By Vineet Kumar 
HDFC Bank, India’s largest private-sector lender, has securitised over ₹12,700 crore in new car loans by issuing pass-through certificates (PTCs). These PTCs, which have been given a stellar “AAA/stable” rating by India Ratings, come with maturity periods ranging from two to six years.
This move is a strategic step for HDFC Bank, helping it unlock liquidity while leveraging its strong auto loan portfolio. As of the end of September 2024, the bank’s total gross advances stood at a whopping ₹25.19 trillion, with auto loan assets under management (AUMs) making up ₹1.3 trillion.
Here’s how it works: HDFC Bank has transferred a pool of new car loans to a trust, which will issue these PTCs to investors. The loan pool, valued at ₹12,371.8 crore as of October 31, 2024, includes about 1.8 lakh individual loans. Each of these loans has a strong repayment track record, demonstrating the reliability of the underlying borrowers. For example, imagine a car owner in Maharashtra who has diligently paid EMIs on their new sedan loan for over a year — loans like these form the backbone of the securitisation pool.
The financial details further highlight the appeal of these PTCs. The weighted average internal rate of return (IRR) for the pool stands at 8.91%, offering investors a solid yield. Plus, all the loans in the pool were classified as standard assets—meaning no defaults—as of the cut-off date.
Interestingly, the geographical diversity of the pool is notable. The top three contributing states account for 42.7% of the loans, indicating a broad-based demand for car loans across regions. For example, borrowers from thriving industrial hubs in Gujarat, Punjab, and Maharashtra are among the significant contributors to the pool.
By securitising these loans, HDFC Bank not only improves its cash flow but also bolsters its lending capacity, enabling it to meet growing customer demand for auto financing. This move underscores the bank’s ability to innovate and strategically manage its financial resources, maintaining its leadership in the private banking sector.