HDFC Bank in talks with global lenders to offload ₹84 billion in loans to improve credit-deposit ratio

HDFC Bank is in talks with multiple global banks to offload nearly ₹84 billion in loans to reduce the company's credit book and bring it more in line with the deposits, Bloomberg reported on Thursday, quoting people aware of the development.

India's biggest private lender is in ongoing discussions with banks like Barclays Plc and JPMorgan Chase & Co. ICICI Bank is also a part of the talks, as per the report.

The terms of the proposed loan portfolio sale are yet to be finalised; it would take place through a pass-through certificate, a debt instrument, the sources told the news agency.

Queries sent to HDFC Bank, Barclays, Citi, and ICICI Bank remained unanswered, while JPMorgan declined to comment on the development, as per the report.

Indian banks are under rising regulatory pressure to improve their credit-to-deposit ratios, which show how much of the bank's deposits are being lent out to borrowers. The loan sale will help the private bank improve the ratio, which has been impacted in recent years as credit growth has outpaced deposits, as per the agency report.

HDFC Bank is also in a separate discussion with local asset management companies (AMCs) to sell as much as ₹100 billion in loans, reported the news agency earlier. The company has already sold ₹50 billion loan portfolio to an undisclosed buyer in June, according to the report. 

HDFC Bank's deposit details:

The private lenders' credit deposit ratio stood at 104 per cent as of March 2024, higher than 85 to 88 per cent in the previous three financial years, according to ICRA. The ratio increased after the HDFC merger with its mortgage lending entity, said the report.

HDFC Bank's deposits rose 11 per cent annually through August 23, slower than loan growth of 14 per cent, as per data from the Reserve Bank of India (RBI), cited in the report. The deposit growth has been lagging credit for some time, which “may potentially expose the system to structural liquidity issues,” the RBI had said in August.

The bank's gross advances rose 52.6 per cent to ₹24.9 trillion as of June 2024, compared year-on-year.