The Reserve Bank of India in April 2023 asked HDFC Bank to reduce its shareholding in HDFC Credila to 10% within two years of the merger with mortgage lender HDFC.
HDFC Bank announced on 20th March that it has completed the sale of its stake in education finance arm HDFC Credila for 95.53 billion rupees ($1.15 billion) to private equity firms BPEA EQT and ChrysCapital, reported Reuters.
Why Did HDFC Sell Stakes In HDFC Credila?
The deal was already announced in June 2023 which was part of mandated regulatory requirements that had to be done before the completion of HDFC with HDFC Bank merger.
As per the regulation the bank was barred from owning its inherited education loan company after its merger with its parent company HDFC Bank in 2023.
HDFC Bank will maintain a 9.99% stake in HDFC Credila. The Reserve Bank of India in April 2023 asked HDFC Bank to reduce its shareholding in HDFC Credila to 10% within two years of the merger with mortgage lender HDFC.
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HDFC’s Investment In HDFC Credila
HDFC invested in an education loan company in 2009. This deal became profitable for HDFC. The company has a loan book of 25237 crore and it reported net profit of rs.397 crore with bad loans of just rs. 0.1%, reported Times Of India.
HDFC Credila was India’s first company which was dedicated only for education loans. The company was founded by Mr. Anil and Ajay Bohora in 2006, it was HDFC Ltd. subsidiary since 2010, where HDFC holded a majority stake. Co-Founder and CEO of HDFC Credila, Ajay Bohora, started his career with Tata Exports Ltd. and then went to New York to pursue his MBA.
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HDFC Bank Quarter Results
HDFC Bank has completed the deal before it is going to announce its fourth-quarter results next month.
HDFC reported a net profit of Rs 16,372.5 crore for the October-December period (Q3 FY24). The quarterly net profit increased 33.5 per cent on a year-on-year basis, according its filing with regulator. HDFC Bank said its net interest income (NII)—or the difference between interest earned and interest paid—grew 23.9 per cent to Rs 28,470 crore for the three-month period, reported Zee Business.
(With Input From Reuters)
