HDFC may link interest rates to external benchmarks, says report

Housing Development Finance Corp (HDFC Ltd), the country’s largest mortgage lender, is looking to link interest rate to external benchmarks, reported The Economic Times. The home financier is looking to link both loans and liabilities as this will protect interest margins, HDFC vice chairman Keki Mistry told The Economic Times. “We will still examine such loan products in our next asset liability committee (ALCO) meeting to be held in the next two weeks,” Mistry said. “We would come up with external benchmark-linked loan products only when we are able to match the same mechanism on our liabilities side.” The lender, the report added, is likely to engage in aggressive trades in interest-rate swaps and exchange fixed-rate payments for floating rates. HDFC’s total assets under management rose 13 percent to Rs 4.76 lakh crore as of June 30, report said. According to the report, it meets nearly half of its fund requirement through debt securities while public deposits form over 30 percent of the borrowing book.  

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