HOME AND THE WORLD
While studying at the London School of Economics in 1939, Hasmukh T. Parekh observed that many Londoners owned their houses (via mortgage), unlike in India where most would only buy property at the end of their careers, using retirement savings, provident funds and the like. So, after stepping down as the chairman of ICICI at the age of 68, he founded the Housing Development Finance Corporation (HDFC) in 1977. Deepak, his nephew and the present chairman recalls: “In those days, HDFC was viewed with a great deal of scepticism. People wondered whether the venture would work at all.”
Even today, the real estate sector is notorious for black money payments. Matters were no different when HDFC set up shop. To encourage professionalism and transparency, HDFC insisted that developers doing business with it accept payments only via cheque. The firm even offered a 0.5 per cent discount on interest rates to developers willing to sell property based on carpet area. It was not until 1994 that HDFC made its first move towards being a financial services conglomerate. Within a decade of setting up its banking arm, HDFC made inroads into asset management, life insurance, general insurance, real estate and later, into education loans.
“This year is HDFC’s 40th anniversary, and we will be entering our golden decade. We are more excited today than we were 40 years ago about the prospects of housing in India,” says Deepak Parekh. With India’s housing loans-to-GDP ratio at an abysmal 9 per cent (compared to 18 per cent in China and between 60 and 85 per cent in most advanced economies), there is tremendous scope for growth for housing in the country.