HDFC Bank Slows Lending, Cuts Borrowings After Merger Reshuffle

Once known for quick lending, HDFC Bank has slowed down. Its latest financial results show smaller loan growth and lower borrowings. The bank now seems focused on keeping its balance sheet steady.

Have you been getting fewer calls offering personal loans or credit cards? That’s not a coincidence. India’s biggest private bank is no longer chasing fast loan growth, at least for the moment.

In the financial year 2024–25 (FY25), HDFC Bank’s total loans grew by just 5.4 percent. This data was shared in its Q4 FY25 Investor Presentation released in April 2025. Chairman Sashidhar Jagdishan said this is the bank’s slowest loan growth in recent years.

Loan Push Softens, Borrowings Decline

Post its merger with HDFC Ltd in July 2023, the bank was left with a larger balance sheet but also a heavier debt load. Now, the focus seems to have shifted. As per the FY25 report, the bank reduced its borrowings by ₹1.14 lakh crore in just the last quarter of the financial year, pointing to a sharper control on liability costs.

The gross advances (total loans given) stood at ₹26.44 lakh crore as of March 2025. While this marks a year-on-year growth, it falls short compared to pre-merger expansion rates. The slowdown was intentional, said the Chairman, aimed at correcting a high loan-to-deposit ratio and managing the merger-related asset-liability mismatch.

Here's how the bank’s borrowing and advances looked on the books:

Advances and Borrowings – FY25 Snapshot

Metric	March 2024	March 2025	Change
Gross Advances	₹24.84 lakh crore	₹26.44 lakh crore	#ERROR!
Borrowings	₹6.62 lakh crore	₹5.48 lakh crore	–₹1.14 lakh crore

While deposits kept rising, the bank was quietly cleaning up its loan-to-deposit imbalance.

Read More – HDFC Bank Plans Aggressive Loan Growth After Resetting Credit-to-Deposit Ratio

Deposit Strength Improves Stability

A stable deposit base allows a bank to lend without heavy reliance on high-cost borrowings. That’s exactly what HDFC Bank appeared to strengthen in FY25.

The investor presentation also showed that HDFC Bank’s total deposits stood at ₹27.15 lakh crore at the end of March 2025, which is 14.1 percent higher than a year ago. More importantly, average deposits during the quarter grew by 15.8 percent, faster than loan growth.

CASA deposits, which give banks cheaper funds, rose by 8.2 percent compared to the last quarter. The CASA ratio remained stable, holding close to 35 percent.

Deposit Movement – FY25

Type of Deposit	Growth (YoY)	Growth (QoQ Q4 FY25)
End-of-Period Deposits	+14.10%	+5.90%
Average Deposits	+15.80%	+3.10%
CASA Deposits (EOP)	—	+8.20%

Thanks to the strong deposit growth, HDFC Bank brought down its credit-to-deposit ratio from over 110 percent during the merger to around 96 percent by March 2025.

The increase in low-cost deposits also gave the bank room to rely less on outside borrowing, especially bonds and other tools that came with higher interest costs.

Loan Securitisation by HDFC Bank

In a lesser-known move, HDFC Bank also leaned on securitisation during the fiscal year to manage its liquidity and capital needs. According to the bank's disclosures, ₹46,300 crore worth of loans were securitised in FY25. This strategy allowed it to raise funds without inflating its loan book further.

In Q1 FY26 alone, which started in April 2025, another ₹3,300 crore was offloaded using the same method.

Period	Loans Securitised
FY25 (Total)	₹46,300 crore
Q1 FY26	₹3,300 crore

Securitisation also helped the bank manage its capital more efficiently while preserving liquidity.

Capital Position Stays Strong

HDFC Bank also ended the fiscal year with a healthy capital adequacy ratio. The Capital to Risk Weighted Assets Ratio (CAR) stood at 19.6 percent, with a Common Equity Tier 1 (CET1) ratio of 17.2 percent, well above the regulatory minimum.

At a time when loan growth was kept subdued, maintaining a strong capital buffer shows the bank's focus on readiness for the next phase of lending.

Capital Metrics – March 2025

Metric	Value
CAR	19.60%
CET1 Ratio	17.20%
Loan-to-Deposit	~96%

While loan growth stayed low, HDFC Bank kept a strong capital base, showing it is getting ready for the next round of lending.

Also Read - How Banks Are Adapting to Inflationary Pressures in India’s Economy?

Looking Ahead

For the near term, HDFC Bank seems in no hurry to chase high growth. In a call with investors post the Q4 FY25 release, executives indicated that higher loan growth may resume only after FY26, once the funding structure is stronger and more balanced.

By slowing down and fixing its financial ratios after the merger, the bank has made room to grow in a steady way. It now plans to focus more on affordable housing, better reach in retail banking, and digital lending, which may pick up in the coming year.

With less debt, more deposits, and stronger capital, the bank is clearly changing its approach, cautious, well-planned, and ready for slow but steady growth.

In a sector known for speed, India’s top private bank is now choosing control.

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