Interest Rate Risk Management: a HDFC Case Study

Abstract

HDFC started off in 1977 as a mortgage bank and operated like S&Ls in the first few years and raised retail deposits. This did not create much problem for the entity in the administered interest rate regime. A paradigm shift in the financing pattern of HDFC was observed. The shift of financial strategy is suited to counter-shift risk profiles in the housing finance business in India and thus HDFC managed to create a niche in the industry.