HDFC Bank Ltd. has sold a housing loan portfolio worth approximately ₹60 billion ($717 million) as part of efforts to ease its credit burden amid growing regulatory pressure on the industry.
The Mumbai-based bank also sold a pool of car loans valued at around ₹90.6 billion, securitized through pass-through certificates (PTCs), according to sources. This follows reports from late August that the bank was in discussions to offload the portfolio to about a dozen local asset management companies.
These sales highlight India’s largest bank by market value ramping up its efforts to reduce its retail loan portfolio amid heightened regulatory scrutiny aimed at improving the sector’s credit-deposit ratios—a key indicator of how much of a bank’s deposits are being lent out. The portfolio offloading will help HDFC Bank improve its ratio, which has deteriorated in recent years as credit growth outpaced deposit accumulation, especially following its merger with Housing Development Finance Corp.
Among the buyers of the PTCs, backed by HDFC’s car loans, were ICICI Prudential AMC, Nippon Life India Asset Management Ltd., SBI Funds Management Pvt., and Kotak Mahindra Asset Management Co., according to sources. The certificates offered yields between 8.02% and 8.20% across three tranches.
In June, HDFC Bank also sold a loan portfolio worth ₹50 billion. Its credit-deposit ratio stood at 104% at the end of March, compared to 85% to 88% over the previous three fiscal years, as reported by ICRA Ltd., a Moody’s affiliate.
The Reserve Bank of India warned in August that the slower growth in deposits compared to credit could expose the banking system to liquidity challenges.
HDFC Bank’s upcoming earnings report for the quarter ended in September is expected to reflect a 13% year-on-year growth in deposits, outpacing an 8% rise in loans, according to Suresh Ganapathy, head of financial services research at Macquarie Capital.
