sweating that opportunity, which is there. So the point is, apart from having our own customer base in urban and metropolitan which we have not proactively done a need-based selling on this particular emotional product, just imagine the opportunity when we go down to the Tier 3 to Tier 4. So even though the penetration -- I mean it is really nearly, I mean it is evident when you have only 11% of GDP on this, the fact that it's a runway that is there for us. It's a runway that will be there for other institutions as well. But here is an opportunity where as I mentioned, we have not really spreaded our liability machinery to the fullest. As I mentioned, in FY '21, we added incrementally INR 100,000 plus crores of assets. We just had enough liabilities to fund that kind of a growth, and CASA grew at about 24%, 25%. So the balance was the granular -- the time deposits. In FY '22, we added 200,000 plus crores of assets. We funded that with granular liabilities with CASA growing at 24.5%. But time deposits growing only by about 70%, which means that we said enough, just enough to do that. Now when you look at the 70 million customer base, only 14% of our customers have term deposits. Now when you look at -- take a poll in this room, you take a poll in this room we will have -- all of us will have some time deposit in the bank -- in some bank with us in our portfolio. So willy-nilly, why is it that only 14% of our customers have? Because we have not sort of kept it as a key initiative. We've said that, look, we have a lot of other things to do. This is necessarily only to the extent that we need. So the moment you make this as a part of a scorecard of the front end, you can move the needle. So when you talk about liabilities, that's one of our strategy. Every 1% change, a 14% to 15% change gives you a $6 billion to $7 billion or $6 billion of incremental liabilities. So we need to have a vision over a 3-year period to move from a 14% to 16% to 18% to 20% to 25%. I mean, why not? Because we have never focused on this. The moment you start to focus like all other aspects, we should sort of -- this is a part of our execution. This is our responsibility, apart from the ramping up of distribution to see that our liability growth, and you will start to see, I mean, obviously, you need to be comfortable. So even before the merger, as we see probably -- I'm not talking about this current quarter, maybe next quarter onwards, you will start our live commissionary growing faster than our assets. So which means that we will have -- sorry.

One other thing maybe that's helpful. On day 1 of the merger, it is not envisaged that the funding side of HDFC Limited is replaced by the deposits of HDFC Bank. It is not envisaged like that. The contractual liabilities of HDFC Limited will run through its course. And as it turns through its course over the next 3, 5 years after the effective date, it gets replaced by the bank deposits.

Sashi, just wanted to ask one question. You said the entire thesis is on extending the relationship engagement. In the existing customer, can you give a rough thesis that what the customer relationship value has gone up to? And after this merger, where your internal targets you want to take it to?

You have any metrics on that? I may not have at this juncture. It's not that we don't look at it. We do look at it but often it's not there. But broadly, because we acquired a large portion of our customers every year, and if you see in the last 5 years, the vintage of our customer acquisition has been very large. Out of the 70 million customers, a large portion would come in over the last 5 years. We were maybe 5 years ago, 1.5 million, there are 3 million, there are 6 million, there are 8 million and 10 million. So when you aggravate that, the 70 million that we're talking about is all recently acquired. So when you stratify the 70 million into a, the top end, which is a private banking, when you talk about the preferred way, you have an RM, the relationship management, when you talk about the virtual registration, which is 1 level notch below and then when you talk about the mass affluent, which is non-managed, the product penetration is different. The first one will have -- I'm talking about revenue products, not -- we're not talking about engagement products like the net banking or mobile banking is the highest for the private banking, which will range between a 6% to 8%. You go to the next level, which is your Imperia relationship, et cetera, you will come to 4% to 6%. You come down to the next level, which is the virtual relation management program that will be a 2% to 3%. And the last one will have just a 1% to 1.5%, which is the mass affluent. So weighted average because a large part of it is in the nonmanaged part of it. You will have a weighted average product penetration, not more than 2 to 3. That is the weighted average or maybe a 1.8 to 2.2 is where it will be there. That's reality. That also sort of suggests and that also sort of signifies the runway we have. See ultimately, our job is to engage with customers and serve the customers. The moment you start to focus, you start to focus, you start to penetrate. My point is our 27 years of our -- of whatever we are at this juncture is a resultant of our institutionalized sales process and engagement process that we've had. We probably will be fine-tuning it more and more with better tools and better technology platforms that you will start to see when our teams start to present in terms of how we can cut down process, how they can be a self-service or how we can run this on their own. So we believe that without any dramatic change to what it is, I think the runway that we have in terms of just penetrating more because ultimately our only job, our main job, which I say internally and also externally is moving the primary banking to us. The value comes in not from an acquisition, not from putting a product. Value comes in when I move the primary banking where you are the primary bank. It doesn't mean 100% of the cash flows or his transactions have. At least, you should be the market leader with a 30% to 40% share, which is the kind of principle we have, whether it's a corporate banking, whether it's an MSME. Of course, MSME is different. From a risk perspective, you asked our Chief Credit Officer, he will say that I would like to have 80% to 100% flows through me. So that's a different model altogether where we have a self-funding ratio, which is almost about nearly 100%. We operate between the 90% to 100%. And that's a model -- limited model. So each of the segments that we're talking about, we have an engagement philosophy, engagement process, engagement thought process, various levels, how we -- because obviously, it's not feasible and possible to have 70 million, but we are going to do the impossible that over a 5-year period, we will have our -- large part of our customers to be engaged either by the physical RMs and the personal bankers or through virtual relationship management programs. Of course, I'm not even talking about the engagement through the digital marketing. That is something that is probably -- it may be small today, but it's probably advanced better than what anyone else has globally, and it will only evolve with better analytics as well.

Sashi, just a follow-up on this. Can we expect the run rate which you maintained that doubling the balance sheet in 5 years, the same customer acquisition, which your total value, that will also run in the same manner of 15%? And just on top of that, the private banking, the top notch, is that -- that segment getting matured in terms of growth? Because the mass affluent can go to 2 to 4, but private banking, that 6 can go to 10 is the...

Yes. So let me answer this in 2 parts. Number one is when we're talking about a certain amount of growth, we are not compromising on the customer segmentation itself. Our customer segmentation since you're talking about retail is the middle and the upper middle income segment group. We have a large segment waiting to be tapped. I mean whether it is already banking with, say, the existing banking system, which is one of our feeders or it's new to credit, new to banking system as well. So we are not compromising on that. So when we are not compromising, we have a certain normal distribution curve, which is currently there, which when we are projecting a certain growth rates, which is very conservative, it also factors in this kind of penetration levels even across since you specifically mentioned about private banking, which you can probably hear Rakesh and team during the day. Today, we are probably present in a smaller set of locations. The vision for the private banking is that if you are going to be in 1,000 -- 3,000 centers, our first milestone is we would like to be in 1,000 centers. Now we are not in the -- I don't think we are in the ultra-high net worth category, which is Julius Baer, the IFL, et cetera, the Motilal Oswal, no. We are probably 1 notch below, but there's a massive amount of opportunity. You'll be amazed to know that just think about intuitively, you go to Roorkee, you go to Dharamshala, you will have 500,000 wealthy people, or Palanpur, you will have 500,000 sight and seen. People who are there who are living in Palanpur, who are wealthy enough to be a private banking customer. So you'll be surprised to know that this is going to be a key strategy which will ensure that we will be the largest private banking segment in the country today after we reach 1,000 or 2,000 or 3,000. I have -- probably Rakesh will sort of explain that even better in his presentations. But that's the opportunity. So we are not going to be trying to do things, which we are not an expert. We are not the ultra-high net worth as of now, unless Rakesh, wherever he is, yes, unless he has that thought process, which -- he will unveil it in his course of the presentation.

Just in the interest of time, we'll go towards the center of the room. If you don't mind -- just so we can maximize the ground that we can cover.

Yes. Just one continuation of the previous question. When you talk about our liability and our customer acquisition, and adding the number of customer, one of the key aspects of customer acquisition is somebody who opens an account for the first time or a minor who turns major and come to your bank for the first time, the experience which they get is not very healthy, not exciting and this is a personal experience I did in last 3 months. And the kid is so annoying that you have an emotional connect with HDFC. That I don't have that. I care a s***, and I'll go to next bank. So what are you trying to do for that and want to retain him and become your top-notch customer. If you can share something about it.

No, you're -- hit the right point. One of the priorities for me, as I said, I have -- we all have -- the leadership team has inherited a platform and an engine which is amazing. Kudos to the man who built this, Mr. Puri and his founding team over 27 years. It's a great engine. But one of the things that we need to focus, and that's why it's one of my priorities is the customer service first culture. Now it's a combination of how you interact with the customer, the speed of reaction as frontline people or the touch points that you are seeing and 2 is even from a process perspective. It is a fact that we probably have not even reexamined some of the processes, which are very, very antiquated. And it's a flaw. It's a flaw that we need to correct. So we have embarked on, especially called the wow journeys, walk out -- walk in, walk out...

Walk out, working.

Walk out, working. So it is -- what we're trying to do is the example, a minor to a major or change of address or change of mobile number, these are all fundamental instructions. Of course, it has to be in compliance with the regulations. But these are all can be done with a click of a button. So I'm not too sure whether the tech teams will do it, but behind, maybe Arvind is presenting today, one of his most focus areas, along with our quality initiative team is to see how many can be migrated on a service mode. When I say self-service mode, where the customer can do it or when you walk in, whether it can be on an assisted mode. But it has to be 1 click. It cannot be -- that it takes the kind of pain that you went through in converting from a minor to a major. It is a point. Today, we do have complaints. It is not -- it may be for the kind of balance sheet and this, it may be small, but it is not good. We have brought it down by 20%, 30%, but it's not enough. So the leadership team, we -- it's one of the biggest priorities apart from employee culture is a service-first culture wherein we are focusing on to see how we can get down to the basic respect to the customer. It's a kind of a wave that we are going at it. We are not perfect. We are not still there. And the second one is how do we convert our processes to be a self-service one-click experience. So this is, as I said, when we are talking about key objectives, which is under my radar and in my responsibility, these are some of the things that we are working on, and this is something that may not happen overnight, but it is going down on a wave. So we are focusing on this. We have a lot to do, we are not there. I think if I need to have sustainability of growth into the future, that is why this is one of our priorities. You will start to see, in fact, probably maybe we can unveil it in a form, in a public document as to how many such transactions, instructions that the customer would like to do, how much of this can -- is moving towards a one-click experience? Maybe we will start to put that up.

Just an abbreviation. You know the [ DKOIC ]?

I agree. I agree.

This is a [indiscernible] there on social media especially at individual accounts with DKOIC. I think the matter even at the marquee branches ever -- more the number of documents required. So the customer needs to keep walking in and out and eventually he gets very frustrated. And you lose up the important account from Goa bank to somebody else's. It's not something we or the investor would love to feel.

You're right. I agree with you. These are especially on the current accounts or the nonindividual accounts that you're talking about, it is a pain. It is a pain area, which has been identified and Rakesh is here as Head of the overall product team. It is their responsibility along with the cohort of people to ensure that we digitize all these things. We reexamine the compliance requirements. We reexamine the documentation requirements. There is a lot of work to be done on this. Yes. So we are saying that whatever we are talking about is with all these inadequacies and inefficiencies baked in. Just imagine, by changing all this, you are only going to make it even better. But these are priorities that we are -- we have recognized, we acknowledge we have a lot of work to do. It is my responsibility on this one.

Sorry, just in the interest of time, if you can restrict yourself to just one question. We take 3 or 4 hands at best?

Sashi, just 2 questions One is on the -- from now till merger, when you build your regression on your deposit accretion, how do you see the loan-to-deposit ratios moving? And how do you see the margins moving during that time? And the second part is post the merger, when you are just a couple of points lower than the SBI in terms of the overall industry market share, would your philosophy on the wholesale loan change from a more working capital and balance sheet funding to a more project financing kind of structures?

So good questions. The credit deposit ratio should start to change. I mean we are probably in the mid-80s at the moment. Is that right?

Yes.

So it has to come down as we start to demonstrate to ourselves, forget about the world at large that we are live at machinery can absorb this growth. I wouldn't say overnight, but it should have a glide part to come down to -- from an 85 to an 80, to a 75 et cetera. So that's part 1. It's not an easy, it's an execution on our part. I think we still have 18 months, and you will start to see that. What -- will it have an impact? Absolutely, whilst you -- Normally, if you do deploy and put it in high-quality liquid assets, it's still a positive 2% ROE. It's not a problem at all. But yes, the spreads will be smaller. So you will have a margin impact anywhere between 15 to 20 basis points depending on the size of the excesses that we have because these are things that we have been doing it right from October '17. So it's already embedded. For a long period of time, we have been carrying a drag of 15 to 20 basis points. I don't see any reason why we should -- we will not be carrying this drag even into the future. It's all right. It's part of the business model now. But the ROE will be plus 2% because you want to explain that why is it 2% ROE?

No. Cost of deposits -- when you compare the cost of deposits to the yield that you get done on HQLA, the margin is quite enough that gives you the 2-plus percent ROE, so it's not ROE decretive. And the second thing is that from an ROE point of view, also, it is actually accretive to ROE because securities typically don't have capital. It will have leverage capital, not risk-weighted capital. So it is keeping additional reserves or higher liquidity is actually not a bad thing. It's actually a good thing.

Sorry, what is the third question? Yes. See, I think whilst we are one of the largest working capital banks in the country today, there is a little bit of a myth thing that we are not into term finance or project finance or infrastructure lending. I think over the last 10 years, I think the bank has great expertise in assessing infrastructure projects, term finance and you can probably get to hear about that you can sort of ask Nirav and Rakesh and Jimmy in the next presentation, which you'll be surprised. Today, they will tell you that over the last 10 years, I think we've become one of the second largest loan and debt indicator in that particular part of the business, which means that we have been participating in term finance, et cetera. We may have probably started off is only in the brownfield projects. But now I think I'm sure -- we are doing a lot of greenfield projects in sectors and in areas that we are extremely comfortable also. I think with the -- with one of the advantages, which I did not mention what the merger will do is to give us the runway for our ability to build for a larger proportion without compromising on credit on the term finance as well. So it's just going to add to that advantage, because we have that ability to assess credit much better than what we did maybe 15 years ago. So I think we're not going to sort of go back to an era where we're going to be drilling out like this is us, obviously, that's not our philosophy. Our credit architecture is independent. So we're going to do only what makes economic sense. And by the way, the business is whether it's investment banking team or the business team or the corporate side are all mature enough, and they themselves are first levels of filters even other way. So it's an opportunity, and we will be having their advantage to bat on the front foot in terms of bidding for projects and term finance because we'll have a larger amount of capital that we'll have. So the concentration risk today will be much lower as the capital comes in.

We'll take Ashwini and then I'll come to you definitely.

Sir, just on clarification, you said you will double the balance sheet in the next 5 years. Is it post the merger or from the current date?

Doesn't matter whichever way.

Look, anyway we are doing. Anyway, we're doing at 2.4x every 4, 5 years.

No, the equation changes substantially because...

The point is it's -- as I said, again, at the cost of repetition, growth is not an issue. Growth is going to be pouring out of our ears. It's how we execute in terms of funding that growth is important. That is the reason why it's theoretically possible that I can grow faster. But what we want to do that because there are 2 things. And this is 27 years of rich experience, not just for me but for the leadership team out here, which you will mention. When you start to grow faster than what you can, you get a bit uneasy. If it's possible, we will do it, but we wouldn't want to do that. We would want to restrict only to the extent that our stomach -- sometimes we have all been thought, and that's one of the greatest USPs, the HDFC Bank is sometimes the stomach will say slow down, et cetera. Even if you look at even the COVID period, it's -- it may be hindsight now, but when March happened, when COVID struck, none of us knew what was happening. But look at the intrusion of the entire organization. They just clamped it. They just said enough, we can grow, but we don't want to grow because this is the beauty about the architecture that we're talking about. I can grow faster. We can grow faster, but do we want to grow? No, we will try and see multiple aspects, the macro, the early indicators, b, the funding. So there are a lot of points that we need to keep in mind when we are trying to talk about theoretically possible, but do you want to really stretch beyond your limits, I don't think we will do that. Yes, what I'm talking about, it's conservative because our track record says that we have done faster. Maybe that will happen. Maybe that will happen even more because if it is a secured product like a mortgage and that is driving growth. Why not? It's a great, secure product with a fantastic quality -- asset quality. But I don't want to push myself and give something to you and then you will keep us. The very fact that I'm saying that we double itself is a big departure from our normal. We don't have a guidance. So I think we should be happy with what I've said thus far, anything beyond is a bonus.

If you don't mind, just take one question and we'll come again. Yes, if you could just -- I know you don't have a mic, but I can probably paraphrase.

Yes, that probably 50% of that time [indiscernible]. What [indiscernible] we have one more product to sell to a customer who don't have more than 5 minutes to spare. So whether you would be selling mortgage or vehicle or credit card? It's probably increasing in competing the...

So 2 parts to it. Number one is, unlike a bank-to-bank merger, which we have done in the past in 2000 with Times Bank 2008 with Centurion Bank. This is going to be a less intensive. It's going to occupy lesser bandwidth. And I'll tell you the reason of it. They have just 600 branches. We have 6,300 branches. All of them are quality branches. So it's a -- I'm adding -- as I said, we want to add 1,500 to 2,000 branches. So it's a straight, simple -- in fact, it's not there. When you really come down to the grass roots, it's not there. It's just about 6 or 7 branches, which will have an overlap. But I -- quality is so good that we may want to keep it because of spaces even if it's in Ahmedabad, I have an HDFC opposite and I have the HDFC main branch opposite to each other. But why not, have the home loan operations there. So it's good. So these are minimal overlap, so the integration of branches is going to be so easy for me. Two is on people. 3,500 people, 141,000 people. It's no sweat. We are adding almost about 15,000 to 20,000 people per annum. We -- the quality of people when you look at HDFC is fantastic. They will all probably -- they were all handling a monoline product. Now they will handle multiple products. It's going to be upgrading their selves, upgrading the career, giving them a new career path and growth. So that's not an easy issue we want. We -- and I've said this openly to the leadership team in HDFC Limited, we want to welcome all of them. We have seen what it is. Third aspect is on technology. See, unlike a branch bank where you have millions of transactions on a per millisecond basis, in an asset company you have a loan to be booked and you have the back end to set up for EMIs, et cetera. It's not a high-intensity system. So all that is required. We have -- I just consume the APIs into our system so that we can integrate the GL and the aspects of it and into our various relationship program. Fortunately, that's an advantage now. Unlike in the past, you have a services-based architecture, which is not there many years ago. What was the last question?

Growth rate for the non-mortgage.

Yes. So effectively, what I'm trying to say is, am I going to be spending too much time on the -- or where the leadership team is going to be spending time on the integration? No. We need a battery of compliance teams and the legal teams to do all that is required. We probably need a finance team. We probably need -- others are going to be very peripheral. It's not going to -- it's going to be a low intensity, low bandwidth integration. Last, but not least, on your question. Today, home loan is a part of our product portfolio. It's a part of the product offering, but we are not selling it because we don't have the tools or the enablers to help the frontline team to sell. That is the reason why we have such a low penetration or low set of branches doing it. The moment you start to converge, the moment you start to have your policies converge, open up to be able for the frontline team to sell. Actually, he will be delighted or he or she will be delighted. So it's a positive because when you look at it, it is the most easiest product because it's a motion product. People would love to have a home loan as against fishing for, oh, whether you want a personal loan or a consumer durable or a card. So it is, I believe, is going to be going by, and you can check it when you go down and you interview with the people at the ground level. You'll be surprised to see the joy that the frontline people will have when they say that I now have all the enabling tools to sell a home loan. That is the reason why we have not been able to do. Now when you enable them, it's going to be a positive.

Just in the interest of time, I need to bring this to an end. We are at 1 p.m. if you don't mind. I know I missed out a handful of people, but the sessions beyond lunch are going to give you a lot of those answers as well. So if you don't mind, we'll now dispersed for lunch. I'm extremely, sorry.

Anyone who needs further questions, I mean, I can -- we are on call. We can be reached. I know familiar faces. I'm happy to take calls. Happy to sort of talk to them even on a 10-, 15-minute basis outside.

Yes, we'll do small huddles maybe.

Thank you so much. It was a pleasure to meet all of you. Thank you.

Second side, RBI kept ample liquidity into the system to fuel growth. What -- it provided us as an opportunity was, one, in terms of refinancing some of the existing debt that was sitting with some of the other banks. Second, it gave us an opportunity. There were a set of companies who were very uncertain about future and wanted to keep ample liquidity on their balance sheets, and they ended up taking working capital drawings. Third is we participated into the TRO program, and we were one of the most active participants in that particular space. There were certain green shoots, there were opportunities on the CapEx side, and that is what we participated in. While everyone was working from home, we were working in a manner that how do we facilitate work from home better. And that is where we ended up integrating with a lot of our corporate clients on their ERP platforms. And today, as we speak, 94% of transactions collections and payments our straight-through processing at HDFC Bank, 87% of trade is untouched by human hand. So we, today, are one of the largest movers of cash in the country, and I'll cover the volumes as well but we managed to digitize. So for us, pandemic acted as a catalyst to grow our volumes. Over the last 6 months, what we've seen is while private CapEx has been subdued, government expenditure has been high. There has been asset monetization. There have been INWIT structures that have come in. There is production-linked incentive scheme of the government, wherein fresh CapEx demand is visible, and we continue to participate in the growth opportunity. The other thing that people witnessed was in terms of supply chain disruptions. It's not only in terms of the price but also in terms of availability. And all large companies wanted to stitch up their supply chain better and both in terms of financing and two, in terms of settlements. So we did a lot of work there in Q3 of FY '22. We launched an altogether new supply chain platform. So while whatever I said, what did it translate into. It translated into a 15.7% growth over the last 1 year in my corporate book in spite of foreclosures, which we have never seen before. How does this compare? If you look at large credit growth, large corporate credit growth was 0.9%, and we grew at 15.7%. So we were growing 16x faster than the market. If we see it over a period of 2 years, we have grown at a CAGR of 22%. The good part is the book has been carefully built. Now different ways in which you can cut this particular book and we cut it in multiple ways. One way of looking at it is in terms of the breakup of the book between PSUs and non-PSUs. Today, 62% of the book is non-PSU. 38% is PSU plans. If you look at it in terms of both parts of the book have been growing well. The PSU book growing at 13%, non-PSU growing at 17%. The other way you would cut it is in terms of the rating of our customers. My PSU book today has an internal rating of 2.84, which typically translates to AAA. My non-PSU, domestic large company book carries a rating of 3.83, which is where at the portfolio level would fall somewhere between a AA+ to a AA at a portfolio level. If I was to just look at it a little differently, today, A, AA, AAA rated customers constitute 93.5% of my book. If I was to look at AA and AAA, it is 87%. And pure AAA customers are at 49%. It's not only in terms of the cut, but even when you look at it from the point of view of industry exposures, we are well spread across industries. There were certain industries where we witnessed better growth. The growth came in from agri, food processing, beverages. It came in from infrastructure spends that came from telecom and services. There were certain sectors like telecom, pharma, chemicals, which saw more cement -- which saw more foreclosures during this particular period. The beauty of the book is that it has been built in a manner. So while we look at this particular book composition. There is a lot of science that has gone behind the book. In terms of whether it is the mix of working capital and term. Even within term, what is manufacturing, what is infrastructure, what is greenfield, what is brownfield? In terms of rating-wise distribution, so you typically end up having a larger tenor book in better-rated companies and as you keep going down. So in terms of -- historically, this is a business that the bank has built, and we are very proud of the pristine book that we've created in this particular space. Now putting out asset is just one part of it. Our journey is actually in terms of how are we participating in the larger ecosystem of our corporate clients. And that is where working capital and term is one part of it. How are we facilitating their international trade? How are we moving cash within the country, whether it is collections and payments? How are we adding value by funding both the customers and the vendors of our clients? How are we actually providing digital integration? What are we doing for employees of our corporate clients? What are we doing in terms of tax collections? How are we distributing all the profits corporates are generating by way of dividend distribution? So there is -- this is one department that does not work only for corporate bank, but works for the entire bank. And in true sense, it's one bank that we deliver to the client because some of the products that we offer to our corporate clients does not sit in my BDP. So just to touch upon some of these products. Today, I have, amongst corporate clients, 2,000-odd relationships, where I have a salary relationship. We have 44 lakh employees working in these 2,000-plus companies who have their salary accounts with us. Now this has grown at 14% over the previous year. If I look at balances in these salary accounts, it's INR 54,000 crores plus is the balance sitting in these accounts. That has grown at 21%. And I'm not even counting in terms of the retail asset cross-sell that happens on this particular portfolio. But we've leveraged our asset relationship to bring in a lot of cross-sell. In terms of trade, we are present across both products, across both domestic and international trade. We are present through domestic factoring, invoice discounting, bill discounting. We are present through export funding solutions and very well spread. We participate through the nonfunded space. And again, there is a science that has gone behind. If you look at my letters of credit book, 82% of transactions are for cross-border. This not only provides me the ability to handle volumes, but also generates FX income for the bank. If I look at the guarantee space, it's the other way around, wherein 93% of guarantees are issued for domestic purposes where risk associated is substantially lower than cross-border guarantees that we issue. Now we handle trade, not only in terms of discounting, but even in terms of document handling. So if we look at our trade volumes, discounting, collections, imports, exports, all put together, we have seen a great traction wherein 48% of growth in our trade transactions over the previous year. What we have done over this particular period is integrated our solutions with the clients. So today, when it comes to EDPMS, IDPMS and automatic reconciliation. That is where we add value. The 48% growth in volume has not come by magic. It has come because we have delivered a solution to the client that the customer finds useful. So whether -- just to take an example, if there is an importer, he has imported a particular article that import is physically reflecting under the DGFT data against him. We help populate that particular data on our trade-on-net system. The customer is able to make payment. We reconcile the physical import with the payment going out reported to RBI and help reconcile it to the customers in. So these are kind of value-added solutions that we have offered to our clients to actually come a lot closer and become the primary bank for our customers. If we look at pure [ tone ], when you look at it, there is 2 parts. If you look at the numbers, there has been 16% growth in total transactions rooted through trade on that platform. But if you look at digital transaction, there has been a 26% growth. So while on one side, we keep acquiring clients, keep acquiring volumes. And once acquired, very soon, we try and move it to a digital platform, which helps build volumes without actually incurring a high cost of processing. I mentioned in terms of the supply chain platform that we provided. This product has a great potential, and I have a slide which covers the larger ecosystem here. But just to quickly tell you, this product will allow me to, one, do everything digitally. At this particular point in time, 80% of supply chain transactions have already moved to a digital platform, whether it would be going forward in future, whether it is credit underwriting, whether it is loan booking, account opening, documentation, execution, all of it would be done digitally. And the turnaround time will be the best in the industry. In terms of cash management, this particular service, we are market leaders. There are multiple benefits that we accrue out of this. The first one is in terms of -- for our corporate. Current account float is nothing but the time gap between collections and payments. Now this gives me the more volumes I handle the larger float I have. And we have seen data over last 5 years, there is a direct correlation between your collection volumes, value and the kind of current account float that you build in. So this is a business where we have seen, again, in spite of a very large base, as you see in terms of number of transactions, we have grown volumes by 24% and value growth has been 35%. It's spread across industries, and we actually have a solution for each of the industries. What we have also seen is a very quick adoption of the API platforms and host-to-host integration, and the volume growth here is even higher. And this is a product that creates more stickiness around the customer. So while we've covered in terms of volumes, which are unparalleled in the market, 94% of total transactions. If I split it into collections and payments, 97% of payments are straight through today. Collections is at 92%, overall at a 94%. And while I handle these kind of volumes, my cost to income is in low single digit on transaction processing. When we look at statutory payments, the total direct plus indirect individual plus corporate tax collection in India last year was INR 27 lakh crores. We ended up collecting purely out of our corporate bank customers a tax of INR 225,000 crores last year. And to this, now that we have the mandate to collect e-freight customs duty and better engagement with clients we are going to see the share going up. And this is only corporate bank. As a bank, the share will be even higher, but this is what we contribute in terms of corporate bank. Now we all would wonder why am I talking about -- why am I talking so much about transaction volumes? Now we handle volumes for a particular reason. So if you look at my change in my liability book for corporate bank, CASA ratio was 44% -- 45% as of March 21. And with all the digitization, integrations and garnering a higher share of volume my liability franchise has improved wherein my CASA provides me 50% and fixed deposits are 50%. So the quality of the liability book has improved. Similarly, whatever we do, it's for a corporate bank, it is not only about asset income. And if you look at it in terms of various -- whether it is fees, whether it is FX, whether it is cross-sell, whatever else I do for rest of the bank, that is what gives me a kicker on my revenues. So asset contribution to the total income is reducing, which shows the richness of what we knew leveraging on the balance sheet that we extend to these set of clients. Well, the other important aspect is in terms of my risk adjusted return on capital, and this is what we measure in terms of profitability. There is only 7% of my customers who figure into a high capital low return. And if I was to be more conservative, if I add high capital, high return, that is another 1% of my book. So there is only 8% of the book today that is consuming high capital, but does not generate commensurate returns. Now there is a monthly review that we have in terms of how do we get these 8% customers down. It's simple. Either you get the facilities rated or you improve cross-sell. And that's something that is there in our DNA that would always remain. While we're talking about corporate bank business, but there is a lot of digitalization that can be built on the corporate bank also. So we have embarked on an architecture, wherein we are redesigning and moving away from the legacy system into a cloud-native, resilient, agile, scalable API platform. And that is where you saw in terms of the volume growth. We are redesigning both the RM journey as well as the customer journey. Foreign RM, what we are trying to bring in is a lot of artificial intelligence in terms of how things can be done. So whether it is in terms of providing one view to the customer or giving him insight into what product your customer is most likely to buy or timing of a particular sell or arming them with information in terms of how to price your loan better or what are peers in the same industry paying or people with similar rating paying. So we have completely changed in terms of the way and RM handles. There is another beautiful initiative that we run today, that is called perform to potential. Here what we are trying to do is we've realized that within the same industry, the business models are very similar. So you pick up an automobile company and you will find that there is a similar model between a Tata Motors to a Mahindra and Mahindra to an Ashok Leyland. And if you pick up a pharma companies, you will find they have a similar arrangement when it comes to their distribution. Same will be the case with all the cement companies, same will be the case with all the tire companies. So if there is something that you are doing right for one of the companies, you understood the pain point of that particular industry. How well can you replicate it to others? And we've realized that all the engagements and volume growth that we are getting today is on the back of not providing a product but extending a solution. And that is what the technology platform is going to help RM to do better. In terms of customer experience, we are trying to see what more can be done digitally. We are also seeing what on a self-service mode, what a corporate client can do. This, in addition to the transaction banking platform, which is on the supply chain side, in terms of the trade on net side, there is a lot that would happen. The last block is on the ecosystem banking. And we are partnering with a lot of fintechs, who bring in certain specialty skills to further sharpen our offering in the market. It's not only in terms of collecting money today, but if I can do an invoice level reconciliation for a client, and then directly upload it into the ERP system, the customer is ready to pay me a lot more for the services that I extend. Here, I'm just -- while I've covered in terms of digital, I was told keep a lot of time for Q&A. So I'm just going to very quickly tell you, this is in terms of the client testimonials. Some of the things that they have been mentioning is that we are -- technology is very flexible. The ease of implementation, direct integration with the ERP system and all offerings and mindset of digitizing everything. And this is what is helping us win clients at this point in time. I spoke about the supply chain landscape, just visualize this. There is a corporate at the center. Up to now offerings from most banks was limited to the Tier 1 vendor. And now we have developed capabilities of even doing Tier 2 vendor finance. So this is a deep tier of funding that we would be able to do. Corporate maybe cash rich, may not require money. Tier 1 vendor, maybe -- Tier 1 vendor would may or may not need money, but definitely, the Tier 2 vendor definitely needs money. So how do we take the corporate risk of cash flow and go right up to the Tier 2. Similarly, that would be with GST. There are large warehouses coming. Certain businesses, you have the 2P, 3P manufacturers coming in. And if you look at it on the entire vendor side, you have a large part of your credit risk is mitigated somewhere partially and somewhere fully. Similarly, when we look at the sales side, there are distributors, there are dealers. There would be things that we would be able to build digitally and picking up with the consent of the customer GST details, a lot of underwriting can be built based on customer experience or vintage with a corporate client of ours. Some of it would be with recourse. Some of it would be without recourse. In certain cases, we will partner with the rest of the bank, whether it is our business banking, whether emerging enterprises group, wherein we will create a funnel of customers for them through our corporate engagement. Primarily, our competition here used to be banks, and we are looking at seeing whether partnerships internally or with fintechs, how do we actually leverage this a lot more. This is another interesting business, and this is the vision. So while we would be leaders across a lot of businesses and more particularly, when it comes to corporate bank, we would either be #1 or #2 across products or at an overall business point of view. This is a business which where we feel growth potential is large. And this is multinational clients. We have a vision that over the next 3 years, we want to become the largest Indian bank to multinational companies in India. At this particular point in time, I have 653 odd relationships. In the last 1 year itself, we have acquired 59 new relationships. If you look at composition of this particular book, these are customers who prefer to be asset-light in India. But look at the contribution in terms of the liability, FX, cross-sell, salary accounts that these set of customers provide us. At this point in time, as per our identification, we have 2,000 more M&C clients that are available in the country for us to go and tap. This has been divided by country of origin. It has been divided but across industries. It has been divided across geographies. It has been divided across chambers of commerce or counsel general. How do we attack them to an effect that we have now a Korean speaking RM as part of the team to go at market to these Korean companies. So that is the kind of focus that we are bringing into these set of clients and trying to see how we achieve this particular dream. The other growth driver for corporate bank. There are -- and just a lot of it is not -- you will do search, you will not get these details. So whether it is getting data from various industry sources, rating agencies, ROC database. At this particular point in time, there are 2,237 companies with turnover more than INR 1,000 crores, and that's the segment corporate bank deals with. Out of this, we have a credit relationship with 1,066 customers already. Out of the balance names, if I was to do a simple filter that companies who have rating -- external rating better than A and have not been reported ever with the bureau for any kind of overdues of evidence of stress, you come across 617 companies. Now these 617 companies between them are currently sitting on a debt of INR 11 lakh crores, 80% of it is term, 20% of it is working capital. It is not that because they are rated and not reported SME, it's not that we may have appetite to deal with all of them. It is not that all of them would want to deal with me. But even if in terms of a runway for me, in terms of if I was to convert whatever number out of it, it comes and sits over what my existing customers provide me as growth. And when you compare it with a INR 4 lakh crore book at this particular point in time, this particular new-to-bank initiative itself is capable of providing us a much larger growth. The next initiative is -- and everyone is talking about PLI. what does the PLI opportunity provide us? There are, at this point in time, 14 sectors, 16 schemes, government has announced various investments. The total incentive announced up to now is to the tune of INR 234,000 crores. There are 2 sectors where the bidding applicants have not been announced as yet. Across the 12 sectors where wines have been announced, that's 600-odd companies that are there. Some of them are existing customers of HDFC Bank. Some of them happen to be new-to-bank clients for me as well as other parts of the bank. We've engaged with a lot of these clients. Some of them have crystallized their debt requirements. Some of them are still in the process of figuring out their total debt means. A lot of them are looking at raising equity. A lot of them are looking at bringing in foreign direct investment. And we are very actively engaged with them, not only in terms of participating in the debt needs, but also in terms of offering services on the FX and other products that the bank offers. Now opportunities are large. It is for us to decide what makes sense to us and what do we take? So just to summarize in terms of corporate bank, where do we see this particular business going forward? And let me start with the existing 2 bank customers. One is, I will continue to work towards increasing my share of wallet on products that I've already sold to the client. And I will try to bring in new products to existing clients. And our exercise on perform to potential and benchmarking to the best and bringing in solution should help this endeavor. Second thing is in terms of the new-to-bank clients, we showed you the space where we are not present in spite of being one of the largest corporate banks in the country, there is still a lot more that can be done. Third thing is there is an opportunity that the economy has provided, whether it is in terms of production-linked incentive or it can be to do with asset monetization. We have been -- we have engaged with a lot of agencies just to take a name NHAI. In terms of they are looking at monetizing 26,000 kilometers of road. And if you look at it lately, whatever monetization has happened, whereas the money come in or who are the new acquirers. These are international companies who are coming and buying assets that are generating stable cash flows for a long period of time. So these are the kind of opportunities, whether it is through PLI or asset monetization or the CapEx cycle as and when they kick in will provide us avenues for growth. I spoke about supply chain. It is a risk mitigate tool as well as an avenue for us to lend at better yields at the same risk of lending to a corporate. So that is where it fits into our future strategy. There are a lot of new products that the corporates are asking for which the banking system does not provide or does not provide it as widely as the need is felt, whether it is in terms of international trade export factoring and a lot of things, while domestic factoring is popular. There are transactions and structures around international trade. All of it would provide better returns than the traditional way of doing things. So we are investing into products. We are investing into partnerships that would help us grow this particular business. I have spoken in terms of the vision to be a very large bank to multinational companies in India. We do believe that digital is the way to go. So continuing to improve our platforms that we extend to clients. In fact, we are now live on treads for SME bill discounting, which would help corporate bank to even meet the priority sector needs. So there are enough and more opportunities that still exist. So in spite of coming from a back of 2 great growth years, we do believe that corporate bank can continue to grow and add value to the organization. Thank you.

Wanted to just understand, are there any sectors or segments that you want to avoid at this point of time in the corporate banking space?

Not really. We try to focus on the top performers in all sectors. So of course, there will be some sectors where we are more cautious, more vary, but we don't have a blacklist if that's what your question is. We look to interact as actively as we can with the better performers in every sector. And of course, there are some industries that have many more well-rated companies than others on top moderating on our own scale. So that's how we go about it. But we don't blacklist anybody. You'll probably find someone from every industry on our books.

Sure. So would you like to call out sectors on which you're cautious about?

I don't think it's appropriate given that people will be my clients. Honestly, I -- sorry about that.

Sure. And thirdly...

But did you have a reason. I don't mind explaining to you what our ethos is and what we are? If you have a reason on hedges...

So if you can just pick up a sector of your choice. And between the 2 of us, we can tell you how do you pick a winner in that sector.

So let's say something like something like road project road projects, infrastructure projects, where the right of way again...

Let me tell you.

Good one, good one.

So -- and let's -- you mentioned in terms of road if you see evolution of funding roads, it started off with a BOT, then it moved into annuities, then it moved into EPC and then it moved into hybrid annuities. Now if you look at it over the years, the risk associated with funding road has progressively kept coming down. Now what you are looking at when it comes to road, the biggest thing is that you need to look at whether are you taking a traffic risk or are you taking an annuity risk? In terms of traffic risk, what are the alternate road, if you are taking a traffic risk and we would be more comfortable if there is an annuity over a traffic that you are looking at alternate roads that are coming in. You look at who the sponsorer is, you look at how aggressive the debt equity mix is. You look at what kind of support that is being provided. You look at 2 or 3 other estimates in terms of traffic that would come in. So while people may associate a higher risk, there is so much of opportunity that is coming out in the road space that you will be able -- it's not that I want to participate in every single project. So I will only pick up projects, which makes sense to me. And where at the end of it, I need to have a good night sleep. So I don't want to end up having something. And what we have built incrementally besides sector capabilities at the stage of underwriting, but we have built our own post-funding post-sanction post-disbursement monitoring tools around each sector to pick up early warning signals and take corrective action. So it's not only about originating right or underwriting right, but it is in terms of monitoring it through the life cycle of the project. And that is where you will end up picking better exposures in sectors, people may perceive or more risky.

I think your example was very, very well placed. So there would be several players in the road sector who we don't deal with and there are several we do. And I hope that's why you understand I didn't want to because my client is in that industry. But there are pharma companies we would not want to bank with. There are IT companies we would not want to bank with. Now those are known to be very highly rated sectors. There wouldn't be on anybody's negative list if there is a negative list. But -- that's why I said, we look at the good quality in every single industry, and you will find good players in every single industry.

I'll just go towards the middle first and then ...

Just one last question. Just one last question. Just my last question. In the last couple of years, and based on con calls that we've had the corporate banking focus has largely been on working capital financing and maybe on shorter duration loans. Is the focus continues to be on that? Or are you open to ...

Not in the last couple of years. If you went 5, 6 years back, you would probably be right. But over the last 5 years or so, the corporate bank has looked at increasing the duration of the book in a selective, cautious way. And term exposures have now grown to a reasonable proportion of that book. They all remain within the same well-rated entities that you just saw. So they are all focused into that space. But it's not over the -- so I would say since at least 5 years or so, the corporate bank has been moving into longer maturities into project loans, some infra, some manufacturing. It's quite a good mix of this.

Yes. So just to add to what Jimmy said, term is not only infrastructure, term is also manufacturing companies. Term is also somewhere where you're not taking a project risk, it can be a completed project. Term is also where you are relying on the balance sheet funding that there is a new CapEx requirement for the corporate, but existing cash flows are capable of repaying the debt even if the project does not generate INR 1 of revenue. So there are a lot of things that go behind. And what is more important is it's easy to build a term book, but it is -- what is more required is in terms of maturity while you are building the term book. So at this particular point in time, we have triggers in terms of the rating of the client, how much is going term. So at a portfolio level, the system will start throwing out triggers if we are doing anything, which is not within our risk appetite. So there is -- if you end up doing too much of lowly rated guys term exposure, the scores will start going up and it would come into amber or red. If you are doing too much of term vis-à-vis even with better-rated companies, there would be triggers that would be thrown. So there are control mechanisms that are built in that while you may create a portion of your book as term, but you are not unduly taking more risk than what you are typically used to from HDFC Bank.

What is the average ...

If you don't mind, we'll just move around. [ Shash ], you have the mic. I'll come to you as well.

Yes. So I just wanted to discuss the competitive environment in the corporate banking segment. My understanding is that a large part of your success in the last 5, 7 years has been taking share away from PSU banks. And that's been driven by 2 factors: one, that the PSU banks themselves have been constrained by capital and resolving their NPA issues and your superior technology. Reason number one is going. The PSU banks, especially post the couple of private bank, their liquidity also has improved, so they are in a position to start growing. I'm also hearing from a couple of corporates that some of the PSU banks are seriously upping the technology game by outsourcing to tech companies, et cetera. So have you sort of run that gamut of taking market share away from PSU banks or that funnel that you referred to in Slide 20. Does -- is there a large opportunity to take market share away? And what role does the expanded distribution that Shashi was referring to play in your ability to penetrate more corporates?

Okay. So let me try and answer this in 3 parts. First is today, competition was intense in corporate bank even 25 years back, was intense 20 years back and continues to be intense win today. What is changing is the way corporates are looking at dealing with the bank. And it is -- today, everyone wants to reduce their touch points. Today, there was a time wherein you would see a typical consortium of lenders to a large company with 20 lenders. And today, you would find that they have all cut down their dealings with 8 to 10 banks. Second thing is there has been this new current account circular which says that you can only run operational banking with banks who have more than 10% share of your total funded needs. So when you look at it, there were banks with marginal share that were present in those banks. So it is not about what they are offering, but are they material to the customers' needs. And that is where some of the stronger banks who offer a wide area of products tend to benefit at the cost of smaller banks. And that is where one part of the growth that is going to come in. Second thing is a product by itself will not sell. So I can believe that my ENet platform is the best. My [ Ton ] platform is the best. But in terms of the effort it takes to go across to the client, make him familiar with the product, help him and hold it through the initial days. And today, for a corporate and a large company, it is not about going to the head office. Today, my relationship managers travel the length and breadth of the country, they would visit 12 plants of the client to ensure that they start using a digital product and do it. So that is where the execution part of it also plays a role in addition to the product itself. Third thing is in terms of -- today for a company, it is important what kind of quality of engagement that you have. So we are a financial supermarket, and I can offer everything right from a debt and capital market requirements to working capital to advisory to salary to foreign exchange. And the quality of that interaction is very important. So at this particular point in time, if you look at it, corporates typically used to keep borrowing foreign currency because it was cheaper. But if you have followed what happened, one, the U.S. interest rates went up before Indian interest rates went up. Two, forward premiums were very high. So on a fully hedged basis it was a lot cheaper for someone to borrow in rupees even for an export-oriented unit. And then you can sell dollars, your effective cost of debt would be cheaper than the dollar debt that people were selling. Now someone needs to keep looking at opportunities and arbitrage that is available in the market and advise the customers in terms of what are the possibilities that they have. Similarly, there are regulations around ECB refinance. So there -- and a lot of companies ended up taking ECB at a time. But today, if someone was to cover their LIBOR risk or after a year, the SOFR risk, the cost of that particular debt is substantially higher. So if -- do they need various criteria of RBI to do refinance. Now this is where engagement is very different. Today, the conversation that you have. So you have a client in the cement industry. I can go and tell you, okay, give me cash management, give me payments. And the customer says, the guys come and only talk about one particular thing. But if you engage with him very differently, saying that this is what is happening in the industry. This is the area where growth is. This is where you should be looking at a grinding unit. This is where you should be looking at a clinker capacity. The conversation and the value that you bring to that particular conversation is going to differentiate whether you get -- you deal with a manager finance or a director finance. It is going to differentiate whether everything else being equal, who gets the business. So our effort is to change the narrative and engagement with clients. And that's the differentiating factor.

Thank you. That's great color ...

Can I add a small word to what he said? No, I think throughout our history and used to be in the corporate bank with them right in the beginning. I don't think we ever looked out for who's weak and who we can go after. So I don't think that's how we've looked at it. We've actually looked on the other side of the client and who's strong and who can we go after. And that -- what do you need to succeed in this? You obviously need the product range which we have. You need the reputation and the longevity of your business, which we now have and in the earlier days, obviously was much harder. And you need perseverance and determination and you need the tenacity never to give up because these are very hard clients to break into.

Okay. I'm Rahul Shukla. I run this new beast called commercial and rural banking. It was created on 1st May last year. So we are 1 year old. Obviously, my body size, et cetera, may not make you think that I'm a 1-year-old baby, but that is how it is. So Sashi, created this group. Obviously, the bank had all these businesses existing. And he put it all together and said this is commercial and rural banking. If you think about basically this business, there are 6 pieces of business over here. One is mid-corporate, then we have wholesale SME businesses. So it keeps going down. Retail SME business, you have health care finance, you have transport where you finance dealers, their working capital, inventory funding, also retail and so on and so forth. And then you have the rural financing where you actually finance farmers. So this is what the scope of this business is. On March 31, I think basically the size of the business in terms of book size, asset size was about INR 495,000 crores. I think if you look at just the advances share of the bank, it would be somewhere between 35% and 40% in terms of share. So that is what it is. But the fact is that how does this all come together? Why is this basically even together these disparate pieces of business. And I -- that was my question, and I think I could think of only 2 or 3 reasons. Number one is that this is a PSL heavy business. So this business mission has to be that I have to create PSL for the bank. So that retail can grow and basically wholesale can grow. And I keep telling my team that we like the middle child. Nobody likes the middle child, right? You always think that the eldest is the closest and the youngest is dearest to the parent. So I said, but if b***** I create PSL, then the company is going to basically love me for that, right? I enable everybody else to grow. So today, about 65% to 70% of the bank's PSL is contributed by this group, and we are increasing the book size in terms of just the PSL origination. The second thing is that if you actually take a look at where these products get distributed, obviously, there is metro and urban, but it has a large semi-urban and rural focus. The semi-urban and rural, that, again, basically, there is, you can say, different businesses, but where we are distributing, there is a geography synergy over there, right? So I can cross-fertilize, and I can run that. It comes with basically the PSL nature of the bank. So that is the second piece. The third is obviously high growth, 25% to 30% from day 1, I said. And now it's like the guillotine on my head that we have to continue at 25% to 30%. Otherwise, [Foreign Language]. The last bit that I would say is in terms of just the nature of the business. the retail SME. So if you're a retail customer, you have certain needs and new products, they will continue to grow. Or if you are a mature corporate, you have certain needs. They'll continue to grow. Here, basically, the [Foreign Language], and he becomes a small size, it has a different need. When they become a mid-corporate different need, where there is trust, IPO, this, that. So we have to be sort of all rounded and bring all parts of the bank and service their needs as they basically keep growing to the thing and at some point of time, just with [Foreign Language] another group and say, okay, I hand over. And that's how you think about it. So it's different. It is not static. The need of the customer keeps changing all throughout. And the last factor is like the yield. So if you think about it, me with the corporate banking background, am I even the right person or to basically drive this, but the thought process that has become clear to me is that if the yield is nearing retail and if you control basically the NPA like you do in corporate, suddenly, it's a cash cow for the bank, which is what it is. And this is how basically this stuff comes together. We distribute all parts of basically the bank through this particular segment. You should also know that basically the life cycle management of companies is a very important concept, right? Because if you are a SME typically, they have one bank relationship, and you have 100% of the business. When they become a mid-corporate, they normally have about 1.5 bank relationships. But the bank, which was the main bank when they were SME continues to get 70% of the business. And when they become large corporate, right, over a 20-year period, and there would be 15 banks at that point of time, even then the original bank where they started, will get 40% of the business, share of wallet of that thing. So it is very important that the bank manages it very well. Also in our economy, what is happening is that it is expected, consulting studies would show that by 2030, there would be about 10,000 SMEs who will become mid-corporate. And by then, there would be about 1,000 mid-corporate companies who will become large corporate, right? So that is the continuum that you're riding and a lot of stuff basically comes along with that. This is our performance snapshot. The average asset last 2 years, 11% growth and then 26% growth last year. And the income or the revenues that we make, which is just the core income, right, not the cross-sell that comes other parts of the bank, et cetera, just the core income. 18%, it grew and then it grew 26%, right? So obviously, one can say fabulous performance, which is what I'm going to be saying in my performance appraisal, discussion with my supervisors, et cetera. But the fact is that is this sustainable? Can this continue? And those are the only 2 questions that I have to answer for you guys. Is the market big enough to continue this growth? [Foreign Language] INR 5 lakh crore [Foreign Language] [ 25% to 30% ] [Foreign Language]. So that is roughly INR 625,000 to INR 650,000 crore in a year. Maybe you pull it a what about next year and what about next year, right? So is the market big enough? And do I have an executable strategy, something that is common sensical that I can continue to grow. And these 2 questions is, you know what I will answer. So the first piece is the MSME piece, right? I mean this is a INR 50 lakh crore credit market, right? Today, banks and NBFCs only cover INR 20 lakh crore. That is a second column. So the first is total demand is INR 50 lakh crores. This is a BCG Jefferies consulting data and TransUnion CIBIL. INR 20 lakh crore is what is currently being done by banks and NBFCs. There is another INR 10 lakh crore where borrowers are borrowing in proprietors name against lab and so on and so forth. And there is about INR 20 lakh crore, which is being serviced through the informal system. And there, the rate of interest is 3% to 4%, right? Now if they get pulled into the banking system, it's pretty simple. Instead of paying 3% to 4% per annum, you are suddenly basically looking at significantly lower interest rate, you make more money, you expand your business, you create more jobs. And jobs is basically an issue that is quite front and center in the economy today, right? And that is why you see a lot of regulatory and government focus in trying to formalize the MSME system. So ECLGS supported that system. Now they are looking at other schemes, et cetera. And there are a lot of schemes, and they keep getting pulled in. So I look at not that I have as per TransUnion CIBIL 14% market share on INR 20 lakh crore. Or as per RBI data, where NBFCs are not included, I have 18.4% market share or something like that, right? I look at on INR 50 lakh crores, my market share is just about 5%, yes? I can continue to grow for a while, unhindered in a way, right? So that is one way we think about this. The next is just to take a look at our growth of lending. And I show this to make a point. The bars don't have basically numbers because we don't disclose this. But if you look at from FY '16, the CAGR of the growth rate of the asset book in the SME is 26% and last year is 44%. So what happened, basically, this 26%, if you see the last 3 years, the slope basically becomes sharper, right, compared to the growth before. And these are the periods that were coincided with the pandemic. During the pandemic, if you were basically SME who was sitting maybe in Karur or somewhere else, right? You were banking with a particular bank and your digital wasn't working. It was a question of survival. You needed a bank whose digital systems were working and you could basically do trade LCs, bids, collections, payments, everything all together. So there's a lot of talk, right, on digital, digital, digital. I mean you can be a digital idiot, and you can sound digitally very savvy. That is just how it is. But the fact is, does that digital work? Now I can demonstrate to you that my digital works and 100%, it works better than the other banks. When I look at SLBC data and how many proportion of our customers are digitally activated and how many -- what proportion are using it. So that effectively has helped us. The proof of the pudding is in the eating. The branch was there. and the digital systems who are there. Even today, when I buy, I don't know about you, I buy a laptop in Croma, I tell them to set it up. I don't try and do-it-yourself, DIY, in my house. [Foreign Language] So we -- that is how it works. The customer has the benefit of somebody is handholding them and customer has a benefit basically that the systems are good. Obviously, a lot of customers, gush that they can't do business without our systems, but I think that is RMs only telling them to say all that to me when I visit them, so I discount it. But I can tell you that to date, those systems are so good, what does the SME need? He has to give stock statement monthly. If the stock statement is not given, then the limits will drop, if the limits will drop, then 2% penal interest will happen. Okay, they will e-mail you stock statement or give it. And from the branch, it will go to some central office in a nationalized banking system and somebody has to update it. There is a gap. And it's a big issue. It's not a small issue, right? In my system, they can upload it on the system and it gets ticked off automatically by the system as having been submitted, their limits will not drop. Their checks will not bounce, right? And they will not have to do penal interest reconciliation. These are very simple things. The needs of the customers are very simple. You are bidding today for a contract, right? You want suddenly, you've used up your limits and you need 20% additional limits. You go to basically a nationalized banking system and you want those limit. You will have to pony up collateral, you'll have to give data. You will basically take another 60 days for evaluation. There are many areas like in Andhra, I said the other day also that 6 months limited renewals haven't happened. Now if that is the situation. In HDFC Bank system, you basically apply for the 20% so that you can get that order, it's QED, why customers are coming to us upward sloping curve, right? I mean, that is the point that I'm trying to make, that the systems are such. The second thing is last year's 44%. I today believe that we have a heft in the marketplace that the -- other than the branches and all our other channels we'll talk about. Today, the promoters are getting other promoters for us from the association. If they have their son married into a family that is also a promoter family, they will get. And that network effect is what is basically helping us and it's fantastic because this can continue for a few years, right? It is just a positive spiral curve that works. This is MSME market share. As per RBI's data. This does not include NBFCs, 12% in March '20, 14.6%, March '21 and 18.4%. And for everyone who basically looks at MSME, micro is a very important need, right? In the micro and small segment, that also we have a 16.6% market share. So we quite are pretty strong in this particular area. How we look at basically our presence? It is the geographical spread. We believe that we have to be everywhere, okay? I mean our goal is to go out and do banking in 650 districts in the country. There are total 730 districts in the country. I didn't know this number 4 years ago, but we all learn as we go along. But that is where we want to do business. And today, I'm not looking at my position in a state that I'm #1. I am #1 in Gujarat. But if you go down basically from that small hump right from Porbandar to Veraval, my market share is low. I may be strong around Chennai and around Coimbatore. But if you go to the middle Tamil Nadu around to the Kottai, my market share is low. Rajasthan, we are #1 MSME bank as a state. But if you drive from Bikaner to Bhilwara, my market share is low. And why should I shy away today from doing business in Srinagar because now sarfaesi is applicable, right? All the steel guys in the government infrastructure contract, they have no basically inventory, all sold out. Cement all sold out, why should we not do it? Why have the fear because today, things have changed. Today, there are at least 6 states in which you can do digital mortgage. That is the thing that basically compresses disbursement time frame from 2, 3 months to about 2 days. And we are pushing that it should be done across. Do you know that in Kashmir today, there is a land passport that is given, which is in 3 languages in Urdu, English and Hindi. So anybody who had any issues about land ownership, details, et cetera, it is all there. In Uttarakhand, you can create a mortgage digitally, right? I mean, so this is how things are changing so that we can go out and accelerate giving credit even further, fairly evenly distributed. And when you look at growth, one of the channels that we use is HDFC Bank branches, so out of 6,300, 5,300 branches do MSME business. But out of 5,300, if we are 35% to 40% of the advances of the bank, now just take how many branches have MSME advances more than 25% of the branches advances. It's only about 2,300. So I still have 3,000 branches where we can push and increase our market share around that particular region. It comes with repeal, People know it's the same community, et cetera. Good business comes, and that is how you look at it. So we have a long runway other than the market within our system to continue to grow. This is our MSME GNPA trends. It's TransUnion CIBIL data. The numbers are not there, but the numbers will be available to you if you look hard enough, the topmost client is the public sector banks, GNPA, that's about 21%. The second line is the NBFC's GNPA, that's about 11%. The third is private sector banks, excluding HDFC Bank, which is about 7.8%. And the lowest line is 1.4%, which is us, which is as of December, and then it went down further. So I come back to the same point. keep growing high, manage your NIMs properly. When we grew 44% on the MSME business, everybody says, [Foreign Language]. So I basically go back and say we grew 44%. But do you know what was the impact on my NIM? We were in a very soft environment, right? Our NIM went down by 1 basis point. So 1.44x is basically the book growth and 0.99 is the multiplier for the NIM. So I'm still growing quite dramatically, right? And if you are able to control this, look at the amount of basically cash that gets generated for the firm. This is a strong moat for the bank. This is not replicable easily. There are only 2 banks around the INR 3 lakh crore mark. And every single private sector bank is less than INR 1 lakh crore. So whenever they ask me about competition, I say, please don't ask me about competition because we want to do business together with State Bank of India, and we will continue to do that. We don't want to compete. There is enough business for us to go out and do it, but it's a strong moat and the bank knows how to do it. This is our agri business market share. It is strategically important for the bank. Now what do I have as a market share? Today, I have 6.4%, right, as a bank. And we aspire to go to 9% because we have to meet our agriculture lending guidelines, et cetera. So the total business in this space is about INR 15 lakh crore. That is the size of the agri lending in the country. And out of that, about INR 5 lakh crore is secured and INR 10 lakh crore is unsecured. But the fallacy today in our system is that there are 10 crore farmer families. [Foreign Language], you can say that every farmer has got from the banking system, INR 1.5 lakh of credit. But in reality, the banking system has failed our farmers because 6 to 7 crore farmer families do not have access to any credit, they don't. Now okay, I can be fearful of basically doing unsecured for small and marginal, right? But why have that fear. Today, you have FPU. You can go out and do that. You have corporate supply chain. You can go out and do that. You can basically take a security of gold. And today, every farmer has 2, 3 other sources of cash flows. You can go out and do that. So if you go forward, and our goal is very simple. First, control the NPS or was 4.73%. It was -- we're trying to bring it down to a GNPA number of about 4% or so. But if you go out and think about it, we are expanding our footprint to 2 lakh villages. They're at 6.4 lakh villages in this country. We were at 98,000 last year in March. We were 1.3 lakh as of this March, and we will in 2 years, be 2 lakh. And my push is only to find 2 farmers in every village and give credit. That's all. Only 2 farmers. I'll be able to basically get all this market share increased and all that, right? And a lot is changing because there is a push towards growing farm income, farmers' income, et cetera, right? There are about 25 to 40 different -- 25 central schemes, and then there are many other schemes, which basically promote piggery, fishery, the ECLGS was one, CGTMSE is another. There are all other types of rural agri infra fund that where you have government support, guarantee as well as subvention that you can go out and do that. So you would have heard that we did ECLGS, fantastic, great. But in agri infra fund, we were the only private sector bank, which met its target that was given by the ministry, and they ran a competition from 1st February to 15th of March. No other private sector bank did it. And second point is that in terms of total amount of disbursement, we were second only to Punjab National Bank. All other banks were behind the bank. So the bank believed in that, that the fact that there is basically an agri intra fund and warehouse, et cetera, creation that has to be done. And if you go out and do that, the cold refrigerated LCVs that were financed for COVID vaccination transfer, et cetera. You are basically, again, building a moat not just around agri financing but rural financing, where we have a strong presence through our GIB business who run rural ecosystem. But the bank is basically pushing deeper and deeper into that space, without being very afraid of NPA. Now this is our strategy. Geography penetration I talked about, diversification from staple crop. We don't want to only finance sugarcane, rice and beat. We don't have allergy to it, but we want to do other stuff. So today, what happens is that if you are a rice farmer in 1 acre, you make INR 25,000 a year. But if you move into a fruit, then suddenly, you're making 3 lag. They call it kamalam, but it's actually the Chinese dragon fruit, right? I mean there's farms and forms of dragon fruit. Great supply from there, it goes to the Kandla port, gets exported too. So those are sort of things that are happening. You look at basically Kashmir me today. The apple farming is changing to high-density apple farming. You go to Imphal today. Just 1 kilometer outside. Today, they do rice and fish farming together in the field at the same time, at the same time. You go to Darbhanga area, 85% of your fox nuts or makhana, all of you are English-educated and all that. So you will know fox nuts, I know makhana we eat during Navratri and all that. That has grown in that area. But makhana grows in a water body or a pond together with fish. You go out and basically look at financing. There is enough and more opportunities in this country to finance and keep growing. Government schemes we spoke about in small and marginal farmers we spoke about. We just have to share inhibition and keep at it. We are on that path. Small and marginal farmer. We are small. We grew 37% last year. We are planning for a 100% jump this year. It's a paradigm shift that we are trying to achieve. Transportation segment, we were well, we are #1. Our HCV market share is 28%. CE, commercial equipment, basically 17%, 8%, et cetera. But the fact is that whether you take a look at either a captive NBFC of an OEM, you take a look at any NBFC specializing in transportation finance and you compare my numbers, our numbers are today larger than anybody else that is what the bank basically is doing. Now the question in this business always is that this business does great when the GDP growth is there and then it goes through a 3-year cycle, right? That is the transportation business. We have to make sure that our growth is proved from GDP growth rate, irrespective of the GDP growth rate. So a few things that we are doing. In HCV, strong; LCV, slightly lower market share. Can I use the CGTMSE scheme more effectively, right? I can also get some OEM support, et cetera. The second thing that we look at is that, okay, there are INR 3.5 lakh equipment that gets sold in CV every year. But there is 2 lakh, which gets traded in used commercial vehicle, right? That's a Shriram business. Why am I not strong in that? I have to basically push that, right? The third thing that you think about is that all the new equipment that gets sold, that INR 3 lakh crore, right, every year, or last year was INR 3.5 lakh crores, and it was INR 3 lakh crores. But together with that, when the transporter uses for fast stack for diesel, for spare parts, for tires, that expenditure in a year is INR 7 lakh crore. All that we need to do is that you have the largest bunch of transporters with you and you know their history and you move in financing working capital needs. And as you basically start getting even half the market share for the next 5 years, you've proved it that you know, you can continue to grow. So 2 things that happen. One is that the market size is much bigger than what we think of. And the second is that how to transition into that, which is where we are working in this particular year in this ecosystem. Health care, again, a major growth here is a small part of our portfolio. It's a high market share, but it's just small. But today, every district has a hospital coming up, right? In UP before elections, they had announced in 14 districts that there will be a new hospital, and now they're going to cover all. And there's a government scheme also which supports basically with guarantees, et cetera. So we are looking at this. It's a very interesting play. We already have a large market share because if you have 17,000 chemists, 14,000 new laboratories, 6,000-plus hospitals and 3.2 lakh doctors, we are just basically trying to capture more and more out of this. This is our goal, growth, PSL and income, which we have to deliver for the firm. How we are going to do it? A lot I've spoken about, but geography expansion is a fundamental tenet. Market share gain continues to happen at a rapid pace. Whether you can call it is the HDFC DNA or DNA, not of aggression, but of service that we want to basically push credit into the system. I mean we are a country where 70% of the rural districts today have a credit-to-deposit ratio of less than 10%. And then people talk about growth rate of banks. The banks here can grow until 2050. So that is something that we need to do. The government schemes, we have to follow because these are very thoughtful schemes, which are changing the landscape. And looking at high cash crop clusters, et cetera. We use the channels. We have direct sourcing. We use branches. We do digital sourcing through our website, clients can apply. VRM, today, we sell tractors as well as CV through that Sampath Kumar's virtual relationship management team and common service center. There, again, we basically look at Kisan credit, et cetera, and we just have to scale all of that up. Our focus is on people, succession planning. Three levels down, if there is anybody who moves to other part of the bank or leave within 24 hours, we should be able to be announcing a replacement, which is where we are ready today. And this business is about basically going deeper than you need a lot more supervisors in every district and every such place and you have to get their mindset together. We spend a lot of time in that. And it helps also to develop the managerial bench training and focus on productivity is key tenets for us. This is a geographical expansion. From 135 cities, we will be in 250 cities; from 573 districts, we will be in 650 districts; and from 1.35 lakh villages, we will be by next year, 1.65 lakh villages, and this. We talked about SME digital offerings. We have all of this stuff. The key thing I will just come back and basically show you one simple thing. This is our goal. Our strategy for PSL on the right side, and then we are going to do 1 plus 1 for the next 3 years. So our strategy is very simple, 1 plus 1, then 1 plus 1 and then 1 plus 1. So the first 1 plus 1 for FY '23 is very simple. Whatever was our book as of March 31 in the MSME business, we are going to do the same amount of disbursement in this year. So anybody who comes in small NBFC says, my book is INR 1,100 crores. So I ask them next year, will it be INR 25,000 crores? So they are falling off, and I say, look, the largest market share, bookbuild over 26 years. The bank basically has the desire to basically do the same amount of disbursement. We will be changing our systems, which is under development, but those systems are not 5% or 10% upgrade. Those new systems should have the ability of handling INR 2 crore, INR 2.5 crore more customers who will come from the informal system towards the formal system. So that is getting rolled out this year. So next year, our 1 plus 1 is doubling the number of entities that we bank with. And that doubling before anybody says, we're going to dilute standards, that is not going to happen because Jimmy is here [Foreign Language]. But the fact is that on 11 lakh customers that we have and our NPAs, excluding agri, 1.15%. Out of 6.5 crore customers, we will be able to find 11 lakh more customers of acceptable equivalent capacity. You just have to go deep into our country. And the third year is basically from FY '22, doubling of basically our revenues in the business. Now just on digital, I just shared with you this one slide, and I came across this data. There is one district called Samba, which is on the border of basically India and Pakistan, right? It's a very small border. If you take a look at basically this data, HDFC Bank has 780 customers, which is second only to Jammu & Kashmir bank. They are the largest bank in the state, so we acknowledge that. So we have the second largest number of business accounts. But by the way, 778, 100% is digitally activated. It's not my data, the SLBC data. I mean you can go back and look at all your digital favorites and see what is their number of customers and what is their activation, right? So in this same thing, if I show you for Srinagar, right, even more start, right, 8,210 accounts, 8155, 99%, digitally, basically activated. So when you come back and look at the secret for success in the MSME business, you have to have distribution, whether it's Srinagar, Samba or Arunachal Pradesh, the bank distribution and you have to have digital that works. Look at third-party data, don't look at internal data because there will always be ideal logs internally, we'll be saying [Foreign Language]. Third-party data is a validation, which is what we look at, which is what we live by, and I stop there. Thank you very much for listening to my monologue.

So thanks a lot, Rahul. We have about 10 minutes. I think we should start with the right in case there's anybody -- can you please raise your hand, and we'll have someone to get to you the mic.

So good because you're convinced that the market is very big and my strategy is perfect, near perfect.

So great presentation and always been a learning listening to you.

Not great presentation, great delivery [Foreign Language] whole management is sitting here.

Yes. Yes. correct. So now that we're going to merge ahead. In terms of PSL and semi-urban and rural, we always had a strategy to move deeper into semi-urban and rural. But with the balance sheet size is getting larger, and PSL is very important, the scale at which we'll have to move up, is it different? What the strategy in the merge entities context?

No, that's correct. You're absolutely right because that is a challenge, but there's also an opportunity. Many times, you are so successful in doing what you're doing, that the windows in your -- between your ears and sight is all closed. You don't look outside, right? When you go out and say, how can I do small and marginal, you will find a way. When you go out and find affordable housing, you will then go out and find a way because Sashi must have spoken a lot about that, right? Farmer expansion, we are doing it. This was our plan even without a merger. But now there is a certain amount of urgency that you have to go. Now the system offers you two things. You can do organic or you can do basically inorganic through PSLC, IBPC, et cetera, right? You will have to transition to a glide path and go out and do that because what is your solution otherwise. Noncompliance is equal to putting money in RIDF. So -- but that's not the right way because if the government is pushing you for it, you have to find ways of doing it responsibly and that urgency is there.

The necessity is the mother of invention. I can remember a time in the bank when we didn't want to do agriculture, we thought it was very high risk. We probably have India's second largest agriculture book today with India's lowest delinquency. It's possible. You just have to apply your mind.

On the agri book, all private sector banks, excluding HDFC Bank, the total Kisan credit card outstanding is about INR 80,000 crores. HDFC Bank alone is around INR 60,000 crores, INR 65,000 crores against that. [Foreign Language]. And at the end of the day, between December 31 of last year and year prior, we have reduced, shrunk our NPA by, I think, 1.2% or 1.3%. Everybody else has basically dramatically increased there NPA. That's what basically the situation is. So we have to do it. We have seized a bit. We've put people behind it. We put policies behind it, and we are measuring and tracking, and we did great pride in that fact here.

In case if there's anyone on the left side. If you could just raise your hand.

Sir, first question from the last benches. You said regarding the farmers, right? So what about the farmers who have taken the loans. And because of floods, draughts or certain problems, the government waives the farmers' loans like from the government agri banks.

Yes, yes. Just stop there -- I get. So what happens when there is a waiver and all that. I don't want to weigh into that question, but I'll tell you what happens, okay? Today, you have a Fasal Bima Yojana. And if there is a crop failure today, right, farmer gets the money. That money basically takes care of his needs and investments, but that money does not go out and repay the lending, right? So you have to work with insurers to have a better product that not only takes care of farmers loss and livelihood, but also takes care of retirement of debt. And the system is basically gradually moving towards that. The second thing that I would say is that even a 10-year old NPA does not need to be written off because there come time where the farmer comes out and basically gives you back the money. For example, in the month of April, we kept disbursing new loans, but our book was only shrinking. Why was it shrinking because they had so much cash flows from wheat. They were only repaying and repaying and repaying. That is what you basically went through. So certain systemic changes have to happen. Fasal Bima Yojana is a good first step. combining insurance for loan repayment is another step. The third thing is we are pushing is for expansion of the pledge financing. What happens is that the farmer when you have the produce and the small farmer may not have -- they don't have the ability to store it, then they have to go out and basically sell it at the prevailing price. That could be high, that could be very low. We are buying tomatoes at INR 100. If you go where tomatoes have been produced, that is about INR 3 or INR 5 at this point of time. Now it allows the farmer the pledge financing expansion through the regulatory changes to store it and then basically sell it later, but not have basically the debt overhang on their head because the bank takes the risk or does lending basically against the collateral that you have, with a warehouse collateral manager. And you give them the money and they're repaying their crop loan. That is where the system is going. So rural ecosystem is completely changing. Look, we always think about rural from an agri PSL perspective. That's 1971 when 70% of the GDP was agriculture. Today, only 15% of GDP is agriculture, but 60% people are still living in rural areas and the needs of credit have dramatically changed. It's not just farmer financing. Today, the next three, basically big things for which the farmer goes out and takes loan is home improvement. We can do that. They go out and basically do consumer durable financing against security, whichever security, you can go out and do that and they do 2-wheeler and 4-wheeler loans. So that space is just completely changing and agri processing is becoming a reality in this country. You go to Marathwada where the farmer used to make in a good crop season, INR 25,000 earnings per acre. Today, because they have moved with the help of people into fruits, that is about INR 3 lakh per annum in terms of earnings. So things are changing on the ground quite dramatically and quite fast.

Yes. We'll just take one last query.

I just wanted to know your thought on the book of -- which is under Emergency Credit Line Guarantee Scheme. How do you see the asset quality of that book?

Let me just tell you this. ECLGS, when it came, people can think about it in many different ways. I'm proud of how our bank thought about it, right? MSME lending, everybody does on personal collateral of the proprietor. Because for years, the proprietor was basically taking money from the business and buying property and creating and you were doing it. Today, after GST, they are not able to take out basically that cash. The cash remains. So it is transitioning into you don't have collateral buildup, you want more credit, there's no collateral and you have to look at basically the net worth of the company and then we'll go out and do lending. And that system is changing. After 2025, that will be the predominant mode of financing. The bank took a view that let's follow the government support that is number one. My team basically said, if we gave ECLGS, the rate is lower than OD, we're going to lose earnings. No problem. But the fact is that they got 30% extra credit at no extra collateral, right? Now what did they do in the beginning when they took basically the 20%, that is how it started, they went on reduced utilization of the OD. But today, because of that INR 42,000 crores or INR 43,000 crores that we have lent and we are the #1 disburser, the OD utilizations are going up. So you've given basically with the help of government 30% extra credit without basically additional collateral. And from 2025 that is also going to change quite dramatically. The next half of the decade will be a completely different scale and game in terms of MSME lending where you will see a lot of pain across the banking system, and you will see some clear winners increasing their lead. Obviously, we would put ourselves in that clear winner category.

ECLGS, if you -- it depends on the original clientele you had. If you had great client selection, ECLGS was a liquidity tool for an MSME customer. ECLGS was not a stress management tool, it was liquidity to kick start another working capital cycle. It was just liquidity, which held up well. But it's a misnomer to think that it was a stress management tool.

We'll bring this session to an end. Many thanks, Rahul. Jimmy, if you could stay with us, we'll get our next speaker, Mr. Arvind Kapil Group Head Retail Assets and SLI, seated just next to us.

Very good afternoon to all of you. Hi, Jimmy. I think that's -- I had the opportunity to meet a couple of you today afternoon. I think let me take this opportunity. We presented a day for yesterday, which many of you are aware is uploaded, but let me make an effort to kind of personally take you through a couple of interesting parts. I've tried to make a presentation, which kind of touches on a few items. It's a quick one, where we kind of touch on -- I think I'm taking the opportunity to start with something which we are excited about. That's an end-to-end digital car loans indigenous, which we believe is the first in the industry across India and at times across the world as well with what information we've seen. Why it's relevant is because I think it's something which is not a me-too product. It's something which is which we've actually sat inside for us -- between us as a team on the business side, credit operations and actually come up with the customer at the center and see how we can connect the dots. It took us 2 years. I've also taken the opportunity to get some dealer feedback to give you a first sense what it is. It's basically after, I'm going to cover your retail asset, a few tenets as to how I believe -- probably you should look at us at what's our plans in terms of across products. And a quick memory on what all indigenous stuff that we've done because I do see a lot of questions at times on the fact that how ready we are on the digital. So let me start with that as well, straight dive into it. So we call it the Xpress digital. It's nothing but end to end today when the customer -- 90% of the customers, if you see today, their car buying journey begins online. But if you see -- can any of them get disbursed? It's around 1% or 2%, which actually can get disbursed. Today, what happens when you want to buy a car, you will land up with a test drive, you land up by the dealership, but you don't walk out after disbursing the case. You predominantly walk out selecting a car at best. So again, it's an open issue. It doesn't help the dealer, the productivities and the finance doesn't go up, the dealer counter guy is still chasing in multiple calls, all that ecosystem. So inspired by a 10-second loan, which is, of course, for existing customers, this product serves the purpose of an end-to-end digital journey, a customer who's not an account holder could walk into my branch and say, I have an account in a public sector bank or another private sector bank and in 30 minutes, walk out with a disbursal to his dealer with a car booked. You can have an end-to-end, you have a seamless across geographies with the bank that you're hearing or focus on the semi-urban and rural with our liability franchise, expanding at a rapid rate from here on, you need less to and fro with the customers. And this is going to be Pan-India across massive amount of touch points. And of course, it's 24 hours by 7. So you can considering most of the 90% of the journeys as I began, actually begin online. This could be a great opportunity in itself for us to leverages at effective cost structures as we go along. So a quick summary of this, 90% -- the major assumptions when we started this work, 90% car buying journey is online. We're looking at 20% to 30% of our business moving on to this platform because this is assisted online on multiple platforms, you can do this, even the physical assisted model. You have 40% of annual auto credit products grow in the semi-urban and rural, and that substantiates your case for that build. If you look at 50% of incremental sales growth likely to come in from that segment and our reach of this to and fro in the rural, which is far more scattered, I think could really give us a cutting edge there. 80% of OEMs actually are already building a lot of online API platforms. And I think that is something which we could together with them and together with the dealer, leverage that strength, unless we are ahead of the curve, we will not be able to leverage that. If I can -- can I -- is this the journey? So I think let me take you quickly through the journey and you have a digital here, who's also going to repeat this to get a quick sense. The application is around 3 to 5 steps. You go on the Google and everybody searches for a loan. You virtually have this. And then it moves on to your next slide where we've made financing is 3 simple. If your pre-eligible is done, your mobile numbers asked, your date. It will give you various checkpoints. It will ask you for an OTP. It's kind of moving at its own speed. But just to give you a sense that within no time, I think approximately 5 to 10 minutes, your loan and disbursal can be done if your KYC is already with us. That 30 minutes -- that 20, 25 minutes has been kept for video KYC, in case you are ready, and we can do it. So a, this builds a massive amount of transparency as well from a governing standard point of view and the speed of execution across rural and semi-urban. So you set up your EMI mandate, your disbursement letter is right there, and that's it. Your loan is done. And you completely seamless, hassle-free. You don't have to carry any documents. So if you're filing respectable returns, I don't think you have a problem at all. Can we have the video, please? This is a video of a couple of dealer feedbacks. If I can just take a minute or 2. It might be worth. These are one of the best in the country. [Presentation]

I think these are the 6 tenets, the top three are more fundamental ones. I would suggest you should keep these three in mind when you look at our business strategy, because we will keep hand-in-hand all three. For example, a consistent, good quality portfolio, an absolute noncompromisable entity for us. If you look at, we would operate at the best class yields and margins across the industry. That will be our endeavor at all times. And, of course, most consistent prudent pricing as a result of that. If you look at the next three, which I see as our strengths and things we're going to leverage on. The first right of refusal as an open market acquisition. If you look at most of our products with distribution and entrepreneurs that we are working, we have clearly have the strength of the first right to refusal. And that really means that we almost get the best quality credit or probably the first set of best customers because we probably process it the fastest as well as our consistency of response. If you look at the indigenous products that I introduced to you and if you look at the set that I refresh your memory with at the end of the presentation, you will realize, it's a substantially solid strength, I believe, that the bank and the retail assets and lending rest on. If we look at government business, I specifically put this -- I think this is -- offers a similar opportunity for HDFC Bank as it offered when probably HDFC Bank and private sector banks were launched vis-a-vis the public sector. I think there's a great opportunity here or private versus public of the business side. And I think considering the bank's focusing big time in this segment as well. On retail lending, we've seen some fantastic growth rates coming in on this segment, and we see that as really growing. And a couple of our indigenous digital products will also make it much more seamless and across-the-table closure. You don't have to make repeat visits because it's much tougher there. Quick aligns in some of the businesses that we do as to what we are planning. Like I mentioned to you the unsecured, I see a very big strength coming out of the government segment. And we're seeing a very high accelerated growth of this segment, and we see that over the next 3 to 5 years has been lead growth driver for us where opportunity is unleashing big time. And this is also collaborated with the fact that our liabilities is penetrating and our percentages of the public sector is substantially high. And that's going to unleash massive amount of growth here. If you look at the digital car loans that I showed, we believe that an industry first, 24 hours by 7. This should only ship productivity edge on the auto side and expand our business, of course, subject to the car availability is coming in. If you look at the Gold Loan branches, we want 100% of our branches to be Gold Loan. Probably there will be some amount of infrastructure putting in on our new branches. We're making effort to put in the requisite space and all of you are aware that gold needs a certain security and some 70, 80 square feet at the minimum. So all new branches, it's our endeavor to kind of strengthen it with that infrastructure. Also, it has a direct synergy with a rural and semi-urban strategy that we are putting in place. And I think we are putting in a lot of effort here. I see that probably yielding over 3x our present distribution now and probably by third quarter, we should probably get close to most of the branches that we are launching. The digital end-to-end personal loans, today, we have a 10-second loan for our existing customers. We are work in progress. And hopefully, by the third quarter, closer to the end of third quarter, we should be in a position to do it, do an algorithm-based a very smart option even for a quick digital personal loans for even non-account holders. And that should unveil the next level of agility and growth even on the assisted model because we do believe the assisted model also will run parallel to an end to a digital model for a couple of years to come. On the expanding geographies, I think for retail assets, we're constantly expanding with speed and semi-urban and rural in the home loan and unsecured loans to cater to demand of enhanced productivity. And we're seeing that. We're setting ourselves ready for that opportunity to tap in. I think 1 of our strengths that I wanted to highlight was that the digital really leads to a substantial reduction in our tax. And even if it's -- the customer is not fully digitally accessing us, we've managed to connect it, whether it's open market or slowly connected even to the branch where the customer could be serviced in an assisted form and in a safe environment where he could actually be closing it and the delight kind of stays exactly the way we planned it for. I think on the home loan side, yes, we've announced the merger, and we will take it as it comes in on the regulatory side. But I think on the home loan piece that we do, we are looking at 3 fundamental tenets where we see that the bank brings in massive strength. One is HDFC Bank strength on the corporate salary base on our multiproduct bouquet that we kind of connect up on the corporate side with multiple teams, I think home could see a substantial strength there. On the government segment, as I shared with you, we're putting in a massive amount of focus. And I think that's another area where there's a fantastic connect to synergy. And we see that playing out very well on the home loan side. And one more big area, I think if you look at our first right to refusal at the entrepreneurs and DSS, both for unsecured and for a couple of other products, I think that distribution is substantially solid, consistent. They work with us for 1 to 2 years. And I think that trend a lot of them do home loans. And considering that we are market leaders in most bouquet of products, this itself should unleash the new level of strength for us on the synergy side. Analytics skill is the cornerstone for our backbone in terms of a lot of stuff that we succeeded because a lot of stuff is not just technology, it's also the way our risk guys are able to connect the dots and unleash that strength. And plus added together the analytics on of the marketing side and on the risk side for us to optimize our efforts. I think over the next 3 to 5 years, we see robust growth rates with those three tenets that I shared with you, we see a consistency of ours going in. And I think in my limited view, merger should add substantial value. A quick -- before I close, a quick recap on the stuff we have done on the indigenous side. The reason I'm highlighting this is to just share with you the strengths because at times, a lot of us saying that everybody does digital, but how many of them, as retail lending that I represent today, are able to launch indigenous products, which could be the first in the industry, not once, not twice, but we do it repeatedly. So if you look at the 10 Second we had launched is a fantastic success. We do substantial business today. It opened up multiple dose for the bank. If you look at the digital loans against shares, the loans against shares was not invented by the bank, but we did convert this to digital. What did it do? The 7 days became 3 minutes. And today almost 80% cases get processed digital. A lot of them are assisted, but then imagine the convenience that the customer has, even a branch could help them to close it. Similarly, if you see loans against mutual funds, the minute we made it digital, today, we [ exude ] the strength of 90%. We didn't invent this product. We kind of connected the dots that it made the 6, 7 days come down. It expanded our reach to rural areas massively. We had to have a couple of meetings with the regulators here because it's not an easy product. Even if you look at Xpress loans, it's not a straight like a personal loan where it directly [ creates ] your account. I think this is a product that I shared with you. We are excited about this by, hopefully, close to third quarter. We should be coming up and launching this. We have been more prudent on this one. This is an unsecured version. The idea was not just to launch digital products, but launch and sensibly build on it. And I hope we're able to -- we're quite proud and excited about it, but I think let the rubber hit the road and let's see how we pull this off to success, but the aim is to constantly challenge ourselves. There is nobody in the market that we really need to look up to right now. But I think the whole idea is that can we keep challenging ourselves and keep moving in a certain direction and correct the dots, whether it's on segments, whether it's on indigenized products or whether it's building the framework for us to be consistent growth at sensible pricing. I think it all connects up to be a business model that can stay in business for years to come at sensible terms. Thank you so much and will do any questions if you guys have any.

We can do a quick round of questions. I see a hand up here. We could get the mic to this table, please.

Yes. My question is more towards Gold Loans. I mean you clearly stated that you want to be aggressive and you want to increase the -- become a Pan-India sort of a player. So my question is what other ticket sizes that are you -- that you are targeting right now in gold loans? Are you sort of indifferent to it? And secondly, we've already seen a lot of you can say a pricing pressure in the NBFCs given that the PSU banks have been very aggressive. Now even if the private banks are now getting aggressive, so how do you see this space entirely? Do you see a lot of migration happening from the NBFC space? Or do you feel that the market -- gold loan market itself is seeing a lot of expansion from here on?

Okay. Before I think -- Jimmy, why don't you take up the risk side, and then I'll come back to this.

I don't think we get aggressive on gold or any other product. We're already a national player. And all we want to do is distribute gold loans through a larger and larger number of branches and soon enough virtually every single branch that we have. Ticket sizes in gold loans don't really need to be regulated because, of course, there are some norms and you can't do more than 50 grams of bullion and that sort of stuff. And frankly, we don't even do that. But you don't need to regulate it because it comes at a relatively granular level in any way. The thing about gold loans, it's an extremely low-risk product, if you get your operating risk right. There's minimal credit risk in a gold loan, but operating risk what you need to manage. So the way you've put in the right infrastructure, the right training and the right people you need -- as I think Arvind mentioned a little earlier, in a very small area. You just need to have that infrastructure in place. You need it backed up. You need a cool 100% redundancy on that technology because you kind of ought to get a single case round. And once you actually have the gold in the bank, it doesn't really matter what the ticket size was. It doesn't matter very much who the customer was. So of course, we have our filters and cutoffs, and we have them beyond [ VR ]. Historically, our Gold Loan customers have been a little different from what you would find in many NBFCs, but that may not remain and it doesn't need to remain is the point I'm trying to make. You control your operating risk, you will not have a problem in gold loans. It's as simple as that.

Yes. No. And I think one of the reasons we are also rapidly expanding is and we're planning it much better in terms of -- because like Jimmy almost alluded to it, we have -- you need a separate world and a separate space, so that's 65, 80 square feet. And I think we're planning it much better. As you get it more in the semi-urban space and start getting into carpet bombing situation, I think gold can be a very high synergy is the feedback. And I think that's where we're leveraging that strength. So where will we get our growth? I think we have one way up from where the kind of size we do in gold. So I think that's where we should be able to build strengths.

Then I said a little earlier, and I just want to repeat, we're not targeting nationalized banks, and we're not targeting NBFCs. We're targeting customers. And I think that's a point I'd really like to express because it's never been our strategy to look at somebody else's plate and see how much food we can take off it. That's not us. That's not us.

In case you have any further queries, yes. Can we get the mic here, please?

[indiscernible]. So in the morning, Sashi was also talking about the preapproved loan. Also you have been talking about preapproved. So just wanted to get a sense, out of the 77 million customer that you have offered a preapproved loan, how much typically get converted at, say, year 1, year 2 or year 3? And second question is how much is your mix of new to bank and new to credit customers in the retail portfolio? And what percentage you would be comfortable? Is it 25%, 30%? Or 35%, 40% also you are willing to go?

Of internal customers?

The new to banks and the new to customers. So there are two questions. Out of the preapproved loans that you offer, how much typically get converted? And second thing is what is the mix that you like to be comfortable on the retail side for a new-to-bank or a new-to-credit side?

So the new to credit, we are very, very cautious about. So I'll be honest and open about that. New to bank does not impact us because we have the models and we have the programs whether it be auto underwritten, which is the straight through or the manually underwritten, we have programs for everything and every product. The mix of internal penetration into products differs quite significantly. If you look at credit cards, you are extremely high penetration. And I think Sashi mentioned the penetration that we have on auto loans. You have to understand the difference there in terms of customer need. Everyone shops, everyone eats, everyone wants a card, but you need to first want a car before you can have the car loan. So there is a difference in the penetration due to the nature of that product itself. When it comes to how much we would be comfortable in terms of mixing the preapproved along with the regular underwritten, we don't frankly have a target and you could go to 100%. It doesn't matter to us, and I'll just explain why for a second. We are very, very fortunate that we have the largest and longest database of retail customer behavior in the country. And this allows us to do the analytics that we are famous for. I'm never trying to say that we are the smartest people in the world. Everyone is capable of doing it. But it's the ingredient that's in short supply. We are very fortunate that we have that. And because of that and the head start that, that has provided us, as Arvind was saying a minute ago, we have to just keep improving what we are doing. Unlike a lot of what fintechs do, we don't just build models. Despite having better data, we don't just rely on the model that gets built. We actually overlay filters over those. And this is what allows it to be done successfully. Product by product, I can tell you, the auto underwritten portfolio of HDFC Bank has a lower delinquency than the manually underwritten. This is not because we are geniuses, again. It's because we have the flexibility to control it. So take, for example, [ March '20 ], we had a preapproved base. We were able to truncate it to the extent we thought was safe in the prevailing circumstances at that point in time. We, again, have the ability to lease it again. We have a very large. You asked how large it is? It is extremely large. You could probably make a new retail bank if we wanted to. But what we release out to the sales staff at any point of time, is the mix of what we want to do from a credit perspective, looking at the macro parameters at that point in time. And of course, as I think perhaps Parag or Ravi or someone will explain little later, what the marketing strategy at that point in time and who we wish to target which products we need to put at that point of time. So that is a restriction. But otherwise, the base is huge.

But I think we are more open while Jimmy said we are not geniuses, I think we have a process by which we're constantly ahead of the curve. And that's kind of agility does, in my limited assessment, set us apart. And the way we have the courage -- because every door that you start opening, it opens new doors for sure. Otherwise, you'll not have courage enough to build your preapproved connected with digital, connecting all of that and putting it to the customer for the end result to really work. But yes, it's our constant endeavor by the way, the most time is spent in saying, how your liability franchise, which is constantly acquiring customers, how the bank which is acquiring, as you rightly said, on the new-to-bank customers, how do we connect the dots, how do we connect information with his buying on giving him the bouquet of products in a seamless manner? So it's like from the -- if you had asked me 5 years ago to now, I think a lot of the time, whether you call it the risk part of it or marketing part of it, we're constantly with these teams, working towards to get future-ready.

Sir, but 77 million preapproved, so probably the most of the credit check would have been done. So just -- because what is happening is a lot of banks are also offering a preapproved loans and those things, but it hardly matters if the conversion doesn't happen. So I'm looking at it out of the 77 million customers...

This a big piece on actual disbursement.

By the way, I didn't say we have 77 million preapproved in any product. It's not a number we put out.

In the first -- in the morning, I think Sashi mentioned some number about 77 million odd product or the customers. So how much typically get converted? Because every banks talk about [indiscernible], we have preapproved 10-minute loans and those things. But at the end of the day, it has to be getting converted.

So I mean I can ask, if you just ask Ajit or someone, we can give you what the share of preapproved is in the portfolio.

A couple of these things, we don't put it in the public domain. But I mean, it's a very substantial part of the strategy. That should give you a sense on how important. Yes, it's very large. It's a very high focus, because it's very large. And this is how it connects us to build our strengths. Because we have a lot of liability customers. And this becomes very critical for us not to reopen the entire open market chain and really build up this.

It's a very meaningful share as it stands today. But it could easily be made much larger if we wanted to. We don't want to take the risk. So I -- that's the best way I can answer it.

If you could just get the mic from [ Sumeet ] just behind.

Yes. Just two quick questions. So one is, I see the launch of these new products. How do you solve -- or how will these be nudged and discovered in the market? What is the...

How will this be?

How will they be discovered by the customers?

How will they be discovered?

Yes, because they are going to think that the bank is -- they're thinking of buying a car, right?

No. So see, you have -- presently, you have an online Google search where you go. So that's one touch point, just to give you a few examples. You have your distribution, physical distribution. So where do you go for calls where the cars are, which is your dealers. We have counters at almost 100% of the dealers. And if you look at the telecalling setup, they themselves will be briefed. So virtually, whether in your bedroom just say that I want car financing, can I close a loan right now? So from every touch point of the chain, we'll be visible to the customers. So our sales teams right now are physically embedded everywhere. So everything which does digitally will either be online without assisted option or right now will run with a sister option, where you have an executive there, but with his assisted help, you can close it there, and he doesn't have to call you again, the loan is done and over with by the time the customer walks out.

So the question -- I'm trying to understand is that I get it that your delight -- the customer delight goes up, the NPS improves and the cost also drop. But doesn't it also give you the opportunity to create net new growth, which was -- you could already be run rating 20% the way you have been doing with your network expansion. Does this produce a layer of growth over and above your existing infrastructure? So can your asset grow at maybe -- if they were growing at 20%, can you do 25%?

So that's the whole idea. We didn't do this. See, I would assume customer delight. You -- it consolidates your first right to refusal at the counters. It makes you -- the customers talk about you. If you manage to close a loan in 20, 30 minutes, I would assume you will talk to 4 people. And they will -- it will create a kind of a [indiscernible] effect, and that's natural to happen. So every customer delight life that we try and create in the bank, the idea is to create a massive amount of productivity, massive amount of good name out there, which starts leading into more productivities of various products, including the product that you're selling. That's the whole idea, including -- look at rural areas. Now rural is so much more fragmented. Even if you have a branch in any of the rural areas and the more deeper you get, how many times we want to go to the customer to pick up this document, that document. So let's say he's got a certain -- a teacher, in a panchayat, want to close for a 2-wheeler or for that auto for that matter. And the car can easily get disbursed in one visit. So I think other than the cost efficiencies, customer delight, word of mouth, I would tend to believe that it should be -- we are very optimistic about it. But you have to be at the ball. I mean, there's no magic. You've got to constantly -- I don't have a magic wand. If it doesn't work, we'll find something that works, but we'll work. The attitude is -- I'm just exuding that attitude. It's not the magic I have, it's work so far. The first one has been fantastic this month. But we -- I mean, we will be added.

Reading into your question a little more, if I can maybe be presumptive and read your mind. It's not just -- it's virtually a new channel, but it's also very, very safe and low risk. All these people have been pre-approved. We know they are safe.

Not the Xpress loans.

Not the Xpress loans, not the Xpress ones. We're talking about our preapproved channel. So we know they are safe. And when they are safe, you would like to preempt the ability of someone to shop around and you would like to give that in gratification so that you do get the good low-risk customers. So across our preapproved [indiscernible] you're talking about the Xpress loan, that's new to bank. But over here, we definitely believe that it is adding a safer layer, don't look at a preapproved 10-second loan as something that's higher risk. If you do it well, it's actually risk. I'd like to emphasize that.

And since your -- with this channel, you're also helping the OEM close the sale faster, are you also seeing conversations with OEM, which are kind of pushing you and giving you some kind of...

That's the next phase. As a matter of fact, OEMs have their own APIs. We are creating our own. So that's not connected yet. But as they start building on it, that's what we want to do.

So you could even give the customer another reason to kind of...

I think it would be a larger platform. It could be more interesting where the customer could have an online car selection sorts from the dealer which you can do partly now with OEMs, it could be -- even on his website, you will have our option.

The SmartBuy like thing where [indiscernible] by you get these extra points, which nudges you do...

We could look at it depending on what regulator allows.

Right. In case there are no further questions, we'll bring this session to an end. Many thanks. Now we'll quickly break for 15 minutes for tea and will reassemble. Thanks a lot. Thanks a lot Arvind, thanks a lot Jimmy. [Break]

Good evening, and welcome back. We will begin with the post tea session. We're now joined by Mr. Arvind Vohra, Group Head, Retail Branch Banking and Ms. Smita Bhagat, Group Head, Government and Institutional business, Partnerships, Ecosystem and Inclusive Banking and Start-Ups. Arvind and Smita, please.

Good afternoon, everyone. So good afternoon, everyone. My name is Arvind Vohra. I look after Retail Branch Banking, and I'm going to talk about customer franchise, build up, managing life cycle and how we have been managing our retail liabilities franchise and how we propose to manage mature. And then my colleagues, Smita will talk about government and institutional side of business and also alternative banking channels. So I'm going to talk about three things largely. What has been our strategy? So we have a simple strategy in place. How we have been executing? And what's our ambition? And what is the strategy delivery in context of the credibility we've built over the last 3 years? So the key part of our strategy is multi-format distribution. I know there was a discussion in the morning about branch expansion plans that we have in the numbers, but we'll talk about the numbers is not important part, how we are looking at it bottoms the process of looking at what is the right micro markets from both financial and customer point of view and strategic point of view to look at expansion and which kind of format, right? What is our approach to manage customer life cycle because you acquire a customer and then you manage that life cycle with the focus on proactively understanding customer need and then serving them and then be really able to extract the right financial solutions and engage with them with the right solutions as per their needs. How we're using AI-led analytics to proactively identify customer needs and then build need-focused conversations? Building a service-first focus culture is really the bottom line of our relationship management architecture, enabling digital transformation. So when you think of branches, we'll talk about the multiple formats, but don't think of just branches as a brick-and-mortar stores because I think we are transforming our branches. They are neither branches nor offices. They are more of phygital stores or outlets, where we are going to be doing digital rendering while keeping the relationship and humanization quotient intact, and then we'll talk about the growth segments, the rural employee banking and government. What has the strategy delivered us in the last 3 years? 2x retail CASA in last 3 years and 1.9x on retail CASA term deposits. So just about double the business in about 3 years few months, right? What is our ambition? Our ambition is exactly similar to that, right? Double it in the next 3.5 years or so, okay? And we come to you with a credibility that we have done it in the last 3 years, and we're going to again do it in the next 3, 3.5 years. So let's start with the seed point, how we are trying to build the customer franchise. So if you look at our journey over the last 3 years, we used to acquire about 3 million, 3.5 million 4, 5 years back, number of customers or customer accounts. In '18, '19 -- the FY '19 year that we ended, we acquired 4.4 million accounts, which has grown to 8.28. Now the important question is, hey, you're acquiring customers? What are you doing with them? What are they -- how are they helping you? So if you look at the deposit franchise that we have gained from this 1.9x growth in units is actually 2.1x, yes. The new customer acquisition value, the financial year we just ended is over INR 71,000 crores, which is larger than the deposit franchise of many banks in this country. Our unique customer portfolio, which means that if you exclude the joint accounts and all of that and put them only under one customer family in that sense, cust ID is what we call them, has grown more than 60% from 27 million to 43 million. I'll also share with you before I go on to my distribution slide in terms of the strategy and what is the way forward that we are thinking. Number of people we had in March '19 was -- and I just took this figure, it was some 36,600. 36,600 people in March '19, in retail branch banking, everybody put together. Number of people in March '22 is a little over 47,000 people. So we've grown our number of people by 28% in 3-year period, and we've grown our unit acquisition by 2x and a value acquisition by 2.1x. And this set of people not only deliver the CASA franchise, the fundamental goal franchise that we build up, they also deliver more than half of retail assets, almost 80% to 90% of our business banking assets because assets come in as a hook based on the customer life cycle and the needs at different point in time, right? So retail branch banking is really the owner of creating a customer franchise, managing that in a certain life cycle and we'll just explain welcome immersed nourish how we have these processes in place. We won't go delve deep into the how part, and then different interventions come in to engage with customers based on their needs. Our immediate ambition in the next 12 months is to scale up to 12 million new customer accounts on an annualized run rate with a new acquisition value ambition of INR 100,000 crores plus. This is from the new acquisition value alone. I will talk about the change in base, I'll talk about the growth segments separately as well. And the 6 levers that we spoke about, I'll just go into that. So first of all, how is our distribution strategy playing out? I know Sashi spoke about numbers in the morning. I have numbers in this same slide as well. But the numbers that we're talking about for branch expansion, right? It's a bottoms-up number based on where we see that we are going to have profitable growth to bring in. What is the micro market science we identify or we build on to understand that where do we really put up a branch if you really want to sort of extract market share. So this is straightaway linked to our market share goal objectives for a particular territory. For example, just to amplify the point, we aren't looking at setting up too many branches in large cities, right? Where are we looking at Sashi spoke about the example of Keylong, INR 500 crore market if you set up a branch there, get 10% market share in 2 to 3 years, that's INR 50 crores of deposit franchise, right? So we identified RBI centers where we don't have presence in. We have presence in 660 districts, right? And the centers which are large enough with INR 1,000 crore plus kind of a potential. We have only one branch that has broken even 2, 3 years back, more than INR 100 crores of franchise. So how do we add there. And within those also, we use Google Maps. We use delinquency trends. We use assets trends to understand which exact micro market which should be having a standard brand. So a lot of these branches would be having rural sales. They will all be phygital enabled. When I say phygital enabled, I'm going to explain that what kind of interventions, but it's all about digital delivery in a physical outlet so that we bring the best of the both worlds. We bring the digitization angle and combine that with the humanization angle to deliver the comparative advantage in the marketplace. In terms of formats, branches is what we usually see. But we have 4 formats, and Smita will talk about business correspondents in detail. Other than the standard branches, we're looking at smart banking lobbies, the neighborhood small outlet with just one relationship manager. Digital banking, you need just 2 resources. And the cost -- the rentals of these -- some of these smart banking lobbies and digital banking units are as low as close to an ATM, right? So behind the distribution number that you're talking about, there is detailed bottoms of P&L led planning that where is that we are going to be delivering our topline per square feet and bottom line per square feet. The way any retail setup or a globally retail -- globally well set up a well-managed retail network should be managed. And within these also, not just at a branches, I mean, 5, 6 years back, most of -- a lot of banks would just say that every cluster head set of 2 branches and things like those. Now yes, we look at bureau data and population, et cetera, but we made it a lot more granular. The chart that you see is every cluster head would have this kind of a charge for every district, right, every state. Now this is for Rewari district. It has 3 colors for different pin codes, right? High, medium, low potential. The potential comes from the analytics-led scoring that we do. You present the link into this, you go down to a community level data. When you go to an Uber and Ola, you see that where your communities are, right? We identify pockets where a community life is very school, is the colleges, is university, is campuses, right? That's the level of brand that I don't think in banking anybody in banking industry, anybody is planning distribution. It's typically consumer industry way of planning distribution, but that's the kind of science we are putting behind it. What is that giving us? Our typical breakeven period has been 30 to 36 months historically, right? We've cut it down to 55% of our branches breaking even in 12 to 24 months. Not just that, there are a lot of branches that are broken even in 6, 7, 9 months, maybe smaller number, about 10%, 15%. But example of a branch, if you're breaking even in 6, 9 months, you can imagine that location was crying out loud, "Hey, you have a big gap in distribution here." So it is not just about expanding branches. It is about putting the right distribution point. It could be a small branch with 4 members, right? Our average branch typically has 10 members when we start, we just put 4 in rural versus urban. So lot of new branches are going to be coming in rural centers, semi-urban and rural, right? And then identifying the right format, whether it's a standard 3- 4-member branch or a smart banking unit or a digital banking unit in terms of giving us the right format in the right place at the right cost. So it's a bottoms-up plan led by financials and customer lens and market share and market opportunity lens. There is no top-down view in terms of we are trying to looking at it. And our last 3-year growth has come in from branch expansion. So if I tell you the data on the first slide, I'll go back to that. This growth that we're talking about, on the deposit franchise between March '19 and '22, 95% of growth has come from same-store as in retail industry, we talk about same stores and new stores. So if March '19 had X number of branches, those branches have contributed to 95% of the growth in the last 3 years. The new branches have contributed 5%. But a lot of these new branches will now start delivering in the next 3-year cycles as they become more mature. So if we look at our retail franchise, in terms of topline, bottom line, catchment market opportunity as well as same-store versus incremental stores and how is the contribution moving. But with people strength growing by 28% or 28% to 29%, new customer acquisition, almost doubling new customer acquisition value more than doubling is almost 50% growth in our productivity over a 3-year period, right? So it's a mix of both productivity-led growth as well as right distribution that growth that is coming. And when we start up a branch, what do we do there? You get -- it's a phygital unit. It could be an SBL, it could be a DBU, it could be a small branch. You do the catchword scoping where you identify all the customers in 10 different segments. I'll just talk about which is those 10 -- and each one of them is then split into subsegments, which are 83 number, 8 or 10, this thing. And then each of these segments identified to the potential dimensioning. We acquire customers. Then we have a welcome call process or welcome visit process, immersion and nourish in first 30 to 90 days. And then we have AI-led tools like a recommendation adviser and next-best action that help our teams to engage with customers based on predictively understanding their needs using our AI engine. And relationship management architecture is the over-encompassing piece. So in our catchment scoping, these are the 10 segments, education, health care, entertainment, localized industries, merchants, rural, government, startups, trusts and prominent individuals. And each of them has 10 to 14 subsegments. So if you were to ask me that 6,300 branches, how many of start-ups have been mapped in the catchment of these? We can give you that -- I have that number. And I have the number in terms of each of these start-ups further into ad tech, health tech and 7,8 of the start-up segment, that how many are mapped, how many are in conversion cycle over the next 2 to 3 months. right? And it is not just the branch teams working. You go -- typically, a branch team would go and meet the customer, understand the need. And then the branch resources, retail trade and ForEx resources are a very important part of business customers, EEG or BBG resource. We build a team, meet that customer and holistically bring the HDFC Bank, one bank value proposition alive for him. Next best action is our tools really for analytics-led predictively understanding customer needs. I think there were questions around preapproved offer in Kapil's section. Preapproved offers is the way to go. But hey, the question I think is right that why is spending of that, [Technical Difficulty] right? So we predict that and then it goes in form of an NBS -- immediate NB, which means the contact and engagement has to be done within 24 hours of loading up into the CRM, right? So interventions like those. And we've launched this only immediate NB about 3, 4 months back. Customers have got surprised some of them that, hey, how do you know that I was already thinking about this? And I think we need to do better and better job. We're not yet perfect, right? SparkBeyond is our partner in helping us do this, and it will keep you becoming better because the RM's feedback also goes back as one of the inputs to the AI engine because that will keep improving it as the time goes by because of the machine learning algorithm. So you see some numbers here, not just liabilities, but we've grown our retail assets, disbursal growth, liability change in base book of more than INR 16,000 crores. And from a liability perspective, we have specific enablers, predictive loss of relationship, which is about low balances, loan rejection. Sometimes you rejectify, that liability balance start to dissipate, right? So there are surrogates we build to proactively, predictively understand if there's going to be lots of relationship and then you engage with them. Try to relationship, value enhancements basis wallet size. My ATS may be a lack of rupees, but if somebody living in 90 million point, having a lack of rupees comparison to wallet share -- wallet size it, nothing isn't it? Probably he should have millions with us in the bank. So we do all of that analysis and then engage with customers, hey, what is that? And again, it's not really about going and asking for money. That's not how things work. You meet the customers, you understand the right hooks for the customer from a financial solution point of view and build a holistic relationship and sort of then take it along. So you see an example, there is a customer who is doing self transfers to other banks. He has a loan outside the HDFC bank of INR 4.8 crores. So the hook here has to be you take over that loan. And so you get the loan back into the bank and you also get the self transfers to other banks stopping. And changing base, if you observe a lot of banks are not able to grow that, reason being it typically moves up and down by 2% here and there. We've been able to grow by more than INR 16,000 crores and that's something that will continue to sharpen as we go forward. So we spoke about NAV earlier or the new acquisition value. This is about the base -- frozen base or change in base that we talk about. Relationship management architecture. We are the largest in the industry, 13.5 million customers, 5.5 million branch-managed RMs and another 8 million virtual-managed RMs. And we are constantly innovating there. Imperial preferred plastic have been our standard programs. But at the top end, now we are adding Infinity, more than INR 5 crore of net relationship value. We're adding a differentiated program for semi urban and rural. How many of you think that Imperial is a word most people in rural would understand, right? So no bank has a rural specific relationship management architecture, right? We are now working Vishesh -- Vishesh Trust some of the things that we're working on. But that has to have very rural-centric value adds, maybe a soil testing program, maybe a crop insurance, maybe a few other things, right? And we hope to launch this as early as July. But service first is really the base or the most underlying part of our relationship management architecture because whatever technology, other things we bring in, it's really about serving the customer well. So just a glimpse of this symbiotic minute show. So a lot of fundamental work in terms of customer experience basics, adequate grooming training. We started this journey of Infinex miles or Net Promoter Score, the first thing was that treat the customer with a smile. Experience in HDFC Bank should be as pleasant going to an Oberoi hotel or a hospitality industry. Long statement to make, but that is what we endeavor to do. Why can't it happen like that? Why don't you get an Oberoi hotel feeling when you enter an HDFC branch or any bank branch, right? So service is the culture that we are building. Our MD, Sashi, he reads each and every e-mail on customer complaint. I read each and every e-mail. And we would agree that we are not perfect, but our intent is to be the best customer experience brand across industries. When you think of a mezzanine or rest in your living room, right? We want HDFC Bank name from a service point of view, from a customer experience point of view to be right up there. We don't treat other banks as our competitors, but we treat the best of the digital brands or phygital brands to be our competitors. That's the ambition that we have. We are not there yet, but they're going to be there over the next 2 to 3 years. We rolled out Net Promoter Score program, Infinex Miles. We call that Miles Score. And Net Promoter Score seemed very, very jargonish for a large number of people, and we wanted to keep it emotive, but the meat is not measuring just the Net Promoter Score. The meat is in understanding detractors, right? And each of the detractors getting back to those detractors and see that what is that we need to improve. NPS fundamentally is an improvement philosophy, right? The lot of processes we have improving base is this, but there's a lot more we need to do. There are some big ones which are sort of work in progress at this point in time. But we know that which are the processes we need to keep pace with time. But the first part is engaging back with detractors, listening to them, understanding them. That itself is start of a positive relationship even with a detractor. Our NPS score have moved. This is an independent external benchmarking study. We have an internal interaction NPS also. But we are sharing an external benchmark. This is by PRISM, which is done by independent by Bain & Company, and we have been consistently improving our scores at about 51. You see the peer banks scores there as well. But as I said, the real meat is using this as an improvement philosophy rather than just get caught in scores. But yes, improving scores always gives us some satisfaction. How are we achieving the phygital transformation? Three years back, we had some 67 registers in HDFC Bank branches. They have been cut by more than 60%, and we want to be 0 register, 0 paper, right? The digital banking unit that we are setting up, we are going to bring them into branches, putting up interesting stuff there, self-service kiosk, tabs with walkout, walk-in journeys and so on and so forth. We also believe that it's important to completely transform how we serve customers, especially if you have to connect to the youth, millennials and Gen Z much better. This is the age of the QR codes, WhatsApp banking and so on and so forth, right? Really bank through any channels, whatever you prefer? And whichever channels customers prefer, we should be available in the most easiest way. So we are delivering on the walkout, walk-in journeys, 100% branches we have enabled with biometric. Concept of walkout, walk-in journey is very simply. You come to my website or come to my branch, by the time you're going out of the door, your journey or the request is executed, right? He signed for legal documentation and automating all the journeys. Do we have a video here or the next one? Reimagining CRM. Our entire team is now enabled with CRM on the go so that they don't have to sit in an office to do it. We could be doing the CRM interactions, the NB interaction recommendations, adviser interactions on the go, even be able to register a service request or a complaint from a customer. This is the concept of walkout, walk-in, which is what we are going to be enabling not just in branches, but branches our website, WhatsApp, QR code, all these areas, right? And... [Presentation]

So the point here is that if all of this is available in net banking, WhatsApp, QR, not only customers get delightful experiences, but -- earlier the process was, there is a page in the net banking, you fill that form. It goes to the back end. We have a TAT of 2 days. There is a soul sitting at the back end. He takes the form, checks it and does it. So not only we get better experience, but we take the cost out at the back end, right? In this process, it's just written real-time basis into the system. A lot of other digitization programs, Insta savings is already a big part of our account acquisition. We're already 56% digital between smart app and InstaAccount that we want to take it to 70%. Current account, digi current account and the integrated journeys. There were some interesting questions in Kapil's session again on NTV for PL and SX. We want to have integrated journeys also because the way we manage our life cycle historically, the way I just explained it, even in an NTV scenario, PL is a hook, right? We could give the customer the option of opening a savings account right there and then itself, if it's an NTV customer, right? It's an option. You may not want to mandate it, but at least an option we can give them. You already have the journey through InstaAccount available, right? Because the preference is if you get the savings out of the customer, it's a lifelong relationship. Today, you're giving a PL, tomorrow the same customer may need an auto loan, tomorrow the same customers may need a mortgage, right? And that's really the glue that sort of work. So integrated journeys of saving with FD, savings with credit card, demat, personal loans will be on the way in the next 3 to 9 months. Business Express is again for our small businesses and MSMEs, where there could be requirements of bulk salary transfers, completely digitizing their world, where the net banking is not good enough for them. And the corporate net banking is really a high-end system, which is a desktop-based system. So this is something which is also coming about next 3 to 6 months. It will meet all the requirements of the trade, ForEx, bulk sell repayments, GSTs and all those related things to enable the small businesses on the go, on the mobile while they focus on their business part. The other enabler is the life-centric propositions like typically, any consumer category, we should do. A lot of products end of the day can get commoditized in our industry, right? But the trick is in understanding customer needs and then create propositions. Some of the proposition may seem very simple, my account, my choice. But hey, can you guess what is the kind of book size we build on my account, my choice? Which is really about giving a number of customers' references birthday, his daughter's birthday or #9, it might be adding up to. So can somebody guess, what is the kind of book size we built on MAMC, right? INR 25,000 crores over the last 3 years. And imagine if a customer has a number which he has -- he or she has an affinity for, do you think he's going to leave that account ever, if he's put his daughter's birthday, right? Simple insight, right? There's no big rocket science or radical innovation there. But similarly, short cover FDs, health cover FDs. The insight is safety, right? But along with safety, if you talk about a health cover or hospicash and especially in a COVID scenario, if you get hospitalized your medical insurance, there are companies a lot of times deduct some moneys, et cetera, et cetera. This gives them maybe INR 1,000 per day for the up to maximum 15 days. But the point is not a bundling hospicash. The point is that the team that we have built is able to create. If safety is the insight, then you're able to put together a sort of proposition where that is sort of delivered to the customer. Super Kids program, 3x or 4x the ATS, how because the meat is not in the savings, the meat is in the tie-up with the BYJU'S and the tie with the Gymboree which can counsel students and get them free counseling sessions when they are to study a broader study in high education. And similarly, unique benefits for our employee banking space and special for the lifestyle customers or lifestyle focused customers where [ Targa ] precure memberships and other stuff is available. And you saw the segment-led slide, right? So there's a segment-led go-to-market and there is a segment-led proposition development based on the insight specific to that segment. I'm going to have a doctor's product. We're going to have a senior citizen premium product, right? Imagine if senior citizen you give them a real good, high-quality benefit of hospitalization discount or medical discount, right? And then when you take it to them, that's where the magic happens. So the combination of segment-led go-to-market and segment-led proposition development is one of the backbones along with the phygital transformation and the digital part that we spoke about behind this customer franchise buildup and journey. Rural, we spoke about rural, why we need a differentiated approach. Opportunity is very, very large, INR 26 lakhs crores on deposits, INR 15 lakhs crores on credit. And other than the distribution expansion, we're looking at curated program for rural relationship architecture, more curated credit products for rural propositions, rural opinion leader program, partnership with Agri Universities, the 67 of them, and we're planning to partner with them on how to spread financial education and also give the focused value adds, be it soil testing programs and others in partnership with them and Sarpanch Samaro programs in form of the customers. So is it completely different and unique go-to-market propositions we're going to build for rural, which is a vertical we have set up -- in the vertical that we have set up recently. Because here, our mission is not doubling in 3 years, but doubling in 18 to 20 months. This is the outcomes that we briefly touched upon. So consistently, last 3 years, we have grown, and this is the retail deposit, it's not the total deposit of the bank. Wholesale corporate is separate, more than 2x of the industry, right? We have been gaining market share on all the legs, current savings as well as time. If we run time deposits, which has been a little sluggish in that industrial level, we have grown more than 2x of that, right? And if you look at the growth dispersion, not just the growth, right, we've gained market share in 90% of the districts we are present in, right? That validates the science of how we are building a bottoms-up approach of not just where we need a standard branch, but what kind of branch and what kind of format do we need that? So this is really our strategy. Customer franchise buildup, be the best customer experience brand, consistently grow at more than 2x of the industry growth rate, analytics-focused customer conversation, phygital transformation and in terms of ambition, deliver 2x again in next 3 to 3.5 years. Yes. So that's all from my side, and we'll be happy to take questions. But I hand it over to my colleague, Smita, talk about government and alternate channels. Thank you.

Good evening, everyone. I'm Smita. I'm out of the verticals I look after in the bank. I will talk about government and institutional business and alternate banking channels. So why government? Historically, all of us know that government funds have been with nationalized banks. And I would say that they have been enjoying CASA without making much efforts because all the government accounts are with nationalized banks. In last 3 years, the government has opened up agency business for private sector banks and also lifted embargo in many states on doing business with private sector banks. And that is where opportunity has come up. What have we done and why we are focusing here? So we have -- government business is all about payment and collection and it touches everyone's lives. I'm sure all of us are paying taxes, all of us are paying bills on a daily basis and somewhere government touches all our lives, and payment and collection has to happen through banks. So we have built digital solutions, which actually differentiate us and help us to actually take the market share from nationalized banks and actually in line with Digital India initiative of government, we are able to provide the solutions. On the institutional side, education, religious institutions, health care touch everyone's life. Now today, all of us know that in our play school, today, the fees could be between INR 5,000 to INR 25,000. And ultimately, you have to pay from your bank account. Whether you use any payment mode, you have to use a bank account. Now here, given the digital solutions to educational institutions, universities, colleges, coaching centers, et cetera, is a huge opportunity. I mean, more than INR 2.5 lakh crores is the budget of Government of India for educational institutions. Similar budgets are for health care institutions. We all know that religious institutions touch our lives. 40% of tourism today in the world is religious tourism. And all of us, [Foreign Language], a lot of us visit temples. [Foreign Language] So it is a huge opportunity to actually provide again digital solutions. So today, you'll find in all the marquee temples, HDFC Bank's QR code. And if somebody is paying through them, it obviously comes into my bank account. So I'm just setting this context before I actually play audiovisual of my presentation, which will showcase what are the solutions which we have developed for government and institutional business. And what is the kind of market share we are looking for in the next 18 to 24 months. I must tell you that out of the total deposits in the bank which RBI publishes, HDFC Bank within the short time has already got 6% market share, and we want to go to 10% market share in, I would say, 12 to 18 months' time. Why alternate channels at this point of time? Now India has 640,000 villages, out of which 1.9 lakh to 2 lakh villages have 72%, 73% of the total consumption or total, I would say, economy of rural and semi-urban area. And if we focus on that, we will be able to anyway double our market share, as Arvind was talking about, in less than 24 months. Because the branches are there. We are expanding our branches. And if these branches get supported by partner network, look at what is the scale we can build up. And what have we done differently. The fact is that historically, the agent, the banking correspondents, customer service points will look to open Jan Dhan accounts and do domestic remittances, which is a huge business in India. But what HDFC Bank has done is that over the last 2.5, 3 years, we have built our technology stack. We have built our APIs, journeys, APIs and integrated them with our partners. Today, we can offer all payment, asset, liability products through our partners and through our agent network. And this is what we will tell you how we have build up. So let me just play -- a pause here, play the AV and then we're happy to take questions later. [Presentation]

Thank you. And I just wanted to add to this that rural was always there. What has changed is adoption of technology in rural areas and how now we are leveraging adoption of technology to retail and sell our banking products into the last mile in the country. Thank you, and happy to now take questions.

Just have the mics going around. Yes, please. Sorry.

As you mentioned on the service part, the scaling which you are giving and the emphasis was also on to improve the service capability. So currently, where are that parameter stands? Like we give internal targets on the scorecards for the asset side. On the service side, where you stand and where you want to take it?

So we shared this external benchmark of the Net Promoter Score. You saw that score of 54 and we're tracking that versus every other bank. Other than this, what we do is so this is the top down, which is compared with the other banks. Other than that, the other parameters that we look at, interaction NPS in retail branch banking, in our phone banking. So each of the teams, where they represent the scores for the bank. If I have to tell you about how the internal scores are trending, I think in last -- we started this Net Promoter Score journey about, I think, 2 years back or so. We've roughly improved by about 20 to 25 points in that 2-year period. But again, as I said that I think, honestly, if you ask me on a scale of 1 to 10, this is our ambition because we don't want to use this to browbeat about that we have achieved enough. We haven't achieved enough. We'll be honest enough to say. I would rate ourselves that maybe a significant part of journey is yet to be undertaken. But I think the start is great. You go to any branch and I invite all of you, ask any branch manager what's your Smiles group because that is outside in perspective. Then we have an inside out perspective, which is service quality index, where we have our TATs, where we have other things like activation time and so on and so forth. But that is all about how well the machine is working. NPS is or Smile score is all about, timely is that machine generating customer delight or customers are not feeling good about it because recently, we changed our TATs from 7 days kind of TATs to 2 days, 3 days, because I may come up and tell you that I'm achieving 99.7% of my TAT achievement. But the fundamental question is, is my customer happy with the TAT that I put in the first place? So slides and statistics can sometimes be misleading. I think this journey is about honesty. This journey is about authenticity. This journey is emotive. We're very proud of the way we started off in first 2 years, but I think we have a significant road to travel.

Sure. And one more question on -- as you mentioned about the government side and institutional, that is the asset side, which you are looking as of flows. But what -- can you give some color on the revenue potential and the profitability you are doing? And more importantly, any scheme where you can give more detail for an example, MGNREGA or et cetera, where the flows come from the government and it goes to the masses and how you tap that masses into the liability and the asset side?

Yes. So you saw that in the presentation, out of the INR 16 lakh crores of funds, which flow through banking sector, while the government budget is much more. But finally, the money goes to the beneficiaries. It could be what you can talk about MGNREGA, you can talk about various I mean, farmers, et cetera. So we have achieved the first leg, which is getting integration with government departments to get the funds flow through HDFC Bank. And second step is what I mentioned in the presentation, is to work towards retaining those funds. So we have already put up products, beneficiary and Saksham accounts. And a lot of focus now is to get beneficiary accounts. So for example, highways [Foreign Language]. Now land acquisition government has to do. And government has to pay money to the farmers or the landowners who are there. So we acquired those accounts so that the funds can be retained. So this is a journey, which we have started to see first journey was to get government to approve agency business for private sector banks. And I think we have done a reasonably good job in collections, et cetera, and getting funds flow. The next journey definitely is to work on beneficiary and Saksham accounts big time. The other thing which you mentioned about the schemes, see, the government business is changing in the last 2 or 3 years, if you have seen and what we mentioned about single nodal account. So the money is moving from central government to state government, and they want efficiency in funds. And that is why you need digital solution in payment and collections. So single nodal account is where a lot of now money will flow. And we have already acquired 16% of those accounts, and our aim is to get 20% of those accounts. Now the money in those accounts come as and when the schemes are approved and fund utilization certificate is governed by the respective state government. You talked about revenue potential. So one is the flow which comes. Secondly, when we engage with government, there is potential for lending, potential for ForEx business, potential for salary accounts. You saw I already mentioned about pension, the salary bill of almost every government department and corporation is almost 40%. It can range between 40% to 60% of the total budget allocated. So salary account is a huge opportunity, and you would have seen Rahul, Arvind mentioning about how everybody is focusing on this segment. So there is a huge ramp.

Just this -- whatever the flows, which different ministries you are getting or for agency, do they get a rotation basis to the other bank also is government...

Yes, yes, sorry -- let me answer. So CBDT collection was besides nationalized bank. It was opened up only for ICICI and HDFC initially. Last year, they've opened for all private sector banks now. So it is dependent that how many customers you have and what is the kind of engagement you have. And that is where you see -- we are very happy to speak about while CBDT collections we have been doing now for almost 9 years. GST collection for the last 3 or 4 years. Customs duty, we started in January, and we already have a 7% share, which is a reflection of our customer base as well as the relationship management which we have. So you may have multiple accounts, but we want the funds to move through our accounts.

We'll take the next one from Hitain.

This refers to the Slide 2 in our presentation, where you were saying the growth of CASA and retail TD, it has virtually doubled in last 3 years. And the ambition is also of doubling it in the next 3 years.

3 to 3.5, yes.

Yes, 3, 3.5 years. But given what we heard in the initial presentation, the focus will be on liabilities. That's a challenge, which you have to prepare before the merger. So I was a little curious. I thought that next 3 years should be faster growth in liabilities versus the last 3 years that you reported?

So I mean, if you just look at our retail deposit book, it's roughly about INR 11 lakh crore, right? So if you are saying doubling from here in 3, 3.5 years, it is another INR 11 lakh crore on that large base. At an absolute number level, difficult to give you targets for this financial year. But it's going to jump up, for example, let's say, we delivered -- on retail deposit side, roughly about INR 180,000 crores, INR 185,000 crores last year. So it's going to jump up to something like 3, 4, 5, that kind of number. So when you look at absolute, you will see the absolutes are very, very large, right? And that more than meets our sort of the requirements. And so one is looking at doubling versus doubling. The second is looking at an absolute rupee value, how much are we adding.

Sure. And another question was on branches. So again last...

This one is the favorite one since morning so...

The last 5 years, your number of branches has grown at a CAGR of 6%. You're guiding for doubling the branches in next 3 years.

No, no. So first of all, I think I'm not guiding for any particular number of branches. I've tried to explain -- Sashi might have given you his view in terms of how he foresees it. But let me explain this point really, really well. There's no number in mind. I am not going after expanding. There's no number which is coming top down, okay? It's all a bottoms-up plan. And I'll tell you this a little bit in detail. For example, if I have -- I'm sure Sashi talked about Keylong because he went there to -- in Himachal to inaugurate that branch, INR 500 crore deposit market, no private bank in that town, none. We're the first one to enter there. If you pick up 10%, 12% market share in 2 to 3 years' time, that's INR 50 crores, INR 60 crores, right? Now when I cut my RBI centers, there could be X number of centers, right? I'm not giving you a number, but I'm telling you the thought process in terms of building blocks, where -- which are about INR 300 crore, INR 400 crore in terms of current size, leave the growth that catchment will also grow to, leave that aside. That's a top up, right? And I don't have a presence there today. Or alternatively, at layer 2, there is a center, which is INR 1,200 crore, and I have only one branch, which is INR 120 crores, and that broke even 4 years back, right? So a lot of our expansion is going to come in semi-urban and rural, right? There is no number that we are chasing. It is going to come up through this bottoms-up the process. And bottoms-up process also doesn't throb that I have to do a branch. It could be a branch. It could be a smart banking lobby, which is more of a captive concept. It could be a digital banking unit, right? And as I explained that smart banking lobbies and digital banking units are coming to us or almost at the rental cost of an ATM, with 1 or 2 resources added. So they're extremely, extremely cost efficient. Based on the catchment potential we see that, whether we put up a phygital small branch with, let's say, 1,200, 1,300 square feet, or 500, 400 square feet ATM kind of an extended ATM, kind of a smart banking lobby. So it's a fairly P&L-driven exercise, customer-driven exercise and catchment potential-driven exercise. So whatever is going to come through, is going to come through this bottoms-up number. Yes, there's a number that has come up when we have ran this exercise in the last 3, 4, 5 months, okay, for next 1 or 2 years, but we run that for just about 1 or 2 years. We do see a potential where it is going to be not just extremely viable, but it's going to be an eye-popping opportunity. But remember, last 3 years, we've extended our branch expansion, but we cut down our breakeven tenures, right? Our breakeven tenures prior to 2017, '18 were in the region of 30, 36 months. A couple of years for metros and close to 3 years for -- average is about 30 months or so, right? Now 60% of the branches, we are breaking even in 12 to 24 months. There are branches that I explained to you in the morning, and we can share those names, 6 months, 9 months, we've broken even, right? Now if you had not done those branches, which are breaking even in 6, 9 months' time or 14 months' time or 15 months' time. If you don't do them, we are just committing hara-kiri to our own growth. Merger, no merger. End of the day, we've got to do the right thing from the opportunity, the point of view that we see. However, merger is a contextual thing. And I think it is also going to aid in that process, right? And honestly, my view is you can have a merger or no merger scenario. I'm agnostic to it, even then we would have done the same because it makes business sense for us to do that. So it's a bottoms-up kind of an exercise driven through 3 axis, market opportunity, customer lens, financials, the P&L financials in terms of the topline, bottom line and the breakeven period that we'll be able to do. And the reduced breakeven that we've been able to achieve of 18 to 24 months or 18 months on an average versus what 30 to 35 months, I think we'll be able to sustain this primarily because of our approach, okay? You -- we have 500 cluster heads. Every cluster head has got this kind of a rewarding map that I showed you. What is a PIN code. There could be 10, 15 PIN codes in a district, which is high, medium, low potential, then you zoom into that PIN code, then you understand that here, the school is here the college is, here the bank branches are, here the BCs are, not buying industries and then analyze that which micro pocket should I have an SBL or a DBU or a small branch or a BC. If it's a BC, then we rush to Smita. Hey, Smita, this is a very low potential branch. We need a very, very low cost, variable cost model, we'll just put up a BC here, right? That's how we try to work it out. And Octopus Strategy you saw is really working on that. Smita?

Just to add like Pulwama, Anantnag, Kargill, Purulia, all these places have huge amount of deposit base. Now it may not be easier to have many branches out there. But when you have partners who already are working there and integrate your product KPIs, you obviously will get that share as well. So complementary strategy with branch expansion, digital units, agent network, partner network helps us to reach out to all these pockets of deposits.

So on branches, it's a bottoms-up exercise, right? The number is an indicative one. But we're going to test our parameters versus the bottoms-up approach, and that's what we are trying to explain here as well.

Yes, in the interest of time, I'll bring this session to an end. Many thanks, Arvind. Many thanks, Smita. Thanks a ton.

Thanks.

We'll now begin with the next session. May I call on stage Parag Rao, Group Head, Payments business, Digital and IT; Anjani Rathor, Chief Digital Officer at HDFC Bank; and Ramesh Lakshminarayanan, Chief Information Officer of the bank. We just have a very quick -- because the slide deck is very similar to what was shared a couple of days back, we'll not go through the slide deck completely. There will just be an opening remarks from the Parag and team, and then we'll open up for a Q&A, that might be more efficient. There's also a little bit of time for demo that Anjani can take us through. Thanks. We can actually directly begin with the Q&A. I mean the slide deck remains very similar to what was already shared in the public domain a couple of days back. So I presume there are no big secrets in it. Yes. In case any of you have any questions for Parag, Anjani or Ramesh, if you could raise your hand, we'll make sure the mic reaches you or we'll directly take you to demo, 1 of the 2. So...

Can you hear me? Yes, yes, yes, at the right, right back. So if you could talk a little bit about the customer experience on some of the interfaces like the app and so on? So historically, we've had issues and so on. At this point in time, could you walk us through what are the fundamental changes we're doing? Because I understand like a lot of the IT stack can be of legacy, and it might take a long time to change that. So could you walk us through what are we doing fundamentally to make sure that our consumer experience is as good as some of the newer digital players or fintechs and so on?

Okay. Thanks. So let me put it, from a product point of view, if you see -- and the customer selection and a distribution channel point of view, I think the bank has always been sort of up ahead in terms of addressing customer needs and segments, et cetera, with conventional banking products across the length and breadth of retail and wholesale, okay? That's been a strength. That's been -- that's what has sort of led us the bank to be what we are today after 27 years of existence. With the emergence of the digital, if you may call, so do-it-yourself sort of environment change, which has happened over the last 5 to 7 years, I think increasingly a little bit of what was exposed is that the customer UI/UX is not up to their compared to many of the apps who work only purely in the digital world. That being true, okay? We clearly said that, that's an area which we need to build up on. But that alone is not enough in the new digital world. What there are added dimensions to our larger transformation. So UI/UX, customer experience, looking at user journeys, making them simpler, focusing on do it yourself, which is what you call unassisted journeys and also having in an India-type scenario, the unassisted journey is also available because not everyone can and will be comfortable with just doing everything yourself. That was one layer of experience and change, which is part of our transformation journey, okay? Important, and I'll cover that after this. But there are 2 more legs after that, I think which added -- which has added the on the scale and enormity of the kind of transformation journeys which we've done. One is obviously the scale. We're an extremely large bank as part of the ecosystem, #1 in most of the products in which we choose to be in. The scale of transactions, the scale of throughput, the scale of interactions, actually, which we go through are clearly, number one. And if you take on a weighted average across most of the transactions anywhere between 20%, 25%, the 1/4 of the transactions of the larger economy actually flow through our network. So what was important from a digital perspective is not just the UI/UX, but also ensuring that the infrastructure is capable of taking that scale, UPI being an example. The kind of retail asset, dispersal transactions, which sort of take on the card volume transactions, both on the issuing side and the acceptance side are just examples of the kind of volume throughputs, which you sort of go through. So it was imperative as part of the transformation to also look at the core key infrastructure, whether it is the conventional stack, which we've been working on and the newer stacks in the digital stack, which we sort of working on. So that's the second bit and a very important bit of the -- of our transformation journey. The third bit, obviously, is that given our stature and status in the industry, we had to significantly strengthen also the network, the security of transactions. Given the fact that whilst we have done quite a lot in the conventional world, the digital era has brought in different forms and types and velocities of, if you may call, fraud, risk, operational risk, et cetera, in a much more holistic manner. So these are the 3 levels in which we've clearly, clearly sort of invested in and our transformation journey is this sliver of all the 3 process. So it's not just about changing the UI/UX. Changing the UI/UX is only one part of the journey, not enough, okay? Two other dimensions, which I would -- I definitely want to mention before I get into your first part of the question, which you asked me, is that we're a running bank. All that we did, the infrastructure, the capabilities, the distribution assets, the customer franchise, which we built in and has obviously taken us to the success levels that we are today and the stage at which we are today. All of that was great at a point in time. With the changing time, what has changed essentially in the environment? Customer needs and needs to interact with their principles has very clearly changed in terms of the ways in which he wants to interact with, okay, digital being a clear phenomena of that. The second bit is obviously demand or consumption or transactions, has also grown up in multiple scale, driven a lot by the fintech and then a lot of new players getting into each category, okay? So given that we are a running bank, we had a task of looking at the existing stack and we chose to go the modernization route of the existing stack. Simultaneously, the second part of our transformation journey is about building new capabilities, practices and also building new digital platforms, which are grounds-up approach on a completely new architecture, okay? So we've adopted that strategy in our part of our transformation. So if you look at it as a metric, we looked at in terms of scale, UI/UX changing, scale capacity and risk and security. And this side looking at modernizing the stack and building on new incremental capabilities, that's the metrics of the transformation, which we've gone through right now. And therefore, as you see, UI/UX is one subset of that whole transformation journey, an important subset because that's what you and me as customers also see and feel and experience. And I'll now talk about it. Okay. So that was just sort of run up to -- and Ramesh and Anjani can sort of talk a little more about that if you have questions on that front. Coming to the UI/UX, very important part. Customers see field experience, et cetera. So a significant amount of work has gone in rebuilding, reimagining a lot of the customers' user journeys at the back end. That is again critical because just changing the UI/UX is not enough, and there are constant parts for each and every product journey, which have been reimagined in the UI/UX space aside, and I'll just talk about the kind of profession. I mean we've brought in a lot of internal help and professional help to change this thing. But what you'll see, what you will see, and I'll give you some -- 3, 4 examples of completely revamped and changed UI/UX, which you will see, which is going to only aid and abet our growth in the digital space. Some of the demos you will see soon, so PayZapp 2.0. We had a PayZapp 1.0, feedback was exactly the same. UI/UX not up to the mark, A, B, C, X, Y, Z. PayZapp 2.0 is a completely reimagined UI/UX experience, part #1 one of that transformation. Part #2 of that of the transformation is a complete comprehensive set of payment, payment options for a customer and a mobile commerce platform in built into that, the smart buy built into the PayZapp. And the third is completely built on a new digital grounds-up, cloud-ready, cloud-native, containerized stack, which therefore factors in for nimble, agile product changes on the fly and, of course, scalability at the front. So you'll see PayZapp 2.0, and we'll take you through a demo of that of an example, one aspect of the kind of UI/UX change, which has been designed to take into account current means and also benchmark to competition. SmartHub Vyapar 2.0, which is our version of the mobile merchant ecosystem to ensure -- which is targeted at the small retail small retailers, small grocery. 1.0 was a point solution. It was an app which scanned a QR, and the UI/UX was just that, okay? 2.0 has been once again reimagined to ensure that it's a 1 app platform solution, plug-and-play for merchants, which therefore -- which allows 2, 3 things or in short, all payment forms in a box. The merchant can accept any form of payment which a customer chooses to pay by, completely interoperable, okay? The SmartHub Vyapar app can scan a Paytm QR or a GPAY QR and still initiate a payment. It accepts cards. It accepts remote payments, wallet payments, all interoperable, okay, and UI/UX change accordingly. It offers them because the bulk of the merchants will also be either potential bank customers or existing bank customers offer him what you call a suite of banking, core banking products available on-the-fly accounts and products related to accounts. Asset build. Part of our strategy is very simple, enter into the merchant acceptance space through payments, get the liability relationship use the velocity of transactions and the balances which the merchant displays and therefore, underwrite him for loans. So small ticket, small tenure loans like Dukandar loans, business loans, cards -- loan on card, et cetera, et cetera, all available as a pre-approved offer inside the app, single-click money into the account type of products, okay? And the fourth is giving him productivity tools, which will help him enhance its business, how can he display his product on Facebook, send a link to you, remote and collect payment, so on and so forth, so far. The UI/UX will reflect all of these changes in a completely contemporary manner designed both for Android and iOS, okay? So aside of the functionalities which we built up and a very strong robust back end, once again, UI/UX is another form. The third example, which I'll talk about thing is the -- our 24/7 360-degree customer servicing platform; conventional world, call center, stand-alone; e-mail, stand-alone; SMS stand-alone. This is a completely digital omnipresent channel which allows the customer to access queries questions, complaints, what have you, et cetera, through 1 digital interface, UI/UX being an important part of this whole thing, carry forward his interactions across -- seamlessly across any channel, just as much as you see in Netflix, you can start a journey on mobile and then continue on your iPad or on your laptop seamlessly, and to the back-end agent, which sort of responds to it. He gets a one view of the customer interactions. These are 3 examples I'll talk about where UI/UX has played an extremely important role of designed -- being designed, customized to today's needs of the customer. We've built it on a platform, which is given to us in partnership with Adobe or forms which gives us also the flexibility to change those UI/UXs on the fly. Anjani will talk a little more about that and probably demo you also on that. But that's our approach to these 3 apps which I talked about, but fundamentally the same approach we have applied across all customer-facing applications. I hope that answers your question.

Parag, I have a quick follow-up on that. Very exciting to hear this, both as a customer and an investor.

You'll see it also, by the way. And Anjani will talk about when the customers will also see it, okay?

Sure, sure. My question is on the next step. Do you -- in the past, you haven't -- at least my opinion is that you haven't exactly evangelized your product features as aggressively as you could have. I will give you a simple example, PayZapp 1.0 with all its flaws is hardly present in -- on the checkout of most e-commerce apps, et cetera, as a specific checkout. And for that, you initially, once you launch it, you'll have to spend a little money and get into that checkout, maybe even offer discounts, et cetera, to promote the use of these apps. And with your user base, then it will probably catch on. So is that part of the strategy? I'll give you another example. About 6, 7 years ago, you had a unified POS machine, right, where you said you could pay by your phone, you could pay by your card, you could pay multiple -- it was hardly ever evangelized. Pine Labs now is talking about it, but you had it -- it was your own machine, which was promoting it. I knew because I was an analyst then, but I don't think, in general, many merchants knew about it or at least many users did not know about it. So revamping the digital, your digital infrastructure is a great first step. But what is your strategy in evangelizing this, making sure that they get taken on? And are you prepared to spend initially for the first year or 2 to speed up the adoption of these apps, and then with your customer base, it should take off fairly well.

okay. So I'll break up your question or the answer to your question in 2 parts. One is -- yes, I admit, probably we've not been in the face in terms of advertising, as you call, so many of the changes we should do, and there have been a host of changes, new product launches, improvements, et cetera, et cetera. Fundamental belief is that when we directly reach out to customers, a lot of that experience, et cetera, is what he feels so. We probably need to change that, and you will see some changes clearly happening over the year and 2 because we do believe that, yes, sometimes seeing is also -- is part of the experience. So I'll nuance that pit to say, yes, that's an area which -- where we have clearly said that we will go back. And with properties like PayZapp, which are hard core consumer apps, properties like even SmartHub or our Auto Express, which was sort of going on, we will be going aggressively to the marketplace, which is a combination of above the line and below the line, okay? We are -- will we be still up there as the hero in terms of front page edge? Maybe not, okay. But we'll definitely ensure that through digital and other physical means, we'll be there, et cetera, and that's a change which we've clearly done. So admittedly so. Coming to your second point about the relevant type of features being there. You said PayZapp not accepted in many actions. Once again, yes, that was a clear weakness, okay? The way we've addressed it, therefore, now and even more deeply so than what was in the first one, the Payzapp number 1 only accepted through cards and a wallet, okay? There was no UPI there was no penny accessories. The new PayZapp, just to sort of quickly mention, will not just have all cards. All cards means not my cards, HDFC Bank, but also other bank cards. Number one, it's still has the wallet. It has UPI, clearly, with a similar experience as GPAY, like when you test out the product, you will see that. It has tap-and-pay, okay? So I can take the mobile, tap on our NFC-enabled POS machine, and I can pay, therefore, in the physical stores. And of course, it reads all QRs in the marketplace. And so therefore, there are multiple ways and means in which I can sort of pay, okay? Our leveraging at the ground level and all of that work is actually happening, we'll be to leverage HDFC Bank's very vast acceptance system. But because it's also an interoperable system, it will be accepted at all POS machines. Take your point about -- you talked about the DigiPOS, which we call -- which we had launched, et cetera. Once again, we've not talked about it, but today of our 1 million-plus POS machine base, which carries 46% of the card volumes in the industry, okay, even though it's only 18% of the installed base, okay, 80% are DigiPOS. And going beyond this, the conventional swipe or the tip we get a significant amount of digital transactions already on that also. So -- but yes, I admit to your point, we've not verbally tom-tomed or talked about it. That's something which we want to sort of address going forward. I hope I sort of answered your question.

But I just want to take a little more point, one point, that were missed out if I can come in? Parag, I just wanted to respond, if that's okay?

Sorry, yes.

On the -- am I audible?

Yes, yes. You're audible.

Okay So I don't need this. So I think one of the things that you spoke about on the checkouts, on the payment gateway because it's a very important part of the growth hacking that you do, right? So what are you going to see in Payzapp 2.0, it's a swipe and pay, no biometric, no this, everything is combined into 1 swipe. And we have a strategy to proliferate this at every single look up on the -- on any of the gateways that you see today. And you far simplify, in fact, a lot of focus had gone into growth hackings, just to give you a little more perspective because that's where we're learning from the fintech world that it's not about just putting the app, it's also about putting it in the right place at the same time in the right way. So there's a lot of work that's gone and you will see that. Actually, in the demo, we'll show you how kind of looking at that simple swipe and pay options coming through. So one is just building the product and like said then distributing the product digitally in a way that it gets adopted. A lot of thoughts have gone in this time. So.....

Exactly. In a post tokenization world, even PayZapp 1.0 is a pretty powerful product, right? If I have my card stored pn PayZapp, and by the way, I already can store, I have a Citi Bank card stored on my PayZapp. In a post tokenization world, it's a very powerful product, right? Because I do -- some vague website, I may not want to store my card, I can go to PayZapp. But in most checkout sites or even on Razorpay, PayZapp doesn't appear as an option. I have to click on wallets and then go to PayZapp. So if you strike a deal with your payment gateway, right, and install that, and that aggression has been -- I'm not trying to tell you how to run your business, but that aggression somehow has been missing from HDFC Bank, despite having pretty decent digital products, which somehow are not as visible as it has been. So I just want to understand, is that mindset changing? Because this -- or some of this involves costs, right? You have to strike a deal with the payment gateway to get your checkout right up there. So I'm trying to find out whether the mindset is changing in terms of evangelizing your products?

Yes, absolutely. I mean, you'll see that. We'll show you how we're thinking of these assets getting plugged into various -- and there will be a marketing push, so to say. You can't do it without this.

Okay. What you are actually saying our conventional business where we are #1, et cetera, scale is important, and we've shown aggression deprecation in doing that. In the digital world, even more so. So customer acquisition okay, it is an extremely part of every digital journey and digital app, which we've created. The focus is to build that scale, okay? And it will be -- and without really naming numbers over the next 2 to 3 years, the pure digital assisted and unassisted will be a significant portion of incremental acquisition going forward. To answer that question of scale, yes, the point is absolutely valid, and we've baked into our study, not just the payments, but whether it's Arvind or whether Arvind Kapil or Arvind Vohra, all the businesses, acquisition of new customers at scale is an integral part of our digital journeys.

So if I look at HDFC Bank, right, so there is the UI that we are discussing right now, right? And there is our lending part of the business, right? So in lending, we've been like a stealth learning machine over the last 20 years. We probably have the best risk adjusted book. And we've learned as -- in products, asset by asset, and we've kind of got the best asset quality book in this country, right. Whereas in terms of UI of our -- be it net banking, be it SmartBuy, be it wallet or -- consistently, we've been like subpar, right? So is there -- do we have -- I mean are we lacking a feedback loop system within our organization, which kind of gives us a feedback or some third-party audit or some third-party feedback, which kind of tells you that, look, the UI is like sorely lagging, right, lagging behind peers, lagging behind new edge fintechs or even peer banks, right? So I was just kind of baffled between the 2, right? On one side, we are like miles ahead of everybody else. And on the other side, we seem to be either lacking a feedback system or something seems to be a miss. Like so if you could just share how do we kind of go about this? Whereas lending like you expressed it every year after year, and we kind of hear that and we see it in the numbers, whereas this is something that we kind of cannot solve the puzzle in our heads? So if you could just give a deeper insight as to how are we going about solving? Where are the issues? Have we identified the issues or something if you could share?

So to understand your question in a lighter vein, you're asking me why am I ugly duckling? But jokes apart. I think your question is reasonably similar to the earlier question, which you had to say, is UI/UX an important part of our digital transformation journeys, okay? Amongst the other things, which I do mention, I think the answer is the unequal yes, yes. Clearly, we understand that customer optics, use and the user journey is an extremely important part of his onboarding journey, et cetera, et cetera. And we've done multiple things, amongst other things, to really look at that. More than me talking about it, I think the glimpse which we'll give you in the demo will give you an indication of the kind of UI/UX, et cetera, we're doing, but detailed -- I mean, from a structure perspective, building an in-house and an external design studio to focus on building contemporary UI/UXs, which we sort of look at what the customer does. A design philosophy, which starts from UI/UX first and goes backwards to ensure that the user journeys are adapted to the design philosophy is the second, okay? Clearly, the kind of audits, which we do to ensure that user journeys are optimized to the extent that use automation and therefore, improve the UI/UX are a couple of the areas which are an integral part of our entire board structure when we build our MUPs, et cetera, and not just the front end but also a lot of the back-end stuff, et cetera. So I can keep on going on, on fourth. But -- and these are the things which we're doing at a ground level. They are operating work level related changes, which we're doing. But I think the proof of the pudding will be to start off with will be the demos, which you'll see and give you an indication of the kind of UI/UX, which we're actually building, okay? And I probably try to leave it at that because then the demos will speak for themselves.

Yes. So just to add, right, so what you just said, right? I could not really understand this still as to do we really have a feedback system that just to give you an example, right? The net banking website just got ......

Yes. So I'll come to the net banking because that's the question that you are, net and mobile, right?

Yes, yes.

Why is that you're not able to change, right? It's a simple question. I mean you're not asking in the same format. I mean every other bank's website looks glossy, good, UI/UX. And here, you have to see the same thing for the last 7 years, right? That's the fundamental question.

No, glossy is different, ease of use is different.

I'll come to that. So there are 2 aspects to this, okay? One, what the scale at which the mobile and Internet assets of the bank works is extremely different from some of the payer players, okay, number one, okay? So changing that at the mass scale is a very, very risky aspect. And we have gone through this multiple times earlier on. What we are doing there is instead of -- so one is to really make the UI/UX very good, but then the back end is not holding up, you will again come back in from because the problem has largely been to scale up the back end first. And that's what we've actually consciously done on our mobile apps and on Internet as of late actually, a lot of work around DR resiliency, ability to come up quickly, not too many transaction failures, those kind of focus we have done actually. And you would have seen some of those results coming off if you use our app up late. But changing incremental on the UI platform on an old technology will only take you that far. So what we are doing there is too important thing. We are rebuilding and rewriting our entire mobile okay? And not just from a thing, not just don't look at it from a front end percent because that's just going to again lead you into trouble. So there is a project. In fact, we couldn't cover in the presentation. But if you look up on the presentation, you will see a new mobile bank. In fact, we are actually developing the mobile app because we want to keep the entire front-end experience and the middle with us actually not kind of dependent on a third-party partner. And you understand a lot of banks today work only as product packaged product kind of company when they just buy their product. We did that a few years back, if you remember, we are on a platform called Backbase. A lot of you would know that. What it does is that it doesn't allow you to do like the smart rollouts like a fintech because the whole game is 3 weeks MVP and that quick rollout on the front-end apps. So I think there are 2 strategies here. And that's why mobile and net banking interfaces will be follow-on will start following up. So PayZapp will come in. SmartHub is already in. Some of the new acquisition journey, the entire look and feel is changing. And you will start seeing some improvements into mobile. In fact, I don't know if you've already looked at 11.1 merging that we have done some lookups, I wouldn't say it's gone beyond. We're going to launch a new Internet banking, and that's still a little back-ended in this sense. And then we will introduce our own mobile app around -- let's say, around about 9 to 10 months away at this point of time. And you will start seeing one by one all the assets plex. So what we are doing is we're trying to do it in a way that both back end and front end are completely done in a holistic way because you don't get multiple opportunities to relaunch your mobile and get it right. And I can talk about it as a big different strategy from a back-end technology of what we are doing there. while we are building the mobile app. These are not just buying the product. We are actually getting into a very deep partnership with people like Google, with AeroSpike, with -- and the programming languages completely changed from Java-based to Golang. A lot of those kind of work is happening today on the ground. And none of these applications, like Parag said, are built in by enterprise classical thought works. These are quasi startups working in co-working spaces, in partnership with design studios. So a lot of change that's gone in. It's just that we don't talk about it because we think we will need to get some time to start putting these assets on the table and then show what we can do.

Just one example. Building a good digital product is actually, we also have to architect it properly. And today, the way it is architected is we have a good core which has to scale up. It has to perform at scale and always be on. And at the top, where we have the engagement layer there, we create good experiences. Both have to work together. And in between as a middleware, it allows APIs, data and function to be exposed. We have to do it holistically. And a good example is what we have done on UPI. UPI, everybody has a very similar experience, it's a public digital good. Why is it that HDFC Bank has the least amount of failures on that? Because with that kind of experience, we have built a very robust and a resilient back end and the underlying infrastructure. So we are now ready to create new experiences, which will match the best available in the market, and it will be supported by a very resilient infrastructure that we are putting in place, which is cloud native digital infrastructure to support that kind of experience. And this is what we've been doing over the past few quarters. You will see the results right now. the kind of experiences that we are creating is no less than what is available by the best in the market today.

The demos will give us .....

And none of the -- all of the demos that you see, none of them are on-prem. These are all cloud native, container-driven modern kind of stack. And these are already on. In fact, we're probably one of the banks which have gone 4 to 5 apps already onto cloud. And we are clear that over a period of next 2 to 3 years, we're probably 60% on cloud actually as a company, actually.

So if you allow me, I'll just narrate one small example. I'll not take more than 15 seconds, sorry, really 15 seconds.

I think the -- I mean the answers might take a bit longer, yes, right?? So we can probably go through the demo.

We can connect offline and then have a conversation if that works for you.

So the way in which I pay to anybody, it could be through a credit card, debit card, UPI, by any of the form factors that we use today. And this is the kind of experience that we see here on the new PayZapp. So I'm a citizen of this country who has got a bank account with some cards available. I switch on my PayZapp. I download it from the App Store. I choose my mobile number. I choose the terms and conditions, move ahead and say, okay, I have a dual SIM phone, so I have to choose which SIM I'm going to use for my transactions. And the moment I give my mobile number, this recognizes me as a customer of HDFC Bank in this case and shows my debit card where I'm being asked for the last 4 digits of my debit card. I enter that and submit. So the moment I do this, all my cards and relationship with the bank is available here. I've got 1, 2, 3, few debit cards and credit cards available. And -- but this is not all. I am also having a bank account from another bank, which is not HDFC Bank. So how do I link my card over there? I just add that. I give the details of that card here. It's a PNB account. So I have to give my OTP to authenticate myself, which comes from the bank. And there you see my PNB account and a card is also linked here. With this, I'm able to onboard myself as a customer with all my credit card, debit cards across any bank in the country. And then when I proceed from here, I'm able to link my account as well. In this case, I'm just choosing an HDFC bank account that I have. I choose this particular account, which is available and proceed, and this becomes my account on which my UPI handle is going to work. This is my prepaid card, which appears inside PayZapp, and here, I'm live. I use my authentication with my face ID or biometric to open the account, which is set up here. So this is the onboarding process, which is available. This is completely safe and secure. It pulls all my accounts and cards across any banking ecosystem where it is present today. Now how do I -- what do I do with this? I go into a store, where I want to use my Payzapp as a payment app. I see a QR code. I choose the amount that I have to pay, let's say, I want to pay INR 500. I choose the account through which I want to pay and give my UPI pass, and this transaction is done. So I'm able to pay using any of the form factors here. This -- what I demonstrated just now is only through UPI, but I can pay through a credit card, debit card, all our tokenized cards here, it can -- the transaction can go through any of these means. We can add any of the billers, here where I click on linking billers, it uses my mobile number to fetch all the billers that I have and I can view the bills which are available. I have a Videocon, a Vodafone Idea and HDFC Fast tag, which is available. I can see that some of these are due in 2 days and 3 days. I can use any of these methods to pay for it. Here, you can see that the Videocon outstanding is INR 1,760 on my bill. This is the experience that Parag was talking to about this is a swipe to pay, which is a much easier way and a safer way to pay. I just swipe on my app, which will help me just pay directly. I apply a coupon code, which is available right now through PayZapp. I apply it, I get a discount of INR 20 because I'm using the coupon, and then I swipe and pay and the transaction is done. This is the experience, which is not available today on any of the payment apps across the country. So in that same manner, if I want to pay to any of my contacts available in UPI. I go through the app again. I choose send money I put down the name of the person who I want to pay. In this case, it is Nirmal. I choose Nirmal's name here. I choose the amount that I want to pay. And then I choose to pay using my UPI pin, which is available here, and I'm able to pay to Nirmal directly through this. Here, because of the Mapper, which is now available through NPCI, it is possible that the recipient is not with PayZapp. The recipient could be on any of the PSP apps, let's say, Phone Pay or Google Pay, I'm able to send money to that person. But at the same time, we can add PayZapp as a preferred means of receiving money by saying that create UPI handle through PayZapp. I give my mobile number and create a UPI number. So then PayZapp becomes the preferred way of receiving money from any of the PSP apps across the country here. So that's the kind of experience that we are building through the new PayZapp. Just want to take you through, let's say, if I want to book a ticket, how can I do that? So I go into shop, I choose, let's say, redBus, which is an app which allows me to book tickets. I choose from Chennai to Bangalore on a certain date. Then I get the various options, which is available from redBus. I choose the option that is suiting me, I apply the promotion code and this is what it gives me. I can pay through a credit card, debit card, net banking or through PayZapp, and I choose to pay with PayZapp. Here, again, I swipe to pay, and the transaction is done. This is one of the safest way to make payments for commerce as well as any of the marketplaces using the new PayZapp that we are building here. Likewise, if I'm on a website where I want to, let's say, buy some groceries, I go on the website where I need to purchase. I choose my product added to the catalog. And during checkout option, again, I have here the options to pay with PayZapp. I place the order. Because I'm going there for the first time, I'm going to register myself on PayZapp, add the pin, which is available here, link my account, which is linked here and pay using PayZapp here. So that's the kind of experience that we are talking about. When you do commerce, and we are able to pay using PayZapp for each of these properties. I think there was 1 question around how do we link PayZapp and make it available across all digital commerce properties? This is now equipped to do that. The other question, of course, is how do we make it happen across the entire ecosystem, which is available in India? This also has -- this is a completely self-care app, customers can raise tickets. We can see smart statements, where I can go and see how am I spending? What is my spending details here? I have spent 35% on food, 20% bills, 15% peer-to-peer transfer, 10% at shopping and 20% others. I can then get my smart statement regularly on e-mails as well. So that's the kind of experience that we are creating on PayZapp. I'm also going to take us through another one, which is -- can we go to the PPT now? So that's a sneak preview of PayZapp. I'm just now going to move on to the customer experience hub, which is what Parag spoke about in his conversation, which is a way to support a customer. A customer today can reach out to the bank through various means. It could be through a voice call, a mobile app, an e-mail, social care, WhatsApp, SMS, video chat. There are multiple ways in which a customer can reach out. what we are going to demonstrate here is when you call a phone banking line, which is 1800 number now available, what is the kind of experience our customers are going to get? [Presentation]

So what heard just now was the voice of a bot. This is a digital deflection. A call is coming in to get support from phone banking. The IVR is smart enough to speak to the customer and is able to serve the customer. We have seen that we've analyzed the calls that come to our call center and various complaints and queries that come. Most of these can be solved using technology today. There are complex queries and questions which will come, which still has to be handled with agents, but a lot of it can be handled using technology. And today, the bots are smart enough, if we can power it with the right kind of APIs to block a credit card, a debit card or issue a new card, those kind of things are possible. And this is one example of the capability that we are bringing in. The same capability will be available on text channels like WhatsApp or the new Tweet and complained. Again, the same bot is going to respond accordingly and is going to get in touch with the customer to solve the customer problem. This kind of digital deflection, we are seeing encouraging results, about 25% of the overall TAT is coming down. So if we had a human who was handling this as compared to a bot, we've already launched it at 2 of the channels, and we are seeing some encouraging results over there. A lot of e-mails that come today, earlier, somebody used to read that and say, okay, this is a credit card-related e-mail, it needs to go to the credit card support desk. This is a PL-related complaint, it needs to go to a PL desk. Now all that is being managed through a bot, which is able to sort the e-mails which are coming in and send it to the right desk. Of course, this is not 100% accurate. And there may be cases where the board is able to not capture the intent of the customer. In that case, human interventions are needed. But a large part of it is handling -- is being handled through bots today. We have seen encouraging results. AI, ML is also acting on the same set of things where bots are learning as well. The first 100,000 e-mails might be difficult to read, but the next 100,000 e-mails are easier to read because the bot is constantly reading and understanding some of these things. So that's the kind of customer care platform we are building. Sashi in the morning spoke about building a service-first organization. And here is a capability that we are bringing in to serve our customers across multiple channels. So after this, I'm going to show 1 more capability that we have today, which is around SmartHub. So what we saw on PayZapp was essentially on the issuing side, how our customers can link their credit card, debit card, UPI handle, et cetera, to make payments. This is a smart hub. So Parag spoke about creating a merchant ecosystem. We've already got active set of merchants, which are more than 2 million today. And these merchants have taken some time. We had to go to these merchants, open their current account, make them a merchant, onboard them, and now they are ready to accept. If we have to do the same to get to $20 million, then we have to hand a long tail of merchants. Imagine, if I'm a shopkeeper in a rural hinterland in India, how can I become a merchant very quickly with HDFC Bank? Now that kind of capability is available today with us on the new SmartHub. I want to just demonstrate how a small shopkeeper in any small town can easily become a merchant with HDFC Bank and start accepting payments from its customers and do a lot more. So let's imagine that I'm a merchant and I download this SmartHub app from the App Store. What can I do with it? I will choose a language here. Then I say I want to register, I choose my mobile number. Then I enter my PAN details. I agree to the terms and conditions I give the OTP that is coming on my mobile phone. My OTP gets verified. I'm setting an mPin for my new app so that I can use it again and again. The mPin is set regularly. I mean this is checking the eligibility for me, whether I can become a merchant or not, and it gives me terms and conditions, saying that I can accept payment, SMS. Is it visible now? I choose my account with HDFC Bank that I want to link it, where I want to accept money, then I choose the category of merchant I am, so I want to be -- I'm an apparel merchant. This is for MCC. I give my GSTN ID details, my e-mail ID, I disclose my annual turnover. And here, I say whether I'm helped by an HDFC Bank employee. As Parag mentioned, we have an assisted and an unassisted economy, both is running. So in case I'm helped by an HDFC Bank employee, I can choose this or if I'm not, I can switch it off. And then I accept the terms and conditions and complete it. Just by following this process, I have become a merchant who is active and ready to accept payment by any customer who comes into my store. So let's see what I can do with this. Now I've become a merchant who is live. I have the first customer walking in. I show my Bharat QR code to that customer and put down the mobile number of the customer, I say, I want to collect INR 1,000 and initiate the payment. Here is a QR code that wears on my phone that the customer is going to scan through her phone and make the payment immediately. Then I can go to the dashboard and see that I've received INR 1,000 of payment from my first customer who came in. My next customer comes in, takes the stuff and goes back home. Now I have to send a collect UPI instruction to my customer. So I'm doing that, I'm sending a INR 1,500 instruction to my customer to initiate a payment. This I sent through WhatsApp. My customer gets this message that she has to pay me INR 1,500. I go to the dashboard. I still see INR 1,000. This means my customer has not paid it yet. Then I see my recent transactions, I can see a green tick here, which was INR 1,000, which the customer paid. This is a yellow tick. So my customer who has received the instruction on WhatsApp has actually not paid yet. The moment that customer pays, it becomes green here. And it reflects in my app that I've got INR 2,500 collected from my customer. So this enables a small shopkeeper across the country to become a merchant immediately and accept money in any form from the customer. That is one. The second, it allows that shopkeeper to engage with the customer. Typically, a small karyana store will have 100 families in and around who are going to take the stuff, paid groceries back home, you need to collect money from those families. This allows the shopkeeper to collect all that kind of payments from -- coming from the customer. Not only this -- this app also enables me to do banking, and this is what we are going to share here. So let's say, I am a shopkeeper who is using this app, and I need loan here from HDFC Bank. How can I get a loan? I go to the app again. I see that these are the various options available from HDFC Bank. I've got INR 2 lakh to INR 15 lakh more than 1 year, I choose these options. And I say what are the loan options available for me as a shopkeeper? I can see a Dukandar Overdraft. I can see FlexiPay available, business loan, insta loan, various loan amounts are given. I choose one of the loans, let's say, Jumbo Loan and apply for it. The moment I click on that, I see a new form that appears here. This is, again, 100% digital inside the app on my handset. I can give my mobile number. I enter the OTP. It allows me to choose, do I want INR 8 lakh or do I want a little more or less? I choose the tenure here. It shows me how much is the EMI, what is the monthly rate of interest, what is the processing fee? Once I agree to the terms and conditions, this INR 8 lakh is transferred into my account instantly, and I get the loan here from HDFC Bank. So this Vyapar app allows me to actually grow my business as well. I can engage with my customers. I can accept payments and this is a bank in a box for me. I don't really need to go into a bank branch or talk to any bank officer. I can be in any part of the country, and this is available as long as I have connectivity. So this is another way on the acquiring side where our merchants can grow faster in partnership with HDFC Bank. So I'm going to just stop here with these 3 examples.

We'll just do a very quick ground of 1 or 2 questions, maximum, and then -- a mic in the middle, and then we'll take the one last question at the end, yes?

Yes. A couple of questions. When you're putting this aspiration to build this technology stack, what is the target you're benchmarking guest? Is it the equivalent of the best in fintech or the best bank? What is the aspirational level? And what is the time line for that aspiration level?

So first of all, what you are seeing here is not an aspiration. This is something, for example, SmartHub is already live in the market today. with few of the stores, we've not rolled it out across the country. It is available. What you saw on the sprinkler that is again available today for the 2 channels. We are doing the pilot in one of our phone banking centers in Jaipur. So some of these things are real and live. It's that we are testing it till we are thoroughly satisfied that it's going to work at the scale that we have and make it work. Now in terms of experience, our benchmark is consumer tech companies. It's not financial services, it's not fintech. When you get up in the morning, you don't want to go into a bank. You are used to dealing with technology in a certain manner, which is actually being propagated over the last so many years in consumer tech. When I watch Netflix, I know which movie I'm going into, if I pause the film, I can come back tomorrow again and it starts from there. So my consumer habit is being framed not just by fintechs or financial services or banks. It is being inculcated in me through various touch points of technology. And that is the kind of experience that we want to bring in. When you call a phone banking channel, do you really want a banker to pick up the phone and answer your query or you're okay that a bot answers that, I just gives you an OTP, authenticates you and blocks your card. Because in the end, you had called to block your credit card because you lost it. You want to reissue a card. You can just do that conversation and move on. So the kind of experience that we are building should be so seamless that it is not a chore for a customer. It is fun to interact and get some of these things done.

On this same -- under different axis on this, you want to benchmark in this consumer tech. Consumer tech companies do a great job of using whatever data they can get on customers to customize and solve problems. The banks sit on treasure trove of data. You know where -- which mobile operator I use, what is my monthly electricity bill because I paid electricity bill on your app. You know my -- whether I have how many kids because school fees gets paid. So there's treasure trove data what my salaries are, my home loans are, vehicle loans are. So where I eat, by the way, because your credit cards get swiped, what way do I shop. So how do you use this treasure trove data to take better actions because you have all the data sitting inside the bank, right, unlike other platforms? How do you use this data to take -- offer better products to customers? Because even today I see, you might know everything about me. But in fact, my current actions are taken by a CIBIL score. Despite the fact that I may have a 15-year history with you as a bank customer.

So I'll respond to the question because you asked other questions on [indiscernible]. Banks had a very poor data strategy, okay? Why? Because a lot of them chase monolithic data warehouses, okay, enterprise projects, Netis, Teradata of the world, centrally run -- IT running, trying to put all the data together, it hasn't worked. Let's be honest, every single bank globally, make a name. What happened with big techs? The way they use the data was very different. Basically, they use the compute of new technology like Spark, Hadoop came in actually left or Spark is like the leap factor and then the cloud database has started coming in. So the entire data strategy moved from an on-prem monolithic clunky stuff to a very agile, scalable cloud data lake. That's -- the first is to facilitate. So the bank is already, in fact, we're moving away from our centralized data warehouse thought process to a cloud data lake. We are actually working with Microsoft, we're going Azure data lake, actually. So that doesn't -- that's still consolidating the data. The second is you actually overlay with, what I call, every API has to be tagged along with the data API because that's where the decision points come. So if you're fetching a account query balanced and there's a data API equivalent to give an insight on that, then you make it much more powerful for a cross-sell at every point of time. So the APIfication of the data platform is the second part of the journey. And then comes the third part which is the Holy Grail, which is when you can apply the AIML on top of it. Where are we in this journey? We just started the movement from a classical core data-driven -- centralized data-driven to a cloud, and there's a lot of work happening. And the way we're looking at this -- each of these data points are federated lakes for the businesses to really leverage because other than centralizing everything and running, and that's been the problem actually. So there is a lot of work that's happening in this area. It's a project that's -- a long-standing project, but you'll start seeing MVPs coming out actually much faster. In fact, we're already doing something very interesting called Spark beyond actually on the marketing side, which is an interesting cloud-enabled data analytics platform. where the cross-sell analytics is coming through, but a lot of work to do, just to answer the question. And fundamentally, the foundation has already started being built. And clearly moving away from classical data thought process to a new age data sent process. And you're right, this is a trove of data to be used. The lakes will come, the business ownership will come, the APR data will come and then the AIML will start firing on that. So it's still a long way to go on that.

In the morning session, you saw Sashi and Srini talking about 77 million preapproved customer base and the offers that we have today. With 70 million customers, when we mine their data, we have got 77 million product offers, which are available. So technically, just by looking at our own data, we can create another HDFC Bank, out of the products that we can target and personalize. What you saw is an application, which works on APIs, but analytics is a big part of it and app, APIs and analytics together are going to do that magic. We are good under -- this journey is underway, but you will see some of this personalization happening now.

In fact, some of the thought process on the digital banking also comes from that. For example, a lot of work today moving on headless CRMs right? No longer people log into service CRMs or sales CRMs because the analytics behind to do that, I don't know how many of you use outlook in Viva sales, Viva today -- I don't know if anybody is using out here on your daily outlooks, right? I mean it just kind of organizes and give, that's the kind of intelligence data [indiscernible]. In fact, we are planning to build as a part of the digital banking unit. So imagine the sales guys actually, why should they log in and do 4 clicks to get a data point. Your AI ML engine can tell you, these are the top 3 customers to call. This is the relationship value of that particular 4 customers. And this is probably where you also focus your sales on, right? It's an intuitive thing that can come from the back end. Not just that, in fact, it's moved much beyond today. If we are working with Microsoft and a very interesting project where you get a third person. Suppose the RM calls up the customer and assume you need to convert those nodes, right, because it's a conversation in demo. You have bots today sitting in between listening to the conversation, converting it and then making insights and then pushing it to your outlook or teams kind of stuff rather than kind of you logging into the CRM. In fact, our entire digital bank strategy would actually emanate from that. So when an HDFC customer -- a limited customer walks into a bank, I can actually take a consent API, and I can look at the 360 of the group companies, that's where we would want to actually go as a directional thing. The part of that strategy starts with building the data lake and then like getting the AP -- data API architecture, right, and then comes the AIML overlay on that. That's the direction that we plan to go. It's foundational. It's a lot of work to be done. I definitely want to qualify that it's a beginning. In fact, we just signed up with Microsoft on a very large enterprise data lake structure and moving all our data to the Azure cloud, actually.

Just in the interest of time, that was the last, I mean, question. Thanks for your, I mean, patients. Thanks, Anjani, Parag and Ramesh as well. If you still have the energy, we can take some of this offline. I'll just call Unmesh. I'll just request Unmesh or Varun, if you could just step in for a very quick vote of thanks. Thanks.