HDFC Plans To Invest Rs 100 Crore Per Year In Tech Startups: Deepak Parekh
India’s largest mortgage lender Housing Development Finance Corporation Ltd. is planning to invest up to Rs 100 crore per year in tech startups, Chairman Deepak Paresh said Tuesday.
HDFC will set up a dedicated team with an understanding of the startup ecosystem to do the investments, he said.
Parekh’s annoucement comes at a time when there is a lot of focus on the policy front to encourage startups with an objective of encouraging innovation and creating employment opportunities. Many corporate entities, including the country’s largest lender State Bank of India, have been creating in-house funds to invest in startups.
"At the last board meet, I took an idea of investing Rs 100 crore per year in startups," Parekh said, speaking at the annual Tiecon event.
He said that just like the idea to branch out into universal banking, the HDFC board had reluctance with the idea of investing in startups, but underlined that he believes there is a need to invest in the ideas of the future in the tech space. The company will be creating a an in-house team at the headquarters to take charge of investments and exuded confidence that they will start operating in two months.
Parekh urged the youngsters not to get "consumed" by the ongoing economic slowdown and exuded confidence that the tide will change soon. "Do not be disillusioned with the current difficulties. The tide will and has to change," he told the young entrepreneurs, stressing that India will be an important engine for the world.
Recounting his days while starting HDFC Bank Ltd., which is now India’s largest lender in terms of market capitalisation, Parekh said he pushed the company’s board to get into mainstream banking because of the need to diversify beyond its forte of mortgage finance.
He said it is never too late to start, mentioning that HDFC itself was started as a retirement venture by HT Parekh when he was 65 years old.
The new institution went through a string on difficulties from its earliest days, including an initial public offering which bombed, difficulties in arranging loans from Life Insurance Corporation of India and challenges in getting UTI Mutual Fund, the only domestic asset manager, to invest, Parekh said.
Despite these challenges, HDFC adopted a unique model open for business. Parekh recalled that Infosys co-founder NR Narayana Murthy's first house in Mumbai was bought on a Rs 70,000 loan from his company, granted only on the basis of an appointment letter.