Private Banks Securitize Rs 40,000 Cr Loans

29 Nov 2024 , 09:27 AM

In order to increase liquidity and balance their books in the face of poor deposit growth, private sector banks, led by HDFC Bank, have sold about ₹40,000 crore worth of loans this fiscal year, the first such sale in over 20 years.

Just HDFC Bank, which has a severe trouble keeping the credit-deposit ratio stable, has sold over ₹36,000 crore to investors through the bilateral direct assignment (DA) route or by selling pass-through certificates (PTCs).

According to data compiled by ET from rating agencies, IDFC First Bank sold ₹2,142 crore worth of unsecured loans earlier this year, while smaller lender RBL Bank sold ₹381 crore worth of loans.

PTCs are financial products that enable the holder to get principle and interest payments from a group of assets or loans. In India, trusts are used to bundle various instruments together, enabling banks to remove assets from their records.

Bilateral sales of these loan pools between lenders are known as DAs.

Since private sector banks, which are renowned for their emphasis on growth, have seldom ever liquidated assets in decades, analysts referred to it as an unprecedented phenomenon.

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