We had a vision that we will be a world class Indian bank: Aditya Puri – The Economic Times

Clipped from: https://economictimes.indiatimes.com/industry/banking/finance/banking/we-had-a-vision-that-we-will-be-a-world-class-indian-bank/articleshow/81538208.cms

Synopsis–Puri, who gets the ET Award for Lifetime Achievement, tells that while he helmed the lender, a team focused on common goals and driven by a set of common values helped build the institution that has emerged as gold standard in prudential banking.

When Aditya Puri sacrificed a promising global career at Citibank nearly three decades ago to head HDFC Bank, his decision was likened to a big gamble where risks seemingly outweighed potential rewards. But when Puri stepped down after leading the bank for 26 years, it was more valuable than all the government-owned banks put together. How did he manage to achieve what he did? Puri, who gets the ET Award for Lifetime Achievement, tells Saloni Shukla and MC Govardhana Rangan that while he helmed the lender, a team focused on common goals and driven by a set of common values helped build the institution that has emerged as gold standard in prudential banking. Edited excerpts:

You built an institution like no other. As you started from the scratch, what was the cornerstone on which you built it?
When we are thinking of such a large institution, nobody can build it alone; the whole team has to think on the same lines. We looked at the opportunity; public sector banks had distribution while the foreign banks had products, service and technology. So, we said if we can bring these two together and create a bank that has characteristics of both, we will be a winner. Then we started building a team – we recruited Paresh Sukthankar, CN Ram, Harish Engineer, Sashi Jagdishan, Bharat Shah – a whole lot of people. This was based on the understanding that they had the same values. We all took huge salary cuts and the only way we would have made money was if the bank did well.

What is this ‘we’ philosophy that you mention about?
I told them upfront that you are all brilliant guys but I only want to see how your brilliance results in a better product and service for the customer. It’s very important to have team work, otherwise I will end up proving I know better than everybody else and that won’t get us anywhere. We were not looking at superstars… we were looking at creating a superstar institution. My role as first among the equals was to make sure people follow this.

How did you ensure that a team of brilliant people delivered without conflicts?
I had to walk the talk; if I say I know more than all of them, then what’s the point of hiring such brilliant people. A lot of the ideas did not come from me, a lot of the ideas didn’t come from the senior management team…, the guy on the ground gave us some of the best ideas. Our vision has to go across to everybody in the bank, even a branch manager was empowered to give suggestions and we would alter the whole thing.

As institutions grow, the complexity grows as well. How do you handle it?
We were very open to ideas. We never implemented a single idea without speaking to the people at the ground level. We wanted to be customer centric, the technology experience should be frictionless; we should have fairness, transparency and integrity. In 26 years, never once have I said “loan de do” (give them a loan). I would say here is an opportunity, examine it. If there were major differences, then the majority decision prevailed – not mine.

We Had a Vision that We Will be a World Class Indian Bank


You were one of the earliest bankers to talk about technology. How did you harness technology?

We didn’t want customers to come to us just because we were different but because we were giving them a superior product. When CN Ram was coming from Bank of America he had examined what the future of banking would look like, but he found it very difficult to convince his people in the US. When he came here and explained it to me, I bought his vision. Similarly, I had my ideas. Some were accepted, and some were not accepted. But within the overall framework we had a vision that we will be a world class Indian bank and among the top three banks in the country.

When the move toward digital happened, you were not happy. How did you catch up?
There came a time where everyone was saying that FinTechs would replace banks. I spoke to my team and said that let’s see if we are missing the revolution, or are we getting scared unnecessarily. So I went to the Silicon Valley to get a glimpse of what FinTech was all about. They were talking about loans, payments, shopping, artificial intelligence, etc. They were doing this all on the OTT applications which rode on the top of a bank network. We found that they were riding on our bank to provide a better product to the customer. So we decided we needed a transformation. Change is not easy; 90% change fails. When you are at the cutting edge and moving to futuristic systems you are bound to face some snags along the way. These snags can happen with anyone. Presuming that with technology there would never be a mistake like it was there in the physical world is wrong. As long as your base systems are fine (that is), and I can categorically tell you our (HDFC Bank’s) base systems are absolutely fine.

Was it easy growing HDFC Bank because the market was not developed? Can you create another HDFC Bank?

It is much easier today. We are leaders in the physical space, now we are converting it to digital and aiming for scale in semi-urban and rural India where 60% of India lives. Prime Minister Modi is rightly focusing there. If they get infrastructure, credit and medical facilities, we would have built a middle class that we have in the urban centres. Who dominates that space? HDFC Bank. With digital banking we gained market share even during Covid. We are big in the SME sector. We have got into project lending as well because we understand it much better now.

RBI is once again talking about bank licences. Is it a good idea to allow more players?
The credit deposit ratio for the country is very less. There is paucity of credit in this country. In semi-urban and rural India, availability of credit is dismal. There is a shortage of supply – not demand – in financial services. We first tried with the public sector. Then we tried with esteemed individuals. Now we are debating whether it should be opened for corporates. Why? Multiple corporates have got licences in the past. Private equity funds have been allowed to hold majority stakes. All of this has happened before. The key is if we want to reach that $5 trillion economy, then we have to create that middle class in semi urban and rural and make sure that the middle level in the country gets credit. And we have to do that quickly. Large corporates with integrity, if you are ok with them, give them licences quickly with proper supervision. Then there will be no issue. This is the crying need of the day.

The government is now talking about privatising a few PSU banks. If you were the CEO of a bank, would you look at them?

I would definitely look at it. One concern would be how to handle the union. In Malaysia, they gave stock options to employees. They are working happily. Something like that could be considered. The other concern is what price and value you are willing to give. You get a great franchise, you get great distribution, you get customers … this is the same strategy on which we made our acquisitions.

The RBI is looking at a new umbrella entity, a competitor to NPCI. What are your thoughts?
NPCI is a great institution. They have had some great CEOs who have worked under a lot of constraints. We should be very clear that NPCI should be allowed to charge appropriately and there should be enough investments going into NPCI. I believe they have the capacity to go global and they are an excellent competition to a Visa and MasterCard. If I was in the government I would put more money in NPCI and bring in more scale. NPCI should be one of our larger institutions that should have the dynamics to go to the public and raise money. I don’t want to comment on new institutions coming in but if they are Google Pay or Apple Pay, they are again riding on bank infrastructure.

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