Chapter 1

COMPANY PROFILE

BANKING STRUCTURE IN INDIA

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Scheduled Banks in India (A) Scheduled Commercial Banks Public sector Banks (28) Nationalized Bank Other Public Sector Banks (IDBI) SBI and its Associates Private sector Banks (27) Old Private Banks New Private Banks Foreign Banks in India (29) Regional Rural Bank (102)

(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-ofthe-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 efficiency

INDIAN BANKING INDUSTRIES 2

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."

INTRODUCTION TO HDFC BANKING

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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 as on june 2012, HDFC Bank, has a network of over 2564 branches spread over 1416 cities across India. All branches are linked on an online real-time basis. Customers in over 1354 locations are serviced through Telephone Banking. The Bank also has a network of about over 9709 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 Bank (NYSE: HDB), one of the first, new generation, tech-savvy commercial banks of India, was incorporated in August 1994, after the Reserve Bank of India allowed setting up of Banks in the private sector. The Bank was promoted by the Housing Development Finance Corporation Limited, a premier housing finance company (set up in 1977) of India. Net Profit for the year ended March 31, 2006 was Rs. 1,141 crores. Results of the latest quarter ended June 2007, indicate that the bank continues to grow in a steady manner. The Housing Development Finance Corporation Limited (HDFC) was amongst the first to receive an 'in principle' approval from the Reserve Bank of India (RBI) to set up a bank in the private sector, as part of the RBI's liberalization of the Indian Banking Industry in 1994. The bank was incorporated in August 1994 in the name of 'HDFC Bank Limited', with its registered office in Mumbai, India. HDFC Bank commenced operations as a Scheduled Commercial Bank in January 1995. The current Managing Director Of HDFC bank is Mr.Aditya Puri

DISTRIBUTION NETWORK
HDFC Bank headquartered is in Mumbai. The Bank at present has an enviable network of over 2564 branches spread over 1416 cities across India. All branches are linked on an online real-time basis. Customers in over 1350 locations are also serviced through Telephone Banking. The Bank's expansion plans take into account the need to have a presence in all major industrial and commercial centers where its corporate customers are located as well as the need to build a strong retail customer base for both deposits and loan products. Being a clearing/settlement bank to various leading stock exchanges, the Bank has branches in the centers where the NSE/BSE has a strong and active member base. The Bank also has a network of about over 9709 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. 4

MANAGEMENT
Mr. C.M. Vasudev took over as the bank's Chairman in July 2010. Prior to this Mr. Vasudev has been a Director of the Bank since October 2006,. 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 indusy, the bank believes that its people are a significant competitive strength.

COMPANIES VISION
Technologically Strong Financially Sound All India Presence Personalized Services Value Maximization Employee Satisfaction Maximization Skill

BUSINESS 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 5

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.

TECHNOLOGY
HDFC Bank operates in a highly automated environment in terms of information technology and communication systems. All the bank's branches have online connectivity, which enables the bank to offer speedy funds transfer facilities to its customers. Multi-branch access is also provided to retail customers through the branch network and Automated Teller Machines (ATMs). The Bank has made substantial efforts and investments in acquiring the best technology available internationally, to build the infrastructure for a world class bank. The Bank's business is supported by scalable and robust systems which ensure that our clients always get the finest services we offer. The Bank has prioritized its engagement in technology and the internet as one of its key goals and has already made significant progress in web-enabling its core businesses. In each of its businesses, the Bank has succeeded in leveraging its market position, expertise and technology to create a competitive advantage and build market share.

Business focus
HDFC Bank's mission is to be a World-Class Indian Bank. The objective is to build sound customer franchises across distinct businesses so as to be the preferred provider of banking services for target retail and wholesale customer segments, and to achieve healthy growth in profitability, consistent with the bank's risk appetite. The bank is committed to maintain the highest level of ethical standards, professional integrity, corporate governance and regulatory 6

compliance. HDFC Bank's business philosophy is based on four core values Operational Excellence, Customer Focus, Product Leadership and People.

PARTNERS

HDFC SDLC

HDFC BANK
Incorporated in August 1994 as HDFC Bank Limited, the bank now has a wide network of over 531 branches across 228 cities in India, and over a thousand networked ATM's. The Housing Development Finance Corporation Limited (HDFC) was amongst the first to receive an 'in principle' approval from the Reserve Bank of India (RBI) to set up a bank in the private sector, as part of the RBI's liberalization of the Indian Banking Industry in 1994. The bank was incorporated in August 1994 in the name of 'HDFC Bank Limited', with its registered office in Mumbai, India. HDFC Bank commenced operations as a Scheduled Commercial Bank in January 1995

RATINGS

Credit Rating HDFC Bank has its deposit programmers rated by two rating agencies - Credit Analysis & Research Limited. (CARE) and Fitch Ratings India Private Limited. The Bank's Fixed Deposit programmer 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) programmer "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 (India)" rating to the Bank's deposit programmer, 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?

PRODUCT SCOPE
HDFC Bank offers a bunch of products and services to meet the every need of the people. The company cares for both, individuals as well as corporate and small and medium enterprises. For individuals, the company has a range accounts, investment, and pension scheme, different types of loans and cards that assist the customers. The customers can choose the suitable one from a range of products which will suit their life-stage and needs. For organizations the company has a host of customized solutions that range from funded services, Non-funded services, Value addition services, Mutual fund etc. These affordable plans apart from providing long term value to the employees help in enhancing goodwill of the company. The products of the company are categorized into various sections which are as follows: Accounts and deposits. Loans Investments and Insurance Forex and payment services Cards Customer center

PRODUCTS AND SERVICES AT A GLANCE

1. PERSONAL BANKING SERVICES A. Accounts & Deposits 8

Savings Account Regular Savings Account Savings Plus Account Savings Max Account Senior Citizens Account No Frills Account Institutional Savings Account Payroll Salary Account Classic Salary Account Regular Salary Account Premium Salary Account Defense Salary Account Kid's Advantage Account Pension Saving Bank Account Family Savings Account Kisan No Frills Savings Account Kisan Club Savings Account

Current Account Plus Current Account Trade Current Account Premium Current Account Regular Current Account Apex Current Account Max Current Account Reimbursement Current Account

Fixed Deposit Regular Fixed Deposit Super Saver Account Sweep-in Account 9

Recurring Deposit Demat Account Safe Deposit Locker

B. Loans Personal Loans Home Loans Two Wheeler Loans New Car Loans Used Car Loans Overdraft against Car Express Loans Loan against Securities Loan against Property Commercial Vehicle Finance Working Capital Finance Construction Equipment Finance

C. Investments & Insurance Mutual Funds Insurance Bonds Financial Planning Knowledge Centre Equities & Derivatives Mudra Gold Bar

D. Forex Services Trade Finance Travelers Cheques 10

Foreign Currency Cash Foreign Currency Drafts Foreign Currency Cheque Deposits Foreign Currency Remittances Forex Plus Card

E. Payment Services Net Safe Prepaid Refill Bill Pay Direct Pay Visa Money Transfer E-Monies Electronic Funds Transfer Excise & Service Tax Payment

F. Access Your Bank - One View Insta Alerts G. Cards Mobile Banking ATM Phone Banking Branch Network Silver Credit Card Gold Credit Card Woman's Gold Credit Card Platinum plus Credit Card Titanium Credit Card Value plus Credit Card Health plus Credit Card 11

HDFC Bank Idea Silver Card HDFC Bank Idea Gold Card

2. WHOLESALE BANKING SERVICES Funded Services Non Funded Services Value Added Services Internet Banking Clearing Sub-Membership RTGS sub membership Fund Transfer ATM Tie-ups Corporate Salary a/c Tax Collection Financial Institutions Mutual Funds Stock Brokers Insurance Companies Commodities Business Trusts

3. NRI BANKING SERVICES Rupee Saving a/c Rupee Current a/c Rupee Fixed Deposits Foreign Currency Deposits Accounts for Returning Indians Payment Services Net Safe 12

Bill Pay Insta Pay Direct Pay Visa Money Online Donation Remittances MILESTONES IN THE HISTORY

HDFC Bank began its operations in 1995 with a simple mission to be a "Worldclass Indian Bank. They realized that only a single-minded focus on product quality and service excellence would help us get there. Today, they are proud to say that they are well on our way towards that goal. It is extremely gratifying that their efforts towards providing customer convenience have been appreciated both nationally and internationally. 2009 Asia Money 2009 Awards IBA Banking Technology Awards 2009 Global Finance Award IDRBT Banking Technology Excellence Award 2009 Asian Banker Excellence in Retail Financial Services 2008 Finance Asia Country Awards for Achievement 2008 CNN-IBN Nasscom IT User Award 2008 Business India Forbes Asia 'Best Domestic Bank in India' IBA Banking Technology Awards 2009 'Best Trade Finance Bank in India for 2009 IT Governance and Value Delivery' 'Asian Banker Best Retail Bank in India Award 2009 '

'Best Bank and Best Cash Management Bank' 'Indian of the Year (Business)' 'Best IT Adoption in the Banking Sector' 'Best Bank 2008' Fab 50 companies in Asia Pacific 13

Asian Banker Excellence in Retail Financial Services Asia money Microsoft & Indian Express Group Business Today-Monitor Group survey Financial Express-Ernst & Young Award

Best Retail Bank 2008 Best local Cash Management Bank Award voted by Corporate Security Strategist Award 2008 One of India's "Most Innovative Companies" Best Bank Award in the Private Sector category

2007 Business Today-Monitor survey Financial Express-Ernst & Award One of India's "Most Innovative Group Companies". Young Best Bank Award in the Private Sector Category. Employer Brand of the Year 20072008-Award- First Runner-up. Best Bank Award.

Global HR Excellence Awards - Asia Pacific HRM Congress: Business Today

Dun & Bradstreet American Corporate Best Bank-Award. Express Corporate Best Bank Award 2007 The Bombay Stock Exchange and Best Corporate Nasscom Responsibility Foundation's Business for Social Practice Award. Responsibility Awards 2007 Outlook Money & NDTV Profit Social

Best Bank Award in the Private sector Category.

The Asian Banker Excellence in Best Retail Bank in India. Retail Financial Services Awards Asian Banker Managing Director Aditya Puri won the Leadership achievement Award for India. 14

2006 Business Today Forbes Magazine Business world The Asset Country Awards Magazine's Triple

Best Bank in India. One of Asia Pacific's Best 50 companies. Best listed Bank of India. A Best Domestic Bank.

Asia money Awards

Best Local Cash Management Bank in Large and Medium segments. "Best Bank" in India

Euro money Awards

Organizational Structure
HDFC Bank and Centurion Bank of Punjab merger at share swap ratio of 1:29 The Boards of HDFC Bank and Centurion Bank of Punjab met on 25 February, 2008 and approved, subject to due diligence, the share swap ratio for the proposed merger of Centurion Bank of Punjab with HDFC Bank. The Scheme of Amalgamation envisages a share exchange ratio of one share of HDFC Bank for twenty nine shares of Centurion Bank of Punjab. The combined entity would have a nationwide network of 1,148 branches (the largest amongst private sector Banks) a strong deposit base of around Rs. 1,200 billion and net advances of around Rs. 850billion. The balance sheet size of the combined entity would be over Rs. 1,500 billion. Commenting on the proposed merger, Mr. Deepak Parekh, Chairman, HDFC said, We were amongst the first to get a banking license, the first to do a merger in the private sector with Times Bank in 1999, and now if this deal happens, it would be the largest merger in the private sector banking space in India. HDFC Bank was looking for an appropriate merger opportunity that would add scale, geography and experienced staff to its franchise. This opportunity arose and we thought it is an attractive route to supplement HDFC Banks organic growth. We believe that Centurion Bank of Punjab would be the right fit in terms of culture, strategic intent and approach to business. Mr. Aditya Puri, Managing Director, HDFC Bank said, These are exciting times for the Indian banking industry. The proposed merger will position the combined entity to significantly exploit opportunities in a market globally recognized as one of the fastest growing. Im particularly bullish about the 15

potential of business synergies and cultural fit between the two organizations. The combined entity will be an even greater force in the market. Mr. Rana Talwar, Chairman, Centurion Bank of Punjab stated, Over the last few years, Centurion Bank of Punjab has set benchmarks for growth. The bank today has a large nationwide network, an extremely valuable franchise, 7,500 talented employees, and strong leadership positions in the market place. I believe that the merger with HDFC Bank will create a world class bank in quality and scale and will set the stage to compete with banks both locally as well on a global level. Mr. Shailendra Bhandari, Managing Director and CEO, Centurion Bank of Punjab said, We are extremely pleased to receive the go ahead from our board to pursue this opportunity. A merger between the banks provides significant synergies to the combined entity. The proposed merger would further improve the franchise and customer proposition offered by the individual banks.

QUALITY POLICY
SECURITY: The bank provides long term financial security to their policy. The bank does this by offering life insurance and pension products. TRUST: The bank appreciates the trust placed by their policy holders in the bank. Hence, it will aim to manage their investments very carefully and live up to this trust. INNOVATION: Recognizing the different needs of our customers, the bank offers range of innovative products to meet these needs. INTEGRITY CUSTOMER CENTRIC PEOPLE CARE ONE FOR ALL AND ALL FOR ONE TEAM WORK JOY AND SIMPLICITY a

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CHAPTER-2
PROJECT PROFILE

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HDFC BANKING
A banker or bank is a financial institution whose primary activity is to act as a payment agent for customers to borrow and lend. The first modern bank was founded in HDFC BANK, . Many other financial activities were added over time. For example banks are important players in financial markets and offer financial services such as investment funds. In some countries such as India, banks are the primary owners of industrial corporations while in other countries such as the United States banks are prohibited from owning non-financial companies.. Traditional banking activities Definition Accounting for bank accounts Wider commercial role Economic functions Law of banking Entry regulation Politics and history Origin of the word Banking channels Banks in the economy Size of global banking industry Top ten banking groups in the world ranked by shareholder equity Bank crisis Challenges within the banking industry Profitability

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Traditional banking activities Banks act as payment agents by conducting checking or current accounts for customers, paying cheques drawn by customers on the bank, and collecting cheques deposited to customers' current accounts. Banks also enable customer payments via other payment methods such as telegraphic transfer, EFTPOS, and ATM. Banks borrow money by accepting funds deposited on current account, accepting term deposits and by issuing debt securities such as banknotes and bonds. Banks lend money by making advances to customers on current account, by making installment loans, and by investing in marketable debt securities and other forms of lending. Banks provide almost all payment services, and a bank account is considered indispensable by most businesses, individuals and governments. Non-banks that provide payment services such as remittance companies are not normally considered an adequate substitute for having a bank account. Banks borrow most funds from households and non-financial businesses, and lend most funds households and non-financial businesses, but non-bank lenders provide a significant and in many cases adequate substitute for bank loans, and money market funds, cash management trusts and other non-bank financial institutions in many cases provide an adequate substitute to banks for lending savings to. Definition The definition of a bank varies from country to country. Under English common law, a banker is defined as a person who carries on the business of banking, which is specified as

conducting current accounts for his customers paying cheques drawn on him, and Collecting cheques for his customers.

In most English common law jurisdictions there is a Bills of Exchange Act that codifies the law in relation to negotiable instruments, including cheques, and this Act contains a statutory definition of the term banker: banker includes a body of persons, whether incorporated or not, who carry on the business of banking. Although this definition seems circular, it is actually functional, because it ensures that the legal basis for bank transactions such as cheques do not depend on how the bank is organized or regulated. The business of banking is in many English common law countries not defined by statute but by common law, the definition above. In other English common law jurisdictions there are statutory definitions of the business of banking or banking business. When looking at these definitions it is important to keep in minds that they are defining the business of banking for the purposes of the legislation, and 19

not necessarily in general. In particular, most of the definitions are from legislation that has the purposes of entry regulating and supervising banks rather than regulating the actual business of banking. However, in many cases the statutory definition closely mirrors the common law one. Examples of statutory definitions:

"banking business" means the business of receiving money on current or deposit account, paying and collecting cheques drawn by or paid in by customers, the making of advances to customers, and includes such other business as the Authority may prescribe for the purposes of this Act; (Banking Act (Singapore), Section 2, Interpretation). "banking business" means the business of either or both of the following:

1. receiving from the general public money on current, deposit, savings or other similar account repayable on demand or within less than [3 months] ... or with a period of call or notice of less than that period; 2. paying or collecting cheques drawn by or paid in by customers Since the advent of EFTPOS (Electronic Funds Transfer at Point Of Sale), direct credit, direct debit and internet banking, the cheque has lost its primacy in most banking systems as a payment instrument. This has lead legal theorists to suggest that the cheque based definition should be broadened to include financial institutions that conduct current accounts for customers and enable customers to pay and be paid by third parties, even if they do not pay and collect cheques. Accounting for bank accounts Bank statements are accounting records produced by banks under the various accounting standards of the world. Under GAAP and IFRES there are two kinds of accounts: debit and credit. Credit accounts are Revenue, Equity and Liabilities. Debit Accounts are Assets and Expenses. This means you credit accounts to increase their balances and you debit accounts to increase their balances. This also means you debit your savings account every time you deposit money into it (and the account is normally in deficit) and you credit your credit card account every time you spend money from it (and the account is normally in credit). However, if you read your bank statement, it will say the opposite- that you have credited your account when you deposit money and you debit when you withdraw it. If you have cash in your account you have a positive or credit balance and if you are overdrawn it will say you have a negative or a deficit balance. The reason for this is because the bank, and not you, has produced the bank statement. Your savings might be your assets, but it is the bank's liability, so your savings account is a liability account which is a credit account and should have a positive credit balance. Your loans are your liabilities but the bank's assets so they are debit accounts which should have a negative balance. 20

Below where bank transactions, balances, credits and debits are discussed, they are done so from the viewpoint of the account holder which is traditionally what most people are used to seeing. Wider commercial role However the commercial role of banks is wider than banking, and includes:

issue of banknotes (promissory notes issued by a banker and payable to bearer on demand) processing of payments by way of telegraphic transfer, EFTPOS, internet banking or other means issuing bank drafts and bank cheques accepting money on term deposit lending money by way of overdraft, installment loan or otherwise providing documentary and standby letters of credit, guarantees, performance bonds, securities underwriting commitments and other forms of off balance sheet exposures safekeeping of documents and other items in safe deposit boxes currency exchange sale, distribution or brokerage, with or without advice, of insurance, unit trusts and similar financial products as a 'financial supermarket'

Economic functions The economic functions of banks include: 1. Issue of money, in the form of banknotes and current accounts subject to cheque or payment at the customer's order. These claims on banks can act as money because they are negotiable and/or repayable on demand, and hence valued at par and effectively transferable by mere delivery in the case of banknotes, or by drawing a cheque, delivering it to the payee to bank or cash. 2. netting and settlement of payments -- banks act both as collection agent and paying agents for customers, and participate in inter-bank clearing and settlement systems to collect, present, be presented with, and pay payment instruments. This enables banks to economies on reserves held for settlement of payments, since inward and outward payments offset each other. It also enables payment flows between geographical areas to offset, reducing the cost of settling payments between geographical areas. 3. credit intermediation -- banks borrow and lend back-to-back on their own account as middle men 4. Credit quality improvement -- banks lend money to ordinary commercial and personal borrowers (ordinary credit quality), but are high quality borrowers. The improvement comes from diversification of the bank's assets and the banks own capital which provides a buffer to absorb losses without defaulting on its own obligations. However, since banknotes and deposits are generally unsecured, if the bank gets into difficulty and pledges assets as security to try to get the funding it needs to continue to 21

operate, this puts the note holders and depositors in an economically subordinated position. 5. Maturity transformation -- banks borrow more on demand debt and short term debt, but provide more long term loans. Bank can do this because they can aggregate issues (e.g. accepting deposits and issuing banknotes) and redemptions (e.g. withdrawals and redemptions of banknotes), maintain reserves of cash, invest in marketable securities that can be readily converted to cash if needed, and raise replacement funding as needed from various sources (e.g. wholesale cash markets and securities markets) because they have a high and more well known credit quality than most other borrowers. Law of banking Banking law is based on a contractual analysis of the relationship between the bank and the customer. The definition of bank is given above, and the definition of customer is any person for whom the bank agrees to conduct an account. The law implies rights and obligations into this relationship as follows: 1. The bank account balance is the financial position between the bank and the customer, when the account is in credit, the bank owes the balance to the customer, when the account is overdrawn, and the customer owes the balance to the bank. 2. The bank engages to pay the customer's cheques up to the amount standing to the credit of the customer's account, plus any agreed overdraft limit. 3. The bank may not pay from the customer's account without a mandate from the customer, e.g. a cheque drawn by the customer. 4. The bank engages to promptly collect the cheques deposited to the customer's account as the customer's agent, and to credit the proceeds to the customer's account. 5. The bank has a right to combine the customer's accounts, since each account is just an aspect of the same credit relationship. 6. The bank has a lien on cheques deposited to the customer's account, to the extent that the customer is indebted to the bank. 7. The bank must not disclose the details of the transactions going through the customer's account unless the customer consents, there is a public duty to disclose, the bank's interests require it, or under compulsion of law. 8. The bank must not close a customer's account without reasonable notice to the customer, because cheques are outstanding in the ordinary course of business for several days. These implied contractual terms may be modified by express agreement between the customer and the bank. The statutes and regulations in force in the jurisdiction may also modify the above terms and/or create new rights, obligations or limitations relevant to the bank-customer relationship. Entry regulation 22

Main article: Banking regulation Currently in most jurisdictions commercial banks are regulated by government entities and require a special bank license to operate. Usually the definition of the business of banking for the purposes of regulation is extended to include acceptance of deposits, even if they are not repayable to the customer's order, however money lending, by itself, is generally not included in the definition. Unlike most other regulated industries, the regulator is typically also a participant in the market, i.e. government owned bank (a central bank). Central banks also typically have a monopoly on the business of issuing banknotes. However, in some countries this is not the case, e.g. in the India the Financial Services Authority licenses banks and some commercial banks, such as the Bank of Scotland, issue their own banknotes in competition with the Bank of England, the UK government's central bank. Some types of entity may be partly or wholly exempt from bank license requirements and are regulated by separate regulators, e.g. building societies and credit unions. The requirements for the issue of a bank license vary between jurisdictions but typically include: 1. Minimum capital 2. Minimum capital ratio 3. 'Fit and Proper' requirements for the bank's controllers, owners, directors, and/or senior officers 4. Approval of the bank's business plan as being sufficiently prudent and plausible. Politics and history Main article: History of banking Banks have influenced economies and politics for centuries. Historically, the primary purpose of a bank was to provide loans to trading companies. Banks provided funds to allow businesses to purchase inventory, and collected those funds back with interest when the goods were sold. For centuries, the banking industry only dealt with businesses, not consumers. Commercial lending today is a very intense activity, with banks carefully analyzing the financial condition of their business clients to determine the level of risk in each loan transaction. Banking services have expanded to include services directed at individuals, and risk in these much smaller transactions is pooled. Origin of the word The name bank derives from the HDFC Bank bench", used during the Renaissance by Florentines bankers, who used to make their transactions above 23

a desk covered by a green tablecloth. However, there are traces of banking activity even in ancient times. In fact, the word traces its origins back to the Ancient Roman Empire, where moneylenders would set up their stalls in the middle of enclosed courtyards called macella on a long bench called a bancu, from which the words banco and bank are derived. As a moneychanger, the merchant at the bancu did not so much invest money as merely convert the foreign currency into the only legal tender in Rome- that of the Imperial Mint. Banking channels Banks offer many different channels to access their banking and other services:

A branch, banking centre or financial centre is a retail location where a bank or financial institution offers a wide array of face-to-face service to its customers ATM is a computerized telecommunications device that provides a financial institution's customers a method of financial transactions in a public space without the need for a human clerk or bank teller. Most banks now have more ATMs than branches, and ATMs are providing a wider range of services to a wider range of users. For example in Hong Kong, most ATMs enable anyone to deposit cash to any customer of the bank's account by feeding in the notes and entering the account number to be credited. Also, most ATMs enable card holders from other banks to get their account balance and withdraw cash, even if the card is issued by a foreign bank. Mail is part of the postal system which itself is a system wherein written documents typically enclosed in envelopes, and also small packages containing other matter, are delivered to destinations around the world. This can be used to deposit cheques and to send orders to the bank to pay money to third parties. Banks also normally use mail to deliver periodic account statements to customers. Telephone banking is a service provided by a financial institution which allows its customers to perform transactions over the telephone. This normally includes bill payments for bills from major bilkers (e.g. for electricity). Online banking is a term used for performing transactions, payments etc. over the Internet through a bank, credit union or building society's secure website

The HDFC banking industry The banking industry is a highly regulated industry with detailed and focused regulators. All banks with FDIC-insured deposits have the FDIC as a regulator; however, for examinations, the Federal Reserve is the primary federal regulator for Fed-member state banks; the Office of the Comptroller of the Currency (OCC) is the primary federal regulator for national banks; and the Office of Thrift Supervision, or OTS, is the primary federal regulator for thrifts. State non24

member banks are examined by the state agencies as well as the FDIC. National banks have one primary regulatorthe OCC. Each regulatory agency has their own set of rules and regulations to which banks and thrifts must adhere. The Federal Financial Institutions Examination Council (FFIEC) was established in 1979 as a formal interagency body empowered to prescribe uniform principles, standards, and report forms for the federal examination of financial institutions. Although the FFIEC has resulted in a greater degree of regulatory consistency between the agencies, the rules and regulations are constantly changing. In addition to changing regulations, changes in the industry have led to consolidations within the Federal Reserve, FDIC, OTS and OCC. Offices have been closed, supervisory regions have been merged, staff levels have been reduced and budgets have been cut. The remaining regulators face an increased burden with increased workload and more banks per regulator. While banks struggle to keep up with the changes in the regulatory environment, regulators struggle to manage their workload and effectively regulate their banks. The impact of these changes is that banks are receiving less hands-on assessment by the regulators, less time spent with each institution, and the potential for more problems slipping through the cracks, potentially resulting in an overall increase in bank failures across the United States. The changing economic environment has a significant impact on banks and thrifts as they struggle to effectively manage their interest rate spread in the face of low rates on loans, rate competition for deposits and the general market changes, industry trends and economic fluctuations. It has been a challenge for banks to effectively set their growth strategies with the recent economic market. A rising interest rate environment may seem to help financial institutions, but the effect of the changes on consumers and businesses is not predictable and the challenge remains for banks to grow and effectively manage the spread to generate a return to their shareholders. The management of the banks asset portfolios also remains a challenge in todays economic environment. Loans are a banks primary asset category and when loan quality becomes suspect, the foundation of a bank is shaken to the core. While always an issue for banks, declining asset quality has become a big problem for financial institutions. There are several reasons for this, one of which is the lax attitude some banks have adopted because of the years of good times. The potential for this is exacerbated by the reduction in the regulatory oversight of banks and in some cases depth of management. Problems are more likely to go undetected, resulting in a significant impact on the bank when they are recognized. In addition, banks, like any business, struggle to cut costs and have consequently eliminated certain expenses, such as adequate employee training programs. Banks also face a host of other challenges such as aging ownership groups. Across the country, many banks management teams and board of directors are aging. Banks also face ongoing pressure by shareholders, both public and 25

private, to achieve earnings and growth projections. Regulators place added pressure on banks to manage the various categories of risk. Banking is also an extremely competitive industry. Competing in the financial services industry has become tougher with the entrance of such players as insurance agencies, credit unions, check cashing services, credit card companies, etc. As a reaction, banks have developed their activities in financial instruments, through financial market operations such as brokerage and trading and become big players in such activities. Profitability A bank generates a profit from the differential between the level of interest it pays for deposits and other sources of funds, and the level of interest it charges in its lending activities. This difference is referred to as the spread between the cost of funds and the loan interest rate. Historically, profitability from lending activities has been cyclical and dependent on the needs and strengths of loan customers. In recent history, investors have demanded a more stable revenue stream and banks have therefore placed more emphasis on transaction fees, primarily loan fees but also including service charges on an array of deposit activities and ancillary services (international banking, foreign exchange, insurance, investments, wire transfers, etc.). Lending activities, however, still provide the bulk of a commercial bank's income.

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CHAPTER-3
RESEARCH METHODOLOGY

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MEANING OF RESEARCH Research is common parlance reference to search of knowledge. One can also define research as scientific and systematic search for pertinent information on specific topic. In fact research is an art of scientific investigation Research is an academic activity and as such the term should be used in technical sense. According to Clifford woody research comprises defining and redefining problems, formulating hypothesis or suggested solution; collecting, organizing and evaluating data; making deduction and reaching conclusion; and at last carefully testing the conclusion to determine whether the fit the formulating hypothesis. TITLE OF RESEARCH Title of research is under taken is Recruitment of financial consultant for HDFC BANK who are an authorized salesmen for insurance acts on behalf of company. Making business is the main motto of every organization in todays scenario insurance sector is emerging with good business opportunities; so all companies

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are penetrating in insurance sector to make more profit. Today insurance is not govern by public organization but private companies are also coming big way. The recruitment process is rational it is difficult to search for a likely financial consultant who fulfill all optional and mandatory parameters to be an FC. Although we face various problem regarding seeking information about target or to whom we had to and hoe to approach but the co-operation from various friends, colleagues and specially the staff we have completed our work with satisfaction. OBJECTIVE OF THE RESEARCH Financial Consultant are one who bring business for the company, they are attached with. Objective of the research is to find out FCs for HDFC BANK Ltd. Who well suited to the criteria of likely fc? Research is also focus on the acceptability and market perception of the private insurances sector. To know the extent to which public rely on private insurance sector. It was a descriptive research as it covers both widespread objectives. We collected data through various seminar, clubs meeting and public joints. To know acceptability above private insurance we interviewed existing FCs and some customers. SIGNIFICANCE OF RESEARCH Every one put his/her time money effort because of some signification. My studies had some significance too. TO THE STUDENT: It also has a lot of significance to me we got the previous knowledge about various function of insurance companies, their product and data regarding. The various services, benefits provided by the companies. It helps us in identifying, targeting and segmenting the potential area. It will help us in my future for the practical application in real life. RESEARCH DESIGN A research design is the arrangement of condition for collection and analysis of data in a manner that aims to combine relevance to the research purpose with economy in procedure. In fact the research design conceptual structure with in research is conducted. Define research problem 29

Review the Literature

Design Research F Sample Design Collection of Data

Interpretation & Findings Sample Design All time in any field of inquiry constitute a universe or population. A complete enumeration of all times in the population is known as census inquiry .It can be presumed that in such an in inquiry. When all items are covered no element is left & highest accuracy is obtained. But in practice this may not be true. Besides this type of inquiry involves a great deal of time money & energy. There for when the field of inquiry is large this method because difficult to adopt because of resources involved. But when the field studies are taken in practical life, consideration of time cost all most invariably to lead to a selection of only few items that is technically called sampling technique . a sample & the selection process is called

RESEARCH MERHODOLOGY Research methodology is the way to systematically solve the research problem. It may be understood as a science of studying how research is done scientifically. Universe Kota Unit HDFC BANK Sample size 30 Date source survey 30

Method: Sampling plan: Contact method: -

random sampling identify and select potential area questionnaire OVERALL PURPOSE OF THE ROLE

To sell the products of the company in a professional and ethical manner. The set, monitor and achieve sales targets for self. To positively promote the companys brand, its mission aims and values. Relationships: Internal BDM Resident Branch Manager Sales Training Manager Customer Service Officer at the branch level

External
Customers

CHAPTER-4
FACTS &
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FINDINGS

1. Age distribution of potential HDFC BANK consultant.

Age distribution of potential FC's
40yrs & above 10% 35yrs-40yrs 15% 30yrs-35yrs 25% 18yrs-25yrs 25yrs-30yrs 30yrs-35yrs 18yrs-25yrs 20%

25yrs-30yrs 30%

35yrs-40yrs

40yrs & above

Age 18yrs-25yrs 25yrs-30yrs

No. of people 20% 30%

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30yrs-35yrs 35yrs-40yrs 40yrs & above

25% 15% 10%

Interpretation As per the survey conducted for the recruitment of HDFC BANKING at HDFC BANK, 30% of people i.e. 9 people out of 30 were between 25yrs to 30yrs. And only 10% people were above 40 yrs.

2. What is your educational Qualification? Qualification Qualification of potential FC's No. of people 10thpass 5% 12th 25% 0 % pass 0 Graduate 40% 0% 0 Post graduate 30%
0% 0 0% 0 0% 0 0 % 0 thpass 0 0 th pass 0 Graduate Post graduate Qulification Series0

No. of people

Interpretation From the above table most of the people are qualified to become an FCs as per the IRDA rules. 70% of people under the survey are Graduate & post Graduate.

4. Number of potential male in comparison to Females.

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100% No. of people 80% 60% 40% 20% 0% Male Gender Female Series1

Gender Male Female

No. of people 85% 15%

Interpretation Under the survey of recruitment of FCs at HDFC BANK Kota, Number of male interested to become FCs is more than the percentage as compare to females. From the above table we come to know that 85% of them were Male.

5. What is your current Occupation?

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Occupation of potential FC's

Housewifes Student 5% 15% Bussiness 30%

Salaried 50% Bussiness

Occupation Business Salaried Student Housewifes

Salaried

Student

Housewifes

No. of people 30% 50% 15% 5%

Interpretation On the part of occupation of potential FCs, 50% of people i.e. 15 were salaried people and 9 of them from Business Background.

6. Which Field does you belongs to.

40% No. of people 30% 20% 10% 0% Banking Pharma Investment Field Manufacturing Others 20%

30% 20% 10% 20% Series1

Field Banking Parma

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No. of people 20% 30%

Investment Manufacturing Others

20% 10% 20%

Interpretation Under the survey conducted we come to know that most of the servicing people belongs to Parma sector i.e. 9 people belongs to this sector out of 30 people.

7. Do you have experience of selling of Financial Products?

No. of people

40% 30% 20% 10% 0% Below 1Yrs 1yrs2yrs 2yrs3yrs 3 yrs & above Series1

Experience in Yrs
Experience Below 1Yrs 1yrs-2yrs 2yrs-3yrs 3 yrs & above No. of people 10% 25% 30% 35%

Interpretation From the above table,35% of people under the survey, have more than 3yrs of sales experience And only 10% of people have below one year of Sales experience.

8. Are you interested to work with HDFC Bank as a Banking consultant?

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Response to the recruitment

Cant say 10%

Negative 30%

Possitive 60%

Possitive

Negative

Cant say

Response Positives Negative Cant say

No. of people 60% 30% 10%

Interpretation At last, there are a number of people who respond us in positive manner to become an FCs and like to work with HDFC BANK. Out of 30 people, 18 people responded in positive manner and only 3 people didnt give any answer to the question.

9. Have you ever had difficulty with a supervisor or instructor?

70% 60% 50% 40% 30% 20% 10% 0% Positives Negative Cant say

Response Positives Negative Cant say

No. of people 20% 70% 10%

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10. Would you say that you can easily deal with high pressure situation?

80% 70% 60% 50% 40% 30% 20% 10% 0% No. of people Yes No Cant say

Response Yes No Cant say

No. of people 80% 15% 5%

11.What were your reasons for selecting HDFC BANKING FC? 12.Why did you decide to seek a position in this field? 13.What level of compensation would it take to make you happy? 14.Tell me what you know about FC?

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CHAPTER-5
SWOT ANALYSIS

STRENGTH
With 175 years of experience of HDFC Bank also strengthen by synergy of partners. Financial rating of companies 39

Flexibility of plans Highly co-operative & skilled staff. Sales oriented organization. Aggressiveness of sales force in selling products. The company has expertise in managing big business. Effective and wider distribution network. Product designed for each age group & every area of personal. HDFC Bank provides unique training program for FC called Disha. The company enjoys a very high brand loyalty & recall value among its customer. The company has a presence in all metros as well as in most of the major cities in country. WEAKNESS Less coverage in rural areas. Less staff Lack in making follow up. Lack of corporate agent. Lack of customer services. Lack of promotional activities. OPPORTUNITY There is continuous growth in banking sector. Government has also started investing in private banking sector. Market is fully to capture because the branch has recently set up its business. THREATS Competition in banking sector is increase sing with the entry of private giants like ICICI prudential, Bajaj Allanze, Sahara Selling attitude the company always has to be maintained in order to company other insurance company. Continuous follow up of the client and customers. As banking has strong market position so it is little bit difficult to capture the market. Customers are still finding risky to in private banking sector.

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CHAPTER-6
CONCLUSION

CONCLUSION
After completion of research, we conclude that: 41

 Segmentation of target market is best way to work in. Womens are proving better FC. Cut throat competition as new insurance companies are also opening branch. Public accepts Ulip readily. Private insurance sector making their place in insurance sector. FC should be approach according to need. In short can be said that HDFC Banking has to do more for their good future as it is on a good position as private insurance is concerned. According to survey there are various player in market ( Kota) and really it is difficult for HDFC Banking to survive on the basis of brand name for different products. So there is not much awareness in kota city of HDFC Banking as it started working from July 2004 what we think HDFC Banking just needs promotional activities. During our promotional activities when we found that HDFC Banking could capture big market in kota. They would be on n0. One position in Kota because the benefits and flexibility which HDFC providing is not provide by any other insurance company in Kota. ICICI Bank is the only private player, which is there in competition with HDFC Banking. As ICICI banking launch first so it capture the market very soon At last we want to state that HDFC Banking need promotional actives and the benefits should be given to the customers. Customer satisfaction should be first preference.

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CHAPTER-7 Bibliography

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Bibliography
1. www.hdfcbank.com 2. www.google.com 3. www.thetimeofindia.com Books Booklets of HDFC BANK

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HDFC BANKIG PLAN AND ACCOUNTING

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