Indian banks selling retail loan portfolios as deposits lag
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India’s largest lender, HDFC Bank Ltd., sold a 50 billion rupee ($597 million) loan portfolio to an undisclosed buyer in June, Chief Financial Officer Srinivasan Vaidyanathan said in a post-earnings media call last week.
“We did see a good amount of interest in the market,” he said, noting the bank had last done such a transaction more than a decade ago. “It’s just a beginning,” and “at appropriate price points we will keep doing it,” he added.
IDFC First Bank Ltd. sold a basket of unsecured retail loans to Citigroup Inc. in a securitization deal worth 6 billion to 7 billion rupees at the beginning of the year, according to people familiar with the plans who asked not to be named because the information is private.
IDFC “will be happy to entertain more such transactions”, said Paritosh Mathur, its head of wholesale banking, without confirming the size or timing of the transaction. The deal won a AAA rating, Mathur said, due to the “high performance of our asset portfolio.”
Sales of retail loan portfolios by private banks have been uncommon in India, but several of them are now exploring deals to improve their CD ratios given the success of HDFC’s transaction, according to the people familiar.
Private lenders are discussing loan portfolio sales with foreign banks, state-backed lenders, debt mutual funds and insurance companies, said the people.
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