Indian bank HDFC (Housing Development Finance Corporation) has announced plans to open eight additional branches solely dedicated to microfinance before December 2008. The expansion would increase its microfinance branch offices from four to twelve. HDFC first ventured into microfinance in February 2007 with the launch of its microfinance branch, as reported by MicroCapital. When designing its microfinance services, the bank modeled lending after India’s self-help group linkage model. Its microfinance product suite includes savings, credit, insurance, and remittances.
HDFC’s recent market entry and rapid scaling-up of operations reflects a general recognition by prominent Indian banks that microfinance is a financially sustainable if not lucrative enterprise. Other recent market entrants include banking giants UTI and ICICI, holding total assets of USD 1.2 billion and RUP 3.9 trillion (USD 92.7 billion) respectively. Further details on this movement can be found in the MicroCapital story Commercial Banks in India Delve into Microfinance Investments.
In addition to managing its own microfinance operation, HDFC holds investments in several microfinance institutions. As MicroCapital reports, during 2007 HDFC made a USD 1.2 million loan to Indian microfinance institution Cashpor, and obtained an undisclosed equity stake in commercial microlending giant SKS Microfinance.
Originally founded in 1997, HDFC held USD 1.3 billion in total assets as of December 2007. Calculated from its financial statements, the bank has a debt-equity ratio of 107.83 percent and return on assets of 0.84 percent.
By Ryan Benson, Research Assistant
MICROCAPITAL STORY: Indian Microfinance Institution Cashpor Receives a USD 1.16m Loan from HDFC Bank and a USD 111,500 Guarantee from the Grameen Foundation, by Lisa Kalajian, April 20, 2007.
MICROCAPITAL STORY: Commercial Banks in India Delve into Microfinance Investments, September 1, 2006.
MICROCAPITAL STORY: Heavyweight Indian Bank Housing Development Finance Corporation (HDFC) Begins Microfinance Operations, by Lisa Kalajian, February 9, 2007.
MICROCAPITAL STORY: SKS Microfinance Raises $37 Million in Equity Sale, by Jake Keller, February 4, 2008.
Business Standard: HDFC to open 8 micro-finance branches, July 17, 2008.
Google Finance: HDFC Profile
UTI: Investor Relations
MF Gateway: SHG Model
Reuters: ICICI 2007 Balance Sheet
Yahoo: Currency Converter
- MICROCAPITAL BRIEF: Thailand’s Group Lease Acquires 30% Equity Stake in Sri Lanka’s Commercial Credit and Finance (CCF) for $70m
- MICROCAPITAL BRIEF: India’s Bharat Sanchar Nigam Limited (BSNL), Mobikwik Unveil Mobile Wallet
- MICROCAPITAL BRIEF: India’s Suryoday Microfinance Raises $15m in Equity as Aavishkaar Goodwell Exits
- MICROCAPITAL BRIEF: Fidelity Bank Ghana Borrows $54m for SME Lending from FMO, BIO, Symbiotics, Oikocredit, Incofin
- MICROCAPITAL BRIEF: IFC, KfW, OeEB Renew $310m in Commitments to Microfinance Enhancement Facility (MEF)