Advertisement
When should a housing society in Mumbai start considering re...
From GST on JDAs to SEBI’s REIT reclassification and the S...
Stay ahead in the world of real estate with our daily podcas...
Stay ahead in the world of real estate with our daily podcas...
HDFC Bank, one of India's largest lenders, has sold a housing loan portfolio worth INR 60 billion (USD 717 million) to state-controlled banks and a car loan pool of INR 90.6 billion through securitization. These transactions reflect the bank's efforts to streamline its retail loan portfolio and improve its credit-deposit ratio, which has deteriorated in recent years due to credit growth outpacing deposit growth. The portfolio sales are expected to help HDFC Bank address regulatory pressure to enhance the sector's credit-deposit ratios, a key measure of banking system stability.
HDFC Bank, one of India's largest lenders, has sold a housing loan portfolio worth approximately INR 60 billion (USD 717 million) to several state-controlled banks through private deals, according to sources familiar with the matter who requested anonymity as the information is not yet publicly disclosed. Advertisement
Additionally, the Mumbai-based bank has offloaded another pool of car loans valued at around INR 90.6 billion, which were securitized in the form of pass-through certificates, a type of fixed income product. In August, Bloomberg had reported that HDFC Bank had been in discussions to sell this pool to about a dozen local asset management companies.
These transactions reflect HDFC Bank's efforts to streamline its retail loan portfolio amid heightened regulatory pressure to improve the sector's credit-deposit ratios, a measure of how much of a bank's deposits are being lent out. The portfolio sales are expected to help HDFC Bank enhance its credit-deposit ratio, which has deteriorated in recent years as credit growth outpaced deposit growth in the country, and following its merger with the mortgage lender Housing Development Finance Corp.
The buyers who subscribed to the pass-through certificates backed by HDFC's car loans included ICICI Prudential AMC, Nippon Life India Asset Management Ltd., SBI Funds Management Pvt., and Kotak Mahindra Asset Management Co. The certificates offered monthly yields ranging from 8.02% to 8.20% for three tranches, according to the sources.
In June, HDFC Bank also sold a loan portfolio of INR 50 billion. The bank's credit-deposit ratio stood at 104% at the end of March, higher than the 85% to 88% range in the previous three fiscal years, according to ICRA Ltd., an affiliate of Moody's Ratings. For its upcoming earnings report for the quarter ended September, HDFC Bank is expected to report a deposit growth of 13% year-on-year, while its loan growth is expected to be around 8%, according to Suresh Ganapathy, head of financial services research at Macquarie Capital.
The Central Bank has highlighted that the lag in deposit growth compared to credit growth may expose the banking system to structural liquidity issues. HDFC Bank's proactive measures to optimize its loan portfolio and strengthen its credit-deposit ratio are crucial steps in ensuring the long-term stability and resilience of the institution, as it navigates the changing regulatory landscape and adapts to the evolving needs of the Indian financial sector.
5th Jun, 2025
25th May, 2023
11th May, 2023
27th Apr, 2023
Advertisement
Facebook
Whatsapp
