Citi to hawk HDFC loans

Citigroup is expanding its relationship with Housing Development Finance Corporation (HDFC) beyond the stake it owns in the country's mortgage lender.

The US financial services group's Indian branches will now sell HDFC's home loans alongside their own mortgage loan products and are also helping HDFC in its asset management business.

Banking source said Citigroup and HDFC have signed an operating agreement, based on which the US financial services group would start selling HDFC home loans.

HDFC and Citigroup also plan to expand their business relationship to cross-selling of more products, but HDFC will have to ensure that its dealings with the US financial services provider are not in conflict with HDFC Bank, promoted by it.

Citigroup had acquired 9.27 per cent stake in HDFC from Standard Life in May 2006 for Rs 3,021 crore to raise its stake to 12.3 per cent. When HDFC decided earlier this month to make a preferential allotment to private equity investor Carlyle Group, Citigroup sought a preferential allotment to it to ensure its stake in HDFC remains at 12.3 per cent after the allotment to Carlyle.

"We would work out arrangements for cross-selling each others' products in due course," Keki Mistry, managing director, HDFC, said.

Further details of the Citigroup-HDFC deal were not available. Banking sources said Citigroup would sell HDFC's home loans based on the Indian lender's risk criteria.