HDFC Bank plans significant expansion of loan securitisation business, CFO says

HDFC Bank, India’s largest private lender by assets, plans to expand its loan securitisation business over the next few years to meet rising investor demand, said CFO Srinivasan Vaidyanathan in an interview late on Thursday. The bank aims to create space for fresh loans without increasing its balance sheet.

Loan securitisation involves bundling loans and converting them into new investments. “We believe this is a strategic initiative… Over a three to five-year period, it would be substantial,” said Vaidyanathan, though he did not specify a target for loan sales.

So far this financial year, HDFC Bank has sold 463 billion rupees ($5.30 billion) in loans through securitisation. According to rating agency ICRA, securitisation volumes in India are expected to rise to 2.4 trillion rupees in the current fiscal year ending March 31, a 25% increase over last year. The loan sales are driven by multiple objectives, including reducing the loan-to-deposit ratio, which increased after HDFC Bank’s merger with parent HDFC in July 2023. The bank aims to bring down this ratio from close to 100% to below 90%, indicating a stronger liquidity position.

However, a growing market for loan securitisation is the main factor behind this decision. “We currently see significant interest from local investors, pension funds, insurance companies, and other banking institutions,” said Vaidyanathan, noting the increasing interest from international investors as well.




























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