Due to the merger with HDFC ltd (which was a mortgage lender so didn’t take any deposits, correct me if I’m wrong), the CD ratio, Credit part of the lender was added while deposits didn’t grow hence the ratio jumped to above 100%. Another point to note is that there must be some loan structuring etc that might be happening since we don’t know if HDFC had the same standards as HDFC Bank when it comes to loan recovery, etc.
As I mentioned about the acceptable ratio previously which is around 80% and less, others won’t have this issue as they already are in the acceptable range.
So it’s basically the problem for HDFC Bank, not for others, as even if others grow their credit and deposit ~ equally, they won’t have the problem but for HDFC Bank at whatever growth they have, they have an added compulsion of making sure Credit < Deposit.
All in all, once this issue is sorted, we might see rerating.
This will pertain till RBI is tightening it’s noose. I personally think it’s good for them to have a tight noose to reduce slippage, etc since we’re moving into credit based society as consumerism/premiumization keeps on increasing. If you’ve observed the recent results of microfinance, you’ll notice that MFI is not at all healthy these days. Of course it may not be related to larger banks, but still we don’t know how big a picture that RBI is seeing.
Happy to receive feedbacks.
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