In his last letter to shareholders of Housing Development Finance Corporation (HDFC) on June 30, Chairman Deepak Parekh announced his retirement ahead of the mega merger with HDFC Bank saying it is time for him to hang up boots.
Parekh, 78, will not take up any role in the bank while HDFC Chief Executive Officer Keki Mistry is likely to join the bank’s Board subject to clearance from the Reserve Bank of India.
“It is my time to hang my boots with both anticipation and hope for the future,” Parekh told shareholders. “While this will be my last communication to shareholders of HDFC, rest assured we now stride tall into a very exciting future of growth and prosperity,” Parekh added.
In a rather emotional letter, Parekh said the HDFC experience is invaluable. “Our history cannot be erased and our legacy will be taken forward,” said the veteran banker.
Merger to give cross-selling opportunities to bank
The merger of HDFC with Bank will offer cross-selling opportunities to the bank, while the home-loan business will be complemented by the bank’s core strengths, Parekh said in the letter.
“For HDFC Bank, a home loan customer marks the beginning of a journey of having a customer in perpetuity. HDFC Bank is excited at the prospect of cross-selling an array of asset and liability products to home loan customers. This will be done seamlessly on their digitalisation platforms – all through a one-click experience,” the HDFC chairman said in the letter.
HDFC and HDFC bank merger is likely to take effect from July 1.
Parekh said HDFC Bank’s vast distribution network will be better harnessed for both home loans and the group companies. “As a natural progression, the synergies between HDFC Bank and the group companies will deepen with HDFC Bank taking on the mantle of ownership,” Parekh said.
Further, Parekh said what the future holds, only time will tell but the biggest risk organisations face today is staying with the status quo, believing what worked well yesterday will continue in the future.
“Change takes courage as it displaces one from the cocoon of comfort and familiarity. Yet, with change comes the power of adaptability, growth and new aspirations. The orchestration of this merger is to ensure that the future is not constrained for any of our stakeholders,” Parekh added.
Focus on HDFC Culture
In the letter, Parekh reemphasised the importance of HDFC culture that has helped the institution become a household name in India.
“An oft-repeated question is what happens to the culture of HDFC? My answer to this is that mergers are inherently about change. The work culture will be an amalgamation of the best of both organisations,” Parekh wrote.
Explaining further, Parekh said culture at the workplace is always a shared responsibility that needs daily reinforcement through the demonstration effect with the tone set at the top.
“As HDFC hands the baton, my wish is that our core founding values of kindness, fairness, efficiency and effectiveness get woven deeper into the fabric of the HDFC group,” Parekh added.
In the letter, Parekh said HDFC Bank managing director and CEO Sashidhar Jagdishan and his team at the bank will take the HDFC legacy ahead.
“With the proven execution capabilities of HDFC Bank, we are confident that Sashi, together with the leadership team will forge an era of new opportunities for the combined entity,” Parekh wrote in the letter.
Status quo biggest risk
Parekh said that the biggest risk organisations face today is staying with the status quo, believing what worked well yesterday will continue in the future. “Change takes courage as it displaces one from the cocoon of comfort and familiarity. Yet, with change comes the power of adaptability, growth and new aspirations,” Parekh said.
The orchestration of this merger is to ensure that the future is not constrained for any of our stakeholders, the HDFC Chairman added.
Home loan customers special
In what appeared like a message or guidance to the bank with respect to home loan business, Parekh said that every home loan customer has their own story and it is the empathy factor that is the key differentiator between housing finance providers.
“Dealing with home loan customers requires immense patience. It is about understanding the needs and feelings of a home loan customer, assuaging their anxiety during this complex transaction, customising solutions, explaining financial implications of a mortgage product and lending responsibly to ensure a customer is not over stretched,” the veteran banker said.
Post-merger, the loan book or advances of the merged entity will jump by 38.77 percent to Rs 22.21 lakh crore. as against 16 lakh crore as on March 31, as per investor presentation of bank while deposits will rise to The deposit of the bank will be at Rs 18.84 lakh crore. Further, HDFC Bank’s market capitalisation will rise to Rs 14.6 lakh crore, from Rs 9.45 lakh crore prior to the merger.
Parekh said for over ten months, the integration committee has beenlabouring on ensuring a seamless transition which was a painstaking exercise given the many moving parts of this complex merger. “Cross functional teams are hard at work to ensure that the execution plan and strategic objectives are upheld in the merged entity,” Parekh added.
Further, working towards the common goal of executing the merger has helped both sides get to know each other better, the veteran banker said. “It has been a phase of working jointly to tackle issues on hand, but more importantly, it has enabled HDFC Bank to have a deeper understanding of the underlying dynamics of the home loan business,” Parekh added.