HDFC Bank to buy Rs 600 cr home loan portfolio from parent

In a bilateral deal between the new generation private sector HDFC Bank and mortgage major Housing Development Finance Corporation (HDFC), the bank is expected to buy back around Rs 600 crore worth of home loans from its parent in the current fiscal.

The bank has in the recent past bought back around Rs 200 crore worth of home loans from HDFC.

According to the arrangement entered into last year, home loans sold by HDFC Bank are booked and serviced by HDFC and 70 per cent of these loans are sold back to HDFC Bank, said HDFC Bank vice-president and business manager-retail lending, S Ramakrishnan.

The bank generates around Rs 125 crore of home loan business per month, he added. The home loan portfolio which is around Rs 200 crore is expected to grow to Rs 600 crore in the current fiscal.

The average interest rate on the portfolio which is the range of 7.50 to 8 per cent sourced through this arrangement. The home loan market is competitive and the size of the pie is growing everyday. The bank offers the home loan product to the its customers and also targets the open market through its distribution channels, said Ramakrishnan.

The bank expects the incremental growth in housing loan business to contribute to its bottomline by next fiscal.

The bank's retail business is expected to grow by 30 to 40 per cent by the end of this fiscal, he added.