The merger of Housing Development Finance Corporation (HDFC), India's oldest and largest mortgage lending firm, with HDFC Bank came into effect on July 1. And it is an emotional moment for many old HDFC employees who spent a lifetime with the company.
Some HDFC employees Moneycontrol spoke to recall their early days, including the struggles of selling home loans when the product wasn't popular. "I still remember the first day I joined HDFC. Now I've worked for more than two decades with the company, and it feels like home to me," said Nitin Walia, Assistant Manager of a branch in Delhi.
Another employee, who did not wish to be named, said after working 34 years at HDFC, the culture of the company is what he will miss the most. "The spirit of working and the culture is the most important thing I experienced in my career at HDFC," said the employee.
"HDFC is an iconic brand. No one can take HDFC from us," said another senior employee.
"My 17 years in HDFC were full of a roller-coaster ride. Now to see that HDFC merged with HDFC Bank is a happy moment," said Shalabh Sharma, Deputy Manager at an HDFC branch in Mumbai.
Old days
HDFC opened in 1977 and was the sole mortgage lender in India at that time. Keki Mistry, CEO and Vice Chairman, HDFC, in an exclusive interview to Moneycontrol in March 2023, said that initially it was the only mortgage lender in India, and, with time, “we created our competition."
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"We trained some individuals and banks to start mortgage lending. During the early years of the company, home loans were not popular in India," Mistry said.
Echoing this, Sharma said that his role in the initial years involved developing leads and contacts. "In the early years, people did not know about home loans. Before selling, there was a need for informing," said Sharma.
Mahesh Shah, former Corporate Communications Head at HDFC, said that the first word that comes to his mind when he recalls his journey with HDFC is commitment. Shah recalled that in May 1987, Deepak Parekh, Chairman, HDFC, came to Cross Maidan to motivate the HDFC Cricket team during the finals of the Corporate Cricket tournament ‘The Times Shield.’
"He took me for a stroll on the ground as it was a lunch break to discuss the status of the match which he responded HDFC will win. He wanted to know if we needed to strengthen the team to meet the challenges of a higher level and he stuck to his commitment of a spinner being recruited," said Shah.
The evolution
HDFC Bank was incorporated in 1994 as a banking subsidiary of HDFC in Mumbai. With time, HDFC and HDFC Bank became mammoths in their respective sectors. The bank’s loan book, over the years, grew tremendously from Rs 2.3 lakh crore in 2013 to Rs 16 lakh crore in 2023. As of March 2023, the market capitalisation of HDFC Bank is Rs 9.5 lakh crore and that of HDFC is Rs 5.2 lakh crore.
The struggle of selling a home loan was something that HDFC faced in the years of its evolution. Parekh, in a press conference in Mumbai, on June 27, said that he still remembers the first loan the company gave. "Our first home loan was of Rs 30,000. We took photographs of the customer with his house and made it the cover picture of our first annual report," said Parekh.
Shah recalled that during his time in HDFC, he remembered the growth of the company and summed it up in one word — commitment. "The management of the company created an environment of subtleness and friendliness from the earliest days," said Shah.
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Culture of HDFC
Parekh said HDFC and HDFC Bank have different cultures due to the nature of their business. However, though there is some difference, the company aims to have the same culture in the bank, he added. "We want to have the culture of HDFC in HDFC Bank. Culture is the essential part of our organisation. A bank which does not do housing will have a different culture," said Parekh.
Mistry also said that there is not much cultural difference in HDFC and HDFC Bank and that every single employee from the mortgage lender will get absorbed into the bank. "We don't see too many cultural differences between the two entities and all our staff. We have reassured that every single employee of HDFC will be taken into the bank," said Mistry.
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The employee, who did not wish to be named, highlighted that the culture at HDFC is one thing he takes pride in. "Culture is the essence of a workplace. I felt a home-like culture at HDFC," said the employee.
The merger
HDFC and HDFC Bank announced the decision to merge on April 4, 2022. As per the plan, HDFC will acquire a 41 percent stake in HDFC Bank through the merger.
In fact, Parekh had said, back in 2015 itself, that his firm could consider a merger with HDFC Bank, if circumstances were favourable. But the wait for the merger got longer with the parent putting the idea on the backburner. Parekh had said that the merger makes sense, provided there is no loss for shareholders.
Sashidhar Jagdishan, Managing Director, HDFC Bank, on an analyst call on May 24, said that the merger is only about a month away.
Once the deal comes into force, HDFC Bank will be 100 percent owned by public shareholders, and existing shareholders of HDFC will own 41 percent of the bank. With the parent finally joining with the bank, the combined entity will emerge as a powerhouse in the Indian banking industry.
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