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Project Study Report

On

Training Undertaken at

HDFC Bank LtdTitled

RETAIL LOAN & PARA BANKING PRODUCT IN HDFC BANK LTD.

Submitted in partial fulfillment for theAward of degree of

MASTER OF BUSINESS ADMINISTRATION

Submitted by Submitted to

Abhimanyu Singh RathoreMrs. Dhwani Mishra

MBA Part IVFaculty Member

2007-2009

IILM Academy Of Higher Learning, Jaipur Campus(Affiliated to the University of Raj. & Raj. Technical University,

Approved by AICTE, Ministry of HRD, Govt. of India)

Preface

Its my pleasure and delight to bring out a comprehensive and concise study in organization about RETAIL BANKING System. This study will help in identifying the strength and weakness of the BANKING and also working a quick comparison with ICICI Bank. It will help in taking strategic decision.

Im highly grateful to Mr. Amit Sharma and my helping co trainees.

There are innumerable persons who have contributed in brining out this study report of Banking System in India with Specific reference to HDFC Bank Ltd.

Acknowledgement

I express my sincere thanks to my project guide Mrs. Dhwani Mishra Branch Manager HDFC Bank Ltd. for guiding me right from the inception till the successful completion of the project. I sincerely acknowledge him for extending their valuable guidance, support for literature, critical reviews of project and the report and above all the moral support he had provided to me with all stages of this project.

I would like to thank supporting staff Javed, Maneesh Sharma, Mrs. Neetu Sharma, Aalok Sharma, Ashok Sharma for their help and cooperation trough out our project.

(Signature of the Student)

Abhimanyu Singh RathoreExecutive Summary This project report presented contains detail my summer training assignment. This is a part of my curriculum of M.B.A. program (2007 2009) Rajasthan Technical University. The Project is based on Retail and Para Baniking in HDFC Bank.The main of this project is to deal with customer Various Loan product including Para Banking Products and their queries in HDFC, Jaipur and also to find the Market share of Bank in comparison to other banking companies. The aim of this project was evaluating and managing the Loan Segment among customers on different parameters, creating awareness about the various plans of the HDFC and generating leads for future business prospects.

Bright highlight of the methodology used for the survey project: -

1) Filling the questionnaires by various individuals, which are given by my project guide.

2) Sampling on cluster random basis.

3) Coding

4) Analysis

5) Final report construction

In the current business scenario, to know about the competitors marketing policies and schemes is equally important as emphasizing on companys own policies.

CONTENTS

S.No.DetailsPage No

1.Industry Profile Page 1

2. Introduction to OrganizationPage 2 - 14

2.1. Introduction to HDFC Ltd.

2.2. Company Profile

2.3. Payment Gateway

2.4. Merchant Product Offering

3. Research MethodologyPage 15 - 19

3.1. Title of the study

3.2. Duration Of the Project

3.3. Objective of the Study

3.4. Type of Research

3.5. Sample Size and method of selecting sample

3.6. Scope of Study

3.7. Limitation of Study

4.FACTS AND FINDINGSPage 20 - 52

5.ANALYSIS AND INTERPRETATIONPage 53 - 98

6.SWOT ANALYSISPage 99

7.CONCLUSIONPage 100

8.RECOMMENDATION AND SUGESSIONSPage 101

9.APPENDIXPage 102

0.BIBLIOGRAPHYPage 104

Introduction to Industry

POS (Point of Sale)

Point of sale or point of service (POS or PoS) can mean a retail shop, a checkout counter in a shop, or the location where a transaction occurs. By synecdoche point of sale often refers to a POS terminal or more generally to the hardware and software used for checkouts the equivalent of an electronic cash register. Point of sale systems are used in supermarkets, restaurants, hotels, stadiums, and casinos, as well as almost any type of retail establishment.

Early software

Early electronic cash registers (ECR) were programmed in proprietary software and were very limited in function and communications capability. In August 1973 IBM announced the IBM 3650 and 3660 Store Systems that were, in essence, a mainframe computer packaged as a store controller that could control 128 IBM 3653/3663 Point of Sale Registers. This system was the first commercial use of client-server technology, peer to peer communications, Local Area Network (LAN) simultaneous backup, and remote initialization. By mid-1974, it was installed in Pathmark Stores in New Jersey and Dillards Department Stores.

Programmability allowed retailers to be more creative. In 1979 Gene Mosher's Old Canal Cafe in Syracuse, New York was using POS software written by Mosher that ran on an Apple II to take customer orders at the restaurant's front entrance and print complete preparation details in the restaurant's kitchen. In that novel context, customers would often proceed to their tables to find their food waiting for them already. This software included real time labor and food cost reports. In 1986 Mosher used the Atari ST and bundled NeoChrome paint to create and market the first graphical touchscreen POS software.

Hardware interface standardization

Vendors and retailers are working to standardize development of computerized POS systems and simplify interconnecting POS devices. Two such initiatives are OPOS and JavaPOS, both of which conform to the UnifiedPOS standard led by The National Retail Foundation.

OPOS, short for OLE for POS, was the first commonly-adopted standard and was created by Microsoft, NCR Corporation, Epson and Fujitsu-ICL. OPOS is a COM-based interface compatible with all COM-enabled programming languages for Microsoft Windows. OPOS was first released in 1996. JavaPOS was developed by Sun Microsystems, IBM, and NCR Corporation in 1997 and first released in 1999. JavaPOS is for Java what OPOS is for Windows, and thus largely platform independent.

Communication command protocols

There are several communication protocols POS systems use to control peripherals. Among them are

* EPSON Esc/POS

* UTC Standard

* UTC Enhanced

* AEDEX

* ICD 2002

* Ultimate

* CD 5220

* DSP-800

* ADM 787/788.

There are also nearly as many proprietary protocols as there are companies making POS peripherals. EMAX, used by EMAX International, was a combination of AEDEX and IBM dumb terminal.

Most POS peripherals, such as displays and printers, support several of these command protocols in order to work with many different brands of POS terminals and computers.

Web Based POS

Web based POS can run it on any computer with an Internet connection, without software installations or updates required. It runs on secure servers in multiple data centers with real-time backups.

The restaurant industry

A typical example of modern, touch screen, Restaurant Point of Sale software

Hospitality point of sale systems have revolutionized the restaurant industry. This is particularly found in fast food service and sales. A number of restaurant chains employ systems which use computer networks. In the most recent technologies, registers are virtual computers, sometimes using touch screens. They will connect to a server, often referred to as a "store controller" or a "central control unit." Printers and monitors are also found on the network. Additionally, remote servers will connect to store networks and monitor sales and other store data.

The efficiency of such systems have decreased service times and increased efficiency of orders.

Currently, POS systems are manufactured and serviced by several firms; see point of sale companies category. Point of sales systems in restaurant environments operate on DOS, Windows or Unix environments. They can use a variety of physical layer protocols, though Ethernet is currently the preferred system.

In the fast food industry, a number of configurations may be used in able to aid in the speed of operations. Registers themselves may be in front counter, drive through or walk through cashiering and ordertaking modes. Front counter registers will take and serve orders at the same terminal. Drive through registers will allow orders to be taken at one or more drive through windows and cashiered and served at another. In addition to registers, drive through and kitchen monitors may be used by store personnel to view orders. Once orders appear they may be deleted or recalled by "bump bars", small boxes which have different buttons for different uses. Drive through systems are often enhanced by the use of drive through wireless (or headset) systems which enable communications with drive through speakers.

BANKING STRUCTURE IN INDIA

Scheduled Banks in India

(A) Scheduled Commercial Banks

Public sector Banks

Private sector BanksForeign Banks in IndiaRegional Rural Bank

(28)(27)(29)(102)

Nationalized Bank

Other Public Sector Banks

(IDBI)

SBI and its Associates Old Private Banks

New Private Banks

(B) Scheduled Cooperative Banks

Scheduled Urban Cooperative

Banks (55)

Scheduled State Cooperative

Banks (31)

Here we more concerned about private sector banks and competition among them. Today, there are 27 private sector banks in the banking sector: 19 old private sector banks and 8 new private sector banks.

These new banks have brought in state-of-the-art technology and aggressively marketed their products. The Public sector banks are facing a stiff competition from the new private sector banks.

The banks which have been setup in the 1990s under the guidelines of the Narasimham Committee are referred to as NEW PRIVATE SECTOR BANKS.

New Private Sector Banks

Superior Financial Services Designed Innovative Products Tapped new markets Accessed Low cost NRI funds Greater efficiencyINDIAN BANKING INDUSTRIES

The Indian banking market is growing at an astonishing rate, with assets expected to reach US$1 trillion by 2010. An expanding economy, middle class, and technological innovations are all contributing to this growth.

The countrys middle class accounts for over 320 million people. In correlation with the growth of the economy, rising income levels, increased standard of living, and affordability of banking products are promising factors for continued expansion.

The Indian banking Industry is in the middle of an IT revolution, Focusing on the expansion of retail and rural banking. Players are becoming increasingly customer - centric in their approach, which has resulted in innovative methods of offering new banking products and services. Banks are now realizing the importance of being a big player and are beginning to focus their attention on mergers and acquisitions to take advantage of

economies of scale and/or comply with Basel II regulation.Indian banking industry assets are expected to reach US$1 trillion by 2010 and are poised to receive a greater infusion of foreign capital, says Prathima Rajan, analyst in Celent's banking group and author of the report. The banking industry should focus on having a small number of large players that can compete globally rather than having a large number of fragmented players."

UPCOMING FOREIGN BANKS IN INDIA

By 2009 few more names is going to be added in the list of foreign banks in India. This is as an aftermath of the sudden interest shown by Reserve Bank of India paving roadmap for foreign banks in India greater freedom in India. Among them is the world's best private bank by EuroMoney magazine, Switzerland's UBS.

The following are the list of foreign banks going to set

up business in India :-

Royal Bank of Scotland

Switzerland's UBS

US-based GE Capital

Credit Suisse Group

Industrial and Commercial Bank of China

Introduction to Organization

Introduction to HDFC Bank Ltd

HDFC Bank was incorporated in August 1994 in the name of 'HDFC Bank Limited', with its registered office in Mumbai, India. The Bank commenced operations as a Scheduled Commercial Bank in January 1995.

The Housing Development Finance Corporation Limited (HDFC) was amongst the first to receive an 'in principle' approval from the Reserve Bank of India (RBI) to set up a bank in the private sector, as part of the RBI's liberalization of the Indian Banking Industry in 1994.

Headquartered in Mumbai, HDFC Bank, has a network of over 531 branches spread over 228 cities across India. All branches are linked on an online real-time basis. Customers in over 120 locations are serviced through Telephone Banking. The Bank also has a network of about over 1054 networked ATMs across these cities. 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.

HDFC Bank has won many awards for its excellent service. Major among them are "Best Bank in India" by Hong Kong-based Finance Asia magazine in 2005 and "Company of the Year" Award for Corporate Excellence 2004-05.

HDFC Limited.

FC is India's leading housing finance institution and has helped build more than 23,00,000 houses since its incorporation in 1977. In Financial Year 2003-04 its assets under management crossed Rs. 36,000 Cr. As at March 31, 2004, outstanding deposits stood at Rs. 7,840 crores. The depositor base now stands at around1 million depositors. Rated 'AAA' by CRISIL and ICRA for the 10th consecutive year Stable and experienced management High service standards Awarded The Economic Times Corporate Citizen of the year Award for its long-standing, commitment to community development. Presented the 'Dream Home' award for the best housing finance provider in 2004 at the third Annual Outlook Money Awards.

About the Company

Helping Indians experience the joy of home ownership.

The road to success is a tough and challenging journey in the dark where only obstacles light the path. However, success on a terrain like this is not without a solution.

As we found out over two decades ago, in 1977, the solution for success is customer satisfaction. All you need is the courage to innovate, the skill to understand your clientele and the desire to give them your best.

Today, over a million satisfied customers whose dream we helped realise, stand testimony to our success.

Our objective, from the beginning, has been to enhance residential housing stock and promote home ownership.

Now, our offerings range from hassle-free home loans and deposit products, to property related services and a training facility.

We also offer specialised financial services to our customer base through partnerships with some of the best financial institutions worldwide.

Background

HDFC was incorporated in 1977 with the primary objective of meeting a social need that of promoting home ownership by providing long-term finance to households for their housing needs. HDFC was promoted with an initial share capital of Rs. 100 million.

Over the past two decades, HDFC has been making inroads into varied spheres of development, while retaining a focus on low-income

Business Objectives

The primary objective of HDFC is to enhance residential housing stock in the country through the provision of housing finance in a systematic and professional manner, and to promote home ownership. Another objective is to increase the flow of resources to the housing sector by integrating the housing finance sector with the overall domestic financial markets..

Organisational Goals

HDFC' s main goals are to

a) Develop close relationships with individual households,

b) Maintain its position as the premier housing finance institution in the country,

c) Transform ideas into viable and creative solutions,

d) Provide consistently high returns to shareholders, and

e) To grow through diversification by leveraging off the existing client base.

Company Profile

The company has done away with structural hierarchy, so the front- runner does not need to seek permission to interact with the CEO of the company. The type of communication is also two ways i.e. communication follows both vertical and horizontal type thereby providing maximum interaction and flow of information.

The activities of the different functional departments are directed in such a way that it meets the goals of the organization. The various activities of the company are well coordinated, organized and directed and at the same time integrated too. Decision-making has been made at the Headquarter level.

Overview

For Merchants, the world over, accepting payments through cards; both debit and credit, is an easy and cost effective way to enhance business, increase revenue, and improve efficiency.

As an acquirer, HDFC Bank makes accepting credit and debit cards easy. Our valued merchant establishments can now accept all credit and debit cards issued under the Visa, Visa Electron, MasterCard and Maestro brands. Our service is backed by superior technology infrastructure and personalised support from a designated relationship officer.

We offer card acceptance solutions both on EDC machine and on the Internet through our Payment Gateway product.

Why Merchant Services ?

With HDFC bank Merchant Services, you can offer your customers the convenience of paying with cards and Reduce transaction time

Have freedom of accepting exact amounts- e.g. an amount of 1297.67 can be easily accepted on card but is quite inconvenient to accept in cash.

Reduce manual errors in cash counting and collection.

Increase customer retention by offering customers standing instructions payment options on their cards to make recurring payments. Customers do not need to come to your billing center every month for making recurring payments

Options of accepting payments on regular EDC (Electronic Data Capture) Terminals, through your ECR (Electronic Cash Registers) or through the website.

Features & Services:

Speed and Accuracy of Transactions

HDFC bank Merchant Services offers latest technology EDC machines and payment gateway, supported by world-class technological infrastructure to ensure fast transactions.

The time taken to process a transaction is in seconds and you can be rest assured of the net amount getting credited to your current account on the next working day.

Greater Profitability

Accepting payments in cash is costly. If you calculate the time spent by you or your employee in accepting cash, counting the same, making appropriate stacks, time and cost involved in visiting the nearest bank branch, waiting time at the branch and the cost of depositing cash (some banks charge for accepting cash), you will realise that paying a small discount rate on card transactions is a much more effective way of saving cost and time.

Reduced Risk

HDFC bank-Merchant Services has a dedicated team working round the clock and strives to guard our merchant customers against the risk posed by fraudsters. We have proactive risk management software that

runs checks on the cards swiped on our terminals. We inform our merchant customers within minutes of a suspicious transaction being done on our machines to take necessary actions.

Payment Reports

With HDFC bank Merchant Services, you get an option of taking payment reports on a daily, weekly, fortnightly or monthly basis. This will help you match your card transactions against the payment credits in your current account with us.

Relationship Officers

A dedicated Relationship Officer is assigned to the merchant. This officer acts as a one point contact for all your requirements concerning the Merchant Services department and will also facilitate your other banking related requirements.

Dedicated Helpdesk

We have an, in-house, dedicated, customer service team, which trouble shoots in case you need any assistance on the machine operations, rolls, charge backs, reports, etcPayment Gateway

HDFC Bank Payment Gateway provides a single platform to support multiple payment technologies. The solution supports Secure Sockets Layer (SSL), Secure Electronic Transactions, Pseudo Card Numbers (PCN), 3-D Secure Visa Authenticated Payment protocol and MasterCard Secure Payment Application (SPA).

HDFC Bank Payment Gateway enables the merchants to stay abreast of rapidly changing payment technology; it incorporates a hosted payment page that provides a common interface with the merchant web site, regardless of which secure payment protocol is used. HDFC Bank Payment Gateway also provides secure browser-based access for real time transaction monitoring and reports download.

Our Payment Gateway integrates risk-management and fraud-detection software using a sophisticated, easy-to-manage rules-based system that monitors merchant and cardholder activity.

Payment Gateway is a flexible, scalable solution designed to accommodate the rapidly evolving Internet secure payment environment for businesses. It offers a user-friendly facility to businesses to sell their products in a hassle-free manner to their target customers and ensure receipt of payments upfront.

Payment Gateway integrates risk-management software.

Provides an integrated, flexible rules-based proactive risk management system that operates with all secure payment protocols

Supports branding and CSS for merchants.

Supports online transactions, batch processed transactions as well as IVR and kiosks.

Transaction data, reports and other relevant information is easilyaccessible through browser enabled user interface for merchants

Supports multiple payment types and can route to various authorisation systems and traditional card payment engines

Supports multiple platforms.

VBV and Securecode compliant.

Highly reliable Payment Gateway offering 99.99% uptime.

Customised MIS solutions for travel,, retail and service (e.g. telecom) industries.

Easy to integrate and maintain..

24 Hour helpdesk support.

How an Internet transaction is initiated and processed through Payment Gateway?

The customer fills his shopping cart on a merchant website and proceeds to check out.

The transaction information is transmitted to the merchant server.

The web merchant forwards a digital order to the Payment Gateway server in an encrypted format.

The Payment Gateway authenticates the merchant and provides payment options and payment details screens directly on the customer's browser over a secure 128-bit SSL+ connection.

The customer provides his credit card details, which is directly sent to the Payment Gateway server when he clicks "Pay" .

The credit card details are then switched to the Operator / Bank for authentication.

The Operator / Bank then transmits the message to the cardholders' bank for payment authorisation.

The issuing bank authorises the payment, provided the card is valid and has the requisite credit limit and transmits the confirmation back to the Payment Gateway through the Operator / Bank

On receiving the authorisation, Payment Gateway forwards a digital receipt to the merchant server.

The merchant provides a confirmation of the payment to the customer's browser.

The entire process integrates seamlessly with the shop and buy application of the web merchant.

The merchant may then ship the goods and capture the transaction on the gateway server.

Flexible

Supports multiple merchants on a single platform.

Acceptance for most of the major credit and debit cards.

User interfaces for merchants are browser enabled.

Supports multiple platforms.

Fast

Time to. market - integrating merchants via simple universal payment adapter (Merchant Plug-In).

Scalable to process a few thousand transactions to millions of transactions / month on a real time basis..

Utilises Java architecture and a relational database either Microsoft SQL or Oracle for scalability and portability.

Integration with existing applications and support for various shopping cart applications are simpler and faster.

Smart

Provides an integrated, flexible rules-based risk-management system that operates with all secure payment protocols.

Transactions are screened by up to three negative files - BINs; hot cards reported lost or stolen; and warm cards that have exceeded usage or other temporary parameters.

Supports multiple payment types and can route to various authorisation systems and traditional card payment engines.

Provides extensive online query capabilities that support evaluation of transaction activity.

Allow cardholders to create personal assurance messages which can later be exchanged with their financial institutions during the purchase transaction

Supports CVV2 and CVC2 for fraud control .

Reliable

Supports online, batch and manually entered transactions.

Provides merchants with Internet access to transaction data, reports, and other relevant information.

Provide both cardholders and financial institutions with the knowledge that purchases have been securely authenticated.

Maintain a complete digital history of orders, including confirmation numbers, payment and shipment details and relevant captured Web pages.

Secured user interfaces for system management and operations.

State-of-the-art security technology and processes .

Comprehensive user guides and support information.

24x7 helpdesk support - Local.

Merchant Product Offerings

HDFC Bank Merchant Services is the national leader in electronic payment solutions. We give a competitive edge to businesses and financial institutions, by offering a complete portfolio of systems, services and innovative products to meet the ever-changing market dynamics.

Card Acceptance:

On the EDC terminals provided by HDFC Bank, all cards issued under the following brands can be accepted by your outlets

Visa (Credit)

MasterCard (Credit)

Visa Electron (Debit)

Maestro (Debit)

As part of our terminal sharing arrangement with American Express, you can also accept American Express Cards on our terminals. However you

need to have a Merchant relationship with American Express directly and communicate with American Express to have this activated on the HDFC Bank Terminal.

Technology infrastructure:

HDFC Bank would install the state of the art latest generation EDC terminals on which you can accept all signature-based cards. The entire service is backed by superior technology infrastructure in terms of the network, systems and processes.

Payment Options:

Payment can be made by credit to current account with the bank or manager's cheque

Personalised service:

We offer personalised service to our Merchants. One merchant relationship officer is designated for taking care of the relationship with our merchants. This officer will be the one point contact in the bank for all issues relating to your merchant account.

For more details, write in to us at hdfcbank.meservices@hdfcbank.com and we will get back to you.

Working Capital Finance

At HDFC bank understanding a customer's requirement and fulfilling it with innovative product solutions is a way of life. We understand that businesses need working capital to run day to day operations and to fund your business expansion. We have products, which can be structured to suit your business loan requirements.

We are a bank with substantial appetite for recognised credits.We can offer you working capital finance by way of cash credit or loans suitably structured to your needs and your risk profile in consortium or as a sole banker.

Marketing and Other Support

Card Support

Imagine a leading newspaper reserving sole space for you, running your ad, and mailing it individually to each of your prospective customers. Here's an innovative marketing idea that's sure to give maximum mileage to your product or service. Just carry your offer on the monthly statements of India's high end Credit Cards of HDFC Bank.

Targeted Direct Mailers

You get a direct reach to your specific target group and you can communicate one on one with them. You have a captive audience who'll

read and re-read your message at leisure. And since the people you are targeting are personally addressed, there's no wastage.

EMI Opportunities

Advertise your EMI offers to HDFC Bank credit card customers interested in buying now and paying later in installments coupled with a fantastic finance offer.

Catalogue based rewards Program.

You can also widen your reach and popularise your products by participating in HDFC Bank's Rewards Program.

As of March 31, 2008, the Banks distribution network was at 761 Branches and 1977 ATMs in 327 cities as against 684 branches and 1,605 ATMs in 320 cities as of March 31, 2007.

Against the regulatory approvals for new branches in hand, the Bank expects to further expand the branch network by around 150 branches by June 30, 2008. During the year, the Bank stepped up retail customer acquisition with deposit accounts increasing from 6.2 million to 8.7 million and total cards issued (debit and credit cards) increasing from 7 million to 9.2 million.Whilst credit growth in the banking system slowed down to about 22% for the year ended 2007-08, the Banks net advances grew by 35.1% with retail advances growing by 38.6% and wholesale advances growing by 30%, implying a higher market share in both segments. The transactional banking business also registered healthy growth With cash management volumes increased by around 80% and trade services volumes by around 40% over the previous year.

Portfolio quality as of March 31, 2008 remained healthy with gross nonperforming assets at 1.3% and net non-performing assets at 0.4% of total customer assets. The Banks provisioning policies for specific loan loss provisions remained higher than regulatory requirements.

TECHONOLOGY USED IN HDFC BANK

In the era of globalization each and every sector faced the stiff competition from their rivals. And world also converted into the flat from the globe. After the policy of liberalization and RBI initiatives to take the step for the private sector banks, more and more changes are taking the part into it. And there are create competition between the private sector banks and public sector bank.

Private sector banks are today used the latest technology for the different transaction of day to day banking life. As we know that Information Technology plays the vital role in the each and every industries and gives the optimum return from the limited resources.

Banks are service industries and today IT gives the innovative Technology application to Banking industries. HDFC BANK is the leader in the industries and today IT and HDFC BANK together combined they reached the sky. New technology changed the mind of the customers and changed the queue concept from the history banking transaction. Today there are different channels are available for the banking transactions.

We can see that the how technology gives the best results in the below diagram. There are drastically changes seen in the use of Internet banking, in a year 2001 (2%) and in the year 2008 ( 25%).

These type of technology gives the freedom to retail customers.

Centralized Processing Units

Derived Economies of Scale

Electronic Straight Through Processing

Reduced Transaction Cost

Data Warehousing , CRM

Improve cost efficiency, Cross sell

Innovative Technology Application

Provide new or superior products

HDFC BANK is the very consistent player in the New private sector banks. New private sector banks to withstand the competition from public sector banks came up with innovative products and superior service.

2001

2005

(%customer initiated Transaction by Channel)

HDFC BANK PRODUCT AND CUSTOMER SEGMENTS

PERSONAL BANKING

1. Loan Product

2. Deposit Product

3. Investment & Insurance

4. Cards

5. Payment Services

6. Access To Bank

7. Forex ServicesLoan Product

Auto Loan

Loan Against Security

Loan Against Property

Personal loan

Credit card

2-wheeler loan

Commercial vehicles finance

Home loans

Retail business banking

Tractor loan

Working Capital Finance

Construction Equipment Finance

Health Care Finance

Education Loan

Gold LoanHOUSING LOAN - APNA GHAR SCHEME

Eligibility: Any person / group of persons, Salaried / Self - Employed /business class /retired jointly with employed spouse or son having regular income and capacity to repay installments of proposed housing loan.

Age: Minimum age - 21 years; Maximum age - 65 years (last installment should mature at the age of 65 years)

Income:

Salaried Individuals - Any individual who is in permanent service in Government/ reputed Companies having a minimum salary of Rs. 8,500/- (Salary means Gross salary less statutory deductions like PF, income tax & ESI);

Professionals- Doctors, Engineers, Dentists, Architects, CAs, Cost Accountants, CSs, MBAs and other professionals havingminimum annual average income of last three years - Rs. 1.00 lac;

Self-Employed / Business class Individuals & and other individuals not classified above- Minimum annual average income of last three years ofRs. 1.00 lac.

Purpose:

Purchase of ready built house / flat, land and construction thereon;

Repairs and Renovation;

Shifting/ take over of loan. (Take over of loans availed from otherfinancial Institutions).

Quantum of Loan:

For Repairs andRenovation Maximum Rs.10.00 lacs;

For Purchase of ready built house / flat, land and construction thereon - Maximum Rs.100.00 lacs.

Switch Over Cost: Switching from the fixed rate to floating rateand vice versa will attract1% of the outstanding amount.

Reset Clause: In case of Fixed Interest Rate, reset clause will be applied after every 3 years.

Margin:15% in case of purchase of house, flat, land and construction and repairs and renovation.

Assessmentof Loan Amount:

Salaried Individuals: Up to 36 times of monthly salary or cost of project (less 15% margin)whichever is less. Income of spouse or blood relatives can be clubbed if they are made co-borrower. As a matter of credit prudence the total deductions including installment of proposed loan should not exceed 50% of the salary (gross salary less P.F.& income-tax). The EMI should not exceed 30% of gross monthly salary. However, if we are otherwise satisfied about the credit worthiness and repaying capacity of the borrower, the norms for deductions may be relaxed.

Professionals: 3 times of the average annual income of last three years or the cost of the project less 15% margin whichever is less.Income of spouse or blood relatives can be clubbed if they are made co-borrower. In case the applicant is proprietor of any firm, then depreciation charged in the firm's balance sheet can be added back in the income. Self employed, Businessmen & and other individuals not classified above:3 times of the average annual income of last three years or the cost of the project less 15% margin whichever is less. Income of spouse and sons can be clubbed if they are made co-borrower. Income of other blood relatives can be clubbed only if they are joint owners of property and made co-borrower. In case the applicant is proprietor of some firm, then depreciation charged in the firm's balance sheet can be added back in the income.

Repayment Period: Maximum 20 years in case of purchase of house inclusive of moratorium period; Maximum 9 years in case of repairs and renovations.

Processing Charges:

Loans up to Rs 2.00 lacs -0.50% of sanctioned loan amount

Loans above Rs 2.00 lacs - 1.00%of sanctioned loan amount.

(Valuation, Advocate Fee, Documentation, stamps, inspection charges etc.) to be recovered from the borrower on actual basis, before release of facility.

Foreclosure Charges: 2% of the prepaid amount. Out of pocket expenses

Sanction Procedure: The decision to sanction the loan is based on scoring model. The loan can be sanctioned if an applicant scores marks 50 or above. If the score is 45 to 49, the loan can be sanctioned with additional interest of 0.50%, and if it is between 40 to 44, the loan can be sanctioned at additional interest of 1%.

Similarly, loans to salaried person can be allowed upto 50 and 60 months of salary at an additional interest of 0.50% and 1% respectively. Loans to persons other than salaried class can be allowed upto 4 to 5 times of average annual income at additional interest of 0.50% or 1% respectively.

PERSONAL LOAN SCHEME

Eligibility: Salaried Individual with permanent service of minimum three years in Government, PSU/MNC, reputed Public or Private Company. Professionals like Doctors, Chartered Accountants, Company Secretaries, MBAs, Engineers etc Self Employed other than Professionals, businessmen etc. Other individuals not classified like partners or directors having cash credit accounts of their firms or companies

Income:

Salaried Individuals -Minimum salaryofRs. 7500/- p.m. (Salary means Gross salary less statutory deductions like PF, income tax & ESI); Self Employed/Professional / Businessmen/ other Individuals not classified - Minimum average Annual Income Rs. 1.00 lac for last three years as per Income TaxReturnPurpose: To meet personal expenses.

Age: Minimum 24 years; Maximum 65 years inclusive of loan period.

Loan Amount:

In case of Salaried Individuals-MinimumRs 25,000/-, Maximum Rs. 10.00 lacs;

Self-employed/ Professionals/Businessmen/Other individuals not classified -MinimumRs 25,000/-, Maximum Rs. 15.00 lacs.

Repayment Period: 12 to 48 months.

Interest Rate: Declared on time-to-time basis.

Service Charge: 2% of Loan amount as up-front fee.

Prepayment Charges: 2% of prepaid amount.

Disbursement: In the SB/CD account of borrower or as per his instruction.

Assessment of Loan Amount:

Salaried Individuals - 5 to 12 months salary, subject to the condition thattotal deductions including installment of proposed loan should not exceed 50% of the net salary (i.e. gross salary less P.F.& income tax). The EMI should not exceed 20% of gross monthly income.Professional/ Self employed persons/ Businessmen/other individuals not classified- Up to 40% to 150 % of average annual income of last three years based upon repayment period as per chart given under:

Sanction Procedure:

The decision to sanction the loan is based on scoring model. The loan can be sanctioned if an applicant scores marks 50 or above.Mortgage Loan/ Overdraft Scheme for Individuals

Eligibility:Individuals (against self owned property/ properties or property / properties owned by his spouse, children) HUF Concern (against self owned property /properties or property / properties owned by karta, major coparceners, his /her /their spouse, children)

Amount:

Maximum Loan upto Rs. 100 lacs. Additional advance against same property can be allowed to same or other party if there is sufficient residual value i.e. remaining value after advance against mortgage loan is sufficient to take care of other advance. Property where housing loan is already availed can also be considered for loan under this scheme if residual value is sufficient and eligibility criterion is complied with.

Purpose: Personal needs.

Nature of advance: By way of Loan or Over Draft.

Security:

Equitable Mortgage of the property for which the advance is sanctioned. It includes: a) Residential/commercial immovable property; b) Free hold land (vacant plot); c) Leasehold land (vacant plot) subject to permission of lessor (viz. respective Municipal Corporation, Development Authority etc.) is obtained d) Leased/rented property provided owner & lessee/tenant agree for assignment of lease income/rent in favour of Bank for direct receipt of the same in the loan/OD a/c.

Guarantee:

Personal guarantee / guarantee of owner (s) of the property (in case property is owned & occupied by person other than the borrower / applicant.). In case of HUF personal guarantee of Karta, major coparceners.

Interest: Declared on time-to-time basis.

Penal Interest: 4 % above the normal rate applicable on the defaulted amount.

Foreclosure Charges: 2 % of the prepaid amount

Amount of advance:

Four times of the average of gross yearly income as declared in the Income Tax returns of the immediately completed past two financial years or 70 % of the property value, assessed by the Banks approved valuer or assessed by the Branch Manager as per the Spot Visit Report whichever is lower.

(In case of salaried / self employed / professionals / businessmen, the income of spouse and depreciation can be clubbed for arriving at the eligible loan/overdraft amount. In such cases the spouse should become co-borrower or his / her personal guarantee should be obtained.)

Repayment

Loan Maximum 180 equated monthly installments.

Over Draft Repayable on demand subject to yearly review. Interest is to be recovered on as and when debited basis. Annual review to be based on income tax, audited balance sheet (wherever applicable) business statistics, conduct of account, earnings etc. The utilization of the limit should be at least 80%, otherwise commitment charges @ 2% on the unutilized portion shall be levied. In case of Loan/overdraft facility the annual repayment obligation is subject to following conditions:

In case of professional / self-employed personals / Businessmen / entrepreneurs etc the annual repayment obligation (including all other repayment commitments) should note exceed 75% of the Gross yearly Income.

In case of loan to salaried class, the total future yearly repayment obligation (including all other repayment commitments) of the borrower should not exceed 60% of the Gross Yearly salary of the borrower. Estimated interest amount for full year on sanctioned OD amount will be considered as annual repayment obligation in case of overdraft facility.

Procession charges:

(a) For Loan: - @. 0.50 % of loan sanctioned (one time)

(b) For Overdraft: - @ 0.50 %p.a. on overdraft sanctioned limit and @ 0.50 % for the subsequent renewal every year for each calendar year basis.

Out of pocket expenses (Valuation, Advocate Fee, Documentation, stamps, inspection charges etc.) to be recovered from the borrower on actual basis, before release of facility.

Sanction Procedure:

The decision to sanction the loan is based on scoring model. The loan can be sanctioned if an applicant scores marks 50 or above.

CAR LOAN SCHEME

Eligibility:

Any salaried individual / businessman, professional and self-employed and other individual not classified with a minimum gross Salary / Income of Rs. 1.00 lac per annum.

Purpose:

Purchase of brand new passenger car. The car will be hypothecated to the Bank as security.

Age: Minimum 21 years; Maximum 65 years inclusive of loan period.

Loan amount: Minimum loan amount is Rs. 1.00 lac and Maximum Rs. 25.00 lacs.

Repayment period: 12 to 60 months based on surplus available for repayment.

Interest Rate. Declared on time-to-time basis.

Margin:

10% of cost of Vehicle up to the loan of Rs. 10.00 lac & 20% of cost of Vehicle for loan of more than Rs. 10.00 lac. Processing Fee: 0.50% of Loan amount. Prepayment Charges: 1% of prepaid amount.Assessment of Loan amount: The total deductions including installment of proposed loan should not exceed 50% of the salary (gross salary less P.F.& income tax). The EMI should not exceed 20% of gross monthly salary.

Sanction Procedure:

The decision to sanction the loan is based on scoring model. The loan can be sanctioned if an applicant scores marks 50 or above.

Deposit Product

Saving a/c

Current a/c

Fixed deposit

Demat a/c

Safe Deposit LockersInvestment & Insurance

Mutual Fund

Bonds

Knowledge Centre

Insurance

General and Health Insurance

Equity and Derivatives

Mudra Gold Bar

Cards

Credit Card

Debit Card

Prepaid Card

Payment Services NetSafe

Merchant

Prepaid Refill

Billpay

Visa Billpay

InstaPay

DirectPay

VisaMoney Transfer

eMonies Electronic Funds Transfer

Online Payment of Direct Tax

Access To Bank

NetBanking

OneView

InstaAlert

MobileBanking

ATM

Phone Banking

Email Statements

Branch Network

Forex Services Product & Services

Trade Services

Forex service Branch Locater

RBI Guidelines

WHOLESALE BANKING

Corporate

Funded Services

Non Funded Services

Value Added Services

Internet Banking

Small and Medium Enterprises

Funded Services

Non Funded Services

Specialized Services

Value added services

Internet Banking

Financial Institutions and Trusts

BANKS

Clearing Sub-Membership

RTGS submembership

Fund Transfer

ATM Tie-ups

Corporate Salary a/c

Tax Collection

Financial Institutions

Mutual Funds

An investment vehicle that pools savings of various investors with a common financial goal.

Advantages of investing in a mutual fund Professional Management of Funds

Well regulated industry

Diversification

Easy Liquidity

Low Cost

Transparency

Higher return potential compared to FDsMyths surrounding Mutual Funds It is unsafe

It only deals with Equity Markets

My money is locked in

I do not have a tangible investmentMutual Funds - The Basics

Sponsor

Person who establishes the mutual fund - role akin to that of a promoter of a company.

Eligibility criteria

Sound Track record

Holds at least 40% of the net worth of the AMC

Appoint Trustees

Appoint AMC

Trustees

First level regulators for mutual fund schemes

Hold the property of the MF in trust for the benefit of the unit-holders

Prior approval of SEBI needed for appointment

2/3rd to be independent

Ensure that AMC is managing schemes in accordance with Regulations and scheme mandate

General and Specific Due Diligence

The Asset Management Company (AMC)

Is the Investment Manager

Employs people in marketing, fund management, operations and compliance

50% independent directors

Can undertake only permitted activities

Reporting to Trustees and SEBI

Other Fund Constituents

Bankers

Registrar

Custodians

Distributors

Fund Accountant

Types of Mutual Funds

By Structure

Open-ended v/s close-ended

By Investment Objective Equity Funds

Debt Funds

Balanced Funds

Liquid Funds

Index Funds

Variants in overseas markets - real estate funds, gold funds, derivative funds, etc.

SYSTEMATIC INVESTMENT PLAN

Creates the investing habit

Participation in all market movements

Avoids Timing the market

Avoids Greed and FearGeneral Insurance - Mediclaim

Group Mediclaim

The Group Mediclaim is a cover under which all Bank Account holders can be covered and the main benefit is that the premium here is much less than under Individual Mediclaim Scheme, whereas the benefits are more.

Premium: Paid in advance at rates mutually agreed.

Commencement of Cover: The cover commences from date of credit of premium in United Indias Account.

Salient Features:

Raj Arogya Nidhi

Cover is granted to a family on floater basis, consisting of account holder, spouse and two dependant children under Plan A. If parents are covered, Plan B is opted.

The maximum age limit for entering the scheme is 65 years. After entering the scheme, continuous renewals upto 80 years can be done. Minimum age is 3 months.

The amount of cover for floater family can be from Rs. 50,000/- to Rs. 5 lacs maximum.

The account holder has to fill up and sign the proposal form containing authorization to debit the account, and declaration of good health. The form is to be obtained in 3 copies, along with photographs.

Proof of Insurance: When the proposal form reaches the Insurance Company, a policy is issued by United India Insurance Company Limited and Photo ID card issued by TPA (Third Party Administrator)

Benefits available under the scheme: The account holder and floater family who have enrolled under the scheme are eligible for the following benefits:

Subject to maximum of sum insured, hospitalization expenses in the event of sudden illness, accident, surgery required in respect of disease are covered.

Ambulance expenses upto Rs. 1,000 will be reimbursed during hospitalization within overall sum assured per policy year.

In case children below 12 years are hospitalized, out of pocket expenses upto Rs. 1,000/- is reimbursed to parents taking care of the children with in the overall sum assured per policy year.

Cost of health check up 1% of sum assured is reimbursed after completion of four continuous claim free policy years. The four continuous claim free policy years are counted if the policy was obtained from any other Insurance Company in the earlier years. IMPORTANT: The health check up provision is applicable only in respect of continuous insurance without break.

Pre existing diseases would be covered after three continuous claim free policy years which includes policies taken from any other insurance company.

Funeral expenses for maximum amount of Rs. 1,000/- in the case of insured donating eye(s) is reimbursed over and above the sum assured, subject to original illness/ accident claim admitted under the policy.

Maternity and Baby care expenses are reimbursed upto 5% of the sum assured. Waiting Period is 9 months and Baby Care expenses payable to 90 days from the date of birth.

Expenses on treatment taken in hospitals in Nepal and Bhutan are also covered in Indian currency.

Treatment of NRIs at hospitals in India is covered upto sum assured in Indian currency.

Cashless hospitalization facility through TPAs is available.

Add on Facility

Personal Accident Insurance Death Benefit (optional) for the family is available on payment of additional premium. The premium mentioned under the Personal Accident Insurance Death Benefit should be obtained over and above the premium as per Plan A. The Personal Accident Insurance Death Benefit is optional and additional premium is collected only for those who opt for the scheme.

The Personal Accident (death cover) available for members who are covered under the scheme is as follows:

Account Holder

:100% of sum insured

Spouse of Account Holder:50% of sum insured

Dependent Children of age

Above 5 yrs and upto 21 yrs:20% of sum insured

Dependent children of

upto 5 yrs of age

:10% of sum insured

Exclusions

The policy does not cover:

Pre-existing diseases (however, it is covered after four continuous claim free policy years which includes policies taken from any other insurance company)

Hospitalization expenses incurred in the first 30 days of commencement of cover except in cases of injury due to accident

Domiciliary hospitalization

Other standard exclusions applicable to Mediclaim policies will also apply.

Claim Procedure

Cashless treatment can be availed at the network hospitals by showing thee photo ID cards issued by TPA and in case for any reason cashless service could not be availed, the customer can meet the hospital bills and claim reimbursement from TPA. If the insured has not opted for TPA, the claim forms along with bills should be sent to the nodal office of United India Insurance Company Ltd.

Income Tax Benefit

Income tax benefit as per Section 80D of Income Tax is available to account holders who enroll under the scheme.

Claims:

The claims will be settled by Company

Stock Brokers

Insurance Companies

Commodities Business

Trusts

BUSINESS MIX

Total Deposits Gross Advances Net Revenue

RetailWholesale

HDFC Bank is a consistent player in the private sector bank and have a well balanced product and business mix in the Indian as well as overseas markets.

Customer segments (retail & wholesale) account for 84% of Net revenues ( FY 2008)

Higher retail revenues partly offset by higher operating and credit costs.

Equally well positioned to grow both segments.

.

NRI SERVICESAccounts & Deposits

Rupee Saving a/c

Rupee Current a/c

Rupee Fixed Deposits

Foreign Currency Deposits

Accounts for Returning Indians

Remittances

North America

UK

Europe

South East Asia

Middle East

Africa

Others such as Quick remit

India Link

Investment & Insurances

Mutual Funds Insurance Private Banking Portfolio investment SchemeLoans

Home Loans

Loans Against Securities

Loans Against Deposits

Gold Credit Card

Payment Services

NetSafe BillPay InstaPay DirectPay Visa MoneyAccess To Bank

NetBanking OneView InstaAlert ATM PhoneBanking Email Statements Branch NetworkBUSINESS STRATEGY

HDFC BANK mission is to be "A World Class Indian Bank", benchmarking themselves against international standards and best practices in terms of product offerings, technology, service levels, risk management and audit & compliance. The objective is to build sound customer franchises across distinct businesses so as to be a preferred provider of banking services for target retail and wholesale customer segments, and to achieve a healthy growth in profitability, consistent with the Bank's risk appetite. Bank is committed to do this while ensuring the highest levels of ethical standards, professional integrity, corporate governance and regulatory compliance. Continue to develop new product and technology is the main business strategy of the bank. Maintain good relation with the customers is the main and prime objective of the bank.

HDFC BANK business strategy emphasizes the following:

Increase market share in Indias expanding banking and financial services industry by following a disciplined growth strategy focusing on quality and not on quantity and delivering high quality customer service.

Leverage our technology platform and open scaleable systems to deliver more products to more customers and to control operating costs.

Maintain current high standards for asset quality through disciplined credit risk management.

Develop innovative products and services that attract the targeted customers and address inefficiencies in the Indian financial sector.

Continue to develop products and services that reduce banks cost of funds.

Focus on high earnings growth with low volatility.

INSIDE HDFC BANK

FIVE S , PART OF KAIZEN

WORK PLACE TRANSFORMATION

Focus on effective work place organization

Believe in Small changes lead to large improvement

Every successful organization have their own strategy to win the race in the competitive market. They use some technique and methodology for smooth running of business. HDFC BANK also aquired the Japanese technique for smooth running of work and effective work place organization.

Five S Part of Kaizen is the technique which is used in the bank for easy and systematic work place and eliminating unnecessary things from the work place.

BENEFIT OF FIVE S

It can be started immediately. Every one has to participate. Five S is an entirely people driven initiatives. Brings in concept of ownership. All wastage are made visible. FIVE S Means:-

S-1SORTSEIRI

S-2SYSTEMATIZESEITON

S-3SPIC-N-SPANSEIRO

S-4STANDARDIZESEIKETSU

S-5SUSTAINSHITSUKE

SORT:-

It focus on eliminating unnecessary items from the work place. It is excellent way to free up valuable floor space. It segregate items as per require and wanted.

SYSTEMATIZE:-

Systematize is focus on efficient and effective Storage method. That means it identify, organize and arrange retrieval. It largely focus on good labeling and identification practices.

Objective :- A place for everything and everything in its place.

SPIC- n - SPAN:- Spic-n-Span focuses on regular clearing and self inspection. It brings in the sense of ownership.

STANDERDIZE:-

It focus on simplification and standardization. It involve standard rules and policies. It establish checklist to facilitates autonomous maintenance of workplace. It assign responsibility for doing various jobs and decide on Five S frequency.

SUSTAIN:-It focuses on defining a new status and standard of organized work place. Sustain means regular training to maintain standards developed under S-4. It brings in self- discipline and commitment towards workplace organization.

LABELLING ON FILE

FILE NUMBER

SUBJECT

FROM DATE

TO DATE

OWNER

BOX LABEL

For Example 1 / 3 / A / 6

1 Work Station (1)

3 Drawer (3)

A - Shelf (A)

6 File Number ( 6)

COLOUR CODING OF FILES

DEPARTMENT

Welcome Desk

Personal Banker

Teller

Relationship Manager

Branch Manager

Demat

Others

In the HDFC BANK each department has their different color coding apply on the different file. Due to this everyone aware about their particular color file which is coding on it and they save their valuable time. It is a part of Kaizen and also included in the system of the Five S. Logic behind it that , the color coding are always differentiate the things from the similar one.

BUSINESS PROMOTION

As the HDFC POS business is at a very initial stage and growing, the marketing and business promotion activities will be an ongoing activity for the life of the product. We have divided the year into two parts. It is known from the market practice that the season from October to March (six months) is the peak season for shopping, where as people like to keep themselves indoors during April to September.

But as the competition is very stiff in the market, it is the merchant who makes the decision on which machine the card is to be swiped. In most of the cases its the Sales representative or the person at cash counter who is the correct person to cultivate relations with to maximize swipes on HDFC machines.

As explained earlier also, When HDFC becomes Issuer and acquirer both then it is the best deal in terms of earnings because we do not have to share anything with other banks or MasterCard or Visa International. So we target two different kind of schemes for which a separate approval from higher authorities will be taken from time to time after analysis of the situation.HUMAN RESOURCE

The Banks staffing needs continued to increase during the year particularly in the retail banking businesses in line with the business growth. Total number of employees increased from 14878 as of March31,2006 to 21477 as of March 31, 2007. 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 so far covers around 9000 employees.

RUPEE EARNED- RUPEE SPENT

It is more important for every organization to know about from where and where to spent money. And balanced between these two things rupee earned and rupee spent are required for smooth running of business and financial soundness. This type of watch can control and eliminate the unnecessary spending of business. In this diagram it include both things from where Bank earned Rupee and where to spent.

HDFC BANK earned from the Interest from Advances 51.14 % ,Interest from Investment 27.12 %, bank earned commission exchange and brokerage of 15.25 %. These are the major earning sources of the bank. Bank also earned from the Forex and Derivatives and some other Interest Income.

Bank spent 39.75 % on Interest Expense, 30.27 % on Operating Expense and 14.58 % on Provision. Bank also spent Dividend and Tax on dividend, Loss on Investment , Tax. As we discuss above that balancing is must between these two for every organization especially in the era of globalization where there are stiff competition among various market players.

RECENT DEVELOPMENT

The Reserve Bank of India has approved the scheme of amalgamation of Centurion Bank of Punjab Ltd. with HDFC Bank Ltd. with effect from May 23, 2008.

All the branches of Centurion Bank of Punjab will function as branches of HDFC Bank with effect from May 23, 2008. With RBIs approval, all requisite statutory and regulatory approvals for the merger have been obtained.

The combined entity would have a nationwide network of 1167 branches; a strong deposit base of around Rs.1,22,000 crores and net advances of around Rs.89,000 crores. The balance sheet size of the combined entity would be over Rs.1,63,000 crores.

Merger with Centurion Bank of Punjab Limited

On March 27, 2008, the shareholders of the Bank accorded their consent to a scheme of amalgamation of Centurion Bank of Punjab Limited with HDFC Bank Limited. The shareholders of the Bank approved the issuance of one equity share of Rs.10/- each of HDFC Bank Limited for every 29 equity shares of Re. 1/- each held in Centurion Bank of Punjab Limited. This is subject to receipt of approvals from the Reserve Bank of India, stock exchanges and

Other requisite statutory and regulatory authorities. The shareholders also accorded their consent to issue equity shares and/or warrants convertible into equity shares at the rate of Rs.1,530.13 each to HDFC Limited and/or other promoter group companies on preferential basis, subject to final regulatory approvals in this regard. The Shareholders of the Bank have also approved an increase in the authorized capital from Rs.450 crores to Rs.550 crores.

Promoted in 1995 by Housing Development Finance Corporation (HDFC), India's leading housing finance company, HDFC Bank is one of India's premier banks providing a wide range of financial products and services to its over 11 million customers across hundreds of Indian cities using multiple distribution channels including a pan-India network of branches, ATMs, phone banking, net banking and mobile banking. Within a relatively short span of time, the bank has emerged as a leading player in retail banking, wholesale banking, and treasury

operations, its three principal business segments. The bank's competitive strength clearly lies in the use of technology and the ability to deliver world-class service with rapid response time.

Over the last 13 years, the bank has successfully gained market share in its target customer franchises while maintaining healthy profitability and asset quality.

As on March 31, 2008, the Bank had a network of 761 branches and 1,977 ATMs in 327 cities. For the year ended March 31, 2008, the Bank reported a net profit of INR 15.90 billion (Rs.1590.2crore),up 39.3%, over the corresponding year ended March 31, 2007.

As of March 31, 2008 total deposits were INR 1007.69 billion,(Rs.100,769 crore) up 47.5% over the corresponding year ended March 31, 2007. Total balance sheet size too grew by 46.0% to INR 1,331.77 billion (133177 crore). Leading Indian and international Publications have recognized the bank for its performance and quality.

Centurion Bank of Punjab is one of the leading new generation private sector banks in India. The bank serves individual consumers, small and medium businesses and large corporations with a full range of financial products and services for investing, lending and advice on financial planning. The bank offers its customers an array of wealth management products such as mutual funds, life and general insurance and has established a leadership 'position'. The bank is also a strong player in foreign exchange services, personal loans, mortgages and agricultural loans.

Additionally the bank offers a full suite of NRI banking products to Overseas Indians. On 29th August 2007, Centurion Bank of Punjab merged with Lord Krishna Bank (LKB), post obtaining all requisite statutory and regulatory approvals. This merger has further strengthened the geographical reach of the Bank in major towns and cities across the country, especially in the State of Kerala, in addition to its existing dominance in the northern part of the country.

Centurion Bank of Punjab now operates on a strong nationwide franchise of 404 branches and 452 ATMs in 190 locations across the country, supported by employee base of over 7,500 employees.In addition to being listed on the major Indian stock exchanges, the Banks shares are also listed on the Luxembourg Stock Exchange.

ACHIEVEMENT IN 2007

Business Today-Monitor Group survey

One of India's "Most Innovative Companies"

Financial Express-Ernst & Young Award Best Bank Award in the Private Sector category

Global HR Excellence Awards - Asia Pacific HRM Congress:'Employer Brand of the Year 2007 -2008' Award - First Runner up, & many more

Business Today

'Best Bank' Award

Dun & Bradstreet American Express Corporate Best Bank Award 2007'Corporate Best Bank' Award

The Bombay Stock Exchange and Nasscom Foundation's Business for Social Responsibility Awards 2007'Best Corporate Social Responsibility Practice' Award

Outlook Money & NDTV Profit

Best Bank Award in the Private sector category.

The Asian Banker Excellence in Retail Financial Services AwardsBest Retail Bank in India

Asian BankerHDFC BANK Managing Director Aditya Puri wins the Leadership Achievement Award for India

SWOT ANALYSIS

STRENGTH

Right strategy for the right products.

Superior customer service vs. competitors.

Great Brand Image

Products have required accreditations.

High degree of customer satisfaction. Good place to work

Lower response time with efficient and effective service.

Dedicated workforce aiming at making a long-term career in

the field.

WEAKNESSES

Some gaps in range for certain sectors.

Customer service staff need training.

Processes and systems, etc

Management covers insufficient.

Sectoral growth is constrained by low unemployment levels and competition for staff

Opportunities

Profit margins will be good.

Could extend to overseas broadly.

New specialist applications.

Could seek better customer deals.

Fast-track career development opportunities on an industry-wide basis.

An applied research centre to create opportunities for developing techniques to provide added-value services.Threats

Legislation could impact.

Great risk involved

Very high competition prevailing in the industry.

Vulnerable to reactive attack by major competitors

Lack of infrastructure in rural areas could constrain investment.

High volume/low cost market is intensely competitive.COMPETITIVE SWOT ANALYSIS WITH ICICI BANK

STRENGTHS

S O Strategies

Strength: Large Capital base.

Opportunity: Market Expansion.

Strategy: Deep Penetration into Rural Market.

WEAKNESSES

W O Strategies

Weakness: Workforce Responsiveness.

Opportunity: Outsourcing of Non Core Business.

Strategy: Outsource Customer Care & other E-Helps.

S T Strategies

Strength: Low operating costs

Threat: Increased Competition from others Pvt. Banks.

Strategy: Steps to Ensure Loyalty by old Customers.

W T Strategies

Weakness: Not Equal to International Standards.

Threat: Entry of many Foreign Banks.

Strategy: Consider additional benefits

Detailed Analysis:

i. Strength - Opportunity Analysis.

Strength:

It is well know that ICICI Bank has the largest Authorised Capital Base in the Banking System in India i.e. having a total capacity to raise Rs. 19,000,000,000 (Non Premium Value).

Opportunity:

Seeing the present financial & economic development of Indian Economy and also the tremendous growth of the Indian Companies including the acquisition spree followed by them,it clearly states the expanding market for finance requirements and also the growth in surplus disposal income of Indian citizens has given a huge rise in savings deposits from the above point it is clear that there is a huge market expansion possible in banking sector in India.

Strategy:

From the analysis of Strength & Opportunity the simple and straight possible strategy for ICICI Bank could be - to penetrate into the rural sector of India for expanding its market share as well as leading all other Pvt. Banks from a great gap.

ii. Strength - Threat Analysis.

Strength:

ICICI Bank is not only known for large capital but also for having a low operations cost though having huge number of branches and services provided.

Threat:

After showing a significant growth overall, India is able to attract many international financial & banking institutes, which are known for their state of art working and keeping low operation costs.

Strategy:

To ensure that ICICI Bank keeps going on with low operation cost & have continuous business it should simply promote itself well & provide quality service so as to ensure customer loyalty, therefore guaranteeing continuous business.

iii. Weakness - Opportunity Analysis.

Weakness:

It is well known that workforce responsiveness in banking sector is Very low in Indian banking sector, though ICICI Bank has better responsible staff but it still lacks behind its counterparts like HSBC, HDFC BANK, CITI BANK, YES BANK etc.

Opportunity:

In the present world, India is preferred one of the best places for out sourcing of business process works and many more.

Strategy:

As international companies are reaping huge benefits after out-sourcing there customer care & BPOs, this same strategy should be implemented by ICICI Bank so as to have proper customer service without hindering customer expectations.

iv. Weakness - Threat Analysis.

Weakness:

Though having a international presence, ICICI Bank has not been able to keep up the international standards in providing customer service as well as banking works.

Threat:

In recent times, India has witnessed entry of many international banks like CITI Bank, YES Bank etc which posses an external entrant threat to ICICI Bank as this Banks are known for their art of working and maintain high standards of customer service.Strategy:

After having new entrants threat, ICICI Bank should come up with More additional benefits to its customer or may be even reduce some fees for any additional works of customers. PLASTIC MONEY

I give the project on Plastic Money to bank. The objective behind this project is to increase the rich customers list in a bank. Plastic Money title itself says the use of Credit Card and Debit Card in day to day transaction of the business. I prepared the presentation on it and submitted to bank and Bank already started work on this project.

Idea behind this project is to sale the bulk product. Target customer Of this project are two parties one is Wholesaler and second is Retailer. Due to this idea bank also sell their swipe machine to wholesaler and create brand image in the market.

The idea behind this, bank give the credit card swipe machine to wholesalers and retailers use the credit card of the bank. Bank gives the 50 days credit to their credit card holders. So here retailers can get benefit of long credit period and on the other side wholesalers can get the benefit of same day payment. As a result bank got the wide list of customers of wholesalers and retailers.

Idea behind it, to convenience both the parties and create the group transaction between them so bank can got the maximum benefit from it. Each wholesaler has more than 15 to 20 retailers, so by this way bank sell the bulk products.

This power point slide shows the how idea works behind this project. Meet the wholesaler first and get the details about their retailers and convince both parties and shows the benefit of using this type of transaction by plastic money.

Bank always find those customers which are more involve in the banking transaction. These type of group transaction between the wholesalers and retailers maintain the well account in a bank.

MASTER CARD AND VISA SETTLEMENT

It is the acquiring banks responsibility to re-imburse the merchants and claim the same from Master card or Visa as the case may be. Both the organisations have different rules and procedures of claiming funds by the acquiring banks. We need to understand the rules and procedures of both the organisations separately. We need to understand the system of transmitting outgoing files, system of receiving incoming files and clearing procedures and time frames.

MASTER CARD

MasterCard offers the means for an acquirer bank and an issuer bank involved in a transaction to clear and settle the transaction. The issuer is the institution that issues cards to cardholders. The acquirer is an institution that has agreements with merchants to process payments account transactions and reimburse the merchants for those transactions. The acquirer enters those transactions into clearing (through Master Card), thus settling with the issuer to receive funds that it needs to reimburse to merchants. The acquirer bank and Master Card must perform a series of steps to accomplish clearing and settlement.

a) Clearing : Clearing is the process of sending transactions from the acquirer to the issuer for posting to the cardholder account. Within INET, the sending of data is determined by the issuer ICA number. Currently, an acquirer groups its batches by issuing ICA number. When MasterCard receives the batches (whether through the Banknet telecommunications network, MasterCard file

express, MasterCard mainframe to member mainframe or on magnetic tape), MasterCard edits the records, checking the data for accuracy and directs it to. issuer bank.

b) Settlement : Clearing is the movement of data from the member to MasterCard and from MasterCard to the member. Settlement is the process by which funds are exchanged representing the net equivalent of monetary value from clearing and billing processing. These funds are exchanged each day between the banks for net monetary value of the cleared transactions. MasterCard calculates the net position of each member involved in the clearing process-and performs the functions of (a) sending advisements (b) Transferring funds.

c) Means of Transferring Data : Acquiring Bank (HDFC Bank Ltd) sends and receives data via a Master Card Interface processor (MIP). The file names which are sent to master card have following description

10121501.512 --- The file name starting with 101 means this is outgoing file for clearing. Next three digits (215 in this case) represent Julian date (Feb. 1 as 32 date) and next two digits represent the file number for that particular date being transmitted.

10221501.asc The file name starting with 102 means this is incoming file for settlement and clearing sent for previous day. Next two digits represent the Julian date and four files will be received by Bank for everyday whether clearing for previous day was sent or not.

Bank can also use other transmission methods instead of a MIP connection. Following transmission methods are as follows :

Transfer data via dial-up access between remote personal computers and central site based mainframe using modems and communication software developed and licensed by MasterCard International.

MasterCard mainframe to bank's mainframe using dedicated networkcommunication facilities. Also referred to as "Complex - to Complex"

Send and receive data on magnetic tape via the postal service or courier. Magnetic tapes are used to transmit data when a member is - experiencing problems with connectivity to MasterCard.

Time frame for Clearing

An acquirer has 30 calendar days to process the transaction to the issuer. An issuer must, however, accept a transaction submitted beyond the 30 day time frame if the account is in good standing, or the transaction can be honored. The 30 day time frame is measured as the time between the transaction date and processing date. When calculating the number of days, do not count the transaction date as day one, but do count the Central Processing Date. In case the transaction is submitted to MasterCard for clearing with issuer bank, issuer bank takes interchange fee of 1.1% of the transaction amount. But if the transaction is submitted after 5 days then the interchange fee is 1.50% of the transaction amount. Below is a diagram depicting the relationship of banks during the various processing cycles.

Calculation of net Positions :

As HDFC Bank Ltd is acquiring Master Credit Cards and Maestro credit cards along with the issuing of Meastro Debit Cards. MasterCard makes a net settlement of all POS and ATM transactions for issuer and acquirer transactions.

MasterCard received incoming transaction date from between 9:01 A.M. and the end of the fourth clearing (9:00A.M.) The next day (St., Louis Time) and then the net position is calculated and settling bank is advised accordingly by MasterCard along with the copy of the net position to acquiring and issuing bank

Below is the diagram how the net position and settlement is done by MasterCard international.

It is to- be noted that , Maestro Debit card settlement is done online by MasterCard International and there is no need of sending these transactions through clearing. But the net position will take into consideration these transactions also.

VISA INTERNATIONAL :

As the bank is acquiring VISA cards also, the settlement procedure with VISA International for acquiring of VISA cards on HDFC terminals is also one of the requirements.

The outgoing files which are sent to Visa international will have the name as ifftl.out. This means the file is for clearing and the file number is 1 for the date. Similarly incoming files ifft 1.in is the file for incoming.

However VISA sends 16 files for clearing every day as compared to Master cards 4 files everyday.

Time frame of clearing with VISA International

An acquirer has 30 calendar days to process the transaction with the issuer. An issuer must, however, accept a transaction submitted - beyond the 30 day time frame if the account is in good standing, or the transaction can be honored.

The 30 day time frame is measured as the time between the transaction date and processing date. When calculating the number of days, do not count the transaction date as day done, but do count the Central Processing Date.

In case the transaction is submitted to VISA International for clearing with issuer bank, issuer bank takes interchange fee of 1.1% of the transaction amount. But if the transaction is submitted after 5 days then the interchange fee is 1.50% of the transaction amount.

It is to be noted unlike with Maestro debit cards the settlement is not done online for Visa Electron Debit cards. The claim with Visa International will be for Credit Cards and Visa Electron Debit Cards also.

As Bank is not issuing any visa cards, so the net position for HDFC Bank Ltd as on date with Visa transactions must be positive on any given date.

DISPUTED TRANSACTIONS BY MASTER CARD AND VISA INTERNATIONAL

If a cardholder-disputes the transaction, issuer bank can raise a charge back on acquiring bank through Master Card or Visa International.

The Charge back rules for MasterCard and VISA International are defined in the next chapter.

CATEGORY - 2 (CARDHOLDER BASED SCHEMES)

As HDFC Bank Ltd. is issuer of Maestro -Debit Card, it is very important that customers should be informed by way of schemes about the usage of card other than ATMs only. Since we also plan to launch credit cards soon, it is also essential that schemes for cardholders are launched from time to time. Following Schemes can be floated which are popular in the market :

1. Discounts to HDFC Bank Ltd. Cardholders : These kind of schemes will benefit the bank in becoming Issuer and Acquirer of transactions at the same time.

2. Lucky Draw Schemes : These schemes are useful to enhance the usage of Debit Card at merchant outlets. E.g. E-bank club.

3. Loyalty programme schemes : One of most popular way to enhance the usage of cards.

However other promotional and marketing activities will be an ongoing process to maximise the acquiring business through HDFC cards.

Appendix

9.1 Appendix

Study Questionnaire

What are different types of plans provided by bank?

What are the administrative charges for Processing Loan?

What are your transaction limits ?

What are the distribution channels used by your bank for Disbursement of Loan?

What are the value added services you are providing to your Customer?

Who are your target customer and segment?

Salaried Tourists Industrialist

Foreign Tourist

What are the promotion tools used by the bank?

Print media Road Shows

Trade Fair Festival Offers

Hoarding

What are proceedings for POS terminal approval to merchants by your bank ?

What is the procedure for POS approval by your bank?

What are the basic documents needed.

How many POS terminals do you have ?

Field Investigation Report

1. Residence: -

Name of Applicant: - ________________________________

Address of Applicant: -________________________________

_________________________________

Type Of House: -

Flat Chawl Bungalow Hutment Free Hold Lease Hold

Residence is Easily Approachable From :-

Railway Station Bus Stop Not Easily App.

Residence Ownership :-

@ House/Flat Owned by Self / Spouse @ House/Flat Owned by Parents Of applicant

@ House/Flat Owned by Parents Of Spouse

@ Other

Loan taken for Residence: -

Yes, Loan Amount Rs. ____________ EMI Rs.______ Outstanding Rs-----------

Name of Institution

No

Above informations verified from :-

Society Officers Name ___________________________

Neighbor ___________________________

Watchman ___________________________

Other _______________________________

Locality Of Residence :-

@ Posh @ Upper Class @ Middle Class @ Lower Class

Interior Impression :-

@ Well Maintained @Avg. Maintained @ Poorly Maintained

In Residence :-

Phone T.V. Refrigerator Music System A.C. Cooler

How easy to Locate the house :-

@Easy @Difficult @ Unable to Locate

2. Residence Details :-

Details of Vehicle Owned :- ___________________________________________

___________________________________________

Details of Discussion

With Neighbors :-

Details of Discussion with

Property Broker / Estate Broker :-

Detail of Discussion with

Society / Office :-

Land Mark Observed :- ___________________________________________

Loan Details

:-

Car : Market Cost Rs ___________ Car Loan Amount Rs _____________

EMI Rs. _____________ Present Outstanding Rs.____________

3. Office

Office is Easily Approachable From :-

Railway Station Bus Stop Not Easily App.

Size of Office ( Sq. M. ) :-

Office / Business Premises :-

@ Owned @ Parental @ Spouse @ Rental

Location of office :-

@Commercial Area @ Industrial Estate @ Residential @ Other

Locality :-

@ Posh

@ Upper Class @ Middle Class@ Lower Class

Furnishing: -

@ Well Furnished @ Avg. Furnishing @ Sparsely Furnished

Asset visible at time of field visit :-

Phone Computer Fax

Photocopier A.C.

Number Of Employee Visible ________

Level of activity observed in office :-

@ High @ Medium @ Low @None

Salary / Income

Statutory Deductions Other Deductions

Any feed back through Reference Checks

Name of the Field Officer :- ________________________________________________

Date of Visit :-

Observations of Field Officer :-

Signature Of Field Officer with date

Check box for multiple selections @ Radio Button for single selection

PRE SANCTION / PRE RELEASE / POST SANCTION MONITORING

SPOT VISIT / INSPECTION REPORT

(For properties proposed for Equitable Mortgage / Negative Lien )

Name of Account :.

Branch : Region:

Date of Visit :.............................................. By :.....

Particulars of Property : (Brief Description).......

..Location : (Complete postal address to be given).........---------------------------------------------------------------------Whether property is built up or vacant plot?...........................................................................

Land Area....................... sq.mts ............----------.Cnstructed area...........................

Year of construction..................................

Name of the owner(s)....................

Nature of Ownership : Free-hold / Lease hold/ Private Lease..............---------------------------OCCUpied by :