HDFC Bank’s loans to corporate giant Reliance Industries is within regulatory limits and the bank is comfortable with the loan exposure, said Managing Director Aditya Puri at the bank’s annual general meeting (AGM).
Without disclosing the exact loan amount while answering a shareholder’s query on the recent media reports that the bank had “exceeded the single-borrower limits prescribed by the Reserve Bank of India”, Puri said, “The Reliance exposure is within RBI limits and we are comfortable with it.”
The central bank has fixed the credit exposure ceiling of a bank at 15 per cent in case of a single borrower and at 40 per cent in case of a borrower group. This can be further enhanced by 5 per cent of capital funds in exceptional circumstances, with board approval.
Talking about the first quarter results, Puri said there were slippages largely in the SME (small and medium enterprises) and agriculture businesses but they were within limits and the bank is not showing any signs of stress despite the increase in provisions during the quarter. “Large portions of the provisions are floating provisions, which are prudent to provide when times are good but specific provisions have not increased much,” Puri told newspersons on the sidelines of the AGM.
On interest rates, Puri said: “We believe that interest rates should go down between now and the year-end, maybe by around 50-75 basis points, if not more...”