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A PROJECT REPORT ON

DEPOSITS
At

HDFC Bank
In Partial fulfillment of the requirement for the degree of Master of Business Administration from U.P. Technical University, Lucknow Submitted To: U.P. Technical University, Lucknow Under the guidance of Mr. Alok Gupta HOD of MBA Deptt. SD College, Muzaffarnagar

Submitted By ARUN MBA -III SEM Roll.No. 0908570024

DEPARTMENT OF MANAGEMENT STUDIES

SD COLLEGE OF MANAGEMENT, MUZAFFARNAGAR

TABLE OF CONTENTS
Company Profile Objectives of the project Introduction of Deposits Project 1 Saving Account & Current Account

Introduction

Detailed project Project 2 Fixed Deposits

Introduction Schemes of fixed deposits. Payment of interest.

Research methodology
Swot analysis of HDFC Analysis & findings Conclusion Limitations

Recommendation Annexure Bibliography

DECLARATION
I have been declare that the project report entitled DEPOSITS submitted to the Advance Institute of Technology & Management, M.D.U, ROHTAK for the partial fulfillment for the requirement of the award of M.B.A is a record of independent research work under the guidance of Ms. MITALI BHARDWAJ. This has not previously submitted for the award of any diploma, degree or other similar title. Vishant Nehra M.B.A 2.3

ACKNOWLEDGEMENT
I would like to begin my report by extending a sincere word of thanks to A.I.T.M for giving me an opportunity to work on this project. It had been a very knowledgeable experience for me working on this project. It helped me in enhancing my level of self-confidence. I would like to show my sincere gratitude to my Guide Mr. Narender Negi (Branch Head) for giving me the opportunity to work in his esteemed bank. He has been continuously providing his help despite his preoccupation with his profession. While expressing my sincere gratitude, I seek his continued guidance for my career. I would like to thank Ms. Mitali Bhardwaj and Mr. Abhishek for giving me invaluable suggestion and priceless guidance without which, my project would have been incomplete. I also extend my heartfelt thanks to the management and staff of HDFC-BANK for creating an extremely informal, responsible and flexible work culture career prospect. It had been an excellent experience working with the employees of HDFC. In the end I would also like to thank all other people who have rendered their valuable insights to me and my team of A.I.T.M-Palwal from time to time and also to everybody who had to bear with us.

PREFACE
With deep sincerity and immense sense of pleasure, I had completed my training at this branch of Housing Development of Financial Corporation(HDFC). The purpose of training is to develop skills of performing Work effectively and efficiently .I feel that the training at HDFC is different than the other banks in the manner that here you are given the opportunity to meet the challenges of routine work. It also develops favorable attitude on the part of trainee in regard to actual job requirement in management skills and human relations. My two months of training at this branch gave me enough opportunity to fulfill the above stated needs of training and I utilized the same with best of my efforts.

VISHANT NEHRA

INTRODUCTION TO HDFC
HDFC is private owned bank where your money is absolutely secure. It is the one of the top five banks where the balance sheet size one of the largest financial undertakings in the country offering a range of financial products. It won the four technologies awards( hosted by Indian banks association). Best use of IT in Retail Banking & Best Payment Initiatives being some of them. It has been rated as one of the fastest growing banks in many surveys. 130 branches & 332 ATMs at 92 cities.

WHY HDFC?
RBI takes the undertaking of the HDFC.

Safety of your money placed in a savings account deposit. Financial conglomerate. Technologically advance banking product and services. Fast growing bank.

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HISTORY OF HDFC BANK

July 1964: Set up under an Act of parliament as a wholly subsidiary of Reserve Bank of India. February 1976: Ownership transferred to Private of India. Designated Principle Financial Institution for co-coordinating the working of institutions at national and state levels engaged in financing, promoting and developing industry. March 1982: International Finance Division of HDFC transferred to exportimport Bank of India, established as wholly owned corporation of Private of India, under ac Act of Parliament. April 1990: set up Small Industries Development Bank of India (SHDFC) Under SHDFC Act as a wholly owned subsidiary to cater to specific needs of small- scale sector. In terms of amendment to SHDFC Act in September 2000, HDFC divested 51% of its shareholding in SHDFC in favour of banks and other institutions in the first phase. HDFC has subsequently divested 79.13% of its stake in its erstwhile subsidiary to date. January 1992: Accessed domestic retail debt market for the first time with innovative Deep Discount Bonds; registered path-breaking success. December 1993: Set up HDFC capital market Services Ltd. As a wholly owned subsidiary to offer a broad range of financial services, including Bond Trading, Equity Broking ,Client Asset Management and Depository services. HDFC Capital is currently a leading Primary Dealer in the country. September 1994: Set up HDFC Bank Ltd. In association with SHDFC as a private sector commercial bank subsidiary, a sequel to RBIs policy opening
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up domestic banking sector to private participation as part of overall financial sector reforms. October 1994: HDFC Act amended to permit public ownership up 49%. July 1995: made initial public offer of Equity and raised over Rs.2000 crore, thereby reducing Private stake to 72.14% March 2000: Entered into a JV agreement with Principal Financial Group, USA for participation in equity and management of HDFC Investment Management company Ltd. , erstwhile a 100% subsidiary. HDFC divested its entire shareholding in its asset management venture in March 2003 as part of overall corporate strategy. March 2000: Set up HDFC Intech Ltd. as wholly owned subsidiary to undertake IT- related activities. June 2000: A part of Private shareholding converted to preference capital, since redeemed in march 2001; Private stake currently 58.47%. August 2000: Became the first All-India Financial Institution to obtain ISO 9002: 1994 Certification for its treasury operations. Also became the first organization in Indian Financial sector to obtain ISO 9001:2000 Certification for its forex services. March 2001: Set up HDFC Trusteeship Services Ltd. to provide technologydriven information and professional services to subscribers and issuers of debentures. February 2002: associated with selected banks/institutions in selecting up Asset Reconstruction Company (India) Limited (ARCIL), which will be
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involved with the strategic management of non-performing and stressed assets of Financial Institutions and Banks. September 2003: HDFC acquired entire shareholding of Tata Finance Limited in Tata Home Finance LTD, signaling HDFCs foray into the retail finance sector. The housing finance subsidiary has since been renamed HDFC Home finance Limited Limited. December2003; December 16, 2003 , the Parliament approved The Industrial Development Bank (Transfer of Undertaking and Repeal Bill) 2002 to repeal HDFC Act 1964. The Presidents assent for bringing for the same was obtained on December 30, 2003. The Repeal Act is aimed bringing HDFC under the Companies Act for investing it with requisite operational flexibility to undertake commercial banking business under the Banking Regulation Act 1949 in addition to the business carried on and transacted by it under the HDFC Act, 1964. July 2004: The Industrial Development Bank (Transfer of Undertaking and Repeal) Act 2003 came into force from July 2, 2004. July 2004: The Boards of HDFC and HDFC Bank Ltd. take in principle decision regarding merger of HDFC Bank Ltd. with proposed Industrial Development Bank of India Ltd. in their respective meetings on July 29, 2004. September 2004: The Trust Deed for Stressed Stabilization Fund (SASF) executed by its Trustees on September 24, 2004. The new entity Industrial Development Bank if India was incorporated on September 27, 2004 and Certificate of commencement of business was issued by the Registrar of
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Companies on September 28,2004.Notification issued by Ministry of Finance specifying SASF as a financial institution under Section 2(h)(ii) of Recovery of Debts due to Banks and Financial Institution Act, 1993. Notification issued by Ministry of Finance on September 29,2004 for issue of non-interest bearing GOI HDFC Special Security, 2004 aggregating Rs.9000 crore ,of 20-year tenure. Notification for appointed day as October 1, 2004, issued by Ministry of Finance on September 29, 2004. RBI issues notification for inclusion of Industrial Development Bank of India Ltd. in schedule II of RBI Act, 1934 on September 30, 2004. October 2004: Appointed day-October 01, 2004 Transfer of undertaking of HDFC to HDFC Ltd. HDFC Ltd. commences operation as a banking company. HDFC Act, 1964 stands repealed. January 2005: The Board of Directors of HDFC Ltd., at its meeting held on January 20, 2005, approved the Scheme of Amalgamation, envisaging merging of HDFC Bank Ltd. with HDFC Ltd. Pursuant to the scheme approved by Board of both the Banks, HDFC Ltd, will issue 100 equity shares for 142 equity shares held by shareholders in HDFC Bank Ltd. EGM has convened on February 23, 2005 for seeking shareholder approval for the scheme.

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SERVICE OFFERED BY HDFC

1) ATM Card Facilities of ATM include: At any ATM of any Branch Cash withdrawals up to Rs 25,000/perday.Depositing cash / cheques etc. Knowing balance in the account and getting a statement of account. Submitting request for new cheque book. At any ATM of American Express or Swadhan Cash withdrawals as per the limit set-up by the Bank maintaining the ATM. 2) Add on ATM Card - All the facilities of regular ATM Card. 3) Any where Banking. Facilities include: Instant electronic transfer of funds (EFT) from one branch to any another branch of the Bank for credit to the own account of the customer at such branch. Withdrawal of cash from any branch of the Bank, subject to the balance available in the account. Deposit of cash / cheques etc., at any branch of the Bank. Knowing balance, getting statement of accounts or giving instructions for any transaction at any branch of the Bank. 4) Phone banking / Mobile Banking Facility - 24 hours and on all days (Presently limited to select cities) - Access is free of charge. Facilities include: -Checking balance in the account.
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-Submitting request for cheque book. -Ordering / receiving statement of account on fax. -Ordering demand drafts. 5) Other Retail Banking Services:

Internet-Banking (Access is Free). Sweep-In Savings Account.

Fixed Deposit Schemes, including Recurring Deposit.

Demand Drafts (at most of the major centers through our Arrangement with agency bank). Pay Orders. Safe Deposit Locker (subject to availability of the facility Demat Account for dematerialisation of shares, holding Loan against Demat Shares. Auto Loan. Housing Loan. Investment Products.

branch net work as well as through

at the branch and availability of vacant lockers). and sale / purchase of demat shares.

The attention of the customers may also be brought to the following special features of our Savings account: Door-Step Account Opening - Free of Charge. ii) Welcome Kit Account Opening - Cheque book and ATM card is given instantly. iii) Personalized Cheque Books (Cheques with name of the customer and account number printed on it).
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iv) Quarterly interest payment. (In some banks interest is paid on half yearly basis). v) Extended Banking Hours. vi) Sunday Banking (at select branches). vii) Free Interest Certificates. viii) Payable at Par Cheque Facility. ix) Cash Pickup and Delivery in select centers.

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BOARD OF DIRECTORS
Mr. Yogesh Aggarwal , Chairman and Managing Director Mr. O.V. Bundellu, Deputy Managing Deputy Managing Director Mr. Jitender Balakrishanan, Deputy managing Director Mr. Vinod Rai, Secretary (Financial Services) Ministry of Finance, Departmental of Financial Services Dr. Ajay Dua Secretary (IPP), Ministry of Industry, Private of India Mr. Analjit Singh . Mr. Lila Firoz Poonawala Mr. R.V. Gupta Mr. K. Narasimha Murthy Mr. Hiralal Zutshi Mr. A Sakthivel Dr. D Veerenra Heggade.

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(i) Year 2005-06

Business Achievements o January - Launched the online investing portal www.HDFCpaisabuilder.in_ o September HDFC bags CNBC TV18 Best National Award. o HDFC Capital ties up with PNB and Bank of Rajasthan Bank. o June Commenced Merchant Banking and Corporate Advisory Services. o October commenced trading in interest rate swaps. o March Achieved an outright secondary market turnover exceeding 1, 00,000 crores in G- sec. o June Acquired derivatives membership of BSE and NSE o February Acquired membership of BSE, Mumbai. o November started Operations as a primary dealer. o April Commenced operations as a Portfolio Manager o October commenced debt broking on NSE WDM segment. o December started operations as a Depository Participant and started to act as Arranger to Privately placed Bond issues. Financial Advisor-Institutional

2004-05 2002-04 2000-02

19992000 1998-99

1995-96

DEPOSITS
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Significance of Deposits Accepting deposits for the purpose of lending and investment is one of the basic functions of banks. Deposits are the main source of their working funds. The volume and growth of deposits of a bank are indicators of the confidence, which the public reposes in it, and are also considered as important parameters for measuring its size and performance. Mobilization of deposits is also important as they play a very important role in the economic growth of the country. Given the critical role of deposits in the working of the Bank, vigorous efforts should be made by all the concerned staff members to mobilize deposits. Providing prompt, courteous and professional service at all times to the customers is of prime importance in this regard.

Relationship with the Depositor

The relationship in respect of deposits in general between a bank and its customer is that of a Debtor and a Creditor. The deposit accepted by a bank is a loan taken from the depositors though it is not considered as borrowing for the purpose of Section 292 [Certain Powers (like power to borrow money etc.) to be exercised by Board only at a Meeting] of Companies Act, 1956. Money deposited with the bank is entirely under its control. The bank is not the Trustee of the funds deposited. The money is required to be returned to the depositor according to terms of acceptance, when claimed.

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Deposits are broadly categorized as : Demand deposits are the deposits that are with drawable on demand. Savings bank deposits and current deposits mainly constitute the demand deposits. Fixed deposits are deposits received for a fixed period and withdrawable on the expiry of the fixed period

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SAVINGS AND CURRENT ACCOUNTS

SAVINGS ACCOUNTS Savings Bank accounts, commonly referred to as Savings accounts, have huge potential for mobilizing low cost and stable deposits. In HDFC Bank, savings accounts are offered to prospective customers as value added retail liability products. Savings accounts are to be opened under specific codes advised by Product-Head from time to time. Separate scheme codes are assigned to facilitate providing different sets of offerings in savings accounts to various target groups. At present Savings accounts are offered as core Savings product and as Corporate Salary Account product in which corporate / employers can directly credit the salary to savings accounts of their employees maintained with HDFC. The Bank also offer a product called Sweep-In Savings Accounts which allows customers to meet short fall in savings accounts by breaking Fixed Deposits.

Eligibility
Savings accounts can be opened in the names of: i) Individuals (single or joint). ii) Joint Hindu Families (HUFs) iii) Associations, Clubs, Societies etc., engaged in non-commercial activities. iv) Trusts. v) Institutions, specifically permitted by Reserve Bank of India. (In addition to these categories of institutions, if a branch desires to open savings account in the name of an institution which is working for the
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welfare of the weaker and under-privileged sections of the society, an application should be made to Reserve Bank of India, through Corporate Office, furnishing full particular of the institution and their application seeking permission for opening such account). Savings accounts should not be opened in the names of organisations / institutions specifically prohibited by the Reserve Bank of India. Savings accounts should not also be opened in the names of trading, business or professional concerns.

List of Specifically Prohibited Institutions by RBI for Opening Savings Bank Account
Prohibited Institutes
a) Private departments

b) Municipal Corporation or Municipal Committees c) Panchayat Samitis d) State Housing Boards e) Water and Sewerage / Drainage Boards f) Metropolitan Development Authorities g) State / District Level Housing Co-op. Societies, etc. h) Trading, business or professional concerns (e.g. firms of Chartered Accountants, Lawyers etc.) including proprietary concerns or partnership firms or a companies or associations.
i) Political Parties. (Registered or deemed to be registered. India, as

such, under the Election Symbols Order 1908). Minimum Deposit Balance Savings accounts should be opened with stipulated amount of minimum deposit as per the prevailing guidelines applicable to the respective branches/ centers.
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Interest and Charges As per Reserve Bank of India directives, interest on savings accounts is to be paid at quarterly or longer rests at the rate prescribed by them 3.5% p.a. at present. In HDFC Bank it is paid quarterly as on 30th June, 30th September, 31st December and 31st March every year. Interest is calculated on minimum (closing) balance in the account between 10th and the last day of the month on monthly product basis. Statements of Account Statements of account are to be provided to the savings account holders at the frequency stipulated by the Bank from time to time. Prescribed charges should be recovered for providing statements at a frequency other than the normally permitted free of cost under the respective scheme. The printing and mailing should be carried out by CPU/ branches as per the arrangements evolved for this purpose. If an account holder specifically requests for not mailing the statement, it may be held at the branch for collecting personally by the customer/ their authorized representative. In any case, statements of account should not be kept in the counter area in open condition for the customers themselves to pick up. Withdrawals From Accounts An account holder can withdraw money from his/her account either by means of a cheque from a cheque book supplied to him/her or by Withdrawal Form. In savings accounts with cheque book facility, all withdrawals must be made by cheque from the cheque book issued to the account holder. Withdrawal Form may be allowed in an account with cheque book facility only when the account holder personally comes to the branch for undertaking the transaction. The Teller / official should identify the customer before making payments by Withdrawal Form. In case of such
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withdrawals above Rs 20,000/-, after the customer is identified by verifying his/ her signature carefully, the Teller / concerned official should write a remark to this effect on the Withdrawal Form under his/her initials. Extra caution should be exercised in case of newly opened accounts. The prescription of the Bank, if any, (no such prescription, at present) for maximum number of withdrawals permitted in a savings account may be followed. Service charges, as prescribed by the Bank, should be levied for additional debits. Clean Overdraft Clean overdraft should not ordinarily be allowed in savings accounts, except to recover the Bank charges or to meet the exigencies on account of delay in receipt of regular remittance/credit like monthly salary etc. Approval of appropriate authority should be obtained for allowing such drawings. The customer should be advised to regularize the account and followup made till the overdraft is wiped out. Issuance of Cheque Book Cheque books should normally be issued in all savings (and current) account to facilitate easy operations. However, request of a depositor for opening savings account without cheque book facility can be considered by the Branch Head on merit. The instructions for issue of cheque book for the first time is incorporated in the Account Opening Form. For subsequent issue of cheque books, it should be ensured that the request is received by way of Cheque Book Requisition Slip from the previous cheque book issued in the account or other approved modes/ delivery channels such as ATM, Phone / Internet Banking etc.
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Issuance of cheque books is now centralized in HDFC and carried out through CPU. The request is entered into the Cheque Book Indent Module. The Cheque Book Section of CPU down loads data and prepares and mails cheque books to the branches / customers as per the guidelines evolved for the purpose. The branch may however, maintain some cheque books (buffer stock) for issuing in emergent circumstances. Proper record / inventory of such cheque books should be maintained. For this purpose, on receipt of stock of blank cheque forms / books, they should be entered in the system by using appropriate menu and the related guidelines. Cheque books should be held securely in custody of two officials and stock should be verified periodically, (say every 3 months). For issuing a cheque book, the details should be first entered in the system by using appropriate menus and the related guidelines. The series of new cheque book and date of issue should be noted on the Account Opening Form / Requisition Slip etc., against which the new cheque book is issued. The name of the account, account number (if not already printed) and the date of issue of cheque book should be mentioned on the Requisition Slip attached to the new cheque book under the initials of the concerned official and round stamp of the branch. Cheque book should be sent to customer by courier at the address given by the customer. Where specially requested by the customer, the cheque book issued can be retained at the branch for personally handing over to the customer or their representative. In such cases, the account holder / their representative should be requested to count the number of cheque leaves in

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the book and his/her acknowledgment obtained. The signature so obtained should be tallied with the one on record / Cheque Requisition Slip. As the Bank follows the practice of issuing personalized cheques, the account holders should be advised to maintain adequate balance of cheques and give sufficient advance intimation for fresh requisition to take care of the time required for printing (and delivering) them. It should be ensured while issuing a new cheque book, that the account holder is not already in possession of unduly large number of unused cheques and the cheque book supplied earlier has not been misused. Only one cheque book should be issued at a time. When as a special case, considering the magnitude of operations, it is decided to issue more than one cheque books at a time in an account, the Cheque Book Requisition Slips offal cheque books, except the last one in serial order, should be removed and destroyed and a proper note made in the records. Issuing more than one cheque book should be particularly guarded against tendencies of some customers of indiscriminate issue of Post Dated Cheques to other banks / finance companies (and in case of current accounts, by finance companies to their depositors / customers). Stop Payment Instructions Any one who is a party to the account (any account holder or authorized signatory) can give stop payment instructions of a cheque, irrespective of the operational instructions of the account. The only exception being, joint accounts of individuals with Former or Survivor instructions, where the former alone has full powers to the account.

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Instruction of stop payment should usually be received where the customers account is maintained, although it can also be given by the customer at any branch of the Bank. The instruction should be obtained in writing with full particulars (Cheque No., Date of Cheque, Payees Name and Amount) of cheque/s to be stopped. If instruction is received on telephone / telegram etc., confirmation in writing should be obtained promptly. Payment of the cheque received in the intervening period may be postponed. If instruction is received through fax, the original message should be called for at the earliest. On receipt of a stop payment instruction in writing, the signature on the letter should be verified. The date and time of receipt of intimation should be noted on the letter. It should be ascertained from the system that the cheque is unpaid. The details should be immediately entered and verified into the computer system by using appropriate menu and following the related guidelines. Appropriate charges for stop payment instructions should be collected through the system. The customer should be given an acknowledgement after entering the details in the system. As the Bank provides the facility of accepting Stop Payment Instructions at any branch of the Bank, in case of failure or suspension of inter-branch communication link of the Bank for maintenance or for any other reason, the Stop Payment Instructions can be effected only after re-establishment of such link. Similarly, the requests received after End of the Day (EOD) operations of the branch, can be processed only after the branch opens on the next day. The fact that the Bank would not be responsible for payment of stopped cheque/s during such intervening period should be brought to the
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notice of the customer. However, depending on the circumstances of each case, in such an eventuality, the branch receiving the instructions may approach the other concerned branch or IT for incorporating the instructions immediately in the system. Also in view of Any where Banking facility provided in the account, in case of failure of inter-branch communication link as above, the Bank would not be able to affect the Stop Payment till the link is re-established. The fact that the Bank would not be responsible for payment of stopped cheque/s during such intervening period by a branch other than where the instructions are given should also be brought to the notice of the customer. If a cheque, the payment of which is stopped, is presented for payment, a remark Payment Stopped should be written on the face of the cheque in bold letters/ red ink and the cheque should be returned by following the prescribed procedure. If a cheque, the payment of which is stopped, is received in Inward Clearing of that day and balance has been carved, the Carving Flag should be changed from Y to N. Thereafter, the acknowledgement should be handed over to the customer. Though payee / holder have no right to stop the payment of a cheque, if he/she reports the loss of a cheque to the Bank, caution should be recorded in the Account Details. The drawer should be contacted or the payee should be advised to contact the drawer at once to give instructions to the Bank. If the cheque, is received in the intervening period, it should be returned with the reason Cheque Reported Lost by Payee. Drawers Confirmation Awaited.

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An account holder desiring to revoke stop payment instructions should be advised to issue a new cheque in lieu of such cheque. Alternatively, his/her written instructions should be obtained to cancel / revoke stop payment instructions recorded. Stop payment instructions should be cancelled in the system only after verifying the signature on the letter and after obtaining approval of the Branch Head / Head - Operations. In view of the Any where Banking facility and peculiar nature of the computerized environment, accepting stop payment instructions for undated cheques would expose the Bank to unwarranted risks. For example, in case of off-line operations, the branches will be required to exercise caution for all times to come (without any time limit). Therefore, for stop payment requests in respect of blank cheques, branches should close the account and open another account with new cheque book. Instructions from the customer may be obtained authorizing debit in new account for cheques issued but not paid to be listed by the customer. Return of (Unpaid) Cheques If a cheque received for payment, transfer or under clearing is to be returned for some valid reasons, Cheque Return Memo should be prepared citing appropriate reason. It should be entered into Cheque Returned Register. Approval / signature of the Branch Head / Head - Operations should be obtained for such return. Appropriate charges should be debited to the account and the account holder should be sent an advice / intimation.

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Return of Cheques for Financial Reasons - Intimation to the Customers The customer should be immediately advised about return of cheque for want of funds. Frequent return of cheques for want of funds would call for a warning to the customer against issuance of cheques without sufficient balance in the account. Letter should be sent as the first warning if cheques are returned on 3 occasions when the branch decides to close the account of the customer. Current and savings accounts of those customers who continue to issue cheques without providing adequate cover, despite sending caution letters, should be closed after giving proper intimations / notices as mentioned above. If the defaulting customer is a borrower of the Bank, it should be brought to the notice of the relative (credit) official for suggesting further action. Return of Paid Cheques Requests from customers for facility for return of paid cheques by the Bank at periodic intervals to them can be considered by the Bank at its discretion, by stipulating appropriate charges for the facility. Such requests should be referred to Corporate Office - Operations Department for approval. On receiving approval of the Corporate Office, the cheques required to be returned should be kept separately everyday. At agreed intervals, the cheques should be sent to the customer along with a copy of statement of account, which should additionally contain a column of names of the Bank through which they are paid. A copy of the statement would serve as duplicate vouchers. Acknowledgment should be obtained from the customers for the Cheques delivered.

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Dormant Accounts Savings (and current) accounts in which no transactions, other than that of interest or commission, have taken place for a period of 12 months are to be treated as Dormant Accounts. The system automatically assigns Dormant status to such accounts. Value Added Features of Savings Accounts Savings accounts are offered as a value added retail liability products in HDFC Bank. Apart from regular savings account features, the customers of savings accounts are normally offered following facilities / services, subject to meeting the eligibility criteria, completing the formalities of the respective facilities / schemes and collection of appropriate charges/ fees, where applicable: The latest product features and service charges schedule as advised by Product Head may be referred and followed.

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CURRENT ACCOUNTS
Current accounts are meant for customers who have to carry out business and/ or large number of transactions in the account every day. There are no restrictions on the number of transactions in current accounts. No interest is paid on the balances in current accounts, except credit balance lying in the current account in the name of deceased individual depositor (including proprietorship firm) on which interest is paid at the savings bank rate from death of the depositor till the balance is paid to his/her legal heirs. Cheque facility is compulsory in current accounts. Withdrawals in current accounts should be allowed by cheques only and not by withdrawal form. Current accounts are offered in HDFC Bank as various value added products targeted at different customer segments. Eligibility Current accounts can be opened in the names of: Individuals (Single or Joint) Proprietary Concerns Partnership Firms Joint Hindu Family Firms Limited Companies Association, Clubs, Societies etc. Trusts Executors and Administrators and Liquidators Provident Funds Banks

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Current accounts should not be opened for blind persons, pardanashin ladies, minors and illiterates. Code of Conduct - Credit Facilities with Other Banks Declaration regarding not having any credit facilities or giving particulars of credit limits availed from other banks / branches, as the case may be, incorporated in the Account Opening Form should be obtained from the applicant at the time of opening a current account. If an applicant is enjoying credit facilities with other bank, the concerned bank should be informed about opening of the current account by the applicant with HDFC BANK. Temporary Overdraft Temporary Overdraft (TOD) is a facility granted to provide temporary accommodation to an account holder. Request for temporary overdraft facility may be considered on a selective basis in current accounts. The occasions to grant temporary overdraft should be few and far between in any account. The extent of such temporary overdraft permitted should bear a reasonable proportion to the average balance in the account and the means of the account holder. The previous dealings of the customer with the Bank should also be reckoned with. As far as possible, requests for allowing the account to be overdrawn by withdrawal of cash should not be entertained. Sanction / approval / authorisation of the appropriate authority as per the Delegation of Powers must be obtained for such debit / overdraft. The policy / guidelines in this regard issued by Corporate Office from time to time should be followed for granting the overdraft.

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Interest on the overdrawn amount should be recovered at the applicable rate. The accounts should be monitored on daily basis to ensure that the overdraft is liquidated as scheduled. Where the account holder requires the facility of drawing in excess of balance frequently, it is advisable to consider granting a regular overdraft limit, and the matter should be taken up with appropriate authority for approval. Drawing Against Cheques in Clearing Following guidelines should be observed for permitting withdrawals against cheques sent in clearing: Request for drawing against un-cleared effects should be considered only for first class customers. Such drawing should need based and properly scrutinized and approval for it should be obtained at appropriate level as per the Delegation of Powers. The facility should normally be only of a temporary nature. It should not be allowed on a regular basis without Proper scrutiny, through appraisal and sanction by appropriate authority. The drawings should normally be confined against credits by means of pay orders, bank drafts, Private cheques, cheques of reputed companies. Counterparty risk of the bank whose drafts/ pay orders are being given effect against clearing should be taken into account. Drawings against cheques of allied/sister concerns should not be permitted. The conduct of the account where facility is allowed against uncleared effects should be closely watched to ensure that the facility is not misused. Balance Confirmation Letters

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Current Account Statements should contain printed instruction reading Please verify the entries and balances and notify the Bank within 30 days of any error or discrepancy, failing which, the last balance shown below will be treated as having been acknowledged as correct. It is thus not necessary to send balance confirmation letters to all current account holders. The balance confirmation letters should however be sent once in a year, as of 31 st March, to the current account holders of: Overdrawn accounts Trust accounts Non-resident accounts Other accounts where it is considered necessary to obtain confirmation in the Banks interest. The Branch Head / Head - Operations may, where warranted, call for balance confirmation on any other days for the above mentioned accounts. When balance confirmation letters are received from these account holders duly signed, the signature on the letters should be verified by the concerned official and filed properly. Proper follow-up by reminder letters/telephone calls may be made in cases where balance confirmations are not received from the account holders.

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FIXED DEPOSITS
Fixed Deposits, also known as Term Deposits or Time Deposits, are deposits kept for fixed period and are repayable on expiry of the fixed period. Eligibility All types of account holders are eligible for opening fixed deposit accounts. Rate of Interest The Bank decides the rates of interest on fixed deposits of various maturities from time to time by taking into account the market conditions and directives of the Reserve Bank of India in this regard. Unless otherwise stated, the revised rates advised by Corporate Office are applicable for fresh deposits and on renewal of existing deposits. The Reserve Bank of India has now given freedom to banks to offer varying rates of interest in respect of single fixed deposits of Rs 15 lacs and above. It has also permitted banks to offer deposit schemes for senior citizens offering higher rates. In terms of Reserve Bank of India directives, interest on fixed deposits cannot be compounded at intervals less than a quarter. However, if any depositor insists on monthly payment of interest, the amount of interest to be paid every month should be worked out on the basis of the discounted value of the interest for one month, so that if interest is allowed on the interest so paid, the aggregate amount (i.e. amount of interest paid monthly together with the interest that may accrue on the interest so paid every month) would equal the one months interest on the deposit calculated for a quarter on flat basis. This is taken by the system on the basis of parameters fixed for schemes for payment of monthly interest.
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Fixed deposits in our Bank are defined in terms of days for periods up to 6 months. Periods above 6 months are defined in months. Quarterly compounding of interest in our Bank is done only for fixed deposits for periods of 6 months and above. For deposits below six months, the interest is paid on simple basis. Thus interest on deposits received for less than six months, even if more than 181 days, would be paid on simple basis. Interest on deposits ceases on maturity of the deposit. Interest for the overdue period on deposits, tendered for renewal, should be paid accordance to their deposits. Current interest rate for common people is 7% and for senior citizens is 7.5%. Period Minimum and maximum periods of fixed deposits are determined by the Bank by taking into consideration the Reserve Bank of Indias guidelines in this regard. The present Reserve Bank of India guidelines provide discretion to banks to offer fixed deposits from a minimum period of 7 days to maximum of 120 months (10 years). The minimum period of 7 days is applicable only for single fixed deposits of Rs 15 lacs and above. The minimum period for other deposits is 15 days. Our Bank at present, offers fixed deposits for minimum period as permitted by Reserve Bank of India. The Bank has, however, at present, restricted the maximum period for accepting fixed deposits to 5 years. Due Date The due date of terms deposits is to be calculated by including the date of deposit and excluding the date of payment.
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Deposits Maturing on Holidays When due date for payment of a fixed deposit falls on a holiday, the deposit is repaid on the next day. In such cases, as per the Reserve Bank of India guidelines, interest should be paid on the deposit amount at the original contracted rate for the intervening holiday. The maturity proceeds of the fixed deposit, however, cannot be paid prematurely on account of the maturity date falling on a holiday, without invoking the penal provisions, if any, for pre-mature payment. Basic Fixed Deposit Schemes The Bank has formulated various fixed deposit schemes on the basis of types of customers, period of deposit, amount of deposit, frequency of payment of interest, etc., by parameterising their features into the Finale system. A full list of such schemes and their parameters are available in the Finale User Manual. The schemes can broadly be classified into the following types: 1) Payment of simple interest on maturity for deposits less than 6 months. 2) Payment of interest on quarterly basis for deposit for periods 6 months to 60 months. 3) Payment of interest on monthly basis for periods 6 months to 60 months (Interest is paid at discounted value as the interest is otherwise payable quarterly). 4) Payment of interest on quarterly compounding basis - Interest is added back to the principal (re-invested) and cumulative amount paid at the maturity.

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For periods of 6 months to 60 months fixed deposits are considered in units of Rs 1,000/- and part amount (in units of Rs 1,000/-) can be withdrawn before maturity (unless, pre-mature payment is prohibited under the scheme) as per the guidelines for payment before maturity. The balance amount continues as fixed deposit at original rate. Minimum Deposit The prescription of minimum amount of fixed deposit decided by the Bank from time to time for various schemes of fixed deposits should be followed. Confirmation of Deposit (COD) On entering particulars of fixed deposit transaction and its authorization into the system (after receipt of the amount of deposit form the customer), a Confirmation of Deposit (COD) should be generated / printed on the standard Confirmation of Deposit form of the Bank. It should be ensured that all the relevant particulars of the deposit, including in particular the operating / repayment instructions, are properly incorporated in the Confirmation of Deposit. The Confirmation of Deposit should be signed by an authorized official / signatory of the Bank. Undelivered Confirmations of Deposit should be held in proper custody.

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Payment of Interest In case of fixed deposits where interest is payable monthly / quarterly and in cases where accumulated interest is not to be renewed with principal, the interest should be paid (credited to account indicated by the customer or DD / pay order issued) to the customer as per his/ her Interest Payment Instructions. Payment and Renewal (Roll Over) of Fixed Deposits Fixed deposits should be paid to the account holder or renewed in his/her name (for the full or part amount of maturity value) on due date as per the Maturity Payment Instructions given by the account holder in the Account Opening Form at the time of making deposit or subsequently during the period of deposit. As the Bank follows the practice of issuing Confirmation of Deposit (which is only an intimation / acknowledgement of deposit and not a Fixed Deposit Receipt in the traditional sense), the production of Confirmation of Deposit need not be insisted for repayment / renewal of fixed deposits as above. In absence of any specific disposal instructions to the contrary given for payment / renewal in the Account Opening Form at the time of time of deposit or subsequently, the proceeds of the deposit (including accrued interest, where applicable) should be renewed for the same period from the maturity date at the rate of interest prevailing on the date of maturity. An authority to this effect to the Bank is included in the Account Opening Form. Before a deposit is paid / renewed, it should be ensured that it is not under any lien of the Bank. Deposit receipts / Confirmation of Deposits issued by

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banks for fixed deposits are not transferable by endorsement. The amount of fixed deposit should be paid only to the depositor. A fixed deposit once renewed on the basis of instructions/ authority given by the account holder in the Account Opening Form or subsequently, cannot be paid / terms altered without closing it pre-maturely as per the guidelines in this regard. The flow charts and related operational and control guidelines for Fixed Deposits Roll Over processes at branches and RPU / CPU. Overdue Fixed Deposits Given the above guidelines for payment and renewal of fixed deposits on maturity, a situation of overdue fixed deposit, payment of interest on overdue period or renewal of overdue deposit would not occur in our Bank. However, the Reserve Bank of Indias present guidelines in this regard are given below for general information: An overdue term deposit or its portion may be renewed from the date of Maturity, provided the overdue period from the date of maturity till the date of renewal does not exceed 14 days. The rate of interest payable on the amount of the deposit so renewed shall be the appropriate rate of interest for the period of renewal as prevailing on the date of maturity. If the overdue period is more than 14 days and if the depositor places the entire amount of overdue deposit or its portion as a fresh term deposit, interest may be paid for the overdue period on the amount so placed as a fresh deposit at the rate decided by the Bank.

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Repayment and Renewal of Deposits before Maturity The present guidelines of Reserve Bank of India with regard to premature payment of fixed deposits are as follows: The Bank at its discretion can disallow premature withdrawal of large fixed deposits held by account holders other than individuals and HUFs. However, if a bank decides to do so, such depositors should be made aware of its policy of disallowing pre-mature withdrawal at the time of accepting deposits. In case of other fixed deposits, Bank should allow pre-mature withdrawal of fixed deposits. The Bank has freedom to determine its own penal interest rate in respect of pre-mature withdrawal of fixed deposits. The depositors should be made aware of the applicable penal rate along with the deposit rate at time of making deposit. The above instructions of Reserve Bank of India as well as the guidelines issued by the Bank from time to time within the frame work of these instructions should be followed with regard to pre-mature withdrawal of fixed deposits. Deposits transferred in the names of legal heirs upon death of a depositor without reducing the original period of fixed deposit is not considered as repayment or renewal before maturity.

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Penalty, if any, applicable, for premature withdrawal of fixed deposits should be waived in case of: Renewal of a fixed deposit before maturity for a period longer than the remaining period of original contract. Premature repayment of deposit on the death of a sole. a) Fixed Deposit in Lieu of Earnest Money The Bank at times, is required to issue Fixed Deposit Receipts/ Confirmation of Deposits on account of earnest moneys, security deposits and tender deposits, etc., as security for performance of contracts by contractors to Private departments and other agencies/ institutions. As per Private/ Reserve Bank of India clarification, deposits of any scheduled bank should be accepted as earnest moneys etc. by the Private departments/other agencies. The receipt can be issued on the following lines. Private Department Account ______________ (name of the depositor). [Tender for _______________________ (description of the job work in brief) Tender No. _________ date ________]. If interest is to be paid to the depositor, authority of the Private Department / agency should be obtained. For repayment of deposit on maturity or before maturity, release order should be obtained from the Private department / agency. In genuine cases, where the contractor was not able to participate in the tender and the Private Department / agency refuses to issue release order, the amount of fixed deposit may be paid on being fully satisfied about the stated facts.
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Addition, Deletion of Names

The guidelines for addition or deletion of name/s of joint account holders are applicable to fixed deposits also, provided the amount or duration of the original deposit is not changed. Splitting-up of Deposit in Joint Accounts A fixed deposit held in a joint account can be split in the name of each joint account holders at the request of all the joint account holders, without charging applicable penalty, if any for premature withdrawal, provided the period and the aggregate amount of deposit do not undergo any change. Interest Payable on the Deposit of a Deceased Depositor In case of a fixed deposit standing in the name of a deceased individual depositor, or two or more joint depositors, where one of the depositors has died, interest should be paid in the manner indicated below: At the contracted rate on the maturity of the deposit. If the payment of the deposit is claimed before the maturity date, the applicable rate for the period the deposit remained with the Bank prevailing on the date of deposit, without charging the penalty. If the amount of the deposit is claimed after the date of maturity, interest at the contracted rate till the date of maturity. And from the date of maturity till the date of payment: 1. Simple interest at the rate applicable for the period on the date

of maturity, if the depositor has died before the maturity of the deposit.

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2.

At the savings bank rate, if the depositor has died after the

maturity of deposit. 3. On request from the claimant/s, the amount of fixed deposit

may be split and two or more receipts be issued individually in the name/s of the claimant/s. This should not be constructed as premature withdrawal of the fixed deposit for the purpose of levy of penalty, provided the period and aggregate amount of the deposit do not undergo any change. Marking Lien on Deposit Whenever a lien on a deposit in favor of the Bank is to be created, necessary entries for freezing should be made in the account by following the prescribed procedure. When the lien is to be lifted, the account should be de-freeze under proper authorization. Loss of Confirmation of Deposit -Issue of Duplicate The following guidelines should be followed for issue of duplicate Confirmation of Deposit, in lieu of the lost/ misplaced/ destroyed Confirmation of Deposit: 1.
2.

An intimation of loss, misplacement etc. of the Confirmation of Letter should be obtained from the depositor, if not already This letter should be signed by persons authorized to operate the

Deposit should be immediately noted on record for exercising caution. received, reporting the loss of the Confirmation of Deposit. 3. account.

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4.

A fresh / duplicate Confirmation of Deposit of the same

particulars as the original reported lost may then be issued, with notings in bold letters as follows: Duplicate in Lieu of Original Reported Lost Note of the loss of the original Confirmation of Deposit and issue of a duplicate should be made in the account details. Caution should be exercised while making repayment or any premature withdrawal, granting advance against such deposits. Payment of Fixed Deposit by Cross Cheque In terms of Section 269 T of Income Tax Act, 1961, payment of fixed deposits, together with interest, if any, of Rs 20,000/- or more must be made by an account payee cheque / bank draft / bankers cheque or by crediting the current / savings account of the customer to whom the deposit is repaid. All deposits, together with interest, held with the branch in the name of the depositor in his own name or jointly with any other person on the date of such repayment should be included for the limit of Rs 20,000/-. Renewal of deposit does not amount to repayment.

Deduction of Tax at Source (TDS) from Interest on Fixed Deposits General In terms of Finance Act, 1995, amendment to Section 194A of Income Tax Act, 1961, banks are under obligation to deduct tax at source from interest credited or paid on fixed (time / term) deposits.

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SCOPE
The provision of Tax Deduction at Source (TDS) are applicable to all types of fixed (time / term) deposits, excluding recurring deposits, accepted on or after July 01, 1995. TDS is applicable on interest on fixed deposits, when the aggregate of interest paid or payable in a financial year exceeds the threshold limit (Rs 5,000/- at present). For the threshold limit, all fixed deposits at the same branch standing in the name of the depositor either singly or jointly held with others and his/her name appearing first should be considered. The deduction is to be made at the time of credit of such income to the account of the payee or at the time of its payment, whichever is earlier. The tax is to be deducted even in those cases where the interest is credited to any account whether called Interest Payable Account or Suspense Account or by any other name in the books of the person liable to pay such income (HDFC Bank). Such crediting is deemed to be credit of such income to the account of the payee. In case of cumulative plan, tax is required to be deducted at source every time the interest is credited / provided in the books of accounts and not postponed till maturity. In case of automatic renewal, if interest does not exceed threshold, no TDS is to be deducted. If interest on renewed deposit plus interest paid on earlier fixed deposit exceeds threshold, TDS is to be deducted on interest paid on earlier too.
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The provision is not applicable on following: 1. Fixed deposits made prior to 1-7-1995 2. Recurring Deposits. 3. NRNR / NRE / FCNR / RFC deposits. 4. Certificates of Deposit (CDs) 5. Interest paid or credited to: 6. Private 7. Other banks 8. Financial corporations established under Central/State laws 9. LIC 10.UTI 11. Insurance companies 12. Any other company so notified to be exempt by the Private Wherever a depositor (not being a company or registered firm) submits to the Bank: A certificate in Form AA obtained by him/her from his Assessing Officer (of Income Tax Department) OR A declaration in Form 15 H an duplicate declaring that the total income assessable for the financial year does not exceed the minimum amount liable for the tax. (As per Income Tax Act, for deduction of tax at source each branch has to deal with Term Deposits separately. Therefore, form 15 H submitted by the customer pertains to that specific branch and not to all branches of the Bank. A separate 15 H is required to be submitted by the customer for each of the branches where they hold TDRs. Form 15 H is meant for one financial year and should be taken for each financial year separately).
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One copy of the certificate should be forwarded within seven days to the Income Tax Office having jurisdiction and the other copy should be preserved for bank records. Rates of TDS TDS should be deducted at the rates prescribed and related guidelines of the Private for the relevant year. For this financial year the TDS should be deducted @ 10.25%. Informing the Customer The customer should be informed about the deduction of tax at source from the interest amount, where applicable. In Cumulative Plan, if the maturity amount is shown on the confirmation of deposit, it may not be actually payable due to deduction of tax, where applicable. This may also be brought to the notice of the customer. Remittance of Tax Deducted to Private The tax deducted at source should be deposited to the credit of Central Private at any branch of Reserve Bank of India / State Bank of India or any other authorized bank. The following time limits set in this regard should be observed:

When deduction is made at the time of credit of interest to the account on the last day of the financial year. Within two months. In other cases: By 7th of next month

Following challans should be used for deduction of tax: Challan No. ITNS 269 for TDS in respect of Companies. Challan No. ITNS 271 for TDS in respect of Non-companies.
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NOTE: Ten digit Permanent Account Number (PAN) allotted to the Bank should be mentioned in the challan. Tax Deduction Account No. (TAN) allotted to the branch should also be mentioned in the challan. TAN allotted for salary deduction can be used for the purpose. Maintenance of Records A year-wise record of tax deducted at source is required to be maintained in TDS on Interest on Fixed Deposits Register. Similarly, particulars of cases where interest is paid / credited without deduction of tax (by obtaining Form AA / 15 H) are also required to be maintained year-wise in a register. Where the system takes care of this requirement, the register need not be maintained manually. Issuance of TDS Certificate to Depositor TDS certificate should be issued to the depositor in Form 16A of Income Tax within one month from the end of the month in which the payment is made / credited. In case of loss of original certificate, duplicate may be issued after obtaining an indemnity from the depositor. DUPLICATE should be marked prominently on such certificate. Filing of Returns Following returns should be filed for TDS Form 26 A - Annual Return of TDS on Interest Paid - by 30th June every year for the preceding financial year. Form 27 A - Interest paid without deduction of tax in respect of person who have furnished statements in Form 15 AA/15 H - by 30 th April each year for the preceding financial year. - Failure to deduct tax: Interest U/S 201(1A) and Penalty U/S 271 C
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Consequence of Default Severe penalties and prosecution are prescribed for non-compliance of the provisions of TDS, brief details of which are given below: @ 100% of tax not deducted / short deducted. Delay in paying the tax : Simple interest @ 15 % p.a. on the Failure to file Return : U/S 272 A(2) (C) - @ Rs 100 per day of Furnishing False TDS Return : Prosecution U/S 277. Failure to deposit tax deducted at source : Interest U/S 201(1A) amount of tax from the date of deduction to actual payment. default.

and Prosecution U/S 276 B.

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SENIOR CITIZENS - GOLDEN YEARS SPECIAL

General The Senior Citizens - Golden Years Special is a fixed deposit product aimed at attracting the new and retaining the existing customers of the Bank who have completed 60 years of age by offering them higher interest rates on fixed deposits. All the guidelines given in Part - A, Fixed Deposits - Common Guidelines of this Chapter are applicable to the Senior Citizen - Golden Years Special Scheme, unless they are otherwise modified by the guidelines given in this Part. Eligibility All individuals who have completed 60 years of age are eligible to invest under the scheme. Suitable proof of age (such as Secondary School Leaving Certificate / Life Insurance Policy / Pension Card/ Driving Licence/ Ration Card/ Birth Certificate Issued by competent Authority / Passport/ Govt. Identity Card) of the depositor should be obtained at the time of deposit. Joint Accounts The account can be a single holding or jointly with others, but the senior citizen should be the primary applicant (first account holder) in case of joint account. Period of Deposit The deposit under the scheme are accepted, at present, for a minimum period of 46 days and maximum 5 years.

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Rate of Interest Rates of interest for the scheme are advised by Corporate Office from time to time.

Indian Banking Sector & NRI Services

India's economy has seen strong economic growth, especially in the second half of the last decade. GDP growth was nearly 8% or more over the last four years. The reason behind this impressive economic performance is the development of the nation's services industry. An expressive growth of banking sector is also a most important factor in the development of services industry. Some of the major areas where the banks have played crucial roles are: 1. Huge employment generation for a vast population of young Indians; 2. Penetration of retail credit products into middle and lower income groups; 3. Corporate Social Responsibility work in the social sector development; 4. Facilitating growth of Small & Medium Enterprises (SME) by providing much needed funding; 5. Wealth Management Services for high income group clients; 6. Corporate Advisory Services; Facilitating mergers and acquisitions by Indian Companies, both within and outside India, and many more In the similar way Non Resident Indians (NRIs) have come to be seen as an important niche segment for banks to target them as a key potential growth
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area in the future. All the major banks in India have got their NRI Banking Division catering to the Non Resident diasporas needs whether it be their remittance requirements, investment needs, easier access to funds overseas, exclusive service desks etc. All Private and foreign Banks have scored well on this front by providing much needed value added services to Non Resident customers.

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ORGANIZATION INFORMATION

HDFC Bank (NYSE: HDB), one amongst the firsts of the new generation, tech-savvy commercial banks of India, was incorporated in August 1994, after the Reserve Bank of India allowed setting up of Banks in the private sector. The Bank was promoted by the Housing Development Finance Corporation Limited, a premier housing finance company (set up in 1977) of India. Net Profit for the year ended March 31, 2006 was Rs. 1,141 crores. Results of the latest quarter ended June 2007, indicate that the bank continues to grow in a steady manner.

Mission and Business Strategy

Our mission is to be a World Class Indian Bank, benchmarking ourselves against international standards and best practices in terms of product offerings, technology, service levels, risk management and audit & compliance. The objective is to build sound customer franchises across distinct businesses so as to be a preferred provider of banking services for target retail and wholesale customer segments, and to achieve a healthy growth in profitability, consistent with the Banks risk appetite. We are committed to do this while ensuring the highest levels of ethical standards, professional integrity, corporate governance and regulatory compliance. Our business strategy emphasizes the following: Increase our market share in Indias expanding banking and financial services industry by following a disciplined growth strategy focusing on balancing quality and volume growth while delivering high quality customer service; Leverage our technology platform and open scaleable systems to deliver more products to more customers and to control operating costs; Maintain high standards for asset quality through disciplined credit risk management;

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 Develop innovative products and services that attract our targeted customers and address inefficiencies in the Indian financial sector; Continue to develop products and services that reduce our cost of funds; and Focus on healthy earnings growth with low volatility.

Philosophy on Code of Corporate Governance

The Bank believes in adopting and adhering to best recognized corporate governance practices and continuously benchmarking itself against each such practice. The Bank understands and respects its fiduciary role and responsibility to shareholders and strives hard to meet their expectations. The Bank believes that best board practices, transparent disclosures and shareholder empowerment are necessary for creating shareholder value. The Bank has infused the philosophy of corporate governance into all its activities. The philosophy on corporate governance is an important tool for shareholder protection and maximization of their long term values. The cardinal principles such as independence, accountability, responsibility, transparency, fair and timely disclosures, credibility etc. serve as the means for implementing the philosophy of corporate governance in letter and spirit.

Board of Directors
The Composition of the Board of Directors of the Bank is governed by the Companies Act, 1956, the Banking Regulation Act, 1949 and the listing requirements of the Indian Stock Exchanges where the securities issued by the Bank are listed. The Board has a strength of 12 Directors as on March 31, 2008. All Directors other than Mr. Aditya Puri, Mr. Harish Engineer and Mr. Paresh Sukthankar are non-executive directors. The Bank has five independent directors and seven non-independent directors. The Board consists of eminent persons with considerable professional expertise and experience in banking, finance, agriculture, small scale industries and other related fields. None of the Directors on the Board is a member of more than 10 Committees and Chairman of more than 5 Committees across all the companies in which he/ she is a Director. All the Directors have made necessary disclosures regarding Committee positions occupied by them in other companies. 57

 Mr. Jagdish Capoor, Mr. Keki Mistry, Mrs. Renu Karnad, Mr. Vineet Jain, Mr. Aditya Puri, Mr. Harish Engineer and Mr. Paresh Sukthankar are nonindependent Directors on the Board. Mr. Arvind Pande, Mr. Ashim Samanta, Mr. Gautam Divan, Mr. C. M. Vasudev and Dr. Pandit Palande are independent directors on the Board. Mr. Keki Mistry and Mrs. Renu Karnad represent HDFC Limited on the Board of the Bank. Mr. Vineet Jain represents Bennett, Coleman Group on the Board of the Bank. The Bank has not entered into any materially significant transactions during the year, which could have a potential conflict of interest between the Bank and its promoters, directors, management and/or their relatives, etc. other than the transactions entered into in the normal course of business. The Senior Management have made disclosures to the Board confirming that there are no material, financial and/or commercial transactions between them and the Bank which could have potential conflict of interest with the Bank at large.

Additional Capital
In June 2007, the Bank allotted 1,35,82,000 equity shares of Rs. 10/- each at a premium of Rs. 1,013.49 per share on a preferential basis to Housing Development Finance Corporation Ltd. (HDFC) aggregating to Rs. 1,390 crores. In July 2007, the Bank made a public offering of 6,594,504 American Depositary Shares (ADS), each ADS representing three equity shares, at a price of $ 92.10 per ADS aggregating to of Rs. 2,394 crores (net of underwriting discounts and commissions). During the year under review, 16.78 lacs shares were allotted to the employees of your Bank pursuant to the exercise of options under the Employee Stock Option Scheme of the Bank.

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Capital Adequacy Ratio

Your Banks total Capital Adequacy Ratio (CAR) stood at a healthy 13.6%, well above the regulatory minimum of 9.0%. Of this, Tier I CAR was 10.3%.

Human Resources
The Banks staffing-needs continued to increase during the year particularly in the retail banking and SME businesses in line with the business growth. Total number of employees increased from 21,477 as of March 31, 2007 to 37,836 as of March 31, 2008. The Bank continues to focus on training its employees on a continuing basis, both on the job and through training programs conducted by internal and external faculty. The Bank has consistently believed that broader employee ownership of its shares has a positive impact on its performance and employee motivation. The Banks employee stock option scheme so far covers around 6,535 employees.

Service Quality Initiatives

Your Bank continued to seek and drive process improvement in all spheres of business through structured Quality Projects using Lean Sigma Project Management Methodology. Over 1,000 projects were executed during the year that resulted in substantial Cost and Turn Around Times reduction, and productivity and process efficiency improvement. Service Quality initiatives were refined to capture and improve upon real customer experiences at various touch-points. New elements were added and renewed improvement schemes installed to provide customer delight. Your Bank launched a Service Quality improvement drive for some of the key support departments as well. Customer feedback was taken into account to introduce new services using technology to ensure customer convenience, secured transactions and, reduced cost of transactions. Your Bank plans to use this platform to drive systemic changes and process re-engineering using technology, Lean Six Sigma tool-kit, 5 S and other business excellence initiatives to further enhance customer experience and value to business.

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Social Initiatives
In keeping with the HDFC Group philosophy, your Bank has always believed in making a difference to society at large. As a responsible corporate citizen, it has been your Banks vision to empower the community through socio-economic development of underprivileged and weaker sections of society. During 2007-08 your Bank further intensified its efforts in this direction. Most of the Banks social activities revolve around educational initiatives (including school adoption projects, educational sponsorships of girl children, primary education to first generation learners etc.) and initiatives in the field of livelihood training and support. In the latter area, the Bank has been working with NGOs in providing non-formal vocational and technical education programs as well as skill up gradation courses to enable sustainable employment and income generation for economically weaker sections. To further integrate some of its Corporate Social Responsibility (CSR) initiatives with its banking operations, the Bank has started outsourcing some non-core back office operations to certain small semi-urban locations. This creates jobs for the local educated youth in those towns with obvious gains for the families (as the youth is gainfully employed without having to relocate to distant cities) and also gives a boost to the local economy in those locations. Where relevant, the Bank coordinates its CSR activities with its microfinance and self help group (SHG) financing.

The Bank has relationships with 110 micro finance institutions and has extended credit facilities, whereby 1.61 million households have been beneficiaries of financial inclusion. In this regard, your Bank has also appointed around 150 NGOs across the country as business correspondents (BCs) to provide SHG Bank linkage to help tribals, physically challenged, beggars, etc. to earn a livelihood and join the mainstream. The Bank under the direct SHG linkage programme, has credit linked over 32,000 SHGs and thereby roughly another half a million households have been brought under Financial Inclusion. Employees are a key part of your Banks social initiatives and are encouraged to participate in these activities, contributing their time and skills. The Bank also administers a payroll-giving programme whereby employees offer deductions from their salary to donate for specified charities or social causes of their choice and the Bank contributes an equivalent amount. 60

Merger with Centurion Bank of Punjab Limited

On March 27, 2008, the shareholders of the Bank accorded their consent to a scheme of amalgamation of Centurion Bank of Punjab Limited with HDFC Bank Limited. The shareholders of the Bank approved the issuance of one equity share of Rs. 10/- each of HDFC Bank Limited for every 29 equity shares of Re. 1/- each held in Centurion Bank of Punjab Limited. This is subject to receipt of approvals from the Reserve Bank of India, stock exchanges and other requisite statutory and regulatory authorities. The shareholders also accorded their consent to issue equity shares and/or warrants convertible into equity shares at the rate of Rs.1,530.13 each to HDFC Limited and/or other promoter group companies on preferential basis, subject to final regulatory approvals in this regard. The Shareholders of the Bank have also approved an increase in the authorized capital from Rs. 450 crores to Rs. 550 crores. In terms of distribution, HDFC Bank stands to gain: 1,148 branches and 2,358 automated teller machines (ATMs) will make it the largest by branches in the private sector. It also gains from substantial cross-selling opportunities in the short-term. However, it will not vend home loans given the conflict of interest with parent HDFC and may even sell down CBoPs home-loan book to it. A point of concern is the fact that the retail portfolio of the merged entity will have more by way of unsecured and two-wheeler loans. This business has come under pressure in recent times. A report by Deutsche Bank (India) says getting a 50 per cent boost to the branch network in one shot, which even under a benign regulatory stance may take nearly three years to achieve organically, is a big positive. The other important point is that having acquired two banks in 15 months (Bank of Punjab and Lord Krishna Bank), CBoP is not working anywhere close to optimal profit-earning capacity. HDFC Bank may attempt to improve it.

Subsidiary Companies
In terms of the approval granted by the Government of India, the provisions contained under Section 212(1) of the Companies Act, 1956 shall not apply in respect of the Banks subsidiaries namely, HDFC Securities Limited (HSL) and HDB Financial Services Limited (HDBFSL).Accordingly, a copy of the balance sheet, profit and loss account, report of the Board of Directors and Report of the Auditors of HSL and HDBFSL have 61

not been attached to the accounts of the Bank for the year ended March 31, 2008. Investors who wish to have a copy of the annual accounts and detailed information on HSL and HDBFSL may write to the Bank for the same. Further, the said documents shall also be available for inspection by the investors at the registered offices of the Bank, HSL and HDBFSL.

Risks and concerns

While Indian banks have limited direct exposure to the international markets for mortgage linked securities, they are unlikely to be completely insulated from the turmoil in the global financial markets. Reduced availability of global finance through external commercial borrowings on the back of rising risk aversion in the global markets could affect domestic growth, particularly investments in capacity expansion. This in turn could have some impact on demand for domestic credit. Lower capital inflows could also impact domestic liquidity, which has largely been a function of external capital inflows for most of 2007-08 with the ratio of net foreign exchange assets to reserve money consistently exceeding 100%. The initial moderation in bank credit growth rates in 2007-08 seems to have been largely confined to the retail segment (housing, consumer durables and auto loans). It is possible that the moderation in growth in 2008-09 could be more broad-based, affecting both retail and certain wholesale segments, due to trends in consumption and capital formation. This has obvious implications for the credit portfolio of the banking system. A low 2.1% growth in the capital goods component of the index of industrial production (IIP) for January 2008 seems to indicate a further decline in investment demand going forward which could affect overall credit growth for the banking system, particularly in term loans and project finance. Rising global commodity prices created inflationary pressures for most of 2007-08. A benign base-effect and the suppression in the petroleum product prices kept headline wholesale price inflation in a comfort zone for the first three quarters of the year. However, given the focus on managing underlying price pressures rather than headline inflation, monetary policy showed no signs of easing in 2007-08. Thus banks operated in 62

an environment where the central bank did not allow any surplus liquidity in the system, resulting in interest rates remaining firm. Despite the prospect of a slowdown in the global economy, commodity price pressures, particularly those in food and mineral oils, show little sign of abating. As the base-effect wears off, headline inflation is likely to ramp up to well over 7%. So, inflation concerns are likely to influence monetary policy stance going forward and the prospect of an economic slowdown need not entail immediate monetary easing. Thus, the operating environment of banks in 2008-09 could be a combination of slower credit growth and some upward bias in interest rates.

Opportunities
The financial system in India has witnessed considerably less turmoil and volatility than that in advanced economies. Given this scenario, domestic corporates are more likely to turn to local sources of funding. Cyclical slowdown is unlikely to impact segments of the economy such as agriculture where a structural shift is under way. The rural economy has been the greater focus of government policy in recent years, and significant opportunities lie for banks here where the penetration of credit and financial products is still relatively low. The central and state governments appear to be driving an ambitious programme in the infrastructure sectors. The eleventh five year plan (2007-2012) envisages an investment of USD 500 billion, with approximately USD 80 billion envisaged for 2008-09 alone. This presents a major opportunity for banks and financial institutions to finance these investments. Although growth in retail credit has moderated in the last year, the low penetration levels of retail credit (estimated at less than 12% of GDP), the shift in demographics towards a higher proportion of younger working population, the changing attitudes towards borrowings, higher income levels amongst the growing middle class, and the large pentup demand for housing, cars etc., all augur well for the long-term, sustainable growth of retail lending in the Indian market.

63

Outlook
The Indian economy seems likely to see some moderation in growth rates in 2008-09 relative to 2007-08. It is still likely to experience healthy growth in absolute terms and will probably remain one of the fastest growing economies in the world. Nonetheless, with a lower GDP growth coupled with tighter liquidity conditions (as RBI tackles concerns on inflation) and stable or slightly higher interest rates, system credit growth is likely to be lower than in 2007-08. Downward pressures on economic growth may not immediately translate into an expansionary monetary policy, given the continued risks of inflation from global energy and commodity prices. Thus, slightly slower credit growth could coexist with firm, if not rising, interest rates. Given Indias strong macro-economic fundamentals, however, structural drivers will continue to support growth which is a positive for banks as well.

64

FINANCIAL RESULT
TABLE NO:- 2.1

65

FINANCIAL RESULTS:
Profit & Loss Account: Quarter ended March 31, 2008 The Bank earned total income of Rs.3,505.5 crores for the quarter ended March 31, 2008, as against Rs.2,321.0 crores in the corresponding quarter ended March 31, 2007, registering a growth of 51.0%. Net revenues (net interest income plus other income) were Rs.2,191.4 crores for the quarter ended March 31, 2008, an increase of 51.2% over Rs.1,448.9 crores for the corresponding quarter of the previous year. Interest earned (net of loan origination costs and amortization of premia on investments held in the Held to Maturity (HTM) category) increased from Rs.1,926.5 crores in the quarter ended March 31, 2007 to Rs.2,956.2 crores in the quarter ended March 31, 2008, up by 53.4%. Net interest income (interest earned less interest expended) for the quarter ended March 31, 2008 increased by 55.7% to Rs.1,642.1 crores, driven by average asset growth of 50.3% and a core net interest margin of around 4.4%.Other income (non-interest revenue) registered strong growth of 39.3% from Rs.394.4 crores for the quarter ended March 31, 2007 to Rs.549.3 crores for the quarter ended March 31, 2008. The main contributor to Other Income for the quarter was fees and commissions of Rs.490.4 crores, up 37.6% from Rs.356.3 crores in the corresponding quarter ended March 31, 2007. The other two major components of other income were foreign exchange/derivatives revenues of Rs.60.4 crores and profit/ (loss) on revaluation/sale of investments of Rs. 11.4 crores, as against Rs.103.3 crores and Rs. (65.6) crores respectively for the quarter ended March 31, 2007. Operating expenses for the quarter were at Rs.1,102.7 crores, as against Rs. 683.9 crores for the corresponding quarter of the previous year. Provisions and contingencies for the quarter were Rs.465.1 crores (against Rs.267.1 crores for the corresponding quarter ended March 31, 2007), principally comprising of specific provisions for non-performing assets and general provisions for standard assets of Rs.293.0 crores and provisions for tax, legal and other contingencies of Rs. 172.7 crores..After providing Rs.152.5 crores for taxation, the Bank earned a Net Profit of Rs.471.1 crores, an increase of 37.1% over the quarter ended March 31, 2007. Profit & Loss Account: Year ended March 31, 2008 For the year ended March 31, 2008, the Bank earned total income of Rs.12,398.2 crores as against Rs.8,164.2 crores in the previous year. Net revenues (net interest income plus other income) for the year ended March 31, 2008 were Rs.7,511.0 crores, up 50.7% over 66

Rs.4,984.7 crores for the year ended March 31, 2007. Net Profit for year ended March 31, 2008 was Rs. 1,590.2 crores, up 39.3%, over the corresponding year ended March 31, 2007.

FIGURE NO:- 2.1

Balance Sheet: As of March 31, 2008 Total balance sheet size increased by 46.0% from Rs.91,236 crores as of March 31, 2007 to Rs.133,177 crores as of March 31, 2008. Total deposits were Rs.100,769 crores, an increase of 47.5% from March 31, 2007. With savings account deposits of Rs.26,154 crores and current account deposits at Rs.28,760 crores, the CASA mix continued to remain healthy at around 54.5% of total deposits as at March 31, 2008. Net advances as at March 31, 2008 were Rs.63,427 crores, an increase of 35.1% over March 31, 2007. The Banks total customer assets (including advances, corporate debentures, investments in securitized paper, etc. net of loans securitized and participated out) were Rs.70,403 crores as of March 31, 2008.

Dividend:

67

FIGURE NO:- 2.2

The Board of Directors recommended an enhanced dividend of 85% for the year ended March 31, 2008, as against 70% for the previous year. This would be subject to approval by the shareholders at the next annual general meeting.

Capital Infusion & Capital Adequacy

FIGURE NO:- 2..3

In June 2007, the Bank allotted 1,35,82,000 equity shares on a preferential basis to HDFC Ltd. aggregating to Rs. 1,390 crores. In July 2007, the Bank made a public offering of 6,594,504 American Depositary Shares (ADS), aggregating to of Rs. 2,393 crores (net of underwriting discounts and commissions). The Banks total Capital Adequacy Ratio (CAR) as at March 31, 2008 stood at 13.6% as against the regulatory minimum of 9.0%. Tier-I CAR was 10.3% as against 8.6% as of March 31, 2007.

68

Segment information in accordance with the Accounting Standard on Segment Reporting (AS17) of the operating segments of the Bank is as under:
TABLE NO:- 2.2

Particulars

Quarter ended 31-3-2008 (unaudited) 47998 250449 199388 41208 539043 188491 350552 9131 20136 29398 10108 (6417)

Quarter ended 31-3-2007 (unaudited) 18101 217361 149186 384648 152551 232097 2767 21732 25801 (507)

Year ended 31-3-2008 (audited)

Year ended 31-3-2007 (audited) 47339 776488 509043 1332870 516454 816416 1837 91715 75503 (5180)

1. Segment Revenue a) Treasury b) Retail Banking c) Wholesale Banking d) Other Banking Operations e) Unallocated TOTAL Less: Inter Segment Revenue Income from Operations 2. Segment Results a) Treasury c) Retail Banking b) Wholesale Banking d) Other Banking Operations e) Unallocated

165167 909649 673731 127942 1876489 636674 1239815 48832 54015 119796 30987 (25567)

Total Profit Before Tax 3.Capital Employed (Segment Assets-Segment Liabilities) a) Treasury b) Retail Banking1 c) Wholesale Banking d) Other Banking Operationse) Unallocated Total

62356

49793

228063

163875

5056093 (1903697) (2109915) 325401 (1367882) -

127627 223761 257770 34157 643315

5056093 (1903697) (2109915) 325401 (1367882) -

127627 223761 257770 34157 643315

69

Business Segments have been identified and reported taking into account, the target customer profile, the nature of products and services, the differing risks and returns, the organization structure, the internal business reporting system and the guidelines prescribed by RBI. The bank operates in the following segments:

(a) Treasury
The treasury services segment primarily consists of net interest earnings on the entire investment portfolio of the Bank and gains or losses on investment operations. (b) Retail Banking The retail banking segment serves retail customers through a branch network and other delivery channels. This segment raises deposits from customers and makes loans and provides other services to such customers. Exposures are classified under retail banking taking into account the status of the borrower (orientation criterion), the nature of product, granularity of the exposure and the quantum thereof. Revenues of the retail banking segment are derived from interest earned on retail loans, net of commission (net of subvention received) paid to sales agents, and interest earned from other segments for surplus funds placed with those segments. Expenses of this segment primarily comprise interest expense on deposits, infrastructure and premises expenses for operating the branch network and other delivery channels, personnel costs, other direct overheads and allocated expenses.

(c) Wholesale Banking

The wholesale banking segment provides loans and transaction services to large corporate, emerging corporate, supply chain and institutional customers. Revenues of the wholesale banking segment consist of interest earned on loans made to corporate customers and the corporate supply chain customers, interest earned on the cash float arising from transaction services, fees from such transaction services and also earnings from foreign exchange and derivatives transactions on behalf of corporate customers. The principal expenses of the segment consist of interest expense on funds borrowed from external sources and other internal segments, premises expenses, personnel costs, other direct overheads and allocated expenses. 70

(d) Other Banking Business

This segment includes income from para banking activities such as credit cards, debit cards, third party product distribution, and primary dealership business and their associated costs.

(e) Unallocated
All items of which cannot be allocated to any of the above are classified under this segment. This includes capital and reserves, debt classifying as tier I or tier II capital and other unallocable assets and liabilities. Segment revenue includes earnings from external customers plus earnings from funds transferred to other segments. Segment result includes revenue less interest expense less operating expense and provisions, if any, for that segment. Segment-wise income and expenses include certain allocations. Interest income is charged by a segment that provides funding to another segment, based on yields benchmarked to an internally developed composite yield curve, which broadly tracks market discovered interest rates. Transaction charges are made by the retailbanking segment to the wholesale banking segment for the use by its customers of the retail banking segments branch network or other delivery channels; such transaction costs are determined on a cost plus basis. Segment capital employed represents the net assets in that segment.

Geographic Segments
Since the Bank does not have material earnings emanating outside India, the Bank is considered to operate in on the domestic segment.

71

Business Update:

FIGURE NO:- 2.4

As of March 31, 2008, the Banks distribution network was at 761 branches and 1,977 ATMs in 327 cities as against 684 branches and 1,605 ATMs in 320 cities as of March 31, 2007. Against the regulatory approvals for new branches in hand, the Bank expects to further expand the branch network by around 150 branches by June 30, 2008.

72

During the year, the Bank stepped up retail customer acquisition with deposit accounts increasing from 6.2 million to 8.7 million and total cards issued (debit and credit cards) increasing from 7 million to 9.2 million. Whilst credit growth in the banking system slowed down to about 22% for the year ended 2007-08, the Banks net advances grew by 35.1% with retail advances growing by 38.6% and wholesale advances growing by 30%, implying a higher market share in both segments. The transactional banking business also registered healthy growth with cash management volumes increased by around 80% and trade services volumes by around 40% over the previous year. Portfolio quality as of March 31, 2008 remained healthy with gross nonperforming assets at 1.3% and net non-performing assets at 0.4% of total customer assets. The Banks provisioning policies for specific loan loss provisions remained higher than regulatory requirements.

73

LIMITATIONS OF THE STUDY

The limitations of the study are: Cost Time Schedule Lack of proper responses COST Cost is one of the limitations of the study. As the study is concerned with the Resident in Faridabad as well its nearby places, therefore it was not possible to cover almost all the aspects. Paucity of Time: The time frame was not sufficient to study all the aspects of the topic under great detail. So this became one of the limitations while conducting the work. Lack of proper responses: Due to the pre-occupation of the respondents, they were not able to give us proper time because of which the responses obtained were not the same as desired.

74

OBJECTIVES AND SCOPE OF THIS REPORT

The objective of this study is to understand and analyze the scope and potential of HDFC`s deposits with respect to Resident in Faridabad and the nearby places. It includes detailed study of products and services offered by HDFC. Therefore the main objectives of the study are:
1.

To gain knowledge about the deposits of the HDFC bank.

2. To gain knowledge about the banking needs of Individuals, keeping target audience in mind.

3.

To know the current state of understanding of individuals about HDFC and its products in Faridabad.

4. To know the manners in which an individual selects his/her banking services provider.

75

ANALYSIS & FINDINGS

Some questions were asked to respondents to gather the knowledge about their understanding of banking services which are primarily focused on High net worth Individuals. The question asked to them was:Q. Have you ever heard about the bank accounts and their services?

Maximum respondents were not aware of the facts related to a banking account & their related services. They do not know about wealth management services also. Answering to other questions respondent showed their willingness to accept the Wealth Management services from a reputed bank.

76

Awareness Of HDFC
During our primary data collection several questions were asked to the respondents related to the bank accounts and their banking needs. In our survey we tried to identify the Top of the Mind Bank. Following questions were asked to know their awareness about HDFC and its products.

Q. Which bank first comes to your mind when you think about banks?

17% 15%

10% 28%

SBI ICICI HDFC IDBI others

30%

77

It is quite evident from the Pie-chart that SBI and ICICI Bank are holding the strongest position in the mind of customers. These banks have maximum customer base as well. HDFC has less awareness level in comparison to other banks. Reasons for the above can be:a.

HDFC being new entrant in the Faridabad market, very few

individual recognize it. b. Less visibility: Target audience is not informed about the product. c. Wrong perception: Individuals are not aware of wealth management concepts, due to which they do not give due consideration to the bank.

78

STRENGTHS OF HDFC
1.

Capabilities: Though HDFC is a PSU, still it is well-qualified to

advise the customers & companies on aspects of investment. It is a private owned bank- customers money is absolutely secure. It has been rated as one of the fastest growing banks in many surveys. Further, the Bank and employees are competent enough to advice their clients for the invest their money in fixed deposits and many other investments. Hence, these capabilities can utilized to leverage the potential market of Faridabad.
2.

World Class Products: Since HDFC has possession of recognized

products and services, it gives competitive advantages to perform at one step ahead than its competitors. Its products like wealthsurance are very strong product in comparison to any other banking product or service.

79

HDFC offers finest services to customers, and provides several value added services to the customers.
3.

Innovative aspects: HDFC holds several representative offices in

various cities around the especially to focus on NRI services.

4.

Strong Position in India: The Industrial Development Bank of

INDIA in India offer a full range of banking and financial services to over 2.5 million customers through its 130 branches and 332 ATMs across 92 cities. It is among the top 5 banks in INDIA.

80

WEAKNESSES OF HDFC FARIDABAD

Following weakness of HDFC Faridabad has been identified during the study: Branding for the Non Resident Individuals Services: While HDFC

1.

is certainly a global PSU, it came late to the game on deciding to perform an integrated marketing strategy and capitalize on its global brand. Because it had set up so many different banks in different countries at different times over a hundred year period, it set them up under different names even all of these banks, prior to 1998, carried the HDFC logo. In 1998, they were all branded together, but the previous lack of branding and the name changes may have hurt HDFC in brand recognition. Customers may have thought that HDFC was taking over their local bank and not realized that HDFC had already been serving them for decades. In any case, the re-branding was an overdue move that should have occurred before 1998.
2.

Low awareness about the Branch: Only 15 months has passed,

HDFC incorporated its business in Faridabad. In this short span the branch has achieved a customer base of 2500 which is equivalent to Citi Bank, a major competitor to HDFC. Still there is a lack of awareness about the branch. Reason for this can be that the customers were not made educated about the products and services of HDFC.

81

Customers have a misconception about HDFC. The Bank has an image of Credit Card Services Provider amongst potential customers. Due to which customer do not provide due consideration to the Bank.
3.

82

OPPORTUNITIES AVAILABLE TO THE BANK

1.

High Growth rate in Banking Sector: Banking sector in India is

witnessing high growth since last decade. Every bank has recorded profits during this growth phase. Various foreign banks also incorporated their business in India during the last decade only. New benchmarks have been set by all the nationalized and Private International banks.
2.

Opportunities at Middle East and Gulf countries: HDFC is a

trusted name in Middle East, and the company has taken advantage of Iraq's new democracy by creating a presence in the country. HDFC is the largest international bank in the Middle East. Further, there is a large number of expatriation from Faridabad and other parts of Uttar Pradesh to Gulf countries and Middle East. Hence, the bank may find huge potential for the NRI services.
3.

Rising trend of Internet & Phone banking: Literacy ratio in

Faridabad is very high in comparison to other cities of India. People are willing to adopt new innovative services offered by banks like Internet Banking and Phone Banking. Today more and more customers are using internet banking and phone banking, which is a helping tool to provide international services. As HDFC has a strong technological base, it is able to serve customers in a very efficient way.
4.

Integrated Services in Global Premier: HDFC offers various

integrated services under Global Premier. It is a product of global preposition, and is very relevant to the global Indian.

83

Section 0.1
at its end.

One can be very optimistic regarding the

development of HDFC in Faridabad with several opportunities available

THREATS TO HDFC
1. Presence of large no. of both Govt. and private players in the market.

2. There is a cutthroat competition mainly based on value added and innovative service.

3.

In Faridabad market there is a strong competition going based on designs and prices.

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Questionnaire-1(Questions asked to Domestic Respondents) Dear Sir, We are carrying out a study on the specialized services provided by Banks to their selected Individuals/Customers. We request your response on the following aspects of services offered by banks.
1.

Which bank first comes to your mind when you think about banks? ____________________

2.

According to you on what basis a bank can differentiate its services for its customer?
a.

Income.

b. Status. d. No differentiation required at all.

c. Needs.
3.

Have you ever heard about a bank account which is primarily for High Net worth Individuals (HNIs) only? a. Yes b. No

(i) (ii)

If No, please go to Question No.6. If Yes, please mention the Name of Account and The Bank__________________

4.

From where have you heard about it?

85

a. News Paper b. Bank Personals c. Others

c. Business Magazines e. Friends

5.

Please tick () the appropriate box

Yes
i. ii. iii. iv. v. vi.

No

Does the HNI Account give Global recognition to the customer? Does it provide worldwide assistance to the customer? Does it provide worldwide assistance to the customer? Does it help an individual to shift from one country to another? Do you think a Bank should act as an investment advisor to the customer? With a Bank account one can get global investment perspective.

Cant Say

6.

How satisfied are you with your current Banker? a. Highly Satisfied b. Not satisfied c. Satisfied d. Not satisfied at all

7.

What are the other services that you expect from your Banker?

i. ________________________
86

ii. _________________________

8.

Wealth management is an essential feature that a bank should provide

to its customers. a. Yes

1.

b. No

c. Cant say.

Here are some of the features that people tell us are important to them

in wealth management. How important is each to you? Please tick the appropriate box, defined as Most Important (MI), Important (Imp), Somewhat Important (SI), Least Important (LI), Not Important at all (NI). Attributes Tax Planning Insurance Cover Investing in Securities Investing in Mutual Funds Investing in Commodities Keeping Money in Bank only 2. Classificatory Data: Name: ____________________________________ Your Age group( Years): 18 25 26-40 41- 55 above 50 years MI Imp. SI LI NI

Contact No: ________________________________ Organization: _______________________________

87

Designation: ________________________________ Your Familys Avg. Monthly Income: Rs. 20,000 Rs. 50,000 Above Rs. 1 Lac. Rs. 50,000 Rs. 1,00,000

88

RECOMMENDATIONS
Though the overall functions performed by the department of HDFC are excellent enough and also the overall working of the organization are appropriate but still certain recommendations are drawn:
1.

The brand awareness of HDFC is very low as compared to its HDFC is new entrant in the market. Secondly, the absence of too many banks branches within the city do

competitors in Faridabad. This may be due to:

not attract public at large . To increase the brand awareness, the company needs to invest in an integrated communications campaign to spread awareness about the bank and its salient features within the Faridabad population as well as outside.
1.

The maximum penetration amongst all the communication mediums in Faridabad has been found to be TV and magazines (Both business magazines and non-business magazines), specifically for the target group. Hence, HDFC Premier should focus on its advertising through these mediums.

2. Large numbers of expatriate labor and NRIs from Faridabad serve in the Gulf and Middle East countries and send considerable remittances to their families back home. These individuals can be targeted with personalized NRI services.

3. Customer acquisition and retention rate can be modified by delivering more personalized and interactive service.
89

4.

Expatriates prefer quick remittance services. Any delays in money transfer leads to dissatisfaction. Hence by providing tailored services related to remittance customer retention rate can be improved.

5.

An Indian customer expects safe and fast transfer of money from abroad. If the customers get acknowledgments for his/her transactions, it increases the satisfaction level. Provide information about the account transactions to the customers by e-mail or by SMS.

6.

New innovations like opening of representative offices in different cities and introduction of tailored services can be most preferred options to increase customer base.

Finally, Faridabad is a developing city and many customers are willing to try out new products and services from banks such as mutual funds and wealth management services etc. Hence HDFC should focus to strive to be a one stop shop for all these products and services. In short HDFC should be able to have a wide range of products and services to gain a significant differentiating factor among its competitors.

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CONCLUSIONS
Following points were considered while drawing the conclusion:
1.

HDFC being a new entrant in Faridabad market, very few individual

recognize it.
2.

Less visibility: HDFC Premier does not have much visibility among

the potential customers of the desired segment which poses a problem for the bank to position its product in the market. 3. Target customers are less aware of wealth management concepts.
4.

HDFC has an image of Credit Cards services provider in the minds of

consumers, which leads to diversion of customers mind. 5. The additional services sought by the respondents are: Wealth Management Investment Management Depository Services Phone banking & e-fund transfer
6.

HDFC Global premier is a product of global preposition, and is very

relevant to the global Indian. Hence, it is preferred by those who travel abroad very frequently because of its global recognition. 7. The customers are much more inclined towards investing in mutual funds and safer investment avenues which they can get through these
91

banks along with expert guidance which makes them turn towards such banks. 8. Understanding of income tax position is a large concern for expatriates. Tax planning and advice were considered the most important advisory and planning services that an offshore bank could provide to expatriates.

RESEARCH METHODOLOGY
Methods of collecting Data Section 0.2 For the project the data is collected based on the following two methods of data collection:

Primary Data collection method Secondary Data collection method

PRIMARY DATA COLLECTION Data is collected by adopting Primary Data Collection technique. For this purpose questions were asked to the respondents through a questionnaire. The target audience for the study was High Net-worth Individuals (HNIs), and their families. Several In-Depth-Interviews have also been conducted. Information was sought from individuals living in Faridabad as well as living in abroad. For this purpose a questionnaires were e-mailed to the respondents. SECONDARY DATA COLLECTION The second method that is adopted to collect the data is Secondary data collection technique. For this the main tool is Internet from which the necessary information about the topic and other related information are
92

collected. The other mediums of secondary sources are Books, Annual Reports of different banks for different years, Journals and Articles on Non Resident Indians. From all these sources data related to the project is collected. The detail is mentioned in the reference list.

BIBLIOGRAPHY
NEWSPAPERS:Economic Times. Mint. WEBSITES:www.Google.co.in www.wikipedia.com www.altavista.com www.HDFC.com MAGAZINES. Business today. Business Week. Banking Reforms.

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94