`India Has To Be Aggressive'

Housing Development Finance Corporation (HDFC) plans to offer personal

finance loans, working capital finance, cash credit facility, and

long-term loans and guarantees under one roof. It will seek

shareholders' approval for this move towards universal banking at its

annual general meeting scheduled for July 9.

After HDFC partly divested its stake in Countrywide Financial Services

Ltd, a personal finance company, it will now enter this high-return

segment on its own. The products will initially be offered to the

existing customers.

In the HDFC annual report, chairman Deepak Parekh states, "It is clear

that no matter what form of banking you adopt, the customer will

increasingly want to deal with fewer intermediaries and will expect his

preferred intermediary to provide him all financial products and

services that he needs, whether they be assets or liabilities."

The financial institution (FI) has also announced plans of setting up an

asset management company, while it has tied up with Standard Life for

insurance and has been instrumental in floating a HDFC Bank. "The move

to provide all facilities under one roof indicates that the institution

is gearing up to move into the era of universal banking," said sources

form the organisation.

HDFC has sough approval from shareholders for providing financial

assistance by way of overdraft, cash credit, refinance, guarantees,

counter guarantees and indemnities or in any other form to institutions,

corporates, associates, authorities, bodies, trusts, agencies and

societies. It would also be willing to provide the same facilities to

anyone engaged in urban infrastructure development.

For personal loans, the FI plans to provide loans for durable,

equipment, vehicles, and home appliances among other things.

HDFC has said it is planning a range of investment management services,

including setting up of a mutual fund."We hope that the regulators will

permit us to offer not only the standard growth and fixed income

products but also real estate-related investment products to help

diversify the savings portfolio of small savers, thereby reducing risks

for given level of returns," the annual report said. e=arial size=2>

Importantly, the note is still at the draft stage, government sources

said, and has a long way to go before it is finally taken up by the

Cabinet. First, the note will attract the comments of the ministries of

finance and law. It will then go back to the department of

telecommunications (DoT), which will prepare the final Cabinet note.

This final proposal will then be vetted and cleared by the PMO.

"The draft note has to go through all these stages before it is taken up

by the Cabinet for approval," an official explained. "We don't see it

happening even in the next week. The earliest one could hope for is late

next week, though it is unlikely," he added.

The note seeks migration of existing private telecom operators of

cellular and basic services to a revenue-sharing arrangement.