India’s Top Banks Turn Cautious! HDFC & ICICI Avoid Risky Loans Despite Festive Boom

In the second quarter of this financial year, the two largest private sector banks in India – HDFC Bank and ICICI Bank, seemed to be cautious while providing unsecured loans.

HDFC Bank’s total loan book grew 7.4% year-on-year and 2.2% quarter-on-quarter, reaching ₹15.55 lakh crore, according to Managing Director and CEO Sashidhar Jagdishan.

During the bank’s earnings call, Jagdishan made it clear that HDFC Bank would not relax its credit standards to chase higher market share in unsecured loans.

“We will not dilute our credit standards for underwriting,” he said, emphasising the bank’s focus on maintaining lending quality.

The bank also stayed careful with credit card lending, being “circumspect on increasing credit lines for revolvers” — borrowers who carry forward balances on their cards. HDFC Bank further restricted certain spending categories, avoiding large e-commerce purchases even during the festive season to manage risk exposure.

In the home loan segment, the management said HDFC Bank decided not to cut interest rates aggressively to match competitors. The bank followed its policy of not chasing market share at the cost of profitability.

ICICI Bank also reported a steady rise in its retail lending portfolio, which now makes up 52.1% of its total loan book. Retail loans grew 6.6% year-on-year and 2.6% quarter-on-quarter, reaching ₹7.39 lakh crore in Q2.

Within retail loans:

• Mortgages (home loans), which form 62% of retail loans, grew 9.9%.
• Personal loans declined 0.7%.
• Credit card outstandings increased 6.4%.
• Loans against shares dropped 11%.

The bank’s management said ICICI Bank remains committed to risk-calibrated, profitable, and sustainable growth. Corrective steps taken in the unsecured loan segment between 2020 and 2023 have strengthened the overall portfolio, allowing the bank to lend more cautiously.

The retail portfolio, including non-fund-based loans, now accounts for 42.9% of ICICI Bank’s total advances. The bank noted that sequential growth across retail segments has picked up pace in Q2, and it remains optimistic about future growth.

Both banks’ approach reflects a broader trend in India’s banking sector — focusing on asset quality and risk management rather than aggressive growth, especially in unsecured lending.

Click here to download Financial Results of Banks for Sep Quarters