Assiduously shielding its loan book from the flying debris of India’s $207 billion bad-debt crisis, HDFC Bank Ltd has kept its balance sheet in a near-pristine condition. The aura of invincibility bestowed by a 1.26% soured-loan ratio—compared with almost 10% for State Bank of India and 25% for IDBI Bank Ltd — also explains why HDFC Bank has a price-to-book multiple of 5.2. In that case, the correct thing to do would be for HDFC Bank to acknowledge the “divergence” between its self-reported and RBI-assessed NPAs. Its halo would thus slip, and the charge of being less than truthful that I’ve levelled at other non-state Indian lenders—Axis Bank Ltd, ICICI Bank Ltd and Yes Bank Ltd—would apply equally to HDFC Bank. Meanwhile, HDFC Bank must present a more accurate picture of its soured loans.

Source: Mint December 04, 2017 03:11 UTC