Housing Development Finance Corporation (HDFC) has reportedly picked Jefferies Financial Group to manage the sale of HDFC Credila Financial Services, which offers education loans.

According to a Bloomberg report, HDFC could seek a value of as much as $1 billion for the higher education financier and the proposed transaction is part of its move to meet the Reserve Bank of India’s requirements for its merger with HDFC Bank. The report added that Jefferies has started initial talks with interested bidders, and a formal process for the sale may be launched soon.

While HDFC is proposed to be merged with HDFC Bank, the RBI recently did not give exceptions on certain forbearances sought by the lender.

In the case of HDFC Credila Financial Services, which has a book of over Rs 10,000 crore and is owned fully by HDFC at present, HDFC Bank will have to reduce its holding to 10 per cent in two years and stop onboarding new customers.

The Bloomberg report said that no decision has been taken on the valuation of the student loan provider or the time by which the sale will be completed.

While HDFC Bank is looking to conclude the merger with the country’s largest housing finance company by July, the RBI did not make any exceptions on cash reserve ratio (CRR) and statutory liquidity ratio (SLR) requirements as sought by the lender. It, however, gave some relaxation on the priority sector lending (PSL) and investments front.

HDFC Bank shall continue to comply with the current requirements of CRR, SLR and LCR (liquidity coverage ratio) from the effective date of merger without exceptions, the bank had recently said, quoting from an RBI letter.

CRR is the percentage of deposits which a bank has to park with the RBI for which it does not earn any interest, while SLR is a percentage of deposits which are mandated to be invested in government securities.