PROJECT REPORT

On
A COMPARATIVE ANALYSIS OF HDFC
BANK FIXED DEPOSIT
Submitted in the partial fulfillment of the requirement of the degree
of Master of Business Administration (Business Economics)

(Session: 2007-09)
Under the Supervision of:

Submitted By:

Dr. Sanjay Nandal

Faculty
Deptt. Of Business Economics

SURENDER SINGH
Roll No-4907
MBA (BE) 4th Sem

Submitted To:

Department Of Business Economics

Maharshi Dayanand University, Rohtak

DECLARATION:

I, Surender Singh Roll No. 4907 M.B.A (B.E) 4 th Semester of Department of Business
Economics hereby declare that the project Report entitled A Comparative Analysis Of
HDFC fixed Deposit is an original work and the same has not been submitted to any
other institute for the award of any other degree.
The seminar presentation was made on ________. The suggestions as approved by the
faculty were dully incorporated

Signature Of Supervisor

Signature of the Candidate

Countersigned
Head of Department

ACKNOWLEDGEMENT:
I want to clarify that this is not just a formal acknowledgement but also a sincere note of
thanks and regard from my side. I feel a deep sense of gratitude and affection for those who
were associated with the project and without whose cooperation and guidance this research
could not have been conducted properly.
I would especially like to thank Dr. SANJAY NANDAL faculty of our (Department of
Business Economics-M.D.U Rohtak) For taking keen interest in the completion of my
report.
Last but not least I dedicate this effort of mine to those persons who are light of my life: My
Father, Mother, Friends who have been behind every successful endeavor in my life.

(Surender singh)

PREFACE

I am the sort of person who backs himself for whatever he goes. That is why whenever
someone used to mention about experienced people getting all the preference in jobs, I
used to get assertive. I always persisted that I can compete with very best in the industry
and it does not make sense to benefit someone on the basis of experience alone. But my
slumber was broken in the very first day in the market. All my theoretical knowledge and
percentage counted for nothing. By the time I finished my training I had firm belief in the
old saying "Experience is the best teacher" .These eight weeks have taught me what all
my education failed to. Now I feel more confidence about myself and have hardened to
core. This training taught me what to expect from others. How the things move in
corporate world, what the market has for you in store and much more, which can't be
expressed in words? It is a great experience and one should try to take advantage of the
opportunity given to him/her.
I thank everyone who has contributed to make this experience complete and stimulating.

TABLE OF CONTENTS
Page No.

Declaration

Acknowledgement

II

Preface

III

Executive Summary

IV

Chapter 1
(a) Introduction to project
11-16
(b) Company profile
Background

18

Business Objective

19

Board of Directors

20

Profit and Loss Account

21

Balance Sheet

23

Awards Won

24

(c) H DF C F i x e d D e p o s i t s
HDFC Fixed Deposits

28

Benefits

29

Features of Fixed Deposits

33

 Scheme of Fixed Deposits

38

Interest on Fixed Deposits

47

Com parison of HDFC Fixed Deposits With

Other Banks

50

Chapter 2
(a) Research Methodology
56
(b) Research Method used

60

Chapter 3
(a) Findings

69

(b) Reccomendations

71

A n n e x u re

74

EX E C U T I V E S U M M A RY

M a r k e t r e s e a r c h i s t h e f u n c t i o n t h a t l i n k s t h e c o n s u m e r , c u s t o m e r,
and public to the marketer through information-information used to
identify and define marketing opportunities and problems; generate
refine,

and

evaluate

marketing

actions;

monitor

marketing

performance; and improve understanding of marketing as a process.

S p e a k i n g i n l a y m e n s l a n g u a g e m a r k e t i n g r e s e a r c h i s t h e s ys t e m a t i c
and objective identification, collection, analysis, dissemination and
use of information for the purpose of assisting management in
decision

making

related

to

the

identification

and

solution

of

problems (and opportunities) in marketing.

A s m a r k e t i n g R e s e a r c h i s s y s t e m a t i c , t h u s , s ys t e m a t i c p l a n n i n g i s
required at all stages of the marketing research process. Marketing
Research attempts top provide accurate information that reflects a
true state of affairs. Therefore the motto of every researcher should
be, Find it and tell it like it is.
Basically marketing research is of two types: 1. Problem identification Research
2. Problem Solving Research

PROBLEM IDENTIFICATION RESEARCH : It is the process under which complete survey is being done about
the subject in which every important concept is being covered and
problematic area is detected. Survey can be regarding available
r e s o u r c e s , a p p r o p r i a t i o n o f a v a i l a b l e f u n d s , c o m p e t i t o r s p o l i c y, e t c .
Under this process we can under go following researches: -

1. Market Potential Research

2. Market Share Research
3. Image Research
4. Market characteristics Research
5 . S a l e s An a l y s i s R e s e a r c h
6. Forecasting Research
7 . B u s i n e s s Tr e n d s R e s e a r c h

P R O B L E M S O LVI N G R E S E A R C H : -

In this process after finding the problem we try to find out the
solution and giving the recommendations to
t h e c o n c e r n e d p a r t y. Af t e r t h i s p r o c e s s i t b e c o m e s e a s y f o r t h e
institution to grab the opportunities. For problem solving we can go
for following researches: 1. Segmentation research
2. Product research
3. Pricing research
4. Promotion research
5. Distribution research

N ATU R E O F J O B AS S I G N E D

The job assigned was to conduct interviews with customers of

various

fixed

deposits

to

surface

and

define

their

key

preferences and priorities while selecting deposit of any bank.

To

study

the

attitude

of

depositors

by

knowing

their

expectations and viewpoint about fixed deposits.

Prepare statistical findings and analysis and reports related to
the customer s choice for fixed deposits.
To p r e p a r e a n d d e f i n e s u r v e y q u e s t i o n n a i r e t o f i n d t h e l e v e l
and pattern of considerations of customers while choosing any
bank for

d e p o s i t i n g t h e m o n e y.

To c o n d u c t d i s c u s s i o n s a n d i n t e r v i e w s t o c o l l e c t m a x i m u m
possible information.
To c o r r e l a t e t h e d a t a c o l l e c t e d u s i n g K e n d a l l s C o e f f i c i e n t o f
c o n c o r d a n c e a n d m o d e ( m e a s u r e o f c e n t r a l t e n d e n c y) .

10

I N T R O D U C T I O N O F TH E TOP I C

:-

Top i c o f t h e p r o j e c t i s o n M a r k e t r e s e a r c h f o r

Comparative

a n a l y s i s o f H D F C d e p o s i t s T h e a n a l ys i s o f t h e p r o j e c t w a s b a s e d
on the Information fetched from various depositors coming to the
banks. For the study of fixed deposits the primary data was collected
based on a survey research, using a structured questionnaire with
both open ended and closed ended questions.

The sample size was around 20 Students from different customers of

banks the mode of the survey was of personal interview of the
depositors of the banks fill the questionnaire. Secondary data was
also taken from the various annual reports, brochures of different
banks and the Internet.

After collecting the data proper analysis has been done by using
s t a t i s t i c a l t o o l s s u c h a s K e n d a l l s m e t h o d a n d m o d e ( m e a s u r e o f
c e n t r a l t e n d e n c y) .
O n a n a l ys i s f i n d i n g s a r e b e i n g p r e s e n t e d i n s u c h a f o r m s o t h a t i t
can give proper results easily understandable by layman.

The project concludes with results and findings of the analysis,

which we hope, will provide enough information about the factors
influencing deposits coming to any bank.

11

Regular fixed deposits in India: Great way to earn

m o r e i n t e r e s t t h a n s a vi n g s ac c o u n t : F i x e d d e p o s i t s c a n h e l p yo u s e c u r e y o u r h a r d e a r n e d m o n e y f o r l o n g
durations while giving you higher risk-free returns on your money
t h a n r e g u l a r s a v i n g s a c c o u n t . Wit h t h e s t o c k m a r k e t p e r f o r m i n g
p h e n o m e n a l l y, t h e p o p u l a r i t y o f f i x e d d e p o s i t s h a v e d e c l i n e d b u t ,
they are regaining ground at a gradual pace.
As the name implies a fixed deposit is a financial instrument
meant for people who want to deposit their money with banks for a
f i x e d d u r a t i o n r a n g i n g f r o m 1 5 d a y s t o 5 ye a r s a n d a b o v e , a n d e a r n a
higher rate of interest on their money than conventional savings
a c c o u n t . Af t e r t h e m a t u r i t y o f f i x e d d e p o s i t t h e i n v e s t o r g e t s a
return which is equal to the principal plus the interest earned on this
principal over the entire duration of fixed deposit.
Fixed deposits have been very popular among investors and keeping
this fact in mind banks in India have a wide variety of fixed deposit
schemes to suit almost every need.

I n t e re s t r a t e s o n re g u l a r fi xe d d ep o s i t s
At current prevailing rates a regular fixed deposit can earn you an
interest up to 8.75% and senior citizens who opt for such a fixed
deposit scheme are eligible for an additional 0.5 percent increase,

12

which makes the effective interest rate 9.25% for certain fixed
deposit intervals.
Fixed deposits though are invested for a certain time period but they
c a n b e a s o u r c e o f m o n e y a n d f u n d s c a n b e w i t h d r a w n p a r t l y, f r o m
fixed deposits in times of need. Depending on the bank's policies,
t h i s w i t h d r a w a l m a y o r m a y n o t a t t r a c t p e n a l t y.

Fe a t u re s o f a re g u l a r fi xe d d e p o s i t
The interest rates on regular fixed deposits are time based and fixed
deposit for longer duration attract better interest rates. For example
from HDFC Bank, a fixed deposit amount below 15 lakhs of 15 - 29
d a ys w i l l e a r n 5 . 5 0 % i n t e r e s t r a t e f o r g e n e r a l p u b l i c a n d 6 . 0 0 % f o r
senior citizens. For the same amount , a fixed deposit of 100 - 101
d a ys w i l l e a r n y o u a n i n t e r e s t r a t e o f a r o u n d 6 . 7 5 % a n d 7 . 2 5 % i f y o u
a r e a s e n i o r c i t i z e n . S i m i l a r l y, f o r a n a m o u n t b e l o w 1 5 l a k h s a f i x e d
d e p o s i t b e t w e e n t h e p e r i o d 2 ye a r s 1 5 d a y s - 2 ye a r s 1 6 d a ys w i l l
give a 8.75% interest rate return and this will be 9.25% for senior
citizens.

The power of compounding on your side

The earning potential of fixed deposit is greatly increased by the
power of compounding. If the fixed deposit allows the potential to
earn compound interest by reinvesting the principal amount along
with the interest earned during the period, it can dramatically
i n c r e a s e t h e a m o u n t yo u w i l l g e t a t t h e m a t u r i t y o f f i x e d d e p o s i t . To

13

get the maximum returns one should compare fixed deposit schemes
from various banks before settling for one.
If you have surplus funds, instead of keeping them in your savings
account and thereby earning a paltry interest rate, you can add them
t o yo u r f i x e d d e p o s i t . T h i s w a y t h e f u n d s w i l l e a r n a m u c h h i g h e r
rate of interest.

How to open a fi xed deposit?

The process of opening a fixed deposit is very simple and this is
accessible to almost all section of Indian population. For example:
resident individuals , Hindu undivided families, sole proprietorship
firms, partnership firms, limited companies, trust accounts etc. all
can open fixed deposits. Banks in India have a certain minimum
initial deposit limit like Rs. 10,000 to open a fixed deposit and the
value of fixed deposit can be increased in multiples of a minimum
amount (for example Rs. 5000). These limits can vary and also
depend upon rural, urban or semi-urban nature of population. The
limits are very low for rural areas so that even those with a low
incomes can open a fixed deposit.
C a l c u l a t i o n o f i n t e re s t r a t e s a n d t a x d e d u c t i o n s o n
re g u l a r fi xe d d e p o s i t
How the interest rate is calculated on your fixed deposit varies from
bank to bank. For a fixed deposit of six months or above the banks
may calculate the

interest on a quarterly basis. In case the tenure of fixed deposit is

less than six months the interest is calculated at maturity as simple

14

interest. The compounding factor or interest for re-investment is

calculated on a quarterly basis.
Every fixed deposit is subject to the Indian income tax regulations
prevalent from time to time. Keeping these regulations in mind
b a n k s d e d u c t t a x a t s o u r c e f r o m yo u r f i x e d d e p o s i t s a n d i s s u e yo u a
TDS certificate for the same.
R e g u l a r f i x e d d e p o s i t s b r i n g i n c r e a s e d r e t u r n s o n yo u r s a v i n g s a s
compared to regular fixed deposits. These are great instruments for
i n v e s t i n g m o n e y. T h e f a c t t h a t t h e y c a n b e u s e d a s g u a r a n t e e f o r
loans and financial transactions make them even more valuable.

Documentation
Applicants must satisfy the following documentation requirements:

Identity proof
Proof of communication address
Self cheque (if the applicant is not visiting the branch for account opening)

Fixed Deposit Eligibility

Resident Indian.

OBJECTIVE

T h e b a s i c o b j e c t i v e o f m y c o m p a r a t i v e a n a l y s i s w a s t o a n a l yz e
the general view of public on HDFC fixed deposits. The main aim of
the project is to study the current position of HDFC deposits in the
market by taking public view with the help of questionnaire and then
afterwards study the feedback got from the same.

The project also focuses on the people inclination towards a

particular criterion after interest rates, which they consider while

15

choosing any bank for their fixed deposits. My research also

browsed many different reasons which people take into account
when they deposit their money in banks.

T h e r e s e a r c h s o n e o f t h e a i m s w a s t o f i n d o u t t h e c u r r e n t
position of HDFC deposits as compare to other competitive banks,
finding out different areas of improvement where HDFC is lagging
behind in the race of deposits with other banks.

Company
16

profile

C O M PA N Y P R O F I L E

BACKGROUND
HDFC Bank was incorporated in August 1994, and, currently has an nationwide network
of

1412

Branches

and

3275

ATM's

in

528 Indian towns and cities.and w i t h t h e p r i m a r y o b j e c t i v e o f m e e t i n g a

social need that of promoting home ownership by providing longterm finance to households for their housing needs.

17

The Housing Development Finance Corporation Limited (HDFC) was amongst the first
to receive an 'in principle' approval from the Reserve Bank of India (RBI) to set up a
bank in the private sector, as part of the RBI's liberalisation of the Indian Banking
Industry in 1994. The bank was incorporated in August 1994 in the name of 'HDFC Bank
Limited', with its registered office in Mumbai, India. HDFC Bank commenced operations
as a Scheduled Commercial Bank in January 1995.
H D F C w a s p r o m o t e d w i t h a n I N I T I A L S H A R E C A P I TAL o f R s .
100 .

BUSINESS OBJECTIVE
The main objectives of HDFC are as follows:

To e n h a n c e r e s i d e n t i a l h o u s i n g s t o c k i n t h e c o u n t r y t h r o u g h
the

provision

of

housing

finance

in

systematic

and

p r o f e s s i o n a l m a n n e r,

To p r o m o t e h o m e o w n e r s h i p , b y e n a b l i n g a c o m m o n m a n t o
buy a house by providing him loans and advances.

18

Another objective is to increase the flow of resources to the

housing sector by integrating the housing finance sector with
the overall domestic financial markets.

O R G A N I S AT I O N A L G OA L S

H D F C s m a i n g o a l s a r e a s f o l l o w s :

Develop close relationships with individual households,

Maintain its position as the premier housing finance

i n s t i t u t i o n i n t h e c o u n t r y,

Transform ideas into viable and creative solutions,

Provide consistently high returns to shareholders, and

To g r o w t h r o u g h d i v e r s i f i c a t i o n b y l e v e r a g i n g o f f t h e
existing client base.

B OA R D O F D I R E C T O R S

HDFC is a professionally managed organization with a board of

directors consisting of eminent persons who represent various fields
including

finance,

taxation,

construction

and

urban

policy

&

development. The board primarily focuses on strategy formulation,

policy

and

control,

designed

to

deliver

increasing

value

to

shareholders.

19

Board of directors:

M r. D e e p a k S P a r i k h C h a i r m a n

M r. K e s h u b M a h i n d r a Vic e C h a i r m a n

Ms. Renu S Karnad ... Executive Director

M r. K . M . M i s t r y . . M a n a g i n g
Director

D r. S . A D a v e

M r.D . N G h o s h

M r. S . Ven k i t a r a m a n a n

M r. R a m S Tar n e j a

M r. N . M M u n j e e

M r.D . M S a t w a l e k a r

P R O F I T AN D L O S S AC C O U N T F O R TH E YE A R E N D E D
MARCH 21, 2008
PARTI C U L A R S
AMOUNT (AS
AMOUNT (AS
ON 31,
ON 31, MARCH
MARCH 2007)
2008)

20

INCOME
Operating
expenses
F e e s a n d o t h er
c h a rge s
O t h e r i n c o me
E X P E N DI T U R E
AND CHARGES
I n t e r e s t a n d o t h er
c h a rge s
S t a ff e x p e n s e s
Establishment
expenses
Other expenses
Depreciation
Provision for
contingencies
PROFIT BEFORE
TAX
Less: Provision
for tax
P R O F I T AF T E R
TAX
AVAI L A B L E
FOR

3298,88,10,688
101,72,31,818

2943,05,25,838
125,87,73,832

9,83,59,219
3410,44,01,725

8,98,53,595
3077,91,53,529

1959,42,84,905

1873,66,31,762

64,89,50,919
23,05,37,209

58,15,85,302
22,71,62,152

73,58,92,173
18,68,79,984
14,00,00,000
2153,65,45,190

61,81,42,425
23,58,32,889
11, 0 0 , 0 0 , 0 0 0
2050,93,54,530

1256,78,56,535

1026,97,98,999

220,20,00,000

175,20,00,000

1036,58,56,535

851,77,98,999

A P P R O P R I ATI O N

21

265,00,00,000
282,83,06,570
5,00,00,000

230,00,00,000
242,18,97,314
4,00,00,000

423,50,52,444

33293,31,134

59,39,66,105

42,65,70,551

85,31,416
1036,58,56,535

-851,77,98,999

A P P R O P R I ATI O N S

Special reserve
General reserve
S h e l t er
assistance
reserve
Proposed

22

BALANCE SHEET as at March 31, 2008

PARTI C U L A R S
SOURCES OF
FUNDS
S h ar e c a p i t a l
Reserve and
surplus
LOAN FUNDS

A P P L I C ATI O N S
OF FUNDS
Loans
I n v e s t me n t s
Deferred tax
Current assets
and advances
LESS: Current
liabilities and
pr o v i s i o n
Fixed assets
LESS:
Depreciation

AMOUNT
(As on 31,
ma rch 2 0 0 8 )

A mo u n t
(As on 31,
ma rch 2 0 0 7 )

2 4 9 , 11, 6 8 , 1 7 0
246,61,32,060
3633,98,62,065
3147,17,57,625
3883,10,30,235
3393,78,89,685
36647,39,55,994 28684,03,87,133
40530,49,86,229 32077,82,87,133

3 6 0 11, 4 9 , 6 6 , 9 11
3130,03,63,692
69,38,29,546

27974,27,23,017
2793,36,56,515
54,58,29,546

2982,13,27,620

2396,44,44,070

( 1 9 5 7 , 3 9 , 8 4 , 7 9 3) ( 1 7 5 8 , 4 7 , 11, 1 6 7 )
567,86,33,512

7 3 4 , 11, 5 7 , 6 2 9

( 2 7 3 , 0 1 , 5 0 , 2 5 9)

(296,48,22,792)

40530,49,86,229

32077,82,76,818

23

Tod a y H D F C

Ltd.

is

great

brand

name

and

has

very

good

reputation among all the nationalized banks. This is due to the fact
that HDFC has won many prestigious awards.

AWAR D S F O R H DF C LTD :CNN-IBN

'Indian of the
Year (Business)'
Nasscom IT User
Award 2008
Business India
Forbes Asia
Asian Banker
Excellence in
Retail Financial
Services
Asiamoney
Microsoft &
Indian Express
Group
World Trade
Center Award of
honour

'Best IT Adoption in the Banking Sector'

'Best Bank 2008'
Fab 50 companies in Asia Pacific
Best Retail Bank 2008

Best local Cash Management Bank Award voted by

Corporates
Security Strategist Award 2008

For outstanding contribution to international trade

services.

Business Today- One of India's "Most Innovative Companies"

Monitor Group
survey

24

Financial
Express-Ernst &
Young Award
Global HR
Excellence
Awards - Asia
Pacific HRM
Congress:
Business Today

Best Bank Award in the Private Sector category

'Employer Brand of the Year 2007 -2008' Award - First

Runner up, & many more

'Best Bank' Award

2007
Dun &
Bradstreet
American
Express
Corporate Best
Bank Award
2007
The Bombay
Stock Exchange
and Nasscom
Foundation's
Business for
Social
Responsibility
Awards 2007
Outlook Money
& NDTV Profit
The Asian
Banker
Excellence in
Retail Financial
Services Awards
Asian Banker

'Corporate Best Bank' Award

'Best Corporate Social Responsibility Practice'

Award

Best Bank Award in the Private sector category.

Best Retail Bank in India

Our Managing Director Aditya Puri wins the

Leadership Achievement

25

M r. D e e p a k P a r e k h , C h a i r m a n , H D F C L t d . C o n f e r r e d w i t h
the prestigious Padma Bhushan award..

H D F C r e c e i v e s a w a r d f o r T h e B e s t P r e s e n t e d Ac c o u n t s o f
the institute of chartered accountants of India for 2004-05

H D F C R a n k e d a s I n d i a s T h i r d B e s t M a n a g e d C o m p a n y b y
F i n a n c e As i a 2 0 0 5

M r. D e e p a k P a r e k h a w a r d e d t h e ' H a l l o f F a m e ' a w a r d b y
Outlook Money magazine.

HDFC receives the 'Dream Home' award for the best Housing
Finance Company for 2004 from Outlook Money magazine

Awa r d s g a l o r e b y H D F C a t t h e 4 4 t h AB C I Awa r d s ! ! !

5th Best Company to work for in India, ranked by Business

Tod a y i n N o v e m b e r 2 0 0 4

HDFC fi xed deposits

26

FIXED DEPOSITS: - Fixed deposit is that deposit provided by

banks in which money can be deposited after equal intervals or after
any period of time as provided under the respective scheme of bank.
Interest is provided by bank as in accordance with the interest rates
of the scheme. Interest rate may vary from time to time as well as
according to the amount deposited.
HDFC FIXED DEPOSITS: - HDFC has instituted well-defined
service standards for both depositors and deposit agents. HDFC has
been

able

to

mobilize

deposits

from

over

lack

depositors.

Outstanding deposits grew from Rs. 1,458 crores in March 1994 to

Rs. 7,840 crores in March 2005. Much of this success can be
attributed to its strong brand image, superior services, security and
above all, the significant contribution made by HDFC's deposit
agents. HDFC has over 50,000 deposit agents and distributes all its
retail savings (deposit) products primarily through this channel.
HDFC has been awarded AAA rating for its deposits from both
CRISIL

and

ICRA

for

the

ELEVENTH

consecutive

ye a r ,

representing highest safety as regards timely payment of principal

and interest.

F i x e d d ep o s i t s i n I n d i a: B e n e f i t s , d r aw ba c ks a n d
p rec a u t i o n s : -

27

Any investment portfolio should comprise the right mix of safe,

moderate and risky investments. While mutual funds and stocks are
the favorite contenders for moderate and risky investments, fixed
deposits, government bonds etc. are considered safe investments.
Fixed deposits have been particularly popular among a large section
of investors in India as a safe investment option for a long period.

Wi t h f i x e d d e p o s i t s o r F D s a s t h e y a r e p o p u l a r l y k n o w n , a p e r s o n
can invest an amount for a fixed duration. The banks provide
interest rates depending on this loan amount and the tenure of
deposit. Here are the benefits, drawbacks of fixed deposits and
precautions one should take while making such investments.

Benefits

28

1. Safety
The fixed deposits of reputed banks and financial institutions
regulated by RBI (Reserve Bank of India) the banking regulator in
India are very secure and considered as one of the safest investment
methods.

2 . R e g u l a r In c o m e
Fixed deposits earn fixed interest rates for their entire tenure, which
i s u s u a l l y c o m p o u n d e d q u a r t e r l y. S o , t h o s e w h o w a n t a n i n c o m e o n a
regular basis can invest into fixed deposits and use the interest rate
as their income. This makes a fixed deposit very popular way of
investing money for retirees.

3. Saves tax
Wi t h t h e d i r e c t i v e s o f t h e i n c o m e t a x d e p a r t m e n t s t a t i n g t h a t
investment in fixed deposits up to a maximum of Rs.100,000 for 5
years are eligible for tax deductions under section 80 C of income
t a x a c t , f i x e d d e p o s i t s h a v e a g a i n b e c o m e p o p u l a r. F i x e d d e p o s i t s
s a v e t a x a n d g i v e h i g h r e t u r n s o n i n v e s t e d m o n e y.

Drawbacks

1 . L o w e r r a t e o f r e t u rn s

29

W h i l e t h e m o n e y i n v e s t e d i n s t o c k m a r k e t s m a y g i v e yo u a r e t u r n o f
20% the fixed deposits will yield only about 10%. So, the money
grows slowly in the case of fixed deposits.

2 . Ta x e s
The interest earned on fixed deposits is fully taxable and is added to
the annual income of the individual. Gains from stocks are
considered capital gains while dividends are tax free.

3 . R i s i n g i n fl a t i o n c a n w i p e o u t th e in t e r e s t
b e n e fi t s
The actual benefits or income from fixed deposit can be annulled by
a rising inflation. Suppose the inflation which is currently at 3 %
rises to about 6%, your fixed deposit at 10% annual return will
e f f e c t i v e l y y i e l d o n l y( 1 0 % - 6 % ) = 4 % o f r e t u r n . T h i s r e t u r n w o u l d
have been (10% -3%) = 7% if the rate of inflation had not changed.
This can drastically eat into your fixed deposit income.

Precaution
1 . C om p a n y fi x e d d e p o s i t s
Company fixed deposits are not considered as safe as fixed deposits
from leading banks and financial institutions regulated by the RBI.
So, if a company runs into losses or goes bankrupt the money
i n v e s t e d i n t o i t s f i x e d d e p o s i t c a n b e l o s t . To l u r e i n v e s t o r s , s u c h

30

companies offer a fixed deposit interest rate which is much higher

than those offered by banks. Before investing in any company fixed
d e p o s i t i t i s a d v i s e d t o c h e c k t h e c r e d e n t i a l s o f t h e c o m p a n y.

2 . In t e r e s t r a t e c o m p o u n d i n g p e r i o d
The interest rates offered on fixed deposit vary greatly with banks
and tenures. Whether the interest rate is compounded quarterly or
monthly will determine how much a person earns from his fixed
deposit. A fixed deposit with interest rate compounded monthly will
e a r n m o r e t h a n o n e w h i c h i s c o m p o u n d e d q u a r t e r l y. I t i s t h e r e f o r e
advised to shop around for the right fixed deposit scheme.

3. Premature ending of fi xed d e p o s i t s

B a n k s w i l l i m p o s e a p e n a l t y i f y o u b r e a k yo u r f i x e d d e p o s i t b e f o r e
the maturity period. Make sure you get the facts right about this
thing. How the bank calculates this penalty and what all charges will
i t l e v y w h e n y o u b r e a k a f i x e d d e p o s i t s h o u l d b e n o t e d c a r e f u l l y.

H D F C S TAF F : H u m a n r e s o u r c e s a r e H D F C s m o s t v a l u a b l e a s s e t s . T h e e f f i c i e n c y o f
H D F C s s t a f f i s e v i d e n t f r o m t h e f a c t t h a t , t h e n u m b e r o f o f f i c e s
increased from 41 in 1998 to181 currently as against the number of
e m p l o ye e s w h i c h i n c r e a s e d f r o m 8 0 6 t o 1 2 9 1 d u r i n g t h e s a m e
period.

This staff strength of 1291 includes professionals from the

f i e l d s o f f i n a n c e , l a w, a c c o u n t a n c y, e n g i n e e r i n g a n d m a r k e t i n g .

31

S U B S I D I A RY C O M PA N I E S

HDFC Developers Limited.

HDFC Investment Limited.

HDFC Holdings Limited.

H D F C Tr u s t e e C o m p a n y L i m i t e d .

HDFC Realty Limited.

Home Loan services India Private Limited.

H D F C Ven t u r e C a p i t a l L i m i t e d .

H D F C Ven t u r e Tr u s t e e C o m p a n y L i m i t e d .

HDFC Chubb General Insurance Company Limited.

GRUH Finance Limited.

H D F C As s e t M a n a g e m e n t C o m p a n y L i m i t e d .

Intel net global Services Private Limited.

Credit Information Bureau (India) Limited.

HDFC Bank Limited.

32

LATEST

INTEREST

GRAPH

PROFITS OF HDFC

33

P r o f i t s o f H D F C f o r p a s t f e w ye a r s a r e s h o w i n g a r i s i n g t r e n d . I t h a s
showing average growth rate of 24.28% in 2005, 23.33% in 2006,
20.53% in 2007, and 22.39% in 2008.

P r o f i t s f o r t h e s e ye a r s c a n b e s h o w n w i t h t h e h e l p o f f o l l o w i n g
schedule:

PROFITS OF HDFC

PROFIT
AFTER
TAX
PROFIT
BEFORE
TAX

2004

2005

2006

2007

2008

474

580

690

852

1037

851

1027

556

691

1257

After analyzing above table we can say that profits of HDFC Ltd are
increasing at fluctuating rate.

34

The above schedule can be explained with the help of following

graph. The below shown graph represents that HDFC profits have
been rising continuously after 2001.

1400
1200
1000
profit after tax
profit before tax

800
600
400
200
0

2004 2005 2006 2007 2008

T h e a b o v e g r a p h a l s o s h o w s t h a t H D F C p r o f i t s a r e r i s i n g e v e r y ye a r.
F o r t h e ye a r s n o t s h o w n i n t h e g r a p h g r o w t h r a t e i s a s f o l l o w s : starting from 26.67% in 1995-96, 18.34% in 1996-97 to 22.46% in
2000-01.There is no consistency in the change in profits sometimes
i t i s i n c r e a s i n g t o d e c r e a s i n g i n f e w ye a r s .
35

HDFC Ltd today is competing to leading Indian

banks due to proper management of funds and resources available.
Allocation of HDFC Ltd resources can be shown with the help of
profit

and

loss

account.

Al s o

there

are

different

sources

and

applications of funds of HDFC Ltd. There can be different sources

of funds like share capital, reserve and surplus, loan funds. Whereas
applications

of

funds

can

be

loans

given

to

general

public,

investments made, current assets, fixed assets, which play very

important role in development of any organization.

Proper allocation of funds like expenses and incomes along with

composition of assets and liabilities can be shown with the help of
following profit and loss account and balance sheet: -

C U R R E N T D E P O S I T S C H E M E S O F H D F C: -

The current deposit rate scheme provided by HDFC is as follows: -

PERIOD

Rate of interest (% p.a)

36

(Months) Monthly Non

Income Cumula tive
Plan
Option
Quarterly HalfYearly
12
7.25
7.30
7.35
13-59 7.00
7.05
7.10
60-84 7.25
7.30
7.35

Annual *Cumula tive

Income Option
plan
7.50
7.25
7.50

7.50
7.25
7.50

* I n t e r e s t c o m p o u n d e d a n n u a l l y. S e n i o r c i t i z e n s Ad d i t i o n a l r a t e o f
0.25 % p.a
This above-mentioned scheme is available for all the individuals
either they are customers of HDFC Ltd or not. There is one more
scheme, which is specially designed for HDFC Ltd home loan
customers. The scheme is as follows: -

T h e c u rre n t d e p o s i t r a t e s c h e m e p ro v i d e d b y H D F C t o
home loan customers is as follows : -

PERIOD
Rate of interest (% p.a)
(Months) Monthly Non
Annual *Cumula tive
Income Cumula tive
Income Option
Plan
Option
plan
Quarterly HalfYearly

37

12-59
60-84

7.50
7.75

7.55
7.80

7.60
7.85

7.75
8.00

7.75
8.00

*Interest compounded annually

*0.25% p.a additional for senior citizens

VAR I A B L E R ATE D E P O S I T: - I n t e r e s t r a t e o n v a r i a b l e d e p o s i t i s
linked to the benchmark rate and will vary from time to time with
benchmark rate. Benchmark rate is that rate which is applicable on
HDFC fixed rate deposit product for the corresponding period. Rate
of interest on the first day of interest period will be applicable for
the entire interest period.

Deposit once placed cannot be interchanged between fixed and

v a r i a b l e r a t e t i l l t h e d a t e o f m a t u r i t y.

B e n e f i t s of a n H D F C I n d i v i d u a l D e p o s i t :
1. Highest Safety
2 . Tax b e n e f i t

38

3 . At t r a c t i v e R e t u r n s
4. Quick Loan Facility
5. Nomination Facility
6. Demand Draft Facility
7. High Service Standards
8. Electronic Clearing service

T h e s e b e n e f i t s c a n b e e x p l a i n e d a s f o l l ow s : 1 . H i g h e s t S a f e t y : ' FAA A ' a n d ' M A A A ' r a t i n g a f f i r m e d f o r t h e

e l e v e n t h c o n s e c u t i v e y e a r b y C R I S I L a n d I C R A r e s p e c t i v e l y.
2. Quick Loan Facility: Loan against deposit is available after 3
months from the date of deposit up to 75% of the deposit amount
subject to the other terms and conditions framed by HDFC. Interest
on such loans will be 2% above the deposit rate

3 . Tax B e n e f i t s : T D S : N o t a x d e d u c t i o n a t s o u r c e o n i n t e r e s t f r o m
d e p o s i t s u p t o R s . 5 , 0 0 0 / - p e r b r a n c h i n a F i n a n c i a l Yea r.

ANNUAL INCOME PLAN

PERIOD
R ATE O F
(MONTHS)

INTEREST
(% PER

MAXIMUM DEPOSIT
WITHOUT TDS (Rs)
INDIVIDUALS
SENIOR
CITIZENS

12-23

ANNUM)
5.75

86,000

80,000

24-35

6.00

83,000

76,000

36-59

6.50

76,000

71,000

60-84
6.75
74,000
M a x i m u m D e p o s i t Am o u n t R s . 5 , 0 0 0

68,000

39

4 . At t r a c t i v e R e t u r n s : H D F C d e p o s i t s a r e A v a i l a b l e t h r o u g h o u t t h e
year and offer Attractive, Assured returns to investors. Interest rates
offered are higher than that offered by most of the commercial
banks.
5 . N o m i n a t i o n F a c i l i t y : I n d i v i d u a l d e p o s i t o r s , s i n g l y o r j o i n t l y,
c a n n o m i n a t e u n d e r t h i s f a c i l i t y. I n c a s e t h e d e p o s i t i s p l a c e d i n t h e
name of a minor only a person lawfully entitled to act on behalf of
the minor can make the nomination. Power of attorney holder or any
person acting in representative capacity as holder of an office or
otherwise cannot nominate. The nominee shall have the right to
receive the amount due in respect of deposit on death of all the
depositors and payment by HDFC to the nominee shall constitute
full discharge to HDFC of its liability in respect of the deposit.

6. Demand Draft Facility: Outstation depositors can send demand

drafts after deducting demand draft charges. This facility is not
available to investors under Easy way Savings. This facility is
applicable for places where HDFC does not have an office .

7. High Service Standards:

Depositors are offered across the

counter services for new deposits, renewals, repayments and loan

a g a i n s t d e p o s i t f a c i l i t y. F u r t h e r, a l l e n q u i r i e s t h r o u g h e m a i l , p o s t ,
t e l e p h o n e a n d i n p e r s o n a r e a t t e n d e d t o i m m e d i a t e l y.

40

8.

Electronic

Clearing

Service:

This

facility

is

provided

to

depositors in select centers whereby the interest will be credited

directly

to

the

depositors'

bank

account.

The

depositor

would

receive a credit entry "ECS HDFC" in his passbook/bank statement.

Intimation of interest credited would be sent on an annual basis.
You r b a n k w i l l n o t l e v y a n y c h a r g e f o r t h i s f a c i l i t y a s p e r p r e s e n t
RBI guidelines.
Presently this facility is being offered by us at the following centers
ECS

Centers:

Ah m e d a b a d ,

Bangalore,

B h u b a n e s h w a r,

Kolkata,

C h a n d i g a r h , C h e n n a i , H y d e r a b a d , J a i p u r, K a n p u r, M u m b a i , N a g p u r,
N a s i k , N e w D e l h i , P u n e a n d Vad o d a r a .

Other main features attached to HDFC deposits: -

1.

Mode

of

acceptance:

-Deposits

can

be

made

by

cash/cheques/demand drafts. Cheques and drafts are drawn in the

f a v o u r o f H O U S I N G D E V E L O P M E N T F I N A N C E C O R P O R ATI O N
Ltd or HDFC Ltd and should be marked Account Payee Only.

2. Renew als and Repayment : - For renewals or repayment of

deposit, the duly discharged deposit receipt must be surrendered to
H D F C a t l e a s t a w e e k b e f o r e t h e d a t e o f m a t u r i t y. A c r o s s e d

41

Account Payee cheque favoring the first named depositor will

make repayment of deposit amount.

3.

Agents:

HDFC

invites

deposits

through

the

channel

of

authorized agents. HDFC has agent network of over 50,000 and a

depositor base of around 1 million.

4. Premature Withdrawals : - premature withdrawals will not be

allowed before completion of 3 months from the date of deposit. In
case of request for premature withdrawal after the expiry of three
months, the rates given in the following table shall apply: -

TAB L E F O R P R E M ATU R E WI T H D R AWAL S : -

M o n t h s c o mp l e t e d f r o m t h e R a t e o f i nt e r e s t p ay a b l e
date of deposit
3 less than 6

No interest

6 less than 12

3.50% p.a

42

12 less than

Fixed rate deposit:

2% less than the rate
a p p l i c a b l e f o r t h e c o mp l e t e d
period.

ma t u r i t y
Var i a b l e r at e d e p o s i t :
2% less than the rate
a p p l i c a b l e f o r t h e c o mp l e t e d
p e r i o d u n d e r v ar i a b l e r a t e
d e p o s i t pr o d u c t o n t h e
r e s p e c t i v e i n t er e s t r e s e t
dates.

POSITION OF HDFC DEPOSITS: -

HDFC has a depositor base of 1 million. Public deposits constitute

approximately 80% of the total deposits of the corporation. Deposits
o f H D F C f o r p a s t f e w ye a r s a r e a s f o l l o w s : -

43

YEARS

DEPOSITS

1995-96

2512.69

1996-97

3502.19

1997-98

4423.79

1998-99

5252.40

1999-00

6223.85

2000-01

7249.83

2001-03

8491.02

2002-05

9121.55

2003-07

9337.65

2004-08

7840.09

Fixed deposits can be shown with the help of following diagram.

The graph shows that HDFC deposits are increasing upto 2003-04
and showed a decline in 2007-08.

I N T E R E S T R ATE O N F I X E D D E P O S I T S O F H DF C B A N K
W h e n y o u o p e n a Fi xe d d e p o s i t w i t h H D F C B a n k Yo u r
i n t e re s t i s c a l c u l a t e d o n a q u a r t e r l y b a s i s f o r d e p o s i t s o f
6 m o n t h s a n d a b o v e Fo r t h o s e d e p o s i t s w i t h a t e n u re o f
b e l o w 6 m o n t h s , y o u r i n t e re s t i s c a l c u l a t e d a t m a t u r i t y

44

a s S i m p l e I n t e re s t . T h e p e r i o d o f Fi xe d D e p o s i t i s
calculated in number of days.
I n t e re s t f o r re - i n v e s t m e n t i s c a l c u l a t e d e v e r y q u a r t e r ,
a n d t h e Pr i n c i p a l i s i n c re a s e d t o i n c l u d e i n t e re s t e a rn e d
d u r i n g t h e p re v i o u s q u a r t e r.
Ta x a t s o u rc e i s d e d u c t e d a s p e r t h e I n c o m e Ta x
re g u l a t i o n s p re v a l e n t f ro m t i m e t o t i m e .

D O M E S T I C TE R M D E P O S I T S
Period

Amount

Interest
Rate
(per
annum)

7 - 14 days

Below
Rs.15
Lacs

3.00%

3.50%

August 6,
2007

1 5 - 2 9 d a ys

Below
Rs.15
Lacs

5.50%

6.00%

August 6,
2007

6.00%

6.50%

3 0 - 4 5 d a ys

Below
Rs.15

**Senior
Citizen
Rates (per
annum)

Effective
From

July 3,
2008

45

Lacs
4 6 - 6 0 d a ys

Below
Rs.15
Lacs

6.00%

6.50%

July 3,
2008

6 1 - 9 0 d a ys

Below
Rs.15
Lacs

6.25%

6.75%

July 3,
2008

9 1 - 9 9 d a ys

Below
Rs.15
Lacs

7.00%

7.50%

July 3,
2008

100 - 101
d a ys

Below
Rs.15
Lacs

7.75%

8.25%

July 3,
2008

102 - 180
d a ys

Below
Rs.15
Lacs

7.00%

7.50%

July 3,
2008

6 months 1
day - 6
months 14
d a ys

Below
Rs.15
Lacs

8.00%

8.50%

July 3,
2008

6 months 15
d a ys - 6
months 16
d a ys

Below
Rs.15
Lacs

8.25%

8.75%

July 3,
2008

6 months 17
d a ys - 9
months 14
d a ys

Below
Rs.15
Lacs

8.00%

8.50%

July 3,
2008

9 months 15
d a ys - 9
months 16
d a ys

Below
Rs.15
Lacs

9.00%

9.50%

July 3,
2008

9 months 17
d a ys - 1
ye a r

Below
Rs.15
Lacs

8.75%

9.25%

July 3,
2008

1 year 1 day
- 1 year 14

Below
Rs.15

9.00%

9.50%

August 8,
2008

46

d a ys

Lacs

1 year 15
d a ys - 1
ye a r 1 6 d a ys

Below
Rs.15
Lacs

10.00%

10.50%

August 8,
2008

1 year 17
d a ys - 2
years

Below
Rs.15
Lacs

9.00%

9.50%

August 8,
2008

2 years 1
day - 2
ye a r s 1 4
d a ys

Below
Rs.15
Lacs

9.50%

10.00%

August 8,
2008

2 ye a r s 1 5
d a ys - 2
ye a r s 1 6
d a ys

Below
Rs.15
Lacs

10.00%

10.50%

August 8,
2008

2 ye a r s 1 7
d a ys - 3
years

Below
Rs.15
Lacs

9.50%

10.00%

August 8,
2008

3 years 1
day - 5
years

Below
Rs.15
Lacs

9.50%

10.00%

August 8,
2008

5 years 1
day - 8
years

Below
Rs.15
Lacs

9.50%

10.00%

August 8,
2008

Interest rates are subject to change from time to time.

Applicable interest rates will be given as on the date of receipt
of the funds by the bank. When booking FD through
NetBanking please note the actual interest rate being applied
on the "Confirm" screen. This screen appears before you
confirm your request for opening a new FD.

47

O n l y S e n i o r C i t i z e n s / R e t i r e d P e r s o n n e l ( 6 0 ye a r s a n d a b o v e )
who are Resident Indians are eligible. The special rates are
applicable only for INR deposits.

The FD rate applicable for a monthly interest option will be a

discounted rate over the standard FD Rate. Please contact the
nearest Branch for further information.

For interest rates on Fixed Deposits for Rs. 15 Lacs and above,
please contact your nearest HDFC Bank branch.

Effective 01st Dec'06, the interest rate applicable for

premature closure of deposits will be lower of :

the original rate at which the deposit has been booked OR

the base rate applicable for the tenure for which the deposit
has been in force with the Bank.

The base rate is the rate applicable to deposits of less than

Rs.15 lacs.

T h e F i x e d D e p o s i t Ad v i c e w i l l b e d i s p a t c h e d t o yo u r r e c o r d e d
m a i l i n g a d d r e s s w i t h i n 3 - 4 w o r k i n g d a ys o f a c c o u n t o p e n i n g .

48

C O M PAR I S O N O F I N T E R E S T R ATE S O F F I X E D
D E P O S I T S O F D I F F E R E N T NATI O N A L I S E D B A N K S

Interest rates for fixed deposits for different nationalized banks with
respect to different time period can be shown with the help of
following graphs: -

49

Interest rates are for following banks: (1). HDFC

(2). State Bank of India
(3). Punjab and Sindh Bank
(4). Centurian Bank of Punjab
(5). Indus Ind Bank
(6). Bank of Baroda
(7). ICICI Bank
(8). IDBI Bank
(9). UTI Bank
(10). Standard chartered
(11). HSBC Bank
( 1 2 ) . I N G Vya s y a
(13). Union Bank of India
(14). State Bank of Patiala

Tab l e b a s e d o n 1 6 ma rch 2 0 0 9 d a t a
INTEREST RATES ON FIXED DEPOSITS
In the above table we can see that HDFC Ltd provides interest rates
f o r t h e t i m e p e r i o d o f 1 - 2 ye a r s t h a t i s 8 . 0 0 % .

50

In the above table we can see that Public sector banks provide
interest rates for the time period of 2-3 years that is 8.00%

In the above table we can see that Public sector banks provide
maximum interest rates for the time period of 5years above that is
8.00 %.

Below ONE Year

Foreign Banks
BANK NAME /
DURATION

15- 30- 46- 61- 91- 120- 180- 27129 45 60 90 120 179 270 364
days days days days days days days days

ABN-Amro Bank

4.00 4.50 4.50 4.50 6.50 6.50 6.50 6.50

Barclays

3.75 4.00 4.25 5.00 5.50 5.50 5.75 6.00

Citi Bank

3.50 4.50 5.00 5.50 7.00 7.00 8.00 8.00

DBS Bank

4.00 5.50 5.50 5.75 6.00 6.00 7.25 7.25

Standard Charted Bank

4.00 4.50 4.50 5.75 6.50 6.50 6.75 6.75

The Bank of Nova Scotia

4.75 5.75 5.75 5.75 6.75 6.75 6.75 6.75

The HongKong & Shanghai 3.50 4.25 5.25 5.25 5.25 5.25 5.50 8.00

Indian Banks - Public Sector

BANK NAME /
DURATION

15- 30- 46- 61- 91- 120- 180- 27129 45 60 90 120 179 270 364
days days days days days days days days

Allahabad Bank

4.25 4.25 5.50 5.50 6.75 6.75 7.75 8.25

Andhra Bank

4.50 4.50 5.25 5.25 6.75 6.75 7.00 7.00

Bank of Baroda

4.75 4.75 5.25 5.25 6.75 6.75 8.00 8.00

Bank of India

4.25 4.50 6.00 6.00 6.25 6.25 7.25 7.50

Bank of Maharashtra

4.50 4.75 5.50 5.50 7.25 7.25 7.75 8.25

Canara Bank

4.00 4.00 5.50 5.50 6.25 6.25 7.00 7.25

Central Bank of India

4.75 4.75 7.00 7.00 7.50 7.50 7.75 7.75

Corporation Bank

4.00 5.00 5.00 5.50 6.75 6.75 7.25 8.00

Dena Bank

4.25 4.75 5.25 5.25 6.75 7.00 7.50 8.00

IDBI Bank

5.00 5.00 5.50 5.50 6.75 6.75 8.00 8.00

51

Indian Bank

3.75 4.00 5.00 5.00 6.00 6.00 7.25 7.50

Indian Overseas Bank

4.25 4.75 5.00 5.00 6.00 6.50 7.50 7.75

Oriental Bank of Commerce 4.25 4.75 6.00 6.00 7.00 7.75 7.75 8.00
Punjab & Sind Bank

4.00 4.00 5.50 5.50 7.50 7.50 7.50 7.50

Punjab National Bank

4.00 4.00 5.00 5.00 5.50 5.50 7.00 7.00

State Bank of Bikaner &

Jaipur

4.50 4.50 5.50 5.50 6.75 6.75 7.50 7.50

State Bank of Hyderabad

4.50 4.50 5.25 5.25 6.50 6.50 7.25 7.25

State Bank of India

4.25 4.25 5.25 5.25 6.50 6.50 7.25 7.25

State Bank of Mysore

4.50 4.50 5.25 5.25 7.00 7.00 7.75 7.75

State Bank of Patiala

4.25 4.25 6.00 6.00 7.00 7.00 8.00 8.00

State Bank of Travancore

4.25 4.25 5.25 5.25 6.75 6.75 7.50 7.50

Syndicate Bank

3.75 4.25 5.00 5.25 6.00 6.50 7.25 7.50

UCO Bank

4.00 5.00 5.50 6.00 6.75 6.75 8.00 8.00

Union Bank of India

3.75 4.00 5.00 5.00 6.00 6.00 7.25 7.50

United Bank of India

4.00 4.50 5.00 5.50 6.50 6.50 7.50 7.50

Vijaya Bank

4.00 4.50 5.50 5.50 6.75 6.75 7.25 7.50

Indian Banks - Private Sector

BANK NAME /
DURATION

15- 30- 46- 61- 91- 120- 180- 27129 45 60 90 120 179 270 364
days days days days days days days days

Axis Bank

3.00 4.00 5.00 5.00 6.50 6.50 7.00 8.00

City Union Bank

5.50 5.50 6.00 6.00 7.25 7.25 8.75 8.75

Development Credit Bank

6.00 6.00 7.00 7.00 8.00 8.00 9.00 9.00

HDFC Bank

3.50 4.00 4.50 5.00 5.50 5.50 7.00 8.75

ICICI Bank

3.75 4.00 4.00 4.00 6.25 6.25 7.25 8.00

IndusInd Bank

4.25 5.00 5.00 5.25 7.00 7.00 7.25 7.75

ING Vysya Bank

5.00 5.50 5.50 7.00 8.00 8.00 8.00 8.00

Karnataka Bank

4.50 4.50 5.50 5.50 7.50 7.50 8.50 8.50

Kotak Bank

3.50 4.00 5.00 5.00 6.00 6.00 7.00 7.50

Tamilnadu Mercantile Bank 5.50 5.50 7.00 7.00 7.50 7.50 8.75 8.75
The Bank of Rajasthan Ltd 4.25 4.25 4.50 4.50 7.25 8.00 8.75
The Catholic Syrian Bank

4.75 5.75 5.50 5.50 7.25 7.25 8.50 8.50

52

The Dhanalakshmi Bank

4.75 4.75 5.50 5.50 7.00 7.00 8.00 8.00

The Federal Bank

4.50 4.50 5.50 5.50 7.00 7.00 8.00 8.00

The J & K Bank

4.00 6.00 6.00 6.00 7.50 7.50 7.50 7.75

The Karur Vysya Bank

4.50 5.00 5.00 5.00 6.00 6.00 7.50 7.50

The Lakshmi Vilas Bank

5.00 5.50 6.00 6.00 7.00 7.00 8.25 8.50

The South Indian Bank

4.50 4.50 5.50 5.50 7.00 7.00 8.00 8.00

TNSC Bank

4.00 4.50 5.00 5.00 6.00 6.00 7.50 7.50

1 y e a r-5 y ea r
Foreign Banks
BANK NAME /
DURATION

1 year < 2
years

2 years < 3
years

3 years < 5
years

ABN-Amro Bank

8.00

8.00

8.00

Barclays

6.25

6.50

6.50

CitiBank

8.00

8.00

8.00

DBS Bank

9.00

7.50

8.25

Standard Charted Bank

7.00

7.00

7.25

The Bank of Nova Scotia

6.75

6.75

6.75

The HongKong & Shanghai

8.00

7.50

7.50

Indian Banks - Public Sector

1 year < 2
years

2 years < 3
years

3 years < 5
years

Allahabad Bank

8.50

8.75

8.75

Andhra Bank

8.00

8.00

8.00

Bank of Baroda

8.50

8.75

8.50

Bank of India

8.00

8.25

8.25

Bank of Maharashtra

8.75

8.75

8.50

Canara Bank

8.25

8.25

8.25

Central Bank of India

8.50

8.50

8.50

Corporation Bank

8.25

8.25

8.25

BANK NAME / DURATION

53

Dena Bank

8.75

8.75

8.50

IDBI Bank

8.50

8.50

8.25

Indian Bank

8.00

8.00

8.00

Indian Overseas Bank

8.00

8.50

8.00

Oriental Bank of Commerce

8.25

8.50

8.50

Punjab & Sind Bank

8.50

8.00

8.00

Punjab National Bank

8.00

8.00

8.00

State Bank of Bikaner & Jaipur

9.00

9.25

8.50

State Bank of Hyderabad

8.25

8.25

8.50

State Bank of India

8.10

8.25

8.50

State Bank of Mysore

8.50

9.00

8.50

State Bank of Patiala

8.50

8.75

8.50

State Bank of Travancore

8.50

8.75

8.50

Syndicate Bank

8.00

8.00

8.00

UCO Bank

8.50

8.50

8.25

Union Bank of India

8.00

8.00

8.00

United Bank of India

8.50

8.50

8.25

Vijaya Bank

8.00

8.00

8.00

Indian Banks - Private Sector

BANK NAME /
DURATION

1 year < 2
years

2 years < 3
years

3 years < 5
years

8.55

8.25

8.00

City Union Bank

10.00

10.25

9.50

Development Credit Bank

10.25

10.25

9.00

HDFC Bank

8.00

8.00

8.00

ICICI Bank

8.25

8.25

8.25

IndusInd Bank

8.00

8.25

8.25

ING Vysya Bank

9.00

8.50

8.50

Karnataka Bank

9.00

9.00

9.50

Axis Bank

54

Kotak Bank

8.00

8.00

8.00

Tamilnad Mercantile Bank

10.00

10.00

9.75

The Bank of Rajasthan Ltd

9.50

9.00

8.75

The Catholic Syrian Bank

9.50

9.50

9.25

The Dhanalakshmi Bank

9.00

9.00

8.50

The Federal Bank

9.00

9.00

8.75

The J & K Bank

8.75

8.75

8.25

The Karur Vysya Bank

9.50

9.50

8.00

The Lakshmi Vilas Bank

9.75

10.00

9.50

The South Indian Bank

9.00

9.00

8.75

TNSC Bank

8.00

7.75

7.50

This data is based on March, 2009

55

RESEARCH
METHODOLOGY

RESEARCH METHODOLOGY
S TATE M E N T O F TH E P R O B L E M AN D I T S
SIGNIFICANCE
T h e s t u d y i s o n a s p e c i a l s yn o p s i s o n f i x e d d e p o s i t s . I t c o v e r s
aspects like interest rates, safety of funds, services provided etc.
The study is a mode to understand the importance of brand name of
the institute, financial aspects while choosing a fixed deposit.

56

The present study is both qualitative and quantitative in nature as it

seeks to find out the aesthetical as well as financial considerations
taken by customers while selecting a fixed deposit. Research simply
means a search for facts answers to questions and solutions to
p r o b l e m s . I t i s a p u r p o s i v e i n v e s t i g a t i o n . I t i s a n o r g a n i z e d e n q u i r y.

In other words research means search for knowledge and research

methodology is a systematic way to solve the research problem. It is
a science of study how the search is actually done. It presents the
source of data collection, the sampling procedures and tools of
i n v e s t i g a t i o n a n d l i m i t a t i o n s o f t h e s t u d y. O u r r e s e a r c h p r o j e c t h a s a
s p e c i f i e d f r a m e w o r k f o r c o l l e c t i n g t h e d a t a i n a n e f f e c t i v e m a n n e r.
Such framework is called research design.

T h e r e s e a r c h m e t h o d o l o g y, w h i c h w a s f o l l o w e d b y u s , c o n s i s t s o f
the following steps: -

( 1 ) . D E F I N I N G T H E R E S E A R C H P R O B L E M AN D R E S E A R C H
OBJECTIVES: The definition of the problem includes the study of fixed deposits of
various banks, different policies of competitor banks and finding out
the unique features of various banks along with the customer s
p r e f e r e n c e t o w a r d s a s p e c i f i c b a n k s f i x e d d e p o s i t .

(2). DEVELOPING THE RESEARCH PLAN: -

57

The development of research plan has the following steps: D ATA S O U R C E : T h e s o u r c e o f t h e d a t a w a s p r i m a r y d a t a o n l y.

Primary Data defined as the data, which is collected for the
first time. It is new in nature. His type of data is collected
directly from the source of information. The techniques, which
were involved in collecting the primary data, are personal
i n t e r v i e w, q u e s t i o n n a i r e e t c .
RESEARCH

AP P R O A C H :

Surveys

are

best

suited

for

d e s c r i p t i v e r e s e a r c h . S u r v e ys a r e u n d e r t a k e n t o l e a r n a b o u t
p e o p l e s k n o w l e d g e , b e l i e f s , p r e f e r e n c e s , s a t i s f a c t i o n a n d s o
on and to measure these magnitudes in the general public.
Therefore I have done this survey for the descriptive research
process.
R E S E A R C H I N S T R U M E N T:

Questionnaire was conducted for

survey had both closed-ended and open-ended. A questionnaire

considered a set of question was presented to customers.

SAMPLING PLAN: The sampling plan calls for three decisive

S A M P L I N G U N I T: S a m p l i n g u n i t i s w h o i s t o b e s u r v e y e d ?
T h e t a r g e t p o p u l a t i o n m u s t b e d e f i n e d t h a t s t o b e s a m p l e d i t
i s n e c e s s a r y s o a s o d e v e l o p s a m p l i n g f r a m e s s o t h a t e v e r yo n e
in the target population has an equal chance of being sampled.
My sample unit was various Branches of different banks and
the account holders in Chandigarh and Panchkula.

SAMPLE SIZE: Sample size is how many people have to be

surveyed?

58

SAMPLING METHOD: Here method used for sampling is convenience sampling.

G e n e r a l l y, l a rge s a m p l e s g i v e mo r e r e s u l t s t h a n t h e
s ma l l e r

samples.

Th e

s a mp l e

refers

to

the

n u mb e r

of

r e s p o n d e n t s f r o m t h e u n i v e r s e . My s a m p l e s i z e w a s t o t a l 2 2
B a n k br a n c h e s o f v a r i o u s a r e a s i n C h a n d i g a r h a n d P a n c h k u l a
C O N TAC T M E T H O D : o n c e t h e s a m p l i n g p l a n h a s d e t e r m i n e d ,
the question was how the subject should be contacted, i.e. by
telephone, mail or personal interviews. But the single way to contact
the subject was personal interviews.

REASEARCH METHODS USED:-

The method used for deriving some important conclusions out of

survey conducted and questions being asked by general public the
following methods are being used: (1). Kendalls m ethod
(2). Mode

59

( 1) . K E N D A L LS M E T H O D
K e n d a l l s c o e f f i c i e n t o f c o n c o r d a n c e , r e p r e s e n t e d b y t h e s ym b o l
W, is an important non-parametric measure of relationship. It is
used for determining the degree of association among several (k)
s e t s o f r a n k i n g o f N o b j e c t s o r i n d i v i d u a l s . K e n d a l l s c o e f f i c i e n t o f
concordance (W) is considered an appropriate measure of studying
the degree of association among three or more sets of rankings.

T h e b a s i s o f K e n d a l l s c o e f f i c i e n t o f c o n c o r d a n c e i s t o i m a g i n e h o w
the given data would look if there were no agreement among several
set of rankings, and then to imagine how it would look if there were
perfect agreement among several sets.

This method is being used for finding the criteria ranked highest by
the maximum depositors while selecting as given to them by
HDFC as compare to other banks. Under this method only
those potential depositors are considered who know about
HDFC deposits.

B y u s i n g k a n d e l l s m e t h o d c a l c u l a t i o n s a r e b e i n g d o n e a s f o l l o w s : -

ASSUMPTION: -

60

Before showing calculations here it is being observed that although

people consider safety of their funds the most important criteria for
selecting any deposit but still they want high interest rates therefore
in our question most of people marked interest rates as the most
selected

criteria. Therefore

while

finding the choice

to which

maximum people give importance we have eliminated our option of

interest rate as to give unbiased results.

PROCEDURE: T h e p r o c e d u r e f o r c o m p u t i n g a n d i n t e r p r e t i n g K e n d a l l s c o e f f i c i e n t
of concordance (W) is as follows.
(A) All the objects are ranked by all (k) different respondents and
put in the form of k by N matrix
(B) The sum of ranks (Rj) for each object assigned by all judges
is determined.
(C). Rj is determined and then value of s is determined by the
formula
61

S = E (Rj Rj) ^ 2

( D ) . K e n d a l l s c o e f f i c i e n t o f c o n c o r d a n c e i s w o r k e d o u t b y t h e
formula

S
W = -------------------------1 / 1 2 x k ^ 2 ( N^ 3 N )

Where, k = No. Of respondents

N = No. Of objects ranked

(E). Significant value of W may be interpreted and understood as if the respondents

are applying essentially the same standards in ranking n objects under consideration.
Kendall therefore suggested that the best estimate of the TRUE ranking is provided
by the order of sum of the ranks. The best estimate is related to the lowest value
observed amongst Rj.

METHOD: -

Let safety of funds be x1, liquidity be x2, services be x3, additional

benefits be x4, market reputation be x5.
Now on the basis of calculations made in the
table we will calculate as follows: -

62

H Y P O T H E S I S AS S U M E D : F o r r a n k s g i v e n b y p u b l i c l e t u s t a k e a N u l l h yp o t h e s i s t h a t t h e r e
is no significance difference between the sample size of 20
people and their considerations of safety of funds while selecting
a fixed deposit. (Ho).

By putting the values in the formula: 1214.8

W =

-------------------------1/12 x 20^2 (5^3 5)

W = 0.3037
To j u d g e t h e s i g n i f i c a n c e o f t h i s W, w e l o o k i n t o t a b l e f o r c r i t i c a l
v a l u e s o f S i n t h e K A N D E L LS C o e f f i c i e n t o f C o n c o r d a n c e f o r
finding value of s at 5% level for k = 20 and N = 5. This value is
468.5 and our calculated value is 1214.8 much higher then the
tabular value therefore we reject the null hypothesis and infer that
t h e p e o p l e a r e a p p l yi n g e s s e n t i a l l y t h e s a m e s t a n d a r d i n r a n k i n g t h e
N objects i.e., there is significant agreement in ranking by people at
5 % level.

The lowest value observed amongst Rj is 41 and as best estimate of

true rankings in the case of criteria x1, all people on the whole
placed this criterion on the first most important criteria.

63

Therefore we can say that people consider SAFETY OF FUNDS as

the most important criteria for going for any fixed deposit.

(2). MODE

Mode is the most commonly or frequently occurring value in a

series. The mode in a distribution is that around which there is
maximum concentration. In general, mode is the size of item,
w h i c h h a s m a x i m u m f r e q u e n c y, b u t a t i t e m s s u c h a n i t e m m a y n o t
be mode on account of the effect of the frequencies of the
neighboring items. Like median, mode is a positional average and
is not affected by the values of extreme items. It is therefore,
useful in all situations where we want to eliminate the effect of
extreme variations. Mode is particularly useful in the study of
popular sizes.
Mode represents the variable having highest
f r e q u e n c y.

PROCEDURE
Finding out the frequency for every criterion firstly by assigning the
tally mark then by counting the tally mark and then finding the
m o d a l v a l u e b y c o n s i d e r i n g t h e h i g h e s t f r e q u e n c y.
We a r e g i v i n g d i f f e r e n t t i m e p e r i o d s d i f f e r e n t v a r i a b l e s .
L e t < 1 ye a r b e x 1
64

1-2 years be x2
2-5 years be x3
A n d 5 ye a r s a b o v e b e x 4
Now when 30 people were asked about the time period they will
prefer to deposit their money then we observe following
observations: CRETERIA

FREQUENCY

X1
X2
X3
X4

5
16
6
3

Now with the help of following table we can find that generally
p e o p l e p r e f e r 1 - 2 ye a r s f o r d e p o s i t i n g t h e i r m o n e y.

The above used method can also be shown with the help of following
graph as well.

65

16
14
12
10
8

East

6
4
2
0
X1

X2

X3

X4

W h e r e X 1 r e p r e s e n t s < 1 ye a r f o r d e p o s i t i n g t h e m o n e y.
X2 represents 1-2 years.
X3 represents 2-5 years.
X 4 r e p r e s e n t s m o r e t h a n 5 ye a r s .

FOR REFERENCE: -

66

JUDGES
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Sum of
ranks
(Rj)
(Rj Rj)
(Rj
Rj)^2

X1

X2

X3

X4

1
1
2
2
3
1
2
1
2
3
1
1
2
2
3
2
3
1
3
1
41

2
3
1
1
2
4
1
3
2
1
2
2
3
3
1
1
5
4
4
5
50

5
1
4
4
3
5
4
5
3
5
5
4
1
1
5
3
1
2
1
3
65

3
3
3
4
3
3
2
4
4
3
3
4
4
4
4
4
3
5
2
67

-18.8

-9.8

5.2

7.2

96.04

27.04

51.84

X5
4
4
5
5
1
2
5
4
5
2
4
5
5
5
2
5
2
5
2
4
76

26.2
686.44

353.44

TAB L E F O R K A N D E L LS M E T H O D

67

In the above table we have assigned points to our ranks, which are
being allotted to the options by the people being questioned. In
order to calculate the values out of collected data we have to sum
total our rank points therefore we have given ranks as follows: Point 1 to 5th rank.
Points 2 to 4th rank.
Points 3 to 3rd rank.
Points 4 to 2nd rank.
Points 5 to 1st rank.

68

FINDINGS
AND
RECOMENDATION
S

FINDINGS AND RECOMENDATIONS

F I N D I N G S AN D C O N C L U S I O N S

69

( 1 ) . H D F C d e p o s i t s a r e i n c r e a s i n g y e a r b y ye a r b u t a t d i m i n i s h i n g
rate. Where deposits are increasing like 2512.69 in 1995-96, 3502.19
in 1996-97 to 6223.85 in 1999-2000 and 8471.02 in 2004-05 with a
d e c l i n e i n 2 0 0 7 - 0 8 a t 7 8 4 0 . 0 9 a s c o m p a r e t o p r e v i o u s ye a r 2 0 0 6 - 0 7
with 9337.65.

(2). Main motive behind depositing money in fixed deposits is that

people want their money safe and intact for sometime. Generally
income derived from fixed deposits is so low as compare to other
investment options that people dont consider interest income while
going for fixed deposit they just want that their money can be safe
for this they consider those institutes which can ensure safety of
their funds.

(3). HDFC has been given AAA rating by CRISIL and ICRA
(institutions

which

rank

financial

institutions

on

the

basis

of

services provided by them) of which general public is not aware of.

If general public is aware of this fact then HDFC can have more
deposits as people only go for the institutes, which can ensure them
safety of their funds.

(4). Less awareness about HDFC deposits in general public. HDFC is

mainly recognized as loan giving institution and very few people are
aware of the fact that HDFC also go for fixed deposits. When 30
people were asked about HDFC deposits only 8 were aware of it and
22 people were unaware of HDFC deposits. This can be explained
with the help of following diagram.

70

F i g u re 1 1

yes
27%
yes
no
no
73%

(5). People also take into consideration the services provided to

them by other HDFC departments. If they are unsatisfied with the
s e r v i c e s o f a n y H D F C d e p a r t m e n t s s e r v i c e s t h e n i n s p i t e o f t h e f a c t
that HDFC is giving highest interest rate on 1 year deposit that is
7% p.a people will avoid to go for HDFC deposits.

RECOMMENDATIONS
( 1 ) . AD V E R T I S E M E N T :
People are not aware of HDFC deposits therefore in order to
increase the awareness level among public more advertisements

71

should

be

there.

These

advertisements

can

be

in

newspapers,

economic journals or they can be on televisions. People should be

m a d e m o r e a w a r e o f t h e f a c t t h a t H D F C L t d h a s b e e n g i v e n A A A
ranking by CRISIL and ICRA.
(2). People just want safety of their funds while depositing their
money in fixed deposits and as HDFC Ltd has the capability of
keeping the funds safe therefore it should highlight this capability
t o t h e p u b l i c s o t h a t m o r e f u n d s c a n b e g a i n e d . Tod a y a l s o m a n y
people believe that depositing money in government banks is more
safe rather to deposit the money in any private bank therefore it is
very important for HDFC to ensure safety of their funds.
(3). Better Services can fetch more customers. Sometimes it happens
that people consider old relations and services provided by the bank
before going for future dealings.
(4). HDFC has won so many prestigious awards of which people are
not aware therefore HDFC should advertise more and more so that
more people can become aware of this fact and this can help to fetch
more deposits.

BIBLIOGRAPHY

A N N U A L R E P O RT O F H D F C L t d
w w w.h d f c . c o m
72

 w w w.my i r i s . c o m
w w w.go o g l e . c o m
RESEARCH METHODOLOGY METHODS &
TECHNIQUES ( C.R KOTHARI)
w w w.h d f c . c o m
C o mp a r a t i v e s t u d y o f d i f f e ren t ba n ks

73

ANNEXURE

QUESTIONNAIRE FOR CUSTOMERS VIEWS ON FIXED

DEPOSITS

Name:

Ph no:

74

Q 1 . Ar e y o u a w a r e o f H D F C f i x e d d e p o s i t s ? Yes / N o
I f Yes : Do you know HDFC offers highest interest rates on
deposits for 1 year?
D o y o u k n o w H D F C i s b e i n g r a t e d A A A b y C R I S I L a n d
I C R A f o r 11 t h c o n s e c u t i v e y e a r ?
Q 2 . D o yo u h a v e a n y i n v e s t m e n t i n H D F C d e p o s i t s ? YE S / N O
Q3. What would be the main reason for
deposits? Put a tick mark.
To p u t y o u r m o n e y s a f e a n d i n t a c t
To s p r e a d yo u r m o n e y i n d i f f e r e n t
To e n s u r e a v a i l a b i l i t y o f m o n e y a t
To e n s u r e r e g u l a r i t y o f i n c o m e .

yo u t o i n v e s t i n
for sometime.
investment options.
some point of time.

Q 4 . C a n yo u m e n t i o n t h e p e r i o d f o r w h i c h y o u w o u l d i n v e s t i n
fixed deposits?
<1 year
1-2 years
2-5 years
5 years and above
Q 5 . I f yo u p r e f e r t o i n v e s t i n d e p o s i t s , w h a t c r i t e r i a y o u u s e f o r
s e l e c t i n g o n e ? As s i g n r a t e s & s i m u l t a n e o u s l y r a t e H D F C
deposits on these criteria.
(Scale 1-5, 5 to excellent and 1 to poor).
Selection criteria
HDFC ranking

Interest rates
-----------Safety of funds
-----------Liquidity
-----------Services
------------

---------------------------------------------

75

Additional benefits
-----------Market reputation
------------

-----------------------

Q 6 . Ar e y o u s a t i s f i e d w i t h H D F C d e p o s i t s ? YE S / N O
If not, state the reason

Q 7 . You r s u g g e s t i o n s m a y h e l p u s s e r v e yo u b e t t e r & o f f e r yo u
the best.
(Please be specific in giving suggestions).

T H A N K YO U

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