New Delhi

HDFC Bank Ltd. has sold a housing loan portfolio of about 60 billion rupees ($717 million), seeking to further lighten its credit load amid regulatory pressures on the industry as detailed in a report by Bloomberg.

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The portfolio was sold to about half a dozen state-controlled banks through private deals, according to people familiar with the matter, who asked not to be identified as the information is not yet public.

The Mumbai-based bank also unloaded another pool of car loans worth about 90.6 billion rupees, securitized in a fixed-income product called pass-through certificates, the people said. The lender had been engaged in talks reported in late August by Bloomberg to offload the pool to about a dozen local asset management companies.

The deals confirm India’s largest bank in market value is intensifying efforts to shrink its retail loan portfolio amid heightened regulatory pressure to improve the sector’s credit-deposit ratios a measure of how much of an institution’s deposits are being lent out. The portfolio sales would help HDFC Bank improve its ratio which has worsened in recent years as credit growth outpaced deposits in the nation and following its merger with mortgage lender Housing Development Finance Corp.

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The buyers who subscribed to the pass-through certificates, backed by HDFC’s car loans, included ICICI Prudential AMC, Nippon Life India Asset Management Ltd., SBI Funds Management Pvt., and Kotak Mahindra Asset Management Co., the people said. The certificates offered yields in the range of 8.02 per cent to 8.20 per cent monthly for three tranches, they said.

A spokesperson for the SBI fund confirmed the car-loan deal. HDFC Bank and other buyer funds didn’t immediately respond to Bloomberg’s requests for comments.

Brief history of HDFC Bank

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HDFC Bank Limited is an Indian banking and financial services company, headquartered in Mumbai. It is India's largest private sector bank by assets and the world's tenth-largest bank by market capitalization as of May 2024.

The Reserve Bank of India (RBI) has identified the HDFC Bank, State Bank of India, and ICICI Bank as Domestic Systemically Important Banks (D-SIBs), which are often referred to as banks that are “too big to fail”.

As of April 2024, HDFC Bank has a market capitalization of $145 billion, making it the third-largest company on the Indian stock exchanges. It is also the sixteenth largest employer in India with over 173,000 employees, following its takeover of parent company Housing Development Finance Corporation.

‘Liquidity Issues’

In June, HDFC also sold a 50 billion rupee loan portfolio. Its credit-deposit ratio stood at 104 per cent at the end of March, higher than the 85 per cent to 88 per cent rate in the previous three fiscal years, according to ICRA Ltd., an affiliate of Moody’s Ratings.

The fact that deposit growth is lagging that of credit “may potentially expose the banking system to structural liquidity issues,” the central bank said in August.

For its upcoming earnings report for the quarter that ended September, HDFC Bank is expected to show deposit growth of 13 per cent on-year, compared with an 8% increase in loans, according to Suresh Ganapathy, head of financial services research at Macquarie Capital.