Deepak Parekh heads Housing Development and Finance Company (HDFC), India’s first and largest mortgage finance company, which has now grown into a large financial conglomerate. A subsidiary, HDFC Bank, was the first of nine private banks set up in the mid-1990s to showcase India’s liberalisation and economic reform. Mr Parekh, who trained as a chartered accountant in London and worked with Chase Manhattan Bank early in his career, has been instrumental in a general insurance joint venture with Chubb and a tie-up with Standard Life of the UK for asset management and life insurance.
Mr Parekh has advised various governments on high-powered, government-appointed panels to lay out the blueprint for reform in the banking, insurance and housing sectors. Often, this has meant telling the government to take hard decisions. In the mid-1990s, when state-controlled Unit Trust of India (UTI), the largest asset manager, was in a crisis after serious mismanagement by its top managers, Mr Parekh was called in to advise on the rescue effort. The report of the panel he headed pointed out that the absence of independent regulation and government meddling had resulted in the UTI mess. Today, UTI, like all other private asset managers, is under the scrutiny of the securities regulator.
Mr Parekh says the UPA government is fortunate “to inherit a buoyant economy” and that it has so far deftly balanced the demands of a coalition government with continuing reform. Opening up foreign investment is a bold step and the introduction of a transactions-based tax on securities trading and doing away with long-term capital gains tax will encourage “foreign institutional investors to register in India rather than route their investments through tax havens”, he adds.
Mr Parekh is somewhat disappointed that the government’s maiden budget has no significant measures for the housing industry, particularly since it has “strong linkages” in the economy and that “it is the second largest employment generator in the country”. He adds that the government’s target for tax collection and the budget deficit could be a bit “over-stretched”.
