SLAC Mauritius offloads enitre HDFC Bank stake

Foreign institutional investor (FII) SLAC Mauritius Investments has pared its entire stake in HDFC Bank in the open market.

SLAC held close to 4 per cent in the bank which was offloaded in the open market on June 30. Total FII holding in the bank, as of March 2005, stood at 31.71 per cent.

Meanwhile, the bank has decided to enhance its exposure to capital markets to 8 per cent against the norm of 5 per cent for all other banks, following the central bank's approval.

"RBI has put a cap of 5 per cent of a bank's advances for taking exposure on the capital markets. We had been utilising this limit almost to its entirety in the past. Our overall experience on capital market exposure has been highly satisfactory and with such track acceded we requested RBI for giving us a special dispensation by raising the cap. RBI acceded to our request and allowed us a eight per cent cap on capital market exposure," said Jagdish Capoor, chairman.

Capoor told reporters at the sidelines of a banking conclave organised by Ficci that the bank's earnings was expected to grow at 25 to 30 per cent for the next three years. He said the thrust areas would include lending to small- and medium-sized businesses and the rural sector.

"The annual growth in earnings is expected to be 25-30 per cent for three years, while the balance sheet size is likely to grow by 20-25 per cent The bank plans to increase its network to 500 branches by the end of this fiscal. Its card business is also slated to touch two million, while its net receivables was expected to touch Rs 1,000 crore," he said.

The bank is also seriously considering the possibility of launching a non-banking financial outfit that would primarily concentrate on fund-based activities.

"Being a bank there are certain fee based activities for which we need to adhere to stringent RBI guidelines, but for an NBFC these would be easier and vice versa. We are looking at the pros and cons of floating a NBFC fund and the idea is to be put in the form of a project proposal and placed at the board," Capoor said.

"There are opportunities that would be easier to avail if we are in the NBFC domain which we would like to explore, now that Reserve bank of India (RBI) has allowed bank's to float non-banking financial outfits," he explained.

Asked what kind of activities HDFC was looking at through its subsidiary Capoor said, "It would primarily be fund-based activities that would reap the benefits the bank cannot."