The stockbroker is H.T.Parkeh, and the institution is HDFC

The Original HDFC

H T Parekh (HTP)

Hasmukh Thakordas Parekh was a Gujarati Jain who started his working life as a lecturer at St. Xavier’s College in Bombay. But, like most other folks from his community, he will soon get attracted to Equity Market. After three years of teaching others to make a better living, he began his financial career with one of the biggest brokers in Bombay in those times, Harkisandass Lukhmidass. This is where he will draft his first proposal for a housing finance company for them in 1951. In 1953 he brought out a volume called: The Bombay Money Market which detailed the intricate working of the Indian money market. But, then he will leave India for his studies at the London School of Economics(LSE). 

Post that, on his arrival, he will join Industrial Credit and Investment Corporation of India (ICICI) and was its Chairman (1972) till his retirement. Along the same time, he will argue for public-private partnership in financial institutions and will again push for the affordable financial support for basic needs such as housing. Alongside he was also the key member of Sameeksha Trust, that was running the Economic Weekly magazine (today’s EPW)

He was the advisor to the LIC during the Haridas Mundhra scandal and knew the financial markets inside out. During the Harshad Mehta Scam, he plays a key role in pushing Stanchart Chartered to file an FIR against Bhupen Dalal.

Pioneer in Housing Finance

At ICICI he made another proposal for a housing finance company – this time, for Bank of Baroda to set up a subsidiary for housing finance-and sent it for the finance ministry’s consideration in 1973. But, no one was interested. 

He retired from ICICI in December 1975, at the age of 65. Now, he started focusing on his dream project of Housing Finance in India. By March 1977, the Janata government had replaced the Congress government. Parekh went to New Delhi to meet H.M. Patel, then Finance Minister. He told Mr. Patel about his plan and also said that he had come to him not for any financial help but for the new government’s support, in principle. Patel told Parekh, ‘What are you waiting for, go ahead, it is an excellent idea”. Housing Development Finance Corporation Limited (HDFC) was registered as a company on October 17 and H.M. 

The Board of Directors of ICICI had agreed to back the project by taking up ₹50 lakhs of equity, i.e. 5% of the proposed capital. Mukhtar Munjee will convince Aga Khan to be their investor. He will also ask his son Nasser Munjee to join this budding institution as the first set of employees.

HTP formally launched HDFC on October 22, 1977, (Dussehra day) in Bombay, with Mr Patel as the Chief Guest and with an initial capital of 10 crores.

Deepak Parekh

In May 1978, HDFC will have their public issues. Within a year, HTP called upon his nephew who was then in his late thirties and was working with Chase Manhattan Bank in Saudi Arabia. told his nephew: ‘We are doing something new, why don’t you join us instead of running all over the world?’ Deepak joined as the Deputy General Manager in November 1978. When Deepak Parekh joined HDFC, he had to take a 50 per cent salary cut. 

But Banking was in his blood, Central Bank of India would hire Deepak’s grandfather as their first employee. His father, too, was an employee of the Central Bank of India and retired as its deputy managing director.

The other Deepak

Deepak Satwalekar, a B.Tech from IIT Bombay will join in 1981. He came from a family of artists. His grandfather was a famous painter and his father, Madhav Satwalekar was the Director of Art, Government of Maharashtra for many years. Madhavji painted H.T. Parekh’s portrait that hangs today at the Indian Merchants’ Chamber.

HDFC-Powerhouse in Making

For years, HDFC relied on wholesale money that came from international agencies to fund its retail loans. It had no competition. Till the late 1980s, it governed 100 % of the housing loan business.

HDFC floated two more ventures in 1986-87. Gujarat Rural Housing Finance Corporation (GRUH), set up jointly with IFC, Washington, and the Aga Khan, will operate only in Gujarat, for acquisition or upgrading of residential loans in small towns and rural areas.

By 1987, their disbursements reached Rs 175.52 crore, registering increases of 20 % (yes the same 20%, with which we all associate HDFC Bank today). Within a year they started doing a few new innovations in the Indian market.

Three new products launched during earlier years, the Step-Up Repayment Facility (SURF), Telescopic Loans (TLP) and Short Term Bridging Loans (STBL).

SURF offers an option where the repayment schedule is linked to the expected growth in your income. Soon it accounted for a 21% share of total loan approvals during the following year.

HDFC has been like its sister concern HDFC bank phenomenal wealth creator


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