Despite admitting that deposit growth has fallen short of expectations, the chief of the country’s largest private sector bank is confident that funding would not be an issue to drive brisk loan growth in the next financial year. 

“We did fall short (deposit growth) of our strong ambitions but we are confident that continuous focus on our strengths will bring the expected outcomes,” said HDFC Bank managing director and CEO Sashidhar Jagdishan.

HDFC Bank is targeting loan growth higher by at least 100 basis points than the anticipated 13% for the banking system in the next fiscal. The lender is also looking to bring down its credit-to-deposit (CD) ratio, which stood at 98.7% as of 31 December 2025, to a range between 85-90% by FY27. 

The Mumbai-based bank has been seeking to ramp up its deposit base after a merger with its parent HDFC two years ago, which had lifted the CD ratio to an uncomfortable level of 110%. 

For the three months to end-December, HDFC Bank’s deposits grew 11.6% to Rs 28.60 lakh crore from Rs 25.64 lakh crore a year ago. On a sequential basis, the rise was by 2.1% from Rs 28.02 lakh crore. 

Gross advances, on the other hand, stood at Rs 28.45 lakh crore, up 11.9% year-on-year and 2.7% on quarter. 

Jagdishan believes the credit growth buildup has been “extremely encouraging” and balanced across customer segments. According to him, the easing rate cycle and benign credit has provided catalysts for growth. The cash reserve ratio (CRR) release, as a result of the Reserve Bank of India’s relaxation, has also enabled credit deployment slightly ahead of the bank’s expectations.

“We are very optimistic about outpacing loan growth in the coming year in FY27. Liquidity and benign credit costs provides us a lot of runway to growth,” he said.

Jagdishan is not unduly worried about deposits trailing behind credit growth, even as there is a thrust to maintain interest rate discipline.

“The foundations are in place to build deposits to fund loan growth. We continue to expand our customer base. We are now intensifying customer engagement primarily and largely focused on granular mobilisations. We are aligning pricing with segmented approach, and we shall see that in coming quarters as well,” the CEO said.

On the CD front, he said that the effort to lower down the ratio would continue as it is “an important focus for sustainable profitability” and “it has significantly dropped since the merger to March 2025”. The speed of CD ratio movement would, however, depend on how the bank is able to provide funding in the system at rational rates.

“Under the current scenario, we don't think that we shall be constrained by the CD ratio. To reiterate, we're confident that it will be on a downward glide path. I would also like to reiterate that we shall meet the glide path that we had indicated earlier in terms of growth, our top-line growth which is in line with the system this financial year and faster than the system in the next financial year,” Jagdishan told analysts in a post-earnings call.

The bank has guided to a wide target range for CD ratio, from 92-96% in the current financial year to 85-90% in FY27. Prior to the merger, the CD ratio was operating in the 87-88% range.

A significant drop in the CD ratio would require a strong movement on the deposit growth front. With the RBI moving to an interest-rate lowering cycle, HDFC Bank faces the challenge of growing deposits at a faster pace than loans.

The bank currently has an over 11% market share in deposits and a little more than 6% of the system’s branches. About 50% of its total 9,616 branches contribute around 20% of the bank’s incremental deposits. The branch expansion over the last five years is expected to settle in to accelerate the bank’s total business.

The thrust in FY27 would be to prioritise and participate in credit growth from a rate-easing cycle. “Credit, which has always been our USP, remains best in class, allowing us to deliver stable returns as we pivot to the next stage of growth,” said Jagdishan. 

The bank’s asset quality has remained stable, with gross non-performing asset (NPA) unchanged at 1.2% in the last two quarters ending December 2025. Similarly, net NPA was flat at 0.4%.

“The bank’s asset quality continues to be pristine and as we see it, there is no particular segment which is showing any major signs of concern,” said Jagdishan.

HDFC Bank, which posted an 11.5% year-on-year rise in net profit to Rs 18,654 crore during the December quarter, is ready to push the pedal harder on growth. 

“I think now we are opening up, the engine is opening up and you will start to see this kind of consistency in the trajectory that we have laid out for ourselves,” Jagdishan summed up.