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Difference Between HDFC and HDFC Bank
HDFC or Housing Development Finance Corporation is a financial services company that was established in 1977 in India. It was the first mortgage bank in the country and played a significant role in revolutionizing the housing finance industry. HDFC Bank, on the other hand, is a separate entity that was established in 1994 as a subsidiary of HDFC. While both entities have similarities due to their common roots, there are key differences between HDFC and HDFC Bank.
1. Ownership and Structure:
HDFC is a non-banking financial corporation, known as NBFC, while HDFC Bank is a banking institution. HDFC is a publicly listed company on the Bombay Stock Exchange, with various institutional and retail shareholders. Although HDFC Bank is also publicly listed, it is a separate entity and is operated as a private limited company.
2. Financial Services:
HDFC primarily focuses on providing housing finance services. It offers a range of products such as home loans, home improvement loans, and loans for the purchase of residential and commercial properties. HDFC Bank, on the other hand, provides a broader spectrum of financial services. It offers retail banking, wholesale banking, treasury, and other financial services to individuals and businesses, including loans, credit cards, savings accounts, and wealth management services.
3. Regulation:
Both HDFC and HDFC Bank are regulated by different authorities. As an NBFC, HDFC is regulated by the Reserve Bank of India (RBI) and complies with the guidelines and regulations applicable to non-banking financial companies. HDFC Bank, being a banking institution, is regulated by the RBI as well as other regulatory bodies governing the banking sector. This includes complying with the guidelines set by the Banking Regulation Act, 1949, and other statutory bodies such as the Securities and Exchange Board of India (SEBI).
4. Branding and Recognition:
HDFC is a well-known brand in India, particularly in the housing finance sector. It is recognized for its pioneering efforts in providing affordable housing finance solutions in the country. On the other hand, HDFC Bank has gained substantial recognition as one of the leading private sector banks in India. It has been consistently ranked among the top banks in the country in terms of market capitalization, customer base, and profitability.
5. Products and Services:
As mentioned earlier, HDFC primarily focuses on providing housing finance services. Its range of products includes home loans, home improvement loans, loan against property, and lease rental discounting, among others. HDFC Bank, being a full-fledged banking institution, offers a more diverse range of products and services. These include savings and current accounts, fixed deposits, personal loans, credit cards, insurance products, investment services, and more.
6. Geographic Presence:
HDFC operates primarily within India and has a widespread network of offices and branches across the country. It has a significant presence in urban as well as semi-urban areas. In contrast, HDFC Bank has a larger geographical presence, not only in India but also in other countries. It has a network of branches spread across India and has also expanded its operations to other countries like Dubai, Hong Kong, and Bahrain.
7. Customer Base:
While both HDFC and HDFC Bank cater to a wide customer base, they have slightly different target segments. HDFC primarily focuses on providing housing finance solutions to individuals and families, particularly for the purchase of homes. HDFC Bank, being a full-service bank, caters to a broader range of customers, including individual consumers, small businesses, corporates, and government entities.
8. Revenue Sources:
HDFC generates its revenue primarily through interest income from its housing finance portfolio. It also generates income from fees and other charges related to its services. HDFC Bank, on the other hand, generates revenue from various sources. This includes interest income from lending activities, fees and commissions from banking services, foreign exchange operations, and treasury operations.
In summary, while HDFC and HDFC Bank share a common history and lineage, they are distinct entities with different business focuses. HDFC is a non-banking financial corporation primarily providing housing finance services, while HDFC Bank is a full-fledged banking institution offering a wide range of financial products and services to individuals and businesses. While HDFC operates primarily within India, HDFC Bank has a larger geographical presence. Despite their differences, both entities play a significant role in the Indian financial sector, contributing to the growth and development of the economy.