Amogh upadhyay 2010

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Chapter 1

COMPANY PROFILE

BANKING STRUCTURE IN INDIA

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Scheduled Banks in India

(A) Scheduled Commercial Banks

Public sectorBanks

Private sectorBanks

Foreign Banksin India

Regional Rural Bank

(28) (27) (29) (102)

NationalizedBank

Other PublicSector Banks(IDBI)

SBI and its

Associates

Old PrivateBanks

New PrivateBanks

(B) Scheduled Cooperative Banks

Scheduled Urban CooperativeBanks (55)

Scheduled State CooperativeBanks (31)

Here we more concerned about private sector banks and competition among them.

Today, there are 27 private sector banks in the banking sector: 19 old private sectorbanks and 8 new private sector banks. These new banks have brought in state-of-the-art technology and Aggressively marketed their products. The Public sectorbanks are facing a stiff competition from the new private sector banks. The bankswhich have been setup in the 1990s under the guidelines of the NarasimhamCommittee are referred to as NEW PRIVATE SECTOR BANKS.

New Private Sector Banks

Superior Financial Services Designed Innovative Products Tapped new markets

Accessed Low cost NRI funds

Greater efficiency

INDIAN BANKING INDUSTRIES

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The Indian banking market is growing at an astonishing rate, with Assetsexpected to reach US$1 trillion by 2010. An expanding economy, middle class,and technological innovations are all contributing to this growth.

The countrys middle class accounts for over 320 million people. In correlation

with the growth of the economy, rising income levels, increased standard ofliving, and affordability of banking products are promising factors for continuedexpansion.

The Indian banking Industry is in the middle of an IT revolution, Focusingon the expansion of retail and rural banking. Players are becomingincreasingly customer - centric in their approach, which has resulted in

innovative methods of offering new banking products and services. Banks arenow realizing the importance of being a big player and are beginning tofocus their attention on mergers and acquisitions to take advantage ofeconomies of scale and/or comply with Basel II regulation.

Indian banking industry assets are expected to reach US$1 trillion by 2010 and are poisedto receive a greater infusion of foreign capital, says Prathima Rajan, analyst in Celent's

banking group and author of the report. The banking industry should focus on having asmall number of large players that can compete globally rather than having a large numberof fragmented players."

INTRODUCTION TO HDFC BANKING

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HDFC Bank was incorporated in August 1994 in the name of 'HDFC BankLimited', with its registered office in Mumbai, India. The Bank commencedoperations as a Scheduled Commercial Bank in January 1995.The Housing Development Finance Corporation Limited (HDFC) was amongstthe 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 theIndian Banking Industry in 1994.

Headquartered in Mumbai as on june 2012, HDFC Bank, has a network of over2564 branches spread over 1416 cities across India. All branches are linked onan online real-time basis. Customers in over 1354 locations are serviced throughTelephone Banking. The Bank also has a network of about over 9709 networkedATMs across these cities. HDFC Bank's ATM network can be accessed by alldomestic and international Visa / MasterCard, Visa Electron / Maestro, Plus /Cirrus and American Express Credit / Charge cardholders.

HDFC Bank has won many awards for its excellent service. Major among themare "Best Bank in India" by Hong Kong-based Finance Asia magazine in 2005and "Company of the Year" Award for Corporate Excellence 2004-05.HDFC Bank (NYSE: HDB), one of the first, new generation, tech-savvycommercial banks of India, was incorporated in August 1994, after the ReserveBank of India allowed setting up of Banks in the private sector. The Bank waspromoted by the Housing Development Finance Corporation Limited, a premierhousing finance company (set up in 1977) of India. Net Profit for the year endedMarch 31, 2006 was Rs. 1,141 crores. Results of the latest quarterended June2007, indicate that the bank continues to grow in a steady manner.

The Housing Development Finance Corporation Limited (HDFC) was amongst the first toreceive an 'in principle' approval from the Reserve Bank of India (RBI) to set up a bankin the private sector, as part of the RBI's liberalization of the Indian Banking Industry in1994. 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 aScheduled Commercial Bank in January 1995. The current Managing Director Of HDFC

bank is Mr.Aditya Puri

DISTRIBUTION NETWORK

HDFC Bank headquartered is in Mumbai. The Bank at present has an enviablenetwork of over 2564 branches spread over 1416 cities across India. All branchesare linked on an online real-time basis. Customers in over 1350 locations are alsoserviced through Telephone Banking. The Bank's expansion plans take intoaccount the need to have a presence in all major industrial and commercialcenters where its corporate customers are located as well as the need to build astrong retail customer base for both deposits and loan products. Being aclearing/settlement bank to various leading stock exchanges, the Bank hasbranches in the centers where the NSE/BSE has a strong and active memberbase. The Bank also has a network of about over 9709 networked ATMs acrossthese cities. Moreover, HDFC Bank's ATM network can be accessed by all

domestic and international Visa/MasterCard, Visa Electron/Maestro, Plus/Cirrusand American Express Credit/Charge cardholders.

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MANAGEMENT

Mr. C.M. Vasudev took over as the bank's Chairman in July 2010. Prior to thisMr. Vasudev has been a Director of the Bank since October 2006,.The Managing Director, Mr. Aditya Puri, has been a professional banker for over25 years and before joining HDFC Bank in 1994 was heading Citibank'soperations in Malaysia. The Bank's Board of Directors is composed of eminentindividuals with a wealth of experience in public policy, administration, industry

and commercial banking. Senior executives representing HDFC are also on theBoard.Senior banking professionals with substantial experience in India and abroadhead various businesses and functions and report to the Managing Director.Given the professional expertise of the management team and the overall focuson recruiting and retaining the best talent in the indusy, the bank believes that itspeople are a significant competitive strength.

COMPANIES VISION

Technologically Strong

Financially Sound

All India Presence

Personalized Services

Value Maximization

Employee Satisfaction

Maximization Skill

BUSINESS STRATEGY

HDFC BANK mission is to be "a World Class Indian Bank", benchmarkingthemselves against international standards and best practices in terms ofproduct offerings, technology, service levels, risk management and audit &compliance. The objective is to build sound customer franchises across distinctbusinesses so as to be a preferred provider of banking services for target retailand wholesale customer segments, and to achieve a healthy growth inprofitability, consistent with the Bank's risk appetite. Bank is committed to do this

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while ensuring the highest levels of ethical standards, professional integrity,corporate governance and regulatory compliance. Continue to develop newproduct and technology is the main business strategy of the bank. Maintain goodrelation with the customers is the main and prime objective of the bank.

HDFC BANK business strategy emphasizes the following:

Increase market share in Indias expanding banking and financialservices industry by following a disciplined growth strategy focusing onquality and not on quantity and delivering high quality customer service.

Leverage our technology platform and open scaleable systems to delivermore products to more customers and to control operating costs.

Maintain current high standards for asset quality through disciplined creditrisk management.

Develop innovative products and services that attract the targetedcustomers and address inefficiencies in the Indian financial sector.

Continue to develop products and services that reduce banks cost offunds.

Focus on high earnings growth with low volatility.

TECHNOLOGY

HDFC Bank operates in a highly automated environment in terms of informationtechnology and communication systems. All the bank's branches have onlineconnectivity, which enables the bank to offer speedy funds transfer facilities to itscustomers. Multi-branch access is also provided to retail customers through thebranch network and Automated Teller Machines (ATMs). The Bank has madesubstantial efforts and investments in acquiring the best technology availableinternationally, to build the infrastructure for a world class bank. The Bank'sbusiness is supported by scalable and robust systems which ensure that ourclients 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 corebusinesses. In each of its businesses, the Bank has succeeded in leveraging itsmarket position, expertise and technology to create a competitive advantage andbuild market share.

Business focus

HDFC Bank's mission is to be a World-Class Indian Bank. The objective is tobuild sound customer franchises across distinct businesses so as to be thepreferred provider of banking services for target retail and wholesale customersegments, and to achieve healthy growth in profitability, consistent with the

bank's risk appetite. The bank is committed to maintain the highest level of ethicalstandards, professional integrity, corporate governance and regulatory

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compliance. HDFC Bank's business philosophy is based on four core values -Operational Excellence, Customer Focus, Product Leadership and People.

PARTNERS

HDFC SDLC

HDFC BANK

Incorporated in August 1994 as HDFC Bank Limited, the bank now has a widenetwork of over 531 branches across 228 cities in India, and over a thousandnetworked ATM's.The Housing Development Finance Corporation Limited (HDFC) was amongstthe 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 theIndian Banking Industry in 1994. The bank was incorporated in August 1994 inthe name of 'HDFC Bank Limited', with its registered office in Mumbai, India.HDFC Bank commenced operations as a Scheduled Commercial Bank inJanuary 1995

RATINGS

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Credit Rating

HDFC Bank has its deposit programmers rated by two rating agencies - CreditAnalysis & Research Limited. (CARE) and Fitch Ratings India Private Limited.The Bank's Fixed Deposit programmer has been rated 'CARE AAA (FD)' [TripleA] by CARE, which represents instruments considered to be "of the best quality,carrying negligible investment risk". CARE has also rated the Bank's Certificate ofDeposit (CD) programmer "PR 1+" which represents "superior capacity forrepayment of short term promissory obligations". Fitch Ratings India Pvt. Ltd.(100% subsidiary of Fitch Inc.) has assigned the "TAAA (India)" rating to theBank's deposit programmer, with the outlook on the rating as "stable". This ratingindicates "highest credit quality" where "protection factors are very high". HDFCBank also has its long term unsecured, subordinated (Tier II) Bonds of Rs.4billion rated by CARE and Fitch Ratings India Private Limited. CARE hasassigned the rating of "CARE AAA" for the Tier II Bonds while Fitch Ratings IndiaPvt. Ltd. has assigned the rating "AAA (Ind)" with the outlook on the rating as

"stable". In each of the cases referred to above, the ratings awarded were thehighest assigned by the rating agency for those instruments?

PRODUCT SCOPE

HDFC Bankoffers a bunch of products and services to meet the every needof the people. The company cares for both, individuals as well as corporateand small and medium enterprises. For individuals, the company has a rangeaccounts, investment, and pension scheme, different types of loans and cardsthat assist the customers. The customers can choose the suitable one from arange of products which will suit their life-stage and needs. For organizationsthe company has a host of customized solutions that range from fundedservices, Non-funded services, Value addition services, Mutual fund etc.These affordable plans apart from providing long term value to the employeeshelp in enhancing goodwill of the company. The products of the company arecategorized into various sections which are as follows:

Accounts and deposits.

Loans

Investments and Insurance

Forex and payment services

Cards

Customer center

PRODUCTS AND SERVICES AT A GLANCE

1. PERSONAL BANKING SERVICESA. Accounts & Deposits

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Savings Account

Regular Savings Account

Savings Plus Account

Savings Max Account

Senior Citizens Account

No Frills Account

Institutional Savings Account

Payroll Salary Account

Classic Salary Account

Regular Salary Account

Premium Salary Account Defense

Salary Account Kid's Advantage Account Pension Saving Bank

Account

Family Savings Account

Kisan No Frills Savings Account

Kisan Club Savings Account

Current Account

Plus Current Account

Trade Current Account

Premium Current Account

Regular Current Account

Apex Current Account

Max Current Account

Reimbursement Current Account

Fixed Deposit

Regular Fixed Deposit

Super Saver Account

Sweep-in Account

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Recurring DepositDemat AccountSafe Deposit Locker

B. Loans

Personal Loans Home Loans

Two Wheeler Loans

New Car Loans

Used Car Loans

Overdraft against Car

Express Loans

Loan against Securities

Loan against Property

Commercial Vehicle Finance

Working Capital Finance

Construction Equipment Finance

C. Investments & Insurance

Mutual Funds

Insurance

Bonds

Financial Planning

Knowledge Centre

Equities & Derivatives

Mudra Gold Bar

D. Forex Services

Trade Finance

Travelers Cheques

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Foreign Currency Cash

Foreign Currency Drafts

Foreign Currency Cheque Deposits

Foreign Currency Remittances

Forex Plus Card

E. Payment Services

Net Safe

Prepaid Refill

Bill Pay

Direct Pay

Visa Money Transfer

E-Monies Electronic Funds Transfer

Excise & Service Tax Payment

F. Access Your Bank - One View

Insta Alerts

Mobile Banking

ATM

Phone Banking

Branch Network

G. Cards

Silver Credit Card

Gold Credit Card

Woman's Gold Credit Card

Platinum plus Credit Card

Titanium Credit Card

Value plus Credit Card

Health plus Credit Card

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HDFC Bank Idea Silver Card

HDFC Bank Idea Gold Card

2. WHOLESALE BANKING SERVICES

Funded Services

Non Funded Services

Value Added Services

Internet Banking

Clearing Sub-Membership

RTGS sub membership

Fund Transfer

ATM Tie-ups

Corporate Salary a/c

Tax Collection

Financial Institutions

Mutual Funds

Stock Brokers

Insurance Companies

Commodities Business

Trusts

3. NRI BANKING SERVICES

Rupee Saving a/c

Rupee Current a/c

Rupee Fixed Deposits

Foreign Currency Deposits

Accounts for Returning Indians

Payment Services

Net Safe

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Bill Pay

Insta Pay

Direct Pay

Visa Money

Online Donation

Remittances

MILESTONES IN THE HISTORY

HDFC Bank began its operations in 1995 with a simple mission to be a "World-

class Indian Bank. They realized that only a single-minded focus on productquality and service excellence would help us get there. Today, they are proud tosay that they are well on our way towards that goal. It is extremely gratifying thattheir efforts towards providing customer convenience have been appreciated bothnationally and internationally.

2009

Asia Money 2009 Awards 'Best Domestic Bank in India'

IBA Banking Technology Awards 2009 IBA Banking Technology Awards2009

Global Finance Award 'Best Trade Finance Bank in India for2009

IDRBT Banking TechnologyExcellence Award 2009

IT Governance and Value Delivery'

Asian Banker Excellence in RetailFinancial Services

'Asian Banker Best RetailBank in India Award 2009 '

2008

Finance Asia Country Awards forAchievement 2008

'Best Bank and Best CashManagement Bank'

CNN-IBN 'Indian of the Year (Business)'

Nasscom IT User Award 2008 'Best IT Adoption in the BankingSector'

Business India 'Best Bank 2008'

Forbes Asia Fab 50 companies in Asia Pacific

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Asian Banker Excellence in RetailFinancial Services

Best Retail Bank 2008

Asia money Best local Cash Management BankAward

voted by CorporateMicrosoft & Indian Express Group Security Strategist Award 2008

Business Today-Monitor Group survey One of India's "Most InnovativeCompanies"

Financial Express-Ernst & YoungAward

Best Bank Award in the PrivateSector category

2007

Business Today-Monitor Groupsurvey

One of India's "Most InnovativeCompanies".

Financial Express-Ernst & YoungAward

Best Bank Award in the PrivateSectorCategory.

Global HR Excellence Awards - AsiaPacific HRM Congress:

Employer Brand of the Year 2007-2008-Award- First Runner-up.

Business Today Best Bank Award.

Dun & Bradstreet AmericanExpressCorporate Best Bank Award 2007

Corporate Best Bank-Award.

The Bombay Stock Exchange andNasscomFoundation's Business for SocialResponsibility Awards 2007

Best Corporate SocialResponsibilityPractice Award.

Outlook Money & NDTV Profit Best Bank Award in the PrivatesectorCategory.

The Asian Banker Excellence inRetailFinancial Services Awards

Best Retail Bank in India.

Asian Banker Managing Director Aditya Puri wonthe Leadership achievement AwardforIndia.

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2006

Business Today Best Bank in India.

Forbes Magazine One of Asia Pacific's Best 50companies.

Business world Best listed Bank of India.

The Asset Magazine's Triple ACountryAwards

Best Domestic Bank.

Asia money Awards Best Local Cash ManagementBank inLarge and Medium segments.

Euro money Awards "Best Bank" in India

Organizational Structure

HDFC Bank and Centurion Bank of Punjab merger at share swap ratio of 1:29The Boards of HDFC Bank and Centurion Bank of Punjab met on 25 February,2008 and approved, subject to due diligence, the share swap ratio for the

proposed merger of Centurion Bank of Punjab with HDFC Bank. The Scheme ofAmalgamation envisages a share exchange ratio of one share of HDFC Bank fortwenty nine shares of Centurion Bank of Punjab.

The combined entity would have a nationwide network of 1,148 branches (thelargest amongst private sector Banks) a strong deposit base of around Rs. 1,200billion and net advances of around Rs. 850billion. The balance sheet size of thecombined entity would be over Rs. 1,500 billion.

Commenting on the proposed merger, Mr. Deepak Parekh, Chairman, HDFCsaid, We were amongst the first to get a banking license, the first to do a merger

in the private sector with Times Bank in 1999, and now if this deal happens, itwould be the largest merger in the private sector banking space in India. HDFCBank was looking for an appropriate merger opportunity that would add scale,geography and experienced staff to its franchise. This opportunity arose and wethought it is an attractive route to supplement HDFC Banks organic growth. Webelieve that Centurion Bank of Punjab would be the right fit in terms of culture,strategic intent and approach to business.

Mr. Aditya Puri, Managing Director, HDFC Bank said, These are excitingtimes for the Indian banking industry. The proposed merger will position thecombined entity to significantly exploit opportunities in a market globally

recognized as one of the fastest growing. Im particularly bullish about the

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potential of business synergies and cultural fit between the two organizations.The combined entity will be an even greater force in the market.

Mr. Rana Talwar, Chairman, Centurion Bank of Punjab stated, Over the lastfew years, Centurion Bank of Punjab has set benchmarks for growth. The bank

today has a large nationwide network, an extremely valuable franchise, 7,500talented employees, and strong leadership positions in the market place. I believethat the merger with HDFC Bank will create a world class bank in quality andscale and will set the stage to compete with banks both locally as well on a globallevel.

Mr. Shailendra Bhandari, Managing Director and CEO, Centurion Bank ofPunjab said, We are extremely pleased to receive the go ahead from our boardto pursue this opportunity. A merger between the banks provides significantsynergies to the combined entity. The proposed merger would further improve thefranchise and customer proposition offered by the individual banks.

QUALITY POLICY

SECURITY: The bank provides long term financial security to their policy. The bankdoes this by offering life insurance and pension products.

TRUST: The bank appreciates the trust placed by their policy holders in the bank. Hence,it will aim to manage their investments very carefully and live up to this trust.

INNOVATION: Recognizing the different needs of our customers, the bank offers a

range of innovative products to meet these needs.

INTEGRITY

CUSTOMER CENTRIC

PEOPLE CARE ONE FOR ALL AND ALL FOR ONE

TEAM WORK

JOY AND SIMPLICITY

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CHAPTER-2

PROJECT PROFILE

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HDFC BANKING

A banker or bank is a financial institution whose primary activity is to act as apayment agent for customers to borrow and lend.

The first modern bank was founded in HDFC BANK, .

Many other financial activities were added over time. For example banks areimportant players in financial markets and offer financial services such asinvestment funds. In some countries such as India, banks are the primary ownersof industrial corporations while in other countries such as the United States banksare prohibited from owning non-financial companies..

Traditional banking activities

Definition

Accounting for bank accounts

Wider commercial role

Economic functions Law of banking Entry regulation

Politics and history Origin of the word

Banking channels

Banks in the economy

Size of global banking industry

Top ten banking groups in the world ranked by shareholder equity

Bank crisis

Challenges within the banking industry

Profitability

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Traditional banking activities

Banks act as payment agents by conducting checking or current accounts forcustomers, paying cheques drawn by customers on the bank, and collectingcheques deposited to customers' current accounts. Banks also enable customer

payments via other payment methods such as telegraphic transfer, EFTPOS, andATM.

Banks borrow money by accepting funds deposited on current account, acceptingterm deposits and by issuing debt securities such as banknotes and bonds.Banks lend money by making advances to customers on current account, bymaking installment loans, and by investing in marketable debt securities andother forms of lending.

Banks provide almost all payment services, and a bank account is consideredindispensable by most businesses, individuals and governments. Non-banks that

provide payment services such as remittance companies are not normallyconsidered an adequate substitute for having a bank account.

Banks borrow most funds from households and non-financial businesses, andlend most funds households and non-financial businesses, but non-bank lendersprovide a significant and in many cases adequate substitute for bank loans, andmoney market funds, cash management trusts and other non-bank financialinstitutions in many cases provide an adequate substitute to banks for lendingsavings to.

Definition

The definition of a bank varies from country to country.

UnderEnglish common law, a banker is defined as a person who carries on thebusiness of banking, which is specified as

conducting current accounts for his customers paying cheques drawn on him, and Collecting cheques for his customers.

In most English common law jurisdictions there is a Bills of Exchange Act thatcodifies the law in relation to negotiable instruments, including cheques, and thisAct contains a statutory definition of the term banker: banker includes a body ofpersons, whether incorporated or not, who carry on the business of banking.Although this definition seems circular, it is actually functional, because it ensuresthat the legal basis for bank transactions such as cheques do not depend on howthe bank is organized or regulated.

The business of banking is in many English common law countries not defined bystatute but by common law, the definition above. In other English common lawjurisdictions there are statutory definitions of the business of banking or banking

business. When looking at these definitions it is important to keep in minds thatthey are defining the business of banking for the purposes of the legislation, and

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not necessarily in general. In particular, most of the definitions are fromlegislation that has the purposes of entry regulating and supervising banks ratherthan regulating the actual business of banking. However, in many cases thestatutory definition closely mirrors the common law one. Examples of statutorydefinitions:

"banking business" means the business of receiving money on current ordeposit account, paying and collecting cheques drawn by or paid in bycustomers, the making of advances to customers, and includes such otherbusiness as the Authority may prescribe for the purposes of this Act;(Banking Act (Singapore), Section 2, Interpretation).

"banking business" means the business of either or both of the following:

1. receiving from the general public money on current, deposit, savings orother similar account repayable on demand or within less than [3

months] ... or with a period of call or notice of less than that period;2. paying or collecting cheques drawn by or paid in by customers

Since the advent ofEFTPOS (Electronic Funds Transfer at Point Of Sale), directcredit, direct debit and internet banking, the cheque has lost its primacy in mostbanking systems as a payment instrument. This has lead legal theorists tosuggest that the cheque based definition should be broadened to includefinancial institutions that conduct current accounts for customers and enablecustomers to pay and be paid by third parties, even if they do not pay and collectcheques.

Accounting for bank accounts

Bank statements are accounting records produced by banks under the variousaccounting standards of the world. Under GAAP and IFRES there are two kindsof accounts: debit and credit. Credit accounts are Revenue, Equity and Liabilities.Debit Accounts are Assets and Expenses. This means you credit accounts toincrease their balances and you debit accounts to increase their balances.

This also means you debit your savings account every time you deposit moneyinto it (and the account is normally in deficit) and you credit your credit card

account every time you spend money from it (and the account is normally incredit).

However, if you read your bank statement, it will say the opposite- that you havecredited your account when you deposit money and you debit when you withdrawit. If you have cash in your account you have a positive or credit balance and ifyou are overdrawn it will say you have a negative or a deficit balance.

The reason for this is because the bank, and not you, has produced the bankstatement. Your savings might be your assets, but it is the bank's liability, so yoursavings account is a liability account which is a credit account and should have a

positive credit balance. Your loans are your liabilities but the bank's assets sothey are debit accounts which should have a negative balance.

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Below where bank transactions, balances, credits and debits are discussed, theyare done so from the viewpoint of the account holder which is traditionally whatmost people are used to seeing.

Wider commercial role

However the commercial role of banks is wider than banking, and includes:

issue ofbanknotes (promissory notes issued by a banker and payable tobearer on demand)

processing of payments by way of telegraphic transfer, EFTPOS, internetbanking or other means

issuing bank drafts and bank cheques accepting money on term deposit lending money by way ofoverdraft, installment loan or otherwise providing documentary and standby letters of credit, guarantees,

performance bonds, securities underwriting commitments and other formsof off balance sheet exposures

safekeeping of documents and other items in safe deposit boxes currency exchange sale, distribution or brokerage, with or without advice, of insurance, unit

trusts and similar financial products as a 'financial supermarket'

Economic functions

The economic functions of banks include:

1. Issue of money, in the form ofbanknotes and current accounts subject tocheque or payment at the customer's order. These claims on banks canact as money because they are negotiable and/or repayable on demand,and hence valued at par and effectively transferable by mere delivery inthe case ofbanknotes, or by drawing a cheque, delivering it to the payeeto bank or cash.

2. netting and settlement of payments -- banks act both as collectionagent and paying agents for customers, and participate in inter-bankclearing and settlement systems to collect, present, be presented with, andpay payment instruments. This enables banks to economies on reserves

held for settlement of payments, since inward and outward paymentsoffset each other. It also enables payment flows between geographicalareas to offset, reducing the cost of settling payments betweengeographical areas.

3. credit intermediation -- banks borrow and lend back-to-back on their ownaccount as middle men

4. Credit quality improvement -- banks lend money to ordinary commercialand personal borrowers (ordinary credit quality), but are high qualityborrowers. The improvement comes from diversification of the bank'sassets and the banks own capital which provides a buffer to absorb losseswithout defaulting on its own obligations. However, since banknotes and

deposits are generally unsecured, if the bank gets into difficulty andpledges assets as security to try to get the funding it needs to continue to

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operate, this puts the note holders and depositors in an economicallysubordinated position.

5. Maturity transformation -- banks borrow more on demand debt and shortterm debt, but provide more long term loans. Bank can do this becausethey can aggregate issues (e.g. accepting deposits and issuing banknotes)

and redemptions (e.g. withdrawals and redemptions of banknotes),maintain reserves of cash, invest in marketable securities that can bereadily converted to cash if needed, and raise replacement funding asneeded from various sources (e.g. wholesale cash markets and securitiesmarkets) because they have a high and more well known credit qualitythan most other borrowers.

Law of banking

Banking law is based on a contractual analysis of the relationship between thebank and the customer. The definition of bank is given above, and the definition

of customer is any person for whom the bank agrees to conduct an account.

The law implies rights and obligations into this relationship as follows:

1. The bank account balance is the financial position between the bank andthe customer, when the account is in credit, the bank owes the balance tothe customer, when the account is overdrawn, and the customer owes thebalance to the bank.

2. The bank engages to pay the customer's cheques up to the amountstanding to the credit of the customer's account, plus any agreed overdraftlimit.

3. The bank may not pay from the customer's account without a mandatefrom the customer, e.g. a cheque drawn by the customer.

4. The bank engages to promptly collect the cheques deposited to thecustomer's account as the customer's agent, and to credit the proceeds tothe customer's account.

5. The bank has a right to combine the customer's accounts, since eachaccount is just an aspect of the same credit relationship.

6. The bank has a lien on cheques deposited to the customer's account, tothe extent that the customer is indebted to the bank.

7. The bank must not disclose the details of the transactions going through

the customer's account unless the customer consents, there is a publicduty to disclose, the bank's interests require it, or under compulsion of law.8. The bank must not close a customer's account without reasonable notice

to the customer, because cheques are outstanding in the ordinary courseof business for several days.

These implied contractual terms may be modified by express agreement betweenthe customer and the bank. The statutes and regulations in force in thejurisdiction may also modify the above terms and/or create new rights, obligationsor limitations relevant to the bank-customer relationship.

Entry regulation

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Main article: Banking regulation

Currently in most jurisdictions commercial banks are regulated by governmententities and require a special bank license to operate.

Usually the definition of the business of banking for the purposes of regulation isextended to include acceptance of deposits, even if they are not repayable to thecustomer's order, however money lending, by itself, is generally not included inthe definition.

Unlike most other regulated industries, the regulator is typically also a participantin the market, i.e. government owned bank (a central bank). Central banks alsotypically have a monopoly on the business of issuing banknotes. However, insome countries this is not the case, e.g. in the India the Financial ServicesAuthority licenses banks and some commercial banks, such as the Bank ofScotland, issue their own banknotes in competition with the Bank of England, the

UK government's central bank.

Some types of entity may be partly or wholly exempt from bank licenserequirements and are regulated by separate regulators, e.g. building societiesand credit unions.

The requirements for the issue of a bank license vary between jurisdictions buttypically include:

1. Minimum capital

2. Minimum capital ratio3. 'Fit and Proper' requirements for the bank's controllers, owners, directors,and/or senior officers

4. Approval of the bank's business plan as being sufficiently prudent andplausible.

Politics and history

Main article: History of banking

Banks have influenced economies and politics for centuries. Historically, the

primary purpose of a bank was to provide loans to trading companies. Banksprovided funds to allow businesses to purchase inventory, and collected thosefunds back with interest when the goods were sold. For centuries, the bankingindustry only dealt with businesses, not consumers. Commercial lending today isa very intense activity, with banks carefully analyzing the financial condition oftheir business clients to determine the level of risk in each loan transaction.Banking services have expanded to include services directed at individuals, andrisk in these much smaller transactions is pooled.

Origin of the word

The name bank derives from the HDFC Bank bench", used during theRenaissance by Florentines bankers, who used to make their transactions above

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a desk covered by a green tablecloth. However, there are traces of bankingactivity even in ancient times.

In fact, the word traces its origins back to the Ancient Roman Empire, wheremoneylenders would set up their stalls in the middle of enclosed courtyards

called macella on a long bench called a bancu, from which the words banco andbank are derived. As a moneychanger, the merchant at the bancu did not somuch invest money as merely convert the foreign currency into the only legaltender in Rome- that of the Imperial Mint.

Banking channels

Banks offer many different channels to access their banking and other services:

A branch, banking centre or financial centre is a retail location where abank or financial institution offers a wide array of face-to-face service to its

customers ATM is a computerized telecommunications device that provides a

financial institution's customers a method of financial transactions in apublic space without the need for a human clerk or bank teller. Most banksnow have more ATMs than branches, and ATMs are providing a widerrange of services to a wider range of users. For example in Hong Kong,most ATMs enable anyone to deposit cash to any customer of the bank'saccount by feeding in the notes and entering the account number to becredited. Also, most ATMs enable card holders from other banks to gettheir account balance and withdraw cash, even if the card is issued by aforeign bank.

Mail is part of the postal system which itself is a system wherein writtendocuments typically enclosed in envelopes, and also small packagescontaining other matter, are delivered to destinations around the world.This can be used to deposit cheques and to send orders to the bank topay money to third parties. Banks also normally use mail to deliverperiodic account statements to customers.

Telephone banking is a service provided by a financial institution whichallows its customers to perform transactions over the telephone. Thisnormally includes bill payments for bills from major bilkers (e.g. forelectricity).

Online banking is a term used for performing transactions, payments etc.over the Internet through a bank, credit union or building society's securewebsite

The HDFC banking industry

The banking industry is a highly regulated industry with detailed and focusedregulators. All banks with FDIC-insured deposits have the FDIC as a regulator;however, for examinations, the Federal Reserve is the primary federal regulatorfor Fed-member state banks; the Office of the Comptroller of the Currency(OCC) is the primary federal regulator for national banks; and the Office of Thrift

Supervision, or OTS, is the primary federal regulator for thrifts. State non-

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member banks are examined by the state agencies as well as the FDIC. Nationalbanks have one primary regulatorthe OCC.

Each regulatory agency has their own set of rules and regulations to which banksand thrifts must adhere.

The Federal Financial Institutions Examination Council (FFIEC) was establishedin 1979 as a formal interagency body empowered to prescribe uniform principles,standards, and report forms for the federal examination of financial institutions.Although the FFIEC has resulted in a greater degree of regulatory consistencybetween the agencies, the rules and regulations are constantly changing.

In addition to changing regulations, changes in the industry have led toconsolidations within the Federal Reserve, FDIC, OTS and OCC. Offices havebeen closed, supervisory regions have been merged, staff levels have beenreduced and budgets have been cut. The remaining regulators face an increased

burden with increased workload and more banks per regulator. While banksstruggle to keep up with the changes in the regulatory environment, regulatorsstruggle to manage their workload and effectively regulate their banks. Theimpact of these changes is that banks are receiving less hands-on assessmentby the regulators, less time spent with each institution, and the potential for moreproblems slipping through the cracks, potentially resulting in an overall increasein bank failures across the United States.

The changing economic environment has a significant impact on banks and thriftsas they struggle to effectively manage their interest rate spread in the face of lowrates on loans, rate competition for deposits and the general market changes,industry trends and economic fluctuations. It has been a challenge for banks toeffectively set their growth strategies with the recent economic market. A risinginterest rate environment may seem to help financial institutions, but the effect ofthe changes on consumers and businesses is not predictable and the challengeremains for banks to grow and effectively manage the spread to generate areturn to their shareholders.

The management of the banks asset portfolios also remains a challenge intodays economic environment. Loans are a banks primary asset category andwhen loan quality becomes suspect, the foundation of a bank is shaken to the

core. While always an issue for banks, declining asset quality has become a bigproblem for financial institutions. There are several reasons for this, one of whichis the lax attitude some banks have adopted because of the years of goodtimes. The potential for this is exacerbated by the reduction in the regulatoryoversight of banks and in some cases depth of management. Problems are morelikely to go undetected, resulting in a significant impact on the bank when theyare recognized. In addition, banks, like any business, struggle to cut costs andhave consequently eliminated certain expenses, such as adequate employeetraining programs.

Banks also face a host of other challenges such as aging ownership groups.

Across the country, many banks management teams and board of directors areaging. Banks also face ongoing pressure by shareholders, both public and

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private, to achieve earnings and growth projections. Regulators place addedpressure on banks to manage the various categories of risk. Banking is also anextremely competitive industry. Competing in the financial services industry hasbecome tougher with the entrance of such players as insurance agencies, creditunions, check cashing services, credit card companies, etc.

As a reaction, banks have developed their activities in financial instruments,through financial market operations such as brokerage and trading and becomebig players in such activities.

Profitability

A bank generates a profit from the differential between the level of interest it paysfor deposits and other sources of funds, and the level of interest it charges in itslending activities. This difference is referred to as the spread between the cost offunds and the loan interest rate. Historically, profitability from lending activities

has been cyclical and dependent on the needs and strengths of loan customers.In recent history, investors have demanded a more stable revenue stream andbanks have therefore placed more emphasis on transaction fees, primarily loanfees but also including service charges on an array of deposit activities andancillary services (international banking, foreign exchange, insurance,investments, wire transfers, etc.). Lending activities, however, still provide thebulk of a commercial bank's income.

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CHAPTER-3

RESEARCH

METHODOLOGY

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MEANING OF RESEARCH

Research is common parlance reference to search of knowledge. One can also

define research as scientific and systematic search for pertinent information on

specific topic. In fact research is an art of scientific investigation

Research is an academic activity and as such the term should be used in

technical sense. According to Clifford woody research comprises defining and

redefining problems, formulating hypothesis or suggested solution; collecting,

organizing and evaluating data; making deduction and reaching conclusion; and

at last carefully testing the conclusion to determine whether the fit the formulating

hypothesis.

TITLE OF RESEARCH

Title of research is under taken is Recruitment of financial consultant for HDFC

BANK who are an authorized salesmen for insurance acts on behalf of company.

Making business is the main motto of every organization in todays scenario

insurance sector is emerging with good business opportunities; so all companies

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are penetrating in insurance sector to make more profit. Today insurance is not

govern by public organization but private companies are also coming big way.

The recruitment process is rational it is difficult to search for a likely financial

consultant who fulfill all optional and mandatory parameters to be an FC.

Although we face various problem regarding seeking information about target or

to whom we had to and hoe to approach but the co-operation from various

friends, colleagues and specially the staff we have completed our work with

satisfaction.

OBJECTIVE OF THE RESEARCH

Financial Consultant are one who bring business for the company, they are

attached with. Objective of the research is to find out FCs for HDFC BANK Ltd.

Who well suited to the criteria of likely fc? Research is also focus on the

acceptability and market perception of the private insurances sector. To know the

extent to which public rely on private insurance sector. It was a descriptive

research as it covers both widespread objectives. We collected data through

various seminar, clubs meeting and public joints. To know acceptability above

private insurance we interviewed existing FCs and some customers.

SIGNIFICANCE OF RESEARCH

Every one put his/her time money effort because of some signification. My

studies had some significance too.

TO THE STUDENT: -

It also has a lot of significance to me we got the previous knowledge about

various function of insurance companies, their product and data regarding. The

various services, benefits provided by the companies. It helps us in identifying,targeting and segmenting the potential area. It will help us in my future for the

practical application in real life.

RESEARCH DESIGN

A research design is the arrangement of condition for collection and analysis of

data in a manner that aims to combine relevance to the research purpose with

economy in procedure. In fact the research design conceptual structure with in

research is conducted.

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Define researchproblem


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Sample Design

All time in any field of inquiry constitute a universe or population. A complete

enumeration of all times in the population is known as census inquiry .It can be

presumed that in such an in inquiry. When all items are covered no element is left

& highest accuracy is obtained. But in practice this may not be true.

Besides this type of inquiry involves a great deal of time money & energy. There

for when the field of inquiry is large this method because difficult to adopt

because of resources involved. But when the field studies are taken in practical

life, consideration of time cost all most invariably to lead to a selection of only few

items that is technically called a sample & the selection process is called

sampling technique .

RESEARCH MERHODOLOGY

Research methodology is the way to systematically solve the research problem. Itmay be understood as a science of studying how research is done scientifically.Universe - KotaUnit - HDFC BANKSample size - 30Date source - survey

30

Review theLiterature

Design Research

SampleDesign

Collection ofData

Interpretation& Findings

F


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Method: - random samplingSampling plan: - identify and select potential areaContact method: - questionnaire

OVERALL PURPOSE OF THE ROLE

To sell the products of the company in a professional and ethical manner. The set, monitor and achieve sales targets for self. To positively promote the companys brand, its mission aims and values.

Relationships: -Internal

BDM Resident Branch ManagerSales Training ManagerCustomer Service Officer at the branch level

ExternalCustomers

CHAPTER-4

FACTS

&

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FINDINGS

1. Age distribution of potential HDFC BANK consultant.

Age distribution of potential FC's

40yrs & above

10%

35yrs-40yrs

15%

18yrs-25yrs

20%

25yrs-30yrs30%

30yrs-35yrs25%

18yrs-25yrs 25yrs-30yrs 30yrs-35yrs 35yrs-40yrs 40yrs & above

Age No. of people

18yrs-25yrs 20%25yrs-30yrs 30%

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30yrs-35yrs 25%35yrs-40yrs 15%40yrs & above 10%

InterpretationAs per the survey conducted for the recruitment of HDFC BANKING at HDFCBANK, 30% of people i.e. 9 people out of 30 were between 25yrs to 30yrs. Andonly 10% people were above 40 yrs.

2. What is your educational Qualification?

Qualification No. of people

10thpass 5%12th pass 25%

Graduate 40%

Post graduate 30%

InterpretationFrom the above table most of the people are qualified to become an FCs as perthe IRDA rules. 70% of people under the survey are Graduate & post Graduate.

4. Number of potential male in comparison to Females.

33

Qualification of potential FC's

%0

%00

%00

%00

%00

%00

thpass00 th pass00 Graduate Post graduate

Qulification

No.ofpeople

Series0


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0%

20%

40%

60%

80%

100%

Male Female

Gender

No.ofpeo

ple

Series1

Gender No. of people

Male 85%

Female 15%

InterpretationUnder the survey of recruitment of FCs at HDFC BANK Kota, Number of maleinterested to become FCs is more than the percentage as compare to females.From the above table we come to know that 85% of them were Male.

5. What is your current Occupation?

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Occupation of potential FC's

Bussiness

30%

Housewifes

5%Student

15%

Salaried

50%

Bussiness Salaried Student Housewifes

Occupation No. of people

Business 30%

Salaried 50%

Student 15%

Housewifes 5%

InterpretationOn the part of occupation of potential FCs, 50% of people i.e. 15 were salaried

people and 9 of them from Business Background.

6. Which Field does you belongs to.

20%

30%

20%

10%

20%

0%

10%

20%

30%

40%

Banking Pharma Investment Manufacturing Others

Field

No.ofpeople

Series1

Field No. of people

Banking 20%

Parma 30%

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Investment 20%

Manufacturing 10%

Others 20%

InterpretationUnder the survey conducted we come to know that most of the servicing peoplebelongs to Parma sector i.e. 9 people belongs to this sector out of 30 people.

7. Do you have experience of selling of Financial Products?

0%

10%

20%

30%

40%

Below

1Yrs

1yrs-

2yrs

2yrs-

3yrs

3 yrs &

above

Experience in Yrs

No.ofpeop

le

Series1

Experience No. of people

Below 1Yrs 10%

1yrs-2yrs 25%

2yrs-3yrs 30%

3 yrs & above 35%

InterpretationFrom the above table,35% of people under the survey, have more than 3yrs ofsales experience And only 10% of people have below one year of Salesexperience.

8. Are you interested to work with HDFC Bank as a Banking consultant?

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Response to the recruitment

Possitive

60%

Negative

30%

Cant say

10%

Possitive Negative Cant say

Response No. of people

Positives 60%Negative 30%

Cant say 10%

InterpretationAt last, there are a number of people who respond us in positive manner tobecome an FCs and like to work with HDFC BANK. Out of 30 people, 18 peopleresponded in positive manner and only 3 people didnt give any answer to the

question.

9. Have you ever had difficulty with a supervisor or instructor?

0%

10%

20%

30%

40%

50%

60%

70%

Positives

Negative

Cant say


Positives 20%

Negative 70%

Cant say 10%

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10. Would you say that you can easily deal with high pressure situation?

0%

10%

20%

30%

40%

50%

60%

70%

80%

No. of people

Yes

No

Cant say


Yes 80%

No 15%

Cant say 5%

11.What were your reasons for selecting HDFC BANKING FC?

12.Why did you decide to seek a position in this field?

13.What level of compensation would it take to make you happy?

14.Tell me what you know about FC?

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CHAPTER-5

SWOT

ANALYSIS

STRENGTH

With 175 years of experience of HDFC Bank also strengthen by synergy of

partners. Financial rating of companies

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Flexibility of plans Highly co-operative & skilled staff. Sales oriented organization. Aggressiveness of sales force in selling products. The company has expertise in managing big business. Effective and wider distribution network. Product designed for each age group & every area of personal. HDFC Bank provides unique training program for FC called Disha. The company enjoys a very high brand loyalty & recall value among its

customer. The company has a presence in all metros as well as in most of the major

cities in country.

WEAKNESS

Less coverage in rural areas. Less staff Lack in making follow up. Lack of corporate agent. Lack of customer services. Lack of promotional activities.

OPPORTUNITY

There is continuous growth in banking sector.

Government has also started investing in private banking sector.Market is fully to capture because the branch has recently set up its business.

THREATS

Competition in banking sector is increase sing with the entry of privategiants like ICICI prudential, Bajaj Allanze, Sahara

Selling attitude the company always has to be maintained in order tocompany other insurance company.

Continuous follow up of the client and customers. As banking has strong market position so it is little bit difficult to capture

the market. Customers are still finding risky to in private banking sector.

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CHAPTER-6

CONCLUSION

CONCLUSION

After completion of research, we conclude that: -

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Segmentation of target market is best way to work in. Womens are proving better FC. Cut throat competition as new insurance companies are also opening

branch. Public accepts Ulip readily. Private insurance sector making their place in insurance sector. FC should be approach according to need.

In short can be said that HDFC Banking has to do more for their good futureas it is on a good position as private insurance is concerned. According tosurvey there are various player in market ( Kota) and really it is difficult forHDFC Banking to survive on the basis of brand name for different products.

So there is not much awareness in kota city of HDFC Banking as it startedworking from July 2004 what we think HDFC Banking just needs promotional

activities.

During our promotional activities when we found that HDFC Banking couldcapture big market in kota. They would be on n0. One position in Kotabecause the benefits and flexibility which HDFC providing is not provide byany other insurance company in Kota. ICICI Bank is the only private player,which is there in competition with HDFC Banking. As ICICI banking launchfirst so it capture the market very soonAt last we want to state that HDFC Banking need promotional actives and thebenefits should be given to the customers. Customer satisfaction should befirst preference.

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CHAPTER-7

Bibliography

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Bibliography

1. www.hdfcbank.com

2. www.google.com

3. www.thetimeofindia.com

Books

Booklets of HDFC BANK

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HDFC BANKIG PLAN AND ACCOUNTING

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Documents

Amogh upadhyay 2010