Business Model Innovation at Housing Development Finance Corporation

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Case Details:

Case Code : BSTA048
Case Length : 21 Pages
Period : 1977 - 2004
Organization : Housing Development Finance Corporation (HDFC)
Pub Date : 2004
Teaching Note :Not Available
Countries : India
Industry : Financial Services

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"The financial discipline it (HDFC) brings to its operation is phenomenal. Thin spread and high volume form the backbone of its success story."

- Keshub Mahindra, Leading Industrialist1


Housing Development Finance Corporation (HDFC) was often described as an extraordinary company, run for ordinary Indians by ordinary Indians. It was India's premier housing finance company and one of the most successful and most admired financial institutions in the country. In 2003, HDFC recorded a revenue of Rs. 3077.85 crores and a net profit of Rs 851.78 crores.

By all accounts, HDFC had made a significant impact on the Indian society. It had pioneered the housing finance market and had, in essence, created the opportunity for middle-class Indians to own a home. At the same time, HDFC had demonstrated that a business venture that met an important social need, could also be extremely profitable.

Most remarkably, HDFC had done well in a business that, no other business group in the country had thought of venturing into. Even as the housing finance market looked increasingly crowded in the early 2000s, HDFC's business model looked robust.

Background Note

Early History
Hasmukhbhai Parekh incorporated HDFC as a public limited company on October 17, 1977. Born in a traditional banking family in Surat (Gujarat), Hasmukhbhai started his financial career at Harkisandass Lukhmidass - a leading stock broking firm. In 1956, he was appointed as General Manager of the newly formed Industrial Credit and Investment Corporation of India (ICICI). He later became Chairman and continued so till his retirement in 1972. Hasmukhbhai authored over 200 articles, full of incisive comments on finance and economics. In 1992, the Government of India honored him with the Padma Bhushan Award. The prestigious London School of Economics & Political Science conferred on him an Honorary Fellowship...

Excerpts >>

1] Business India, 16th - 29th August 1993.


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