Mortgage finance major HDFC is planning to invest up to Rs 100 crore per year in technology start-ups, chairman Deepak Parekh said on Tuesday. According to Parekh, HDFC will install a dedicated team tasked with understanding the start-up ecosystem to do investments.
HDFC follows finance giants like State Bank of India (SBI) to thaw to the idea of investing in start-ups. SBI had earlier created an in-house fund to invest in start-ups. Parekh, who was speaking at the TiEcon summit in Mumbai earlier this week said, that he had first broached the idea at a board meeting. And just like the idea to branch out into universal banking, the board had expressed reluctance in investing in start-ups as well, he said, but added that he believed there was a need to invest in ideas of the future in the technology sectors. Parekh had helmed HDFC’s foray into mainstream banking because of the need to diversify beyond its forte of mortgage finance.
This announcement comes at a time when there is a lot of focus on the policy front to encourage start-ups in the country with an objective of encouraging innovation and creating employment opportunities. Parekh also urged young entrepreneurs to not get consumed by the ongoing economic slowdown, exuding confidence that the tide would change soon. “India will be an important engine for the world,” Parekh further said, pointing out that there was no time too late to take the entrepreneurial leap, giving as an example the fact that HDFC itself was started as a retirement venture by H T Parekh when he was 65-year-old.
The new institution went through a string of difficulties from its earliest days, including an initial public offering which bombed, difficulties in arranging loans from LIC for which lawyers had to called-in from Washington for convincing and challenges in getting UTI Mutual Fund, the only domestic asset manager, to invest, Parekh pointed out.
He also noted how Infosys co-founder N R Narayana Murthy’s first house in the financial capital was bought on a Rs 70,000 loan from his company, granted only on the basis of an appointment letter due to HDFC’s unique model. The veteran industry player said honesty, integrity and accountability are key attributes that create a successful institution.