HDFC Full Form is Housing Development Finance Corporation. Better known as HDFC is a leading Indian private sector bank. It was promoted by Housing Development Finance Corporation. This bank is very popular and trustworthy among Indian people who use banking services. HDFC is the leading private sector bank of India and 45th on the list of 50 banks in the world in terms of market capitalization.
The bank was incorporated in 1994. Headquartered in India, HDFC has numerous branches across India. So, the availability of HDFC is also outstanding. It provides its customers with a number of products and variety in the range of its services. HDFC is one of the most trustworthy brands in terms of NRI Banking, Wholesale Banking, Retail Banking, Treasury and much more. All branches of HDFC are linked online on real time basis.
It has two subsidiaries namely HDFC Financial Services Limited which deals with retail asset financing and HDFC Securities Limited which is known for its active engagement in stock broking. It has gained a number of awards and recognitions over the years from across the globe. The variety of its services, its trustworthy strategies, customer-oriented business policies and its availability have made HDFC the fifth largest bank in India in terms of measured assets.
HDFC Full Form – Additional Information
As our subject of discussion, we have Housing Development Finance Corporation (also known by its abbreviated form HDFC) as our topic. Housing Development Finance Corporation, hereinafter referred to as HDFC, is a big name in the Indian market relating to finance and we shall see what is there to know about this entity. HDFC is a giant financial conglomerate based in India. It is headquartered in Mumbai, India and was established way back in the year 1977.
HDFC is, and for a long time, a major finance provider in the country and has earned public and professional acclaim for many years. The financial conglomerate marks its presences in various sectors relating to finances such as insurance, banking, education loans, management of assets, and venture capital. We shall explore more about HDFC in the forthcoming paragraphs, which elaborate upon some important aspects of the conglomerate in a more lucid manner. Here are certain things you must know about HDFC.
History behind the foundation of HDFC, the giant financial conglomerate
We shall begin with certain historical facts that have contributed to the establishment of such a big brand in the country. When we brief ourselves with historical facts, we shall be able to fully prepare ourselves for more complicated or rather other aspects about the conglomerate. So under this head, we shall begin with the most important aspect, the history.
The HDFC was founded in, as mentioned before, the year 1977. In the year 1977, the conglomerate began as a merely specialized mortgage company and it was first of its kind in India. The Industrial Credit and Investment Corporation of India was a nodal agency that promoted HDFC in its formative years. Throughout the formative years and even after, Hasmukhbhai Parekh played a prominent role in the development and promotion of the company.
In the year 2000, various mutual fund schemes were launched by the HDFC Asset Management Company. An important event occurred in the same year as Insurance Regulatory and Development Authority (abbreviated as IRDA) of India allowed registration to HDFC Standard Life Insurance.
This marked the launch of the country’s first ever private life insurance company. This, in a nutshell, apprises the readers about the journey that HDFC has made. This discussion is brief but highlights some important events that caused the rise of the country’s one of the biggest private financial conglomerates.
Products and Services by HDFC
This is an important segment, which shall highlight the outreach of the HDFC in terms of products and services it has to offer to several institutions and common public. Some of the products and services offered by HDFC are:
- Mortgages: Of course, HDFC began as a specialized mortgage company and thus, this service should be the first for this discussion. The company is engaged in providing finance facilities to common public and institutions, which are involved in the construction of buildings meant for residential purposes. HDFC is currently the biggest provider of home loans in the country. An Annual Report was published by the company for the year 2012-13 in which it claimed to have disbursed about Rs. 456,000 crores in 35 years of business and has reached out to about 4.4. housing units.
- Life Insurance: As mentioned earlier, HDFC has been granted registration to carry out insurance business. Since the year 2000, the company has been engaged in such activities. It is undertaking all of these activities through its HDFC Standard Life Insurance Company Ltd. This subsidiary has in its kitty 22 individual products and about 8 group products. It also offers customized products as well. Currently, the subsidiary has its operations in about 451 offices and serves about 965 locations. As far as the statistics of the year 2013 are concerned, the HDFC’s life insurance business amounts to 4.6 percent share in the market.
- General Insurance: It is another service provided by HDFC. The company provides general insurance for health, travel, home and personal accident. This accounts for total 47 percent of the total business in the general insurance sector. The subsidiary also provides general insurance in marine, property, aviation, and other segments of corporates.
- Mutual funds: In 2000, the HDFC came up with various mutual funds scheme. All these schemes are made available through its subsidiary HDFC Asset Management Company Ltd. It is one of the major businesses of the HDFC as its has average Assets Under Management (abbreviated as AUM) amounting to trillions.
Key subsidiaries and associates of HDFC
In the preceding paragraphs, many subsidiaries have been mentioned. Under this segment, we shall elaborate a little on some of the subsidiaries and associates operational under the aegis of HDFC. Some of the major associates and subsidiaries of the HDFC include HDFC ERGO General Insurance Company Limited, GRUH Finance Limited, its HDFC Standard Life Insurance Company Ltd, HDFC Venture Capital Limited., HDFC Asset Management Company Limited, Credila Financial Services Private Limited, HDFC Bank Limited, etc.
- HDFC ERGO General Insurance Company Limited: This was formed with the ERGO Insurance Company. In this, ERGO Insurance Company holds about 26 percent whereas the HDFC General Insurance Company Limited 74 percent shares.
- GRUH Finance Limited: It is another functionary within the HDFC group. In GRUH, the HDFC holds about 50 percent shares. GRUH Finance Limited is a housing finance company that provides loans to common public for works such as renovation, construction, and purchase of residential houses. It also facilitates loans in cases of self-employed segments. It has a network of 136 retail offices across seven states in the country.
- HDFC Standard Life Insurance Company Ltd: In association with Standard Life, HDFC Standard Life Insurance Company Ltd provides private life insurance in the country. In this, the HDFC holds about 72 percent shares whereas Standard Life holds about 26 percent shares. HDFC Standard Life Insurance Company Ltd ranks third in terms of market share of private companies engaged in providing life insurance facilities in the country. Thus, it is a big name in the country.
- HDFC Bank Limited: In HDFC Bank, HDFC holds approximately 22.8 percent shares. The focus zones of HDFC Bank Limited are retail and wholesale banking services and undertaking treasury operations. It is the country’s seventh-biggest publicly traded company.
- HDFC Asset Management Company Limited: The HDFC Asset Management Company Limited was founded with Standard Life has the key investor. HDFC holds 60 percent shares in this association. It undertakes the management of 44 schemes and these schemes compose of equity exchange and debt, etc. HDFC Asset Management Company Limited is ranked first as far as Average Assets Under Management (AUM) is concerned.
- Credila Financial Services Private Limited: It is a nonbanking company undertaking financing. It is the country’s first ever that focused purely on grant of education loans. This company provides loans for undergraduate and post graduate students studying in India or in any foreign destination. (8 percent shares in the company are held by HDFC.
Awards and recognition achieved by HDFC
It can be easily inferred that HDFC has played a key role in the development of private financing system in the country and this has been acknowledged by many. HDFC group has received many awards and recognition for its many contributions.
In the year 2013, HDFC’s Board of Directors was listed as one of the best five boards in the country. Forbes has listed HDFC on the rank 561 in its Global 2000 list of companies in the year 2013. HDFC has also been recognized as one of the best companies to work and recognition by Economic Times and The Great Place To Work Institute is a proof. Its subsidiaries and associates have garnered much national and international attention too thus making HDFC as one of the most successful financial conglomerate in the country and beyond. If one reads about its associates and their recognition, one will understand it well.
HDFC Bank – Housing Development Finance Corporation Bank
We have for our discussion one of the country’s most prominent private banks in the country, which has successfully managed to secure a strong place in the foreign banking market. We are talking about Housing Development Finance Corporation Bank, which is known popularly by its abbreviated form HDFC Bank. In this segment, we shall discuss various aspects about HDFC and what makes it one of the most credible private banks in the country. However, before we engage ourselves in those aspects, let us discuss about HDFC.
Housing Development Finance Corporation Bank hereinafter will be referred to as HDFC Bank throughout the article, is a banking and financing service providing company in India. The bank is headquartered in Mumbai, India. The Bank, which was incorporated in the year 1994, is the biggest bank in the country as far as market capitalization is concerned in the year 2016. In terms of assets, HDFC Bank is the second biggest private bank in the country.
What more, the Bank has been listed at 58th position in the list of India’s most trusted Band produced by Brand Trust report in the year 2015. HDFC Bank has garnered international recognition too with it being listed in top 50 global banks in respect of market capitalization. The net revenues of the bank have increased by 20.7 percent as of December 2015 is concerned.
The current Managing Director of the HDFC Bank is Aditya Puri and he has held this position ever since the incorporation of the Bank in the year 1994. He has been named in the list of 30 best CEO’s and business leaders produced by AIMA. Now that we have briefly discussed about the Bank, we shall now move our attention towards various aspects of the Bank.
History behind the establishment and development of the Bank
Let us begin with the history behind the establishment and development of the bank, which ultimately went on to become the country’s most prominent private bank. As mentioned before, the bank was incorporated in the year 1994. The registered office was Mumbai, India. It was incorporated under the name HDFC Bank Limited and began its operations as a Scheduled Commercial Bank in the year 1995 after having received a licence to provide banking services. In the formative years, the bank engaged itself with National Westminster Bank Group.
Eventually, the Housing Development Finance Corporation, which is a major housing financing company in the country promoted the HDFC Bank. It was HDFC only which was the first to receive a positive response from the nodal Bank of the country, Reserve Bank of India (abbreviated as RBI), to establish a private bank. In the year 1995, the Bank launched its Initial Public Offering (abbreviated as IPO) and went public.
Acquisition credited to HDFC
HDFC gradually expanded through various acquisitions that it undertook. This created a strong identity of HDFC Bank in the financial market. Under this segment, we shall explore important acquisitions undertaken by HDFC, which is essentially two in number.
The first acquisition we shall discuss is that of the Times Bank, which was merged with the HDFC Bank Ltd. in the year 2000. It was a major merger as the Times Bank was promoted by famous Bennett, Coleman & Co. This was the first ever merger between two private banks belonging to the New Generation Private Sector Banks category and thus holds significance. The scheme of amalgamation provided that the Times Bank would receive one share of the HDFC Bank for each 5.75 shares of the Time Bank.
The second acquisition that we shall discuss is that of Centurion Bank of Punjab. The acquisition happened in the year 2008. The Board of HDFC Bank Limited agreed on the acquisition of the Centurion Bank of Punjab for the huge sum of Rs. 9,510 crores and this has made it one of the largest acquisitions in the financial market of the country. The scheme of amalgamation provided that the Centurion Bank of Punjab would obtain 1 share of the HDFC Bank for every twenty-nine shares of the Centurion Bank of Punjab. These two aforementioned acquisitions have become one of the key mergers to have happened in the Indian financial market and these mergers are essentially responsible for the rise of the HDFC Bank in the market.
Products and services provided by HDFC Bank Limited.
There is a big range of financing and banking services that HDFC Bank Limited provides to its customers, both common public and institutions. This segment shall elaborate upon some of the products and services offered by the bank.
- Wholesale Banking services: The Bank provides for a range of wholesale banking facilities which include trade services, management of cash, etc to several small and moderate sized corporations and those businesses which are based on agriculture.
- Retail Banking Services: The Bank is known to be the first bank in the country that came up with the service of International Debit card. It came up with this service in association with VISA. Apart from this, the bank also issues to its customers Maestro Debit Cards. In the year 2001, the bank launched credit card services.
- Treasury operations: Currently, the bank provides three main product areas namely, Equities, Local Currency Money Market & Debt Securities, and Foreign Exchange. All these services are provided to the customers through the treasury team under the HDFC Bank Limited. It is this treasury team that is responsible for overseeing the management of returns and market risks.
Operations of HDFC Bank Limited
As of the year 2016, the Bank operates a network of 4281 branches situated across 2505 cities in the country. The Bank also has branches operating in overseas markets such as Dubai, Hong Kong, and Bahrain. The Bank operates two major subsidiaries that undertake important services namely, HDB Financial Services Limited (abbreviated as HDBFS) and HDFC Securities Limited (abbreviated as HSL).
- HDB Financial Services Limited: This subsidiary is involved in retail asset financing. It serves as Non-Bank Finance Company (Abbreviated as NBFC). The subsidiary grants individual loans as well loans to enterprises (small, medium and large). The subsidiary is promoted by the HDFC Bank Limited, in which the latter has 97.42 percent as of the year 2012. The HDBFS operates about 425 branches in across 265 cities, as per records of the year 2015 are concerned.
- HDFC Securities :Limited (HSL): This subsidiary is engaged in the business of stock broking. In this subsidiary, the HDFC Bank holds 89.24 percent.
Initiatives undertaken by the HDFC Bank Limited as a part of Corporate Social Responsibility (abbreviated as CSR)
HDFC Bank has undertaken many CSR activities and some of them have been mentioned in the following paragraphs.
- Sustainable Livelihood: It is an initiative that aims at providing finance for livelihood to ensure empowerment of people belonging to rural areas. The focus is on providing training sessions to people in areas relating to credit Counseling Market linkages, etc. The initiative is stated to have reached about 20 lacs beneficiaries.
- Education: It is yet another initiative wherein it conducts Galli School Project. In this project, family based, literary programs are organized. The project has participated in about 600 schools across Andhra Pradesh and Orissa.
- Go Green: This initiative is aimed at investing the development of a greener environment. In this, the company promotes multi-channel delivery mechanisms such as Mobiles, ATM transactions, etc. It also focuses on the development of green buildings.
- Training: In this, the company organizes many skill development courses for youths such as basic computer skills, and other vocational programs. The project is slated to have reached about 1500 youths in the country.