“At our wholesale bank, we have adopted a risk assessment of our clients in terms of their compliance with environmental norms. And that becomes an assessment criterion as we look at each proposal,” Kaizad Bharucha, deputy managing director of HDFC Bank, told reporters at an event organised by the lender in Varanasi.
As per the lender’s official disclosures, loans above Rs 100 crore are subject to HDFC Bank’s ESG Risk Management Framework for Lending, under which a detailed E&S (environmental and social) assessment is undertaken. Notably, wholesale borrowers with a direct customer risk above Rs 100 crore across all facilities are subject to a detailed E&S due diligence assessment, while exposures up to Rs 50 crore are subject to an abbreviated E&S due diligence.
Talking about the bank Corporate social responsibility (CSR) The ‘Parivartan’ programme Bharucha said the lender has set a target of increasing the income of 5 lakh marginal farmers earning less than Rs 60,000 a year by 2025.
From Rs 118.25 crore in 2014-15, the bank’s CSR allocation to the Parivartan scheme has increased to Rs 945.31 crore in 2023-24. Under the Companies Act, 2013, certain classes of profitable companies are required to spend at least 2% of their average net profit of the preceding three financial years on CSR activities in a given financial year.
Since 2014, which was when HDFC Bank launched the Parivartan programme, the bank has made a CSR spend of a little over Rs 5,100 crore, Bharucha said. Bharucha, who said that HDFC Bank will work towards becoming climate neutrality By 2032, it said that in the previous financial year, the lender had engaged with over 150 NGOs and implementing agencies as part of the Parivartan programme. The bank’s targets for 2025 include skill training for around 2 lakh people, scholarships for 25,000 underprivileged students and support to 20,000 institutions to promote local economies. HDFC Bank reported a standalone net profit of Rs 16,175 crore for the quarter ended June 30, 2024, up 35% from Rs 11,952 crore reported by the lender in the year-ago period. The lender’s gross advances stood at Rs 24.87 lakh crore as of June 30, 2024, up 52.6% year-on-year.
Green deposits
Referring to the Reserve Bank of India’s (RBI) green deposit framework, Bharucha said that while the central bank had not made it mandatory for regulated entities to raise green deposits, HDFC Bank had taken steps to increase ESG-compliant liabilities and would align with the central bank’s norms as and when they are formalised.
“The short answer to this is that we went out and issued a $300 million green bond which is in line with the guidelines set by the RBI as well as the government guidelines,” he said.
“As the guidelines become more formalized, we will have no problem adhering to them because the approach, the architecture, the mindset and the ability to do it consistently are things we are comfortable with.”
In April 2023, the RBI published a framework for acceptance of green deposits to encourage regulated entities to offer green deposits to customers and help them achieve their sustainability agenda. Banks were required to put in place a board-approved funding framework for effective allocation of green deposits, primarily for climate or environment-related objectives.
The correspondent was in Varanasi at the invitation of HDFC Bank.
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