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SBI ups ante against HDFC in loan war

Sometime in 2010, the State Bank of India (SBI) refused a few hundred-crore-rupee loan to HDFC to go through despite the latter being a bluechip borrower from the bank.

SBI had perfectly valid reasons: The loan would have been used by HDFC to finance a small part of its housing finance business. The fly in the ointment was that SBI had also moved in big time into this line of retail credit and so it made little sense to finance its competitor.

Yet, in the highly regulated world of Indian finance, this was a most unusual competitive development. At stake is the race for market leadership of the largest business segment in the Indian financial sector. The players slugging it out, SBI and HDFC are two of the country’s most valuable financial entities.

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