HDFC attempts to sell stressed loans ahead of merger with HDFC Bank
ECONOMY & POLICY

HDFC attempts to sell stressed loans ahead of merger with HDFC Bank

Mortgage-lending pioneer Housing Development Finance Corp (HDFC) is attempting to sell around £200 million worth of stressed loans that it had extended to developers before its merger with the bank it founded almost three decades ago. These loans are spread across 7-8 accounts and include advances to the local owners of Radisson Blu properties, according to two banking sources close to the development, who spoke to ET.

HDFC is presently in talks with asset reconstruction companies to sell these loans, both sources said. Alvarez & Marsal, a consulting firm, is actively seeking potential buyers for the loans, they added. "HDFC is seeking to sell a portion of its distressed loans in preparation for its merger with HDFC Bank. The merger is expected to be finalised by early next quarter," said the first of the two executives cited above.

"The loan portfolio is presently valued at roughly £200 million, although HDFC continues to include or exclude certain loans from this pool," the person said.

An HDFC spokesperson did not respond to an email inquiry, while an Alvarez & Marsal spokesperson did not respond immediately.

Some of these loans may include non-performing assets (NPA), while others may be stressed but have not been officially declared as NPAs yet.

In March, HDFC had showcased some of these accounts for potential sale but ultimately did not proceed due to lower-than-expected recovery prospects. It had sold only £15 million in bad loans - its exposure to Matoshree Developers - to Omkara ARC, according to both sources cited above.

Omkara purchased the outstanding loans of Matoshree Developers valued at £15 million for £5 million, which entails a 33% recovery for HDFC.

During the last quarter, HDFC had received a bid from Omkara ARC for around £110 million pooled stressed assets, but the bid value fell short of the mortgage lender's expectations, resulting in the sale not taking place.

In FY23, Assets Care and Reconstruction Enterprise (ACRE) had twice bought developer loans at around 50% of the loan value. They paid £27 million against a total loan of £57.7 million, resulting in a 47% recovery in the first quarter of FY23 and £60.2 million for a £118 crore loan pool, resulting in a 51% recovery in the third quarter.

HDFC's asset quality has been improving over the past few quarters, with individual Gross Non-Performing Assets (GNPA) decreasing from 0.99% to 0.75% as of March 31, 2023. Non-individual GNPA decreased from 4.76% to 2.9%. The total restructured pool stood at 0.6% of assets under management (AUM), down from 0.8% in the previous year.

The company management expects the effective date of the merger to be in July.

HDFC has been reducing certain non-individual exposures ahead of the impending merger with HDFC Bank. Non-individual loans continued to decline, primarily due to payment of previous facilities, resolutions, and a reduction in certain exposures stemming from the merger.

Also Read
RVNL and Siemens consortium awarded Mumbai Metro 2B project
Tricity Metro Project in Punjab and Haryana gains momentum

Mortgage-lending pioneer Housing Development Finance Corp (HDFC) is attempting to sell around £200 million worth of stressed loans that it had extended to developers before its merger with the bank it founded almost three decades ago. These loans are spread across 7-8 accounts and include advances to the local owners of Radisson Blu properties, according to two banking sources close to the development, who spoke to ET. HDFC is presently in talks with asset reconstruction companies to sell these loans, both sources said. Alvarez & Marsal, a consulting firm, is actively seeking potential buyers for the loans, they added. HDFC is seeking to sell a portion of its distressed loans in preparation for its merger with HDFC Bank. The merger is expected to be finalised by early next quarter, said the first of the two executives cited above. The loan portfolio is presently valued at roughly £200 million, although HDFC continues to include or exclude certain loans from this pool, the person said. An HDFC spokesperson did not respond to an email inquiry, while an Alvarez & Marsal spokesperson did not respond immediately. Some of these loans may include non-performing assets (NPA), while others may be stressed but have not been officially declared as NPAs yet. In March, HDFC had showcased some of these accounts for potential sale but ultimately did not proceed due to lower-than-expected recovery prospects. It had sold only £15 million in bad loans - its exposure to Matoshree Developers - to Omkara ARC, according to both sources cited above. Omkara purchased the outstanding loans of Matoshree Developers valued at £15 million for £5 million, which entails a 33% recovery for HDFC. During the last quarter, HDFC had received a bid from Omkara ARC for around £110 million pooled stressed assets, but the bid value fell short of the mortgage lender's expectations, resulting in the sale not taking place. In FY23, Assets Care and Reconstruction Enterprise (ACRE) had twice bought developer loans at around 50% of the loan value. They paid £27 million against a total loan of £57.7 million, resulting in a 47% recovery in the first quarter of FY23 and £60.2 million for a £118 crore loan pool, resulting in a 51% recovery in the third quarter. HDFC's asset quality has been improving over the past few quarters, with individual Gross Non-Performing Assets (GNPA) decreasing from 0.99% to 0.75% as of March 31, 2023. Non-individual GNPA decreased from 4.76% to 2.9%. The total restructured pool stood at 0.6% of assets under management (AUM), down from 0.8% in the previous year. The company management expects the effective date of the merger to be in July. HDFC has been reducing certain non-individual exposures ahead of the impending merger with HDFC Bank. Non-individual loans continued to decline, primarily due to payment of previous facilities, resolutions, and a reduction in certain exposures stemming from the merger. Also Read RVNL and Siemens consortium awarded Mumbai Metro 2B project Tricity Metro Project in Punjab and Haryana gains momentum

Next Story
Infrastructure Urban

Greta Minerals Doubles WA Exploration Land, Targets Lithium Supply for India

Greta Minerals Pte, part of Singapore-based Greta Group, has expanded its exploration footprint in Western Australia to 1,550 sq km, up from 700 sq km acquired in 2024.Nitesh Chaudhari, Chairman of Greta Group, said, “We are very happy to expand our landholding, encouraged by initial results from Ultrafine+ soil sampling at Gecko North. The geological corridor appears promising for lithium, gold, and other critical minerals.”The Gecko North Project, 25 km northwest of Coolgardie, is one of seven critical mineral and gold projects under Greta Minerals (Australia) Pty, which now holds 37 gra..

Next Story
Infrastructure Urban

Vedanta Extends Demerger Deadline to March 2026 Amid Pending Approvals

Vedanta, led by Anil Agarwal, has extended the deadline for its corporate demerger to March 31, 2026, as approvals from the National Company Law Tribunal (NCLT) and relevant government authorities are still pending, the company said in a regulatory filing. The deadline had earlier been extended from March 31, 2025, to September 30, 2025.The board stated, “Given that the conditions precedent in the Scheme, including NCLT approval and approvals from certain government authorities, are still in process, the timeline for fulfilment of these conditions has been extended to March 31, 2026.” The ..

Next Story
Infrastructure Urban

MOIL Achieves Record September Production and Strong Q2 Performance

MOIL posted its best-ever September production of 1.52 lakh tonnes, up 3.8 per cent from the same period last year, reflecting robust operational performance. Exploratory core drilling also surged to 5,314 metre, a 46 per cent increase, highlighting the company’s focus on expanding its resource base.For Q2 FY26 (July–September 2025), MOIL achieved record quarterly production of 4.42 lakh tonnes, up 10.3 per cent year-on-year, and sales of 3.53 lakh tonne, growing 18.6 per cent over the same quarter last year. Exploratory drilling for the quarter reached 21,035 metre, marking a 4.1 per cent..

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement

Talk to us?