HDFC Bank In Talks To Offload Rs 84 Bn In Loans Amid Regulatory Pressure
Global Banks like Barclays, Citi, and JPMorgan engaged in negotiations to Help improve credit-to-deposit ratio
HDFC Bank, India's largest private sector lender, is in advanced discussions with several global banks to offload up to Rs 84 billion (USD 1 billion) in loans, aiming to balance its credit book with its deposit base, according to media reports. The banks involved in the talks include Barclays, Citigroup, JPMorgan Chase, and ICICI Bank, aa revealed in report.
The sale would be facilitated through debt instruments known as pass-through certificates, though terms are yet to be finalised. This move comes in response to mounting regulatory pressure on Indian banks to maintain a healthier credit-to-deposit ratio. Currently, HDFC Bank’s ratio stands at 104 per cent as of March 2024, a sharp rise from its previous range of 85 per cent to 88 per cent over the past three fiscal years.
HDFC Bank’s credit expansion has outpaced its deposit growth, further exacerbated by its merger with Housing Development Finance Corp last year. The bank's gross advances soared by 52.6 per cent year-on-year, reaching Rs 24.9 trillion as of June 2024.
In addition to talks with global banks, HDFC Bank is negotiating with local asset management firms to sell up to Rs 100 billion in loans, following a sale of Rs 50 billion in June to an undisclosed buyer. These efforts are intended to ease regulatory concerns and bring the bank’s lending activities in line with its deposit growth.
