HDFC Financial Analysis &amp Marketing Research

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HDFC BANK
Until the early 1990s the role of financial system was primarily restricted to the function of channelizing resources from surplus to deficit sectors. Although 14 major commercial banks were nationalized in July 1969, regional rural banks were set up in 1975 and another six commercial banks were nationalized in 1980, the banking sector in India suffered form lack of competition, low capital base, low productivity, minimal role of technology, weak prudential standards and low quality of service. As a result, banks suffered from poor asset quality and low profitability and banks functioned in an overprotected environment. Therefore, when economic reforms were introduced in various sectors of the economy in 1991 under the New Economic Policy, several reforms were introduced in the banking sector also. Subsequent to the Report of the Committee on Financial System, 1992 (Chairman: M. Narasimham) reforms in the banking sector focused mainly on enabling* and strengthening measures. During the second phase of reforms in the banking sector, which were introduced on the recommendations of the Committee on Banking Sector Reforms, 1998 (Chairman: M. Narasimham) greater stress was placed on structural measures and improvement standards of disclosure and levels of transparency, so as to align Indian standards with best international practices. As a consequence of the various measures undertaken by the government, we find that an extensive banking network has been established, banks have contributed a lot to increase in savings and Indian Banking System is no longer confined to metropolitan cities and large towns but it is spread out to remote corner of the country. With a network of about 68,330 branches, of which 47% are located in rural areas and aggregate deposits of about Rs. 12,80,567 crores and bank credit of Rs. 7,25,368 crores, Indian banking is one of the largest, if not the largest, in the world. During the last decade, both the nationalized banks and the private sector banks have grown but private sector banks have shown a much better standard in terms of different banking parameters. HDFC Bank is one such bank, which has shown tremendous progress.
* Enabling measures were designed to create an environment where financial intermediaries could respond optimally to market signals on the basis of commercial consideration
HDFC BANK A HISTORICAL PRELUDE

HDFC Bank has been promoted by the Housing Development Finance Corporation, which is Indias premier Housing Finance Company and has a sound track record. Since its inception in 1977, HDFC has maintained a consistent and healthy growth in its operations which is evidenced by the fact that its loan approvals / sanctions and loan disbursements have been increasing year after year. The outstanding housing loans of the HDFC have increased from Rs. 29.8 crores as on 31st March 1981 to Rs. 1,726.9 crores at the end of March 1991, to Rs. 13,224.7 crores at the end of March 2001 and further to Rs. 17,169.2 crores at the end of March 2002. The corporation continues to remain a market leader and its loan portfolio covers more than a million dwelling units. HDFC has developed significant expertise in retail mortgage loans for different market segments, has a large corporate client base and has a sound market reputation. Naturally, HDFC was ideally placed to promote a bank in the Indian environment. Under the liberalization measures adopted under the New Economic Policy, improvement in the efficiency of financial intermediaries has been at the core of the reform process. In order to provide greater choice to customers and promote competitions the Reserve Bank of India permitted the entry of new private banks and more liberal entry of foreign banks. The HDFC was amongst the first to receive in principle the approval of the RBI to set up a bank in the private sector. Therefore, HDFC Bank Ltd. was incorporated in August 1994 with its registered office in Mumbai. This bank commenced its operation as a scheduled commercial bank in January 1995. Since its inceptions, the HDFC Bank has been able to achieve healthy growth across various operating and financial parameters and has focused on four core values: Customer focus, Operational excellence, Product leadership and the people. It has tried to fulfill these values through open and transparent work culture, providing opportunities to take on challenging assignments and empowering its employees to take decisions. An important event took place which added significant value to the HDFC Bank in terms of increased branch network, enhanced customer base, skilled manpower and leverage alternative delivery channels. This event was the amalgamation of Times Bank Limited (Promoted by Bennett Coleman and Company / Times Group) with the HDFC Bank Ltd with effect from February 26, 2000. According to the scheme of amalgamation, shareholders of Times Bank received one share of HDFC Bank for every 5.75 shares of Times bank. After the merger of the Times bank with HDFC Bank, the HDFC Bank has been expanding its network with passage of time.
CAPITAL STRUCTURE
The authorized capital of HDFC Bank is Rs.450 crores (Rs.4.5 billion). The paid-up capital is Rs.311.9 crores (Rs.3.1 billion) as at 31st March 2006. The HDFC Group holds 22.1% of the bank's equity, Foreign Institutional Investors (FIIs) roughly holds 31.3% and about 19.4% of the equity by the American Depository Shares (in respect of the bank's American Depository Shares issue). The FII holders include Standard life Investment (4.27%), Indian Private Equity Fund (1.58%) and Small Cap World Fund (4%) and J.P Morgan has a stake of 5.48%. The balance amount of the bank is held by about 190,000 shareholders. The shares of the HDFC Bank are listed on both Mumbai Stock Exchange (BSE) and at the National Stock Exchange (NSE). The bank's American Depository Shares are listed on the New York Stock Exchange (NYSE) under the symbol "HDB".
DISTRIBUTION NETWORK
HDFC Bank is headquartered in Mumbai. The Bank at present has an enviable network of over 535 branches spread over 228 cities against 495 branches in 217 cities in June 2005 across India. All branches are linked on an online real-time basis. Customers in over 189 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 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 1323-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.
BRANCH NETWORK CITIES COVERED

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. Agra Ahmedabad Ambala Amritsar Aurangabad Bangalore Baroda Bharuch Bhavnagar Bhopal Bhubaneshwar Calicut Chandigarh Chennai Cochin 39. 40. 41. 42. 43. 44. 45. 46. 47. 48. 49. 50. 51. 52. 53. Madurai Mangalore Margao Mohali Mumbai Mysore Nagpur Nashik Navi Mumbai Navsari Noida Pallakad Panchkula Panjim Patalganga
16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. 38.
Coimbatore Dahej Daman Delhi Faridabad Ghaziabad Gurgaon Hyderabad Indore Jaipur Jallunder Jamshedpur Jodhpur Kanpur Kapurthala Karad Khanna Kolhapur Kolkata Kota Kottayum Lucknow Ludhiana
54. 55. 56. 57. 58. 59. 60. 61. 62. 63. 64. 65. 66. 67. 68. 69. 70. 71. 72. 73. 74. 75. 76. 77.
Patiala Phagwara Ponda Pune Raipur Rajkot Rajpura Ranchi Ropar Secunderabad Siliguri Silvassa Surat Thane Trichur Trichy Trivandrum Udaipur Vasai Vasco Vijayawada Virar Vishakapatnam Zirakpur
ORGANIZATIONAL STRUCTURE
CHAIRMAN
MANAGING DIRECTOR
GROUP HEADS
BUSINESS HEADS
DIRECTORS (9)
General Information:
Name of the organization Year of Establishment Chairman Managing Director Main Service Registered Office : : : : : : HDFC Bank Ltd. August 1994 Mr. Jagdish Capoor Mr. Aditya Puri Banking related service HDFC Bank House Senepati Bapat Marg, Lower Parel, Mumbai 400 013 Tel: 022 6652 1000 www.hdfcbank.com Rs. 3,669.82 Lacs 9.5 Million
Website Revenue No. of Customers of HDFC Bank
: : :
HDFC Bank Senior Management Team

Group Heads A Rajan Abhay Aima Ashish Parthasarthy Bharat Shah C N Ram G Subhramaniam Harish Engineer Kaizad Barucha Mandeep Maitra Paresh Sukhthankar Pralay Mondal Samir Bhatia Sudhir Joshi Vinod Yennemadi Business Heads Ashima Bhatt Ashok Khanna Bhavesh Zaveri Chitra Pandeya G V Gopalakrishnan Jimmy Tata Mamta Chhabra Manavjeet Singh N S Kishore Kumar Navin Puri Neena Singh Nitin Rao P Ravindranath Pai P V Ananthakrishnan Rahul Bhagal Rajendra Seghal Sashi Jagdishan Seshan Ramakrishnan Shyamal Saxena Surindra Singh Chawla V Chakrapani Operations Equities & Private Banking Trading Depository & Merchant services Information Technology Audit, Compliance, Service Quality Wholesale Banking Credit & Market Risk Human Resources Credit & Market Risk & HR Unsecured Products Corporate Banking Treasury Finance, Administration, Legal SCM & ECG Two Wheelers & Express Loans TBG Operations Liabilities Product Group Information Technology Corporate Banking - West Treasury Advisory Group Auto, Commercial Transportation & Health Care Corporate Banking - South Branch Banking - West Branch Banking North 2 Equities & Private Banking Treasury Stock Exchange, Corresponding Banking Branch Sales, HNW, Phone Banking & Market Corporate Banking North Finance & Administration Branch Banking North 1 Branch Banking North, South & East Branch Banking - South Audit
MANAGEMENT STYLE
Chairman: Mr. Jagdish Capoor
Managing Director: Mr. Aditya Puri
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.
MISSION AND BUSINESS STRATEGY

HDFC Banks 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 sound customer franchises across distinct businesses so as to be a preferred provider of banking services for target retail and wholesale customer segments, and to achieve a healthy growth in profitability, consistent with the Banks risk appetite. The bank is committed to do this while ensuring the highest levels of ethical standards, professional integrity, corporate governance and regulatory compliance. HDFC banks business philosophy is based on four core values Operational Excellence, Customer Focus, Product Leadership and People.
HDFC Banks business strategy emphasizes the following: Increase our market share in Indias expanding banking and financial services industry by following a disciplined growth strategy focusing on balancing quality and quantity and on delivering high quality customer services; Leverage our technology platform and open scaleable systems to deliver more products to more customers and to control operating costs; Maintain high standards of 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; Continue to develop products and services that reduce our cost of funds; Focus on high earnings growth with low volatility.
TECHNOLOGY
HDFC Bank operates in a highly automated environment in terms of information technology and communication systems. The strength of a bank is judged by its infrastructure and its processes. At HDFC Bank, investments have been made right from inception, to create a robust technology platform i.e. seamlessly integrated with centralized and audited processes. This has enabled the HDFC Bank to expand rapidly and grew many folds while maintaining acceptable service standards. Well-documented procedures, high levels of automation, intensive training of personnel have enabled the bank to improve the reliability of its operational processes. ISO 9002 certifications of its cash management, retail centralized processing and custody and depository operations are indicative of the banks achievement in this regard. 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 technology adopted at the HDFC bank has also enabled it to offer innovative products and services with greater convenience and at an affordable price. It has offered products to match the needs of every customer corporate or individual, borrower or investor. All the bank's branches have online connectivity, which enables the bank to offer speedy funds transfer facilities to its customers. Multibranch access is also provided to retail customers through the branch network. The bank makes available more than 40 products to serve the needs of its growing customers. Their customers have access to their accounts as and when they need it through the internet, mobile, Automated Teller Machines (ATMs), Phone banking, Debit card and through personal visit into a branch. Almost 80% of customers are serviced through the nonbranch channels ATMs, Phone banking, Net banking and Mobile banking. Banks ATM network had expanded to 1323 by the end of March, 2006. 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. With this significant infrastructure expansion, the banks customers have even greater convenience and choice in dealing with the bank Any time, any where, any how.
RISK MANAGEMENT & PORTFOLIO QUALITY

Risk is integral to almost every aspect of the banking business and sound risk management and risk rewards trade offs are critical to the banks success. It is well accepted that revenues that bank earn, relate to a large extent to the risks the bank accept. Business and revenue growth therefore, have to be weighed in the context of the risks implicit in the banks business strategy. While the bank is exposed to various types of risk, the most important amongst them are credit risk, market risk (which includes liquidity risk and price risk) and operational risk. The identification, measurement, monitoring and management of risks remain a key focus area for the bank. For credit risk, distinct policies and processes are in place for the wholesale and retail asset businesses. For wholesale credit exposures, management of credit risk is done through target market definition, appropriate credit approval processes, ongoing post-disbursement monitoring and remedial management procedures. On the other hand Portfolio diversification remains key, particularly given the volatility in the business environment and facilitates risk management. In the retail asset businesses, the credit cycle is managed through credit policy definition, appropriate front-end credit buying, operations and collection processes enable the management of risk on a portfolio basis for different products and customers segments. The Risk monitoring Committee of the board monitors the banks risk management policies and procedures and reviews portfolio composition and impaired credits. From an industry (Rs. Lacs) % to concentration perspective, as Gross Gross of march 31, 2006, the core Loans Loans Retails Except where otherwise retail portfolio constituted classified 1587898 41.3% 41.3% of total customer Automobiles 409703 10.7% assets. The large industry Transportation 368416 9.6% exposures included the share Retail Trade 143573 3.7% of automobiles at 10.7%, Engineering 129072 3.4% transportation at 9.6%, Agriculture 115597 3.0% agriculture at 3.0% heavy NBFC* / Investment Companies 104303 2.7% Others < 2% of Advances engineering at 3.4% and (29 industries) 982695 25.6% investment companies at 2.7% Total 3841257 100.0% of customer assets.
* NBFC: Non Banking Financial Companies
The well-diversified nature of the portfolio is evidenced by the fact that 29 industries account for 2% or less of the banks customer asset portfolio. As of March 31, 2006, the banks ratio of gross non-performing assets (NPAs) to total customer assets was 1.17% as against 1.47% as of March 31, 2005 and 1.50% at the end of March 2004. There has been an increase in non-performing assets* (NPAs) in absolute terms during the year. Increases in NPAs during the year were primarily related to delinquencies in various retail loan products. These delinquencies and NPAs were within the expected levels for each of the retail asset products given the seasoning of the retail portfolio. Net non-performing assets (gross non-performing assets less specific loan loss provisions, interest in suspense and ECGC claims received) were 0.44% of net advances and 0.36% of customer assets as of March 31, 2006 as against 0.24% and 0.20% respectively as of march 31, 2005 reflecting the higher proportion of retail loans in the banks loan book and the changing mix of the retail loan portfolio. The bank continues to have a policy of creating general provisions upfront based on estimated portfolio losses for its major retail loan product programs against which specific provisions are set-off as the portfolio ages and NPAs surface. As on March 31, 2006, total general loan loss provisions were 0.5% of the standard advances which was above the regulatory requirement. Towards meeting the requirements, the Bank launched a suite of new credit risk rating models during the year for rating entities specific to each segment in wholesale credit. To automate the entire computation process for credit under various approaches, the Bank is currently implementing a Portfolio Credit Risk Management (PCRM) model.
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* According to the guidelines of RBI, a non-performing asset (NPA) is one in respect of which the interest and / or installment of principal has remained due for over 90 days.
HUMAN RESOURCES
Given the Banks significant expansion in terms of geographical area as well as in terms of products and business volumes, the Banks staffing-needs continued to increase during the year particularly in the retail banking businesses. In addition, changes in regulatory guidelines necessitated additions to the staff in respect of sales function for liability products. Simultaneously, the total number of employees increased from 5673 as of March 31, 2004 to 9030 as of March 2005 to 14878 as of March 31, 2006. 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 Banks employee stock option scheme therefore extends to all levels and so far covers around 59% of the employees. .
SEGMENTATION INFORMATION
The Bank operates in three segments: Retail Banking, Wholesale Banking and Treasury Services. Segments have been identified and reported taken into account, the target customer profile, the nature of products and services, the differing risks and returns, the organization structure and the internal business reporting systems. 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 advisory services to such customers. Revenues of the retail banking segment are from interest earned on retail loans, net of commission (net of subvention received) paid to sales agents, interest on card receivables, gains / loans from securitization receivables, fees for banking and advisory services 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. The Wholesale Banking Segment provides loans and transaction services to corporate 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, investment income from commercial paper, debentures and bonds, interest earned on the cash float arising from transaction services, fees from such transaction services and also trading operations on behalf of corporate customers in debt, foreign exchange and derivatives segment. 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. The Treasury Services Segment undertakes trading operations on the proprietary account, foreign exchange operations and derivatives trading. Revenues of the treasury services segment primarily consist of fees and gains or losses from trading operations and net interest earnings on assets held in the treasury desk book.
The summary in form of financial report of the three operating segments of the Bank is as follows: Particulars 1. Segment Revenue a) Retail Banking b) Wholesale Banking c) Treasury Particulars Total Less: Inter Segment Revenue Income from operations 2. Segment Results a) Retail Banking b) Wholesale Banking c) Treasury Total Profit Before Tax Income Tax Expense Total Result 3. Capital Employed Segment Assets a) Retail Banking b) Wholesale Banking c) Treasury d) Unallocated Total Assets Segment Liabilities a) Retail Banking b) Wholesale Banking c) Treasury d) Unallocated Total Liabilities 2005-06 5,173,84 2,853,38 773,89 2005-06 8,801,11 3,201,79 5,599,32 701,67 537,87 13,97 1,253,51 (382,73) 870,78 (Rs. Lacs) 2004-05 3,536,27 2,056,35 286,89 2004-05 5,879,51 2,134,68 3,744,68 520,64 539,36 (81,06) 978,64 (313,38) 665,56
38,571,09 28,790,53 5,733,94 410,83 73,506,39 38,584,25 26,717,93 2,708,22 196,46 68,206,86
24,469,93 24,962,34 1,756,03 240,70 51,429,00 27,361,46 14,932,39 4,455,16 160,14 46,909,15
PRODUCTS & MARKET

HDFC Bank caters to a wide range of banking services covering both commercial and investment banking and has offered different types of accounts and cards to meet the changing needs of a dynamic and comparative economy. Among the diversified portfolio products offered by HDFC Bank some of the important products offered are: 1. 2. 3. 4. SAVINGS ACCOUNT CURRENT ACCOUNT SALARY / CORPORATE ACCOUNT FIXED DEPOSITS a) Regular Fixed Deposit b) Super Saver Account c) Sweep-in Account DEMAT ACCOUNT NRI ACCOUNT LOAN CREDIT CARDS
5. 6. 7. 8.
Apart from this HDFC Bank also sells third party products like Mutual Funds, Bonds, Insurance to its retail customers. SAVINGS ACCOUNT: Banking should be effortless. With HDFC Bank, the efforts are rewarding. No matter what a customer's need and occupational status, the bank has a range of solutions that are second to none. HDFC Bank has the perfect solution and also can recommend products that can augment planning for the future. Savings Accounts are primarily meant to inculcate a sense of saving for the future, accumulating funds over a period of time. Individual can open an account in their name or register for one jointly with a family member. The Bank is offering various types of savings account under the retail banking segment. 1. Regular Savings Account: An easy-to-operate savings account that allows issuing cheques, draw Demand Drafts and withdraw cash. The customer can check up their own balances with ease form the home or office through NetBanking, PhoneBanking and MobileBanking.
2. No Frills Savings Account: In an effort to make banking simpler and more accessible for the customers, Bank has introduced the 'No Frills' Savings Account, which offers all the basic banking facilities, while maintaining a nominal average quarterly balance of only Rs. 250. Through this account one can access a wide network of branches and over a thousand ATMs across the country to meet the banking needs. This includes 9 free cash withdrawals per quarter at HDFC branch, 1 cash withdrawal per month at the branch and 2 cash withdrawals per month at HDFC Bank ATMs. Additional branch cash withdrawals in the month will be charged @ Rs.50/- per transaction. Cheque deposits at branches will be free of charge and without any restrictions. The facility of International Debit Card could be enjoy only on request at the branch, which cost Rs. 100/- p.a. for each applicant. 3. Retail Trust Account: The Retail Trust Account is beneficial for Trusts and Societies as it earns them a higher interest as compared to a conventional Current Account that offers no interest. HDFC Bank's Retail Trust now offers features and benefits previously offered only on Current Accounts. - Enjoy free DD's payable on HDFC bank locations up to a limit of Rs. 50,000/- per DD, per day. - Avail of free Outstation Cheque Collection at HDFC Bank locations across the country. - Access the account from any of the branches in the HDFC banking network. - Avail of facilities like Free 24-hour Phone Banking and Net Banking and carry out banking transactions with ease from home or office. 4. Kids Advantage Account: HDFC Bank offers to an account for the kids, which facilitates to builds up savings for childs future. This needs to open a kids advantage account and deposits money into the account every month. The accumulated savings in the Kids Advantage Account can over the years help in meeting the child's needs. Opening the account with HDFC Bank will cover Free International Debit Card for the kids (above 7 years of age) with a maximum drawing capability of Rs. 2,500/- per day. Free Education Insurance cover of up to Rs. 1,00,000/for the child with every Kids Advantage Account. 5. Pension Saving Bank Account: A Pension Saving Account is a Zero Balance Account that accumulates the pension over the years. It comes with a free International Debit card and facilities like Phone and Net Banking. This Account can be accessed from any branch within the HDFC network and the customer can also request for
transfer to another bank. The HDFC bank provides certain advantages to pension saving account holders like: - Pension Accounts are opened immediately after advice, and deliverables reach in time- within the 1st and 5th of the new month (in case of EPFO) and last day of the month (in case of Central Govt. Civil Pensions). - No delays in commencement of pension disbursals (subject to all the stipulated terms/conditions are fulfilled by the pensioner). - Dispatch of credit advice containing detailed calculations of the amount credited each month within 10 days of the payment. - Timely intimation of revisions due to changes in rates of Pension or Dearness Allowance. 6. Family Saving Group Account: The Family Savings Group links together upto four individual HDFC Bank accounts (same family) under a single group. All the account holders can take the advantage of the group Average Quarterly Balance (AQB) and can operate their account freely without worrying about the minimum balance. CURRENT ACCOUNT: With an HDFC Bank Current Account, the individual can experience the freedom of multi-city banking. This will enhance the power of multi-location access to current account from any of our 535 branches in 228 cities. Not only that, the account holder can do most of their banking transactions with ease from home or office without stepping out. The bank offers a Current Account with all the benefits that one needs to stay ahead from competition. HDFC Bank understands that running a business requires time and money and also needs constantly evolving. The Bank provides with a choice of Current Account options to exclusively suit the kind of business - whatever the size or scope. The Bank is offering various types of current account under the retail banking segment. 1. Plus Current Account: In today's fast-paced world, business regularly requires to receive and send funds to various cities in the country. HDFC Bank Plus Current Account gives the power of inter-city banking with a single account and access to more than 228 cities. From special cheques that get treated at par with local ones in any city where HDFC Bank has a branch; to free collection of outstation cheques (payable at branch locations); to free inter-city funds transfers of up to 100 lakhs, the bank priority services have become the benchmark for banking efficiency.
2. Regular Current Account: A Current account is ideal for carrying out day-to-day business transactions. With the HDFC Bank Regular Current Account, the account holder can access their account anytime, anywhere. Withdraw and deposit cash, issue and encash cheques, make balance-inquiries or ask for mini statements, and even request for cheque books can be done any time, anywhere. With a vast network of branches in cities all over the country, and access to a multitude of ATM's, one can keep track of all transactions at anytime. 3. Trade Current Account: In today's changing business requirements, one needs to transfer funds across cities, and time is of the essence. HDFC Bank Trade Current Account gives the power of inter-city banking with a single account. From special cheques that get treated at par with local ones in any city where HDFC Bank has a branch; to free collection of outstation cheques (payable at branch locations); to free inter-city funds transfers of up to 25 lakhs, the bank services have become the benchmark for banking efficiency. 4. Premium Current Account: The business needs a partner who can manage the finance efficiently while one concentrated on growing his business. The bank provides with the benefits of inter-city banking account with Premium Current Account, that requires an average quarterly balance of only Rs. 25,000 per quarter with Payable-At-Par cheque book facility & free inter-city finds transfer across our network upto Rs.10 Lacs per month. 5. Reimbursement Current Account: A hassle-free Account that allows the customers to deposit the reimbursements that receives from the company on a monthly basis. The customer does not have to maintain a minimum balance with the bank. 6. RFC Domestic Account: It is a Resident Foreign Currency Domestic Account that manages the customers foreign currency quite efficiently. The customer can choose to set up his own account either in US Dollar, Great Britain Pound European Euro. SALARY / CORPORATE ACCOUNT: HDFC Bank offers five kinds of salary account to its customer. These are as follows.
1. Classic Salary Account: The Classic Salary account is a Zero Balance Account which earns normal interest on the savings from salary at a competitive rate fixed by the bank from time to time. There is no fee applicable for branch transactions and the account holder receives banking statements once every six months. The account facilitates with free personalized cheque books, free ATM Card with a withdrawal limit of up to Rs. 10,000/- per day, free facilities like Net Banking, Phone Banking and Mobile Banking. 2. Payroll Account: The HDFC Bank payroll account offers flexibility as well as access to premium features like BillPay, Insta Alert at a nominal charge. The customer can also access their account anytime by phone or through the Internet and pay for their utility bills at a nominal charge. 3. Regular Salary Account: The Regular account is a Zero Balance account and comes with a Free International Debit Card, facilities like free inter-city/branch banking and Safe Deposit lockers. 4. Premium Salary Account: A power-packed account for successful salaried professionals, the Premium Salary account comes with a free International Debit Card and add-on Debit card for life, with the option of choosing between a Silver or Gold credit card at preferential rates. 5. Defence Salary Account: The account is mainly meant for defence personnel working with the Indian Armed Force or Indian Navy. The account is a zero balance account and comes with a free International Debit Card. FIXED DEPOSITS: Long-term investments form the chunk of everybody's future plans. An alternative way too simply by applying for loans, fixed deposits allow to borrow from customers own funds for a limited period, thus fulfilling the needs as well as keeping the savings secure. There are three basic types of fixed deposits that a customer can go for it.
1. Regular Fixed Deposit: Invest your savings, and then let them work for you. If one believes in long-term investments and wish to earn higher interests on savings, then invest the money in a Fixed Deposit. By investing in a HDFC Bank Fixed Deposit, the customers money not only stays secure but also accumulates good interest over the period of deposit. Partial withdrawal from fixed deposits before the date of maturity can bail out in times of need. 2. Super Saver Facility: The customer can enjoy a high rate of interest along with the liquidity of an savings account by opting for a Super Saver Facility and avail of an overdraft facility of up to 75% of the value of fixed deposit. 3. Sweep-in Facility: The customer can link the Fixed Deposit with savings or current account and use it to fall back on in case of emergencies. A deficit in the savings or current account is taken care of by using up an exact value from the fixed deposit. Since deposits are broken down in units of Re 1/-, the customer will lose interest only for the actual amount that has been withdrawn. DEMAT ACCOUNT: Dematerialization account is the process by which physical certificates of an investor are converted into equivalent number of securities in electronic form and credited to the investors account with his Depository Participant. The bank offers its customer for opening a Demat Account so that their online trading could be made easy. The annual charges for maintaining a Demat Account with HDFC Bank is Rs. 500 p.a. NRI ACCOUNT: As an NRI customer, the bank understands that you have specific banking needs. That is why, the bank offers a variety of accounts & deposits specially designed to suit the customers precise need. 1. Rupee Savings Accounts: NRE Savings Account NRO Savings Account Special RI Savings Account
2. Rupee Current Accounts: NRE Current Account NRO Current Account 3. Rupee Fixed Deposits: NRE Fixed Deposits NRO Fixed Deposits SuperSaver Account Sweep-in Account 4. Foreign Currency Deposits: FNCR Deposits 5. Accounts for Returning Indians: RFC Savings Account RFC Current Account RFC Fixed Deposits LOANS: HDFC Bank offer different types of loan to their customer. These are as below: 1. Personal Loan 2. Home Loan 3. Two Wheeler Loan 4. New Car Loan 5. Used Car Loan 6. Overdraft Against Car 7. Express Loan 8. Loan Against Securities 9. Loan Against Property 10. Health Care Finance 11. Commercial Vehicle Finance 12. Working Capital Finance 13. Construction Equipment Finance
CREDIT CARDS:
Silver Credit Card
Health Plus Credit Card
Value Plus Credit Card
Idea Gold Credit Card
Idea Silver Credit Card
Gold Credit Card
Titanium Credit Card
Womans Gold Credit Card
Corporate Credit Card
DEBIT CARDS:
Easy Shop International Gold Dedit Card
Easy Shop International Debit Card
Easy Shop Womans Advantage Debit Card
PREPAID CARDS:
ForexPlus Card
GiftPlus Card
Kisan Card
HDFC BANK OPERATIONS

The overall performance during the financial year 2005-06 remained healthy with total net revenues (net interest income plus other income) increasing by 51.1% to Rs. 3669.8 crores from Rs. 2429.3 crores in 2004-05. The HDFC Bank has registered a robust growth in different Balance Sheet parameters. Total deposits of the bank have increased from Rs. 2,192 crores on 31st March, 1998 to Rs. 8,428 crores as on 31st March 2002 to Rs. 17,654 crores on 31st March, 2003 to Rs. 30,409 crores on 31st March 2004 to Rs. 36,354 crores as on 31st March 2005 and to Rs. 55,797 crores as on 31st March 2006. Thus, there has been a tendency of the total deposits to nearly double in a span of two years. Total deposits of Rs. 55,797 crores at the end of March 2006 also included around Rs. 2,000 crores of collections held as a banker to various initial public offerings. Savings account deposits, which are core to the banks strategy for building stable, low cost sources of funds and reflect the strength of the retail liabilities franchise, increased from Rs. 1,903 crores on 31st March, 2001 to Rs. 2,960 crores on 31st March, 2002 to Rs. 4,663 crores on 31st March 2003 and further to Rs. 7,804 crores on 31st March 2004 to Rs. 16,186 crores on 31st March, 2006 and current account deposits at Rs. 14,752 crores. Thus, savings and current account deposits both have shown a compound annual growth rate of 55.4% of the total deposits as on March 31, 2006. The average savings balance per account has also increased from Rs. 19,363 in 2004 to Rs. 26,732 in 2006. Further, the share of savings deposit in the HDFC Bank is now 67.4% of total deposits. Because of this, the mix of deposits is skewed in favour of low cost deposits. During the year 2005-06, the banks incremental cost of deposits for the first time stood under 4%. Along with increase in deposits, loans and advances by the HDFC Bank have also increased rapidly with the passage of time. During 2005-06, gross advances grew by 48.1% to Rs. 38,413 crores. Net advances of the bank increased from Rs. 842 st crores on 31 st March 1998 to Rs. 3,462 crores on 31 March 2000, to Rs. 6,814 st crores on 31 March 2002, to Rs. 17,745 crores on 31 st March, 2004 and more rapidly to Rs. 35,061 crores on 31 st March 2006. This rapid increase in advances was primarily driven by a growth of 112.9% in retail advances (including Car loans, personal loans, two-wheeler loans, commercial vehicle loans, etc. but excluding investment in securitized paper) and an increase of 25.7% in wholesale advances.
The mix of bank's total advances as on March 31 21,037 crores) and 40% retail (Rs. 14,024 crores)
st
, 2006 was 60% wholesale (Rs.
BUSINESS SEGMENT UPDATE

The overall banking environment remained benign in 2005-06, other than the drying up of liquidity and resultant hardening of interest rates in the last quarter. The bank has been able to achieve healthy growth across various operating and financial parameters. This performance reflects the strength and diversity of the banks three primary business franchises Retail Banking, Wholesale Banking and Treasury, as well as a disciplined approach to risk reward management. The Retail Banking Business continued to be the fastest growing of the Banks businesses in 2005-06. The Bank has positioned itself as a one-stop-shop financial services provider, focused primarily on the middle class, mass affluent and high Networth segments. During 2005-06, the Bank launched the no-frills account, a basic savings account offering. This product would facilitate financial inclusion for customers who wish to maintain only token minimum balances in their savings accounts. The Banks range of retail financial products and services is fairly exhaustive including various deposit products, loans, credit cards, debit cards, depository (custody services), investment advice, bill payments and various transactional services. The bank sells third party financial products like mutual funds and insurance to the retail customers. The success of the Banks multi channel strategy is evidenced in the fact that almost 77% of customers initiated transactions are serviced through the non-branch channels. The Banks total customer base increased from 68.1 lacs in March 2005 to 96.0 lacs in March 2006. The Banks focus on semi urban and under banked market continued, with about 545 of the Banks branches now outside the top nine cities. The Bank also extends more than half of its retail loans in non-metro markets. The Banks success in its third party distribution business is best evidenced with income from sales of mutual funds and life insurance policies contributing over 20% of retail fees and commission. On the Banks housing loan business, the origination of the HDFC home loan product crossed Rs. 2 billion per month in March 2006. In the Wholesale Banking Business, the Bank provides its corporate and institutional clients a wide range of commercial and transactional banking products, backed by high quality service and relationship management. The Bank now has four business groups catering to various Small and Medium Enterprise customers extending its services including cash management services, foreign exchange products and electronics banking. The Bank also achieved healthy growth in its agriculture and micro
financing. Products including the Kisan Gold Card, rural supply chain initiatives and commodity finance covering the entire agriculture financing cycle, the Banks direct agriculture lending increased by over 60% during the year. The Bank has relationships with over 25 micro finance institutions and has provided financing where the ultimate
beneficiaries exceed 300000 households. During financial year 2005-06, growth in the wholesale banking business continued to be driven by new customer acquisition and higher cross sell with a focus on optimizing yields and increasing product penetration. The Bank further consolidated its position as a leading player in the cash management business (covering all outstation collection, disbursement and electronic fund transfer products across the Banks various customer segment) with volumes growing from about Rs. 800000 crores in financial year 2004-05 to over Rs. 1000000 crores in financial year 2005-06. The Bank also strengthened its market leadership in cash settlement services for major stock exchanges and commodity exchanges in the country. The Bank met the overall priority sector lending requirement of 40% if net bank credit. The Banks Treasury Banking Business has a presence in the foreign exchange, derivatives and local currency debt securities and money market. The treasury group manages the Banks balance sheet and its responsible for compliance wit reserve requirements and management of market and liquidity risk. During 2005-06 revenues from foreign exchange and derivative transactions grew by 6.35 to Rs. 118.6 crores with over 40% of the revenue streams emanating from retail and Small and Medium enterprise (SME) segments. The Bank has to realize gains in a declining interest rate environment but exposes the Bank to losses or depreciation in value of investments when yields rise. HDFC Bank remains exposed to market risk primarily on the non-SLR investment portfolio in the Available for Sale (AFS) category. In March 2006, there was a sharp increase in short term yields in the debt market which resulted in marked to market loss of Rs. 89.7 crores mainly on the non-SLR book.
FINANCIAL HIGHLIGHTS
The Board of Directors of HDFC Bank Limited approved the annual audited (Indian GAAP) accounts for the year ended March 31, 2006 at their meeting held in Mumbai on Monday, April 17, 2006. The comparative financial statement for the last six years is as follows: 2000-01
Interest Income Interest Expense Net Interest Income Other Income Net Revenues Operating costs Operating Result Provisions and Contingencies Profit before tax Provision for taxation Profit after tax 1,259,46 753,75 505,71 176,57 682,28 309,59 372,69 57,63 315,06 104,94 210,12 11,658,11 200,00 913,09 15,617,33 4,636,66 7,145,14 8.64 24.53% 8.69% 11.09% 2.00 25.55% 37.50 228.35
2001-02
1,702,99 1,073,74 629,25 335,90 965,15 417,95 547,20 121,82 425,38 128,34 297,04 17,653,81 200,00 1,942,28 23,787,38 6,813,72 12,004,02 11.01 18.30% 10.81% 13.93% 2.50 23.68% 69.00 236.60
2002-03
2,013,61 1,191,96 821,65 465,55 1,287,20 577,05 710,15 139,30 570,85 183,25 387,60 22,376,07 200,00 2,244,83 30,424,08 11,754,86 13,388,08 13.75 18.10% 9.49% 11.12% 3.00 24.72% 79.60 234.55
2003-04
2,548,93 1,211,05 1,337,88 480,03 1,817,91 810,00 1,007,91 288,95 718,96 209,46 509,50 30,408,86 600,00 2,691,88 42,306,99 17,744,51 19,256,79 17.95 20.14% 8.03% 11.66% 3.50 22.15% 94.52 378.75
(Rs. Lacs) 2004-05 2005-06

3,093,49 1,315,56 1,777,93 651,34 2,429,27 1,085,40 1,343,87 364,93 978,94 313,38 665,56 36,354,25 500,00 4,519,85 51,429,00 25,566,30 19,349,81 22.92 20.44% 9.60% 12.16% 4.50 24.00% 145.86 573.64 4,475,34 1,929,50 2,545,84 1,123,98 3,669,82 1,691,09 1,978,73 725,22 1,253,51 382,73 870,78 55,796,82 1,702,00 5,299,53 73,506,39 35,061,26 28,393,96 27.92 17.47% 8.55% 11.41% 5.50** 22.55% 169.24 774.25
Funds:
Deposits Subordinated debt Stockholders Equity Working Funds Loans Investments
Key Ratios:
Earnings per share (Rs.) Return on Average Networth Tier 1 Capital Ratio Total Capital Ratio Dividend per share (Rs.) Dividend payout ratio Book value per share as at March 31, 2006 (Rs.) Market price per share as at March 31, 2006 (Rs.)*
Price to Earnings Ratio Rs. 10Lacs = Rs. 1 Million
26.43 21.50 17.06 Rs. 1 Crore = Rs. 10 Million
21.10 ** Proposed
25.03 27.74 * Source: NSE
HDFC BANK LIMITED BALANCE SHEET AS AT 31ST MARCH, 2006

Schedule CAPITAL AND LIABILITIES Capital Reserves and Surplus Employees stock options (grants) outstanding Deposits Borrowings Subordinated debt Other liabilities and provisions Total ASSETS Cash and balances with Reserves Bank of India Balances with banks and money at call and short notice Investments Advances Fixed assets Other assets Total Contingent liabilities Bills for collection The attached notes form part of the financial statements.
In terms of our report of even date attached.
As at 31.03.2006 313,14 4,986,39 7 55,796,82 2,858,48 1,702,00 7,849,49 73,506,39
(Rs. Lacs) As at 31.03.2005 309,88 4,209,97 43 36,354,25 4,790,01 500,00 5,264,46 51,429,00
1 2 3 4 5
6 7 8 9 10 11 12
3,306,61 3,612,39 28,393,96 35,061,26 855,08 2,277,09 73,506,39 214,782,34 2,828,89
2,650,13 1,823,87 19,349,81 25,566,30 708,32 1,330,57 51,429,00 140,777,15 2,549,68
For P.C. Hansotia & Co.

Chartered Accountants
For and on behalf of the Board Jagdish Capoor

Chairman
Keki M. Mistry Vineet Jain Ashim Samanta Dr. Venkat Rao Gadwal Renu Karnad Arvind Pande Bobby Parikh
Khurshed N. Pastakia Partner
Aditya Puri Managing Director Sanjay Dongre Vice President (Legal)
Mumbai, 17 April, 2006 Director

_______________________ Rs. 10 lacs = Rs. 1 million
& Company Secretary
Financial Analysis:
Profit & Loss Account: Quarter ended March 31, 2006 For the quarter ended March 31, 2006, the Bank earned total income of Rs. 1,682.7 crores as against Rs. 1,087.3 crores in the corresponding quarter ended March 31, 2005. Net revenues (net interest income plus other income) were Rs. 1,043.6 crores for the quarter ended March 31, 2006, an increase of 42.2% over Rs. 733.6 crores for the corresponding quarter of the previous year. Interest earned (net of loan origination costs) increased from Rs 867.2 crores in the quarter ended March 31, 2005 to Rs. 1,378.5 crores in the quarter ended March 31, 2006. Net interest income (interest earned less interest expended) for the quarter ended March 31, 2006 increased by 44.0% to Rs. 739.4 crores, driven by average asset growth of 47.6% and a net interest margin of just over 4%. Other income for the quarter ended March 31, 2006 was up by 38.2% to Rs. 304.2 crores, consisting primarily of fees & commissions of Rs. 336.7 crores, foreign exchange & derivatives revenues of Rs. 46.3 crores, and profit / loss on sale & revaluation of investments of Rs. (86.8) crores as against Rs. 176.8 crores, Rs 25.5 crores and Rs. 20.5 crores respectively for the quarter ended March 31, 2005. Losses on sale & revaluation of investments during the quarter were primarily on non-SLR investments, due to the sharp increase in short term yields in the debt market in March 2006. Operating expenses for the quarter at Rs. 482.3 crores were 46.2% of net revenues. Provisions and contingencies for the quarter were Rs. 181.6 crores (against Rs. 107.1 crores for the corresponding quarter ended March 31, 2005), and primarily comprised general & specific loan loss provisions of Rs. 110.3 crores and amortization for investments (in the Held to Maturity category) of Rs. 71.7 crores as against Rs. 55.1 crores and Rs. 59.6 crores respectively for the corresponding quarter ended March 31, 2005. After providing Rs. 116.4 crores for taxation, the Bank earned a Net Profit of Rs. 263.2 crores, a 30.1% increase over the quarter ended March 31, 2005. Profit & Loss Account: Year ended March 31, 2006 For the year ended March 31, 2006, the Bank earned total income of Rs. 5,599.3 crores as against Rs. 3,744.8 crores in the corresponding period of the previous year. Net revenues (net interest income plus other income) for the year ended March 31, 2006 were Rs. 3,669.8 crores, up 51.1% over Rs. 2,429.3 crores for the year ended March 31, 2005. Net Profit for year ended March 31, 2006 was Rs. 870.8 crores, up 30.8%, over the corresponding year ended March 31, 2005.
Balance Sheet: Audited as on March 31st, 2006 During 2005-06, the Banks total balance sheet size increased by 42.9% to Rs. 73,506.4 crores. Total Deposits increased by 53.5% from Rs. 36,354.3 crores (as of March 31, 2005) to Rs. 55,796.8 crores (as of March 31, 2006). Savings account deposits at Rs. 16,185.8 crores and current account deposits at Rs. 14,752.5 crores, together accounted for approximately 55.4% of total deposits as of March 31, 2006. During 2005-06, gross advances grew by 48.1% to Rs. 38,412.6 crores. This was driven by a growth of 79.7% in retail advances to Rs. 21,231.1 crores, and an increase of 21.7% in wholesale advances to Rs. 17,181.5 crores. One of the reasons for the high growth rate in retail loans was that the quantum of retail loans securitized (sold) during the year was less than half of the Rs.4,800 crores sold during the previous year. The banks core customer assets (advances plus credit substitutes like commercial paper, corporate bonds etc.) increased by 44.9% to Rs. 38,992.4 crores in March 2006. In addition, the bank held Rs. 4,457.1 crores of investments in mortgage backed and asset backed securities where the underlying assets were primarily home loan and commercial vehicle/car loans receivables. Total customer assets (including securitization investments) were therefore Rs. 43,449.5 crores as of March 31, 2006. Dividend Payout: The Board of Directors recommended an enhanced dividend of 55% for the year ended March 31, 2006, as against 45% for the previous year (which included a special one-time dividend of 5% on the occasion of the Bank completing 10 years of operations). This would be subject to approval by the shareholders at the next annual general meeting. Capital Adequacy Ratio: The Banks total Capital Adequacy Ratio (CAR) as at March 31, 2006 stood at 11.4% as against the regulatory minimum of 9.0%. Tier-I CAR was 8.6%. During 2005-06, 32.7 lac shares were allotted to the employees of the Bank pursuant to the exercise of options under the Employee Stock Option Scheme of the Bank. The Bank raised Rs 1,202 crores subordinated debt at an annualized coupon ranging between 7.5% to 8.6% and having a maturity from 9 to 10 years. The debt is
subordinated to present and future senior indebtness of the Bank and qualifies as Tier-II capital under RBIs guidelines for assessing capital adequacy for the year 2005-06.
ACHIEVEMENTS
HDFC Bank began operations in 1995 with a simple mission: to be a World-class Indian Bank". The Bank realized that only a single-minded focus on product quality and service excellence would help to get there. Today, the Bank is proud to say that it is well on the way towards that goal. It is extremely gratifying that Banks efforts towards providing customer convenience have been appreciated both nationally and internationally. AWARDS FOR THE YEAR 2005-06 Best Bank in India 2005 Business Today KPMG Survey Best Domestic Commercial Bank & Best Cash Management Bank India Asiamoney Awards for Corporate Excellence 2004-05 Best Bank India Finance Asia Company of the Year The Economic Times Awards for Corporate Excellence 2004-05 Best Domestic Bank In India The Asset Triple A Country Awards 2005 Most Customer Responsive Company Banking and Financial Services The Economic Times Avaya Global Connect Customer Responsiveness Awards 2005 AWARDS FOR THE YEAR 2004-05 "Best Bank in India" 2004 Business Today KPMG Survey
"Best Overall Local / Domestic Bank India - Hong Kong-based Finance Asia magazine "One of India's Most Respected Companies " as part of The Business World Most Respected Company Awards 2004 - Business World
Best Under a Billion 100 Best Smaller Size Enterprises in Asia / Pacific and Europe - Forbes Global Operational Excellence in Retail Financial Services India - Asian Banker Excellence in Retail Financial Services Program AWARDS FOR THE YEAR 2003-04 Best Local Bank India - Hong Kong-based Finance Asia magazine "Best Bank in India" 2003 Business Today KPMG Survey Best Domestic Bank - The Asset Triple A Country Awards Best Under a Billion, 200 Best Small Companies for 2003 - Forbes Global Best New Private Sector Bank - 2003 in the FE-Ernst & Young - The Financial Express Best Bank in the Private Sector - Outlook Money magazine Best IT User in Banking - NASSCOM and economictimes.com 2003 AWARDS FOR THE YEAR 2002-03 Best Local Bank India - Hong Kong-based Finance Asia magazine "Best Bank in India - Euromoney magazine Commercial Bank in India 2002 - Asiamoney magazine AWARDS FOR THE YEAR 2001-02
Best Domestic Commercial Bank India - Hong Kong-based Finance Asia magazine Best Bank in India - Euromoney magazine
300 Best Small Companies one of the 20 for 2001 best FE-E&Y Best Banks small companies - Forbes Global Awards for Corporate Excellence as the Emerging Company of the Year - The Economic Times AWARDS FOR THE YEAR 2000-01 India 's Best Bank - Business India Best Domestic Commercial Bank India - Hong Kong-based Finance Asia magazine Best Private Sector Bank - Business Today
HDFC BANK SWOT ANALYSIS

STRENGTHS:
HDFC Bank has strong brand equity. HDFC Bank has the second largest number of linked branches in the country and also has the most advanced data warehouse. The total numbers of branches of the Bank were 535 at the end of March 2006 as against only 312 at the end of March 2004. This provides a competitive edge over the competitors. The quality of HDFC Bank product portfolio is excellent. The company has a strong and rich infrastructure to support its working which include a strong technological base. It has a highly skilled workforce, which gives a competitive advantage over others. HDFC Bank is strongly positioned as a collecting bank in the IPO market. The Bank has registered a strong deposit growth. During 2005-06, total deposits increased by 55.4 supported by an increase of 67.4% in savings deposits.
WEAKNESSES:
A weak network of ATMs in comparison to its main competitors, especially ICICI Bank, UTI Bank and State Bank of India. Being not a Nationalized Bank general customers are found reluctant in Banking with this bank, as also in other private sector banks. Business per employee in the HDFC Bank at Rs. 778 lacs, although higher than IDBI Bank and ICICI Bank, was lower than UTI Bank (Rs. 896 lacs) and IndusInd Bank (Rs. 1,588 lacs). Operating Expenses as percentage of total assets have been higher for the HDFC Bank as compared to some of its competitors.
OPPORTUNITIES:
With emphasis on core values such as customers focus, operating excellence, product leadership and the people, along with open and transparent work culture, the HDFC Bank has a bright future. Since HDFC Bank has invested in technology right from its inception. Its technology platform has been acknowledged as one of the best in terms of robustness, flexibility and cost efficiency. This would help the bank to further build cost and service advantage and compete not only with other private sector banks but also with foreign banks those who are opening more and more branches in India. The Bank has infused the philosophy of Corporate Governance in all its activities. The philosophy would help the bank to move further towards shareholder protection and maximization of their long-term values. Being customer becoming more service oriented could open up new avenues of growth for the Bank. In case of future advancement HDFC is well placed to capitalize on any such opportunities.
THREATS:
The company is facing tough competition from players like SBI, ICICI Bank and UTI Bank itself. This might reduce the margins in the future.
The company is foraying into fields where they dont have experience of operations and might end up deteriorating the quality of the assets. This remains a key threat in the fast changing global scenario. In a mad race for expanding retail lending, especially in housing and auto loans, banks are laying less emphasis on collaterals. This is likely to increase the risk of defaults for banks including HDFC Bank.
OVERVIEW OF BANKING SECTOR

Banking Stands For
Banking refers to the business of accepting deposits and lending money. The deposits are repayable on demand and withdrawal by cheque or draft.
Meaning of Banking Company

According to Section 5 of Banking Regulation Act, 1949, A Banking Company means any company which transacts the business of banking. Banking means the accepting for the purpose of lending or investment, or deposits of money from the public, payable on demand or otherwise and withdrawal by cheque, draft or otherwise. Popularly, banking company is called a bank or banker. Now a day, in addition to acceptance of deposits, the bank provides various other services like safe custody of valuables, remittance of funds etc. Thus, a bank may define as institution, which is engaged in accepting deposits, providing loans and other services to its customers and the general public.
BANKING IN INDIA: - A Historical Perspective

Indian banks have a chequered history. The British legacy left behind a host of large and small private banks that were not quite professional in their approach. India at
Independence was under-banked. Bank of Hindustan, set up in 1870, was the earliest Indian Bank. Banking in India on modern lines started with the establishment of three presidency banks under Presidency Banks Act 1876 i.e. Bank of Calcutta, Bank of Bombay and Bank of Madras. In 1921, all presidency banks were amalgamated to form the Imperial Bank of India. Imperial Bank carried out limited central banking functions also prior to establishment of RBI. It engaged in all types of commercial banking business except dealing in foreign exchange. Reserve Bank of India Act was passed in 1934 and Reserve Bank of India (RBI) was constituted as an apex bank without major government ownership. Banking Regulations Act was passed in 1949. This regulation brought Reserve Bank of India under government control. Under the act, RBI got wide ranging powers for supervision
and control of banks. The Act also vested licensing powers and the authority to conduct inspections in RBI. In 1955, RBI acquired control of the Imperial Bank of India, which was renamed as State Bank of India (SBI). In 1959, SBI took over control of eight private banks floated in the erstwhile princely states, making them as its 100% subsidiaries. RBI was empowered in 1960, to force compulsory merger of weak banks with the strong ones. The total number of banks was thus reduced from 566 in 1951 to 85 in 1969. In July 1969, government nationalized 14 banks having deposits of Rs. 50 crores and above. In 1980, government acquired 6 more banks with deposits of more than Rs. 200 crores. Nationalization of banks was to make them play the role of catalytic agents for economic growth. The Narsimham Committee report suggested wide ranging reforms for the banking sector in 1992 to introduce internationally accepted banking practices. The amendment of Banking Regulation Act in 1993 saw the entry of new private sector banks.
PREFACE
HDC Bank has been promoted by Housing Development Finance Corporation (HDFC), Indias premier housing finance company. 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 RBIs liberalization of the Indian Banking Industry. In August1994, the bank was incorporated in the name of HDFC Bank Limited with its registered office in Mumbai. The bank commenced its operation as a Scheduled Commercial Bank in January 1995. In financial year 2002, the bank issued ADRs amounting to US $ 172.5 mn at the issue price of US $ 13.83 per share (1ADR = 3 equity shares) at the New York Stock Exchange. Liberalization and reforms have thrown up a few challenges as well as created opportunities for banks to increase revenues by diversifying into investment banking, insurance, credit cards, mortgage financing, retail financing, depository services and more. With the emergence of e-commerce, the way in which banking business is presently conducted would undergo a radical change. Future competition among banks will be essentially based on the twin platforms of technology savviness and ability to attract talent. Telephone and internet banking will gain importance and the future will see the emergence of internet driven operations without a broad-based branch network. Increasing competition will exert pressure on bottom line, forcing banks to cope with thinning margins. It is looking for both organic and inorganic growth. The year 2006 has witnessed rapid changes in the banking sector with a rather strong and aggressive presence of private sector Indian banks. These new banks have taken a sizable amount of business away from the public sector as well as the foreign
banks. This new crop of banks has been leveraging technology to its advantage to rope in new business and create a sizable presence in this sector. The gradual deregulation of the sector has been increased presence of such banks in almost all sectors that warrant their services. The decrease in the small savings interest rates by the Government has been the strongest incentive for this sector to attract new client. But on the other hand, the lower growth in the economy of around 7.2% (initial target was 8%) has also affected the banking sector. Future Scenario: With most of the banks, including the private sector ones fast adopting the latest technologies in banking, the early bird advantage of technological superiority will soon fade away. With most banks providing almost all services under the sun and the real potential of the retail market now unfolding, most banks operating on similar lines are expected to exhibit more than normal rates of growth in the short term. In the long term, the differentiating factor will be the ability of these banks to retain their customer base at affordable margins both to itself as well as its client. HDFC Bank emphasizes a lot on quality control. It has become the first bank in India to get ISO 9001:2000 certification for depository services at the Central Processing Unit and backend processing of retail liabilities and direct banking operations. The bank also has ISO 9001:2000 certification for Custodial services. My task during the summer training was concerned with taking feedback regarding customer awareness of the Classic Portfolio Programme. I had study the market and analyze the prospective customers who might not still aware of the classic programme. I tried to know the preferences of the customer and did analyze the same with other private banks. I thoroughly explored the market and have examined the factors influencing the present and future prospects of HDFC Bank.
GROUP MEMBERS
CREDIT RATING
HDFC 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 "tAAA (ind r)" 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". HDFC Bank also has its long term unsecured, subordinated (Tier II) Bonds of Rs.4 billion rated by CARE and Fitch Ratings India Private Limited. CARE has assigned the rating of "CARE AAA" for the Tier II Bonds while Fitch Ratings India Pvt. Ltd. has assigned the rating "AAA (ind)" with the outlook on the rating as "stable". In each of the cases referred to above, the ratings awarded were the highest assigned by the rating agency for those instruments.
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.
MAIN COMPETITORS
HDFC Bank is one of the largest private bank in India, it has many competitors in the market on the way of its development. Still the bank has quite efficiently managed its competitors and paves the path of success in the following 10 years since its inception. The competitors are in the form of two categories like Private banks of India and Foreign banks of India
Private Banks of India:

ICICI BANK UTI BANK IDBI BANK INDUSIND BANK KOTAK MAHINDRA BANK ING VYSYA BANK
Foreign Banks of India:

HSBC BANK STANDARD CHARTERED BANK CITI BANK
COMPOSITION OF HDFC BANK, GOLPARK BRANCH (KOLKATA)

. Branch office: HDFC Bank Ltd. 132A, Dr. Meghnad Saha Sarani, (Location: Golpark) Kolkata 700 029 Ph: 033 2463 1385/ 2463 2041 Registered office: HDFC Bank House Senepati Bapat Marg Lower Parel, Mumbai 400 013 Ph: 022 6652 1000
Branch Manager
Assistant Manager Authorized Personal Banker
Relationship Manager
Investment Relationship Manager
Deputy Branch Manager Authorized Teller Teller 1 Teller 2
PB 1
PB 2
PB 3
PB 4
Investors are the backbone, Customers the heart and Employees the soul of our Bank
Philosophy of HDFC Bank
DECLARATION
I hereby declare that the information presented in this Project Report is correct to the best of my knowledge. This project has not been published anywhere else.
SAYAN GANGULY
PGDBM III SEMESTER M/11/91 [FINANCE]
ACKNOWLEDGEMENT
No gain without pains is a common saying. Gratitude is the hardest of emotion to express and often does not find adequate words to convey. Therefore, a Project Report is not an effort of a single person but it is a contributory effort of many hands and brains. I am heartily grateful to the Almighty, whose blesses and grace helped me in competing the project, for they did not disposed what I proposed. In this regard I would like to thank to Prof. Mukund Lal (Director General of SMS) and Mr. Neeraj Srivastav (DGM Corporate Relations) for providing me an opportunity to do my summer training project in HDFC Bank. Secondly, I would like to thank HDFC Bank for providing me information which is helped in making my project. I am very thankful to Mr. Anindya Sundar Basu (RSMHREast) for providing me an opportunity to do my summer training project in HDFC Bank. I would like to express my deep gratitude towards Mr. Harsha Dutta (Branch Manager) of HDFC Bank Golpark Branch, Kolkata, for his valuable guidance and cooperation. I deeply acknowledge the interest and enthusiasm shown by all the Classic Portfolio Customers and other banks of Kolkata while filling up the questionnaire. I would like to thank all other members of the branch for their efforts and also their co-operation in successful completion of my training. I am indebted to Dr. D. S. Mishra (Senior Professor) SMS Varanasi, who helped me in completing my project work. Lastly, I express my sincere gratitude towards my loving and caring parents who supported and guided me throughout my training period and helped me in successful completion of the project.
PART - I
CROSS SELLING TO CLASSIC PORTFOLIO CUSTOMERS
INTRODUCTION
The Classic Portfolio was introduced in 2003 with a view to identifying customers with large CASA (Current Account and Savings Account) balances, who also had potential to grow. The Classic Portfolio was relaunched as at 1st April 2005 to achieve the following four objectives: To include a much larger base of customers and capture share of wallet. To consciously improve customers retention from these customers through cross sales and enhanced liability balances. To provide a bundled offering in recognition of their existing relationship and to further enhance it. To give PBs (Personal banker) greater ownership of these customers for whom they are responsible.
Classic Banking Programme:

The Classic banking has been centrally identified and raced to PBs since 2003. The logic behind creating this portfolio lay in identifying customers with large balances. It was felt that these customers offered high potential to enhance balances if they were proactively focused on by branches. Over the last couple of years, it has been observed that full justice has been done to the inherent potential of this portfolio offered since it was viewed as a glorified database. To correct this, it was Structured Programme needed to be evolved. While not enlisting as a Preferred Customer, it is widely believed that we need to include customers on the Classic Portfolio in a more structured relationship programme, managed by PBs.
Objective of Classic Portfolio Programme:

Retaining existing base of relationships Be primary banker to these relationships Cross sell products and services Capture share of wallet via Family relationship Mature the relationships to upgrade to Preferred Programme Enhance customer profitability
Eligibility for entry into the Classic Banking Programme:

To be eligible for the Classic Banking Programme the following criteria has to be met Retail Resident Individual. 1 SA account under customer ID is mandatory. CASA AQB => Rs. 5 lacs at a customer ID/group level, with at least 1 savings account (Tenor of FD is recommended to be at least 6 months). In addition to the above, group profitability to be Bands 4 or 5.
Exclusive Benefits available to Classic Customers:

The following benefits will be available to all Classic Banking Programme customers All Classic Banking Programme customers will have a dedicated Personal Banker (PB) to look after the relationship. The PB will be available for servicing if the customer comes to the branch. The PB will call and keep in touch with the customer to fulfill all servicing needs and to cross sell and deepen the relationship. Special price offs or discounts on products and services will be available to the Classic Banking Programme customers as listed below. Sr. No. 1 Products Demat A/c Benefits All Classic customers can open multiple Demat A/cs with first year annual folio maintenance charges waived. This waived is available even if all the Demat A/cs are linked I to a single SA A/c. This pricing is available subject to assets being deposited within the first month of opening the Demat A/c The offer is applicable on all Demat A/cs opened after the customer is part of the PB programme. The FMC charges from second year onwards will reduce to Rs. 250 provided the customers transfers shares into the A/c within the 1st year. Priced at Rs. 649 for registration If volume transacted is 205 lacs within 3 months of A/c opening, the AOC will be credited in broking A/c
HSL A/c
3 Credit Cards
All Classic Portfolio customers can avail of a Titanium Credit Card by paying a one time fee of Rs. 750 or All Classic Portfolio customers can avail of a Gold Credit Card free for life Conversion rates on FX transactions can be improved up to 5 paise on card rates for both buy and sell Normal Debit card annual fee of Rs. 100 will be waived for life (where life = the duration the customer is part of the Classic Portfolio) Annual Locker rental rates will be reduced by 25% for these customers All customers will receive a combined statement at a monthly frequency. The statement will provide details of all CASA and FD A/cs where the customers is the 1st holder Bill Pay charges of Rs. 25 per annum will be waived for these customers as long as they are part of the Classic portfolio Insta Alert charges will be waived for these customers as long as they are part of the Classic portfolio Classic portfolio customers will get reduced pricing on Asset product Charges on non maintenance of AQB will be waived for all A/c of the Classic portfolio customers
Forex
Debit Cards
6 7
Lockers Combined Monthly Statement Bill Pay
Insta Alert
10 11
Assets Service charges (Non Maintenance of AQB charges)
PB Portfolio Programme Entry Form:

HDFC Bank uses a particular form to enlist the existing customers name into the Portfolio Programme. The exact form is shown below which the bank uses for raising its customers name.
PB Portfolio Programme Entry Form

PB Code: * Group ID: Br Code: Name of Primary ID in Relationship: BR Name:
(* Note: Group ID should be the cust of the Primary ID)
Sr. No.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 13
Cust ID
Name of Customer
Relationship to Group ID
- Is this a new group? - Is this an addition to an existing group? - Is this regrouping of an existing group? - Is this a change in PB codes? - If yes, is current PB approval attached? - Is this an upgrade from Family a/c to PB Portfolio? - If yes, is Family a/c Exit Form attached? - Does this group meet eligibility criteria? - If no, is RBM approval attached? - Is there > 10 IDs being grouped? - If yes, is RBM approval attached?
Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes
No No No No No No No No No No No
Signature of PB:_______________________________ Signature of BM:_______________________________ Date:_____________________________
PB Name:________________________ BM Name:_______________________
For office Use only CPU Activity

PB Code update Group ID Maintained Ethnic code maintained Combined statement flag maintained PB Portfolio Memo maintained Yes Yes Yes Yes Yes
RESEARCH OBJECTIVES
The objectives of the project are enumerated as below:
To find out the Awareness of Classic Portfolio Programme among the customers regarding facilities provided by the bank To gauge the level of service offered by the bank and degree of satisfaction among the customers
To find out different issues of the customers relating to their
investment and in which scheme they have invested more To evaluate the percentage of banking by the customers with HDFC Bank To derive the need of additional products by the customers
RESEARCH METHODOLOGY
Research Problem:
The research problem was to find out Awareness of Classic Portfolio Programme among customers regarding facilities provided by the banks.
Type of Research:
The research conducted was descriptive in nature.
Sample Technique:
Simple Random Sampling.
Area Selected for research:

The survey was conducted on classic customers at the Kolkata city.
Sampling Units:
Each respondent was considered as a single unit in the survey .
Sample size:
The sampling was done taking 200 units of the universe i.e., taking the total PB Classic Portfolio customers of HDFC Bank
Collection Of Data:
The data that is used for this project is primary data i.e., first hand data is used. The method used for collection of data is through questionnaire method. The questions were asked related to the problems and feedback was received
LIMITATIONS
Some limitations are being faced during the survey was conducted. The limitations are listed as: Due to time and money constraints during Summer Training I could not complete the survey on total classic portfolio customers of 1300 Cancellation of an appointment with the customers on a particular day due to their time constraints is one of the limitations faced during the survey Some customers are unwilling to give any appointment or speak over the telephone Some customers stays abroad. It is not even possible to contact them over telephone or meet them personally. When contacted through email by sending the feedback form but didnt get any reply.
FINDINGS & INTERPRETATION

1. Customers having products of HDFC Bank
Savings A/c No. of Customers Responded % of Customers having the products 200 100% Current A/c 200 2% Fixed Deposit 200 18% Credit Card 200 16% Mutual Funds 200 10% Insurance Locker Loan NRE Others & NRO A/c 200 200 4% 10%
200 13%
200 3%
200 6%
Interpretation
The above table exhibits that with 200 responded customers, all of them are having Savings A/c. Apart from this the customers are also having other products offered by HDFC Bank. Only 2% of 200 prospective customers are having the Current A/c. Fixed Deposit counts to 18%. The percentage of holding credit cards among Classic customers is 16%. 10% of them have invested in Mutual Fund through HDFC Bank. 13% have done their Insurance in HDFC Standard Life. Out of 200, only 3% customers are availing the locker facility.
In loan segment, 6% respondents have taken loan through HDFC Bank. The percentage of having NRE & NRO A/c in HDFC Bank is only 4% out of 200 responded customers. In others product (which includes SIP, Demat A/c, On Line Trading A/c, Bill Pay, Intra Alert) are having customers of only 10%. Awareness of Classic Portfolio Programme among the customers Options
Yes No Total
2.
No. of Customers
90 110 200
Percentage
45% 55% 100%
Awareness of Classic Portfolio Programme
Yes 45% No 55%
Interpretation
The diagram shows that the awareness of Classic Portfolio Programme among the eligible customers is very less. Only 45% (out of 200) responded customers said that they are fully aware of the above-mentioned programme. But 55% customers replied that they do not know about classic programme.
3.
Awareness of facilities provided under Classic Portfolio Programme Options

Yes No Total
No. of Customers
80 120 200
Percentage
40% 60% 100%
Awareness of Facilities
Yes 40% No 60%
Interpretation
As the awareness of the Classic Programme is less among the responded customers, its obvious that facilities provided by the bank under this programme would be unknown to them. Only 40% said they are aware of the facilities, which they are enjoying under this programme and 60% replied no.
4.
Customers Satisfaction Level regarding service of HDFC Bank Options

Absolutely Relatively Somewhat Not at all Total
No. of Customers
70 100 20 10 200
Percentage
35% 50% 10% 5% 100%
Customer's Satisfaction Level

50% 50% 45%
No. of Respondents in %
40% 35% 30% 25% 20% 15% 10% 5% 0%
35%
10% 5%
Absolutely
Relatively
S omewhat
Not at all
Interpretation
Regarding the customers satisfaction level about the service rendered by HDFC Bank, the graph represents that half of the respondents are relatively satisfied; only 35% said they are absolutely satisfied with the service; while 10% replied somewhat due to personal reasons.
5.
Investment made through HDFC Bank Options

Yes No Total
No. of Customers
60 140 200
Percentage
30% 70% 100%
Investment made through HDFC Bank
No 30 0 20
70
Ye s
40
60
80
Interpretation
The above diagram shows that out of 200 responded customers only 30% have made their investment through HDFC Bank in different schemes. But 70% of them have not invested through this bank. Reasons: 1. Not aware of HDFC investment service option.
2.
Other banks approached the customers much earlier than PB of HDFC Bank does and these banks rendered good customized service and support after their investment. Most of the customers have invested through their personal agent and they offer valuable incentives in return. Some financial institutions also offers brokerage cost at lower level.
3.
4.
5.
Getting direct online trading options from other banks.
6.
Some customers are Priority banking customers of other banks and their any kind of activities are handled from home and office with the help of bank representative. Invested before opening an Account with HDFC Bank.
7.
8.
Customers investing in LIC feel that their investment is much more reliable and secured in according to Insurance sector.
6.
Invested In Options
Mutual Funds Insurance SIP Total
No. of Customers
20 25 15 60
Percentage
10% 13% 7% 30%
Invested In
14 12 10 8 6 4 2 0 1
13 10 7
Mutual Fund Insurance
SIP
Interpretation
As it has been already shown that only 30% of the respondents have made their investment through HDFC Bank. Accordingly, the graph exhibits that out of 30% customers - 13% have invested in different plans of Insurance; 10% and 7% invested in diversified schemes of Mutual Fund and SIP respectively.
7.
Customer invested in different schemes through HDFC Bank
MUTUAL FUNDS
Tata Sundaram SBI Kotak
Tata Infrastructure Fund, Tata Contra Fund *Sundaram Select Midcap Fund, Sundaram Rural India Fund SBI Magnum Comma Fund Kotak Opportunities Fund, Kotak Midcap Fund HSBC Equity Fund, *HSBC Advantage India Fund, *HSBC India Opportunities Fund, HSBC Gilt Fund, HSBC Midcap Equity Fund *HDFC Equity Fund, *HDFC TOP 200 Fund, HDFC Core & Satellite Fund
INSURANCE
SIP
*Sundaram Select Midcap Fund
*HSBC Advantage India Fund
HSBC
HDFC ABN AMRO Franklin Templeton
*HDFC Unit Linked Endowment Plan, *HDFC Pension Plan, Accident Insurance Plan, HDFC CHUBB
*HDFC Equity Fund, *HDFC TOP 200 Fund
Prudential ICICI
FT India Balanced Fund, Franklin India Opportunities Fund *Prudential ICICI Emerging Star Fund, Prudential ICICI Infrastructure Fund *Reliance Growth Fund, Reliance Equity Fund, Reliance Vision fund UTI Infrastructure Fund IDBI Flexi Bond *DSPML TIGER Fund, DSPML Opportunities Fund Birla Advantage Fund Fidelity Equity Fund
Reliance UTI IDBI DSP Merrill Lynch Birla Fidelity Deutsche ING Vysya Standard Chartered
*Prudential ICICI Dynamic Fund, Prudential ICICI Power Fund, *Prudential ICICI Emerging Star Fund *Reliance Growth Fund
*DSP Merrill Lynch TIGER Fund Birla Sun Life Endowment & pension Plan
Note: * indicates that percentages of investment among customers are more
8.
Invested through other Financial Institutions or Banks Options

LICI UTI Bank ICICI Bank & icicidirect.com Kotak Securities Indiabulls Sharekhan Personal Agent Post Office (MIS) Total
No. of Customers
22 15 32 9 8 4 42 8 140
Percentage
11% 7% 16% 5% 4% 2% 21% 4% 70%
In tedth u ho ers ves ro g th 2 5 2 0 1 5 1 0 5 0 11 7 5 4 2 4 16 21
1 N of R on en in% o. esp d ts
U IB n T ak K ta S cu s o k e ritie S a kh n h re a P st O o ffice (M ) IS
L I IC IC I B n & icicid ct.co IC a k ire m In ia u d b lls P rso a A e t e nl gn
Interpretation
The percentage of investment made through others apart form HDFC Bank is 70%. Out of these, customers prefer most through their Personal Agent, ICICI Bank & icicidirect.com and to put money in LICI. 9. Customers dealing with other banks apart from HDFC Bank
Nationalized Banks in India

Allahabad Bank Andhra 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
% of Dealing Private Banks in India

5% Bank of Rajasthan 5% 5% 2% 5% 5% 2% 5% Bharat Overseas Bank Catholic Syrian Bank Centurion Bank of Punjab Dhanalakshmi Bank Federal Bank ICICI Bank IDBI Bank IndusInd Bank ING Vysya Bank Jammu & Kashmir Bank 5% Karnataka Bank Karur Vysya Bank Kotak Mahindra Bank 40% 4% SBI Commercial and International Bank South Indian Bank United Western Bank UTI Bank YES Bank 1% 1% 15% 20% 5% 10% 5% 35% 10% 5% 5% 5%
% of Dealing
Foreign Banks in India

ABN-AMRO Bank Abu Dhabi Commercial Bank Ltd. American Express Bank Ltd BNP Paribas Citibank DBS Bank Ltd Deutsche Bank HSBC Ltd Standard Chartered Bank
% of Dealing
5%
20%
5% 30% 40%
Interpretation
These are the following banks in which the customers are dealing with their seed capital apart from HDFC Bank. The banks are being segregated into three different types according their nature 1. 2. 3. Nationalized Banks of India Private Banks in India Foreign Banks in India
The percentage has been calculated differently on three different types of banks as because customers banking with Private or Foreign banks might have an Account in Nationalized banks also. From the above chart it can be assumed that major percentages of customers are dealing with State Bank of India in Nationalized Banking Segment; with ICICI Bank in Private Banking Segment and with Standard Chartered Bank in Foreign Banking Segment.
10.
Products of other banks
Savings A/c No. of Customers Responded % of Customers having the products 200 85%
Current A/c 200 10%
Fixed Deposit 200 30%
Credit Card 200 30%
Mutual Funds 200 10%
Insurance
Locker
Loan
200 5%
200 20%
200 8%
NRE Others & NRO A/c 200 200 5% 6%
Interpretation
As the customers are dealing with other banks apart from HDFC Bank, these are the following products offered by those banks and accordingly shown the percentage of holding the various products of these 200 responded customers.
11.
Reasons for availing the facilities
Options
Good customized services Old Accounts Convenience Nearer to the house Opened for Salary A/c Equity Advanced A/c Unavailability of locker Total
No. of Customers
36 70 28 30 20 10 6 200
Percentage
18% 35% 14% 15% 10% 5% 3% 100%
Reasons for availing the facilities

5% 3% 10% 18%
G ood C ustom ized Services O Accounts ld C onvenience
15%
N earer to the house O pened for Salary A/c
35% 14%
E quity Advance A/c U navailability of locker
Interpretation
The customers have depicted some important reasons of availing the aforementioned facilities from other banks. One of the important reasons is that they are maintaining an Old Account with other banks before becoming a customer of HDFC Bank. 12. Frequency of transaction of PB customers with other banks
Options
Regularly Often Sometimes Occasionally Never Total
No. of Customers
100 60 30 10 0 200
Percentage
50% 30% 15% 5% 0% 100%
Frequency of transaction
50 40 30 20 10 0
Regularly Often
50
30
15 5
Sometimes Occasionally
0
Never
Interpretation
Being a customer of other banks, obviously they will do their transaction regularly as 50% says yes. 30% and 15% replied often and sometimes respectively due to some constraints.
13.
Customer enjoying extra benefits through other banks
Apart from the facilities providing by the HDFC Bank, the customers are also enjoying extra benefits while being a part of other banks. The benefits are enumerated as below: Good personalized service Takes care of the problems with helping hand by the bank representatives Facility of saving money into bank through Recurring Deposit Doorstep banking through easy availability of ATM of concerned bank Unlimited withdrawal from other bank ATM without any withdrawal charges Gets the facility of evening banking Customers having an account with ICICI Bank gets banking hours from 8 a.m to 8 p.m Getting the facility of Passbook instead of quarterly statement UTI Bank provided the customers with total yearly interest credited statement separately Provide At Par cheque for all kind of Savings A/c in UTI Bank
CONCLUSION
On 18th February, 1995, the first branch of a new bank was inaugurated called HDFC Bank. It was promoted by India's premier housing finance institution. Now HDFC Bank is being listed as one of the leading private banks in India. HDFC Bank began its operations with the mission of becoming a World-class Indian Bank, and the endeavour of fulfilling all the financial requirements of the customers under one roof. With this determination HDFC Bank came into the market to satisfy the needs of the profitable customers by providing products and services in most efficient way. Within the time span of 10 years the bank has made a great impact upon the customers regarding their service and support they extended in enhancing the customers profitability and apart from this, bank itself marked its glorified path towards the success. Within a short interval bank use used to experiment itself by introducing new product or new concept of marketing strategy. Recently they came up with an innovative concept of Classic Portfolio Programme under which the customers will be getting certain benefits to further enhance their profitability. Till, this programme has been really a triumph for the HDFC bank as far as the banking part is concerned and it also helped in creating a good image upon the customers.
SUGGESTIONS
Good relationships are pivotal to business success. With this organizational objective HDFC Bank tries to maintain a fine balance between high level of customer satisfaction and the quality of service provided by them but it lacks in some sense. These are the following suggestions that should be taken care of while upgrading the quality of service by which they can able penetrate more classic customers into portfolio management.
Suggestions and Recommendations:

The bank should take initiative in calling up the existing classic based customers and try to solve the problems that they are facing relating to the service quality.
Inspite of phenomenal success of Classic Portfolio Programme of
HDFC bank, still lot of customers are unaware of the aforementioned programme and this should be taken care off in order to generate more profitable customers. The bank must approach the customers personally in order to share more of their seed capital.
PART - II
COMPARATIVE STUDY OF VARIOUS VALUE ADDED SERVICES PROVIDED BY HDFC BANK IN COMPARISON WITH OTHER BANKS
RESEARCH OBJECTIVE
The objective of the project is enumerated as below: To get a comparative analysis of various value added services
provided by HDFC in comparison to other Private Banks.
RESEARCH METHODOLOGY
Research Design:
The research conducted was analytical in nature.
Source Collection Of Data:

The data that is used for this project is secondary data. All the data are collected from internet and various banks report and records.
FINDINGS & INTERPRETATION

1. Total Branches in India Options
ICICI BANK UTI BANK HSBC BANK STANDARD CHARTERED BANK CITI BANK ING VYSYA BANK INDUSIND BANK IDBI BANK KOTAK MAHINDRA BANK HDFC BANK
Total Branches
614 450 43 81 39 374 145 179 85 535
Total Branches
HDFC BANK KOTAK MAHINDRA BANK IDBI BANK INDUSIND BANK ING VYSYA BANK CITI BANK STANDARD CHARTERED BANK HSBC BANK UTI BANK ICICI BANK
535 85 179 145 374 39 81 43 450 614
200
400
600
800
2.
Account Opening Experience
Options
Time taken for account opening

15 20 mins 10 15 mins 15 20 mins 15 20 mins 15 20 mins 20 30 mins 10- 15 mins 15 20 mins 15 20 mins 7 10 mins
Time committed for receipt pf Welcome Kit

7 days Less than 7 days 7 days 10 days 10 days 10 days 7 days 10 days 10 days 7 days
Account material received within

7 days 7 days 7 days Within 12 days 10 days 15 days 7 days 15 days 10 days 7 days
Interpretation
As the table shows that different banks have different timing schedule regarding the Account opening of the customers. HDFC Bank showed better service in regard to other banks in a manner that it takes 7 to 10 mins of initial Account opening and the customer receives the welcome kit within the committed time made the bank. While in UTI Bank & Standard Chartered Bank the customer does not receive the welcome kit within the committed time.
3.
Service provided by Personal Banker
Options
Does PB greets enthusiastically & politely 4 3 5 5 5 3 2 3 4 5
PB area neat & clean with name plate visible 4 3 5 5 5 3 2 3 4 4
PB response the queries satisfactorily 4 3 5 5 4 3 2 3 4 4
Note: A parameter of 5 to 1 scale is being set to judge the level of effectiveness. 5 = Best, 3 = Average, 1 = Worst
Interpretation
To analyze the service rendered by the Personal Banker, a parameter of 5 to 1 scale is being set to judge the level of efficiency and effectiveness. The table exhibits that all the banks perform their duty with most efficient way to survive in this competitive world. If comparison is made between Standard Chartered Bank, HSBC Bank and HDFC Bank; these two banks are much more professionalized than HDFC Bank in terms of service and on this part bank needs improvement.
4.
Total ATMs in India
Options
Total ATMs
2200 1891 137 183 440 101 200 + Correspondence 395 61 + Correspondence 1323
T otal AT M s
H D FC B A N K KO TA K M A H IN D R A B A N K ID B I B A N K IN D U S IN D B A N K IN G V Y S Y A B A N K C ITI B A N K S TA N D A R D C H A R TER ED B A N K H SB C B ANK U TI B A N K IC IC I B A N K
5 00 10 0 0 1 50 0 2 0 00 2 5 00
5.
Total Phone Banking Locations in India
Options
Total Phone Banking Locations
37 Localized No., but connecting directly to Mumbai 19 46 25 28 N/A 48 Toll Free No. for North India & Rest of India 189
Total Phone Banking Locations
200 180 160 140 120 100 80 60 40 20 0

IC IC A IB
189
37 19 1
46 25 28 0
48
K K K NK NK NK NK NK NK NK AN AN AN BA BA BA BA T I B B A C BA IB IB D A A D B F BC UT IN CI ID SY RE DR HS HD US IN VY TE D H R G IN IN HA MA DC AK R T DA KO AN ST
6.
Net Banking Services
Options
ICICI BANK UTI BANK HSBC BANK STANDARD CHARTERED BANK CITI BANK
Ease of Connectivity 4 4 5 5 4
Range of Transaction 4 4 5 4 4
Requests action taken within committed time 3 4 5 4 4
More effective than other Banks 3 4 4 4 4
ING VYSYA BANK INDUSIND BANK IDBI BANK KOTAK MAHINDRA BANK HDFC BANK
4 3 5 5 5
4 3 5 5 4
3 3 4 4 3
3 3 3 4 3
Interpretation
On the part of Net Banking service, the most efficient banks are HSBC Bank, IDBI Bank, and Kotak Mahindra Bank in comparison with HDFC Bank A same parameter of scale is being used to judge to level of efficiency and effectiveness.
7.
Mobile Banking Services
Options
ICICI BANK UTI BANK HSBC BANK STANDARD CHARTERED BANK CITI BANK
Ease of Connectivity 5 3 5 4 5
Range of Transaction 5 3 4 4 4
Requests action taken within committed time 4 3 5 4 4
ING VYSYA BANK INDUSIND BANK IDBI BANK KOTAK MAHINDRA BANK HDFC BANK
4 N/A 4 4 4
4 N/A 4 3 4
4 N/A 3 3 4
Interpretation
In Mobile Banking service, the above table shows that ICICI Bank, CITI Bank and HSBC Bank provide better service in compare to the service rendered by HDFC Bank. A same parameter of scale is being used to judge to level of efficiency and effectiveness.
8.
Extra Benefits given to the customers apart from other Banks Benefits provided by the bank
i) Money Multiplier A/c ii) Largest network of ATMs in India i) Providing Reward Card ii) Easy availability of ATM anywhere in India
Options
ICICI BANK
UTI BANK
HSBC BANK
i) Customers taking loan can enjoy free Gold Credit Card ii) Free Home Banking iii) HSBC Power Vintage A/c i) Frequent meeting with customers in Five star hotels ii) Distributing gifts and giving privileges to profitable customers from time to time i) Providing Citi Bank Jet Airways Gold Card i) Free ATM transactions with any bank except UBI ii) Providing loan at preferential rate for agricultural equipments i) Kingfisher Airlines tickets at discounted rates. ii) Mobile Top Up through ATM. i) Special loan for financing IPOs ii) Customer can open a Sabka A/c with minimum balance of Rs. 250 iii) Providing World Currency Card for the tourists. i) Kotak Capital Multiplier Plan ii) Kotak Edge Savings A/c i) Prepaid Refilling through ATM ii) Providing RFC Domestic A/c to the customers iii) Express loan iv) Enhanced EquiAll service on demand
STANDARD CHARTERED BANK
CITI BANK
ING VYSYA BANK
INDUSIND BANK
IDBI BANK
KOTAK MAHINDRA BANK
HDFC BANK
9.
Promotional activities the bank usually does
Options
Promotional Activities Outdoor Indoor

i) Displaying informative posters on the wall i) Sponsoring an event ii) Giving Advertisement on television regarding banking information
ICICI BANK
UTI BANK HSBC BANK
STANDARD CHARTERED BANK
CITI BANK
ING VYSYA BANK
INDUSIND BANK
IDBI BANK
KOTAK MAHINDRA BANK
i) Campaign ii) Sponsorship i) Indulging in social activities ii) Distributing gifts to the customers i) Sponsoring various events ii) Do philanthropic activities iii) Distributing gifts to the customers i) Contributing funds in Tsunami Tragedy Relief Fund ii) Funding for primary education i) Giving Advertisement on television regarding banking information i) Sponsoring social welfare organizing by NGOs ii) Offer discount coupons on certain commodities i) Financed in Film industry to promote their Brand name ii) Giving Advertisement on television regarding banking information i) Do philanthropic activities i) Giving Advertisement on television regarding bank information ii) Sponsoring various events iii) Offer discount coupons on certain commodities
i) Hanging out the banners inside the bank premises i) Providing brouchers inside the bank i) Informative posters hanging on the wall i) Posters are being put on the wall of the bank premises and ATMs i) Providing brouchers on demand i) Various information posters are being displayed in front of Teller counter i) Easy available of brouchers inside the bank
HDFC BANK
i) Displaying informative posters on the wall and ATMs i) Hanging out the various informative posters inside the bank premises specially in front of Teller counter
CONCLUSION
The Indian financial sector underwent a radical change during the nineties to the beginning of 21st century. From the relatively closed and regulated environment in which agents had to operate earlier, the sector was opened up as part of the efficiency enhancing structural policies to bring about high sustainable long-term growth of the economy. The banking sector was also
not an exception to this rule. More specifically private sector banks and foreign banks like ICICI Bank, UTI Bank, Standard Chartered Bank, HSBC Bank, HDFC Bank, CITI Bank etc differ significantly in performance, performance being measured in terms of profitability, efficiency in portfolio management and operating efficiency. The environment was made friendlier for domestic private sector and foreign banks too. As a result, many private players entered the banking sector giving rise to the heightened competitive pressure. Amongst them HDFC Bank showed its development in all respect immensely for the last ten years. Being aware of the current economic environment is challenging, with persistent sluggishness in industrial production and an overall dampening of business confidence. The rapid dismantling of trade barriers, decline in several international commodity prices and intensifying global competition have exposed the Indian corporate sector to greater risk. In such an environment, HDFC Bank's growth have been driven by enhanced customer acquisition, geographic expansion and new product introductions as well as increased penetration of the existing customer base by enlisting on classic portfolio programme. It could be believed that HDFC Bank is well positioned in this respect and should be able to achieve healthy growth in long run both in terms of business volumes and profitability.
BIBLIOGRAPHY
Research Methodology Statistical Method Financial Management : : : C. R. Kothari. Dr. S. P. Gupta. I. M. Pandey.
Journals
Annual Report of HDFC Bank (2005-06) Annual Report (2004-05). www.google.co.in www.hdfcbank.com www.hsbc.co.in www.standardchartered.co.in www.idbibank.com www.icicibank.com www.kotakmahindrabank.com www.citibank.co.in www.ingvysyabank.com www.indusindbank.com www.utibank.com www.information.com
Websites
ANALYSIS OF THE FINDINGS

Awareness of Classic Portfolio Programme among the customers is very low which counts only 45% and 40% of the respondent knows about the facilities provided by the bank under this programme.
50% of the customers are relatively satisfied with the service rendered by HDFC Bank. About 70% of the Classic customers did not invest their money through HDFC Bank due to some reasons. Maximum customers have invested their seed capital through other financial institutions like LICI, Indiabulls, Post Office (MIS) and Sharekhan etc. The Classic Portfolio customers are also having their account with other Banks due to following reasons like old account, opened for salary a/c, good customized services, nearer to the house etc.
ANALYSIS OF THE FINDINGS

Regarding the total Branches in India, HDFC Bank is in the second position (535 branches) among these ten private banks. The first position is occupied by ICICI Bank with total branches of 614.
HDFC Bank showed a better service regarding account opening as it takes 7-10 mins for initial account opening and customers received the welcome kit within the committed time. In total ATMs in India, ICICI Bank and UTI Bank leads the way whereas HDFC Bank ranked as third position. In total Phone Banking in India, HDFC Bank clearly leads the position with 189 phone banking locations and the second position is occupied by IDBI Bank.
CONTENTS
Chapter: 1
Overview of Banking Sector
Chapter: 2
HDFC Bank a. Historical Prelude b. Group M embers c. Organizational Structure i. Composition of HDFC Bank, Golpark Branch (Kolkata) M anagement Style Distribution Network Capital Structure M ission and Business Strategy Technology Risk Management and Portfolio Quality Human Resources Segmentation Information Products and Market M ain Competitors
d. e. f. g. h. i. j. k. l. m.
Chapter: 3
a. b. HDFC Bank Operations Business Segment Update Financial Highlights
Chapter:4
Achievements a. Credit Rating
Chapter: 5
HDFC Bank SWOT Analysis a. Strengths b. Weaknesses c. Opportunities d. Threats
Chapter:6
Portfolio Penetration Of HDFC Bank A. Part I: Cross Selling to Classic Portfolio Customers a. Introduction b. Research Objectives c. Research Methodology d. Findings and Interpretation e. Analysis of the findings f. Limitations g. Conclusion h. Suggestions B. Part II: Comparative Study of Various Value Added Services provided by HDFC Bank in comparison with Other Banks a. b. c. d. e. Research Objectives Research Methodology Findings and Interpretation Analysis of the findings Conclusion
Chapter: 7
Annexure
Chapter: 8
Bibliography
QUESTIONNAIRE FOR THE CUSTOMERS

Name: Customer ID: Please mark () where applicable:
1.
What products of HDFC Bank are you availing? i) Savings A/c iv) Credit Card vii) Lockers ii) Current A/c v) Mutual Fund viii) Loan iii) Fixed Deposit vi) Insurance ix) NRE & NRO A/c
2.
Are you aware that you have been enlisted as a classic portfolio customer of our bank? i) Yes ii) No
3.
Being a classic portfolio customer, are you aware of the facilities that our bank is providing? i) Yes ii) No Facilities: [Free Gold Credit Card, Free International Debit card, reduced charges for lockers and demat A/c, opening Zero Balance A/c for your family members, better Forex rates, preferencial loan rates, personalized investment advice and services.]
4.
Are you satisfied with the service that our bank is providing? i) Absolutely ii) Relatively iii) Somewhat iv) Not at all.
5.
Have you ever invested through HDFC Bank? i) Yes Invested In Mutual Funds Insurance SIP Yes/No Schemes ii) No
6.
Any means of investment you did through others financial institutions apart from HDFC Bank? ..................................................................................................... .
7.
Why? Reason:
8.
Apart from HDFC Bank what other banks are you dealing with? i) ii) iii) iv)
9.
What products of other banks are you having?
i) Savings A/c iv) Credit Card vii) Lockers 10.
ii) Current A/c v) Mutual Fund viii) Loan
iii) Fixed Deposit vi) Insurance ix) NRE & NRO A/c
Why do you avail the aforementioned products from other banks? Reason:..
11.
How often you do your transaction with other banks? i) Regularly ii) Often iii) Sometimes iv) Occasionally v) Never.
12.
What extra benefits are you getting while being a customer of other banks? i) ii) iii) iv)

HDFC Financial Analysis &amp Marketing Research

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HDFC BANK A HISTORICAL PRELUDE

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BRANCH NETWORK CITIES COVERED

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Website Revenue No. of Customers of HDFC Bank

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HDFC Bank Senior Management Team

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Chairman: Mr. Jagdish Capoor

Managing Director: Mr. Aditya Puri

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MISSION AND BUSINESS STRATEGY

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RISK MANAGEMENT & PORTFOLIO QUALITY

* NBFC: Non Banking Financial Companies

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PRODUCTS & MARKET

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Silver Credit Card

Health Plus Credit Card

Value Plus Credit Card

Idea Gold Credit Card

Idea Silver Credit Card

Gold Credit Card

Titanium Credit Card

Womans Gold Credit Card

Corporate Credit Card

Easy Shop International Gold Dedit Card

Easy Shop International Debit Card

Easy Shop Womans Advantage Debit Card

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HDFC BANK OPERATIONS

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, 2006 was 60% wholesale (Rs.

BUSINESS SEGMENT UPDATE

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(Rs. Lacs) 2004-05 2005-06

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Price to Earnings Ratio Rs. 10Lacs = Rs. 1 Million

26.43 21.50 17.06 Rs. 1 Crore = Rs. 10 Million

25.03 27.74 * Source: NSE

HDFC BANK LIMITED BALANCE SHEET AS AT 31ST MARCH, 2006

As at 31.03.2006 313,14 4,986,39 7 55,796,82 2,858,48 1,702,00 7,849,49 73,506,39

3,306,61 3,612,39 28,393,96 35,061,26 855,08 2,277,09 73,506,39 214,782,34 2,828,89

2,650,13 1,823,87 19,349,81 25,566,30 708,32 1,330,57 51,429,00 140,777,15 2,549,68

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