HDFC MD on banking frauds: ‘Not a single bank run in country’

The Indian Express
April 05, 2018

The HDFC MD said, "The faith of the common Indian in the Indian banking system is so great that despite all these things we have not heard of a single person saying I will take the money out of the system. I think that is a very positive aspect.

Despite several incidents of banking frauds that have come to light in the recent past, there has not been a single bank run in the country, Renu Sud Karnad, Managing Director, HDFC Ltd said Wednesday.

Claiming that the entire banking system in India should not be blamed for the incidences of frauds, Karnad who was at MICA for a convocation ceremony said, “Whatever has happened today in the public sector banking system, we haven’t had a run on in a single bank. That is what we need to be proud of in some ways. Despite all the problems we are having in the banking segment — we all know things need to change — but the faith of the common Indian in the Indian banking system is so great that despite all these things we have not heard of a single person saying I will take the money out of the system. I think that is a very positive aspect.”

“In other countries if there is a problem in a bank, people suddenly go to withdraw their money. Such a thing has not happened. That is the strength of India and banking system.” Karnad said during an interaction with mediapersons before the convocation.

Karnad pointed out the deposits in the banking system has continued to grow despite banking frauds coming to light. “These things (frauds) should not happen. These are not good things. There has been a lacuna somewhere. But the entire banking system should not be blamed for these things,” she said without naming any of the entities like Punjab National Bank, State Bank of India, Union Bank of India and IDBI where alleged frauds have been reported during this calendar year.

According to the HDFC official, the private sector system is more accountable and more performance oriented than the public sector banks. “On the other side, public sector banks needs more capital and there is an opportunity for some of it to be privatised. I really think that may be in the next five years of the Mr Modi’s government you will see some of these things happen,” she said.

Later in a written speech circulated among mediapersons, Karnad stated that HDFC had one of the “best NPA figures globally.” Narrating her experience at the bank, she said, “A balanced approach to business is the hallmark of great organisations. Indiscriminate lending sans realising the impact on the quality of the portfolio would not auger well for any housing finance company’s balance sheet. I take pride in sharing that this balanced approach has ensured that HDFC has been recording healthy year-on-year growth for the last 40 years with one of the best NPA figures globally.”

She also did not miss on emphasising the “culture” that exists within HDFC. “The culture of HDFC is the most important ingredient in the concoction of success. This culture in addition to inducing learning fosters an environment which promotes empowerment of employees and sense of belonging which reflects in the performance and profitability per employee. The informal interactions with the senior management is the most important tool of transferring wisdom and values to the younger generation,” Karnad added.

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