However, loans overdue for 6-months increased marginally to 2.4 percent from 2.0 percent and defaulted loans over 12 months increased to 0.3 percent from 0.2 percent by end-March 2008 from June 2007.
"HDFC has not repurchased defaulted loans from the trust as per the transaction's legal documents," Fitch said,
"However, the agency does not view this as a serious concern due to the small percentage - 0.3 percent - of assets in this category."
At the moment HDFC holds collections from the portfolio in a bank account in its own name. If HDFC's rating fall below 'A-(lka)' Fitch says the collection account will have to be transferred to an account in the name of the trust. HDFC Bank itself is rated 'A-(lka)' with a negative outlook, after its rating was cut by one notch.
The series A pass through securities issued by a home loan securities trust is now heavily over-collateralized.
"The affirmation is based on the good performance of the mortgage portfolio to date, the