HDFC Bank is reportedly looking into offloading some of its loan portfolio as the lender finds itself on the receiving end of increased scrutiny from the regulators, media reports said.
The lender is approaching public-sector lenders, non-banking financial firms along with some insurance firms and asset managers and seeking their participation in the sale, reported Bloomberg citing people in the know.
The report noted that the bank has been facing scrutiny as its credit growth increases. The credit-deposit ratio of the HDFC Bank has been called out by the Reserve Bank of India as the country’s banking industry witnesses a decade high level of the metric. Notably, the credit-deposit ratio indicates how much of a bank’s deposits are being deployed as loans.
Offloading some of the loan portfolio would help the lender in reducing this ratio that surged following the 2023 merger of the bank with its parent company HDFC. The decision is also expected to help the bank in raising its liquidity, the report stated.
At the same time, citing anonymous sources, the report said that this was the first time the lender is looking into such a move post the merger.
Notably, the banking industry’s credit-deposit ratio touched 80.3 per cent in March, RBI data revealed. This was a record high figure seen in the last decade. As of June 14, 2024, however, the level has eased to 77.9 per cent, but it still remains elevated.
With a faster growth in loans as compared to deposits in the country, senior officials in the industry are facing increasing pressure to address likely financial risks that are piling up.
The central bank has also urged banks to increase its buffers for certain consumer loans as it tries to bring the evolving risks under control.
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