Mr. Sashidhar Jagdishan, if I may start with you — this is your last quarter, you're going to be stepping down from your position in a few days from now. Any unfinished agenda, and the kind of advice you'd have for the incoming CEO, Anup Bagshi? Also, if you could assure stakeholders — I mean, we've just had the news that Kaizad Bharucha is also seeking an early retirement, end of December, as the Deputy Managing Director. Srinivasan, your CFO as well, is retiring later this year, and then Puneet takes over. So there's a whole lot of management changes that are suddenly taking place together at HDFC Bank. So how would you assure stakeholders of stability, of continuity of execution, and that there'd be no more changes at the top level? That is one.
Secondly, the margin trajectory. Yes, we understand the dip in the quarter, of course, has been on account of some of that large FCNR raise that has come in. But that said, this is an all-time low for HDFC Bank on the margin front as well. The CASA ratio remains much lower than what we'd seen a few years ago, pre-merger. What are the steps you're taking to improve both of those? And if Mr. Anup Bagshi could also chip in with what he sees as the key agenda, the key priorities as he takes on this role as the new CEO — the first outside CEO that the bank is going to have.
Let me answer a few of that. Number one is, look, the good part is, of course, Kaizad and Srinivasan and others have been stalwarts for sure, but this institution has been driven more by processes and not by an individual personality. So I think — and the second part of it is that the depth in management is so large that the continuity and the ethos of the institution will be intact as well. So Anup comes in and he will lead a team of able leaders who have been with the institution for a long time below him, and they will be the fulcrum at which the ethos and the fact of the matter is they will support Anup to chart out his vision and his strategy as well. So, you know, Anup has about 34 years of experience in the field of financial services. He is a seasoned player who has been not just in banking but also in insurance. So he has a very holistic view, and I think for him this is going to be as easy as it was in his earlier roles as well. So I wish him the very best, and you will hear more from him going forward.
On the aspect of margins, yes, the impact may be slightly higher this quarter. That's because of the full impact of the previous quarters' asset push in terms of the non-retail composition being high, both on the liability side and the asset side. I think that sort of has gone through in this quarter, in addition to the small impact on account of the mobilization as well. But as we move on from here, I think with the upward rate trajectory, there should be a change because a large part of our balance sheet is linked to variable benchmarks, and therefore you will see a slightly much faster transmission on the asset side. Of course, it doesn't mean that the entire thing will pass through in one quarter, because there will be the so-called asset mix change that will need to also happen over a few quarters before you can see the full impact of the rate cycle changes being transmitted on the asset side of the balance sheet.
As regards CASA ratio, I think it's a combination of the proportion of low-cost flows moving into the banking system, which has been steadily coming down thanks to the changing household behavior. That is something that the entire system has to confront, because overall I think the CASA ratio has even come down for the system as a whole as well. But to us it's slightly more heightened because of the fact that we had to take in more time deposits, more than what we normally would have done. One is because we have a larger proportion of the balance sheet, and two is we have to substitute a fair amount of borrowings that have been maturing over the last three years with time deposits as well. So that's one of the reasons why the ratio has been falling. But this is something that we knew, that this would be the kind of trajectory. But there will be an inflection point when probably Anup will be able to explain it now, or in slightly greater depth after a couple of weeks or a month, where he comes out with a kind of strategy which may have some alternate funding sources which can then protect the retail core liabilities as well. Anup, anything you would like to add?
I've always seen this group with great admiration and respect. It has a very, very rich market leadership and reputation within the Indian financial system, which are exceptional. So what are we going to do in the very, very near term? Very near term, I'm going to engage with all the regulators, customers, stakeholders. I'll gather insights, and that will become a key input to our organization. Sashi, Kaizad — a very warm goodbye to them, and I'm going to take inputs from them. But I must assure all of you, I have yet to join here. I'm going to join here on the 26th, but I've been here for one or two days and I met the team. I know many of the teams from earlier stints. Exceptional team, very sound team, very able team, and it's a very process-driven institution, and it is not dependent on just one or two or three individuals. It is a great institution, very interlinked with each other, and great because of serving the customer. And if you look at the leadership, they have spent many, many years within the system, and they know the system, and they are fully, fully committed to the system, to the institution. So in fact, I'm very, very lucky, I think, for an institution which is solid, very sound.
The balance sheet transformation that has happened — that is, in some sense, much of it is behind us. Some more work needs to be done, which collectively I'm sure we will do. But at this point of time, I'm just listening in to feedback, understanding the mechanics of the balance sheet, which from outside India I only understand that much. But a very, very sound institution, sound practices, so lucky to be here.
