The iconic HDFC, India’s oldest and largest standalone housing finance company (HFC), may cease to exist in the next one-and-a-half years or so if its planned merger with HDFC Bank gets regulatory and statutory approvals.

As a result, LIC Housing Finance Ltd (LICHFL) would be catapulted to the numero uno position as India’s largest standalone HFC.

HDFC was promoted as a ‘development finance institution’ in 1977 by the Industrial Credit and Investment Corporation of India (ICICI), the International Finance Corporation, Washington (IFC) and His Royal Highness The Aga Khan.

Hasmukh Thakordas (HT) Parekh was the Founder-Chairman of HDFC. His vision to empower the common man to be a home owner early on in life drove him to establish HDFC, India’s first retail housing finance company, after he retired as the Chairman of ICICI.

Fondly referred to as ‘Hasmukhbhai’, he was a doyen of the Indian housing and financial sectors and uncle of current Chairman Deepak Parekh.

Deepak Parekh and his top team, including Keki Mistry (Vice Chairman and Chief Executive Officer), Renu Sud Karnad (Managing Director) and V Srinivasa Rangan (Executive Director) ably carried forward HT Parekh’s legacy, building institutions — both India and overseas — starting foreign operations and nurturing leaders.

A pioneer in housing finance, HDFC gave out its first loan to DB Remedios in Mumbai in 1978. 

From then on the Institution has gone from strength to strength, increasing not just its loan book but also floating institutions (some in association with financial institutions and commercial banks) such as Gujarat Rural Housing Finance Corporation (GRUH), Infrastructure Leasing and Financial Services Limited (IL&FS), Credit Rating Information Services of India Limited (CRISIL), Housing Promotion and Finance Corporation Limited (now SBI Home Finance) and Can Fin Homes.

HDFC has become a gold standard when it comes to home loans, with its stringent underwriting standards ensuring that bad loans stay well within manageable limits.

In 1993, HDFC became the first Indian company to receive an in-principal approval from the Reserve Bank of India for setting up a banking company (HDFC Bank) in the private sector. The bank was inaugurated in 1995 by the then Finance Minister Manmohan Singh. In 1996, the Corporation opened its first international office in Dubai, UAE.

HDFC was the first Housing Finance Company to introduce the ‘Adjustable Rate Home Loans’ in India in 1999. 

In 2000, the Corporation entered into a joint venture with Standard Life Investments, UK to promote HDFC Asset Management Company. In the same year, HDFC Standard Life Insurance Company became the first private insurer in India to obtain registration from the Insurance Regulatory and Development Authority (IRDA) to issue life insurance policies.

In 2001, HDFC promoted India’s first credit bureau, CIBIL along with the State Bank of India, Dun & Bradstreet Services India Pvt Ltd and TransUnion International Inc. In 2002, HDFC entered into a joint venture with Chubb Corporation, US, to promote HDFC-Chubb General Insurance Company Limited.

In 2006, HDFC’s cumulative Home Loan approvals crossed ₹ 1 lac crore. In 2009, the Corporation acquired an equity stake in Credila Financial Services, India’s first dedicated education loan company. In 2019, HDFC announced acquisition of entire 50.8 per cent shareholding of Apollo Hospitals Group in Apollo Munich health insurance.

If the merger of HDFC with HDFC Bank goes through, LIC Housing Finance Ltd (LIC HFL) will become India’s largest standalone HFC.

As at December end-2021, HDFC’s assets under management (AUM) stood at ₹6,18,917 crore and LIC HFL’s outstanding loan portfolio was at ₹2,43,412 crore.

Parekh, in his address to the media on Monday, emphasised that change is inevitable, but change which is beneficial is always welcome.

He concluded his address by stating that: “…after 45 glorious years of providing home loans to over 9 million customers, the time is right for HDFC to find a new home. Our new home is with our family, with our own people, but it’s bigger, better and significantly more promising.”

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