HDFC Bank, India’s largest private sector lender, is in talks with several global banks to offload nearly Rs 8,400 crore  ($1 billion) in loans to reduce its credit book and bring it more in line with deposits, Bloomberg reported, quoting sources.

Discussions are ongoing with banks including Barclays Plc, Citigroup Inc. and JPMorgan Chase & Co. ICICI Bank is also a part of the talks, Bloomberg reported.

The terms of the proposed loan portfolio sale are yet to be finalised. It would take place through a debt instrument known as pass-through certificates.

Indian banks are under increased regulatory pressure to improve their credit-to-deposit ratios, which show how much of the bank's deposits are being lent out to borrowers. The loan sales will help HDFC Bank improve that ratio, which has worsened in recent years as growth in credit has outpaced deposits, the report said.

HDFC Bank is also in separate discussions with local asset management companies (AMCs) to sell as much as Rs 10,000 crore of loans, Bloomberg had earlier reported. It already sold a Rs 5,000 crore loan portfolio to an undisclosed buyer in June, as per the report. 

HDFC Bank’s credit to deposit ratio stood at 104% as of March 2024, higher than the 85 to 88% rate in the previous three financial years, according to ICRA. 

The ratio rose following HDFC Bank’s merger last year with mortgage lender Housing Development Finance Corp.

HDFC Bank’s gross advances grew 52.6% year-on-year to Rs 24.9 lakh crore as of June 2024. 

Indian banks’ deposits grew 11% annually through 23 August, slower than loan growth of 14%, according to the latest data from the Reserve Bank of India.

The deposit growth has been lagging credit for some time, which “may potentially expose the system to structural liquidity issues,” the RBI said in August.