The rating took into account the bank's 51 percent state ownership, perceived importance to the country's low and- middle- income housing, considerable borrowings from state-related entities and low credit risk of its housing loan portfolio.
It had low its relatively lower systemic importance compared to larger commercial banks.
Fitch notes said that the rating could come under negative pressure if the bank is unable to pass-on a considerable amount of future funding cost increases via the timely re-pricing of its existing loans.
HDFC's group return on assets (ROA) had improved to an annualised 0.79 percent at end-September 2009 from a low of negative 1.68 percent at financial year end 2008.
This was partly due to the re-pricing of almost 50 percent of the bank's existing loans in October 2008, together with improvements in the average funding costs in 2009.
Improvements to f