News that HDFC Bank and HDFC (Housing Development Corporation) Holdings have merged to form HDFC Bank, the fourth largest lender in the world by market cap, is a great leap forward for an economy whose housing stock is arguably the worst worldwide. Over 80 percent of the country’s 260 million households live in dilapidated homes averaging 500 sq. ft in urban India, and in rural India a large number of families live in thatched roof dwellings. Hopefully the merged entity will extend its operations to affordable housing for the masses which was its prime objective when HDFC was promoted way back in 1977. However, this objective has remained unrealised because the corporation has restricted itself to providing term loans to the urban middle and upper classes.
This landmark initiative has poignant memories for your correspondent because as founding-editor of Business India, I strongly supported the promotion of HDFC, India’s first housing loans company launched due to determined efforts of the late H.T. Parekh (1911-1994). I was indignant that housing loans long-established in the UK (as building society loans) were not permitted under India’s cock-eyed socialist dispensation. Therefore when HDFC acquired the all-important licence to dispense home loans, we fully endorsed its promotion and celebrated it in print. To the extent that when HT’s nephew Deepak Parekh was appointed managing director — a classic case of nepotism which was criticised by bolshie journalists — we justified it.
However when EducationWorld was launched in 1999 and was struggling to remain afloat, Deepak – a powerhouse in Indian finance — declined to support it notwithstanding our commitment to raising standards in public education, the sine qua non of national development. Simultaneously, he made no effort to lead HDFC into the affordable housing segment, which could have been essayed by cross-subsidisation of interest rates. Therefore well into the 21 century, India remains a country for the middle class, of the middle class and by the middle class in which over 800 million citizens, deprived of half-decent education, live in shanties that are an affront to human dignity. A disappointment on two counts.
