Private lender HDFC Bank is treading into a territory it avoided till now – unsecured personal loans in 10 seconds for even those who do not have an account with the bank, said head of retail assets Arvind Kapil.

As competition intensifies and data availability improves, the bank is widening its offers to self-employed who were not seen as creditworthy. The bank is looking to increase loan exposure to self-employed customers who form only 5% of the total market.

“HDFC Bank has been a paradigm pioneer in 10-second loans for existing customers. We’ve been able to successfully deliver this over the past six years and having created service delight for our existing customers, we plan to introduce the product to the broader open market for personal loans by year-end,” said Kapil.

The private lender has 12 million pre-approved loan customers across products. It has set up an infrastructure base across 650 districts in India to disburse unsecured loans.

Kapil, who handles retail assets of more than ₹5.6 lakh crore across various categories, also has plans to target the self-employed customer base and scale it up further. Overall loan penetration in the self-employed segment of the market is just 5% as per HDFC Bank management.

At the end of June 2022, personal loans contributed the largest share in retail loans at ₹1.48 lakh crore and 10-second loans contributed the largest share.

With the bank receiving conditional approval from the Reserve Bank of India on the merger with parent HDFC, the bank is firming up plans to grow its mortgage book. It has stated that the merger could be consummated by September 2023.

As per a Macquarie report, HDFC Bank has around 12 million pre-approved loans, which will be used to cross-sell mortgages. Currently, mortgages are done in 440 districts which will be scaled up further.

Mortgage lender HDFC does only around 20% of their overall loans to self-employed. HDFC Bank’s loan against property (LAP) book alone is 30% more than HDFC’s self-employed housing loans, the report said.

“The point here is that HDFC Bank does have a better ability to underwrite loans to self-employed customers compared to HDFC Ltd and intends to scale this up further. Overall loan penetration in the self-employed segment of the market is just 5% as per HDFC Bank management. Delinquency trends in the LAP book are half of their private sector peers,” Macquarie said.

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