by Who gave the first home loan in India to whom? You see these big buildings and concrete houses. Home loans are a big contributor to this, because if you have to buy a flat or build a house, then you can easily take a home loan.
In the year 2022, 34,00,000 people of India took home loans. At present, the home loan market in India is worth Rs 24,00,000 crore. And in the next 5 years, the home loan market will double to Rs 48,00,000 crore.
You or someone you know must have built a house or bought a flat by taking a home loan. But do you know what the amount was when the first person in the country took a home loan? What year was it?
Today on The Smile Pencil, we will tell you the story of the hero who started home loans in India. This post will tell the story of a man who first thought of housing finance, who first thought of legally lending to someone to build a house through the banking system.
We will tell you how an idea of home loan fulfilled the dream of building a house for crores of people in India and who was behind it? You must have seen such advertisements in which there is talk of giving a home loan within forty-eight hours. Home loan is available in 8-10 days, even after a little delay from the claim.
You build a house or take a flat with that money, but that was not the case in the olden days. The house was either owned by landlords or government bungalows of politicians and government officials. There were cells of big businessmen.
Common people could not build a house even after doing a job, because they did not have so much money at once. But in the 1970s a major change began in the country. At that time, that change was dreamed of by a 66-year-old man who had retired from the job. But he probably didn’t accomplish what he wanted to do. Therefore, the home loan revolution started in India and this revolution was started by Hasmukh Bhai, Thakurdas Parekh.
Hasmukhbhai Thakurdas Parekh was born on March 10, 1911, in a Jain family in Surat, Gujarat. In early life, he had to live with his father Thakurdas in a hall where he saw the lives of common people. He also had to work for some time, but the good thing was that since childhood, the intelligent Hasmukh Bhai Thakurdas Parekh’s higher education was done from the London School of Economics.
After this, he worked as a lecturer in a college in Mumbai for 3 years. In 1955, when the Industrial Credit and Investment Corporation of India Bank, now known as ICICI, was established, Hasmukhbhai Pare joined this bank as general manager in 1956 and in 1977 Hasmukh bhai resigned as chairman of ICICI after a long banking journey.
He was told that the bank needed you right now. You can’t leave like that, we won’t let you go. But he didn’t agree. He said I won’t rest now, but I have something else to do. Hasmukh Bhai’s resignation was big news for the business world at that time.
The question on everyone’s mind was what he was going to do? He had an idea in his mind. The idea was to fulfill people’s dream of homes. He wanted to change something in his country. He wanted to give a new flight to the dreams of Indians.
For this, he thought that the people of India should be given loans to build houses so that they have their own roof over their heads. In the 1970s, houses were built in India in two ways, either deposit money or build a house with retirement money. Taking a loan was a foreign idea for which the people of India were not mentally prepared.
That’s what Hasmukh Bhai wanted to change. For this, he planned to set up the Housing Development Finance Corporation i.e., HDFC. The 1970s were infamous for licensing state in India. There was instability in politics, the Emergency ended shortly before. Indira Gandhi lost the election badly, in which a non-Congress government was formed for the first time.
In such a situation, it was a difficult task to get permission from the government for a new type of business, which was more likely that Hasmukh Bhai’s dream would be broken, but the one who gave up was not Hasmukh Bhai. They not only took necessary permissions from government-related institutions, banking institutions and financial institutions. He also sets up the Housing Development Finance Corporation (HDFC).
This did not end the work but increased. Now Hasmukh bhai had the next challenge. There was no tradition in India to build a house by taking a loan. People were afraid of taking loans, so HDFC initially had a lot of trouble in finding customers.
HDFC found a customer after some time. A person named Mr. D. B. Remedios was persuaded by HDFC to take a home loan after a lot of efforts. He wanted to build his own house in Malad, Mumbai. The cost of the house was ₹70,000 HDFC gave him a loan of ₹35,000. This loan was given at a fixed rate of interest of 10.5%. And with this loan, Remedios became a first home loan customer.
The first home loan agreement was signed between Remedios and HDFC Limited, which led to the introduction of home loans under housing finance in the country. After getting the first customer, HDFC’s work started going well, but there were some new challenges, which again created the fear that HDFC would be closed.
Talking about this fear, Deepak Parekh, Hasmukh bhai’s nephew and former HDFC chairman, says, “HDFC was the only player in the formal housing market when home loans were introduced. In an interview, Deepak Parekh said that when we advertised, a large number of people came to take a home loan, but there was no one to give us money. About 10 years later, we had the first line of credit and LIC gave us ₹10,00,00,000 in those days. After this, the speed increased.
In fact, after the establishment of HDFC in 1977, Hasmukh Bhai decided to issue an IPO, but at that time there was no big investment culture in India’s stock market. HDFC’s brand had not become so famous yet. So, when HDFC launched its IPO in 1978, people did not buy it. Investors stayed far away from it and the stock did not jump even on the day of listing, completely collapsed. That is, it’s all over.
Hasmukh bhai had created a team that remained with HDFC for a long time. We are talking about the one who went on to become a lifetime worker at HDFC Limited. Hasmukj Bhai kept his nephews Deepak Pare, Renu Sood Karnad and Keki Mistry in his team.
In 1990, Deepak Parekh introduced the model of establishment of HDFC Bank. Renu Sood Karnad introduced the hub and spoke model and Keki Mistry introduced the HDFC Standard Life concept. With the help of this team, Hasmukh Bhai’s HDFC grew rapidly.
In a few decades, this company gave more than ₹ 100,00,00,000 loans. Hasmukh Bhai founded another India’s first rural housing finance company which he has named Gujarat Rural Housing Finance Corporation Limited i.e., GRUH. Especially the poor people living in the village used to give loans.
Apart from this, Hasmukh Bhai also helped the government in setting up SBI Home Finance Campaign, Housing finance etc. Hasmukh Bhai Thakurdas Parekh were awarded the Padma Bhushan in 1992 for developing a new model of loan to fulfill the dreams of the people of India to have a home. He died in 1994 at the age of 83.
HDFC Bank is the largest bank in the country today. Its market capitalization is ₹14 Lacks12 Thousands 55 Crore, which is more than double the market capitalization of the second largest bank ICICI of ₹6 Lacks 53 thousand 704 Crore. HDFC’s market share in the home loan market in the year 2021-2 was 31%.
Only the State Bank of India is ahead of this. Hasmukh Bhai is not in this world, but with one of his ideas, the middle class of India is buying a house. That is, even if we take a home loan from housing finance companies, build a house and start living, but we would never have thought how difficult the beginning of a home loan was.
The institute started by Hasmukhbhai Thakurdas Parekh is in the hands of the third generation. HDFC Ltd and HDFC Bank have been merged. A few days ago, on June 30, 2023, when 78-year-old Deepak Parekh stepped down as chairman of HDFC Bank, he wrote an emotional letter, in which he said that our experience taught us that every home loan customer has his own story.
Home loan customers need extreme patience to overcome their anxiety in understanding the need emotions. The need and patience that Deepak Parikh is talking about, all that Hasmukh bhai Thakurdas Parekh showed in 1970. Because of which today the dream of homes of crores of home loan people in India is being fulfilled.
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