CHAPTER IINTRODUCTION

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A BRIEF ABOUT BANKING INDUSTRY

Today the Indian banking system is among the best in the world and the years to come

may see them taking on the global behemoths.

The Indian Banking Industry can be categorized into non-scheduled banks and scheduled

banks. Scheduled banks constitute of commercial banks and co-operative banks. There

are about 67,000 branches of Scheduled banks spread across India. During the first phase

of financial reforms, there was a nationalization of 14 major banks in 1969. This crucial

step led to a shift from Class banking to Mass banking. Since then the growth of the

banking industry in India has been a continuous process.

As far as the present scenario is concerned the banking industry in India is in a transition

phase. The Public Sector Banks (PSBs), which are the foundation of the Indian Banking

system account for more than 78 per cent of total banking industry assets. Unfortunately

they are burdened with excessive Non Performing assets (NPAs), massive manpower and

lack of modern technology.

On the other hand the Private Sector Banks are witnessing immense progress. They are

leaders in Internet banking, mobile banking, phone banking, ATMs. On the other hand

the Public Sector Banks are still facing the problem of unhappy employees. There has

been a decrease of 20 percent in the employee strength of the private sector in the wake of

the Voluntary Retirement Schemes (VRS). As far as foreign banks are concerned they are

likely to succeed in India.

Indusland Bank was the first private bank to be set up in India. IDBI, ING Vyasa Bank,

SBI Commercial and International Bank Ltd, HDFC Bank Ltd, Dhanalakshmi Bank Ltd,

Karur Vysya Bank Ltd, Bank of Rajasthan Ltd etc are some Private Sector Banks. Banks

from the Public Sector include Punjab National Bank, Vijaya Bank, UCO Bank, Oriental

Bank, Allahabad Bank, Andhra Bank etc. ANZ Grindlays Bank, ABN-AMRO Bank,

American Express Bank Ltd, Citibank etc are some foreign banks operating in India.

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RETAIL BANKING MEANING AND SCOPE:

Most of the Indian banks have been retail banks in their business composition. The term

‘Retail Banking’ encompasses various financial products (different types of deposit

accounts, housing-consumer-auto and other types of loan accounts, demat facilities,

insurance, mutual funds, Credit and Debit Cards, ATM and other technology-based

services, stock-broking, payment of utility bills, reservation of railway tickets, etc.,)

catering to diverse customer groups, offering a host of financial services, mostly to

individuals. Simply speaking, it takes care of the diverse banking needs of an individual.

HDFC BANK

The Housing Development Finance Corporation Limited (HDFC) was amongst the first

to receive an 'in principle' approval from the Reserve Bank of India (RBI) to set up a bank

in the private sector, as part of the RBI's liberalization of the Indian Banking Industry in

1994. The bank was incorporated in August 1994 in the name of 'HDFC Bank Limited',

with its registered office in Mumbai, India. HDFC Bank commenced operations as a

Scheduled Commercial Bank in January 1995.

Promoter

HDFC is India's premier housing finance company and enjoys an impeccable track record

in India as well as in international markets. Since its inception in 1977, the Corporation

has maintained a consistent and healthy growth in its operations to remain the market

leader in mortgages. Its outstanding loan portfolio covers well over a million dwelling

units. HDFC has developed significant expertise in retail mortgage loans to different

market segments and also has a large corporate client base for its housing related credit

facilities. With its experience in the financial markets, a strong market reputation, large

shareholder base and unique consumer franchise, HDFC was ideally positioned to

promote a bank in the Indian environment

Business Focus

HDFC Bank's mission is to be a World-Class Indian Bank. The objective is to build

sound customer franchises across distinct businesses so as to be the preferred provider of

banking services for target retail and wholesale customer segments, and to achieve

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healthy growth in profitability, consistent with the bank's risk appetite. The bank is

committed to maintain the highest level of ethical standards, professional integrity,

corporate governance and regulatory compliance. HDFC Bank's business philosophy is

based on four core values - Operational Excellence, Customer Focus, Product Leadership

and People.

Management

Mr. Jagdish Capoor took over as the bank's Chairman in July 2001. Prior to this, Mr.

Capoor was a Deputy Governor of the Reserve Bank of India.

The Managing Director, Mr. Aditya Puri, has been a professional banker for over 25

years and before joining HDFC Bank in 1994 was heading Citibank's operations in

Malaysia.

The Bank's Board of Directors is composed of eminent individuals with a wealth of

experience in public policy, administration, industry and commercial banking. Senior

executives representing HDFC are also on the Board.Senior banking professionals with

substantial experience in India and abroad head various businesses and functions and

report to the Managing Director. Given the professional expertise of the management

team and the overall focus on recruiting and retaining the best talent in the industry, the

bank believes that its people are a significant competitive strength.

Capital Structure

The authorized capital of HDFC Bank is Rs.450 crore (Rs.4.5 billion). The paid-up

capital is Rs.311.9 crore (Rs.3.1 billion). The HDFC Group holds 22.1% of the bank's

equity and about 19.4% of the equity is held by the ADS Depository (in respect of the

bank's American Depository Shares (ADS) Issue). Roughly 31.3% of the equity is held by

Foreign Institutional Investors (FIIs) and the bank has about 190,000 shareholders. The

shares are listed on the The Stock Exchange, Mumbai and the National ock Exchange.

The bank's American Depository Shares are listed on the New York Stock Exchange

(NYSE) under the symbol "HDB

Times Bank Amalgamation

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In a milestone transaction in the Indian banking industry, Times Bank Limited (another

new private sector bank promoted by Bennett, Coleman & Co. /Times Group) was

merged with HDFC Bank Ltd., effective February 26, 2000. As per the scheme of

amalgamation approved by the shareholders of both banks and the Reserve Bank of India,

shareholders of Times Bank received 1 share of HDFC Bank for every 5.75 shares of

Times Bank. The amalgamation added significant value to HDFC Bank in terms of

increased branch network, expanded geographic reach, enhanced customer base, skilled

manpower and the opportunity to cross-sell and leverage alternative delivery channels.

Distribution Network

HDFC Bank is headquartered in Mumbai. The Bank at present has an enviable network of

over 495 branches spread across the country. All branches are linked on an online real-

time basis. Customers in 90 locations are also serviced through Phone Banking. The

Bank's expansion plans take into account the need to have a presence in all major

industrial and commercial centers where its corporate customers are located as well as the

need to build a strong retail customer base for both deposits and loan products. Being a

clearing/settlement bank to various leading stock exchanges, the Bank has branches in the

centers where the NSE/BSE has a strong and active member base.

The Bank also has a network of over 1054 networked ATMs across these cities.

Moreover, HDFC Bank's ATM network can be accessed by all domestic and international

Visa/MasterCard, Visa Electron/Maestro, Plus/Cirrus and American Express

Credit/Charge cardholders.

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Technology

HDFC Bank operates in a highly automated environment in terms of information

technology and communication systems. The entire bank's branches have connectivity

which enables the bank to offer speedy funds transfer facilities to its customers. Multi-

branch access is also provided to retail customers through the branch network and

Automated Teller Machines (ATMs). The Bank has made substantial efforts and

investments in acquiring the best technology available internationally to build the

infrastructure for a world-class bank. In terms of software, the Corporate Banking

business is supported by Flexcube, while the Retail Banking business by Finware, both

from i-flex Solutions Ltd. The systems are open scaleable and web enabled.

The Bank has prioritized its engagement in technology and the internet as one of its key

goals and has already made significant progress in web-enabling its core businesses. In

each of its businesses, the Bank has succeeded in leveraging its market position, expertise

and technology to create a competitive advantage and build market share.

There was a vacuum in the market as there were the nationalized bank on one side

Providing service to a larger part of the country both in terms of geography and People.

There were the foreign banks on the other side small but catering to a premium segment.

Thus HDFC bank came up with a special package that had the geographical reach of

India bank and products and services of the foreign bank. for producing world class

services such people were hired, who were the best in their field , so as inculcate new

thinking and mindset like managing director from Citibank:, head of technology from

bank of AMERICA rich manager from Citibank head of private banking from UBS ,

marketing head from levers and bank of America, treasury team from HONG KONG.

Businesses

HDFC Bank offers a wide range of commercial and transactional banking services and

treasury products to wholesale and retail customers. The bank has three key business

segments:

Wholesale Banking Services

The Bank's target market ranges from large, blue-chip manufacturing companies in the

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Indian corporate to small & mid-sized corporate and agri-based businesses. For these

customers, the Bank provides a wide range of commercial and transactional banking

services, including working capital finance, trade services, transactional services, cash

management, etc.

The bank is also a leading provider of structured solutions, which combine cash

management services with vendor and distributor finance for facilitating superior supply

chain management for its corporate customers. Based on its superior product delivery /

service levels and strong customer orientation, the Bank has made significant inroads into

the banking consortia of a number of leading Indian corporate including multinationals,

companies from the domestic business houses and prime public sector companies. It is

recognized as a leading provider of cash management and transactional banking solutions

to corporate customers, mutual funds, stock exchange members and banks.

Retail Banking Services

The objective of the Retail Bank is to provide its target market customers a full range of

financial products and banking services, giving the customer a one-stop window for all

his/her banking requirements. The products are backed by world-class service and

delivered to the customers through the growing branch network, as well as through

alternative delivery channels like ATMs, Phone Banking, Net Banking and Mobile

Banking.

The HDFC Bank Preferred program for high net worth individuals, the HDFC Bank Plus

and the Investment Advisory Services programs have been designed keeping in mind

needs of customers who seek distinct financial solutions, information and advice on

various investment avenues. The Bank also has a wide array of retail loan products

including Auto Loans, Loans against marketable securities, Personal Loans and Loans for

Two-wheelers. It is also a leading provider of Depository Participant (DP) services for

retail customers, providing customers the facility to hold their investments in electronic

form.

HDFC Bank was the first bank in India to launch an International Debit Card in

association with VISA (VISA Electron) and issues the Mastercard Maestro debit card as

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well. The Bank launched its credit card business in late 2001. By September 30, 2005, the

bank had a total card base (debit and credit cards) of 5.2 million cards. The Bank is also

one of the leading players in the "merchant acquiring" business with over 50,000 Point-

of-sale (POS) terminals for debit / credit cards acceptance at merchant establishments.

Treasury

Within this business, the bank has three main product areas - Foreign Exchange and

Derivatives, Local Currency Money Market & Debt Securities, and Equities. With the

liberalization of the financial markets in India, corporate need more sophisticated risk

management information, advice and product structures. These and fine pricing on

various treasury products are provided through the bank's Treasury team. To comply with

statutory reserve requirements, the bank is required to hold 25% of its deposits in

government securities. The Treasury business is responsible for managing the returns and

market risk on this investment portfolio.

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PROBLEM FORMULATION

Being a new branch, Bank is really doing great job and performing beyond the

expectations and targets given by the Head of the HDFC Bank. As known to all HDFC

Bank have a good brand image, highest in customer services

But, some problems do occur at initial stage of business, so happening with HDFC Bank

and constraints are:

The problems of Retail Banking:

Business oriented community as in Ballabhgarh is more interested in having CC

accounts than keeping their money in their current or SB accounts.

Since HDFC bank is not considering small CC loans which is below 40 lacs turnover,

challenges from existing nationalized banks are faced

Less awareness amongst people about private bank products.

People with mindset of having lower IP transactions at nationalized Banks.

Senior Citizens always want passbooks and make it a mandate to have one before

account opening.

Visibility of the bank.

Awareness of the products and services which carry good features

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NEED OF THE STUDY

To conduct a research there is always a requirement for that particular research by any

company, organization or anyone for further proceedings in any particular project.

The need for Comparative Study of Performance of Banks, Market Potential &

Awareness is as follows:

To give an insight of the market, that

What is the market scenario?

What is the performance of various banks?

Who are the main competitors?

Who are my best customers and how can I keep them?

Where is the greatest market potential to find new customers?

What locations should I choose to expand our branch network?

Is our network of bank branches optimized for maximum performance?

Is there awareness of bank in the market?

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SCOPE OF THE STUDY

Scope of the project means that what data we have collected that can be used in many

other field and as a secondary data for other project for many other company and this data

can be use for general purpose also:-

This study helps HDFC bank in competing with other banks in that area and what

is their market share by analyzing their performance.

The study also shows the customer mind set and their preference.

This study will also help HDFC Bank in capturing market & creating huge

customer base.

This study provides the insight that in which area potential customer for bank

exists.

This study helps HDFC Bank in making better strategies & plans.

LITERATURE SURVEY

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RETAIL BANKING IN INDIA

It is by now well recognized that India is one of the fastest growing economies in the

world after over a decade of financial and banking sector reforms since 1991. Evidence

from across the world suggests that a sound and evolved banking system is required for

sustained economic development. India has a better banking system in place vis-à-vis

other developing countries, but there are several issues that need to be ironed out. The

course of banking evolution and growth has gone through innumerable twists and turns in

the post independence era. Retail banking segment in the banking industry is

continuously undergoing innovations, product reengineering, adjustments and alignments.

Given the size advantages, diverse customer base and scope for future expansion, there is

a need for evolving a systematic approach to retail banking.

The Potential for Retail Banking in India:

An insight into the following paragraphs will justify the immense underlying potential for

the Indian retail baking industry.

While the total outstanding retail loans in Taiwan is around 41% of its GDP, the figure in

India stands at less than 5%. The comparison with the West is even more staggering.

Another situation that is natural when comparing retail sectors is the use of credit cards.

Here also, the potential lies in the fact that of the consumer expenditure in India in 2001,

less than 1% was through plastic, the corresponding US figure standing at 18%.

Hence, The Indian players are bullish on the retail business and this is not totally

unfounded. Two primary reasons are as follows:

It is now undeniable that the face of the Indian consumer is changing. This is reflected

adequately in a change in the urban household income pattern. The direct fallout of such a

change will be the consumption patterns and hence the banking habits of Indians, which

will now be skewed towards Retail products.

a) Going by international standards, a large portion of the Indian population is

simply not "bankable" - taking profitability into consideration. On the other hand, the

financial services market is highly over-leveraged in India. Competition is fierce,

particularly from local private banks such as HDFC Bank and ICICI Bank, in the business

of home, car and consumer loans. There, precisely lie the pitfalls of such explosive

growth. All banks are targeting the fluffiest segment i.e. the upwardly mobile urban

salaried class. Although the players are spreading their operations into segments like self-

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employed and the semi-urban rich, it is an open secret that the big city Indian yuppies

form the most profitable segment. Over-dependence on this segment is bound to bring in

inflexibility in the business. Hence the challenge for various banks is to tap the

underlying potential of the tapped and specifically the untapped market by developing

sophisticated financial behavior and spreading the scope to all over the country.

Prospects of Retail Banking in India:

The conventional scenario of Banks is fast changing. The Banking Institutions have

started revisiting their Visions. Should they have thousands of C class Accounts or a few

A and B class Accounts? They have come to the conclusion that it is not economical to

service the C class Accounts. Even in India, banks are raising the bar on deposits. Some

Banks have even increased the minimum balance in Savings accounts so that they are out

of reach of the small man.

Why is this so? This is a natural corollary to the competencies that are being built up at a

significant speed in all banks. Examining them one by one will help us know where the

banks are heading, in the near future.

a. Customer Focus:

All along, the word "Customer" used to denote any person who is having an account with

a branch of a Bank or using the services of a Branch. Now, we are seeing a new definition

for customer. A customer is no more a customer of the Branch; he is the Customer of the

BANK. With the advent of 'AAA Banking' (Anytime, Anywhere, Anyhow Banking) the

new definition of customer has become relevant. Technology enables the customer to

"help himself" through Internet Banking, ATM Banking, Telephone Banking, Online

Banking, Mobile Banking, or e-Banking, etc. Moreover the concept like Know Your

Customer (KYC) reinforced when Reserve Bank of India recently urged banks to improve

customer focus as a strategic initiative for effective management of profitability, risk and

customer satisfaction as well as customer delight!

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b. Segment focus:

Banks are obviously for customer service. But banks are finding that they too need to

segment and target High Networth Individuals (HNIs) and companies if they have to

satisfy the needs of their stakeholders. Therefore, Banks are generally moving towards

products that are focused on their targeted end customers. And this target is specifically

the high end customers; as they do not find any leverage from the small accounts. But

there is a strong trend in terms of consolidation in terms of the business segmentation.

The general pattern of the banks is to cater to all segments – from agriculturists to high

net worth individual to corporate banking to international banking. An analysis of the

current scenario indicates that in future, each bank will decide on its core competency and

cater only to selected segments. For example, the Deutsche Bank in India operates only in

the corporate banking and it has turned as a market leader in this segment.

c. Product focus:

Banks have been offering various asset products (Loans) and liability products (Deposits),

taking the customers’ general needs like fixed amount loans or running Cash Credit /

Overdraft accounts or Fixed Deposit or Cumulative Deposit or Recurring Deposit as

liability products. Now, the time has come for the Customer to demand a product that is

not currently available in the Banker's kitty and the Bank has to literally create customer-

specific products. Here comes the Banker in the role of a Financial Engineer.

Financial Services: Then and Now

TABLE NO:- 1.1

Old Economy New Economy

Confined market place Unlimited market space

Competition between banks Competition from brands

Limited product line Extensive product breadth

One-size-fits-all products Customisation and innovation

Branch-focused e-Enabled, multi-channel players

Focus on business growth Focus on revenue growth as well as cost-reduction

Revenues through marginRevenue generated through fees and value-added services

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Existing products and services are changing way for value-added ones thanks to the one-

upmanship game among competing banks, sparked off by soaring consumer-demands.

d. Technology focus:

As banks face the mutually interdependent forces of competition, regulation, technology,

and customer expectations, a picturesque setting for the tremendous upheaval and

opportunity emerges. This interdependency, in turn, is built upon mutually dependent

technological trends.

Increase processing power

Increase in networking

Increase in flexibility in defining business standard:

Increase in modularity of software

These four trends are impacting irreversibly the business of banking, outsourcing, in

sourcing, analytics, and payment systems. Given these factors the banks are being more

technology focused and driving the use of internet to help meet the requirements of their

customers through segmentation.

(i) Internet banking:-

The trend in banking is changing from computerization of branches to laying a

uniform platform by having core banking solution in all the branches. At the same

time, banks are looking at internet banking. While a start has been made in the

Internet banking in India, the number of transactions through this mode is extremely

negligible (less than 1%). A study group appointed by the RBI has suggested that for

Internet banking, there should be robust system keeping a log of all network activities

and analyzing the same. RBI has gone on to suggest various technical features

essential for having such a robust system. This should be in place within the next 2

years. Hopefully, the retail banks will see a surge/splurge in the usage from 1% to at

least 10% in the next couple of years. Passing of Information Technology Act, 2000

gave enough relief to the users assuring of proper use of technology in banking.

(ii) Shared ATMs: -

Till the year 2003, each bank was interested in opening its own ATMs to provide

access and anytime banking to its customers. Cost of Installation of ATM is about

Rs.15 lacs with an additional maintenance cost of Rs.1.5 lacs per month. To break

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even, 300 transactions are to be put through each ATM per day. The cost of

transaction in the branch of the Bank is approximately Rs. 60 while it is Rs. 10 if

carried out through an ATM. To take advantage of this lower transaction cost, there is

need for banks to induce customers to use more and more ATMs. In view of the huge

investment cost of ATMs, Banks have now come to an understanding by which the

customer of one Bank can use the ATMs of other Bank/s.

This is in the right direction. Already SBI, HDFC Bank, ICICI Bank and others have

started offering such a facility at a nominal payment per transaction, for which the

customers are readily agreeable.

(iii) Outsourcing: -

The challenge of managing the diverse services in a networked environment has caused

the banks to introspect on what should be considered as their core skills and primary

roles.

In future, banks will need to focus on value-differentiating services by keeping in-house

their competitive advantages while partnering with others who complement its services-

making the argument for best-of-breed integration a necessity.

(iv) In sourcing: -

In sourcing is a model wherein banks perform operations that are originally done by their

customers/other banks. Corporate clients may outsource activities like receivable

management, accounting and risk management of corporate investments to banks. New

product offerings will emerge as a combination of existing products and the new in

sourced activities Banks, with their established processing capacities, are ideal partners

for insurance and other financial service firms in their pursuit of customer reach and

service provision.

(v) Analytics: -

As they realize that product and related services by themselves cannot provide sustainable

competitive advantage, banks are paying more attention to relationship with their

customers and the way they manage risk, determine price, and allocate capital.

Hence, going forward, banks will attempt to augment their behavioral and economic

views of the customer, preferably captured at the “Point of Contact” in addition to

existing transactional and demographic data (in-house and external). Banks will require

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use of analytics to effectively manage their customer relationships, conduct detailed

analysis that help more accurately model, and predict future customer behavior and lay a

quantified foundation for strategic decision-making.

On the other hand, banks often face the tricky task of asset allocation and pricing. In the

last decade, investments in risk management and related systems have increased

multifold, albeit made with a compliance objective towards identifying, measuring and

funding risk. The future will see increasing investments in risk analytics as part of an

integrated framework supporting asset pricing, performance measurement, and asset

allocation models.

(vi) Payment systems: -

In recent years, alternate money transmission avenues, especially the development of

electronic money schemes, have been gaining currency. Gradual expansion of Western

Union Money Transfer in India through alliances with Banks, Post Offices, etc., is a thing

to note in this direction. While electronic money has the potential to take over from cash

for making small-value payments, making such transactions are becoming easier and

cheaper for both consumers and merchants. This raises policy issues for central banks in

its role as the guardian of the payment network and implementer of the monetary policy.

The emergence of peer-to-peer money transmission mechanisms poses a challenge to

current role of banks as gatekeepers to traditional payment systems. Robust payment

systems, therefore, are a key requirement in maintaining and promoting financial stability

with technology playing both a facilitating and disruptive role in them.

(vii) Real Time Gross Settlement (RTGS) :-

In the last one decade, thanks to continuous thrust on computerization in the banking

system, RBI took initiative for bringing in Electronic Funds Transfer (EFT), Electronic

Clearing System (ECS), ATMs and Internet Banking. Cross selling of various financial

products has been possible due to ATMs and Internet Banking. Investment climate has

also geared up in volumes with Dematerialisation facility introduced by setting up of

NSDL and CDSL after formation of National Stock Exchange in Mumbai. Clearing

Corporation of India Ltd., (CCIL) has also made remarkable impact on funds settlement

mechanism. Very soon Cheque Truncation system is going to be spearheaded by RBI in a

phased manner.

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RTGS is a payment system in which processing and settlement takes place in real-time

(continuously). In this system, funds would flow freely from one market to another

leading to better integration of the Domestic Financial Markets among themselves, and

with International Financial Markets as well. RTGS, as a settlement process will

minimize settlement risks by settling individual payments in real time in the books of

accounts held by the RBI. RTGS will be a mode for large value Inter-Bank settlement, to

be widely used, for enhancing risk control measures, for faster and efficient settlement of

liabilities for better customer services for the ultimate users in the value chain. RTGS

would eliminate the time lag between the debit to an account of customer and its

corresponding credit to another customer in a different bank. RTGS requires

implementation of a 2 Level Gateway- one at the individual bank level and the other at

the RBI level. Significant contribution made by Institute for Development and Research

in Banking Technology (IDRBT), Hyderabad in this regard is commendable.

e. Employee focus:

Earlier, there were premises where the branch of a Bank is located and there were three

categories of staff to attend to the customers viz., Supervisory, Clerical and Sub-ordinate

staff. With the disappearance of big ledgers and registers, the need for Sub-ordinate staff

is also getting reduced. The role of supervisory staff would increase and not in the sense

of controlling the staff working with them but in different areas of delivering competitive

services. Awareness about productivity, customer focus, competition, grievance/

complaint redressals, market surveys, etc among the bank staff has gone up very high.

The VRS scheme introduced in the year 2000 by the Banks was to reduce the redundant

staff consequent to computerization. It is felt that one more VRS would be needed for the

Banks to shed their excess flab and make them fit and trim. Henceforth, the role for

clerical staff would have to undergo a change from sitting under the roof in a branch to

moving into the field and market various financial services offered by their Bank and not

only attract new customers and retain existing clientele but also retrieve the customers

lost to competitors. In a nutshell the trend is towards sophisticated well trained customer

orientation.

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Banking Hours:

Bank hours were fixed so far. Now the fact is that almost all banks are moving towards

any time/any where/home banking. Again, a closer look at this will reveal that Banks are

moving away from the traditional customer to the customer who is extra busy. Who is

this? Again, the high net worth individual and the highly profitable companies. For

example ICICI bank has started 8 to 8 banking where the banking hours are 8 a.m. to 8

p.m. looking at this competitive market we may witness 24 hours banking, very soon.

f. Others:

(i) The Basel II effect:

Essentially, the rules evolved by Basel Committee for Bank Supervision (BCBS) and

adopted by RBI tell the banks how much capital the banks should have to cover up for the

risk that their loans might go bad. The rules set out by Bank for International Settlements

(BIS) in 1988 led the banks to differentiate among the customers it lent out money to.

Different weightages were given to various forms of assets, with zero percentage

weightings being given to cash, deposits with the central bank/govt etc, and 100 per cent

weighting to claims on private sector, fixed assets, real estate etc. The summation of these

assets gave us the risk-weighted assets.

Against these risk weighted assets the banks had to maintain a (Tier I + Tier II) capital of

9 per cent i.e. every Rs100 of risk assets had to be backed by Rs 9 of Tier I + Tier II

capital. To put it simply, the Indian banks had to maintain a Capital Adequacy Ratio

(CAR) of 9 per cent as at present.

The problem with these rules is that they do not distinguish within a category i.e. all

lending to private sector is assigned a 100 per cent risk weighting, be it a company with

the best credit rating or company which is in the doldrums and has a very low credit

rating. This is not an efficient use of capital. The company with the best credit rating is

more likely to repay the loan vis-à-vis the company with a low credit rating. So the banks

should be setting aside a far lesser amount of capital against the risk of a Company with

the best credit rating defaulting vis-à-vis the company with a low credit rating.

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With the rules being revised by BCBS and RBI, BASEL-II norms are to take place in the

year 2007, the banks can decide on the amount of capital to set aside depending on the

credit rating of the borrowing company.

Credit risk is not the only type that banks face in course of their business. These days, the

operational risks that banks face are huge. The various risks that come under operational

risk are competition risk, technology risk, casualty risk, crime risk etc. The original

BASEL rules did not take into account the operational risks. Besides, there are other risks

like Interest Rate Risk, Exchange Risk, etc. As per the BASEL-II norms, banks will have

to set aside 15 per cent of net income to protect themselves against operational risks.

So to be ready for the new BASEL rules, the banks all over including in India will have to

set aside more capital because the new rules could lead to Capital Adequacy Ratios of the

banks falling. How the banks plan to go about meeting these requirements is something

that remains to be seen. A few banks are planning initial public offerings / share issues to

have enough capital on their books to meet these new norms. Recent examples are Dena

Bank, Punjab National Bank, SBI, Andhra Bank, ICICI Bank, etc.

(ii) Consolidation –the future wave

In the recent past, there has been a lot of talk about Indian Banks lacking in scale and

size. The State Bank of India is the only bank from India to make it to the list of Top 100

banks, globally. Most of the PSBs are either looking to pick up a smaller bank or waiting

to be picked up by a larger bank. The buzzword in banking circles these days is, in

particular, consolidation (mergers) of Public Sector Banks for good although facing stiff

resistance from various corners.

The central government also seems to be game about the issue and is seen to be

encouraging PSBs to merge or acquire other banks. Global evidence seems to suggest that

even though there is great enthusiasm when companies merge or get acquired, majority of

the mergers/acquisitions do not really work. So in the zeal to merge with or acquire

another bank, the PSBs should not let their common sense take a back seat. Before a

merger is carried out cultural issues should be looked into. A bank based primarily in

North India might want to acquire a bank based primarily in South India to increase its

geographical presence but their cultures might be very different. So the integration

20

process might become very difficult. Technological compatibility both for software and

hardware, besides trained work force, is another issue that needs to be looked into in

detail, before any merger or acquisition is carried out.

The banks must not just merge because everybody around them is merging. As Keynes

wrote,” Worldly wisdom teaches us that it's better for reputation to fail conventionally

than succeed unconventionally". Banks should avoid falling into this trap.

The Problems of   Retail Banking in INDIA

Now, the challenges that the sector in India faces:

a. Customer focus:

The retail banks in future will try to aggressively market their products. To market these

products, there will be innovative modes to reach customers like SMS, internet, and

mobile phones. Some banks are also engaging the services of Direct Selling Agents

(DSAs), Franchisees, etc for sourcing and appraisal of loan proposals, issue of Credit

Cards, selling of insurance and mutual fund products, etc. Such methods may some times

displease/disturb the customer. Moreover, banks generally pitch on higher levels of

service but if the banks do not match up to what they have claimed, this may lead to

unsatisfied customers and higher customer attrition rate.

b. Product focus:

The challenge here will be to design and innovate the financial products which cater to

the target segment needs. In future, retail banking scenario will see a huge proliferation of

products. This will in turn require devising product which is easy to understand and at the

same time meet the financial goals of the customers. The problem that lies ahead is to

gain a mindshare for one’s product given a wide range of products.

c. Technology focus: Technology in India has been for over seven years now. But its penetration in the Industry

in general and that in the financial services market has been rather uninspiring despite its

professed advantages. The surprising aspect that came out from the study was that though

the banks were aware of the technology’s benefits, they are skeptical about its

applicability to their organization. The root cause for this is the astonishing growth that

21

the banks are experiencing at the moment. Most of the Retail banks are witnessing a

tremendous expansion in their customer base: one bank even claim to be adding over

100% customer on y-on-y basis. However, on the other front there is increasing menace

of hacking, phishing and farming through which scamsters are creating havoc indulging

in cyber crimes on a large scale.

Apart from this, there are many other factors that have undermined the acceptance of

Customer Relations Management (CRM). The chart shown below enlists the various

factors (and their relative weightages on a scale of 1 to 5) that are believed to have played

a role in the sluggish penetration of CRM in the retail-banking sector:

FIGURE NO :- 1.2

The above chart clearly shows that it is the implementation time that has affected the way

people in banks look at CRM the most. In order to further CRM in this segment, it is of

paramount importance to reduce the implementation time to minimum possible. This

factor makes CRM on Demand (web based CRM services offered by service providers) a

particularly attractive alternative. The second important parameter that came out from the

study was the cost. To sum up, Indian retail banking players want less risk and faster

returns at lesser costs.

22

FIGURE NO:- 1.3

Since, banks generally can’t do with an investment that takes a long time to get running,

implementation time figures as the top-most criteria closely followed by initial costs and

training required.

d. Employee Focus:

In a service based industry the value can be delivered at the moment of interaction with

the customers. It is vivid from the above chart that there needs to be focus on the

employees and upgrading their skills as they at the front end would be the face of the

bank. Hence, training requirement factor figures prominently in the case of banks due to

the fact that these banks generally make do with just the required amount of manpower

and it is very difficult for them to spare them. That will immediately start affecting their

operations.

Banks, in a drive to carry on with tremendous expansion in terms of customer base, need

to have requirements of the employees who are well informed about the products as well

as have the necessary soft skills to deal and satisfy the customers. In future there may be a

problem of getting manpower or in specifics customer care executives with enhanced

skills, knowledge and attitude. Hence, it challenges for the bank to upgrade their existing

23

manpower and retain or lock in the best talents for having competitive edge in terms of

human resources.

e. Others:

TABLE NO:- 1.2

(i) Interest Rate Risk

Interest rate risk can be defined as exposure of bank's net interest income to adverse

movements in interest rates. A bank's balance sheet consists mainly of rupee assets and

liabilities. Any movement in domestic interest rate is the main source of interest rate risk.

Over the last few years the treasury departments of banks have been responsible for a

substantial part of profits made by banks. Between July 1997 and Oct 2003, as interest

rates fell, the yield on 10-year government bonds (a barometer for domestic interest rates)

fell, from 13 per cent to 4.9 per cent.

This will make it difficult to show huge profits from treasury operations. This concern

becomes much stronger because a substantial percentage of bank deposits remain

invested in government bonds.

24

Banking in the recent years had been reduced to a trading operation in government

securities. Recent months have shown a rise in the bond yields which has led to the profit

from treasury operations falling. The latest quarterly reports of banks clearly show several

banks incurring losses on their treasury operations. If the rise in yields continues, the

banks might end up posting huge losses on their trading books. Given these facts, banks

will have to look at alternative sources of investment.

(ii) Non-Performing Assets

The best indicator of the health of the banking industry in a country is its low level of

NPAs. Given this fact, Indian banks seem to be better placed than they were in the past. A

few banks have even managed to reduce their net NPAs to less than one percent (before

the merger of Global Trust Bank into Oriental Bank of Commerce, OBC was a zero NPA

bank). But as the bond yields start to rise, the chances are the net NPAs will also start to

go up. This will happen because the banks have been making huge provisions against the

money they made on their bond portfolios in a scenario where bond yields were falling.

Reduced NPAs generally gives the impression that banks have strengthened their credit

appraisal processes over the years. This does not seem to be the case. With increasing

bond yields, treasury income will come down and if the banks wish to make large

provisions, the money will have to come from their interest income, and this in turn, shall

bring down the profitability of banks. The shaping up of newly formed Credit Information

Bureau of India Ltd., (CIBIL) is much desired in the years to come so that entire MIS of

banks depositors and borrowers is available on line. Credit decisions will be quicker,

efficient and of quality both in respect of individuals and institutions.

25

(iii) Competition

The entry of new generation private sector banks during mid-1990s has changed the

entire scenario. Earlier the household savings went into banks and the banks then lent

money to corporates. Now they need to sell banking. The retail segment, which was

earlier ignored, is now the most important of the lot, with the banks jumping over one

another to give out retail loans. The consumer has never been so lucky with so many

banks offering so many products to choose from with varying terms and conditions, rates

of interest, etc. With supply far exceeding demand it has been a race to the bottom, with

the banks undercutting one another.

A lot of foreign banks have already burnt their fingers in the retail game and have now

decided to get out of a few retail segments completely. Notable examples are Bank

Paribas and Oman International Bank in India.

The nimble footed new generation private sector banks have taken a lead on this front and

the public sector banks are trying to catch up. The PSBs have been losing business to the

private sector banks in this segment. PSBs need to figure out the means to generate

profitable business from this segment in the days to come.

CONCLUSION

Over the last few years, the falling interest rates gave banks very little incentive to lend to

projects, as the return did not compensate them for the risk involved. This and a host of

other technological, legal, financial, structural changes/developments led to the banks

getting into the retail segment in a big way. It also led to a lot of banks playing it safe and

putting in most of the deposits they collected into government bonds. Now, with the bond

party over and the bond yields starting to go up, the banks will have to concentrate on

their core function of lending with reasonable spreads and safety of funds.

Furthermore, the banking sector in India needs to tackle these challenges successfully to

keep growing and strengthen the Indian financial system. Moreover the interference of

the central government with the functioning of PSBs should stop. A fresh autonomy

package for public sector banks has been announced recently.  The package seeks to

provide a high degree of freedom to PSBs on operational matters. This seems to be the

26

right way to go for PSBs function in a professional manner and face stiff competition

from Private and Foreign players. Productivity, Profitability and Pricing of products are at

the top of the priority list of the banking system today.

With the economy experiencing respectable growth rates at around 7 – 8 per cent, it is

incumbent on the part of the banks to fall in line to offer best quality services to their

customers. Retail Banking deals with the lives of a vast majority of the population in the

age bracket between 25 and 60 years with disposable incomes. Regulators and Policy

makers shall take on their responsibility of facilitating the banks discharge their

responsibilities in an efficient manner. Problems enumerated above are not surmountable.

The growth of the banking sector will be one of the most important inputs that shall go

into making sure that India progresses and becomes a global economic super power.

27

CHAPTER II

ORGANIZATION INFORMATION

28

HDFC Bank (NYSE: HDB), one amongst the firsts of the new generation, tech-savvy

commercial banks of India, was incorporated in August 1994, after the Reserve Bank of

India allowed setting up of Banks in the private sector. The Bank was promoted by the

Housing Development Finance Corporation Limited, a premier housing finance company

(set up in 1977) of India. Net Profit for the year ended March 31, 2006 was Rs. 1,141

crores. Results of the latest quarter ended June 2007, indicate that the bank continues to

grow in a steady manner.

Mission and Business Strategy

Our mission is to be “a World Class Indian Bank”, benchmarking ourselves against

international standards and best practices in terms of product offerings, technology,

service levels, risk management and audit & compliance. The objective is to build sound

customer franchises across distinct businesses so as to be a preferred provider of banking

services for target retail and wholesale customer segments, and to achieve a healthy

growth in profitability, consistent with the Bank’s risk appetite. We are committed to do

this while ensuring the highest levels of ethical standards, professional integrity,

corporate governance and regulatory compliance.

Our business strategy emphasizes the following:

● Increase our market share in India’s expanding banking and financial services industry

by following a disciplined growth strategy focusing on balancing quality and volume

growth while delivering high quality customer service;

● Leverage our technology platform and open scaleable systems to deliver more products

to more customers and to control operating costs;

● Maintain high standards for asset quality through disciplined credit risk management;

● Develop innovative products and services that attract our targeted customers and

address inefficiencies in the Indian financial sector;

29

● Continue to develop products and services that reduce our cost of funds; and

● Focus on healthy earnings growth with low volatility.

Philosophy on Code of Corporate Governance

The Bank believes in adopting and adhering to best recognized corporate governance

practices and continuously benchmarking itself against each such practice. The Bank

understands and respects its fiduciary role and responsibility to shareholders and strives

hard to meet their expectations. The Bank believes that best board practices, transparent

disclosures and shareholder empowerment are necessary for creating shareholder value.

The Bank has infused the philosophy of corporate governance into all its activities. The

philosophy on corporate governance is an important tool for shareholder protection and

maximization of their long term values. The cardinal principles such as independence,

accountability, responsibility, transparency, fair and timely disclosures, credibility etc.

serve as the means for implementing the philosophy of corporate governance in letter and

spirit.

Board of Directors

The Composition of the Board of Directors of the Bank is governed by the Companies

Act, 1956, the Banking Regulation Act, 1949 and the listing requirements of the Indian

Stock Exchanges where the securities issued by the Bank are listed. The Board has a

strength of 12 Directors as on March 31, 2010. All Directors other than Mr. Aditya Puri,

Mr. Harish Engineer and Mr. Paresh Sukthankar are non-executive directors. The Bank

has five independent directors and seven non-independent directors. The Board consists

of eminent persons with considerable professional expertise and experience in banking,

finance, agriculture, small scale industries and other related fields. None of the Directors

on the Board is a member of more than 10 Committees and Chairman of more than 5

Committees across all the companies in which he/ she is a Director. All the Directors

have made necessary disclosures regarding Committee positions occupied by them in

other companies.

30

• Mr. Jagdish Capoor, Mr. Keki Mistry, Mrs. Renu Karnad, Mr. Vineet Jain, Mr. Aditya

Puri, Mr. Harish Engineer and Mr. Paresh Sukthankar are nonindependent Directors on

the Board.

• Mr. Arvind Pande, Mr. Ashim Samanta, Mr. Gautam Divan, Mr. C. M. Vasudev and Dr.

Pandit Palande are independent directors on the Board.

• Mr. Keki Mistry and Mrs. Renu Karnad represent HDFC Limited on the Board of the

Bank.

• Mr. Vineet Jain represents Bennett, Coleman Group on the Board of the Bank.

• The Bank has not entered into any materially significant transactions during the year,

which could have a potential conflict of interest between the Bank and its promoters,

directors, management and/or their relatives, etc. other than the transactions entered into

in the normal course of business.

The Senior Management have made disclosures to the Board confirming that there are no

material, financial and/or commercial transactions between them and the Bank which

could have potential conflict of interest with the Bank at large.

Additional Capital

In June 2009, the Bank allotted 1,35,82,000 equity shares of Rs. 10/- each at a premium

of Rs. 1,013.49 per share on a preferential basis to Housing Development Finance

Corporation Ltd. (HDFC) aggregating to Rs. 1,390 crores. In July 2009, the Bank made a

public offering of 6,594,504 American Depositary Shares (ADS), each ADS representing

three equity shares, at a price of $ 92.10 per ADS aggregating to of Rs. 2,394 crores (net

of underwriting discounts and commissions). During the year under review, 16.78 lacs

shares were allotted to the employees of your Bank pursuant to the exercise of options

under the Employee Stock Option Scheme of the Bank.

31

Capital Adequacy Ratio

Your Bank’s total Capital Adequacy Ratio (CAR) stood at a healthy 13.6%, well above

the regulatory minimum of 9.0%. Of this, Tier I CAR was 10.3%.

Human Resources

The Bank’s staffing-needs continued to increase during the year particularly in the retail

banking and SME businesses in line with the business growth. Total number of

employees increased from 21,477 as of March 31, 2009 to 37,836 as of March 31, 2010.

The Bank continues to focus on training its employees on a continuing basis, both on the

job and through training programs conducted by internal and external faculty. The Bank

has consistently believed that broader employee ownership of its shares has a positive

impact on its performance and employee motivation. The Bank’s employee stock option

scheme so far covers around 6,535 employees.

Service Quality Initiatives

Your Bank continued to seek and drive process improvement in all spheres of business

through structured Quality Projects using Lean Sigma Project Management Methodology.

Over 1,000 projects were executed during the year that resulted in substantial Cost and

Turn Around Times reduction, and productivity and process efficiency improvement.

Service Quality initiatives were refined to capture and improve upon real customer

experiences at various touch-points. New elements were added and renewed improvement

schemes installed to provide customer delight. Your Bank launched a Service Quality

improvement drive for some of the key support departments as well. Customer feedback

was taken into account to introduce new services using technology to ensure customer

convenience, secured transactions and, reduced cost of transactions. Your Bank plans to

use this platform to drive systemic changes and process re-engineering using technology,

Lean Six Sigma tool-kit, 5 S and other business excellence initiatives to further enhance

customer experience and value to business.

32

Social Initiatives

In keeping with the HDFC Group philosophy, your Bank has always believed in making a

difference to society at large. As a responsible corporate citizen, it has been your Bank’s

vision to empower the community through socio-economic development of

underprivileged and weaker sections of society. During 2009-10 your Bank further

intensified its efforts in this direction. Most of the Bank’s social activities revolve around

educational initiatives (including school adoption projects, educational sponsorships of

girl children, primary education to first generation learners etc.) and initiatives in the field

of livelihood training and support. In the latter area, the Bank has been working with

NGOs in providing non-formal vocational and technical education programs as well as

skill up gradation courses to enable sustainable employment and income generation for

economically weaker sections. To further integrate some of its Corporate Social

Responsibility (CSR) initiatives with its banking operations, the Bank has started

outsourcing some non-core back office operations to certain small semi-urban locations.

This creates jobs for the local educated youth in those towns with obvious gains for the

families (as the youth is gainfully employed without having to relocate to distant cities)

and also gives a boost to the local economy in those locations. Where relevant, the Bank

coordinates its CSR activities

with its microfinance and self – help group (SHG) financing.

The Bank has relationships with 110 micro finance institutions and has extended credit

facilities, whereby 1.61 million households have been beneficiaries of financial inclusion.

In this regard, your Bank has also appointed around 150 NGOs across the country as

business correspondents (BCs) to provide SHG – Bank linkage to help tribals, physically

challenged, beggars, etc. to earn a livelihood and join the mainstream. The Bank under

the direct SHG linkage programme, has credit linked over 32,000 SHGs and thereby

roughly another half a million households have been brought under Financial Inclusion.

Employees are a key part of your Bank’s social initiatives and are encouraged to

participate in these activities, contributing their time and skills. The Bank also administers

a payroll-giving programme whereby employees offer deductions from their salary to

donate for specified charities or social causes of their choice and the Bank contributes an

equivalent amount.

33

Merger with Centurion Bank of Punjab Limited

On March 27, 2008, the shareholders of the Bank accorded their consent to a scheme of

amalgamation of Centurion Bank of Punjab Limited with HDFC Bank Limited. The

shareholders of the Bank approved the issuance of one equity share of Rs. 10/- each of

HDFC Bank Limited for every 29 equity shares of Re. 1/- each held in Centurion Bank of

Punjab Limited. This is subject to receipt of approvals from the Reserve Bank of India,

stock exchanges and other requisite statutory and regulatory authorities. The shareholders

also accorded their consent to issue equity shares and/or warrants convertible into equity

shares at the rate of Rs.1,530.13 each to HDFC Limited and/or other promoter group

companies on preferential basis, subject to final regulatory approvals in this regard. The

Shareholders of the Bank have also approved an increase in the authorized capital from

Rs. 450 crores to Rs. 550 crores.

In terms of distribution, HDFC Bank stands to gain: 1,148 branches and 2,358 automated

teller machines (ATMs) will make it the largest by branches in the private sector. It also

gains from substantial cross-selling opportunities in the short-term. However, it will not

vend home loans given the conflict of interest with parent HDFC and may even sell down

CBoP’s home-loan book to it. A point of concern is the fact that the retail portfolio of the

merged entity will have more by way of unsecured and two-wheeler loans. This business

has come under pressure in recent times.

A report by Deutsche Bank (India) says “getting a 50 per cent boost to the branch

network in one shot, which even under a benign regulatory stance may take nearly three

years to achieve organically, is a big positive”. The other important point is that having

acquired two banks in 15 months (Bank of Punjab and Lord Krishna Bank), CBoP is not

working anywhere close to optimal profit-earning capacity. HDFC Bank may attempt to

improve it.

Subsidiary Companies

In terms of the approval granted by the Government of India, the provisions contained

under Section 212(1) of the Companies Act, 1956 shall not apply in respect of the Bank’s

subsidiaries namely, HDFC Securities Limited (HSL) and HDB Financial Services

Limited (HDBFSL).Accordingly, a copy of the balance sheet, profit and loss account,

report of the Board of Directors and Report of the Auditors of HSL and HDBFSL have

34

not been attached to the accounts of the Bank for the year ended March 31, 2010.

Investors who wish to have a copy of the annual accounts and detailed information on

HSL and HDBFSL may write to the Bank for the same. Further, the said documents shall

also be available for inspection by the investors at the registered offices of the Bank, HSL

and HDBFSL.

Risks and concerns

While Indian banks have limited direct exposure to the international markets for mortgage

linked securities, they are unlikely to be completely insulated from the turmoil in the

global financial markets. Reduced availability of global finance through external

commercial borrowings on the back of rising risk aversion in the global markets could

affect domestic growth, particularly investments in capacity expansion. This in turn could

have some impact on demand for domestic credit.

Lower capital inflows could also impact domestic liquidity, which has largely been a

function of external capital inflows for most of 2009-10 with the ratio of net foreign

exchange assets to reserve money consistently exceeding 100%.

The initial moderation in bank credit growth rates in 2009-10 seems to have been largely

confined to the retail segment (housing, consumer durables and auto loans). It is possible

that the moderation in growth in 2008-09 could be more broad-based, affecting both retail

and certain wholesale segments, due to trends in consumption and capital formation. This

has obvious implications for the credit portfolio of the banking system. A low 2.1%

growth in the ‘capital goods’ component of the index of industrial production (IIP) for

January 2009 seems to indicate a further decline in investment demand going forward

which could affect overall credit growth for the banking system, particularly in term loans

and project finance.

Rising global commodity prices created inflationary pressures for most of 2009-10. A

benign ‘base-effect’ and the suppression in the petroleum product prices kept headline

wholesale price inflation in a comfort zone for the first three quarters of the year.

However, given the focus on managing underlying price pressures rather than headline

inflation, monetary policy showed no signs of easing in 2009-10. Thus banks operated in

35

an environment where the central bank did not allow any surplus liquidity in the system,

resulting in interest rates remaining firm.

Despite the prospect of a slowdown in the global economy, commodity price pressures,

particularly those in food and mineral oils, show little sign of abating. As the base-effect

wears off, headline inflation is likely to ramp up to well over 7%. So, inflation concerns

are likely to influence monetary policy stance going forward and the prospect of an

economic slowdown need not entail immediate monetary easing. Thus, the operating

environment of banks in 2008-09 could be a combination of slower credit growth and

some upward bias in interest rates.

Opportunities

The financial system in India has witnessed considerably less turmoil and volatility than

that in advanced economies. Given this scenario, domestic corporates are more likely to

turn to local sources of funding. Cyclical slowdown is unlikely to impact segments of the

economy such as agriculture where a structural shift is under way. The rural economy has

been the greater focus of government policy in recent years, and significant opportunities

lie for banks here where the penetration of credit and financial products is still relatively

low.

The central and state governments appear to be driving an ambitious programme in the

infrastructure sectors. The eleventh five year plan (2007-2012) envisages an investment

of USD 500 billion, with approximately USD 80 billion envisaged for 2008-09 alone.

This presents a major opportunity for banks and financial institutions to finance these

investments.

Although growth in retail credit has moderated in the last year, the low penetration levels

of retail credit (estimated at less than 12% of GDP), the shift in demographics towards a

higher proportion of younger working population, the changing attitudes towards

borrowings, higher income levels amongst the growing middle class, and the large pent-

up demand for housing, cars etc., all augur well for the long-term, sustainable growth of

retail lending in the Indian market.

36

Outlook

The Indian economy seems likely to see some moderation in growth rates in 2009-10

relative to 2008-09. It is still likely to experience healthy growth in absolute terms and

will probably remain one of the fastest growing economies in the world. Nonetheless,

with a lower GDP growth coupled with tighter liquidity conditions (as RBI tackles

concerns on inflation) and stable or slightly higher interest rates, system credit growth is

likely to be lower than in 2009-10. Downward pressures on economic growth may not

immediately translate into an expansionary monetary policy, given the continued risks of

inflation from global energy and commodity prices. Thus, slightly slower credit growth

could coexist with firm, if not rising, interest rates. Given India’s strong macro-economic

fundamentals, however, structural drivers will continue to support growth which is a

positive for banks as well.

37

FINANCIAL RESULTS: Profit & Loss Account: Quarter ended June 30, 2010

For the quarter ended June 30, 2010, the Bank’s total income was Rs. 5,360.0 crores as against Rs. 5,136.8 crores for the quarter ended June 30, 2009. Net revenues (net interest income plus other income) were Rs.3,341.0 crores for the quarter ended June 30, 2010, an increase of 15.2% over Rs. 2,899.2 crores for the corresponding quarter of the previous year. Interest earned (net of loan origination costs and amortization of premia on investments held in the Held to Maturity (HTM) category) increased from Rs. 4,093.1 crores in thequarter ended June 30, 2009 to Rs. 4,420.2 crores in the quarter ended June 30, 2010. Net interest income (interest earned less interest expended) for the quarter ended June 30, 2010 grew by 29.4% to Rs. 2,401.1 crores, driven by average asset growth of 23.2% and a net interest margin (NIM) of 4.3% as against a core NIM of 4.2% for the quarter ended June 30, 2009.Other income (non-interest revenue) for the quarter ended June 30, 2010 was at Rs. 939.9 crores, primarily contributed by fees and commissions of Rs. 745.7 crores (up 14.9% over Rs. 649.3 crores in the quarter ended June 30, 2009) and foreign exchange/derivative revenues of Rs. 171.8 crores (up 24.7% over Rs. 137.8 crores in the quarter ended June 30, 2009). Profit on revaluation/sale of investments for the quarter ended June 30, 2010 was significantly lower at Rs. 21.5 crores as against Rs. 256.0 crores for the quarter ended June 30, 2009.Operating expenses for the quarter ended June 30, 2010 were up 15.3% to Rs. 1,592.3 crores and were stable at 47.7% of net revenues. On account of the improvement in asset quality, provisions and contingences reduced from Rs. 658.8 crores for the quarter ended June 30, 2009 to Rs. 555.0 crores (including loan loss provisions of Rs. 365.1 crores) for the quarter ended June 30, 2010. Profit before tax for the quarter ended June 30, 2010increased by 38.8% over the corresponding quarter ended June 30, 2009 to Rs. 1,193.7 crores. After providing Rs. 382.0 crores for taxation, the Bank earned a Net Profit of Rs. 811.7 crores, an increase of 33.9% over the corresponding quarter ended June 30, 2009.

Balance Sheet: As of June 30, 2010The Bank’s total balance sheet size increased by 25.3% to touch Rs. 233,253 crores as of June 30, 2010. Total deposits were Rs. 183,033 crores, up by 25.6% over June 30, 2009. With Savings account deposits at Rs. 53,869 crores and Current account deposits at Rs. 36,169 crores as of June 30, 2010, CASA deposits registered a growth of 37% over June 30, 2009. The CASA mix was therefore at 49.2% of total deposits as at June 30, 2010. Gross advances grew by 40.2% over June 30, 2009 to Rs. 147,620 crores. Of this, around 10% increase in advances was due to short-term, one-off movements in wholesale loans. Retail loans grew by 24.4% over June 30, 2009 to Rs. 76,068 crores and constituted 51.5% of gross advances

38

FIGURE NO:- 2.1

Capital Infusion & Capital Adequacy

The Bank’s total Capital Adequacy Ratio (CAR) as at June 30, 2010 (computed as per Basel 2 guidelines)remained strong at 16.3%, as against 15.4% as of June 30, 2009 and against the regulatory minimum of 9%.

Tier-I CAR was 12.4% as of June 30, 2010 as against 10.6% as of June 30, 2009

In June 2010, the Bank allotted 1,35,82,000 equity shares on a preferential basis to HDFC

Ltd. aggregating to Rs. 1,390 crores. In July 2007, the Bank made a public offering of

6,594,504 American Depositary Shares (ADS), aggregating to of Rs. 2,393 crores (net of

underwriting discounts and commissions).

The Bank’s total Capital Adequacy Ratio (CAR) as at March 31, 2008 stood at 13.6% as

against the regulatory minimum of 9.0%. Tier-I CAR was 10.3% as against 8.6% as of

March 31, 2010.

Business Segments have been identified and reported taking into account, the target

customer profile, the nature of products and services, the differing risks and returns, the

39

organization structure, the internal business reporting system and the guidelines

prescribed by RBI. The bank operates in the following segments:

(a) Treasury

The treasury services segment primarily consists of net interest earnings on the entire

investment portfolio of the Bank and gains or losses on investment operations.

(b) Retail Banking

The retail banking segment serves retail customers through a branch network and other

delivery channels. This segment raises deposits from customers and makes loans and

provides other services to such customers. Exposures are classified under retail banking

taking into account the status of the borrower (orientation criterion), the nature of

product, granularity of the exposure and the quantum thereof.

Revenues of the retail banking segment are derived from interest earned on retail loans,

net of commission (net of subvention received) paid to sales agents, and interest earned

from other segments for surplus funds placed with those segments. Expenses of this

segment primarily comprise interest expense on deposits, infrastructure and premises

expenses for operating the branch network and other delivery channels, personnel costs,

other direct overheads and allocated expenses.

(c) Wholesale Banking

The wholesale banking segment provides loans and transaction services to large

corporate, emerging corporate, supply chain and institutional customers. Revenues of the

wholesale banking segment consist of interest earned on loans made to corporate

customers and the corporate supply chain customers, interest earned on the cash float

arising from transaction services, fees from such transaction services and also earnings

from foreign exchange and derivatives transactions on behalf of corporate customers. The

principal expenses of the segment consist of interest expense on funds borrowed from

external sources and other internal segments, premises expenses, personnel costs, other

direct overheads and allocated expenses.

(d) Other Banking Business

40

This segment includes income from para banking activities such as credit cards, debit

cards, third party product distribution, and primary dealership business and their

associated costs.

(e) Unallocated

All items of which cannot be allocated to any of the above are classified under this

segment. This includes capital and reserves, debt classifying as tier I or tier II capital and

other unallocable assets and liabilities.

Segment revenue includes earnings from external customers plus earnings from funds

transferred to other segments. Segment result includes revenue less interest expense less

operating expense and provisions, if any, for that segment. Segment-wise income and

expenses include certain allocations.

Interest income is charged by a segment that provides funding to another segment, based

on yields benchmarked to an internally developed composite yield curve, which broadly

tracks market discovered interest rates. Transaction charges are made by the retail-

banking segment to the wholesale banking segment for the use by its customers of the

retail banking segment’s branch network or other delivery channels; such transaction

costs are determined on a cost plus basis. Segment capital employed represents the net

assets in that segment.

Geographic Segments

Since the Bank does not have material earnings emanating outside India, the Bank is

considered to operate in on the domestic segment.

41

FIGURE NO:- 2.4

Business Update:

As of March 31, 2010, the Bank’s distribution network was at 761 branches and 1,977

ATMs in 327 cities as against 684 branches and 1,605 ATMs in 320 cities as of March

31, 2009. Against the regulatory approvals for new branches in hand, the Bank expects to

further expand the branch network by around 75 branches by June 30, 2010.

During the year, the Bank stepped up retail customer acquisition with deposit accounts

increasing from 6.2 million to 8.7 million and total cards issued (debit and credit cards)

increasing from 7 million to 9.2 million.

Whilst credit growth in the banking system slowed down to about 22% for the year ended

2009-10, the Bank’s net advances grew by 35.1% with retail advances growing by 38.6%

and wholesale advances growing by 30%, implying a higher market share in both

segments. The transactional banking business also registered healthy growth with cash

management volumes increased by around 80% and trade services volumes by around

40% over the previous year.

Portfolio quality as of March 31, 2008 remained healthy with gross nonperforming assets

at 1.3% and net non-performing assets at 0.4% of total customer assets. The Bank’s

provisioning policies for specific loan loss provisions remained higher than regulatory

requirements.

42

CHAPTER III PERFORMANCE

OF BANKS&

MARKET MAPPING

43

BANKING IN A NEW LOCATION

There are about 10 branches of HDFC Bank in Faridabad. The one of the HDFC Bank

branch recently opened in Ballabhgarh, a very big and huge customer potential area with

cut throat bottleneck competition with other banks which comprise private bank ICICI,

nationalized banks, like SBI, CBI, PSB, CANARA, ALLAHABAD, UNION,

RAJDHANI, VIJAYA, & PNB and foreign banks like IDBI, INDISENT all in vicinity.

The new branch of HDFC Bank started operating from March, 01, 2010, adding up to 11

branches of Bank in Faridabad. The branch is located in main market of Ballabhgarh, i.e.

Chander Nagar from where Bank can have huge business to its pocket and other potential

areas for business in vicinity are Suraj Kund, Badkal, Ashiana, LDA, and many more.

Mission and Strategy

The main vision or focus of HDFC Bank is to capture maximum area of Ballabhgarh, to

have huge customer base and market base so that bank can expand, grow and have upper

edge over other banks, which are operating since long in that area and have strong brand

image.

The strategies followed by bank are:

a) Distribution of brochures, pamphlets and the strong tool of marketing i.e. word of

mouth.

b) Campaigning in various areas

c) Providing door-to-door services like details about products and services to potential

customers,

opening a/c’s, solving various customer queries

d) Taking people feed back on the brand, products and customer services of the bank and

improving on

those drawbacks if any.

e) Keeping sharp eye on the market changes and competitors, so that to do planning

accordingly.

44

Automation and Communication

The automation and communication of branch employees comprise on- role and off- role

employees or say managerial, clerical, and outsourced employees. On-role hierarchy is

like, Branch Manager, Back-up Branch Manager, Personal Banker Authorizer, Personal

Banker Sales, Teller and Personal Banker Welcome Desk where by off- role include all

Direct Sales Team. Both type of employees work together but with there respective

targets, so that branch can avail maximum business for the HDFC Bank.

FIGURE NO: - 3.1

Marketing Mix

The marketing mix is probably the most famous marketing term. Its elements are the

basic, tactical components of a marketing plan. Also known as the Four P's, the

marketing mix elements are price, place , product, and promotion.

4 P of Marketing

Place: The location of any organization should be so that it can grow and flourish in that

area, and should be visible and in the reach of the people. Same is with HDFC Bank, the

place where it is located is very good but it lack visibility.

Promotion: An organization after its place require proper promotion of its brand,

products and services so that people become aware and can easily recognize and

differentiate brand, products and services with other competitive organization in the area.

BRANCH MANAGER

PERSONAL BANKER

SALESTELLER

PERSONAL BANKER

WELCOME DESK

BACK-UP BRANCH

MANAGER

PERSONAL BANKER

AUTHORISER

45

So is with HDFC Bank although people are aware but not fully as some lacking in

promotional activities.

Product: The products of the organization should be so that have all features according to

customers and organization demand and need. Similarly with products of HDFC Bank,

which provide security and capital appreciation against various investment products?

Price: The product price or its value should be reasonable; it shouldn’t cost much to

customer and organization should also be able to recover its cost of product. HDFC Bank

is competent enough in providing products price worth its value.

Products and Services The bank deals in all type of banking i.e. Personal Banking, NRI Banking and Wholesale

Banking and its products include all types of accounts/deposits, advances and

investments, like Saving A/c, Current A/c, Salary A/c as first product, Fixed Deposit,

Debit card, Credit card, Locker and various Loans as second product, and then the third

party product as Insurance, Mutual Fund, SIP, and Securities. The customer services

provided by the bank are WAS (wealth advisory services), Insta Alert, Net Banking,

Phone Banking, Mobile Banking, Free Quarterly Bank Statements.

Contribution

My contribution to the HDFC Bank, new branch in Ballabhgarh during 8 weeks of summer training is

I have been assigned the task of collecting data from various banks in the vicinity, for this

I went to banks and met the branch managers of the bank so as to avail the required

information. The information collected by me is beneficial for HDFC Bank as it would

give an idea about the bank’s business value, performance in the market and any type of

problem bank facing in that area. With the information HDFC Bank can plan accordingly

and perform effectively in the market.

After completing my first task, I did market mapping in three potential areas for bank.

The three areas I covered are Ballabhgarh, Suraj Kund ,Badkal, AJRONDA CHOWK &

Bata Chowk for this I went to these places and met different businessmen, and taken

46

information about their banks with which they are dealing, their various investments and

whether they know about HDFC Bank in their area or not.

The information is useful for bank, as it would give an idea about their book value, their

potential to invest and whether they know about HDFC Bank in their area or not.

All, this I did during training and researched and prepared a report on it.

MAJOR PLAYERS IN BANKING IN BALLABHGARH

Top Performing Public Sector Banks

State Bank of IndiaPunjab National BankPunjab & Sind BankVijiya BankCentral Bank of IndiaAllahabad BankCanara BankUnion Bank of IndiaRajdhani BankBank of Baroda

Top Performing Private Sector Banks

ICICI BankHDFC Bank

Top Performing Foreign Banks

Indi Sea BankIDBI Bank

Bank Performance Checklist

The important tools in evaluation of banking companies are RoA, NPA, CASA and NIM

while CASA and NIM are the drivers it is actually the RoA that sets the pace in terms of

market cap expansion and is one of the best efficiency indicators of capital usage.

Declining NPA’s, increasing fee incomes, Robust CASA growth with expanding RoA’s

are the drivers that could catapult Banks The parameters for the choice are as follows

(equally weightage to all):

1) Profitability (NIM, Net Profit/Total Income)

47

2) Efficiency (Return on Average assets, Profit per employee)

3) Safety (Net NPA to net advances, CAR)

4) Size (Total assets, Total income)

5) Valuation (Price to Book, Price to Earnings)

6) Growth (NII, Net Profit)

How can one assess the quality -- and therefore the safety -- of a bank?

The foremost concern should be the level of non-performing assets -- or loans that

are not being repaid or serviced through interest payments on time -- in a bank.

The interest rate risk. A key risk these days pertains to the interest rate -- how badly

will the bank be affected by rising rates? The way to find this out is by checking the

growth in a bank's loans or 'advances' portfolio and in its net interest income. How

much did treasury income (or income generated from non-banking investments such

as government securities) contribute to the bank's net profit last year? Was that

substantial? The moot point is, will the bank be able to grow its lending enough to

offset the inevitable loss in treasury income? In the case of public sector banks,

there is a buffer -- they have large unrealized gains from treasury.

Net interest margin: The higher it is (net interest margin is interest earned minus

interest paid divided by total earning assets) the better it is for the bank.Net interest

margin is the difference between interest income and interest expenses, divided by

average earning assets. Earning assets are those, which bring income for a bank.

They are interest bearing accounts, bonds, and securities available for sale. Mainly

expressed as a percentage, the ratio is a guide to the profitability of a bank's

investments. Or more simply, it indicates the average interest margin that the bank

is receiving by borrowing and lending funds.

Cost to income ratio: This is simple -- the lower the cost, the better the bank.

The capital adequacy ratio. Another critical barometer is the bank's capital adequacy

ratio. Capital adequacy ratio measures the amount of a bank's capital expressed as a

percentage of its credit exposure. Globally, the capital adequacy ratio has been

developed to ensure banks can absorb a reasonable level of losses before becoming

insolvent. Indian banks are expected to maintain a minimum capital adequacy ratio

of 9 per cent (Rs 9 as capital for every Rs 100 in loans or asset). Applying minimum

48

capital adequacy ratios serves to protect depositors and promote the stability and

efficiency of the financial system by reducing the likelihood of banks becoming

insolvent. In the event of a wind-up of a bank, depositors' money gets precedence

over capital. This means, depositors would only lose money if the bank makes a loss

that exceeds the amount of capital it has. Ergo, the higher the capital adequacy ratio,

the higher the level of protection available to depositors. But there's a catch here -- a

higher capital adequacy could also mean a bank is sitting on money rather than

making productive use of it -- interest is not being earned.

A bank's capital, or equity, is the margin by which creditors are covered if the bank

had to liquidate assets. In banking, there are two types of capital. Tier I capital

(comprising money from ordinary shares that help a bank absorb losses without

being required to stop trading), and Tier II capital (comprising subordinated debt).

Capital adequacy ratio or the ratio of total capital (Tier I plus Tier II) to total risk

weighted assets must not be less than 9 per cent.

The Banks taken for the research are as follows

1) ICICI BANK2) SBI3) Punjab and Sind Bank4) Central Bank of India5) Allahabad Bank6) Union Bank of India7) Canara Bank

TABLE NO: - 3.1

NAME OF BANK CASA BOOK FD ADVANCES

Allahabad Bank 23 Cr 98.50 Cr 19.26 Cr

Canara Bank 50 Cr NA 40 Cr

Union Bank Of India 17.30 Cr 41.86 Lacs13.67 Lacs

Punjab & Sind Bank 55 Cr( Rough Data Provided)

51.24 Cr 9.24 Cr

49

Central Bank of India 35 Cr 72 Cr 9 Cr

SBI 53 Cr 83.35 Cr 15 Cr

Punjab National Bank 40 Cr 55 Cr 9.4 Cr

ICICI Bank 45 Cr 60 Cr NA

IDBI Bank LtdNA

MARKET MAPPING

Bank decision makers and financial services marketers faced with ongoing challenges can

make better business decisions with the help of software, data and analytic services from

Mapping Analytics:

Who are my best customers and how can I keep them?

Where is the greatest market potential to find new customers?

What locations should I choose to expand our branch network?

Is our network of bank branches optimized for maximum performance?

The answer to each of these questions depends in large part on geography and location.

That means working with Mapping Analytics — experts in mapping and analysis since

1989 — make sense. Many banks, both large and small, use these services to improve

marketing and branch network decisions.

BANK CUSTOMER SEGMENTATION ANALYSIS

Gain a clear understanding of your customers. Mapping Analytics combines data from

your customer information file with demographic and lifestyle data that describes and

predicts consumer behavior and buying patterns. For banks with commercial customers,

we segment by SIC codes and business demographics.

50

By segmenting your customers into groups based on their type and behavior, you will

have a foundation for successful marketing, including targeted promotions, market

expansion and branch network optimization.

Solving almost any sales and marketing challenge starts with knowing who your customer

is. Mapping Analytics can help you find out who your best customers are and apply

geographic analysis techniques to discover where to find more of them.

What Goes Into a Customer Profile

What makes up a customer profile? It depends on whether your customers are businesses

or consumers. In either case, you typically start with your own customer data (such as

location, purchases, spending volume), append additional consumer or business data, then

group into segments that share similar characteristics.

Consumer Customer Profiles

Demographics - age, income, gender, ethnicity, education level, etc.

GeoDemographic Clusters - there are many clustering databases available, and

we will help you choose the right one for your specific profiling needs. Some are

industry specific. Others are general. They often include data on interests,

lifestyles, purchasing behavior, attitudes and more.

Survey Data - based on data available for purchase or gathered through primary

research.

Businesses

SICs or NAICs - Standard Industry Classification (SIC) and North American

Industry Classification (NAIC) codes are added to your customer data to

determine type of business.

Firmographics - this invented word is used by marketers to refer to a company's

characteristics, including number of employees, revenue, growth rate and even

specialty data such as the number of computers or spending on

telecommunications.

51

Customer Profiling Benefits

Many of our customers ask for help in finding out who their customers are. It's an

important question to ask — and answer. Once you perform customer segmentation, you

can understand who your customers are from a demographic perspective. And you're on

your way to achieving many key benefits for your organization:

Understand Untapped Market Potential

An accurate profile of your customers allows you to analyze market areas or

neighborhoods to understand your penetration rates and the market potential for

your products and services. Penetration rate points to where market opportunity

exists.

Improve Targeted Marketing

By identifying and understanding the customers in the clusters where you have the

highest penetration, you can target marketing or business activities to those who are

most likely to purchase your products. You can improve response rates and ROI by

precisely marketing to prospects with offers that will appeal specifically to them.

Choose Better Sites

Customer profiling is a key analysis necessary to project the size of the total

market opportunity, and project revenue and customers for new or planned

locations. Few companies can make successful site selection decisions without

first understanding customer profiles.

52

MARKET POTENTIAL AND MARKET SIZING ANALYSIS

Market analysis services from Mapping Analytics help you know the economic

opportunity available to you in any geographic market. Whether you sell to consumers, to

businesses, or both, market sizing provides intelligence you need to deploy sales and

marketing resources effectively.

Benefits of Market Potential Analysis Understand market potential for a single store, network of stores or a new market

Deploy resources effectively by ranking markets in priority order

Forecast total opportunity in terms of number of customers and revenue potential

Estimate your market share

ACCESS MARKET OPPORTUNITY

Market analysis services from Mapping Analytics will provide the key intelligence you

need to rank and prioritize markets. You will know:

The top new geographic markets to target based on customer or revenue potential

Which markets where you currently do business have untapped potential

Gaining this market understanding is essential to growing and expanding your business.

But it isn't enough on its own.

What steps are you taking to gain market share where there is market potential?

You need to act upon your new found market understanding by deploying sales and

marketing resources effectively.

This is where Mapping Analytics separates from other firms that might offer you analytic

services. We can help you choose higher-performing store or business locations, align

your sales force more productively, and acquire prospect lists. All so you can tap into the

market opportunity we've helped you identify.

The area covered for market mapping are Ballabhgarh, Suraj Kund, Badkal, AJRONDA CHOWK & VIPRoad

53

BALLABHGARH

This area has been identified as the bigger market area in comparison to other areas. The major market segments that where identified in Ballabhgarh area are:

The main segments are of Garments and Departmental Stores, then Jewellery Shops. Other segments are of some renowned Companies, White Goods, Traders/Distributors, and Furniture’s

FIGURE NO: -3.2

SURAJ KUND

Suraj Kund area is the major hub of Plastic Industries and Wholesalers. It also includes

Confectionery Shops, Steel traders & others like Cement Distributors

FIGURE NO: - 3.3

54

BADKAL

The major market segments that where identified in Badkal area are:

Tranport Business, Pharma companies, Brick Fields & Industrial chemicals.

FIGURE NO : - 3.4

AJRONDA CHOWK

This area mainly has Property Dealers and Retailers. Other segments are of Fast Foon Junctures/Hotels, Various offices and Super Markets.

FIGURE: - 3.5

55

BATA CHOWK

The major segments identified in this area are of Marble Shops, Automobile Shops, Hotels/ Aashramand some confectionery Shops. Traders & Distributors.

FIGURE NO : - 3.6

56

SCALE 3MS/CC/FD

SCALE 2 MS/CC/LIC/FD

SCALE 1 MS/CC /MF/SEC/LIC/ FD

CATOGERISATION OF CUSTOMERS IN MARKET AND THERE MAJOR REQUIREMENTS

FIGURE NO: - 3.7

After analyzing the Market Scenario the customers are categorized in the market into

three scales on the basis of their monthly saving, working capital requirement and

investments. The three scales have been explained from the next page.

57

SCALE 1:

Scale 1 consists of the kinds of customers as follows

Real Estates Businessmen

Industrialists

Importers / Exporters

School/College Owners

Real Estates Businessmen and Industrialists usually have the requirement of Cash Credit

Limit or Over Draft Limit as they require huge amount money for meeting their demands

of working capital on regular basis .So these two products are best suitable for them.

While businessmen dealing in Import/Export save 15000-25000 monthly. Therefore they

have huge investments in Mutual Fund & Securities along with Cash Credit & Over Draft

Limit

Schools/College owners are more interested in Fix Deposits as they have large unused

funds and they usually look out for banks which can provide them best rate of interests.

SCALE 2:

Scale 2 consists of the kinds of customers as follows

Marble Traders

Owners of Furniture Shops

Owners of Jewelry Shops

Construction Material Distributors

All the kinds of customers in this scale require large amount of cash credit for working

capital but not on regular basis. They require money only for maintaining the inventories

in advance. Their monthly saving lye between 5000-15000 and have investment mostly in

Insurance and Fixed Deposit

SCALE 3:

58

Scale 3 consists of the kinds of customers owning business of:

Garments

Departmental Stores

Traders of Construction Materials

All the kinds of customers in this scale require small amount of cash credit for working

capital but not on regular basis. They require money only for maintaining the inventories

in advance. Their saving is around 5000/ month and have investment mostly in Fixed

Deposit.

FOCUS AREA FOR MARKET MAPPING

BALLABHGARH SURAJ KUND BADKAL AJRONDA CHOWK BATA CHOWK

59

CHAPTER IVRESEARCH

METHODOLOGY

60

OBJECTIVE OF THE STUDY

Any project work to be carried out in any organization or in any fieldwork in the market

has certain pre decided and specified objective, which is to be attained. The whole survey

or fieldwork is designed in accordance with that objective .The whole survey is broken

down in two various parts, which individually contribute to that project's objective. The

objective laid down helps to solve the problems that exist in the organization. This

problem provides the foundation for the project.

The various things that are to be done in any survey, the various components of the

problem and the project objective provide the base for deciding the scope of the project.

The scope of the project varies from project to project, the scope are the limit with in

which the person carrying out the project has to work. It provides the person various

things that are to be done. Under project it is basically the subdivision of the project

objective.

The topic of my project is “Comparative Study of Performance of Banks, Market

Potential & Awareness”. This includes the following Objectives:

To find out market share of each bank in the area & their performance

To find out the problems other banks are facing in the area.

To find out market segmentation & customer profile.

To find out HDFC Bank preference among customers.

61

Research methodology is a way to systematically solve the research problem.

RESEARCH DESIGN

Research Design is a detailed blueprint used to guide a researcher study toward its

objectives. Research design provides the glue that holds the research project together. A

design is used to structure the research, to show how all of the major parts of the research

project — the samples or groups, measures, treatments or programs, and methods of

assignment — work together to try to address the central research questions. To design

something also means to ensure that the pieces fit together. The achievement of this fit

among objectives, research approach, and research tactics is inherently an iterative

process in which earlier decisions are constantly reconsidered in light of subsequent

decisions. The process for designing a research study involves many interrelated

decisions. The most significant decision is the choice of Research Approach, because it

determines how the information will be obtained. The choice of research approach

depends on the nature of the research that one wants to do. It means types of Research

Approaches, data Collection methods etc.

The research design is the master plan specifying the methods and procedures for

collecting and analyzing the needed information.

Types of Research

Three traditional categories of research design:

• Exploratory

• Descriptive

• Causal

The choice of the most appropriate design depends largely on the objectives of the

research and how much is known about the problem and these objectives.

Although every problem and research objective may seem unique, there are usually

enough similarities among problems and objectives to allow decisions to be made in

advance about the best plan to resolve the problem.

62

There are some basic marketing research designs that can be successfully matched to

given problems and research objectives.

Research Design: Some Observations

• The overall research design for a project may include one or more of these three designs

as part(s) of it.

• Further, if more than one design is to be used, typically we progress from Exploratory

toward Causal.

Exploratory Research

Exploratory Research is used when one is seeking insights into the general nature of a

problem, the possible decision alternatives, and the relevant variable that need to be

considered. The research method is highly flexible, unstructured and qualitative.

Exploratory Research methods are either vague or ill defined, or they do not exist at all.

Exploratory research is useful for establishing priorities among research questions and for

learning about the practical problems of carrying out the research.

e.g. what kinds of question will respondents be able to answer?

What are the barriers to contacting the appropriate respondents?

When should the study be conducted?

Exploratory Research hypothesis are vague and ill defined, or they do not exist at all. If

we need to find “what benefits do people seek from the product?” since no previous

research considered consumer benefits, it is difficult even to provide a list of them.

Exploratory research is used in a number of situations.

• To gain background information

• To define terms

• To clarify problems and hypotheses

• To establish research priorities

63

FEATURES OF EXPLORATORY RESEARCH

Exploratory research is most commonly unstructured, “informal” research that is

undertaken to gain background information about the general nature of the research

problem.

Exploratory research is usually conducted when the researcher does not know much about

the problem and needs additional information or desires new or more recent information.

Exploratory research is a type of research conducted because a problem has not been

clearly defined. It helps determine the best research design, data collection method and

selection of subjects. Given its fundamental nature, exploratory research often concludes

that a perceived problem does not actually exist.

'The objective of exploratory research is to gather preliminary information that will help

define problems and suggest hypotheses.

Conclusive Research

As the term suggests, conclusive research is meant to provide information that is useful in

reaching conclusions or decision-making. It tends to be quantitative in nature that is to

say in the form of numbers that can be quantified and summarized. It relies on both

secondary data, particularly existing databases that are reanalyzed to shed light on a

different problem than the original one for which they were constituted, and primary

research, or data specifically gathered for the current study.

The purpose of conclusive research is to provide a reliable or representative picture of the

population through the use of a valid research instrument. In the case of formal research,

it will also test hypothesis.

Conclusive research can be sub-divided into two major categories:

1. Descriptive or statistical research, and

2. Causal research

64

Descriptive Research

Descriptive research or statistical research provides data about the population or universe

being studied. But it can only describe the "who, what, when, where and how" of a

situation, not what caused it. Therefore, descriptive research is used when the objective is

to provide a systematic description that is as factual and accurate as possible. It provides

the number of times something occurs, or frequency, lends itself to statistical calculations

such as determining the average number of occurrences or central tendencies.

One of its major limitations is that it cannot help determine what causes a specific

behavior, motivation or occurrence. In other words, it cannot establish a causal research

relationship between variables.

The two most commonly types of descriptive research designs are

Observation and

Surveys

Causal Research

If the objective is to determine which variable might be causing certain behaviour, i.e.

whether there is a cause and effect relationship between variables, causal research must

be undertaken. In order to determine causality, it is important to hold the variable that is

assumed to cause the change in the other variable(s) constant and then measure the

changes in the other variable(s). This type of research is very complex and the researcher

can never be completely certain that there are not other factors influencing the causal

relationship, especially when dealing with people’s attitudes and motivations. There are

often much deeper psychological considerations that even the respondent may not be

aware of.

There are two research methods for exploring the cause and effect relationship between

variables:

1. Experimentation, and

2. Simulation

65

For conducting my research I have used “EXPLORATORY” research design. Reason

being comparing HDFC Bank performance with other long back established banks in an

area and analyzing market potential & awareness for the bank in a new location.

Therefore for implementing something new I had to undertake an exploratory research

process.

Whenever there is a vague problem we move from exploratory research to conclusive

one. Moreover the primary objective of this research is the provision of insight into, and

comprehension of, the problem situation confronting the researcher

DATA COLLECTION

While deciding about the method of data collection to be used for the study, the

researcher should keep in mind two types of data viz., primary and secondary.

Primary Data:

The primary data are those which are collected afresh and for the first time, and thus

happen to be original in character. In primary data collection, you collect the data yourself

using methods such as interviews and questionnaires. The key point here is that the data

you collect is unique to you and your research and, until you publish, no one else has

access to it.

There are many methods of collecting primary data and the main methods include:

questionnaires

interviews focus group interviews observation case-studies diaries critical incidents Portfolios.

The primary data, which is generated by the above methods, may be qualitative in nature

(usually in the form of words) or quantitative (usually in the form of numbers or where

you can make counts of words used).

66

Secondary Data:

The secondary data, on the other hand, are those which have already been collected by

someone else and which have already been passed through the statistical process

To conduct my research I have used both primary and secondary sources of data. For the

secondary data I looked through various books, surfed the net and went through the

Standard Operating Procedures of the company & for the first hand data I have taken

FOCUS GROUP INTERVIEW & used the QUESTIONNAIRE . Questionnaire is

selected as the survey instrument. The forms used for the survey were both open-ended &

close-ended questionnaire consisting of various items.

Questionnaire

Questionnaires are a popular means of collecting data, but are difficult to design and often

require many rewrites before an acceptable questionnaire is produced.

Advantages:

Can be used as a method in its own right or as a basis for interviewing or a telephone

survey.

Can be posted, e-mailed or faxed.

Can cover a large number of people or organizations.

Wide geographic coverage.

Relatively cheap.

No prior arrangements are needed.

Avoids embarrassment on the part of the respondent.

Respondent can consider responses.

Possible anonymity of respondent.

No interviewer bias.

Disadvantages:

Design problems.

Questions have to be relatively simple.

67

Historically low response rate (although inducements may help).

Time delay whilst waiting for responses to be returned.

Require a return deadline.

Several reminders may be required.

Assumes no literacy problems.

No control over who completes it.

Not possible to give assistance if required.

Problems with incomplete questionnaires.

Replies not spontaneous and independent of each other.

Respondent can read all questions beforehand and then decide whether to complete or

not. For example, perhaps because it is too long, too complex, uninteresting, or too

personal

SAMPLING

Since out of such big population we can not include each unit therefore we use sample.

When only A FEW UNITS OF THE POPULATION are considered for study for analysis

it is known as SAMPLING method. Sample is the true representative of the population.

There are various methods of sampling.

Sampling Process

All the items under consideration in any field of inquiry constitute a “universe” or

“population”. The researcher must decide the way of selecting the sample or what is

popularly known as the Sample Design, in other words a sample design is a definite plan

determined before any data are actually collected for obtaining a sample from a given

population.

METHODS of SAMPLING

Basically there are two methods of sampling:

Probability sampling

Here every member has a known chance of being selected. There are various methods

under this.

68

1. Simple Random Sampling

Each member of the population has a known and equal chance of being selected.

2. Systematic Sampling

In this sample members are chosen in a systematic manner from the entire

population. Each member has a known chance of being selected but not

necessarily equal one

3. Stratified sampling

A stratified sample is selected when the researcher is particularly interested in

certain specific categories within the population. The population is divided in to

strata on the basis of certain measurable characteristics of its members.

4. Cluster Sampling

In this method the various units comprising the population are grouped in clusters

and the sample selection is made in such a way that each cluster has a known

chance of being selected.

Non Probability Sampling

In non probability sampling the chance of any particular unit in the population being

selected is unknown.

1. Judgment Sampling

A person knowledgeable about the population under study chooses sample

members he feels would be the most appropriate for the particular study.

2. Convenience Sampling

The sample units are chosen as per the convenience to the investigator.

3. Quota Sampling

The method is similar to the stratified sampling. Here also the population divided

into strata on the basis of characteristics of population the sample units are chosen

69

on the basis of characteristics of population. The only difference is that in

stratified sampling the units are chosen on the random basis whereas in quota

sampling it is chosen on the units are in the non random manner individuals

While conducting my research I have used the Convenience & Judgmental

technique in collecting the sample. As a result of this for Focus Group Interview

units are chosen as per the convenience and for other data collected, units chosen

that are the most appropriate for the study .Since the bank growth and awareness

can be checked in 3 months in a new location only with long back established

banks Business value & potential market for the bank. Therefore this method

makes my data more authentic and representative of the sample.

Sample Size

It is yet another important element to be considered while collecting the data. The sample

size should not be very small because then it is not the true representative of the sample.

When the sample is large, the sampling error estimate becomes more precise but the costs

might become too high. Therefore the researcher is to be very careful while he is selecting

the sample size.

The sample size taken for Focus Group Interview is of 8 banks & for Commercial survey,

sample of 250 been taken. The sample places taken for research are Ballabhgarh, Suraj

Kund, Badkal, AJRONDA CHOWK & Bata Chowk.

STATISTICAL TOOLS

Representation of statistical data by diagram, graphs, charts or pictures is more effective

than tabular representation being easily intelligible to a layman, indeed diagrams is most

essential whenever required to convey any statistical information to the general public.

The more important types of diagram which are use in statistical work are:-

1. Bar Diagram:

Mode of diagrammatic representation of data is the bar diagram. In this method

bar of equal width are taken for the different items of the series. The length of the bar

represents value of the variables concerned.

70

2. Pie Chart:

It is a circle whose area is divided proportionately among the different

components by straight lines drawn from the center to the circumference of the circle.

When statistical data are given for a number of categories and we are interested in the

comparison of various categories or between parts of the whole, such a diagram is very

helpful in effectively displaying the data.

The Statistical tools I have used in simplifying and summarizing the data collected are

both type of diagram i.e. Bar Diagram & Pie Chart. With this one can easily understand

what exactly been done & analyzed.

CHAPTER VDATA ANALYSIS

71

AND INTERPRETATION

MANAGERS QUESTION’S

1) What is your Bank staff strength?TABLE NO. 5.1

SBI PNB PSB CBI UBI CANARA ALLAHABAD ICICI HDFC

MANAGERIAL 4 5 6 4 4 6 2 3 2CLERICAL 12 13 11 12 6 6 6 10 4OUT- SOURCED

- - - - - - - 11 12

72

FIGURE NO. 5.1

ANALYSIS: - The max no. of Managerial Staff is of Canara Bank & min of HDFC

Bank, and then Clerical Staff max. of PNB & min. of HDFC Bank. & the outsourced staff

max. of HDFC Bank & min. of ICICI Bank.

INTERPRETATION:- The HDFC Bank has lowest staff of managerial & clerical but

more of outsourced as nationalized banks don’t have outsourced employees. ICICI Bank

is a private bank therefore it has outsourced employees.

2) Average no. of accounts opened daily

TABLE NO. 5.2

SBI PNB PSB CBI UBI CANARA ALLAHABAD ICICI HDFCSA 12 8 6 3 7 3 5 4 10

CA 1 13 11 0 1 1 1 2 3

TD 9 5 3 3 4 5 2 5 6

73

FIGURE NO. 5.2

ANALYSIS: - The max. no. of saving a/c’s opened in SBI Bank & min. in Central

Bank of India & Canara Bank. Then max. no. of current ac’s opened in Punjab National

Bank & min. in SBI, UBI, Canara Bank & Allahabad Bank. Max. no. of fixed deposit’s

opened by SBI & min. no. by Allahabad Bank.

INTERPRETATION: - This indicates that HDFC Bank hold good position in saving

a/c, current a/c & term deposit opened daily. Its stands 2nd in opening saving a/c, 3rd in

current a/c & again 2nd in term deposit opening. The main competitor in this are SBI,

PNB & PSB & ICICI too.

74

3) WHAT ARE YOUR BUSINESS MIX VALUES?

TABLE NO. 5.3

SBI PNB

PSB

CBI

UBI CANARA

ALLAHABAD

ICICI

HDFC

SV 15.24

43.35

53 30 15 33 22 1.77 .11

CV 3.14 9.65 10.78

5 2.3 2.78 1.05 .58 .15

TD VALUE 83.35

86 97.24

72 41.86

97 98.05 60 .2

ADVAVCES

15.07

9.4 9.24 9 13.67

40 19.26 11 .1

FIGURE NO. 5.3

ANALYSIS: - The highest in saving value & current value is Punjab & Sind Bank, then

Allahabad Bank holds highest value in term deposit or say fixed deposit & lastly the

maximum advance is given by

Canara Bank.

INTERPRETATION: - This shows that HDFC Bank has lowest CASA Book value &

fixed Deposit value & lowest in advances. The main competitor in saving & current value

is Punjab & Sind Bank and in term deposit main competitor is Canara Bank which hold

maximum of term deposit. In advance HDFC Bank seems ok otherwise main competitor

is Central Bnak of India. But other banks also have good book value. All are competition.

75

4) HOW MUCH IS NPA & ITS PERCENTAGE TO TATAL ADVANCES?TABLE NO. 5.4

SBI PNB PSB CBI UBI CANARA ALLAHABAD ICICI HDFCNPA 3.06 .33 .48 .13 .28 .04 .74 - -

% 20.3 3.57 5.19 1.4 2.04 1 3.84 - -

FIGURE NO. 5.4

ANALYSIS: - The Non Performing Asset is more of SBI, therefore its percentage is also

high. The lowest Non Performing Asset is of Canara Bank. HDFC Bank stands no where.

INTERPRETATION: - As visible that HDFC Bank is no where in graph. As it’s a new

branch in area.

Other banks do have non performing assets. The main competitor in this case is Canara

Babk which has lowest NPA percent.

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5) ANY CONSTRAINT OR PROBLEM FACING IN THE AREA?

ANALYSIS: - Out of 8 banks only 3 banks are facing problem in the area and 5 banks

don’t have any problem in the area. The 3 banks are SBI, Union Bank of India & ICICI

and their responses are:-

1) SBI problem - More walk in of old & illiterate customer.

2) Union Bank of India problem- Staff Shortage

3) ICICI constraint facing of- Low profitable customer profile & more of retail appetite

in customer.

Other 5 banks are facing no problem in the area.

INTERPRETATION: - The above responses show that mostly banks are operating

smoothly in the area without any difficulty. But SBI, UBI & ICICI facing some big

problems due to which they can’t operate effectively & efficiently in the area .The above

said problems of banks are:

1) Illiterate & Old customer walk in create problem of handling customer & making them

understand the things of the bank easily.

2) Staff shortage creates the problem in branch work & customer handling.

3) Private banks main focus is profitability & more of wholesale banking but this is not so

with ICICI Bank.

77

MARKET QUESTION’SBALLABHGARH SURAJ

KUNDBADKAL AJRONDA

CHOWKBATA CHOWK

<5000 20 19 12 9 115000-15000

13 15 14 13 9

15000-25000

9 9 10 11 22

>25000 8 7 14 17 8

1) HOW MUCH YOU SAVE MONTHLY APPROXIMATELY?

TABLE NO. 5.5

FIGURE NO. 5.5

ANALYSIS: - In Ballabhgarh 20 people lie in < 5000 class & 13 people lie in 5000-

15000 class. In Suraj Kund 19 people lie in < 5000 class & 15 in 5000-15000 class. In

Badkal 14 people lie in >25000 class & 14 people lie in 5000-15000 class. In

AJRONDA CHOWK 17 people lie in >25000 class & 13 people lie in 5000-15000

class & in Bata Chowk 22 people lie in 15000-25000 class & 11 people lie in <5000

class.

INTERPRETATION: - This shows that mostly people in all area save around 5000-

15000 monthly. Very less no. of people saves 25000 monthly. The customers with

saving of 25000 monthly are in AJRONDA CHOWK, and then people with saving of

5000 are in Ballabhgarh. The people with saving of 10000 & 20000 are in Suraj Kund

& Bata Chowk. In Badkal people save 5000, 10000, 20000 & 25000.

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2) DO YOU HOLD ANY TYPE OF ACCOUNT

BALLABHGARH SURAJ KUND

BADKAL AJRONDA CHOWK

BATA CHOWK

YES 49 48 46 47 49NO 1 2 4 3 1

TABLE NO. 5.6

79

FIGURE NO. 5.6

ANALYSIS: - In Ballabhgarh 98% people do have a/c & only 2% don’t have. In Suraj

Kund 96% people have a/c & 4% don’t have a/c. In Badkal 92% people have a/c & 8%

don’t have a/c. In AJRONDA CHOWK 94% people have a/c & 6% don’t possess a/c and

in Bata Chowk area 98% do have a/c & 2% don’t have a/c.

INTERPRETATION: - This shows that in all area mostly people have a/c & only few

people don’t have a/c. The maximum people which don’t have a/c are in Transport Ngar.

80

3) PRESENTLY BANKING WITH WHICH BANK?

TABLE NO. 5.7

BALLABHGARH SURAJ KUND

BADKAL AJRONDA CHOWK

BATA CHOWK

SBI 13 9 11 12 11PNB 14 8 10 7 9ICICI 9 8 10 11 9HDFC 9 8 10 10 8OTHERS 7 16 9 10 13

FIGURE NO. 5.7

ANALYSIS: - In Ballabhgarh 28% & 26% people have a/c with PNB & SBI. In Suraj

Kund 32% people have a/c’s in other banks. In Transpoet Nagar 22% & 20% people have

a/c with SBI, PNB, ICICI & HDFC Bank respectively. In AJRONDA CHOWK 24%,

22% & 20% people have a/c with SBI, ICICI, HDFC & other banks. In Bata Chowk area

26% of people have a/c with other banks & 22% people have a/c with SBI. HDFC Bank

has 18%, 16%, 20%, 20% & 16% a/c in respective area.

INTERPRETATION: - This shows that very less no. of people have a/c with HDFC

Bank but HDFC Bank almost have a/c’s equal to ICICI Bank. People of Badkal &

AJRONDA CHOWK have maximum a/c with HDFC Bank & people of Ballabhgarh area

have least a/c with HDFC Bank. Mostly people have a/c with nationalized banks.

4) WHICH TYPE OF ACCOUNT YOU HOLD?

81

TABLE NO. 5.8

BALLABHGARH SURAJ KUND

BADKAL AJRONDA CHOWK

BATA CHOWK

SAVING A/C

36 49 31 28 33

CURRENT A/C

40 42 42 42 46

SALARY A/C

24 9 27 26 22

FIGURE NO. 5.8

ANALYSIS: - In Ballabhgarh 80% people hold current a/c, 72% people have saving a/c

& 48% have salary a/c. In Suraj Kund 98% people hold a/c saving a/c, 84% people hold

current a/c, & 18% hold salary a/c. In Badkal 84% people hold current a/c, 62% people

hold saving a/c & 54% people hold salary a/c. In AJRONDA CHOWK 84 % people have

current a/c, 56% people hold saving a/c, & 52% people hold salary a/c. In Bata Chowk

area only 92% people have current a/c, 66% hold saving a/c & 44% people have salary

a/c.

INTERPRETATION: - This shows that in all areas mostly people have current a/c and

very less no. of salary a/c. Maximum no. of people who hold current a/c are in Bata

Chowk & minimum in Ballabhgarh. Then maximum no. of saving a/c holders is in Suraj

Kund & minimum in AJRONDA CHOWK. Lastly more salary a/c holder is in Badkal &

least in Suraj Kund.

82

5) DOES YOUR BANK PROVIDE FINANCIAL ADVISORY SERVICES?

TABLE NO. 5.9

YES 91NO 159

FIGURE NO. 5.9

ANALYSIS: - Out of 250 people 36% say that their bank provides financial advisory

services & 64% say no.

INTERPRETATION: - This interprets that mostly people don’t get financial advisory

services from their bank & just few have the privilege of having financial advisory

services.

6) ARE YOU SATISFIED WITH YOUR BANK SERVCES

83

TABLE NO. 5.10

YES 113NO 137

FIGURE NO. 5.10

ANALYSIS: - Around 45% people say that they are satisfied with their bank services but

55% say that they aren’t satisfied with their bank services.

INTERPRETATION: - When asked people whether they are satisfied with their bank

services less than 50% said yes they are satisfied but more then 50% said no they aren’t

satisfied with their bank services. This shows mostly people aren’t satisfied.

7) WHAT TYPE OF OTHER INVETMENTS YOU HAVE?TABLE NO. 5.11

84

FIXED DEPOSIT

INSURANCE MUTUAL FUND

SECURITIES

BALLABHGARH 44 27 13 16

SURAJ KUND 47 19 13 16

TRANSPORTNAGAR 46 33 11 10

AJRONDA CHOWK 43 34 22 33

BATA CHOWK 35 39 30 22

FIGURE NO. 5.11

ANALYSIS: - In Ballabhgarh 88% people invest in Fixed Deposit, 54% invest in

Insurance, only 26% invest in Mutual Fund & 32% invest in Securities. In Suraj Kund

94% invest in Fixed Deposit, 38% invest in Insurance, 26% make investment in Mutual

Fund & 32% invest in Securities. Similarly in Badkal 92% invest in Fixed Deposit, 66%

in Insurance, 22% invest in Mutual Fund, & 20% invest in Securities. Again in

AJRONDA CHOWK 86% invest in Fixed Deposit, 68% invest in Insurance, 44% do

invest in Mutual Fund, and 66% invest in Securities. In Bata Chowk 70% invest in Fixed

Deposit, 78% invest in insurance, 60% invest in Mutual fund, & 44% make investment in

Securities.

INTERPRETATION: - When asked people their investment preference they said they

prefer to invest in Fixed Deposit more then in Insurance, then Securities and lastly in

Mutual Fund.In Ballabhgarh, Suraj Kund, Badkal & AJRONDA CHOWK people prefer

to make investment in fixed Deposit & people of Bata Chowk prefer to invest more in

Insurance. Less preference is given to Mutual Fund.

8) WHAT IS YOUR CASH CREDIT AND OVER DRAFT LIMIT?

85

TABLE NO. 5.12

BALLABHGARH SURAJ KUND

BADKAL AJRONDA CHOWK

BATA CHOWK

<100000 13 16 5 10 5100000-130000

12 14 7 12 4

130000-150000

15 10 11 15 9

>150000 10 10 27 13 24

FIGURE NO. 5.12ANALYSIS: - In Ballabhgarh 30% people have CC & OD limit of 130000-150000, 26%

have limit of <100000, 24% have limit of 100000-130000 & 20% have limit of >150000.

In Suraj Kund 32% people have limit of <100000, 28% have limit of 100000-130000,

20% have limit of 130000-150000 & 20% have limit of >150000. In Badkal 94% have

limit of >150000, 22% have limit of 130000-150000, 14% have limit of 100000-130000

& 10 have limit oh <100000. In AJRONDA CHOWK 30% have limit of 130000-150000,

26% have limit of > 150000, 24% have limit of 100000-130000, & 20% have limit of

<100000. In Bata Chowk 48% people have limit of >150000, 18% have limit of 130000-

150000, 10% have limit of <100000 & 8% have limit of 100000-130000.

INTERPRETATION: - When analyzed most people have Cash Credit & Over draft

Limit of 130000-150000. People of Bata Chowk & Badkal have limit more of >150000.

Ballabhgarh & AJRONDA CHOWK people have more limits of 130000-150000. In Suraj

Kund people have requirement of CC & OD limit up to <100000.

9) ARE YOU AWARE OF HDFC BANK FOLLOWING PRODUCTS AND SERVICES

86

TABLE NO. 5.13

WD 50000 FFD SC A/C GDC TPDBALLABHGARH 9 16 17 22 31SURAJ KUND 19 23 11 14 21BADKAL 25 33 17 33 20AJRONDA CHOWK 18 38 40 27 18BATA CHOWK 13 29 14 34 22

FIGURE NO. 5.13ANALYSIS: - In Ballabhgarh 62% people are aware of third party cash deposit & only

18% aware of withdrawal upto 50000. In Suraj Kund, 46% people are aware of Flexi

Fixed Deposit & only 22% are awre of Senior Citizen a/c. In Badkal 66% know about

Flexi Fixed Deposit & Gold Debit Card & only 34% know about Senior Citizen a/c. In

AJRONDA CHOWK 80% people are aware of Senior Citizen a/c & 36% know about

withdrawal upto 50000 in a day from ATM & third party cash deposit. In Bata Chowk

area 68% know about Gold Debit Card & 26% aware of withdrawal upto 50000.

INTERPRETATION: - When asked about products & services people mainly were

aware of Flexi Fixed deposit & Gold Debit Card. Ballabhgarh people are more aware of

Gold Debit Card. Suraj Kund people more know about Flexi Fixed Deposit .Badkal

people know more about Flexi Fixed Deposit, Gold Debit Card & withdrawal upto 50000.

in aashana people are aware of Senior Citizen a/c, Flexi Fixed Deposit & Gold debit

Card. In Bata Chowk area people know more about Flexi Fixed Deposit & Gold Debit

Card.

10) RATE HDFC BANK ON FOLLOWING PARAMETERS

TABLE NO. 5.14

87

WAS CUSTOMER SERVICES

ROI CHARGES AQB

RANK 1 98 129 38 37 68RANK 2 56 62 59 46 31RANK 3 34 16 67 27 19RANK 4 29 27 52 82 34RANK 5 33 16 34 58 98

FIGURE NO. 5.14

ANALYSIS: - Around 51.6% & given Rank 1 to Customer Sevices, 39.2% & 24.8%

given Rank 1 &

Rank 2 to Wealth Advisory Services, 26.8% given Rank 3 to Return on Investment,

32.8% given Rank 4

to Charges & 39.2% given Rank 5 to Average Quarterly Balance.

INTERPRETATION: - This shows that mostly people prefer Customer Services of

HDFC Bank, then

Wealth Advisory Services, then have preference for return on investment, then least

preference for

Charges & Average Quarterly Balance.

11) ARE YOU AWARE OF HDFC BANK IN BALLABHGARH

88

TABLE NO. 5.15

YES 84NO 166

FIGURE NO. 5.15

ANALYSIS: - Out of 250 people only 84 i.e. 34% are aware of HDFC Bank in

Ballabhgarh & 166 i.e. 66% don’t know about the bank in Ballabhgarh.

INTERPRETATION: - When asked people about the HDFC bank in Ballabhgarh,

mostly people were unaware & just few know about it in Ballabhgarh.

12) HOW CAN WE MAKE HDFC BETTER

89

ANALYSIS: - The people when asked about the betterment for the bank, the following

response been give:-

1) More better Customer Services (39.2%)

2) Transparency Required (64%)

3) Less Average Quarterly Balance maintenance account (71.2%)

4) More money appreciation (40.8%)

5) More ATM (75.2%)

6) Branch location easily reachable (35.2%)

INTERPRETATION: - This indicates that people are interested in HDFC Bank, only if

they get some of these facilities & services. The people emphasized more on ATM &

AQB maintenance a/c, then for transparency requirement & then least for Customer

Services & branch Location.

90

CHAPTER VICONCLUSIONS, SUGGESTIONS

ANDLIMITATIONS

OFTHE STUDY

91

CONCLUSION

A research is incomplete if there is no conclusion to research conducted for period of

time.

The conclusions come from the study are as follows:

Conclusions for Banks Performance in the area are:-

1) As the HDFC Bank is in a new location, it started with only 5 employees Managerial &

Clerical, &

10 outsourced but other banks have more employees.

2) Despite of being in new location, with long back established banks, & in between

bottle-neck cut

throat competition, HDFC Bank is performing excellently.

3) As HDFC Bank is in new location just 3 months, that’s why it’s CASA book value &

Term Deposit

value is less. But HDFC Bank is continuously making efforts to leave behind all banks

in CASA

book value & term deposit.

4) HDFC Bank is also lowest in advances & it has no Non Performing Assets, as it just

started

operating.

5) The problems other banks are facing can be over come by HDFC Bank, as it can

handle all types of

customers whether old, illiterate, low profitable & retail appetite customer.

The bank has tough competition in Ballabhgarh area; as mainly area comprises of

nationalized banks & there is only one private bank i.e. ICICI Bank.

92

Conclusion for Market

1) Mostly people hold a/c’s with nationalized banks, as these banks have strong faith &

impact in people’s, mind. In all mapped area people doesn’t have much savings. The

maximum people do hold accounts with their nearest located bank, as they require quick

transaction, in less time. The people mostly hold current a/c for commercial purpose,

saving a/c for security& appreciation of money & salary a/c if the person is salaried

2) Mostly people aren’t satisfied with their bank services & they aren’t provided financial

advisory services. They do prefer to invest in Fixed Deposit for capital appreciation &

working capital & insurance. People are least knowledgeable about mutual fund &

securities. People do have requirement for cash credit & over draft in all areas between

130000-150000.

3) People are not fully aware of products & services of banks, they have least knowledge

about withdrawal upto 50000, third party cash deposit upto 100000 & senior citizen

account. No. of people are unaware of HDFC Bank in Ballabhgarh, as said by many that

the bank lack visibility.

4) People are more concerned with AQB & charges. Otherwise bank is alright. People

want more transparency and more ATM’s in the vicinity. Customer Service wise it is

ranked 1.

Therefore, bank has huge chances of capturing market, as there is huge potential in the

market.The highest market potential is in Badkal, Bata Chowk & AJRONDA CHOWK

93

LIMITATIONS

As we all know that for every good work there should be some leakage also. Here

leakage means some drawbacks. What I found in my SUMMER TRAINING which are

as follows:-

This is a two months study only.

Data available was not sufficient, there was lack of availability of data as most of

it was confidential for the banks.

Study has been basically done taking into consideration the retail investors.

Study has been done on Indian environment only.

Only four major areas have been taken up to make this portfolio.

Growing awareness is very low.

Segmented area is very specific.

Database is always dependable

Data have been taken of from different sources so there may be biasness in the

study.

94

SUGGESTIONS

1. To beat the competition in the market HDFC bank should either work hard or

increase the no. of employees.

2. To increase the CASA book value & Term Deposit, HDFC Bank should capture

maximum market by opening more & more a/c’s & aware people about the

benefits of opening a/c with the bank.

3. HDFC bank should try to make strong faith & believe in people mind about the

bank, by providing good services.

4. HDFC Bank try to make other banks problems their strong point, this way bank

can avail good business from those banks customer.

5. HDFC Bank should more focus on Customer Service & Financial Advisory

Services as mostly people are not getting these from their respective banks.

6. HDFC Bank should aware people more about investments in Mutual Fund &

Securities & its benefits. Bank should also open cash credit a/c of < 150000.

7. As people are not aware of bank in Ballabhgarh & its products & services,

therefore they should do more campaigning in various areas & marketing of their

products.

8. It should focus on increasing ATM’s, provide transparency to customer matters.

Should also consider AQB problem of customer due to which customer are more

nationalized oriented.

9. Overall HDFC Bank has to do a lot in order to be in market at an upper edge.

Only this way HDFC Bank can have maximum market base & customer base.

95