Mortgage finance major HDFC is mulling to invest up to Rs 100 crore per year in technology startups, its chairman Deepak Parekh said on Tuesday. The largest mortgage lender will install a dedicated team understanding the startup ecosystem to do the investments, he said.
The announcement comes at a time when there is a lot of focus on the policy front to encourage startups with an objective of encouraging innovation and creating employment opportunities.
Many corporate entities and also the largest lender SBI have been creating in-house funds to invest in startups.
"At the last board meet, I took an idea of investing Rs 100 crore per year in startups," Parekh said, speaking at the annual Tiecon event here.
He said just like the idea to branch out into universal banking, the board had reluctance with the idea of investing in startups as well, but underlined that he believes there is a need to invest in ideas of the future in the tech space.
The company will be creating a an in-house team at the headquarters to take charge of investments and exuded confidence that they will start operating in two months.
Parekh urged the youngsters not to get "consumed" by the ongoing economic slowdown and exuded confidence that the tide will change soon.
"Do not be disillusioned with the current difficulties. The tide will and has to change," he told the younger entrepreneurs, stressing that India will be an important engine for the world.
Recounting his days while starting up HDFC Bank, which has become the largest by market valuations now, Parekh said he pushed the board to get into mainstream banking because of the need to diversify beyond its forte of mortgage finance.
The veteran industry player, who has set up many an entity in the over four decades, said honesty, integrity and accountability are the key attributes that create a successful institution.
He said it is never too late to start, mentioning that HDFC itself was started as a retirement venture by H T Parekh when he was 65 years old.
The new institution went through a string on difficulties from its earliest days, including an initial public offering which bombed, difficulties in arranging loans from LIC for which lawyers had to called-in from Washington for convincing and challenges in getting UTI Mutual Fund, the only domestic asset manager, to invest, Parekh said.
He said despite faced with challenges like absence of security enforcement for defaults, HDFC adopted a unique model open for business and recalled that Infosys co-founder N R Narayana Murthy's first house in the financial capital was bought on a Rs 70,000 loan from his company, granted only on the basis of an appointment letter.