Business Daily from THE HINDU group of publications
Saturday, Nov 18, 2006
Money & Banking - Insight
Opinion - Housing Finance
Remembering Hasmukhbhai T. Parekh The man who gave people a home
R. M. Lala
Hasmukhbhai T. Parekh was instrumental in shaping two of India's largest and most respected financial institutions ICICI and HDFC. Twelve years ago, on November 18, he passed away. This is a tribute to a man who, when studying in the UK, dared to dream of common people owning their own homes. Forty years later, when he stepped down from ICICI, a million Indians owned homes.
On Tuesday, November 8, 1994, when I arrived at my office from Pune, there was a phone call from Hasmukhbhai. In a faint voice, he asked: `Will you come and have lunch with me today?" Having just arrived, I would have excused myself with any other person, but Hasmukhbhai had told me how lonely he was at home in his illness. So I went.
He was more subdued that day than ever before. For a man who had spent a life-time in busy financial circles, to be confined at home with just a nurse and a servant was a punishment. During his illness, I once asked him: "What is your ailment?"
He replied: "Loneliness." When his wife died, he published, in Gujarati, a set of letters to her, recalling their life together. These letters were compiled in two volumes.
It helped assuage the pain in his heart. They had no children. His niece, Harshaben, who was a librarian at the SNDT, lived in the house and cared for him. She recalls: "As children, we remember both of them as if they were one personality, complementary, dependent on each other." When she died in 1970, he was 59fifty-nine. "To be happy in marriage," he used to say, "it is not enough to be in love. One must also learn to accommodate each other."
Conscious at lunch that this was perhaps my last chance to meet him, I ventured to ask: "Hasmukhbhai, how did you acquire your value system, your integrity?" I thought he would say his faith in God or the impact of reading. He replied in two words: "My mother." He briefly added, "We were six brothers and two sisters." He did not say more and, as he had a respiratory problem, I did not press him to elaborate. His nephew, Deepak Parekh, who succeeded him as chairman of HDFC, dropped in faithfully after office everyday, and so did friends, from 5 to 7 p.m., but the rest of the day seemed to drag on endlessly for him.
Sixty years earlier, Hasmukhbhai lived in a chawl with his father, Thakurdas. He managed to take up a part-time job, study and pass out from the London School of Economics. He also worked as a lecturer at St. Xavier's College, Bombay, for three years and that made him a fluent public speaker.
Having served in a private firm for some years, he joined ICICI, one of the earliest institutions sponsored by the World Bank in cooperation with the Governments of India and the US. "My friend William Diamond, a passionate development official of the World Bank and an authority on the subject, defined development finance institution as `profit-making but service-oriented'." His friend's words made a deep impression on him and it became his obsession to work towards such an ideal.
"I was able to shape ICICI to my concept of a development institution; financial corporations should use a part of their large accumulated annual retained profits for wider development of skills, institutions and purposes which deserve encouragement and help. They should become the springboard for the country's further development in new areas of social progress." For Hasmukhbhai, public institutions had broader public responsibilities than profit, important as it was. They had to be `service-oriented'.
At 68, when most men think of retiring, as he was stepping down from ICICI, heaped with honours, he started a new institution, Housing Development Finance Corporation (HDFC). I asked him once, what had made him start HDFC. He replied: "I thought of it when I was in England at the London School of Economics."
"But that must be almost 40 years ago!" I exclaimed. He agreed, and added that while in England he had observed how people owned their houses (on mortgage), unlike in India, and he wanted people here to enjoy the same facility. For years he had harboured a dream, and at the pinnacle of his career, after ICICI, he launched HDFC.
To launch HDFC, he went to meet the then Secretary of Finance, Dr Manmohan Singh. Dr Singh once told me: "It (HDFC) was an unknown adventure (the first of its kind for housing finance in India). No one knew if it would click. But he had obtained promises from abroad (for funds) and he was enthusiastic."
"As Governor of the Reserve Bank of India, Bombay," Dr Singh said, "whenever I had any doubts, I went to him. He was always so positive, always coming up with new ideas. He never stagnated."
Multilateral organisations and the Union Government supported HDFC on the strength of Parekh's idea, his reputation and integrity. After giving clearance to the venture, Dr Manmohan Singh did not give it direct government support but advised some government financial institutions to support it.
Dr Bimal Jalan, who many years later also became Governor of the Reserve Bank of India, was with the World Bank in the 1960s. Parekh is reported to have told him: "What are you, an Indian, working in the World Bank for? Come with me. I will give you a job." Dr Jalan became chief economist of ICICI at the young age of 28 and worked there for two-and-a-half years. He steadily rose in his career, though not salary-wise for he was getting a far better pay package in the World Bank. Dr Jalan says that he joked with Parekh: "You are the one who introduced me to poverty." He says that Parekh was "one of the greatest persons I have met".
When I asked, "What made him great?" Dr Jalan replied: "His great desire to move ahead, great humility, simplicity of behaviour and a sense of public purpose." He added, "He was so supportive of me. If the system had ten more people like him, we could do things."
Similarly, when Deepak, Hasmukhbhai's nephew, joined HDFC, Parekh was happy. Deepak's children were like his grandchildren. He told Deepak's wife, Smita, that the children could spend the weekends with him. They did. And one day, when Smita dropped in, she found the busy banker sitting in bed with a children's storybook, reading to Aditya and Siddarth, the two boys stretched out on either side of him, absorbed in the story. He became so fond of them that a mere Sunday was too short for him and once he asked Smita: "Do you think the boys could take Monday off from school? Then I too will take a day off!"
Builder Of Men
Behind this warm-hearted institution builder was also a great builder of men. How did he train them? "He spotted talent and went after such people and allowed them to work. He never told them what to do, but he did caution us to be careful," says Deepak Parekh.
"He instituted a sense of values amongst us, not by instruction, but by example. His management style was marked by large-heartedness and human considerations," said S. S. Nadkarni, former Chairman of Securities and Exchange Bureau of India. He trained young people by inviting them to be present at discussions with captains of industry, thus giving them a sense of belonging. He was a visionary. "HTP stood for financing new entrepreneurs long before venture capital became a slogan," said Mr Nadkarni. Many years before SEBI was established, Parekh recommended such a watchdog body for the stock market. He also advocated a Common Asian Market.
Few people know that Parekh was the first to float a private firm to explore India's oil potential in the shape of Hindustan Oil Exploration Company. He was a towering figure in industrial banking. In the first 25 years of ICICI, he spent a sizeable chunk in laying its foundations on sound business lines. He was governed by values, not by profit, by care and not by cash. Soft in speech, he was strong in his convictions.
In the last years of his life, he gave most of his time and energy to philanthropic causes. He was co-founder Chairman of the Centre for Advancement of Philanthropy (CAP) and Founder-Chairman of The Bombay Community Public Trust.
When Parekh felt the time had come for him to step down from CAP, he twice asked me to take over the chairmanship. I declined and said we needed him. He was not to be outdone so easily. One day, at the meeting of the board of directors, he got the better of me. He announced he was stepping down and proposed my name. I felt sorry for my colleagues on the board, for none of them dared say `No' to him!
Parekh lived in a typical middle-class home. He believed in the simple pleasures of life, in friendship and in reading. Every morning he looked forward to a walk and a chat with his friends on the Marine Drive, Mumbai's sea-face. When younger, his friends and he used to go for long, brisk walks. But as age crept in, the walk was more of an excuse to talk. In his last years, at about 8 a.m., Parekh would perch himself with his friends on the parapet of a building opposite Air India. I used to tease him about the `Hasmukh Parekh Corner'. He was a kind man who was able to achieve all he did because he did not think of himself but of others.
When I saw him six days before he died, he was breathing through an oxygen tube. He smiled sweetly but said not a word. And as I left, I thought: `Hindus believe in thousands of rebirths but for Hasmukhbhai this may be his last visit.' The soul of a man who made homes available to so many would, I was sure, find shelter in a far more beautiful place.
(The author, a prolific writer, is co-founder of the Centre for Advancement of Philanthropy and, since 1993, its chairman.)
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