A
PAGE 3
A
Project Study Report
On
Training Undertaken at
HDFC Bank LtdTitled
RETAIL LOAN & PARA BANKING PRODUCT IN HDFC BANK LTD.
Submitted in partial fulfillment for theAward of degree of
MASTER OF BUSINESS ADMINISTRATION
Submitted by Submitted to
Abhimanyu Singh RathoreMrs. Dhwani Mishra
MBA Part IVFaculty Member
2007-2009
IILM Academy Of Higher Learning, Jaipur Campus(Affiliated to the
University of Raj. & Raj. Technical University,
Approved by AICTE, Ministry of HRD, Govt. of India)
Preface
Its my pleasure and delight to bring out a comprehensive and
concise study in organization about RETAIL BANKING System. This
study will help in identifying the strength and weakness of the
BANKING and also working a quick comparison with ICICI Bank. It
will help in taking strategic decision.
Im highly grateful to Mr. Amit Sharma and my helping co
trainees.
There are innumerable persons who have contributed in brining
out this study report of Banking System in India with Specific
reference to HDFC Bank Ltd.
Acknowledgement
I express my sincere thanks to my project guide Mrs. Dhwani
Mishra Branch Manager HDFC Bank Ltd. for guiding me right from the
inception till the successful completion of the project. I
sincerely acknowledge him for extending their valuable guidance,
support for literature, critical reviews of project and the report
and above all the moral support he had provided to me with all
stages of this project.
I would like to thank supporting staff Javed, Maneesh Sharma,
Mrs. Neetu Sharma, Aalok Sharma, Ashok Sharma for their help and
cooperation trough out our project.
(Signature of the Student)
Abhimanyu Singh RathoreExecutive Summary This project report
presented contains detail my summer training assignment. This is a
part of my curriculum of M.B.A. program (2007 2009) Rajasthan
Technical University. The Project is based on Retail and Para
Baniking in HDFC Bank.The main of this project is to deal with
customer Various Loan product including Para Banking Products and
their queries in HDFC, Jaipur and also to find the Market share of
Bank in comparison to other banking companies. The aim of this
project was evaluating and managing the Loan Segment among
customers on different parameters, creating awareness about the
various plans of the HDFC and generating leads for future business
prospects.
Bright highlight of the methodology used for the survey project:
-
1) Filling the questionnaires by various individuals, which are
given by my project guide.
2) Sampling on cluster random basis.
3) Coding
4) Analysis
5) Final report construction
In the current business scenario, to know about the competitors
marketing policies and schemes is equally important as emphasizing
on companys own policies.
CONTENTS
S.No.DetailsPage No
1.Industry Profile Page 1
2. Introduction to OrganizationPage 2 - 14
2.1. Introduction to HDFC Ltd.
2.2. Company Profile
2.3. Payment Gateway
2.4. Merchant Product Offering
3. Research MethodologyPage 15 - 19
3.1. Title of the study
3.2. Duration Of the Project
3.3. Objective of the Study
3.4. Type of Research
3.5. Sample Size and method of selecting sample
3.6. Scope of Study
3.7. Limitation of Study
4.FACTS AND FINDINGSPage 20 - 52
5.ANALYSIS AND INTERPRETATIONPage 53 - 98
6.SWOT ANALYSISPage 99
7.CONCLUSIONPage 100
8.RECOMMENDATION AND SUGESSIONSPage 101
9.APPENDIXPage 102
0.BIBLIOGRAPHYPage 104
Introduction to Industry
POS (Point of Sale)
Point of sale or point of service (POS or PoS) can mean a retail
shop, a checkout counter in a shop, or the location where a
transaction occurs. By synecdoche point of sale often refers to a
POS terminal or more generally to the hardware and software used
for checkouts the equivalent of an electronic cash register. Point
of sale systems are used in supermarkets, restaurants, hotels,
stadiums, and casinos, as well as almost any type of retail
establishment.
Early software
Early electronic cash registers (ECR) were programmed in
proprietary software and were very limited in function and
communications capability. In August 1973 IBM announced the IBM
3650 and 3660 Store Systems that were, in essence, a mainframe
computer packaged as a store controller that could control 128 IBM
3653/3663 Point of Sale Registers. This system was the first
commercial use of client-server technology, peer to peer
communications, Local Area Network (LAN) simultaneous backup, and
remote initialization. By mid-1974, it was installed in Pathmark
Stores in New Jersey and Dillards Department Stores.
Programmability allowed retailers to be more creative. In 1979
Gene Mosher's Old Canal Cafe in Syracuse, New York was using POS
software written by Mosher that ran on an Apple II to take customer
orders at the restaurant's front entrance and print complete
preparation details in the restaurant's kitchen. In that novel
context, customers would often proceed to their tables to find
their food waiting for them already. This software included real
time labor and food cost reports. In 1986 Mosher used the Atari ST
and bundled NeoChrome paint to create and market the first
graphical touchscreen POS software.
Hardware interface standardization
Vendors and retailers are working to standardize development of
computerized POS systems and simplify interconnecting POS devices.
Two such initiatives are OPOS and JavaPOS, both of which conform to
the UnifiedPOS standard led by The National Retail Foundation.
OPOS, short for OLE for POS, was the first commonly-adopted
standard and was created by Microsoft, NCR Corporation, Epson and
Fujitsu-ICL. OPOS is a COM-based interface compatible with all
COM-enabled programming languages for Microsoft Windows. OPOS was
first released in 1996. JavaPOS was developed by Sun Microsystems,
IBM, and NCR Corporation in 1997 and first released in 1999.
JavaPOS is for Java what OPOS is for Windows, and thus largely
platform independent.
Communication command protocols
There are several communication protocols POS systems use to
control peripherals. Among them are
* EPSON Esc/POS
* UTC Standard
* UTC Enhanced
* AEDEX
* ICD 2002
* Ultimate
* CD 5220
* DSP-800
* ADM 787/788.
There are also nearly as many proprietary protocols as there are
companies making POS peripherals. EMAX, used by EMAX International,
was a combination of AEDEX and IBM dumb terminal.
Most POS peripherals, such as displays and printers, support
several of these command protocols in order to work with many
different brands of POS terminals and computers.
Web Based POS
Web based POS can run it on any computer with an Internet
connection, without software installations or updates required. It
runs on secure servers in multiple data centers with real-time
backups.
The restaurant industry
A typical example of modern, touch screen, Restaurant Point of
Sale software
Hospitality point of sale systems have revolutionized the
restaurant industry. This is particularly found in fast food
service and sales. A number of restaurant chains employ systems
which use computer networks. In the most recent technologies,
registers are virtual computers, sometimes using touch screens.
They will connect to a server, often referred to as a "store
controller" or a "central control unit." Printers and monitors are
also found on the network. Additionally, remote servers will
connect to store networks and monitor sales and other store
data.
The efficiency of such systems have decreased service times and
increased efficiency of orders.
Currently, POS systems are manufactured and serviced by several
firms; see point of sale companies category. Point of sales systems
in restaurant environments operate on DOS, Windows or Unix
environments. They can use a variety of physical layer protocols,
though Ethernet is currently the preferred system.
In the fast food industry, a number of configurations may be
used in able to aid in the speed of operations. Registers
themselves may be in front counter, drive through or walk through
cashiering and ordertaking modes. Front counter registers will take
and serve orders at the same terminal. Drive through registers will
allow orders to be taken at one or more drive through windows and
cashiered and served at another. In addition to registers, drive
through and kitchen monitors may be used by store personnel to view
orders. Once orders appear they may be deleted or recalled by "bump
bars", small boxes which have different buttons for different uses.
Drive through systems are often enhanced by the use of drive
through wireless (or headset) systems which enable communications
with drive through speakers.
BANKING STRUCTURE IN INDIA
Scheduled Banks in India
(A) Scheduled Commercial Banks
Public sector Banks
Private sector BanksForeign Banks in IndiaRegional Rural
Bank
(28)(27)(29)(102)
Nationalized Bank
Other Public Sector Banks
(IDBI)
SBI and its Associates Old Private Banks
New Private Banks
(B) Scheduled Cooperative Banks
Scheduled Urban Cooperative
Banks (55)
Scheduled State Cooperative
Banks (31)
Here we more concerned about private sector banks and
competition among them. Today, there are 27 private sector banks in
the banking sector: 19 old private sector banks and 8 new private
sector banks.
These new banks have brought in state-of-the-art technology and
aggressively marketed their products. The Public sector banks are
facing a stiff competition from the new private sector banks.
The banks which have been setup in the 1990s under the
guidelines of the Narasimham Committee are referred to as NEW
PRIVATE SECTOR BANKS.
New Private Sector Banks
Superior Financial Services Designed Innovative Products Tapped
new markets Accessed Low cost NRI funds Greater efficiencyINDIAN
BANKING INDUSTRIES
The Indian banking market is growing at an astonishing rate,
with assets expected to reach US$1 trillion by 2010. An expanding
economy, middle class, and technological innovations are all
contributing to this growth.
The countrys middle class accounts for over 320 million people.
In correlation with the growth of the economy, rising income
levels, increased standard of living, and affordability of banking
products are promising factors for continued expansion.
The Indian banking Industry is in the middle of an IT
revolution, Focusing on the expansion of retail and rural banking.
Players are becoming increasingly customer - centric in their
approach, which has resulted in innovative methods of offering new
banking products and services. Banks are now realizing the
importance of being a big player and are beginning to focus their
attention on mergers and acquisitions to take advantage of
economies of scale and/or comply with Basel II regulation.Indian
banking industry assets are expected to reach US$1 trillion by 2010
and are poised to receive a greater infusion of foreign capital,
says Prathima Rajan, analyst in Celent's banking group and author
of the report. The banking industry should focus on having a small
number of large players that can compete globally rather than
having a large number of fragmented players."
UPCOMING FOREIGN BANKS IN INDIA
By 2009 few more names is going to be added in the list of
foreign banks in India. This is as an aftermath of the sudden
interest shown by Reserve Bank of India paving roadmap for foreign
banks in India greater freedom in India. Among them is the world's
best private bank by EuroMoney magazine, Switzerland's UBS.
The following are the list of foreign banks going to set
up business in India :-
Royal Bank of Scotland
Switzerland's UBS
US-based GE Capital
Credit Suisse Group
Industrial and Commercial Bank of China
Introduction to Organization
Introduction to HDFC Bank Ltd
HDFC Bank was incorporated in August 1994 in the name of 'HDFC
Bank Limited', with its registered office in Mumbai, India. The
Bank commenced operations as a Scheduled Commercial Bank in January
1995.
The Housing Development Finance Corporation Limited (HDFC) was
amongst the first to receive an 'in principle' approval from the
Reserve Bank of India (RBI) to set up a bank in the private sector,
as part of the RBI's liberalization of the Indian Banking Industry
in 1994.
Headquartered in Mumbai, HDFC Bank, has a network of over 531
branches spread over 228 cities across India. All branches are
linked on an online real-time basis. Customers in over 120
locations are serviced through Telephone Banking. The Bank also has
a network of about over 1054 networked ATMs across these cities.
HDFC Bank's ATM network can be accessed by all domestic and
international Visa / MasterCard, Visa Electron / Maestro, Plus /
Cirrus and American Express Credit / Charge cardholders.
HDFC Bank has won many awards for its excellent service. Major
among them are "Best Bank in India" by Hong Kong-based Finance Asia
magazine in 2005 and "Company of the Year" Award for Corporate
Excellence 2004-05.
HDFC Limited.
FC is India's leading housing finance institution and has helped
build more than 23,00,000 houses since its incorporation in 1977.
In Financial Year 2003-04 its assets under management crossed Rs.
36,000 Cr. As at March 31, 2004, outstanding deposits stood at Rs.
7,840 crores. The depositor base now stands at around1 million
depositors. Rated 'AAA' by CRISIL and ICRA for the 10th consecutive
year Stable and experienced management High service standards
Awarded The Economic Times Corporate Citizen of the year Award for
its long-standing, commitment to community development. Presented
the 'Dream Home' award for the best housing finance provider in
2004 at the third Annual Outlook Money Awards.
About the Company
Helping Indians experience the joy of home ownership.
The road to success is a tough and challenging journey in the
dark where only obstacles light the path. However, success on a
terrain like this is not without a solution.
As we found out over two decades ago, in 1977, the solution for
success is customer satisfaction. All you need is the courage to
innovate, the skill to understand your clientele and the desire to
give them your best.
Today, over a million satisfied customers whose dream we helped
realise, stand testimony to our success.
Our objective, from the beginning, has been to enhance
residential housing stock and promote home ownership.
Now, our offerings range from hassle-free home loans and deposit
products, to property related services and a training facility.
We also offer specialised financial services to our customer
base through partnerships with some of the best financial
institutions worldwide.
Background
HDFC was incorporated in 1977 with the primary objective of
meeting a social need that of promoting home ownership by providing
long-term finance to households for their housing needs. HDFC was
promoted with an initial share capital of Rs. 100 million.
Over the past two decades, HDFC has been making inroads into
varied spheres of development, while retaining a focus on
low-income
Business Objectives
The primary objective of HDFC is to enhance residential housing
stock in the country through the provision of housing finance in a
systematic and professional manner, and to promote home ownership.
Another objective is to increase the flow of resources to the
housing sector by integrating the housing finance sector with the
overall domestic financial markets..
Organisational Goals
HDFC' s main goals are to
a) Develop close relationships with individual households,
b) Maintain its position as the premier housing finance
institution in the country,
c) Transform ideas into viable and creative solutions,
d) Provide consistently high returns to shareholders, and
e) To grow through diversification by leveraging off the
existing client base.
Company Profile
The company has done away with structural hierarchy, so the
front- runner does not need to seek permission to interact with the
CEO of the company. The type of communication is also two ways i.e.
communication follows both vertical and horizontal type thereby
providing maximum interaction and flow of information.
The activities of the different functional departments are
directed in such a way that it meets the goals of the organization.
The various activities of the company are well coordinated,
organized and directed and at the same time integrated too.
Decision-making has been made at the Headquarter level.
Overview
For Merchants, the world over, accepting payments through cards;
both debit and credit, is an easy and cost effective way to enhance
business, increase revenue, and improve efficiency.
As an acquirer, HDFC Bank makes accepting credit and debit cards
easy. Our valued merchant establishments can now accept all credit
and debit cards issued under the Visa, Visa Electron, MasterCard
and Maestro brands. Our service is backed by superior technology
infrastructure and personalised support from a designated
relationship officer.
We offer card acceptance solutions both on EDC machine and on
the Internet through our Payment Gateway product.
Why Merchant Services ?
With HDFC bank Merchant Services, you can offer your customers
the convenience of paying with cards and Reduce transaction
time
Have freedom of accepting exact amounts- e.g. an amount of
1297.67 can be easily accepted on card but is quite inconvenient to
accept in cash.
Reduce manual errors in cash counting and collection.
Increase customer retention by offering customers standing
instructions payment options on their cards to make recurring
payments. Customers do not need to come to your billing center
every month for making recurring payments
Options of accepting payments on regular EDC (Electronic Data
Capture) Terminals, through your ECR (Electronic Cash Registers) or
through the website.
Features & Services:
Speed and Accuracy of Transactions
HDFC bank Merchant Services offers latest technology EDC
machines and payment gateway, supported by world-class
technological infrastructure to ensure fast transactions.
The time taken to process a transaction is in seconds and you
can be rest assured of the net amount getting credited to your
current account on the next working day.
Greater Profitability
Accepting payments in cash is costly. If you calculate the time
spent by you or your employee in accepting cash, counting the same,
making appropriate stacks, time and cost involved in visiting the
nearest bank branch, waiting time at the branch and the cost of
depositing cash (some banks charge for accepting cash), you will
realise that paying a small discount rate on card transactions is a
much more effective way of saving cost and time.
Reduced Risk
HDFC bank-Merchant Services has a dedicated team working round
the clock and strives to guard our merchant customers against the
risk posed by fraudsters. We have proactive risk management
software that
runs checks on the cards swiped on our terminals. We inform our
merchant customers within minutes of a suspicious transaction being
done on our machines to take necessary actions.
Payment Reports
With HDFC bank Merchant Services, you get an option of taking
payment reports on a daily, weekly, fortnightly or monthly basis.
This will help you match your card transactions against the payment
credits in your current account with us.
Relationship Officers
A dedicated Relationship Officer is assigned to the merchant.
This officer acts as a one point contact for all your requirements
concerning the Merchant Services department and will also
facilitate your other banking related requirements.
Dedicated Helpdesk
We have an, in-house, dedicated, customer service team, which
trouble shoots in case you need any assistance on the machine
operations, rolls, charge backs, reports, etcPayment Gateway
HDFC Bank Payment Gateway provides a single platform to support
multiple payment technologies. The solution supports Secure Sockets
Layer (SSL), Secure Electronic Transactions, Pseudo Card Numbers
(PCN), 3-D Secure Visa Authenticated Payment protocol and
MasterCard Secure Payment Application (SPA).
HDFC Bank Payment Gateway enables the merchants to stay abreast
of rapidly changing payment technology; it incorporates a hosted
payment page that provides a common interface with the merchant web
site, regardless of which secure payment protocol is used. HDFC
Bank Payment Gateway also provides secure browser-based access for
real time transaction monitoring and reports download.
Our Payment Gateway integrates risk-management and
fraud-detection software using a sophisticated, easy-to-manage
rules-based system that monitors merchant and cardholder
activity.
Payment Gateway is a flexible, scalable solution designed to
accommodate the rapidly evolving Internet secure payment
environment for businesses. It offers a user-friendly facility to
businesses to sell their products in a hassle-free manner to their
target customers and ensure receipt of payments upfront.
Payment Gateway integrates risk-management software.
Provides an integrated, flexible rules-based proactive risk
management system that operates with all secure payment
protocols
Supports branding and CSS for merchants.
Supports online transactions, batch processed transactions as
well as IVR and kiosks.
Transaction data, reports and other relevant information is
easilyaccessible through browser enabled user interface for
merchants
Supports multiple payment types and can route to various
authorisation systems and traditional card payment engines
Supports multiple platforms.
VBV and Securecode compliant.
Highly reliable Payment Gateway offering 99.99% uptime.
Customised MIS solutions for travel,, retail and service (e.g.
telecom) industries.
Easy to integrate and maintain..
24 Hour helpdesk support.
How an Internet transaction is initiated and processed through
Payment Gateway?
The customer fills his shopping cart on a merchant website and
proceeds to check out.
The transaction information is transmitted to the merchant
server.
The web merchant forwards a digital order to the Payment Gateway
server in an encrypted format.
The Payment Gateway authenticates the merchant and provides
payment options and payment details screens directly on the
customer's browser over a secure 128-bit SSL+ connection.
The customer provides his credit card details, which is directly
sent to the Payment Gateway server when he clicks "Pay" .
The credit card details are then switched to the Operator / Bank
for authentication.
The Operator / Bank then transmits the message to the
cardholders' bank for payment authorisation.
The issuing bank authorises the payment, provided the card is
valid and has the requisite credit limit and transmits the
confirmation back to the Payment Gateway through the Operator /
Bank
On receiving the authorisation, Payment Gateway forwards a
digital receipt to the merchant server.
The merchant provides a confirmation of the payment to the
customer's browser.
The entire process integrates seamlessly with the shop and buy
application of the web merchant.
The merchant may then ship the goods and capture the transaction
on the gateway server.
Flexible
Supports multiple merchants on a single platform.
Acceptance for most of the major credit and debit cards.
User interfaces for merchants are browser enabled.
Supports multiple platforms.
Fast
Time to. market - integrating merchants via simple universal
payment adapter (Merchant Plug-In).
Scalable to process a few thousand transactions to millions of
transactions / month on a real time basis..
Utilises Java architecture and a relational database either
Microsoft SQL or Oracle for scalability and portability.
Integration with existing applications and support for various
shopping cart applications are simpler and faster.
Smart
Provides an integrated, flexible rules-based risk-management
system that operates with all secure payment protocols.
Transactions are screened by up to three negative files - BINs;
hot cards reported lost or stolen; and warm cards that have
exceeded usage or other temporary parameters.
Supports multiple payment types and can route to various
authorisation systems and traditional card payment engines.
Provides extensive online query capabilities that support
evaluation of transaction activity.
Allow cardholders to create personal assurance messages which
can later be exchanged with their financial institutions during the
purchase transaction
Supports CVV2 and CVC2 for fraud control .
Reliable
Supports online, batch and manually entered transactions.
Provides merchants with Internet access to transaction data,
reports, and other relevant information.
Provide both cardholders and financial institutions with the
knowledge that purchases have been securely authenticated.
Maintain a complete digital history of orders, including
confirmation numbers, payment and shipment details and relevant
captured Web pages.
Secured user interfaces for system management and
operations.
State-of-the-art security technology and processes .
Comprehensive user guides and support information.
24x7 helpdesk support - Local.
Merchant Product Offerings
HDFC Bank Merchant Services is the national leader in electronic
payment solutions. We give a competitive edge to businesses and
financial institutions, by offering a complete portfolio of
systems, services and innovative products to meet the ever-changing
market dynamics.
Card Acceptance:
On the EDC terminals provided by HDFC Bank, all cards issued
under the following brands can be accepted by your outlets
Visa (Credit)
MasterCard (Credit)
Visa Electron (Debit)
Maestro (Debit)
As part of our terminal sharing arrangement with American
Express, you can also accept American Express Cards on our
terminals. However you
need to have a Merchant relationship with American Express
directly and communicate with American Express to have this
activated on the HDFC Bank Terminal.
Technology infrastructure:
HDFC Bank would install the state of the art latest generation
EDC terminals on which you can accept all signature-based cards.
The entire service is backed by superior technology infrastructure
in terms of the network, systems and processes.
Payment Options:
Payment can be made by credit to current account with the bank
or manager's cheque
Personalised service:
We offer personalised service to our Merchants. One merchant
relationship officer is designated for taking care of the
relationship with our merchants. This officer will be the one point
contact in the bank for all issues relating to your merchant
account.
For more details, write in to us at
[email protected] and we will get back to you.
Working Capital Finance
At HDFC bank understanding a customer's requirement and
fulfilling it with innovative product solutions is a way of life.
We understand that businesses need working capital to run day to
day operations and to fund your business expansion. We have
products, which can be structured to suit your business loan
requirements.
We are a bank with substantial appetite for recognised
credits.We can offer you working capital finance by way of cash
credit or loans suitably structured to your needs and your risk
profile in consortium or as a sole banker.
Marketing and Other Support
Card Support
Imagine a leading newspaper reserving sole space for you,
running your ad, and mailing it individually to each of your
prospective customers. Here's an innovative marketing idea that's
sure to give maximum mileage to your product or service. Just carry
your offer on the monthly statements of India's high end Credit
Cards of HDFC Bank.
Targeted Direct Mailers
You get a direct reach to your specific target group and you can
communicate one on one with them. You have a captive audience
who'll
read and re-read your message at leisure. And since the people
you are targeting are personally addressed, there's no wastage.
EMI Opportunities
Advertise your EMI offers to HDFC Bank credit card customers
interested in buying now and paying later in installments coupled
with a fantastic finance offer.
Catalogue based rewards Program.
You can also widen your reach and popularise your products by
participating in HDFC Bank's Rewards Program.
As of March 31, 2008, the Banks distribution network was at 761
Branches and 1977 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. 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.
TECHONOLOGY USED IN HDFC BANK
In the era of globalization each and every sector faced the
stiff competition from their rivals. And world also converted into
the flat from the globe. After the policy of liberalization and RBI
initiatives to take the step for the private sector banks, more and
more changes are taking the part into it. And there are create
competition between the private sector banks and public sector
bank.
Private sector banks are today used the latest technology for
the different transaction of day to day banking life. As we know
that Information Technology plays the vital role in the each and
every industries and gives the optimum return from the limited
resources.
Banks are service industries and today IT gives the innovative
Technology application to Banking industries. HDFC BANK is the
leader in the industries and today IT and HDFC BANK together
combined they reached the sky. New technology changed the mind of
the customers and changed the queue concept from the history
banking transaction. Today there are different channels are
available for the banking transactions.
We can see that the how technology gives the best results in the
below diagram. There are drastically changes seen in the use of
Internet banking, in a year 2001 (2%) and in the year 2008 (
25%).
These type of technology gives the freedom to retail
customers.
Centralized Processing Units
Derived Economies of Scale
Electronic Straight Through Processing
Reduced Transaction Cost
Data Warehousing , CRM
Improve cost efficiency, Cross sell
Innovative Technology Application
Provide new or superior products
HDFC BANK is the very consistent player in the New private
sector banks. New private sector banks to withstand the competition
from public sector banks came up with innovative products and
superior service.
2001
2005
(%customer initiated Transaction by Channel)
HDFC BANK PRODUCT AND CUSTOMER SEGMENTS
PERSONAL BANKING
1. Loan Product
2. Deposit Product
3. Investment & Insurance
4. Cards
5. Payment Services
6. Access To Bank
7. Forex ServicesLoan Product
Auto Loan
Loan Against Security
Loan Against Property
Personal loan
Credit card
2-wheeler loan
Commercial vehicles finance
Home loans
Retail business banking
Tractor loan
Working Capital Finance
Construction Equipment Finance
Health Care Finance
Education Loan
Gold LoanHOUSING LOAN - APNA GHAR SCHEME
Eligibility: Any person / group of persons, Salaried / Self -
Employed /business class /retired jointly with employed spouse or
son having regular income and capacity to repay installments of
proposed housing loan.
Age: Minimum age - 21 years; Maximum age - 65 years (last
installment should mature at the age of 65 years)
Income:
Salaried Individuals - Any individual who is in permanent
service in Government/ reputed Companies having a minimum salary of
Rs. 8,500/- (Salary means Gross salary less statutory deductions
like PF, income tax & ESI);
Professionals- Doctors, Engineers, Dentists, Architects, CAs,
Cost Accountants, CSs, MBAs and other professionals havingminimum
annual average income of last three years - Rs. 1.00 lac;
Self-Employed / Business class Individuals & and other
individuals not classified above- Minimum annual average income of
last three years ofRs. 1.00 lac.
Purpose:
Purchase of ready built house / flat, land and construction
thereon;
Repairs and Renovation;
Shifting/ take over of loan. (Take over of loans availed from
otherfinancial Institutions).
Quantum of Loan:
For Repairs andRenovation Maximum Rs.10.00 lacs;
For Purchase of ready built house / flat, land and construction
thereon - Maximum Rs.100.00 lacs.
Switch Over Cost: Switching from the fixed rate to floating
rateand vice versa will attract1% of the outstanding amount.
Reset Clause: In case of Fixed Interest Rate, reset clause will
be applied after every 3 years.
Margin:15% in case of purchase of house, flat, land and
construction and repairs and renovation.
Assessmentof Loan Amount:
Salaried Individuals: Up to 36 times of monthly salary or cost
of project (less 15% margin)whichever is less. Income of spouse or
blood relatives can be clubbed if they are made co-borrower. As a
matter of credit prudence the total deductions including
installment of proposed loan should not exceed 50% of the salary
(gross salary less P.F.& income-tax). The EMI should not exceed
30% of gross monthly salary. However, if we are otherwise satisfied
about the credit worthiness and repaying capacity of the borrower,
the norms for deductions may be relaxed.
Professionals: 3 times of the average annual income of last
three years or the cost of the project less 15% margin whichever is
less.Income of spouse or blood relatives can be clubbed if they are
made co-borrower. In case the applicant is proprietor of any firm,
then depreciation charged in the firm's balance sheet can be added
back in the income. Self employed, Businessmen & and other
individuals not classified above:3 times of the average annual
income of last three years or the cost of the project less 15%
margin whichever is less. Income of spouse and sons can be clubbed
if they are made co-borrower. Income of other blood relatives can
be clubbed only if they are joint owners of property and made
co-borrower. In case the applicant is proprietor of some firm, then
depreciation charged in the firm's balance sheet can be added back
in the income.
Repayment Period: Maximum 20 years in case of purchase of house
inclusive of moratorium period; Maximum 9 years in case of repairs
and renovations.
Processing Charges:
Loans up to Rs 2.00 lacs -0.50% of sanctioned loan amount
Loans above Rs 2.00 lacs - 1.00%of sanctioned loan amount.
(Valuation, Advocate Fee, Documentation, stamps, inspection
charges etc.) to be recovered from the borrower on actual basis,
before release of facility.
Foreclosure Charges: 2% of the prepaid amount. Out of pocket
expenses
Sanction Procedure: The decision to sanction the loan is based
on scoring model. The loan can be sanctioned if an applicant scores
marks 50 or above. If the score is 45 to 49, the loan can be
sanctioned with additional interest of 0.50%, and if it is between
40 to 44, the loan can be sanctioned at additional interest of
1%.
Similarly, loans to salaried person can be allowed upto 50 and
60 months of salary at an additional interest of 0.50% and 1%
respectively. Loans to persons other than salaried class can be
allowed upto 4 to 5 times of average annual income at additional
interest of 0.50% or 1% respectively.
PERSONAL LOAN SCHEME
Eligibility: Salaried Individual with permanent service of
minimum three years in Government, PSU/MNC, reputed Public or
Private Company. Professionals like Doctors, Chartered Accountants,
Company Secretaries, MBAs, Engineers etc Self Employed other than
Professionals, businessmen etc. Other individuals not classified
like partners or directors having cash credit accounts of their
firms or companies
Income:
Salaried Individuals -Minimum salaryofRs. 7500/- p.m. (Salary
means Gross salary less statutory deductions like PF, income tax
& ESI); Self Employed/Professional / Businessmen/ other
Individuals not classified - Minimum average Annual Income Rs. 1.00
lac for last three years as per Income TaxReturnPurpose: To meet
personal expenses.
Age: Minimum 24 years; Maximum 65 years inclusive of loan
period.
Loan Amount:
In case of Salaried Individuals-MinimumRs 25,000/-, Maximum Rs.
10.00 lacs;
Self-employed/ Professionals/Businessmen/Other individuals not
classified -MinimumRs 25,000/-, Maximum Rs. 15.00 lacs.
Repayment Period: 12 to 48 months.
Interest Rate: Declared on time-to-time basis.
Service Charge: 2% of Loan amount as up-front fee.
Prepayment Charges: 2% of prepaid amount.
Disbursement: In the SB/CD account of borrower or as per his
instruction.
Assessment of Loan Amount:
Salaried Individuals - 5 to 12 months salary, subject to the
condition thattotal deductions including installment of proposed
loan should not exceed 50% of the net salary (i.e. gross salary
less P.F.& income tax). The EMI should not exceed 20% of gross
monthly income.Professional/ Self employed persons/
Businessmen/other individuals not classified- Up to 40% to 150 % of
average annual income of last three years based upon repayment
period as per chart given under:
Sanction Procedure:
The decision to sanction the loan is based on scoring model. The
loan can be sanctioned if an applicant scores marks 50 or
above.Mortgage Loan/ Overdraft Scheme for Individuals
Eligibility:Individuals (against self owned property/ properties
or property / properties owned by his spouse, children) HUF Concern
(against self owned property /properties or property / properties
owned by karta, major coparceners, his /her /their spouse,
children)
Amount:
Maximum Loan upto Rs. 100 lacs. Additional advance against same
property can be allowed to same or other party if there is
sufficient residual value i.e. remaining value after advance
against mortgage loan is sufficient to take care of other advance.
Property where housing loan is already availed can also be
considered for loan under this scheme if residual value is
sufficient and eligibility criterion is complied with.
Purpose: Personal needs.
Nature of advance: By way of Loan or Over Draft.
Security:
Equitable Mortgage of the property for which the advance is
sanctioned. It includes: a) Residential/commercial immovable
property; b) Free hold land (vacant plot); c) Leasehold land
(vacant plot) subject to permission of lessor (viz. respective
Municipal Corporation, Development Authority etc.) is obtained d)
Leased/rented property provided owner & lessee/tenant agree for
assignment of lease income/rent in favour of Bank for direct
receipt of the same in the loan/OD a/c.
Guarantee:
Personal guarantee / guarantee of owner (s) of the property (in
case property is owned & occupied by person other than the
borrower / applicant.). In case of HUF personal guarantee of Karta,
major coparceners.
Interest: Declared on time-to-time basis.
Penal Interest: 4 % above the normal rate applicable on the
defaulted amount.
Foreclosure Charges: 2 % of the prepaid amount
Amount of advance:
Four times of the average of gross yearly income as declared in
the Income Tax returns of the immediately completed past two
financial years or 70 % of the property value, assessed by the
Banks approved valuer or assessed by the Branch Manager as per the
Spot Visit Report whichever is lower.
(In case of salaried / self employed / professionals /
businessmen, the income of spouse and depreciation can be clubbed
for arriving at the eligible loan/overdraft amount. In such cases
the spouse should become co-borrower or his / her personal
guarantee should be obtained.)
Repayment
Loan Maximum 180 equated monthly installments.
Over Draft Repayable on demand subject to yearly review.
Interest is to be recovered on as and when debited basis. Annual
review to be based on income tax, audited balance sheet (wherever
applicable) business statistics, conduct of account, earnings etc.
The utilization of the limit should be at least 80%, otherwise
commitment charges @ 2% on the unutilized portion shall be levied.
In case of Loan/overdraft facility the annual repayment obligation
is subject to following conditions:
In case of professional / self-employed personals / Businessmen
/ entrepreneurs etc the annual repayment obligation (including all
other repayment commitments) should note exceed 75% of the Gross
yearly Income.
In case of loan to salaried class, the total future yearly
repayment obligation (including all other repayment commitments) of
the borrower should not exceed 60% of the Gross Yearly salary of
the borrower. Estimated interest amount for full year on sanctioned
OD amount will be considered as annual repayment obligation in case
of overdraft facility.
Procession charges:
(a) For Loan: - @. 0.50 % of loan sanctioned (one time)
(b) For Overdraft: - @ 0.50 %p.a. on overdraft sanctioned limit
and @ 0.50 % for the subsequent renewal every year for each
calendar year basis.
Out of pocket expenses (Valuation, Advocate Fee, Documentation,
stamps, inspection charges etc.) to be recovered from the borrower
on actual basis, before release of facility.
Sanction Procedure:
The decision to sanction the loan is based on scoring model. The
loan can be sanctioned if an applicant scores marks 50 or
above.
CAR LOAN SCHEME
Eligibility:
Any salaried individual / businessman, professional and
self-employed and other individual not classified with a minimum
gross Salary / Income of Rs. 1.00 lac per annum.
Purpose:
Purchase of brand new passenger car. The car will be
hypothecated to the Bank as security.
Age: Minimum 21 years; Maximum 65 years inclusive of loan
period.
Loan amount: Minimum loan amount is Rs. 1.00 lac and Maximum Rs.
25.00 lacs.
Repayment period: 12 to 60 months based on surplus available for
repayment.
Interest Rate. Declared on time-to-time basis.
Margin:
10% of cost of Vehicle up to the loan of Rs. 10.00 lac & 20%
of cost of Vehicle for loan of more than Rs. 10.00 lac. Processing
Fee: 0.50% of Loan amount. Prepayment Charges: 1% of prepaid
amount.Assessment of Loan amount: The total deductions including
installment of proposed loan should not exceed 50% of the salary
(gross salary less P.F.& income tax). The EMI should not exceed
20% of gross monthly salary.
Sanction Procedure:
The decision to sanction the loan is based on scoring model. The
loan can be sanctioned if an applicant scores marks 50 or
above.
Deposit Product
Saving a/c
Current a/c
Fixed deposit
Demat a/c
Safe Deposit LockersInvestment & Insurance
Mutual Fund
Bonds
Knowledge Centre
Insurance
General and Health Insurance
Equity and Derivatives
Mudra Gold Bar
Cards
Credit Card
Debit Card
Prepaid Card
Payment Services NetSafe
Merchant
Prepaid Refill
Billpay
Visa Billpay
InstaPay
DirectPay
VisaMoney Transfer
eMonies Electronic Funds Transfer
Online Payment of Direct Tax
Access To Bank
NetBanking
OneView
InstaAlert
MobileBanking
ATM
Phone Banking
Email Statements
Branch Network
Forex Services Product & Services
Trade Services
Forex service Branch Locater
RBI Guidelines
WHOLESALE BANKING
Corporate
Funded Services
Non Funded Services
Value Added Services
Internet Banking
Small and Medium Enterprises
Funded Services
Non Funded Services
Specialized Services
Value added services
Internet Banking
Financial Institutions and Trusts
BANKS
Clearing Sub-Membership
RTGS submembership
Fund Transfer
ATM Tie-ups
Corporate Salary a/c
Tax Collection
Financial Institutions
Mutual Funds
An investment vehicle that pools savings of various investors
with a common financial goal.
Advantages of investing in a mutual fund Professional Management
of Funds
Well regulated industry
Diversification
Easy Liquidity
Low Cost
Transparency
Higher return potential compared to FDsMyths surrounding Mutual
Funds It is unsafe
It only deals with Equity Markets
My money is locked in
I do not have a tangible investmentMutual Funds - The Basics
Sponsor
Person who establishes the mutual fund - role akin to that of a
promoter of a company.
Eligibility criteria
Sound Track record
Holds at least 40% of the net worth of the AMC
Appoint Trustees
Appoint AMC
Trustees
First level regulators for mutual fund schemes
Hold the property of the MF in trust for the benefit of the
unit-holders
Prior approval of SEBI needed for appointment
2/3rd to be independent
Ensure that AMC is managing schemes in accordance with
Regulations and scheme mandate
General and Specific Due Diligence
The Asset Management Company (AMC)
Is the Investment Manager
Employs people in marketing, fund management, operations and
compliance
50% independent directors
Can undertake only permitted activities
Reporting to Trustees and SEBI
Other Fund Constituents
Bankers
Registrar
Custodians
Distributors
Fund Accountant
Types of Mutual Funds
By Structure
Open-ended v/s close-ended
By Investment Objective Equity Funds
Debt Funds
Balanced Funds
Liquid Funds
Index Funds
Variants in overseas markets - real estate funds, gold funds,
derivative funds, etc.
SYSTEMATIC INVESTMENT PLAN
Creates the investing habit
Participation in all market movements
Avoids Timing the market
Avoids Greed and FearGeneral Insurance - Mediclaim
Group Mediclaim
The Group Mediclaim is a cover under which all Bank Account
holders can be covered and the main benefit is that the premium
here is much less than under Individual Mediclaim Scheme, whereas
the benefits are more.
Premium: Paid in advance at rates mutually agreed.
Commencement of Cover: The cover commences from date of credit
of premium in United Indias Account.
Salient Features:
Raj Arogya Nidhi
Cover is granted to a family on floater basis, consisting of
account holder, spouse and two dependant children under Plan A. If
parents are covered, Plan B is opted.
The maximum age limit for entering the scheme is 65 years. After
entering the scheme, continuous renewals upto 80 years can be done.
Minimum age is 3 months.
The amount of cover for floater family can be from Rs. 50,000/-
to Rs. 5 lacs maximum.
The account holder has to fill up and sign the proposal form
containing authorization to debit the account, and declaration of
good health. The form is to be obtained in 3 copies, along with
photographs.
Proof of Insurance: When the proposal form reaches the Insurance
Company, a policy is issued by United India Insurance Company
Limited and Photo ID card issued by TPA (Third Party
Administrator)
Benefits available under the scheme: The account holder and
floater family who have enrolled under the scheme are eligible for
the following benefits:
Subject to maximum of sum insured, hospitalization expenses in
the event of sudden illness, accident, surgery required in respect
of disease are covered.
Ambulance expenses upto Rs. 1,000 will be reimbursed during
hospitalization within overall sum assured per policy year.
In case children below 12 years are hospitalized, out of pocket
expenses upto Rs. 1,000/- is reimbursed to parents taking care of
the children with in the overall sum assured per policy year.
Cost of health check up 1% of sum assured is reimbursed after
completion of four continuous claim free policy years. The four
continuous claim free policy years are counted if the policy was
obtained from any other Insurance Company in the earlier years.
IMPORTANT: The health check up provision is applicable only in
respect of continuous insurance without break.
Pre existing diseases would be covered after three continuous
claim free policy years which includes policies taken from any
other insurance company.
Funeral expenses for maximum amount of Rs. 1,000/- in the case
of insured donating eye(s) is reimbursed over and above the sum
assured, subject to original illness/ accident claim admitted under
the policy.
Maternity and Baby care expenses are reimbursed upto 5% of the
sum assured. Waiting Period is 9 months and Baby Care expenses
payable to 90 days from the date of birth.
Expenses on treatment taken in hospitals in Nepal and Bhutan are
also covered in Indian currency.
Treatment of NRIs at hospitals in India is covered upto sum
assured in Indian currency.
Cashless hospitalization facility through TPAs is available.
Add on Facility
Personal Accident Insurance Death Benefit (optional) for the
family is available on payment of additional premium. The premium
mentioned under the Personal Accident Insurance Death Benefit
should be obtained over and above the premium as per Plan A. The
Personal Accident Insurance Death Benefit is optional and
additional premium is collected only for those who opt for the
scheme.
The Personal Accident (death cover) available for members who
are covered under the scheme is as follows:
Account Holder
:100% of sum insured
Spouse of Account Holder:50% of sum insured
Dependent Children of age
Above 5 yrs and upto 21 yrs:20% of sum insured
Dependent children of
upto 5 yrs of age
:10% of sum insured
Exclusions
The policy does not cover:
Pre-existing diseases (however, it is covered after four
continuous claim free policy years which includes policies taken
from any other insurance company)
Hospitalization expenses incurred in the first 30 days of
commencement of cover except in cases of injury due to accident
Domiciliary hospitalization
Other standard exclusions applicable to Mediclaim policies will
also apply.
Claim Procedure
Cashless treatment can be availed at the network hospitals by
showing thee photo ID cards issued by TPA and in case for any
reason cashless service could not be availed, the customer can meet
the hospital bills and claim reimbursement from TPA. If the insured
has not opted for TPA, the claim forms along with bills should be
sent to the nodal office of United India Insurance Company Ltd.
Income Tax Benefit
Income tax benefit as per Section 80D of Income Tax is available
to account holders who enroll under the scheme.
Claims:
The claims will be settled by Company
Stock Brokers
Insurance Companies
Commodities Business
Trusts
BUSINESS MIX
Total Deposits Gross Advances Net Revenue
RetailWholesale
HDFC Bank is a consistent player in the private sector bank and
have a well balanced product and business mix in the Indian as well
as overseas markets.
Customer segments (retail & wholesale) account for 84% of
Net revenues ( FY 2008)
Higher retail revenues partly offset by higher operating and
credit costs.
Equally well positioned to grow both segments.
.
NRI SERVICESAccounts & Deposits
Rupee Saving a/c
Rupee Current a/c
Rupee Fixed Deposits
Foreign Currency Deposits
Accounts for Returning Indians
Remittances
North America
UK
Europe
South East Asia
Middle East
Africa
Others such as Quick remit
India Link
Investment & Insurances
Mutual Funds Insurance Private Banking Portfolio investment
SchemeLoans
Home Loans
Loans Against Securities
Loans Against Deposits
Gold Credit Card
Payment Services
NetSafe BillPay InstaPay DirectPay Visa MoneyAccess To Bank
NetBanking OneView InstaAlert ATM PhoneBanking Email Statements
Branch NetworkBUSINESS STRATEGY
HDFC BANK mission is to be "A World Class Indian Bank",
benchmarking themselves against international standards and best
practices in terms of product offerings, technology, service
levels, risk management and audit & compliance. The objective
is to build sound customer franchises across distinct businesses so
as to be a preferred provider of banking services for target retail
and wholesale customer segments, and to achieve a healthy growth in
profitability, consistent with the Bank's risk appetite. Bank is
committed to do this while ensuring the highest levels of ethical
standards, professional integrity, corporate governance and
regulatory compliance. Continue to develop new product and
technology is the main business strategy of the bank. Maintain good
relation with the customers is the main and prime objective of the
bank.
HDFC BANK business strategy emphasizes the following:
Increase market share in Indias expanding banking and financial
services industry by following a disciplined growth strategy
focusing on quality and not on quantity and 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 current high standards for asset quality through
disciplined credit risk management.
Develop innovative products and services that attract the
targeted customers and address inefficiencies in the Indian
financial sector.
Continue to develop products and services that reduce banks cost
of funds.
Focus on high earnings growth with low volatility.
INSIDE HDFC BANK
FIVE S , PART OF KAIZEN
WORK PLACE TRANSFORMATION
Focus on effective work place organization
Believe in Small changes lead to large improvement
Every successful organization have their own strategy to win the
race in the competitive market. They use some technique and
methodology for smooth running of business. HDFC BANK also aquired
the Japanese technique for smooth running of work and effective
work place organization.
Five S Part of Kaizen is the technique which is used in the bank
for easy and systematic work place and eliminating unnecessary
things from the work place.
BENEFIT OF FIVE S
It can be started immediately. Every one has to participate.
Five S is an entirely people driven initiatives. Brings in concept
of ownership. All wastage are made visible. FIVE S Means:-
S-1SORTSEIRI
S-2SYSTEMATIZESEITON
S-3SPIC-N-SPANSEIRO
S-4STANDARDIZESEIKETSU
S-5SUSTAINSHITSUKE
SORT:-
It focus on eliminating unnecessary items from the work place.
It is excellent way to free up valuable floor space. It segregate
items as per require and wanted.
SYSTEMATIZE:-
Systematize is focus on efficient and effective Storage method.
That means it identify, organize and arrange retrieval. It largely
focus on good labeling and identification practices.
Objective :- A place for everything and everything in its
place.
SPIC- n - SPAN:- Spic-n-Span focuses on regular clearing and
self inspection. It brings in the sense of ownership.
STANDERDIZE:-
It focus on simplification and standardization. It involve
standard rules and policies. It establish checklist to facilitates
autonomous maintenance of workplace. It assign responsibility for
doing various jobs and decide on Five S frequency.
SUSTAIN:-It focuses on defining a new status and standard of
organized work place. Sustain means regular training to maintain
standards developed under S-4. It brings in self- discipline and
commitment towards workplace organization.
LABELLING ON FILE
FILE NUMBER
SUBJECT
FROM DATE
TO DATE
OWNER
BOX LABEL
For Example 1 / 3 / A / 6
1 Work Station (1)
3 Drawer (3)
A - Shelf (A)
6 File Number ( 6)
COLOUR CODING OF FILES
DEPARTMENT
Welcome Desk
Personal Banker
Teller
Relationship Manager
Branch Manager
Demat
Others
In the HDFC BANK each department has their different color
coding apply on the different file. Due to this everyone aware
about their particular color file which is coding on it and they
save their valuable time. It is a part of Kaizen and also included
in the system of the Five S. Logic behind it that , the color
coding are always differentiate the things from the similar
one.
BUSINESS PROMOTION
As the HDFC POS business is at a very initial stage and growing,
the marketing and business promotion activities will be an ongoing
activity for the life of the product. We have divided the year into
two parts. It is known from the market practice that the season
from October to March (six months) is the peak season for shopping,
where as people like to keep themselves indoors during April to
September.
But as the competition is very stiff in the market, it is the
merchant who makes the decision on which machine the card is to be
swiped. In most of the cases its the Sales representative or the
person at cash counter who is the correct person to cultivate
relations with to maximize swipes on HDFC machines.
As explained earlier also, When HDFC becomes Issuer and acquirer
both then it is the best deal in terms of earnings because we do
not have to share anything with other banks or MasterCard or Visa
International. So we target two different kind of schemes for which
a separate approval from higher authorities will be taken from time
to time after analysis of the situation.HUMAN RESOURCE
The Banks staffing needs continued to increase during the year
particularly in the retail banking businesses in line with the
business growth. Total number of employees increased from 14878 as
of March31,2006 to 21477 as of March 31, 2007. 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 9000 employees.
RUPEE EARNED- RUPEE SPENT
It is more important for every organization to know about from
where and where to spent money. And balanced between these two
things rupee earned and rupee spent are required for smooth running
of business and financial soundness. This type of watch can control
and eliminate the unnecessary spending of business. In this diagram
it include both things from where Bank earned Rupee and where to
spent.
HDFC BANK earned from the Interest from Advances 51.14 %
,Interest from Investment 27.12 %, bank earned commission exchange
and brokerage of 15.25 %. These are the major earning sources of
the bank. Bank also earned from the Forex and Derivatives and some
other Interest Income.
Bank spent 39.75 % on Interest Expense, 30.27 % on Operating
Expense and 14.58 % on Provision. Bank also spent Dividend and Tax
on dividend, Loss on Investment , Tax. As we discuss above that
balancing is must between these two for every organization
especially in the era of globalization where there are stiff
competition among various market players.
RECENT DEVELOPMENT
The Reserve Bank of India has approved the scheme of
amalgamation of Centurion Bank of Punjab Ltd. with HDFC Bank Ltd.
with effect from May 23, 2008.
All the branches of Centurion Bank of Punjab will function as
branches of HDFC Bank with effect from May 23, 2008. With RBIs
approval, all requisite statutory and regulatory approvals for the
merger have been obtained.
The combined entity would have a nationwide network of 1167
branches; a strong deposit base of around Rs.1,22,000 crores and
net advances of around Rs.89,000 crores. The balance sheet size of
the combined entity would be over Rs.1,63,000 crores.
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.
Promoted in 1995 by Housing Development Finance Corporation
(HDFC), India's leading housing finance company, HDFC Bank is one
of India's premier banks providing a wide range of financial
products and services to its over 11 million customers across
hundreds of Indian cities using multiple distribution channels
including a pan-India network of branches, ATMs, phone banking, net
banking and mobile banking. Within a relatively short span of time,
the bank has emerged as a leading player in retail banking,
wholesale banking, and treasury
operations, its three principal business segments. The bank's
competitive strength clearly lies in the use of technology and the
ability to deliver world-class service with rapid response
time.
Over the last 13 years, the bank has successfully gained market
share in its target customer franchises while maintaining healthy
profitability and asset quality.
As on March 31, 2008, the Bank had a network of 761 branches and
1,977 ATMs in 327 cities. For the year ended March 31, 2008, the
Bank reported a net profit of INR 15.90 billion (Rs.1590.2crore),up
39.3%, over the corresponding year ended March 31, 2007.
As of March 31, 2008 total deposits were INR 1007.69
billion,(Rs.100,769 crore) up 47.5% over the corresponding year
ended March 31, 2007. Total balance sheet size too grew by 46.0% to
INR 1,331.77 billion (133177 crore). Leading Indian and
international Publications have recognized the bank for its
performance and quality.
Centurion Bank of Punjab is one of the leading new generation
private sector banks in India. The bank serves individual
consumers, small and medium businesses and large corporations with
a full range of financial products and services for investing,
lending and advice on financial planning. The bank offers its
customers an array of wealth management products such as mutual
funds, life and general insurance and has established a leadership
'position'. The bank is also a strong player in foreign exchange
services, personal loans, mortgages and agricultural loans.
Additionally the bank offers a full suite of NRI banking
products to Overseas Indians. On 29th August 2007, Centurion Bank
of Punjab merged with Lord Krishna Bank (LKB), post obtaining all
requisite statutory and regulatory approvals. This merger has
further strengthened the geographical reach of the Bank in major
towns and cities across the country, especially in the State of
Kerala, in addition to its existing dominance in the northern part
of the country.
Centurion Bank of Punjab now operates on a strong nationwide
franchise of 404 branches and 452 ATMs in 190 locations across the
country, supported by employee base of over 7,500 employees.In
addition to being listed on the major Indian stock exchanges, the
Banks shares are also listed on the Luxembourg Stock Exchange.
ACHIEVEMENT IN 2007
Business Today-Monitor Group survey
One of India's "Most Innovative Companies"
Financial Express-Ernst & Young Award Best Bank Award in the
Private Sector category
Global HR Excellence Awards - Asia Pacific HRM
Congress:'Employer Brand of the Year 2007 -2008' Award - First
Runner up, & many more
Business Today
'Best Bank' Award
Dun & Bradstreet American Express Corporate Best Bank Award
2007'Corporate Best Bank' Award
The Bombay Stock Exchange and Nasscom Foundation's Business for
Social Responsibility Awards 2007'Best Corporate Social
Responsibility Practice' Award
Outlook Money & NDTV Profit
Best Bank Award in the Private sector category.
The Asian Banker Excellence in Retail Financial Services
AwardsBest Retail Bank in India
Asian BankerHDFC BANK Managing Director Aditya Puri wins the
Leadership Achievement Award for India
SWOT ANALYSIS
STRENGTH
Right strategy for the right products.
Superior customer service vs. competitors.
Great Brand Image
Products have required accreditations.
High degree of customer satisfaction. Good place to work
Lower response time with efficient and effective service.
Dedicated workforce aiming at making a long-term career in
the field.
WEAKNESSES
Some gaps in range for certain sectors.
Customer service staff need training.
Processes and systems, etc
Management covers insufficient.
Sectoral growth is constrained by low unemployment levels and
competition for staff
Opportunities
Profit margins will be good.
Could extend to overseas broadly.
New specialist applications.
Could seek better customer deals.
Fast-track career development opportunities on an industry-wide
basis.
An applied research centre to create opportunities for
developing techniques to provide added-value services.Threats
Legislation could impact.
Great risk involved
Very high competition prevailing in the industry.
Vulnerable to reactive attack by major competitors
Lack of infrastructure in rural areas could constrain
investment.
High volume/low cost market is intensely competitive.COMPETITIVE
SWOT ANALYSIS WITH ICICI BANK
STRENGTHS
S O Strategies
Strength: Large Capital base.
Opportunity: Market Expansion.
Strategy: Deep Penetration into Rural Market.
WEAKNESSES
W O Strategies
Weakness: Workforce Responsiveness.
Opportunity: Outsourcing of Non Core Business.
Strategy: Outsource Customer Care & other E-Helps.
S T Strategies
Strength: Low operating costs
Threat: Increased Competition from others Pvt. Banks.
Strategy: Steps to Ensure Loyalty by old Customers.
W T Strategies
Weakness: Not Equal to International Standards.
Threat: Entry of many Foreign Banks.
Strategy: Consider additional benefits
Detailed Analysis:
i. Strength - Opportunity Analysis.
Strength:
It is well know that ICICI Bank has the largest Authorised
Capital Base in the Banking System in India i.e. having a total
capacity to raise Rs. 19,000,000,000 (Non Premium Value).
Opportunity:
Seeing the present financial & economic development of
Indian Economy and also the tremendous growth of the Indian
Companies including the acquisition spree followed by them,it
clearly states the expanding market for finance requirements and
also the growth in surplus disposal income of Indian citizens has
given a huge rise in savings deposits from the above point it is
clear that there is a huge market expansion possible in banking
sector in India.
Strategy:
From the analysis of Strength & Opportunity the simple and
straight possible strategy for ICICI Bank could be - to penetrate
into the rural sector of India for expanding its market share as
well as leading all other Pvt. Banks from a great gap.
ii. Strength - Threat Analysis.
Strength:
ICICI Bank is not only known for large capital but also for
having a low operations cost though having huge number of branches
and services provided.
Threat:
After showing a significant growth overall, India is able to
attract many international financial & banking institutes,
which are known for their state of art working and keeping low
operation costs.
Strategy:
To ensure that ICICI Bank keeps going on with low operation cost
& have continuous business it should simply promote itself well
& provide quality service so as to ensure customer loyalty,
therefore guaranteeing continuous business.
iii. Weakness - Opportunity Analysis.
Weakness:
It is well known that workforce responsiveness in banking sector
is Very low in Indian banking sector, though ICICI Bank has better
responsible staff but it still lacks behind its counterparts like
HSBC, HDFC BANK, CITI BANK, YES BANK etc.
Opportunity:
In the present world, India is preferred one of the best places
for out sourcing of business process works and many more.
Strategy:
As international companies are reaping huge benefits after
out-sourcing there customer care & BPOs, this same strategy
should be implemented by ICICI Bank so as to have proper customer
service without hindering customer expectations.
iv. Weakness - Threat Analysis.
Weakness:
Though having a international presence, ICICI Bank has not been
able to keep up the international standards in providing customer
service as well as banking works.
Threat:
In recent times, India has witnessed entry of many international
banks like CITI Bank, YES Bank etc which posses an external entrant
threat to ICICI Bank as this Banks are known for their art of
working and maintain high standards of customer
service.Strategy:
After having new entrants threat, ICICI Bank should come up with
More additional benefits to its customer or may be even reduce some
fees for any additional works of customers. PLASTIC MONEY
I give the project on Plastic Money to bank. The objective
behind this project is to increase the rich customers list in a
bank. Plastic Money title itself says the use of Credit Card and
Debit Card in day to day transaction of the business. I prepared
the presentation on it and submitted to bank and Bank already
started work on this project.
Idea behind this project is to sale the bulk product. Target
customer Of this project are two parties one is Wholesaler and
second is Retailer. Due to this idea bank also sell their swipe
machine to wholesaler and create brand image in the market.
The idea behind this, bank give the credit card swipe machine to
wholesalers and retailers use the credit card of the bank. Bank
gives the 50 days credit to their credit card holders. So here
retailers can get benefit of long credit period and on the other
side wholesalers can get the benefit of same day payment. As a
result bank got the wide list of customers of wholesalers and
retailers.
Idea behind it, to convenience both the parties and create the
group transaction between them so bank can got the maximum benefit
from it. Each wholesaler has more than 15 to 20 retailers, so by
this way bank sell the bulk products.
This power point slide shows the how idea works behind this
project. Meet the wholesaler first and get the details about their
retailers and convince both parties and shows the benefit of using
this type of transaction by plastic money.
Bank always find those customers which are more involve in the
banking transaction. These type of group transaction between the
wholesalers and retailers maintain the well account in a bank.
MASTER CARD AND VISA SETTLEMENT
It is the acquiring banks responsibility to re-imburse the
merchants and claim the same from Master card or Visa as the case
may be. Both the organisations have different rules and procedures
of claiming funds by the acquiring banks. We need to understand the
rules and procedures of both the organisations separately. We need
to understand the system of transmitting outgoing files, system of
receiving incoming files and clearing procedures and time
frames.
MASTER CARD
MasterCard offers the means for an acquirer bank and an issuer
bank involved in a transaction to clear and settle the transaction.
The issuer is the institution that issues cards to cardholders. The
acquirer is an institution that has agreements with merchants to
process payments account transactions and reimburse the merchants
for those transactions. The acquirer enters those transactions into
clearing (through Master Card), thus settling with the issuer to
receive funds that it needs to reimburse to merchants. The acquirer
bank and Master Card must perform a series of steps to accomplish
clearing and settlement.
a) Clearing : Clearing is the process of sending transactions
from the acquirer to the issuer for posting to the cardholder
account. Within INET, the sending of data is determined by the
issuer ICA number. Currently, an acquirer groups its batches by
issuing ICA number. When MasterCard receives the batches (whether
through the Banknet telecommunications network, MasterCard file
express, MasterCard mainframe to member mainframe or on magnetic
tape), MasterCard edits the records, checking the data for accuracy
and directs it to. issuer bank.
b) Settlement : Clearing is the movement of data from the member
to MasterCard and from MasterCard to the member. Settlement is the
process by which funds are exchanged representing the net
equivalent of monetary value from clearing and billing processing.
These funds are exchanged each day between the banks for net
monetary value of the cleared transactions. MasterCard calculates
the net position of each member involved in the clearing
process-and performs the functions of (a) sending advisements (b)
Transferring funds.
c) Means of Transferring Data : Acquiring Bank (HDFC Bank Ltd)
sends and receives data via a Master Card Interface processor
(MIP). The file names which are sent to master card have following
description
10121501.512 --- The file name starting with 101 means this is
outgoing file for clearing. Next three digits (215 in this case)
represent Julian date (Feb. 1 as 32 date) and next two digits
represent the file number for that particular date being
transmitted.
10221501.asc The file name starting with 102 means this is
incoming file for settlement and clearing sent for previous day.
Next two digits represent the Julian date and four files will be
received by Bank for everyday whether clearing for previous day was
sent or not.
Bank can also use other transmission methods instead of a MIP
connection. Following transmission methods are as follows :
Transfer data via dial-up access between remote personal
computers and central site based mainframe using modems and
communication software developed and licensed by MasterCard
International.
MasterCard mainframe to bank's mainframe using dedicated
networkcommunication facilities. Also referred to as "Complex - to
Complex"
Send and receive data on magnetic tape via the postal service or
courier. Magnetic tapes are used to transmit data when a member is
- experiencing problems with connectivity to MasterCard.
Time frame for Clearing
An acquirer has 30 calendar days to process the transaction to
the issuer. An issuer must, however, accept a transaction submitted
beyond the 30 day time frame if the account is in good standing, or
the transaction can be honored. The 30 day time frame is measured
as the time between the transaction date and processing date. When
calculating the number of days, do not count the transaction date
as day one, but do count the Central Processing Date. In case the
transaction is submitted to MasterCard for clearing with issuer
bank, issuer bank takes interchange fee of 1.1% of the transaction
amount. But if the transaction is submitted after 5 days then the
interchange fee is 1.50% of the transaction amount. Below is a
diagram depicting the relationship of banks during the various
processing cycles.
Calculation of net Positions :
As HDFC Bank Ltd is acquiring Master Credit Cards and Maestro
credit cards along with the issuing of Meastro Debit Cards.
MasterCard makes a net settlement of all POS and ATM transactions
for issuer and acquirer transactions.
MasterCard received incoming transaction date from between 9:01
A.M. and the end of the fourth clearing (9:00A.M.) The next day
(St., Louis Time) and then the net position is calculated and
settling bank is advised accordingly by MasterCard along with the
copy of the net position to acquiring and issuing bank
Below is the diagram how the net position and settlement is done
by MasterCard international.
It is to- be noted that , Maestro Debit card settlement is done
online by MasterCard International and there is no need of sending
these transactions through clearing. But the net position will take
into consideration these transactions also.
VISA INTERNATIONAL :
As the bank is acquiring VISA cards also, the settlement
procedure with VISA International for acquiring of VISA cards on
HDFC terminals is also one of the requirements.
The outgoing files which are sent to Visa international will
have the name as ifftl.out. This means the file is for clearing and
the file number is 1 for the date. Similarly incoming files ifft
1.in is the file for incoming.
However VISA sends 16 files for clearing every day as compared
to Master cards 4 files everyday.
Time frame of clearing with VISA International
An acquirer has 30 calendar days to process the transaction with
the issuer. An issuer must, however, accept a transaction submitted
- beyond the 30 day time frame if the account is in good standing,
or the transaction can be honored.
The 30 day time frame is measured as the time between the
transaction date and processing date. When calculating the number
of days, do not count the transaction date as day done, but do
count the Central Processing Date.
In case the transaction is submitted to VISA International for
clearing with issuer bank, issuer bank takes interchange fee of
1.1% of the transaction amount. But if the transaction is submitted
after 5 days then the interchange fee is 1.50% of the transaction
amount.
It is to be noted unlike with Maestro debit cards the settlement
is not done online for Visa Electron Debit cards. The claim with
Visa International will be for Credit Cards and Visa Electron Debit
Cards also.
As Bank is not issuing any visa cards, so the net position for
HDFC Bank Ltd as on date with Visa transactions must be positive on
any given date.
DISPUTED TRANSACTIONS BY MASTER CARD AND VISA INTERNATIONAL
If a cardholder-disputes the transaction, issuer bank can raise
a charge back on acquiring bank through Master Card or Visa
International.
The Charge back rules for MasterCard and VISA International are
defined in the next chapter.
CATEGORY - 2 (CARDHOLDER BASED SCHEMES)
As HDFC Bank Ltd. is issuer of Maestro -Debit Card, it is very
important that customers should be informed by way of schemes about
the usage of card other than ATMs only. Since we also plan to
launch credit cards soon, it is also essential that schemes for
cardholders are launched from time to time. Following Schemes can
be floated which are popular in the market :
1. Discounts to HDFC Bank Ltd. Cardholders : These kind of
schemes will benefit the bank in becoming Issuer and Acquirer of
transactions at the same time.
2. Lucky Draw Schemes : These schemes are useful to enhance the
usage of Debit Card at merchant outlets. E.g. E-bank club.
3. Loyalty programme schemes : One of most popular way to
enhance the usage of cards.
However other promotional and marketing activities will be an
ongoing process to maximise the acquiring business through HDFC
cards.
Appendix
9.1 Appendix
Study Questionnaire
What are different types of plans provided by bank?
What are the administrative charges for Processing Loan?
What are your transaction limits ?
What are the distribution channels used by your bank for
Disbursement of Loan?
What are the value added services you are providing to your
Customer?
Who are your target customer and segment?
Salaried Tourists Industrialist
Foreign Tourist
What are the promotion tools used by the bank?
Print media Road Shows
Trade Fair Festival Offers
Hoarding
What are proceedings for POS terminal approval to merchants by
your bank ?
What is the procedure for POS approval by your bank?
What are the basic documents needed.
How many POS terminals do you have ?
Field Investigation Report
1. Residence: -
Name of Applicant: - ________________________________
Address of Applicant: -________________________________
_________________________________
Type Of House: -
Flat Chawl Bungalow Hutment Free Hold Lease Hold
Residence is Easily Approachable From :-
Railway Station Bus Stop Not Easily App.
Residence Ownership :-
@ House/Flat Owned by Self / Spouse @ House/Flat Owned by
Parents Of applicant
@ House/Flat Owned by Parents Of Spouse
@ Other
Loan taken for Residence: -
Yes, Loan Amount Rs. ____________ EMI Rs.______ Outstanding
Rs-----------
Name of Institution
No
Above informations verified from :-
Society Officers Name ___________________________
Neighbor ___________________________
Watchman ___________________________
Other _______________________________
Locality Of Residence :-
@ Posh @ Upper Class @ Middle Class @ Lower Class
Interior Impression :-
@ Well Maintained @Avg. Maintained @ Poorly Maintained
In Residence :-
Phone T.V. Refrigerator Music System A.C. Cooler
How easy to Locate the house :-
@Easy @Difficult @ Unable to Locate
2. Residence Details :-
Details of Vehicle Owned :-
___________________________________________
___________________________________________
Details of Discussion
With Neighbors :-
Details of Discussion with
Property Broker / Estate Broker :-
Detail of Discussion with
Society / Office :-
Land Mark Observed :-
___________________________________________
Loan Details
:-
Car : Market Cost Rs ___________ Car Loan Amount Rs
_____________
EMI Rs. _____________ Present Outstanding Rs.____________
3. Office
Office is Easily Approachable From :-
Railway Station Bus Stop Not Easily App.
Size of Office ( Sq. M. ) :-
Office / Business Premises :-
@ Owned @ Parental @ Spouse @ Rental
Location of office :-
@Commercial Area @ Industrial Estate @ Residential @ Other
Locality :-
@ Posh
@ Upper Class @ Middle Class@ Lower Class
Furnishing: -
@ Well Furnished @ Avg. Furnishing @ Sparsely Furnished
Asset visible at time of field visit :-
Phone Computer Fax
Photocopier A.C.
Number Of Employee Visible ________
Level of activity observed in office :-
@ High @ Medium @ Low @None
Salary / Income
Statutory Deductions Other Deductions
Any feed back through Reference Checks
Name of the Field Officer :-
________________________________________________
Date of Visit :-
Observations of Field Officer :-
Signature Of Field Officer with date
Check box for multiple selections @ Radio Button for single
selection
PRE SANCTION / PRE RELEASE / POST SANCTION MONITORING
SPOT VISIT / INSPECTION REPORT
(For properties proposed for Equitable Mortgage / Negative Lien
)
Name of Account :.
Branch : Region:
Date of Visit :.............................................. By
:.....
Particulars of Property : (Brief Description).......
..Location : (Complete postal address to be
given).........---------------------------------------------------------------------Whether
property is built up or vacant
plot?...........................................................................
Land Area....................... sq.mts
............----------.Cnstructed
area...........................
Year of construction..................................
Name of the owner(s)....................
Nature of Ownership : Free-hold / Lease hold/ Private
Lease..............---------------------------OCCUpied by :