1. EXECUTIVE SUMMARY..............................................................................................................3 1.1 Summary of Project....................................................................................................................3 1.2 Objective of Project....................................................................................................................3 1.3 Scope of the Project....................................................................................................................3 2. COMPANY PROFILE.....................................................................................................................4 2.

1 HDFC BANK LTD. ...................................................................................................................4 2.2. Promoter ....................................................................................................................................4 2.3 Business Focus ...........................................................................................................................4 2.4 Capital Structure.........................................................................................................................5 2.5 Distribution network...................................................................................................................5 2.6 Management ...............................................................................................................................5 2.7 Technology.................................................................................................................................6 2.8 Business......................................................................................................................................6 i.Wholesale Banking Services......................................................................................................6 ii.Retail Banking Services ............................................................................................................6 iii. Treasury ..................................................................................................................................7 2.9 Rating .........................................................................................................................................8 i. Credit Rating .............................................................................................................................8 ii. Corporate Governance Rating..................................................................................................8 3. BANKING IN INDIA ......................................................................................................................9 3.1 ROLE OF RBI..........................................................................................................................10 3.2 Classification of Banks.............................................................................................................12 3.2.1 Nationalized banks ............................................................................................................12 3.2.2 Private Banks in India .......................................................................................................13 3.2.3 Foreign bank......................................................................................................................14 3.3 Importance of CO OPERATIVE BANKS ...............................................................................15 4. CORRESPONDENT BANKING SERVICES ..............................................................................16 1. Funds Drawing Arrangement .....................................................................................................16 2.Collection of Cheques: ................................................................................................................16 3. Constituent SGL accounts:.........................................................................................................17 4.Call Money :................................................................................................................................17 5. RTGS Transfers:.........................................................................................................................17 6. Currency Chest:..........................................................................................................................18 7. Demat Services:..........................................................................................................................18 8. Trade Finance and Foreign Exchange Services: ........................................................................18 9. Letter of Credit Facilities: ..........................................................................................................18 5. CONCEPT AND PROCEDURE ...................................................................................................20 I .CASH MANAGEMENT SERVICE ..........................................................................................20 II. CBDT (Central Board of Direct Tax)........................................................................................26 1. Organization and Functions....................................................................................................26 2. Historical Background of C.B.D.T.........................................................................................26 6. ANALYSIS OF CMS & CBDT Payment......................................................................................28 7. RESEARCH METHODOLOGY ...................................................................................................29 7.1 Objective of the research ..........................................................................................................29 7.2 Research approach....................................................................................................................29 7.3 Research Design:......................................................................................................................29 A) Primary Sources: ...................................................................................................................29 B) Secondary Sources: ...............................................................................................................30 8. ANALYSIS & INTERPRETATION OF DATA...........................................................................31 8.1From Questionnaire:..................................................................................................................31 Department of Management Sciences, University of Pune 1

ANALYSIS OF THE BUSINESS .....................................................................................................37 8.2Findings .....................................................................................................................................41 8.3 Suggestion ................................................................................................................................42 8.4 Scope for Improvement :..........................................................................................................43 9. CONCLUSION ..............................................................................................................................48 10 Bibliography..................................................................................................................................49 Annexure ............................................................................................................................................50 QUESTIONNAIRE........................................................................................................................50

Department of Management Sciences, University of Pune

1. EXECUTIVE SUMMARY
1.1 Summary of Project
Indian economy is essentially an agricultural economy with 60% people being directly or indirectly dependent on agricultural for their livelihood. Many import-export businesses are mainly dependent on agricultural based products for the raw materials. Apart from this, the export of grains & fruits is also a huge business. Rural banking has become the core part of banking these days as the urban market is over saturated with plenty of service providers being in queue for a single customer. The market today has become more buyer's market as the negotiation capacity lies with him. Looking at the banking scenario, the banking giants have not yet seemed to have reached the roots of our economy i.e. Rural India. It is not that there is no demand in the rural India for the advanced banking services but the problem mainly lies with the insufficiency of capital available with the Co-operative Banks in the local region in providing their customers the services & also some regulations imposed by RBI. To overcome this problem, the co-operative banks may tie up with the existing giants in the market for providing their customers the services which they don't have right now & this is how they can use the already established channel of the service provider bank. On the other side, the giants in the market may provide them the services as a part of their business, this upcoming business is known as Correspondent Banking. HDFC Bank does provide various banking services to their client banks viz. funds drawing arrangement, collection of cheques, constituent SGL accounts, call money, RTGS transfers, currency chest, demat services, trade finance, forex services & letter of credit facilities. There is one separate section which takes care of the correspondent banking services being provided to cooperative banks. HDFC Bank has the largest Co-operative bank client base with almost 376 banks (in pune region) availing the various services mentioned above. These co-operative banks overcome the limitation of short branch network, failing to provide promt clearing service, with use of HDFC Bank's wide branch network . CBDT online tax payment, the new complience regarding compulsory tax payment trough internet, is made simpler by HDFC Bank.

1.2 Objective of Project

To study various correspondent banking products and to find out the region wise potential for the Cash management service and CBDT payment (on-line tax payment) by the cooperative banks as a part of correspondent banking strategy.

1.3 Scope of the Project

To find out the CMS and CBDT potential in west 1 region only, amongst HDFC Bank's existing correspondent banking clients. Report also studies various correspondent banking products offered by HDFC Bank.

Department of Management Sciences, University of Pune

2. COMPA Y PROFILE
2.1 HDFC BA K LTD.
HDFC Bank Ltd., promoted by HDFC Ltd. commenced its operations in 1995. Headquartered in Mumbai, the bank has at present an enviable network of 684 branches spread across more than 316 cities. All branches are linked on an on line real-time basis. HDFC Bank has received recognition for its business, from various leading publications, both national and international. Forbes Global has named it in its list of The 300 Best Small Companies/Business Today, Business India and Business Baron have adjudged HDFC Bank Limited as the Best Private Sector Bank / Finance Asia as Indias Best Domestic Commercial Bank / Asia Money as among the top 25 Best Managed Companies in Asia Pacific / Euro money as Indias Best Bank.

2.2. 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

2.3 Business Focus

HDFC Bank's mission is to be a World-Class Indian Bank. The objective is to build sound customer franchises across distinct businesses so as to be the preferred provider of banking services for target retail and wholesale customer segments, and to achieve healthy growth in profitability, consistent with the bank's risk appetite. The bank is committed to maintain the highest level of ethical standards, professional integrity, corporate governance and regulatory compliance. HDFC Bank's business philosophy is based on four core values -Operational Excellence, Customer Focus, Product Leadership and People.

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2.4 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 Stock Exchange. The banks American Depository Shares are listed on the New York Stock Exchange (NYSE) under the symbol "HDB

2.5 Distribution network

HDFC Bank is headquartered in Mumbai. The Bank at present has an enviable network of over 1229 branches spread over 444 cities across India. All branches are linked on an online realtime basis. Customers in over 120 locations are also serviced through Telephone Banking. The Bank's expansion plans take into account the need to have a presence in all major industrial and commercial centres where its corporate customers are located as well as the need to build a strong retail customer base for both deposits and loan products. Being a clearing/settlement bank to various leading stock exchanges, the Bank has branches in the centres where the NSE/BSE have a strong and active member base. The Bank also has a network of about over 2526 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.

2.6 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.

Department of Management Sciences, University of Pune

2.7 Technology
HDFC Bank operates in a highly automated environment in terms of information technology and communication systems. All the bank's branches have online 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. The Bank's business is supported by scalable and robust systems which ensure that our clients always get the finest services we offer. 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.

2.8 Business
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:

i.Wholesale Banking Services

The Bank's target market ranges from large, blue-chip manufacturing companies in the Indian corporate to small & mid-sized corporates 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 corporates 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.

ii.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 Department of Management Sciences, University of Pune 6

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 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.

iii. 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 liberalisation of the financial markets in India, corporates 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.

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2.9 Rating
i. Credit Rating
The Bank has its deposit programs rated by two rating agencies Credit Analysis & Research Limited (CARE) and Fitch Ratings India Private Limited. The Bank's Fixed Deposit programme has been rated 'CARE AAA (FD)' [Triple A] by CARE, which represents instruments considered to be "of the best quality, carrying negligible investment risk". CARE has also rated the bank's Certificate of Deposit (CD) programme "PR 1+" which represents "superior capacity for repayment of short term promissory obligations". Fitch Ratings India Pvt. Ltd. (100% subsidiary of Fitch Inc.) has assigned the "AAA ( ind )" rating to the Bank's deposit programme, with the outlook on the rating as "stable". This rating indicates "highest credit quality" where "protection factors are very high". The Bank also has its long term unsecured, subordinated (Tier II) Bonds rated by CARE and Fitch Ratings India Private Limited and its Tier I perpetual Bonds and Upper Tier II Bonds rated by CARE and CRISIL Ltd. CARE has assigned the rating of "CARE AAA" for the subordinated Tier II Bonds while Fitch Ratings India Pvt. Ltd. has assigned the rating "AAA (ind)" with the outlook on the rating as "stable". CARE has also assigned "CARE AAA [Triple A]" for the Banks Perpetual bond and Upper Tier II bond issues. CRISIL has assigned the rating "AAA / Stable" for the Bank's Perpetual Debt programme and Upper Tier II Bond issue. In each of the cases referred to above, the ratings awarded were the highest assigned by the rating agency for those instruments.

ii. Corporate Governance Rating

The bank was one of the first four companies, which subjected itself to a Corporate Governance and Value Creation (GVC) rating by the rating agency, The Credit Rating Information Services of India Limited (CRISIL). The rating provides an independent assessment of an entity's current performance and an expectation on its "balanced value creation and corporate governance practices" in future. The bank has been assigned a 'CRISIL GVC Level 1' rating which indicates that the bank's capability with respect to wealth creation for all its stakeholders while adopting sound corporate governance practices is the highest.

Department of Management Sciences, University of Pune

3. BA KI G I I DIA
India has a well developed banking system. Most of the banks in India were founded by Indian entrepreneurs and visionaries in the pre-independence era to provide financial assistance to traders,agriculturists and budding Indian industrialists. Indian banks have played a significant role in the development of Indian economy by inculcating the habit of saving in Indians and by lending finance to Indian industry. The commercial banking structure in India consists of: Scheduled Commercial Banks and Unscheduled Banks. Scheduled commercial Banks constitute those banks, which have been included in the Second Schedule of Reserve Bank of India (RBI) Act, 1934. RBI includes only those banks in this schedule, which satisfy the criteria laid down section 42 (6) (a) of the Act.

Classification of scheduled banks:

Reference: www.rbi.org.in Department of Management Sciences, University of Pune 9

3.1 ROLE OF RBI

Main objectives a) Monetary authority Formulates, implements and monitors the Monetary Policy, announced twice a year. Announces the Credit Policy, announced twice a year - in April it announces new policy initiatives, the October pronouncement is a review of the April policy. Objective: Maintaining price stability and ensuring adequate flow of credit to productive sectors. Maintain optimum Liquidity in the economy. b) Regulator and supervisor of the financial system Prescribes broad parameters of banking operations within which the country's banking and financial system functions. Objective: Maintain public confidence in the system, protect depositors' interest and provide costeffective banking services to the public. TheBanking Ombudsman Scheme has been formulated by the Reserve Bank of India (RBI) for effective redressal of complaints by bank customers. c) Manager of exchange control Manages the Foreign Exchange Management Act, 1999. Objective: To facilitate external trade and payment and promote orderly development and maintenance of foreign exchange market in India. d) Issuer of currency Issues and exchanges or destroys currency and coins not fit for circulation. Objective: The main objective is to give the public adequate supply of currency of good quality and to provide loans to commercial banks to maintain or improve the GDP. The basic objectives of RBI are to issue bank notes, to maintain the currency and credit system of the country to utilize it in its best advantage, and to maintain the reserves. RBI maintains the economic structure of the country so that it can achieve the objective of price stability as well as economic development, because both objectives are diverse in themselves.

e) Developmental role Performs a wide range of promotional functions to support national objectives. To incubate or establish financial institutions of national importance, for e.g.: NABARD, IDBI Department of Management Sciences, University of Pune 10

Related functions 1. Banker to the Government: performs merchant banking function for the central and the state governments; also acts as their banker. 2. Banker to banks: maintains banking accounts of all scheduled banks. 3. Owner and operator of the depository (SGL) and exchange (NDS) for government bonds. 4. There is now an international consensus about the need to focus the tasks of a central bank upon central banking. RBI is far out of touch with sprawling mandate described above. such a principle, owing to the

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3.2 Classification of Banks

Indian banks can be broadly classified into nationalized banks, public sector banks, private banks and foreign banks.

3.2.1 ationalized banks

Banking System in India is dominated by nationalized banks. The Nationalization of banks in India took place in 1969 by Mrs. Indira Gandhi the then prime minister. The major objective behind nationalization was to spread banking infrastructure in rural areas and make available cheap finance to Indian farmers. Fourteen banks were nationalized in 1969. These Banks were Before 1969, State Bank of India (SBI) was the only public sector bank in India. SBI was nationalized in 1955 under the SBI Act of 1955. The second phase of nationalization of Indian banks took place in the year 1980. Seven more banks were nationalized with deposits over 200 crores. List of Public Sector Banks in India is as follows: Andhra Bank Allahabad Bank Bank of Baroda Bank of India Bank of Maharashtra Canara Bank Central Bank of India Corporation Bank Dena Bank Indian Bank Indian Overseas Bank Oriental Bank of Commerce Punjab and Sind Bank Punjab National Bank State Bank of Bikaner & Jaipur State Bank of Hyderabad State Bank of India (SBI) State Bank of Indore State Bank of Mysore State Bank of Patiala State Bank of Saurashtra State Bank of Travancore Syndicate Bank UCO Bank Union Bank of India United Bank of India Vijaya Bank

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3.2.2 Private Banks in India

All the banks in India were earlier private banks. They were founded in the preindependence era to cater to the banking needs of the people. But after nationalization of banks in 1969 public sector banks came to occupy dominant role in the banking structure. Private sector banking in India received a filip in 1994 when Reserve Bank of India encouraged setting up of private banks as part of its policy of liberalisation of the Indian Banking Industry. 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. Private banks have played a major role in the development of Indian banking industry. They have made banking more efficient and customer friendly. In the process they have jolted public sector banks out of complacency and forced them to become More competitive. Major Private Banks in India are: Bharat Overseas Bank Bank Of Rajasthan Catholic Syrian Bank Centurion Bank of Punjab Dhanalakshmi Bank Federal Bank HDFC Bank ICICI Bank IDBI Bank IndusInd Bank ING Vysya Bank Jammu & Kashmir Bank Karnataka Bank Karur Vysya Bank Kotak Mahindra Bank SBI Commercial and International Bank South Indian Bank United Western Bank UTI Bank YES Bank

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3.2.3 Foreign bank

Foreign banks have brought latest technology and latest banking practices in India. They have helped made Indian Banking system more competitive and efficient. Government has come up with a road map for expansion of foreign banks in India. The road map has two phases. During the first phase between March 2005 and March 2009, foreign banks may establish a presence by way of setting up a wholly owned subsidiary (WOS) or conversion of existing branches into a WOS. The second phase will commence in April 2009 after a review of the experience gained after due consultation with all the stake holders in the banking sector. The review would examine issues concerning extension of national treatment to WOS, dilution of stake and permitting mergers/ acquisitions of any private sector banks in India by a foreign bank. Major foreign banks in India are: ABN-AMRO Bank Standard Chartered Bank Abu Dhabi Commercial Bank Ltd. American Express Bank Ltd BNP Paribas Citibank DBS Bank Ltd Deutsche Bank HSBC Ltd

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3.3 Importance of CO OPERATIVE BA KS

Introduction The Co-operative banks have a history of almost 100 years. The Co-operative banks are an important constituent of the Indian Financial System, judging by the role assigned to them, the expectations they are supposed to fulfill, their number, and the number of offices they operate. The co-operative movement originated in the West, but the importance that such banks have assumed in India is rarely paralleled anywhere else in the world. Their role in rural financing continues to be important even today, and their business in the urban areas also has increased phenomenally in recent years mainly due to the sharp increase in the number of primary cooperative banks. While the co-operative banks in rural areas mainly finance agricultural based activities including farming, cattle, milk, hatchery, personal finance etc. along with some small scale industries and self-employment driven activities, the co-operative banks in urban areas mainly finance various categories of people for self-employment, industries, small scale units, home finance, consumer finance, personal finance, etc. In the beginning of 20th century, availability of credit in India, more particularly in rural areas, was almost absent. Agricultural and related activities were starved of organized, institutional credit. The rural folk had to depend entirely on the money lenders. The co-operative banks arrived in India in the beginning of 20th Century as an official effort to create a new type of institution based on the principles of co-operative organization and management, suitable for problems peculiar to Indian conditions. These banks were conceived as substitutes for money lenders, to provide timely and adequate short-term and long-term institutional credit at reasonable rates of interest Categories There are two main categories of the co-operative banks a) Short term lending oriented co-operative Banks - within this category there are three sub categories of banks viz 1.State co-operative banks, 2.District co-operative banks and 3. Primary Agricultural co-operative societies. b) long term lending oriented co-operative Banks - within the second category there are land development banks at three levels state level, district level and village level.

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4. CORRESPO DE T BA KI G SERVICES
HDFC Banks co-operative bank department has the following products on offer with dynamic changes being made continuously to cater to the changing needs of customers.

1. Funds Drawing Arrangement

The facility to issue instruments on all the HDFC Bank locations offered, presently 283 locations being available. Pre-printed stationery may be used by Co-operative branches for issuing drafts to their customers for our locations. HDFC Bank would honor the instruments at all their locations, subject to availability of clear funds in current account with HDFC Bank branch. There is not any ceiling on the value of instruments to be issued per day on RBI locations. The funding of current account, for all the drafts issued during the day, would have to be done through a pay order/RTGS to be deposited with HDFC Bank Branch on the next day before 10.00 a.m. Features: Two types of cheque stationery with different colours and other security features for amounts upto Rs. 1 lakh and above Rs. 1 lakh. Daily account statements on e-mail and exhaustive month-end statement of account is provided to facilitate error free and timely reconciliation of banks book of accounts. Co-operative bank Software (CBS) developed exclusively for Co- operative banks, the same can be installed at the co-operative banks Head office and branches.

2.Collection of Cheques:
A facility to collect outstation cheques deposited by Co-operative bank clients drawn on HDFC Bank locations. All the instruments, received for collection by your branches (drawn on HDFC Bank locations), would have to be deposited with HDFC Banks Pune/Mumbai branch. The instruments have to be deposited in one lot for each location. HDFC Bank would credit clear funds to Co-operative banks account on Day 4 for cheques deposited at clearing location directly and Day 7 for any outstation cheques (Day 0 being the date of deposit with HDFC Bank).

The facility is being offered to co-operative banks at collection charges of Rs. 15/- per instrument. A charge of Rs.50/- per instrument is applicable for cheques returned unpaid. Rs. 10/- per packet per location would be charged as courier charges. Department of Management Sciences, University of Pune 16

Features: Credit passed on to the Co-operative banks account on an assured day A whole range of MIS can also be provided for such collections

3. Constituent SGL accounts:

Co-operative banks can open a Constituent SGL account with HDFC Bank for making investments in Government securities for taking care of their SLR requirements. Features: An advisor cum dealer at Pune to help you with your investments Treasury support provided from the nearest HDFC Bank location Highly efficient services provided to co-operative banks to help them in their investment activities Low transaction charges and no charges for any direct deals with HDFC Bank Interest realisation at no extra charges Monthly statement of the holdings of co-op. Bank with regular advices for transactions and half-yearly interest credits

4.Call Money :
Call money facility for clear funds only in clients current account on an overnight basis. Co-operative banks can give HDFC Bank a payorder of MSC Bank which can be deposited in High Value at Mumbai by 10.30 am and the funds will be taken in call effective the next day. Client can also transfer funds to their current a/c by RTGS Client will have to fax Daily the Call Money instructions to Pune for Call booking. Call Timings Mon to Fri : 09:30 a.m. to 12:30 p.m. Saturday: 09:30 a.m. to 11:00am

5. RTGS Transfers:
RTGS Charges (For RTGS charges where Bank is beneficiary A/c) Rs 5 per transcation + RBI Charges + taxes if any. (At present RBI Charges are nil) RTGS Timings: Mon to Fri : 09:30 a.m. to 1.00 p.m. Saturday : 09:30 a.m. to 10:30 p.m

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6. Currency Chest:
Co-operative banks can use our currency chest for cash depositions as well as cash withdrawals. Currency chest facility affords you the perfect arrangement to effectively handle your cash requirements as well as reducing your risk of holding cash at your end. This facility is presently available at Bangalore, Chandigarh, Chennai, Delhi, Hyderabad, Kolkata, Mumbai & Pune.

7. Demat Services:
HDFC bank is a Depository participant and has tie-ups with NSDL and CSDL. Our bank is interested in extending Depository facilities to the customers of the co-operative bank. Features: Facility to convert your banks investment portfolio in dematerialised formalities Demat services available to your customers through HDFC Banks' depository by opening their demat account with HDFC bank Regular statements of transactions and debits provided to the Co-op. Banks.

8. Trade Finance and Foreign Exchange Services:

HDFC Bank Ltd. is proud to present to the Co-operative bank, Trade Finance and Foreign Exchange Services on behalf of their customers. Our bank has developed substantial expertise in the fields of foreign exchange, treasury and International trade finance. The bank also has an extensive Foreign Correspondent Bank network for fast realization of fund transfers and other related services. The charges for these services are very competitive. The following are some of the products, which can be availed of by the Co-op. Banks on behalf of their customers: Collection of Export bills Collection of foreign currency instruments Foreign inward remittances Import collection documents NRE/NRO accounts

9. Letter of Credit Facilities:

Co-operative banks are not allowed to offer LC facilities to their customers leading to the loss of these customers to other nationalized banks, we would be glad to offer these facilities considering the credit/financial factors, our relationship and services availed through us over a period of time.

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DOCUMENTATION: Board resolution specifying the mode of operation of the account and authorized to operate the account. Agreement & Indemnity for funds drawing arrangement. Accepted copy of the offer letter RBI License Copy State Registration Copy Copy of the Bye Laws of the Cooperative Bank Collection Agreement the persons

OVATIVE PRODUCTS

1. Agriflows / Industrial collections : This is a revolutionary service specially designed for your traders and businessmen dealing in various agricultural as well as industrial commodities. This service is specially designed to enable you to offer your clients cash management as offered by various private and foreign banks to their traders clients. HDFC bank provides you its cash management infrastructure to enable you to provide customised service to your clients and prevent them from moving to other banks for availing these services.This is most useful incase of your loan accounts, where the flows can be routed through your bank instead of other banks. Please get in touch with us for more details. 2. CBLO ( Collateralised Borrowing and Lending Obligation) : CCIL has developed a new money market product called Collateralized Borrowing and Lending Obligation (CBLO), to meet the needs of banks, financial institutions and primary dealers for borrowing and lending of funds. CCIL with HDFC Bank has launched a CBLO programme specially designed for the co-operative banks. This is an excellent product for cooperative banks as you can pledge your surplus government securities with CCIL and borrow funds at the prevailing market rates to meet any liquidity constraints. The co-operative bank can also lend surplus funds in the market through CCIL. Since all transactions are guaranteed by CCIL, the co-operative banks will enjoy the benefits of favourable rates.

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5. CO CEPT A D PROCEDURE
5.1 CASH MANAGEMENT IN INDIA Cash management in India is dogged by poor communication and archaic clearing rules and procedures. The funds transfer process is entirely paper driven, bogged down by needless delays and errors. The clearing system is such that it hinders optimal management of cash. Transit delays, which some times can be as much as a month results in an expensive float. The sheer geographic spread of the country only aggravates the problem.

I .CASH MA AGEME T SERVICE

Normal cheque clearing process involves the traveling of cheque from various locations. Time taken to clear these cheque is basically depends on the kind of cheque it is and the location from where it is been drawn. These cheques are basically categorised as 1. High value & 2. MICR cheques Depending upon the value of the amount it supposed to debit. While another category is that, they are classified on basis of it issuance as 1. Local cheques & 2. Out- station cheques. High value cheques are with amount more than One lack rupees while MICR (Magnetic Ink Character Recognition) cheques have it less than One lack rupees. Where as local cheques comprise of the deposition in the local clearing house and Out-station as deposition in another clearing house. HDFC Banks cash management service deals with this problem as solution to late credit which would other wise take more time in clearing. HDFC Bank through its wide base of branches all over India, effectively serves the purpose of CMS. Correspondence banking group at bank looks after this service.

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Basic Clearing process at any Bank :

Whenever a person say Trader, for our sake, deposits a cheque at bank where he has his current account will have to wait for the clearing which may took as long as fifteen days. The main backdrop behind the time lag is that the bank where he has his account not necessarily have any branch at the location from where trader has got the cheque. This is usual case with traders as they supply their goods to various distinct locations in India. The late credit is an obvious out come of normal clearing process. For high value cheques it will be quite earlier but generally for MICR cheques, it is time consuming process and makes trader suffer from idle cash which he wont get even week after he had delivered the goods.

Normal flow of the cheque will be as shown below

Assumption: Trader has got out station cheque of Delhi.

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If Organizations activities are spread across major cities through out the country, Managing outstation funds collection & disbursements can often be time consuming and expensive. Adopting conventional wisdom & adhering to traditional channels of banking for collection & pulling of funds, quite often the corporate is deprived of timely access of funds of there own for profitable deployment. Under delay & uncertainty in the funds flow means additional borrowing & resultant increased borrowing cost. Efficient fund management is about getting funds in time, quick transfers, quick realization of out station cheques, easy disbursements, account reconciliation, controlled processes and customized MIS. While these contribute to effective cash management, reliable and accurate information is an indispensable aid to smooth cash flow. Quickening the process of accessing the receivables makes the operating cycle move faster leading to better efficiency. For corporate with an eye on reducing the cost of operations, cash management services are a necessity.

For example, the strength of Hindustan Uni lever Ltd, the FMCG giant is in strong distribution network with thousands of suppliers and retailers. When Uni lever has to receive a cheque from a customer in a remote place say Asansol, it might take more than 15 days for the cheque to be cleared and the amount to be actually credited in UL L's mumbai account. This may lead to non-optimal utilization of cash.

CMS offers bank the facility of clearing of local / out station instrument favoring bank organization deposited at HDFC Banks branch location with pooling of funds at mumbai or at any other location where HDFC Bank has presence on vary competitive terms. CMS eliminates the inherent delays of traditional fund transfer mechanism. CMS enhances liquidity and insures optimum planing and utilization of funds. In addition to faster access to funds, CMS provides the client bank with MIS, which will help to improve client banks reconciliation.

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CASH MANAGEMENT PROCESS FLOW Cash management service serves for the betterment of the client. CMS implementation involves some basic requirement to be fulfilled. For this Client needs to have one current account with HDFC Bank. The process for availing the CMS facility is as mentioned below CMS client code is provided to the client at the time of set up All the deposits in the CMS account are to be made wit reference to this unique client code. All the cheques can be collected from the designated clients office through a courier service. If the courier facility is not availed, the cheque are to be deposited with the designated HDFC Bank branch or a coordinator along with a specific CMS deposit slip for that product before the cut off time. Daily MIS is provided with the collections in the account for that particular day in soft copy at the email id's given at set up by client. The MIS can be customized in the format required by Cooperative bank. E-net viewing :- Under this facility, bank can view all the details that are required. The details are provided under two headsThe account viewing where bank can see the account statement, balance etc. The CMS module where bank can view the deposits on that day, the day of credit for these cheques.

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Figure : Existing CMS Process

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Facilities provided in CMS service

1. Daily report on location wise collections/returns 2. Monthly report on total collections and service charges. 3. Monthly report on total payouts and service charges. 4. Enet facility to check/validate cheque collection across location at one central place through deposit and instrument query. 5. Any additional report, in mutual consolation which the company may be requiring from time to time.

Documentation and Charges Documents required to avail this facility are as mentioned below 1. The Bank to execute an application-cum-agreement / Fax indemnity. 2. A board resolution for availing the cash management services from HDFC Bank. 3. A list of Signatories who are authorized to give instructions to the HDFC Bank for operating services.

Courier charges of Rs.25/- per packet per location per day will be applicable.

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II. CBDT (Central Board of Direct Tax)

1. Organization and Functions
The Central Board of Direct Taxes in a statutory authority functioning under the Central Board of Revenue Act, 1963. The officials of the Board in their ex-officio capacity also function as a Division of the Ministry dealing with matters relating to levy and collection of direct taxes and formulation of policy concerning administrative reforms and changes for the effective functioning of Income-tax Department.

2. Historical Background of C.B.D.T.

The Central Board of Revenue as the Department apex body charged with the administration of taxes came into existence as a result of the Central Board of Revenue Act, 1924. Initially the Board was in charge of both direct and indirect taxes. However, when the administration of taxes become too unwieldy for one Board to handle, the Board was split up into two, namely the Central Board of Direct Taxes and Central Board of Excise and Customs with effect from 1.1.1964. This bifurcation was brought about by constitution of the two Boards u/s 3 of the Central Boards of Revenue Act, 1963.

Circular from CBDT

The Central Board of Direct Taxes, vide notification S.O.No.493(E) dated 13.3.2008 have notified the categories of taxpayers who are mandatorily required to electronically pay taxes on or after the 1st day of April, 2008. The taxpayers who are required to pay taxes by the prescribed mode are (i) A company; and (ii) A person (other than a company), to whom provisions of section 44AB of the Income-tax Act, 1961 are applicable.

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HDFC Bank

HDFC Bank was the first private sector bank to be authorised by the Central Board of Direct Taxes (CBDT) as well as the Reserve Bank of India for collection of direct tax, from April 01, 2001. At present HDFC Bank collect direct taxes at 322 branches across 22 zones.

Key Benefits: 1. 2. 3. 4. 5. Convenience at its best - no standing in long queues for payment of tax, No hassles of writing cheques. No filling challans in four copies and No visiting a collecting bank! Extended deadlines for payments on cut off date.

Process: 1. 2. 3. 4. A simple and convenient process Fill in the details of Challan and submit the transaction. Input Net Banking Customer ID and Password. Give the details of your account & your account will get debited on line.

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6. ANALYSIS OF CMS & CBDT Payment

HDFC Banks correspondence Banking group looks after the co operative banks as prospective customers for these products. The group work as facilitator and provider of correspondent banking products to co operative banks. Big players in banking sector like HDFC Bank, though couldn't make their impact in rural parts of India. This untapped market in rural India is big and good option to in growth perspective. As per 2006 Rangarajan committee report on Financial inclusion, it mentions the hard facts. As per the report, in rural area, the people are still dependent on private lending as an option and they are very less interested towards dealing with banks as an option for saving accounts and other good services availed by banks. In this regards, importance of co operative banks is quite visible. Co operative banks have good network of branches in rural areas. They have good relations with their customers and are served as only source for banking. Co operative banks strong presence in rural area makes them as potential client and maintaining them with HDFC Bank, is thus important prospect of this business.

2.CMS and CBDT payments are two products which were studied as business generating services. CMS avails the timely clearance of outstation cheques and easy reconciliation of those. Many co operative banks were benefited by this services & are satisfied customers of HDFC Bank. Current CMS is well managed system with good Day arrangements and other facilities provided with the same. As we all aware of the traditional process of outstation cheques realization process . it was a time consuming process which used to take at least 15 days to realization of outstation cheques. Because of the requirement of competitive market about the fast process of clearing of outstation cheques cash management service took place of traditional process . by using the vast network of banks customer has been provided by the fast realization process of out station cheques. As we got introduced with Cash Management Service ,we know that it facilitate the procedure of realization of outstation cheques, cash management services provides the required reconciliations to the client which helps to get the track or record of the transactions happened or the all realizations of out station cheques. In the current procedure of cash management the realization procedure of out station cheques get quicker compare to traditional process. As below figure shows the process of cash management service.

3.CBDT on-line tax payment is new service provided by HDFC Bank. Co operative banks who have current account with HDFC Bank can avail this facility. Client base of more than 300 co operative branches, this CBDT on-line tax payment is good business product.

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7. RESEARCH METHODOLOGY 7.1 Objective of the research

The Research aimed at finding out scope for possible growth potential in west 1 region for Cash management service and CBDT payment as correspondent Banking products. Co operative banks using CMS product were to be analyzed and the CBDT tax payment is researched as new product.

7.2 Research approach

The approach for the research is qualitative and analytical one as it involves the generation of data in qualitative forms which can be subjected to rigorous qualitative analysis in formal and rigid fashion. It deals with qualitative aspects and is used more in the descriptive research process. It expresses and summarizes data numerically and graphically. The research involves structured questionnaire and can be applied on a large number of responses. These attributes are then assigned weights depending on their importance level and are measured. The findings would then help us to know the market potential.

7.3 Research Design:

It was basically a Descriptive Research. Since, the research is about to know the potential of cash management serice & CBDT potential as correspondent banking service in west 1 region. For understanding the meaning and procedure of Cash Management Service and to study it in detail information has been collected by two methods:

1. Collection of data through Primary Sources and 2. Collection of data through Secondary Sources.

A) Primary Sources:
Data collected through Primary Sources are: Questionnaire was the main instrument for primary data collection. a) Questions asked to the managers of corporate loans department in HDFC Bank. b) Questions asked to the co operative banks those are the existing customer of HDFC Bank in West 1 region. Department of Management Sciences, University of Pune 29

B) Secondary Sources:
The secondary data was also collected as a supplement to primary data. The data was collected through:

a) Data collected through various brochures, pamphlets etc provided by the Manager, Corporate loan HDFC bank. b) Data collected through the website of HDFC Bank- Wholesale Banking. c) From the web site of RBI The Research followed by the above two methods helped me to complete my project successfully.

7.4 SAMPLI G DETAIL : Selecting a sample of 31 from the total headcount was an arduous task. Still, it was done carefully and can be described as under: (a) Sampling Element: Mainly first 31 co operative banks, From west 1 region, concerning to their business with HDFC Bank.

(b)

Sample Size: 31 co operative Bank were selected.

Hypothesis of the Study: 1. I assumed that the information given by the customers are of their own. 2. Findings are based on the interview with the existing customers (co operative Banks) , and managers and officers of HDFC Bank Ltd.,Pune.

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8. ANALYSIS & INTERPRETATION OF DATA 8.1From Questionnaire:

From the above questionnaire its analyse that most of the Co Op banks having the customer group those who are traders. Following is the chart which shows the percentage of retail & trader customers with the Co Op Bank. Table : Client distribution of sample
No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 Name of the co op Bank
BHINGAR URBAN COOP BANK LTD COSMOS CO OP BANK CHIPLUN URBAN CO-OP. BANK LTD GODAVARI URBAN CO OP BANK ICHALKARANJI JANATA SAH BANK JALNA MERCHANT S COOP BANK JANASEVA SAHAKARI BANK LTD. PUNE LONAVALA SAHAKARI BANK NAGAR URBAN CO-OP. BANK LTD PUNE PEOPLE S COOP BANK LTD POORNAWADI NAGRIK SAH.BANK PRAVARA SAHAKARI BANK LTD PUNE URBAN CO-OP BANK LTD PAVANA SAHAKARI BANK LIMITED RAJARSHI SHAHU SAH Bank RUPEE CO OP BANK LTD SAHYADRI SAHAKARI BANK LTD KARAD SADGURU JANGLI MAHARAJ SAH BANK LTD SAMARTH SAHAKARI BANK LTD SUVARNAYUG CO OP BANK LTD SHREE SHARADA SAHAKARI BANK LTD SHRI CHHATRAPATI R S U CO-OP BANK Ltd AHMEDNAGAR CO OP BANK LTD BARAMATI SAHAKARI BANK LTD JALGAON PEOPLES CO-OP BANK MAHAD COOP URBAN BANK LTD SEVA VIKAS CO-OP BANK LTD THE VISHWESHWAR SAH BANK COMMERCIAL CO-OP BANK LTD. KARAD URBAN CO OP BANK LTD AJARA URBAN CO OP.BANK LTD.

Trader % 60% 70% 55% 50% 65% 30% 40% 75% 65% 65% 70% 55% 70% 75% 55% 60% 60% 50% 55% 68% 60% 70% 55% 60% 65% 45% 60% 70% 67% 80% 60%

Retail % 40% 30% 45% 50% 35% 70% 60% 25% 35% 35% 30% 45% 30% 25% 45% 40% 40% 50% 45% 32% 40% 30% 45% 40% 35% 55% 40% 30% 33% 20% 40%

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Graph : Graphical presentation of Client categories of Sample

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Interpretation
After analyzing the chart we can easily say that most of the bank have large trader group as a customer compare to salaried Or Retail customers. As per survey its found that traders need bank account for there daily transactions ,co op bank plays real role in those cases by providing current account facility at rural areas to these customers.

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Other Bank Cheque Collection (OBC) Facility is the important facility provided by banks. Traders used to supply there goods to different peoples against that they get cash or cheques as payment. Many times they get out station cheques as payment, traders always seeks for the earliest payment so this can be possible with OBC facility. As per research its found that some banks dose not provides OBC facility because of their narrow network. Following chart shows facility provide by co op banks. Table : Facilities provided by Co-operative banks OBC Facility Sr. o.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31

Co Op Bank ame
BHINGAR URBAN COOP BANK LTD COSMOS CO OP BANK CHIPLUN URBAN CO-OP. BANK LTD GODAVARI URBAN CO OP BANK ICHALKARANJI JANATA SAH BANK JALNA MERCHANT S COOP BANK JANASEVA SAHAKARI BANK LTD. PUNE LONAVALA SAHAKARI BANK NAGAR URBAN CO-OP. BANK LTD PUNE PEOPLE S COOP BANK LTD POORNAWADI NAGRIK SAH.BANK PRAVARA SAHAKARI BANK LTD PUNE URBAN CO-OP BANK LTD PAVANA SAHAKARI BANK LIMITED RAJARSHI SHAHU SAH Bank RUPEE CO OP BANK LTD SAHYADRI SAHAKARI BANK LTD KARAD SADGURU JANGLI MAHARAJ SAH BANK LTD SAMARTH SAHAKARI BANK LTD SUVARNAYUG CO OP BANK LTD SHREE SHARADA SAHAKARI BANK LTD SHRI CHHATRAPATI R S U CO-OP BANK Ltd AHMEDNAGAR CO OP BANK LTD BARAMATI SAHAKARI BANK LTD JALGAON PEOPLES CO-OP BANK MAHAD COOP URBAN BANK LTD SEVA VIKAS CO-OP BANK LTD THE VISHWESHWAR SAH BANK COMMERCIAL CO-OP BANK LTD. KARAD URBAN CO OP BANK LTD AJARA URBAN CO OP. BANK LTD

On Line Tax Payment

Y N Y Y Y Y N N Y Y Y N N N Y Y N N Y Y Y Y Y N N N Y Y Y Y N

For OBC For Tax Facility Acceptance

Y Y Y N Y Y Y Y Y Y Y Y Y Y Y Y Y N Y Y Y N Y Y N Y Y Y Y Y N

Yes o

26 4

Yes o

18 12

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Figure: Showing % of OBC facility provided by Co op Banks.

Interpretation: As it is mention above the importance of Other Bank Cheque Collection facility, it is found from the research that some banks are not providing the service of OBC due to their Branch network problem. The above diagram is giving overview of the situation in co op bank about the Other Bank Cheque Collection Facility.

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Figure: Showing Tax Acceptance facility provided by Co op Banks

Interpretation: Regarding to the amendment by CBDT of on Line tax payment from questionnaire we get the idea that still 40% co op bank does not pay their taxes from internet. So this would help to the bank to capture them for the business purpose. The above Diagram is giving the normal idea about the present scenario of co op bank towards on line tax payment

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A ALYSIS OF THE BUSI ESS

Below is the list of 30 co-operative banks who has good deal of business with HDFC Bank. The table mentions the Actual turnover of the bank and it's corresponding business with HDFC Bank and percentage share of business with HDFC Bank. 1. These banks uses the correspondent banking products from HDFC Bank. On average there are sixteen banks who has 30 % or more of their business is with HDFC Bank. Six banks have it between twenty to thirty percent and almost eight banks have less than or equal to twenty percent of their business with HDFC Bank. 2. The list comprises of wide variety of co operative banks in around pune region. So do they vary in their actual turn over. Accordingly their client base is vast and small in comparison with others. 3. The scope of the project is to study and suggest the way in order to seek the increase in the banks business with HDFC Bank. 4. The questionnaire was prepared and the response of few of the sample (Banks) was considered.

Pie chart showing the number of Co-operative banks grouped by their present business with HDFC bank as percentage of their current business.

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Actual Data showing the business of the co-operative banks with HDFC Bank comparing with their present business.

Table : Comparative Business ( Rs in '000 ) Division : MMI Banks BHINGAR URBAN COOP BANK LTD COSMOS CO OP BANK CHIPLUN URBAN CO-OP. BANK LTD GODAVARI URBAN CO OP BANK ICHALKARANJI JANATA SAH BANK JALNA MERCHANT S COOP BANK JANASEVA SAHAKARI BANK LTD. PUNE LONAVALA SAHAKARI BANK NAGAR URBAN CO-OP. BANK LTD PUNE PEOPLE S COOP BANK LTD POORNAWADI NAGRIK SAH.BANK Actual Turnover 10.00 250.00 10.00 10.00 50.00 10.00 50.00 60.00 75.00 50.00 25.00 Present Business 1.00 80.00 3.00 1.00 2.00 2.00 2.00 25.00 20.00 15.00 1.00 % Business with HDFC Bank 10.00 32.00 30.00 10.00 4.00 20.00 4.00 41.67 26.67 30.00 4.00

Sr No. 1 2 3 4 5 6 7 8 9 10 11

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12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31

PRAVARA SAHAKARI BANK LTD PUNE URBAN CO-OP BANK LTD PAVANA SAHAKARI BANK LIMITED RAJARSHI SHAHU SAH Bank RUPEE CO OP BANK LTD SAHYADRI SAHAKARI BANK LTD KARAD SADGURU JANGLI MAHARAJ SAH BANK LTD SAMARTH SAHAKARI BANK LTD SUVARNAYUG SHREE SHARADA SAHAKARI BANK LTD SHRI CHHATRAPATI R S U CO-OP BANK Ltd AHMEDNAGAR BARAMATI SAHAKARI BANK LTD JALGAON PEOPLES CO-OP BANK MAHAD COOP URBAN BANK LTD SEVA VIKAS CO-OP BANK LTD THE VISHWESHWAR SAH BANK COMMERCIAL CO-OP BANK LTD. KARAD URBAN CO OP BANK LTD AJARA URBAN CO OP. BANK

10.00 10.00 10.00 15.00 25.00 10.00 50.00 10.00 15.00 25.00 10.00 100.00 10.00 10.00 30.00 40.00 50.00 10.00 25.00 5.00

3.00 3.00 1.00 8.00 8.00 2.00 15.00 4.00 4.00 10.00 5.00 30.00 3.00 1.00 12.00 10.00 10.00 1.00 10.00 1.00 293.00

30.00 30.00 10.00 53.33 32.00 20.00 30.00 40.00 26.67 40.00 50.00 30.00 30.00 10.00 40.00 25.00 20.00 10.00 40.00 20.00

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Graph:

Interpretation:
As above chart is based on the analysis of the Co operative banks visited in period of project. In this chart Actual Turnover means the Actual turnover of the concern Co operative Bank at present, & the Present Business denotes the business of that concern Co Operative Bank With HDFC Bank at present from that actual Business.

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8.2Findings
It is found, during the period of project in HDFC Bank , that HDFC Bank has currently 371 co-operative banks to whom it is providing various correspondent services, but still more co op banks in west 1 region those are not tie up with HDFC Bank yet. So Bank needs to implement aggressive awareness program to capture those co op banks those are untouched. Though Cash Management Service of HDFC Bank provides the early clearance of OBC, But still some co op banks are not satisfy with this lengthy process, they want quick clearance of OBC compare to the existing process. As HDFC Bank being one of the Biggest bank in India have a large Branch network across India & also outside India, hence they need to take advantage of this.

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8.3 Suggestion
The suggestion of Trader CMS as mentioned above revises the business generated of the cooperative banks with HDFC Bank. We have Categorized banks into three groups as Banks having their present business more than or equal to Rs.30 Cr Banks having their present business more than or equal to 20 Cr and less than 30 Cr. And Banks having present business less than or equal to Rs. 10 Cr Basically, the fragmentation is done with the view that the solution thus provided will be more helpful to banks having more cheque transactions and with more use of HDFC Banks CMS. It has been suggested that the banks with more turnover will get benefited and thus in turn will result in improved business with HDFC Bank. Hence an increase in Business by Fifty percent is expected for those banks having turnover more than Rs. Thirty cr. Like wise, the use of Trader CMS will surely add up an additional feature into the service and could better be marketed to increase business. For banks having business less than 30 Cr and greater than 20 Cr will add up to current business and could show an increase of 25%And for other small banks, though important, could hardly be show an increase in the business and hence considered to be negligible increase by them.

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8.4 Scope for Improvement :

Every system is always subject to some more effective changes and there is always scope for improvement. The above mentioned table shows the list of banks and their business with HDFC Bank. The CMS provided by bank provide great deal of time that is saved and the early credit as well. In current CMS, there are basically two types of steps and charges that were found to me as an improvement. In current CMS, the realization of OBC (other bank cheque) is satisfactory. But in todays world, still making that idle cash into availability is of prime importance. HDFC Bank is having vast network of over 300 branches and core banking system, can easily avail good, robust and even improved cash management service. The current CMS can also be made more effective by providing additional feature. Our suggestion to improve the turnover of these co operative banks with HDFC Bank is an additional facility, can be called as 'Trader CMS'. Traders, who are clients of co operative bank & are frequent cheque user can be given the some code like that of the parent co operative bank. When the customer deposits the cheque in favor of the trader, he will mention the trader code as well. It will work out in following mentioned way. Whenever a customer deposits cheque, say at Chennai HDFC Bank at other location, he will use specially provided deposit slip. The deposit slip will have the space to take the details of the trader, like his account number and also the Special Trader Code provided to him. To effect this, the current account of the trader with co-operative bank will also be linked with this trader code. The basic legal procedure of endorsement could be resolved by making a agreement, which will be a legal document for the trader code provided and the trader and co-operative bank. Now, when customer deposits the cheque at say Chennai branch, it will take hardly two more days to get cleared, being a local clearing cheque. And the amount will be transferred to the co-operative banks current account on next day. Effectively, the co-operative bank will keep a float and will credit the amount to trader on very next day.

The effective day arrangement will be as follows : o Day 1 Deposit cheque at HDFC Bank, Chennai o Day 2 Go to Chennai clearing house, HDFC Bank, Chennai will get the credit o Day 3 A float will be kept o Day 4 Funds will be transferred to co-operative banks account The process flow for trader CMS would be like as follow :

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The excel chart mentioned ahead explains the rise and thus expected business:

( Rs in '000 ) Division : MMI Banks BHINGAR URBAN COOP BANK LTD COSMOS CO OP BANK CHIPLUN URBAN COOP. BANK LTD GODAVARI URBAN CO OP BANK ICHALKARANJI JANATA SAH BANK JALNA MERCHANT S COOP BANK JANASEVA SAHAKARI BANK LTD. PUNE LONAVALA SAHAKARI BANK NAGAR URBAN CO-OP. BANK LTD PUNE PEOPLE S COOP BANK LTD POORNAWADI NAGRIK SAH.BANK PRAVARA SAHAKARI BANK LTD PUNE URBAN CO-OP BANK LTD PAVANA SAHAKARI BANK LIMITED RAJARSHI SHAHU SAH Bank RUPEE CO OP BANK LTD SAHYADRI SAHAKARI BANK LTD KARAD SADGURU JANGLI MAHARAJ SAH BANK LTD Actual Turnover 10.00 250.00 10.00 10.00 50.00 10.00 50.00 60.00 75.00 50.00 25.00 10.00 10.00 10.00 15.00 25.00 10.00 Present Business 1.00 80.00 3.00 1.00 2.00 2.00 2.00 25.00 20.00 15.00 1.00 3.00 3.00 1.00 8.00 8.00 2.00 % Business with HDFC Bank 10.00 32.00 30.00 10.00 4.00 20.00 4.00 41.67 26.67 30.00 4.00 30.00 30.00 10.00 53.33 32.00 20.00 Expected Business 1.00 120.00 4.50 1.00 2.00 2.50 2.00 37.50 25.00 22.50 1.00 4.50 4.50 1.00 12.00 12.00 2.50

Sr No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

50.00

15.00 30.00 22.50

18

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19 20 21 22 23 24 25 26 27 28 29 30 31

SAMARTH SAHAKARI BANK LTD SUVARNAYUG SHREE SHARADA SAHAKARI BANK LTD SHRI CHHATRAPATI R S U CO-OP BANK Ltd AHMEDNAGAR BARAMATI SAHAKARI BANK LTD JALGAON PEOPLES COOP BANK MAHAD COOP URBAN BANK LTD SEVA VIKAS CO-OP BANK LTD THE VISHWESHWAR SAH BANK COMMERCIAL CO-OP BANK LTD. KARAD URBAN CO OP BANK LTD AJARA URBANCO OP. BANK LTD

10.00 15.00 25.00 10.00 100.00 10.00 10.00 30.00 40.00 50.00 10.00 25.00 5.00

4.00 4.00 10.00 5.00 30.00 3.00 1.00 12.00 10.00 10.00 1.00 10.00 1.00 293.00

40.00 26.67 40.00 50.00 30.00 30.00 10.00 40.00 25.00 20.00 10.00 40.00 20

6.00 5.00 15.00 7.50 45.00 4.50 1.00 18.00 12.50 12.50 1.00 15.00 12.50 433.50

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Graph:

Expected Growth with comparison with present Business

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9. CO CLUSIO

HDFC Bank has currently 371 co-operative banks to which it is providing various correspondent services. This project was an attempt to find out the potential available for Cash Management Service & CBDT Potential in West 1 region. The West 1 Region as defined by HDFC Bank is found to have a potential of around 60 crs per annum.

Merely conducting market research is inconsequential till concrete steps and actions are taken based on the findings of the study. As correspondent Banking product, CMS i.e. Cash Management Service has very good scope. Apart from its importance, its really a good service in sense which uses the competitive advantage of big players and there by effectively working out the needs of the other necessary work groups. At HDFC Bank, CMS is a well established product and yet offers very wide scope for improvement. CBDT on line tax payment, the new compulsory amendment for E-Tax payment for co-operative banks stands as an additional good service. This E-Tax payment made it easier for co-operative banks to pay the taxes at their source with their current account with HDFC Bank without any extra charges. As a correspondent banking product CBDT tax payment has potential as good income source in this region.

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10 Bibliography
1. HDFC Bank www.hdfcbank.com 2. National Security Depository Limited www.nsdl.co.in 3. Reserve Bank of India www.rbi.org.in 4. Printed material Available at HDFC Bank

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Annexure

QUESTIO

AIRE

Project ame: CMS & CBDT Payment Potential in West 1 Region Date: Location: Bank Details: Name: Tel No: Person Interviewed: Name: Designation: Mob/Tel No: 1. What is the percentage of client base of your bank is, in below mentioned category Retail / Salaried :__________ Traders / Companies :__________ 2. Do you provide OBC collection facility to your clients? Yes No

With which Bank & what kind of Facility you get from the Bank? :___________________________________________ ___________________________________________ If not with HDFC Bank, Please mention the reason: i) Location: _________________________________ ii) Pricing: _________________________________ iii) Credit time: _______________________________ iv) A/C statement Reconciliation: _________________ 3. What is the volume of OBC with your bank? Rs.1,00,000 Rs.10,00,000 Rs.20,00,000 Rs.50,00,000 Rs.10,00,000Rs.20,00,000 Rs.50,00,000 & Above

PTO...

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4. How do you reconcile your OBC collection facility? By phone By e-mail From monthly statement 5. Does all your clients and Cash credit clients do OBC collection with you? Yes No

If 'NO', Please mention the reason: 1. _______________________________________________ 2. _______________________________________________ 3. _______________________________________________ 4. _______________________________________________ 6. Do you pay your taxes On-line? Yes No In process

7. With Which Bank do you avail this facility? __________________________________________________ 8. Which kind of Taxes do you pay? i) ________________________________________________ ii) ________________________________________________ iii) _______________________________________________ iv) _______________________________________________ 9. Do you offer RTGS facility to your clients? Yes If 'YES', then for Incoming Outgoing If 'NO', then would you like to offer the same? Yes No No

Thank You!

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