Development Credit Bank acquires 2000 Citibank home loans

Development Credit Bank has acquired a portion of Citibank''s home loan portfolio for Rs100 crore to facilitate its entry into the mortgage financing sector. The deal, which was finalised recently, consists of a mortgage book of 2,000 loans and will continue to be serviced by Citibank while the book bought will be reflected in DCB''s balance sheet. A senior company official said that DCB will earn about 12 per cent interest on the EMIs.

According to Shalinee Mimani, head, retail credit and risk, DCB, the company has also initiated advanced talks with Tata Finance and ICICI Bank to acquire their home loan portfolios for mortgage financing.

Mimani said, "We have a presence in the personal loan segment and now we want to grow our retail asset base. This will be done by expanding our portfolio and mortgage financing is one sector where we would like to go. We have just concluded a deal with Citibank and have bought their mortgage book for Rs100 crore."

According to senior DCB officials, the bank will launch its mortgage-financing product in mid-July and will be put under the umbrella of the ''LoanVantage'' brand. They said, "We were looking at foraying into the home loan sector through acquisitions and were in fact talking to many players. Initially we will roll out the service in 10 cities including Mumbai, Delhi, Bangalore, Chennai, Hyderabad and Kolkata."

Buying of mortgage books has become a trend recently, where big banks or NBFCs who have a bigger portfolio and can''t accommodate all of them in their balance sheet, sell some part of the portfolio. The loans sold will continue to be serviced by the former bank while the book will get reflected in the buyer''s balance sheet.