CHAPTER -1 PROFILE OF THE COMPANY

INTRODUCTION What is a bank? Bank is defined as an institution for the keeping, landing and exchanging etc. of money. Economists have also defined a bank highlighting its various functions. According to Crowther, the banker business is to take the debt of other people to offer his own in exchange and thereby create money. Thus a bank is an institution that accepts deposits from the public in turn advances loans by creating credit. It is different from other financial institutions in that they cannot create credit though they may be accepting deposits and making advances. TYPES OF BANKS: Commercial banks are those banks which perform all kinds of banking functional such as accepting deposits, advancing loan, and recreation and agency functions. They are also called joint stock banks as they are organized in the same manner as joint stock companies. They usually advance short term loans to customers some of commercial banks in India are Andhra Bank, Canara Bank, Indian Bank, PNB etc. Exchange banks are those banks, which deal in foreign exchange and specialize in financing trade. They are called foreign exchange banks. In India these exchange banks have their head offices located outside India. These banks also render other services such as collecting and supplying information about the foreign customers providing remittance facilities etc. such as chartered bank, Gridlays bank.

Industrial banks are those banks, which provide medium term and long-term finance for industries for the purchase of land, machinery, etc. They underwrite the debenture and shares of industries and also subscribe to them such as industrial development bank of India, industrial finance corporation of India etc. Agricultural banks are those banks, which provide cr. To farmers for short term, medium term and long term needs. In India, commercial banks, regional rural banks and agricultural co-operative banks provide short-term loans to farmers. Such as national bank for agriculture and rural development, NABARD. Cooperative banks are those financial institutions, which are organized on the principle of cooperation. They provide short term, medium term loans to their members. In rural area there are agriculture cooperative banks, which are also cooperative banks, which perform the function of ordinary commercial banks but give loan to their members only. They also get funds from the RBI. There is a state cooperative bank in every state of India with its branches at the district level known as the central cooperative banks. Saving banks help promote small saving and mobilize them. They have been very successful in Japan and Germany. In India post office act as saving bank. Central banks is the apex bank, in a country, which controls its monetary, and banking structure. It is owned by the govt. of the country and operates in national interest. It regulates and issues currency, performs banking and a agency services for the state, keeps cash reserves of commercial banks, keeps and manages international currency, act as the lender of the last resort, acts as the clearing house and controls of credit. The RBI is the central bank in India.

CLASSIFCATION OF BANK

Reserve Bank of India

Scheduled Banks

Non Scheduled Banks

State Co-op-Banks

Commercial Banks

Indian Banks

Foreign Banks

Public sector Banks

Private sector Banks

Private sector Banks

SBI & its Subordinates

Nationalized

Regional Rural

Bank

Banks
Figure 1

Banking system The banking system is an integral sub-system of the financial system. It represents an important channel of collecting small saving from the households and lending it to the corporate sector. The Indian banking system has the RBI as the apex body for all matters relating to the banking system. It is the central bank of India. It is the bankers to all other banks. Functions of RBI: 1. Currency issuing authority. 2. Banker to the government. 3. Banker to other banks. 4. Framing of monetary policy. 5. Exchange control. 6. Custodian to foreign exchange and gold reserves. 7. Development activities. 8. Research and development in the banking sector.

Major Banks in India

ABN-AMRO Bank Abu Dhabi Commercial Bank American Express Bank Andhra Bank Allahabad Bank Bank of Baroda Bank of India Bank of Maharashtra Bank of Punjab Bank of Rajasthan Canara Bank Central Bank of India Centurion Bank China Trust Commercial Bank Citi Bank Corporation Bank Dena Bank

Indian Overseas Bank IndusInd Bank ING Vysya Bank Jammu & Kashmir Bank Karnataka Bank Karur Vysya Bank Laxmi Vilas Bank Oriental Bank of Commerce Punjab National Bank Punjab & Sind Bank South Indian Bank Standard Chartered Bank State Bank of India (SBI) State Bank of Bikaner & Jaipur State Bank of Hyderabad State Bank of Indore State Bank of Mysore

Deutsche Bank Development Credit Bank Dhanalakshmi Bank Federal Bank HDFC Bank HSBC ICICI Bank IDBI Bank Indian Bank

State Bank of Saurastra State Bank of Travancore Syndicate Bank UCO Bank Union Bank of India United Bank of India United Bank Of India UTI Bank Figure 2

CLASSIFICATION OF BANKS:

1. Non scheduled Banks: These are banks which are not included in the second schedule of the Banking Regulation Act, 196. It means they do not satisfy the conditions laid down by that schedule. They are further classified as follows: Central Co-operative Banks & Primary Credit Societies. Commercial Banks

2. Scheduled Banks: Scheduled Banks are banks which are included in the second schedule of the Banking Regulation Act, 1965.According to this schedule a scheduled bank. Must have paid up capital reserve of not less than Rs. 5, 00,000/Must also satisfy the RBI that its affairs are not conducted in a manner detrimental to the interest of its depositors. Scheduled banks are sub divided as: 1. State co-operative Banks: These are co-operative owned and managed by the state. 2. Commercial banks. These are business entities whose main business is accepting deposits and loans. Their main objective is profit maximization and adding shareholder value. extending

Scheduled Banks in India (A) Scheduled Commercial Banks

Public Banks (27)

sector Private sector Banks Foreign Banks in Regional (29) Old Banks Public New Banks Private Private India (31) Bank (133)

Rural

Nationalized Bank

Other

Sector Banks (IDBI) SBI and its

Associates Table 1 (B) Scheduled Cooperative Banks

Scheduled Urban Cooperative Banks (55)

Scheduled State Cooperative Banks (31) Table 2

Type

Public (BSE: 500180, NYSE: HDB) Banking and Financial services August 1994 Deepak Parekh Mumbai, India

Industry Founded Founder(s) Headquarters Key people

Jagdish Kapoor (Chairman) Aditya Puri (MD)

Products

Investment Banking Commercial Banking Retail Banking Private Banking Asset Management Mortgages Credit Cards

Revenue

20,266.99 crores (US$4.48 billion)

10

Operating income Profit Total assets Total equity Employees Website

4,419.01 crores (US$976.6 million) 3,032.92 crores (US$670.28 million) US$ 39.723 billion 21,158.15 crores (US$4.68 billion) 51,888 (2010) HDFCBank.com Figure 3

11

BACKGROUND HDFC Bank Ltd. is major Indian financial services company based in Mumbai, incorporated in August 1994, after the Reserve Bank of India allowed establishing private sector banks. The Bank was promoted by the Housing Development Finance Corporation, a premier housing finance company (set up in 1977) of India. HDFC Bank has 1,725 branches and over 4,232 ATMs, in 779 cities in India, and all branches of the bank are linked on an online real-time basis. The Bank started operations as a scheduled commercial bank in January 1995 under the RBI's liberalization policies. Times Bank Limited (owned by Bennett, Coleman & Co. / Times Group) was merged with HDFC Bank Ltd., in 2000. This was the first merger of two private banks in India. Shareholders of Times Bank received 1 share of HDFC Bank for every 5.75 shares of Times Bank. In 2008 HDFC Bank acquired Centurion Bank of Punjab taking its total branches to more than 1,000.

12

Board of Directors

The Composition of the Board of Directors of the Bank is governed by the Companies Act, 1956, the Banking Regulation Act, 1949 and the listing requirements of the Indian Stock Exchanges where the securities issued by the Bank are listed. The Board has strength of ten (10) Directors as on March 31, 2011.

All Directors other than Mr. Aditya Puri, Mr. Harish Engineer and Mr. Paresh Sukthankar are non-executive directors. The Bank has six independent directors and four nonindependent directors. The Board consists of eminent persons with considerable professional expertise and experience in banking, finance, agriculture, small scale industries and other related fields.

None of the Directors on the Board is a member of more than ten (10) Committees and Chairman of more than five (5) Committees across all the companies in which he/she is a Director. All the Directors have made necessary disclosures regarding Committee positions occupied by them in other companies.

13

1. Mrs. Renu Karnad, Mr. Aditya Puri, Mr. Harish Engineer and Mr. Paresh Sukthankar are non-independent Directors on the Board. 2. Mr. C. M. Vasudev, Mr. Ashim Samanta, Dr. Pandit Palande, Mr. Partho Datta, Mr. Bobby Parikh and Mr. A. N. Roy are independent directors on the Board. 3. Mrs. Renu Karnad represents HDFC Limited on the Board of the Bank. 4. The Bank has not entered into any materially significant transactions during the year, which could have a potential conflict of interest between the Bank and its promoters, directors, management and/or their relatives, etc. other than the transactions entered into in the normal course of business. The members of the Senior Management team have made disclosures to the Board confirming that there are no material, financial and/or commercial transactions between them and the Bank which could have potential conflict of interest with the Bank at large. 5. None of the directors are related to each other. Table 3

DISTRIBUTION NETWORK

14

The Bank of present has an enviable network of over 241 branches spread over 129 cities all across the country. All branches are linked on an online real time basis. Customers in 39 locations are also serviced through Telephone Banking. The Banks expansion plans take into account the need to have a presence in all major industrial and commercial centres where its corporate customers are located as well as the need to build a strong retail customer base. Being a clearing/settlement bank to various leading stock exchanges, the Bank has branches in the centres where the NSE/BSE has a strong and active member base. The Bank also has a network of almost over 775 networked ATMs across these cities. Moreover, HDFC Banks ATM network can be accessed by all domestic and international Visa/Master Card, Visa Electron/Maestro,

CAPITAL STRUCTURE

15

The authorized capital of HDFC Bank is Rs. 450 crores. The paid up capital is Rs. 281.2 crores. The HDFC Group holds 24.5% of the banks equity while about 13.3% of the equity is held by the depository in respect often banks issue of American Depository Shares (ADS/ADR Issue). The Indian Private Equity Fund, Mauritius (IPEF) and Indocean Financial Holdings Ltd., Mauritius (IFHL) (both funds advised by JP Morgan Partners, formerly Chase Capital Partners) together hold about 11.6% of the banks equity. Roughly 18% of the equity is held by FIIs, NRIs/OCBs while the balance is widely held by about 300,000 shareholders. The shares are listed on the Stock Exchange, Mumbai and the National Stock Exchange. The Banks American Depository Shares are listed on the New York Stock Exchange under the symbol HDB. 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

MISSION AND VISION:

16

HDFC Bank is a young and dynamic bank, with a youthful and enthusiastic team determined to accomplish the vision of becoming a world-class Indian bank benchmarking ourselves against international standards and best practices in terms of product offerings, technology, service levels, risk management and build sound customer franchises across distinct businesses so as to be a preferred provider of banking services for target retail and wholesale customer segments and to achieve a healthy growth in profitability, consistent with the Banks risk appetite.

Business strategy emphasizes the followings: Increase our market share in Indias expanding banking and financial services industry by following a disciplined growth strategy 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 cost; Maintain our current high standards for asset quality through discipline credit risk management Develop innovative products and services that attract our targeted customers and address inefficiencies in the Indian financial sector; Continue to develop products and services that reduce our cost of funds; and Focus on high earnings growth with low volatility.

AWARDS AND ACCOLADES

17

HDFC Bank began operations in 1995 with a simple mission: to be a World Class Indian Bank.

We realized that only a single minded focus on product quality and services excellence would help us get there. Today, we are proud to say that we are well on our way towards that goal.

It is extremely gratifying that our efforts towards providing customer convenience have been recognized both nationally and internationally. In the year 2000, leading financial magazine Forbes Global named us it list of The 300 Best Small Companies in the world and as one of the 20 for 2001 best small companies in the world. There have been some other proud moments as well.

London Based Euro money magazine gave us the award for Best Bank India in 1999, Best Domestic Bank in India in 2000, and Best Bank in India in 2001 and 2002. Hong Kong based Finance Asia Magazine rated us Best Domestic Commercial Bank in India in 1999, 2000 and 2001 respectively and Best Local Bank in India in 2002. Asia money magazine has named us Best Commercial Bank in India 2002. The Economic Times has conferred on us The Economic Times Awards for Corporate Excellence as the Emerging Company of the Year 2000-01.

18

 Leading Indian business magazines Business India named us Indias Best Bank in 2000. Another leading Indian business magazine Business Today in a survey rated us Best Private Sector Bank in India in 1999. For our use of information technology we have been recognized as a Computer world Honors Laureate and awarded the 21st Century Achievement Award in 2002 for Finance, Insurance & Real Estate category by Computerworld, Inc., USA. Our technology initiative has been included as a case study in their online global achieves.

NASSCOM and economic times.com has named us the Best IT User in Banking at the IT Users Awards 2003. We are aware that all these awards are mere milestones in the continuing, never ending journey of providing excellent service tour customers. We are confident, however, that with your feedback and support, we will be able to maintain and improve our services.

PRODUCT RANGE

19

Savings, Fixed Deposits, Current and Demat Accounts Savings Accounts: Apart from the usual facilities, you get a free ATM Card, Interbranch banking, Net Banking, Bill pay, Phone Banking, Debit Card and Mobile Banking, among others.

HDFC BANK PREFERRED A preferential Savings Account where you are assigned a dedicated Relationship Manager, who is your one point contact. You also get privileges like fee waivers, enhanced ATM withdrawal limit, priority locker allotment, free Demat Account and lower interest rates on loans, to name a Sweep-In Account: A fixed deposit linked to your Savings Account. So, even your Savings Account runs a bit short, you can issue a cheque (or use your ATM Card). The money is automatically swept in from your fixed deposit into your Savings Account.

SUPER SAVER ACCOUNT

Gives you an overdraft facility up to 75% of your Fixed Deposit. In an emergency, you can access your funds while your Fixed Deposit continues to earn high interest.

PRODUCTS AND SERVICES AT A GLANCE

20

ACCOUNTS DEPOSITS

&

LOANS

INVESTMENTS INSURANCE

&

- Regular Savings Account - Savings Plus Account - Savings Max Account - Senior Citizens Account - No Frills Account - Salary Account - Kid's Advantage Account Pension Saving

- Personal Loans - Home Loans - Two Wheeler Loans - New Car Loans - Used Car Loans - Overdraft against Car - Express Loans

- Mutual Funds - Tax Planning - Insurance - Bonds - Financial Planning - Knowledge Centre - Equities & Derivatives - Mudra Gold Bar - Mudra silver Bar

Bank - Loan against Securities - Loan against Property -Loan against Rental

Account - Family Savings Account - Plus Current Account - Trade Current Account - Premium Current Account - Regular Current Account - Apex Current Account - Max Current Account -Merchant Current Account - Regular Fixed Deposit -Recurring Deposits. - Super Saver Account

Receivables -Health care finance -Tractor Loans Commercial CARDS - Credit cards Vehicle - Debit cards - Prepaid cards

Finance - Working Capital Finance - Construction Equipment Finance

21

- Sweep-in Account

FOREX SERVICES

PAYMENT SERVICES

ACCESS

YOUR

ACCOUNT THROUGH - Product & Services - Trade services Forex service - Net Safe - Prepaid Refill Branch - Bill Pay - Direct Pay - Visa Money Transfer E-Monies -Net Banking -Credit card Online -One View -Insta Alert -Mobile Banking

Locator - Forex Limits - Forex Plus Card - RBI Guidelines

Electronic -ATM -Phone Banking

Funds Transfer

- Excise & Service Tax -Email Statements Payment ` Table 4

HDFC BANK PLUS

22

Apart from Regular and Premium Current accounts we also have HDFC Bank Plus, a Current Account and then some more. You can transfer up to Rs. 50 lakhs per month at no extra charge, between the four metros. You can also avail of cheque clearing between the four metros, get cash delivery/pickup upto Rs. 25,000/- home delivery of Demand Drafts, at par cheques, outstation cheque clearance facility, etc. DEMAT ACCOUNT Conduct hassle free transactions on your shares. You can also access your Demat Account on the Internet. PHONE BANKING 24 hour automated banking services with 39 Phone Banking numbers available. ATM 24 hour banking: Apart from routine transactions, you can also pay your utility bills and transfer funds, at any of our ATMs across the country all year round. INTERCITY/ INTERBRANCH BANKING Access your account from any of our 241 branches in 129 cities. NET BANKING Access your bank account from anywhere in the world, at anytime, at your own convenience. You can also view your Demat Account through Net Banking. INTERNATIONAL DEBIT CARD An ATM card you can shop with all over the country and in over 140 countries with. You can spend in any currency, and pay in Rupees.

MOBILE BANKING

23

Access your account on your mobile phone screen at no airtime cost. Use SMS technology to conduct your banking transactions from your cell phone. BILL PAY Pay your telephone, electricity and mobile phone bills through our ATM, Internet, Phone or mobile phone. No more standing in long queues or writing cheques.

LOANS: PERSONAL LOANS Take a loan of up to Rs. 3 lakhs for a wedding, education, purchase of a computer or an exciting holiday. NEW CAR LOANS AND USED CAR LOANS Finance up to 90% of the cost of car, new or used! And the loans come to you with easy documentation and speedy processing at attractive interest rates. LOANS AGAINST SHARES Get an overdraft up to Rs. 10 lakhs at an attractive interest rate against physical shares, up to 50% of the market value of your shares. In case of Demat Shares, you can get a Loans against Shares of up to 65% of the market value of your shares, till Rs. 20 lakh.

SOME BRANCHES IN DELHI with their IFSC code

24

Area Address ATM Lockers IFSC Code Area Address ATM Lockers IFSC Code Area Address ATM Lockers IFSC Code Area Address ATM Lockers IFSC Code Area Address ATM Lockers IFSC Code Area Address ATM Lockers IFSC Code

Anand Vihar A38 Anand Vihar New Delhi - 110092 YES YES HDFC0001668 Ashok Vihar B - 3 / 2 Ashok Vihar Phase 2 New Delhi - 110052 YES YES HDFC0000287 Barakhamba Road GF - 1, O & H, DCM Building New Delhi - 110001 YES NA HDFC0000708 Chandni Chowk 1907 Chandni Chowk opposite Sish Ganj Gurudwara, Main Road New Delhi - 110006 YES YES HDFC0000553 Chattarpur Khasra No. 619 / 21, Chattarpur, New Delhi - 110074 YES YES HDFC0001669 Chawri Bazaar 73 - 75, 60 / 1, Chawri Bazaar New Delhi - 110006 YES YES HDFC0001070

Area Address

Chittranjan Park B105 Chittranjan Park New Delhi - 110019

25

ATM Lockers IFSC Code Area Address ATM Lockers IFSC Code Area Address ATM Lockers IFSC Code Area Address ATM Lockers IFSC Code Area Address ATM Lockers IFSC Code Area Address ATM Lockers IFSC Code

YES YES HDFC0000934 Connaught Circus, Delhi N 47 Connaught Circus New Delhi - 110001 YES NA HDFC0001401 Connaught Place H 69 Outer Circle Connaught Place New Delhi - 110001 YES YES HDFC0000313 Defence Colony D - 23, Defence Colony New Delhi - 110024 YES YES HDFC0000134 Dwarka Aggarwal Central Plaza, Plot No. 11, Sector 5, Dwarka, DDA Market, New Delhi - 110075 YES YES HDFC0000249 Green Park H - 7, Green Park Extension New Delhi - 110016 YES YES HDFC0000586

26

Area Address ATM Lockers IFSC Code Area Address ATM Lockers IFSC Code Area Address ATM Lockers IFSC Code Area Address ATM Lockers IFSC Code

Kamla Nagar D 147 Kamla Nagar New Delhi - 110007 YES YES HDFC0001439 Lajpat Nagar A - 9, Ring Road Lajpat Nagar New Delhi - 110024 YES YES HDFC0000294 Lajpat Nagar 2 B 36 Near Samar Hyundai Lajpat Nagar - II New Delhi - 110024 YES YES HDFC0001557 Pahar Ganj Shop No. Ag - 1 to Ag - 8 & Ag - 20 & Ag - 21 R. G. Complex, Plot No. 2, Community Center Motia Khan Pahar Ganj New Delhi 110055 YES YES HDFC0000457 Table 5

TRUSTS

27

HDFCs trust services provide you with the dual advantages of a secure depository and efficient administration of your securities. Its solutions help you maximize returns, meet fiduciary responsibilities, and improve operational efficiency. Knowing that its clients needs are complex and varies, it leverage its extensive expertise and experience to provide you with a customized set of benefit and investment services that work best in assisting its employee benefits program. And whats more, since HDFC takes on custodian services for all types of securities, you can protect your securities from loss, theft, damage or destruction. In addition to the benefits of a securities account, you can also take advantage of its other services such as professional investment advice as well as banking products. You will receive important information concerning changes in RBI policy and auctions in timely fashion. Based on your instructions, it will bid for your in RBI auctions, settle your purchase or sale transactions, and convert your securities from physical to dematerialized mode. All the work involved in handling securities transactions is taken care of. Incoming credits will be immediately deposited to your account and you receive regular statement of interest, redemption and payments. You can also request at a predefined interval a custody account or account statement showing clearly the accounts current holdings. Its Phone Banking facility enables you to stay informed about your account around the clock.

28

CHAPTER 2 SWOT ANALYSIS OF THE COMPANY

29

S.W.O.T ANALYSIS OF HDFC BANK

STRENGTHS: 1. Right strategy for the right products. 2. Superior customer service vs. competitors. 3. Great Brand Image. 4. Products have required accreditation. 5. High degree of customer satisfaction. 6. Good place to work 7. Lower response time with efficient and effective service. 8. Dedicated workforce aiming at making a long-term career in the field.

WEAKNESS: 1. Some gaps in range for certain sectors. 2. Customer service staff needs training. 3. Processes and systems, etc 4. Management cover insufficient. 5. Sectoral growth is constrained by low unemployment levels and competition for staff

30

OPPORTUNITIES:

1. Profit margins will be good. 2. Could extend to overseas broadly. 3. New specialist applications. 4. Could seek better customer deals. 5. Fast-track career development opportunities on an industry-wide basis. 6. An applied research center to create opportunities for developing techniques to provide added-value services.

THREATS: -

1. Legislation could impact. 2. Great risk involved 3. Very high competition prevailing in the industry. 4. Vulnerable to reactive attack by major competitors. 5. Lack of infrastructure in rural areas could constrain investment. 6. High volume/low cost market is intensely competitive.

31

CHAPTER 3 ANALYSIS OF FINANCIAL REPORTS OF THE COMPANY

32

BALANCE SHEET OF HDFC BANK

Mar '11

Mar '10

Mar '09 12 months

Mar '08 12 months

Mar '07 12 months

12 months 12 months Capital and Liabilities: Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Net Worth Deposits Borrowings Total Debt Other Liabilities & Provisions Total Liabilities 465.23 465.23 0.00 0.00 24,914.04 0.00 25,379.27 14,394.06 28,992.86 457.74 457.74 0.00 0.00 21,064.75 0.00 21,522.49 12,915.69 20,615.94

425.38 425.38 400.92 0.00 14,226.43 0.00 15,052.73 142,811.58 2,685.84 145,497.42 22,720.62 183,270.77 Mar '09 12 months 13,527.21 3,979.41 98,883.05 58,817.55 3,956.63 2,249.90 1,706.73 0.00 6,356.83 183,270.78 396,594.31 17,939.62 344.44

354.43 354.43 0.00 0.00 11,142.80 0.00 11,497.23 100,768.60 4,478.86 105,247.46 16,431.91 133,176.60 Mar '08 12 months 12,553.18 2,225.16 63,426.90 49,393.54 2,386.99 1,211.86 1,175.13 0.00 4,402.69 133,176.60 582,835.94 17,092.85 324.38

319.39 319.39 0.00 0.00 6,113.76 0.00 6,433.15 68,297.94 2,815.39 71,113.33 13,689.13 91,235.61 Mar '07 12 months 5,182.48 3,971.40 46,944.78 30,564.80 1,917.56 950.89 966.67 0.00 3,605.48 91,235.61 202,126.73 7,211.88 201.42

208,586.41 167,404.44 222,980.47 180,320.13

277,352.60 222,458.56 Mar '11 Mar '10

12 months 12 months Assets Cash & Balances with RBI 25,100.82 15,483.28 14,459.11 Balance with Banks, Money at 4,568.02 Call Advances Investments Gross Block Accumulated Depreciation Net Block Capital Work In Progress Other Assets Total Assets Contingent Liabilities Bills for collection Book Value (Rs) 70,929.37 5,244.21 3,073.56 2,170.65 0.00 14,601.08

159,982.67 125,830.59 58,607.62 4,707.97 2,585.16 2,122.81 0.00 5,955.15

277,352.61 222,458.56 559,681.87 466,236.24 28,869.10 545.53 20,940.13 470.19

Figure 4

33

PROFIT AND LOSS A/C

Mar '11 Income Interest Earned Other Income Total Income Expenditure Interest expended Employee Cost Selling and Admin Expenses Depreciation Miscellaneous Expenses Preoperative Exp Capitalised Operating Expenses Provisions & Contingencies Total Expenses Net Profit for the Year Extraordionary Items Profit brought forward Total Preference Dividend Equity Dividend Corporate Dividend Tax Per share data (annualised) Earning Per Share (Rs) Equity Dividend (%) Book Value (Rs) Appropriations Transfer to Statutory Reserves Transfer to Other Reserves Balance c/f to Balance Sheet Total 997.52 392.64 6,174.24 8,456.55 84.40 165.00 545.53 9,385.08 2,836.04 2,510.82 497.41 5,205.97 0.00 8,045.36 3,004.88

Mar '10

Mar '09

Mar '08

Mar '07

19,928.21 16,172.90 4,433.51 3,810.62 24,361.72 19,983.52 7,786.30 2,289.18 3,395.83 394.39 3,169.12 0.00 7,703.41 1,545.11

16,332.26 3,470.63 19,802.89 8,911.10 2,238.20 2,851.26 359.91 3,197.49 0.00 7,290.66 1,356.20 17,557.96 2,244.94 -0.59 2,574.63 4,818.98 0.00 425.38 72.29 52.77 100.00 344.44 641.25 224.50 497.67 3,455.57 4,818.99

10,115.00 2,205.38 12,320.38 4,887.12 1,301.35 974.79 271.72 3,295.22 0.00 3,935.28 1,907.80 10,730.20 1,590.18 -0.06 1,932.03 3,522.15 0.00 301.27 51.20 44.87 85.00 324.38 436.05 159.02 352.47 2,574.61 3,522.15

6,889.02 1,510.24 8,399.26 3,179.45 776.86 727.53 219.60 2,113.28 0.00 2,590.66 1,246.61 7,016.72 1,382.54 -0.35 1,455.02 2,837.21 0.00 223.57 38.00 43.29 70.00 201.42 288.38 114.14 261.57 1,932.03 2,596.12

20,435.32 17,034.82 3,926.40 -2.65 4,532.79 8,456.54 0.00 767.62 124.53 2,948.70 -0.93 3,455.57 6,403.34 0.00 549.29 91.23 64.42 120.00 470.19 935.15 294.87 640.52 4,532.79 6,403.33

Proposed Dividend/Transfer to Govt 892.15

Figure 5

34

CASH FLOW

Cash Flow of HDFC Bank

------------------- in Rs. Cr. ------------------Mar '11 12 months Mar '10 12 months 4289.14 9389.89 -551.51 3598.91 12435.78 17506.62 29942.40 Mar '09 12 months 3299.25 -1736.14 -663.78 2964.66 564.74 14778.34 15343.08 Mar '08 12 months 2280.63 3583.43 -619.82 3628.34 6591.95 8074.54 14666.49 Mar '07 12 months 1638.75 666.63 -311.40 1637.88 1993.11 6188.66 8181.77

Net Profit Before Tax Net Cash (used Investing Activities in)/from

5818.66

Net Cash From Operating Activities -375.83 -1122.74

Net Cash (used 1227.99 in)/from Financing Activities Net (decrease)/increase In Cash -273.56 and Cash Equivalents Opening Cash & Cash Equivalents Closing Cash & Cash Equivalents 29942.40 29668.83

Figure 6

35

Ratio Analysis
MMMar ' 11 Mar ' 10 Mar ' 09 Mar ' 08 Mar ' 07

Per share ratios

Adjusted EPS (Rs) Adjusted cash EPS (Rs) Reported EPS (Rs) Reported cash EPS (Rs) Dividend per share Operating profit per share (Rs) Book value (excl rev res) per share (Rs) Book value (incl rev res) per share (Rs.) Net operating income per share (Rs) Free reserves per share (Rs) 84.42 95.11 84.40 95.09 16.50 160.36 545.53 545.53 524.34 419.10 64.33 72.95 64.42 73.03 12.00 106.25 470.19 470.19 436.03 363.55 52.68 61.14 52.77 61.24 10.00 92.36 344.44 344.44 464.77 252.37 44.85 52.51 44.87 52.53 8.50 107.32 324.38 324.38 348.57 35.77 50.20 35.74 50.16 7.00 86.19 201.42 201.42 259.98

269.89 155.69

Profitability ratios
Operating margin (%) Gross profit margin (%) Net profit margin (%) Adjusted cash margin (%) Adjusted return on net worth (%) Reported return on net worth (%) Return on long term funds (%) 30.58 28.54 16.09 18.13 15.47 15.47 59.91 24.36 22.39 14.76 16.71 13.68 13.70 56.08 19.87 18.05 11.35 13.15 15.29 15.32 83.31 30.78 33.15 28.58 30.50 12.82 13.57 15.01 19.07 13.82 17.75 13.83 17.74 62.34 74.91

Leverage ratios
Long term debt / Equity Total debt/equity Owners fund as % of total source Fixed assets turnover ratio 8.22 10.84 4.65 7.78 11.39 4.24 9.75 9.30 5.00 -

8.76 10.62 10.24 8.60 5.18 4.33

Liquidity ratios
Current ratio Current ratio (inc. st loans) Quick ratio 0.50 0.06 6.89 0.28 0.03 7.14 0.27 0.03 5.23 0.26 0.26 0.03 0.04 4.89 4.07

36

MMMar ' 11 Inventory turnover ratio -

Mar ' 10 -

Mar ' 09 -

Mar ' 08 -

Mar ' 07 -

Payout ratios
Dividend payout ratio (net profit) Dividend payout ratio (cash profit) Earning retention ratio Cash earnings retention ratio 22.72 20.16 77.29 79.84 21.72 19.15 78.25 80.82 22.16 19.10 77.79 80.87 22.16 22.91 18.93 16.32 77.83 77.11 81.07 83.69

Coverage ratios
Adjusted cash flow time total debt Financial charges coverage ratio Fin. charges cov.ratio (post tax) 47.14 0.79 1.47 50.13 1.63 1.43 54.91 0.44 1.29 54.14 42.60 0.78 1.90 1.38 1.50

Component ratios
Material cost component (% earnings) Selling cost Component Exports as percent of total sales Import comp. in raw mat. consumed Long term assets / total Assets Bonus component in equity capital (%) 0.65 0.83 0.41 0.91 0.54 0.90 0.92 0.90 -

0.91 0.89 -

Figure 7

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CHAPTER-4 LESSONS LEARNT

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WORKING The main working methodology was to understand the banking functions provided by the HDFC bank to its valuable customers. To understand more on the banking functions I used to attend the clients coming to the bank daily and trying to know about the services they need and queries they have. Then I used to direct to the respective service managers who can help them and standing with hem and understanding how they are doing the work. Then I used to work with different service managers and was given a task to understand the working of the different services being provided to the customers. 1. I was given a project on KYCs. In this project I was given a data of around 30 priority customers had to interact with the customers and tell them about the KYCs and telling them to get their KYC documents updated. Then I used to maintain the data of all the customers whom I have interacted with.

2. The next project which I was given was the electronic services. In this I was given a task to get at least 10 forms filled by the walk INS clients on the daily bases. And at the end of the day I used to give the forms to the respected service managers to send it for the scheduling.

3. Then in the next task I was given a task to update the banks dashboard every 15 days. In this I was given a format on the basis of which I had to make the slides. It included updating the current news related to the economy, political, sports etc.

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Date: Nov 29, 2004 Know Your Customer (KYC) Guidelines Anti Money Laundering Standards RBI-2004-05/284 DBOD.NO.AML.BC.58/14.01.001/2004-05 The Chief Executives of All Commercial Banks Dear Sir, 'Know Your Customer' (KYC) Guidelines Anti Money Laundering Standards Please refer to our circular DBOD. No. AML.BC.18/ 14.01.001/2002-2003 dated August 16, 2002 on the guidelines on 'Know Your Customer' norms. Banks were advised to follow certain customer identification procedure for opening of accounts and monitoring transactions of a suspicious nature for the purpose of reporting it to appropriate authority. These Know Your Customer guidelines have been revisited in the context of the Recommendations made by the Financial Action Task Force (FATF) on Anti Money Laundering (AML) standards and on Combating Financing of Terrorism (CFT). These standards have become the international benchmark for framing Anti Money Laundering and combating financing of terrorism policies by the regulatory authorities. Customer Due Diligence(CDD) for banks by the Basel Committee on Banking Supervision, with indicative suggestions wherever considered necessary are enclosed. Banks are advised to ensure that a proper policy framework on Know Your Customer and Anti-Money Laundering measures is formulated and put in place with the approval of the Board within three months of the date of this circular. It may also be ensured that banks are fully compliant with the provisions of this circular before December 31, 2005. 2. While preparing operational guidelines banks may keep in mind the instructions issued in terms of our circular DBOD.AML. BC. No.83/14.01.001/2003-2004 dated May 12,2004 wherein banks were advised to treat the information collected from the customer for the purpose of opening of account as confidential and not divulge any details thereof for cross selling or any other purposes. Banks may, therefore, ensure that information sought from the customer is relevant to the perceived risk, is not intrusive, and is in conformity with the guidelines issued in this regard. 3. Banks should continue to ensure that any remittance of funds by way of demand draft, mail/ telegraphic transfer or any other mode and issue of travelers cheques for value of Rupees fifty thousand and above is effected by debit to the customers account or against cheques and not against cash payment. 4. Banks should ensure that the provisions of Foreign Contribution and Regulation Act, 1976 wherever applicable are adhered to strictly. 5. These guidelines are issued under Section 35A of the Banking Regulation Act, 1949 and any contravention of or noncompliance with the same may attract penalties under the relevant provisions of the Act Yours faithfully, ( Prashant Saran) Chief General Manager November 29, 2004

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Guidelines on Know Your Customer norms 'Know Your Customer' Standards 1. The objective of KYC guidelines is to prevent banks from being used, intentionally or unintentionally, by criminal elements for money laundering activities. KYC procedures also enable banks to know/understand their customers and their financial dealings better which in turn help them manage their risks prudently. Banks should frame their KYC policies incorporating the following four key elements: i. ii. iii. iv. Customer Acceptance Policy; Customer Identification Procedures; Monitoring of Transactions; and Risk management.

For the purpose of KYC policy, a Customer may be defined as :

a person or entity that maintains an account and/or has a business relationship with the bank; one on whose behalf the account is maintained (i.e. the beneficial owner); beneficiaries of transactions conducted by professional intermediaries, such as Stock Brokers, Chartered Accountants, Solicitors etc. as permitted under the law, and any person or entity connected with a financial transaction which can pose significant reputational or other risks to the bank, say, a wire transfer or issue of a high value demand draft as a single transaction. Customer Identification Requirements Indicative Guidelines

Trust/Nominee or Fiduciary Accounts There exists the possibility that trust/nominee or fiduciary accounts can be used to circumvent the customer identification procedures. Banks should determine whether the customer is acting on behalf of another person as trustee/nominee or any other intermediary. If so, banks may insist on receipt of satisfactory evidence of the identity of the intermediaries and of the persons on whose behalf they are acting, as also obtain details of the nature of the trust or other arrangements in place. While opening an account for a trust, banks should take reasonable precautions to verify the identity of the trustees and the settlors of trust (including any person settling assets into the trust), grantors, protectors, beneficiaries and signatories. Beneficiaries should be identified when they are defined. In the case of a 'foundation', steps should be taken to verify the founder managers/ directors and the beneficiaries, if defined. Accounts of companies and firms Banks need to be vigilant against business entities being used by individuals as a front for maintaining accounts with banks. Banks should examine the control structure of the entity, determine the source of funds and identify the natural persons who have a controlling interest and who comprise the management. These requirements may be moderated according to the risk perception e.g. in the case of a public company it will not be necessary to identify all the shareholders. Client accounts opened by professional intermediaries When the bank has knowledge or reason to believe that the client account opened by a professional intermediary is on behalf of a single client, that client must be identified. Banks may hold 'pooled' accounts managed by professional intermediaries on behalf of entities like mutual funds, pension funds or other types of funds. Banks also maintain 'pooled' accounts managed by lawyers/chartered accountants or stockbrokers for funds held 'on deposit' or 'in escrow' for a range of clients. Where funds held by the intermediaries are not co-mingled at the bank and there are 'sub-accounts', each of them attributable to a beneficial owner, all the beneficial owners must be identified. Where such funds are co-mingled at the bank, the bank should still look through to the beneficial owners. Where the banks rely on the 'customer due

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diligence' (CDD) done by an intermediary, they should satisfy themselves that the intermediary is regulated and supervised and has adequate systems in place to comply with the KYC requirements. Accounts of Politically Exposed Persons(PEPs) resident outside India Politically exposed persons are individuals who are or have been entrusted with prominent public functions in a foreign country, e.g., Heads of States or of Governments, senior politicians, senior government/judicial/military officers, senior executives of state-owned corporations, important political party officials, etc. Banks should gather sufficient information on any person/customer of this category intending to establish a relationship and check all the information available on the person in the public domain. Banks should verify the identify of the person and seek information about the sources of funds before accepting the PEP as a customer. The decision to open an account for PEP should be taken at a senior level which should be clearly spelt out in Customer Acceptance policy. Banks should also subject such accounts to enhanced monitoring on an ongoing basis. The above norms may also be applied to the accounts of the family members or close relatives of PEPs. Accounts of non-face-to-face customers With the introduction of telephone and electronic banking, increasingly accounts are being opened by banks for customers without the need for the customer to visit the bank branch. In the case of non-face-to-face customers, apart from applying the usual customer identification procedures, there must be specific and adequate procedures to mitigate the higher risk involved. Certification of all the documents presented may be insisted upon and, if necessary, additional documents may be called for. In such cases, banks may also require the first payment to be effected through the customer's account with another bank which, in turn, adheres to similar KYC standards. In the case of cross-border customers, there is the additional difficulty of matching the customer with the documentation and the bank may have to rely on third party certification/introduction. In such cases, it must be ensured that the third party is a regulated and supervised entity and has adequate KYC systems in place. Correspondent Banking Correspondent banking is the provision of banking services by one bank (the 'correspondent bank') to another bank (the 'respondent bank'). These services may include cash/funds management, international wire transfers, drawing arrangements for demand drafts and mail transfers, payable-through-accounts, cheques clearing, etc. Banks should gather sufficient information to understand fully the nature of the business of the correspondent/respondent bank. Information on the other banks management, major business activities, level of AML/CFT compliance, purpose of opening the account, identity of any third party entities that will use the correspondent banking services, and regulatory/supervisory framework in the correspondent's/respondents country may be of special relevance. Similarly, banks should try to ascertain from publicly available information whether the other bank has been subject to any money laundering or terrorist financing investigation or regulatory action. While it is desirable that such relationships should be established only with the approval of the Board, in case the Boards of some banks wish to delegate the power to an administrative authority, they may delegate the power to a committee headed by the Chairman/CEO of the bank while laying down clear parameters for approving such relationships.

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Customer Identification Procedure Features to be verified and documents that may be obtained from customers Features Accounts of individuals Documents (i) Passport (ii) PAN card (iii) Voters Identity Card (iv) Driving licence (v) Identity card (subject to the banks satisfaction) (vi) Letter from a recognized public authority or public servant verifying the identity and residence of the customer to the satisfaction of bank (i) Telephone bill (ii) Bank account statement Letter from any recognized public authority (iii)

Legal name and any other names used Correct permanent address

(iv) Electricity bill (v) Ration card (vi) Letter from employer (subject to satisfaction of the bank)

Accounts of companies

Name of the company Principal place of business Mailing address of the company

(i) Certificate of incorporation and Memorandum & Articles of Association (ii) Resolution of the Board of Directors to open an account and identification of those who have authority to operate the account (iii) Power of Attorney granted to its managers, officers or employees to transact business on its behalf (iv) Copy of PAN allotment letter (v) Copy of the telephone bill (i) Registration certificate, if registered (ii) Partnership deed (iii) Power of Attorney granted to a partner or an employee of the firm to transact business on its behalf (iv) Any officially valid document identifying the partners and the persons holding the Power of Attorney and their addresses (v) Telephone bill in the name of firm/partners

Telephone/Fax Number Accounts of partnership firms

Legal name Address Names of all partners and their addresses

Telephone numbers of the firm and partners Accounts of trusts & foundations
Names of trustees, settlers, beneficiaries signatories Names and addresses of the founder.

(i) Certificate of registration, if registered (ii) Power of Attorney granted to transact business on its behalf (iii) Any officially valid document to identify the trustees, settlors, and beneficiaries and those holding Power of Attorney, founders/managers/ directors and their addresses (iv) Resolution of the managing body of the foundation/association (v) Telephone bill.

Figure 8

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EXPERIENCE OF Working with HDFC Bank

The working really proved to be beneficial for me. I was very successful. It gave out positive results as I got to learn different things from different service managers and their style of working and how the customers queries are solved. Almost got to learn the whole basics of the banking and got interact with customers. As this working helped me to interact with the customers, it helped in me building the confidence to talk to them.

When I interacted the priority clients, they were very supportive and listened and to the things very respectfully. Earlier I was very hesitant in talking to clients but slowly and steadily it build in me the confidence to talk to them. My next project i.e. on the electronic services was also successful as I was able to achieve my target off getting the applications filled by the customers an encouraging them to operate their accounts through the net and visiting less to the branch.

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Findings:
All the private and public sector banks are recognizing importance of the relationship management in their growth and customer retention. The officials try to make best relation with the customers. Staff member gives regular updates to their customers and information of the product and their services. The registers and files are systematically maintained on a daily basis and in an organized manner. Most of the respondents are having more than two accounts and holds more than two products with HDFC Bank. Bank has shown better utilization of cash balance of customer by cross selling other products.
According to respondents feedback it is observed that bank is in need to increase

their branches in region as well as pay concern to increase their ATM network. Greater retention of customers is being needed as they are offering various products and services. This enables a great understanding of what customers may expect from the bank and what to offer to them. This leads to defining where each customer is in his relationship with the bank so that cross-selling can be done Officials employed find themselves in much burden as there are very less number of sales executives.

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RECOMMENDATION

Managers should recognize that a certain amount of conflict will almost always exist between professional and hierarchical authority and control systems. The key is to transform this conflict into motivation by structurally insulating these workers from organization pressure, while simultaneously making them aware of the importance that their work holds for the firms well being and its continued competitive advantages.

They should recognize that managing high-technology and professional employees is significantly different from managing non-professionals have a different set of values and characteristics, which have been gained through their socialization in the technical specialty. Managers need to be cognizant of those values and characteristics if they are not anticipate tension points and enhance the fit between the individual and the job.

They should attempt to develop HR practices and policies that have had some success in attracting, motivating and retaining the high-tech work force.

That requires, at a minimum, knowledge of or systematic diagnosis of organizational practices, and matching HR practices to the organizations culture.

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It also requires that a cadre of competent HR manager manage the transition. The days of ready-fire aim are over for high-technology firms seeking competitive advantages in their markets. They should study the change process and learn from their experiences from change owing to internal and external factors, including departures from tradition, new leaders with new visions, crisis or other starting events, key decisions on the part of senior management, or tests, of their infrastructure ability to accommodate change. Firm also change because of change. But professionals and other high-tech workers must clearly see the need for change, otherwise, they may not support the change, or they may even sabotage it, therefore communication must be reemphasized. They should design jobs and work relationship to take advantage of technical specialties. For example, rotating professionals through multiple role and job responsibilities can sensitize them to new ides and opportunities.

They should establish career sensitive tracking systems so that career development becomes an integrated part of their firm practices.

They should utilize a menu of salient relevant that are relevant for high tech and professional workers. These reminders ideally should be linked to performance, but in some culture they might be liked so effort, risk taking, or other relevant behaviors.

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REFERENCES/BIBLIOGRAPHY

Banking : The Network is the bank, by Yogesh Sharma, Dataquest, January 31, 2006

Race will end in survival of the fittest, The Financial Express, November 29, 2006.

The Times of India, 26 July, 2007. The future is in e-banking by Mr. K.V. Kamath (Managing Director, ICICI), April 14, 2002, Business Line.

RBI road map for banking, The Indian Express, July 21, 2007. Banking in India, by Dr A. K. Mishra (Professor & Chairman of Finance Group at IIM Lucknow).

www.hdfcbank.com www.hdfc.com www.netbanking.hdfcbank.com www.moneycontrol.com

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