SERVICE QUALITY OF HDFC BANK

A PROJECT REPORT
ON

“SERVICE QUALITY OF HDFC BANK”

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 SERVICE QUALITY OF HDFC BANK

CONTENTS

1. INTRODUCTION

2. COMPANY PROFILE

3. SERVICE QUALITY IN BANKS

4. RESEARCH OBJECTIVE

5. RESEARCH METHODOLOGY

6. DATA ANALYSIS

7. FINDINGS OF THE REPORT

8. CONCLUSION

9. RECOMMENDATIONS

10. BIBLIOGRAPHY

11. ANNEXURE: QUESTIONNAIRE

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INTRODUCTION
Today‟s finicky banking customers will settle for nothing less. The
customer has come to realize somewhat belatedly that he is the king. The
customer‟s choice of one entity over another as his principal bank is
determined by considerations of service quality rather than any other factor.
He wants competitive loan rates but at the same time also wants his loan or
credit card application processed in double quick time. He insists that he be
promptly informed of changes in deposit rates and service charges and he
bristles with „customary rage‟ if his bank is slow to redress any grievance
he may have. He cherishes the convenience of impersonal net banking but
during his occasional visits to the branch he also wants the comfort of
personalized human interactions and facilities that make his banking
experience pleasurable. In short he wants financial house that will more
than just clear his cheque and updates his passbook: he wants a bank that
cares and provides great services.

So does HDFC bank meet these heightened expectations? What are the
customers‟ perceptions of service quality of the banks? Which dimension
of service quality of HDFC bank is performing well? To find out answers to
these questions I undertook a survey of 2 branches of HDFC bank.
A lot of surveys have been done in the past to understand the aspect of
customer satisfaction and to find out the customer friendly banks. My
research is conducted to find out “SERVICE QUALITY OF HDFC BANK”.

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 SERVICE QUALITY OF HDFC BANK
HDFC BANK
The Housing Development Finance Corporation Limited (HDFC) was
amongst the first to receive an 'in principle' approval from the Reserve
Bank of India (RBI) to set up a bank in the private sector, as part of the
RBI's 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.
HDFC Bank comprises of a dynamic and enthusiastic team determined to
accomplish the vision of becoming a World-class Indian bank. HDFC
bank‟s business philosophy is based on our four core values - Customer
Focus, Operational Excellence, Product Leadership and People. They
believe that the ultimate identity and success of their bank will reside in the
exceptional quality of people and their extraordinary efforts. They are
committed to hiring, developing, motivating and retaining the best people in
the industry.

BUSINESS FOCUS
HDFC Bank's mission is to be a World-Class Indian Bank. The objective is
to build sound customer franchises across distinct businesses so as to be
the preferred provider of banking services for target retail and wholesale
customer segments, and to achieve healthy growth in profitability,
consistent with the bank's risk appetite. The bank is committed to maintain
the highest level of ethical standards, professional integrity, corporate
governance and regulatory compliance. HDFC Bank's business philosophy

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is based on four core values - Operational Excellence, Customer Focus,
Product Leadership and People.

MISSION STATEMENT OF HDFC BANK

 World Class Indian Bank.

 Benchmarking against international standards.

 To build sound customer franchises across distinct businesses

 Best practices in terms of product offerings, technology, service

levels, risk management and audit & compliance

VISION STATEMENT OF HDFC BANK

The HDFC Bank is committed to maintain the highest level of ethical
standards, professional integrity and regulatory compliance. HDFC Bank‟s
business philosophy is based on four core values such as:-

1. Operational excellence. 2. Customer Focus. 3. Product leadership. 4.

People.

The objective of the HDFC Bank is to provide its target market customers a
full range of financial products and banking services, giving the customer a
one-step window for all his/her requirements. The HDFC Bank plus and the
investment advisory services programs have been designed keeping in
mind needs of customers who seeks distinct financial solutions, information
and advice on various investment avenues.

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BUSINESS STRATEGY
 Increasing market share in India‟s expanding banking

 Delivering high quality customer service

 Maintaining current high standards for asset quality through

disciplined credit risk management

 Develop innovative products and services that attract targeted

customers and address inefficiencies in the Indian financial sector.

DISTRIBUTION NETWORK
HDFC Bank is headquartered in Mumbai. The Bank at present has an
enviable network of over 1229 branches spread over 444 cities across
India. All branches are linked on an online real-time basis. Customers in
over 120 locations are also serviced through Telephone Banking. The
Bank's expansion plans take into account the need to have a presence in
all major industrial and commercial centers where its corporate customers
are located as well as the need to build a strong retail customer base for
both deposits and loan products. Being a clearing/settlement bank to
various leading stock exchanges, the Bank has branches in the centers
where the NSE/BSE has a strong and active member base.

The Bank also has a network of about over 2526 networked ATMs across
these cities. Moreover, HDFC Bank's ATM network can be accessed by all
domestic and international Visa/MasterCard, Visa Electron/Maestro,
Plus/Cirrus and American Express Credit/Charge cardholders.

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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 a market leader in mortgages. Its
outstanding loan portfolio covers well over a million dwelling units. HDFC
has developed significant expertise in retail mortgage loans to different
market segments and also has a large corporate client base for its housing
related credit facilities. With its experience in the financial markets, a strong
market reputation, large shareholder base and unique consumer franchise,
HDFC was ideally positioned to promote a bank in the Indian environment.

MANAGEMENT
Mr. C.M. Vasudev has been appointed as the Chairman of the Bank with
effect from 6th July 2010 subject to the approval of the Reserve Bank of
India and the shareholders. Mr. Vasudev has been a Director of the Bank
since October 2006. A retired IAS officer, Mr. Vasudev has had an
illustrious career in the civil services and has held several key positions in
India and overseas, including Finance Secretary, Government of India,
Executive Director, World Bank and Government nominee on the Boards of
many companies in the financial sector. The Managing Director, Mr. Aditya
Puri, has been a professional banker for over 25 years, and before joining
HDFC Bank in 1994 was heading Citibank's operations in Malaysia. The
Bank's Board of Directors is composed of eminent individuals with a wealth
of experience in public policy, administration, industry and commercial
banking. Senior executives representing HDFC are also on the Board.

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Senior banking professionals with substantial experience in India and
abroad head various businesses and functions and report to the Managing
Director. Given the professional expertise of the management team and the
overall focus on recruiting and retaining the best talent in the industry, the
bank believes that its people are a significant competitive strength.

TECHNOLOGY
HDFC Bank operates in a highly automated environment in terms of
information technology and communication systems. All the bank's
branches have online connectivity, which enables the bank to offer speedy
funds transfer facilities to its customers. Multi-branch access is also
provided to retail customers through the branch network and Automated
Teller Machines (ATMs). The Bank has made substantial efforts and
investments in acquiring the best technology available internationally, to
build the infrastructure for a world class bank. The Bank's business is
supported by scalable and robust systems which ensure that our clients
always get the finest services we offer. The Bank has prioritised its
engagement in technology and the internet as one of its key goals and has
already made significant progress in web-enabling its core businesses. In
each of its businesses, the Bank has succeeded in leveraging its market
position, expertise and technology to create a competitive advantage and
build market share.

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

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

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

offers a range of innovative products to meet these needs.

INTEGRITY

CUSTOMER CENTRIC

PEOPLE CARE “ONE FOR ALL AND ALL FOR ONE”

TEAM WORK

JOY AND SIMPLICITY

BUSINESS
HDFC Bank offers a wide range of commercial and transactional banking
services and treasury products to wholesale and retail customers. The
bank has three key business segments:

Wholesale Banking Services The Bank's target market ranges from large,
blue-chip manufacturing companies in the Indian corporate to small & mid-
sized corporates and agri-based businesses. For these customers, the
Bank provides a wide range of commercial and transactional banking
services, including working capital finance, trade services, transactional

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services, cash management, etc. The bank is also a leading provider of
structured solutions, which combine cash management services with
vendor and distributor finance for facilitating superior supply chain
management for its corporate customers. Based on its superior product
delivery / service levels and strong customer orientation, the Bank has
made significant inroads into the banking consortia of a number of leading
Indian corporates including multinationals, companies from the domestic
business houses and prime public sector companies. It is 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. The HDFC Bank Preferred program for high
net worth individuals, the HDFC Bank Plus and the Investment Advisory
Services programs have been designed keeping in mind needs of
customers who seek distinct financial solutions, information and advice on
various investment avenues. The Bank also has a wide array of retail loan
products including Auto Loans, Loans against marketable securities,
Personal Loans and Loans for Two-wheelers. It is also a leading provider of
Depository Participant (DP) services for retail customers, providing
customers the facility to hold their investments in electronic form. HDFC

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Bank was the first bank in India to launch an International Debit Card in
association with VISA (VISA Electron) and issues the Mastercard Maestro
debit card as well. The Bank launched its credit card business in late 2001.
By March 2010, the bank had a total card base (debit and credit cards) of
over 14 million. The Bank is also one of the leading players in the
“merchant acquiring” business with over 90,000 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. With the liberalisation of the financial markets in
India, corporates need more sophisticated risk management information,
advice and product structures. These and fine pricing on various treasury
products are provided through the bank's Treasury team. To comply with
statutory reserve requirements, the bank is required to hold 25% of its
deposits in government securities. The Treasury business is responsible for
managing the returns and market risk on this investment portfolio.

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RESEARCH OBJECTIVE
The objective of the study is as follows:
 To examine the essential dimensions of service quality i.e. RATER-
Reliability, assurance, tangibles, empathy and responsiveness of
HDFC bank and its effect on customer‟s satisfaction.

 To find out the level of perception of the customers from the service
quality offered by the banks.

 To know which service quality dimension of the bank is performing

well.

 To identify which dimension of service quality needs improvement so

that the quality of service of HDFC banks is enhanced

IMPORTANCE AND SCOPE OF THE STUDY

The study would try to throw some insights into the existing services
provided by the banks, perceptions and the actual service quality of the
bank. The results of the study would be able to recognize the lacunae in
the system and thus provide key areas where improvement is required for
better performance and success ratio. In the days of intense competition,
superior service is the only differentiator left before the banks to attract,
retain and partner with the customers. Superior service quality enables a
firm to differentiate itself from its competition, gain a sustainable
competitive advantage, and enhance efficiency

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SCOPE OF STUDY
The scope of this research is to identify the service quality of HDFC bank.
This research is based on primary data and secondary data. This study
only focuses on the dimensions of service quality i.e. RATER. It aims to
understand the skill of the company in the area of service quality that are
performing well and shows those areas which require improvement. The
study was done taking two branches of HDFC bank into consideration. The
survey was restricted to the bank customers in BBSR and Cuttack only.

RESEARCH METHODOLOGY
DATA SOURCE
Primary Data:
The primary data was collected by means of a survey. Questionnaires were
prepared and customers of the banks at two branches were approached to
fill up the questionnaires. The questionnaire contains 20 questions which
reflect on the type and quality of services provided by the banks to the
customers. The response of the customer and the is recorded on a grade
scale of strongly disagree, disagree, uncertain, agree and strongly agree
for each question. The filled up information was later analyzed to obtain the
required interpretation and the findings.

Secondary Data:
In order to have a proper understanding of the service quality of bank a
depth study was done from the various sources such as books, a lot of data
is also collected from the official websites of the banks and the articles from
various search engines like Google, yahoo search and answers.com.

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RESEARCH DESIGN

The research design is exploratory till identification of service quality

parameters. Later it becomes descriptive when it comes to evaluating
customer perception of service quality of the banks.

Descriptive research, also known as statistical research, describes data

and characteristics about the population or phenomenon being studied.
Descriptive research answers the questions who, what, where, when and
how.
Although the data description is factual, accurate and systematic, the
research cannot describe what caused a situation. Thus, descriptive
research cannot be used to create a causal relationship, where one
variable affects another. In other words, descriptive research can be said to
have a low requirement for internal validity.
The description is used for frequencies, averages and other statistical
calculations. Often the best approach, prior to writing descriptive research,
is to conduct a survey investigation. Qualitative research often has the aim
of description and researchers may follow-up with examinations of why the
observations exist and what the implications of the findings are.

RESEARCH SAMPLE
SAMPLING PLAN:
Since it is not possible to study whole universe, it becomes necessary to
take sample from the universe to know about its characteristics.
 Sampling Units: Customers of HDFC bank

 Sample Technique: Random Sampling.

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 Research Instrument: Structured Questionnaire.

 Contact Method: Personal Interview.

SAMPLE SIZE:
The work is a case of HDFC Bank, one of the largest bank of Indian
banking industry together representing over 25 per cent of the market
share of Indian banking space. The survey was conducted in the city of
BBSR and Cuttack with two branches of HDFC Bank, with 50 customers as
respondent.
DATA COLLECTION TOOL Data was collected through a structured
questionnaire. Likert scale technique is used. The format of a typical five-
level Likert item is:
1. Strongly disagree

2. Disagree

3. Neither agree nor disagree

4. Agree

5. Strongly agree

Likert scaling is a bipolar scaling method, measuring either positive or

negative response to a statement. The questionnaire consists of two parts.
The first part consists of three questions concerning the demographic
information of the respondent such as the name, age, educational
qualifications and income. The second part consisting of 18 questions

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exploring the respondent‟s perception about the service quality of HDFC.
For evaluation of service quality of HDFC bank service quality dimension of
reliability, assurance, tangibility, empathy and responsiveness is used in
order to evaluate the actual service quality of HDFC bank.

RESEARCH LIMITATIONS
The study is only for the HDFC Bank confined to a particular location and a
very small sample of respondents. Hence the findings cannot be treated as
representative of the entire banking industry.

The study can also not be generalized for public and private sector banks
of the country.

Respondents may give biased answers for the required data. Some of the
respondents did not like to respond.

Respondents tried to escape some statements by simply answering

“neither agree nor disagree” to most of the statements. This was one of the
most important limitation faced, as it was difficult to analyse and come at a
right conclusion.

In our study we have included 50 customers of bank because of time limit.

FINDINGS OF THE REPORT

 The Reliability dimension of service quality is better as compared to
empathy and tangibility. Still the score is low. For most services,
customer‟s perceptions of whether the service has been performed

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correctly, and not provider-established criteria, are the major
determinants of reliability. Customers of the bank hesitate to rely on
the bank. Whenever they have a problem, the bank shows sincere
interest in solving it but the services are not performed by a certain
time as promised. The employees should take this problem seriously
and take steps to remove this.

 As score for Assurance is at second place after responsiveness, so

the customers of HDFC bank are very confident and feel safe while
transacting with the bank. Moreover the employees of the bank have
proved to be trustworthy. Employees are also educated enough to
answer all the questions.

 The score of Tangibility dimension of service quality of HDFC bank

is the lowest. The service quality factor tangible is defined by whether
the physical facilities and materials associated with the service are
visually appealing at the bank. These are all factors that customers
notice before or upon entering the bank. Customer expectations
regarding visual appealing of HDFC is very high. From my study I
found that Physical facilities and modern looking equipment are not
sufficient in HDFC bank. Respondents were uncertain about the neat
appearance of the reception desk employees. So they should work
on that and try to fulfill the gap.

 According to my findings, the score of Empathy is not satisfactory but

not unsatisfactory also. HDFC bank is unable to give individual
attention to its customers and is unable to understand specific needs
of its customers. But still bank has taken steps to satisfy its

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customers by keeping operating hours convenient to its customers
and keeping their interest best at heart.

 In HDFC bank, the score of Responsiveness is highest so they are

focusing on prompt service, employees are willing to help the
customers and say the exact time when the services will be
performed. Employees at bank give their customers first preference
and are always ready to help them. Overall HDFC bank‟s
responsiveness dimension of service quality is the highest.

 According to the customer perception, HDFC bank is highly

responsive. Customers are assured while transacting with the bank.
The reliability dimension is lower than the first to dimension. They feel
that the bank is unable to give them individual attention and its
equipments are not modern and sufficient for the bank.

 There is not much gap between all the dimensions, this shows that
HDFC BANK is a better service provider in all the dimensions i.e.
reliability, assurance, tangibility, responsiveness and empathy. As a
result of which, the customers are satisfied with the service offered by
HDFC bank.

CONCLUSION
Based on the study conducted it can be concluded that responsiveness,
assurance and reliability are the critical dimensions of service quality of
HDFC bank and they are directly related to overall service quality. The
factors that may delight customers tend to be concerned more with the

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intangible nature of the service, commitment, attentiveness, friendliness,
care, and courtesy.

The employees give prompt services, always are ready to answer the
questions and are trustworthy. The main sources of dissatisfaction appear
to be cleanliness, up to date technology modern equipments, and neatly
dressed up employees. The Tangibility dimension of service quality of
HDFC bank is highly disappointing and serious steps are needed to be
taken to enhance this dimension. Customers of the bank are dissatisfied
with the empathy dimension. To satisfy these customers, the management
can take some attempts, noted earlier as recommendations.

The study brings about the areas which require urgent attention of the
employees, the management, and the policy makers of the industry. These
are areas in which customers are hugely dissatisfied with the services of
the banks against their expectation. This high degree of dissatisfaction
resulting from the services received clearly questions the design of services
or subsequent response of the bank employees. These limitations are too
serious to be avoided as these question the front-line people dealing with
the customers and the approach of the management in taking customers
seriously.

The management should understand the benefits of service quality. It

include increased customer satisfaction, improved customer retention,
positive word of mouth, reduced staff turnover, decreased operating costs,
enlarged market share, increased profitability, and improved financial

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performance. In the days of intense competition, superior service is the
only differentiator left before the banks to attract, retain and partner with the
customers. Superior service quality enables a firm to differentiate itself from
its competition, gain a sustainable competitive advantage, and enhance
efficiency. Thus, improving service quality leads to the customer
satisfaction and, ultimately, to customer loyalty.

BIBLIOGRAPHY
References
Kotler Philip, marketing management, (Pearson education, 12th edition)
Malhotra K. Naresh, marketing research (An applied orientation), Research
design,
(Prentice hall of India pvt. 5th edition)
Zeithmal V. A., Grembler D.D., Bitner M.j., and Pandit A.: Service
Marketing Integrated customer Focus across the Firm” (4th Edition)
M.K. Rampal : Service Marketing
Websites
www.google.com
www.hdfcbank.com
www.hdfcindia.com
www.wikipedia.org
www.marketresearch.com

Send mail to skresearchcentre@gmail.com for full project

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