A Bank For The Buck (The New Bank Movement & The Untold Story of The Making of India's Most Valued Bank)

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This is the story of the birth and growth of India's most valued Bank HDFC Bank Ltd against the backdrop of the new hank movement in India that started in 1994 when the Reserve Bank of India opened up the sector to introduce competition and to force hanks to be efficient and more productive.

Many hooks have tried to give meaning to India's recent history, to put it in the larger context of a complicated and confounding society, hut this effort stands out because it does something that has been difficult to attempt retelling the story of modern India through the lens of business.

Given the author's familiarity with hankers, policy makers and central bankers, this fast- paced, jargon - free hook, written for a wide audience, brings to life an engrossing and sweeping tale of 21st century India, with all its foibles and charms.

Tamal Bandyopadhyay is one of the most respected business journalists in India. His weekly column, Banker’s Trust, in India’s second-largest read financial daily Mint, where he is Deputy Managing Editor, is widely read for its deep insights into the world of finance and its unerring ability to anticipate major policy moves.

Tamal has kept a close watch on the financial sector for over fifteen years and has had a ringside view of the enormous change in Indian finance over this period. He has been a frequent speaker at seminars across India and has hosted a very successful weekly show (by the same name as his weekly column) on television, featuring some of India’s most respected bankers, policy maker, central bankers and regulator.

He has contributed to the Oxford Companion to Economics in India, edited by Kaushik Basu and published by Oxford University Press in 2007. Banker’s Trust, an anthology of His weekly Column in Mint, has recently been published. This is Tamal’s first book.

What one can do when one turns eighteen varies from country to country. In India, one can vote and get a licence to drive a car, but one can't drink in public places. In New Delhi, India's capital, and Mumbai, the commercial hub, the drinking age is twenty-five years. In China, the world's fastest growing economy, turning eighteen gives one the licence to drink.

If one goes by the date of incorporation, HDFC Bank turned eighteen on 30 August 2012. Has life since become very different for the bank's employees, customers and investors? I don't think so. It has been life as usual for the bank. The freedom of 'adulthood' hasn't changed its character-it won't probably do anything it hasn't done so far.

In some sense, this bank has been a precocious child; it has known pretty well from day one that as a bank what it doesn't do matters more than what it does.

It hasn't done many things that its peers have done or tried to do and so the past eighteen years have not been hugely exciting. There has been absolutely no volatility in its performance-it has announced its earnings with monotonous precision, quarter after quarter, higher than the industry average-something the investors love and swear by.

HDFC Bank does very ordinary things in ordinary ways, but that yields extraordinary results. With this book I have attempted to tell the story of HDFC Bank in the context of the overall banking space in India, which has been changing with freedom from regulations, introduction of new products and newer ideas. Since my focus is the story, I haven't used excessive data unless they help illustrate the story. Many of the anecdotes in this book aren't in public domain yet, and in that sense this book is the untold story of the making of India’s most valuable bank.

I started reporting on the banking sector about a year after HDFC Bank was born, but I discovered several incidents narrated in this book only while working on this project. They have been impeccably sourced, even though in some case the people involved don't want to be named.

This book is based on hundreds of hours of interviews with bankers, central bankers, policy makers, corporate executives, consumers and investors in different parts of India and overseas. Most of the interviews were conducted in person and a few on the phone. For the data, I depended on information available in the public domain such as stock market notice documents filed with regulators in India and abroad and the bank's balance sheets.

Some of the conversations narrated in this book may not be exactly the way they happened because they were not documented; I depended on people's versions, recalled from their memories. I have lightly edited these in a few case for effect, but by and large they are a faithful representation of what happened.

I have tried to maintain an informal style of narration. For instance, I have used the first names of people mentioned in the book unless more than one person has the same first name, as that would have created confusion. So, Deepak Parekh is called Deepak, but Deepak Maheshwari and Deepak Satwalekar have been referred to by their surnames. D. D. Rathi of the Aditya Birla Group is well known by his surname and hence I call him Rathi, but Ishaat Hussain of Tata Sons Ltd is Ishaat, and not Hussain. The entire story is divided into thirteen chapters. They don't follow a chronology but rather a theme, as my objective is not to merely write the bank's history but to weave the story of the making of a successful bank in India after economic liberalization.

The first four chapters- 'One Day in Malaysia', 'Raising a Toast: 'The Dirty Dozen' and 'There's a Baby on the Trading Floor!' - are about the making of the bank: how it was conceptualized, how the team was built and the fun of the initial days when many senior recruits wore helmets and supervised the brick and mortar work at the headquarters and the branches and held training sessions under a tree at a textile mill compound in central Mumbai.

The next four chapters- 'Business Before the Shop Opens', 'Doing Ordinary Things in Extraordinary Ways', 'The Change in Course' and 'The Entire Pyramid' -discuss the business philosophy of the bank and how it is different from that of others. Chapter 6 is, in fact, the heart of the book. It talks about the things that make HDFC Bank different from others, in terms of business philosophy, product innovation, cost of funds, risk management and so on. Chapters 9 and 10 are about two mergers, the first instance of a friendly merger through share swap and the biggest merger in India's banking history, respectively. Again, the emphasis is not on financial ratios and data but on how the mergers happened-the inside story. Of course, there are data but their use is limited to creating the context.

HDFC Bank, despite being a highly successful venture, couldn't escape the regulator's wrath. On two occasions, the bank was penalized by the RBI. Chapter 11—‘Warts and All' -dissects what went wrong with the bank, how it got into a mess and the safety valves it created to avoid such incidents. The next chapter-'The Common Sense Banker'- tries to analyse the Puri magic, what makes Aditya Puri, the longest-serving chief executive officer of any bank in India, different from his peers.

Finally, the last chapter-'Whose Bank Is It Anyway?'—looks at why this bank has been successful. It's not that it hasn't had problems-in terms of the occasional boardroom fights with the promoter on policies and minor egotistical skirmishes among senior people-but despite these it has succeeded because it's nobody's bank.

The key lesson from the HDFC Bank story is that freedom for professional managers, non-interference by the board and the promoter and passion for success are more important than ownership. HDFC Bank illustrates this formula better than anybody else-something that the new set of private banks opening shop soon can imbibe. If you like the book, my dear reader, it's because the story of the bank is compelling. If you find it boring, blame the storyteller.