Housing finance major Housing Development Finance Corporation Ltd and its group companies are in the process of succession planning as the present leadership is well past the productive age.
In a letter addressed to shareholders of the country’s largest mortgage lender, its non-executive chairman Deepak Parekh said the group is looking at a smooth transition of the board, especially after the impending retirement of HDFC Bank’s chief executive officer Aditya Puri.
In his annual letter to shareholder, Parekh, however, said there won’t be any immediate changes or announcements as the selection process is bound to take time.
Succession planning requires 18-24 months of preparation, Parekh said, hinting at the impending retirement of HDFC Bank’s chief executive officer Aditya Puri. The boards of group companies will look at both internal and external candidates to fill positions, he said.
“All the boards of the HDFC group of companies believe that succession planning needs a time frame of 18 to 24 months to ensure a smooth transition.”
“As passionate and energetic as some of our leaders within the HDFC Group are about their jobs, the reality is that individuals do get on in age,” Parekh said in the letter which was part of the company’s annual report.
HDFC Bank CEO Aditya Puri, whose term ends in October 2020, had laid down a road map for the transition at an analyst meet in May this year. The bank plans to have a 12-month overlap period during which the new successor will work with Puri. It will look at talent which could be internal or external and an announcement will be made in next 18 months, the CEO had said.
Meanwhile shareholder at today’s meeting approved a three-year extension for vice chairman Keki Mistry.
Parekh also suggested that housing finance companies themselves take up the business of real estate development, including acquisition of land and construction of buildings in order to ensure longer term viability.
This, he said, would also help bring down the rates at which real estate developers can raise funds, since housing finance companies can provide cheaper funding than non-bank lenders.
He also criticised the growing practice of housing finance players picking loans off each other’s balance sheet and said this needs to be carefully monitored.
“With the regulators prohibiting prepayment charges on most home loans, no one gains in this game, except the agent who keeps collecting commissions...,” he said. “To my mind, regulators should not encourage ‘lazy housing finance’.”