HDFC Bank has made a back-door entry into home loans by offering loans against property. This move by the bank is being seen by market observers as building up its expertise in home loans, a segment which it formally enters this calendar year.
At present, the bank does not offer home loans as it will lead to a conflict of interest with its parent, the Housing Development Finance Corporation.
In fact, the introduction of loans against property coincides with HDFC Bank starting to sell home loans on behalf of its parent over the next few days. Under the arrangement, the bank will receive a commission of 0.50 to 0.80 per cent of the loan amount.
Market observers said there could be a new arrangement when the bank starts offering home loans. Under the new system, the bank will create loans and take it on its own books, while HDFC could administer these loans.