PROJECT REPORT

ON
“A STUDY OF BEST PERFORMING
SCRIPTS OF NIFTY IN LAST 5 YEAR IN
BANKING SECTOR”

CONTENTS

1. Declaration (i) -

2. Mentor Certificate (ii) -

3. Acknowledgement (iii) -

4. Chapter 1 - Introduction 1 10

5. Chapter 2 - Objective/Research 11 22
methodology/ Limitation/Scope

6. Chapter 3 - Organizational Profile 23 51

7. Chapter 4 - Data Analysis And 52 62

Interpretation
8. Chapter 5 - Observations And Findings 63 64

9. Chapter 6 - Conclusion 65 -

10. Recommendations 66 -

11. Bibliography 67 -
12. Annexure 68 88

Chapter 1
 Introduction

INTRODUCTION
My Topic “Best performing scripts of nifty in last 5 year in
banking sector “Is a Comparative Analysis Of All the Banks Which are listed
in Nifty In the period of last five years. For this I have calculated beta separately
for each bank as well as Risk & Return Relating to each of them. I made review
of various Journals published by NSE and gone Through NSE INDIA web. As
Showed in my Project The Banking sector Is one Of The Most performed During
Last Five Year, which Inspired me To Select this topic.

To develop a more clear view about the topic we have to

Understand Nifty and Banking

NIFTY & BANKING

NIFTY- The National Stock Exchange of India Limited has genesis in the

report of the High Powered Study Group on Establishment of New Stock

Exchanges. It recommended promotion of a National Stock Exchange by

financial institutions (FIs) to provide access to investors from all across the

country on an equal footing. Based on the recommendations, NSE was

promoted by leading Financial Institutions at the behest of the Government of

India and was incorporated in November 1992 as a tax-paying company unlike

other stock exchanges in the country.

On its recognition as a stock exchange under the Securities Contracts

(Regulation) Act, 1956 in April 1993, NSE commenced operations in the

Wholesale Debt Market (WDM) segment in June 1994. The Capital Market

(Equities) segment commenced operations in November 1994 and operations in

Derivatives segment commenced in June 2000.

The following years witnessed rapid development of Indian capital

market

2
 with introduction of internet trading, Exchange traded funds (ETF), stock

derivatives and the first volatility index - IndiaVIX in April 2008, by NSE.

August 2008 saw introduction of Currency derivatives in India with the

launch of Currency Futures in USD INR by NSE. Interest Rate Futures was

introduced for the first time in India by NSE on 31st August 2009, exactly after

one year of the launch of Currency Futures.

With this, now both the retail and institutional investors can participate

in equities, equity derivatives, currency and interest rate derivatives, giving them

wide range of products to take care of their evolving needs.

OUR GROUP Associate/Affiliate Companies

NSCCL NCCL NSETECH

DotEx Intl. Ltd.

IISL NSE.IT

3
NIFTY 50 IN LAST 20 YEAR: ONE OF THE GREATEST WEALTH
CREATER

Equity is the one of the most exotic asset class, it has given about 21%

average annualized return since 1990, investment in equity has seen sea

change in recent decade. Emergence of business channel sprayed the

awareness about equity among the investor community ,earlier to buy equity

was not so easy as it is now, today market is in pockets of investor in terms of

access, technology has provided the multiple way to access the market through

internet, through cell phone and WAP , now a day’s various expert advices

trading and investment tips are available with the investors, Many fund house

are running their mutual fund and giving good return to their investors and the

asset under management of mutual fund industry is approximately $ 6.7 lakh

billion. Reliance capital is the largest mutual fund whose asset under

management is more than one lakh crore followed by HDFC MF, ICICI

Prudential MF, state run UTI Mutual Fund whose asset under management is

68,000 crore and Birla Sun Life MF are the five largest fund house of the

country. Insurance companies, HNI, FII, Retail investors are holding significant

amount of equities in their portfolio, although the allocation in equity is less than

5% of the total house hold saving in the country however in totality it is a huge

amount. In recent market selloff where FII has sold 13.1billion US$ at one way

and DII has bought more than 16.2 US$ at the same time in other way.

Identification of investable share is the tuff job even for the market participant

and timing the market is even tougher for the expert, but the fundamental

analysis and technical analysis helps the people to identify the cheap stocks at

the right time to park their investments. But still

 4

the question remain same what and how much one should buy? The main

barometer which is index it

gives the diversity and credibility of the basket and also liquid to exit and enter

at desired time for the investor NIFTY 50 stocks reflects the appropriate

behaviour of equity because this is the broader index composed of 50 blue

chips Company of various sector having better corporate governance, credibility

and profitability. Nifty is claimed as the stocks of the nation gives the diversity

and reliability .Reshuffling in script is also an important phenomena because we

have observed that time to time the company who hasn’t followed the corporate

governance and not adequately performed have shown exit way from the index,

similar incident happened with the Satyam computers after the scam broke out

in the company the script of the company removed from the index and replaced

by other company. The most important characteristics of NIFTY is the diversity it

is the basket of the shares who represents the various sectors like Reliance and

ONGC represents the petrochemical sector, NTPC represents the power sector,

ACC represents the cement sector ,Infosys represent the IT sector and SBI and

ICICI bank represents the banking sectors and so on. The stocks in NIFTY gets

proportionate weight age according to their market capitalization so if money will

allocated to the company who are the component of index according to their

proportion, then the capital appreciation will be similar as the index fluctuation.
 5

LIST OF COMPANIES IN THE NIFTY 50

Company Name Industry Symbol

ABB Ltd. ELECTRICAL EQUIPMENT ABB
CEMENT AND CEMENT
ACC Ltd. PRODUCTS ACC
CEMENT AND CEMENT
Ambuja Cements Ltd. PRODUCTS AMBUJACEM
Axis Bank Ltd. BANKS AXISBANK
Bharat Heavy Electricals Ltd. ELECTRICAL EQUIPMENT BHEL
Bharat Petroleum Corporation Ltd. REFINERIES BPCL
TELECOMMUNICATION -
Bharti Airtel Ltd. SERVICES BHARTIARTL
OIL
Cairn India Ltd. EXPLORATION/PRODUCTION CAIRN
Cipla Ltd. PHARMACEUTICALS CIPLA
DLF Ltd. CONSTRUCTION DLF
GAIL (India) Ltd. GAS GAIL
HCL Technologies Ltd. COMPUTERS - SOFTWARE HCLTECH
HDFC Bank Ltd. BANKS HDFCBANK
AUTOMOBILES - 2 AND 3
Hero Honda Motors Ltd. WHEELERS HEROHONDA
Hindalco Industries Ltd. ALUMINIUM HINDALCO
Hindustan Unilever Ltd. DIVERSIFIED HINDUNILVR
Housing Development Finance
Corporation Ltd. FINANCE - HOUSING HDFC
I T C Ltd. CIGARETTES ITC
ICICI Bank Ltd. BANKS ICICIBANK
TELECOMMUNICATION -
Idea Cellular Ltd. SERVICES IDEA
Infosys Technologies Ltd. COMPUTERS - SOFTWARE INFOSYSTCH
Infrastructure Development Finance Co.
Ltd. FINANCIAL INSTITUTION IDFC
Jaiprakash Associates Ltd. DIVERSIFIED JPASSOCIAT
STEEL AND STEEL
Jindal Steel & Power Ltd. PRODUCTS JINDALSTEL
Kotak Mahindra Bank Ltd. BANKS KOTAKBANK
Larsen & Toubro Ltd. ENGINEERING LT
AUTOMOBILES - 4
Mahindra & Mahindra Ltd. WHEELERS M&M
AUTOMOBILES - 4
Maruti Suzuki India Ltd. WHEELERS MARUTI
NTPC Ltd. POWER NTPC
OIL
Oil & Natural Gas Corporation Ltd. EXPLORATION/PRODUCTION ONGC
Power Grid Corporation of India Ltd. POWER POWERGRID
Punjab National Bank BANKS PNB
Ranbaxy Laboratories Ltd. PHARMACEUTICALS RANBAXY
 6

Reliance Capital Ltd. FINANCE RELCAPITAL

TELECOMMUNICATION –
Reliance Communications Ltd. SERVICES RCOM
Reliance Industries Ltd. REFINERIES RELIANCE
Reliance Infrastructure Ltd. POWER RELINFRA
Reliance Power Ltd. POWER RPOWER
Siemens Ltd. ELECTRICAL EQUIPMENT SIEMENS
State Bank of India BANKS SBIN
STEEL AND STEEL
Steel Authority of India Ltd. PRODUCTS SAIL
Sterlite Industries (India) Ltd. METALS STER
Sun Pharmaceutical Industries Ltd. PHARMACEUTICALS SUNPHARMA
Suzlon Energy Ltd. ELECTRICAL EQUIPMENT SUZLON
Tata Consultancy Services Ltd. COMPUTERS – SOFTWARE TCS
AUTOMOBILES - 4
Tata Motors Ltd. WHEELERS TATAMOTORS
Tata Power Co. Ltd. POWER TATAPOWER
STEEL AND STEEL
Tata Steel Ltd. PRODUCTS TATASTEEL
Unitech Ltd. CONSTRUCTION UNITECH
Wipro Ltd. COMPUTERS – SOFTWARE WIPRO
 7

BANKING- The Indian Banking industry, which is governed by the Banking

Regulation Act of India, 1949 can be broadly classified into two major

categories, non-scheduled banks and scheduled banks. Scheduled banks

comprise commercial banks and the co-operative banks. In terms of ownership,

commercial banks can be further grouped into nationalized banks, the State

Bank of India and its group banks, regional rural banks and private sector banks

(the old/ new domestic and foreign). These banks have over 67,000 branches

spread across the country.

The banking section will navigate through all the aspects of the Banking

System in India. It will discuss upon the matters with the birth of the banking

concept in the country to new players adding their names in the industry in

coming few years.

The banker of all banks, Reserve Bank of India (RBI), the Indian Banks

Association (IBA) and top 20 banks like IDBI, HSBC, ICICI, ABN AMRO, etc.

has been well defined under three separate heads with one page dedicated to

each bank.

However, in the introduction part of the entire banking cosmos, the

past has been well explained under three different heads namely:

• History of Banking in India

• Nationalisation of Banks in India

• Scheduled Commercial Banks in India

The first deals with the history part since the dawn of banking system

in India. Government took major step in the 1969 to put the banking sector into

systems and it nationalised 14 private banks in the mentioned year. This has
been elaborated in Nationalisation of Banks in India. The last but not the least

explains about the scheduled and unscheduled banks in India. Section 42 (6)

(a) of RBI Act

1934 lays down the condition of scheduled commercial banks. The description

along with a list of scheduled commercial banks is given on this page.

Currently, India has 96 scheduled commercial banks (SCBs) - 27 public sector

banks (that is with the Government of India holding a stake), 31 private banks

(these do not have government stake; they may be publicly listed and traded on

stock exchanges) and 38 foreign banks. They have a combined network of over

53,000 branches and 49,000 ATMs. According to a report by ICRA Limited, a

rating agency, the public sector banks hold over 75 percent of total assets of the

banking industry, with the private and foreign banks holding 18.2% and 6.5%

respectively.

EARLY HISTORY

Banking in India originated in the last decades of the 18th century. The first

banks were The General Bank of India which started in 1786, and the Bank of
Hindustan, both of which are now defunct. The oldest bank in existence in India

is the State Bank of India, which originated in the Bank of Calcutta in June 1806,

which almost immediately became the Bank of Bengal. This was one of the

three presidency banks, the other two being the Bank of Bombay and the Bank

of Madras, all three of which were established under charters from the British

East India Company. For many years the Presidency banks acted as quasi-

central banks, as did their

successors. The three banks merged in 1921 to form the Imperial Bank of India,

which, upon India's independence, became the State Bank of India.

Foreign banks too started to arrive, particularly in Calcutta, in the 1860s. The

Comptoire d'Escompte de Paris opened a branch in Calcutta in 1860, and

another in Bombay in 1862; branches in Madras and Pondicherry, then a

French colony,

followed. HSBC established itself in Bengal in 1869. Calcutta was the most

active trading port in India, mainly due to the trade of the British Empire, and so

became a banking center.

The first entirely Indian joint stock bank was the Oudh Commercial Bank,

established in 1881 in Faizabad. It failed in 1958. The next was the Punjab

National Bank, established in Lahore in 1895, which has survived to the present

and is now one of the largest banks in India.

Around the turn of the 20th Century, the Indian economy was passing through a

relative period of stability. Around five decades had elapsed since the Indian

Mutiny, and the social, industrial and other infrastructure had improved. Indians
had established small banks, most of which served particular ethnic and

religious communities.

10

LIBERALISATION

In the early 1990s, the then Narsimha Rao government embarked on a policy of

liberalization, licensing a small number of private banks. These came to be

known as New Generation tech-savvy banks, and included Global Trust Bank

(the first of such new generation banks to be set up), which later amalgamated

with Oriental Bank of Commerce, Axis Bank(earlier as UTI Bank), ICICI Bank

and HDFC Bank. This move, along with the rapid growth in the economy of

India, revitalized the banking sector in India, which has seen rapid growth with

strong contribution from all the three sectors of banks, namely, government

banks, private banks and foreign banks.

Currently (2007), banking in India is generally fairly mature in terms of supply,

product range and reach-even though reach in rural India still remains a

challenge for the private sector and foreign banks. In terms of quality of assets
and capital adequacy, Indian banks are considered to have clean, strong and

transparent balance sheets relative to other banks in comparable economies in

its region. The Reserve Bank of India is an autonomous body, with minimal

pressure from the government. The stated policy of the Bank on the Indian

Rupee is to manage volatility but without any fixed exchange rate-and this has

mostly been true.

Chapter 2
 Objective
  Research
Methodology
 Limitatins
 Scope

11

OBJECTIVES OF THE PROJECT

1. To know the correlation between Nifty movement & Banks movement

under Nifty 50.

2. To know the best bank in the Nifty 50 in terms of risk & return.

3. To guide the investors in framing the criteria for judging the best bank in

terms associated risk & returns generated.

4. To check the volatility of banking counter through Beta calculation.

ASSUMPTIONS

1. All the news related to banks is ignored in this calculation.

2. All the extra benefits given by these banks are also ignored in the

calculation like ESOP, Bonus Shares, and Right Issues, etc.

12

RESEARCH METHODOLOGY

For the project undertaken collecting Primary Data is very difficult so I use

Secondary Data for the project.

SAMPLE SIZE- For the project I have taken 4 banks of Nifty 50 i.e.

• HDFC Bank

• ICICI Bank
 • Punjab National Bank

• State Bank of India

DATA ANALYSIS TOOLS

• Calculation of Correlation.

• Risk & Return Calculation.

• Beta Calculation.

13

→WHAT IS CORRELATION?

The correlation coefficient a concept from statistics is a measure of how well

trends in the predicted values follow trends in past actual values. It is a

measure of how well the predicted values from a forecast model "fit" with the

real-life data.

The correlation coefficient is a number between 0 and 1. If there is no

relationship between the predicted values and the actual values the correlation

coefficient is 0 or very low (the predicted values are no better than random

numbers). As the strength of the relationship between the predicted values and
actual values increases so does the correlation coefficient. A perfect fit gives a

coefficient of 1.0. Thus, the higher the correlation coefficient the better.

In statistics, correlation and dependence are any of a broad class of statistical

relationships between two or more random variables or observed data values.

Familiar examples of dependent phenomena include the correlation between

the physical statures of parents and their offspring, and the correlation between

the demand for a product and its price. Correlations are useful because they

can indicate a predictive relationship that can be exploited in practice. For

example, an electrical utility may produce less power on a mild day based on

the correlation between electricity demand and weather. Correlations can also

suggest possible causal, or mechanistic relationships; however, statistical

dependence is not sufficient to demonstrate the presence of such a relationship.

14

PEARSON'S PRODUCT-MOMENT COEFFICIENT

The most familiar measure of dependence between two quantities is the

Pearson product-moment correlation coefficient, or "Pearson's correlation." It is

obtained by dividing the covariance of the two variables by the product of their

standard deviations. Karl Pearson developed the coefficient from a similar but

slightly different idea by Francis Galton.

The population correlation coefficient ρX,Y between two random variables X and

Y with expected values μX and μY and standard deviations σX and σY is defined

as:
where E is the expected value operator, cov means covariance, and, corr a

widely used alternative notation for Pearson's correlation.

The Pearson correlation is defined only if both of the standard deviations are

finite and both of them are nonzero. It is a corollary of the Cauchy–Schwarz

inequality that the correlation cannot exceed 1 in absolute value. The correlation

coefficient is symmetric: corr(X,Y) = corr(Y,X).

The Pearson correlation is +1 in the case of a perfect positive (increasing) linear

relationship, −1 in the case of a perfect decreasing (negative) linear relationship,

and some value between −1 and 1 in all other cases, indicating the degree of

linear dependence between the variables. As it approaches zero there is less of

a relationship. The closer the coefficient is to either −1 or 1, the stronger the

correlation between the variables.

15

→RISK VERSUS RETURN

One Can't Have One Without the Other

Risk — Just the thought of it can give investors sleepless nights. However,

through careful planning for your financial future, you can help manage risk.
Risk is something you encounter every day. Even crossing a busy street

involves some risk. With investments, balancing risk and return can be a tricky

operation. All investors want to maximize their return, while minimizing risk.

Some investments are certainly more "risky" than others, but no investment is

risk free. Trying to avoid risk by not investing at all can be the riskiest move of

all. That would be like standing at the curb, never setting foot into the street.

You'll never be able to get to your destination if you don't accept some risk. In

investing, just like crossing that street, you carefully consider the situation,

accept a comfortable level of risk, and proceed to where you're going. Risk can

never be eliminated, but it can be managed. Let's take a look at the different

types of risk, how different asset categories perform, and the ways and means

to help manage risk.

16

TYPES OF RISK

However, there are many kinds of risk. Let's take a look at some of them:

• Capital Risk: Losing your invested monies.

 • Inflationary Risk: Investment's rate of return doesn't keep pace with

inflation rate.

• Interest Rate Risk: A drop in an investment's interest rate.

• Market Risk: Selling an investment at an unfavorable price.

• Liquidity Risk: Limitations on the availability of funds for a specific

period of time.

• Legislative Risk: Changes in tax laws may make certain investments

less advantageous.

• Default Risk: The failure of the institution where an investment is made.

The risk/return tradeoff could easily be called the "ability-to-sleep-at-night test."

While some people can handle the equivalent of financial skydiving without

batting an eye, others are terrified to climb the financial ladder without a secure

harness. Deciding what amount of risk you can take while remaining

comfortable with your investments is very important.

In the investing world, the dictionary definition of risk is the chance that an

investment's actual return will be different than expected. Technically, this is

measured in statistics by standard deviation. Risk means you have the

possibility of losing some, or even all, of our original investment.

17

Low levels of uncertainty (low risk) are associated with low potential returns.

High levels of uncertainty (high risk) are associated with high potential returns.

The risk/return tradeoff is the balance between the desire for the lowest possible

risk and the highest possible return. This is demonstrated graphically in the
chart below. A higher standard deviation means a higher risk and higher

possible return.

WHAT DOES RISK-RETURN TRADE-OFF MEAN?

The principle that potential return rises with an increase in risk. Low levels of

uncertainty (low risk) are associated with low potential returns, whereas high

levels of uncertainty (high risk) are associated with high potential

returns. According to the risk-return trade-off, invested money can render higher

profits only if it is subject to the possibility of being lost.

The objective of risk and return analysis is to maximize the return by creating a

balance of risk. For example, in case of working capital management, the less

inventory you keep, the higher the expected return as less of your money is

locked as asset; but you also have a increased risk of running out of raw

material when you actually need it for production or maintenance. Which means

you lose sale. Thus all

18

companies tries very hard to maintain a minimum inventory as possible without

effecting smooth production. This is a very common example of risk return

trade-off

→WHAT IS BETA CALCULATION?

In finance, the beta (β) of a stock or portfolio is a number describing the relation

of its returns with that of the financial market as a whole.

An asset with a beta of 0 means that its price is not at all correlated with the

market. A positive beta means that the asset generally follows the market. A

negative beta shows that the asset inversely follows the market; the asset

generally decreases in value if the market goes up and vice versa.

The beta coefficient is a key parameter in the capital asset pricing model

(CAPM). It measures the part of the asset's statistical variance that cannot be

mitigated by the diversification provided by the portfolio of many risky assets,

because it is correlated with the return of the other assets that are in the

portfolio. Beta can be estimated for individual companies using regression

analysis against a stock market index.

The formula for the beta of an asset within a portfolio is

where ra measures the rate of return of the asset, rp measures the rate of return

of the portfolio, and cov(ra,rp) is the covariance between the rates of return. The

19
portfolio of interest in the CAPM formulation is the market portfolio that contains

all risky assets, and so the rp terms in the formula are replaced by rm, the rate of

return of the market.

Beta is also referred to as financial elasticity or correlated relative volatility,

and can be referred to as a measure of the sensitivity of the asset's returns to

market returns, its non-diversifiable risk, its systematic risk, or market risk. On

an individual asset level, measuring beta can give clues to volatility and liquidity

in the marketplace. In fund management, measuring beta is thought to separate

a manager's skill from his or her willingness to take risk.

SECURITY MARKET LINE

The SML graphs the results from the capital asset pricing model (CAPM)

formula. The x-axis represents the risk (beta), and the y-axis represents the

expected return. The market risk premium is determined from the slope of the

SML.

The relationship between β and required return is plotted on the security market

line (SML) which shows expected return as a function of β. The intercept is the

nominal risk-free rate available for the market, while the slope is E(Rm)− Rf. The

security market line can be regarded as representing a single-factor model of

the asset price, where Beta is exposure to changes in value of the Market.
 20

A beta value less than 1 indicates the investment is less volatile than the

benchmark. A beta value equal to 1 means the investment's volatility is

the same as the benchmark, and a beta greater than 1 means the

investment is more volatile.

Beta is a measure of a stock's volatility in relation to the market. By definition,

the market has a beta of 1.0, and individual stocks are ranked according to how

much they deviate from the market. A stock that swings more than the market

over time has a beta above 1.0. If a stock moves less than the market, the

stock's beta is less than 1.0. High-beta stocks are supposed to be riskier but

provide a potential for higher returns; low-beta stocks pose less risk but also

lower returns.

Beta is a key component for the capital asset pricing model (CAPM), which is

used to calculate cost of equity. Recall that the cost of capital represents the

discount rate used to arrive at the present value of a company's future cash

flows. All things being equal, the higher a company's beta is, the higher its cost

of capital discount rate. The higher the discount rate, the lower the present
value placed on the company's future cash flows. In short, beta can impact a

company's share valuation.

21
Advantages of Beta
To followers of CAPM, beta is a useful measure. A stock's price variability is
important to consider when assessing risk. Indeed, if you think about risk as the
possibility of a stock losing its value, beta has appeal as a proxy for risk.

Intuitively, it makes plenty of sense. Think of an early-stage technology stock

with a price that bounces up and down more than the market. It's hard not to
think that stock will be riskier than, say, a safe-haven utility industry stock with a
low beta.

Besides, beta offers a clear, quantifiable measure, which makes it easy to work
with. Sure, there are variations on beta depending on things such as the market
index used and the time period measured, but broadly speaking, the notion of
beta is fairly straightforward to understand. It's a convenient measure that can
be used to calculate the costs of equity used in a valuation method that
discounts cash flows.

DISADVANTAGES OF BETA
However, if you are investing in a stock's fundamentals, beta has plenty of
shortcomings.

For starters, beta doesn't incorporate new information. Consider the electrical
utility company American Electric Power (AEP). Historically, AEP has been
considered a defensive stock with a low beta. But when it entered the merchant
energy business and assumed high debt levels, AEP's historic beta no longer
captured the substantial risks the company took on. At the same time, many
technology stocks, such as Google, are so new to the market they have
insufficient price history to establish a reliable beta.
Another troubling factor is that past price movements are very poor predictors of
the future. Betas are merely rear-view mirrors, reflecting very little of what lies
ahead.
Furthermore, the beta measure on a single stock tends to flip around over time,
which makes it unreliable. Granted, for traders looking to buy and sell stocks
within short time periods, beta is a fairly good risk metric. But for investors with
long-term horizons, it's less useful.

LIMITATIONS

• Sample size is of only 5 years.

• Calculation is little bit time consuming.

• Major Banks like Axis & Kotak Mahindra are not included because

of data unavailability.
 22

Scope

With the help of this study An individual as well as organisational investor can

select the banking stock of their choice before investment. Also they can study

the beta distribution so calculated to gain better results from their stocks.

They can also judge the risk and return relation before going for a combination

of stocks.
 Chapter 3
 Organization
Profile
 23

I. HDFC BANK (HOUSING DEVELOPMENT FINANCE

CORPORATION LIMITED)

HDFC Bank Ltd. (BSE: 500180, NYSE: HDB) is a major Indian financial

services company based in Mumbai, incorporated in August 1994, after the

Reserve Bank of India allowed establishing private sector banks. The Bank was

promoted by the Housing Development Finance Corporation, a premier housing

finance company (set up in 1977) of India. HDFC Bank has 1,412 branches and

over 3,295 ATMs, in 528 cities in India, and all branches of the bank are linked

on an online real-time basis. As of September 30, 2008 the bank had total

assets of INR 1006.82 billion. For the fiscal year 2008-09, the bank has reported

net profit of Rs.2,244.9 crore, up 41% from the previous fiscal. Total annual

earnings of the bank increased by 58% reaching at Rs.19,622.8 crore in 2008-

09.

HISTORY

HDFC Bank was incorporated in the year of 1994 by Housing

Development Finance Corporation Limited (HDFC), India's premier housing

finance company. It was among the first companies to receive an 'in principle'

approval from the Reserve Bank of India (RBI) to set up a bank in the private

sector. The Bank commenced its operations as a Scheduled Commercial Bank

in January 1995 with the help of RBI's liberalization policies.

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

Limited (promoted by Bennett, Coleman & Co. / Times Group) was merged with

HDFC Bank Ltd., in 2000. This was the first merger of two private banks in
India. As per the scheme of amalgamation approved by the shareholders of

both banks and the

24

Reserve Bank of India, shareholders of Times Bank received 1 share of HDFC

Bank for every 5.75 shares of Times Bank.

In 2008 HDFC Bank acquired Centurion Bank of Punjab taking its total

branches to more than 1,000. The amalgamated bank emerged with a strong

deposit base of around Rs. 1,22,000 crore and net advances of around Rs.

89,000 crore. The balance sheet size of the combined entity is over Rs.

1,63,000 crore. The amalgamation added significant value to HDFC Bank in

terms of increased branch network, geographic reach, and customer base, and

a bigger pool of skilled manpower.

BUSINESS FOCUS

HDFC Bank deals with three key business segments - Wholesale

Banking Services, Retail Banking Services, Treasury. It has entered the banking

consortia of over 50 corporate for providing working capital finance, trade

services, corporate finance and merchant banking. It is also providing

sophisticated product structures in areas of foreign exchange and derivatives,

money markets and debt trading and equity research.

 25

WHOLESALE BANKING SERVICES

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

companies in the Indian corp 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. HDFC Bank has made

significant inroads into the banking consortia of a number of leading Indian

corporate including multinationals, companies from the domestic business

houses and prime public sector companies. It is recognised as a leading

provider of cash management and transactional banking solutions to corporate

customers, mutual funds, stock exchange members and banks.

RETAIL BANKING SERVICES

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

a full range of financial products and banking services, giving the customer a

one-stop window for all his/her banking requirements. The products are backed
by world-class service and delivered to customers through the growing branch

network, as well as through alternative delivery channels like ATMs, Phone

Banking, Net Banking and Mobile Banking.

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

26

as well. The Bank launched its credit card business in late 2001. By March

2009, the bank had a total card base (debit and credit cards) of over 13 million.

The Bank is also one of the leading players in the “merchant acquiring” business

with over 70,000 Point-of-sale (POS) terminals for debit / credit cards

acceptance at merchant establishments. The Bank is well positioned as a leader

in various net based B2C opportunities including a wide range of internet

banking services for Fixed Deposits, Loans, Bill Payments, etc.

TREASURY

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

Exchange and Derivatives, Local Currency Money Market & Debt Securities,

and Equities. These services 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.

HDFC Ltd has the objective to enhance residential housing stock and

promote home ownership. Their offerings range from hassle-free home loans
and deposit products, to property related services and a training facility. They

also offer specialized financial services to the customer base through

partnerships with some of the best financial institutions worldwide.

HDFC Bank is a young and dynamic bank, with a youthful and

enthusiastic team determined to accomplish the vision of becoming a world-

class Indian bank.

Our business philosophy is based on four core values - Customer Focus,

Operational Excellence, Product Leadership and People. We believe that the

27

ultimate identity and success of our bank will reside in the exceptional quality of

our people and their extraordinary efforts. For this reason, we are committed to

hiring, developing, motivating and retaining the best people in the industry.

MISSION AND BUSINESS STRATEGY

Our mission is to be "a World Class Indian Bank", benchmarking

ourselves against international standards and best practices in terms of product

offerings, technology, service levels, risk management and audit & compliance.

The objective is to build sound customer franchises across distinct businesses

so as to be a preferred provider of banking services for target retail and

wholesale customer segments, and to achieve a healthy growth in profitability,

consistent with the Bank's risk appetite. We are committed to do this while

ensuring the highest levels of ethical standards, professional integrity, corporate

governance and regulatory compliance.

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

28

markets, a strong market reputation, large shareholder base and unique

consumer franchise, HDFC was ideally positioned to promote a bank in the

Indian environment.

KEY PEOPLE

1-Deepak Parekh (Founder)

2-Jagdish Kapoor (Chairman)
3-Aditya Puri (MD)
 29

II. ICICI BANK (Industrial Credit and Investment

Corporation of India)

ICICI Bank (BSE: 532174, NYSE: IBN) (formerly Industrial Credit and

Investment Corporation of India) is a major banking and financial services

organization in India. It is the 4th largest bank in India and the largest private

sector bank in India by market capitalization. The bank also has a network of

1,700+ branches (as on 31 March 2010) and about 4,721 ATMs in India and

presence in 18 countries, as well as some 24 million customers (at the end of

July 2007). ICICI Bank offers a wide range of banking products and financial

services to corporate and retail customers through a variety of delivery channels

and specialization subsidiaries and affiliates in the areas of investment banking,

life and non-life insurance, venture capital and asset management. (These data

are dynamic.) ICICI Bank is also the largest issuer of credit cards in India. ICICI

Bank's shares are listed on the stock exchanges at Kolkata and Vadodara,

Mumbai and the National Stock Exchange of India Limited; its ADRs trade on

the New York Stock Exchange (NYSE).

Founded in 1955 as Industrial Credit and Investment Corporation of

India, ICICI Limited was established by the Government of India in the 1960s as

a Financial Institution like Industrial Development Bank of India (IDBI) to finance

large industrial projects . ICICI then, was not a bank and hence could not take

retail deposits and was not required to comply with Indian banking requirements

for liquid reserves. ICICI borrowed funds from various agencies like the World

Bank, often at

30

concessional rates. These funds were deployed in large corporate loans.

However, the scenario changed drastically in1990s when ICICI founded a

separate legal entity and named it "ICICI Bank". ICICI Bank, as the name would

suggest, undertook

normal banking operations like accepting deposits, issuing credit cards,

providing car loans etc. The experiment was so successful that ICICI merged

into ICICI Bank and this "reverse merger" happened in 2002.

 ICICI Bank (BSE: ICICI) (formerly Industrial Credit and Investment

Corporation of India) "ICICI Bank is India's second largest Bank with

consolidated total assets of over Rs. 470,000 crores and networth of over Rs.

50,000 crores. The Bank's capital adequacy ratio of 15.6% is among the highest

levels of capital adequacy in large Indian banks and much higher than the

regulatory requirement of 9.0%. ICICI Bank made a profit after tax of Rs. 4,158

crore (over US$ 850 million) in FY2008 and Rs. 3,014 crore (US$ 619 million) in

the nine months ended December 31, 2008."

ICICI Bank offers a wide range of banking products and financial

services to corporate and retail customers through a variety of delivery channels

and specialised subsidiaries and affiliates in the areas of investment banking,

life and non-life insurance, venture capital and asset management. ICICI Bank

is also the largest issuer of credit cards in India. Banks have also provide

internet banking, phone banking, anywhere banking, mobile banking, debit

cards, Automatic Teller Machines (ATMs) and combined various other services

and integrated them into the mainstream banking arena.

In a span of just four years, ICICI Bank has emerged as a consumer

banking behemoth. With a retail book of over Rs 56,000 crore (Rs 560 billion)

and a market

31

share that is the envy of competition -- it has a share of over 30 per cent -- ICICI

Bank today has reached a commanding position. The bank boasts of the widest

integrated technology platform in the country and only a fourth of its

business takes place at its branches

 The Bank is expanding in overseas markets and has the largest

international balance sheet among Indian banks. ICICI Bank now has wholly-

owned subsidiaries, branches and representative offices in 18 countries,

including an offshore unit in Mumbai. This includes wholly owned subsidiaries in

Canada, Russia and the UK (the subsidiary through which the his savings

brand is operated), offshore banking units in Bahrain and Singapore, an

advisory branch in Dubai, branches in Belgium, Hong Kong and Sri Lanka, and

representative offices in Bangladesh, China, Malaysia, Indonesia, South Africa,

Thailand, the United Arab Emirates and USA. Overseas, the Bank is targeting

the NRI (Non-Resident Indian) population in particular.

HISTORY

• 1955 The Industrial Credit and Investment Corporation of India Limited

(ICICI) was incorporated at the initiative of World Bank, the Government of India

and representatives of Indian industry, with the objective of creating a

development financial institution for providing medium-term and long-term

project financing to Indian businesses.

32

• 1994 ICICI established Banking Corporation as a banking subsidiary.

formerly Industrial Credit and Investment Corporation of India. Later, ICICI

Banking Corporation was renamed as 'ICICI Bank Limited'. ICICI founded a

separate legal

entity, ICICI Bank, to undertake normal banking operations - taking deposits,

credit cards, car loans etc.

• 2001 ICICI acquired Bank of Madura (est. 1943). Bank of Madura was a

Chettiar bank, and had acquired Chettinad Mercantile Bank (est. 1933) and

Illanji Bank (established 1904) in the 1960s.

• 2002 The Boards of Directors of ICICI and ICICI Bank approved the

reverse merger of ICICI, ICICI Personal Financial Services Limited and ICICI

Capital Services Limited, into ICICI Bank. After receiving all necessary

regulatory approvals, ICICI integrated the group's financing and banking

operations, both wholesale and retail, into a single entity.

• Also in 2002, ICICI Bank bought the Shimla and Darjeeling branches that

Standard Chartered Bank had inherited when it acquired Grindlays Bank.

33

• ICICI started its international expansion by opening representative offices

in New York and London.

• 2003 ICICI opened subsidiaries in Canada and the United Kingdom (UK),

and in the UK it established an alliance with Lloyds TSB. It also opened an

Offshore Banking Unit (OBU) in Singapore and representative offices in Dubai

and Shanghai.

• 2004 ICICI opens a rep office in Bangladesh to tap the extensive trade

between that country, India and South Africa.

• 2005 ICICI acquired Investitsionno-Kreditny Bank (IKB), a Russia bank

with about US$4mn in assets, head office in Balabanovo in the Kaluga region,

and with a branch in Moscow. ICICI renamed the bank ICICI Bank Eurasia.

Also, ICICI established a branch in Dubai International Financial Centre and in

Hong Kong.

• 2006 ICICI Bank UK opened a branch in Antwerp, in Belgium. ICICI

opened representative offices in Bangkok, Jakarta, and Kuala Lumpur.

34
• 2007 ICICI amalgamated Sangli Bank, which was headquartered in

Sangli, in Maharashtra State, and which had 158 branches in Maharashtra and

another 31 in Karnataka State. Sangli Bank had been founded in 1916 and was

particularly strong in rural areas.

• ICICI also received permission from the government of Qatar to open a

branch in Doha.

• ICICI Bank Eurasia opened a second branch, this time in St. Petersburg.

• 2008 The US Federal Reserve permitted ICICI to convert its

representative office in New York into a branch.

• ICICI also established a branch in Frankfurt.

NATURE OF BUSINESS:

ICICI is a financial intermediary which brings together the savers and

borrowers in the economic system. It collects funds from surplus units and lends

the same to those units whose income exceeds its expenditure. In the pursuit of

these objectives the ICICI Bank Limited (ICICI Bank) offers products and

services in the
 35

areas of commercial banking to retail and corporate customers (both domestic

and international), treasury and investment banking and other products, such as

insurance and asset management. Its commercial banking operations for retail

customers consist of retail lending and deposits, distribution of third-party

investment products and other fee-based products and services, as well as

issuance of unsecured redeemable bonds. ICICI Bank provides a range of

commercial banking and project finance products and services, including loan

products, fee and commission-based products and services, deposits and

foreign exchange and derivatives products to corporations, growth-oriented

middle market companies and small and medium enterprises.

ONWNERSHIP TYPE

JOINT STOCK COMPANY:

ICICI BANK LIMITED, is the joint stock company which is incorporated

under the Companies Act, 1956 and licensed as a bank under the Banking

Regulation Act, 1949 ICICI Bank's equity shares are listed in India on Bombay

Stock Exchange and the National Stock Exchange of India Limited and its

American Depositary Receipts (ADRs) are listed on the New York Stock

Exchange (NYSE).
 36

VISION

• To be the leading provider of financial services in India and a major

global bank.

• To be the preferred brand for total financial and banking solutions for

both corporate and individuals

• To be the dominant Life, Health and Pensions player built on trust by

world-class people and service.

MISSION

We will leverage our people, technology, speed and financial capital to:

• be the banker of first choice for our customers by delivering high quality,

world-class products and services.

• expand the frontiers of our business globally.

• play a proactive role in the full realisation of India’s potential.

• maintain a healthy financial profile and diversify our earnings across

businesses and geographies.

• maintain high standards of governance and ethics.

• contribute positively to the various countries and markets in which we

operate.

• create value for our stakeholders

• Provide the social facilities to the society

37

SUBSIDIARIES

KEY PEOPLE

1. K.V. Kamath (Chairman)

2. Chanda Kochhar (MD & CEO)

 3. N. S. Kannan (CFO)

38

III. PNB (Punjab National Bank)

Punjab National Bank (PNB) (BSE: 532461), was registered on May 19,

1894 under the Indian Companies Act with its office in Anarkali Bazaar Lahore.

Today, the Bank is the second largest government-owned commercial bank in

India with about 5000 branches across 764 cities. It serves over 37 million

customers. The bank has been ranked 248th biggest bank in the world by the

Bankers Almanac, London. The bank's total assets for financial year 2007 were

about US$60 billion. PNB has a banking subsidiary in the UK, as well as

branches in Hong Kong, Dubai and Kabul, and representative offices in Almaty,

Dubai, Oslo, and Shanghai.

Punjab National Bank with 4497 offices and the largest nationalised

bank is serving its 3.5 crore customers with the following wide variety of banking

services:

• Corporate banking

• Personal banking

• Industrial finance

• Agricultural finance

• Financing of trade

• International banking
 Punjab National Bank has been ranked 38th amongst top 500 companies by The

Economic Times. PNB has earned 9th position among top 50 trusted brands in

India. Punjab National Bank India maintains relationship with more than

200 leading international banks world wide. PNB India has Rupee Drawing

Arrangements with 15 exchange companies in UAE and 1 in Singapore.

39

PNB ONLINE

Punjab National Bank of India is also a member of SWIFT and more

than 150 PNB Branches are connected with terminals in Mumbai. It promotes

"Any Time, Any Where Banking".

PNB offers Internet Banking services for both to the Corporate and Individuals.

It provides 24 hours, 365 days banking from the PC of the user. A user can

operate anytime and from anywhere its accounts. The following are some of the

services available online:

• Access to account

• Complete details of transactions and statement of account

• Online information of deposits, loans overdraft account etc.

• Online Payment Facility for railway reservation through IRCTC Payment

Gateway Project

• Online Utility Bill Payment Services which allows Internet Banking

account holders to pay their telephone, mobile, electricity, insurance and

other bills anytime from anywhere from their desktop.

 Punjab National Bank Card user can buy goods and enable services from

45,000 merchant outlet in India and can withdraw cash from over 4500 ATMs

with its own 450 ATMs.

40

PUNJAB NATIONAL BANK BRANCHES

Punjab National Bank has its Branches in all the 7 metropolitan and

cosmopolitan cities in India namely New Delhi, Mumbai, Calcutta, Chennai,

Bangalore, Hyderabad and Ahmedabad. It even has its branches in small town

in both urban as well as rural areas.

PNB is always focussing on expanding abroad and till date has identified

some emerging economies abroad. They are in few of these places.

• Almaty

• Kazakhktan

• Shanghai

• China

• London

• Kabul

• Afghanistan
PUNJAB NATIONAL BANK HOUSING LOAN

Any individual can avail Punjab National Bank Housing Loan for any of the

following purpose:

• For construction of house.

• For purchase of house/ flat.

• For purchase of house/ flat from the original allottee, i.e. on First Power

of Attorney basis.

41

• For carrying out repairs/ renovation/ additions/ alterations in the existing

house.

Approximately 80% of the cost of project is sanctioned by PNB Housing

Finance, subject to a maximum of Rs. 50 lac. In case of carrying out repairs/

renovation/ additions/ alterations in the existing house, the ceiling is Rs. 5 lac.

The loan is available for a period of 5 years to 20 years or before the borrowers

attain the age of 65.

Interest of Punjab National Bank Home Loan is charged on reducing

balance and the amount to be sanctioned depends upon the repaying capability

of the borrower.

The following securities are required by the cell of PNB Housing Loan:

• Mortgage of property for which finance is being given.

• In case of purchase of house flat from housing board/ society where

mortgage cannot be created immediately, a tripartite agreement shall be

executed amongst the housing board/society, borrower and the Bank.

• In case of purchase of house/ flat on first power of attorney, additional

security by way of mortgage of some other property or pledge of Bank's Fixed

Deposit Receipt/ LIC policy/ Govt. securities has to be provided.

• Suitable third party guarantee acceptable to the Bank which may include

guarantee from family members/ other relatives.

42

HISTORY

• 1895: PNB commenced its operations in Lahore. PNB has the distinction

of being the first Indian bank to have been started solely with Indian capital that

has survived to the present. (The first entirely Indian bank, the Oudh

Commercial Bank, was established in 1881 in Faizabad, but failed in 1958.)

PNB's founders included several leaders of the Swadeshi movement such as

Dyal Singh Majithia and Lala HarKishen Lal,Lala Lalchand, Shri Kali Prosanna

Roy, Shri E.C. Jessawala, Shri Prabhu Dayal, Bakshi Jaishi Ram, and Lala

Dholan Dass. Lala Lajpat Rai was actively associated with the management of

the Bank in its early years.

• 1904: PNB established branches in Karachi and Peshawar.

• 1940: PNB absorbed Bhagwan Dass Bank, a scheduled bank located in

Delhi circle.

• 1947: Partition of India and Pakistan at Independence. PNB lost its

premises in Lahore, but continued to operate in Pakistan.

• 1951: PNB acquired the 39 branches of Bharat Bank (est. 1942); Bharat

Bank became Bharat Nidhi Ltd.

• 1961: PNB acquired Universal Bank of India.

• 1963: The Government of Burma nationalized PNB's branch in Rangoon

(Yangon).

• September 1965: After the Indo-Pak war the government of Pakistan

seized all the offices in Pakistan of Indian banks, including PNB's headoffice,

which may have moved to Karachi. PNB also had one or more branches in East

Pakistan (Bangladesh).

43

• 1960s: PNB amalgamated Indo Commercial Bank (est. 1933) in a

rescue.

• 1969: The Government of India (GOI) nationalized PNB and 13 other

major commercial banks, on July 19, 1969.

• 1976 or 1978: PNB opened a branch in London.

• 1986 The Reserve Bank of India required PNB to transfer its London

branch to State Bank of India after the branch was involved in a fraud scandal.

• 1986: PNB acquired Hindustan Commercial Bank (est. 1943) in a rescue.

The acquisition added Hindustan's 142 branches to PNB's network.

• 1993: PNB acquired New Bank of India, which the GOI had nationalized

in 1980.

• 1998: PNB set up a representative office in Almaty, Kazakhstan.

• 2003: PNB took over Nedungadi Bank, the oldest private sector bank in

Kerala. At the time of the merger with PNB, Nedungadi Bank's shares had zero

value, with the result that its shareholders received no payment for their shares.

• PNB also opened a representative office in London.

• 2004: PNB established a branch in Kabul, Afghanistan.

• PNB also opened a representative office in Shanghai.

• PNB established an alliance with Everest Bank in Nepal that permits

migrants to transfer funds easily between India and Everest Bank's 12 branches

in Nepal.

• 2005: PNB opened a representative office in Dubai.

44
• 2007: PNB established PNBIL - Punjab National Bank (International) - in

the UK, with two offices, one in London, and one in South Hall. Since then it has

opened a third branch in Leicester, and is planning a fourth in Birmingham.

• 2008: PNB opened a branch in Hong Kong.

• 2009: PNB opened a representative office in Oslo, Norway, and a second

branch in Hong Kong, this in Kowloon.

• 2010: PNB received permission to upgrade its representative office in the

Dubai International Financial Centre to a branch.

PRODUCTS OFFERED

• Investment Banking

• Consumer Banking

• Commercial Banking

• Retail Banking

• Private Banking

• Asset Management

• Pensions

• Mortgage Loans

• Credit Cards

• Life insurance
 45

VISION
"To be a Leading Global Bank with Pan India footprints and become a

household brand in the Indo-Gangetic Plains providing entire range of financial

products and services under one roof"

MISSION
"Banking for the unbaked"

CHAIRMAN OF PNB

Mr. K.R. Kamath (Since 2009)

 46

IV. SBIN (STATE BANK OF INDIA)

State Bank of India (SBI) (BSE: 500112, NSE: SBIN) is the largest

banking and financial services company in India, by almost every parameter -

revenues, profits, assets, market capitalization etc. The bank traces its ancestry

to British India, through the Imperial Bank of India, to the founding in 1806 of the

Bank of Calcutta, making it the oldest commercial bank in the Indian

Subcontinent. The Government of India nationalized the Imperial Bank of India

in 1955, with the Reserve Bank of India taking a 60% stake, and renamed it the

State Bank of India. In 2008, the Government took over the stake held by the

Reserve Bank of India.

The evolution of State Bank of India can be traced back to the first

decade of the 19th century. It began with the establishment of the Bank of

Calcutta in Calcutta, on 2 June 1806. The bank was redesigned as the Bank of

Bengal, three years later, on 2 January 1809. It was the first ever joint-stock

bank of the British India, established under the sponsorship of the Government

of Bengal. Subsequently, the Bank of Bombay (established on 15 April 1840)

and the Bank of Madras (established on 1 July 1843) followed the Bank of

Bengal. These three banks dominated the modern banking scenario in India,

until when they were amalgamated to form the Imperial Bank of India, on 27

January 1921.

An important turning point in the history of State Bank of India is the launch of

the first Five Year Plan of independent India, in 1951. The Plan aimed at serving
the Indian economy in general and the rural sector of the country, in particular.

Until the Plan, the commercial banks of the country, including the Imperial Bank

of India, confined their services to the urban sector. Moreover, they were not

equipped to respond to the growing needs of the economic revival taking shape

in the rural areas

47

of the country. Therefore, in order to serve the economy as a whole and rural

sector in particular, the All India Rural Credit Survey Committee recommended

the formation of a state-partnered and state-sponsored bank.

The All India Rural Credit Survey Committee proposed the takeover of

the Imperial Bank of India, and integrating with it, the former state-owned or

state-associate banks. Subsequently, an Act was passed in the Parliament of

India in May 1955. As a result, the State Bank of India (SBI) was established on

1 July 1955. This resulted in making the State Bank of India more powerful,

because as much as a quarter of the resources of the Indian banking system

were controlled directly by the State. Later on, the State Bank of India

(Subsidiary Banks) Act was passed in 1959. The Act enabled the State Bank of

India to make the eight former State-associated banks as its subsidiaries.

The State Bank of India emerged as a pacesetter, with its operations

carried out by the 480 offices comprising branches, sub offices and three Local

Head Offices, inherited from the Imperial Bank. Instead of serving as mere

repositories of the community's savings and lending to creditworthy parties, the

State Bank of India catered to the needs of the customers, by banking

purposefully. The bank served the heterogeneous financial needs of the

planned economic development.

BRANCHES

The corporate centre of SBI is located in Mumbai. In order to cater to

different functions, there are several other establishments in and outside

Mumbai, apart from the corporate center. The bank boasts of having as many

as 14 local

48

head offices and 57 Zonal Offices, located at major cities throughout India. It is

recorded that SBI has about 10000 branches, well networked to cater to its

customers throughout India.

ATM SERVICES

SBI provides easy access to money to its customers through more

than 8500 ATMs in India. The Bank also facilitates the free transaction of money

at the ATMs of State Bank Group, which includes the ATMs of State Bank of

India as well as the Associate Banks – State Bank of Bikaner & Jaipur, State

Bank of Hyderabad, State Bank of Indore, etc. You may also transact money

through SBI Commercial and International Bank Ltd by using the State Bank

ATM-cum-Debit (Cash Plus) card.

SUBSIDIARIES
 The State Bank Group includes a network of eight banking

subsidiaries and several non-banking subsidiaries. Through the establishments,

it offers various services including merchant banking services, fund

management, factoring services, primary dealership in government securities,

credit cards and insurance.

THE EIGHT BANKING SUBSIDIARIES ARE:

• State Bank of Bikaner and Jaipur (SBBJ)

• State Bank of Hyderabad (SBH)

49

• State Bank of Indore (SBIR)

• State Bank of Mysore (SBM)

• State Bank of Patiala (SBP)

• State Bank of Saurashtra (SBS)

• State Bank of Travancore (SBT)

PRODUCTS AND SERVICES

PERSONAL BANKING

• SBI Term Deposits SBI Loan For Pensioners

• SBI Recurring Deposits Loan Against Mortgage Of Property

• SBI Housing Loan Loan Against Shares & Debentures

• SBI Car Loan Rent Plus Scheme

• SBI Educational Loan Medi-Plus Scheme

OTHER SERVICES

• Agriculture/Rural Banking

• NRI Services

• ATM Services

• Demat Services

• Corporate Banking

• Internet Banking

• Mobile Banking

• International Banking

• Safe Deposit Locker

• RBIEFT

50

• E-Pay

• E-Rail

• SBI Vishwa Yatra Foreign Travel Card

• Broking Services

• Gift Cheques

INTERNATIONAL PRESENCE

The bank has 52 branches, agencies or offices in 32 countries. It has

branches of the parent in Colombo, Dhaka, Frankfurt, Hong

Kong,Johannesburg, London and environs, Los Angeles, Male in

the Maldives, Muscat, New York, Osaka, Sydney, and Tokyo. It has offshore
banking units in the Bahamas, Bahrain, and Singapore, and representative

offices in Bhutan and Cape Town.

SBI operates several foreign subsidiaries or affiliates. In 1990 it

established an offshore bank, State Bank of India (Mauritius). It has two

subsidiaries in North America, State Bank of India (California), and State Bank

of India (Canada). In 1982, the bank established its California subsidiary, which

now has seven branches. The Canadian subsidiary was also established in

1982 and also has seven branches, four in the greater Toronto area, and three

in British Columbia. In Nigeria, it operates as INMB Bank . This bank was

established in 1981 as the Indo-Nigerian Merchant Bank and received

permission in 2002 to commence retail banking. It now has five branches in

Nigeria. In Nepal SBI owns 50% of Nepal SBI Bank, which has branches

throughout the country. In Moscow SBI owns 60% of Commercial Bank of India,

with Canara Bank owning the rest. In Indonesia it owns 76% of PT Bank Indo

Monex. State Bank of India already has a branch in Shanghai and plans to open

one

51

up in Tianjin.State Bank of India has presence in Dubai International Financial

Centre, Dubai, United Arab Emirates.

GROWTH

State Bank of India has often acted as guarantor to the Indian Government,

most notably during Chandra Shekhar's tenure as Prime Minister of India. With

11,448 branches and a further 6500+ associate bank branches, the SBI has

extensive coverage. State Bank of India has electronically networked all of its
branches under Core Banking System(CBS). The bank has one of the

largest ATM networks in the region. More than 8500 ATMs across India. The

State Bank of India has had steady growth over its history, though it was marred

by the Harshad Mehtascam in 1992. In recent years, the bank has sought to

expand its overseas operations by buying foreign banks. It is the only Indian

bank to feature in the top 100 world banks in the Fortune Global 500 rating and

various other rankings.

 Chapter 4
• Data Analysis &
Interpretation
 52

CALCULATION OF CORRELATION

Bank Names Correlation

HDFC 0.930206867

ICICI 0.877994998

PNB 0.702472868

SBIN 0.914815796

*Data is attached in annexure.

RESULT FROM THE CALCULATION OF CORRELATION

In the calculation I have seen that correlation coefficient of HDFC is higher than

other banks (0.930) in last 5 years which shows that it is highly correlated with

nifty. So, whenever Nifty 50 moves up usually the share price of HDFC also

moves up and vice-versa. It means that in last 5 years it moves according to

Nifty. In second place correlation coefficient of SBIN is good it shows that SBIN

is also highly correlated with the Nifty 50 up’s & down’s in last 5 years analysis.
 53

CALCULATION OF RISK & RETURN

1- HDFC BANK

HDFC Bank Yearly Return on HDFC Bank (in

Date Closing Rate %age)
1st
Year
01-Apr-
05 551.5
31-
Mar-06 774.25 1st Year 40.38984587
2nd
Year
03-Apr-
06 773.85
30-
Mar-07 954.15 2nd Year 23.29908897
3rd
Year
02-Apr-
07 901.35
31-
Mar-08 1331.25 3rd Year 47.69512398
4th
Year
01-Apr-
08 1309.55
31-
Mar-09 945.5 4th Year -27.79962583
5th
Year
01-Apr-
09 973.4
31-
Mar-10 1933.5 5th Year 98.63365523

Risk 45.57889548
Average
Return 36.44361765
 54

2- ICICI BANK

Yearly Return
ICICI Bank on ICICI Bank
Date Closing Rate (in %age)
1st
Year
01-
Apr-05 406.05
31-
Mar-06 589.05 1st Year 45.06834134
2nd
Year
03-
Apr-06 604
30-
Mar-07 855.3 2nd Year 41.60596026
4th
Year
02-
Apr-07 857
31-
Mar-08 843.95 3rd Year -1.522753792
4th
Year
01-
Apr-08 834.55
31-
Mar-09 375.05 4th Year -55.05961297
5th
Year
01-
Apr-09 385.2
31-
Mar-10 952.5 5th Year 147.2741433

Risk 74.48828638
Average Return 35.47321563
 55

3- PUNJAB NATIONAL BANK

Yearly Return on
PNB Bank PNB Bank (in
Date Closing Rate %age)
1st
Year
01-Apr-
05 396.9
31-
Mar-06 470.4 1st Year 18.51851852
2nd
Year
03-Apr-
06 466.5
30-
Mar-07 474.2 2nd Year 1.650589496
3rd
Year
02-Apr-
07 426.7
31-
Mar-08 510.25 3rd Year 19.58050152
4th
Year
01-Apr-
08 438.6
31-
Mar-09 411.45 4th Year -6.190150479
5th
Year
01-Apr-
09 405.75
31-
Mar-10 1012.75 5th Year 149.5995071

Risk 64.10527498
Average
Return 36.63179323
 56

4- STATE BANK OF INDIA

SBIN Bank Yearly Return on SBIN

Date Closing Rate Bank (in %age)
1st
Year
01-Apr-
05 670.1
31-Mar-
06 968.5 1st Year 44.53066706
2nd
Year
03-Apr-
06 983.35
30-Mar-
07 994.45 2nd Year 1.128794427
3rd
Year
02-Apr-
07 930.5
31-Mar-
08 1600.25 3rd Year 71.97743149
4th
Year
01-Apr-
08 1623.2
31-Mar-
09 1067.1 4th Year -34.25948743
5th
Year
01-Apr-
09 1077.45
31-Mar-
10 2078.2 5th Year 92.8813402

Risk 51.84648463
Average
Return 35.25174915

57

RESULT FROM THE CALCULATION OF RISK & RETURN

 From the above calculation performance of HDFC Bank in last 5 years is better

than other banks because it is providing 36.44% of return at 45.58% risk. It

means providing good return at lower risk. At second place SBIN bank stand

and provide return of 35.25% at 51.85% risk.

In Risk & Return analysis we consider that script as best script which gave the

Maximum return at Minimum Risk. So from the data of 5 years HDFC bank is

the best script in terms of RISK & RETURN analysis.

Avg. Closing Nifty Six Monthly %age Avg. Closing HDFC Six Monthly
Dates (Six Month Basis) change (Six Month Basis) %age change
01-Apr-05 2067.65 551.55
31-Oct-05 2242.98 7.816832963 615.375 10.37172456
01-Apr-06 2902.053 22.71057765 720.62 14.60478477
31-Oct-06 3330.201 12.85652127 826.618 12.82309362
01-Apr-07 3921.559 15.07966602 1034.44 20.0902904
31-Oct-07 4471.548 12.29974497 1174.977 11.96082987
01-Apr-08 5507.344 18.80754135 1570.683 25.19324396
31-Oct-08 4331.751 -27.13897913 1224.422 -28.27954741
01-Apr-09 2842.19 -52.40891707 931.748 -31.41128288
31-Oct-09 4384.67 35.17893023 1423.734 34.55603364
01-Apr-10 5051.0225 13.19242787 1724.95 17.46230326

58

CALCULATION OF BETA
 1. HDFC BANK WITH NIFTY

Beta of HDFC Bank = 0.804697745

59

2. ICICI BANK WITH NIFTY

Avg. Closing
Nifty Six Monthly
(Six Month Six Monthly %age Avg. Closing ICICI %age
Dates Basis) change (Six Month Basis) change
01-Apr-05 2067.65 406.05
31-Oct-05 2242.98 7.816832963 458.748 11.48735253
01-Apr-06 2902.053 22.71057765 575.816 20.33080012
31-Oct-06 3330.201 12.85652127 588.253 2.114226362
01-Apr-07 3921.559 15.07966602 886.678 33.65652469
31-Oct-07 4471.548 12.29974497 938.134 5.484930724
01-Apr-08 5507.344 18.80754135 1155.242 18.7932918
-
31-Oct-08 4331.751 -27.13897913 693.453 66.59268905
-
01-Apr-09 2842.19 -52.40891707 386.67 79.33974707
31-Oct-09 4384.67 35.17893023 706.12 45.2401858
01-Apr-10 5051.0225 13.19242787 867.83 18.63383382
 Beta of ICICI Bank = 1.8709125

3. PUNJAB NATIONAL BANK WITH NIFTY

Six Monthly
Avg. Closing Nifty Six Monthly %age Avg. Closing PNB %age
Dates (Six Month Basis) change (Six Month Basis) change
01-Apr-05 2067.65 396.9
31-Oct-05 2242.98 7.816832963 401.276 1.090521237
01-Apr-06 2902.053 22.71057765 448.238 10.47702337
-
31-Oct-06 3330.201 12.85652127 425.59 5.321553608
01-Apr-07 3921.559 15.07966602 497.865 14.51698754
31-Oct-07 4471.548 12.29974497 509.119 2.210485171
01-Apr-08 5507.344 18.80754135 603.204 15.59754246
-
31-Oct-08 4331.751 -27.13897913 479.041 25.91907582
-
01-Apr-09 2842.19 -52.40891707 426.348 12.35915262
31-Oct-09 4384.67 35.17893023 668.98 36.26894675
01-Apr-10 5051.0225 13.19242787 913.3535 26.75563186
60

Beta of PNB = 0.381567483

4. STATE BANK OF INDIA WITH NIFTY

 Six Monthly
Avg. Closing Nifty Six Monthly %age Avg. Closing SBIN %age
Dates (Six Month Basis) change (Six Month Basis) change
01-Apr-05 2067.65 670.1
31-Oct-05 2242.98 7.816832963 748.327 10.45358513
01-Apr-06 2902.053 22.71057765 903.008 17.12952709
31-Oct-06 3330.201 12.85652127 887.974 -1.69306759
01-Apr-07 3921.559 15.07966602 1156.044 23.18856376
31-Oct-07 4471.548 12.29974497 1493.534 22.59674035
01-Apr-08 5507.344 18.80754135 2188.263 31.74796631
-
31-Oct-08 4331.751 -27.13897913 1458.928 49.99115789
-
01-Apr-09 2842.19 -52.40891707 1130.347 29.06903809
31-Oct-09 4384.67 35.17893023 1752.056 35.48453931
01-Apr-10 5051.0225 13.19242787 2135.446 17.95362655

Beta of SBIN = 1.313855349

61
 62

RESULT FROM BETA CALCULATION

Beta is a measure of a stock's volatility in relation to the market. By definition,

the market has a beta of 1.0, and individual stocks are ranked according to how

much they deviate from the market. A stock that swings more than the market

over time has a beta above 1.0. If a stock moves less than the market, the

stock's beta is less than 1.0. High-beta stocks are supposed to be riskier but

provide a potential for higher returns; low-beta stocks pose less risk but also

lower returns. Therefore, investing in PNB would be much saver for the

investors who aim at investing for long durations as its beta is lowest, HDFC is

also a good option for the investors who are looking for a stock which is less

risky in comparison to the other competitors and offers high and timely returns.

Whereas, ICICI is an aggressive stock whose beta is almost double than the

market beta.
Chapter 5

 Observati
ons &
Finding
63

Observations

TOOLS USED →↓

BANKS NAME

↓
Correlation Risk Vs. Return (in %age) Beta

HDFC 0.930206867 45.57:36.44 0.804698

ICICI 0.877994998 74.48:35.47 1.870913

PNB 0.702472868 64.10:36.63 0.381567

SBIN 0.914815796 51.84:35.25 1.313855

1- The result of Correlation shows that in last 5 years HDFC Bank is highly

correlates with nifty. It means that this script positively moves according

to the Nifty movement. In second place State Bank of India correlates

better with Nifty-50.

2- In the analysis of Risk & Return I observe that HDFC bank is the best

performing bank in the Nifty in last 5 years because its risk level is low in

comparison of other banks stock taken into consideration and its average

return is also higher. In second place SBIN is the best stock in last 5

years.
 64

3- From the calculation of Beta I observe that Punjab National Bank is the

best stock in Nifty 50 in last 5 years because its Beta is less than 1 and it

stands at 0.381. At the second place HDFC is best stock if we compare

stock with Beta calculation because its beta also less than 1 but little bit

higher than PNB.

Chapter 6

 Conclusion
 65

CONCLUSION

• It's important for investors to make the distinction between short-term

risk--where beta and price volatility are useful--and longer-term,

fundamental risk, where big-picture risk factors are more telling. High

betas may mean price volatility over the near term, but they don't always

rule out long-term opportunities.

• Inflation rate Of the Economy should Also Be Considered While

investing.

• The stock prices Hit the top At the end of the financial year(refer to

annexure chart) in comparison to begning of the year.

Chapter 7

 Recommendations
 66

Recommendations

• Investors can invest in Share market for better returns but his investment

view should be long term.

• Investment in HDFC Bank & SBIN Bank is more profitable in banking

sector.
 Chapter 8

 Bibliography
 67

BIBLIOGRAPHY

1. Websites

• www.nseindia.com

• www.google.com

• www.wikipedia.com

• www.moneycontrol.com

• www.statistics-help-online.com

• www.fundmanagersoftware

2. Books

Suresh C. Sinha and Anil K. Dhiman, Research Methodology

Himalaya publication house New Delhi

• Jain S P, Narang K L Financial Accounting Kalyani Publication New

Delhi,2004

• Gupta Sashi and Joshi Rosi Management Accounting

 ANNEXURE