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Wednesday, August 9, 2017

HDFC Bank increasing its term financing exposure riding on demand

HDFC Bank, India’s most valuable private sector bank, is slowly increasing its term financing exposure riding on demand for financing from the road and power transmission sector as it seeks to diversify its balance sheet.

Though working capital loans still dominate the bank’s corporate balance sheet, it is increasing looking at term loans especially refinancing opportunities, executive director Kaizad Bharucha said.

“Though 80% to 85% of our loans were working capital loans, it was not as if we were averse to term financing. But as our balance sheet has increased we have to diversify our lending as well. There are increasing opportunities in refinancing, even though private capex is yet to kick in,” Bharucha said.

Loans to companies or wholesale loans made up 46% of the bank’s loan book as of June 2017. The bank’s total advances as of June stood at Rs 5.80 lakh crore out of which 30% were term loans, up slightly from 27% a year ago, Bharucha said.

HDFC Bank is looking at opportunities especially in road projects under the hybrid annuity model (HAM) under which is a mixture of the built operate transfer (BOT) and engineering procurement and construction (EPC) models in road development. “Besides roads we also have interest in transmission. We will ultimately lend prudently and to projects in which we have seasoned with the management and know the company,” Bharucha said.

On Tuesday, HDFC Bank was ranked number one among banks in India by a annual survey of US based Greenwich Associates on the basis of interviews with CFOs and treasurers of 500 middle market and large companies.

Source : Economic Times


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