HDFC Asks RBI For Permission To Classify Some Bonds Under ‘Infra’ Category: Report

Housing Development Finance Corp (HDFC) has reportedly asked for the Reserve Bank of India (RBI’s) nod to classify some bonds. As per updates, HDFC is seeking to classify these outstanding bonds under the ‘infra’ category.

According to a report in the Economic Times, HDFC has brought such bonds under scanners that have tenure of more than seven years. Since it is waiting for RBI’s permission to classify them as infrastructure bonds, meanwhile, HDFC is also preparing to complete the merger with HDFC Bank. 

“The central bank has been examining the request over the last few months and is assessing the possible impact of it if granted,” the Economic Times quoted a source as saying.

If RBI gives the nod to HDFC as planned, the dispensation is reportedly expected to give some breathing room to the merged entity of HDFC and HDFC Bank. This would be especially helpful on the maintenance of the cash reserve ratio (CRR) and statutory liquidity ratio (SLR) on the entity’s infrastructure and affordable-housing loan portfolio.

The report explains RBI rules and mentions that as per the central bank’s rules, the funds raised from long-term bonds issued by banks for investment in infrastructure and affordable housing are usually exempted from maintenance of SLR and CRR.

The topic becomes important in this case as HDFC is in the process of merging with HDFC Bank, the entity is set to witness CRR and SLR demands, those that run into thousands of crores of rupees. 

“An approval would help the merged entity’s profitability. They have around Rs 1.2 lakh crore of such bonds and a dispensation from the RBI would help set off liabilities against the infrastructure and affordable-housing loans for the merged entity without maintaining CRR and SLR on them," the report quoted a source as saying.