HDFC Bank plans to offload ₹70,000cr loan assets, shares surge
HDFC Bank's shares witnessed a 1.25% increase today, following news of the bank's intention to sell loan assets worth ₹60,000-₹70,000 crore. This strategic move is aimed at enhancing liquidity and decreasing its credit-deposit ratio, which was recorded at 105% as of June 30. A very high CDR is seen risky, as it means the bank has a higher exposure to potential loan defaults. The bank is expected to primarily sell mortgage and car loans through pass-through certificates (PTCs).
Mutual funds and insurance firms: Potential buyers
Mutual funds and insurance companies are anticipated to be the primary buyers of these loan assets. HDFC Bank has also revealed plans to sell over ₹9,000 crore in car loans via the PTC channel this month, marking its largest PTC sale ever. This strategy aligns with the bank's broader objective of improving its financial health by reducing its credit-deposit ratio.
HDFC Bank's board approves IPO for financial services unit
In a separate development, the board of HDFC Bank has reportedly given preliminary approval for an initial public offering (IPO) of its financial services unit, HDB Financial Services Ltd. This decision signifies the bank's ongoing efforts to diversify its operations and enhance its market presence. However, further details about the proposed IPO are yet to be disclosed by the bank.
