HDFC Bank seeks RBI nod to up market exposure

HDFC Bank has sought the Reserve Bank of India's (RBI) permission to increase its exposure to the capital market.

"The bank's market exposure is within the 5 per cent norm laid down by the Reserve Bank of India (RBI) but we have applied to the RBI for reviewing the limit after the Union Budget announcement," Aditya Puri, managing director, said after inaugurating the bank's 348th branch in Mumbai.

Finance minister P Chidambaram in his budget has proposed that banks with good risk handling capability and expertise may be allowed to go for higher market exposure.

HDFC Bank and ICICI Bank, according to government sources, are likely to get the go-ahead based on the new criteria.

Puri said the bank expects a 25 per cent to 30 per cent growth in earnings in three years and a 20-25 per cent growth in balance sheet during the same period. The bank has identified small and medium enterprises as its thrust area for business opportunity, he added.

The bank also sees huge potential in agriculture lending and is working closely with commodity exchanges to explore opportunities, Puri said. He, however, clarified that the government has put no pressure on banks to step up lending to agricultural sector and even on interest rates.

HDFC Bank has around 80 branches in semi-urban and rural areas across the country and is scheduled to open a branch in Latur this week. The bank plans to open around 100 branches taking the total to over 400 branches, Puri added.