---
endpoint: analytics
pattern: Financial Services
status: done
latency_ms: 126853
conversation_id: 4ae4eb8d-bf70-496e-a28c-f9d937fa59ca
citations: 7
created: 2026-05-31 20:59:20Z
---

# What is HDFC Bank’s core business franchise and the key components of its operating model?

# HDFC Bank — Core Business Franchise and Operating Model

HDFC Bank is India's largest private-sector bank by assets, with a universal-banking franchise spanning retail, wholesale, treasury, and digital/payments. The franchise is anchored by a deeply granular retail liability base, a balanced asset book between wholesale and retail, and a multi-pillar technology operating model now branded as "Shift Right."

## 1. Core Business Franchise

### 1.1 Liability-led retail franchise (the defining moat)
The single most distinctive feature of HDFC Bank's franchise is its retail liability base — what management itself calls its core differentiator.

- **82% of total deposits are retail (granular)**, with CASA at ~45% and time deposits at ~55% of the book [2]. This granularity is what allows the bank to fund growth without chasing rate-sensitive wholesale funding.
- **Time-deposit penetration is only ~14% of the customer base** — management treats this as headroom to deepen primary-banker share via relationship managers, positioning HDFC Bank as the "primary banker" in the customer's asset allocation [2].
- The bank pitches itself internally as having "a great retail franchise, especially on the liability side," alongside brand strength, capital adequacy, and digital readiness as the four pillars of incumbency [6].

### 1.2 Asset book — wholesale + retail balance
- Loan mix is roughly **55% wholesale / 44% retail** [1]. Management explicitly notes that as retail share rises, NIMs structurally lift but with a lead-lag dynamic: opex steps up first, NIM follows, and credit cost normalizes later — i.e. retail is upfront-spend, accrual-later [1].
- Through-the-cycle, returns sit in a "narrow band of about 2% plus-minus a small difference" irrespective of product mix or NIM cycle [1] — a steady-state ROA framework that anchors how management talks about the franchise.

### 1.3 Branch network and geographic strategy
- HDFC Bank operates a **maturity-curve branch model**: each branch reaches ~1x deposit base in the first 0–5 years, ~3x at 5–10 years, and ~10x at 10–15 years [2]. New branches are therefore an investment that compounds — a "best-in-class branch operating model" [2].
- **Semi-urban and rural India** — entered around 2010 — now contributes roughly 20% of business and is growing faster than urban, with cost and delinquency parameters maintained [7]. This SURU push is the geographic leg of the franchise.

### 1.4 Wealth management and HNW segments
HDFC Bank has become one of India's largest wealth managers, segmented across Ultra-HNW, Super-Affluent, and Mass-Affluent:
- For Ultra-HNW it has more than doubled platform-referred products; for Super-Affluent it deploys "Wealthfy" portfolio analytics; for Mass-Affluent it runs the **SmartWealth** digital app (~6 lakh downloads, ~4 lakh clients onboarded) [4].
- Brand promise: "Protect. Manage. Grow." with a Service-First culture — Net Promoter Score (NPS) of **87 in FY25**, described as one of the highest in the industry [4].

### 1.5 Payments / merchant acquiring
- **PayZapp** ("Pay Your Way") is HDFC Bank's UPI/payments super-app. Registrations crossed **1.6 crore**, with the app ranking moving from 42nd to 14th in the UPI category; ratings of 4.8 (App Store) / 4.6 (Play Store) [8]. PayZapp is the consumer payments leg of a broader merchant-ecosystem scaling effort.

## 2. The Operating Model — "Shift Right" Framework

Launched in FY24 and now in execution mode, **Shift Right** is HDFC Bank's framework for re-architecting from a product-centric stack to a customer-centric, platform-led, API-first model. It is built on five strategic pillars [3]:

| Pillar | What it does |
|---|---|
| **Journeys** | Outcome-first digital journeys across retail, SME, rural, corporate — many with Straight-Through-Processing, assisted onboarding, or embedded servicing |
| **Channels** | Mobile apps, branches, business correspondents, embedded APIs — unified front-end layer |
| **Core** | Re-engineered core banking; migration toward microservices-led, cloud-adaptive modules ("Lighten the Core") |
| **Data** | Enterprise Data Lake centralising data across critical systems for AI/ML-powered analytics |
| **Security** | Embedded security across the full stack |

Key implications of the operating-model design:
- The framework reframes the bank from a **product-centric concentric stack** (Core Banking → Data → APIs → Channels → Partnerships) to a **customer-centric stack** with Channels on the outside, an API orchestration layer, microservices-based core, and AI/ML-powered data inside [3].
- HDFC Bank treats technology as a "core strategic driver," not just an enabler — every digital interaction (mobile, BC, embedded API, branch) runs through this platform [3].
- Concrete FY25 milestones include migration of the **Core Banking System** to a next-gen engineered platform, with **IMPS Inwards** as the first deployment under "Lighten the Core" — marking the transition away from monolithic systems [3]. New Net and Mobile Banking platforms have been rolled out in phases.

## 3. How the Components Interlock

Putting the franchise and operating model together, the operating logic is:

1. **Granular retail deposits** (82% retail; 45% CASA) [2] → low-cost, stable funding base.
2. **Branch maturity curve** (1x → 3x → 10x over 15 years) [2] + **SURU expansion** [7] → distribution flywheel that grows wallet share over time.
3. **Balanced wholesale/retail asset book** (~55/45) [1] → steady ROA band of ~2% across cycles.
4. **Shift Right platform stack** (Journeys + Channels + Core + Data + Security) [3] → cost-efficient, scalable customer engagement, with frictionless service the explicit benchmark.
5. **Wealth + payments overlay** (SmartWealth, PayZapp) [4][8] → deepen primary-banker status and capture engagement beyond the deposit/loan account.
6. **Service-First culture** (NPS 87) [4] → relationship-banking moat that compounds with each maturity cohort.

The key insight is that HDFC Bank does not depend on any one product engine. The franchise is durable because the **liability granularity funds the asset book**, the **branch network compounds wallet share over a 15-year curve**, and the **Shift Right platform** is intended to keep unit-cost servicing competitive with fintech platforms — what management has described as benchmarking digital experience against "an Amazon or a Google" rather than against banks alone.

---

**Sources**
[1] HDFC Bank Limited — Shareholder/Analyst Call (Management on wholesale/retail mix and ROA band)
[2] HDFC Bank Limited — Shareholder/Analyst Call (CASA/time-deposit mix, retail-deposit %, branch maturity curve)
[3] HDFC Bank Ltd. — Annual Report FY25 (Shift Right framework — five strategic pillars)
[4] HDFC Bank Ltd. — Annual Report FY25 (Service-First culture, NPS 87, wealth management segments)
[6] HDFC Bank Limited — Shareholder/Analyst Call (Retail-liability franchise as core moat)
[7] HDFC Bank Limited — Shareholder/Analyst Call (Semi-urban / rural India expansion)
[8] HDFC Bank Ltd. — Annual Report FY25 (PayZapp scale and ranking)

## Citations

- [1] **HDFC Bank Limited - Shareholder/Analyst Call** · external
- [2] **HDFC Bank Limited - Shareholder/Analyst Call** · external
- [3] **HDFC Bank Ltd. (HDB-IN) - Annual Report for period end 31-Mar-2025 (English) - PDF** · external
- [4] **HDFC Bank Ltd. (HDB-IN) - Annual Report for period end 31-Mar-2025 (English) - PDF** · external
- [5] **HDFC Bank Limited - Shareholder/Analyst Call** · external
- [6] **HDFC Bank Limited - Shareholder/Analyst Call** · external
- [7] **HDFC Bank Ltd. (HDB-IN) - Annual Report for period end 31-Mar-2025 (English) - PDF** · external

