The gigantic HDFC of today is part of H.T. Parekh’s rich entrepreneurial legacy

H.T. Parekh wanted middle class Indians to have the chance to build a home before they were too old. He set up HDFC in 1977. By the time he passed away, in 1994, HDFC Bank, too, had started. (Illustration by Suneesh K.)

The merger of the HDFCs, the original housing finance company and its offspring, the bank, is a good occasion to remember the man who made them possible. Together, the two will make for a financial powerhouse, a banking giant with a market capitalisation of Rs 14 lakh crore. But even as independent entities they were huge successes. HDFC Bank is India’s largest private sector bank by assets while HDFC has been the Indian home buyers’ lender of choice for the last five decades.

All thanks to Hasmukh Thakordas Parekh, an extraordinary business leader who ended his professional career as the chairman of ICICI, and then, at the age of 65, went on to set up the country's first housing finance corporation.

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This was in 1977, nearly 14 years before liberalisation and 40 years before startups became the flavour of business in the country. Indeed, what an era that was for the sheer explosion of entrepreneurship in the country. In 1973, Dhirubhai Ambani renamed his tiny polyester firm Reliance Industries and started a journey that would lead to today’s dominant mega-corporation, straddling multiple businesses. Around the same time, in 1976, Anil Agarwal was laying the foundations of today’s Vedanta Resources which started off as a tiny cable manufacturing unit and went on to list on the London Stock Exchange in 2003. There were others too. Karsanbhai Patel started selling detergent powder made in his backyard even while a host of computer manufacturers like HCL were planting the seeds of today’s world-beating IT industry.

The environment in which they seeded their vision couldn't have been more asphyxiating. India of the 1970s was the very epitome of the infamous licence-permit raj whose sole purpose seemed to have been to prevent businesses from growing.

When Parekh came up with the idea of Housing Development Finance Corporation, a company that would give loans to ordinary home buyers, it was a massive leap of faith in a country with a razor-slim middle class and a crippling shortage of jobs which made most people averse to any kind of debt. Parekh, however, had the will and the persistence to make it happen. It would be well over a decade before HDFC had any form of competition.

The striking thing about the entrepreneurs of that era, men like Parekh, Ambani, Karsanbhai and Agarwal, is how they identified a real need and set about addressing it. HDFC went on to finance millions of middle class homes in the country. Ambani in his lifetime created a refining and domestic petrochemical giant, a real need in an oil-starved country with rising energy requirements. And they did it without being part of traditional business families having easy access to capital and political clout.

Parekh wanted middle class Indians to have the chance to build a home before they were too old. Dhirubhai Ambani, not satisfied with building a petroleum giant, dreamt of giving every Indian a chance to make a phone call for the price of the postcard. Karsanbhai wanted to make a detergent at a price point that every middle class housewife could afford.

Nor were they looking to build and bolt, a common enough occurrence in the new era of entrepreneurship. In the face of steep competition, they stayed the course to build institutions that define India in 2022.

Entrepreneurship does not flourish in a vacuum. It needs a robust and even competitive environment. Many nations, lucky enough to have a handful of such builders, have been unlucky not to have enough of them. The Indian entrepreneurs of the 1960s and '70s, much like another generation that started out before independence, fed off each others’ exertions and together they all grew. Pushing back against stifling restrictions on scale and scope, they laid the foundations for the robust business climate of today. Their contribution needs to be measured not just in the milestones they achieved, but in the roadmap they set out for future generations.

Hasmukh Thakordas Parekh set up HDFC in 1977. He passed away on 18 November 1994. By then HDFC Bank, too, had started. His legacy will endure in the combined might of the two.

Also read: RBI examining HDFC-HDFC Bank merger proposal, says Governor Shaktikanta Das