2) Role of Hdfc Bank
-
Upload
kumar-abhishek -
Category
Documents
-
view
2.275 -
download
2
Transcript of 2) Role of Hdfc Bank
CHAPTER IINTRODUCTION
1
A BRIEF ABOUT BANKING INDUSTRY
Today the Indian banking system is among the best in the world and the years to come
may see them taking on the global behemoths.
The Indian Banking Industry can be categorized into non-scheduled banks and scheduled
banks. Scheduled banks constitute of commercial banks and co-operative banks. There
are about 67,000 branches of Scheduled banks spread across India. During the first phase
of financial reforms, there was a nationalization of 14 major banks in 1969. This crucial
step led to a shift from Class banking to Mass banking. Since then the growth of the
banking industry in India has been a continuous process.
As far as the present scenario is concerned the banking industry in India is in a transition
phase. The Public Sector Banks (PSBs), which are the foundation of the Indian Banking
system account for more than 78 per cent of total banking industry assets. Unfortunately
they are burdened with excessive Non Performing assets (NPAs), massive manpower and
lack of modern technology.
On the other hand the Private Sector Banks are witnessing immense progress. They are
leaders in Internet banking, mobile banking, phone banking, ATMs. On the other hand
the Public Sector Banks are still facing the problem of unhappy employees. There has
been a decrease of 20 percent in the employee strength of the private sector in the wake of
the Voluntary Retirement Schemes (VRS). As far as foreign banks are concerned they are
likely to succeed in India.
Indusland Bank was the first private bank to be set up in India. IDBI, ING Vyasa Bank,
SBI Commercial and International Bank Ltd, HDFC Bank Ltd, Dhanalakshmi Bank Ltd,
Karur Vysya Bank Ltd, Bank of Rajasthan Ltd etc are some Private Sector Banks. Banks
from the Public Sector include Punjab National Bank, Vijaya Bank, UCO Bank, Oriental
Bank, Allahabad Bank, Andhra Bank etc. ANZ Grindlays Bank, ABN-AMRO Bank,
American Express Bank Ltd, Citibank etc are some foreign banks operating in India.
2
RETAIL BANKING MEANING AND SCOPE:
Most of the Indian banks have been retail banks in their business composition. The term
‘Retail Banking’ encompasses various financial products (different types of deposit
accounts, housing-consumer-auto and other types of loan accounts, demat facilities,
insurance, mutual funds, Credit and Debit Cards, ATM and other technology-based
services, stock-broking, payment of utility bills, reservation of railway tickets, etc.,)
catering to diverse customer groups, offering a host of financial services, mostly to
individuals. Simply speaking, it takes care of the diverse banking needs of an individual.
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 in January 1995.
Promoter
HDFC is India's premier housing finance company and enjoys an impeccable track record
in India as well as in international markets. Since its inception in 1977, the Corporation
has maintained a consistent and healthy growth in its operations to remain the market
leader in mortgages. Its outstanding loan portfolio covers well over a million dwelling
units. HDFC has developed significant expertise in retail mortgage loans to different
market segments and also has a large corporate client base for its housing related credit
facilities. With its experience in the financial markets, a strong market reputation, large
shareholder base and unique consumer franchise, HDFC was ideally positioned to
promote a bank in the Indian environment
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
3
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. HDFC Bank's business philosophy is
based on four core values - Operational Excellence, Customer Focus, Product Leadership
and People.
Management
Mr. Jagdish Capoor took over as the bank's Chairman in July 2001. Prior to this, Mr.
Capoor was a Deputy Governor of the Reserve Bank of India.
The Managing Director, Mr. Aditya Puri, has been a professional banker for over 25
years and before joining HDFC Bank in 1994 was heading Citibank's operations in
Malaysia.
The Bank's Board of Directors is composed of eminent individuals with a wealth of
experience in public policy, administration, industry and commercial banking. Senior
executives representing HDFC are also on the Board.Senior banking professionals with
substantial experience in India and abroad head various businesses and functions and
report to the Managing Director. Given the professional expertise of the management
team and the overall focus on recruiting and retaining the best talent in the industry, the
bank believes that its people are a significant competitive strength.
Capital Structure
The authorized capital of HDFC Bank is Rs.450 crore (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 ock Exchange.
The bank's American Depository Shares are listed on the New York Stock Exchange
(NYSE) under the symbol "HDB
Times Bank Amalgamation
4
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 amalgamation 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.
Distribution Network
HDFC Bank is headquartered in Mumbai. The Bank at present has an enviable network of
over 495 branches spread across the country. All branches are linked on an online real-
time basis. Customers in 90 locations are also serviced through Phone Banking. The
Bank's expansion plans take into account the need to have a presence in all major
industrial and commercial centers where its corporate customers are located as well as the
need to build a strong retail customer base for both deposits and loan products. Being a
clearing/settlement bank to various leading stock exchanges, the Bank has branches in the
centers where the NSE/BSE has a strong and active member base.
The Bank also has a network of over 1054 networked ATMs across these cities.
Moreover, HDFC Bank's ATM network can be accessed by all domestic and international
Visa/MasterCard, Visa Electron/Maestro, Plus/Cirrus and American Express
Credit/Charge cardholders.
5
Technology
HDFC Bank operates in a highly automated environment in terms of information
technology and communication systems. The entire bank's branches have connectivity
which enables the bank to offer speedy funds transfer facilities to its customers. Multi-
branch access is also provided to retail customers through the branch network and
Automated Teller Machines (ATMs). The Bank has made substantial efforts and
investments in acquiring the best technology available internationally to build the
infrastructure for a world-class bank. In terms of software, the Corporate Banking
business is supported by Flexcube, while the Retail Banking business by Finware, both
from i-flex Solutions Ltd. The systems are open scaleable and web enabled.
The Bank has prioritized its engagement in technology and the internet as one of its key
goals and has already made significant progress in web-enabling its core businesses. In
each of its businesses, the Bank has succeeded in leveraging its market position, expertise
and technology to create a competitive advantage and build market share.
There was a vacuum in the market as there were the nationalized bank on one side
Providing service to a larger part of the country both in terms of geography and People.
There were the foreign banks on the other side small but catering to a premium segment.
Thus HDFC bank came up with a special package that had the geographical reach of
India bank and products and services of the foreign bank. for producing world class
services such people were hired, who were the best in their field , so as inculcate new
thinking and mindset like managing director from Citibank:, head of technology from
bank of AMERICA rich manager from Citibank head of private banking from UBS ,
marketing head from levers and bank of America, treasury team from HONG KONG.
Businesses
HDFC Bank offers a wide range of commercial and transactional banking services and
treasury products to wholesale and retail customers. The bank has three key business
segments:
Wholesale Banking Services
The Bank's target market ranges from large, blue-chip manufacturing companies in the
6
Indian corporate to small & mid-sized corporate and agri-based businesses. For these
customers, the Bank provides a wide range of commercial and transactional banking
services, including working capital finance, trade services, transactional services, cash
management, etc.
The bank is also a leading provider of structured solutions, which combine cash
management services with vendor and distributor finance for facilitating superior supply
chain management for its corporate customers. Based on its superior product delivery /
service levels and strong customer orientation, the Bank has made significant inroads into
the banking consortia of a number of leading Indian corporate including multinationals,
companies from the domestic business houses and prime public sector companies. It is
recognized as a leading provider of cash management and transactional banking solutions
to corporate customers, mutual funds, stock exchange members and banks.
Retail Banking Services
The objective of the Retail Bank is to provide its target market customers a full range of
financial products and banking services, giving the customer a one-stop window for all
his/her banking requirements. The products are backed by world-class service and
delivered to the customers through the growing branch network, as well as through
alternative delivery channels like ATMs, Phone Banking, Net Banking and Mobile
Banking.
The HDFC Bank Preferred program for high net worth individuals, the HDFC Bank Plus
and the Investment Advisory Services programs have been designed keeping in mind
needs of customers who seek distinct financial solutions, information and advice on
various investment avenues. The Bank also has a wide array of retail loan products
including Auto Loans, Loans against marketable securities, Personal Loans and Loans for
Two-wheelers. It is also a leading provider of Depository Participant (DP) services for
retail customers, providing customers the facility to hold their investments in electronic
form.
HDFC Bank was the first bank in India to launch an International Debit Card in
association with VISA (VISA Electron) and issues the Mastercard Maestro debit card as
7
well. The Bank launched its credit card business in late 2001. By September 30, 2005, the
bank had a total card base (debit and credit cards) of 5.2 million cards. The Bank is also
one of the leading players in the "merchant acquiring" business with over 50,000 Point-
of-sale (POS) terminals for debit / credit cards acceptance at merchant establishments.
Treasury
Within this business, the bank has three main product areas - Foreign Exchange and
Derivatives, Local Currency Money Market & Debt Securities, and Equities. With the
liberalization of the financial markets in India, corporate need more sophisticated risk
management information, advice and product structures. These and fine pricing on
various treasury products are provided through the bank's Treasury team. To comply with
statutory reserve requirements, the bank is required to hold 25% of its deposits in
government securities. The Treasury business is responsible for managing the returns and
market risk on this investment portfolio.
8
PROBLEM FORMULATION
Being a new branch, Bank is really doing great job and performing beyond the
expectations and targets given by the Head of the HDFC Bank. As known to all HDFC
Bank have a good brand image, highest in customer services
But, some problems do occur at initial stage of business, so happening with HDFC Bank
and constraints are:
The problems of Retail Banking:
Business oriented community as in Ballabhgarh is more interested in having CC
accounts than keeping their money in their current or SB accounts.
Since HDFC bank is not considering small CC loans which is below 40 lacs turnover,
challenges from existing nationalized banks are faced
Less awareness amongst people about private bank products.
People with mindset of having lower IP transactions at nationalized Banks.
Senior Citizens always want passbooks and make it a mandate to have one before
account opening.
Visibility of the bank.
Awareness of the products and services which carry good features
9
NEED OF THE STUDY
To conduct a research there is always a requirement for that particular research by any
company, organization or anyone for further proceedings in any particular project.
The need for Comparative Study of Performance of Banks, Market Potential &
Awareness is as follows:
To give an insight of the market, that
What is the market scenario?
What is the performance of various banks?
Who are the main competitors?
Who are my best customers and how can I keep them?
Where is the greatest market potential to find new customers?
What locations should I choose to expand our branch network?
Is our network of bank branches optimized for maximum performance?
Is there awareness of bank in the market?
10
SCOPE OF THE STUDY
Scope of the project means that what data we have collected that can be used in many
other field and as a secondary data for other project for many other company and this data
can be use for general purpose also:-
This study helps HDFC bank in competing with other banks in that area and what
is their market share by analyzing their performance.
The study also shows the customer mind set and their preference.
This study will also help HDFC Bank in capturing market & creating huge
customer base.
This study provides the insight that in which area potential customer for bank
exists.
This study helps HDFC Bank in making better strategies & plans.
LITERATURE SURVEY
11
RETAIL BANKING IN INDIA
It is by now well recognized that India is one of the fastest growing economies in the
world after over a decade of financial and banking sector reforms since 1991. Evidence
from across the world suggests that a sound and evolved banking system is required for
sustained economic development. India has a better banking system in place vis-à-vis
other developing countries, but there are several issues that need to be ironed out. The
course of banking evolution and growth has gone through innumerable twists and turns in
the post independence era. Retail banking segment in the banking industry is
continuously undergoing innovations, product reengineering, adjustments and alignments.
Given the size advantages, diverse customer base and scope for future expansion, there is
a need for evolving a systematic approach to retail banking.
The Potential for Retail Banking in India:
An insight into the following paragraphs will justify the immense underlying potential for
the Indian retail baking industry.
While the total outstanding retail loans in Taiwan is around 41% of its GDP, the figure in
India stands at less than 5%. The comparison with the West is even more staggering.
Another situation that is natural when comparing retail sectors is the use of credit cards.
Here also, the potential lies in the fact that of the consumer expenditure in India in 2001,
less than 1% was through plastic, the corresponding US figure standing at 18%.
Hence, The Indian players are bullish on the retail business and this is not totally
unfounded. Two primary reasons are as follows:
It is now undeniable that the face of the Indian consumer is changing. This is reflected
adequately in a change in the urban household income pattern. The direct fallout of such a
change will be the consumption patterns and hence the banking habits of Indians, which
will now be skewed towards Retail products.
a) Going by international standards, a large portion of the Indian population is
simply not "bankable" - taking profitability into consideration. On the other hand, the
financial services market is highly over-leveraged in India. Competition is fierce,
particularly from local private banks such as HDFC Bank and ICICI Bank, in the business
of home, car and consumer loans. There, precisely lie the pitfalls of such explosive
growth. All banks are targeting the fluffiest segment i.e. the upwardly mobile urban
salaried class. Although the players are spreading their operations into segments like self-
12
employed and the semi-urban rich, it is an open secret that the big city Indian yuppies
form the most profitable segment. Over-dependence on this segment is bound to bring in
inflexibility in the business. Hence the challenge for various banks is to tap the
underlying potential of the tapped and specifically the untapped market by developing
sophisticated financial behavior and spreading the scope to all over the country.
Prospects of Retail Banking in India:
The conventional scenario of Banks is fast changing. The Banking Institutions have
started revisiting their Visions. Should they have thousands of C class Accounts or a few
A and B class Accounts? They have come to the conclusion that it is not economical to
service the C class Accounts. Even in India, banks are raising the bar on deposits. Some
Banks have even increased the minimum balance in Savings accounts so that they are out
of reach of the small man.
Why is this so? This is a natural corollary to the competencies that are being built up at a
significant speed in all banks. Examining them one by one will help us know where the
banks are heading, in the near future.
a. Customer Focus:
All along, the word "Customer" used to denote any person who is having an account with
a branch of a Bank or using the services of a Branch. Now, we are seeing a new definition
for customer. A customer is no more a customer of the Branch; he is the Customer of the
BANK. With the advent of 'AAA Banking' (Anytime, Anywhere, Anyhow Banking) the
new definition of customer has become relevant. Technology enables the customer to
"help himself" through Internet Banking, ATM Banking, Telephone Banking, Online
Banking, Mobile Banking, or e-Banking, etc. Moreover the concept like Know Your
Customer (KYC) reinforced when Reserve Bank of India recently urged banks to improve
customer focus as a strategic initiative for effective management of profitability, risk and
customer satisfaction as well as customer delight!
13
b. Segment focus:
Banks are obviously for customer service. But banks are finding that they too need to
segment and target High Networth Individuals (HNIs) and companies if they have to
satisfy the needs of their stakeholders. Therefore, Banks are generally moving towards
products that are focused on their targeted end customers. And this target is specifically
the high end customers; as they do not find any leverage from the small accounts. But
there is a strong trend in terms of consolidation in terms of the business segmentation.
The general pattern of the banks is to cater to all segments – from agriculturists to high
net worth individual to corporate banking to international banking. An analysis of the
current scenario indicates that in future, each bank will decide on its core competency and
cater only to selected segments. For example, the Deutsche Bank in India operates only in
the corporate banking and it has turned as a market leader in this segment.
c. Product focus:
Banks have been offering various asset products (Loans) and liability products (Deposits),
taking the customers’ general needs like fixed amount loans or running Cash Credit /
Overdraft accounts or Fixed Deposit or Cumulative Deposit or Recurring Deposit as
liability products. Now, the time has come for the Customer to demand a product that is
not currently available in the Banker's kitty and the Bank has to literally create customer-
specific products. Here comes the Banker in the role of a Financial Engineer.
Financial Services: Then and Now
TABLE NO:- 1.1
Old Economy New Economy
Confined market place Unlimited market space
Competition between banks Competition from brands
Limited product line Extensive product breadth
One-size-fits-all products Customisation and innovation
Branch-focused e-Enabled, multi-channel players
Focus on business growth Focus on revenue growth as well as cost-reduction
Revenues through marginRevenue generated through fees and value-added services
14
Existing products and services are changing way for value-added ones thanks to the one-
upmanship game among competing banks, sparked off by soaring consumer-demands.
d. Technology focus:
As banks face the mutually interdependent forces of competition, regulation, technology,
and customer expectations, a picturesque setting for the tremendous upheaval and
opportunity emerges. This interdependency, in turn, is built upon mutually dependent
technological trends.
Increase processing power
Increase in networking
Increase in flexibility in defining business standard:
Increase in modularity of software
These four trends are impacting irreversibly the business of banking, outsourcing, in
sourcing, analytics, and payment systems. Given these factors the banks are being more
technology focused and driving the use of internet to help meet the requirements of their
customers through segmentation.
(i) Internet banking:-
The trend in banking is changing from computerization of branches to laying a
uniform platform by having core banking solution in all the branches. At the same
time, banks are looking at internet banking. While a start has been made in the
Internet banking in India, the number of transactions through this mode is extremely
negligible (less than 1%). A study group appointed by the RBI has suggested that for
Internet banking, there should be robust system keeping a log of all network activities
and analyzing the same. RBI has gone on to suggest various technical features
essential for having such a robust system. This should be in place within the next 2
years. Hopefully, the retail banks will see a surge/splurge in the usage from 1% to at
least 10% in the next couple of years. Passing of Information Technology Act, 2000
gave enough relief to the users assuring of proper use of technology in banking.
(ii) Shared ATMs: -
Till the year 2003, each bank was interested in opening its own ATMs to provide
access and anytime banking to its customers. Cost of Installation of ATM is about
Rs.15 lacs with an additional maintenance cost of Rs.1.5 lacs per month. To break
15
even, 300 transactions are to be put through each ATM per day. The cost of
transaction in the branch of the Bank is approximately Rs. 60 while it is Rs. 10 if
carried out through an ATM. To take advantage of this lower transaction cost, there is
need for banks to induce customers to use more and more ATMs. In view of the huge
investment cost of ATMs, Banks have now come to an understanding by which the
customer of one Bank can use the ATMs of other Bank/s.
This is in the right direction. Already SBI, HDFC Bank, ICICI Bank and others have
started offering such a facility at a nominal payment per transaction, for which the
customers are readily agreeable.
(iii) Outsourcing: -
The challenge of managing the diverse services in a networked environment has caused
the banks to introspect on what should be considered as their core skills and primary
roles.
In future, banks will need to focus on value-differentiating services by keeping in-house
their competitive advantages while partnering with others who complement its services-
making the argument for best-of-breed integration a necessity.
(iv) In sourcing: -
In sourcing is a model wherein banks perform operations that are originally done by their
customers/other banks. Corporate clients may outsource activities like receivable
management, accounting and risk management of corporate investments to banks. New
product offerings will emerge as a combination of existing products and the new in
sourced activities Banks, with their established processing capacities, are ideal partners
for insurance and other financial service firms in their pursuit of customer reach and
service provision.
(v) Analytics: -
As they realize that product and related services by themselves cannot provide sustainable
competitive advantage, banks are paying more attention to relationship with their
customers and the way they manage risk, determine price, and allocate capital.
Hence, going forward, banks will attempt to augment their behavioral and economic
views of the customer, preferably captured at the “Point of Contact” in addition to
existing transactional and demographic data (in-house and external). Banks will require
16
use of analytics to effectively manage their customer relationships, conduct detailed
analysis that help more accurately model, and predict future customer behavior and lay a
quantified foundation for strategic decision-making.
On the other hand, banks often face the tricky task of asset allocation and pricing. In the
last decade, investments in risk management and related systems have increased
multifold, albeit made with a compliance objective towards identifying, measuring and
funding risk. The future will see increasing investments in risk analytics as part of an
integrated framework supporting asset pricing, performance measurement, and asset
allocation models.
(vi) Payment systems: -
In recent years, alternate money transmission avenues, especially the development of
electronic money schemes, have been gaining currency. Gradual expansion of Western
Union Money Transfer in India through alliances with Banks, Post Offices, etc., is a thing
to note in this direction. While electronic money has the potential to take over from cash
for making small-value payments, making such transactions are becoming easier and
cheaper for both consumers and merchants. This raises policy issues for central banks in
its role as the guardian of the payment network and implementer of the monetary policy.
The emergence of peer-to-peer money transmission mechanisms poses a challenge to
current role of banks as gatekeepers to traditional payment systems. Robust payment
systems, therefore, are a key requirement in maintaining and promoting financial stability
with technology playing both a facilitating and disruptive role in them.
(vii) Real Time Gross Settlement (RTGS) :-
In the last one decade, thanks to continuous thrust on computerization in the banking
system, RBI took initiative for bringing in Electronic Funds Transfer (EFT), Electronic
Clearing System (ECS), ATMs and Internet Banking. Cross selling of various financial
products has been possible due to ATMs and Internet Banking. Investment climate has
also geared up in volumes with Dematerialisation facility introduced by setting up of
NSDL and CDSL after formation of National Stock Exchange in Mumbai. Clearing
Corporation of India Ltd., (CCIL) has also made remarkable impact on funds settlement
mechanism. Very soon Cheque Truncation system is going to be spearheaded by RBI in a
phased manner.
17
RTGS is a payment system in which processing and settlement takes place in real-time
(continuously). In this system, funds would flow freely from one market to another
leading to better integration of the Domestic Financial Markets among themselves, and
with International Financial Markets as well. RTGS, as a settlement process will
minimize settlement risks by settling individual payments in real time in the books of
accounts held by the RBI. RTGS will be a mode for large value Inter-Bank settlement, to
be widely used, for enhancing risk control measures, for faster and efficient settlement of
liabilities for better customer services for the ultimate users in the value chain. RTGS
would eliminate the time lag between the debit to an account of customer and its
corresponding credit to another customer in a different bank. RTGS requires
implementation of a 2 Level Gateway- one at the individual bank level and the other at
the RBI level. Significant contribution made by Institute for Development and Research
in Banking Technology (IDRBT), Hyderabad in this regard is commendable.
e. Employee focus:
Earlier, there were premises where the branch of a Bank is located and there were three
categories of staff to attend to the customers viz., Supervisory, Clerical and Sub-ordinate
staff. With the disappearance of big ledgers and registers, the need for Sub-ordinate staff
is also getting reduced. The role of supervisory staff would increase and not in the sense
of controlling the staff working with them but in different areas of delivering competitive
services. Awareness about productivity, customer focus, competition, grievance/
complaint redressals, market surveys, etc among the bank staff has gone up very high.
The VRS scheme introduced in the year 2000 by the Banks was to reduce the redundant
staff consequent to computerization. It is felt that one more VRS would be needed for the
Banks to shed their excess flab and make them fit and trim. Henceforth, the role for
clerical staff would have to undergo a change from sitting under the roof in a branch to
moving into the field and market various financial services offered by their Bank and not
only attract new customers and retain existing clientele but also retrieve the customers
lost to competitors. In a nutshell the trend is towards sophisticated well trained customer
orientation.
18
Banking Hours:
Bank hours were fixed so far. Now the fact is that almost all banks are moving towards
any time/any where/home banking. Again, a closer look at this will reveal that Banks are
moving away from the traditional customer to the customer who is extra busy. Who is
this? Again, the high net worth individual and the highly profitable companies. For
example ICICI bank has started 8 to 8 banking where the banking hours are 8 a.m. to 8
p.m. looking at this competitive market we may witness 24 hours banking, very soon.
f. Others:
(i) The Basel II effect:
Essentially, the rules evolved by Basel Committee for Bank Supervision (BCBS) and
adopted by RBI tell the banks how much capital the banks should have to cover up for the
risk that their loans might go bad. The rules set out by Bank for International Settlements
(BIS) in 1988 led the banks to differentiate among the customers it lent out money to.
Different weightages were given to various forms of assets, with zero percentage
weightings being given to cash, deposits with the central bank/govt etc, and 100 per cent
weighting to claims on private sector, fixed assets, real estate etc. The summation of these
assets gave us the risk-weighted assets.
Against these risk weighted assets the banks had to maintain a (Tier I + Tier II) capital of
9 per cent i.e. every Rs100 of risk assets had to be backed by Rs 9 of Tier I + Tier II
capital. To put it simply, the Indian banks had to maintain a Capital Adequacy Ratio
(CAR) of 9 per cent as at present.
The problem with these rules is that they do not distinguish within a category i.e. all
lending to private sector is assigned a 100 per cent risk weighting, be it a company with
the best credit rating or company which is in the doldrums and has a very low credit
rating. This is not an efficient use of capital. The company with the best credit rating is
more likely to repay the loan vis-à-vis the company with a low credit rating. So the banks
should be setting aside a far lesser amount of capital against the risk of a Company with
the best credit rating defaulting vis-à-vis the company with a low credit rating.
19
With the rules being revised by BCBS and RBI, BASEL-II norms are to take place in the
year 2007, the banks can decide on the amount of capital to set aside depending on the
credit rating of the borrowing company.
Credit risk is not the only type that banks face in course of their business. These days, the
operational risks that banks face are huge. The various risks that come under operational
risk are competition risk, technology risk, casualty risk, crime risk etc. The original
BASEL rules did not take into account the operational risks. Besides, there are other risks
like Interest Rate Risk, Exchange Risk, etc. As per the BASEL-II norms, banks will have
to set aside 15 per cent of net income to protect themselves against operational risks.
So to be ready for the new BASEL rules, the banks all over including in India will have to
set aside more capital because the new rules could lead to Capital Adequacy Ratios of the
banks falling. How the banks plan to go about meeting these requirements is something
that remains to be seen. A few banks are planning initial public offerings / share issues to
have enough capital on their books to meet these new norms. Recent examples are Dena
Bank, Punjab National Bank, SBI, Andhra Bank, ICICI Bank, etc.
(ii) Consolidation –the future wave
In the recent past, there has been a lot of talk about Indian Banks lacking in scale and
size. The State Bank of India is the only bank from India to make it to the list of Top 100
banks, globally. Most of the PSBs are either looking to pick up a smaller bank or waiting
to be picked up by a larger bank. The buzzword in banking circles these days is, in
particular, consolidation (mergers) of Public Sector Banks for good although facing stiff
resistance from various corners.
The central government also seems to be game about the issue and is seen to be
encouraging PSBs to merge or acquire other banks. Global evidence seems to suggest that
even though there is great enthusiasm when companies merge or get acquired, majority of
the mergers/acquisitions do not really work. So in the zeal to merge with or acquire
another bank, the PSBs should not let their common sense take a back seat. Before a
merger is carried out cultural issues should be looked into. A bank based primarily in
North India might want to acquire a bank based primarily in South India to increase its
geographical presence but their cultures might be very different. So the integration
20
process might become very difficult. Technological compatibility both for software and
hardware, besides trained work force, is another issue that needs to be looked into in
detail, before any merger or acquisition is carried out.
The banks must not just merge because everybody around them is merging. As Keynes
wrote,” Worldly wisdom teaches us that it's better for reputation to fail conventionally
than succeed unconventionally". Banks should avoid falling into this trap.
The Problems of Retail Banking in INDIA
Now, the challenges that the sector in India faces:
a. Customer focus:
The retail banks in future will try to aggressively market their products. To market these
products, there will be innovative modes to reach customers like SMS, internet, and
mobile phones. Some banks are also engaging the services of Direct Selling Agents
(DSAs), Franchisees, etc for sourcing and appraisal of loan proposals, issue of Credit
Cards, selling of insurance and mutual fund products, etc. Such methods may some times
displease/disturb the customer. Moreover, banks generally pitch on higher levels of
service but if the banks do not match up to what they have claimed, this may lead to
unsatisfied customers and higher customer attrition rate.
b. Product focus:
The challenge here will be to design and innovate the financial products which cater to
the target segment needs. In future, retail banking scenario will see a huge proliferation of
products. This will in turn require devising product which is easy to understand and at the
same time meet the financial goals of the customers. The problem that lies ahead is to
gain a mindshare for one’s product given a wide range of products.
c. Technology focus: Technology in India has been for over seven years now. But its penetration in the Industry
in general and that in the financial services market has been rather uninspiring despite its
professed advantages. The surprising aspect that came out from the study was that though
the banks were aware of the technology’s benefits, they are skeptical about its
applicability to their organization. The root cause for this is the astonishing growth that
21
the banks are experiencing at the moment. Most of the Retail banks are witnessing a
tremendous expansion in their customer base: one bank even claim to be adding over
100% customer on y-on-y basis. However, on the other front there is increasing menace
of hacking, phishing and farming through which scamsters are creating havoc indulging
in cyber crimes on a large scale.
Apart from this, there are many other factors that have undermined the acceptance of
Customer Relations Management (CRM). The chart shown below enlists the various
factors (and their relative weightages on a scale of 1 to 5) that are believed to have played
a role in the sluggish penetration of CRM in the retail-banking sector:
FIGURE NO :- 1.2
The above chart clearly shows that it is the implementation time that has affected the way
people in banks look at CRM the most. In order to further CRM in this segment, it is of
paramount importance to reduce the implementation time to minimum possible. This
factor makes CRM on Demand (web based CRM services offered by service providers) a
particularly attractive alternative. The second important parameter that came out from the
study was the cost. To sum up, Indian retail banking players want less risk and faster
returns at lesser costs.
22
FIGURE NO:- 1.3
Since, banks generally can’t do with an investment that takes a long time to get running,
implementation time figures as the top-most criteria closely followed by initial costs and
training required.
d. Employee Focus:
In a service based industry the value can be delivered at the moment of interaction with
the customers. It is vivid from the above chart that there needs to be focus on the
employees and upgrading their skills as they at the front end would be the face of the
bank. Hence, training requirement factor figures prominently in the case of banks due to
the fact that these banks generally make do with just the required amount of manpower
and it is very difficult for them to spare them. That will immediately start affecting their
operations.
Banks, in a drive to carry on with tremendous expansion in terms of customer base, need
to have requirements of the employees who are well informed about the products as well
as have the necessary soft skills to deal and satisfy the customers. In future there may be a
problem of getting manpower or in specifics customer care executives with enhanced
skills, knowledge and attitude. Hence, it challenges for the bank to upgrade their existing
23
manpower and retain or lock in the best talents for having competitive edge in terms of
human resources.
e. Others:
TABLE NO:- 1.2
(i) Interest Rate Risk
Interest rate risk can be defined as exposure of bank's net interest income to adverse
movements in interest rates. A bank's balance sheet consists mainly of rupee assets and
liabilities. Any movement in domestic interest rate is the main source of interest rate risk.
Over the last few years the treasury departments of banks have been responsible for a
substantial part of profits made by banks. Between July 1997 and Oct 2003, as interest
rates fell, the yield on 10-year government bonds (a barometer for domestic interest rates)
fell, from 13 per cent to 4.9 per cent.
This will make it difficult to show huge profits from treasury operations. This concern
becomes much stronger because a substantial percentage of bank deposits remain
invested in government bonds.
24
Banking in the recent years had been reduced to a trading operation in government
securities. Recent months have shown a rise in the bond yields which has led to the profit
from treasury operations falling. The latest quarterly reports of banks clearly show several
banks incurring losses on their treasury operations. If the rise in yields continues, the
banks might end up posting huge losses on their trading books. Given these facts, banks
will have to look at alternative sources of investment.
(ii) Non-Performing Assets
The best indicator of the health of the banking industry in a country is its low level of
NPAs. Given this fact, Indian banks seem to be better placed than they were in the past. A
few banks have even managed to reduce their net NPAs to less than one percent (before
the merger of Global Trust Bank into Oriental Bank of Commerce, OBC was a zero NPA
bank). But as the bond yields start to rise, the chances are the net NPAs will also start to
go up. This will happen because the banks have been making huge provisions against the
money they made on their bond portfolios in a scenario where bond yields were falling.
Reduced NPAs generally gives the impression that banks have strengthened their credit
appraisal processes over the years. This does not seem to be the case. With increasing
bond yields, treasury income will come down and if the banks wish to make large
provisions, the money will have to come from their interest income, and this in turn, shall
bring down the profitability of banks. The shaping up of newly formed Credit Information
Bureau of India Ltd., (CIBIL) is much desired in the years to come so that entire MIS of
banks depositors and borrowers is available on line. Credit decisions will be quicker,
efficient and of quality both in respect of individuals and institutions.
25
(iii) Competition
The entry of new generation private sector banks during mid-1990s has changed the
entire scenario. Earlier the household savings went into banks and the banks then lent
money to corporates. Now they need to sell banking. The retail segment, which was
earlier ignored, is now the most important of the lot, with the banks jumping over one
another to give out retail loans. The consumer has never been so lucky with so many
banks offering so many products to choose from with varying terms and conditions, rates
of interest, etc. With supply far exceeding demand it has been a race to the bottom, with
the banks undercutting one another.
A lot of foreign banks have already burnt their fingers in the retail game and have now
decided to get out of a few retail segments completely. Notable examples are Bank
Paribas and Oman International Bank in India.
The nimble footed new generation private sector banks have taken a lead on this front and
the public sector banks are trying to catch up. The PSBs have been losing business to the
private sector banks in this segment. PSBs need to figure out the means to generate
profitable business from this segment in the days to come.
CONCLUSION
Over the last few years, the falling interest rates gave banks very little incentive to lend to
projects, as the return did not compensate them for the risk involved. This and a host of
other technological, legal, financial, structural changes/developments led to the banks
getting into the retail segment in a big way. It also led to a lot of banks playing it safe and
putting in most of the deposits they collected into government bonds. Now, with the bond
party over and the bond yields starting to go up, the banks will have to concentrate on
their core function of lending with reasonable spreads and safety of funds.
Furthermore, the banking sector in India needs to tackle these challenges successfully to
keep growing and strengthen the Indian financial system. Moreover the interference of
the central government with the functioning of PSBs should stop. A fresh autonomy
package for public sector banks has been announced recently. The package seeks to
provide a high degree of freedom to PSBs on operational matters. This seems to be the
26
right way to go for PSBs function in a professional manner and face stiff competition
from Private and Foreign players. Productivity, Profitability and Pricing of products are at
the top of the priority list of the banking system today.
With the economy experiencing respectable growth rates at around 7 – 8 per cent, it is
incumbent on the part of the banks to fall in line to offer best quality services to their
customers. Retail Banking deals with the lives of a vast majority of the population in the
age bracket between 25 and 60 years with disposable incomes. Regulators and Policy
makers shall take on their responsibility of facilitating the banks discharge their
responsibilities in an efficient manner. Problems enumerated above are not surmountable.
The growth of the banking sector will be one of the most important inputs that shall go
into making sure that India progresses and becomes a global economic super power.
27
CHAPTER II
ORGANIZATION INFORMATION
28
HDFC Bank (NYSE: HDB), one amongst the firsts of the new generation, tech-savvy
commercial banks of India, was incorporated in August 1994, after the Reserve Bank of
India allowed setting up of Banks in the private sector. The Bank was promoted by the
Housing Development Finance Corporation Limited, a premier housing finance company
(set up in 1977) of India. Net Profit for the year ended March 31, 2006 was Rs. 1,141
crores. Results of the latest quarter ended June 2007, indicate that the bank continues to
grow in a steady manner.
Mission and Business Strategy
Our mission is to be “a World Class Indian Bank”, benchmarking ourselves against
international standards and best practices in terms of product offerings, technology,
service levels, risk management and audit & compliance. The objective is to build sound
customer franchises across distinct businesses so as to be a preferred provider of banking
services for target retail and wholesale customer segments, and to achieve a healthy
growth in profitability, consistent with the Bank’s risk appetite. We are committed to do
this while ensuring the highest levels of ethical standards, professional integrity,
corporate governance and regulatory compliance.
Our business strategy emphasizes the following:
● Increase our market share in India’s expanding banking and financial services industry
by following a disciplined growth strategy focusing on balancing quality and volume
growth while delivering high quality customer service;
● Leverage our technology platform and open scaleable systems to deliver more products
to more customers and to control operating costs;
● Maintain high standards for asset quality through disciplined credit risk management;
● Develop innovative products and services that attract our targeted customers and
address inefficiencies in the Indian financial sector;
29
● Continue to develop products and services that reduce our cost of funds; and
● Focus on healthy earnings growth with low volatility.
Philosophy on Code of Corporate Governance
The Bank believes in adopting and adhering to best recognized corporate governance
practices and continuously benchmarking itself against each such practice. The Bank
understands and respects its fiduciary role and responsibility to shareholders and strives
hard to meet their expectations. The Bank believes that best board practices, transparent
disclosures and shareholder empowerment are necessary for creating shareholder value.
The Bank has infused the philosophy of corporate governance into all its activities. The
philosophy on corporate governance is an important tool for shareholder protection and
maximization of their long term values. The cardinal principles such as independence,
accountability, responsibility, transparency, fair and timely disclosures, credibility etc.
serve as the means for implementing the philosophy of corporate governance in letter and
spirit.
Board of Directors
The Composition of the Board of Directors of the Bank is governed by the Companies
Act, 1956, the Banking Regulation Act, 1949 and the listing requirements of the Indian
Stock Exchanges where the securities issued by the Bank are listed. The Board has a
strength of 12 Directors as on March 31, 2010. All Directors other than Mr. Aditya Puri,
Mr. Harish Engineer and Mr. Paresh Sukthankar are non-executive directors. The Bank
has five independent directors and seven non-independent directors. The Board consists
of eminent persons with considerable professional expertise and experience in banking,
finance, agriculture, small scale industries and other related fields. None of the Directors
on the Board is a member of more than 10 Committees and Chairman of more than 5
Committees across all the companies in which he/ she is a Director. All the Directors
have made necessary disclosures regarding Committee positions occupied by them in
other companies.
30
• Mr. Jagdish Capoor, Mr. Keki Mistry, Mrs. Renu Karnad, Mr. Vineet Jain, Mr. Aditya
Puri, Mr. Harish Engineer and Mr. Paresh Sukthankar are nonindependent Directors on
the Board.
• Mr. Arvind Pande, Mr. Ashim Samanta, Mr. Gautam Divan, Mr. C. M. Vasudev and Dr.
Pandit Palande are independent directors on the Board.
• Mr. Keki Mistry and Mrs. Renu Karnad represent HDFC Limited on the Board of the
Bank.
• Mr. Vineet Jain represents Bennett, Coleman Group on the Board of the Bank.
• The Bank has not entered into any materially significant transactions during the year,
which could have a potential conflict of interest between the Bank and its promoters,
directors, management and/or their relatives, etc. other than the transactions entered into
in the normal course of business.
The Senior Management have made disclosures to the Board confirming that there are no
material, financial and/or commercial transactions between them and the Bank which
could have potential conflict of interest with the Bank at large.
Additional Capital
In June 2009, the Bank allotted 1,35,82,000 equity shares of Rs. 10/- each at a premium
of Rs. 1,013.49 per share on a preferential basis to Housing Development Finance
Corporation Ltd. (HDFC) aggregating to Rs. 1,390 crores. In July 2009, the Bank made a
public offering of 6,594,504 American Depositary Shares (ADS), each ADS representing
three equity shares, at a price of $ 92.10 per ADS aggregating to of Rs. 2,394 crores (net
of underwriting discounts and commissions). During the year under review, 16.78 lacs
shares were allotted to the employees of your Bank pursuant to the exercise of options
under the Employee Stock Option Scheme of the Bank.
31
Capital Adequacy Ratio
Your Bank’s total Capital Adequacy Ratio (CAR) stood at a healthy 13.6%, well above
the regulatory minimum of 9.0%. Of this, Tier I CAR was 10.3%.
Human Resources
The Bank’s staffing-needs continued to increase during the year particularly in the retail
banking and SME businesses in line with the business growth. Total number of
employees increased from 21,477 as of March 31, 2009 to 37,836 as of March 31, 2010.
The Bank continues to focus on training its employees on a continuing basis, both on the
job and through training programs conducted by internal and external faculty. The Bank
has consistently believed that broader employee ownership of its shares has a positive
impact on its performance and employee motivation. The Bank’s employee stock option
scheme so far covers around 6,535 employees.
Service Quality Initiatives
Your Bank continued to seek and drive process improvement in all spheres of business
through structured Quality Projects using Lean Sigma Project Management Methodology.
Over 1,000 projects were executed during the year that resulted in substantial Cost and
Turn Around Times reduction, and productivity and process efficiency improvement.
Service Quality initiatives were refined to capture and improve upon real customer
experiences at various touch-points. New elements were added and renewed improvement
schemes installed to provide customer delight. Your Bank launched a Service Quality
improvement drive for some of the key support departments as well. Customer feedback
was taken into account to introduce new services using technology to ensure customer
convenience, secured transactions and, reduced cost of transactions. Your Bank plans to
use this platform to drive systemic changes and process re-engineering using technology,
Lean Six Sigma tool-kit, 5 S and other business excellence initiatives to further enhance
customer experience and value to business.
32
Social Initiatives
In keeping with the HDFC Group philosophy, your Bank has always believed in making a
difference to society at large. As a responsible corporate citizen, it has been your Bank’s
vision to empower the community through socio-economic development of
underprivileged and weaker sections of society. During 2009-10 your Bank further
intensified its efforts in this direction. Most of the Bank’s social activities revolve around
educational initiatives (including school adoption projects, educational sponsorships of
girl children, primary education to first generation learners etc.) and initiatives in the field
of livelihood training and support. In the latter area, the Bank has been working with
NGOs in providing non-formal vocational and technical education programs as well as
skill up gradation courses to enable sustainable employment and income generation for
economically weaker sections. To further integrate some of its Corporate Social
Responsibility (CSR) initiatives with its banking operations, the Bank has started
outsourcing some non-core back office operations to certain small semi-urban locations.
This creates jobs for the local educated youth in those towns with obvious gains for the
families (as the youth is gainfully employed without having to relocate to distant cities)
and also gives a boost to the local economy in those locations. Where relevant, the Bank
coordinates its CSR activities
with its microfinance and self – help group (SHG) financing.
The Bank has relationships with 110 micro finance institutions and has extended credit
facilities, whereby 1.61 million households have been beneficiaries of financial inclusion.
In this regard, your Bank has also appointed around 150 NGOs across the country as
business correspondents (BCs) to provide SHG – Bank linkage to help tribals, physically
challenged, beggars, etc. to earn a livelihood and join the mainstream. The Bank under
the direct SHG linkage programme, has credit linked over 32,000 SHGs and thereby
roughly another half a million households have been brought under Financial Inclusion.
Employees are a key part of your Bank’s social initiatives and are encouraged to
participate in these activities, contributing their time and skills. The Bank also administers
a payroll-giving programme whereby employees offer deductions from their salary to
donate for specified charities or social causes of their choice and the Bank contributes an
equivalent amount.
33
Merger with Centurion Bank of Punjab Limited
On March 27, 2008, the shareholders of the Bank accorded their consent to a scheme of
amalgamation of Centurion Bank of Punjab Limited with HDFC Bank Limited. The
shareholders of the Bank approved the issuance of one equity share of Rs. 10/- each of
HDFC Bank Limited for every 29 equity shares of Re. 1/- each held in Centurion Bank of
Punjab Limited. This is subject to receipt of approvals from the Reserve Bank of India,
stock exchanges and other requisite statutory and regulatory authorities. The shareholders
also accorded their consent to issue equity shares and/or warrants convertible into equity
shares at the rate of Rs.1,530.13 each to HDFC Limited and/or other promoter group
companies on preferential basis, subject to final regulatory approvals in this regard. The
Shareholders of the Bank have also approved an increase in the authorized capital from
Rs. 450 crores to Rs. 550 crores.
In terms of distribution, HDFC Bank stands to gain: 1,148 branches and 2,358 automated
teller machines (ATMs) will make it the largest by branches in the private sector. It also
gains from substantial cross-selling opportunities in the short-term. However, it will not
vend home loans given the conflict of interest with parent HDFC and may even sell down
CBoP’s home-loan book to it. A point of concern is the fact that the retail portfolio of the
merged entity will have more by way of unsecured and two-wheeler loans. This business
has come under pressure in recent times.
A report by Deutsche Bank (India) says “getting a 50 per cent boost to the branch
network in one shot, which even under a benign regulatory stance may take nearly three
years to achieve organically, is a big positive”. The other important point is that having
acquired two banks in 15 months (Bank of Punjab and Lord Krishna Bank), CBoP is not
working anywhere close to optimal profit-earning capacity. HDFC Bank may attempt to
improve it.
Subsidiary Companies
In terms of the approval granted by the Government of India, the provisions contained
under Section 212(1) of the Companies Act, 1956 shall not apply in respect of the Bank’s
subsidiaries namely, HDFC Securities Limited (HSL) and HDB Financial Services
Limited (HDBFSL).Accordingly, a copy of the balance sheet, profit and loss account,
report of the Board of Directors and Report of the Auditors of HSL and HDBFSL have
34
not been attached to the accounts of the Bank for the year ended March 31, 2010.
Investors who wish to have a copy of the annual accounts and detailed information on
HSL and HDBFSL may write to the Bank for the same. Further, the said documents shall
also be available for inspection by the investors at the registered offices of the Bank, HSL
and HDBFSL.
Risks and concerns
While Indian banks have limited direct exposure to the international markets for mortgage
linked securities, they are unlikely to be completely insulated from the turmoil in the
global financial markets. Reduced availability of global finance through external
commercial borrowings on the back of rising risk aversion in the global markets could
affect domestic growth, particularly investments in capacity expansion. This in turn could
have some impact on demand for domestic credit.
Lower capital inflows could also impact domestic liquidity, which has largely been a
function of external capital inflows for most of 2009-10 with the ratio of net foreign
exchange assets to reserve money consistently exceeding 100%.
The initial moderation in bank credit growth rates in 2009-10 seems to have been largely
confined to the retail segment (housing, consumer durables and auto loans). It is possible
that the moderation in growth in 2008-09 could be more broad-based, affecting both retail
and certain wholesale segments, due to trends in consumption and capital formation. This
has obvious implications for the credit portfolio of the banking system. A low 2.1%
growth in the ‘capital goods’ component of the index of industrial production (IIP) for
January 2009 seems to indicate a further decline in investment demand going forward
which could affect overall credit growth for the banking system, particularly in term loans
and project finance.
Rising global commodity prices created inflationary pressures for most of 2009-10. A
benign ‘base-effect’ and the suppression in the petroleum product prices kept headline
wholesale price inflation in a comfort zone for the first three quarters of the year.
However, given the focus on managing underlying price pressures rather than headline
inflation, monetary policy showed no signs of easing in 2009-10. Thus banks operated in
35
an environment where the central bank did not allow any surplus liquidity in the system,
resulting in interest rates remaining firm.
Despite the prospect of a slowdown in the global economy, commodity price pressures,
particularly those in food and mineral oils, show little sign of abating. As the base-effect
wears off, headline inflation is likely to ramp up to well over 7%. So, inflation concerns
are likely to influence monetary policy stance going forward and the prospect of an
economic slowdown need not entail immediate monetary easing. Thus, the operating
environment of banks in 2008-09 could be a combination of slower credit growth and
some upward bias in interest rates.
Opportunities
The financial system in India has witnessed considerably less turmoil and volatility than
that in advanced economies. Given this scenario, domestic corporates are more likely to
turn to local sources of funding. Cyclical slowdown is unlikely to impact segments of the
economy such as agriculture where a structural shift is under way. The rural economy has
been the greater focus of government policy in recent years, and significant opportunities
lie for banks here where the penetration of credit and financial products is still relatively
low.
The central and state governments appear to be driving an ambitious programme in the
infrastructure sectors. The eleventh five year plan (2007-2012) envisages an investment
of USD 500 billion, with approximately USD 80 billion envisaged for 2008-09 alone.
This presents a major opportunity for banks and financial institutions to finance these
investments.
Although growth in retail credit has moderated in the last year, the low penetration levels
of retail credit (estimated at less than 12% of GDP), the shift in demographics towards a
higher proportion of younger working population, the changing attitudes towards
borrowings, higher income levels amongst the growing middle class, and the large pent-
up demand for housing, cars etc., all augur well for the long-term, sustainable growth of
retail lending in the Indian market.
36
Outlook
The Indian economy seems likely to see some moderation in growth rates in 2009-10
relative to 2008-09. It is still likely to experience healthy growth in absolute terms and
will probably remain one of the fastest growing economies in the world. Nonetheless,
with a lower GDP growth coupled with tighter liquidity conditions (as RBI tackles
concerns on inflation) and stable or slightly higher interest rates, system credit growth is
likely to be lower than in 2009-10. Downward pressures on economic growth may not
immediately translate into an expansionary monetary policy, given the continued risks of
inflation from global energy and commodity prices. Thus, slightly slower credit growth
could coexist with firm, if not rising, interest rates. Given India’s strong macro-economic
fundamentals, however, structural drivers will continue to support growth which is a
positive for banks as well.
37
FINANCIAL RESULTS: Profit & Loss Account: Quarter ended June 30, 2010
For the quarter ended June 30, 2010, the Bank’s total income was Rs. 5,360.0 crores as against Rs. 5,136.8 crores for the quarter ended June 30, 2009. Net revenues (net interest income plus other income) were Rs.3,341.0 crores for the quarter ended June 30, 2010, an increase of 15.2% over Rs. 2,899.2 crores for the corresponding quarter of the previous year. Interest earned (net of loan origination costs and amortization of premia on investments held in the Held to Maturity (HTM) category) increased from Rs. 4,093.1 crores in thequarter ended June 30, 2009 to Rs. 4,420.2 crores in the quarter ended June 30, 2010. Net interest income (interest earned less interest expended) for the quarter ended June 30, 2010 grew by 29.4% to Rs. 2,401.1 crores, driven by average asset growth of 23.2% and a net interest margin (NIM) of 4.3% as against a core NIM of 4.2% for the quarter ended June 30, 2009.Other income (non-interest revenue) for the quarter ended June 30, 2010 was at Rs. 939.9 crores, primarily contributed by fees and commissions of Rs. 745.7 crores (up 14.9% over Rs. 649.3 crores in the quarter ended June 30, 2009) and foreign exchange/derivative revenues of Rs. 171.8 crores (up 24.7% over Rs. 137.8 crores in the quarter ended June 30, 2009). Profit on revaluation/sale of investments for the quarter ended June 30, 2010 was significantly lower at Rs. 21.5 crores as against Rs. 256.0 crores for the quarter ended June 30, 2009.Operating expenses for the quarter ended June 30, 2010 were up 15.3% to Rs. 1,592.3 crores and were stable at 47.7% of net revenues. On account of the improvement in asset quality, provisions and contingences reduced from Rs. 658.8 crores for the quarter ended June 30, 2009 to Rs. 555.0 crores (including loan loss provisions of Rs. 365.1 crores) for the quarter ended June 30, 2010. Profit before tax for the quarter ended June 30, 2010increased by 38.8% over the corresponding quarter ended June 30, 2009 to Rs. 1,193.7 crores. After providing Rs. 382.0 crores for taxation, the Bank earned a Net Profit of Rs. 811.7 crores, an increase of 33.9% over the corresponding quarter ended June 30, 2009.
Balance Sheet: As of June 30, 2010The Bank’s total balance sheet size increased by 25.3% to touch Rs. 233,253 crores as of June 30, 2010. Total deposits were Rs. 183,033 crores, up by 25.6% over June 30, 2009. With Savings account deposits at Rs. 53,869 crores and Current account deposits at Rs. 36,169 crores as of June 30, 2010, CASA deposits registered a growth of 37% over June 30, 2009. The CASA mix was therefore at 49.2% of total deposits as at June 30, 2010. Gross advances grew by 40.2% over June 30, 2009 to Rs. 147,620 crores. Of this, around 10% increase in advances was due to short-term, one-off movements in wholesale loans. Retail loans grew by 24.4% over June 30, 2009 to Rs. 76,068 crores and constituted 51.5% of gross advances
38
FIGURE NO:- 2.1
Capital Infusion & Capital Adequacy
The Bank’s total Capital Adequacy Ratio (CAR) as at June 30, 2010 (computed as per Basel 2 guidelines)remained strong at 16.3%, as against 15.4% as of June 30, 2009 and against the regulatory minimum of 9%.
Tier-I CAR was 12.4% as of June 30, 2010 as against 10.6% as of June 30, 2009
In June 2010, the Bank allotted 1,35,82,000 equity shares on a preferential basis to HDFC
Ltd. aggregating to Rs. 1,390 crores. In July 2007, the Bank made a public offering of
6,594,504 American Depositary Shares (ADS), aggregating to of Rs. 2,393 crores (net of
underwriting discounts and commissions).
The Bank’s total Capital Adequacy Ratio (CAR) as at March 31, 2008 stood at 13.6% as
against the regulatory minimum of 9.0%. Tier-I CAR was 10.3% as against 8.6% as of
March 31, 2010.
Business Segments have been identified and reported taking into account, the target
customer profile, the nature of products and services, the differing risks and returns, the
39
organization structure, the internal business reporting system and the guidelines
prescribed by RBI. The bank operates in the following segments:
(a) Treasury
The treasury services segment primarily consists of net interest earnings on the entire
investment portfolio of the Bank and gains or losses on investment operations.
(b) Retail Banking
The retail banking segment serves retail customers through a branch network and other
delivery channels. This segment raises deposits from customers and makes loans and
provides other services to such customers. Exposures are classified under retail banking
taking into account the status of the borrower (orientation criterion), the nature of
product, granularity of the exposure and the quantum thereof.
Revenues of the retail banking segment are derived from interest earned on retail loans,
net of commission (net of subvention received) paid to sales agents, and interest earned
from other segments for surplus funds placed with those segments. Expenses of this
segment primarily comprise interest expense on deposits, infrastructure and premises
expenses for operating the branch network and other delivery channels, personnel costs,
other direct overheads and allocated expenses.
(c) Wholesale Banking
The wholesale banking segment provides loans and transaction services to large
corporate, emerging corporate, supply chain and institutional customers. Revenues of the
wholesale banking segment consist of interest earned on loans made to corporate
customers and the corporate supply chain customers, interest earned on the cash float
arising from transaction services, fees from such transaction services and also earnings
from foreign exchange and derivatives transactions on behalf of corporate customers. The
principal expenses of the segment consist of interest expense on funds borrowed from
external sources and other internal segments, premises expenses, personnel costs, other
direct overheads and allocated expenses.
(d) Other Banking Business
40
This segment includes income from para banking activities such as credit cards, debit
cards, third party product distribution, and primary dealership business and their
associated costs.
(e) Unallocated
All items of which cannot be allocated to any of the above are classified under this
segment. This includes capital and reserves, debt classifying as tier I or tier II capital and
other unallocable assets and liabilities.
Segment revenue includes earnings from external customers plus earnings from funds
transferred to other segments. Segment result includes revenue less interest expense less
operating expense and provisions, if any, for that segment. Segment-wise income and
expenses include certain allocations.
Interest income is charged by a segment that provides funding to another segment, based
on yields benchmarked to an internally developed composite yield curve, which broadly
tracks market discovered interest rates. Transaction charges are made by the retail-
banking segment to the wholesale banking segment for the use by its customers of the
retail banking segment’s branch network or other delivery channels; such transaction
costs are determined on a cost plus basis. Segment capital employed represents the net
assets in that segment.
Geographic Segments
Since the Bank does not have material earnings emanating outside India, the Bank is
considered to operate in on the domestic segment.
41
FIGURE NO:- 2.4
Business Update:
As of March 31, 2010, the Bank’s distribution network was at 761 branches and 1,977
ATMs in 327 cities as against 684 branches and 1,605 ATMs in 320 cities as of March
31, 2009. Against the regulatory approvals for new branches in hand, the Bank expects to
further expand the branch network by around 75 branches by June 30, 2010.
During the year, the Bank stepped up retail customer acquisition with deposit accounts
increasing from 6.2 million to 8.7 million and total cards issued (debit and credit cards)
increasing from 7 million to 9.2 million.
Whilst credit growth in the banking system slowed down to about 22% for the year ended
2009-10, the Bank’s net advances grew by 35.1% with retail advances growing by 38.6%
and wholesale advances growing by 30%, implying a higher market share in both
segments. The transactional banking business also registered healthy growth with cash
management volumes increased by around 80% and trade services volumes by around
40% over the previous year.
Portfolio quality as of March 31, 2008 remained healthy with gross nonperforming assets
at 1.3% and net non-performing assets at 0.4% of total customer assets. The Bank’s
provisioning policies for specific loan loss provisions remained higher than regulatory
requirements.
42
CHAPTER III PERFORMANCE
OF BANKS&
MARKET MAPPING
43
BANKING IN A NEW LOCATION
There are about 10 branches of HDFC Bank in Faridabad. The one of the HDFC Bank
branch recently opened in Ballabhgarh, a very big and huge customer potential area with
cut throat bottleneck competition with other banks which comprise private bank ICICI,
nationalized banks, like SBI, CBI, PSB, CANARA, ALLAHABAD, UNION,
RAJDHANI, VIJAYA, & PNB and foreign banks like IDBI, INDISENT all in vicinity.
The new branch of HDFC Bank started operating from March, 01, 2010, adding up to 11
branches of Bank in Faridabad. The branch is located in main market of Ballabhgarh, i.e.
Chander Nagar from where Bank can have huge business to its pocket and other potential
areas for business in vicinity are Suraj Kund, Badkal, Ashiana, LDA, and many more.
Mission and Strategy
The main vision or focus of HDFC Bank is to capture maximum area of Ballabhgarh, to
have huge customer base and market base so that bank can expand, grow and have upper
edge over other banks, which are operating since long in that area and have strong brand
image.
The strategies followed by bank are:
a) Distribution of brochures, pamphlets and the strong tool of marketing i.e. word of
mouth.
b) Campaigning in various areas
c) Providing door-to-door services like details about products and services to potential
customers,
opening a/c’s, solving various customer queries
d) Taking people feed back on the brand, products and customer services of the bank and
improving on
those drawbacks if any.
e) Keeping sharp eye on the market changes and competitors, so that to do planning
accordingly.
44
Automation and Communication
The automation and communication of branch employees comprise on- role and off- role
employees or say managerial, clerical, and outsourced employees. On-role hierarchy is
like, Branch Manager, Back-up Branch Manager, Personal Banker Authorizer, Personal
Banker Sales, Teller and Personal Banker Welcome Desk where by off- role include all
Direct Sales Team. Both type of employees work together but with there respective
targets, so that branch can avail maximum business for the HDFC Bank.
FIGURE NO: - 3.1
Marketing Mix
The marketing mix is probably the most famous marketing term. Its elements are the
basic, tactical components of a marketing plan. Also known as the Four P's, the
marketing mix elements are price, place , product, and promotion.
4 P of Marketing
Place: The location of any organization should be so that it can grow and flourish in that
area, and should be visible and in the reach of the people. Same is with HDFC Bank, the
place where it is located is very good but it lack visibility.
Promotion: An organization after its place require proper promotion of its brand,
products and services so that people become aware and can easily recognize and
differentiate brand, products and services with other competitive organization in the area.
BRANCH MANAGER
PERSONAL BANKER
SALESTELLER
PERSONAL BANKER
WELCOME DESK
BACK-UP BRANCH
MANAGER
PERSONAL BANKER
AUTHORISER
45
So is with HDFC Bank although people are aware but not fully as some lacking in
promotional activities.
Product: The products of the organization should be so that have all features according to
customers and organization demand and need. Similarly with products of HDFC Bank,
which provide security and capital appreciation against various investment products?
Price: The product price or its value should be reasonable; it shouldn’t cost much to
customer and organization should also be able to recover its cost of product. HDFC Bank
is competent enough in providing products price worth its value.
Products and Services The bank deals in all type of banking i.e. Personal Banking, NRI Banking and Wholesale
Banking and its products include all types of accounts/deposits, advances and
investments, like Saving A/c, Current A/c, Salary A/c as first product, Fixed Deposit,
Debit card, Credit card, Locker and various Loans as second product, and then the third
party product as Insurance, Mutual Fund, SIP, and Securities. The customer services
provided by the bank are WAS (wealth advisory services), Insta Alert, Net Banking,
Phone Banking, Mobile Banking, Free Quarterly Bank Statements.
Contribution
My contribution to the HDFC Bank, new branch in Ballabhgarh during 8 weeks of summer training is
I have been assigned the task of collecting data from various banks in the vicinity, for this
I went to banks and met the branch managers of the bank so as to avail the required
information. The information collected by me is beneficial for HDFC Bank as it would
give an idea about the bank’s business value, performance in the market and any type of
problem bank facing in that area. With the information HDFC Bank can plan accordingly
and perform effectively in the market.
After completing my first task, I did market mapping in three potential areas for bank.
The three areas I covered are Ballabhgarh, Suraj Kund ,Badkal, AJRONDA CHOWK &
Bata Chowk for this I went to these places and met different businessmen, and taken
46
information about their banks with which they are dealing, their various investments and
whether they know about HDFC Bank in their area or not.
The information is useful for bank, as it would give an idea about their book value, their
potential to invest and whether they know about HDFC Bank in their area or not.
All, this I did during training and researched and prepared a report on it.
MAJOR PLAYERS IN BANKING IN BALLABHGARH
Top Performing Public Sector Banks
State Bank of IndiaPunjab National BankPunjab & Sind BankVijiya BankCentral Bank of IndiaAllahabad BankCanara BankUnion Bank of IndiaRajdhani BankBank of Baroda
Top Performing Private Sector Banks
ICICI BankHDFC Bank
Top Performing Foreign Banks
Indi Sea BankIDBI Bank
Bank Performance Checklist
The important tools in evaluation of banking companies are RoA, NPA, CASA and NIM
while CASA and NIM are the drivers it is actually the RoA that sets the pace in terms of
market cap expansion and is one of the best efficiency indicators of capital usage.
Declining NPA’s, increasing fee incomes, Robust CASA growth with expanding RoA’s
are the drivers that could catapult Banks The parameters for the choice are as follows
(equally weightage to all):
1) Profitability (NIM, Net Profit/Total Income)
47
2) Efficiency (Return on Average assets, Profit per employee)
3) Safety (Net NPA to net advances, CAR)
4) Size (Total assets, Total income)
5) Valuation (Price to Book, Price to Earnings)
6) Growth (NII, Net Profit)
How can one assess the quality -- and therefore the safety -- of a bank?
The foremost concern should be the level of non-performing assets -- or loans that
are not being repaid or serviced through interest payments on time -- in a bank.
The interest rate risk. A key risk these days pertains to the interest rate -- how badly
will the bank be affected by rising rates? The way to find this out is by checking the
growth in a bank's loans or 'advances' portfolio and in its net interest income. How
much did treasury income (or income generated from non-banking investments such
as government securities) contribute to the bank's net profit last year? Was that
substantial? The moot point is, will the bank be able to grow its lending enough to
offset the inevitable loss in treasury income? In the case of public sector banks,
there is a buffer -- they have large unrealized gains from treasury.
Net interest margin: The higher it is (net interest margin is interest earned minus
interest paid divided by total earning assets) the better it is for the bank.Net interest
margin is the difference between interest income and interest expenses, divided by
average earning assets. Earning assets are those, which bring income for a bank.
They are interest bearing accounts, bonds, and securities available for sale. Mainly
expressed as a percentage, the ratio is a guide to the profitability of a bank's
investments. Or more simply, it indicates the average interest margin that the bank
is receiving by borrowing and lending funds.
Cost to income ratio: This is simple -- the lower the cost, the better the bank.
The capital adequacy ratio. Another critical barometer is the bank's capital adequacy
ratio. Capital adequacy ratio measures the amount of a bank's capital expressed as a
percentage of its credit exposure. Globally, the capital adequacy ratio has been
developed to ensure banks can absorb a reasonable level of losses before becoming
insolvent. Indian banks are expected to maintain a minimum capital adequacy ratio
of 9 per cent (Rs 9 as capital for every Rs 100 in loans or asset). Applying minimum
48
capital adequacy ratios serves to protect depositors and promote the stability and
efficiency of the financial system by reducing the likelihood of banks becoming
insolvent. In the event of a wind-up of a bank, depositors' money gets precedence
over capital. This means, depositors would only lose money if the bank makes a loss
that exceeds the amount of capital it has. Ergo, the higher the capital adequacy ratio,
the higher the level of protection available to depositors. But there's a catch here -- a
higher capital adequacy could also mean a bank is sitting on money rather than
making productive use of it -- interest is not being earned.
A bank's capital, or equity, is the margin by which creditors are covered if the bank
had to liquidate assets. In banking, there are two types of capital. Tier I capital
(comprising money from ordinary shares that help a bank absorb losses without
being required to stop trading), and Tier II capital (comprising subordinated debt).
Capital adequacy ratio or the ratio of total capital (Tier I plus Tier II) to total risk
weighted assets must not be less than 9 per cent.
The Banks taken for the research are as follows
1) ICICI BANK2) SBI3) Punjab and Sind Bank4) Central Bank of India5) Allahabad Bank6) Union Bank of India7) Canara Bank
TABLE NO: - 3.1
NAME OF BANK CASA BOOK FD ADVANCES
Allahabad Bank 23 Cr 98.50 Cr 19.26 Cr
Canara Bank 50 Cr NA 40 Cr
Union Bank Of India 17.30 Cr 41.86 Lacs13.67 Lacs
Punjab & Sind Bank 55 Cr( Rough Data Provided)
51.24 Cr 9.24 Cr
49
Central Bank of India 35 Cr 72 Cr 9 Cr
SBI 53 Cr 83.35 Cr 15 Cr
Punjab National Bank 40 Cr 55 Cr 9.4 Cr
ICICI Bank 45 Cr 60 Cr NA
IDBI Bank LtdNA
MARKET MAPPING
Bank decision makers and financial services marketers faced with ongoing challenges can
make better business decisions with the help of software, data and analytic services from
Mapping Analytics:
Who are my best customers and how can I keep them?
Where is the greatest market potential to find new customers?
What locations should I choose to expand our branch network?
Is our network of bank branches optimized for maximum performance?
The answer to each of these questions depends in large part on geography and location.
That means working with Mapping Analytics — experts in mapping and analysis since
1989 — make sense. Many banks, both large and small, use these services to improve
marketing and branch network decisions.
BANK CUSTOMER SEGMENTATION ANALYSIS
Gain a clear understanding of your customers. Mapping Analytics combines data from
your customer information file with demographic and lifestyle data that describes and
predicts consumer behavior and buying patterns. For banks with commercial customers,
we segment by SIC codes and business demographics.
50
By segmenting your customers into groups based on their type and behavior, you will
have a foundation for successful marketing, including targeted promotions, market
expansion and branch network optimization.
Solving almost any sales and marketing challenge starts with knowing who your customer
is. Mapping Analytics can help you find out who your best customers are and apply
geographic analysis techniques to discover where to find more of them.
What Goes Into a Customer Profile
What makes up a customer profile? It depends on whether your customers are businesses
or consumers. In either case, you typically start with your own customer data (such as
location, purchases, spending volume), append additional consumer or business data, then
group into segments that share similar characteristics.
Consumer Customer Profiles
Demographics - age, income, gender, ethnicity, education level, etc.
GeoDemographic Clusters - there are many clustering databases available, and
we will help you choose the right one for your specific profiling needs. Some are
industry specific. Others are general. They often include data on interests,
lifestyles, purchasing behavior, attitudes and more.
Survey Data - based on data available for purchase or gathered through primary
research.
Businesses
SICs or NAICs - Standard Industry Classification (SIC) and North American
Industry Classification (NAIC) codes are added to your customer data to
determine type of business.
Firmographics - this invented word is used by marketers to refer to a company's
characteristics, including number of employees, revenue, growth rate and even
specialty data such as the number of computers or spending on
telecommunications.
51
Customer Profiling Benefits
Many of our customers ask for help in finding out who their customers are. It's an
important question to ask — and answer. Once you perform customer segmentation, you
can understand who your customers are from a demographic perspective. And you're on
your way to achieving many key benefits for your organization:
Understand Untapped Market Potential
An accurate profile of your customers allows you to analyze market areas or
neighborhoods to understand your penetration rates and the market potential for
your products and services. Penetration rate points to where market opportunity
exists.
Improve Targeted Marketing
By identifying and understanding the customers in the clusters where you have the
highest penetration, you can target marketing or business activities to those who are
most likely to purchase your products. You can improve response rates and ROI by
precisely marketing to prospects with offers that will appeal specifically to them.
Choose Better Sites
Customer profiling is a key analysis necessary to project the size of the total
market opportunity, and project revenue and customers for new or planned
locations. Few companies can make successful site selection decisions without
first understanding customer profiles.
52
MARKET POTENTIAL AND MARKET SIZING ANALYSIS
Market analysis services from Mapping Analytics help you know the economic
opportunity available to you in any geographic market. Whether you sell to consumers, to
businesses, or both, market sizing provides intelligence you need to deploy sales and
marketing resources effectively.
Benefits of Market Potential Analysis Understand market potential for a single store, network of stores or a new market
Deploy resources effectively by ranking markets in priority order
Forecast total opportunity in terms of number of customers and revenue potential
Estimate your market share
ACCESS MARKET OPPORTUNITY
Market analysis services from Mapping Analytics will provide the key intelligence you
need to rank and prioritize markets. You will know:
The top new geographic markets to target based on customer or revenue potential
Which markets where you currently do business have untapped potential
Gaining this market understanding is essential to growing and expanding your business.
But it isn't enough on its own.
What steps are you taking to gain market share where there is market potential?
You need to act upon your new found market understanding by deploying sales and
marketing resources effectively.
This is where Mapping Analytics separates from other firms that might offer you analytic
services. We can help you choose higher-performing store or business locations, align
your sales force more productively, and acquire prospect lists. All so you can tap into the
market opportunity we've helped you identify.
The area covered for market mapping are Ballabhgarh, Suraj Kund, Badkal, AJRONDA CHOWK & VIPRoad
53
BALLABHGARH
This area has been identified as the bigger market area in comparison to other areas. The major market segments that where identified in Ballabhgarh area are:
The main segments are of Garments and Departmental Stores, then Jewellery Shops. Other segments are of some renowned Companies, White Goods, Traders/Distributors, and Furniture’s
FIGURE NO: -3.2
SURAJ KUND
Suraj Kund area is the major hub of Plastic Industries and Wholesalers. It also includes
Confectionery Shops, Steel traders & others like Cement Distributors
FIGURE NO: - 3.3
54
BADKAL
The major market segments that where identified in Badkal area are:
Tranport Business, Pharma companies, Brick Fields & Industrial chemicals.
FIGURE NO : - 3.4
AJRONDA CHOWK
This area mainly has Property Dealers and Retailers. Other segments are of Fast Foon Junctures/Hotels, Various offices and Super Markets.
FIGURE: - 3.5
55
BATA CHOWK
The major segments identified in this area are of Marble Shops, Automobile Shops, Hotels/ Aashramand some confectionery Shops. Traders & Distributors.
FIGURE NO : - 3.6
56
SCALE 3MS/CC/FD
SCALE 2 MS/CC/LIC/FD
SCALE 1 MS/CC /MF/SEC/LIC/ FD
CATOGERISATION OF CUSTOMERS IN MARKET AND THERE MAJOR REQUIREMENTS
FIGURE NO: - 3.7
After analyzing the Market Scenario the customers are categorized in the market into
three scales on the basis of their monthly saving, working capital requirement and
investments. The three scales have been explained from the next page.
57
SCALE 1:
Scale 1 consists of the kinds of customers as follows
Real Estates Businessmen
Industrialists
Importers / Exporters
School/College Owners
Real Estates Businessmen and Industrialists usually have the requirement of Cash Credit
Limit or Over Draft Limit as they require huge amount money for meeting their demands
of working capital on regular basis .So these two products are best suitable for them.
While businessmen dealing in Import/Export save 15000-25000 monthly. Therefore they
have huge investments in Mutual Fund & Securities along with Cash Credit & Over Draft
Limit
Schools/College owners are more interested in Fix Deposits as they have large unused
funds and they usually look out for banks which can provide them best rate of interests.
SCALE 2:
Scale 2 consists of the kinds of customers as follows
Marble Traders
Owners of Furniture Shops
Owners of Jewelry Shops
Construction Material Distributors
All the kinds of customers in this scale require large amount of cash credit for working
capital but not on regular basis. They require money only for maintaining the inventories
in advance. Their monthly saving lye between 5000-15000 and have investment mostly in
Insurance and Fixed Deposit
SCALE 3:
58
Scale 3 consists of the kinds of customers owning business of:
Garments
Departmental Stores
Traders of Construction Materials
All the kinds of customers in this scale require small amount of cash credit for working
capital but not on regular basis. They require money only for maintaining the inventories
in advance. Their saving is around 5000/ month and have investment mostly in Fixed
Deposit.
FOCUS AREA FOR MARKET MAPPING
BALLABHGARH SURAJ KUND BADKAL AJRONDA CHOWK BATA CHOWK
59
CHAPTER IVRESEARCH
METHODOLOGY
60
OBJECTIVE OF THE STUDY
Any project work to be carried out in any organization or in any fieldwork in the market
has certain pre decided and specified objective, which is to be attained. The whole survey
or fieldwork is designed in accordance with that objective .The whole survey is broken
down in two various parts, which individually contribute to that project's objective. The
objective laid down helps to solve the problems that exist in the organization. This
problem provides the foundation for the project.
The various things that are to be done in any survey, the various components of the
problem and the project objective provide the base for deciding the scope of the project.
The scope of the project varies from project to project, the scope are the limit with in
which the person carrying out the project has to work. It provides the person various
things that are to be done. Under project it is basically the subdivision of the project
objective.
The topic of my project is “Comparative Study of Performance of Banks, Market
Potential & Awareness”. This includes the following Objectives:
To find out market share of each bank in the area & their performance
To find out the problems other banks are facing in the area.
To find out market segmentation & customer profile.
To find out HDFC Bank preference among customers.
61
Research methodology is a way to systematically solve the research problem.
RESEARCH DESIGN
Research Design is a detailed blueprint used to guide a researcher study toward its
objectives. Research design provides the glue that holds the research project together. A
design is used to structure the research, to show how all of the major parts of the research
project — the samples or groups, measures, treatments or programs, and methods of
assignment — work together to try to address the central research questions. To design
something also means to ensure that the pieces fit together. The achievement of this fit
among objectives, research approach, and research tactics is inherently an iterative
process in which earlier decisions are constantly reconsidered in light of subsequent
decisions. The process for designing a research study involves many interrelated
decisions. The most significant decision is the choice of Research Approach, because it
determines how the information will be obtained. The choice of research approach
depends on the nature of the research that one wants to do. It means types of Research
Approaches, data Collection methods etc.
The research design is the master plan specifying the methods and procedures for
collecting and analyzing the needed information.
Types of Research
Three traditional categories of research design:
• Exploratory
• Descriptive
• Causal
The choice of the most appropriate design depends largely on the objectives of the
research and how much is known about the problem and these objectives.
Although every problem and research objective may seem unique, there are usually
enough similarities among problems and objectives to allow decisions to be made in
advance about the best plan to resolve the problem.
62
There are some basic marketing research designs that can be successfully matched to
given problems and research objectives.
Research Design: Some Observations
• The overall research design for a project may include one or more of these three designs
as part(s) of it.
• Further, if more than one design is to be used, typically we progress from Exploratory
toward Causal.
Exploratory Research
Exploratory Research is used when one is seeking insights into the general nature of a
problem, the possible decision alternatives, and the relevant variable that need to be
considered. The research method is highly flexible, unstructured and qualitative.
Exploratory Research methods are either vague or ill defined, or they do not exist at all.
Exploratory research is useful for establishing priorities among research questions and for
learning about the practical problems of carrying out the research.
e.g. what kinds of question will respondents be able to answer?
What are the barriers to contacting the appropriate respondents?
When should the study be conducted?
Exploratory Research hypothesis are vague and ill defined, or they do not exist at all. If
we need to find “what benefits do people seek from the product?” since no previous
research considered consumer benefits, it is difficult even to provide a list of them.
Exploratory research is used in a number of situations.
• To gain background information
• To define terms
• To clarify problems and hypotheses
• To establish research priorities
63
FEATURES OF EXPLORATORY RESEARCH
Exploratory research is most commonly unstructured, “informal” research that is
undertaken to gain background information about the general nature of the research
problem.
Exploratory research is usually conducted when the researcher does not know much about
the problem and needs additional information or desires new or more recent information.
Exploratory research is a type of research conducted because a problem has not been
clearly defined. It helps determine the best research design, data collection method and
selection of subjects. Given its fundamental nature, exploratory research often concludes
that a perceived problem does not actually exist.
'The objective of exploratory research is to gather preliminary information that will help
define problems and suggest hypotheses.
Conclusive Research
As the term suggests, conclusive research is meant to provide information that is useful in
reaching conclusions or decision-making. It tends to be quantitative in nature that is to
say in the form of numbers that can be quantified and summarized. It relies on both
secondary data, particularly existing databases that are reanalyzed to shed light on a
different problem than the original one for which they were constituted, and primary
research, or data specifically gathered for the current study.
The purpose of conclusive research is to provide a reliable or representative picture of the
population through the use of a valid research instrument. In the case of formal research,
it will also test hypothesis.
Conclusive research can be sub-divided into two major categories:
1. Descriptive or statistical research, and
2. Causal research
64
Descriptive Research
Descriptive research or statistical research provides data about the population or universe
being studied. But it can only describe the "who, what, when, where and how" of a
situation, not what caused it. Therefore, descriptive research is used when the objective is
to provide a systematic description that is as factual and accurate as possible. It provides
the number of times something occurs, or frequency, lends itself to statistical calculations
such as determining the average number of occurrences or central tendencies.
One of its major limitations is that it cannot help determine what causes a specific
behavior, motivation or occurrence. In other words, it cannot establish a causal research
relationship between variables.
The two most commonly types of descriptive research designs are
Observation and
Surveys
Causal Research
If the objective is to determine which variable might be causing certain behaviour, i.e.
whether there is a cause and effect relationship between variables, causal research must
be undertaken. In order to determine causality, it is important to hold the variable that is
assumed to cause the change in the other variable(s) constant and then measure the
changes in the other variable(s). This type of research is very complex and the researcher
can never be completely certain that there are not other factors influencing the causal
relationship, especially when dealing with people’s attitudes and motivations. There are
often much deeper psychological considerations that even the respondent may not be
aware of.
There are two research methods for exploring the cause and effect relationship between
variables:
1. Experimentation, and
2. Simulation
65
For conducting my research I have used “EXPLORATORY” research design. Reason
being comparing HDFC Bank performance with other long back established banks in an
area and analyzing market potential & awareness for the bank in a new location.
Therefore for implementing something new I had to undertake an exploratory research
process.
Whenever there is a vague problem we move from exploratory research to conclusive
one. Moreover the primary objective of this research is the provision of insight into, and
comprehension of, the problem situation confronting the researcher
DATA COLLECTION
While deciding about the method of data collection to be used for the study, the
researcher should keep in mind two types of data viz., primary and secondary.
Primary Data:
The primary data are those which are collected afresh and for the first time, and thus
happen to be original in character. In primary data collection, you collect the data yourself
using methods such as interviews and questionnaires. The key point here is that the data
you collect is unique to you and your research and, until you publish, no one else has
access to it.
There are many methods of collecting primary data and the main methods include:
questionnaires
interviews focus group interviews observation case-studies diaries critical incidents Portfolios.
The primary data, which is generated by the above methods, may be qualitative in nature
(usually in the form of words) or quantitative (usually in the form of numbers or where
you can make counts of words used).
66
Secondary Data:
The secondary data, on the other hand, are those which have already been collected by
someone else and which have already been passed through the statistical process
To conduct my research I have used both primary and secondary sources of data. For the
secondary data I looked through various books, surfed the net and went through the
Standard Operating Procedures of the company & for the first hand data I have taken
FOCUS GROUP INTERVIEW & used the QUESTIONNAIRE . Questionnaire is
selected as the survey instrument. The forms used for the survey were both open-ended &
close-ended questionnaire consisting of various items.
Questionnaire
Questionnaires are a popular means of collecting data, but are difficult to design and often
require many rewrites before an acceptable questionnaire is produced.
Advantages:
Can be used as a method in its own right or as a basis for interviewing or a telephone
survey.
Can be posted, e-mailed or faxed.
Can cover a large number of people or organizations.
Wide geographic coverage.
Relatively cheap.
No prior arrangements are needed.
Avoids embarrassment on the part of the respondent.
Respondent can consider responses.
Possible anonymity of respondent.
No interviewer bias.
Disadvantages:
Design problems.
Questions have to be relatively simple.
67
Historically low response rate (although inducements may help).
Time delay whilst waiting for responses to be returned.
Require a return deadline.
Several reminders may be required.
Assumes no literacy problems.
No control over who completes it.
Not possible to give assistance if required.
Problems with incomplete questionnaires.
Replies not spontaneous and independent of each other.
Respondent can read all questions beforehand and then decide whether to complete or
not. For example, perhaps because it is too long, too complex, uninteresting, or too
personal
SAMPLING
Since out of such big population we can not include each unit therefore we use sample.
When only A FEW UNITS OF THE POPULATION are considered for study for analysis
it is known as SAMPLING method. Sample is the true representative of the population.
There are various methods of sampling.
Sampling Process
All the items under consideration in any field of inquiry constitute a “universe” or
“population”. The researcher must decide the way of selecting the sample or what is
popularly known as the Sample Design, in other words a sample design is a definite plan
determined before any data are actually collected for obtaining a sample from a given
population.
METHODS of SAMPLING
Basically there are two methods of sampling:
Probability sampling
Here every member has a known chance of being selected. There are various methods
under this.
68
1. Simple Random Sampling
Each member of the population has a known and equal chance of being selected.
2. Systematic Sampling
In this sample members are chosen in a systematic manner from the entire
population. Each member has a known chance of being selected but not
necessarily equal one
3. Stratified sampling
A stratified sample is selected when the researcher is particularly interested in
certain specific categories within the population. The population is divided in to
strata on the basis of certain measurable characteristics of its members.
4. Cluster Sampling
In this method the various units comprising the population are grouped in clusters
and the sample selection is made in such a way that each cluster has a known
chance of being selected.
Non Probability Sampling
In non probability sampling the chance of any particular unit in the population being
selected is unknown.
1. Judgment Sampling
A person knowledgeable about the population under study chooses sample
members he feels would be the most appropriate for the particular study.
2. Convenience Sampling
The sample units are chosen as per the convenience to the investigator.
3. Quota Sampling
The method is similar to the stratified sampling. Here also the population divided
into strata on the basis of characteristics of population the sample units are chosen
69
on the basis of characteristics of population. The only difference is that in
stratified sampling the units are chosen on the random basis whereas in quota
sampling it is chosen on the units are in the non random manner individuals
While conducting my research I have used the Convenience & Judgmental
technique in collecting the sample. As a result of this for Focus Group Interview
units are chosen as per the convenience and for other data collected, units chosen
that are the most appropriate for the study .Since the bank growth and awareness
can be checked in 3 months in a new location only with long back established
banks Business value & potential market for the bank. Therefore this method
makes my data more authentic and representative of the sample.
Sample Size
It is yet another important element to be considered while collecting the data. The sample
size should not be very small because then it is not the true representative of the sample.
When the sample is large, the sampling error estimate becomes more precise but the costs
might become too high. Therefore the researcher is to be very careful while he is selecting
the sample size.
The sample size taken for Focus Group Interview is of 8 banks & for Commercial survey,
sample of 250 been taken. The sample places taken for research are Ballabhgarh, Suraj
Kund, Badkal, AJRONDA CHOWK & Bata Chowk.
STATISTICAL TOOLS
Representation of statistical data by diagram, graphs, charts or pictures is more effective
than tabular representation being easily intelligible to a layman, indeed diagrams is most
essential whenever required to convey any statistical information to the general public.
The more important types of diagram which are use in statistical work are:-
1. Bar Diagram:
Mode of diagrammatic representation of data is the bar diagram. In this method
bar of equal width are taken for the different items of the series. The length of the bar
represents value of the variables concerned.
70
2. Pie Chart:
It is a circle whose area is divided proportionately among the different
components by straight lines drawn from the center to the circumference of the circle.
When statistical data are given for a number of categories and we are interested in the
comparison of various categories or between parts of the whole, such a diagram is very
helpful in effectively displaying the data.
The Statistical tools I have used in simplifying and summarizing the data collected are
both type of diagram i.e. Bar Diagram & Pie Chart. With this one can easily understand
what exactly been done & analyzed.
CHAPTER VDATA ANALYSIS
71
AND INTERPRETATION
MANAGERS QUESTION’S
1) What is your Bank staff strength?TABLE NO. 5.1
SBI PNB PSB CBI UBI CANARA ALLAHABAD ICICI HDFC
MANAGERIAL 4 5 6 4 4 6 2 3 2CLERICAL 12 13 11 12 6 6 6 10 4OUT- SOURCED
- - - - - - - 11 12
72
FIGURE NO. 5.1
ANALYSIS: - The max no. of Managerial Staff is of Canara Bank & min of HDFC
Bank, and then Clerical Staff max. of PNB & min. of HDFC Bank. & the outsourced staff
max. of HDFC Bank & min. of ICICI Bank.
INTERPRETATION:- The HDFC Bank has lowest staff of managerial & clerical but
more of outsourced as nationalized banks don’t have outsourced employees. ICICI Bank
is a private bank therefore it has outsourced employees.
2) Average no. of accounts opened daily
TABLE NO. 5.2
SBI PNB PSB CBI UBI CANARA ALLAHABAD ICICI HDFCSA 12 8 6 3 7 3 5 4 10
CA 1 13 11 0 1 1 1 2 3
TD 9 5 3 3 4 5 2 5 6
73
FIGURE NO. 5.2
ANALYSIS: - The max. no. of saving a/c’s opened in SBI Bank & min. in Central
Bank of India & Canara Bank. Then max. no. of current ac’s opened in Punjab National
Bank & min. in SBI, UBI, Canara Bank & Allahabad Bank. Max. no. of fixed deposit’s
opened by SBI & min. no. by Allahabad Bank.
INTERPRETATION: - This indicates that HDFC Bank hold good position in saving
a/c, current a/c & term deposit opened daily. Its stands 2nd in opening saving a/c, 3rd in
current a/c & again 2nd in term deposit opening. The main competitor in this are SBI,
PNB & PSB & ICICI too.
74
3) WHAT ARE YOUR BUSINESS MIX VALUES?
TABLE NO. 5.3
SBI PNB
PSB
CBI
UBI CANARA
ALLAHABAD
ICICI
HDFC
SV 15.24
43.35
53 30 15 33 22 1.77 .11
CV 3.14 9.65 10.78
5 2.3 2.78 1.05 .58 .15
TD VALUE 83.35
86 97.24
72 41.86
97 98.05 60 .2
ADVAVCES
15.07
9.4 9.24 9 13.67
40 19.26 11 .1
FIGURE NO. 5.3
ANALYSIS: - The highest in saving value & current value is Punjab & Sind Bank, then
Allahabad Bank holds highest value in term deposit or say fixed deposit & lastly the
maximum advance is given by
Canara Bank.
INTERPRETATION: - This shows that HDFC Bank has lowest CASA Book value &
fixed Deposit value & lowest in advances. The main competitor in saving & current value
is Punjab & Sind Bank and in term deposit main competitor is Canara Bank which hold
maximum of term deposit. In advance HDFC Bank seems ok otherwise main competitor
is Central Bnak of India. But other banks also have good book value. All are competition.
75
4) HOW MUCH IS NPA & ITS PERCENTAGE TO TATAL ADVANCES?TABLE NO. 5.4
SBI PNB PSB CBI UBI CANARA ALLAHABAD ICICI HDFCNPA 3.06 .33 .48 .13 .28 .04 .74 - -
% 20.3 3.57 5.19 1.4 2.04 1 3.84 - -
FIGURE NO. 5.4
ANALYSIS: - The Non Performing Asset is more of SBI, therefore its percentage is also
high. The lowest Non Performing Asset is of Canara Bank. HDFC Bank stands no where.
INTERPRETATION: - As visible that HDFC Bank is no where in graph. As it’s a new
branch in area.
Other banks do have non performing assets. The main competitor in this case is Canara
Babk which has lowest NPA percent.
76
5) ANY CONSTRAINT OR PROBLEM FACING IN THE AREA?
ANALYSIS: - Out of 8 banks only 3 banks are facing problem in the area and 5 banks
don’t have any problem in the area. The 3 banks are SBI, Union Bank of India & ICICI
and their responses are:-
1) SBI problem - More walk in of old & illiterate customer.
2) Union Bank of India problem- Staff Shortage
3) ICICI constraint facing of- Low profitable customer profile & more of retail appetite
in customer.
Other 5 banks are facing no problem in the area.
INTERPRETATION: - The above responses show that mostly banks are operating
smoothly in the area without any difficulty. But SBI, UBI & ICICI facing some big
problems due to which they can’t operate effectively & efficiently in the area .The above
said problems of banks are:
1) Illiterate & Old customer walk in create problem of handling customer & making them
understand the things of the bank easily.
2) Staff shortage creates the problem in branch work & customer handling.
3) Private banks main focus is profitability & more of wholesale banking but this is not so
with ICICI Bank.
77
MARKET QUESTION’SBALLABHGARH SURAJ
KUNDBADKAL AJRONDA
CHOWKBATA CHOWK
<5000 20 19 12 9 115000-15000
13 15 14 13 9
15000-25000
9 9 10 11 22
>25000 8 7 14 17 8
1) HOW MUCH YOU SAVE MONTHLY APPROXIMATELY?
TABLE NO. 5.5
FIGURE NO. 5.5
ANALYSIS: - In Ballabhgarh 20 people lie in < 5000 class & 13 people lie in 5000-
15000 class. In Suraj Kund 19 people lie in < 5000 class & 15 in 5000-15000 class. In
Badkal 14 people lie in >25000 class & 14 people lie in 5000-15000 class. In
AJRONDA CHOWK 17 people lie in >25000 class & 13 people lie in 5000-15000
class & in Bata Chowk 22 people lie in 15000-25000 class & 11 people lie in <5000
class.
INTERPRETATION: - This shows that mostly people in all area save around 5000-
15000 monthly. Very less no. of people saves 25000 monthly. The customers with
saving of 25000 monthly are in AJRONDA CHOWK, and then people with saving of
5000 are in Ballabhgarh. The people with saving of 10000 & 20000 are in Suraj Kund
& Bata Chowk. In Badkal people save 5000, 10000, 20000 & 25000.
78
2) DO YOU HOLD ANY TYPE OF ACCOUNT
BALLABHGARH SURAJ KUND
BADKAL AJRONDA CHOWK
BATA CHOWK
YES 49 48 46 47 49NO 1 2 4 3 1
TABLE NO. 5.6
79
FIGURE NO. 5.6
ANALYSIS: - In Ballabhgarh 98% people do have a/c & only 2% don’t have. In Suraj
Kund 96% people have a/c & 4% don’t have a/c. In Badkal 92% people have a/c & 8%
don’t have a/c. In AJRONDA CHOWK 94% people have a/c & 6% don’t possess a/c and
in Bata Chowk area 98% do have a/c & 2% don’t have a/c.
INTERPRETATION: - This shows that in all area mostly people have a/c & only few
people don’t have a/c. The maximum people which don’t have a/c are in Transport Ngar.
80
3) PRESENTLY BANKING WITH WHICH BANK?
TABLE NO. 5.7
BALLABHGARH SURAJ KUND
BADKAL AJRONDA CHOWK
BATA CHOWK
SBI 13 9 11 12 11PNB 14 8 10 7 9ICICI 9 8 10 11 9HDFC 9 8 10 10 8OTHERS 7 16 9 10 13
FIGURE NO. 5.7
ANALYSIS: - In Ballabhgarh 28% & 26% people have a/c with PNB & SBI. In Suraj
Kund 32% people have a/c’s in other banks. In Transpoet Nagar 22% & 20% people have
a/c with SBI, PNB, ICICI & HDFC Bank respectively. In AJRONDA CHOWK 24%,
22% & 20% people have a/c with SBI, ICICI, HDFC & other banks. In Bata Chowk area
26% of people have a/c with other banks & 22% people have a/c with SBI. HDFC Bank
has 18%, 16%, 20%, 20% & 16% a/c in respective area.
INTERPRETATION: - This shows that very less no. of people have a/c with HDFC
Bank but HDFC Bank almost have a/c’s equal to ICICI Bank. People of Badkal &
AJRONDA CHOWK have maximum a/c with HDFC Bank & people of Ballabhgarh area
have least a/c with HDFC Bank. Mostly people have a/c with nationalized banks.
4) WHICH TYPE OF ACCOUNT YOU HOLD?
81
TABLE NO. 5.8
BALLABHGARH SURAJ KUND
BADKAL AJRONDA CHOWK
BATA CHOWK
SAVING A/C
36 49 31 28 33
CURRENT A/C
40 42 42 42 46
SALARY A/C
24 9 27 26 22
FIGURE NO. 5.8
ANALYSIS: - In Ballabhgarh 80% people hold current a/c, 72% people have saving a/c
& 48% have salary a/c. In Suraj Kund 98% people hold a/c saving a/c, 84% people hold
current a/c, & 18% hold salary a/c. In Badkal 84% people hold current a/c, 62% people
hold saving a/c & 54% people hold salary a/c. In AJRONDA CHOWK 84 % people have
current a/c, 56% people hold saving a/c, & 52% people hold salary a/c. In Bata Chowk
area only 92% people have current a/c, 66% hold saving a/c & 44% people have salary
a/c.
INTERPRETATION: - This shows that in all areas mostly people have current a/c and
very less no. of salary a/c. Maximum no. of people who hold current a/c are in Bata
Chowk & minimum in Ballabhgarh. Then maximum no. of saving a/c holders is in Suraj
Kund & minimum in AJRONDA CHOWK. Lastly more salary a/c holder is in Badkal &
least in Suraj Kund.
82
5) DOES YOUR BANK PROVIDE FINANCIAL ADVISORY SERVICES?
TABLE NO. 5.9
YES 91NO 159
FIGURE NO. 5.9
ANALYSIS: - Out of 250 people 36% say that their bank provides financial advisory
services & 64% say no.
INTERPRETATION: - This interprets that mostly people don’t get financial advisory
services from their bank & just few have the privilege of having financial advisory
services.
6) ARE YOU SATISFIED WITH YOUR BANK SERVCES
83
TABLE NO. 5.10
YES 113NO 137
FIGURE NO. 5.10
ANALYSIS: - Around 45% people say that they are satisfied with their bank services but
55% say that they aren’t satisfied with their bank services.
INTERPRETATION: - When asked people whether they are satisfied with their bank
services less than 50% said yes they are satisfied but more then 50% said no they aren’t
satisfied with their bank services. This shows mostly people aren’t satisfied.
7) WHAT TYPE OF OTHER INVETMENTS YOU HAVE?TABLE NO. 5.11
84
FIXED DEPOSIT
INSURANCE MUTUAL FUND
SECURITIES
BALLABHGARH 44 27 13 16
SURAJ KUND 47 19 13 16
TRANSPORTNAGAR 46 33 11 10
AJRONDA CHOWK 43 34 22 33
BATA CHOWK 35 39 30 22
FIGURE NO. 5.11
ANALYSIS: - In Ballabhgarh 88% people invest in Fixed Deposit, 54% invest in
Insurance, only 26% invest in Mutual Fund & 32% invest in Securities. In Suraj Kund
94% invest in Fixed Deposit, 38% invest in Insurance, 26% make investment in Mutual
Fund & 32% invest in Securities. Similarly in Badkal 92% invest in Fixed Deposit, 66%
in Insurance, 22% invest in Mutual Fund, & 20% invest in Securities. Again in
AJRONDA CHOWK 86% invest in Fixed Deposit, 68% invest in Insurance, 44% do
invest in Mutual Fund, and 66% invest in Securities. In Bata Chowk 70% invest in Fixed
Deposit, 78% invest in insurance, 60% invest in Mutual fund, & 44% make investment in
Securities.
INTERPRETATION: - When asked people their investment preference they said they
prefer to invest in Fixed Deposit more then in Insurance, then Securities and lastly in
Mutual Fund.In Ballabhgarh, Suraj Kund, Badkal & AJRONDA CHOWK people prefer
to make investment in fixed Deposit & people of Bata Chowk prefer to invest more in
Insurance. Less preference is given to Mutual Fund.
8) WHAT IS YOUR CASH CREDIT AND OVER DRAFT LIMIT?
85
TABLE NO. 5.12
BALLABHGARH SURAJ KUND
BADKAL AJRONDA CHOWK
BATA CHOWK
<100000 13 16 5 10 5100000-130000
12 14 7 12 4
130000-150000
15 10 11 15 9
>150000 10 10 27 13 24
FIGURE NO. 5.12ANALYSIS: - In Ballabhgarh 30% people have CC & OD limit of 130000-150000, 26%
have limit of <100000, 24% have limit of 100000-130000 & 20% have limit of >150000.
In Suraj Kund 32% people have limit of <100000, 28% have limit of 100000-130000,
20% have limit of 130000-150000 & 20% have limit of >150000. In Badkal 94% have
limit of >150000, 22% have limit of 130000-150000, 14% have limit of 100000-130000
& 10 have limit oh <100000. In AJRONDA CHOWK 30% have limit of 130000-150000,
26% have limit of > 150000, 24% have limit of 100000-130000, & 20% have limit of
<100000. In Bata Chowk 48% people have limit of >150000, 18% have limit of 130000-
150000, 10% have limit of <100000 & 8% have limit of 100000-130000.
INTERPRETATION: - When analyzed most people have Cash Credit & Over draft
Limit of 130000-150000. People of Bata Chowk & Badkal have limit more of >150000.
Ballabhgarh & AJRONDA CHOWK people have more limits of 130000-150000. In Suraj
Kund people have requirement of CC & OD limit up to <100000.
9) ARE YOU AWARE OF HDFC BANK FOLLOWING PRODUCTS AND SERVICES
86
TABLE NO. 5.13
WD 50000 FFD SC A/C GDC TPDBALLABHGARH 9 16 17 22 31SURAJ KUND 19 23 11 14 21BADKAL 25 33 17 33 20AJRONDA CHOWK 18 38 40 27 18BATA CHOWK 13 29 14 34 22
FIGURE NO. 5.13ANALYSIS: - In Ballabhgarh 62% people are aware of third party cash deposit & only
18% aware of withdrawal upto 50000. In Suraj Kund, 46% people are aware of Flexi
Fixed Deposit & only 22% are awre of Senior Citizen a/c. In Badkal 66% know about
Flexi Fixed Deposit & Gold Debit Card & only 34% know about Senior Citizen a/c. In
AJRONDA CHOWK 80% people are aware of Senior Citizen a/c & 36% know about
withdrawal upto 50000 in a day from ATM & third party cash deposit. In Bata Chowk
area 68% know about Gold Debit Card & 26% aware of withdrawal upto 50000.
INTERPRETATION: - When asked about products & services people mainly were
aware of Flexi Fixed deposit & Gold Debit Card. Ballabhgarh people are more aware of
Gold Debit Card. Suraj Kund people more know about Flexi Fixed Deposit .Badkal
people know more about Flexi Fixed Deposit, Gold Debit Card & withdrawal upto 50000.
in aashana people are aware of Senior Citizen a/c, Flexi Fixed Deposit & Gold debit
Card. In Bata Chowk area people know more about Flexi Fixed Deposit & Gold Debit
Card.
10) RATE HDFC BANK ON FOLLOWING PARAMETERS
TABLE NO. 5.14
87
WAS CUSTOMER SERVICES
ROI CHARGES AQB
RANK 1 98 129 38 37 68RANK 2 56 62 59 46 31RANK 3 34 16 67 27 19RANK 4 29 27 52 82 34RANK 5 33 16 34 58 98
FIGURE NO. 5.14
ANALYSIS: - Around 51.6% & given Rank 1 to Customer Sevices, 39.2% & 24.8%
given Rank 1 &
Rank 2 to Wealth Advisory Services, 26.8% given Rank 3 to Return on Investment,
32.8% given Rank 4
to Charges & 39.2% given Rank 5 to Average Quarterly Balance.
INTERPRETATION: - This shows that mostly people prefer Customer Services of
HDFC Bank, then
Wealth Advisory Services, then have preference for return on investment, then least
preference for
Charges & Average Quarterly Balance.
11) ARE YOU AWARE OF HDFC BANK IN BALLABHGARH
88
TABLE NO. 5.15
YES 84NO 166
FIGURE NO. 5.15
ANALYSIS: - Out of 250 people only 84 i.e. 34% are aware of HDFC Bank in
Ballabhgarh & 166 i.e. 66% don’t know about the bank in Ballabhgarh.
INTERPRETATION: - When asked people about the HDFC bank in Ballabhgarh,
mostly people were unaware & just few know about it in Ballabhgarh.
12) HOW CAN WE MAKE HDFC BETTER
89
ANALYSIS: - The people when asked about the betterment for the bank, the following
response been give:-
1) More better Customer Services (39.2%)
2) Transparency Required (64%)
3) Less Average Quarterly Balance maintenance account (71.2%)
4) More money appreciation (40.8%)
5) More ATM (75.2%)
6) Branch location easily reachable (35.2%)
INTERPRETATION: - This indicates that people are interested in HDFC Bank, only if
they get some of these facilities & services. The people emphasized more on ATM &
AQB maintenance a/c, then for transparency requirement & then least for Customer
Services & branch Location.
90
CHAPTER VICONCLUSIONS, SUGGESTIONS
ANDLIMITATIONS
OFTHE STUDY
91
CONCLUSION
A research is incomplete if there is no conclusion to research conducted for period of
time.
The conclusions come from the study are as follows:
Conclusions for Banks Performance in the area are:-
1) As the HDFC Bank is in a new location, it started with only 5 employees Managerial &
Clerical, &
10 outsourced but other banks have more employees.
2) Despite of being in new location, with long back established banks, & in between
bottle-neck cut
throat competition, HDFC Bank is performing excellently.
3) As HDFC Bank is in new location just 3 months, that’s why it’s CASA book value &
Term Deposit
value is less. But HDFC Bank is continuously making efforts to leave behind all banks
in CASA
book value & term deposit.
4) HDFC Bank is also lowest in advances & it has no Non Performing Assets, as it just
started
operating.
5) The problems other banks are facing can be over come by HDFC Bank, as it can
handle all types of
customers whether old, illiterate, low profitable & retail appetite customer.
The bank has tough competition in Ballabhgarh area; as mainly area comprises of
nationalized banks & there is only one private bank i.e. ICICI Bank.
92
Conclusion for Market
1) Mostly people hold a/c’s with nationalized banks, as these banks have strong faith &
impact in people’s, mind. In all mapped area people doesn’t have much savings. The
maximum people do hold accounts with their nearest located bank, as they require quick
transaction, in less time. The people mostly hold current a/c for commercial purpose,
saving a/c for security& appreciation of money & salary a/c if the person is salaried
2) Mostly people aren’t satisfied with their bank services & they aren’t provided financial
advisory services. They do prefer to invest in Fixed Deposit for capital appreciation &
working capital & insurance. People are least knowledgeable about mutual fund &
securities. People do have requirement for cash credit & over draft in all areas between
130000-150000.
3) People are not fully aware of products & services of banks, they have least knowledge
about withdrawal upto 50000, third party cash deposit upto 100000 & senior citizen
account. No. of people are unaware of HDFC Bank in Ballabhgarh, as said by many that
the bank lack visibility.
4) People are more concerned with AQB & charges. Otherwise bank is alright. People
want more transparency and more ATM’s in the vicinity. Customer Service wise it is
ranked 1.
Therefore, bank has huge chances of capturing market, as there is huge potential in the
market.The highest market potential is in Badkal, Bata Chowk & AJRONDA CHOWK
93
LIMITATIONS
As we all know that for every good work there should be some leakage also. Here
leakage means some drawbacks. What I found in my SUMMER TRAINING which are
as follows:-
This is a two months study only.
Data available was not sufficient, there was lack of availability of data as most of
it was confidential for the banks.
Study has been basically done taking into consideration the retail investors.
Study has been done on Indian environment only.
Only four major areas have been taken up to make this portfolio.
Growing awareness is very low.
Segmented area is very specific.
Database is always dependable
Data have been taken of from different sources so there may be biasness in the
study.
94
SUGGESTIONS
1. To beat the competition in the market HDFC bank should either work hard or
increase the no. of employees.
2. To increase the CASA book value & Term Deposit, HDFC Bank should capture
maximum market by opening more & more a/c’s & aware people about the
benefits of opening a/c with the bank.
3. HDFC bank should try to make strong faith & believe in people mind about the
bank, by providing good services.
4. HDFC Bank try to make other banks problems their strong point, this way bank
can avail good business from those banks customer.
5. HDFC Bank should more focus on Customer Service & Financial Advisory
Services as mostly people are not getting these from their respective banks.
6. HDFC Bank should aware people more about investments in Mutual Fund &
Securities & its benefits. Bank should also open cash credit a/c of < 150000.
7. As people are not aware of bank in Ballabhgarh & its products & services,
therefore they should do more campaigning in various areas & marketing of their
products.
8. It should focus on increasing ATM’s, provide transparency to customer matters.
Should also consider AQB problem of customer due to which customer are more
nationalized oriented.
9. Overall HDFC Bank has to do a lot in order to be in market at an upper edge.
Only this way HDFC Bank can have maximum market base & customer base.
95