September 1, 2005
Mail Stop 4561
Aditya Puri
Managing Director
HDFC Bank Limited
HDFC Bank House
Senapati Bapat Marg, Lower Parel
Mumbai, 40013, India
Re: HDFC Bank Limited
Form 20-F for the period ended March 31, 2004
File No. 1-15216
Dear Mr. Puri:
We have reviewed your filing and have the following
comments.
We have limited our review of your filing to those issues we have
addressed in our comments. In some of our comments, we may ask
you
to provide us with information so we may better understand your
disclosure. After reviewing this information, we may raise
additional comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or any other aspect
of
our review. Feel free to call us at the telephone numbers listed
at
the end of this letter.
Audited Financial Statements
Notes to Financial Statements
Note 2 - Summary of Significant Accounting Policies
Allowance for Loan Losses
1. Your table on page 52 indicates that the specific valuation
allowance as a percentage of gross non-performing loans increased
from 71% at March 31, 2003 to 91% at March 31, 2004. Please tell
us
the reasons for the increase.
2. Your tables on pages 52 and 58 indicate that of your total
allowance for loan losses of Rs. 3,494 million at March 31, 2004,
you
determined that Rs. 2,722 was your best estimate of the amount of
losses incurred on impaired loans and that Rs. 772 million was
your
best estimate of the amounts of probable losses inherent in the
remainder of your loan portfolio. Please provide us with the
following information:
* Explain how you determined each element of the allowance for
non-
impaired loans;
* Clarify how your accounting policy is consistent with the
guidance
in SFAS 114 as amended by SFAS 118 for loans individually
evaluated
for impairment; and
* Explain how you determined that an allowance of less than one
percent of the remainder of your gross loan portfolio was
appropriate
for loans that were not impaired. Specifically explain how you
considered historical loss rates for each category of loans.
3. You state that you established an unallocated allowance for
non-
homogenous standard commercial loans based on overall portfolio
quality, asset growth, economic condition and other risk factors
effective April 1, 2003. Please provide us with the following
information:
* Explain how your loan loss methodology captured these risks
prior
to April 1, 2003; and
* Your comprehensive analysis that shows how you determined the
unallocated allowance for non-homogenous standard commercial loans
as
of March 31, 2004.
4. We note that the allowance no longer required on account of
write-
offs increased approximately Rs. 200 million during 2004. Please
provide us with the following information:
* The reasons for the increase in the allowance no longer required
on
account of write-offs during 2004 and how that increase was
considered in your determination of the net expense charged to the
allowance for credit losses;
* Your accounting policy for the allowance no longer required on
account of write-offs; and
* Quantify the allowance no longer required on account of write-
offs
for each type of loan as of March 31, 2003 and 2004.
As appropriate, please respond to these comments within 10
business days or tell us when you will provide us with a response.
Please furnish a response letter that keys your responses to our
comments and provides any requested information. Detailed letters
greatly facilitate our review. Please file your response letter
on
EDGAR. Please understand that we may have additional comments
after
reviewing your responses to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing to be certain that the
filing includes all information required under the Securities
Exchange Act of 1934 and that they have provided all information
investors require for an informed investment decision. Since the
company and its management are in possession of all facts relating
to
a company`s disclosure, they are responsible for the accuracy and
adequacy of the disclosures they have made.
In connection with responding to our comments, please
provide,
in writing, a statement from the company acknowledging that:
* the company is responsible for the adequacy and accuracy of the
disclosure in the filing;
* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filing; and
* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in our review of your filing or in
response to our comments on your filing.
You may contact Sharon Johnson, Staff Accountant, at (202)
551-
3474 or me at (202) 551-3490 if you have questions.
Sincerely,
Donald Walker
Senior Assistant Chief
Accountant
cc: Via U.S Mail and Facsimile 212-765-1049
Timothy G. Massad, Esq.
Cravath, Swaine & Moore LLP
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
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Aditya Puri
HDFC Bank Limited
September 1, 2005
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