CHAPTER I

Introduction of Banking

INTRODUCTION OF BANKING
INDUSTRY
History

Banks have influenced economies and politics for centuries. Historically,

the primary purpose of a bank was to provide loans to trading companies.
Banks provided funds to allow businesses to purchase inventory, and
collected those funds back with interest when the goods were sold. For
centuries, the banking industry only dealt with businesses, not consumers.
Banking services have expanded to include services directed at individuals,
and risk in these much smaller transactions are pooled.
A bank is license by a government. Its primary activity is to lend money.
Many other financial activities were allowed over time. For example banks
are important players in financial markets and offer financial services such
as investment funds in some countries such as Germany, banks have
historically owned major stakes in industrial corporations while in other
countries such as the United States banks are prohibited from owning nonfinancial companies. In Japan, banks are usually the nexus of a cross-share
holding entity known as the zaibatsu. In France, banc assurance is
prevalent, as most banks offer insurance services .

Origin of the word

Silver drachms coin from Trapezes, 4th century BC

The name bank derives from the Italian word banco "desk/bench", used
during the Renaissance by Florentine bankers, who used to make their
transactions above a desk covered by a green tablecloth. However, there are
traces of banking activity even in ancient times.

Definition of Banking:-

The definition of a bank varies from country to country.

Under English common law, a banker is defined as a person who carries on
the business of banking, which is specified as:
Conducting current accounts for his customers
Paying cheques drawn on him, and
Collecting cheques for his customers.
3

 The borrowing, raising or taking up of money, the lending or

advancing of money either with or security acting as agents for any
government or local authority person

Examples of statutory definitions:

"banking business" means the business of receiving money on current or

deposit account, paying and collecting cheques drawn by or paid in by
customers, the making of advances to customers, and includes such other
business as the Authority may prescribe for the purposes of this Act;
(Banking Act (Singapore), Section 2, Interpretation).

"Banking business" means the business of either or both of the following:

1. Receiving from the general public money on current, deposit, savings or

other similar account repayable on demand or within less than [3 months] ...
or with a period of call or notice of less than that period;
2. Paying or collecting cheques drawn by or paid in by customers

3. Since the advent of EFTPOS (Electronic Funds Transfer at Point Of Sale),

direct credit, direct debit and internet banking, the cheque has lost its
primacy in most banking systems as a payment instrument. This has led
legal theorists to suggest that the cheque based definition should be
broadened to include financial institutions that conduct current accounts for
customers and enable customers to pay and be paid by third partie

Commercial role:
4

The commercial role of banks is not limited to banking, and includes:

issue of banknotes ( promissory notes issued by a banker and

payable to bearer on demand)
processing of payments by way of telegraphic transfer, EFTPOS,
internet banking or other means

issuing

bank drafts and

bank cheques
accepting money on term deposit
lending money by way of overdraft, installment loan or
otherwise
providing documentary and standby letters of credit ( trade
finance),
guarantees, performance bonds, securities underwriting
commitments

and other forms of off-balance sheet

exposures
safekeeping of documents and other items in safe deposit boxes
currency exchange

Economic functions:5

The economic functions of banks include:

1. Issue of money, in the form of banknotes and current accounts subject to

cheque or payment at the customer's order. These claims on banks can act
as money because they are negotiable and/or repayable on demand, and
hence valued at par. They are effectively transferable by mere delivery, in
the case of banknotes, or by drawing a cheque that the payee may bank or
cash.
2. Netting and settlement of payments banks act as both collection and
paying agents for customers, participating in interbank clearing and
settlement systems to collect, present, be presented with, and pay payment
instruments. This enables banks to economies on reserves held for
settlement of payments, since inward and outward payments offset each
other. It also enables the offsetting of payment flows between geographical
areas, reducing the cost of settlement between them.
3. Credit intermediation banks borrow and lend back-to-back on their own
account as middle men .
4. Credit quality improvement banks lend money to ordinary commercial
and personal borrowers (ordinary credit quality), but are high quality
borrowers. The improvement comes from diversification of the bank's
assets and capital which provides a buffer to absorb losses without
defaulting on its obligations.

5.

Maturity transformation banks borrow more on demand debt and

short term debt, but provide more long term loans. In other words, they
borrow short and lend long. With a stronger credit quality than most other
borrowers, banks can do this by aggregating issues (e.g. accepting deposits
and issuing banknotes) and redemptions (e.g. withdrawals).

Law of banking:Banking law is based on a contractual analysis of the relationship between

the bank (defined above) and the customerdefined as any entity for which
the bank agrees to conduct an account.
The law implies rights and obligations into this relationship as follows:

1. The bank account balance is the financial position between the bank and the
customer: when the account is in credit, the bank owes the balance to the
customer; when the account is overdrawn, the customer owes the balance to
the bank.
2. The bank agrees to pay the customer's cheques up to the amount standing to
the credit of the customer's account, plus any agreed overdraft limit.
3. The bank may not pay from the customer's account without a mandate from
the customer, e.g. a cheque drawn by the customer.
4. The bank agrees to promptly collect the cheques deposited to the customer's
account as the customer's agent, and to credit the proceeds to the customer's
account.
5. The bank has a right to combine the customer's accounts, since each
account is just an aspect of the same credit relationship.
6. The bank has a lien on cheques deposited to the customer's account, to the
extent that the customer is indebted to the bank.

Entry regulation:-

Currently in most jurisdictions commercial banks are regulated by

government entities and require a special bank license to operate.
Usually the definition of the business of banking for the purposes of
regulation is extended to include acceptance of deposits, even if they are
not repayable to the customer's orderalthough money lending, by itself, is
generally not included in the definition.
Unlike most other regulated industries, the regulator is typically also a
participant in the market, i.e. a government-owned (central) bank. Central
banks also typically have a monopoly on the business of issuing banknotes.
However, in some countries this is not the case. In the UK, for example, the
Financial Services Authority licenses banks, and some commercial banks
(such as the Bank of Scotland) issue their own banknotes in addition to
those issued by the Bank of England, the UK government's central bank.
Some types of financial institution, such as building societies and credit
unions may be partly or wholly exempt from bank license.

The requirements for the issue of a bank license vary between jurisdictions
but typically include:
1. Minimum capital
2. Minimum capital ratio

'Fit and Proper' requirements for the bank's controllers, owners, directors,
and/or senior officers The requirements for the issue of a bank license vary
between jurisdictions but typically include:
3. 'Fit and Proper' requirements for the bank's controllers, owners, directors,
and/or senior officers
4. Approval of the bank's
5. Business plan a being sufficiently

10

The economic functions of banks include:

Issue of money, in the form of banknotes and current accounts

subject to cheque or payment at the customer's order. These
claims on banks can act as money because they are negotiable
and/or repayable on demand, and hence valued at par. They are
effectively transferable by mere delivery, in the case of
banknotes, or by drawing a cheque that the payee may bank or
cash.
Netting and settlement of payments banks act as both collection
and paying agents for customers, participating in interbank
clearing and settlement systems to collect, present, be presented
with, and pay payment instruments. This enables banks to
economies on reserves held for settlement of payments, since
inward and outward payments offset each other. It also enables
the offsetting of payment flows between geographical areas,
reducing the cost of settlement between them.
Credit intermediation banks borrow and lend back-to-back on
their own account as middle men
Credit quality improvement banks lend money to ordinary

11

History of Banking in India

The first bank in India, though conservative, was established in 1786. From
1786 till today, the journey of Indian Banking System can be segregated
into three distinct phases. They are as mentioned below:Early phase from 1786 to 1969 of Indian Banks
Nationalization of Indian Banks and up to 1991 prior to Indian banking
sector Reforms.
New phase of Indian Banking System with the advent of Indian Financial
& Banking Sector Reforms after 1991.
To make this write-up more explanatory, I prefix the scenario as Phase ,
Phase and Phase
Phase (i)
The General Bank of India was set up in the year 1786. Next came Bank of
Hindustan and Bengal Bank. The East India Company established Bank of
Bengal (1809), Bank of Bombay (1840) and Bank of Madras (1843) as
independent units and called it Presidency Banks. These three banks were
amalgamated in 1920 and Imperial Bank of India was established which
started as private shareholders banks, mostly Europeans shareholders.

12

In 1865 Allahabad Bank was established and first time exclusively by

Indians, Punjab National Bank Ltd. was set up in 1894 with headquarters at
Lahore. Between 1906 and 1913, Bank of India, Central Bank of India,
Bank of Baroda, Canara Bank, Indian Bank, and Bank of Mysore were set
up. Reserve Bank of India came in 1935.
During the first phase the growth was very slow and banks also experienced
periodic failures between 1913 and 1948. There were approximately 1100
banks, mostly small. To streamline the functioning and activities of
commercial banks, the Government of India came up with The Banking
Companies Act, 1949 which was later changed to Banking Regulation Act
1949 as per amending Act of 1965 (Act No. 23 of 1965). Reserve Bank of
India was vested with extensive powers for the supervision of banking in
India as the Central Banking Authority.
Phase (II)
Government took major steps in this Indian Banking Sector Reform after
independence. In 1955, it nationalized Imperial Bank of India with
extensive banking facilities on a large scale especially in rural and semiurban areas. It formed State Bank of India to act as the principal agent of
RBI and to handle banking transactions of the Union and State
Governments all over the country.
Seven banks forming subsidiary of State Bank of India was nationalized in
1960 on 19th July, 1969, major process of nationalization was carried out.

13

Second phase of nationalization Indian Banking Sector Reform was carried

out in 1980 with seven more banks. This step brought 80% of the banking
segment in India under Government ownership.
The following are the steps taken by the Government of India to Regulate
Banking Institutions in the Country:1949: Enactment of Banking Regulation Act.
1955: Nationalization of State Bank of India. 1959: Nationalization of SBI
subsidiaries. 1961: Insurance cover extended to deposits. 1969:
Nationalization of 14 major banks.
1971: Creation of credit guarantee corporation. 1975: Creation of regional
rural banks.
1980: Nationalization of seven banks with deposits over 200 crore.
After the nationalization of banks, the branches of the public sector bank
India raised to approximately 800% in deposits and advances took a huge
jump by 11,000%
Banking in the sunshine of Government ownership gave the public implicit
faith and immense confidence about the sustainability of these institutions.
.

14

INTRODUCTION TO THE ORGANIZATION

BANKING SYSTEM IN INDIA

The Banking System in India consists of:
1.

Reserve Bank

2.

Development Banks

3.

Public Sector Bank.

4.

Foreign Banks

5.

Private Sector Banks

6.

Cooperative Banks

7.

Regional Rural Banks

15

The Reserve Bank of India:-

The Reserve Bank of India is the Central Bank of the Country and came
into being by the Reserve Bank of India Act 1934. It was nationalized in
1948.
Reserve Bank of India is the bank that issues and regulates the issue of
currency in India .The banker to the Government of India and the State
governments. It manages the public debt. It has the obligation to transact
the banking business of the Central Government. It undertakes to accept
money on behalf of the Government and make payment on its behalf. The
bankers bank. Commercial banks maintain their current account with the
Reserve Bank of India.
The bank that manages the volume of credit created by the commercial
banks to ensure price stability. The bank that manages the external value of
th currency (Indian rupee).

16

Development Banks:These were set up to give long term finance for the development of the
country. These are the Industrial Finance Corporation of India and the
Industrial Development Bank of India, The Industrial Reconstruction Bank
of India and the National Bank for Agriculture and Rural Development. A
former development bank, the Industrial Credit and Investment Corporation
of India Ltd. by a reverse merger in 2002, became a normal commercial
bank. It is expected that the other development banks, having outlived their
utility would also be either converted to commercial banks or merged with
commercial banks.

Public Sector Banks:These are banks which the Government either owns or has a majority stake
in it. The largest is the State Bank of India which was formed by the merger
of the Presidency Banks the Bank of Bengal, the Bank of Bombay and the
Bank of Madras in 1921. It was then known as the Imperial Bank. It was
nationalized India

17

Foreign Banks:These

are branches of banks incorporated outside India. In 1995/ 96

many other foreign banks (optimistic in view of Indias liberalization)

opened branches in India. However, after banking began to become
increasingly competitive and margins began to be squeezed coupled with
large non performing assets, many banks closed their branches

Private Sector Banks:These are banks which are not government owned or controlled. Their
shares are freely traded in the Stock Markets.

Cooperative Banks:Cooperative Banks are those that are created by a group of individual to
support either a community or a religious group. They operate in
metropolitan, urban and semi urban centers to cater to the needs of small
borrowers.

Regional Rural Banks:These came into being on October 2, 1975 when 5 regional rural banks
were established under what became the Regional Rural Banks Act 1975.
These were to bridge the gap in rural credit granting loans and advances to
small and marginal farmers, artisans, small entrepreneur and persons of
small means engaged in trade, commerce, industry or other productive
,activitiewithin their area of operation.

18

HISTORY OF SBI BANK:-

The evolution of State Bank of India can be traced back to the first decade
of the 19th century. It began with the establishment of the Bank of Calcutta
in Calcutta, on 2 June 1806. The bank was redesigned as the Bank of
Bengal, three years later, on 2 January 1809. It was the first ever joint-stock
bank of the British India, established under the sponsorship of the
Government of Bengal. Subsequently, the Bank of Bombay (established on
15 April 1840) and the Bank of Madras (established on 1 July 1843)
followed the Bank of Bengal.
An important turning point in the history of State Bank of India is the
launch of the first Five Year Plan of independent India, in 1951. The Plan
aimed at serving the Indian economy in general and the rural sector of the
country, in particular. Until the Plan, the commercial banks of the country,
including the Imperial Bank of India, confined their services to the urban
sector. Moreover, they were not equipped to respond to the growing needs
of the economic revival taking shape in the rural areas of the country.
Therefore, in order to serve the economy as a whole and rural sector in
particular.
The All India Rural Credit Survey Committee proposed the take over of the
Imperial Bank of India, and integrating with it, the former state-owned or
state-associate banks. Subsequently, an Act was passed in the Parliament of
India in May 1955. As a result, the State Bank of India (SBI) was
established on 1 July 1955. This resulted in making the State Bank of India
more powerful, because as much as a quarter of the resources of the Indian
banking system were controlled directly by the State. Later on, the State
Bank of India (Subsidiary Banks) Act was passed in 1959.

19

State Bank of India.

There are six associate banks that fall under SBI, and together these six
banks constitute the State Bank Group. All use the same logo of a blue
keyhole and all the associates use the "State Bank of" name followed by the
regional headquarters' name. Originally, the then seven banks that became
the associate banks belonged to princely states until the government
nationalized them in 1959. In tune with the first Five Year Plan,
emphasizing the development of rural India, the government integrated
these banks into State Bank of India to expand its rural outreach. There has
been a proposal to merge all the associate banks into SBI to create a "mega
bank" and streamline operations. The first step along these lines occurred in
September 2008 when State Bank of Saurashtra merged with State Bank of
India, which reduced the number of state banks from seven to six.
State Bank of Indore
State Bank of Bikaner & Jaipur
State Bank of Hyderabad
State Bank of Mysore
State Bank of Patiala
State Bank of Travancore

20

Growth:State Bank of India has often acted as guarantor to the Indian Government,
Most notably during Chandra Shekhar's tenure as Prime Minister of India
. With more than 11,111 branches and a further 6500+ associate bank
The SBI has extensive coverage. State Bank of India has electronically
Networked all of its branches under Core Banking System(CBS). The bank
Has one of the largest ATM networks in the region. More than 8500 ATMs
Across India. The State Bank of India has had steady growth over its
history, though it was marred by the Harshad Mehta scam in 1992. In recent
years, The bank has sought to expand its overseas operations by buying
foreign100 world banks in the Fortune Global 500 rating and various other
rankings.

Group companies:Establishment:Liability, joint-stock banking in India. So was the associated innovation in

banking, viz. the decision to allow the Bank of Bengal to issue notes, which
would be accepted for payment of public revenues within a restricted
geographical area. This right of note the establishment of the Bank of
Bengal marked the advent of limited issue was very valuable not only for
the Bank of Bengal but also its two siblings, the Banks of Bombay and
Madras.

21

Business:The business of the banks was initially confined to discounting of bills of

exchange or other negotiable private securities, keeping cash accounts and
receiving deposits and issuing and circulating cash notes. Loans were
restricted to Rs.one lakh and the period of accommodation confined to three
months only. The security for such loans was public securities, commonly
called Company's Paper, bullion, treasure, plate, jewels, or goods 'not of a
perishable nature' and no interest could be charged beyond a rate of twelve
per cent. Loans against goods like opium, indigo, salt woollens, cotton,
cotton piece goods, mule twist and silk goods were also granted but such
finance by way of cash credits gained momentum only from the third
decade of the nineteenth century. All commodities, including tea, sugar and
jute, which began to be financed later, were either pledged or hypothecated
to the bank.

22

Major change in the conditions:-

A major change in the conditions of operation of the Banks of Bengal,

Bombay and Madras occurred after 1860. With the passing of the Paper
Currency Act of 1861, the right of note issue of the presidency banks was
abolished and the Government of India assumed from 1 March 1862 the
sole power of issuing paper currency within British India. The task of
management and circulation of the new currency notes was conferred on
the presidency banks and the Government undertook to transfer the
Treasury balances to the banks at places where the banks would open
branches. None of the three banks had till then any branches (except the
sole attempt and that too a short-lived one by the Bank of Bengal at
Mirzapore in 1839) although the charters had given them such authority.
But as soon as the three presidency bands were assured of the free use of
government

23

Presidency Banks Act:-

The presidency Banks Act, which came into operation on 1 May 1876,
brought the three presidency banks under a common statute with similar
restrictions on business. The proprietary connection of the Government
was, however, terminated, though the banks continued to hold charge of the
public debt offices in the three presidency towns, and the custody of a part
of the government balances. The Act also stipulated the creation of Reserve
Treasuries at Calcutta, Bombay and Madras into which sums above the
specified minimum balances promised to the presidency banks at only their
head offices were to be lodged. The Government could lend to the
presidency banks from such Reserve Treasuries but the latter could look
upon them more as a favour than as a right.

24

Stamp of Imperial Bank of India

Subsidiaries:
The State Bank Group includes a network of eight banking subsidiaries an
Several non-banking subsidiaries. Through the establishments, it offers
various service including merchant banking service funds management
services, primary dealership in government securities, credit cards.

25

The eight banking subsidiaries are:

State Bank of Bikaner and Jaipur (SBBJ)
State Bank of Hyderabad (SBH)
State Bank of India (SBI)
State Bank of Indore (SBIR)
State Bank of Mysore (SBM)
State Bank of Patiala (SBP)
State Bank of Saurashtra (SBS)
State Bank of Travancore (SBT)

26

Products
Personal Banking: SBI Term Deposits SBI Loan For Pensioners
SBI Recurring Deposits Loan Against Mortgage Of Property
SBI Housing Loan Against Shares & Debentures
SBI Car Loan Rent Plus Scheme
SBI Educational Loan Medi-Plus Scheme

27

Other Services: Agriculture/Rural Banking

NRI Services
ATM Services
Demit Services
Mobile banking
Internet banking
Corporate banking

International Banking

28

NETWORK OF SBI BANK:SBI Bank India has 52 Foreign Offices in 34 countries. SBI India serves
the international needs of its foreign customers, in addition to conducting
retail operations. The focus of the offices of SBI is India-related business.
Few of the countries where SBI Bank has branches are as under:
Australia
Bahamas
Bahrain
Bangladesh
Belgium
Bhutan
Canada
France
Germany
Hong Kong
Japan

29

30

BOARD OF DIRECTORS
List of Directors on the Central Board of State Bank of
India as on 04.10.2015
Under
Sl.No

Name

Designation

Section of
SBI Act
1955

1.

Smt. Arundhati Bhattacharya Chairman

2.

Shri P. Pradeep Kumar

3.

Shri B. Sriram

4.

Shri.V.G.Kannan

5.

Shri Rajnish Kumar

6.

Shri Sanjiv Malhotra

Director

19 (c)

7.

Shri Sunil Mehta

Director

19 (c)

8.

Shri M.D. Mallya

Director

19 (c)

9.

Shri Deepak I. Amin

Director

19 (c)

10.

Shri

Director

19 (d)

Managing
Director

Managing
Director

Managing
Director

Managing
Director

31

19(a)

19 (b)

19 (b)

19 (b)

19 (b)

TribhuwanNathChaturvedi

11.

Ms. Anjuly Chib Duggal

Director

19 (e)

12.

Dr. Urjit R. Patel

Director

19 (f)

Award and recognition

SBI is having an asset value which is higher than the total reserves
of RBI.
SBI is having an asset value which is more than that of LIC.
SBI was ranked 73rd largest bank in the world, according to 2014
SNL financial data.
SBI won the Best Bank award in the 'Asia MONEY FX POLL OF
POLLS 2014 for best overall performance as domestic provider of
Forex services over the last 10 years
SBI was ranked as the top bank in India based on tier 1 capital by
The Banker magazine in a 2014 ranking
SBI was ranked 298th in the Fortune Global 500 rankings of the
world's biggest corporations for the year 2012.
SBI won "Best Public Sector Bank" award in the D&B India's study
on 'India's Top Banks 2013'.
State Bank of India won three IDRBT Banking Technology
Excellence Awards 2013 for Electronic Payment Systems, Best
use of technology for Financial Inclusion, and Customer
Management & Business Intelligence in the large bank category.
SBI won National Award for its performance in the implementation
of Prime Ministers Employment Generation Programmer (PMEGP)
scheme for the year 2012

32

 Best Online Banking Award, Best Customer Initiative Award & Best
Risk Management Award (Runner Up) by IBA Banking Technology
Awards 2010
SKOCH Award 2010 for Virtual corporation Category for its epayment solution
SBI was the only bank featured in the "top 10 brands of India" list in
an annual survey conducted by Brand Finance and The Economic
Times in 2010
The Bank of the year 2009, India (won the second year in a row) by
The Banker Magazine
Best Bank Large and Most Socially Responsible Bank by the
Business Bank Awards 2009
Best Bank 2009 by Business India
The Most Trusted Brand 2009 by The Economic Times.
SBI was named the 29th most reputed company in the world
according to Forbes 2009 rankings Most Preferred Bank & Most
preferred Home loan provider by CNBC
Visionaries of Financial Inclusion By FINO
Technology Bank of the Year by
SBI was 50th Most Trusted brand in India as per the Brand Trust
Report 2013,[an annual study conducted by Trust Research Advisory,
a brand analytics company and subsequently, in the Brand Trust
Report 2014, SBI finished as India's 19th Most Trusted Brand in
India.

33

INTRODUCTION OF HDFC BANK

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.

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.

Organizational Goals

HDFCs main goals are to

a) Develop close relationships with individual households.
b) Maintain its position as the premier housing finance institution in the
34

country,
c) Transform ideas into viable and creative solutions.
d ) Provide consistently high returns to shareholders.

HISTORY OF HDFC BANK

The Housing Development Finance Corporation Limited (HDFC) was

amongst the first to receive an 'in principle' approval from the Reserve
Bank of India (RBI) to set up a bank in the private sector, as part of the
RBI's liberalization of the Indian Banking Industry in 1994. The bank was
incorporated in August 1994 in the name of 'HDFC Bank Limited', with its
registered office in Mumbai, India. HDFC Bank commenced operations As
a Scheduled Commercial Bank on 16th January 1995. In the year 1998
HDFC Bank had tied up with the Ahmadabad Stock Exchange (ASE) to act
as its clearing bank

Business Focus:HDFC Bank's mission is to be a World-Class Indian Bank. The objective is

to build sound customer franchises across distinct businesses so as to be the
preferred provider of banking services for target retail and wholesale
customer segments, and to achieve healthy growth in profitability,
consistent with the bank's risk appetite. The bank is committed to maintain
the highest level of ethical standards, professional integrity, corporate
governance and regulatory compliance.

35

Subsidiary and Associate Companies

The subsidiaries of HDFC consists of
HDFC Bank
HDFC Mutual Fund
HDFC Standard Life Insurance Company
HDFC Realty
HDFC Chubb General Insurance Company Limited.
Intel net Global Services Limited
Credit Information Bureau (India) Limited

36

Other Companies Co Promoted by

HDFC HDFC Trustee Company Ltd.
GRUH Finance Ltd.
HDFC Developers Ltd.
HDFC Venture Capital Ltd
HDFC Venture Trustee Company Ltd
HDFC Securities Ltd.
HDFC Holding Ltd.
Home Loan Services India Pvt. Ltd.

37

HDFC BANK

The Organization:-

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. The bank was
incorporated in August 1994 in the name of 'HDFC Bank Limited', with its
registered office in Mumbai, India. HDFC Bank commenced operations As
a Scheduled Commercial Bank on 16th January 1995. In the year 1998
HDFC Bank had tied up with the Ahmadabad Stock Exchange (ASE) to act
as its clearing bank.

Capital Structure:-

The authorized capital of HDFC Bank is Rs.450 corer (Rs.4.5 billion). The
paid-up capital is Rs.311.9 crore (Rs.3.1 billion). The HDFC Group holds
22.1% of the bank's equity and about 19.4% of the equity is held by the
ADS Depository (in respect of the bank's American Depository Shares
(ADS) Issue). Roughly 31.3% of the equity is held by Foreign Institutional
Investors (FIIs) and the bank has about 190,000 shareholders. The shares
are listed on the The Stock Exchange, Mumbai and the National Stock
Exchange.

38

Times Bank Amalgamation:-`

In a milestone transaction in the Indian banking industry, Times Bank
Limited (another new private sector bank promoted by Bennett, Coleman &
Co./Times Group) was merged with HDFC Bank Ltd., effective February
26, 2000. As per the scheme of amalgamation approved by the shareholders
of both banks and the Reserve Bank of India, shareholders of Times Bank
received 1 share of HDFC Bank for every 5.75 shares of Times Bank. The
acquisition added significant value to HDFC Bank in terms of increased
branch network, expanded geographic reach, enhanced customer base,
skilled manpower and the opportunity to cross-sell and leverage alternative
delivery channels.

39

Management - HDFC Bank

Name

Designation

Shyamala Gopinath

Chairperson

Paresh Sukthankar

Deputy Managing Director

A N Roy

Director

Keki Mistry

Director

Renu Karnad

Director

Name

Designation

Aditya Puri

Managing Director

Kaizad Bharucha

Executive Director

Bobby Parikh

Director

Partho Datta

Director

Malay Patel

Additional Directo

Products and Services HDFC Bank

Product range:
40

The following is the product range offered at HDFC: While various deposit
products offered by the bank are assigned different names, the deposit
products can be categorized broadly into the following types. Definition of
major deposit schemes are as under: -

Demand deposits:
"Demand Deposits" means a deposit received by the bank which is withdrawn
able on demand;
a) Savings Account
"Savings Deposits" means a form of Demand Deposit which is subject

to restrictions as to the number of withdrawals as also the amounts of

withdrawals permitted by the bank during any specified period; HDFC
provides with saving bank account with the usual facilities, and one also
gets a free ATM card, into branch banking, bill payment facilities

41

Term Deposits:
"Term Deposit" means a deposit received by the bank for a fixed period
withdraw able only after the expiry of the fixed period and includes
deposits such as Recurring / Double Benefit Deposits .

Notice Deposit:
''Notice Deposit'' means Term Deposit for a specific period but which can
be withdrawn on giving at least one complete banking day's notice.

Current Account:
"Current Account" means a form of Demand Deposit wherefrom
withdrawals are allowed any number of times depending upon the balance
in the account or up to a particular agreed amount and will also include
other deposit accounts which are neither Savings Deposit nor Term Deposit;
The account holder gets a personalized cheque book, monthly account
statements, and Inter-branch banking.

42

HDFC Bank Preferred:A preferential Savings Account where in, one is assigned with a dedicated
Relationship Manager, whos youre the one point contact. One also get
privileges like fee waivers, enhanced ATM withdrawal limit, priority locker
allotment, free Demat Account and lower interest rates on loans.

Sweep-In Account:A Fixed Deposit linked to ones Savings Account. So, even if
ones Savings account runs bit shortly one a cheque

Super Saver Account:It gives one an overdraft facility up to 75% of ones fixed deposit. In an
emergency, you can access your funds while your fixed deposit continues to
earn high interest

HDFC Bank plus:Apart from Regular and Premium Current Accounts HDFC also has HDFC
Bank Plus, a Current Account and then something extra for the HDFC bank
customers. One can transfer up to Rs. 50 lakh every month at no extra
.

43

Award and Achievement of HDFC

Euro money

- HDFC Bank wins Best Private

Banking Services for Super
affluent clients for 5 years in a
row at Euro money Awards

Euro money Private Banking and

- Best Private Banking Services

Wealth Management Survey 2015

award for Net-worth-specific

services category for Super
affluent clients (US$ 1 million to
US$ 5 million).
- Best Private Banking Services
award Asset Management

FE Best Bank Awards

- Best Bank in the New Private

sector
- Winner - Profitability
- Winner - Efficiency

Business Today - KPMG Study 2014

- Best Large Bank - Overall

- Best Large Bank - Growth

Business world-PwC India Best

- Best Large Bank

Banks Survey 2014

- Fastest Growing Large Bank

The Asian Banker

Strongest Bank in India in the

Asian Banker 500 (AB 500)
44

Strongest Bank by Balance Sheet

Ranking 2014
Dun & Bradstreet - Polaris Financial

- Best Bank - Managing IT Risk

Technology Banking Awards 2014

(Large Banks)
- Best Bank - Mobile Banking
(Large Banks)
- Best Bank - Best IT Team
(Private Sector Banks)

Forbes Asia

Fab 50 Companies List for the 8th

year

Brand Z TM Top 50 Most Valuable

India's Most Valuable Brand

Indian Brands study by Mill ward

Brown
Finance Asia Country Awards 2014

- Best Bank - India

and poll on India's Top Companies

- Best CEO- Rank 1

- Best CSR - Rank 1
- Best CFO - Rank 2

Asia money

Best of Best Domestic Banks India

Dun & Bradstreet - Manappuram

Best Corporate in Banking Sec

Finance Limited Corporate Award

2014

Credit Rating:-

HDFC Bank has its deposit programmers rated by two rating agencies 45

Credit Analysis & Research Limited. (CARE) and Fitch Ratings India
Private Limited. The bank's Fixed Deposit programmed has been rated
'CARE AAA (FD)' [Triple A] by CARE, which represents instruments
considered to be "of the best quality, carrying negligible investment risk".

CARE has also rated the bank's Certificate of Deposit (CD) programmer
"PR 1+" which represents "superior capacity for repayment of short term
promissory obligations". Fitch Ratings India Pvt. Ltd. (100% subsidiary of
Fitch Inc.) has assigned the "taka (india )" rating to the bank's deposit
programmed, with the outlook on the rating as "stable". This rating
indicates "highest credit quality" where "protection factors are very high".

HDFC Bank also has its long term unsecured, subordinated (Tier II) Bonds
of Rs.4 billion rated by CARE and Fitch Ratings India Private Limited.
CARE has assigned the rating of "CARE AAA" for the Tier II Bonds while
Fitch Ratings India Pvt. Ltd. has assigned the rating "AAA( ind )" with the
outlook on the rating as "stable". In each of the cases referred to above, the
ratings awarded were the highest assigned by the rating agency for those
instruments

46

Chapter II
About The Topic

Personal loan
Personal Loans are unsecured loans provided by banks and non-banking
financial companies without taking any collateral, though some public
sector banks may insist on a guarantorAs the name suggest, Personal Loan
47

can be availed for any personal reason ranging from purchasing of lifestyle
products, marriage, holidaying, medical emergencies, etc. getting a personal
loan is a very simple hassle free process with easy documentation and
generally sanctioned within 2-3 working days on submission of all
necessary

document

Personal Loan amount and interest rate is dependent on borrower's income,

the company for which the borrower is Personal loans are one of many
types of loans you can borrow from a bank. These loans are typically
general purpose loans that you can use at your discretion. Personal loans are
often more difficult to get and have strict qualification requirements. If
you're thinking about borrowing a personal loan, here are some things you
know about them

Personal loans are unsecured.

That means the loan doesn't require you to use an asset as collateral. So, if
you default on a personal loan, the lender can't automatically take a piece of
your property as payment for the loan. This is the primary reason that
personal loans are more difficult to get. The lender doesn't have any asset to
seize if you decide you can't make loan payments anymore. Even though
the lender can't automatically take your house or car, it can take other
collection actions.

Working and his past repay Personal loans have a fixed

amount.
The amount of personal loans ranges anywhere from $1,000 to $50,000 and
depends on your credit rating. The better your credit score, the more money
you can borrow for a personal loan. Some banks have a low cap on the
amount of personal loan you can borrow. For example, you may be able to
borrow only a maximum of $10,000 personal loan. You may be able to take
out higher loan amounts at a bank you already have a relationship with.

48

Personal loans usually have fixed interest rates.

The interest rate is locked and doesn't change for the life of the loan Like
the loan amount, interest rates on personal loans are based on credit rating.
The better your credit score, the lower your interest rate. Lower interest
rates are ideal because it means you pay a lower cost for borrowing the
loan. Some personal loans come with a variable interest rate that changes
periodically.

Personal loans a fixed repayment period.

You have a set period of time to repay your personal loan. Loan periods are
stated in months, e.g. 12, 24, 36, 48, and 60. Longer repayment periods
lower your monthly but they also mean you pay more in interest than if you
shorter repayment period. Your interest rate may also be tied to your
repayment

Applying for a Personal Loan

It may be easier to get a personal loan from a bank you already have an
account with. The bank will probably want to know what you're going to
use the money for and may even have a better loan for your needs. As with
any other loan, it's important to choose personal loans wisely and only
borrow what you can afford to repay

SBI PERSONAL LOAN

49

SBI Personal Loans also known as State Bank of India personal finance
schemes, aim to provide the necessary financial assistance to as many
people as possible to help them realize their dreams or come out of
situations of financial need. State Bank of India being India's largest bank is
a trusted name and the SBI personal loan rates of interest are kept at the
most competitive level to make a personal loan as approachable. The most
popular SBI personal loans include housing loans, car loans, education
loan, loans against property, shares or debentures, reverse mortgage loans
and more.
State Bank of India Housing Loan or SBI Home Loan is available in
complete transparency and at no hidden costs. The interest rates are charged
on daily reducing basis.

SBI Car Loans

Offer a lucrative deal of low interest rates, easy repayment facilities and
inclusion of all additional charges like vehicle registration, insurance, onetime road tax and car accessories. State Bank of India offers car loans for
purchase of all kinds of personal use and commercial vehicles. State Bank
of India offers:

Education Loan
To Indian nationals for pursuing higher studies within the country or
50

abroad. The SBI education loan covers the travel expenses, tuition fees,
examination fees, costs of books and other course material and stationery,
refundable caution deposits, expenses for purchase of computers.

SBI Personal Loan Interest Rates up date

on 20oct2015

SBI Personal Loan Details

BR + 8.50%

Interest Rate (Floating)

Base Rate - 9.30%

Processing Fees

2.02%-3.03% of the loan amount

Loan Tenure

4 years

51

Pre-closure Charges

Nil

Guarantor Requirement

No guarantor required

Different types of SBI Personal Loans

The State Bank of India has long been known for providing personal loans
for you that are designed to be easy for you to apply for and, most
importantly, easy for you to pay back. SBI offers people four different types
of personal loans that have to be tailored to suit individuals and their
individual needs. So, without further ado, these are four of the personal
loans that you can avail from SBI.

Xpress Credit Personal Loan

As the name suggests, this loan has been designed to get you cash when
you need it in a hurry. The processing charges are low, there are no hidden
charges and there is minimal documentation required. There arent any prepayment charges either

52

SBI Saral Personal Loan

The SBI Saral Personal Loan is meant to provide people with the
opportunity to have access to money for various things like payments for
vacations, medical bills or even clearing financial liabilities. As long as the
the applicant has a valid reason to apply for the loan, it might get approved
subject to the banks terms and conditions. The processing charges will be
anywhere between 2.02% to 3.03% of the loan amount.

SBI Pension Loan / Jai Jawan Pension Loan

This type of a personal loan is provided to pensioners who are drawing their
pensions from the central or the state government. If you apply for this loan
then you will have to pay a nominal processing fee and there will be no
extra charges levied for early payments

SBI Festival Personal Loan

In case there is a festival coming up and your plans for celebrating it are
threatened by a shortage of money you can go in for a Festival Loans.

53

SBI Personal Loan Interest Rate

SBI Xpress Credit Personal Loan Interest Rate

The base interest rate will be 10% as of the 7th of of Nov, 2013
In case of a full check off, your interest rate will be base rate plus an
additional 3% to 3.5%. This means your interest rate will actually be
13% to 13.5%
If you go for a partial check off then the interest rate will be 4% to
4.5% added to the base rate. In this case the interest charged will be
14% to 14.5%
If you dont plan to go in for a check off then the interest rate will be
5% to 5.5% added to the base rate of 10%. Which means that the
interest charged will be 15% to 15.5%

SBI Saral Personal Loan Interest Rates

The interest rate will be 8.5% added to the current floating base rate of 10%
per annum so your actual interest will be 18.5% p.a.

54

SBI Pension Loan / Jai Jawan Pension Loan Interest

Rates
The interest rate for the Jai Jawan Pension Loan scheme will be 4.75%
added to the base rate of 10%, bringing it to a total of 14.75% per annum.

SBI Festival Personal Loan Interest Rates

The interest rate will be the base rate of 10% with an additional 6.75%
added to it making it a total of 16.75% per annum.

Minimum Loan Amount

Rs.24,000/- in metro and urban centers Rs.10,000/- in

rural/semi-urban centers
12 times Net Monthly Income for salaried individuals

Maximum Loan Amount

and pensioners subject to a ceiling of Rs.10 Lakhs in

all centers

Tenure:

12 to 48 Months

Processing Fee:

2.02% - 3.03% of the loan amount.

Prepayment Charges:

Nil
Personal Loans Scheme (SBI Saral): 8. 50% above
Base Rate floating, currently 18.50% per annum. SBI

Interest Rates:

Loan to Pensioners (all variants): 4.75% above Base

Rate, currently 14.75% p.a. #Base Rate 10.00% w.e.f.
07.

55

SBI Personal Loan Eligibility

State Bank of India offers personal loans to all applicants fulfilling the
basic eligibility criteria. State Bank of India personal loans are available to
all salaried individuals of good quality corporate as well as self employed
individuals and working professionals including engineers, doctors,
architects, chartered accountants and MBAs with a minimum 2 years of
standing period.

SBI Xpress Credit Personal Loan Eligibility

Net Monthly Income must be at least Rs. 7,500 per month
The applicants EMI/NMI (Equated Monthly Installments / Net
Monthly Income) ratio must not exceed 50

SBI Saral Personal Loan Eligibility

If you fall into any of the following categories then you can apply for this
personal loan.
Self employed engineer
Doctor
MBA grad with a minimum of 2 years worth of experience

56

 Chartered Accountant
Architect

SBI Pension Loan / Jai Jawan Pension Loan Eligibility

The person applying for the pension loan must not be over 76 years
of age
The person must be drawing a pension from the central or state
governments and have his/her pension account with SBI
If the family pensioner is the spouse of a pensioner who is
authorised to receive the pension then they too must not be over 76
years of age.

SBI Festival Personal Loan Eligibility

Government employees or those working for PSUs or even private
or public institutions/establishments are eligible for this loan as long
as they have a minimum of 2 years of service.
If the applicant is self-employed then a minimum of 3 years of
experience is a must
In case the applicant does not meet the first condition then they can
be eligible if they have a verifiable source of regular income like
pension or interest from TDR or NSC or Govt Securities.

57

 The applicant must have a net monthly income of Rs.3000 or more

If the applicant wants the spouses income also to be considered then
the spouse should guarantee the loan or turn it into a joint loan.

Eligibility Criteria for Salaried Individuals

Age

Minimum Income

Total years in
job/profession

Minimum: 21 Years Maximum: 58 Years

Salaried individuals with minimum monthly
income Rs.5000

2 Years

Years in current residence 1 Year

Eligibility Criteria for Self Employed Individuals and

Working Professionals:

Age

Minimum: 21 Years Maximum: 65 Years

Minimum Income

Self Employed individuals or working professionals

58

earning a minimum of Rs. 7000 per month

Total years in Profession

2 Years

Documentation needed to apply for an SBI Personal Loan

Signed application form with photograph

.Proof of identity: Passport/voter ID card/driving license
Processing fee cheque
Last 3 months bank statement/6 months bank passbook
Documentation for salaried applicants:
o Latest salary slip
o Current dated salary certificate with the latest Form 16
o Documentation for self-employed applicants:
o Latest Bank statement

59

HDFC Personal Loan

HDFC Bank personal loans can help meet all your financial needs
effectively. With simplified documentation and speedy approvals,
availing personal loans couldn't get easier.

FEATURES
Highly competitive personal loan interest rates
Special offers, interest rates and charges for HDFC Bank account
holders
Personal loan eligibility in 1 minute available online and across all
branches

Special Benefits

Simplified documentation
Competitive pricing
Transparency
Personal loans available for various needs

60

HDFC Bank Personal Loan Interest Rates

Oct 2015 offers for salaried and Self-Employed

Interest Rates 11.49% to 18.50% for salaried. Get lower rate offers for
employees of large reputed companies
Personal loans for businessmen and self employed at 15.75% to 20.00%
Lowest EMI of Rs. 2199 per lakh
Processing fee of 0.25% to 1.50%; Min - Rs. 999, Max - Rs. 25000
Loans up to Rs. 1,500,000 for salaried and up to Rs. 1,500,000 for self
employed
Assured Flip kart e-cash voucher of up to Rs. 4,999/- from My Loan
Care for applications during scheme period on disbursement from
partner banks

Terms & Conditions Apply

HDFC Bank Personal Loan Eligibility

You are eligible for HDFC Bank personal loan if:

You are between 21 and 60 years of age
In case you are salaried, you are in a full time job for at least 24
months of which not less 12 months must be with your current
company

61

 In case you are self-employed, you must be in current profession or

business for at least 4 years and should preferably be owning either
your office or your place of residence. Minimum turnover and
minimum net income criteria may apply
HDFC Bank does not specify any particular CIBIL score for being
eligible for a personal loan, it is observed that a score of 750 and
above is desirable

Prepayment, Foreclosure, Balance Transfer, Top up

Personal Loan
Part prepayment of HDFC Bank personal loan is not permitted
Foreclosure or full prepayment is allowed after 12 EMIs's.
Prepayment charges vary by year: 2nd year - 4%; 3rd year - 3%,
after 3 years - 2%
HDFC Bank offers personal loan balance transfer from another bank
if you have paid at least 12 EMIs regularly on your existing loan.
This is subject to your meeting other eligibility criteria of HDFC
Bank
You can avail additional top-up personal loan from HDFC Bank,
subject to your eligibility

Documents required - Salaried

Filled up loan application form
2 Passport Size Photo
Copy of Income Tax PAN

62

 Identity Proof - Passport/ Driving License/ Voter ID/ PAN

Residential Address Proof - Leave and License/ Registered Rent
Agreement/ Utility Bill (up to 3 months old), Passport
Income Documents 3 months pay slip, 2 years Form 16, 3 months
bank statement showing salary credit and any EMI debit

Documents required - Self-Employed

Filled up loan application form
2 Passport Size Photo
Copy of Income Tax PAN
Identity Proof - Passport/ Driving License/ Voter ID/ PAN
Residential Address Proof - Leave and License/ Registered Rent
Agreement/ Utility Bill (up to 3 months old), Passport
Income Documents 2 years audited financials, 6 months bank
statement

63

 Business proof such as VAT/ service tax registration, incorporation

details in case of companies, business address proof

Objective of study

1.

To Analysis the perception of people towards personal loan of different

bank

2. To study the awareness people regarding terms and condition upon which
personal is extended
3. To determine the difficulties faced by people which getting their
Personal loan passed .

SWOT OF BANKS
Strengths:-

Brand Name:SBI Bank has earned a reputation in the market over the period
64

of time(Being the oldest bank in India tracing history back to

1806)

Market Leader:SBI is ranked at 380 in 2008 Fortune Global 500 list, and ranked 219 in
2008 Forbes Global 2000. With an asset base of $126 billion and its reach,
it is a regional banking behemoth.
Wide Distribution Network:
Excellent penetration in the country with more than 10000 core branches
and more than 5100 branches of associate banks (subsidiaries).

Diversified Portfolio
SBI Bank has all the products under its belt, which help it to extend the
relationship with existing customers Bank has umbrella of products to
offer their customers, if once customer has relationship with the bank.
Some Products, which SBI Bank is offering are: Retail Banking
BusinessBanking Merchant Establishment Services (EDC Machine)
Personal loans & Car loans Insurance Housing Loans

Government Owned:Government owns 60% stake in SBI. This gives SBI an edge
over private banks in terms of customer security.
Low Transition Costs-SBI offers very low transition costs which
attracts small customers.

Weakness
65

 The existing hierarchical management structure of the bank,

although strength in some respects, is a barrier to change.
Though SBI cards are the 2nd largest player in the credit card
industry, it has the highest nonperforming assets (NPAs) in the
industry, which stand out to be at 16.28 % (Dec 2007).
Modernization: SBI lags with respect to private players in terms of
modernization of its processes, infrastructure, centralization, etc.

Opportunities:-

Merger of associate banks with SBI: Merger of all the associate

banks (like SBH, SBM, etc) into SBI will create a mega bank which
streamlines operations and unlocks value.
Planning to add 2000 branches and 3000 ATMs in 2008-2009.
66

This will further increase its reach.

Increasing trade and business relations and a large number of

expatriate populations offers a great opportunity to expand on
foreign soil.

Threats
1. Advent of MNC banks: Large numbers of MNC banks are

mushrooming in the Indian market due to the friendly policies adopted by

the government. This can increase the level of competition and prove a
potential threat for the market share of SBI bank.
2 Consumer expectations have increased many folds in last few years
and the bank has not been responsive enough to meet them on time.
3 Private banks have started venturing into the rural and semi-urban
sector, which used to be the bastion of the State Bank and other PSU
banks
4. Employee Strike: There was an employee strike in the year 2006
which disrupted SBIs activities. This can be repeated in the future.

SWOT ANALIYS OF SBI

1. The biggest bank in the country
2. Has a separate act for itself. Thus, a special
privilege.
3. Biggest branch network in the country
Strength

4. First public sector to move to CBS

67

1. Huge amount of staff

2. Expected to experience high level of attrition
due to retirement of its top management
3. Still carries the image of the old Govt. sector
Weakness

bank

1. Pool in talent to replace the going top

management to serve the next generation
2. Make better use of its CRM
Opportunity

3. Expansion into rural areas

1. Consolidation among private banks

2. New bank licenses by RBI
Threats

3. Foreign banks that have sophisticated products

SWOT ANALYSIS OF HDFC

68

STRENGHTS
HDFC bank is the second largest private banking sector in India
having 2,201 branches and 7,110 ATMs
HDFC bank is located in 1,174 cities in India and has more than
800 locations to serve customers through Telephone banking
The banks ATM card is compatible with all domestic and
international Visa/Master card, Visa Electron/ Maestro, Plus/cirrus
and American Express. This is one reason for HDFC cards to be the
most preferred card for shopping and online transactions
HDFC bank has the high degree of customer satisfaction when
compared to other private banks
The attrition rate in HDFC is low and it is one of the best places to
work in private banking sector
HDFC has lots of awards and recognition, it has received Best
Bank award from various financial rating institutions like Dun and
Bradstreet, Financial express, Euro money awards for excellence,
Finance Asia country awards etc
HDFC has good financial advisors in terms of guiding customers
towards right investments
Weakness
HDFC bank doesnt have strong presence in Rural areas, where as
ICICI bank its direct competitor is expanding in rural market
HDFC cannot enjoy first mover advantage in rural areas. Rural people
are hard core loyal in terms of banking services.
HDFC lacks in aggressive marketing strategies like ICICI

Opportunities

HDFC bank has better asset quality parameters over government

banks, hence the profit growth is likely to increase
69

 The companies in large and SME are growing at very fast pace.
HDFC has good reputation in terms of maintaining corporate salary
accounts
HDFC bank has improved its bad debts portfolio and the recovery
of bad debts are high when compared to government banks
HDFC has very good opportunities in abroad
Greater scope for acquisitions and strategic alliances due to strong
financial position

Threats
HDFCs nonperforming assets (NPA) increased from 0.18 % to
0.20%. Though it is a slight variation its not a good sign for the
financial health of the bank
The non banking financial companies and new age banks are
increasing in India
The HDFC is not able to expand its market share as ICICI imposes
major threat
The government banks are trying to modernize to compete with
private banks
RBI has opened up to 74% for foreign banks to invest in Indian
market

70

CHAPTER-III
Research Methodology

METHODOLOGY OF THE STUDY

Research Methodology
Research as a mean of getting knowledge can be carried out either
arbitrarily or in a systematic fashion. It is a purposive investigation.

71

Research may be a mean to know the small change and time forced upon us
as individual or as a society. Research as process involves defining the
problem, formulating the hypothesis, organizing and evaluating the data,
deriving inference and conclusion after careful testing.

Data Collection

As data is required for any research activity, it is collected (for those both
the Primary and Secondary) as follows:

Primary Data:
I have collected this data through questionnaire.

Secondary Data:
This data is collected from different sources available consolidated from
book publication reports, websites where used as a source of secondary data
in order to do this project and to collect necessary data. I have used the
manuals and leaflets of the HDFC & S.B.I bank.

72

Title of the study:Comparative Analysis of SBI & HDFC Bank Regarding Personal
Loan
Duration of the Study:-

1 Oct to 30 oct 2015

Objective of study
Primary: 1. To Analysis the perception of people towards personal loan of different

bank
2.To study the awareness people regarding terms and condition upon which
personal is extended
3.To determine the difficulties faced by people which getting their
Personal loan passed .

Secondary: 1. Service level and channel associate approach.

2. To find the level of brand awareness.
3. To find out the company market share.

73

Types of research:Descriptive research

Primary data collection

Through Questionnaire are filled by respondents.

Secondary data collection

Data collection through Internet, Magazines.

Sample size & Method of selecting sample

Sample size-:100 respondents

Method of selecting sample: Convenience sampling, 50 customers from
each bank

74

Scope of study

Special area to be focused for increasing the sales and for sales
Promotion activities to be adopted.
ii. To make product more innovative and easy to understand
iii. For providing maximum satisfaction to the customer by knowing
their needs and requirement about product and services.
iv. Steps to be taken at present for survival and facing the competition
with other equivalent product.
v. Continues improvement and for better management.
vi. Maintaining good relation between manager and customer.

75

Data Analysis & Interpretation

Chapter IV

76

Q.1. Which age group do you belong to?

Age Group
18-25
25-35
35-45
Above 45

Number of Person
36
24
26
14

40
35
30
25
20

Number of Person

15
10
5
0
18-25

25-35

35-45

Above 45

Interpretation
As per the study most of people taking a loan from age between
18- 28
Above 45 person age do not taken a personal loan 25-35 people belong to
25% and 35-45 only 16 % people taking loan

77

Q.2 Which occupation do you belong ?

Students
Professor
Business

25
36
14

25%

Other

25

25%
students
professor
business

14%

other
36%

Interpretation:As per the study there main customers of SBI bank and businessman On the
other side working professional are main customers of HDFC bank.

78

Q3. What kind of loan you have taken?

Type of loan
Personal
Home
Education
Corporate
Car
Other

No of person
44
06
15
18
12
05

12%

5%

18%

Corporate
6%

15%

home
personal
education
car
other

44%

79

Interpretation
As per study 44% taking personal loan from bank and 12% car loan 15%
education loan 5% other6% home and 18% corporate

Q4. From which bank have you taken loan?

Bank
HDFC
SBI
OTHER

No of Respond
44
36
20

hdfc

sbi

other

20%
44%

36%

Interpretation:-

80

Maximum number of customers prefers HDFC bank for taking personal

loan compare to SBI bank because of low interest rate, good image, and
public sector bank. 20% customers prefer other bank like ICICI, PNB, and
Bank of Broad.

Q5. If you have multiple loan which type of loan do you prefer most?
corporate
home
car
education
personal
other

26
14
10
12
30
08

loan

corporate

home

education

personal

other

16%

24%

27%

13%
9%

11%

Interpretation

81

car

As per study 27% of people taking a loan from bank Personal

loan because full fill their needs and wants 9% people are taking a car loan
24% corporate 16% 11% education 13% home loan

Q6. How much time do you get as grace period?

One week

10 days

15 days

20 days

More than 20
days

10

25

15

20

30

10%
30%
25%
timeperiod

one week

10 days

15 days

20%

20 days
15%

82

more than 20 days

Interpretation
As per study more than 20% people get a grace period 10% people
are one week 25% people are say 10 days grace period 20 % people are say
only 20 dyas for grace period

Q7 Do you want your bank to give more time grace period?

Yes
No

55
45

60
50
40
30
20
10
0
yes

no

Interpretation
As per the study 55% people want to grace period from bank 45 % people
are not want to grace period more people want to grace period
83

Q8. How much time does your bank take to sanction loan?

One week

10 days

15 days

20 days

More than 20
days

15

20

25

15

one week

10days

20 days

more than 20 days

25%

15 days

15%

20%
15%
25%

Interpretation

84

25

As per the study 25% people are bank sanction 25 %people want to
days and 15% people says 10 days

most of the people want to

sanction loan

Q9. Do you understand different terminologies of loan?

Yes

65

No

35

yes

no

35%

65%

Interpretation
85

As per study 65 say term logy 35 % people are say no termologie

Most of the people are think about termonologies

Q10. What attributes do you consider while taking personal loan?

Attributes
1. Update Information
2. Smooth service
3. Object Handling
4. Office Auto
5. Location
6. Customization
7. EMI
8. Skilled Employee
9. Brand

1
25
20
15
10
5
25
10
15
25

86

2
35
25
30
20
25
35
5
30
05

3
22
30
45
40
25
10
25
15
25

4
10
15
5
15
35
15
35
35
45

5
8
10
5
15
10
15
25
5
0

Update Information
1

10%

8%

25%

22%
35%

Interpretation
As per study 35% give rank update information rank 2 and
22% fill rank3and 8% people fill rank 4 and 10 % people fill rank 4 all
customer want to updated information

87

Smoth Service
1

10%

20%

15%
25%
30%

Interpretation
As per study 30% people are fill rank 3 and 25% people fill rank 2 20%fill
rank 4 and 10 % rank 1 fill .people want to good service from bank

88

Object Handling
1

5% 5% 15%

30%

45%

Interpretation
As per study 45% people rank4 and 30% people fill rank 2and 4and 5 fill
by 55 only most of people think about the object handling

office auto
1

15% 10%
20%

15%

40%

89

Interpretation
As per study 4 and 5 rank fill by people given same40% people fill
rank 4 and 10% people rank 1Most of the people are want to office auto

Location
1

10% 5%
25%
35%
25%

Interpretation
As per the study 35% people given the rank 4 are considered location at
the time taking a loan personal loan 5% people fill the rank one 25% people
also given the rank 2

90

customization
1

15%

25%

15%
10%

35%

Interpretation
As per study 35% people are say customization 4and 5 people are fill rank
same percentage 25% people given the rank in one less people want change
in bank

91

Emi
1

25%

10%
5%
25%

35%

Interpretation
As per study 60% people are fill rank 4and 5 they cannot considered
EMI at the time taking loan 25% people thing about EMI at the time taking
a loan

92

Skilled employes

5; 5% 1; 15%
4; 35%
2; 30%
3; 15%

Interpretation
As per study 40% people are not considered skilled employees
people are

considered skilled employees

skilled employees

93

most people are considered

Brand
1

25%
45%
5%
25%

Interpretation
AS per study 45 % people taken loan brand name of bank 4and 5
rank are same

less minimum 5% people taking loan from their brand

name

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Facts and finding

1. The people are age 18 and 25 taking personal loan from bank most
2. Most students fill by the questiaire
3. 44% people taking a personal loan from bank
4. 44% people taken a loan from HDFC bank
5. 30% people prefer a personal loan
6. More 20 days than 20% people want to grace period
7. 55% people want to more grace period
8. 25% people want to more sectional time
9. 65% people are understand terminologies
10. Attribute
a) 35% people want to updated information
b) 30% people want to smooth service
c) 45% people taking a personal loan to object handling
d) 40 % people want to office auto
e) 35 % people fill rank 4 for location
f) 35% people fill rank 2 for customization
g) 35% fill rank for EMI
h) 35% people want to skilled employees
I) 35% people want taking a loan for brand name

95

CHAPER V
CONCLUSION, SUGEESTION
AND LIMILATION

CONCLUSION
96

Areas in Research:In my report I have tried to show the basic different between the Personal
Loan of HDFC & SBI Banks. Both the Banks are good in terms of
customer satisfactions has an edge because it is the leading Government
regulated bank in India. HDFC is new to this segment (when compared to
SBI) .SBI is preferred because its a government bank. Procedure of loan
financing is easy in HDFC Bank. Family members & increasing standard of
living plays an important role in influencing the decision of taking home
loan.
1. SBI Bank is Leading Bank in the country, it provides a variety of products
and services to different segments of customers.
2. The Bank aims to serve customers from teenagers to senior citizens, hence
different products designed to suit specific requirements of the above.
3. Aims to serve all classes of the society from the salaried middle class to the
high income business class. Customers are categorized and segmented
according to their requirements and needs.
4. For Example , the Saving Regular and Plus Account aims to serve middle
class customers so minimum balance required to be maintained is
RS1.5,000/- or RS. 15000. While the Saving Max Account is targeted at
high income customers, there requirement is RS.30,000.
5. SBI Bank provides personal loan at low interest rate which good for
customers.
6. The Bank prides itself with the ability to provide differentiate products in
the crowded market of saving accounts. Bank offers free insurance, special
co-branded debit cards which makes its product unique.

97

Limitations of the study

The study was limited only Mathura city Hence findings may be differ from
other part of country.
Many formalities and requirements during process of taking personal loan.
Many times respondents were so busy that they didnt t give reply. There
were biased replies also.

98

BIBLIOGRAPHY

1. MAGAZINE

Business world
Business today
2. NEWSPAPER

Economic times
Times of India
The Hindu

3. WEBSITES

www.hdfcbank.com
http://www.hdfcbank.com/nri_banking/money_transfer/MiddleEast/IndiaLi

nk/IndiaLink.htm
http://www.hdfcbank.com/wholesale/fit/financial_institutions/indialink/Indi
aLink.htm
http://www.hdfcbank.com/personal/ways-to-bank/bank-online/loanaccounts-online
www.sbibank.com

https://www.sbi.co.in/portal/web/personal-banking/personal-loans

https://www.sbi.co.in/portal/web/personal-banking/personal-finance

Knowledge through T.V:Watched Ads of Both the Banks, they helped us in Knowing about the banks &
99

raised our interest in the topic. This Ads were the first source of information
about the banks. They helped in choosing the topic.

Television

NDTV PROFIT

ZEE BUSINESS

TIMES NOW

IBN7

100

Questionnaire
Name:
Sex: Male [ ]

Female [ ]

Q1. Which group age do you belong?

a. Less 18-25

b. 25-35

c. 25-45

d. 45-above.

Q2. Which occupation do you belong?

a. Student

b. Business

c. Serviceman

d.

other
Q3. What kind of loan you have taken?
a. Corporate Loan
d.

b. Personal Loan

Educational Loan

c. Car Loan

e. Home Loan

f. other Loan

Q4. From which bank have you taken loan?

a. HDFC

b. SBI

c. other

Q5. If you have multiple loan which type of loan do you prefer most?
a. Corporate Loan
d.

b. Personal Loan

Educational Loan

c. Car Loan

e. Home Loan

Q6. How much time do you get as grace period?

a. One week
d.

20 Days

b. 10 Days

c. 15 Days

e. More than 20 days

Q7 Do you want your bank to give more time grace period?

a. Yes

b. No

101

f. other Loan

Q8. How much time does your bank take to sanction loan?
a. One week

b. 10 Days

d.

e. More than 20 days

20 Days

c. 15 Days

Q9. Do you understand different terminologies of loan?

a. Yes

b. No

Q10. What attributes do you judge while taking?

Attributes

1 Update Information
2 Smooth service
3 Object Handling
4 Office Auto
5 Location
6 Customization
7 EMI
7 Skilled Employee
8 Brand

102