Deepak Parekh: Looking back at the man who transformed HDFC, fullfilled housing dreams of millions

"As the son grows older, he acquires his father's business," is what Deepak Parekh said on April 4, 2022, when the housing finance giant HDFC had first announced it would merge with its subsidiary HDFC Bank.

Saturday, July 1, 2023, will mark an end of an era of sorts as this merger is set to complete. The son will take over the parent, and the country's first and the largest housing finance company will cease to exist. But, it will also be an end of an era for Deepak Parekh, the man who made HDFC a household name and helped millions of middle-class Indians buy their own homes, as he hangs up his boots after 46 years at the firm.

Housing Development Finance Corp was set up by Deepak Parekh's uncle H.T. Parekh in 1977. Deepak was already having a successful career as a banker with Chase Manhattan Bank when he decided to come back to India and join HDFC in 1978.

Back then, HDFC was a small lending firm. Those were also the years when for many Indian middle class, buying their own home was a dream.

By formalising the home loan process and bringing in transparency, HDFC fulfilled that dream of millions of ordinary Indians. Today, almost every scheduled commercial bank and a few non-bank financial institutions offer home loans. But, in the 1980s and even 1990s, HDFC was the go-to institution if someone wanted a home loan and it remains the largest in the mortgage business even today, 46 years later.

For the year ending March 2023, HDFC reported a net profit of Rs 16,239 crore. Its assets under management stood at over Rs 7.2 lakh crore. The stock ended at Rs 2,821.50, up 1.5 per cent and had a market cap of Rs 5.22 lakh crore.

The merger will catapult HDFC Bank to become the world's fourth largest with a combined market cap of Rs 14.74 lakh crore, rivalling the US and Chinese banking giants like JP Morgan Chase, Bank of America and Industrial and Commercial Bank of China.

"No doubt, the housing finance industry is a competitive one today. Yet, HDFC will always have the distinction of being the institution that introduced retail housing finance to the country. Over the years, we have, in no small measure, helped chart the course for housing finance to be recognised as an integral part of development of the country," Parekh wrote in his final letter to shareholders.

"Home loans will now be complemented with HDFC Bank’s core strengths — its sales engine, execution capabilities at scale and deep insights on consumer behaviour. For HDFC Bank, a home loan customer marks the beginning of a journey of having a customer in perpetuity," he further wrote.

Over the years, HDFC expanded its horizons. It set up a bank, which became the largest in the private sector in India. It set up a mutual fund business, which became the largest asset management company (currently the third largest AMC). It also entered the equity broking business and started general as well as life insurance arms with international partners.

While HDFC has gone from strength to strength over the decades, Parekh has also been part of several committees, becoming the go-to man of sorts for his knowledge and advise on critical matters.

For instance, he was appointed to the board of Satyam Computers back in 2009 when the then fourth largest software services exporter was hit by an accounting fraud by its promoters. Parekh along with other board members, played a key role in the revival and subsequent acquisition of the Satyam by Tech Mahindra.

Parekh also chaired the high-level committee that was formed in 1999 to revive UTI's US-64 scheme.

"It is my time to hang my boots with both anticipation and hope for the future. While this will be my last communication to shareholders of HDFC, rest assured we now stride tall into a very exciting future of growth and prosperity," is how Parekh summed up in his letter to shareholders.

The merger of HDFC with HDFC Bank is the largest such deal in corporate India. Once complete, HDFC Bank will have no promoter and will be entirely held by public shareholders.

Sashidhar Jagdishan, the MD and CEO of HDFC Bank, has termed the deal as "defining event in our journey."

"As we navigate the path ahead, we will embrace challenges as opportunities, learn from our experiences, and strive to be the benchmark of success and integrity in the financial services industry," he said.