CHAPTER-II

REVIEW OF LITERATURE

1
 REVIEW OF LITERATURE

LONG TERM INVESTMENT DECISIONS

These days almost everyone is investing in something… even if it’s a savings account
at the local bank or a checking account the earns interest or the home they bought to live in.

However, many people are overwhelmed when they being to consider the concept of
investing, let alone the laundry list of choices for investment vehicles. Even though it may
seem the everyone and their brothers knows exactly who, what and when to invest in so they
can make killing, please don’t be fooled. Before you can confidently choose an investment
path that will help you achieve your personal goals and objectives, it’s vitally important that
you understand the basics about the types of investments available. Knowledge is your
strongest ally when it comes to weeding out bad investment advice and is crucial to
successful investing whether you go at it alone or use a professional.

The investment option before you are many. Pick the right investment tool based on the risk
profile, circumstance, time available etc. if you feel the market volatility is something, which
you can live with then buy stocks. However, remember that risk and returns are directly
proportional to each other. Higher the risk, higher the returns.

TYPES OF INVESTMENT OPTIONS

A brief preview of different investment options is given below:

Equities:

Investment in shares of companies is investing in equities.

Stocks can be brought/sold from the exchanges (secondary market) or via IPO’s – Initial
Public Offerings (primary market). Stocks are the best long-term investment options wherein
the market volatility and the resultant risk of losses, if given enough time, are mitigated by
the general upward momentum of the economy. There are two streams of revenue generation
from this form of investment.

1. Dividend: Periodic payments made out of the company’s profits are termed as dividends.

2
2. Growth: The price of the stock appreciates commensurate to the growth posted by the
company resulting in capital appreciation.

On an average an investment in equities in India has a return of 25%. Good portfolio

management, precise timing may ensure a return of 40% or more. Picking the right stock at
the right time would guarantee that your capital gains i.e. growth in market value of stock
possessions, will rise.

Bonds: It is a fixed income (debt) instrument issued for a period of more than one year with
the purpose of raising capital. The central or state government, corporations and similar
institutions sell bonds. A bond is generally a promise to repay the principal along with fixed
rate of interest on a specified date, called as the maturity date. Other fixed income
instruments include bank deposits, debentures, preference shares etc.

The average rate of return on bond and securities in India has been around 10-14% p.a.

Precious Projects: Precious objects are items that are generally small in size but highly
valuable in monetary terms. Some important precious objects are like the gold, silver,
precious stones and also the unique art objects.

ALL ABOUT EQUITY INVESTMENT

Stocks are investments that represent ownership --- or equity --- in a corporation.
When you buy stocks, you have an ownership share --- however small --- in that corporation
and are entitled to part of that corporation’s earnings and assets. Stock investors --- called
shareholders or stockholders --- make money when the stock increases in value or when the
company the issued the stock pays dividends, or a portion of its profits, to its shareholders.

Some companies are privately held, which means the shares are available to a limited number
of people, such as the company’s founders, its employees, and investors who fund its
development. Other companies are publicly traded, which means their shares are available to
any investor who wants to buy them.

The IPO

A company may decide to sell stock to the public for a number of reasons such as
providing liquidity for its original investor or raising money. The first time a company issues
stock is the initial public offering (IPO), and the company receives the proceeds from that

3
sale. After that, shares of the stock are traded, or brought and sold on the securities markets
among investors, but the corporation gets no additional income. The price of the stock moves
up or down depending on how much investors are willing to pay for it.

Occasionally, a company will issue additional shares of its stocks, called a secondary
offering, to raise additional capital.

Types of Stocks

With thousands of different stocks trading on U.S. and international securities markets, there
are stocks to suit every investor and to complement every portfolio.

For example, some stocks stress growth, while others provide income. Some stocks
flourished during boom time, while others may help insulate your portfolio’s value against
turbulent or depressed markets. Some stocks are pricey, while others are comparatively
inexpensive. And some stocks are inherently volatile, while others tend to be more stable in
value.

Growth & Income

Some stocks are considered growth investments, while others are considered value
investments. From an investing perspective, the best evidence of growth is an increasing
price over time. Stocks of companies that reinvest their earnings rather than paying them out
as dividends are often considered potential growth investments. So are stocks of young,
quickly expanding companies. Value stocks, in contrast, are the stocks of companies that
problems have been underperforming their potential, or are out of favor with investors. As
result, their prices tend to be lower than seems justified, though they may still be paying
dividends. Investors who seek out value stocks expect them to stage a comeback.

4
2.1 THEORETICAL REVIEW

Investment decision

Introduction:

These days almost everyone is investing in something… even if it’s a savings account
at the local bank or a checking account the earns interest or the home they bought to live in.

However, many people are overwhelmed when they being to consider the concept of
investing, let alone the laundry list of choices for investment vehicles. Even though it may
seem the everyone and their brothers knows exactly who, what and when to invest in so they
can make killing, please don’t be fooled. Before you can confidently choose an investment
path that will help you achieve your personal goals and objectives, it’s vitally important that
you understand the basics about the types of investments available. Knowledge is your
strongest ally when it comes to weeding out bad investment advice and is crucial to
successful investing whether you go at it alone or use a professional.

The investment option before you are many. Pick the right investment tool based on the risk
profile, circumstance, time available etc. if you feel the market volatility is something, which
you can live with then buy stocks. However, remember that risk and returns are directly
proportional to each other. Higher the risk, higher the returns.

5
Types of investment options
A brief preview of different investment options is given below:

Equities:

Investment in shares of companies is investing in equities.

Stocks can be brought/sold from the exchanges (secondary market) or via IPO’s – Initial
Public Offerings (primary market). Stocks are the best long-term investment options wherein
the market volatility and the resultant risk of losses, if given enough time, are mitigated by
the general upward momentum of the economy. There are two streams of revenue generation
from this from of investment.

1. Dividend: Periodic payments made out of the company’s profits are termed as
dividends.

2. Growth: The price of the stock appreciates commensurate to the growth posted by the
company resulting in capital appreciation.

On an average an investment in equities in India has a return of 25%. Good portfolio

management, precise timing may ensure a return of 40% or more. Picking the right stock at
the right time would guarantee that your capital gains i.e. growth in market value of stock
possessions, will rise.

Bonds: It is a fixed income (debt) instrument issued for a period of more than one year with
the purpose of raising capital. The central or state government, corporations and similar
institutions sell bonds. A bond is generally a promise to repay the principal along with fixed
rate of interest on a specified date, called as the maturity date. Other fixed income
instruments include bank deposits, debentures, preference shares etc.

The average rate of return on bond and securities in India has been around 10-14% p.a.

Precious Projects: Precious objects are items that are generally small in size but highly
valuable in monetary terms. Some important precious objects are like the gold, silver,
precious stones and also the unique art objects.

6
All about equity investment

Stocks are investments that represent ownership --- or equity --- in a corporation.
When you buy stocks, you have an ownership share --- however small --- in that corporation
and are entitled to part of that corporation’s earnings and assets. Stock investors --- called
shareholders or stockholders --- make money when the stock increases in value or when the
company the issued the stock pays dividends, or a portion of its profits, to its shareholders.

Some companies are privately held, which means the shares are available to a limited number
of people, such as the company’s founders, its employees, and investors who fund its
development. Other companies are publicly traded, which means their shares are available to
any investor who wants to buy them.

The IPO
A company may decide to sell stock to the public for a number of reasons such as
providing liquidity for its original investor or raising money. The first time a company issues
stock is the initial public offering (IPO), and the company receives the proceeds from that
sale. After that, shares of the stock are traded, or brought and sold on the securities markets
among investors, but the corporation gets no additional income. The price of the stock moves
up or down depending on how much investors are willing to pay for it.
Occasionally, a company will issue additional shares of its stocks, called a secondary
offering, to raise additional capital.
Types of Stocks
With thousands of different stocks trading on U.S. and international securities markets, there
are stocks to suit every investor and to complement every portfolio.
For example, some stocks stress growth, while others provide income. Some stocks
flourished during boom time, while others may help insulate your portfolio’s value against
turbulent or depressed markets. Some stocks are pricey, while others are comparatively
inexpensive. And some stocks are inherently volatile, while others tend to be more stable in
value.

Growth & Income

Some stocks are considered growth investments, while others are considered value
investments. From an investing perspective, the best evidence of growth is an increasing
price over time. Stocks of companies that reinvest their earnings rather than paying them out

7
as dividends are often considered potential growth investments. So are stocks of young,
quickly expanding companies. Value stocks, in contrast, are the stocks of companies that
problems have been underperforming their potential, or are out of favor with investors. As
result, their prices tend to be lower than seems justified, though they may still be paying
dividends. Investors who seek out value stocks expect them to stage a comeback.

Market Capitalization
One of the main ways to categorize stocks is by their market capitalization, sometimes known
as market value. Market capitalization (market cap) is calculated by multiplying a company’s
current stock price by the number of its existing shares. For example, a stock with a current
market value of $30 a share and a hundred million shares of existing stock would have a
market cap of $3 billion.

P/E ratio
A popular indicator of a stock’s growth potential is its price-to-earnings ratio, or P/E – or
multiple – can help you gauge the price of a stock in relation to its earnings. For instance, a
stock with a P/E of 20 is trading at a price 20 times higher than its earnings.

A low P/E may be a sign that a company is a poor investment risk and that its earnings are
down. But it may also indicate that the market undervalues a company because its stock price
doesn’t reflect its earnings potential. Similarly, a stock with a high P/E may live up to
investor expectations of continuing growth, or it may be overvalued.

Investor demand
People buy a stock when they believe it’s a good investment, driving the stock price up. But
if people think a company’s outlook is poor and either don’t invest or sell shares they already
own, the stock price will fall. In effect, investor expectations determine the price of a stock.

For example, if lots of investors buy stock A, its price will be driven up. The stock becomes
more valuable because there is demand for it. But the reverse is also true. If a lot of investors
sell stock Z, its price will plummet. The further the stock price falls, the more investors sell it
off, driving the price down even more.

The Dividends
The rising stock price and regular dividends that reward investors and give them confidence
are tied directly to the financial health of the company.

8
Dividends, like earnings, often have a direct influence on stock prices. When dividends are
increased, the message is that the company is prospering. This in turn stimulates greater
enthusiasm for the stock, encouraging more investors to buy, and riving the stock’s price
upward. When dividends are cut, investors receive the opposite message and conclude that
the company’s future prospects have dimmed. One typical consequence is an immediate drop
in the stock’s price.

Companies known as leaders in their industries with significant market share and name
recognition tend to maintain more stable values than newer, younger, smaller, or regional
competitors.

Buying and Selling Stock

To buy or sell a stock you usually have to go through a broker. Generally the more guidance
you want from your broker the higher the broker’s fee. Some brokers usually called full-
service brokers provide a range of service beyond filling buy and sell orders for clients such
as researching investments and helping you develop long and short-term investment goals.

Discount brokers carry out transactions for clients at lower fees than full-service brokers but
typically offer more limited services. And for experienced investors who trade often and in
large blocks of stock there are deep-discount brokers whose commissions are even lower.

Online Trading is the cheapest way to trade stocks. Online brokerage firms offer substantial
discounts while giving you fast access to your accounts through their Web Sites. You can
research stocks track investments and you to trade before and after normal market hours.
Most of today’s leading full-service and discount brokerage firm make online trading
available to their customers. Online trading is an extremely cost-effective option for
independent investors with a solid strategy who are willing to undertake their own research.
However the ease of making trades and the absence of advice may tempt some investors to
trade in and out of stocks too quickly and magnify the possibility of locking in short-term
losses.

Volatility

One of the risks you’ll need to plan for as a stock investor is volatility. Volatility is the speed
with which an investment gains or losses value. The more volatile an investment is the more
you can potentially make or lose in the short term.

9
Managing Risk
One thing for certain: Your stock investment will drop in value at some point. That’s what
risk is all about. Knowing how to tolerate risk and avoid selling your stocks off in a panic is
all part of a smart investment strategy.

Setting realistic goals allocating and diversifying your assets appropriately and taking a long-
term view can help offset many of the risks of investing in stocks. Even the most speculative
stock investment with its potential for large gains may play an important role in a well-
diversified portfolio.

10
All ABOUT BONDS INVESTMENT

Have you ever-borrowed money? Of course you have whether we hit our parents up
for a few bucks to buy candy as children or asked the bank for a mortgage most of us have
borrowed money at some point in our lives.

Just as people need money so do companies and Governments. A company needs funds to
expand into new markets, while governments need money for everything from infrastructure
to social programs. The problem large organizations run into is that they typically need far
more money than the average bank can provide. The solution is to raise money by issuing
bonds (or other debt instruments) to a public market. Thousands of investors then each lend a
portion of the capital needed. Really a bond is nothing more than a loan for which you are the
lender. The organization that sells a bond is known as the issuer. You can think of a bond as
an IOU given by a borrower (the issuer) to a lender (the investor).

Of course, nobody would loan his or her hard-earned money for nothing. The issuer of a bond
must pay the investor something extra for the privilege of using his or her money. This
‘extra’ comes in the form of interest payments, which are made at a predetermined rate and
schedule. The interest rate is often referred to as the coupon. The date on which the issuer
has to repay the amount borrowed (known as face value) is called the maturity date. Bonds
are known as fixed-income securities because you know the exact amount of cash you’ll get
back if you hold the security until maturity. For example, say you buy a bond with a face
value of $1000 a coupon of 8% and a maturity of 10 years. This means you’ll receive a total
of $80 ($1000*8%) of interest per year for the next 10 years. Actually because most bonds
pay interest semi-annually you’ll receive two payments of $40 a year for 10 years. When the
bond matures after a decade, you’ll get your $1000 back.

Face Value / Par Value

The face value (also known as the par value or principal) is the amount of money a holder
will get back once a bond matures. Newly issued bond usually sells at the par value.
Corporate bonds normally have a par value of $1000 but this amount can be much greater for
government bonds. What confuses many people is that the par value is not the price of the
bond. A bond’s price fluctuates throughout its life in response to a number of variables (more

11
on this later). When a bond trades at a price above the face value, it is said to be selling a
premium. When a bond sells below face value it is said to be selling at a discount.

Coupon (The Interest Rate)

The coupon is the amount the bondholder will receive as interest payments. It’s called a
‘coupon’ because sometimes there are physical coupons on the bond that you tear off and
redeem for interest. However this was more common in the past. Nowadays records are more
likely to keep electronically.

As previously mentioned most bonds pay interest every six months but it’s possible for them
to pay monthly, quarterly or annually. The coupon is expressed as a percentage of the par
value. If a bond pays a coupon of 10% and its par value is $1000 then it’ll pay %100 of
interest a year. A rate that stays as a fixed percentage of the par value like this is a fixed-rate
bond. Another possibility is an adjustable interest payment known as a floating-rate bond. In
this case the interest rate is tied to market rates through an index such as the rate on Treasury
bills.

You might think investors will pay more for a high coupon than for a low coupon. All things
being equal a lower coupon means that the price of the bond will fluctuate more.

Maturity
The maturity date is the date in the future on which the investor’s principal will be repaid.
Maturities can range from as little as one day to as long as 20 years (though terms of 100
years have been issued).

A bond that matures in one year is much more predictable and thus less risky than a bond that
matures in 20 years. Therefore in general the longer the time to maturity the higher the
interest rate. Also all things being equal a longer-term bond will fluctuate more than a
shorter-term bond.

12
Bond Rating
Grade Risk
Moody’s S&P / Fitch

AAA AAA Investment Highest Quality

Aa AA Investment High Quality

A A Investment Strong

Baa BBB Investment Medium Grade

Ba, B BB, B Junk Speculative

Highly
Caa/Ca/C CCC/CC/C Junk
Speculative

C D Junk In Default

Notice that if the company falls below a certain credit rating, its grade changes from
investment quality to junk status. Junk bonds are aptly named: they are the debt of
companies in some sort of financial difficulty. Because they are so risky, they have to offer
much higher yields than any other debt. This brings up an important point: not all bonds are
inherently safer than stocks. Certain types of bonds can be just risky, if not riskier, than
stocks.

Yield to Maturity
Of course, these matters are always more complicated in real life. When bond investor refers
to yield, maturity (YMT). YTM is more advanced yield calculation that show the interest
payment you will receive (and assumes that you will reinvest the interest payment at the same
rate as the current yield on the bond) plus any gain (if you purchased at discount) or loss (if
you purchased at a premium).

Knowing how to calculate YTM isn’t important right now. In fact, the calculation is rather
sophisticated and beyond the scope of this tutorial. The key point here is that YTM is more
accurate and enables you to compare bond with different maturities coupons.

13
Different Types of Bonds

Government Bonds
In general, fixed-income securities are classified according to the length of time before
maturity. These are the three main categories:

Bill – debt securities maturing in less than one year,

Notes – debt securities maturing in one to 10 years.

Bonds - debt securities maturing in more than 10 years.

Municipal Bonds
Municipal bonds, known as “munis”, are the next progression in terms of risk. Cities don’t
go bankrupt that often, but it can happen. The major advantage to munis is that the returns
are free from federal tax. Furthermore, local governments will sometimes make their debt
non-taxable for residents, thus making some municipal bonds completely tax-free. Because
of these tax savings, the yield on a muni a usually lower than that of a taxable bond.
Depending on your personal situation, a muni can be great investment on an investment on an
after-tax basis.

Corporate Bonds
A company can issued bonds just as it can issue stock. Large corporations have a lot of
flexibility as to how much debt they can issue: the limit is whatever the market will bear.
Generally, a short-term corporate bond is less than five years; intermediate is five to 12 years,
and long term is over 12 years.

Corporate bonds are characterized by higher yi8eld because there is a higher risk of a
company defaulting than a government. The upside is that they can also be the most
rewarding fixed-income investments because of the risk the investor must take on. The
company’s credit quality is very important: the higher the quality, the lower the interest rate
the investor receives.

14
Risks

As with any investment, there are risks inherent in buying even the most highly related
bonds. These risks can be difficult to anticipate, but learning how to better recognize the
warning signs and knowing how to respond will help you succeed as a bond investor.

15
2.2 ARTICLE

Litarature review-1

Title of the article :The 3 Biggest Risks To Chimera Investment Corporation

Investopedia |

Updated February 23, 2018 AAA |

Whenever you invest in a leveraged financial fund or are thinking about doing so, it's
important to know the risks that could weigh on its returns. I say that because companies like
Chimera Investment Corporation have a tendency to be innately unstable, facing the duel
threat of illiquidity and insolvency at a moment's notice if investor sentiment turns in the
opposite direction.

What follows, in turn, are three of the biggest risks that face Chimera, a New York-based
mortgage REIT founded less than a decade ago.

While any company is susceptible to mismanagement, the risk is greatest when dealing with
leveraged financial firms. This follows from the fact that the entire business model of a
mortgage REIT like Chimera is predicated on making prudent decisions about buying the
right assets, at the right prices, and at the right time.

In Chimera's case, even a cursory review of its past shows that it has failed miserably at this.
Founded in the midst of the financial crisis, Chimera originally specialized in holding non-
agency mortgage-backed securities, many of which were stuffed to the gills with toxic
subprime mortgages.

16
Literature review-2

Author: Brian Perry

Title of the article :Safety and Income: Introduction

Broadly speaking, there are three main reasons why an individual might wish to save and
invest. The first reason is to protect their hard-earned money and ensure its safety. The
second reason is to generate current income with which to meet expenses and the third is a
desire to grow their principal and achieve capital gains. This tutorial will examine investment
strategies designed to meet those first two goals: safety and income.

The tutorial will begin with a discussion of why an investor might wish to focus upon safety
and income, followed by important caveats regarding this investment approach. The tutorial
will then move on to examine various asset classes that might be able to meet the investment
goals of principal safety and income generation. The asset classes discussed will include
dividend paying stocks, bonds, various bank products, guaranteed income products, and real
assets such as gold or real estate. Following this discussion of available asset classes, the
tutorial will conclude with an examination of the role of safety and income within the larger
portfolio management process.

Having read this tutorial, individuals will have a

better understanding of the importance of principal safety and income generation in their
overall investment program. Readers will also better understand asset classes that are
available to them

17
Literature review-3

Author: By Kent Thune

Title of the article :Mutual Funds Expert

Best Tips on Mutual Fund Basics

Fund Selection, Analysis, Diversification, Taxation, Best Practices & More

It's never too early or too late to review the basics of investing with mutual funds. Check out
this easy list to get started or to get back on track toward investing success. Here are the 17
best tips for investing success with mutual funds, from beginning, to selection, to analysis to
building a portfolio, to taxation and more...

1. How to Get Started Investing With Mutual Funds

Investing begins before buying the first mutual fund (or prior to buying the next one). If you
are just getting started, you may want to try beginning with a balanced fund. You will also
want to ask questions: What is it that you would like to accomplish with your savings? Do
you have specific goals, such as saving for retirement, or do you have some broadly defined
goals, such as the accumulation of wealth for the general purpose of strengthening your
financial security? What is your time horizon? One year? Five years? 10 years.Compare &
invest in best Funds. 0 paper work. Start today.Become Maha Crorepati, Invest As Low As
Rs.1000/Month Through SIP

Before choosing your funds, you need to have a good idea of how much risk you
can tolerate. Your risk tolerance is a measure of how muchfluctuation (a.k.a. volatility-ups
and downs) or market risk you can handle. For example, if you get highly anxious when
your $10,000 account value falls by 10% (to $9,000) in a one-year period, your risk tolerance
is relatively low-you can't tolerate high risk investments.

3. Determine Your Asset Allocation

Once you determine your level of risk tolerance, you can determine your asset allocation,
which is the mix of investment assets-stocks, bonds and cash-that comprises your portfolio.
The proper asset allocation will reflect your level of risk tolerance, which can be described as
either aggressive (high tolerance for risk), moderate (medium risk tolerance) or conservative
(low risk tolerance).

18
Literature review-4

Author name: Adam Milton

Title of article: Technical Investing

Day Trading Expert

Bottom of Form

In my article discussing the differences between investing and trading, I explained how
investors make their investing decisions, and why individual investors are almost always at a
significant disadvantage compared to institutional investors (i.e. investors that invest for large
banks, etc.).

The disadvantages that I mentioned can not usually (or at least not easily) be overcome (e.g.
most individual investors are unable to obtain the required education or create their own
research departments), but there is another way that individual investors can level the playing
field as it were, and overcome both the education and research department disadvantages at
the same time.

Technical investing is the process of combining a fundamental investment decision

(e.g. company XYZ's quarterly profit is expected to double over the next two quarters) with a
technical analysis trading decision (i.e. a decision based upon a technical analysis of a
graphical chart of company XYZ's price movement).

Technical investing allows investors to continue making their primary decision as

investors (i.e. the technical analysis would not be performed unless the fundamental analysis
recommended making the investment), but the exact price at which to make the investment
would be determined by the technical analysis.

19
Institutional Technical Investors

Remember the institutional investors that had the education and research advantages over the
individual investors, well, they are usually also technical investors (i.e. they make their
investment decisions using technical investing). I am acquainted with some very successful
institutional investors, and when they are asked if they are investors or traders they respond
that they are investors, but when they make their investing decisions they do so using the
combination of fundamental analysis and technical analysis that is technical investing.

Technical Investing The Easy Way

20
 CHAPTER-II

INDUSTRY PROFILE

&

COMPANY PROFILE

21
A bank is a financial institution that accepts deposits and channels those deposits into
lending activities. Banks primarily provide financial services to customers while enriching
investors. Government restrictions on financial activities by banks vary over time and
location. Banks are important players in financial markets and offer services such as
investment funds and loans. In some countries such as Germany, banks have historically
owned major stakes in industrial corporations while in other countries such as the United
States banks are prohibited from owning non-financial companies. In Japan, banks are
usually the nexus of a cross-share holding entity known as the keiretsu. In France, ban
assurance is prevalent, as most banks offer insurance services (and now real estate services)
to their clients.

Introduction

India’s banking sector is constantly growing. Since the turn of the century, there has been a
noticeable upsurge in transactions through ATMs, and also internet and mobile banking.

Following the passing of the Banking Laws (Amendment) Bill by the Indian Parliament in
2018, the landscape of the banking industry began to change. The bill allows the Reserve
Bank of India (RBI) to make final guidelines on issuing new licenses, which could lead to a
bigger number of banks in the country. Some banks have already received licences from the
government, and the RBI's new norms will provide incentives to banks to spot bad loans and
take requisite action to keep rogue borrowers in check.

Over the next decade, the banking sector is projected to create up to two million new jobs,
driven by the efforts of the RBI and the Government of India to integrate financial services
into rural areas. Also, the traditional way of operations will slowly give way to modern
technology.

Market size

Total banking assets in India touched US$ 1.8 trillion in FY18 and are anticipated to cross
US$ 28.5 trillion in FY25.

Bank deposits have grown at a compound annual growth rate (CAGR) of 21.2 per cent over
FY06–18. Total deposits in FY18 were US$ 1,274.3 billion.

22
Total banking sector credit is anticipated to grow at a CAGR of 18.1 per cent (in terms of
INR) to reach US$ 2.4 trillion by 2017.

In FY16, private sector lenders witnessed discernable growth in credit cards and personal
loan businesses. HDFC Bank witnessed 161.6 per cent growth in personal loan disbursement
in FY16, as per a report by Emkay Global Financial Services. Axis Bank's personal loan
business also rose 49.8 per cent and its credit card business expanded by 31.1 per cent.

Investments

Bengaluru-based software services exporter Mphasis Ltd has bagged a five-year contract
from Punjab National Bank (PNB) to set up the bank’s contact centres in Mangalore and
Noida (UP). Mphasis will provide support for all banking products and services, including
deposits operations, lending services, banking processes, internet banking, and account and
card-related services. The company will also offer services in multiple languages.

Microfinance companies have committed to setting up at least 30 million bank accounts

within a year through tie-ups with banks, as part of the Indian government’s financial
inclusion plan. The commitment was made at a meeting of representatives of 25 large
microfinance companies and banks and government representatives, which included financial
services secretary Mr GS Sandhu.

Export-Import Bank of India (Exim Bank) will increase its focus on supporting project
exports from India to South Asia, Africa and Latin America, as per Mr Yaduvendra Mathur,
Chairman and MD, Exim Bank. The bank has moved up the value chain by supporting
project exports so that India earns foreign exchange. In 2018–18, Exim Bank lent support to
85 project export contracts worth Rs 24,255 crore (US$ 3.96 billion) secured by 47
companies in 23 countries.

Government Initiatives

The RBI has given banks greater flexibility to refinance current long-gestation project loans
worth Rs 1,000 crore (US$ 163.42 million) and more, and has allowed partial buyout of such
loans by other financial institutions as standard practice. The earlier stipulation was that
buyers should purchase at least 50 per cent of the loan from the existing banks. Now, they get
as low as 25 per cent of the loan value and the loan will still be treated as ‘standard’.

23
The RBI has also relaxed norms for mortgage guarantee companies (MGC) enabling these
firms to use contingency reserves to cover for the losses suffered by the mortgage guarantee
holders, without the approval of the apex bank. However, such a measure can only be
initiated if there is no single option left to recoup the losses.

SBI is planning to launch a contact-less or tap-and-go card facility to make payments in

India. Contact-less payment is a technology that has been adopted in several countries,
including Australia, Canada and the UK, where customers can simply tap or wave their card
over a reader at a point-of-sale terminal, which reads the card and allows transactions.

SBI and its five associate banks also plan to empower account holders at the bottom of the
social pyramid with a customer call facility. The proposed facility will help customers get an
update on available balance, last five transactions and cheque book request on their mobile
phones.

Road Ahead

India is yet to tap into the potential of mobile banking and digital financial services. Forty-
seven per cent of the populace have bank accounts, of which half lie dormant due to reliance
on cash transactions, as per a report. Still, the industry holds a lot of promise.

India's banking sector could become the fifth largest banking sector in the world by 2020 and
the third largest by 2025. These days, Indian banks are turning their focus to servicing clients
and enhancing their technology infrastructure, which can help improve customer experience
as well as give banks a competitive edge.

Exchange Rate Used: INR 1 = US$ 0.0163 as on October 28, 2017-18

The level of government regulation of the banking industry varies widely, with countries such
as Iceland, having relatively light regulation of the banking sector, and countries such as
China having a wide variety of regulations but no systematic process that can be followed
typical of a communist system.

The oldest bank still in existence is Monte dei Paschi di Siena, headquartered in Siena, Italy,
which has been operating continuously since 1672.

24
History

Origin of the word

The name bank derives from the Italian word banco "desk/bench", used during the
Renaissance by Jewish Florentine bankers, who used to make their transactions above a desk
covered by a green tablecloth. However, there are traces of banking activity even in ancient
times, which indicates that the word 'bank' might not necessarily come from the word 'banco'.

In fact, the word traces its origins back to the Ancient Roman Empire, where moneylenders
would set up their stalls in the middle of enclosed courtyards called macella on a long bench
called a bancu, from which the words banco and bank are derived. As a moneychanger, the
merchant at the bancu did not so much invest money as merely convert the foreign currency
into the only legal tender in Rome—that of the Imperial Mint.

The earliest evidence of money-changing activity is depicted on a silver drachm coin from
ancient Hellenic colony Trapezus on the Black Sea, modern Trabzon, c. 350–325 BC,
presented in the British Museum in London. The coin shows a banker's table (trapeza) laden
with coins, a pun on the name of the city.

In fact, even today in Modern Greek the word Trapeza (Τράπεζα) means both a table and a
bank.

Traditional banking activities

Banks act as payment agents by conducting checking or current accounts for customers,
paying cheques drawn by customers on the bank, and collecting cheques deposited to
customers' current accounts. Banks also enable customer payments via other payment
methods such as telegraphic transfer, EFTPOS, and ATM.

Banks borrow money by accepting funds deposited on current accounts, by accepting term
deposits, and by issuing debt securities such as banknotes and bonds. Banks lend money by
making advances to customers on current accounts, by making installment loans, and by
investing in marketable debt securities and other forms of money lending.

25
Banks provide almost all payment services, and a bank account is considered indispensable
by most businesses, individuals and governments. Non-banks that provide payment services
such as remittance companies are not normally considered an adequate substitute for having a
bank account.

Banks borrow most funds from households and non-financial businesses, and lend most funds
to households and non-financial businesses, but non-bank lenders provide a significant and in
many cases adequate substitute for bank loans, and money market funds, cash management
trusts and other non-bank financial institutions in many cases provide an adequate substitute
to banks for lending savings to.

Entry regulation

Currently in most jurisdictions commercial banks are regulated by government entities and
require a special bank licence to operate.

Usually the definition of the business of banking for the purposes of regulation is extended to
include acceptance of deposits, even if they are not repayable to the customer's order—
although money lending, by itself, is generally not included in the definition.

Unlike most other regulated industries, the regulator is typically also a participant in the
market, i.e. a government-owned (central) bank. Central banks also typically have a
monopoly on the business of issuing banknotes. However, in some countries this is not the
case. In the UK, for example, the Financial Services Authority licences banks, and some
commercial banks (such as the Bank of Scotland) issue their own banknotes in addition to
those issued by the Bank of England, the UK government's central bank.

Accounting for bank accounts

Bank statements are accounting records produced by banks under the various accounting
standards of the world. Under GAAP and IFRS there are two kinds of accounts: debit and
credit. Credit accounts are Revenue, Equity and Liabilities. Debit Accounts are Assets and
Expenses. This means you credit a credit account to increase its balance, and you debit a
debit account to decrease its balance.

26
This also means you debit your savings account every time you deposit money into it (and the
account is normally in deficit), while you credit your credit card account every time you
spend money from it (and the account is normally in credit).

However, if you read your bank statement, it will say the opposite—that you credit your
account when you deposit money, and you debit it when you withdraw funds. If you have
cash in your account, you have a positive (or credit) balance; if you are overdrawn, you have
a negative (or deficit) balance.

The reason for this is that the bank, and not you, has produced the bank statement. Your
savings might be your assets, but the bank's liability, so they are credit accounts (which
should have a positive balance). Conversely, your loans are your liabilities but the bank's
assets, so they are debit accounts (which should also have a positive balance).

Where bank transactions, balances, credits and debits are discussed below, they are done so
from the viewpoint of the account holder—which is traditionally what most people are used
to seeing.

Economic functions

1. issue of money, in the form of banknotes and current accounts subject to cheque or
payment at the customer's order. These claims on banks can act as money because
they are negotiable and/or repayable on demand, and hence valued at par. They are
effectively transferable by mere delivery, in the case of banknotes, or by drawing a
cheque that the payee may bank or cash.
2. netting and settlement of payments – banks act as both collection and paying agents
for customers, participating in interbank clearing and settlement systems to collect,
present, be presented with, and pay payment instruments. This enables banks to
economise on reserves held for settlement of payments, since inward and outward
payments offset each other. It also enables the offsetting of payment flows between
geographical areas, reducing the cost of settlement between them.
3. credit intermediation – banks borrow and lend back-to-back on their own account as
middle men.
4. credit quality improvement – banks lend money to ordinary commercial and personal
borrowers (ordinary credit quality), but are high quality borrowers. The improvement

27
 comes from diversification of the bank's assets and capital which provides a buffer to
absorb losses without defaulting on its obligations. However, banknotes and deposits
are generally unsecured; if the bank gets into difficulty and pledges assets as security,
to raise the funding it needs to continue to operate, this puts the note holders and
depositors in an economically subordinated position.
5. maturity transformation – banks borrow more on demand debt and short term debt,
but provide more long term loans. In other words, they borrow short and lend long.
With a stronger credit quality than most other borrowers, banks can do this by
aggregating issues (e.g. accepting deposits and issuing banknotes) and redemptions
(e.g. withdrawals and redemptions of banknotes), maintaining reserves of cash,
investing in marketable securities that can be readily converted to cash if needed, and
raising replacement funding as needed from various sources (e.g. wholesale cash
markets and securities markets).

Law of banking

Banking law is based on a contractual analysis of the relationship between the bank (defined
above) and the customer—defined as any entity for which the bank agrees to conduct an
account.

The law implies rights and obligations into this relationship as follows:

1. The bank account balance is the financial position between the bank and the
customer: when the account is in credit, the bank owes the balance to the customer;
when the account is overdrawn, the customer owes the balance to the bank.
2. The bank agrees to pay the customer's cheques up to the amount standing to the credit
of the customer's account, plus any agreed overdraft limit.
3. The bank may not pay from the customer's account without a mandate from the
customer, e.g. a cheque drawn by the customer.
4. The bank agrees to promptly collect the cheques deposited to the customer's account
as the customer's agent, and to credit the proceeds to the customer's account.
5. The bank has a right to combine the customer's accounts, since each account is just an
aspect of the same credit relationship.
6. The bank has a lien on cheques deposited to the customer's account, to the extent that
the customer is indebted to the bank.

28
 7. The bank must not disclose details of transactions through the customer's account—
unless the customer consents, there is a public duty to disclose, the bank's interests
require it, or the law demands it.
8. The bank must not close a customer's account without reasonable notice, since
cheques are outstanding in the ordinary course of business for several days.

These implied contractual terms may be modified by express agreement between the
customer and the bank. The statutes and regulations in force within a particular jurisdiction
may also modify the above terms and/or create new rights, obligations or limitations relevant
to the bank-customer relationship.

Some types of financial institution, such as building societies and credit unions, may be partly
or wholly exempt from bank licence requirements, and therefore regulated under separate
rules.

The requirements for the issue of a bank licence vary between jurisdictions but typically
include:

1. Minimum capital
2. Minimum capital ratio
3. 'Fit and Proper' requirements for the bank's controllers, owners, directors, and/or
senior officers
4. Approval of the bank's business plan as being sufficiently prudent and plausible.

Types of banks

Banks' activities can be divided into retail banking, dealing directly with individuals and
small businesses; business banking, providing services to mid-market business; corporate
banking, directed at large business entities; private banking, providing wealth management
services to high net worth individuals and families; and investment banking, relating to
activities on the financial markets. Most banks are profit-making, private enterprises.
However, some are owned by government, or are non-profit organizations.

Central banks are normally government-owned and charged with quasi-regulatory

responsibilities, such as supervising commercial banks, or controlling the cash interest rate.
They generally provide liquidity to the banking system and act as the lender of last resort in
event of a crisis.

29
Types of retail banks

 Commercial bank: the term used for a normal bank to distinguish it from an
investment bank. After the Great Depression, the U.S. Congress required that banks
only engage in banking activities, whereas investment banks were limited to capital
market activities. Since the two no longer have to be under separate ownership, some
use the term "commercial bank" to refer to a bank or a division of a bank that mostly
deals with deposits and loans from corporations or large businesses.
 Community Banks: locally operated financial institutions that empower employees to
make local decisions to serve their customers and the partners.
 Community development banks: regulated banks that provide financial services and
credit to under-served markets or populations.
 Postal savings banks: savings banks associated with national postal systems.
 Private banks: banks that manage the assets of high net worth individuals.
 Offshore banks: banks located in jurisdictions with low taxation and regulation. Many
offshore banks are essentially private banks.
 Savings bank: in Europe, savings banks take their roots in the 19th or sometimes even
18th century. Their original objective was to provide easily accessible savings
products to all strata of the population. In some countries, savings banks were created
on public initiative; in others, socially committed individuals created foundations to
put in place the necessary infrastructure. Nowadays, European savings banks have
kept their focus on retail banking: payments, savings products, credits and insurances
for individuals or small and medium-sized enterprises. Apart from this retail focus,
they also differ from commercial banks by their broadly decentralised distribution
network, providing local and regional outreach—and by their socially responsible
approach to business and society.
 Building societies and Landesbanks: institutions that conduct retail banking.
 Ethical banks: banks that prioritize the transparency of all operations and make only
what they consider to be socially-responsible investments.
 Islamic banks: Banks that transact according to Islamic principles.

30
Types of investment banks

 Investment banks "underwrite" (guarantee the sale of) stock and bond issues, trade for
their own accounts, make markets, and advise corporations on capital market
activities such as mergers and acquisitions.
 Merchant banks were traditionally banks which engaged in trade finance. The modern
definition, however, refers to banks which provide capital to firms in the form of
shares rather than loans. Unlike venture capital firms, they tend not to invest in new
companies.

Both combined

 Universal banks, more commonly known as financial services companies, engage in

several of these activities. These big banks are very diversified groups that, among
other services, also distribute insurance— hence the term bancassurance, a
portmanteau word combining "banque or bank" and "assurance", signifying that both
banking and insurance are provided by the same corporate entity.

Other types of banks

 Islamic banks adhere to the concepts of Islamic law. This form of banking revolves
around several well-established principles based on Islamic canons. All banking
activities must avoid interest, a concept that is forbidden in Islam. Instead, the bank
earns profit (markup) and fees on the financing facilities that it extends to customers.

31
COMPANY PROFILE
HDFC Bank is India's largest private sector bank with total assets of Rs. 5,946.42 billion
(US$ 99 billion) at March 31, 2017 and profit after tax Rs. 98.12 billion (US$ 1,637 million)
for the year ended March 31, 2017.HDFC Bank currently has a network of 3,839 Branches
and 13,943 ATM's across India.

History

2018

The Industrial Credit and Investment Corporation of India Limited (HDFC) incorporated at
the initiative of the World Bank, the Government of India and representatives of Indian
industry, with the objective of creating a development financial institution for providing
medium-term and long-term project financing to Indian businesses. Mr.A.Ramaswami
Mudaliar elected as the first Chairman of HDFC Limited.

HDFC emerges as the major source of foreign currency loans to Indian industry. Besides
funding from the World Bank and other multi-lateral agencies, HDFC was also among the
first Indian companies to raise funds from international markets.

HDFC Bank was originally promoted in 1994 by HDFC Limited, an Indian financial
institution, and was its wholly-owned subsidiary. HDFC's shareholding in HDFC Bank was
reduced to 46% through a public offering of shares in India in fiscal 1998, an equity offering
in the form of ADRs listed on the NYSE in fiscal 2000, HDFC Bank's acquisition of Bank of
Madura Limited in an all-stock amalgamation in fiscal 2016, and secondary market sales by
HDFC to institutional investors in fiscal 2016 and fiscal 2002. HDFC was formed in 1955 at
the initiative of the World Bank, the Government of India and representatives of Indian
industry. The principal objective was to create a development financial institution for
providing medium-term and long-term project financing to Indian businesses.

In the 1990s, HDFC transformed its business from a development financial institution
offering only project finance to a diversified financial services group offering a wide variety
of products and services, both directly and through a number of subsidiaries and affiliates like

32
HDFC Bank. In 1999, HDFC become the first Indian company and the first bank or financial
institution from non-Japan Asia to be listed on the NYSE.

After consideration of various corporate structuring alternatives in the context of the

emerging competitive scenario in the Indian banking industry, and the move towards
universal banking, the managements of HDFC and HDFC Bank formed the view that the
merger of HDFC with HDFC Bank would be the optimal strategic alternative for both
entities, and would create the optimal legal structure for the HDFC group's universal banking
strategy. The merger would enhance value for HDFC shareholders through the merged
entity's access to low-cost deposits, greater opportunities for earning fee-based income and
the ability to participate in the payments system and provide transaction-banking services.
The merger would enhance value for HDFC Bank shareholders through a large capital base
and scale of operations, seamless access to HDFC's strong corporate relationships built up
over five decades, entry into new business segments, higher market share in various business
segments, particularly fee-based services, and access to the vast talent pool of HDFC and its
subsidiaries.

In October 2016, the Boards of Directors of HDFC and HDFC Bank approved the merger of
HDFC and two of its wholly-owned retail finance subsidiaries, HDFC Personal Financial
Services Limited and HDFC Capital Services Limited, with HDFC Bank. The merger was
approved by shareholders of HDFC and HDFC Bank in January 2002, by the High Court of
Gujarat at Ahmedabad in March 2002, and by the High Court of Judicature at Mumbai and
the Reserve Bank of India in April 2002. Consequent to the merger, the HDFC group's
financing and banking operations, both wholesale and retail, have been integrated in a single
entity.

33
HDFC Group Companies HDFC Foundation
http://www.HDFCfoundation.org

HDFC Group
http://www.HDFCgroupcompanies.com

Disha Financial Counselling

http://www.HDFCfoundation.org
HDFC Prudential Life Insurance Company
http://www.HDFCprulife.com/public/defa
ult.htm

HDFC Securities
http://www.HDFCsecurities.com

HDFC Lombard General Insurance

Company
http://www.HDFClombard.com

HDFC Prudential AMC & Trust

http://www.HDFCpruamc.com

HDFC Venture
http://www.HDFCventure.com

HDFC Direct
http://www.HDFCdirect.com

34
Board of Directors Executive Director

Mr. K. V. Kamath, Chairman ...........................................

.............................................. Mr. Rajiv Sabharwal,

Mr. Dileep Choksi Executive Director

..............................................

Mr. Homi R. Khusrokhan

..............................................

Mr. M.S. Ramachandran

..............................................

Dr. Tushaar Shah

..............................................

Mr. V. K. Sharma

..............................................

Mr. V. Sridar

..............................................

Mr. Alok Tandon

Ms. Chanda Kochhar,

Managing Director & CEO

...........................................

Mr. N. S. Kannan,

Executive Director

...........................................

Mr. K. Ramkumar,

35
 Awards - 2018

HDFC Bank

 Ms. Chanda Kochhar received an honorary Doctor of Laws from Carleton University,
Canada. The university conferred this award on Ms. Kochhar in recognition of her
pioneering work in the financial sector, effective leadership in a time of economic
crisis and support for engaged business practices.
 Ms Chanda Kochhar featured in The Telegraph (UK) list of '13 most important
women in finance'.
 HDFC Bank has been recognised as one of the 'Top Companies for Leaders' in India
in a study conducted by Aon Hewitt.
 IDRBT has given awards to HDFC Bank in the categories of 'Social Media and
Mobile Banking' and' Business Intelligence Initiatives'.
 HDFC Bank won the award for the Best Bank - Global Business Development
(Private Sector) in the Dun & Bradstreet - Polaris Financial Technology Banking
Awards 2017.
 HDFC Bank was awarded the Certificate of Recognition as one of the Top 5
Companies in Corporate Governance in the 16th ICSI (The Institute of Company
Secretaries of India) National Awards for Corporate Governance.
 HDFC Bank has been honoured as The Best Service Provider - Risk Management,
India at The Asset Triple A Transaction Banking, Treasury, Trade and Risk
Management Awards 2017.
 Mr Rakesh Jha has been ranked as the Best CFO in India at the 16th Annual Finance
Asia's Best Managed Companies Poll.
 HDFC Bank has won The Corporate Treasurer Awards 2017 in the categories of 'Best
Cash Management Bank in India' & 'Best Trade Finance Bank in India'.
 HDFC Bank has been awarded the 'Best Retail Bank in India', 'Best Microfinance
Business' and Best Retail Banking Branch Innovation' under the 'Excellence in Retail
Financial Services awards 2017' by The Asian Banker.
 Ms Chanda Kochhar, MD & CEO, HDFC Bank, has been named among Fortune's 50
most powerful women in business for the fourth consecutive year.
 Ms. Chanda Kochhar, MD and CEO received the 'Mumbai Women Of The Decade'
award by ASSOCHAM.

36
HDFC Bank, India’s largest private sector bank, today announced the launch of
India’s only credit card with a unique transparent design and a distinctive look. The
‘HDFC Bank Coral American Express Credit Card’ is the latest addition to the Bank’s
exclusive ‘Gemstone Collection’ of credit cards.

Speaking at the launch, Mr. Rajiv Sabharwal, Executive Director, HDFC Bank
said, "At HDFC Bank, it is our constant endeavour to deliver innovative, powerful
and distinctive value propositions to our discerning customers. We are delighted to
launch the ‘HDFC Bank Coral American Express Credit Card’, the only card in the
country with a youthful, transparent design. Aimed at providing significant lifestyle
benefits, this card re-affirms our commitment to bring forth innovative services to our
customers. We are also introducing a host of exciting privileges including an
introductory extended credit period offer and bonus reward points on online
transactions. We believe this card will be yet another compelling addition to our
Gemstone collection of credit cards."

Ms. Siew Choo Ng, Senior Vice President, Head of Global Network
Partnerships, Asia, American Express International, Inc. said, "We are delighted
to have further strengthened our long and cherished relationship with HDFC Bank
with the launch of the new HDFC Bank Coral American Express Credit Card.
Designed to appeal to value seeking customers, the Card reinforces our consistent
endeavor to provide differentiated products and services to our customers. The Card
offers a wide array of exclusive privileges and features including additional
PAYBACK points on online spend and an innovative transparent design. At
American Express, we always strive to work closely with our partners to develop the
most relevant and compelling products for our valued card members."

Mr. Sanjay Rishi, President, South Asia, American Express, said, “This launch
marks a further strengthening of the relationship between HDFC Bank and American
Express. We already partner with HDFC Bank on customer loyalty programs,
insurance services, retail banking services as well as initiatives to expand card
accepting merchants. The launch of the HDFC Bank Coral American Express Card
combines the strengths and capabilities of both organizations to offer an exciting new
payment choice to customers.

37
 The HDFC Bank Coral American Express® Credit Card offers a wide range of
attractive benefits to its card members:

 Extended Credit Period; a unique proposition offering card members ability to carry
over the retail purchase balances in first two billing statements by simply paying the
minimum amount due. No interest shall be charged in such cases and the total amount
due shall be payable as per the third billing statement. TnC apply, for complete details
please visit www.HDFCbank.com.
 4 PAYBACK points per Rs.120 spent on dining, groceries and at supermarkets, 3
PAYBACK points per Rs.120 of online spends and 2 PAYBACK points per Rs.120
on other spends
 Complimentary movie tickets with 'buy one get one free' offer
on www.bookmyshow.com
 Complimentary visits to Altitude lounges at Mumbai and Delhi airports
 Minimum 17% discount on dining bills at leading restaurants across India with the
HDFC Bank ‘Culinary Treats’ programme
 No fuel surcharge on fuel transactions at HPCL fuel stations

OVERVIEW HDFC Group

HDFC Group offers a wide range of banking products and financial services to
corporate and retail customers through a variety of delivery channels and through its
specialised group companies and subsidiaries in the areas of personal banking,
investment banking, life and general insurance, venture capital and asset management.
With a strong customer focus, the HDFC Group Companies have maintained and
enhanced their leadership positions in their respective sectors.

HDFC Bank is India's second-largest bank with total assets of Rs. 4,736.47 billion
(US$ 93 billion) at March 31, 2018 and profit after tax Rs. 64.65 billion (US$ 1,271
million) for the year ended March 31, 2018. The Bank has a network of 2,791
branches and 12,021 ATMs in India, and has a presence in 19 countries, including
India.

HDFC Prudential Life Insurance is a joint venture between HDFC Bank, a premier
financial powerhouse, and Prudential plc, a leading international financial services

38
group headquartered in the United Kingdom. HDFC Prudential Life was amongst the
first private sector insurance companies to begin operations in December 2000 after
receiving approval from Insurance Regulatory Development Authority (IRDA).
HDFC Prudential Life's capital stands at Rs. 47.91 billion (as of March 31, 2018) with
HDFC Bank and Prudential plc holding 74% and 26% stake respectively. For FY
2018, the company garnered Rs.160.22 billion of total premiums and has underwritten
over 18 million policies since inception. The company has assets held over Rs. 709.71
billion as on March 31, 2018.

HDFC Lombard General Insurance Company, is a joint venture between HDFC Bank
Limited, India's second largest bank with consolidated total assets of over USD 91
billion at March 31, 2018 and Fairfax Financial Holdings Limited, a Canada based
USD 30 billion diversified financial services company engaged in general insurance,
reinsurance, insurance claims management and investment management. HDFC
Lombard GIC Ltd. is the largest private sector general insurance company in India
with a Gross Written Premium (GWP) of Rs. 5,358 crore for the year ended March
31, 2018. The company issued over 76 lakh policies and settled over 44 lakh claims
and has a claim disposal ratio of 99% (percentage of claims settled against claims
reported) as on March 31, 2018.

HDFC Securities Ltd is the largest integrated securities firm covering the needs of
corporate and retail customers through investment banking, institutional broking,
retail broking and financial product distribution businesses. Among the many awards
that HDFC Securities has won, the noteworthy awards for 2018 were: Asiamoney
`Best Domestic Equity House for 2018; 'BSE IPF D&B Equity Broking Awards 2018'
under two categories:- Best Equity Broking House - Cash Segment and Largest E-
Broking House; the Chief Learning Officer Award from World HRD Congress for
Innovation in Learning category. IDG India's CIO magazine has recognized HDFC
Securities as a recipient of CIO 120 award in 2012, 2013, 2014 and 2018. I-Sec won
this awards 4 times in a row for which the CIO Hall of Fame award was additionally
conferred in 2018.

HDFC Securities Primary Dealership Limited (‘I-Sec PD’) is the largest primary
dealer in Government Securities. It is an acknowledged leader in the Indian fixed

39
income and money markets, with a strong franchise across the spectrum of interest
rate products and services - institutional sales and trading, resource mobilisation,
portfolio management services and research. One of the first entities to be granted
primary dealership license by RBI, I-Sec PD has made pioneering contributions since
inception to debt market development in India. I-Sec PD is also credited with
pioneering debt market research in India. It is one of the largest portfolio managers in
the country and amongst PDs, managing the largest AUM under discretionary
portfolio management.
I-Sec PD’s leadership position and research expertise have been consistently
recognised by domestic and international agencies. In recognition of our performance
in the Fixed Income market, we have received the following awards:

 “Best Domestic Bond House” in India - 2010, 2006, 2005, 2002 by Asia
Money
 “Best Bond House” - 2012, 2010, 2009, 2006, 2005, 2016 by Finance Asia
 “Best Domestic Bond House” – 2012 by The Asset Magazine’s annual Triple
A Country Awards
 Ranked volume leader - by Greenwich Associates in 2013 Asian Fixed-
Income Investors Study. Ranked 5th in ‘Domestic Currency Asian Credit’
with market share of 4.5%, Only Domestic entity to be ranked.
 “Best Debt House in India” – 2018 by EUROMONEY

HDFC Prudential Asset Management is the third largest mutual fund with average
asset under management of Rs. 688.16 billion and a market share ( mutual fund ) of
12.34% as on March 31, 2018. The Company manages a comprehensive range of
mutual fund schemes and portfolio management services to meet the varying
investment needs of its investors through137 branches and 196 CAMS official point
of transaction acceptance spread across the country.

HDFC Venture is one of the largest and most successful alternative asset managers in
India with funds under management of over US$ 2 billion. It has been a pioneer in the
Indian alternative asset industry since its establishment in 1988, having managed
several funds across various asset classes over multiple economic cycles. HDFC
Venture is a wholly owned subsidiary of HDFC Bank

40
GROUP PHILOSOPHY

As India transforms into a key player in the global economic arena, multiple
opportunities for the financial services sector have emerged. We, at HDFC Group,
seek to partner the country's growth and globalization through the delivery of world-
class financial services across all cross-sections of society.

From providing project and working capital finance to the buoyant manufacturing and
infrastructure sectors, meeting the foreign investment and treasury requirements of the
Indian corporate with increasing levels of international engagement, servicing the
India linked needs of the growing Indian diaspora, being a catalyst to the consumer
finance story to serving the financially under-served segments of the society, our
technology empowered solutions and distribution network have helped us touch
millions of lives.

Vision:

To be the leading provider of financial services in India and a major global bank.

Mission:

We will leverage our people, technology, speed and financial capital to:

 be the banker of first choice for our customers by delivering high quality,
world-class products and services.
 expand the frontiers of our business globally.
 play a proactive role in the full realisation of India’s potential.
 maintain a healthy financial profile and diversify our earnings across
businesses and geographies.
 maintain high standards of governance and ethics.
 contribute positively to the various countries and markets in which we operate.
 create value for our stakeholders.

41
Towards Sustainable Development

As India's fastest growing financial services conglomerate, with deep moorings in the
Indian economy for over five decades, HDFC Group of companies have endeavored
to contribute to address the challenges posed to the community in multiple ways.

1) HDFC Foundation for Inclusive Growth: HDFC Foundation for Inclusive

Growth (HDFC Foundation) was founded by the HDFC Group in early 2011 to carry
forward and build upon its legacy of promoting inclusive growth. HDFC Foundation
works within public systems and specialised grassroots organisations to support
developmental work in four identified focus areas. We are committed to investing in
long-term efforts to support inclusive growth through effective interventions.

2) Disha Counselling: Disha Financial Counselling services are free to all in areas
like financial education, credit counselling and debt management.

3) Technology Finance Group: TFG's programmes are designed to assist industry

and institutions to undertake collaborative R&D and technology development
projects.

4) Read to Lead campaign: HDFC Bank has pledged to educate 1,00,000 children
through the 'Read to Lead initiative. Because education today means a better life
tomorrow.

5) Go Green. Each one for a better earth: HDFC Bank, is a responsible corporate
citizen and believes that every small 'green' step today would go a long way in
building a greener future and that each one of us can work towards a better earth.

Go Green' is an organisation wide initiative that moves beyond moving ourselves, our
processes and our customers to cost efficient automated channels to building
awareness and consciousness of our environment, our nation and our society.

42
PERSONAL BANKING

Deposits

HDFC Bank offers wide variety of Deposit Products to suit your requirements.
Convenience of networked branches/ ATMs and facility of E-channels like Internet
and Mobile Banking, Select any of our deposit products and provide your details
online and our representative will contact you.

Loans

HDFC Bank offers wide variety of Loans Products to suit your requirements. Coupled
with convenience of networked branches/ ATMs and facility of E-channels like
Internet and Mobile Banking, HDFC Bank brings banking at your doorstep. Select
any of our loan product and provide your details online and our representative will
contact you for getting loans.

Cards

HDFC Bank offers a variety of cards to suit your different transactional needs. Our
range includes Credit Cards, Debit Cards and Prepaid cards. These cards offer you
convenience for your financial transactions like cash withdrawal, shopping and travel.
These cards are widely accepted both in India and abroad. Read on for details and
features of each.

Wealth Management

Wealth is the result of a recognized opportunity. We understand this and we work

with you to plan and manage your financial opportunities prudently. Not just that, we
also extend a host of services so you can remain focused on immediate objectives
while we take care of all your wealth management requirements

43
 CHAPTER-IV
DATA ANALYSIS &
INTERPRETATION

44
 DATA ANALYSIS & INTERPRETATION
PERFORMANCE ANALYSIS OF RETURNS

The below table shows returns of the past 5 years

Table 4.1:

YEAR INDEX* ABSOLUTE PERCENTAGE

CHANGE CHANGE (%)

2014 14786 4389 46.70

2015 14908 122 0.88

2016 20323 6416 31.57

2017 25631 5308 -

2018 30241 - -

ABSOLUTE CHANGE = P2-P1

PERCENTAGE CHANGE (%) = P2 – P1

p1

P1 – Present year.
P2 – Previous Year.

45
 Fig 4.1:

25000
Interpretations:
20000
1. There is no change in the
15000 year of 2014 in sensex.
2. The market was closed – 710 points in the year of 2015
10000
company with the last year the
5000 sensex percentage is – 18.88%.
3. In 2016 the sensex is moved upwards
2014 2015 0 2016 2017 2018
2010 2011 2012 2013 2014

with 116 points i.e., 3.52%. It is not improvement in the market.

4. In 2017 investors got a lot of knowledge about equity market and world markets
they find where to invest and which is suitable to them. Companies with last 3
years this year sensex got profits above 60% I.e., in change +2461 (72.88%).
5. In 2018 sensex reached to 6602 in this year there is no lot of change but the
sensex closed in a profits that is in change +764 points (14.08%).
6. In 2017 and 2018 the sensex was closed in +.
7. The recession occurs in 2014, so the market falls down to 122points (0.88%).
8. At the end of the 2015 market has cover with a huge profit 6416 points (31.57%)

46
BSE100
Table 4.2:

YEAR INDEX ABSOLUTE PERCENTAGE

CHANGE CHANGE (%)

2014 3580 506 17.46

2015 4953 1473 38.32

2016 6982 2029 40.96

2017 7026 44 0.65

2018 9142 2106 23.06

Fig 4.2:

10000
9000
8000
7000
6000
5000
4000
3000
2000
1000
0
2010 2011 2012 2013 2014
2013
2014 2014
2015 2015 2016 2016 2017 2018 2017

47
Interpretations:
1. Their is no change in the year of 2014 in sensex.
2. The market was closed -477 points in the year of 2015 companies with the last
year the sensex percentage is -23.38.
3. In 2016 the sensex is moved upwards with 107points i.e., 6.88%. It is not
higher fetch in the market but some improvement in the market.
4. Company with the last 3 years this year 2017sensex got profits above 60% i.e.,
in change +1512 (84.74%).
5. In this year there is no lot of change but the sensex closed in profits as +506
points. In 2015 & 2016 then sensex was closed in +.

48
BSE200
Table 4.3:

YEAR INDEX* ABSOLUTE PERCENTAGE

CHANGE CHANGE (%)

2014 884 118 16.66

2015 1186 300 33.86

2016 1755 469 39.54

2017 1762 7 0.42

2018 2170 498 23.05

Fig 4.3:

2500

2000

1500

1000

500

0
2013
2014
2010 2014
2015 2011 2015 20162012 2016 2017
2013 2018 2017
2014

49
Interpretations:
1. The market was closed 95 points in the year 2018 companies with last year the
sensex percentage is 21.96.
2. In 2014& 2015 the sensex moved upwards with 53 points and 372 points i.e.,
16.54% & 94.41%.
3. In 2015there is no lot of change and in 2016, 2017 the sensex was closed in +.
4. The recession occurs in 2014 so they moved falls down 7 points.
5. At the end of the 2015 market has covered with a huge profit 498 points
(23.05%).

Bonds returns
If we have a look at the average return, which the central government securities have
given over a period of one year, it is 9.11%. Now if we look at the average return,
which the state government securities have given over a period of one year, it is
9.28%.

Gold returns

“Gold shines when everything else falls apart” goes an old adage. True, the glitter is
back. During the 50s gold appreciated marginally. The next decade, 1960-1970, it
moved from $35 to $40 and between 1970-1980 came the massive rise from $40 to
$615, a whopping 1507%. The trend of gold prices in India in the last few years is
given in the following table.

50
 90

80

70

60

50

40

30

20

10

0
2014
2010 2015
2011 2016
2012 201720132018 2014

Interpretations:

In 2014 the gold rate was increased from 2015 year of 6points and the
followed years are moved to 68points. As per the previous year the gold rates got
decrease to 24points (5.79%). From 2014 to 2016 the gold rates change got increase
as per the percentage are 18.03% – 36.08%.

51
 *Price indicates December end prices of that particular year
The below table shows returns of the past 3years Mutual Funds

Table 4.4:

EQUITY TAX SAVING NAV 1 YR 2 YR 3 YR

M a g n u m T a x G a i n 47.7 107.70 93.40 112.30

P r i n c i p a l T a x S a v i n g s 74.60 91.20 59.30 73.70

H D F C T a x S a v e r 148.50 104.60 83.60 91.60

Fig 4.4:

140
120
100
80
60
40
20
0
NAV 1 YR 2 YR 3 YR
MAGNUM TAX GAIN PRINCIPAL TAX GAIN
HDFC TAX SAVER

52
 CHAPTER-V

FINDING

SUGGESTION

CONCLUSION

53
5.1 FINDINGS OF THE STUDY

 Fluctuations are more in secondary market than any other market.

 There are more speculators than investors.
 Information plays a vital role in the secondary market.
 Previously rolling settlement is T+5 days, now it changed to T+2 days and
further it will be changing to T+1 day.
 It was also observed that many broking houses offering internet trading
allow clients to use their conventional system as well just ensure that they
do not loose them and this instead of offering e-broking services they
becomes service providers.
 The number of players is increasing at a steady rate and today there are
over a dozen of brokerage houses who have opted to offer net trading to
their customers and prominent among them are HDFC BANK, India bulls,
kotakstreet, ICICI direct and geojit.
 The Bombay stock exchange sensex zoomed past the 7700 barrier for the
first time in history to achieve new all time high of 7800 intra day trade
and ended at a historic close of 7732 points.

54
5.2 SUGGESTIONS

 I recommend the exchange authorities to take steps to educate Investors about

their rights and duties. I suggest to the exchange authorities to increase the
investors’ confidences.
 I recommend the exchange authorities to be vigilant to curb wide fluctuations
of prices.
 The speculative pressures are responsible for the wide changes in the price,
not attracting the genuine investors to the greater extent towards the market.
 Genuine investors are not at all interested in the speculative gain as their
investment is based on the future profits, therefore the authorities of the
exchange should be more vigilant to curb the speculation.
 Necessary steps should be taken by the exchange to deal with the situations
arising due to break down in online trading.

55
 5.3 CONCLUSION

Things have changed for the better with the HDFC BANK going on-line coupled
with endeavor to stream line the whole trading system, things have changed
dramatically over the last 3 to 4 years. New and advanced technologies have
breached geographical and cultural barriers, and have brought the countrywide
market to doorstep.
In the present scenario to compete with the Broker’s would require sound
infrastructure and trading as per international standards.
The introduction of on-line trading would influence the investors resulting in an
increase in the business of the exchange. The trading of HDFC BANK of the first
day was Rs. 1.8 crores.
Due to invention of online trading there has been greater benefit to the investors
as they could sell / buy shares as and when required and that to with online
trading.
The broker’s has a greater scope than compared to the earlier times because of
invention of online trading.
The concept of business has changed today, this is a service oriented industry
hence the survival would require them to provide the best possible service to the
clients.

56
BIBLIOGRAPHY

Text Books:
Investment Analysis and Portfolio Management - Prasanna Chandra

Investments - Sharpe & Alexander

Security Analysis and Portfolio Management - Fischer & Jordan

Magazines

Business world

Business Today

Websites:

www.bseindia.com
www.kesoram.com

www.axisbank.com

www.indiabullssecurities.com

www.kesoramcement.com

www.moneycontrol.com

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