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Deepak Parekh to step aside after HDFC-HDFC Bank merger is consummated

HDFC Ltd Chairman Deepak Parekh will step aside, after having led India’s mortgage-lending pioneer for more than four decades, once the proposed merger between the home-financier and HDFC Bank is consummated.

His lieutenant, HDFC Chief Executive Keki Mistry, would also step down, although he may choose to become an independent director in the merged entity, helping the bank navigate the complexities of the mortgage lending business in its initial years.

Sashidhar Jagdishan, the current chief executive of HDFC Bank, would continue to lead the merged entity.

“This (merger) process will take anywhere between 12 and 18 months because of the numerous approvals we need,” Parekh said in Mumbai. “Also, the Reserve Bank of India (RBI) rules do not allow anyone above 75 to be on the board of a bank and I have already crossed that age; so, there is no way I can be on the board of the bank.”

Regulatory norms do not allow any executive to continue on a bank’s board beyond 75 years. The regulator also capped the age of MD & CEO of a bank at 70 years.

For 77-year-old Parekh, who joined HDFC as a 33-year-old in 1978 and built it as India’s largest private-sector housing finance company, the merger marks the culmination of a journey that began by democratizing access to formal credit at a time it was considered a rare privilege in pre-liberalized India. His uncle, HT Parekh, had set up the mortgage financing company in 1977 after working for three decades.

Parekh said that the merger was akin to a son taking over the father’s business.

“We will all be taken care of; you don’t think we will be thrown out. It’s a merger of equals and it’s a friendly merger; it’s not at all hostile and we are one,” he said. “As Mr (Atanu) Chakraborty said, as the son grows older, he acquires the father’s business, so that’s all this is.”

Keki Mistry, too, may not take up an executive role but continue to be on the bank’s board.

“I am 67-and-a-half, and this merger will probably take another year-and-a-half. By that time, I will be 69, and the retirement age for people in a bank is 70,” Mistry said.

Mistry joined HDFC in 1981. He has been spearheading the mortgage lender for more than two decades. Parekh said that while Mistry did not want to take up an executive role, he may oversee some mortgage functions after the merger.

“He will not be a full-time executive; he doesn’t want to be a full-time executive – not that we don’t want him,” Parekh said. “But he can be a director on the board and handle the mortgage functions, investor relations – whatever Sashi wants to do with Keki. We will leave it to them.”

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