1

INTRODUCTION OF INDIAN BANKING INDUSTRY

Banking in India originated in the first decade of 18th century with The General Bank of
India coming into existence in 1786. This was followed by Bank of Hindustan. Both these
banks are now defunct. The oldest bank in existence in India is the State Bank of India
being established as "The Bank of Bengal" in Calcutta in June 1806. A couple of decades
later, foreign banks started their Calcutta operations in the 1850s. At that point of time,
Calcutta was the most active trading port, mainly due to the trade of the British Empire, and
due to which banking activity took roots there and prospered. The first fully Indian owned
bank was the Allahabad Bank, which was established in 1865.
By the 1900s, the market expanded with the establishment of banks such as Punjab
National Bank, in 1895 in Lahore and Bank of India, in 1906, in Mumbai - both of which
were founded under private ownership. The Reserve Bank of India formally took on the
responsibility of regulating the Indian banking sector from 1935. After India's independence
in 1947, the Reserve Bank was nationalized and given broader powers.
At the end of late-18th century, there were hardly any bank in India in the modern sense of
the term. At the time of the American Civil War, a void was created as the supply of cotton
to Lancashire stopped from the Americas. Some banks were opened at that time which
functioned as entities to finance industry, including speculative trades in cotton. With large
exposure to speculative ventures, most of the banks opened in India during that period
could not survive and failed. The depositors lost money and lost interest in keeping deposits
with banks. Subsequently, banking in India remained the exclusive domain of Europeans for
next several decades until the beginning of the 20th century.
The Bank of Bengal, which later became the State Bank of India.

BANKING
Banks have played a pivotal role in the process of development of the district over the
years, especially after the formation of the district in 1993.

Apart from dispensing credit, the Banks have also brought about social changes. The
contribution of the banking sector in the field of overall development of the district is
elaborated in the following paragraphs.
At the beginning of the 20th century, Indian economy was passing through a relative period
of stability. Around five decades have elapsed since the India's First war of Independence,
and the social, industrial and other infrastructure have developed.
At that time there were very small banks operated by Indians, and most of them were
owned and operated by particular communities.
The banking in India was controlled and dominated by the presidency banks, namely, the
Bank of Bombay, the Bank of Bengal, and the Bank of Madras - which later on merged to
form the Imperial Bank of India, and Imperial Bank of India, upon India's independence, was
renamed the State Bank of India.
There were also some exchange banks, as also a number of Indian joint stock banks. All
these banks operated in different segments of the economy.
The presidency banks were like the central banks and discharged most of the functions of
central banks. They were established under charters from the British East India Company.
The exchange banks, mostly owned by the Europeans, concentrated on financing of
foreign trade. Indian joint stock banks were generally undercapitalized and lacked the
experience and maturity to compete with the presidency banks, and the exchange banks.
There was potential for many new banks as the economy was growing. Lord Carson had
observed then in the context of Indian banking:
"In respect of banking it seems we are behind the times. We are like some old fashioned
sailing ship, divided by solid wooden bulkheads into separate and cumbersome
compartments.
Under these circumstances, many Indians came forward to set up banks, and many banks
were set up at that time, a number of which have survived to the present such as Bank of
India and Corporation Bank, Indian Bank, Bank of Baroda, and Canara Bank.

Indian banking sector can be divided mainly into four broad categories namely public sector
Banks, old private sector banks, new private sector banks, and foreign banks.
The other categories of banks include co-operative banks and regional rural banks. Since
these banks dont form a substantial chunk of the banking system, we will focus on the first
four categories.

BANKING SYSTEM IN INDIA

BANKS IN INDIA

CENTRAL BANK

NATIONALISED

PRIVATE BANKS

FOREIGN BANKS

BANKS

CENTRAL BANK:

RESERVE BANK OF INDIA

NATIONALISED BANK IN INDIA

The Banking System in India is dominated by nationalized banks. The Nationalization of

Banks in India took place in 1969 by Mrs. Indira Gandhi the then Prime Minister.
The major objective Behind Nationalization Banks was to spread banking Infrastructure in
Rural areas and make available cheap finance to Indian farmers.
Fourteen banks were nationalized in 1969. These Banks were
State Bank of India
Allahabad Bank

 Andhra Bank
Bank of Baroda
Bank of India
Bank of Maharashtra
Canara Bank
Central Bank of India
Corporation Bank
Dena Bank
Indian Bank
Oriental Bank of Commerce
Punjab & Sind Bank
Punjab National Bank
Syndicate Bank
Union Bank of India

PRIVATE BANK IN INDIA

All the banks in India were earlier private banks. They were founded in the preindependence era to cater to the banking needs of the people. But after nationalization of
banks in 1969 public sector banks came to occupy dominant role in the banking structure.
Private sector banking in India received a fillip in 1994 when Reserve Bank of India
encouraged setting up of private banks as part of its policy of liberalization of the Indian
Banking Industry. Housing Development Finance Corporation Limited (HDFC) was amongst
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the first to receive an 'in principle' approval from the Reserve Bank of India (RBI) to set up a
bank in the private sector.
Axis Bank
Bank of Rajasthan
Catholic Syrian Bank
Centurion Bank of Punjab
City Union Bank
Development Credit Bank
Dhanalakshmi Bank
Federal Bank
Ganesh Bank of Kurundwad
HDFC Bank
ICICI Bank
IDBI Bank
IndusInd Bank
ING Vysya Bank
Jammu & Kashmir Bank
Karnataka Bank Limited
KarurVysya Bank
Kotak Mahindra Bank
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 Lakshmi Vilas Bank

Lord Krishna Bank
Nainital Bank
Ratnakar Bank
SBI Commercial and International Bank

FOREIGN BANKS IN INDIA

Foreign Banks are likely to succeed in their niche markets and be the innovators in terms of
technology introduction in the domestic scenario. The outlook for the private sector banks
indeed looks to be more promising vis--vis other banks. While their focused operations
lower but more productive employee force etc will stand them good, possible acquisitions of
PSU banks will definitely give them the much needed scale of operations and access to
lower cost of funds.
Standard charted Bank
Deutsche Bank
Bank of America
Citi Bank
ABN Amro Bank
HSBC Bank

CBS NETWORKING

Core Banking Solutions is new jargon frequently used in banking circles of India.The
advancement in technology especially internet and information technology has led to new
way of doing business in banking.
The technologies have cut down time ,working simultaneously on different issues and
increased efficiency. The platform where communication technology and information
technology are merged to suit core needs of banking is known as Core Banking Solutions.
Here computer software is developed to perform core operations of banking like recording
of transactions, passbook maintenance, interest calculations on loans and deposits,
customer records, balance of payments and withdrawal are done.
This software is installed at different branches of bank and then interconnected by means
of communication lines like telephones, satellite, internet etc.
It allows the user (customers) to operate accounts from any branch if it has installed core
banking solutions. This new platform has changed the way banks are working.

HISTORY OF BANKING
The period during the First World War (1914-1918) through the end of the Second World
War (1939-1945), and two years thereafter until the independence of India were challenging
for the Indian banking.
The years of the First World War were turbulent, and it took toll of many banks which
simply collapsed despite the Indian economy gaining indirect boost due to war-related
economic activities.
At least 94 banks in India failed during the years 1913 to 1918 as indicated in the following
table:

Years

Number

of

banks Authorized

capital Paid-up

that failed

(Rs. Lacs)

(Rs. Lac)

1913

12

274

35

1914

42

710

109

1915

11

56

1916

13

231

1917

76

25

1918

209

Capital

POSTINDEPENDENCE
The partition of India in 1947 had adversely impacted the economies of Punjab and West
Bengal, and banking activities had remained paralyzed for months.
India's independence marked the end of a regime of the Laissez-faire for the Indian
banking. The Government of India initiated measures to play an active role in the economic
life of the nation, and the Industrial Policy Resolution adopted by the government in 1948
envisaged a mixed economy.

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This resulted into greater involvement of the state in different segments of the economy
including banking and finance. The major steps to regulate banking included:
1. In 1948, the Reserve Bank of India, India's central banking authority, was nationalized,
and it became an institution owned by the Government of India.
2. In 1949, the Banking Regulation Act was enacted which empowered the Reserve Bank
of India (RBI) "to regulate, control, and inspect the banks in India."
3. The Banking Regulation Act also provided that no new bank or branch of an existing
bank may be opened without a license from the RBI, and no two banks could have
common directors.
However, despite these provisions, control and regulations, banks in India except the State
Bank of India, continued to be owned and operated by private persons. This changed with
the nationalization of major banks in India on 19th July, 1969

NATIONALISATION
By the 1960s, the Indian banking industry has become an important tool to facilitate the
development of the Indian economy.
At the same time, it has emerged as a large employer, and a debate has ensued about the
possibility to nationalize the banking industry.
Indira Gandhi, the-then Prime Minister of India expressed the intention of the GOI in the
annual conference of the All India Congress Meeting in a paper entitled "Stray thoughts on
Bank Nationalisation." The paper was received with positive enthusiasm.
Thereafter, her move was swift and sudden, and the GOI issued an ordinance and
nationalized the 14 largest commercial banks with effect from the midnight of July 19, 1969.
Jayaprakash Narayan, a national leader of India, described the step as a "masterstroke of
political sagacity." Within two weeks of the issue of the ordinance, the Parliament passed
the Banking Companies (Actuation and Transfer of Undertaking) Bill, and it received the
presidential approval on 9th August, 1969.
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A second dose of nationalization of 6 more commercial banks followed in 1980. The stated
reason for the nationalization was to give the government more control of credit delivery.
With the second dose of nationalization, the GOI controlled around 91% of the banking
business of India.
After this, until the 1990s, the nationalized banks grew at a pace of around 4%, closer to the
average growth rate of the Indian economy.

LIBERALISATION
In the early 1990s the then NarasimhaRao government embarked on a policy of
liberalization and gave licenses to a small number of private banks, which came to be
known as New Generation tech-savvy banks, which included banks such as UTI Bank(now
re-named as Axis Bank) (the first of such new generation banks to be set up), ICICI Bank
and HDFC Bank. This move, along with the rapid growth in the economy of India, kick
started the banking sector in India, which has seen rapid growth with strong contribution
from all the three sectors of banks, namely, government banks, private banks and foreign
banks.
The next stage for the Indian banking has been setup with the proposed relaxation in the
norms for Foreign Direct Investment, where all Foreign Investors in banks may be given
voting rights which could exceed the present cap of 10%, at present it has gone up to 49%
with some restrictions.
The new policy shook the Banking sector in India completely. Bankers, till this time, were
used to the 4-6-4 method (Borrow at 4%; Lend at 6%; Go home at 4) of functioning. The
new wave ushered in a modern outlook and tech-savvy methods of working for traditional
banks. All this led to the retail boom in India. People not just demanded more from their
banks but also received more.
CURRENT SITUATION
Currently (2007), banking in India is generally fairly mature in terms of supply, product
range and reach-even though reach in rural India still remains a challenge for the private
sector and foreign banks.
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In terms of quality of assets and capital adequacy, Indian banks are considered to have
clean, strong and transparent balance sheets relative to other banks in comparable
economies in its region.
The Reserve Bank of India is an autonomousBody with minimal pressure from the
government.
The stated policy of the Bank on the Indian Rupee is to manage volatility but without any
fixed exchange rate-and this has mostly been true.
With the growth in the Indian economy expected to be strong for quite some timeespecially in its services sector-the demand for banking services, especially retail banking,
mortgages and investment services are expected to be strong.
One may also expect M & A as, takeovers, and asset sales.
In March 2006, the Reserve Bank of India allowed Warburg Pincus to increase its stake in
Kotak Mahindra Bank (a private sector bank) to 10%. This is the first time an investor has
been allowed to hold more than 5% in a private sector bank since the RBI announced
norms in 2005 that any stake exceeding 5% in the private sector banks would need to be
vetted by them.
Currently, India has 88 scheduled commercial banks (SCBs) - 28 public sector banks (that
is with the Government of India holding a stake), 29 private banks (these do not have
government stake; they may be publicly listed and traded on stock exchanges) and 31
foreign banks.
They have a combined network of over 53,000 branches and 17,000 ATMs. According to a
report by ICRA Limited, a rating agency, the public sector banks hold over 75 percent of
total assets of the banking industry, with the private and foreign banks holding 18.2% and
6.5% respectively.
BANKING NETWORK
The total number of branches has gone up from 81 to 93 during the last decade to cater to
the banking need of the growing population of the district. The number of branches of each
bank operating in the district is as under.
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S No

Name of the Banks

No. of Branches.

1.

Andhra Bank

2.

Bank of Baroda

3.

Bank of India

4.

Canara Bank

5.

Indian Overseas Bank

6.

Indian Bank

7.

Punjab National Bank

8.

State Bank of India

14

9.

United Bank

10.

United Commercial Bank

14

11.

Union Bank

12.

Syndicate Bank

13.

DhenkanalGramya Bank

27

14.

Angul United Central Co-op.Bank

12

15.

CARD Bank

16.

Orissa State Co-op. Bank

17.

Orissa State Financial Corporation

Total

93

14

Apart from a good network of Bank branches, NABARD is having its district office at
Dhenkanal with operational area in Angul district also.
The major activities of NABARD in the areas of Planning, Coordination, Monitoring and
Development is being accomplished through preparation of Potential Linked Credit Plan
as a fore runner of SAP, participation in various meetings and with an effective rapport with
the officials of government, banks, NGOs etc.
Under the Lead Bank Scheme evolved by Reserve Bank of India, the lead bank
responsibility is shouldered by United Commercial Bank having its office at Angul.
The Lead District Manager coordinates and monitors the preparation and implementation
of Annual Credit Plans and various government programmes.
Dhenkanal Gramya Bank sponsored by Indian Overseas Bank is operating in this district.

DEPOSITS
The overall deposits of the banks together has increased manifold during the last decade.
The total deposits of Rs.161.45 crores at the end of March, 1994 have swelled to a tune of
Rs.961.99 crores by the end of financial year 2002-2003. The Commercial Banks have a
lions share in the deposit portfolio having 80% of the market share followed by RRB and
CCB with 11% and 9% market share respectively.

ADVANCES
The overall advances of the banks have shown an increasing trend during the last decade.
At the end of March 1994 the total outstanding advances stood at a level of Rs.62.41
crores, which has gone up to a level of Rs.390.96 crores at the end of March, 2003.
The priority sector has a share of Rs.259.29 crores i.e. 66% of the total advances, of which
Agriculture constitute Rs.87.93 crores i.e. 22% of the total advances.

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The Commercial Banks have the maximum share of 55% in the advances portfolio,
followed by RRB, CCB and other financing institutions with 22%, 15% and 8% share
respectively.
The credit dispensed has also increased manifold during the last decade. Rs.154.99 crores
of credit was dispensed during 2002-03 compared to Rs.16.02 crores dispensed during
1993-94.
Under this portfolio, the share of commercial banks was also highest at Rs.85.30 crores
constituting 55% of the total credit deployment followed by RRB, CCB and other financial
institutions with a share of 27%, 17% & 1% respectively.
The trend in credit deployment under various purposes has also undergone change by
addition of new areas of financing like housing, education, consumer durable, transport etc.
Nevertheless agriculture enjoys due importance. Rs. 42.95 crores has gone to this sector
during 2002-03 as against Rs. 3.66 crores in 1993-94.
GOVERNMENT SPONSORED PROGRAMMES
In order to fulfill social commitments, the banks in the district have come forward to extend
financial assistance in respect of a plethora of government sponsored programmes so as to
improve the living condition of the target groups through gainful employment. Some of the
major programmes having the participation of banks are as under.
The details of credit deployment of various banks operating in the district under the annual
credit plans during the last decade are as under
.(Rs.in lakes)

Year/

Particulars

Agricultur

Non-

Other

Total

Non

Total

Farm

priorit

priorit

priorit

advanc

secto

sector

sector

1,005

455

Sector
s

r
Sector

1993-

Target

576

132

297

1,460
16

94
Achieveme

366

128

375

869

733

1,602

Target

471

187

326

984

263

1,247

Achieveme

572

191

610

1,373

597

1,970

Target

859

255

705

1,819

304

2,123

Achieveme

1,024

272

1,065

2,361

544

2,905

Target

1,137

420

1,188

2,745

380

3,125

Achieveme

1,235

353

1,348

2,936

1,091

4,027

Target

1,881

531

1,855

4,267

492

4,759

Achieveme

1,668

205

1,962

3,835

1,511

5,346

2,183

289

2,074

4,545

1,998

6,543

nt
199495

nt
199596

nt
199697

nt
199798

nt
1998-

Target

99

17

Achieveme

2,182

289

2,074

4,545

1,998

6,543

Target

2,747

857

2,334

5,938

1,238

7,176

Achieveme

2,602

267

2,089

4,958

2,522

7,470

Target

2,538

719

2,744

7,001

1,704

8,705

Achieveme

2,782

478

2,391

5,651

3,775

9,426

Target

4,126

821

2,948

7,895

2,200

10,095

Achieveme

3,340

346

5,479

9,165

5,607

14,772

Target

4890

895

4,323

10,098 2,945

13,043

Achieveme

4295

211

5,176

9,682

15,499

nt
19992000

nt
20002001

nt
20012002

nt
20022003
5,817

nt

RECOVERY OF BANK DUES

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The recovery of bank dues has not been commensurate with the growth of loans and
advances. Though in terms of absolute figures the recovery has gone up substantially, the
same in percentage term has shown a moderate change and has settled at 45-50% during
the last few years. The poor recovery has adversely affected the CARD bank, which has
weakened the financial strength of this part of the banking structure. The liberal measures
to augment recovery like One Time Settlement Scheme of RBI and the various
compromise settlement schemes of respective banks have contributed in the percentage
increase in recovery of bank dues.

MAJOR PLAYERS OF BANKING SECTOR

PRIVATE BANK IN INDIA

ICICI Bank

HDFC Bank
IDBI Bank
Indusland Bank
Centurian Bank
Axis Bank

PUBLIC BANKS IN INDIA

State bank of India
Bank of Baroda
Bank of India
Corporation Bank
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 Oriental Bank of commerce

State Bank of Hyderabad
Dena Bank
FOREIGN BANKS IN INDIA
Standard charted Bank
Deutsche Bank
Bank of America
Citi Bank
ABN Amero Bank
HSBC Bank

Role of Banks:
Banks play a positive role in economic development of a country as repositories of
communitys savings and as purveyors of credit. Indian Banking has aided the economic
development during the last fifty years in an effective way.
The banking sector has shown a remarkable responsiveness to the needs of planned economy. It
has brought about a considerable progress in its efforts at deposit mobilization and has taken a
number of measures in the recent past for accelerating the rate of growth of deposits.
As recourse to this, the commercial banks opened branches in urban, semi-urban and rural areas
and have introduced a number of attractive schemes to foster economic development.
The activities of commercial banking have growth in multi-directional ways as well as multidimensional manner.
Banks have been playing a catalytic role in area development, backward area development,
extended assistance to rural development all along helping agriculture, industry, international trade
in a significant manner. In a way, commercial banks have emerged as key financial agencies for
rapid economic development.

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By pooling the savings together, banks can make available funds to specialized institutions
which finance different sectors of the economy, needing capital for various purposes, risks
and durations.
By contributing to government securities, bonds and debentures of term-lending institutions
in the fields of agriculture, industries and now housing, banks are also providing these
institutions with an access to the common pool of savings mobilized by them, to that extent
relieving them of the responsibility of directly approaching the saver.
This intermediation role of banks is particularly important in the early stages of economic
development and financial specification..
A country like India, with different regions at different stages of development, presents an
interesting spectrum of the evolving role of banks, in the matter of inter-mediation and
beyond.
Mobilization of resources forms an integral part of the development process in India. In this process
of mobilization, banks are at a great advantage, chiefly because of their network of branches in the
country.
And banks have to place considerable reliance on the mobilization of deposits from the public to
finance development programmes.
Further, deposit mobIlization by banks in India acquired greater significance in their new role in
economic development.
Commercial banks provide short-term and medium-term financial assistance. The short-term credit
facilities are granted for working capital requirements. The medium-term loans are for the
acquisition of land, construction of factory premises and purchase of machinery and equipment.
These loans are generally granted for periods ranging from five to seven years.
They also establish letters of credit on behalf of their clients favouring suppliers of raw
materials/machinery (both Indian and foreign) which extend the bankers assurance for payment
and thus help their delivery.
Certain transaction, particularly those in contracts of sale of Government Departments, may require
guarantees being issued in lieu of security earnest money deposits for release of advance money,
supply of raw materials for processing, full payment of bills on the assurance of the performance
etc. Commercial banks issue such guarantees also.

The Role of Reserve Bank of India (RBI) Bankers Bank:

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The Reserve Bank of India (RBI) is the central bank of India,

and was established on April 1, 1935 in accordance with the provisions of the Reserve
Bank of India Act, 1934. Since its inception, it has been headquartered in Mumbai.
Though originally privately owned, RBI has been fully owned by the Government of India
since nationalization in 1949.
RBI is governed by a central board (headed by a Governor) appointed by the Central
Government.
The current governor of RBI is Dr.Y.Venugopal Reddy (who succeeded Dr. BimalJalan on
September 6, 2003). RBI has 22 regional offices across India.
The Reserve Bank of India was set up on the recommendations of the Hilton Young
Commission. The commission submitted its report in the year 1926, though the bank was
not set up for nine years.

Main Objective:
Monetary Authority

Formulates, implements and monitors the monetary policy.

Objective: maintaining price stability and ensuring adequate flow of credit to

productive sectors.

Regulator and supervisor of the financial system

Prescribes broad parameters of banking operations within which the countrys

banking and financial system functions.

Objective: maintain public confidence in the system, protect depositors interest and
provide cost-effective banking services to the public.

The Banking Ombudsman Scheme has been formulated by the Reserve Bank of
India (RBI) for effective redressal of complaints by bank customers

Manager of Exchange Control

Manages the Foreign Exchange Management Act, 1999.

22

Objective: to facilitate external trade and payment and promote orderly development
and maintenance of foreign exchange market in India.

Issuer of currency

Issues and exchanges or destroys currency and coins not fit for circulation.

Objective: to give the public adequate quantity of supplies of currency notes and
coins and in good quality.

Developmental role

Performs a wide range of promotional functions to support national objectives.

Related Functions

Banker to the Government: performs merchant banking function for the central and
the state governments; also acts as their banker.

Banker to banks: maintains banking accounts of all scheduled banks.

Owner and operator of the depository (SGL) and exchange (NDS) for government
bonds.

There is now an international consensus about the need to focus the tasks of a central bank
upon central banking. RBI is far out of touch with such a principle, owing to the sprawling
mandate described above.

Supervisory Functions:
In addition to its traditional central functions, the Reserve bank has certain nonmonetary functions of the nature of supervision of banks and promotion of sound banking in India.
The Reserve Bank Act, 1934, and the Banking Regulation Act, 1949 have given the RBI wide
powers of supervision and control over commercial and cooperative banks, relating to licensing and
establishments, branch expansion, liquidity of their assets, management and methods of working,
amalgamation, reconstruction and liquidation.
The RBI is authorized to carry out periodical inspections of the banks and to call for returns and
necessary information from them.
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The nationalization of 14 major Indian scheduled banks in July 1969 has imposed new
responsibilities on the RBI for directing the growth of banking and credit policies towards more rapid
development of the economy and realization of certain desired social objectives.
The supervisory functions of the RBI have helped a great deal in improving the standard of banking
in India to develop on sound lines and to improve the methods of their operation.

Promotional Functions:
With economic growth assuming a new urgency since Independence, the range of
the Reserve Banks functions have steadily widened.
The Bank now performs a variety of developmental and promotional functions, which, at one time,
were regarded as outside the normal scope of central banking.
The Reserve Bank was asked to promote banking habit, extend banking facilities to rural and semiurban areas, and establish and promote new specialized financing agencies.
Accordingly, the Reserve bank has helped in the setting up of the IFCI and the SFC: it set up the
Deposit Insurance Corporation of India in 1963 and the Industrial Reconstruction Corporation of
India in 1972.
These institutions were set up directly or indirectly by the Reserve Bank to promote saving habit
and to mobilize savings, and to provide industrial finance as well as agricultural finance.
As far back as 1935, the RBI set up the Agricultural Credit Department to provide agricultural credit.
But only since 1951 the Banks role in this field has become extremely important.
The Bank has developed the co-operative credit movement to encourage saving, to eliminate
money-lenders from the villages and to route its short term credit to agriculture. The RBI has set up
the Agricultural Refinance and Development Corporation to provide long-term finance to farmers.

Co-operative Banks:
The Co-operative bank has a history of almost 100 years. The Co-operative
banks are an important constituent of the Indian Financial System, judging by the role
assigned to them, the expectations they are supposed to fulfill, their number, and the
number of offices they operate.
The co-operative movement originated in the West, but the importance that such banks
have assumed in India is rarely paralleled anywhere else in the world.

24

Their role in rural financing continues to be important even today, and their business in the
urban areas also has increased phenomenally in recent years mainly due to the sharp
increase in the number of co-operative banks.
While the co-operative banks in rural areas mainly finance agricultural based activities
including farming, cattle, milk, hatchery, personal finance etc.
along with some small scale industries and self-employment driven activities, the cooperative banks in urban areas mainly finance various categories of people for selfemployment, industries, small scale units, home finance, consumer finance, personal
finance, etc.
Some of the co-operative banks are quite forward looking and have developed sufficient
core competencies to challenge state and private sector banks.
According to NAFCUB the total deposits &lendings of Co-operative Banks is much more
than Old Private Sector Banks & also the New Private Sector Banks.
This exponential growth of Co-operative Banks is attributed mainly to their much better
local reach, personal interaction with customers, their ability to catch the nerve of the local
clientele.
Though registered under the Co-operative Societies Act of the Respective States (where
formed originally) the banking related activities of the co-operative banks are also regulated
by the Reserve Bank of India. They are governed by the Banking Regulations Act 1949 and
Banking Laws (Co-operative Societies) Act, 1965.
There are two main categories of the co-operative banks.
(a) Short term lending oriented co-operative Banks within this category there are three sub
categories of banks viz state co-operative banks, District co-operative banks and Primary
Agricultural co-operative societies.
(b) Long term lending oriented co-operative Banks within the second category there are land
development banks at three levels state level, district level and village level.
Features of Cooperative Banks
Co-operative Banks are organized and managed on the principal of co-operation, self-help, and
mutual help.
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They function with the rule of one member, one vote. Function on no profit, no loss basis. Cooperative banks, as a principle, do not pursue the goal of profit maximization. Co-operative bank
performs all the main banking functions of deposit mobilization, supply of credit and provision of
remittance facilities.

Co-operative Banks provide limited banking products and are functionally specialists in agriculture
related products. However, co-operative banks now provide housing loans also.
UCBs provide working capital loans and term loan as well.

The State Co-operative Banks (SCBs), Central Co-operative Banks (CCBs) and Urban Co-operative
Banks (UCBs) can normally extend housing loans uptoRs 1 lakh to an individual. The scheduled
UCBs, however, can lend uptoRs 3 lakh for housing purposes.
The UCBs can provide advances against shares and debentures also. Co-operative bank do
banking business mainly in the agriculture and rural sector. However, UCBs, SCBs, and CCBs
operate in semi urban, urban, and metropolitan areas also.

The urban and non-agricultural business of these banks has grown over the years. The cooperative banks demonstrate a shift from rural to urban, while the commercial banks, from
urban to rural.
Co-operative banks are perhaps the first government sponsored, government-supported,
and government-subsidized financial agency in India.
They get financial and other help from the Reserve Bank of India NABARD, central
government and state governments.
They constitute the most favoured banking sector with risk of nationalization.
For commercial banks, the Reserve Bank of India is lender of last resort, but co-operative
banks it is the lender of first resort which provides financial resources in the form of
contribution to the initial capital (through state government), working capital, refinance.
Co-operative Banks belong to the money market as well as to the capital market.
Primary agricultural credit societies provide short term and medium term loans.

26

Land Development Banks (LDBs) provide long-term loans. SCBs and CCBs also provide
both short term and term loans. Co-operative banks are financial intermediaries only
partially.
The sources of their funds (resources) are (a) central and state government, (b) the
Reserve Bank of India and NABARD, (c) other co-operative institutions, (d) ownership
funds and, (e) deposits or debenture issues.
It is interesting to note that intra-sectoral flows of funds are much greater in co-operative
banking than in commercial banking.
Inter-bank deposits, borrowings, and credit from a significant part of assets and liabilities of
co-operative banks.
This means that intra-sectoral competition is absent and intra-sectoral integration is high for
co-operative bank.
Some co-operative banks are scheduled banks, while others are non-scheduled banks.
For instance, SCBs and some UCBs are scheduled banks but other co-operative bank are
non-scheduled banks. At present, 28 SCBs and 11 UCBs with Demand and Time Liabilities
over Rs 50 crore each included in the Second Schedule of the Reserve Bank of India Act.
Co-operative Banks are subject to CRR and liquidity requirements as other scheduled and nonscheduled banks are.
However, their requirements are less than commercial banks.
Since 1966 the lending and deposit rate of commercial banks have been directly regulated by the
Reserve Bank of India.
Although the Reserve Bank of India had power to regulate the rate co-operative bank but this have
been exercised only after 1979 in respect of non-agricultural advances they were free to charge any
rates at their discretion.
Although the main aim of the co-operative bank is to provide cheaper credit to their members and
not to maximize profits, they may access the money market to improve their income so as to remain
viable.

PRODUCTS AND SERVICES OFFERED BY BANKS

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Broad Classification of Products in a bank:

The different products in a bank can be broadly classified into:

Retail Banking.

Trade Finance.

Treasury Operations.

Retail Banking and Trade finance operations are conducted at the branch level while the wholesale
banking operations, which cover treasury operations, are at the hand office or a designated branch.

Retail Banking:

Deposits

Loans, Cash Credit and Overdraft

Negotiating for Loans and advances

Remittances

Book-Keeping (maintaining all accounting records)

Receiving all kinds of bonds valuable for safe keeping

Trade Finance:

Issuing and confirming of letter of credit.

Drawing, accepting, discounting, buying, selling, collecting of bills of exchange,

promissory notes, drafts, bill of lading and other securities.

Treasury Operations:

Buying and selling of bullion. Foreign exchange

Acquiring, holding, underwriting and dealing in shares, debentures, etc.

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Purchasing and selling of bonds and securities on behalf of constituents.

The banks can also act as an agent of the Government or local authority. They insure, guarantee,
underwrite, participate in managing and carrying out issue of shares, debentures, etc.
Apart from the above-mentioned functions of the bank, the bank provides a whole lot of other
services like investment counseling for individuals, short-term funds management and portfolio
management for individuals and companies.
It undertakes the inward and outward remittances with reference to foreign exchange and collection
of varied types for the Government.

Common Banking Products Available:

Some of common available banking products are explained below:
1)
Credit Card: Credit Card is post paid or pay later card that draws from a
credit linemoney made available by the card issuer (bank) and gives one a grace period to pay. If the
amount is not paid full by the end of the period, one
is charged interest.
A credit card is nothing but a very small card containing a means of identification, such as a
signature and a small photo.
It authorizes the holder to change goods or services to his account, on which he is billed. The bank
receives the bills from the merchants and pays on behalf of the card holder.
These bills are assembled in the bank and the amount is paid to the bank by the card holder totally
or by installments. The bank charges the customer a small amount for these services. The card
holder need not have to carry money/cash with him when he travels or goes for purchasing.
Credit cards have found wide spread acceptance in the metros and big cities. Credit cards are
joining popularity for online payments.
The major players in the Credit Card market are the foreign banks and some big public sector
banks like SBI and Bank of Baroda.
India at present has about 3 million credit cards in circulation.
2)
Debit Cards: Debit Card is a prepaid or pay now card with some stored value. Debit
Cards quickly debit or subtract money from ones savings account,or if one were taking out cash.
Every time a person uses the card, the merchant who in turn can get the money transferred to his
account from the bank of the buyers, by debiting an exact amount of purchase from the card.
To get a debit card along with a Personal Identification Number (PIN).
When he makes a purchase, he enters this number on the shops PIN pad. When the card is swiped
through the electronic terminal, it dials the acquiring bank system either Master Card or Visa that
validates the PIN and finds out from the issuing bank whether to accept or decline the transaction.
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The customer never overspread because the amount spent is debited immediately from the
customers account. So, for the debit card to work, one must already have the money in the account
to cover the transaction.
There is no grace period for a debit card purchase. Some debit cards have monthly or per
transaction fees.
Debit Card holder need not carry a bulky checkbook or large sums of cash when he/she goes at for
shopping.
This is a fast and easy way of payment one can get debit card facility as debit cards use ones own
money at the time of sale, so they are often easier than credit cards to obtain.
The major limitation of Debit Card is that currently only some 3000-4000 shops country wide
accepts it. Also, a person cant operate it in case the telephone lines are down.
3)
Automatic Teller Machine: The introduction of ATMs has given the customers the facility
of round the clock banking.
The ATMs are used by banks for making the customers dealing easier. ATM card is a device that
allows customer who has an ATM card to perform routine banking transaction at any time without
interacting with human teller.
It provides exchange services. This service helps the customer to withdraw money even when the
banks are closed.
This can be done by inserting the card in the ATM and entering the Personal Identification Number
and secret Password.
ATMs are currently becoming popular in India that enables the customer to withdraw their money
24 hours a day and 365 days.
It provides the customers with the ability to withdraw or deposit funds, check account balances,
transfer funds and check statement information.
The advantages of ATMs are many. It increases existing business and generates new business. It
allows the customers.

To transfer money to and from accounts.

To view account information.

To order cash.

To receive cash.

Advantages of ATMs:
To the Customers

ATMs provide 24 hrs., 7 days and 365 days a year service.

Service is quick and efficient

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Privacy in transaction

Wider flexibility in place and time of withdrawals.

The transaction is completely secure you need to key in Personal Identification Number
(Unique number for every customer).

To Banks

Alternative to extend banking hours.

Crowding at bank counters considerably reduced.

Alternative to new branches and to reduce operating expenses.

Relieves bank employees to focus a more analytical and innovative work.

Increased market penetration.

ATMs can be installed anywhere like Airports, Railway Stations, Petrol Pumps, Big Business
arcades, markets, etc. Hence, it gives easy access to the customers, for obtaining cash.
The ATM services provided first by the foreign banks like Citibank, Grind lays bank and now by
many private and public sector banks in India like ICICI Bank, HDFC Bank, SBI, UTI Bank etc.
The ICICI has launched ATM Services to its customers in all the Metropolitan Cities in India. By the
end of 1990 Indian Private Banks and public sector banks have come up with their own ATM
Network in the form of SWADHAN.
Over the past year up to 44 banks in Mumbai, Vashi and Thane, have became a part of
SWADHAN a system of shared payments networks, introduced by the Indian Bank Association
(IBA).
4) E-Cheques: The chequing system uses the network services to issue and process payment that
emulates real world chequing.
The payer issue a digital cheques to the payee and the entire transactions are done through
internet. Electronic version of cheques are issued, received and processed.
A typical electronic cheque transaction takes place in the following manner:

The customer accesses the merchant server and the merchant server presents its goods to
the customer.

The consumer selects the goods and purchases them by sending an e-cheque to the
merchant.

The merchant validates the e-cheque with its bank for payment authorisation.

The merchant electronically forwards the e-cheque to its bank.

The merchants bank forwards the e-cheque to the clearing house for cashing.
31

The clearing house jointly works with the consumers bank clears the cheque and transfers
the money to the merchants banks.

The merchants bank updates the merchants account.

The consumers bank updates the consumers account with the withdrawal information.

The e-chequing is a great boon to big corporate as well as small retailers. Most major banks accept
e-cheques. Thus this system offers secure means of collecting payments, transferring value and
managing cash flows.
(5) Electronic Funds Transfer (EFT): Many modern banks have computerised their cheque
handling process with computer networks and other electronic equipments.
These banks are dispensing with the use of paper cheques. The system called electronic fund
transfer (EFT) automatically transfers money from one account to another.
This system facilitates speedier transfer of funds electronically from any branch to any other
branch.
In this system the sender and the receiver of funds may be located in different cities and may even
bank with different banks.
Funds transfer within the same city is also permitted. The scheme has been in operation since
February 7, 1996, in India.
The other important type of facility in the EFT system is automated clearing houses. These are the
computer centers that handle the bills meant for deposits and the bills meant for payment. In big
companies pay is not disbursed by issued cheques or issuing cash.
The payment office directs the computer to credit an employees account with the persons pay.
5)

Telebanking: Telebanking refers to banking on phone services..a customer can access

information about his/her account through a telephone call and by giving the coded Personal
Identification Number (PIN) to the bank.
Telebanking is extensively user friendly and effective in nature.

6)

To get a particular work done through the bank, the users may leave his instructions in the
form of message with bank.

Facility to stop payment on request. One can easily know about the cheque status.

Information on the current interest rates.

Information with regard to foreign exchange rates.

Request for a DD or pay order.

D-Mat Account related services.

Mobile Banking: A new revolution in the realm of e-banking is the emergence of mobile banking.
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On-line banking is now moving to the mobile world, giving everybody with a mobile phone access
to real-time banking services, regardless of their location. But there is much more to mobile banking
from just on-lie banking.

It provides a new way to pick up information and interact with the banks to carry out the relevant
banking business.

The potential of mobile banking is limitless and is expected to be a big success. Booking and paying
for travel and even tickets is also expected to be a growth area.

According to this system, customer can access account details on mobile using the Short
Messaging System (SMS) technology6 where select data is pushed to the mobile device.

The wireless application protocol (WAP) technology, which will allow user to surf the net on their
mobiles to access anything and everything.
This is a very flexible way of transacting banking business.
Already ICICI and HDFC banks have tied up cellular service provides such as Airtel, Orange, Sky
Cell, etc. in Delhi and Mumbai to offer these mobile banking services to their customers.
7)

Internet Banking: Internet banking involves use of internet for delivery of banking products and
services. With internet banking is now no longer confirmed to the branches where one has to
approach the branch in person, to withdraw cash or deposits a cheque or request a statement of
accounts. In internet banking, any inquiry or transaction is processed online without any reference
to the branch (anywhere banking) at any time.
The Internet Banking now is more of a normal rather than an exception due to the
fact that it is the cheapest way of providing banking services. As indicated by McKinsey Quarterly
research, presently traditional banking costs the banks, more than a dollar per person, ATM banking
costs 27 cents and internet banking costs below 4 cents approximately. ICICI bank was the first one
to offer Internet Banking in India.
Benefits of Internet Banking:

Reduce the transaction costs of offering several banking services and diminishes the need
for longer numbers of expensive brick and mortar branches and staff.

Increase convenience for customers, since they can conduct many banking transaction 24
hours a day.
33

Increase customer loyalty.

Improve customer access.

Attract new customers.

Easy online application for all accounts, including personal loans and mortgages

Financial Transaction on the Internet:

Electronic Cash: Companies are developing electronic replicas of all existing payment system:
cash, cheque, credit cards and coins.
Automatic Payments: Utility companies, loans payments, and other businesses use on automatic
payment system with bills paid through direct withdrawal from a bank account.
Direct Deposits: Earnings (or Government payments) automatically deposited into bank accounts,
saving time, effort and money.
Stored Value Cards: Prepaid cards for telephone service, transit fares, highway tolls, laundry
service, library fees and school lunches.
Point of Sale transactions: Acceptance of ATM/Cheque at retail stores and restaurants for
payment of goods and services. This system has made functioning of the stock Market very smooth
and efficient.
Cyber Banking: It refers to banking through online services. Banks with web site Cyber branches
allowed customers to check balances, pay bills, transfer funds, and apply for loans on the Internet.
9)

Demat: Demat is short for de-materialization of shares. In short, Demat is a process where at the
customers request the physical stock is converted into electronic entries in the depository system.
In January 1998 SEBI (Securities and Exchange Board of India) initiated DEMAT ACCOUNTANCY
System to regulate and to improve stock investing. As on date, to trade on shares it has become
compulsory to have a share demat account and all trades take place through demat.
How to Operate DEMAT ACCOUNT?
One needs to open a Demat Account with any of the branches of the bank.
After opening an account with any bank, by filling the demat request form one can handover the
securities.
The rest will be taken care by the bank and the customer will receive credit of shares as soon as it
is confirmed by the Company/Register and Transfer Agent.
There is no physical movement of share certification any more. Any buying or selling of shares is
done via electronic transfers.
1) If the investor wants to sell his shares, he has to place an order with his broker and give a
Delivery Instruction to his DP (Depository Participant).
34

2) The DP will debit hi s account with the number of shares sold by him.
3) If one wants to buy shares, he has to inform his broker about his Depository Account
Number so that the shares bought by him are credited in to his account.
4) Payment for the electronic shares bought or sold is to be made in the same way as in the
case of physical securities.

BANKING SERVICES
Banking covers so many services that it is difficult to define it. However, these basic services have
always been recognized as the hallmark of the genuine banker. These are

The receipt of the customers deposits

The collection of his cheques drawn on other banks

The payment of the customers cheques drawn on himself

There are other various types of banking services like:

1) Advances Overdraft, Cash Credit, etc.
2) Deposits Saving Account, Current Account, etc.
3) Financial Services Bill discounting etc.
4) Foreign Services Providing foreign currency, travelers cheques, etc.
5) Money Transmission Funds transfer etc.
6) Savings Fixed deposits, etc.
7) Services of place or time ATM Services.
8) Status Debit Cards, Credit Cards, etc.

Customer Services in Commercial Banks:

Customer service is the service provided in support of a banks core products. Customer service
often includes answering questions; handling complaints.
Customer service can occur on site (as when an onstage employee helps a customer or answers a
question) or it can occur over the phone or the Internet.
Quality customer service is essential to building cordial customer relationship.
Banking being a service industry, a lot depends on efficient and prompt customer service.
Customer service is the most important duty of the banking operations. Prompt and efficient service
with smile will develop good public relations reduce complaints and increase business.
35

Why is Customer Service Important?

Changing customer expectations: Today the customer is more demanding and more
sophisticated than he or she was thirty years ago.
The increased importance of customer service: With changing customer expectations,
competitors are seeing customer service as a competitive weapon with which they
differentiate their products and services.
The need for a relationship strategy: To ensure that a customer service strategy that will
create a value preposition for customers should be formulated implemented and controlled.
It is necessary to give it a central role and not one that is subsumed in the various elements
of the marketing mix.
The customer is the kingpim in growth organizations like commercial banks. Only those institutions
which work according to his dictates will flourish.
Quality, Consistency and Durability at low price are the final expectations of a customer. Quality will
have to be unambiguous, of world class quality. Quality cannot be of minimum acceptable
standards.
Customer responsiveness must be quick and also competent. Speed, performance and cost wll be
the new values mantra for success.
The ten key areas of customers services to be attended timely and regularly are:
i.

Submission of statement of A/Cs to customers

ii.

Updating of savings pass books.

iii.

Teller system efficiency.

iv.

Cleanliness and Upkeep of premises.

v.

Intermediate Credit for institution cheques/land bills.

vi.

Advance intimation to customers for rewards of Term Deposits Receipts on maturity.

vii.

Advance for Debit/credit to accounts. Punctuality of staff.

INTRODUCTION TO THE COMPANY

COMPANY PROFILE
36

HOUSING DEVELOPMENT FINANCE CORPORATION LIMITED

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.

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

Social responsibility
The social responsibility function at HDFC is not just restricted to a few specialists or
narrowly defined set of activities packaged somewhere out of sight.
It is a daily part of what the company strives to be: responsive, imaginative and sensitive in
the way we treat our customers, business associates, shareholders, employees and the
wider world in which we operate.
The brief accounts of select grants from the Shelter Assistance Reserve and other
initiatives described in the following pages are suggestive of our approach.
The year 2005-06 marked a decade of HDFCs varied initiatives in the area of micro-finance
with continued bulk-lending operations towards micro-enterprises and low-income housing.
The year also saw India facing a terrible succession of natural calamities, from the floods in
Mumbai and other parts of Maharashtra to the earthquake in the Himalayan region of
Kashmir.
37

HDFC joined hands with local level organisations to provide relief to the victims in the
affected areas.
In each case, the spirit and response of the people involved was characteristically generous
and inspiring.
Shelter Assistance Reserve
During the year, HDFC extended support towards several social causes resulting in an
overall utilisation of Rs. 476.56 lacs from the Shelter Assistance Reserve.
This involved the funding of numerous development initiatives by way of grants to over 150
partner NGOs.The segment-wise break-up of the utilisation is highlighted in the chart below.
Cited below are a few examples of projects funded by way of grant support out of the
Shelter Assistance Reserve during 2005-06:
Anandwan A way of life
It is said that there is no greater force in the universe than the one that drives the human
spirit. Anandwan is a living epitome of the sheer dominance of the human spirit over an
overtly misunderstood and stigma associated disease viz. leprosy.
A township(just off the NagpurChandrapur highway)set up almost five decades ago by the
non agenarianGandhian activist ShriMurlidharDevidas alias Baba Amte, Anandwan is
synonymous with the welfare and settlement of persons afflicted by leprosy who are cast
away by their families and society due to the shame and dishonor linked with this disease.
Over a period of time the township has extended its humanitarian activities to any individual
suffering from a physical handicap who is discarded by society.

Today, the township accommodates nearly 5000 inmates who are either leprosy inflectedor
suffer from some physical handicap.
These inmates are encouraged to lead a normal life and become self-reliant by way of
gainful employment in a plastic re-cycle project and as agriculturists tending to the fields
where cotton and wheat is grown.Residential units, which were built for the seinmates
nearly 45 years ago, are now in a dilapidated condition and some of these,need to be
reconstructed entirely.
38

HDFC along with Sir Ratan Tata Trust has joined hands with the Maharogi SewaSamiti (a
trust founded by Baba Amte) for part funding of the reconstruction and retrofitting expenses.

Kinship for children

SOS Childrens Villages of India is a part of the worldwide SOS Childrens Village
movement present in 131 countries across the world.
SOS provides orphaned childrena closest alternative to a natural family i.e. a SOS family
where they find the sanctuary of a home and a family to grow up with. Within the security of
a family, children can grow-up into independent and responsible citizens of society.
An SOS family typically consists of 9 or 10 children who live together with their SOS
Mother in a family home. Each Village has between 10 to 20 family homes.
SOS Childrens Villages of India has 34 Childrens Villages and 122 allied projects including
facilities for Tibetan children. The organisation provides direct care to 15,000 children
through its childrens villages and indirect care to nearly 200,000 children through various
community programmes.
SOS has recently started the Corporate for Child partnership where in the donor company
can make a commitment towards adopting the education, health (including nutrition) and
living expenses of an SOS family.
HDFC has partnered with SOS Indiain adopting two families living in the SOS Childrens
Village at Faridabad.

Ramakrishna Mission Students Home

The Students Home Chennai which was established in 1905, is one of the oldest social
service organisations in India and is a part of the Ramakrishna Mission, West
Bengal.Originally the Mission had started a centre in Chennai to cater to the needs of
orphaned and destitute boys.
39

Free boarding and lodging was provided to the children but as the numbers grew the
Mission decided to set up a Residential High School.
Along with academic training the school also started providing vocational training and has
now developed into a Residential Technical Institute.

Currently the Home provides boarding, lodging and education to 400 orphaned /destitute
boys in the age bracket of 10-19.As part of its centenary, the school wants to add two new
courses to the existing syllabus- Mechanical Engineering and Computer Technology.
With the increase in the number of students attending the courses, the Home is building
additional hostel facilities.
HDFC has taken up the boarding and lodging expenses of the new students for a period of
two years.

Childline @ Ten Nine Eight

A phone number that spells hope for millions of children across urban India(mostly the
vulnerable ones on the street) CHILDLINE is a 24-hour, free, emergency phone service for
children who are in need of any aid or assistance.
Any concerned adult or a child in need of help can dial 1098, the toll free number to access
Childlines services across the country.
Childline responds not only for emergency needs but also links the children to services for
their long-term care and rehabilitation.
HDFC has partnered with Childline to support the extension of their existing center in
Goa.Being a large tourist destination, Goa attractsa large number of foreigners and thereby
increases the threat of child labour, paedophilia and child abuse, child trafficking etc.
The existing Childline center works out of Panjim responding to calls made in and around
North Goa. With the shift in migrant population to South Goa, the center saw the number of
calls coming in from South Goa increase.

40

It became difficult for the existingcenter to reach the child within the hour hence an
extension of the center was required. HDFC has committed to partnering with Childline on
this project for a period of 3 years.

NGOMela 2005

Concern India Foundation has been organising NGO Melas (trade fair / exhibition)every
year since 1995.
This large-scale event serves as a platform for NGOs to present themselves, market their
products and create awareness on their work.
The Melas include demonstrations of various arts and crafts by skilled artisans who are
otherwise unable to reach their products to the metropolitan clientele.
The event also helps raise much needed financial resources for NGOs from across the
country and enables them to network with each other while exposing them to a competitive
market scenario.

This year, the NGO Mela was organised in Mumbai with HDFC as the main sponsor. Over
100 NGOs from all over the country participated in the event.
These included NGOs working with youth, destitute children, women in distress, disabled
persons, tribal communities and on issues such as environment, rural livelihoods etc.

Self-reliance Thru Skills & Training

The SPJ Sadhana School housed at Sophia College, Mumbai has been training physically
and mentally handicapped students to develop their learning and basic skills over the last
32 years.
41

A team of highly trained teachers and professionally qualified therapists, each of whom has
hands on experience, look at making the best use of the capabilities and skills of the
students such as nurturing the special talents each individual manifests and encouraging
him/her to work on them.
Years of such experience have crystallized into a five-year vocational course, which, while
tapping a trainees special gift and fostering it, aims to equip that student to be launched
into a self-reliant and productive life.
The course covers training in art and crafts, tailoring, fast-food cookery and office. skills.
Some of the projects of the SPJ Sadhana School have successfully metamorphosed into
separate entities now operating as sister concerns, namely (i) The Shraddha Charitable
Trust and (ii) Om Creations.
The Shraddha Charitable Trust is a workshop providing productive support and training to
students who have passed out of Sadhana School and takes pride in producing eco-friendly
items only.
The autistic adults receive intensive training for income-generating activities including
sticking, painting, packing, sorting etc. and are then integrated into the workshop as full
time workers for products ranging from bags to office folders to paper weights and several
other household items.

The Om Creations on the other hand is a pioneering project of the Sadhana School for the
girl students.
Om Creations has a Catering section wherein the students are trained to make cookies,
biscuits, pickles, sweets and other snacks with the help of instructors.
The Trust also has an Art & Craft section wherein a variety of articles like handbags, gift
bags, napkins, mats, jewelry pouches, trays, plates, mugs etc. are made.

These items are bought by retail department stores, grocery shops, corporate bodies and
individuals and a part of the sales proceeds goes back to the adults giving them a sense of
economic independence.
42

HDFC has been regularly supporting the SPJ Sadhana School and its two sister
organizations by providing grant funds towards their programme and infrastructure
expenses and sponsoring their fund-raising events.

43

EMPLOYEE INITIATIVES
Run Mumbai Run and it did!!
Some ran with spirit, some with determination and some with causes but all with a heart.
Seasoned athletes and puffing minnows alike hit the tarmac with a bang at the 3rd Mumbai
Marathon held on January15, 2006.
This year, the marathon saw the pounding of nearly 30,000 pairs of feet, setting the cash
registers ringing. The event raised money for over 100 charities with the committed amount
reaching close to Rs. 5 crore.
Not to be left behind was team HDFC. A majority of the Mumbai region staff
(148employees, almost twice of last year) and some with their families and friends
participated in the Dream Run of 7 Km in support of two Mumbai-based NGOs ALERT
India and Child line India Foundation.
Aids Walk for Life

13 States

300 cities

Over 6,000 Kms

36 exemplary individuals

Over 2 million educated on an oft-misunderstood and stigma associated disease

After covering 6,800 Kms across thirteen states in the country, The AIDS Walk for Life
reached its pinnacle in New Delhi. Today, more than 5 million people in India are infected
with HIV/AIDS. Yet, very little is known about the disease.
On December 1,2005 World AIDS Day, our HDFC Delhi team joined the 36 heroes in
propagating awareness creation for combating HIV/AIDS. The Walk is a unique and
theatrical way of spreading awareness in the interiors of the country where conventional
awareness campaigns may not penetrate.
HDFC is proud to be associated with Project Concern India as a corporate sponsor
supporting the cause of AIDS awareness. .

44

Origami Moulding Paper into Life

Paper is a very versatile and ubiquitous medium.
All of us, without an exception have at some time or another folded a piece of paper and
transformed it into something that must have given us immense pleasure at that time.
Unknowingly we were practicing theart of ORIGAMI. India was selected to host the Origami
Peace Tree Festival 2006 through the Origami Mitra (an association of Origami
enthusiasts).
HDFC joined hands with Origami Mitrain conducting Origami Workshops for visually
impaired children of the NAB Workshop for the Blind and mentally challenged children of
the S. P. J. Sadhana School.
The children were able to visualize the immense scope of this ancient art by merely using
their two hands as tools without having to resort to glue or scissors.
HDFCs Little Indian Idols
The challenge was in chalking out a programme that stimulates a childs creative instincts
and provides the children with a platform to showcase their talent. HDFC did just that by
holding a creativity-cum-talent workshop for primary school children in Nerul, Navi Mumbai.
The workshop was a 2-day programme with professional facilitators that packed in a minitheatre workshop, a create wealth from waste competition, story telling, painting and much
more for over 140 children.
A painting competition was organized by Delhi office for 5th and 6th standard students.
Over 400 students participated in this contest helping young minds give vent to their
imaginations.
HDFC participated in the Fun Day Out kids extravaganza in Pune by organizing a coloring
competition for children. The Pune office organized an exhibition of these drawings and
felicitated every participant.

45

RESPONDING TO NATURAL CALAMITIES

Terrible Tuesday
Mumbai the financial capital of the country, the city that never stops nor sleeps and yet
the metro was thrown into complete chaos on July 26, 2005.
Heavy and incessant rains set off floods and landslides battering normal life and forcing
rail, road and air traffic to a virtual standstill. Millions of citizens were affected stranded for
hours, even days at railway platforms, offices, in traffic jams while others waded through
chest-deepwater to reach their destinations.
The record 944 mm of rains that lashed the metropolis took the death toll to over 1000. The
citys low-income working class, living in slums and shanties, watched helplessly as their
homes disappeared under water.

In spite of this catastrophe, the Mumbaikar spirit was clearly visible in every nook and
corner of the city with people coming out to aid those stranded on the road through the
night.
HDFC partnered with famous singer Ms. UshaUthup to capture this never-say-die spirit of
Mumbai through the videoMumbaiMeriHai.
The song encapsulates the Mumbaikar spirit of reaching out in times of need and rising
back with full zeal and enthusiasm in spite of the adversities.
Not to be left behind was our Mumbai region staff. A collection drive for relief material was
organized immediately after the disaster through our Church gate, Parel and Vashi offices.
Our staff donated wholeheartedly to this cause. The relief material was distributed to floodaffected families in the slums of Mumbai and Navi Mumbai through local NGOs having a
strong

community

presence.HDFC

was

also

able

to

obtain

medicines

from

GlaxoSmithKline, which were distributed among NGOs conducting health camps in various
slums and low-income neighborhoods in the city.

46

Further, HDFC extended grants to several NGOs coordinating relief and rehabilitation
efforts in various parts of Mumbai and NaviMumbai.
The relief process included provision of dry ration, potable water, emergency medical aid,
provision of blankets and plastic sheets etc.
HDFC partnered with the Sir Ness Wadia Foundation and The Bombay Community Public
Trust to provide education material (specifically note books, uniforms and stationery) to
municipal school children in the severely affected areas.

Kashmir Earthquake
An earthquake of magnitude 7.6 struck the Himalayan region of Kashmir on October 8,
2005 resulting in colossal loss of life and property in Pakistan as well as India.
On the Indian side, it is reported that the disaster left more than 1300 people dead and
some 2500 injured, while over 1500 were missing. Through our Jammu, Ludhiana and
Chandigarh offices, HDFC provided relief material in the form of blankets, pulloversand milk
powder for the immediate needs of the victims of the earthquake.
In this initiative, HDFC partnered with Child line India Foundation (CIF) and their partner
organization Youth Technical Training Society(YTTS), Srinagar.
YTTS worked very closely with the Indian Army in planning and carrying out the relief
measures. The packaged relief material was transferred from Ludhiana to Chandigarh from
where it was airlifted to Jammu.

HDFC also partnered with The SOS Childrens Villages of India, who had already started
emergency relief work for families with a primary focus on children.
SOS has offered (with the willingness of the J&KGovt.) to undertake long-term care of 100
orphaned

children

from

this

tragedy

through

their

existing

SOS

village

in

Srinagar.Contribution from HDFCs employees and a matching grant from HDFC have
helped further SOSs commitment for long-term rehabilitation of orphaned children in
Kashmir.
47

RURAL HOUSING SCHEME FOR EWS

Womens Welfare Association
Womens Welfare Association (WWA) is a renowned NGO, which has been serving rural
poor in the Wayanad district of Kerala since 1978.
WWA promotes integrated people-centered rural development for improving the quality of
life and the living conditions of village communities irrespective of caste, creed and political
leaning. Women from different walks of life are members of its General Body.

HDFC has been associated with WWA since 2003 in the area of housing loans to the
economically weaker section (EWS) households.
HDFC has sanctioned threehousing loans amounting to Rs. 134 lacs for onward lending to
the members of WWA.The cumulative disbursement as onMarch 31, 2006 stood at Rs.
98.62 laces for construction of 219 dwelling units. With the active involvement of all the
stakeholders including the beneficiaries, WWA project staff and HDFC officials, the
ABHAYA housing project has become a steppingstone to achieve the goal of housing for
allinWayanad district.

The implementation of the scheme is being carried out in three phases the preparatory
stage followed by physical implementation and development of appropriate recovery
mechanisms.
In the preparatory stage, WWA gives emphasis on Save and Build concept. The
beneficiaries mobilize their own contribution towards the house construction by way of small
thrifts or savings, which ultimately helps WWA to select the beneficiaries in accordance with
the basic principles of credit, viz. character, capacity and capital.
The orientation given by the HDFC officials also helps to generate transparency and a
clear understanding about the housing loan products. There payment of the loan is
structured based on affordability of the WWA members and the recovery mechanism is also
being developed in a participatory way.

48

Voice from Mrs. Sainaba, one of the project beneficiaries....We have lost our property
which was mortgaged for the treatment of our son and we have been residing in a rented
house, giving Rs. 750/- per month for the last four years. With the support of WWA, we
have got Rs. 54,000/- from HDFC and we could construct a small house. I am glad that the
loan which I could never dream of getting, as per advice from other banks has now been
granted to me by HDFC within the shortest period and I find it much convenient to pay Rs.
581/- as monthly payment to HDFC.

FORUM FOR RURAL ENVIRONMENT AND ECONOMIC DEVELOPMENT

Forum for Rural Environment and Economic Development (FREED) was established
in1992 as an innovative programme in micro-finance to promote livelihoods with a special
emphasis on environment protection and ecological preservation.
It has a strong client focus and its products and delivery systems have been designed
accordingly. FREEDoperates in Alappuzha district of Kerala withover 13,000 active
borrowers.
FREED first approached HDFC during 2004 to obtain a housing loan for its members for
new construction.
HDFC sanctioned Rs. 54 laces for onward lending to 100 members. The successful
implementation of theGRAMASREE housing project within a period of six months paved
the way for sanctioning of two more housing loans amounting to Rs. 129 lacs and a microfinance loan of Rs. 25 laces. As of March 2006,FREED has availed a total disbursement of
Rs. 149 laces from HDFC.
Unlike most MFIs in India, FREED has not appointed field officers to transact directly with
the clients. Instead, it works through the leaders of their SHG federations, which fosters
transparency and a sense of ownership among the members.
The operational strategy developed inconsultation with different stakeholders, especially
with the HDFC officials, for the long-term housing loan product, has helped the organization
to implement the housing schemes in a systematic way.

49

The first site-visit report generated by the representatives of FREED provides a clear
understanding about the borrower extent of land, location sketch, type of house to be
constructed, plinth area, total estimated cost, allocation of funds, application of cost
reduction technologies, etc.
The subsequent visits by HDFC officials to the project locations, helps in orienting the
clients on various issues while advising them on certain dos and donts. The actionreflection praxis at FREED has further led to evolving appropriate tools for better
implementation of the scheme.

MICRO ENTERPRISE FINANCE FACILITY

Activists for Social Alternatives
The Activists for Social Alternatives (ASA) commenced operations in 1986 as a facilitating
agency for empowering the poorest of the poor women. During the course of its growth,
ASA felt that economic development of women would be the strongest base for their social,
cultural and political empowerment. ASA observed that the savings and credit program held
the greatest potential for improving the economic status of large number of rural women. In
1993, ASA started adopting the essentials of Grameen principles and initiated a full-fledged
micro finance program (meaning Dawn of theRural Poor) in Tiruchirapalli district.

ASA follows the Grameen Bank model and has evolved its products and delivery systems in
accordance with the felt needs of the community. ASA-GV provides collateral-free credit to
poor women organised in groups of five (known as Grameen Banking Groups) at the village
level.
These groups are federated into centers, each centre being constituted with 20 groups.
The centers are further federated into branches. ASA-GV now operates in 11 districts of
Tamil Nadu with 45 branches serving more than 90,000 members spread over 2,500
villages.

50

HDFC has been associated with ASA since 2002 when the first loan of Rs. 50 laces was
sanctioned under the micro-enterprise finance facility (MFF). The total loan sanctioned
under MFF to ASA is Rs. 250 laces for onward lending to 3000 members and the amount
disbursed as of March 31, 2006 is Rs. 150 laces. In addition, HDFC has sanctioned Rs. 200
laces towards housing up gradation loans of which Rs. 100 lacesstood disbursed.

Through the provision of micro-finance and development services, ASA has empowered
their women clients and improved their access to and control over financial resources. The
following case is an illustration of the impact of ASAs micro-finance initiative:

Lakshmi, aged 28 hails from a backward family and was unable to study beyond 4th
standard due to intense poverty. She did menial jobs to support her familys survival. It was
at this juncture, that the ASA-GVmicro-finance program came to her rescue. Borrowing the
first loan of Rs. 3,000, she purchased a sewing machine to support her parents and save
money for her wedding expenses.

She married Ayappan, a hired laborer of a cycle shop. Ayappans low income was
insufficient for the family expenses. Here again, she sought the aid of ASAGV and
borrowed the 2nd loan of Rs. 7,000 which was invested in their cycle shop with 5 bicycles.
Renting out these cycles, they earned Rs. 500 per week.
After repayment of the 2nd loan, Lakshmi took the 3rd loan ofRs. 9,000 to purchase tape
recorders, mic and sound system to be rented out for functions and weddings. Now she is a
proud mother and is able to provide good education to her two sons.
Lakshmi says My life would have been in chaos if GV had not helped me. Going for a 4th
loan of Rs. 10,000 she has recently bought additional bicycles and also sells spare parts for
them.

51

Evangelical Social Action Forum.

The Evangelical Social Action Forum (ESAF)was established as an NGO in 1992 by a
group of like-minded individuals, who shared the objective of working for the poor and
marginalized sections of the society. ESAF undertakes various developmental activities,
including micro-enterprise development, community development and rehabilitation,
advocacy and vocational training. ESAFs activities were entirely based in Kerala till 2003.
In October 2003, ESAF started community development programmes in the Vidharbha
region of Maharashtra and in the state of Chhattisgarh.

The micro enterprise development (MED) department, of which micro-finance is a part, is

one of the key interventions of ESAF and its objective is to provide a package of financial
and business development services to the socio-economically challenged. Besides microfinance, MED is active in handicrafts promotion, training and marketing.

ESAF first approached HDFC in 2001 for an MFF loan of Rs. 20 laces. It was a small
beginning, but the outcome was a multi-faceted impact in the community. The members
started thinking of initiating group enterprises and the same materialized through
subsequent loans from HDFC. HDFC has sanctioned three MFF loans to ESAF amounting
to Rs. 220 laces of which Rs. 170 laces stood disbursed as on March 31, 2006.

Women in business can sometimes find it difficult to assert themselves, but- a member of
JyothisSangam, Kodungallur and her friends dared to poke into what we understand as a
mans stronghold. They collectively undertook concrete brick manufacturing with the
support of credit made available to them by HDFC through ESAF. Subhashini and her
friends found that coming together as a group helped them to be bold in their approach and
to create a thriving business.

Our activity brings us happiness. Not only to us but to our clients and even to those who
visit and see us.says Subhashini. After finishing their household work they gather together
at around 11o clock everyday and make more than 100 bricks in a day. Today, they stand
52

as a group of 25 members having three enterprises viz, concrete brick manufacturing, goat
rearing and mat weaving. Having availed loans of more than Rs. 2 lace, the group is proud
to say that they have always been regular in repayment of their loans
Organizational Goals
HDFCs main goals are to

Develop close relationships with individual households

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

Transform ideas into viable and creative solutions,

Provide consistently high returns to shareholders, and

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

Corporate strengths

Strong brand

Customer base of over two billion

Stable and experienced management

High service standards

High quality loan portfolio

Provision for contingencies

Constant up gradation of contingencies

One of the best capital adequacy ratio

Awards

2002 - Rated as the best non banking financial company in Asia by institutional
investor research group

2001 - Asias top 10 managed company in finance sector by euro money

2001 - Asia money declared HDFC as Indias second best managed company

2000 CII-EXIM bank commendation certificate for commitment to TQM

1999 - IMC Ramakrishna Bajaj national quality award in service category financial
institutions

1998 - excellence in service industry by IIMM and top management club (Pune)

53

1998 - best company in India for strategy and management and industrial relations

by Asia money
1994-95 and 1996-97 - best presented accounts in SAARC region by south Asian

federation of accounts in financial sector

1997 - one of the five best Indian boards by business today

1997 - most competitive company by euro money

1995 and 1996 - Indias best managed company by Asia money

HISTORY
The Standard Life Assurance Company ("Standard Life") was established in 1825 and the
first Standard Life Assurance Company Act was passed by Parliament in 1832. Standard
Life was reincorporated as a mutual assurance company in 1925.
The Standard Life group originally operated only through branches or agencies of the
mutual company in the United Kingdom and certain other countries.

Banking, Healthcare & Investments

The group set up Standard Life Bank, its UK mortgage and retail savings banking
subsidiary, in 1998 and Standard Life Investments, which had previously been the in-house
investment management unit of the groups life assurance and pensions business, was
separated into a distinct legal entity in the same year, with the aim of establishing it as an
independent investment management business providing services to both the group and
third party retail and institutional clients. The group acquired Prime Health Limited
(subsequently renamed Standard Life Healthcare) in the United Kingdom in 2000. Standard
Life Healthcare expanded in March 2006 with the acquisition of the PMI business of First
Assist.

Standard Life Asia Limited/Joint ventures

54

The groups Hong Kong subsidiary, Standard Life Asia Limited (SL Asia), was incorporated
in 1999 as a joint venture and became a wholly-owned subsidiary of Standard Life in 2002.
The groups operations in Hong Kong were established to give the group a presence in the
Far East from which it could expand into China. The groups joint ventures in India with
Housing Development Finance Corporation Limited (HDFC) were incorporated in 2000 (in
relation to the life assurance and pensions joint venture) and 2003 (in relation to the
investment management joint venture). The groups joint venture in China with Tianjin
Economic Development Area General Company (TEDA) became operational in 2003.

Standard Life International Limited

The group also incorporated Standard Life International Limited (SLIL) in 2005 for the
purposes of providing the group with an offshore vehicle, based in Ireland, through which it
could sell tax-efficient investment products into the United Kingdom. Sales of these
products

commenced

in

2006.

Service company
Following the groups strategic review in 2004, the group established a service company
structure for the provision of central corporate services to the groups business units.
Standard Life Employee Services Limited (SLESL) supplies a wide range of central
services to the rest of the group, including IT, facilities, legal and human resources services,
and employs staff working in the groups UK and Irish operations (other than SLI, SLB and
SLH, which employ their staff directly). This service company structure was created to
enable Standard Life to comply with regulatory restrictions on the provision of noninsurance services and to exploit group-wide synergies.

Demutualization of Standard Life

55

On 31 May 2006, Standard Life's voting members voted in favor of the Special Resolution
for the demutualization of The Standard Life Assurance Company and the flotation of
Standard Life plc on the London Stock Exchange.
Structure of Standard Life plc
Standard Life plc owns all of the businesses and companies in the group. Standard Life plc
is a holding company which is owned by its shareholders (including those Eligible Members
who received and retained shares received as a result of demutualization).

Alternative textual explanation

Standard Life plc structure

56

Underneath Standard Life plc are Standard Life Healthcare Limited, Standard Life
Investments (Holdings) Limited (and underneath it, Standard Life Investments Limited),
Standard Life Oversea Holdings Limited, Standard Life Employee Services Limited,
Standard Life Assurance Limited and Standard Life's Joint Venture interest in China

Underneath Standard Life Oversea Holdings are Standard Life Asia Limited and Standard
Life Financial Inc (and underneath it, The Standard Life Assurance Company of Canada).

Underneath Standard Life Assurance Limited are Standard Life Direct Limited, Standard
Life Savings Limited, Standard Life Direct Limited, Standard Life Trustee Company Limited,
Standard Life Bank Limited, Standard Life Pensions Funds Limited, Standard Life
International Limited and The Standard Life Assurance

Customer statistics
Customers

Statistics

Worldwide customers

Approximately 7 million

Customers in the UK

Over 5 million

With profits members worldwide

2.4 million

Standard Life people

Awards

2002 - Company of the year

2001 - Best personal pension provider

2000 - Company of the year

1999 - Company of the decade

1996 97 - Company of the year

1995 - 4 star service award

1992-94 - overall best company

57

1991 - 3 star service award

1990 - Best mortgage services

Standard Life in the 1800s

1821- Insurance Company of Scotland founded
1825- Life Insurance Company of Scotland founded by the partners in the Insurance
Company
1832 - Name change to Standard Life Assurance Company
1833- Agencies opened in Canada
1834- Agency opened in Ireland
1837- 3 George Street premises bought - occupied in 1839.
1842- First London Office
1845- Formation of the Colonial Life Assurance Company to aid expansion overseas
1846- Montreal office opened
1847- Agencies opened in Madras, Bombay, Uruguay and Shanghai
1854- Agencies opened in South Africa
1864- Minerva Life Assurance Company acquired.
1865-Victoria and Legal and Commercial Assurance Company acquired.
1866-Merger with Colonial Life
1869-First branch office in India opened in Calcutta
1876 -Bombay branch opened
1877 -India Life Assurance Company acquired
58

1888 -Branch opened Montevideo

1890 -Offices opened Brussels and Copenhagen
1892 -Offices opened Christania (Oslo), Norway and Stockholm, Sweden
1895 -Offices opened Port Elizabeth and Johannesburg, South Africa

Standard Life in the 1900s

1900-Office opened Shanghai
1904 -Office opened Barcelona and office built in Cairo
1905 -Bonus passed
1920 -Commence pensions business at a time when occupational schemes were in their
infancy
1922 -First staff magazine published
1925 -Mutualisation
1934 -Heritable Securities and Mortgage Investment Association
1937 -Staff pension scheme established
1941 -London office bombed during the Blitz
1950 -Pensions business expands. Largest life office in Scotland
1952 -South African business transferred to the South Africa Life Assurance Company
1960 -Largest mutual in UK
1961 -New Head Office for Canada opened in Sherbrook Street, Montreal
1966 -Setting up o in Europe, a consortium of SLAC and six European offices
59

1973 -Business in Jamaica transferred to Jamaica Mutual

1979 -Unit linked products launched
1985 -Over 10bn assets now managed
1986 -Launch of Unit Trusts
1990 -Standard Life Act of Parliament
1993 -Prosperity SA in Spain acquired
1994 -Prime Health acquired
1995 -Joint venture in India
1996 -Shanghai office opened. Branch established in Germany
1997 -Standard Life Bank formed
1998-Standard

Life

Investments

launched

Standard

Life

Assurance

Company's

Representative Office, Beijing, China, officially opened

1999-Standard Life Austria begins operations

Standard Life from 2000

2000-175th Anniversary of Standard Life Members vote to retain mutual status Standard
Life Asia is launched in Hong Kong
2001-Joint venture with HDFC launched in Mumbai, India
2002- Alexander Scott Bell retires as Group Chief Executive. Iain Lumsden appointed as
Group Chief Executive
2003-Joint venture with Hengan launched in Tianjin, China

60

2004-Strategic Review of business announced Group Chief Executive Iain Lumsden retires
Sandy

Crombie

appointed

Trevor

Matthews

appointed

Funds

under

management

as

as
Chief

exceed

Group
Executive
100

Chief
UK

billion

Life

Executive
and

for

first

Pensions
time.

Keith Skeoch Appointed as Chief Executive of Standard Life Investments

2005-Standard Life confirms its intention to demutualise and float on the London Stock
Exchange
2006-Special General Meeting is held on 31 May at which 98% of those voting back the
company's

proposal

to

demutualise

and

float

on

the

stock

exchange.

Standard Life floats on the London Stock Exchange on 10 July 2006 with the Offer Price set
at 230p. Standard Life joins the FTSE 100 index on 18 July.

HDFC Standard Life -The Partnership

HDFC Standard Life Insurance is a joint venture between India's largest housing finance
provider, HDFC and Europe's largest Mutual Life Assurance company - The Standard Life
Assurance Company (U. K).
The Standard Life Assurance Co. is one of the very few insurance companies in the world
to have received 'AAA' rating from two of the leading international credit rating agencies,
Moody's and Standard & Poor's. Standard Life was recently voted 'Company of the Decade'
in U.K. by the Independent Brokers called IFAs.
HDFC is a well-known & trusted name in India. Since its inception in 1977 they have
maintained their position as the premier Housing Finance Institution in the country. They
value integrity, commitment, teamwork and excellence in customer service.
HDFC and Standard Life first came together for a possible joint venture, to enter the Life
Insurance market, in January 1995. It was clear from the outset that both companies shared
similar values and beliefs and a strong relationship quickly formed. In October 1995 the
companies signed a 3 year joint venture agreement.
Around this time Standard Life purchased a 5% stake in HDFC, further strengthening the
relationship.
61

The next three years were filled with uncertainty, due to changes in government and
ongoing delays in getting the IRDA (Insurance Regulatory and Development authority) Act
passed in parliament. Despite this both companies remained firmly committed to the
venture.

In October 1998, the joint venture agreement was renewed and additional resource made
available. Around this time Standard Life purchased 2% of Infrastructure Development
Finance Company Ltd. (IDFC). Standard Life also started to use the services of the HDFC
Treasury department to advise them upon their investments in India.
Towards the end of 1999, the opening of the market looked very promising and both
companies agreed the time was right to move the operation to the next level. Therefore, in
January 2000 an expert team from the UK joined a hand picked team from HDFC to form
the core project team, based in Mumbai.
Around this time Standard Life purchased a further 5% stake in HDFC and a 5% stake in
HDFC Bank.
In a further development Standard Life agreed to participate in the Asset Management
Company promoted by HDFC to enter the mutual fund market. The Mutual Fund was
launched on 20th July 2000

Incorporation of HDFC Standard Life Insurance Company Limited:

The company was incorporated on 14th August 2000 under the name of HDFC Standard
Life Insurance Company Limited.
Our ambition from as far back as October 1995 was to be the first private company to reenter the life insurance market in India. On the 23rd of October 2000, this ambition was
realized when HDFC Standard Life was the only life company to be granted a certificate of
registration.

62

HDFC as on March 31, 2007 holds 81.9 per cent of equity in the joint ventureGiven
Standard Life's existing investment in the HDFC Group, this is the maximum investment
allowed under current regulations.
HDFC and Standard Life have a long and close relationship built upon shared values and
trust. The ambition of HDFC Standard Life is to mirror the success of the parent companies
and be the yardstick by which all other insurance company's in India are measured.

ABOUT CRISIL AND ICRA

CRISIL and ICRA (The Internet Rating Association) both are non-profit organizations being
set up for rating financial institutions.
CRISIL was incorporated in 1987 and in the next year it commenced the rating of
companies. In 1989-90 CRISIL started credit assessment service for banks and launches
CRISIL Rating Scan to announce new and current ratings and disseminates the CRISIL
ratings rationale. In 1992-93 CRISIL evolves a methodology and framework of bank ratings.
In the same year CRISIL introduces Rating Set-Debentures and CRISIL Rating Set-Fixed
Deposits and publishes CRISIL Rating Digest

VARIABLE RATE DEPOSIT: - Interest rate on variable deposit is linked to the benchmark
rate and will vary from time to time with benchmark rate. Benchmark rate is that rate which
is applicable on HDFC fixed rate deposit product for the corresponding period. Rate of
interest on the first day of interest period will be applicable for the entire interest period.
Deposit once placed cannot be interchanged between fixed and variable rate till the date of
maturity.

Benefits of an HDFC Individual Deposit:

Highest Safety
Tax benefit
Attractive Returns
63

Quick Loan Facility

Nomination Facility
Demand Draft Facility
High Service Standards
Electronic Clearing service

These benefits can be explained as follows: 1. Highest Safety: 'FAAA' and 'MAAA' rating affirmed for the eleventh consecutive year by
CRISIL and ICRA respectively.

2. Quick Loan Facility: Loan against deposit is available after 3 months from the date of
deposit up to 75% of the deposit amount subject to the other terms and conditions framed
by HDFC. Interest on such loans will be 2% above the deposit rate
3. Tax Benefits: TDS: No tax deduction at source on interest from deposits upto Rs.
5,000/- per branch in a Financial Year.

4. Attractive Returns: HDFC deposits are Available throughout the year and offer
Attractive, Assured returns to investors. Interest rates offered are higher than that offered
by most of the commercial banks.
5. Nomination Facility: Individual depositors, singly or jointly, can nominate under this
facility. In case the deposit is placed in the name of a minor only a person lawfully entitled to
act on behalf of the minor can make the nomination.
Power of attorney holder or any person acting in representative capacity as holder of an
office or otherwise cannot nominate.
The nominee shall have the right to receive the amount due in respect of deposit on death
of all the depositors and payment by HDFC to the nominee shall constitute full discharge to
HDFC of its liability in respect of the deposit.
64

6. Demand Draft Facility: Outstation depositors can send demand drafts after deducting
demand draft charges. This facility is not available to investors under Easy way Savings.
This facility is applicable for places where HDFC does not have an office.

7. High Service Standards: Depositors are offered across the counter services for new
deposits, renewals, repayments and loan against deposit facility. Further, all enquiries
through email, post, telephone and in person are attended to immediately.

8. Electronic Clearing Service: This facility is provided to depositors in select centers

whereby the interest will be credited directly to the depositors' bank account. The depositor
would receive a credit entry "ECS HDFC" in his passbook/bank statement. Intimation of
interest credited would be sent on an annual basis. Your bank will not levy any charge for
this facility as per present RBI guidelines.

Presently

this

facility

is

being

offered

by

us

at

the

following

centers

ECS Centers: Ahmadabad, Bangalore, Bhubaneswar, Kolkata, Chandigarh, Chennai,

Hyderabad, Jaipur, Kanpur, Mumbai, Nagpur, Nasik, New Delhi, Pune and Vadodara.

PERIOD
(MONTHS)

ANNUAL INCOME PLAN

RATE OF
MAXIMUM DEPOSIT WITHOUT
INTEREST
(% PER ANNUM)

TDS (Rs)
INDIVIDUALS

SENIOR
CITIZENS

12-23

5.75

86,000

80,000

24-35

6.00

83,000

76,000
65

36-59

6.50

76,000

71,000

60-84

6.75

74,000

68,000

Maximum Deposit Amount Rs. 5,000

Other main features attached to HDFC deposits: 1. Mode of acceptance: -Deposits can be made by cash/cheques/demand drafts. Cheques
and drafts are drawn in the favors of HOUSING DEVELOPMENT FINANCE
CORPORATION Ltd or HDFC Ltd and should be marked Account Payee Only.

2. Renewals and Repayment: - For renewals or repayment of deposit, the duly discharged
deposit receipt must be surrendered to HDFC at least a week before the date of maturity. A
crossed Account Payee cheque favoring the first named depositor will make repayment of
deposit amount.

3. Agents: - HDFC invites deposits through the channel of authorized agents. HDFC has
agent network of over 50,000 and a depositor base of around 1 million.

4. Premature Withdrawals: - premature withdrawals will not be allowed before completion

of 3 months from the date of deposit. In case of request for premature withdrawal after the
expiry of three months, the rates given in the following table shall apply: -

TABLE FOR PREMATURE WITHDRAWALS: Months completed from the date of Rate of interest payable
deposit
3 less than 6

No interest

6 less than 12

3.50% p.a

66

Fixed rate deposit:

2% less than the rate applicable for
the completed period.
Variable rate deposit:
12 less than maturity
2% less than the rate applicable for
the

completed

period

under

variable rate deposit product on

the respective interest reset dates.

67

POSITION OF HDFC DEPOSITS: HDFC has a depositor base of 1 million. Public deposits constitute approximately 80% of
the total deposits of the corporation. Deposits of HDFC for past few years are as follows: YEARS

DEPOSITS

1995-96

2512.69

1998-99

3502.19

1999-00

4423.79

2000-01

5252.40

2001-02

6223.85

2002-03

7249.83

2003-04

8491.02

2004-05

9121.55

2005-06

9337.65

2006-07

7840.09

Fixed deposits can be shown with the help of following diagram. The graph shows that
HDFC deposits are increasing upto 2005-06and showed a decline in 2006-07

68

10000
9000
8000
7000
6000
5000

DEPOSITS

4000
3000
2000
1000
0
1997-981998-991999-002000-012001-022002-032003-042004-052005-062006-07

FIXED
DEPOSITS FOR HDFC

COMPARISON OF INTEREST RATES OF FIXED DEPOSITS OF DIFFERENT

NATIONALISED BANKS
Interest rates for fixed deposits for different nationalized banks with respect to different time
period can be shown with the help of following graphs: Interest rates are for following banks: (1). HDFC
(2). State Bank of India
(3). Punjab and Sindh Bank
(4). Centurian Bank of Punjab
(5). Indus Ind Bank
(6). Bank of Baroda
(7). ICICI Bank

69

(8). IDBI Bank

(9). UTI Bank
(10). Standard chartered
(11). HSBC Bank
(12). ING Vyasya
(13). Union Bank of India
(14). State Bank of Patiala
In the above table we can see that HDFC Ltd provides maximum interest rates for the time
period of 1-2 years that is 7.50 %.
Fixed Deposit

Flexibility of tenure - 7 days to 10 years

Liquidity
o

Premature / Partial withdrawal permitted (subject to applicable charges)

Loan / Overdraft upto 90% of FD amount

Option of monthly / quarterly payout available

Competitive interest rate - Know interest rates for various tenures

Convenient ways to open a FD

o

Internet Banking

Phone banking

ICICI Bank Branch

What documentation is required to open a senior citizen FD?

While opening the account, the customer needs to provide proof of age establishing
that he/she is a Senior Citizen. To accomplish this, either of the following can be
submitted:
Secondary School Leaving Certificate (10th Class)

70

LIC Policy
Voters Identity Card
Pension Payment Order
Birth Certificate issued by the competent authority
Passport
Defence ID Card / Govt ID Card (Provided they have the cardholder's photo, signature
and date of birth)
PSU Issued ID Cards
Senior Citizen Cards issued by Indian Airlines / Indian Railways
PAN Card
INTEREST RATES ON FIXED DEPOSITS OF DIFFERENT BANKS
Indian Banks - Public Sector
BANK NAME / DURATION

1 - 2yrs

2 - 3yrs

3 - 5yrs

Allahabad Bank

8.00

8.25

8.25

Andhra Bank

9.00

9.25

8.60

Bank of Baroda

8.75

8.75

8.50

Bank of India

8.75

8.25

7.75

Bank of Maharashtra

8.30

8.30

8.30

Canara Bank

8.75

8.75

8.50

Central Bank of India

8.25

8.25

8.50

Corporation Bank

9.15

9.25

9.25

Dena Bank

8.50

8.50

8.25

IDBI Bank

8.75

9.00

9.25

Indian Bank

8.50

8.50

8.50

Indian Overseas Bank

8.25

8.25

8.75

Oriental Bank of Commerce

8.50

8.50

8.50

Punjab & Sind Bank

8.50

9.00

9.00

71

Punjab National Bank

8.75

8.50

8.50

State Bank of Bikaner&Jaipur

8.50

9.25

9.00

State Bank of Hyderabad

8.50

8.75

8.75

State Bank of India

7.75

8.25

8.25

State Bank of Mysore

8.75

8.50

8.50

State Bank of Patiala

8.50

9.00

8.25

State Bank of Travancore

8.50

8.75

8.75

Syndicate Bank

9.00

9.00

9.00

UCO Bank

8.00

8.25

8.25

Union Bank of India

8.00

8.75

8.75

United Bank of India

8.25

8.50

9.00

Indian Banks - Private Sector

BANK NAME / DURATION

1 year < 2 years

2 years < 3 years

3 years < 5 years

Axis Bank

8.75

8.25

7.00

City Union Bank

9.00

9.00

9.00

Development Credit Bank

7.50

7.75

7.75

HDFC Bank

8.00

8.25

8.25

ICICI Bank

8.00

8.25

8.50

IndusInd Bank

9.00

8.75

8.75

ING Vysya Bank

8.50

8.75

8.75

Karnataka Bank

9.75

9.50

9.25

Kotak Bank

8.75

9.00

9.00

Tamilnad Mercantile Bank

9.25

9.25

8.75

The Bank of Rajasthan Ltd

8.00

8.25

8.50

The Catholic Syrian Bank

8.60

8.80

8.80

The Dhanalakshmi Bank

8.60

8.75

8.75

72

The Federal Bank

9.25

8.75

8.75

The J & K Bank

8.50

8.50

8.50

The Karur Vysya Bank

10.00

9.75

9.00

The Lakshmi Vilas Bank

10.10

9.00

7.75

The South Indian Bank

9.25

8.75

8.75

TNSC Bank

9.00

8.50

8.50

Yes Bank

8.25

8.50

8.75

Home Loan Rate of Interest

( Last edited on : 08 May 2011 )

Bank

Interes
t
Rates

State Bank Of India

9.50% 10.25%

ICICI Bank

10% 10.75%

HDFC Ltd

9.75%10.25%

LIC Housing

9.90% 10.75%

DHFL

10.25% 11%

India Bulls

9.75% 10.25%

Union Bank of India

10.50% 11.75%

Bank of Baroda

10.50% 12%

73

Personal Loan
Req_Loan_Perso

Full Name :

PL main page

Please Select

City :

/apply-personal-lo

Occupation :

Please Select

DD
Annual
Income :

DOB :

MM

Other City :

Other City

Loan Amount :

YYYY

+91
Mobile :

Pincode :

Email ID :

Company
Name :

Credit Card Holder?

I have read the Privacy Policy and agree to the Terms And Condition.

Yes

No

Submit

( Last edited on : 08 May 2012 )

What
is
a
Personal
loan?
Personal Loan is an unsecured loan for personal use which doesnt require any security or
collateral and can be availed for any purpose, be it a wedding expenditure, a holiday or
purchasing consumer durables, the personal loan is very handy & caters to all your needs.
The amount of loan can be ranged from Rs. 50,000 Rs. 20 lakh & the tenure for repaying
the loan varies from 1 to 5 years. More Information about personal loan section click articles
about personal loan and Personal loan must read.

Instant Personal Loan Quote From All Banks

Comparison Of Personal Loan Interest Rate Of Various Bank

Name Of

Effective

EMI

No.Of EMI

Processing
74

Interest

Fee

Bank

Rate

HDFC

14%

3491

36

2%

ICICI BANK

15.5%

3418

36

2% to 3%

PNB

13%

3369

36

BANK

75

RESEARCH METHDOLOGY
INTRODUCTION
Research in common parlance refers to a search for knowledge. One can also define
research as a scientific and systematic search for pertinent information on a specific topic.
Infact, research is an art of scientific investigation. Research is a systematized effort to
gain new knowledge
Research is an original contribution to the existing knowledge for its advancement. It is the
pursuit of truth with the help of study,observation, comparison and experiment. In short
knowledge through objective and systematic method of finding solution to a problem is
research. Research refers to the systematic method consisting of enunciating the problem,
formulating the hypothesis, collection of the facts .

Problem Definition / Title of the Study:A Study On Comparative Analysis Of Fixed Deposits, Home Loan & Personal Loan Of
HDFC Bank With PSUs.

Duration of the project:My report on Comparative Analysis Of Fixed Deposits, Home Loan & Personal Loan Of
HDFC Bank With PSUs., have been completed in 22 days.

Objective Of The Study:

The basic objective of my comparative analysis was to analyze the general view of public
on HDFC fixed deposits, personal loans$ home loans.

The main aim of the project is to study the current position of HDFC deposits , personal
loans$ home loans as compared to PSUs by taking public view with the help of
questionnaire and then afterwards study the feedback got from the same.
76

The researchs one of the aims was to find out the current position of HDFC deposits
personal loans $ home loans as compared to other competitive PSUs banks and finding
out different areas of improvement where HDFC is lagging behind.

Type of Research :Descriptive Research: Descriptive research includes fact finding enquiries of different
kinds. The major purpose of descriptive research is description of the state of affairs as it
exists at present. Researcher has no control over the variables of this type of research.

Data Collection:
Primary Data: Data is collected primarily through personal contact, meeting, interview and
questionnaire with the concerned authority of the organization and respondents
Secondary Data:
Secondary data was collected by gathering information from concerned personnel at these
firms and the rest was collected from the various journals and websites

Sample Size & Method Of Selecting Sample:The sampling method so as to obtain a representative sample is the Non-probability
sampling methods. Under Non-probability sampling, the question addressed the basic
questions relating to the Customer Preferences Regarding To The Fixed Deposits, Home
Loan & Personal Loan Of HDFC Bank.
A random sample of 100 people was taken. I selected the respondents to the survey on the
basis of judgment sampling with convenience taken into account.

Scope of the study:

To know the customer prefrence towards the hdfc bank.

Which factor attracts the customer most.

To know the possible drawbacks of the Bank.

To do the competetive analysis.

Limitations Of The Study:-

The survey is conducted in very short time. Hence shortage of time is a big limitation for the
survey.

We use questionnaires tool for data collection.

77

In the Jaipur city, Peoples are very busy in work. They do not give enough time to answer
questions.

Due to time constraint the survey could be conducted only in Jaipur. This proved to be a
limitation because the results thus obtained cannot be accurately generalized for the entire
country.

Indifference and lack of interest disposed by a few respondents leading to unauthentic

responses.

78

FACTS AND FINDINGS

52% customers are banking with private banks and these are the most preferred banks.
Income and growth are the basic purpose of investment in the Banks
Brand and timings are the important factor while choosing a bank
85% customers feel that services of private banks are satisfactory and above the mark of

public sector bank.

In public sector banks 31% of customers like to borrow personal loan from PNB and after

that SBI and BOB are preferred.

Brand image plays an important role in selecting a bank for personal loans.
39% customers find rate of personal loans competitive with HDFC Bank.
73% of the customers are satisfied with the skills of HDFCs employees as compared to
PSUs.
Interest rates and banking staff operation are the main drawbacks of HDFC in providing
loans and deposits.
79

80

1. OCCUPATION:
Govt. Service
Bus. Man
Professional
Others

8
32
14
46

30%
25%
20%
15%
10%
5%
0%
Banking staff operation

Interest rates

INTERPRETATION:
81

In my survey, I got a good mix of respondents from all sectors. I studied the responses of
14% Professionals, 8% Govt. Service personnel, 32% businessman and 46% from other
categories.

2. Income group under which you fall in?

Below 150000

26

150000-300000

42

300000-450000

18

450000$above

14

30%
25%
20%
15%
10%
5%
0%
Banking staff operation

Interest rates

INTERPRETATION:
The income group I got in my survey was very beneficial as it covers wide range of income
groups. 42% respondents were belong to income group of 1,50,000-3,00,000; 26% were
below 1,50,000; 18% were of 3,00,000-4,50,000 and 14% were having income 4,50,000 &
above.

3. What is your basic purpose of investment in banks?

82

Savings

12

Growth

22

Income

12

Safety

22

Tax saving

32

30%
25%
20%
15%
10%
5%
0%
Banking staff operation

Interest rates

INTERPRETATION:
People invest in banks for various reasons. Most of the respondents in survey were
interested in Tax saving factor followed by income, savings and growth.

4. Which bank you are banking with and which is your most preferred
bank?
83

PSU bank

10

Private bank

44

Cooperative bank

26

Foreign bank

20

30%
25%
20%
15%
10%
5%
0%
Banking staff operation

Interest rates

INTERPRETATION:
I found that private banks are more preferred upon PSU banks as 44% respondents were in
favor of the same. 10%respondents are comfortable in dealing with PSU banks while only
26% and 20% were in favor of cooperative and Foreign banks.

5. Which factor you consider most while choosing a bank?

84

Services
Brand
Timing
Network
Investment services

10
18
22
18
32

30%
25%
20%
15%
10%
5%
0%
Banking staff operation

Interest rates

INTERPRETATION:
Survey reveals that respondents have different preference in choosing a bank. 18% give
preference to brand, 22% were concerned with timings; services provided by banks were
given preference by 10% of respondents. Network 18% and Investment services 32% were
preferred by respondents.

85

6. Do you feel that services of private bank like HDFC are satisfactory
and above the mark of public sector banks?
YES

40

NO

60

30%
25%
20%
15%
10%
5%
0%
Banking staff operation

Documentation

INTERPRETATION:
Survey reveals that most of the customers of private banks are not satisfied their services
offered. It constitutes of 40% while 60% feels that the performance of Private bank were not
up to the mark.

86

7. From which bank you would like to borrow personal loan as well as
home loan after HDFC?
SBI

16

PNB

10

BOB

18

Allahabad bank

38

Other psu's

18

30%
25%
20%
15%
10%
5%
0%
Banking staff operation

Interest rates

INTERPRETATION:
Survey reveals that respondents would prefer first Allahabad bank to borrow loans af. BOB
and other psu were second option as 18% of the respondents were in their favor. Rest
would go to other PNB banks for the same.

87

8. Why do you prefer a particular bank to borrow personal loan?

Time saving

12

Interest rate

42

Brand image

46

30%
25%
20%
15%
10%
5%
0%

INTERPRETATION:
Chart shows that most of the respondents i.e. 46% give brand image as a preference while
borrowing loan. Interest rates is preferred by 42% while time saving is preferred by 12% of
the respondents.

88

9. Which of the following banking organization providing the rate of

personal loan interest found competitive with HDFC bank?
SBI

22

PNB

24

BOB

28

Allahabad bank

12

Other psu's

14

30%
25%
20%
15%
10%
5%
0%
Banking staff operation

Interest rates

INTERPRETATION:
28% of the respondents feel that Interest rates of BOB in personal loans are highly
competitive with what HDFC offers. 24% of respondents think PNB is competitive enough in
same terms while 22% feels that SBI has good interest rate to offer in personal loan.

89

10. Which of the following banking organization providing the rate of

fixed deposits found competitive with HDFC bank?
SBI
PNB
BOB
Allahabad bank
Other psu's

28
32
20
12
8

30%
25%
20%
15%
10%
5%
0%
Banking staff operation

Interest rates

INTERPRETATION
pnb provides very good and competitive loan as compared to other PSUs when compared
to HDFC bank as, 32% of the respondents were in favor of it. SBI and BOB were rated as
second and third with 28% and 20% respectively.

90

11. Which of the following banking organization providing the home

loans, rate of interest found competitive with HDFC?

SBI
PNB
BOB
Allahabad bank
other psu's

32
18
22
16
12

30%
25%
20%
15%
10%
5%
0%
Banking staff operation

Interest rates

INTERPRETATION:
SBI again has the highly competitive rates to offer on Home Loan as compared to HDFC
rates. BOB and PNB again rated as second and third spot with 22% and 18% were in favor.
16% feel that Allahabad bank has a competitive rates to offer with HDFC.

91

12. Are you satisfied with the skills of HDFC employees as compared to
psu?
YES

80

NO

20

30%
25%
20%
15%
10%
5%
0%
Banking staff operation

Documentation

INTERPRETATION:
Survey reveals that most of the respondents were highly satisfied with the skills of HDFC
bank employees which constitute 80%.Only 20% of the respondents feel that there is a
scope to improve skills of the employees.

+
92

13. What could be the possible drawbacks of HDFC bank in providing

loans and deposits?
Banking staff operation
Documentation
Interest rates
Delay in handlinggrievances& queries

22
28
22
28

30%
25%
20%
15%
10%
5%
0%
Banking staff operation

Interest rates

INTERPRETATION:
Survey reveals that there are some serious drawbacks in HDFC bank as far as loans and
deposits are concerned. 22% of the respondents feels that it is their interest rates; equally
with it Bank staff operations and handling process also contribute to the drawbacks. 28%
feels that the documentation poses a problem in dealing with HDFC.

93

STRENGTHS

94

1. Right strategy for the right products.

2. Superior customer service vs. competitors.
3. Great Brand Image.
4. Products have required accreditation.
5. High degree of customer satisfaction.
6. Good place to work
7. Lower response time with efficient and effective service.
8. Dedicated workforce aiming at making a long-term career in the field.

WEAKNESS

95

1. Some gaps in range for certain sectors.

2. Customer service staff needs training.
3. Processes and systems, etc
4. Management cover insufficient.
5. Sect oral growth is constrained by low unemployment levels and competition for staff
6.

OPPORTUNITIES

1. Profit margins will be good.

96

2. Could extend to overseas broadly.

3. New specialist applications.
4. Could seek better customer deals.
5. Fast-track career development opportunities on an industry-wide basis.
6. An applied research center to create opportunities for developing techniques to provide
added-value services.

THREATS

1. Legislation could impact.

2. Great risk involved

97

3. Very high competition prevailing in the industry.

4. Vulnerable to reactive attack by major competitors.
5. Lack of infrastructure in rural areas could constrain investment.
6. High volume/low cost market is intensely competitive

CONCLUSION
A survey of the people has been conducted to know the general view of public on HDFC
fixed deposits, personal loans$ home loans and to find out the current position of HDFC
deposits, personal loans $ home loans as compared to other competitive PSUs banks .
It is observed that 52% customers are banking with private banks and these are the most
preferred banks.
Customer gives importance to Brand and timings while choosing a bank. It is also
observed that mostly customers are satisfied with the skills of HDFCs employees as
compared to PSUs.
It is concluded from the facts collected that customers feel that services of private bank like
HDFC are satisfactory and above the mark of public sector banks.

98

SUGGESTIONS AND RECOMMENDATIONS

Bank should provide effective publicity of new product launched & educate the customer so

that they can easily use and avail all the facilities available on the entire product.
HDFC bank should be very careful while reconsidering the price & offering rate of interest of

fixed deposit & loans.

Bank should alter its existing service to satisfy the customer needs.
Bank should focus on customer satisfaction.

99

Questionnaire
Name :
Age:

1. Occupation
a) Govt. service
b) Business man

2. Income group under which you fall in?

a) Below 1,50,000
b) 3,00,000-4,50,000

c) Professional
d) Others

c)1,50,000-3,00,000
d) 4,50,000 & above

3. When the respondents were ask about their basic purpose of investment in banks?
a) Savings
c) Growth
b) Income
d) Safety
e)Tax saving
100

4. Which bank you are banking with and which is your most preferred bank?
a) PSU bank
c)Private bank
b) Cooperative bank
d) oreign bank
5. Which factor you consider most while choosing a bank?
a)Services
c)Brand
b)Timings
d)Network
e)Investment services
6. Do you feel that services of private bank like HDFC are satisfactory and above
the mark of public sector banks?
a)Yes
b) No

7. From which Bank you would like to borrow personal loan as well as home loan?
a) SBI Bank
c)PNB
b) BOB
d) Allahabad Bank
e) Other PSUs

8. Why do you prefer a particular bank to borrow personal loan?

a) Time saving
b) Interest rate
c) Brand image

9. Which of the following banking organization providing the rate of personal loan
interest found competitive with HDFC Bank?
a) SBI Bank
c) PNB
b) BOB
d) Allahabad Bank
e) Other PSUs
10. Which of the following banking organization providing the rate of Fixed Deposits
found competitive with HDFC Bank?
a) SBI Bank
c) PNB
b) BOB
d) Allahabad Bank
e)Other PSUs

11. Which of the following banking organization providing the rate of Home loans
interest found competitive with HDFC?
a) SBI Bank
c) PNB
b) BOB
d) Allahabad Bank
101

e) Other PSUs

12. Are you satisfied with the skills of HDFCs employees as compared to PSU?
a) YES
b) NO
13. What could be the possible drawbacks of HDFC bank in providing loans and
deposits?
a) Banking staff operations
b) Documentation
c) Interest rates
d) Delay in Handling grievances & queries

102

103

BIBLIOGRAPHY
BOOKS:
Kothari C. R.: Research Methodology=methods and techniques.
Kotler Phillip: Marketing Management Eleventh revised edition, 2002.
Gupta S. P.: Statistical Methods Thirteen revised edition, 2001.
Khan, M Y , Financial services, Tata McGraw-Hill, New Delhi 2006.
Khan, M Y ,Indian Financial system, Tata McGraw-Hill, New Delhi 2007

WEBLIOGRAPHY

http://finance.indiamart.com/investment_in_india/banking_in_india.html
http://finance.indiamart.com/investment_in_india/nationalisation_banks.html
http://en.wikipedia.org/wiki/banking_in_india
http://en.wikipedia.org/wiki/indian_bank
http://www.citefin.com/1405-history-banking-india.html
http://en.wikipedia.org/wiki/bank
http://moneycentral.msn.com/banking/services/home.asp
Http://catalogs.indiamart.com/services/banking-services.html
http://www.hdfcbank.com/personal/default.htm
http://www.hdfcbank.com/personal/accounts/default.htm
http://www.hdfcbank.com/personal/loans/default.htm
http://www.hdfcbank.com/personal/cards/default.htm
http://www.hdfcbank.com/personal/investments/default.htm
http://www.hdfcbank.com/personal/forex/default.htm
http://www.hdfcbank.com/personal/payments/default.htm
http://www.hdfcbank.com/personal/preferred/default.htm
http://www.hdfcbank.com/personal/pvt_banking/default.htm
http://www.hdfcbank.com/personal/access/default.htm
http://www.hdfcbank.com/personal/prd_glance.htm

104

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a

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a

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c

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a

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d

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c

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c

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4
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1

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2

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3

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108

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