Newsmaker: Meet HDFC's Kaizad Bharucha, the highest earning banker of FY22

Kaizad Bharucha, executive director of HDFC Bank, who recently emerged as the highest earning banker in FY22, joined the private sector lender in 1995 – a year after it received regulatory approval to start the banking business. In the first few years, HDFC Bank was mostly engaged in wholesale banking. After about five years, the lender forayed into retail banking which became -- and remains -- the bank’s driving force.
 
But through the years, wholesale banking remained a steady performer, though under the shadow of credit cards and personal loans. The person who was driving the corporate lending business was Bharucha (57). By the start of the previous decade when the country’s public sector lenders started to pile up bad loans and slow lending to the corporate sector, HDFC Bank steadily increased its market share.

 
The Covid-19 pandemic turned out to be watershed years for the lender’s wholesale lending business, growing this wholesale book much faster than retail (the bank’s cautious approach towards retail lending during the pandemic also played a part). Retail loans as a proportion of total loans fell from 53 per cent in January-March of 2021 to 39 per cent in the first quarter of the current financial year. Corporate loans formed the other half of the pie (the bank recently divided its corporate loan pie into commercial and rural banking.)
 

Investors expressed some concern at the increase in the share of corporate loans, since such loans are not seen as margin accretive compared to retail. But HDFC Bank held the line; it had maintained a net interest margin of between 4.0 and 4.4 per cent and the growth in corporate loans did not impact it. “It [corporate lending] is not just pure lending, it is not in our philosophy,” Bharucha told the analysts a couple of months ago when they raised apprehension about margins.

 
Instead, he explained that there is a whole range of products and services that the bank offers to a company – from transaction banking to cash management to foreign exchange services and most importantly salary accounts. HDFC Bank is, in fact, the country’s largest “salary banker”. While those services earned the bank fee income, the salary account provided the bank with low-cost deposits [current account and savings account] – a key factor for its steady margins.
 
“The corporate business is a feeder to the retail business,” HDFC Bank’s MD & CEO Sashidhar Jagdishan had told analysts. It ensured that in the two years when the bank slowed down retail, and stepped-up wholesale lending, it continued to maintain a return on assets at 2 per cent for the bank.

 
More importantly, HDFC Bank did not make the same mistake as public sector banks (and some large private banks too) with indiscriminate corporate lending. Given that risk management was Bharucha’s forte before he took up wholesale lending, robust risk assessments were conducted before every corporate loan was sanctioned, ensuring that a large number of such loans didn't turn sour. HDFC Bank continued to report best-in-class asset quality even when the share of wholesale loans in its portfolio went up. For example, when banks were making a beeline to fund thermal power projects, HDFC Bank ensured loans were given to firms that had a coal linkage in place. The companies to which HDFC Bank extends loans grow 15-20 per cent every year – testimony to the quality of the corporate loan book.

 
No surprise, then, that Bharucha emerged as the highest earning banker for 2021-22, earning Rs 10.64 crore as remuneration in FY22, including Rs 4.46 crore as performance bonus. The bonus was earned in the years 2017-18 to 2020-21, which was partly paid in 2021-22.
 
Bharucha has over 35 years of experience and his wholesale banking responsibility covers a wide ambit -- from corporate banking, PSUs, to capital & commodities markets, financial institutions, custody, and mutual funds. Before joining HDFC Bank, he worked in SBI Commercial and International Bank in various areas including trade finance and corporate banking.
 

A squash player who represented the country at the junior level, Bharucha, who holds a Bachelor of Commerce degree from the University of Mumbai, has a reputation for meticulousness. He is always prepared ahead of meetings, his colleagues say, and expects others to be equally prepared. The fact that he is often the last person to leave the office is testimony to his vigilance. All of this is, however, leavened by a sense of humour that is frequently deployed to lighten up a tense moment in a serious discussion.