HDFC Bank Securitizes Loans to Boost Capital Adequacy

4 Oct 2024 , 02:59 PM

HDFC Bank, India’s largest private sector lender, has securitised loan pools worth Rs 24,600 crore in the last nine months, according to an exchange filing. In the September quarter alone, the lender securitised loan assets worth Rs 19,200 crore. The lender described this as a strategic endeavour.

“During the quarter ended September 30, 2024, the Bank securitised loans of Rs 192 billion (Rs 19,200 crore), year to date Rs 246 billion (Rs 24,600 crore) as a strategic initiative,” according to a filing with the exchange.

HDFC Bank recently securitised an auto loan pool worth more than Rs 9000 crore to a trust.

This would be the latest in a series of moves the bank has taken to normalise its balance sheet and enhance its NIM.

Other initiatives include decreasing loan growth, substituting previous HDFC borrowings with infrastructure bonds, and a faster-than-expected reduction in borrowing.

These moves were necessary, notwithstanding HDFC Bank’s substantial incremental market deposit share, due to constrained liquidity conditions and the regulator’s desire to reduce banks’ loan-to-deposit ratios.

HDFC Bank’s LDR has dropped from a high of 110% to 103.5% and is anticipated to fall further.

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