A

SUMMER TRAINING REPORT

ON

AN IN DEPTH ANALYSIS OF HDFC BANK IN THEE FIELD OF

MARKETING

SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR

THE AWARD OF DEGREE OF BACHELORS OF BUSINESS
ASMINISTRATION (BBA)

GURU JABHESHWAR UNIVERSITY OF SCIENCE AND TECNOLOGY,HISAR

TRAINING SUPERVISED BY- SUBMITTED BY-

Mr. Praveen Malhotra Prashant Yadav
(Marketing Manager)

(SESSION: 2006-2009)

DIRECTORATE OF DISTANCE EDUCATION

GURU JAMBHESHWAR UNIVERSITY OF SCIENCE AND TECHNOLOGY
HISAR
HDFC Bank
IIT, Hauz Khas
New Delhi

To whom so ever it may concern

THIS IS TO CERTIFY THAT MR. PRASHANT YADAV, IIND

YEAR STUDENT OF B.B.A. AMITY BUSINESS SCHOOL

MANESSAR, HAS COMPLETED A SUMMER PROJECT ON

MARKETING STRATEGIES AND HAS ALSO GIVEN SOME

VALUABLE SUGGESTIONS ON MARKETING (DEV.)

SYSTEMS. HE HAS DONE THE PROJECT DURING THE

PERIOD 11.07.2008-23.08.2008 .

PRA VEEN M A LH OTRA

M A RKETI N G SA L ES EXECUTI V E
 PREFACE

I thank every one who has contributed to make this experience complete and stimulating.
Before joining my summer training , I thought that an six week training would help me
further in future or not?But by the time , I completed my training I understood how
important was for a BBA student to do a vocational training.

An undergraduate would be a fresher to a company. He would be completely ignorant of

the working condition and environment vocational training prepares you for all that you
are going to face once you complete the pre-graduate degree program because one should
not walk out of a professional college just as he walked out of his /her college. You need
to have a basic professional knowledge along with the theoretical background and six
week among the hard core professionals can really teach a lot.

The following report discusses the detail of these experiences and about the project. I am
proud to get the opportunity to have my practical training in one of the most reputed
bank.
 ACKNOWLEDGEMENT

At the onset, I would like to thank (Prof) Dr R.C Sharma for his guidance encouragement
and support without which I would not have had the knowledge base on which to proceed
on the project.

Foremost among them is our project guide Mr. Praveen Mlhotra who has helped us to
understand the whole project and was there to guide and encourage us during this entire
course.

We would be failing in our duty if we don’t extend our sincere thanks to Mrs. Shailza
Arora (Personnel Manager) for her valuable support and guidance throughout our project
duration and making it a memorable and fruitful experience.

Prashant Yadav
AN IN-DEPTH ANALYSIS OF HDFC BANK IN THE FIELD OF MARKETING
 TABLE OF CONTENTS

Subject Page No.

1) Executive Summary 2
2) Research Methodology 4
i) Primary Objective
ii) Research Design
iii) Sample Design
iv) Scope of the Study
v) Limitations

3) Critical Review of Literature 6

4) Company Profile 24
i) Industry Profile 31
ii) SWOT Analysis 50

5) Data 52
i) Collection
ii) Primary Data
iii) Secondary Data
6) Findings & Analysis 53

7) Recommendations 66

8) Bibliography 70

9) Annexure 71

10) Case Study 86

 EXECUTIVE SUMMARY
From a modest beginning of Rs 7.1 cores in home loan approvals in its first year of
operations to over Rs. 1,00,000 crores in cumulative home loan approvals in 28 years,
HDFC has come a long way. As an institution that introduced an unknown concept in the
late 1970s, it has defined and spearheaded many of the changes that have given shape to
the housing industry through the years and has turned the dream of owning a home into
reality for over 2.7 million families across the country. The journey began as a thought
that took shape in the mind of HDFC’s founder Chairman, Mr. H.T. Parekh, who laid a
solid foundation. This thought grew to become a reality in the form of HDFC to enable
Indian households access housing in their prime earning days through institutional
finance. At the time of its commencement, HDFC was the first private sector housing
finance institution in India. Since the early years, it clearly defined the company’s core
values - integrity, transparency and trust, ingraining it throughout the organization and in
all its activities. It focused on a future that it needed to make, rather than wait for it to
happen and went on to transform the concept of providing retail finance to middle class
families in India into a world class institution. Its success encouraged the creation of a
number of housing finance institutions in India.

HDFC offers a wide range of deposit products, a secure investment option, with attractive
returns. Deposits are accepted from Charitable Trusts, Religious Trusts, Educational
Institutions, Employees' Welfare Trusts and others as decided by the management.

The primary objective of the project is to study, understand and analyze various aspects
related to the Investment patterns of Trusts and Societies. The research is based on the
information collected by the help of the questionnaires filled by various Trusts and
Societies visited. The questionnaire was formulated with the aim of finding about the
preferences of the societies when they go in for the investment of surpluses generated by
them. Due to lack of time the survey was limited to South Delhi. I visited over 250 Trusts
and Societies during my survey. An attempt was made to judge on the basis of the
response generated, the scope to expand the services of HDFC Ltd. in the area of Trust
Deposit.
 RESEARCH METHODOLOGY

Primary Objective:
The primary objective is to study, understand and analyze various aspects related to the
Investment patterns of Trusts and Societies.

Research Design:
The research is based on the information collected by the help of the questionnaires
filled.
The first three questions aim at the basic introductory information of the organization and
the person being interviewed thus rendering the follow up work easier. The fourth
question is about the financial standing of an organization, it gives an idea about the
financial status of the society being approached. The fifth question aims at generating
information about the various sources of funds of the societies. The sixth and seventh
questions deal about the financial performance of the societies. The eighth question is to
find out about what a society does with the surplus amount generated by them. The ninth
question is meant to gather information about the people who are instrumental in advising
and putting to action the investment plans for the society. The tenth question is about
what kind of investments are preferred by the society, on the basis of the organization or
on the basis of the time period. The eleventh question talks about the institutions in which
the societies make their investments in, say the banks or other institutes. The twelfth
question tries to assess what is it exactly that the societies look for, while investing. For
example do they prefer a high rate of interest, or safety, or location, etc..
Thus the research is based only on the basis of the information gathered with the help of
the questionnaires.

Sample design:

The objective is to study the investment pattern of various Trusts and Societies. For this
purpose I obtained a list of all the trusts situated in Delhi. Due to lack of time I had to
focus my study on all the Societies situated in South Delhi. I made a list of all the trusts
situated in the south and targeted them in order to generate the required information.
Scope of the study:

I have focused my study on HDFC Ltd. and based my study primarily on the investment
patterns of various Trusts and Societies situated in South Delhi. For this purpose I visited
over 250 societies. I interviewed the person concerned and got the questionnaire filled.
Even though I visited around 250 societies. I was not able to get the required information
from all of them as many of them refused to provide me with any information giving no
reason at all reasons.

Limitations:

There is no authenticity of the data available. No way of accessing the truth of the
statement. The people who have filled the questionnaire might not have provided me with
the right information.
No statistical tool has been used due to lack of time.

CRITICAL REVIEW OF LITERATURE

Trusts

A trust is an agreement under which money or other assets are held and managed by one
person for the benefit of another. Different types of trusts may be created to accomplish
specific goals. Each kind may vary in the degree of flexibility and control it offers.

The common benefits that trust arrangements offer include:

Providing personal and financial safeguards for family and other beneficiaries;

Postponing or avoiding unnecessary taxes;

Establishing a means of controlling or administering property; and

Creating A Trust

Certain elements are necessary to create a legal trust, including a trustor, trustee,
beneficiary, trust property and trust agreement.

The person who provides property and creates a trust is called a trustor. This person may
also be referred to as the "grantor," "donor" or "settlor."

The trustee is the individual, institution or organization that holds legal title to the trust
property and is responsible for managing and administering those assets. If not
designated by name, a trustee will be appointed by the court. In some cases, a trustor can
serve as the trustee. It is also possible for two or more trustees to serve together, or for
both an individual and an organization to act as co-trustees. Separate trustees may also be
named to manage different parts of a trust estate.

The beneficiary is the person who is to receive the benefits or advantages (such as
income) of a trust. In general, any person or entity may be a beneficiary, including
individuals, corporations, associations or units of government.

The general duties and obligations of the beneficiary, the trustee and the trustor are
summarized elsewhere in this pamphlet.

To be valid, a trust must hold some property to be administered. The trust property may
be any asset, such as stocks, real estate, cash, a business or insurance. In other words,
either "real" or "personal" property may constitute trust property (which may also be
called the "trust corpus," "trust res," "trust estate" or "trust principal"). Trust property
may also include some future interest or right to future ownership, such as the right to
receive proceeds under a life-insurance policy when the insured dies (discussed under
"Insurance Trusts"). Property is made subject to the trust by transfer to the trustee,
commonly called a "gift in trust."

The trust agreement is a contract that formally expresses the understanding between the
trustor and trustee. It generally contains a set of instructions to describe the manner in
which the trust property is to be held and invested, the purposes for which its benefits
(such as income or principal) are to be used, and the duration of the agreement.

Trust agreements may be expressed in writing, by oral agreement or may be implied, and
the trustor usually has considerable latitude in setting the terms of the trust. To be
enforceable, a trust involving an interest in land must be in writing.

Types Of Trusts

Many kinds of trusts are available. Trusts may be classified by their purposes, by the
ways in which they are created, by the nature of the property they contain, and by their
duration. One common way to describe trusts is by their relationship to the trustor's life.
In this regard, trusts are generally classified as either living trusts ("inter vivos" trusts), or
testamentary trusts.

Living Trusts

Living trusts are created during the lifetime of the trustor. Property held in a living trust
is not normally subject to probate (the court-supervised process to validate a will and
transfer property on the death of the trustor). In Washington, because such property is not
subject to probate, it need not be disclosed in the court record and confidentiality may be
maintained. Such trusts are widely used because they allow the trustor to designate a
trustee to provide professional management.

Under some circumstances, living trusts will allow income to be taxed to a beneficiary
and result in income tax savings to the trustor. However, it should be noted that income
earned by a trust established for a beneficiary under the age of 14 may be taxed at the
beneficiary's parent's tax rate. The transfer of property to a living trust may also be
subject to a gift tax.
Testamentary trusts are created as part of a will and must conform to the statutory
requirements that govern wills. This type of trust becomes effective upon the death of the
person making the will (the "decedent") and is commonly used to conserve or transfer
wealth. The will provides that part or all of the decedent's estate will go to a trustee who
is charged with administering the trust property and making distributions to designated
beneficiaries according to the provisions of the trust.

Before the trust property becomes subject to the testamentary trust, it will normally pass
through the decedent's estate. When the estate is probated, those trust assets will be
subject to probate. The assets, which will form the corpus of a testamentary trust, also are
potentially subject to an estate and generation-skipping transfer tax at the time of the
decedent's death.

A testamentary trust gives the trustor substantial control over his or her estate
distribution. It also may be used to achieve significant savings in the future. For example,
by using a testamentary trust, a trustor can provide for a child's education or can delay the
receipt of property by a child until the child gains financial maturity. Moreover, given the
proper form of trust, property may be exempted from death taxation on the later death of
a trust beneficiary. However, a generation-skipping transfer tax may still apply.

Living trusts can be "revocable" or "irrevocable." The trustor may change the terms or
cancel a revocable living trust. Upon revocation, the trustor resumes ownership of the
trust property.

In general, a revocable living trust is used when the trustor does not want to lose
permanent control of the trust property, is unsure of how well the trust will be
administered, or is uncertain of the proper duration for the trust. With a properly drafted
revocable trust, you may:

1. Add or withdraw some assets from the trust during your lifetime;

2. Change the terms and the manner of administration of the trust; and

3. Retain the right to make the trust irrevocable at some future time.
The assets in this type of trust will generally be includable in the trustor's taxable estate,
but may not be subject to probate.

An irrevocable living trust may not be altered or terminated by the trustor once the
agreement is signed. There are two distinct advantages of irrevocable trusts:

1. The income may not be taxable to the trustor; and

2. The trust assets may not be subject to death taxes in the trustor's estates.

However, these benefits will be lost if the trustor is entitled to (1) receive any income; (2)
use the trust assets; or (3) otherwise control the administration of the trust in a manner
that is inconsistent with the requirements of the Internal Revenue Code.

Since a will may be revoked or amended at any time prior to death, a testamentary trust
may be changed or canceled. Revisions can be made by drafting a new will or by using a
simple document called a "codicil" to make changes or additions to your will. However,
to be effective, any such modifications must be executed in the same manner required for
wills. The trust instrument should be explicit regarding revocability or
irrevocability. If it is not, the trust will be considered irrevocable.

Establishing A Trust

Depending on a number of circumstances, trusts may be established orally, in writing or

by conduct. Most trusts involve a number of technical legal concepts relating to
ownership, taxes and control. A lawyer can assist in explaining options, considering
contingencies and preparing documents.

In creating a trust, you should consider several factors and obligations, including:

Your personal situation, including age, health and financial status;

Your family relationships and your family's financial circumstances;

Personal financial data: personal property, real estate holdings, securities, and other
property — as well as your tax situation and any debts or obligations;
The purpose of the trust: your goals, or what you hope to accomplish by the arrangement;

The type of trust, and how versatile or flexible your plans are.

The amount and type of property it will contain;

The duration, or how long the trust will last;

The beneficiaries and their specific needs;

Any conditions that must be met by a beneficiary to receive benefits (such as attaining a
certain age);

Alternatives for disposing of assets in case the trust conditions are not met or
circumstances change; and

The trustee, and the conditions or guidelines under which he or she will function.

Dependency exemptions, capital gains and losses, income, gift, estate and generation-
skipping transfer taxes also should be considered when planning certain types of trusts.
Likewise, you may want to think about naming alternative or contingent beneficiaries and
trustees.

Once a trust has been established, a periodic review of the status of the trust is advisable;
you may want to obtain professional assistance appropriate to the requirements of the
trust.

Location Of A Trust

The location of the trust is usually determined by the residence of either the trustor or
the trustee. In deciding where to establish the trust, it must be remembered that each state
has different laws governing the operation of trusts and trustees' powers.

Circumstances may sometimes warrant moving the trust location. Relocation, called a
"change of situs," may be desirable or necessary for either tax or nontax reasons (e.g., the
trustee moves to another state). Whether or not a move can be made, and how the move is
accomplished, will be dictated by each state's laws.
 DUTIES AND OBLIGATIONS OF A TRUSTEE

A trustee — whether an individual or institution — holds legal title to the trust property
and is given broad powers over maintenance and investment. To ensure that these duties
are properly carried out, the law requires that the trustee act in a certain manner. In
general, a trustee must:

Act in accord with the express terms of the trust instrument;

Act impartially, administering the trust for the benefit of all trust beneficiaries;

Administer the trust property with reasonable care and skill, considering both its safety
and the amount of income it produces;

Maintain complete accounts and records; and

Perform taxpayer duties, such as filing tax returns for the trust and paying required taxes.

The trustee must administer the trust property only for the designated beneficiaries and
may not use trust principal or income for his or her own benefit. In other words, a trustee
is usually prohibited from borrowing or buying from the trust, from selling his or her own
property to it, and from using the trust assets as collateral for a personal debt.

In selecting a trustee you should consider the potential trustee's competence and
experience in managing business or financial matters and the potential trustee's
availability and willingness to serve.

Individuals and certain corporations (or a combination of both) may serve as trustee.
Each selection offers distinct advantages and drawbacks that should be considered. For
example, an institution, such as a bank, usually offers specially trained managers to
provide administrative, counseling and tax services. Other typical advantages include the
institution's continuity and reliability of service, and its ready availability. Most banks
charge a fee for trust services, and some may not want to manage small trusts, so you
may want to compare options.
As an alternative, an individual, such as a relative, family friend or business associate,
may serve as trustee. An individual, unlike an institution, may be willing to serve for little
or no fee. Furthermore, this person could add a more personal touch for special
understanding to the needs of the beneficiaries. However, you will want to be certain that
any nominated individual has the skill and experience necessary to properly manage the
trust property.

Insurance Trusts

Insurance trusts may take various forms, such as business insurance trusts (which may be
used to protect the "key men," proprietor or partners of a business), or personal insurance
trusts (which involve no business interests). These types of trusts are usually intended to
provide assistance in the management of insurance proceeds from estate taxation.
Insurance trusts may be revocable or irrevocable, and various types of agreements are
available to accommodate an individual's circumstances and desires, or the requirements
of a business.

Another form of insurance trust is the life-insurance trust. This trust, similar to a living
trust, is created to receive proceeds payable under a life-insurance policy. It is normally
established to exclude those proceeds from taxation in the decedent's estate. A life-
insurance trust can also be used to provide a vehicle for continued management and
distribution of insurance proceeds for a beneficiary who may need assistance in those
matters.

To obtain the tax benefits of having the proceeds excluded from the decedent's estate, it is
imperative that the insured divest himself or herself of all interest in the policy, and place
those rights in the hands of the trustee. For this reason, it is preferable to have an
individual other than the insured act as trustee.

This type of trust cannot be revocable, and the insured cannot retain any right to trust
income. To ensure the tax advantages are retained, it is important that the document be
properly drafted. The tax rules in this area are quite complex, so professional legal
assistance may be helpful in the preparation of such a document.
Charitable Trusts

A charitable trust is also called a "public trust," because it benefits‚ immediately or

eventually, members of the general public through charitable means. It can offer many
tax advantages to the trustor not available to other "private" trusts. Unlike private trusts, it
can be established to last indefinitely.

Although sometimes complicated in their arrangement, charitable trusts offer

considerable flexibility in providing benefits from the trustor or other trust beneficiaries,
while at the same time meeting charitable goals. Charitable trusts must be carefully
drafted, however, to ensure advantageous tax treatment. A commonly used charitable
trust is the "charitable remainder trust."

Charitable Remainder Trusts

This type of trust allows you to give a future interest in an asset to charity, while keeping
an income stream for yourself or for another beneficiary.

A trustor may specify that a certain portion of the trust income be distributed to a
noncharitable beneficiary for a certain period of time, with the charity to receive the
money or property thereafter (e.g., upon the death of the noncharitable beneficiary).

In addition to offering an immediate tax deduction for the charitable contribution, the
charitable remainder trust can help lower your estate taxes. To qualify for a charitable
deduction, specific formats must be followed, and the charitable beneficiary must meet
standards set by the Internal Revenue Service.

The amount of the charitable deduction is based on complex tax laws that consider such
factors as the age of the beneficiary, the value of the property, and the expected income
from the trust. Because of the detailed legal concepts and changing IRS regulations, it is
advisable to consult a lawyer when considering such arrangements.
Longevity Of A Trust

There is no specified time during which a trust must remain in effect. Each situation must
be evaluated separately. In general, however, Washington State law will not allow a
private trust to continue longer than 21 years after the death of a person living at the time
the trust was established. Charitable trusts, on the other hand, may continue indefinitely.

Taxes

The use of a trust may help you achieve certain goals, such as reduction of taxes.
However, while trusts can offer a number of tax advantages, tax avoidance should not be
the sole motivation for using this estate-planning tool.

It also should be recognized that the laws governing trusts and their taxation are complex
and subject to change. As an example, under the Tax Reform Act of 1986, income earned
in a trust which has a beneficiary under the age of 14 will be taxed at that beneficiary's
marginal tax rate. This is a significant departure from prior tax law, which provided that
such income be taxed to the child at his or her own tax rate, often resulting in little or no
tax being due.

Because of the new tax rules, an individual contemplating a trust for tax purposes should
consult with his or her accountant or attorney to determine whether the trust can be
structured in a way to meet the tax objectives. By carefully choosing the proper type of
investments within a trust, it may still be possible to accomplish tax goals, but careful
planning and drafting are required. These facts, coupled with the numerous financial
considerations involved in estate planning, suggest that professional legal and financial
assistance may be necessary to help you make an informed decision.

Fees And Costs

The cost of creating and administering a trust can vary considerably, depending on its
type and duration. A lawyer's fees to create a trust, for example, will usually be based on
the time involved in consulting with you, and in planning and preparing documents.
Therefore, before you hire a lawyer, you should discuss fees (for example, whether
hourly or flat fees are charged). Ask for an estimate or arrange a written fee agreement.

A trustee's fee may vary with the skill and expertise the trustee offers. Charges may also
be influenced by the size and complexity of the trust estate. This affects the nature and
amount of services required, such as record-keeping, asset management and tax planning.

In addition to legal and trustee expenses, there may be accounting, real estate
management or other service fees. Other common charges include annual, minimum,
withdrawal and termination fees.

HDFC BANKING WITH TRUSTS AND SOCIETIES

Trusts
HDFC offers a wide range of deposit products, a secure investment option, with attractive
returns. Deposits are accepted from Charitable Trusts, Religious Trusts, Educational
Institutions, Employees' Welfare Trusts and others as decided by the management.

Trusts can choose from any of the following products depending on their need.

Trust Deposits:

1) Fixed Rate Deposits

Following options are available under Fixed Rate Deposit -
i) Monthly Income Plan
ii) Non-Cumulative Deposits
iii) Annual Income Plan
iv) Cumulative Deposits

2) Variable Rate Deposits

Variable Rate Deposit is a new addition to the wide range of deposit products offered by
HDFC to enable the depositors to take advantage of movements in interest rates.
Following options are available under Variable Rate Deposit –
i) Monthly Income Plan
ii) Non-Cumulative Deposits
iii) Annual Income Plan
iv) Cumulative Deposits

Benefits of an HDFC Trust Deposit:

1. Highest Safety
2. Attractive Returns
3. Tax Benefits
4. Quick Loan Facility
5. High Service Standards
6. Demand Draft Facility
7. Electronic Clearing Service

Highest Safety:

'FAAA' and 'MAAA' rating affirmed for the eleventh consecutive year by CRISIL and
ICRA respectively.

Attractive Returns: HDFC deposits are Available throughout the year and offer
Attractive, Assured returns to investors

Tax benefits:

1. HDFC Trust Deposits is a specified investment under Section 11(5) (ix) of the
Income Tax Act, 1961.
2. No tax deduction at source from Interest on deposits upto Rs. 5,000/- per branch
in a financial year.

Quick Loan Facility: Loan against deposit is available after 3 months from the date of
deposit upto 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.
High Service Standards: Depositors are offered across the counter services for new
deposits, renewals, repayments and loan against deposit facility. Further, all enquiries
through email, post, telephone and in person are attended to immediately.

Demand Draft Facility: Outstation depositors can send demand drafts after deducting
demand draft charges. This facility is applicable for places where HDFC does not have an
office.

Electronic Clearing Service: This facility is provided to depsoitors in select centres

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. Your bank will not levy
any charge for this facility as per present RBI guidelines.

Presently this facility is being offered by us at the following centers –

ECS Centres :

Ahmedabad, Bangalore, Bhubaneshwar, Kolkata, Chandigarh, Chennai, Hyderabad,

Jaipur, Kanpur, Mumbai, Nagpur, Nasik, New Delhi, Pune and Vadodara

Corporate Governance
The concept of corporate governance is entering a phase of global convergence. The
driver behind this is the recognition that companies need to attract and protect all
stakeholders, especially investors – both domestic and foreign. Global capital seeks its
own equilibrium and naturally flows to where it is best protected and bypasses where
protection is limited or non-existent. Companies stand to gain by adopting systems that
bolster investor trust through transparency, accountability and fairness.

The tide of regulation has risen to a high watermark and while there is compelling
evidence of financial benefits to companies which adopt good governance practices, it
has often been felt that the ethos of corporate governance still needs to sink in. Corporate
irregularities continue to plague investors as regulators relentlessly strive to cleanse the
system. Financial scandals often prompt an overhaul of regulation. But the efficacy of
regulation can get negated when compliance becomes a box-ticking exercise with
prohibitive costs. Again, there is no single model of good corporate governance.
Principles, values and ethics cannot be typecast into a universal one-size-fits-all
framework.

‘Spreading the Word: Changing Rules in Asia’, the title of Corporate Governance Watch
2004, an annual collaborative study of the corporate governance landscape of Asian
markets undertaken by CLSA Asia Pacific Markets and the Asian Corporate Governance
Association has concluded that there appears to be a clear correlation between companies
and markets with strong corporate governance and superior returns over the long term.
According to the study, India ranks among the top three in terms of corporate
governance. With increasingly integrated capital markets, good corporate governance is
of paramount importance for companies seeking to distinguish themselves in the global
economy.

HDFC, within its web of relationships with its borrowers, depositors, agents,
shareholders and other stakeholders has always maintained its fundamental principles of
corporate governance – that of integrity, transparency and fairness. For HDFC, corporate
governance is a continuous journey, seeking to provide an enabling environment to
harmonise the goals of maximising shareholder value and maintaining a customer centric
focus.

HDFC maintains that efforts to institutionalise corporate governance practices cannot

solely rest upon adherence to a regulatory framework. HDFC’s corporate governance
compass has been its business practices, its values and personal beliefs, reflected in the
actions of each of its employees.

The Board of Directors fully support and endorse corporate governance practices as per
the provisions of the listing agreements as applicable from time to time. The Corporation
has complied with the said provisions and listed below is the Report of the Directors of
HDFC on Corporate Governance

COMPANY PROFILE

With years, banks are also adding services to their customers. The Indian banking
industry is passing through a phase of customers market. The customers have more
choices in choosing their banks. A competition has been established within the banks
operating in India.

With stiff competition and advancement of technology, the services provided by banks
has become more easy and convenient. The past days are witness to an hour wait before
withdrawing cash from accounts or a cheque from north of the country being cleared in
one month in the south.

HDFC was incorporated in 1977 with the primary objective of meeting a social need –
that of promoting home ownership by providing long-term finance to households for their
housing needs. HDFC was promoted with an initial share capital of Rs. 100 million.

Business Objectives

The primary objective of HDFC is to enhance residential housing stock in the country
through the provision of housing finance in a systematic and professional manner, and to
promote home ownership. 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.
Organisational Goals

HDFC’s main goals are to :-

The primary objective of HDFC is to enhance residential housing stock and to promote
home ownership.

To acquire by purchase, lease, exchange, hire or otherwise lands & property or any
interest in the same in India.

To advance money to any person/ persons, company or corporation, society or

association either at interest without, and or with or without any security and in particular
to advance money to shareholders of the company or to oth4r persons to enable the
person to erect, or purchase, or enlarge, or repair any house or building or any part or
portions thereof or to purchase any freehold or leasehold or any lands or estate or
property in India upon the terms and conditions as laid by the company.

To develop & turn to account any land acquired by the company or in which the company
is interested, and in particular by laying out and preparing the same for building purposes,
constructing, altering pulling down, decorating, maintaining; furnishing, fitting up and
improving buildings, and by planting, paving draining, farming, cultivating, letting on
building lease or building agreement, and by advancing money and entering into
contracts and agreements of all kinds with builders, tenants and others.

Subject to the provisions of the Banking Regulation Act 1949, to receive moneys on
deposits, loans or otherwise with or without interest and to secure the same in such
manner and on such terms and conditions as the company may think fit and proper and to
guarantee the debts, obligations and contracts of any person, firm, company, or
corporation whatsoever.
To negotiate loans of every description.

To finance or assist in financing the sale of house, buildings, flats, either furnished or
otherwise, by way of hire purchase or deferred payment or similar transactions and to
institute, enter into, carry on, subsidize finance or assist in subsidizing or financing he
sale of these houses, buildings, flats, furnished or otherwise, upon any term whatsoever.

Besides these the company has certain objectives incidental or ancillary to the attainment
of the main objective. These are :

To aid any government, state, or any municipal corporation, or company or association or

individual with capital, credit, means or resources for the prosecution of any work,
undertakings, project or enterprises which are conducive to all or any of the object of the
company.

To adopt such means of making known to the business of the company as may seen
expedient, and in particular by the advertisement in the press, by circulars, by purchase
and exhibition of work, of art of interest, by publication of books and periodicals, by
granting prices, rewards and donations.

To provide for the welfare of the employees or ex employees of the company and the
wives, widows and the children or the dependents of such persons in such manner as the
company deems fit and proper.

To effect and maintain insurance against loss of or inuuryt to any property of or any
persons employed by the company or against any other loss to the company.

To undertake and carry on the business in India or abroad of Merchant Banking including
consultancy services of all kinds and description, investment counseling, portfolio
management, providing of financial and investment assistance, syndication of loans,
counseling, and tie-up for project and working capital finance, syndication of financial
arrangements wheth4er in domestic or international markets, handling of mergers and
amalgamations, assisting in the setting up of joint ventures, foreign currency lending, tax
consultancy, underwriting of any securities, whether singly or in consortium and without
prejudice to the generality of the foregoing to act as advisors and consultants, managers
to the issue of shares, debentures, stocks, bonds and securities.

ORGANISATION AND MANAGEMENT

HDFC is a professionally managed organisation 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.

Board of Directors

Mr. D S Parekh - Chairman Mr. D N Ghosh

Mr. Keshub Mahindra - Vice Chairman Dr. S A Dave
Ms. Renu S. Karnad - Executive Director Mr. S Venkitaramanan
Mr. K M Mistry - Managing Director Dr. Ram S Tarneja
Mr. Shirish B Patel Mr. N M Munjee
Mr. B S Mehta Mr. D M Satwalekar
Mr. D M Sukthankar
FOUNDER OF HDFC

Man with a Mission

An extract from the book 'A Tribute' If ever there was a man with a mission it was
Hasmukhbhai Parekh, our Founder and Chairman-Emeritus, who left this earthly abode
on November 18, 1994.

Born in a traditional banking family in Surat, Gujarat, Mr. Parekh

started his financial career at Harkisandass Lukhmidass – a leading
stock broking firm. The firm closed down in the late seventies, but,
long before that, he went on to become a towering figure on the
Indian financial scene.

In 1956 he began his lifelong financial affair with the economic

world, as General Manager of the newly-formed Industrial Credit
and Investment Corporation of India (ICICI). He rose to become Chairman and continued
so till his retirement in 1972.

At the ripe age of 60, Hasmukhbhai started his second dynamic life, even more illustrious
than his first. His vision for mortgage finance for housing, gave birth to the Housing
Development Finance Corporation – it was a trend-setter for housing finance in the whole
Asian continent.

He was a true development banker. His building up HDFC without any government
assistance, is itself a brilliant chapter in financial history. His wisdom and warmth drew
people from all walks of life to him, for advice, guidance and inspiration.

A soft spoken man of few words, Mr. Parekh nevertheless held strong and definite views
with a quiet conviction. He was always concerned with building bridges, improving and
encouraging communication between people.
As Henry W. Longfellow said:

Lives of great men all remind us

We can make our life sublime,

And, departing leave behind us

Footprints on the sands of time.

 INDUSTRY PROFILE

History

Banking in India originated in the first decade of 18th century with The General Bank of
India coming into existence in 1786. This was followed by Bank of Hindustan. Both
these banks are now defunct. The oldest bank in existence in India is the State Bank of
India being established as "The Bank of Calcutta" in Calcutta in June 1806. Couple of
decades later, foreign banks like HSBC and Credit Lyonnais started their Calcutta
operations in the 1850s. At that point of time, Calcutta was the most active trading port,
mainly due to the trade of the British Empire, and due to which banking activity took
roots there and prospered. The first fully Indian owned bank was the Allahabad Bank set
up in 1865.

By the 1900s, the market expanded with the establishment of banks like Punjab National
Bank, in 1895 in Lahore; Bank of India, in 1906, in Mumbai - both of which were
founded under private onwership. Indian banking sector was formally regulated by
Reserve Bank of India from 1935. After India's independence in 1947, the Reserve Bank
was nationalized and given broader powers.

The next significant milestone in Indian Banking happened in the late 1960s when the
then Indira Gandhi government nationalizd, on 19th July, 1969, 14 major commercial
Indian banks, followed by nationalization of 6 more commercial Indian banks in 1980.
The stated reason for the nationalisation was more control of credit delivery. After this,
until the 1990s, the nationalised banks grew at a leisurely pace of around 4%-also called
as the Hindu growth of the Indian economy.
Banking Reforms since 1992

Financial sector reforms were initiated as part of overall economic reforms in the country
and wide ranging reforms covering industry, trade, taxation, external sector, banking and
financial markets have been carried out since mid 1991. A decade of economic and
financial sector reforms has strengthened the fundamentals of the Indian economy and
transformed the operating
environment for banks and financial institutions in the country. The sustained and gradual
pace of reforms has helped avoid any crisis and has actually fuelled growth. As pointed
out in the RBI Annual Report 2001-02, GDP growth in the 10 years after reforms i.e.
1992-93 to 2001-02 averaged 6.0% against 5.8% recorded during 1980-81 to 1989-90 in
the pre-reform period.

The most significant achievement of the financial sector reforms has been the marked
impovement in the financial health of commercial banks in terms of capital adequacy,
profitability and asset quality as also greater attention to risk management. Further,
deregulation has opened up new opportunities for banks to increase revenues by
diversifying into investment banking, insurance, credit cards, depository services,
mortgage financing, securitisation, etc. At the same time, liberalisation has brought
greater competition among banks, both domestic and foreign, as well as competition from
mutual funds, NBFCs, post office, etc. Post-WTO, competition will only get intensified,
as large global players emerge on the scene. Increasing competition is squeezing
profitability and forcing banks to work efficiently on shrinking spreads. A positive fallout
of competition is the greater choice available to consumers, and the increased level of
sophistication and technology in banks. As banks benchmark themselves against global
standards, there has been a marked increase in disclosures and transparency in bank
balance sheets as also greater
focus on corporate governance.
Trends

The Indian banking industry is currently in a transition phase. On the one hand, the public
sector banks, which are the mainstay of the Indian banking system, are in the process of
consolidating their position by capitalising on the strength of their huge networks and
customer bases. On the other, the private sector banks are venturing into a whole new
game of mergers and acquisitions to expand their bases.

The system is slowly moving from a regime of “large number of small banks” to “small
number of large banks.” The new era will be one of consolidation around identified core
competencies.

In India, one of the largest financial institutions, ICICI, took the lead towards universal
banking with its reverse merger with ICICI Bank a couple of years ago. Another mega
financial institution, IDBI, has also adopted the same strategy and has already
transformed itself into a universal bank. This trend may lead to promoting the concept of
a financial super market chain, making available all types of credit and non-fund facilities
under one roof or specialised subsidiaries under one umbrella organisation.

Growth statistics

Scheduled Commercial Banks (SCBs) in India are categorised into five different groups
according to their ownership and / or nature of operation. These bank groups are (i) State
Bank of India and its associates (ii) other nationalised banks (iii) regional rural banks(iv)
foreign banks and (v) other Indian SCBs (in the private sector).

The banking sector witnessed strong growth in deposits and advances during the year
2004-05. As of March 2005, the number of commercial banks stood at 289. The
aggregate deposits of SCBs increased from US$ 331 billion in March 2004 to US$ 374
billion in March 2005; credit increased from US$ 185 billion to US$ 242 billion; and
investments swelled from US$ 149 billion to US$ 162 billion.
Net domestic credit in the banking system has witnessed a steady increase of 17.5 per
cent from US$ 445 billion on January 21, 2005 to US$ 523 billion on January 20, 2006.
The growth in net domestic credit during the current financial year up to January 20,
2006 was 14.4 per cent.

Nationalised banks were the largest contributors to total bank credit at 47.8 per cent as of
September 2005. While foreign banks' contribution to total bank credit was low at 6.7 per
cent, the contribution of State Bank of India and its associates accounted for 23.8 per cent
of the total bank credit. Credit extended by other SCBs stood at 18.9 per cent.

Banks and consumer finance

Indian banks, particularly private banks, are riding high on the retail business. ICICI
Bank and HDFC Bank have witnessed over 70 per cent year-on-year growth in retail loan
assets in the second quarter of 2005-06. Annual revenues in the domestic retail banking
market are expected to more than double to US$ 16.5 billion by 2010 from about US$ 6.4
billion at present, says a McKinsey study.

The home loan sector is also on a smooth course. The average loan size of home finance
companies is increasing. HDFC, the second largest player in the home finance business,
has seen average loan increase from US$ 10,773 in FY04 to US$ 13,467 in FY05, a
change of almost 25 per cent. For ICICI Bank, which is the largest player in the business,
the average ticket size is about US$ 13,467 – US$ 15,711 and has increased by 10-15 per
cent over last year.

Foreign banks are working on expanding their bases in the country. The Ministry of
Finance and Reserve Bank of India have agreed to allow foreign banks to open 20
branches a year as against 12 now. At present, 40 odd foreign banks have over 225
branches in India. At the end of 2004-05, the total assets of foreign banks aggregated
US$ 30 billion or 6.9 per cent of the assets of all scheduled commercial banks. They will
also be allowed 74 per cent stake in private banks. After 2009, the local subsidiaries of
foreign banks will be treated on par with domestic banks.
Challenges facing Banking industry in India
The banking industry in India is undergoing a major transformation due to changes in
economic conditions and continuous deregulation. These multiple changes happening one
after other has a ripple effect on a bank trying to graduate from completely regulated
sellers market to completed
deregulated customers market.

Deregulation: This continuous deregulation has made the Banking market extremely
competitive with greater autonomy, operational flexibility, and decontrolled interest rate
and liberalized norms for foreign exchange. The deregulation of the industry coupled
with decontrol in interest rates has led to entry of a number of players in the banking
industry. At the same time reduced corporate credit off take thanks to sluggish economy
has resulted in large number of competitors battling for the same pie.

New rules: As a result, the market place has been redefined with new rules of the game.
Banks are transforming to universal banking, adding new channels with lucrative pricing
and freebees to offer. Natural fall out of thist. skill building has led to a series of
innovative product offerings catering to various customer segments, specifically retail
credit.

Efficiency: This in turn has made it necessary to look for efficiencies in the business.
Banks need to access low cost funds and simultaneously improve the efficiency. The
banks are facing pricing pressure, squeeze on spread and have to give thrust on retail
assets.

Diffused Customer loyalty: This will definitely impact Customer preferences, as they
are bound to react to the value added offerings. Customers have become demanding and
the loyalties are diffused. There are multiple choices, the wallet share is reduced per bank
with demand on flexibility and customization. Given the relatively low switching costs;
customer retention calls for customized service and hassle free, flawless service delivery.
Improving profitability: There is increasing competition and narrowing of spreads and
it is having an impact on the profitability of banks. The challenge for banks is how to
manage with thinning margins while at the same time working to improve productivity
which remains low in relation to global standards. This is particularly important because
with dilution in banks’
equity, analysts and shareholders now closely track their performance. Thus, with falling
spreads, rising provision for NPAs and falling interest rates, greater attention will need to
be paid to reducing transaction costs. This will require tremendous efforts in the area of
technology and
for banks to build capabilities to handle much bigger volumes.

Risk management: The deregulated environment brings in its wake risks along with
profitable opportunities, and technology plays a crucial role in managing these risks. In
addition to being exposed to credit risk, market risk and operational risk, the business of
banks would be susceptible to country risk, which will be heightened as controls on the
movement of capital are eased. In this context, banks are upgrading their credit
assessment and risk management
skills and retraining staff, developing a cadre of specialists and introducing technology
driven management information systems.

Corporate governance: Besides using their strengths and strategic initiatives for creating
shareholder value, banks have to be conscious of their responsibilities towards
corporate governance. Following financial liberalisation, as the ownership of banks gets
broadbased, the importance of institutional and individual shareholders will increase.
In such a scenario, banks will need to put in place a code for corporate governance for
benefiting all stakeholders of a corporate entity.

Misaligned mindset: These changes are creating challenges, as employees are made to
adapt to changing conditions. There is resistance to change from employees and the
Seller market mindset is yet to be changed coupled with Fear of uncertainty and Control
orientation. Acceptance of technology is slowly creeping in but the utilization is not
maximised.

Competency Gap: Placing the right skill at the right place will determine success. The
competency gap needs to be addressed simultaneously otherwise there will be missed
opportunities. The focus of people will be on doing work but not providing solutions, on
escalating problems rather than solving them and on disposing customers instead of using
the opportunity to
cross sell.

Investment in India - Banking System

The last decade witnessed the maturity of India's financial markets. Since 1991, every
governments of India took major steps in reforming the financial sector of the country.
The important achievements in the following fields is discussed under serparate heads:

Financial markets

Regulators

The banking system

Non-banking finance companies

The capital market

Mutual funds

Overall approach to reforms

Deregulation of banking system

Capital market developments

Consolidation imperative

Now let us discuss each segment seperately.

Financial Markets

In the last decade, Private Sector Institutions played an important role. They grew rapidly
in commercial banking and asset management business. With the openings in the
insurance sector for these institutions, they started making debt in the market.
Competition among financial intermediaries gradually helped the interest rates to decline.
Deregulation added to it. The real interest rate was maintained. The borrowers did not
pay high price while depositors had incentives to save. It was something between the
nominal rate of interest and the expected rate of inflation.

Regulators
The Finance Ministry continuously formulated major policies in the field of financial
sector of the country. The Government accepted the important role of regulators. The
Reserve Bank of India (RBI) has become more independant. Securities and Exchange
Board of India (SEBI) and the Insurance Regulatory and Development Authority (IRDA)
became important institutions. Opinions are also there that there should be a super-
regulator for the financial services sector instead of multiplicity of regulators.

The Banking System

Almost 80% of the business are still controlled by Public Sector Banks (PSBs). PSBs are
still dominating the commercial banking system. Shares of the leading PSBs are already
listed on the stock exchanges.
The RBI has given licences to new private sector banks as part of the liberalisation
process. The RBI has also been granting licences to industrial houses. Many banks are
successfully running in the retail and consumer segments but are yet to deliver services to
industrial finance, retail trade, small business and agricultural finance.

The PSBs will play an important role in the industry due to its number of branches and
foreign banks facing the constrait of limited number of branches. Hence, in order to
achieve an efficient banking system, the onus is on the Government to encourage the
PSBs to be run on professional lines.

Development Finance Institutions

FIs's access to SLR funds reduced. Now they have to approach the capital market for debt
and equity funds.

Convertibility clause no longer obligatory for assistance to corporates sanctioned by

term-lending institutions.

Capital adequacy norms extended to financial institutions.

DFIs such as IDBI and ICICI have entered other segments of financial services such as
commercial banking, asset management and insurance through separate ventures. The
move to universal banking has started.

Non-Banking Finance Companies

In the case of new NBFCs seeking registration with the RBI, the requirement of
minimum net owned funds, has been raised to Rs.2 crores.

Until recently, the money market in India was narrow and circumscribed by tight
regulations over interest rates and participants. The secondary market was
underdeveloped and lacked liquidity. Several measures have been initiated and include
new money market instruments, strengthening of existing instruments and setting up of
the Discount and Finance House of India (DFHI).

The RBI conducts its sales of dated securities and treasury bills through its open market
operations (OMO) window. Primary dealers bid for these securities and also trade in
them. The DFHI is the principal agency for developing a secondary market for money
market instruments and Government of India treasury bills. The RBI has introduced a
liquidity adjustment facility (LAF) in which liquidity is injected through reverse repo
auctions and liquidity is sucked out through repo auctions.

On account of the substantial issue of government debt, the gilt- edged market occupies
an important position in the financial set- up. The Securities Trading Corporation of India
(STCI), which started operations in June 1994 has a mandate to develop the secondary
market in government securities.

Long-term debt market: The development of a long-term debt market is crucial to the
financing of infrastructure. After bringing some order to the equity market, the SEBI has
now decided to concentrate on the development of the debt market. Stamp duty is being
withdrawn at the time of dematerialisation of debt instruments in order to encourage
paperless trading.

The Capital Market

The number of shareholders in India is estimated at 25 million. However, only an

estimated two lakh persons actively trade in stocks. There has been a dramatic
improvement in the country's stock market trading infrastructure during the last few
years. Expectations are that India will be an attractive emerging market with tremendous
potential. Unfortunately, during recent times the stock markets have been constrained by
some unsavoury developments, which has led to retail investors deserting the stock
markets.

Mutual Funds

The mutual funds industry is now regulated under the SEBI (Mutual Funds) Regulations,
1996 and amendments thereto. With the issuance of SEBI guidelines, the industry had a
framework for the establishment of many more players, both Indian and foreign players.
The Unit Trust of India remains easily the biggest mutual fund controlling a corpus of
nearly Rs.70,000 crores, but its share is going down. The biggest shock to the mutual
fund industry during recent times was the insecurity generated in the minds of investors
regarding the US 64 scheme. With the growth in the securities markets and tax
advantages granted for investment in mutual fund units, mutual funds started becoming
popular.

The foreign owned AMCs are the ones which are now setting the pace for the industry.
They are introducing new products, setting new standards of customer service, improving
disclosure standards and experimenting with new types of distribution.

The insurance industry is the latest to be thrown open to competition from the private
sector including foreign players. Foreign companies can only enter joint ventures with
Indian companies, with participation restricted to 26 per cent of equity. It is too early to
conclude whether the erstwhile public sector monopolies will successfully be able to face
up to the competition posed by the new players, but it can be expected that the customer
will gain from improved service.
The new players will need to bring in innovative products as well as fresh ideas on
marketing and distribution, in order to improve the low per capita insurance coverage.
Good regulation will, of course, be essential.

Overall Approach To Reforms

The last ten years have seen major improvements in the working of various financial
market participants. The government and the regulatory authorities have followed a step-
by-step approach, not a big bang one. The entry of foreign players has assisted in the
introduction of international practices and systems. Technology developments have
improved customer service. Some gaps however remain (for example: lack of an inter-
bank interest rate benchmark, an active corporate debt market and a developed
derivatives market). On the whole, the cumulative effect of the developments since 1991
has been quite encouraging. An indication of the strength of the reformed Indian financial
system can be seen from the way India was not affected by the Southeast Asian crisis.
However, financial liberalisation alone will not ensure stable economic growth. Some
tough decisions still need to be taken. Without fiscal control, financial stability cannot be
ensured. The fate of the Fiscal Responsibility Bill remains unknown and high fiscal
deficits continue. In the case of financial institutions, the political and legal structures hve
to ensure that borrowers repay on time the loans they have taken. The phenomenon of
rich industrialists and bankrupt companies continues. Further, frauds cannot be totally
prevented, even with the best of regulation. However, punishment has to follow crime,
which is often not the case in India.

Deregulation Of Banking System

Prudential norms were introduced for income recognition, asset classification,

provisioning for delinquent loans and for capital adequacy. In order to reach the
stipulated capital adequacy norms, substantial capital were provided by the Government
to PSBs.

Government pre-emption of banks' resources through statutory liquidity ratio (SLR) and
cash reserve ratio (CRR) brought down in steps. Interest rates on the deposits and lending
sides almost entirely were deregulated.

New private sector banks allowed to promote and encourage competition. PSBs were
encouraged to approach the public for raising resources. Recovery of debts due to banks
and the Financial Institutions Act, 1993 was passed, and special recovery tribunals set up
to facilitate quicker recovery of loan arrears.

Bank lending norms liberalised and a loan system to ensure better control over credit
introduced. Banks asked to set up asset liability management (ALM) systems. RBI
guidelines issued for risk management systems in banks encompassing credit, market and
operational risks.

A credit information bureau being established to identify bad risks. Derivative products
such as forward rate agreements (FRAs) and interest rate swaps (IRSs) introduced.

Capital Market Developments

The Capital Issues (Control) Act, 1947, repealed, office of the Controller of Capital
Issues were abolished and the initial share pricing were decontrolled. SEBI, the capital
market regulator was established in 1992.

Foreign institutional investors (FIIs) were allowed to invest in Indian capital markets
after registration with the SEBI. Indian companies were permitted to access international
capital markets through euro issues.
The National Stock Exchange (NSE), with nationwide stock trading and electronic
display, clearing and settlement facilities was established. Several local stock exchanges
changed over from floor based trading to screen based trading

Private Mutual Funds Permitted

The Depositories Act had given a legal framework for the establishment of depositories
to record ownership deals in book entry form. Dematerialisation of stocks encouraged
paperless trading. Companies were required to disclose all material facts and specific risk
factors associated with their projects while making public issues.
To reduce the cost of issue, underwriting by the issuer were made optional, subject to
conditions. The practice of making preferential allotment of shares at prices unrelated to
the prevailing market prices stopped and fresh guidelines were issued by SEBI.
SEBI reconstituted governing boards of the stock exchanges, introduced capital adequacy
norms for brokers, and made rules for making client or broker relationship more
transparent which included separation of client and broker accounts.

Buy Back Of Shares Allowed

The SEBI started insisting on greater corporate disclosures. Steps were taken to improve
corporate governance based on the report of a committee.
SEBI issued detailed employee stock option scheme and employee stock purchase
scheme for listed companies.

Standard denomination for equity shares of Rs. 10 and Rs. 100 were abolished.
Companies given the freedom to issue dematerialised shares in any denomination.

Derivatives trading starts with index options and futures. A system of rolling settlements
introduced. SEBI empowered to register and regulate venture capital funds.

The SEBI (Credit Rating Agencies) Regulations, 1999 issued for regulating new credit
rating agencies as well as introducing a code of conduct for all credit rating agencies
operating in India.

Consolidation Imperative

Another aspect of the financial sector reforms in India is the consolidation of existing
institutions which is especially applicable to the commercial banks. In India the banks are
in huge quantity. First, there is no need for 27 PSBs with branches all over India. A
number of them can be merged. The merger of Punjab National Bank and New Bank of
India was a difficult one, but the situation is different now. No one expected so many
employees to take voluntary retirement from PSBs, which at one time were much sought
after jobs. Private sector banks will be self consolidated while co-operative and rural
banks will be encouraged for consolidation, and anyway play only a niche role.
In the case of insurance, the Life Insurance Corporation of India is a behemoth, while the
four public sector general insurance companies will probably move towards consolidation
with a bit of nudging. The UTI is yet again a big institution, even though facing difficult
times, and most other public sector players are already exiting the mutual fund business.
There are a number of small mutual fund players in the private sector, but the business
being comparatively new for the private players, it will take some time.

We finally come to convergence in the financial sector, the new buzzword

internationally. Hi-tech and the need to meet increasing consumer needs is encouraging
convergence, even though it has not always been a success till date. In India organisations
such as IDBI, ICICI, HDFC and SBI are already trying to offer various services to the
customer under one umbrella. This phenomenon is expected to grow rapidly in the
coming years. Where mergers may not be possible, alliances between organisations may
be effective. Various forms of bancassurance are being introduced, with the RBI having
already come out with detailed guidelines for entry of banks into insurance. The LIC has
bought into Corporation Bank in order to spread its insurance distribution network. Both
banks and insurance companies have started entering the asset management business, as
there is a great deal of synergy among these businesses. The pensions market is expected
to open up fresh opportunities for insurance companies and mutual funds.

It is not possible to play the role of the Oracle of Delphi when a vast nation like India is
involved. However, a few trends are evident, and the coming decade should be as
interesting as the last one.
 SWOT ANALYSIS

Strengths

• Right strategy for the right products.

• Superior customer service vs. Weaknesses

competitors.

• Great Brand Image

• Some gaps in range for certain
• Products have required
sectors.
accreditations.
• Customer service staff need training.
• High degree of customer satisfaction.
• Processes and systems, etc
• Good place to work
• Management cover insufficient.
• Lower response time with efficient
and effective service. • Sectoral growth is constrained by low
unemployment levels and competition
• Dedicated workforce aiming at
for staff
making a long-term career in the
field.
Opportunities
Threats
• Profit margins will be good.
• Legislation could impact.
• Could extend to overseas broadly.
• Great risk involved
• New specialist applications.
• Very high competition prevailing in
• Could seek better customer deals. the industry.
• Fast-track career development • Vulnerable to reactive attack by
opportunities on an industry-wide major competitors.
basis.
• Lack of infrastructure in rural areas
• An applied research centre to create could constrain investment.
opportunities for developing
• High volume/low cost market is
techniques to provide added-value
intensely competitive.
services

DATA

Collection:

Data has been collected from sources like books, periodicals, journals, newspapers,
Internet and through the questionnaires.

Primary Data:
The primary data has been collected by raising a questionnaire with a sample size of 65.
The questionnaire is based on the evaluation of investment pattern of Trusts and
Societies.
Secondary Data:
The secondary data has been collected from various books, magzines, journals,
information brochures and internet web sites.

FINDINGS & ANALYSIS

The survey helped to draw a general trend of the investment pattern of the various Trusts
and Societies

Question no. 1 to 3
The first three questions being self explanatory do not need to be elaborated upon. They
aim at the basic introductory information of the organization and the person being
interviewed thus rendering the follow up work easier.

Question no. 4
The financial standing of an organization is instrumental in the advisory council deciding
upon the investments to be opted for. Further the future decisions regarding the use of the
funds generated and important all the more, the decisions relating to the fund raising
procedure of the society are reviewed in wake of the correct position of the finances of
the society. Hence the forth question which helps to give an idea about the financial
status of the society being approached, thus enabling the organization to market the
appropriate scheme.

Quantitative Analysis
From the responses generated the following results were draw:
The societies lying under the category of:
Very strong 14%
Strong 55%
Moderately strong 31%

Moderately
Strong

Very Strong
Strong Strong
Moderately Strong

Very Strong

0% 10% 20% 30% 40% 50% 60%

Conclusion
A good majority of the investors questioned were of the view that the organization they

are currently dealing with is financially strong.

Question no. 5
The financial position of the society depends a lot on its ability to successfully raise funds
for its working. Also a regular and steady source of funds enables the society to
successfully manage the expenses and earn a decent amount of surplus that can be
apportioned in many ways, one of those ways definitely being investing into some
profitable and safe deposit schemes, which forms the base of the survey conducted.
Therefore the fifth question aims at generating information about the various sources of
funds of the societies approached.
Quantitative Analysis
From the responses generated the following results were drawn:
Donations 75%
Income from the institutions 4%
Aid 8%
Others 13%
 Q5) HOW DOES THE SOCIETY SUSTAIN FINANCIALLY?

75%
80%
70%
60%
50%
Donations
40%
30% Income from the institutions
20% 13% AID (AF)
8%
10% 4% Any others, Please Specify
0%
Donations Income from AID (AF) Any others,
the Please
institutions Specify

Conclusion
Mainly the source of income has been found to be Donations received by the trusts. The
share of other income sources is very low as compared to Donations.
Question no. 6
The funds earned by the society need to be consistent and should be able to meet the
expenses of the society satisfactorily. The fact whether the society is able to meet the
expenses by the funds raised by them, easily or not, points in the direction of the sound or
not so sound position of the society. Thus giving an idea about the surplus or the deficit
being earned by the society. Hence the sixth question enables us to judge which societies
to approach while targeting a particular scheme.
Quantitative Analysis
From the responses generated the following results were drawn:
Yes 80%
No 20%
 NO 20%

YES
No

YES 80%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Conclusion
The management of most of the Societies visited accepted that the funds they are
collecting, are meeting the expenses satisfactorily.

Question no. 7
The financial consistency of the society is the indicator of the growth of the society. The
change in the consistency in any direction, requires the reviewing of the financial
policies of the society. The more consistent the society over the longer period, the
stronger the financial position of the society. Consistency gives a solid base to the
financial working of the society. Hence consistency is the criteria for judgement and has
been incorporated in the questionnaire in the form of seventh question. It was observed
that the officials did not give a straight forward answer to this question, most of them
preferring not to answer the question.
The second part in the question which aimed at finding about any significant happenings
in the working of the society, good or bad, for such happening affects the working and
the financial position of the society. The general response to this question was “nothing
in particular”, with a couple of responses bringing out the good aspects of the changes
brought about by certain happenings. It was observed that the officials did not come out
with the information about any adverse happening.

Question no. 8
What the societies do with the excess funds is of utmost importance to both the society
and the companies that aim to market their schemes to these societies. The amount of
excess funds that remain with these societies determines the uses to which it is put. These
could be towards the development of the society or for expansion purposes or for
investment purposes. Therefore this question has been included to enable the attainment
of further information on the investment pattern of the surveyed societies which would
form the base for deciding upon the marketing of the offered investment schemes to these
societies.

Quantitative Analysis
The results obtained were in the following fashion:
The surplus is mainly used for the following purposes:
Development 8%
Expansion 19%
Investment 73%

Q8) HOW DO YOU APPORTION THE SURPLUS GENERATED BY THE SOCIETY?

8%

19%

USE IT FOR DEVELOPMENTAL ACTIVITIES PLEASE

EXPANSION PURPOSES
INVESTMENTS

73%

Conclusion
The surplus generated by the society is mostly being used for making investments.
A very small percentage of the societies are using these funds for the expansion activities
or developmental activities. It was seen that none of the societies funded to the parent
institution
The main reason cited for this attitude may be that these societies rely heavily on the
interest accrued out of these deposits. In other terms it is there main source of income.
Question no. 9
The ninth question is meant to gather information about people who are instrumental in
advising and putting to action the investment plans for the society. These could be people
belonging to the accounts and finance department, the trustees or the governing body,
auditors, chartered accountants, etc.

Quantitative Analysis
From the responses generated the following results were drawn:
Accounts and finance department 11%
Chartered accountants/consultants 6%
Auditors 7%
Trustees or Governing bodies 76%

Q9) WHO IS INSTRUMENTAL IN RECOMMENDING

INVESTMENTS IN YOUR SOCIETY?:
11% 6%
7%

76%
ACCOUNTS & FINANCE DEPARTMENT
CHARTERED ACCOUNTANTS/CONSULTANTS
AUDITORS
TRUSTEES/GOVERNING BODY

Conclusion
The trustees or the governing body of the societies play the key role in recommending
investments to the society.

Question no. 11
This question aims at gathering information about where these societies like to invest
their surplus money. It tries to find out if investments are made only in banks or they are
made in other organizations as well. Incase they prefer only the banks then what is the
reason behind it.
Incase the answer turned out to be negative, then the next part tries to bring out specific
preferences of these societies apart from banks.

Quantitative Analysis
The results obtained from the first part of the question are:
Yes 88%
No 12%

Q11) ARE INVESTMENTS MADE ONLY IN BANKS?

YES
NO
NO 12%

YES 88%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Conclusion
A very large majority of the societies believe in investing their surplus in banks, as they
feel that the investments made with the banks are safe and secure and yield a high rate of
interest.
Results from the second part are:
PSU’s 22%
Financial institutions 40%
UTI 11%
Housing Finance Institutions 16%
Non Banking Finance Companies 11%

Q11B) IN WHICH TYPE OF INSTITUTION IS THE MONEY INVESTED?

11%
22%

16%

11%

40%

PSU'S FINANCIAL INSTITUTIONS UTI HOUSING FINANCE INSTITUTIONS NON BANKING FINANCE

Conclusion
It is a case with those societies who don’t invest in the banks.
In such cases the second most favoured option is the various financial institutions.
Question no. 10
Each organization or society has its own preferences for investing its excess funds. These
preferences and consequent decisions could be guided by certain rules and regulations
laid down by the department with which they are registered, along with their own reasons
which would justify their investment decisions as being in the best interest of the society.
The first part of the question deals with the choices of these societies with regards to the
decision for investing in public or private sector.

Quantitative Analysis
The results showed the following:
Public sector 80%
Private sector 20%

Q10) PREFERENCE OF INVESTORS ON THE BASIS OF THE TYPE

OF ORGANISATION?

PRIVATE PRIVATE SECTOR

SECTOR 20% PUBLIC SECTOR

PUBLIC SECTOR 80%

0% 20% 40% 60% 80% 100%

Conclusions
A huge majority of the respondents agreed to have made/ willing to make investments in
a public sector organisation.

The next part of the question deals with the preferences of the society to invest in various
deposit schemes differentiated from each other on the basis of the time period.

Quantitative Analysis
The results showed the following:
Long term 32%
Medium term 52%
Short term 32%

Q10B) PREFERENCE OF INVESTORS

ON THE BASIS OF TIME PERIOD?

60%
50%
40% SHORT RANGE
30%
52% MEDIUM
20% 32% 32%
10% RANGE
0% LONG RANGE
LONG MEDIUM SHORT
RANGE RANGE RANGE

Conclusions
Almost half of the responses were in the favour of medium range investments. And
approximately one third of the respondents were in the favour of either short range or
long range investments.

Question no.12
There are various dimensions which are thoroughly scrutinized before the investment
decisions are implemented. Hence the twelfth question tries to assess what is it exactly
that the trusts look for, while investing. For example do they prefer a high rate of interest,
or better service, or safety, etc.. these are the aspects which are dealt in the last question.

Quantitative Analysis
From the responses generated the following results were drawn:
Rate of interest 95%
Flexibility of Withdrawal 50%
Minimum Period of Deposit 50%
Minimum Amount for Deposit 50%
Safety Ratings 90%
Good Service 80%
Location of the Institution 70%

Q12) How do you rate the following if given a ten point scale, for selecting a
particular kind of investment?

LOCATION OF THE INSTITUTION 70%

GOOD SERVICE 85%

RATE OF INTEREST
SAFETY RATINGS 90%
FLEXIBILITY OF WITHDRAW
MINIMUM PERIOD OF DEPOSIT
MINIMUM AMOUNT FOR DEPOSIT 55% MINIMUM AMOUNT FOR DEPOSIT
SAFETY RATINGS
GOOD SERVICE
MINIMUM PERIOD OF DEPOSIT 60%
LOCATION OF THE INSTITUTION

FLEXIBILITY OF WITHDRAW 50%

RATE OF INTEREST 100%

0% 20% 40% 60% 80% 100% 120%

Conclusions
The four most important and critical considerations from the investors point of view
found to be are:
 1. Rate of interest
2. Safety
3. Good service
4. Location of the institution

RECOMMENDATIONS

The following are the points of consideration :-

It is required that the depositor trust and the potential depositor trust be sent a

comparative interest rate table showing the rate of interest being offered by the various

housing finance companies and other such institutions.

It is so because when HDFC cuts interest rates the media publicizes it widely, while when

other housing finance companies do the same it goes unnoticed. This has given an

impression to the trusts that HDFC is paying lower rate of interest.

The fact that people consider banks to be more safe than any other institution and safety

being the most preferred criteria for their selection of investment schemes, HDFC Ltd can

bank upon advertising in a manner that emphasizes the company’s advantage in this

aspect.

The role of advertising has been very limited in collecting deposits. This needs to change,

for more advertising brings more deposits.

The deposit schemes can be advertised to the trusts by post. A brochure giving details of

the deposit schemes can be sent to the trusts who have not been participating in the

deposit scheme of HDFC.

It is known that HDFC is at a disadvantage as are other housing finance companies when

it comes to advertising due to the restriction by the NHB. But still the deposits schemes

must be advertised within the framework laid down by the NHB.

Most people known HDFC as a lending institution and do not know that HDFC also

accepts deposits. This fact makes it very important to advertise vigorously, the deposit

schemes of the corporation.

To increase the goodwill of the corporation further in the minds of the depositors. HDFC

should send greetings to its depositors on such occasions as festivals. Small New Year

gifts such as cards, calendars, diaries, etc can also be sent to the depositors who place a

somewhat large deposit with the corporation.

 CONCLUSIONS

The trusts can participate in fixed deposits of only those institutions which have the

“Trustee Security and Benefit Status” under Sec. 11(5)(ix)). Due to this legal compulsion

the options with the trusts to invest in the fixed deposits gets restricted. All the more, the

trusts usually have very large amounts and placing these deposits with small and not very

reliable companies is not advisable because of safety reasons. HDFC enjoys a reputation

of never having defaulted in its interest payments or refund of deposits. With ‘FAAA’ &

‘MAAA’ rating affirmed to the corporation for 11 consecutive years by CRISIL & ICRA

respectively. HDFC holds the ‘Numero Uno’ position. As was said earlier with the

people considering banks to be the safest options for deposits all that HDFC needs to do

is to bank upon its unquestionable strength.

An awareness needs to be created amongst the masses about the importance of “Credit

Ratings” and what it actually means to earn such credible ratings as ‘FAAA’ & ‘MAAA’

for 11 consecutive years which has been a significant achievement of HDFC over the

years.

The additional questions that formed a part of the post interview discussion brought into

light the fact that the people come to know about the various schemes offered by the

financial institutions through the newspapers, magazines and journals. With the response

available, it was seen that HDFC needs to strengthen upon the reach of its

advertisements.
A lot of stress has been laid on spreading the information regarding the fixed deposits

schemes in the report. In this context HDFC is constrained because it can advertise only

in a statutory format approved by the NHB. But advertising is absolutely essential and the

corporation must advertise within the framework prescribed by the NHB.

To conclude, it can be said that the biggest asset of HDFC is its goodwill and the

corporation must exploit this goodwill to the maximum possible extent to increase the

participation of the general public at large and the trust sin particular in its fixed deposits

schemes.
 BIBLIOGRAPHY

1. www.hdfc.com

2. www.nmc.com

3. www.hdfcfunds.com

4. www.google.com

5. www.yahoosearch.com
ANNEXURES
ANNEXURE-1
Trusts & Societies
S.No. Name Address

1. Humanity Welfare Foundation N-118, G.K.-I

2. National Safai Karamchari Finance & B-2, 1st Floor, G.K. Enclave
Development Corp. Part-II
3. Panchtarni S-525, G.K.-II
4. Retina Associates Eye Foundation G.K. Enclave-II
5. Betterment of Human Trust S-228, G.K.-II
6. Subhash Sushila Lakhotia Trust S-228, G.K.-II
7. Shree Jain Kaushal Suri Jain Khatragachh Jain Dada Bari, R-Block
Dada Bari Trust South Ex. Part-II
8. Bal Vikash Foundation E-63, South Ex Part-I
9. BSB Educational Trust A-68, NDSE Part-I
10. D.V. Nirmal & Mangal Sain Trust C-3/3 Vasant Vihar
11. Helpage India Qutab Institutional Area
12. Indian Society for Training and Qutab Institutional Area
Development
13. Sanjivani Qutab Institutional Area
14. Chinnaya Sewa Trust 89, Lodhi Estate, Lodhi Road
15. Council of Architecture Core 6A, 1st floor,
India Habitat Centre,
Lodhi Road
16. Council of Architecture Employees Core 6A, 1st floor,
Group Gratuity Scheme India Habitat Centre,
Lodhi Road
17. Council for Social Development 53, Lodhi Estate
18. Company Secretaries Benevolent Fund The ICSI House,
22 Institutional Area,
Lodhi Road
19. Namdev Mission Trust 16 Institutional Area, Lodhi
Road
20. Om SAi Sadhna Sansthan D-138 Defence Colony
21. Namgyal Institute for Research on X-14, Green Park
Ladakhi Arts & Culture
22. Parivar National Federation of Parents C-4/5, S.D.A., 1st floor
Association
23. Rahat Ch. and Medieval Research Trust C-7/226 S.D.A.
24. Social out Reach Foundation N-128, Panchsheel Park
25. D.D. Foundation Trust Society N-56, Panchsheel Park
26. Balaji Ch. Trust C-4, Shivalik,
near Malviya Nagar
27. Diabetic Self Care Foundation 13, Sheikh Sarai, Phase-I
Malviya Nagar
28. Children Education Foundation C-451, C.R. Park
29. Holy Child Trust 3-B SFS Block,
East of Kailash
30. Bhartiya Yatri Awas Vikas Samiti B-38, Kailash Colony
31. Pratab Ch. Trust D-50, East of Kailash
32. Sukhdevraj Soin Hospital Trust 164, Kailash Hills,
East of Kailash
33. Blue Bells Education Society Kailash Colony
34. Chandra Educational & Welfare Society B-94, Okhla Industrial Area
Phase-II
35. Sponge Iron Manufacturer’s Associatio IS01, Hemkunt Press
36. Bhandari Ch. Trust 203, Pragati House
47-48 Nehru Place
37. CEEFI Supply Centre Trust 805/92 Deepali Building,
Nehru Place
38. Gyan Educational Society D-1/1 Hauz Khas
39. Centre for Development & Human Rights Q-1A Hauz Khas Enclave
40. Kali for Women K-92, 1st Floor
Hauz Khas Enclave
41. Old Cottonian Association 1 Aurobindo Marg
Hauz Khas
42. NIILM Trust B-11/66, NC-19
Delhi-Mathura Road
43. Path A-9, Qutab Institutional Area
44. Banarsidas Chandiwala Sewa Smarak Chandiwala Estate,
Trust Society Maa Anandmai Marg,
Kalkaji
45. USO USO House, USO Marg
Jeet Singh Marg
Annexure-2
Hospitals
S.No. Name Address

1. Pushpawati Singhania Research Institute Press Enclave Marg

Sheikh Sarai II
2. Sama Nursing Home 8, Siri Fort Road
3. Escorts Heart Institute & Research Centre Okhla Road
4. Apollo Hospital Sarita Vihar, Delhi-Mathura
Road
5. Venu Eye Institute & Research Centre Sheikh Sarai Institutional Area
6. Indian Radiological & Imaging IRIA House,
Association C-5, Qutab Institutional Area
7. Skan Institute & School of Dermatology Zamindpur, N- Block
8. R G Stone Urological Research Institute F-12 East of Kailash
9. Well Spring A-28 Kailash Colony
10. Dr Sharma’s Nursing Home A-19/A Kailash Colony
11. Phoenix Hospital E-60, GK I
12. National Heart Institute 49-50, Community Centre
East of Kailash
13. Focus Imaging & Research Centre Pvt. C-10 Green Park Extension
Ltd
14. Lifeline Laboratory H-11 Green Park Extension
15. Spring Meadows Hospital F-44 East of Kailash
16. Mohinder Hospital C-5 Green Park Extension
17. Rockland Hospital Qutab Institutional Area
18. Max Care Pushp Vihar, Saket
19. AIIMS
20. Safdurjung
21. G.B. Pant
22. Lok Nayak
23. S.S.K. Hospital
24. Kalawati Saran Children’s Hospital
25. Ram Manohar Lohia
Annexure-3
Trusts & societies
S.No. Name Address
1. Stint Trial N-221, G.K.-I
2. Health Education & Research Trust B-26, G.K.-I
3. Business & Communication Foundation E-46, G.K.-I
4. B.I. Educational Society B-117, G.K.-I
5. Balak Ram Puri Charitable Trust B-49, G.K.-I
6. Narendra Nath Bhargava Ch. Trust R-9, G.K.-I
7. New Delhi Television Jai Fund W-17, G.K.-I
8. Ramnivas Asha Rani Lakhotia Trust S-228, G.K.-I
9. Dewan Shri Family Charity Trust B-75, G.K.-I
10. Bhardwaj Welfare Trust E-18, G.K.-I
11. Rameshwari Devi Trust B-22, Pumposh Enclave
G.K.-I
12. St. Janki Devi Trust N-217, G.K.-I
13. Sri Premji Maharaj Ch. Trust R-258-A, G.K.-I
14. Springdale Educational Society Benito Juareg Marg
Dhaula Kuan
15. Himalayan R&D Society A-101, SOS Vihar
Sector-13, R.K. Puram
16. Defence Accounts Sports Control Board West Block-V, R.K. Puram
17. Safe Blood Organisation E-410, G.K.-II
18. Shri Guru Singh Sabha E- Block Gurudwara
G.K.-II
19. Shri Bindra Ban Dass Vimal Kishore Jain M-13, G.K.-II
Dharmarth Trust
20. Spiritual Clubs International S-288, G.K.-II
21. Humanity Welfare Trust S-228, G.K.-II
22. Babulal Aggarwal Ch. Trust W-39, G.K.-II
23. B.D. Rukhmani Khosla Charitable Trust M-235, G.K.-II
24. Ashwat Teerthraj Sammedshikhir Trust G.K. Enclave Part II
25. National Cancer Institute M-129, G.K.-II
26. Bhimsen Shanti Devi Trust G.K.-II
27. Sudesh Madhok Public Ch. Trust M-14, G.K.-II
28. Sai Kirpa 210, South Ex. Plaza-I
389, Masjid Moth, NDSE-III
29. Hedgewar Smarak Nyas C-99, South Ex Part-II
30. Dental Education Society of India C-56, South Ex. Part-II
31. Centra Education Society B-48, South Ex. Part-I
32. Bharat Mata Ch. Trust M-14-B, South Ex. Part-II
33. Sundale Educational Society B-37, South Ex. Part-II
34. Marchhea Devi Memorial Trust C-39, South Ex. Part-II
35. Balfeet Memorial Ch. Trust A-9/27, Vasant Vihar
36. Chaudhary Raja Ram Jakhar Memorial E-1/1 Vasant Vihar
Pubic Ch. Turst
37. Country First C-6/4, Vasant Vihar
38. C&N Charitable Trust E-4/5 , Vasant Vihar
39. Guru Amardas Memorail Trust F-4/10, Vasant Vihar
40. Goodwill Trust and Endownment Fund 2 Vasant Marg, Vasant Vihar
41. Parkinsonism and Related Disorders D-319, Vasant Vihar
Awareness Network
42. Shri Kannashankar Nandlal Dave A-51, Vasant Vihar
Educationa Trust
43. Sunder Amarsheel Ch. Trust A-10/16, Vasant Vihar
44. Tara Tak Employees Provident Fund B-32, Tara Crescent
Trust Qutab Institutional Area
45. Society for Automotive Fitness & Core - 4B, 5th Floor
Environment India Habitat Centre
Lodhi Road
46. Health Fitness Trust B-307, Pragati Alhar Hostle,
Lodhi Road
47. BSF Special Relief Fund Room - 616, Block - 10
CGO Complex, Lodhi Road
48. BSF Contributory Benevolent Fund Room - 616, Block - 10
CGO Complex, Lodhi Road
49. BSF Wives Welfare Association Room - 616, Block - 10
CGO Complex, Lodhi Road
50. BSF Education Fund Room - 616, Block - 10
CGO Complex, Lodhi Road
51. Consulting Engineers Association of East Court Zone-4, Core 4 B
India 2nd floor, India Habitat Centre
52. Gymnastic Federation of India Jawaharlal Nehru Stadium,
Lodhi Road
53. National Adventure Foundation Jawaharlal Nehru Stadium,
Lodhi Road
54. Sports Authority of India Jawaharlal Nehru Stadium,
Lodhi Road
55. Shri Ramayan Vidya Peeth Lodhi Road
56. People Institute for Development & C-114, Vasant Kunj
Training
57. Centre for Development & Action D-3, 3306, Vasant Kunj
58. Godhyi 513 Pocket, C- SCEA
Vasant Kunj
59. Bunts Cultural Association C-1/1289, Vasant Kunj
60. Bhartiya Tripureshwari Shakti Peeth Flat No. 2128, Sec. 6
Pocket - 2, Vasant Kunj
61. Siray Relief And Anilam Welfare 2303, Sec D-2
Vasant Kunj
62. South Delhi Educational Society South Delhi Public School
Defence Colony
63. Baijnath Bhandari Public Ch. Trust E-22, Defence Colony
64. Basant Rajmadhu Bhandari Ch. Trust C-127, Defence Colony
65. D.. Mehta Ch. Trust D-196, Defence Colony
66. Panos Institute (India) Pvt. Ltd 49, Defence Colony, 1st floor
67. Project Corner Integrational C-38, Defence Colony
68. Deviya Nirvan Welfare Ch. Society A-146, Defence Colony
69. Dr Mahesh Chandra Gupta Ch. Trust D-19, Defence Colony
70. Smt. Ramrakhi & Hakim Chunnilal Kohli D-399, Defence Colony
Memorial Ch. Trust
71. Saraswati Ch. Trust 130-C, Saraswati Niwas
Gautam Nagar
72. Centre for Human Development 99/6 Ekta Appartts,
Ground floor, Gautam Nagar
73. Leapfrog A-14, 3rd floor
 Gulmohar Park
74. Jashn-E-Bahar 50 - SFS Flats, Gautam Appartts
Gautam Nagar
75. Centre For Agriculture & Rural G-30 Lajpat Nagar Part-II
Development
76. Centre for Development of Travel & J-59 Lajpat Nagar III
Tourism
77. Rattan Chand Punjabi Ch. Trust A-61 Lajpat Nagar II
78. Dewan Chand Swahney Ch. Trust 34 Lajpat Nagar III
79. Bharat Jagrati Morcha M-67, 1st floor
Lajpat Nagar II
80. Health Care Ch. Trust R-23 Green Park
81. Hindu Sangam G-10 Green Park Extension
82. Common Wealth Human Rights N-18 1s floor
Green Park
83. Centre for Chronic Disease Control 17 Green Park Extension
1st floor
84. Relan Foundation R-5 Green Park Market
85. Country Club Farmlands Association K-7 Green Park Extension
86. Dr (Mrs) Sushila Mehra Ch. Trust C-15 Green Park
87. Desa Bhakta Trust C-6/28 SDA
88. Shri Peru Singh Educational & Welfare 33-A Yusuf Sarai
Society
89. Hospital Welfare Society A-2/171 Safdarjung Enclave
90. Deepannita Baisya Memorial Trust C-2/60 Humayunpur
Safdarjung Encalve
91. Rotary International’s India National A-2/18 Safdarjung Encalve
Polio Plus Society
92. CIOLOSOP Trust D-74 Panchsheel Enclave
93. LRG Foundation Panchsheel Park
94. Centre for Education & Communication 173 A, Khirki Village
Malviya Nagar
95. Charkha F Block 9/11
1st floor Malviya Nagar
96. St. Gregories Jacobite Syrian Orthrodox 33-C Pocket, Sheikh Sarai
Church Society
97. Sansaptak C-1276, 1st floor
C.R. Park
98. St. Georges Education Society G-74 East of Kailash
99. Home for Orphans E-164 East of Kailash
100. Radhika Trust A-73, East of Kailash
101. Society of Human Values and Universal Panchvati 215
Responsibilities Kailash Hills
102. Seth Ch. Trust E-48/14 Okhla Indl. Area
103. Nirmal Society for Educational C-124 Okhla Indl. Area
104. Bacardi Mutini India Employees 227 Okhla Indl. Estate Phase III
Superannuation Fund
105. Houses of Manj Immaalate Delhi Okhla Industrial Area, Phase II
106. Conference of Religious India CRI House, Jamia Nagar
Okhla
107. Parivartan 209 Okhla Indl. Area Phase III
108. Dayal Foundation F-1/7 Okhla Indl. Area Phase I
109. Cooperative Rural Development 34 Nehru Place
110. Bairang Lal Jaju Foundation Jaju Appartts
7/18, Nehru Enclave
111. Dufferin Rajendra Old Cadet Association 214 Hemkunt Towers
Nehru Place
112. Bhartiya Cattle Resource 305 Bakshi House
40-41 Nehru Place
113. Kanahyalal Dayawati Punj Ch. Trust 17 - 1B
114. Shri Mati Vidya Ch. Trust P-8 C Hauz Khas Enclave
Ground Floor
115. Program of Special Olympus Bharat N-27A, Hauz Khas
116. B.D. Education Society C-31 Hauz Khas
117. Cancer Detection Society of India H-8 C Hauz Khas
118. Dey Foundation K-2 Hauz Khas
119. Navdanya Trust A-60 Hauz Khas
120. Research Foundation for Science A-60 Hauz Khas
Technology & Ecology
121. National Bee Board NCUI Auditorium Building
5th floor
122. Centre for Logical Research and 28, Old JNU Campus Amna Asaf Ali
Development Studies Marg, Munirka
123. Cornerstone Community Trust BD 6A, DDA Flats,
Munirka
124. Daya Memorial Ch. Trust 87-A Munirka Village
125. Maraj Sani Siyan Singh Ch. Trust C-45 Mayair Garden,
Near Hauz Khas
126. Hazari Mal Durga Dutt Ch. Trust A-73, New Friends Colony
127. Centre for Femenist Legal Research A-18, 2nd Floor
 New Friends Colony
128. Centre for Cross Cultural Communication D-891 New Friends Colony
129. Centre for Himalayan Rural Action C-57 New Friends Colony
Group
130. Bhartiya Jana Kalyan Nidhi Bhilwara Bhawan 40-41
Community Centre
New Friends Colony
131. Centre for Advocacy & Research E-1 Press Enclave, Saket
132. Environment & Development on Line 46-A, MB Appartts
MB Road, Saket
133. Lok Awaz G-22, Saket
134. Prerna J-332 Sarita Vihar
135. Tyagi Foundation 331, Sant Nagar
136. Devathi Vidya Peeth A-14, Mathura Road
Mohan Co-operative Indl. Estate
137. Mahaniam Spintual Fellowship Society 36/3 Motiram Building
Mathura Road
138. Guruji Ka Ashram Villa - E, Empire Estate
Mehrauli 9
Gurgaon Road
139. Purna Holistic Centres, Near Chattarpur
Mandir, Near Sat Sang Kiran
140. Help Rural India D-10 Neb Valley
Neb Sarai, Mehrauli
141. Dr Pushpa Sethi Memorial Trust C-2 Maharani Bagh
142. Bhagwat Devi Gitaram Garg Welfare 10 Nizamudin East
Trust
143. Saranya Foundation N-42 Nizamudin West
144. Jindal South West Foundation 6, Prithvi Raj Road
145. Shri Rattan Chand Ch. Trust 19, Golf Links
146. Society for Agriculture & Education 42 Golf Links
147. PRIA 42, Tughlakabad Institutiona Area
148. PNB Centemanj Rural Development 7 Bikaji Cama Place
Trust
149. National Network for India Trust 131/132 Som Dutt Chamber I
Bhikaji Cama Place
150. Logical Society of India 1 Tughlakabad Institutional Area
 CASE STUDY

HDFC offers a wide range of deposit products, a secure investment option, with attractive
returns. Deposits are accepted from Charitable Trusts, Religious Trusts, Educational
Institutions, Employees' Welfare Trusts and others as decided by the management.

Trusts can choose from any of the following products depending on their need.

Trust Deposits:

1) Fixed Rate Deposits

Following options are available under Fixed Rate Deposit -

i) Monthly Income Plan
ii) Non-Cumulative Deposits
iii) Annual Income Plan
iv) Cumulative Deposits

2) Variable Rate Deposits

Variable Rate Deposit is a new addition to the wide range of deposit products offered by
HDFC to enable the depositors to take advantage of movements in interest rates.

i) Monthly Income Plan

ii) Non-Cumulative Deposits
iii) Annual Income Plan
iv) Cumulative Deposits
Benefits of an HDFC Trust Deposit:

1. Highest Safety
2. Attractive Returns
3. Tax Benefits
4. Quick Loan Facility
5. High Service Standards
6. Demand Draft Facility
7. Electronic Clearing Service

Highest Safety:
'FAAA' and 'MAAA' rating affirmed for the eleventh consecutive year by CRISIL and
ICRA respectively.

Attractive Returns: HDFC deposits are Available throughout the year and offer
Attractive, Assured returns to investors.

Tax benefits:

1. HDFC Trust Deposits is a specified investment under Section 11(5) (ix) of the
Income Tax Act, 1961.
2. No tax deduction at source from Interest on deposits upto Rs. 5,000/- per branch
in a financial year.

Quick Loan Facility: Loan against deposit is available after 3 months from the date of
deposit upto 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.
High Service Standards: Depositors are offered across the counter services for new
deposits, renewals, repayments and loan against deposit facility. Further, all enquiries
through email, post, telephone and in person are attended to immediately.
Demand Draft Facility: Outstation depositors can send demand drafts after deducting
demand draft charges. This facility is applicable for places where HDFC does not have an
office.
Electronic Clearing Service: This facility is provided to depsoitors in select centres
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. Your bank will not levy
any charge for this facility as per present RBI guidelines.
Variable Rate Deposit is a new addition to the wide range of deposit products offered by
HDFC to enable the depositors to take advantage of movements in interest rates.

It is available with monthly, quarterly, half yearly, annual and cumulative interest
options.

Deposit placed under variable rate deposit cannot be changed to fixed rate deposit before
the maturity date.

Rate of Interest

The rate of interest on variable rate deposit is linked to the Benchmark Rate and will vary
from time to time with the Benchmark Rate.

Benchmark Rate is the rate of interest applicable on HDFC Fixed Rate deposit product
for the corresponding period.

Rate of Interest (ROI) will be reset at the beginning of each interest period. ROI
prevailing on the first day of the interest period will be applicable for the entire interest
period.
For e.g. If a 3-year quarterly deposit is placed on 01/10/04, interest rate for the period
from 01/10/04 to 31/12/04 will be the ROI prevalent on 01/10/04 for a 3-year Fixed Rate
quarterly deposit product. Similarly, interest rate applicable for the next quarter from
01/01/05 to 31/03/05 will be the ROI prevalent on 01/01/05 for a 3-year Fixed Rate
quarterly deposit product.

FIXED RATE DEPOSITS

Interest Rates Applicable from June 01, 2006
ANNUAL INCOME PLAN
Rate of Interest
Period (Months)
payable (% p.a.)*
12 - 59 7.50%
60 - 84 7.75%
Min. Dep. Amt.(Rs.) 10,000/-

0.25% p.a more for Deposits of Rs.10 lac and above for 36-84 months till June 30, 2006

CUMULATIVE DEPOSITS
Maturity Amount
Rate of Interest
Period (Months) for a Deposit of
payable (% p.a.)*
Rs. 1000/- *
12 7.50% 1,075.00
24 7.50% 1,155.63
36 7.50% 1,242.30
48 7.50% 1,335.47
60 7.75% 1,452.40
72 7.75% 1,564.96
84 7.75% 1,686.25
Min. Dep. Amt.(Rs.) 10,000/-

0.25% p.a more for Deposits of Rs.10 lac and above for 36-84 months till June 30, 2006

MONTHLY INCOME PLAN

Rate of Interest
Period (Months)
payable (% p.a.)*
12 - 59 7.25%
60 - 84 7.50%
Min. Dep. Amt.(Rs.) 20,000/-
0.25% p.a more for Deposits of Rs.10 lac and above for 36-84 months till June 30, 2006

NON-CUMULATIVE DEPOSITS - HALF YEARLY

Rate of Interest
Period (Months)
payable (% p.a.)*
12 - 59 7.35%
60 - 84 7.60%
Min. Dep. Amt.(Rs.) 10,000/-

0.25% p.a more for Deposits of Rs.10 lac and above for 36-84 months till June 30, 2006

NON-CUMULATIVE DEPOSITS - QUARTERLY

Rate of Interest
Period (Months)
payable (% p.a.)*
12 - 59 7.30%
60 - 84 7.55%
Min. Dep. Amt.(Rs.) 10,000/-

How can we make the procedure of trust deposits more attractive and appealing?