From home loan provider to historic merger: The journey of HDFC

HDFC, the well-known home loan provider, has now become part of history. Though it lives on within HDFC Bank, the once-iconic company and its distinctive stock are no longer in existence. Launched 46 years ago with a paid-up equity of Rs 10 crore, HDFC achieved an impressive market cap high of Rs 5 lakh crore – a remarkable 5000-fold growth in 45 years.

Throughout its existence, HDFC assisted millions of Indians in building their first homes and enabled thousands of shareholders to amass significant wealth. CNBC-TV18 interviewed two key figures who played pivotal roles in building the company – Keki Mistry, the last Vice Chairman and CEO, and Renu Karnad, the last MD of the company.

Reflecting on the journey, Mistry attributed HDFC's success to the opening up of the financial sector in 1992, which presented numerous opportunities in banking, life insurance, and general insurance. The company was ideally positioned to capitalise on these opportunities, benefiting from customers' trust, reach, and capabilities.

Karnad recalled the tense moments when private banks entered the housing sector and began operating in a manner that HDFC found challenging to match due to its cost-conscious approach. She acknowledged that these times compelled them to reinvent themselves, as they transitioned from being an institution where customers came naturally to one that had to actively market its services and engage in sales efforts. Despite these challenges, HDFC managed to adapt well.

Mistry added that one of the most significant hurdles was securing funding after the initial capital of 10 crores was exhausted. The lack of a robust legal framework made it difficult for the Indian banking system to have confidence in extending loans. However, HDFC secured a crucial lifeline with a 10 crore loan from LIC and a $4 billion loan from IFC, which proved to be their most costly borrowing but saved the day and set them on an unstoppable path.

Reminiscing the best moments, Mistry fondly mentioned the time when HDFC's market cap surpassed Rs 5 lakh crore, marking a significant milestone in the company's history.

Looking at the future, Mistry said that he is currently considering offers for board positions and may venture into something entrepreneurial after a well-deserved break of six to nine months. While there are thoughts brewing, nothing definitive has crystallised yet.

Private sector lender HDFC Bank on Friday (July 14) said the company has allocated over 311 crore new shares of the bank to shareholders of the merged entity HDFC Ltd.