HDFC Bank negotiates with global lenders to offload $1 billion in loans

HDFC Bank is reportedly in talks with Barclays Plc, Citigroup Inc., and JPMorgan Chase & Co., among others, while ICICI Bank Ltd. is also involved in these discussions, according to the report.

The sale of these loans is expected to be conducted through pass-through certificates, although the final terms are still being negotiated.

JPMorgan declined to comment, and HDFC, Barclays, Citi, and ICICI did not respond to Bloomberg's requests for comment.

Indian lenders face increasing regulatory pressure to improve their credit-to-deposit ratios, which measure the proportion of deposits that are lent out.

HDFC Bank aims to enhance this ratio, which has deteriorated in recent years as credit growth has surpassed deposit growth.

In addition to the global loan sale, HDFC Bank is also negotiating with local asset management companies to sell up to Rs 10,000 crore of loans.

The bank previously sold a Rs 5,000 crore loan portfolio to an undisclosed buyer in June.

As of March, HDFC Bank’s credit-to-deposit ratio was 104 percent, up from 85 percent to 88 percent in the previous three fiscal years, according to ICRA Ltd, a Moody’s Ratings unit.

This increase followed HDFC Bank’s merger with mortgage lender Housing Development Finance Corp. last year.

The bank’s gross advances reached Rs 24.9 lakh crore as of June 2024, marking a 52.6 percent increase from the previous year.

Indian bank deposits grew by 11 percent annually through August 23, which is slower than the 14 percent growth in loans, according to the Reserve Bank of India (RBI), according to the Bloomberg report.

The central bank has noted that this gap between deposit and credit growth could potentially lead to structural liquidity issues in the banking system, as per reports.