FY 2024-25 was a year of disciplined execution and balanced growth,
underscoring the strength of our strategy and the resilience of our model.
As we reflect on the past year, I am filled with deep appreciation for
how our growth has not been a solitary pursuit but a collective outcome. An outcome shaped
by the commitment of our people, the strength of our processes, the relevance of our
products and the depth of our partnerships. They are interwoven into our culture, defining
how we serve customers, manage risk, embrace innovation and build for the long term.
Together, these elements have enabled us to evolve into one of India's most trusted
retail-focussed NBFCs, even as we step confidently into a future filled with promise.
Macro View: Resilience Amid Global Uncertainty
The global economy entered 2025 navigating a dynamic and uncertain
landscape. While growth remained steady at 3.3% in CY 2024, rising geopolitical tensions
and a sharp shift in trade policy implemented by sweeping tariff measures, prompting
retaliatory actions from major nations. These developments pushed effective tariff rates
to record highs, delivering a significant shock to global trade and macroeconomic
stability.
The abrupt and unpredictable nature of these changes exacerbated market
volatility, undermined the reliability of traditional forecasting models and introduced
fresh challenges for both policymakers and businesses. Against this backdrop, global
headline inflation is now expected to moderate more slowly, easing to 4.3% in CY 2025 and
3.6% in CY 2026, amid persistently elevated price levels in several advanced economies.
As the global landscape continues to evolve, adaptability and enhanced
regional cooperation will be critical in sustaining economic growth and mitigating
emerging risks.
Riding on India's Growth Story
India continues to reinforce its position as the world's
fastest-growing large economy, with GDP growth projected at a steady 6.7% over the next
two fiscal years. This momentum is underpinned by strong domestic demand, policy
continuity and the rapid formalisation of the economy. A strong digital public
infrastructure, a young and productive workforce and the growing penetration of organised
credit are creating a solid foundation for long-term, broad-based growth.
More importantly, credit is reaching underserved geographies and
firsttime borrowers. This is helping widen the base of financial participation with 32% of
new-to-credit borrowers coming from rural areas as of December 2024, reflecting deeper
inclusion across regions and demographics. This convergence of macroeconomic momentum,
digital infrastructure and financial formalisation places India on a unique growth
trajectory which is broad-based, inclusive and sustainable.
Regulatory Evolution and Technology as a Driver
The NBFC sector has undergone a pivotal transformation with the
implementation of the RBI's Scale- Based Regulation (SBR) framework, tighter governance
norms and greater alignment with banking standards. These developments have materially
raised the bar on compliance, risk management and customer centricity. Our classification
under the Upper
Layer of the SBR has helped us further strengthen board oversight,
strengthen internal controls and upgrade our risk and audit architecture. Strong
regulatory guidance has catalysed a transformation in the NBFC space, reflected in
better-performing portfolios and more diversified funding strategies. We see this evolving
regulatory architecture as a catalyst for building institutional strength. It has
encouraged us to take a sharper view of balance sheet durability, governance discipline
and stakeholder alignment. These shifts are reinforcing our foundation for prudent,
scalable growth.
Year in Review: Performance and Progress
FY 2024-25 was a year of disciplined execution and balanced growth,
underscoring the strength of our strategy and the resilience of our model. Buoyant demand,
particularly from MSMEs and retail borrowers, led to a disbursement increase of about 8.6%
year-on-year with about 3.7 Mn new customers added during the year. We recorded a net
profit of ' 2,176 Crore while maintaining a Gross Stage 3 (GS3) asset ratio of 2.26%. This
performance reflects the strength of our underwriting, which continues to drive consistent
outcomes. It is also supported by our predominantly secured loan portfolio, which offers
greater protection in volatile conditions and enhances long term asset quality. Our
phygital model comprising a network of 1,771 branches and digital infrastructure continues
to resonate across segments and makes us well-positioned for the next phase of our
journey.
Strengthening Our Foundation for the Road Ahead
Our funding strategy remains conservative and well-calibrated to
support growth while managing risk. We continue to maintain a comfortable liquidity buffer
and a positive ALM profile across buckets. The same is reflected in our Liquidity Coverage
Ratio (LCR) of 161.34%, well above the regulatory requirement, ensuring resilience under
stressed conditions. Our ability to raise funds at competitive rates underlines our strong
credit profile, supported by high-quality assets and prudent provisioning.
Strategic Direction: Sharpening the Focus
As we look to the future, HDBFS stands on a foundation of scale,
prudence and consistency. Our strength lies in our balanced loan portfolio, diversified
presence across urban and semi-urban geographies and strong underwriting practices. Our
expansion efforts will continue to target Tier 2 and Tier 3 cities, where significant
credit gaps persist and demand remains high. These regions represent untapped potential
and by focussing on them, we can meet the rising aspirations of underserved customers.
Technology remains at the core of our growth strategy. We are investing
in digital platforms that enhance every stage of the customer lifecycle from acquisition
and underwriting to servicing. This omni-channel approach has already led to over 97% of
our loans being digitally originated, improving both speed and efficiency. By streamlining
our operations, we are not only enhancing the customer experience but also increasing our
operational efficiency.
Our balance sheet remains strong, with a CRAR of 19.22%. Additionally,
our diversified borrowing profile ensures that we have the flexibility to navigate the
changing macroeconomic environment.
We have continued to focus on strengthening the internal audit function
as well as various risk management areas. This has helped us ensure that our journey ahead
is smooth and calibrated.
A Word of Thanks
On behalf of the Board, I extend my deepest gratitude to our customers,
employees, regulators, promoters and stakeholders for their continued trust and belief in
our vision. Every milestone we achieve is built on collective effort and shared
conviction. As we step into a new chapter, we remain committed to growth that is
responsible in spirit, deliberate in execution and deeply anchored in purpose, driven by
our people and guided by the values that define us.
Warm regards, |
Arijit Basu |
Chairman |