The creation of HDFC – supposedly as a proxy for a now exited foreign bank – demolished all notions of creating a truly independent and autonomous bank in India. By riding on a brand like HDFC, the resulting market cap helped create an acquisition vehicle like no other – where the Bank even managed to acquire its parent company.
I have always been a stern critic of such dominance and market share. The entire idea of private sector entry in indian baking was to create truly Indian entities – and it was the job of the regulators to make sure that cartels did not lead to market failure. With majority foreign ownership, HDFC is hardly Indian. Or ethical.
Banks like HDFC refused to lend for growth and national progress. Instead they lend to finance luxury housing and luxury fossil fuel cars. This led to a real estate bubble like no other in markets like Gurgaon where flats were selling at prices greater than Malabar Hill. It made no sense to anyone other than for HDFC and the builder.
The banks narrative has always been around technology, safety and “being Indian” – none of which were true. SBI got into hiring a CTO from HDFC at senior level which made SBI as bad. In private banks it is not if, but when it will blow. So each of them is really a Yes Bank in the making.
RBI had got into investigate mode a few years ago. This led to the removal of Pramath Jhaveri from Citibank and Paresh Sukhtankar from HDFC.
And today saw the unexpected exit of Atanu Chakravarthy from HDFC. You would recall my several posts on HDFC in the past. There are too many of them to repost here. Suffice to say that all was never well in HDFC and permitting the merger was a regulatory disaster:
I first met Atanu in the mid nineties. He was one of the smartest IAS officers in Gujarat and was part of the initial lot of bright ias officers like JN Singh who then held the post of Chief Secretary for the longest duration. As head of GIDB in the Keshubhai Patel govt he oversaw the first set of divestments. Though ones like GCEL did not succeed for political reasons – Atanu subsequently got the model right as head of DIPAM in Delhi. He ticks all the boxes – engineer, bright civil servant, clean track record, gujrati speaking and gujrat cadre etc. He was the perfect pick to clean the story at HDFC.
The problem with smart people like Atanu is that they figure out. And they wouldn’t want to jeopardise their name and reputation for the pennies they get for holding the non-executive posts that they take up post retirement. I often wondered why someone like Atanu would walk into a lions den like HDFC. But I think it is because they don’t know.
Till they know.
And that made him resign.
You cannot fool the wise for long.