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HDFC Bank 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 from Housing Development
Finance Corporation Limited (HDFC), in 1994 during the period of liberalisation of the
banking sector in India. HDFC India was incorporated in August 1994 in the name of
'HDFC Bank Limited'. HDFC India commenced operations as a Scheduled Commercial
Bank in January 1995.

HDFC India deals in varieties of products like home loan, standard life insurance, mutual
fund, securities, credit cards, etc. HDFC has branch offices in all major cities in India like
Calcutta, Chennai, Delhi, Bangalore, Hyderabad, Ahmedabad apart from HDFC Mumbai.

[...] HDFC Securities HDFC securities Invest Right HDFC Securities Ltd. is promoted by
the HDFC Bank, HDFC and Chase capital are capital partners and their associates.
Pioneers in Setting up Dial-a- share services with the largest team of Tele-brokers. Online
Account Type HDFC Online Trading A/c: Plain vanilla A/c with focus on 3 in 1
advantage. Pricing of HDFC Account Account Opening: Rs 799/- Demat: NIL, 1st Year
charges included in account opening. Initial Margin: Rs5000/- for non HDFC Bank
customers Brokerage: |Segment |Exchange |Delivery |Intraday | |Cash |NSE and BSE |
0.50% |0.10% | |Derivatives |NSE |0.10% |0.10% | Deal Clinchers V/s HDFC Securities
Poor online Interface Apart from having no product to cater to Day – traders, the
hdfcsec.com website is plugged with downtime. [...]

Money Matters Financial Services Ltd is a BSE Listed non deposit taking NBFC
primarily focused in the business of financial advisory services (debt syndication) and
trading in debt securities. The company is engaged in businesses such as credit
syndication, securities brokerage, lending and proprietary bond trading besides equity
market advisory services. They are also the holding company for Merchant Banking &
Broking Businesses housed in their subsidiaries. The company conducts their operations
along with their subsidiary companies. They have four subsidiaries namely, Money
Matters Securities Pvt Ltd, Money Matters Investment Advisors Pvt Ltd, Money Matters
Distribution Company Pvt Ltd and Money Matters Capital Pvt Ltd. Money Matters
Financial Services Ltd was originally incorporated on November 1994 with the name
Daiwa Securities Ltd. In May 19, 1999, the name of the company was changed from
Daiwa Securities Ltd to Dover Securities Ltd. In April 2007, Rajesh Sharma and Money
Matters (India) Pvt Ltd (Promoter Group Company) acquired majority stake in the
company through a share purchase agreement. Thus, the new management took over the
control of the company. During the year 2007-08, the company acquired 100% equity
share capital of Money Matters Securities Pvt Ltd, a promoter group company which is
engaged in stock broking business. Thus, Money Matters Securities Pvt Ltd became a
wholly owned subsidiary of the company with effect from March 28, 2008. During the
year 2008-09, the company established Debt Trading Desk with a line of credit from
Bank of India. Also, they Established client relationships with premier business houses in
the country. In October 6, 2008, the name of the company was changed from Dover
Securities Ltd to Money Matters Financial Services Ltd. In April 15, 2008, the company
promoted a new company Money Matters Investment Advisors Pvt Ltd as their wholly
owned subsidiary. In November 18, 2008, they incorporated Money Matters Distribution
Company Pvt Ltd for carrying on the business of distribution of Insurance and Mutual
Fund products. In August 11, 2009, the company incorporated Money Matters Capital
Pvt Ltd for carrying on the business of financing, money lending, bill discounting,
factoring corporate lending and other types of lending activities with or without
securities. In December 2009, the company entered into shareholders agreement and
formed an equal equity joint venture with Milestone Capital Advisors Pvt Ltd under the
name Capstone Capital Services Pvt Ltd for rendering investment advisory services to an
investment fund.

HDFC Bank Ltd is a major Indian financial services company based in Mumbai. The
Bank is a publicly held banking company engaged in providing a wide range of banking
and financial services including commercial banking and treasury operations. The Bank
at present has an enviable network of 1,725 branches spread in 780 cities across India.
They also have one overseas branch in Bahrain and two representative offices in UAE
and Kenya. The Bank has two subsidiary companies, namely HDFC Securities Ltd and
HDB Financial Services Ltd. The Bank has three primary business segments, namely
banking, wholesale banking and treasury. The retail banking segment serves retail
customers through a branch network and other delivery channels. This segment raises
deposits from customers and makes loans and provides other services with the help of
specialist product groups to such customers. The wholesale banking segment provides
loans, non-fund facilities and transaction services to corporate, public sector units,
government bodies, financial institutions and medium-scale enterprises. The treasury
segment includes net interest earnings on investments portfolio of the Bank. The 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. The
Bank`s shares are listed on the Bombay Stock Exchange Limited and The National Stock
Exchange of India Ltd. The Bank`s American Depository Shares (ADS) are listed on the
New York Stock Exchange (NYSE) and the Bank`s Global Depository Receipts (GDRs)
are listed on Luxembourg Stock Exchange. HDFC Bank Ltd Was incorporated on August
30, 1994 by Housing Development Finance Corporation Ltd. In the year 1994, Housing
Development Finance Corporation Ltd was amongst the first to receive an `in principle`
approval from the Reserve Bank of India to set up a bank in the private sector, as part of
the RBI`s liberalization of the Indian Banking Industry. HDFC Bank commenced
operations as a Scheduled Commercial Bank in January 1995. In the year 1996, the Bank
was appointed as the clearing bank by the NSCCL. In the year 1997, the launched retail
investment advisory services. In the year 1998, they launched their first retail lending
product, Loans against Shares. In the year 1999, the Bank launched online, real-time
NetBanking. In February 2000, Times Bank Ltd, owned by Bennett, Coleman & Co. /
Times Group amalgamated with the Bank Ltd. This was the first merger of two private
banks in India. The Bank was the first Bank to launch an International Debit Card in
association with VISA (Visa Electron). In the year 2001, they started their Credit Card
business. Also, they became the first private sector bank to be authorized by the Central
Board of Direct Taxes (CBDT) as well as the RBI to accept direct taxes. During the year,
the Bank made a strategic tie-up with a Bangalore-based business solutions software
developer, Tally Solutions Pvt Ltd for developing and offering products and services
facilitating on-line accounting and banking services to SMEs. During the year 2001-02
the bank was listed on the New York Stock Exchange. Also, they made the alliance with
LIC for providing online payment of insurance premium to the customers. During the
year 2002-03, the Bank increased the number of branches from 171 Nos to 231 Nos and
the size of the Bank`s ATM network expanded from 479 Nos to 732 Nos. They also
expanded their presence in the `merchant acquiring` business. During the year 2003-04,
the Bank expanded the distribution network with the number of branches increased from
231 Nos to 312 Nos and the size of the Bank`s ATM network increased from 732 Nos to
910 Nos. In September 2003, they entered the housing loan business through an
arrangement with HDFC Ltd, whereby they sell HDFC Home Loan product. During the
year 2004-05, the Bank expanded the distribution network with the number of branches
increased from 312 Nos to 467 Nos and the size of the Bank`s ATM network increased
from 910 Nos to 1147 Nos. During the year 2005-06, the Bank launched the `no-frills
account`, a basic savings account offering to the customer. Also, the distribution network
was expanded with the number of branches increased from 467 Nos (in 211 cities) to 535
Nos (in 228 cities) and the number of ATMs from 1147 Nos to 1323 Nos. During the
year 2006-07, the distribution network was expanded with the number of branches
increased from 535 Nos (in 228 cities) to 684 Nos (in 316 cities) and the number of
ATMs from 1323 Nos to 1605 Nos. They commenced direct lending to Self Help Groups.
Also, they opened a dedicated branch for lending to SHGs, in Thudiyalur village (Tamil
Nadu). In September 28, 2005, the Bank increased their stake in HDFC Securities Ltd
from 29.5% to 55%. Consequently, HDFC Securities Ltd became a subsidiary of the
Bank. During the year 2007-08, the Bank added 77 Nos new branches take the total to
761 Nos branches. Also, 372 Nos new ATMs were also added taking the size of the ATM
network from 1605 Nos to 1977 Nos. HDB Financial Services Ltd became a subsidiary
company with effect from August 31, 2007. In June 2, 2007, the Bank opened 19
branches in a day in Delhi and the National Capital Region (NCR). During the year 2008-
09, the Bank expanded their distribution network from 761 branches in 327 cities to
1,412 branches in 528 Indian cities. The Bank`s ATMs increased from 1,977 to 3,295
during the year. As per the scheme of amalgamation, Centurion Bank of Punjab Ltd was
amalgamated with the Bank with effect from May 23, 2008. The appointed date for the
merger was April 01, 2008. In October 2008, the bank opened their first overseas
commercial branch in Bahrain. The branch offers the bank`s suite of banking services
including treasury and trade finance products for corporate clients and wealth
management products for Non-resident Indians. During the year 2009-10, the Bank
expanded their distribution network from 1,412 branches in 528 cities to 1,725 branches
in 779 cities. The Bank`s ATMs increased from 3,295 Nos to 4,232 Nos during the year.
As on June 30, 2010, the total number of branches (including extension counters) and the
ATM network stood at 1725 branches and 4393 ATMs respectively.

Coming To Terms With Risk

investing requires us to choose between eating well and sleeping well. If you want to eat
well, be ready to take on the risks involved in seeking higher returns. If sleeping well is
what you are more concerned about, be ready to give up higher returns in exchange. But
in either case defining risk only in terms of the probability of losing money is not enough.
Risk comes from various sources, so it is important to understand the different types of
risks that come to the fore while picking an investment.

Business risk :

It is the variability of a company's earnings before interest and taxes (EBIT). It is a

combination of the following: one, change in demand. If demand for a product/service is
not stable or predictable, its revenue won't be stable or predictable either. Next is the
company's ability to increase prices or absorb cost increases, which is crucial to sustain
profitability. Companies differentiating their products through branding are better
equipped to pass on cost increases and earn above average profits. Third, if fixed costs
are a substantial portion of total costs, business risk is definitely higher (unless such a
cost also creates a strong entry barrier) since a company's earnings then are more
susceptible to variations in demand and prices.

Credit risk :

Applicable to holders of debentures, it is defined as the ability of a company to pay the

promised interest on fixed-income instruments and return the principal on maturity.
Rating agencies such as Crisil, Icra, Care and Fitch evaluate and rate fixed-instruments of
all types to help investors understand the extent of credit risk. The quality of an
instrument is better if its rating is higher. A lower quality bond generally pays a higher
interest to compensate investors for greater credit risk. So when a company promises
higher rate of interest, remember it does so to attract investors (and not because it can
afford a higher rate of interest).

Exchange rate risk :

This is the risk arising from changes in exchange rate of the rupee versus the US dollar or
any other currency. Profits of companies who import a relatively large part of their raw
material are at risk if they are not able to fully pass on cost increases when the rupee
depreciates. A weakness in the rupee also prompts foreign investors to withdraw from the
stock market by selling their shares and converting those rupees into dollars. While they
may re-enter at lower levels, that stock indices tumble in the short-term is a big risk for
the domestic investor.

Financial risk :

Interest being tax-deductible, equity shareholders welcome debt to the extent it enhances
their returns. But beyond a point, they are exposed to the risk arising from a high level of
fixed commitments. This describes financial risk. It arises when debt represents a higher
proportion of a company's capital structure (comprises net worth and debt).

Industry risk :

It is the risk applicable to an industry. A large scale shift in demand, a rise in input prices,
regulatory changes are typical factors that would signify such a risk. For example, a shift
in demand for generic medicines compared to innovator drugs would pose a big threat to
big pharmaceutical majors globally. Or, a shift in trucks from single-axle trucks to multi-
axle trucks will pose a major threat to companies unable to produce the new type of

Inflation risk :

Inflation can hit a company's profits if it is unable to pass on higher costs to consumers.
This trouble is often faced by large manufacturing concerns and public sector units
through wage hikes that occur due to inflation. They are not easy to pass on. Even if
inflation eases, wage hikes can rarely be rolled back. Worse, inflation can inflate
corporate profits through overvaluation of closing inventory. When a company uses the
FIFO (first in, first out; where the material that is issued first is priced on the basis of the
cost of material received earliest) method to value inventory the charge to production is
low in a period of rising prices. This can inflate reported earnings, increase tax burdens
and may prompt a higher dividend---consequently the company is financially weaker.

Interest rate risk :

Since they come with a fixed return, bond values fluctuate with changes in interest rates.
When interest rates rise, the value of an existing debenture goes down, as it is paying a
lower rate than what investors could earn elsewhere. When interest rates fall, the value of
a debenture rises as they are now earning a higher rate than what investors could earn
from one that is newly issued. The longer the maturity of a bond, the greater is its
vulnerability to an interest rate risk.

Management risk :

It is simply defined as the inability of the management to take decisions in the larger
good of its minority shareholders and the company. All decisions that benefit only a
company's directors and its promoters would classify as a management risk. But even a
shareholder-friendly management can be a risk if it is unable to manage a company's
growth in both good and bad times or if it lacks the dynamism needed to lead a company.

Market/Economy risk :
Risks that are common across companies are known as market/economy risk: economy-
wide factors like money supply, level of government borrowings, changes in industrial
policy, a global recession and so on. It is also known as non-diversifiable risk, since
investors cannot avoid the risk arising from them, however diversified their portfolios
may be.