HDFC Bank is reportedly considering selling a portion of its loan portfolio amidst heightened regulatory scrutiny over the rapid credit growth among the country's lenders, according to sources familiar with the matter.
India’s largest private sector bank has initiated discussions with various public-sector lenders, non-banking financial companies, insurance companies, and asset managers regarding potential participation in the sale. These conversations have taken place under the condition of anonymity due to their private nature.
The Reserve Bank of India (RBI) has expressed concerns over the credit-deposit ratio, a metric indicating the proportion of a bank's deposits being utilised for loans. This ratio has reached its highest level in a decade, prompting regulatory attention. By selling part of its loan portfolio, HDFC Bank aims to address these concerns and reduce its credit-deposit ratio, which saw an increase following its 2023 merger with its parent company, HDFC. Additionally, the sale is expected to enhance the bank’s liquidity position.
The move underscores the ongoing challenges and regulatory pressures faced by Indian banks as they navigate a landscape of rapid growth and increased scrutiny.
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