The merger of Housing Development Finance Corporation Limited and HDFC Bank, which came into effect from July 1, has led to the bank’s entry into the world’s top 10 financial institutions. In a LinkedIn post ‘Revisiting The Story Of HDFC Bank And Early Days Of HDFC’, veteran business journalist Tamal Bandyopadhyay delved into HDFC Bank’s initial journey, based on an extract from his book ‘A Bank for the Buck’.
Picking out the key players
The story began on a February morning in 1994, when Parekh made a phone call to Aditya Puri, an old friend and also the CEO of the Malaysia operations of Citibank. Parekh flew to Kuala Lumpur and told Puri that HDFC was in the process of obtaining a license from the Reserve Bank of India (RBI) to start a bank and that he was looking for a CEO.
Parekh had decided that Puri was the one capable enough to lead and build a top-notch private bank in the newly liberalised environment in India, which could compete with other global banks. Puri considered Parekh’s offer after he promised Puri a good share of the institution’s stock.
Before Puri, Parekh had contacted SS Thakur, who previously was the Controller of Foreign Exchanges in India. Parekh asked Thakur to be the bank’s Founder-Chairman. Thakur eventually joined HDFC Bank in January 1994. He was the one who helped the newly-launched bank to gather bulk deposits as people were unwilling to put deposits along with home loans.
Lastly, Parekh made an appeal to Vinod Yennemadi, a close friend and a corporate executive, to join him in Bombay to establish the bank. Initially, Yennemadi declined the offer saying that he wasn’t a banker. Parekh convinced him to join saying that he had the potential to learn and that he would be fine. He eventually joined the bank in April 1994.
Bank of Bombay (BoB) was the initial name decided for the upcoming bank, which directly clashed with the well-known Bank of Baroda (BoB). Apart from that, Bombay Bank, Greater Bank of Bombay, Everest Bank of India and Bombay International Bank were other names suggested by Parekh. Eventually, the bank was named HDFC Bank after a majority voted for the name. Initially, Parekh was not in favour of naming the bank HDFC, as he believed that the brand would suffer if the bank failed to take off. But it was also argued that HDFC was already a renowned brand and would help the new bank cash-in on the brand’s goodwill.
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