Indian economy will tide over short-term challenges: HDFC Chairman Deepak Parekh

Indian economy will tide over some of the short-term challenges, said HDFC Chairman Deepak Parekh on Wednesday in his letter to the shareholders.

"As far as India is concerned, it is important to stay optimistic and recognize that the economy will tide over some of the short-term challenges. This should not take away focus from the broader picture that India stands tall today," says Parekh.

"Several countries are in the midst of a political storm, while India has voted decisively for stability and continuity. This is a strong mark of confidence and India stands ready to welcome patient capital seeking to earn attractive returns to fund its growth ambitions," he states in the letter.

Parekh also said that HDFC's "advantage has been its access to diversified resources."

"We tapped into new lenders through external commercial borrowings and masala bonds. Our strength has been our ability to seamlessly straddle between wholesale and retail funding," he said.

"In the current environment, we have had to work extremely hard to preserve asset quality. While our non-performing loans have been considerably lower than several others in the financial sector, we know we cannot rest on these laurels," he says in the letter.

"In instances where we have had to write off loans, it has been done only after we have exhausted all possible options. Barring these few loans, our ethos of being conservative in our financial decisions has paid off."

Talking about the role of financial institutions in accelerating the pace of growth, he says: "If lending institutions do not get the support or find the courage to lend, then who will fund India's growth aspirations and who will build India? Rightly so, the Indian financial system is moving to a new landscape, backed by a stronger regulatory and supervisory framework."

Lauding the Pradhan Mantri Awas Yojana - Credit Linked Subsidy Scheme (CLSS), he writes: "To my mind, the CLSS is amongst India's most effective and well-executed welfare schemes for housing. The success of the scheme lies in offering first-time homeowners a small helping hand when they need it the most.