In 1994, Deepak Parekh asked Aditya Puri, then CEO of Citi Malaysia, to return to India and build HDFC Bank from scratch. Puri took the role for less than half his Citi salary and ran the bank for the next 26 years.
The defining test came during the 2004-2007 credit boom, when Indian banks aggressively wrote large loans to infrastructure projects. It was profitable in the short term and every major competitor chased the business. Puri declined, holding to a rule that a short-term opportunity is not worth taking if it compromises the long-term plan.
While rival banks spent the following decade working through corporate NPAs, HDFC Bank spent that decade scaling low-risk retail consumer loans instead.
The results: gross NPAs held at 0.85% against an industry average of 6%. Net profits compounded at 20% a year for over two decades, and HDFC Bank became the 10th most valuable bank in the world by 2020.
The Economist later ranked Puri's performance against CEOs of the world's top 50 banks and placed him first. Shareholders saw a 16,000% return over 25 years, ahead of global banks like J.P. Morgan and HSBC.
