HDFC’s Deepak Parekh Says Optimum Path Is To Be Housed Within Banking Structure

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The optimum path to scale up Housing Development Finance Corp. is to be placed within a banking structure, according to its Chairman Deepak Parekh.

The proposed merger of HDFC with HDFC Bank Ltd. is “the moment of truth”, he said in a letter to shareholders as part of the company’s annual report for FY22. “At HDFC, we know that this is the right time for strategic choices as we prioritise pathways for future growth…”

The proposed merger will ensure that the pool of resources available for lending will be significantly larger and the costs will be lower. Even from a regulatory standpoint, it’s prudent for all large providers of housing finance to be on a level-playing field, within the same rules, he said.

“It remains our every endeavour to be available and accessible to all our stakeholders to assuage concerns in an open and transparent manner.”


The transaction, first announced on April 4, is awaiting regulatory clarity. HDFC, Parekh said, is confident that the outcome will be “judicious and fair at a systemic level”.

In an interview with BQ Prime last month, Parekh said HDFC has a “plan B” if the Reserve Bank of India did not give the corporation more time to meet statutory liquidity ratio and cash reserve ratio requirements, as part of the transaction. This may include borrowing more funds through issuance of longer-term paper and selling loans to reduce the regulatory burden.

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“My only ask of our stakeholders is for your patience as we navigate through the complexities of this transaction. More than ever before, we need your trust and support,” Parekh said in his latest letter.

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