HOME AND THE WORLD

India Today - - STATES - —M.G. Arun

THE FOUN­DA­TION

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.”

EX­PAN­SION MODE

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.

FOR­WARD MARCH

“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.

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