HDFC Bank, a prominent player in the banking sector, is facing challenges that have raised concerns. The key reasons contributing to its struggles are:

1. Sluggish deposit growth, coupled with the issuance of a substantial amount of unsecured credit, has raised concerns about the bank’s risk management strategy.

2. The bank’s home loan department has limitations in lending, only catering to authority-based real estate projects, unlike its peers, such as LIC HFL and PnB Housing Finance, which also lend to municipality-based home buyers. Although not a major reason, this has still contributed to a significant decline in customer base.

3. The bank’s financial performance has been impacted, with Net Interest Income (NII) and Net Interest Margin (NIM) narrowing to 3.2% and 2.8%, respectively, which is unexpected and a cause for concern.

4. Compared to its strong peers, such as Kotak, Axis, Indus, and ICICI, HDFC Bank’s performance has been sluggish, leading to a decrease in demand.

These factors have collectively contributed to HDFC Bank’s struggles, making it essential for the bank to reassess its strategies and adapt to the changing market dynamics.