The Centurion deal, which is subject to shareholder and regulatory
approval, would result in HDFC becoming the first Indian private
sector bank to surpass 1,000 branches (currently HDFC Bank has 754
branches). Centurion’s 394 branches and 452 ATMs are based in 180
locations, mainly in the southern state of Kerala and in Punjab in
the north. Its business is focused on personal and agricultural
loans and mortgages, as well as a range of wealth management
products including mutual funds and life insurance.

According to HDFC, the combined entity will have a deposit base of
around INR1.2 trillion ($30.2 billion) and net advances of around
INR850 billion. “This opportunity arose and we thought it is an
attractive route to supplement HDFC Bank’s organic growth,” said
HDFC’s chairman, Deepak Parekh.

In a buoyant state

The Indian banking sector is in a buoyant state at the moment. HDFC
Bank reported net profit up 45.2 percent to INR4.3 billion for the
quarter ending 31 December 2007. ICICI posted net profit for the
quarter up 35 percent to INR12.3 billion while Canara Bank recorded
year-on-year growth of 26.4 percent.

As their market rapidly matures, Indian banks are becoming much
more innovative, as shown by ICICI’s m-banking launch in January
(see RBI 585). HDFC Bank itself has just launched a
virtual credit card product in partnership with Indian
telecommunications giant Reliance in which a mobile phone handset
and telephone number double up as a credit card and account number.
While the service will initially provide an alternative channel to
pay for Reliance services, plans are under way to extend the
offering to shops, restaurants and shopping online.