India’s Post-Pandemic Recovery to be Uneven: Deepak Parekh

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India’s Post-Pandemic Recovery to be Uneven: Deepak Parekh
Credit: © Reuters.

By Aditya Raghunath -- Housing Development Finance Corporation Ltd (NS: HDFC ) Chairman Deepak Parekh, in his annual letter to shareholders, cautioned that India’s post-pandemic recovery will be “patchy and uneven”. He said that if it wasn’t for interventions by the Reserve Bank of India (RBI), India’s financial system would have been “decimated”.

“Without RBI’s timely interventions, much of the financial system may well have been decimated due to the extreme risk averseness in the early days of the pandemic. Since February 2020, the support announced by RBI stood at Rs 15.7 lakh crore, which is equivalent to 8% of GDP. No doubt, the task ahead remains daunting as RBI has to balance the need for growth, facilitate the government’s borrowing programme, rein in inflation, continue with stimulus measures and support sectors deeply impacted by COVID-19,” said Parekh.

He also said that housing finance companies (HFCs) can lose customers to other players who can lure them away with lower rates as there are no pre-payment penalties.

“Balance transfers only shift assets from one player to another; it does not increase home loans or home ownership at a system level... onboarding a home loan customer takes a great deal of effort and entails costs as well. But certainly, an endeavour to retain a performing customer which could entail a change in the rate of interest is not akin to a loan being restructured. It would be of great comfort for all HFCs to have this issue put to rest,” he said.

HDFC shares have hardly gained in the last six months. The stock was trading at Rs 2,860 in February but has since fallen to 12.7% to Rs 2,496 as of this report.

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