HDFC Limited: India’s Premier Housing Finance Corporation

The changing economical ways of financial establishments are giving a new shape to India’s financial situations. NBFC plays a vital role in the core development of infrastructure, transport, wealth creation opportunities, employment generation, and financial support for economically weaker sections; they also create a mammoth of contribution to the state exchequer. Moreover, with the banking system noticeably constrained or escalating their lending activities, the NBFCs plays an even more important role now, especially when the government has a strong emphasis on promoting entrepreneurship where India can transpire as a country of job creators instead of being one with the job seekers.

In between these monetary fluctuations, Housing Development Finance Corporation Limited (HDFC Ltd.) has pioneered housing finance since 1977 in India and has assisted 5.8 million Indians to own a home thus far. Their widespread distribution network of 427 interconnected offices, including 130 offices of HDFC Sales, caters to over 2,400 towns & cities across the country and endeavors to serve the housing demand in India.

HDFC Ltd. has 3 representative offices in Dubai, London and Singapore offering advice on Home Loan products/solutions to Non-Resident Indians and Persons of Indian Origin. They have efficaciously emerged as the trusted ecosystem leader and have been nominated as the best managed financial services company with a proven track record of admirable corporate governance and value creation for its stakeholders.

HDFC Ltd. is the only organization in India to have received the ‘AAA’ rating for its deposits from both CRISIL and ICRA for 22 consecutive years. It has turned the concept of selling mortgages into a profitable, professionally managed and world-class enterprise. The faith that HDFC’s customers and capital providers have placed in it, over the years, has been nurtured as an epitome of customer relationship on the Indian corporate world.

An Ingenious Leader of HDFC Ltd.

A Chartered Accountant from the Institute of Chartered Accountants of India (ICAI),Mr.Mistry, the  Chief Executive Officer & Vice-Chairman of HDFC Ltd., has a vast work experience over three decades in the Banking & Financial Services domain. In 1981, Mr. Mistry joined HDFC Ltd., India’s premier Housing Finance Company. He was inducted onto the Board of Directors of HDFC Ltd. as an Executive Director in the year 1993 and was appointed to the post of Managing Director in November 2000. In October 2007, Mr. Mistry was re-designated as Vice Chairman & Managing Director of HDFC Ltd. and became the Vice-Chairman & Chief Executive Officer in January 2010.

As a part of the management team, Mr. Mistry has played a critical role in the successful transformation of HDFC Ltd. into a financial conglomerate by facilitating the formation of companies including HDFC Bank Ltd., HDFC Asset Management Company Ltd., HDFC Standard Life Insurance Company Ltd. and HDFC ERGO General Insurance Company Ltd.

Besides being on the board of several HDFC Group companies and HDFC Bank, Mr. Mistry is also on the Board of HCL Technologies, Sun Pharmaceutical Industries Ltd, Torrent Power Ltd, CDC Group (London),  Greatship (India) Ltd., Griha Investments – Mauritius, Griha Investments pte ltd – Singapore  a few others.  He is also the Non-Executive Chairman of GRUH Finance Ltd., a subsidiary of HDFC Ltd and also on the Advisory Boards of a few Indian corporates.

Mr.Mistry has been a Consultant to the Commonwealth Development Corporation (CDC) in Thailand, Mauritius, Caribbean Islands and Jamaica, guiding the company to review and evaluate the operations of mortgage financial institutions in these countries. He has also been a Consultant to the Mauritius Housing Company and Asian Development Bank.

Some of Mr.Mistry’s recent achievements include, being awarded ‘BMA Management Man of the Year 2016’ by Bombay Management Association, ‘Best Independent Director Award 2014’ by Asian Centre for Corporate Governance & Sustainability. ‘Best CEO Financial Services’ (Large Companies) 2014 by Business Today magazine, CFO India Hall of Fame by the CFO India magazine in 2012. One of the Best CEO’s for Investor Relations – India at the Thomson Reuters “Extel Awards” – 2012, Best Banker of the Year in 2011 by Financial Express, the QIMPRO Gold Standard 2011Leader for Quality in Business award by the Qimpro Foundation.

He was also honored with the ‘CA Business Achiever of the year’ award in the Financial Sector by the Institute of Chartered Accountants of India (ICAI) in 2011 and CNBC TV18’s award for the ‘Best Performing CFO in the Financial Services Sector’ for three consecutive years – 2006, 2007 and 2008.

Rising as a Brand by Nourishing Financial Needs

HDFC’s success in the mortgage industry and its involvement across the financial services  industry has proven it to be a financial conglomerate with presence in banking, life insurance, non-life insurance, asset management, real estate fund and education finance. The banking endeavor, HDFC Bank is  rated to be the best in the business. The life insurance venture is with the Standard Life Assurance, UK, and the General Insurance with ERGO International AG of Germany a company of the Munich Re group, while the asset management company is in connotation with Standard Life Investments, UK. Every aspect of these expansions into innumerable other aspects of financial services has come over since two decades, thus creating a lot of value for its shareholders.

Presently, the broadenings that HDFC Ltd. has prepared into many areas of financial services return a small portion of HDFC’s amalgamated earnings, but as these businesses relish swift evolution visions over the next few years, their share of the consolidated profits will upsurge the overall returns for HDFC’s shareholders. The banking, life insurance and asset management businesses have already accomplished scale and have the necessary perilous mass to cultivate rapidly.

Dedication & Devotion towards Client Satisfaction

At Present, HDFC Bank is a leader in consumer banking, capital markets and transaction banking. HDFC Mutual Fund is one of the major asset management companies in the country in terms of assets under management. The life insurance business has a huge value creation potential, as the penetration of insurance products is currently very low in India. The HDFC group has an asset base of over 16 trillion rupees and a customer base of over 61 million, helping it to cross-sell products among the customers of group companies.

The cornerstone of HDFC’s excellent brand strength emerges from its unrelenting focus on corporate governance, its high standards of ethics and clarity of vision, which percolates through the organization.

 This brand standing derives from the solidity – both financial and managerial that the company is well known for. Its capital adequacy, its ROE, and quality of assets reflect its financial solidity. It has consistently striven for and acquired an excellent reputation for professionalism, transparency, integrity and an impeccable record of customer friendly services. These values have not only helped to sustain but have propelled the company further. And despite cut-throat competition especially from commercial banks, it has gone from strength to strength in its core business due to its operating efficiency and its firm bastion of customers across the country.

 

A testimony of the influential brand that HDFC Ltd. has assembled over the years is echoed in its ability to preserve a compounded annual growth rate of 19 % over a five-year period in Individual loan origination. In fact, it not only retains its dominant position in the housing mortgage sector but continues to grow very rapidly and profitably. In spite of this scorching pace, HDFC’s gross NPAs have always been less than 1%, the lowest in the industry. This is a very rare thing in the Indian financial sector.

HDFC offers best play for investors looking at advancing from the growth in the Indian mortgage as it is the ‘only’ great player dedicated primarily to the mortgage market. Its cost competitiveness is fabled with a cost-to-income ratio of 7.4%, one of the lowest in the world.

Driving the Future with Innovation & Excellence

Till date, HDFC Ltd. is roaring as a role model for a number of countries that have begun to institute their own housing finance institutions. Internationally, HDFC Ltd. has accepted consultancy assignments thoroughly with the World Bank, USAID, the Asian Development Bank, United Nations and the Commonwealth Development Corporation (CDC) in a number of countries in Asia and Africa, which include Sri Lanka, Bangladesh, Indonesia, Bhutan, Nepal, Ghana, Egypt, Thailand, Philippines, besides  Jamaica, Russia among other countries.

As an investment vehicle, the reputation of the HDFC Ltd. stock has been well documented. Currently, especially for foreign investors looking to direct the Indian equity market, HDFC Ltd. is something of a safe harbor. Foreign investors at present, hold 77% of the outstanding equity, one of the highest for any listed Indian company. The confidence that investors, foreign and domestic alike, place in the company is comprehensible as the potential for the industry and to prove company’s significance.

HDFC Ltd is well poised as the potential for real estate sector to growth is enourmus given the stable property prices, low interest rates , rapid urbanization, huge government incentives and sustained tax benefits on housing. These key factors have the potential to drive a growth by continuously improving affordability in the housing mortgage market.

The increasing potential of the Indian housing mortgage is reflected in the housing shortage of 18.6 million units in urban India and surprisingly housing mortgage is just 9% of GDP as against 20% to 36% for most Asian countries and above 50% for developed countries.

Source :- The 10 Most Valuable Nonbanking Financial Companies