A round of succession planning is imminent at Housing Development Finance Corporation Ltd. and its group companies, Non-Executive Chairman Deepak Parekh said today in a letter addressing the shareholders of India’s largest mortgage lender.
“As passionate and energetic as some of our leaders within the HDFC Group are about their jobs, the reality is that individuals do get on in age,” Parekh said in the letter which was part of the company’s annual report.
The group will focus on a smooth transition and shareholders should not expect any announcements immediately, he clarified. “All the boards of the HDFC group of companies believe that succession planning needs a time frame of 18 to 24 months to ensure a smooth transition.”
It’s banking subsidiary HDFC Bank’s Chief Executive Officer Aditya Puri, whose term ends in October 2020, had laid down a road map for the transition at an analyst meet in May this year. The bank plans to have a 12-month overlap period during which the new successor will work with Puri. It will look at talent which could be internal or external and an announcement will be made in next 18 months, the CEO had said.
At today’s shareholder meeting, Keki Mistry, vice chairman and managing director at HDFC, received a three-year extension.
On the future of housing finance companies in India, Parekh said these they must be allowed to fund real estate companies to acquire land for development. This, according to the finance sector veteran, will bring down the rates at which real estate developers can raise funds, since housing finance companies can provide cheaper funding than non-bank lenders.
He also criticised the growing practice of housing finance players picking loans off each other’s balance sheet and said this needs to be carefully monitored.
“With the regulators prohibiting prepayment charges on most home loans, no one gains in this game, except the agent who keeps collecting commissions...,” he said. “To my mind, regulators should not encourage ‘lazy housing finance’.”
(Corrects an earlier version which said Parekh made these comments at the company’s annual general meeting.)