Chapter 2D: Around 1998, the HDFC airship hit turbulent weather. A new government was about to come in. The BJP govt under PM Atul Bihari Vajyapai. His poetry did a good job of camouflaging his astuteness. Like any nationalist government, they moved to stem leakage.
They moved to implement the reforms in their literal sense. The Narsimham Committee 1 & 2 were influenced by Mr Narsimhans stint at the World Bank. Too much was happening too fast. The State Financial Corporations were being shut down. Forex leakages were being plugged. The banks were put on a tight leash.
The foreign banks were again in the regulatory gaze. Telgi stamp paper scam was forcing people to ask and answer hard questions. It was a time for both HDFC and their foreign principal to lie low.
Globally Visa and Master were making massive progress. Discover and Diners Club were floundering. There was a desperate search for a god father. An attempt was made to buy a civilian award. But the sale counter was closed.
And then they hit a jackpot in 2004. One of Citibank’s largest cross border services Client became one of the most powerful cabinet ministers. And thus started the biggest bull run. Only to be hit by the crisis of 2008.
The sector was quickly consolidated. A fund called Sabre got going buying bank after bank. And merging it with HDFC. Sabre stood for sword, and the fund manager leading it had a surname “Talwar”. The other partner was from Akola – street smart and Singapore based. They could move like lightning. Sabre was an apt name.
What followed in those ten years will make every single scam from Harshad Mehta to NSE look like loose change. It is too explosive to be revealed in a public forum like social media.
But what Social media will do hopefully is to correct factual inconsistencies if any in the first two chapters. Any comments received will be carefully assessed with an open mind. It is possible that some of the conclusions arrived at have been based on incomplete or incorrect inputs. Even though that is extremely unlikely, it would be prudent to give the company and the individuals involved reasonable time to file for removal of inaccuracies, incorrect conclusions or misunderstandings. It is always good to get criticism – constructive or otherwise.
One would greatly appreciate thoughts on how the banking system should be reinvented in the ai age. The current banking business model for float and fees is soon coming to an end. The FD as an instrument of commonwealth origin may have come to end of life. Finally the cost of money will have to be brought down for our industry to be competitive. And that means FDs may not get the kind of returns and safety that they expect. Money will have to move from real estate and Fixed deposits to stock markets. A large part of that money will move into indices.
This will affect all banks, not just HDFC.
It will hit HDFC more because of its size and DNA.
Chapter 3 onwards is for strictly restricted circulation.
