cms & cbdt potential in west 1 region

Department of Management Sciences, University of Pune 1

1. EXECUTIVE SUMMARY..............................................................................................................3

1.1 Summary of Project....................................................................................................................3

1.2 Objective of Project....................................................................................................................3

1.3 Scope of the Project....................................................................................................................3

2. COMPANY PROFILE.....................................................................................................................4

2.1 HDFC BANK LTD. ...................................................................................................................4

2.2. Promoter ....................................................................................................................................4

2.3 Business Focus ...........................................................................................................................4

2.4 Capital Structure.........................................................................................................................5

2.5 Distribution network...................................................................................................................5

2.6 Management ...............................................................................................................................5

2.7 Technology.................................................................................................................................6

2.8 Business......................................................................................................................................6

i.Wholesale Banking Services......................................................................................................6

ii.Retail Banking Services ............................................................................................................6

iii. Treasury ..................................................................................................................................7

2.9 Rating .........................................................................................................................................8

i. Credit Rating .............................................................................................................................8

ii. Corporate Governance Rating..................................................................................................8

3. BANKING IN INDIA......................................................................................................................9

3.1 ROLE OF RBI..........................................................................................................................10

3.2 Classification of Banks.............................................................................................................12

3.2.1 Nationalized banks ............................................................................................................12

3.2.2 Private Banks in India .......................................................................................................13

3.2.3 Foreign bank......................................................................................................................14

3.3 Importance of CO OPERATIVE BANKS ...............................................................................15

4. CORRESPONDENT BANKING SERVICES ..............................................................................16

1. Funds Drawing Arrangement .....................................................................................................16

2.Collection of Cheques: ................................................................................................................16

3. Constituent SGL accounts:.........................................................................................................17

4.Call Money : ................................................................................................................................17

5. RTGS Transfers:.........................................................................................................................17

6. Currency Chest: ..........................................................................................................................18

7. Demat Services:..........................................................................................................................18

8. Trade Finance and Foreign Exchange Services: ........................................................................18

9. Letter of Credit Facilities: ..........................................................................................................18

5. CONCEPT AND PROCEDURE ...................................................................................................20

I .CASH MANAGEMENT SERVICE ..........................................................................................20

II. CBDT (Central Board of Direct Tax)........................................................................................26

1. Organization and Functions....................................................................................................26

2. Historical Background of C.B.D.T.........................................................................................26

6. ANALYSIS OF CMS & CBDT Payment......................................................................................28

7. RESEARCH METHODOLOGY...................................................................................................29

7.1 Objective of the research..........................................................................................................29

7.2 Research approach....................................................................................................................29

7.3 Research Design:......................................................................................................................29

A) Primary Sources: ...................................................................................................................29

B) Secondary Sources: ...............................................................................................................30

8. ANALYSIS & INTERPRETATION OF DATA...........................................................................31

8.1From Questionnaire:..................................................................................................................31


ANALYSIS OF THE BUSINESS .....................................................................................................37

8.2Findings .....................................................................................................................................41

8.3 Suggestion ................................................................................................................................42

8.4 Scope for Improvement :..........................................................................................................43

9. CONCLUSION ..............................................................................................................................48

10 Bibliography..................................................................................................................................49

Annexure ............................................................................................................................................50

QUESTIONNAIRE........................................................................................................................50


1. EXECUTIVE SUMMARY

1.1 Summary of Project

Indian economy is essentially an agricultural economy with 60% people being directly or

indirectly dependent on agricultural for their livelihood. Many import-export businesses are mainly

dependent on agricultural based products for the raw materials. Apart from this, the export of grains

& fruits is also a huge business.

Rural banking has become the core part of banking these days as the urban market is over

saturated with plenty of service providers being in queue for a single customer. The market today

has become more buyer's market as the negotiation capacity lies with him.

Looking at the banking scenario, the banking giants have not yet seemed to have reached the

roots of our economy i.e. Rural India. It is not that there is no demand in the rural India for the

advanced banking services but the problem mainly lies with the insufficiency of capital available

with the Co-operative Banks in the local region in providing their customers the services & also

some regulations imposed by RBI.

To overcome this problem, the co-operative banks may tie up with the existing giants in the

market for providing their customers the services which they don't have right now & this is how

they can use the already established channel of the service provider bank. On the other side, the

giants in the market may provide them the services as a part of their business, this upcoming

business is known as Correspondent Banking.

HDFC Bank does provide various banking services to their client banks viz. funds drawing

arrangement, collection of cheques, constituent SGL accounts, call money, RTGS transfers,

currency chest, demat services, trade finance, forex services & letter of credit facilities. There is one

separate section which takes care of the correspondent banking services being provided to co-

operative banks.

HDFC Bank has the largest Co-operative bank client base with almost 376 banks (in pune

region) availing the various services mentioned above. These co-operative banks overcome the

limitation of short branch network, failing to provide promt clearing service, with use of HDFC

Bank's wide branch network . CBDT online tax payment, the new complience regarding

compulsory tax payment trough internet, is made simpler by HDFC Bank.

1.2 Objective of Project

To study various correspondent banking products and to find out the region wise

potential for the Cash management service and CBDT payment (on-line tax payment) by the co-

operative banks as a part of correspondent banking strategy.

1.3 Scope of the Project

To find out the CMS and CBDT potential in west 1 region only, amongst HDFC

Bank's existing correspondent banking clients. Report also studies various correspondent banking

products offered by HDFC Bank.


2. COMPA$Y PROFILE

2.1 HDFC BA$K LTD.

HDFC Bank Ltd., promoted by HDFC Ltd. commenced its operations in 1995.

Headquartered in Mumbai, the bank has at present an enviable network of 684 branches spread

across more than 316 cities. All branches are linked on an on line real-time basis.

HDFC Bank has received recognition for its business, from various leading publications,

both national and international. Forbes Global has named it in its list of “The 300 Best Small

Companies”/Business Today, Business India and Business Baron have adjudged HDFC Bank

Limited as the Best Private Sector Bank / Finance Asia as India’s Best Domestic Commercial Bank

/ Asia Money as among the top – 25 Best Managed Companies in Asia –Pacific / Euro money as

India’s Best Bank.

2.2. 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

2.3 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 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.


2.4 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 Stock Exchange. The banks American Depository Shares are listed on

the New York Stock Exchange (NYSE) under the symbol "HDB”

2.5 Distribution network

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

over 1229 branches spread over 444 cities across India. All branches are linked on an online real-

time basis. Customers in over 120 locations are also serviced through Telephone Banking. The

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

commercial centres 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 centres where the NSE/BSE have a

strong and active member base. The Bank also has a network of about over 2526 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.

2.6 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.


2.7 Technology

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

and communication systems. All the bank's branches have online 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. The Bank's business is supported

by scalable and robust systems which ensure that our clients always get the finest services we offer.

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.

2.8 Business

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:

i.Wholesale Banking Services

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

Indian corporate to small & mid-sized corporates 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

corporates 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.

ii.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 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.

iii. 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 liberalisation

of the financial markets in India, corporates 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.


2.9 Rating

i. Credit Rating

The Bank has its deposit programs rated by two rating agencies – Credit Analysis &

Research Limited (CARE) and Fitch Ratings India Private Limited. The Bank's Fixed Deposit

programme has been rated 'CARE AAA (FD)' [Triple A] by CARE, which represents instruments

considered to be "of the best quality, carrying negligible investment risk". CARE has also rated the

bank's Certificate of Deposit (CD) programme "PR 1+" which represents "superior capacity for

repayment of short term promissory obligations". Fitch Ratings India Pvt. Ltd. (100% subsidiary of

Fitch Inc.) has assigned the "AAA ( ind )" rating to the Bank's deposit programme, with the outlook

on the rating as "stable". This rating indicates "highest credit quality" where "protection factors are

very high".

The Bank also has its long term unsecured, subordinated (Tier II) Bonds rated by CARE

and Fitch Ratings India Private Limited and its Tier I perpetual Bonds and Upper Tier II Bonds

rated by CARE and CRISIL Ltd. CARE has assigned the rating of "CARE AAA" for the

subordinated Tier II Bonds while Fitch Ratings India Pvt. Ltd. has assigned the rating "AAA (ind)"

with the outlook on the rating as "stable". CARE has also assigned "CARE AAA [Triple A]" for the

Banks Perpetual bond and Upper Tier II bond issues. CRISIL has assigned the rating "AAA /

Stable" for the Bank's Perpetual Debt programme and Upper Tier II Bond issue. In each of the cases

referred to above, the ratings awarded were the highest assigned by the rating agency for those

instruments.

ii. Corporate Governance Rating

The bank was one of the first four companies, which subjected itself to a Corporate

Governance and Value Creation (GVC) rating by the rating agency, The Credit Rating Information

Services of India Limited (CRISIL). The rating provides an independent assessment of an entity's

current performance and an expectation on its "balanced value creation and corporate governance

practices" in future. The bank has been assigned a 'CRISIL GVC Level 1' rating which indicates

that the bank's capability with respect to wealth creation for all its stakeholders while adopting

sound corporate governance practices is the highest.


3. BA$KI$G I$ I$DIA

India has a well developed banking system. Most of the banks in India were founded by

Indian entrepreneurs and visionaries in the pre-independence era to provide financial assistance to

traders,agriculturists and budding Indian industrialists. Indian banks have played a significant role

in the development of Indian economy by inculcating the habit of saving in Indians and by lending

finance to Indian industry.

The commercial banking structure in India consists of: Scheduled Commercial Banks and

Unscheduled Banks. Scheduled commercial Banks constitute those banks, which have been

included in the Second Schedule of Reserve Bank of India (RBI) Act, 1934. RBI includes only

those banks in this schedule, which satisfy the criteria laid down section 42 (6) (a) of the Act.

Classification of scheduled banks:

Reference: www.rbi.org.in


3.1 ROLE OF RBI

Main objectives

a) Monetary authority

Formulates, implements and monitors the Monetary Policy, announced twice a

year. Announces the Credit Policy, announced twice a year - in April it announces new

policy initiatives, the October pronouncement is a review of the April policy.

Objective:

Maintaining price stability and ensuring adequate flow of credit to productive sectors.

Maintain optimum Liquidity in the economy.

b) Regulator and supervisor of the financial system

Prescribes broad parameters of banking operations within which the country's

banking and financial system functions.

Objective:

Maintain public confidence in the system, protect depositors' interest and provide cost-

effective banking services to the public.

TheBanking Ombudsman Scheme has been formulated by the Reserve Bank of India (RBI)

for effective redressal of complaints by bank customers.

c) Manager of exchange control

Manages the Foreign Exchange Management Act, 1999.

Objective:

To facilitate external trade and payment and promote orderly development and maintenance

of foreign exchange market in India.

d) Issuer of currency

Issues and exchanges or destroys currency and coins not fit for circulation.

Objective:

The main objective is to give the public adequate supply of currency of good quality and to

provide loans to commercial banks to maintain or improve the GDP.

The basic objectives of RBI are to issue bank notes, to maintain the currency and credit

system of the country to utilize it in its best advantage, and to maintain the reserves. RBI

maintains the economic structure of the country so that it can achieve the objective of price

stability as well as economic development, because both objectives are diverse in

themselves.

e) Developmental role

Performs a wide range of promotional functions to support national objectives. To incubate

or establish financial institutions of national importance, for e.g.: NABARD, IDBI


Related functions

1. Banker to the Government: performs merchant banking function for the central and the

state governments; also acts as their banker.

2. Banker to banks: maintains banking accounts of all scheduled banks.

3. Owner and operator of the depository (SGL) and exchange (NDS) for government

bonds.

4. There is now an international consensus about the need to focus the tasks of a central

bank upon central banking. RBI is far out of touch with such a principle, owing to the

sprawling mandate described above.


3.2 Classification of Banks

Indian banks can be broadly classified into nationalized banks, public sector

banks, private banks and foreign banks.

3.2.1 $ationalized banks

Banking System in India is dominated by nationalized banks. The Nationalization of banks in

India took place in 1969 by Mrs. Indira Gandhi the then prime minister. The major objective behind

nationalization was to spread banking infrastructure in rural areas and make available cheap

finance to Indian farmers. Fourteen banks were nationalized in 1969.

These Banks were Before 1969, State Bank of India (SBI) was the only public sector bank in

India. SBI was nationalized in 1955 under the SBI Act of 1955. The second phase of

nationalization of Indian banks took place in the year 1980. Seven more banks were nationalized

with deposits over 200 crores.

List of Public Sector Banks in India is as follows:

Andhra Bank

Allahabad Bank

Bank of Baroda

Bank of India

Bank of Maharashtra

Canara Bank

Central Bank of India

Corporation Bank

Dena Bank

Indian Bank

Indian Overseas Bank

Oriental Bank of Commerce

Punjab and Sind Bank

Punjab National Bank

State Bank of Bikaner & Jaipur

State Bank of Hyderabad

State Bank of India (SBI)

State Bank of Indore

State Bank of Mysore

State Bank of Patiala

State Bank of Saurashtra

State Bank of Travancore

Syndicate Bank

UCO Bank

Union Bank of India

United Bank of India

Vijaya Bank


3.2.2 Private Banks in India

All the banks in India were earlier private banks. They were founded in the pre-

independence era to cater to the banking needs of the people. But after nationalization of banks in

1969 public sector banks came to occupy dominant role in the banking structure. Private sector

banking in India received a filip in 1994 when Reserve Bank of India encouraged setting up of

private banks as part of its policy of liberalisation of the Indian Banking Industry. 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.

Private banks have played a major role in the development of Indian banking industry. They have

made banking more efficient and customer friendly. In the process they have jolted public sector

banks out of complacency and forced them to become More competitive.

Major Private Banks in India are:

Bharat Overseas Bank

Bank Of Rajasthan

Catholic Syrian Bank

Centurion Bank of Punjab

Dhanalakshmi Bank

Federal Bank

HDFC Bank

ICICI Bank

IDBI Bank

IndusInd Bank

ING Vysya Bank

Jammu & Kashmir Bank

Karnataka Bank

Karur Vysya Bank

Kotak Mahindra Bank

SBI Commercial and International Bank

South Indian Bank

United Western Bank

UTI Bank

YES Bank


3.2.3 Foreign bank

Foreign banks have brought latest technology and latest banking

practices in India. They have helped made Indian Banking system more

competitive and efficient. Government has come up with a road map for

expansion of foreign banks in India.

The road map has two phases. During the first phase between March 2005 and March 2009, foreign

banks may establish a presence by way of setting up a wholly owned subsidiary (WOS) or

conversion of existing branches into a WOS. The second phase will commence in April 2009 after a

review of the experience gained after due consultation with all the stake holders in the banking

sector. The review would examine issues concerning extension of national treatment to WOS,

dilution of stake and permitting mergers/ acquisitions of any private sector banks in India by a

foreign bank.

Major foreign banks in India are:

ABN-AMRO Bank

Standard Chartered Bank

Abu Dhabi Commercial Bank Ltd.

American Express Bank Ltd

BNP Paribas

Citibank

DBS Bank Ltd

Deutsche Bank

HSBC Ltd


3.3 Importance of CO OPERATIVE BA�KS

Introduction

The Co-operative banks have a history of almost 100 years. The Co-operative banks are an

important constituent of the Indian Financial System, judging by the role assigned to them, the

expectations they are supposed to fulfill, their number, and the number of offices they operate.

The co-operative movement originated in the West, but the importance that such banks have

assumed in India is rarely paralleled anywhere else in the world. Their role in rural financing

continues to be important even today, and their business in the urban areas also has increased

phenomenally in recent years mainly due to the sharp increase in the number of primary co-

operative banks.

While the co-operative banks in rural areas mainly finance agricultural based activities

including farming, cattle, milk, hatchery, personal finance etc. along with some small scale

industries and self-employment driven activities, the co-operative banks in urban areas mainly

finance various categories of people for self-employment, industries, small scale units, home

finance, consumer finance, personal finance, etc.

In the beginning of 20th century, availability of credit in India, more particularly in rural

areas, was almost absent. Agricultural and related activities were starved of organized,

institutional credit. The rural folk had to depend entirely on the money lenders.

The co-operative banks arrived in India in the beginning of 20th Century as an official effort to

create a new type of institution based on the principles of co-operative organization and

management, suitable for problems peculiar to Indian conditions. These banks were conceived

as substitutes for money lenders, to provide timely and adequate short-term and long-term

institutional credit at reasonable rates of interest

Categories

There are two main categories of the co-operative banks

a) Short term lending oriented co-operative Banks - within this category there are three sub

categories of banks viz

1.State co-operative banks,

2.District co-operative banks and

3. Primary Agricultural co-operative societies.

b) long term lending oriented co-operative Banks - within the second category there are land

development banks at three levels state level, district level and village level.


4. CORRESPO$DE$T BA$KI$G SERVICES

HDFC Banks co-operative bank department has the following products on offer with

dynamic changes being made continuously to cater to the changing needs of customers.

1. Funds Drawing Arrangement

The facility to issue instruments on all the HDFC Bank locations offered, presently 283

locations being available.

Pre-printed stationery may be used by Co-operative branches for issuing drafts to their

customers for our locations. HDFC Bank would honor the instruments at all their locations, subject

to availability of clear funds in current account with HDFC Bank branch.

There is not any ceiling on the value of instruments to be issued per day on RBI locations.

The funding of current account, for all the drafts issued during the day, would have to be done

through a pay order/RTGS to be deposited with HDFC Bank Branch on the next day before 10.00

a.m.

Features:

Two types of cheque stationery with different colours and other security features for

amounts upto Rs. 1 lakh and above Rs. 1 lakh.

Daily account statements on e-mail and exhaustive month-end statement of account is

provided to facilitate error free and timely reconciliation of banks book of accounts.

Co-operative bank Software (CBS) developed exclusively for Co- operative banks, the same

can be installed at the co-operative banks Head office and branches.

2.Collection of Cheques:

A facility to collect outstation cheques deposited by Co-operative bank clients drawn on

HDFC Bank locations.

All the instruments, received for collection by your branches (drawn on HDFC Bank

locations), would have to be deposited with HDFC Banks Pune/Mumbai branch. The instruments

have to be deposited in one lot for each location.

HDFC Bank would credit clear funds to Co-operative banks account on Day 4 for cheques

deposited at clearing location directly and Day 7 for any outstation cheques (Day 0 being the date of

deposit with HDFC Bank).

The facility is being offered to co-operative banks at collection charges of Rs. 15/- per instrument.

A charge of Rs.50/- per instrument is applicable for cheques returned unpaid.

Rs. 10/- per packet per location would be charged as courier charges.


Features:

Credit passed on to the Co-operative banks account on an assured day

A whole range of MIS can also be provided for such collections

3. Constituent SGL accounts:

Co-operative banks can open a Constituent SGL account with HDFC Bank for making

investments in Government securities for taking care of their SLR requirements.

Features:

• An advisor cum dealer at Pune to help you with your investments

• Treasury support provided from the nearest HDFC Bank location

• Highly efficient services provided to co-operative banks to help them in their investment

activities

• Low transaction charges and no charges for any direct deals with HDFC Bank

• Interest realisation at no extra charges

• Monthly statement of the holdings of co-op. Bank with regular advices for transactions

and half-yearly interest credits

4.Call Money :

Call money facility for clear funds only in clients current account on an overnight basis.

Co-operative banks can give HDFC Bank a payorder of MSC Bank which can be deposited in High

Value at Mumbai by 10.30 am and the funds will be taken in call effective the next day.

Client can also transfer funds to their current a/c by RTGS

Client will have to fax Daily the Call Money instructions to Pune for Call booking.

Call Timings

Mon to Fri : 09:30 a.m. to 12:30 p.m.

Saturday: 09:30 a.m. to 11:00am

5. RTGS Transfers:

RTGS Charges (For RTGS charges where Bank is beneficiary A/c)

Rs 5 per transcation + RBI Charges + taxes if any.

(At present RBI Charges are nil)

RTGS Timings:

Mon to Fri : 09:30 a.m. to 1.00 p.m.

Saturday : 09:30 a.m. to 10:30 p.m


6. Currency Chest:

Co-operative banks can use our currency chest for cash depositions as well as cash

withdrawals. Currency chest facility affords you the perfect arrangement to effectively handle your

cash requirements as well as reducing your risk of holding cash at your end. This facility is

presently available at Bangalore, Chandigarh, Chennai, Delhi, Hyderabad, Kolkata, Mumbai &

Pune.

7. Demat Services:

HDFC bank is a Depository participant and has tie-ups with NSDL and CSDL. Our bank is

interested in extending Depository facilities to the customers of the co-operative bank.

Features:

Facility to convert your banks investment portfolio in dematerialised formalities Demat

services available to your customers through HDFC Banks' depository by opening their demat

account with HDFC bank

Regular statements of transactions and debits provided to the Co-op. Banks.

8. Trade Finance and Foreign Exchange Services:

HDFC Bank Ltd. is proud to present to the Co-operative bank, Trade Finance and Foreign

Exchange Services on behalf of their customers. Our bank has developed substantial expertise in the

fields of foreign exchange, treasury and International trade finance. The bank also has an extensive

Foreign Correspondent Bank network for fast realization of fund transfers and other related

services. The charges for these services are very competitive. The following are some of the

products, which can be availed of by the Co-op. Banks on behalf of their customers:

Collection of Export bills

Collection of foreign currency instruments

Foreign inward remittances

Import collection documents

NRE/NRO accounts

9. Letter of Credit Facilities:

Co-operative banks are not allowed to offer LC facilities to their customers leading to the

loss of these customers to other nationalized banks, we would be glad to offer these facilities

considering the credit/financial factors, our relationship and services availed through us over a

period of time.


DOCUMENTATION:

Board resolution specifying the mode of operation of the account and the persons

authorized to operate the account.

Agreement & Indemnity for funds drawing arrangement.

Accepted copy of the offer letter

RBI License Copy

State Registration Copy

Copy of the Bye – Laws of the Cooperative Bank

Collection Agreement

I��OVATIVE PRODUCTS

1. Agriflows / Industrial collections :

This is a revolutionary service specially designed for your traders and businessmen

dealing in various agricultural as well as industrial commodities. This service is specially designed

to enable you to offer your clients cash management as offered by various private and foreign

banks to their traders clients. HDFC bank provides you its cash management

infrastructure to enable you to provide customised service to your clients and prevent them from

moving to other banks for availing these services.This is most useful incase of your loan

accounts, where the flows can be routed through your bank instead of other banks. Please get

in touch with us for more details.

2. CBLO ( Collateralised Borrowing and Lending Obligation) :

CCIL has developed a new money market product called “Collateralized Borrowing and

Lending Obligation” (CBLO), to meet the needs of banks, financial institutions and primary dealers

for borrowing and lending of funds. CCIL with HDFC Bank has launched a CBLO

programme specially designed for the co-operative banks. This is an excellent product for co-

operative banks as you can pledge your surplus government securities with CCIL and

borrow funds at the prevailing market rates to meet any liquidity constraints. The co-operative

bank can also lend surplus funds in the market through CCIL. Since all transactions are guaranteed

by CCIL, the co-operative banks will enjoy the benefits of favourable rates.


5. CO$CEPT A$D PROCEDURE

5.1 CASH MANAGEMENT IN INDIA

Cash management in India is dogged by poor communication and archaic clearing rules

and procedures. The funds transfer process is entirely paper driven, bogged down by

needless delays and errors. The clearing system is such that it hinders optimal management

of cash. Transit delays, which some times can be as much as a month results in an expensive

float. The sheer geographic spread of the country only aggravates the problem.

I .CASH MA$AGEME$T SERVICE

Normal cheque clearing process involves the traveling of cheque from various locations.

Time taken to clear these cheque is basically depends on the kind of cheque it is and the location

from where it is been drawn.

These cheques are basically categorised as

1. High value &

2. MICR cheques

Depending upon the value of the amount it supposed to debit.

While another category is that, they are classified on basis of it issuance as

1. Local cheques &

2. Out- station cheques.

High value cheques are with amount more than One lack rupees while MICR (Magnetic Ink

Character Recognition) cheques have it less than One lack rupees.

Where as local cheques comprise of the deposition in the local clearing house and Out-station as

deposition in another clearing house.

HDFC Banks cash management service deals with this problem as solution to late credit which

would other wise take more time in clearing.

HDFC Bank through its wide base of branches all over India, effectively serves the purpose of

CMS. Correspondence banking group at bank looks after this service.


Basic Clearing process at any Bank :

Whenever a person say Trader, for our sake, deposits a cheque at bank where he has his

current account will have to wait for the clearing which may took as long as fifteen days. The main

backdrop behind the time lag is that the bank where he has his account not necessarily have any

branch at the location from where trader has got the cheque. This is usual case with traders as they

supply their goods to various distinct locations in India.

The late credit is an obvious out come of normal clearing process.

For high value cheques it will be quite earlier but generally for MICR cheques, it is time consuming

process and makes trader suffer from idle cash which he wont get even week after he had delivered

the goods.

Normal flow of the cheque will be as shown below

Assumption: Trader has got out station cheque of Delhi.


If Organizations activities are spread across major cities through out the country,

Managing outstation funds collection & disbursements can often be time consuming and

expensive. Adopting conventional wisdom & adhering to traditional channels of banking for

collection & pulling of funds, quite often the corporate is deprived of timely access of funds

of there own for profitable deployment. Under delay & uncertainty in the funds flow means

additional borrowing & resultant increased borrowing cost.

Efficient fund management is about getting funds in time, quick transfers, quick

realization of out station cheques, easy disbursements, account reconciliation, controlled

processes and customized MIS. While these contribute to effective cash management,

reliable and accurate information is an indispensable aid to smooth cash flow. Quickening

the process of accessing the receivables makes the operating cycle move faster leading to

better efficiency. For corporate with an eye on reducing the cost of operations, cash

management services are a necessity.

For example, the strength of Hindustan Uni lever Ltd, the FMCG giant is in strong

distribution network with thousands of suppliers and retailers. When Uni lever has to

receive a cheque from a customer in a remote place say Asansol, it might take more than 15

days for the cheque to be cleared and the amount to be actually credited in UL L's mumbai

account. This may lead to non-optimal utilization of cash.

CMS offers bank the facility of clearing of local / out station instrument favoring bank

organization deposited at HDFC Banks branch location with pooling of funds at mumbai or

at any other location where HDFC Bank has presence on vary competitive terms. CMS

eliminates the inherent

delays of traditional fund transfer mechanism. CMS enhances liquidity and insures optimum

planing and utilization of funds. In addition to faster access to funds, CMS provides the

client bank with MIS, which will help to improve client banks reconciliation.


CASH MANAGEMENT PROCESS FLOW

Cash management service serves for the betterment of the client. CMS implementation

involves some basic requirement to be fulfilled. For this Client needs to have one current

account with HDFC Bank. The process for availing the CMS facility is as mentioned below

-

● CMS client code is provided to the client at the time of set up

● All the deposits in the CMS account are to be made wit reference to this unique

client code.

● All the cheques can be collected from the designated clients office through a

courier service.

● If the courier facility is not availed, the cheque are to be deposited with the

designated HDFC Bank branch or a coordinator along with a specific CMS

deposit slip for that product before the cut off time.

● Daily MIS is provided with the collections in the account for that particular day

in soft copy at the email id's given at set up by client. The MIS can be

customized in the format required by Cooperative bank.

● E-net viewing :- Under this facility, bank can view all the details that are

required. The details are provided under two heads-

� The account viewing where bank can see the account statement, balance

etc.

� The CMS module where bank can view the deposits on that day, the day

of credit for these cheques.


Figure : Existing CMS Process


Facilities provided in CMS service

1. Daily report on location wise collections/returns

2. Monthly report on total collections and service charges.

3. Monthly report on total payouts and service charges.

4. Enet facility to check/validate cheque collection across location at one central

place through deposit and instrument query.

5. Any additional report, in mutual consolation which the company may be

requiring from time to time.

Documentation and Charges

Documents required to avail this facility are as mentioned below -

1. The Bank to execute an application-cum-agreement / Fax indemnity.

2. A board resolution for availing the cash management services from HDFC

Bank.

3. A list of Signatories who are authorized to give instructions to the HDFC

Bank for operating services.

Courier charges of Rs.25/- per packet per location per day will be applicable.


II. CBDT (Central Board of Direct Tax)

1. Organization and Functions

The Central Board of Direct Taxes in a statutory authority functioning under the Central

Board of Revenue Act, 1963. The officials of the Board in their ex-officio capacity also function as

a Division of the Ministry dealing with matters relating to levy and collection of direct taxes and

formulation of policy concerning administrative reforms and changes for the effective functioning

of Income-tax Department.

2. Historical Background of C.B.D.T.

The Central Board of Revenue as the Department apex body charged with the administration

of taxes came into existence as a result of the Central Board of Revenue Act, 1924. Initially the

Board was in charge of both direct and indirect taxes. However, when the administration of taxes

become too unwieldy for one Board to handle, the Board was split up into two, namely the Central

Board of Direct Taxes and Central Board of Excise and Customs with effect from 1.1.1964. This

bifurcation was brought about by constitution of the two Boards u/s 3 of the Central Boards of

Revenue Act, 1963.

Circular from CBDT

The Central Board of Direct Taxes, vide notification S.O.No.493(E) dated 13.3.2008 have

notified the categories of taxpayers who are mandatorily required to electronically pay taxes on or

after the 1st day of April, 2008. The taxpayers who are required to pay taxes by the prescribed mode

are –

(i) A company; and

(ii) A person (other than a company),

to whom provisions of section 44AB of the Income-tax Act, 1961 are applicable.


HDFC Bank

HDFC Bank was the first private sector bank to be authorised by the Central Board of Direct

Taxes

(CBDT) as well as the Reserve Bank of India for collection of direct tax, from April 01, 2001.

At present HDFC Bank collect direct taxes at 322 branches across 22 zones.

Key Benefits:

1. Convenience at its best - no standing in long queues for payment of tax,

2. No hassles of writing cheques.

3. No filling challans in four copies and

4. No visiting a collecting bank!

5. Extended deadlines for payments on cut off date.

Process:

1. A simple and convenient process

2. Fill in the details of Challan and submit the transaction.

3. Input Net Banking Customer ID and Password.

4. Give the details of your account & your account will get debited on line.


6. ANALYSIS OF CMS & CBDT Payment

HDFC Banks correspondence Banking group looks after the co operative banks as

prospective customers for these products. The group work as facilitator and provider of

correspondent banking products to co operative banks.

Big players in banking sector like HDFC Bank, though couldn't make their impact in

rural parts of India. This untapped market in rural India is big and good option to in growth

perspective.

As per 2006 Rangarajan committee report on Financial inclusion, it mentions the

hard facts. As per the report, in rural area, the people are still dependent on private lending

as an option and they are very less interested towards dealing with banks as an option for

saving accounts and other good services availed by banks.

In this regards, importance of co operative banks is quite visible. Co operative banks

have good network of branches in rural areas. They have good relations with their customers

and are served as only source for banking.

Co operative banks strong presence in rural area makes them as potential client and

maintaining them with HDFC Bank, is thus important prospect of this business.

2.CMS and CBDT payments are two products which were studied as business

generating services. CMS avails the timely clearance of outstation cheques and easy

reconciliation of those. Many co operative banks were benefited by this services & are

satisfied customers of HDFC Bank. Current CMS is well managed system with good Day

arrangements and other facilities provided with the same.

As we all aware of the traditional process of outstation cheques realization process .

it was a time consuming process which used to take at least 15 days to realization of

outstation cheques. Because of the requirement of competitive market about the fast

process of clearing of outstation cheques cash management service took place of traditional

process . by using the vast network of banks customer has been provided by the fast

realization process of out station cheques. As we got introduced with Cash Management

Service ,we know that it facilitate the procedure of realization of outstation cheques, cash

management services provides the required reconciliations to the client which helps to get

the track or record of the transactions happened or the all realizations of out station cheques.

In the current procedure of cash management the realization procedure of out station

cheques get quicker compare to traditional process. As below figure shows the process of

cash management service.

3.CBDT on-line tax payment is new service provided by HDFC Bank. Co operative

banks who have current account with HDFC Bank can avail this facility. Client base of more

than 300 co operative branches, this CBDT on-line tax payment is good business product.


7. RESEARCH METHODOLOGY

7.1 Objective of the research

The Research aimed at finding out scope for possible growth potential in west 1 region for

Cash management service and CBDT payment as correspondent Banking products. Co operative

banks using CMS product were to be analyzed and the CBDT tax payment is researched as new

product.

7.2 Research approach

The approach for the research is qualitative and analytical one as it involves the generation

of data in qualitative forms which can be subjected to rigorous qualitative analysis in formal and

rigid fashion. It deals with qualitative aspects and is used more in the descriptive research process.

It expresses and summarizes data numerically and graphically. The research involves structured

questionnaire and can be applied on a large number of responses. These attributes are then assigned

weights depending on their importance level and are measured. The findings would then help us to

know the market potential.

7.3 Research Design:

It was basically a Descriptive Research. Since, the research is about to know the potential of cash

management serice & CBDT potential as correspondent banking service in west 1 region.

For understanding the meaning and procedure of Cash Management Service and to study it in

detail information has been collected by two methods:

1. Collection of data through Primary Sources and

2. Collection of data through Secondary Sources.

A) Primary Sources:

Data collected through Primary Sources are:

Questionnaire was the main instrument for primary data collection.

a) Questions asked to the managers of corporate loans department in HDFC Bank.

b) Questions asked to the co operative banks those are the existing customer of HDFC Bank in

West 1 region.


B) Secondary Sources:

The secondary data was also collected as a supplement to primary data. The data was

collected through:

a) Data collected through various brochures, pamphlets etc provided by the Manager, Corporate

loan HDFC bank.

b) Data collected through the website of HDFC Bank- Wholesale Banking.

c) From the web site of RBI

The Research followed by the above two methods helped me to complete my project

successfully.

7.4 SAMPLI$G DETAIL :

Selecting a sample of 31 from the total headcount was an arduous task. Still, it was done carefully

and can be described as under:

(a) Sampling Element:

Mainly first 31 co operative banks, From west 1 region, concerning to their business with

HDFC Bank.

(b) Sample Size:

31 co operative Bank were selected.

� Hypothesis of the Study:

1. I assumed that the information given by the customers are of their own.

2. Findings are based on the interview with the existing customers (co operative Banks) , and

managers and officers of HDFC Bank Ltd.,Pune.


8. ANALYSIS & INTERPRETATION OF DATA

8.1From Questionnaire:

From the above questionnaire its analyse that most of the Co Op banks having the customer group

those who are traders. Following is the chart which shows the percentage of retail & trader

customers with the Co Op Bank.

Table : Client distribution of sample

No. Name of the co op Bank Trader % Retail %

1 BHINGAR URBAN COOP BANK LTD 60% 40%

2 COSMOS CO OP BANK 70% 30%

3 CHIPLUN URBAN CO-OP. BANK LTD 55% 45%

4 GODAVARI URBAN CO OP BANK 50% 50%

5 ICHALKARANJI JANATA SAH BANK 65% 35%

6 JALNA MERCHANT S COOP BANK 30% 70%

7 JANASEVA SAHAKARI BANK LTD. PUNE 40% 60%

8 LONAVALA SAHAKARI BANK 75% 25%

9 NAGAR URBAN CO-OP. BANK LTD 65% 35%

10 PUNE PEOPLE S COOP BANK LTD 65% 35%

11 POORNAWADI NAGRIK SAH.BANK 70% 30%

12 PRAVARA SAHAKARI BANK LTD 55% 45%

13 PUNE URBAN CO-OP BANK LTD 70% 30%

14 PAVANA SAHAKARI BANK LIMITED 75% 25%

15 RAJARSHI SHAHU SAH Bank 55% 45%

16 RUPEE CO OP BANK LTD 60% 40%

17 SAHYADRI SAHAKARI BANK LTD KARAD 60% 40%

18 SADGURU JANGLI MAHARAJ SAH BANK LTD 50% 50%

19 SAMARTH SAHAKARI BANK LTD 55% 45%

20 SUVARNAYUG CO OP BANK LTD 68% 32%

21 SHREE SHARADA SAHAKARI BANK LTD 60% 40%

22 SHRI CHHATRAPATI R S U CO-OP BANK Ltd 70% 30%

23 AHMEDNAGAR CO OP BANK LTD 55% 45%

24 BARAMATI SAHAKARI BANK LTD 60% 40%

25 JALGAON PEOPLES CO-OP BANK 65% 35%

26 MAHAD COOP URBAN BANK LTD 45% 55%

27 SEVA VIKAS CO-OP BANK LTD 60% 40%

28 THE VISHWESHWAR SAH BANK 70% 30%

29 COMMERCIAL CO-OP BANK LTD. 67% 33%

30 KARAD URBAN CO OP BANK LTD 80% 20%

31 AJARA URBAN CO OP.BANK LTD. 60% 40%


Graph : Graphical presentation of Client categories of Sample


Interpretation After analyzing the chart we can easily say that most of the bank have large trader group as a

customer compare to salaried Or Retail customers. As per survey it’s found that traders need bank

account for there daily transactions ,co op bank plays real role in those cases by providing current

account facility at rural areas to these customers.


Other Bank Cheque Collection (OBC) Facility is the important facility provided by banks.

Traders used to supply there goods to different peoples against that they get cash or cheques as

payment. Many times they get out station cheques as payment, traders always seeks for the earliest

payment so this can be possible with OBC facility.

As per research it’s found that some banks dose not provides OBC facility because of their narrow

network.

Following chart shows facility provide by co op banks.

Table : Facilities provided by Co-operative banks

Sr.$o. Co Op Bank $ame

OBC

Facility

On Line

Tax

Payment

1 BHINGAR URBAN COOP BANK LTD Y Y

2 COSMOS CO OP BANK Y N

3 CHIPLUN URBAN CO-OP. BANK LTD Y Y

4 GODAVARI URBAN CO OP BANK N Y

5 ICHALKARANJI JANATA SAH BANK Y Y

6 JALNA MERCHANT S COOP BANK Y Y

7 JANASEVA SAHAKARI BANK LTD. PUNE Y N Yes 26

8 LONAVALA SAHAKARI BANK Y N $o 4

9 NAGAR URBAN CO-OP. BANK LTD Y Y

10 PUNE PEOPLE S COOP BANK LTD Y Y

11 POORNAWADI NAGRIK SAH.BANK Y Y

12 PRAVARA SAHAKARI BANK LTD Y N

13 PUNE URBAN CO-OP BANK LTD Y N

14 PAVANA SAHAKARI BANK LIMITED Y N Yes 18

15 RAJARSHI SHAHU SAH Bank Y Y $o 12

16 RUPEE CO OP BANK LTD Y Y

17 SAHYADRI SAHAKARI BANK LTD KARAD Y N

18 SADGURU JANGLI MAHARAJ SAH BANK LTD N N

19 SAMARTH SAHAKARI BANK LTD Y Y

20 SUVARNAYUG CO OP BANK LTD Y Y

21 SHREE SHARADA SAHAKARI BANK LTD Y Y

22 SHRI CHHATRAPATI R S U CO-OP BANK Ltd N Y

23 AHMEDNAGAR CO OP BANK LTD Y Y

24 BARAMATI SAHAKARI BANK LTD Y N

25 JALGAON PEOPLES CO-OP BANK N N

26 MAHAD COOP URBAN BANK LTD Y N

27 SEVA VIKAS CO-OP BANK LTD Y Y

28 THE VISHWESHWAR SAH BANK Y Y

29 COMMERCIAL CO-OP BANK LTD. Y Y

30 KARAD URBAN CO OP BANK LTD Y Y

31 AJARA URBAN CO OP. BANK LTD N N

For Tax

Acceptance

For OBC

Facility


Figure: Showing % of OBC facility provided by Co op Banks.

Interpretation:

As it is mention above the importance of Other Bank Cheque Collection facility, it is found from

the research that some banks are not providing the service of OBC due to their Branch network

problem.

The above diagram is giving overview of the situation in co op bank about the Other Bank Cheque

Collection Facility.


Figure: Showing Tax Acceptance facility provided by Co op

Banks

Interpretation:

Regarding to the amendment by CBDT of on Line tax payment from questionnaire we get the idea

that still 40% co op bank does not pay their taxes from internet. So this would help to the bank to

capture them for the business purpose. The above Diagram is giving the normal idea about the

present scenario of co op bank towards on line tax payment


A$ALYSIS OF THE BUSI$ESS

• Below is the list of 30 co-operative banks who has good deal of business with HDFC Bank.

The table mentions the Actual turnover of the bank and it's corresponding business with

HDFC Bank and percentage share of business with HDFC Bank.

1. These banks uses the correspondent banking products from HDFC Bank. On average there

are sixteen banks who has 30 % or more of their business is with HDFC Bank. Six banks

have it between twenty to thirty percent and almost eight banks have less than or equal to

twenty percent of their business with HDFC Bank.

2. The list comprises of wide variety of co operative banks in around pune region. So do they

vary in their actual turn over. Accordingly their client base is vast and small in comparison

with others.

3. The scope of the project is to study and suggest the way in order to seek the increase in the

banks business with HDFC Bank.

4. The questionnaire was prepared and the response of few of the sample (Banks) was

considered.

Pie chart showing the number of Co-operative banks grouped by their present business with

HDFC bank as percentage of their current business.


Actual Data showing the business of the co-operative banks with HDFC Bank comparing with

their present business.

Table : Comparative Business

( Rs in '000 )

Sr No. Division : MMI Banks

Actual

Turnover

Present

Business

% Business with HDFC

Bank

1

BHINGAR URBAN COOP BANK

LTD 10.00 1.00

10.00

2 COSMOS CO OP BANK 250.00 80.00 32.00

3

CHIPLUN URBAN CO-OP. BANK

LTD 10.00 3.00

30.00

4 GODAVARI URBAN CO OP BANK 10.00 1.00 10.00

5

ICHALKARANJI JANATA SAH

BANK 50.00 2.00

4.00

6

JALNA MERCHANT S COOP

BANK 10.00 2.00

20.00

7

JANASEVA SAHAKARI BANK

LTD. PUNE 50.00 2.00

4.00

8 LONAVALA SAHAKARI BANK 60.00 25.00 41.67

9

NAGAR URBAN CO-OP. BANK

LTD 75.00 20.00

26.67

10 PUNE PEOPLE S COOP BANK LTD 50.00 15.00 30.00

11

POORNAWADI NAGRIK

SAH.BANK 25.00 1.00

4.00


12 PRAVARA SAHAKARI BANK LTD 10.00 3.00 30.00

13 PUNE URBAN CO-OP BANK LTD 10.00 3.00 30.00

14

PAVANA SAHAKARI BANK

LIMITED 10.00 1.00

10.00

15 RAJARSHI SHAHU SAH Bank 15.00 8.00 53.33

16 RUPEE CO OP BANK LTD 25.00 8.00 32.00

17

SAHYADRI SAHAKARI BANK

LTD KARAD 10.00 2.00

20.00

18

SADGURU JANGLI MAHARAJ

SAH BANK LTD 50.00 15.00

30.00

19

SAMARTH SAHAKARI BANK

LTD 10.00 4.00

40.00

20 SUVARNAYUG 15.00 4.00 26.67

21

SHREE SHARADA SAHAKARI

BANK LTD 25.00 10.00

40.00

22

SHRI CHHATRAPATI R S U CO-OP

BANK Ltd 10.00 5.00

50.00

23 AHMEDNAGAR 100.00 30.00 30.00

24

BARAMATI SAHAKARI BANK

LTD 10.00 3.00

30.00

25 JALGAON PEOPLES CO-OP BANK 10.00 1.00 10.00

26

MAHAD COOP URBAN BANK

LTD 30.00 12.00

40.00

27 SEVA VIKAS CO-OP BANK LTD 40.00 10.00 25.00

28 THE VISHWESHWAR SAH BANK 50.00 10.00 20.00

29 COMMERCIAL CO-OP BANK LTD. 10.00 1.00 10.00

30

KARAD URBAN CO OP BANK

LTD 25.00 10.00

40.00

31 AJARA URBAN CO OP. BANK 5.00 1.00 20.00

293.00


Graph:

Interpretation:

As above chart is based on the analysis of the Co operative banks visited in period of

project. In this chart Actual Turnover means the Actual turnover of the concern Co operative Bank

at present, & the Present Business denotes the business of that concern Co Operative Bank With

HDFC Bank at present from that actual Business.


8.2Findings

� It is found, during the period of project in HDFC Bank , that HDFC Bank has

currently 371 co-operative banks to whom it is providing various correspondent

services, but still more co op banks in west 1 region those are not tie up with HDFC

Bank yet.

So Bank needs to implement aggressive awareness program to capture those co op

banks those are untouched.

� Though Cash Management Service of HDFC Bank provides the early clearance of

OBC, But still some co op banks are not satisfy with this lengthy process, they want

quick clearance of OBC compare to the existing process.

As HDFC Bank being one of the Biggest bank in India have a large Branch

network across India & also outside India, hence they need to take advantage of this.


8.3 Suggestion

The suggestion of ‘Trader CMS’ as mentioned above revises the business generated of the co-

operative banks with HDFC Bank. We have Categorized banks into three groups as

� Banks having their present business more than or equal to Rs.30 Cr

� Banks having their present business more than or equal to 20 Cr and less than 30 Cr. And

� Banks having present business less than or equal to Rs. 10 Cr

Basically, the fragmentation is done with the view that the solution thus provided will be more

helpful to banks having more cheque transactions and with more use of HDFC Banks CMS.

It has been suggested that the banks with more turnover will get benefited and thus in turn

will result in improved business with HDFC Bank. Hence an increase in Business by Fifty percent

is expected for those banks having turnover more than Rs. Thirty cr.

Like wise, the use of Trader CMS will surely add up an additional feature into the service

and could better be marketed to increase business.

For banks having business less than 30 Cr and greater than 20 Cr will add up to current

business and could show an increase of 25%And for other small banks, though important, could

hardly be show an increase in the business and hence considered to be negligible increase by them.


8.4 Scope for Improvement :

Every system is always subject to some more effective changes and there is always scope for

improvement. The above mentioned table shows the list of banks and their business with HDFC

Bank. The CMS provided by bank provide great deal of time that is saved and the early credit as

well. In current CMS, there are basically two types of steps and charges that were found to me as an

improvement.

In current CMS, the realization of OBC (other bank cheque) is satisfactory. But in today’s

world, still making that idle cash into availability is of prime importance. HDFC Bank is having

vast network of over 300 branches and core banking system, can easily avail good, robust and even

improved cash management service.

The current CMS can also be made more effective by providing additional feature. Our

suggestion to improve the turnover of these co operative banks with HDFC Bank is an additional

facility, can be called as 'Trader CMS'.

Traders, who are clients of co operative bank & are frequent cheque user can be given the

some code like that of the parent co operative bank. When the customer deposits the cheque in favor

of the trader, he will mention the trader code as well.

It will work out in following mentioned way.

• Whenever a customer deposits cheque, say at Chennai HDFC Bank at other

location, he will use specially provided deposit slip.

• The deposit slip will have the space to take the details of the trader, like his account

number and also the Special ‘Trader Code’ provided to him.

• To effect this, the current account of the trader with co-operative bank will also be

linked with this trader code.

• The basic legal procedure of endorsement could be resolved by making a

agreement, which will be a legal document for the trader code provided and the

trader and co-operative bank.

• Now, when customer deposits the cheque at say Chennai branch, it will take hardly

two more days to get cleared, being a local clearing cheque. And the amount will be

transferred to the co-operative banks current account on next day. Effectively, the

co-operative bank will keep a float and will credit the amount to trader on very next

day.

• The effective day arrangement will be as follows :

o Day 1 – Deposit cheque at HDFC Bank, Chennai

o Day 2 – Go to Chennai clearing house, HDFC Bank, Chennai will get the

credit

o Day 3 – A float will be kept

o Day 4 – Funds will be transferred to co-operative banks account

The process flow for trader CMS would be like as follow :


The excel chart mentioned ahead explains the rise and thus expected business:

( Rs in '000 )

Sr No. Division : MMI Banks

Actual

Turnover Present

Business

% Business with

HDFC Bank

Expected

Business

1

BHINGAR URBAN COOP

BANK LTD 10.00 1.00

10.00 1.00

2 COSMOS CO OP BANK 250.00 80.00 32.00 120.00

3

CHIPLUN URBAN CO-

OP. BANK LTD 10.00 3.00

30.00 4.50

4

GODAVARI URBAN CO

OP BANK 10.00 1.00

10.00 1.00

5

ICHALKARANJI JANATA

SAH BANK 50.00 2.00

4.00 2.00

6

JALNA MERCHANT S

COOP BANK 10.00 2.00

20.00 2.50

7

JANASEVA SAHAKARI

BANK LTD. PUNE 50.00 2.00

4.00 2.00

8

LONAVALA SAHAKARI

BANK 60.00 25.00

41.67 37.50

9

NAGAR URBAN CO-OP.

BANK LTD 75.00 20.00

26.67 25.00

10

PUNE PEOPLE S COOP

BANK LTD 50.00 15.00

30.00 22.50

11

POORNAWADI NAGRIK

SAH.BANK 25.00 1.00

4.00 1.00

12

PRAVARA SAHAKARI

BANK LTD 10.00 3.00

30.00 4.50

13

PUNE URBAN CO-OP

BANK LTD 10.00 3.00

30.00 4.50

14

PAVANA SAHAKARI

BANK LIMITED 10.00 1.00

10.00 1.00

15

RAJARSHI SHAHU SAH

Bank 15.00 8.00

53.33 12.00

16

RUPEE CO OP BANK

LTD 25.00 8.00

32.00 12.00

17

SAHYADRI SAHAKARI

BANK LTD KARAD 10.00 2.00

20.00 2.50

18

SADGURU JANGLI

MAHARAJ SAH BANK

LTD

50.00 15.00

30.00 22.50


19

SAMARTH SAHAKARI

BANK LTD 10.00 4.00

40.00 6.00

20 SUVARNAYUG 15.00 4.00 26.67 5.00

21

SHREE SHARADA

SAHAKARI BANK LTD 25.00 10.00

40.00 15.00

22

SHRI CHHATRAPATI R S

U CO-OP BANK Ltd 10.00 5.00

50.00 7.50

23 AHMEDNAGAR 100.00 30.00 30.00 45.00

24

BARAMATI SAHAKARI

BANK LTD 10.00 3.00

30.00 4.50

25

JALGAON PEOPLES CO-

OP BANK 10.00 1.00

10.00 1.00

26

MAHAD COOP URBAN

BANK LTD 30.00 12.00

40.00 18.00

27

SEVA VIKAS CO-OP

BANK LTD 40.00 10.00

25.00 12.50

28

THE VISHWESHWAR

SAH BANK 50.00 10.00

20.00 12.50

29

COMMERCIAL CO-OP

BANK LTD. 10.00 1.00

10.00 1.00

30

KARAD URBAN CO OP

BANK LTD 25.00 10.00

40.00 15.00

31

AJARA URBANCO OP.

BANK LTD 5.00 1.00

20 12.50

293.00 433.50


Graph:

Expected Growth with comparison with present Business


9. CO$CLUSIO$

HDFC Bank has currently 371 co-operative banks to which it is providing various

correspondent services. This project was an attempt to find out the potential available for Cash

Management Service & CBDT Potential in West 1 region. The West 1 Region as defined by HDFC

Bank is found to have a potential of around 60 crs per annum.

Merely conducting market research is inconsequential till concrete steps and actions are

taken based on the findings of the study. As correspondent Banking product, CMS i.e. Cash

Management Service has very good scope. Apart from its importance, it’s really a good service

in sense which uses the competitive advantage of big players and there by effectively working

out the needs of the other necessary work groups. At HDFC Bank, CMS is a well established

product and yet offers very wide scope for improvement. CBDT on line tax payment, the new

compulsory amendment for E-Tax payment for co-operative banks stands as an additional good

service. This E-Tax payment made it easier for co-operative banks to pay the taxes at their

source with their current account with HDFC Bank without any extra charges. As a

correspondent banking product CBDT tax payment has potential as good income source in this

region.


10 Bibliography

1. HDFC Bank

www.hdfcbank.com

2. National Security Depository Limited

www.nsdl.co.in

3. Reserve Bank of India

www.rbi.org.in

4. Printed material Available at HDFC Bank


Annexure

QUESTIO��AIRE

Project $ame: CMS & CBDT Payment Potential in West 1 Region

Date:

Location:

Bank Details:

Name:

Tel No:

Person Interviewed:

Name:

Designation:

Mob/Tel No:

1. What is the percentage of client base of your bank is, in below mentioned category

– Retail / Salaried :__________

– Traders / Companies :__________

2. Do you provide OBC collection facility to your clients?

Yes No

With which Bank & what kind of Facility you get from the Bank?

:___________________________________________

___________________________________________

If not with HDFC Bank, Please mention the reason:

i) Location: _________________________________

ii) Pricing: _________________________________

iii) Credit time: _______________________________

iv) A/C statement Reconciliation: _________________

3. What is the volume of OBC with your bank?

Rs.1,00,000 – Rs.10,00,000 Rs.10,00,000–Rs.20,00,000

Rs.20,00,000 – Rs.50,00,000 Rs.50,00,000 & Above PTO...


4. How do you reconcile your OBC collection facility?

By phone

By e-mail

From monthly statement

5. Does all your clients and Cash credit clients do OBC collection with you?

Yes No

If 'NO', Please mention the reason:

1. _______________________________________________

2. _______________________________________________

3. _______________________________________________

4. _______________________________________________

6. Do you pay your taxes On-line?

Yes No In process

7. With Which Bank do you avail this facility?

__________________________________________________

8. Which kind of Taxes do you pay?

i) ________________________________________________

ii) ________________________________________________

iii) _______________________________________________

iv) _______________________________________________

9. Do you offer RTGS facility to your clients?

Yes No

If 'YES', then for

Incoming Outgoing

If 'NO', then would you like to offer the same?

Yes No

Thank You!