After 45 years of running HDFC Ltd and overseeing the growth of India’s largest private sector bank from its birth days, Deepak Parekh has decided to hang up his boots. 

As the 78-year-old ends his innings as HDFC Chairman, he rests satisfied seeing the merger of parent HDFC with HDFC Bank create the world’s fourth-largest bank by market capitalisation, behind JPMorgan Chase, Industrial and Commercial Bank of China and Bank of America. 

He fondly calls the reverse merger of HDFC as the “grown up son acquiring the father’s business”.

Parekh will not be able to serve on the board of the merged entity as the Reserve Bank of India’s (RBI) rules on age limit make him ineligible. But he is super excited and says the story of HDFC needs to be told.

“The HDFC experience is invaluable. Our history cannot be erased and our legacy will be taken forward,” Parekh writes in his last letter addressed to the corporation’s shareholders for whom he created immense wealth.

If it was not for him, HDFC Bank would have never been born. Way back in 1993 when private players were allowed to obtain bank licences, it was Parekh who wanted to take the plunge despite a lot of opposition from the HDFC board.  The board finally relented and in August 1994, HDFC Ltd got a private banking licence. No one had then imagined that it would become India’s most valuable bank by market cap.

For Parekh, banking was not virgin territory. His grandfather was the first employee of Central Bank of India; his father went on to become the deputy managing director of Central Bank of India; and his uncle Hasmukhbhai Thakordas Parekh was the Chairman of ICICI before he founded HDFC in 1977 with an initial share capital of Rs 10 crore.

Hasmukh Parekh studied at the London School of Economics, wrote books on the Indian economy, and was awarded Padma Shri for his contribution to the country’s financial sector.

In the late seventies and early eighties, HDFC Ltd was built on a novel concept. Young salaried Indians began buying homes on credit and HDFC opened up a new segment of banking, which today is a big portion of lenders’ portfolio. Until then, banks were mainly doing corporate loans and individual customers were hardly borrowing money from banks.  

When all this excitement was breaking out in the Indian loan market, Deepak Parekh got a call from his uncle HT Parekh to join HDFC Ltd. He was then working with Chase Manhattan Bank in New York. In 1978, he returned to Mumbai and joined HDFC as a deputy general manager with a 50% cut in his salary. “There was no coercion or pressure,” Parekh said in a video he put out last week.

It seemed risky to leave a well-paying investment banking job in the US.  “There were conflicts to deal with. I was giving up a secure job with a foreign bank to join a new company that was still being perceived with a great deal of scepticism. No one in India had so far attempted to finance individuals for their housing needs,” he wrote.

Inducted as the whole-time director of HDFC in 1985, Depak was appointed as its managing director (designated as Chairman) in 1993. After retiring from HDFC as MD on 31 December 2009, he was appointed as non-executive director of the corporation with effect from 1 January 2010.

A man of high ethics, Deepak Parekh guided HDFC to becoming the largest private home financier in India. Over the years, it has helped more than 10 million Indians to own a home on credit.

Inside and outside HDFC, Deepak Parekh has been involved in resolving and stitching many corporate deals. And he has ended it with the HDFC-HDFC Bank merger, making it the second-largest Indian company by market cap after Reliance Industries Ltd.

In his farewell letter to shareholders, he said, "It is my time to hang my boots with both anticipation and hope for the future." 

The merger marks a phase of the two entities working jointly to tackle the issues on hand. But more importantly, the process has enabled HDFC Bank to have a deeper understanding of the home loan business, his letter said.

"Encountering hurdles is part of the course in such transactions. Yet, what amazed us the most has been the immense goodwill and strong relationships that HDFC as a group has. Whenever and wherever we reached out for guidance, doors opened and help was at hand instantly," Parekh said in his letter. 

Parekh expects the work culture of the two organisations to be an amalgamation of the best at both.

No doubt, the housing finance industry is a competitive one today. Yet, HDFC will always have the distinction of being the institution that introduced retail housing finance to the country.

"Home loans will now be complemented with HDFC Bank’s core strengths—its sales engine, execution capabilities at scale and deep insights on consumer behaviour," Parekh said in his letter. “The biggest risk that organisations face today is abiding by the status quo, believing that what worked well yesterday will continue in the future”.

An often 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. Culture at the workplace is always a shared responsibility. It needs daily reinforcement through the demonstration effect with the tone set at the top. What remains steadfast is the underlying ethics and value systems of both entities. The confidence I derive is the agreed tenet of this integration -- preserving the fabric of the 'HDFC way of working'," he said.

Earlier last week when asked what he would do after his last board meeting, he smiled and said "Maybe I will have a few drinks." 

Yes, it will be a befitting toast to both the deal and his invaluable contributions to India's financial sector.  But don't be surprised if Parkeh embarks on yet another journey.