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Bob bank

  1. 1. Qwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxc WHICH BANK TO BANK WITH??? A Project By Mr. Rahul Iyervbnmqwertyuiopasdfghjklzxcvbnmrtyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxc
  3. 3. WHICH BANK TO BANK WITH??? CertificateI, Mr. E.V.GIREESH hereby certify that Mr. RAHUL IYER ofT.Y.B.M.S (Semester V) of SIES (Nerul) College of Arts Science &Commerce has completed the project on WHICH BANK TO BANKWITH??? in the Academic year 2007 - 08. The information submitted istrue and original to the best of my knowledge._____________________________ ______________________________(Prof. E.V. GIREESH) (Dr. U.B. JHANGAM)Signature of the Project Signature of the PrincipalCoordinator of the college 3
  4. 4. WHICH BANK TO BANK WITH??? DeclarationI, Mr. RAHUL IYER of SIES (Nerul) College of Arts, Science &Commerce Studying in T.Y.B.M.S (Semester V) hereby declare that Ihave completed this project on WHICH BANK TO BANK WITH??? inAcademic year 2007-08. The information submitted true & original tothe best of my Knowledge. Signature of the student ______________________ (Mr. RAHUL IYER) 4
  5. 5. WHICH BANK TO BANK WITH??? AcknowledgementBefore starting with the project I take pride in thanking the following people without whom Iwouldn‘t be able to complete this project.First and foremost I would like to thank BMS Coordinator, Mrs. Swatee Sarangi who supportedme, understood my right motive towards the project and helped me get the right guide for myproject.Mr. E.V.Gireesh – My Professor for guiding me throughout the project and making me learn theconcepts of Banking in brief and relating them to the 7P‘s of Service Marketing.Mr. K.S.Ganeshan – Manager, Bank of Baroda & Mrs. Mahalakshmi Iyer - .Senior Manager,HDFC Bank for providing me the knowledge related to this project and guiding me throughoutthe project.I would also like to thank Mrs. Renuka Iyer, Mr. Ninad Sawant, Ms. Prerna Dandona andMs.Kinjal Chitalia who assisted me in completing this project 5
  6. 6. WHICH BANK TO BANK WITH??? EXECUTIVE SUMMARYIn India, with competition heating up in the banking industry and the increase in the number ofprivate banks in the post liberalization era, all players in this market are gearing up their supplychain management processes for better customer acquisition and retention. Most of these newprivate sector banks are handicapped by the lack of a strong branch network as compared to theirpublic sector counterparts to distribute their products or services. In the absence of such anetwork, the market place has seen the emerged of a lot of innovative services by the players toincrease their market share and reduce their cost of service delivery through direct distributionstrategies of Non-Branch Delivery. In this way, private sector banks in terms of innovation, inattracting potential customers by offering a range of services which are aimed at not only bigcorporate houses bur also the small time businessmen and middle class families. A host ofcustomer friendly approaches have been adopted to make banking more pleasant and smooth.Although some Indian public sector banks have started catching up to the tunes of the time byadopting some innovative measures, still the approach is rather less problematic and seems moreout of compulsion.After comparing both the private sector banks and public sector banks in all aspects, it was foundthat:-Private sector banks are having poor performance, lack of training, absence of initiative,reluctant to use modern banking techniques by the employees. Lack of recruitment ofprofessional in lateral stage, pressure of trade union is the other reasons of poor performance ofemployees of public sector banks. In public sector banks, overstaffing with a average of 20 percent is also highlighted. Private sector banks employees are highly motivated and handsomeremuneration is being paid to them in comparison to public sector banks. In public sector banks,majority of the bank employees are not aware of TT. In public sector banks, there is a lack ofawareness of responsibility. In public sector banks employees create a gap between the servicespromised and services offered. In public sector, the policy manner and senior executive makeprovision for improving the quality of services but bank managers and the frontline staff as abarrier. Some of the key problems of public sector banks are the information gap, negativeattitude and indecent behaviour but private sector banks does not face such problems, since theconcerned employees found responsible for obstructing the process of offering services aredemotivated and punished.As of now, New Private Sector and Foreign Banks have an edge over Public Sector Banks as faras implementation of technological solutions is concerned 6
  7. 7. WHICH BANK TO BANK WITH???Sr.No. TOPIC Page Nos. 1. Introduction to Banks 8 - 18 All about Banks 8 - 18 2. Banking in India 19 - 34 History of Banking in India 20 Pre - Independence 21 Post - Independence 21 - 22 Nationalization, Liberalization and Current Situation 22 - 24 Public Sector Banks v/s Private Sector Banks 24 - 34 3. BANK OF BARODA(BOB) 35 - 53 History 35 - 37 Various initiatives taken up by the Bank 38 - 43 4P‘s of Marketing w.r.t Banking 44 - 53 4. HOUSING DEVELOPMENT AND FINANCE CORPORATION BANK (HDFC BANK) 54 - 72 About the Bank 54 - 60 4P‘s of Marketing w.r.t Banking 61 - 72 5. INTERVIEW WITH THE BRANCH MANAGERS OF 73 - 76 BANK OF BARODA AND HDFC BANK Interview with Mr. K.S.Ganeshan, Manager BOB 73 - 74 Interview with Mrs. Mahalakshi Iyer, Senior Manager HDFC Bank 75 - 76 6. Conclusion 77 7. Bibliography 78 7
  8. 8. WHICH BANK TO BANK WITH??? All About BANKSA banker is a person who carries on the business of banking.The legal definition of the business of banking is:  Conducting current accounts for customers  Paying to the customers order (e.g. the customers cheques drawn on the bank), and  Collecting the cheques deposited to the customers‘ account, as the customers agent and crediting the proceeds to the customers current account.Since the advent of EFTPOS (Electronic Funds Transfer and Point Of Sale), the cheque has lostits primacy in most banking systems as a payment instrument, leading legal theorists to suggestthat the cheque based definition should be broadened to include financial institutions thatconduct current accounts for customers and enable customers to pay and be paid by third parties,even if they do not pay and collect cheques.However the commercial role of banks is wider than banking, and includes:  Issue of banknotes (promissory notes issued by a banker and payable to bearer on demand)  Processing of payments by way of telegraphic transfer, EFTPOS, internet banking or other means  Issuing bank drafts and bank cheques  Accepting money on term deposit  Lending money by way of overdraft, installment loan or otherwise  Providing documentary and standby letters of credit, guarantees, performance bonds, securities underwriting commitments and other forms of off balance sheet exposures  Safekeeping of documents and other items in safe deposit boxes  Sale, distribution or brokerage, with or without advice, of insurance, unit trusts and similar financial products as a financial supermarket‘ 8
  9. 9. WHICH BANK TO BANK WITH???Economic functionsThe economic functions of banking include:  Credit intermediation -- banks borrow and lend back to back on their own account as middle men  Maturity transformation -- banks borrow on demand debt and short term debt, but provide long term loans  Settlements of payments -- banks handle payments between geographically remote parties, and can net off payment flows in opposite directions to reduce the cost of settling payment obligations.Entry regulationCurrently in most jurisdictions commercial banks are regulated and require a bank license tooperate.Usually the definition of the business of banking for the purposes of regulation is extended toinclude acceptance of deposits, even if they are not repayable to the customers order, howevermoney lending is generally not included in the definition.Unlike most other regulated industries, the regulator is typically also a participant in the market,i.e. government owned bank (a central bank). Central banks also typically have a monopoly onthe business of issuing banknotes. However, in some countries this is not the case, e.g. in the UKthe Financial Services Authority licenses banks and some commercial banks issue their ownbanknotes in competition with the Bank of England.Some types of entity may be partly or wholly exempt from bank license requirements and areregulated by separate regulators, e.g. building societies and credit unions.Politics and HistoryBanks have influenced economies and politics for centuries. Historically, the primary purpose ofa bank was to provide loans to trading companies. Banks provided funds to allow businesses topurchase inventory, and collected those funds back with interest when the goods were sold. Forcenturies, the banking industry only dealt with businesses, not consumers. Commercial lendingtoday is a very intense activity, with banks carefully analyzing the financial condition of theirbusiness clients to determine the level of risk in each loan transaction. Banking services have 9
  10. 10. WHICH BANK TO BANK WITH???expanded to include services directed at individuals, and risk in these much smaller transactionsis pooled.Origin of the WordThe name bank derives from the Italian word banco "desk/bench", used during the Renaissanceby Florentines bankers, who used to make their transactions above a desk covered by a greentablecloth. However, there are traces of banking activity even in ancient times.Banking channelsBanks offer many different channels to access their banking and other services: A branch, banking centre or financial centre is a retail location where a bank or financialinstitution offers a wide array of face to face service to its customers ATM is a computerized telecommunications device that provides a financial institutionscustomers a method of financial transactions in a public space without the need for a humanclerk or bank teller. Most banks now have more ATMs than branches, and ATMs are providing awider range of services to a wider range of users. For example in Hong Kong, most ATMsenable anyone to deposit cash to any customer of the banks account by feeding in the notes andentering the account number to be credited. Also, most ATMs enable card holders from otherbanks to get their account balance and withdraw cash, even if the card is issued by a foreignbank. Mail is part of the postal system which itself is a system wherein written documentstypically enclosed in envelopes, and also small packages containing other matter, are delivered todestinations around the world. This can be used to deposit cheques and to send orders to the bankto pay money to third parties. Banks also normally use mail to deliver periodic accountstatements to customers. Telephone banking is a service provided by a financial institution which allows itscustomers to perform transactions over the telephone. This normally includes bill payments forbills from major billers (e.g. for electricity). Online banking is a term used for performing transactions, payments etc. over theInternet through a bank, credit union or building societys secure website 10
  11. 11. WHICH BANK TO BANK WITH???Types of banksBanks activities can be divided into retail banking, dealing directly with individuals and smallbusinesses; business banking, providing services to mid-market business; corporate banking,directed at large business entities; private banking, providing wealth management services toHigh Net Worth Individuals and families; and investment banking, relating to activities on thefinancial markets. Most banks are profit-making, private enterprises. However, some are ownedby government, or are non-profits.Central banks are normally government owned banks, often charged with quasi-regulatoryresponsibilities, e.g. supervising commercial banks, or controlling the cash interest rate. Theygenerally provide liquidity to the banking system and act as Lender of last resort in event of acrisis.Banks in the economyA bank raises funds by attracting deposits, borrowing money in the inter-bank market, or issuingfinancial instruments in the money market or a capital market. The bank then lends out most ofthese funds to borrowers.However, it would not be prudent for a bank to lend out all of its balance sheet. It must keep acertain proportion of its funds in reserve so that it can repay depositors who withdraw theirdeposits. Bank reserves are typically kept in the form of a deposit with a central bank. Thisbehaviour is called fractional-reserve banking and it is a central issue of monetary policy. Notethat under Basel I (and the new round of Basel II), banks no longer keep deposits with centralbanks, but must maintain defined capital ratios.Worldwide assets of the largest 1,000 banks grew 15.5% in 2005 to reach a record $60.5 trillion.This follows a 19.3% increase in the previous year. EU banks held the largest share, 50% at theend of 2005, up from 38% a decade earlier. The growth in Europe‘s share was mostly at theexpense of Japanese banks whose share more than halved during this period from 33% to 13%.The share of US banks also rose, from 10% to 14%. Most of the remainder was from other Asianand European countries.The US had by far the most banks (7,540 at end-2005) and branches (75,000) in the world. Thelarge number of banks in the US is an indicator of its geography and regulatory structure,resulting in a large number of small to medium sized institutions in its banking system. Japan 11
  12. 12. WHICH BANK TO BANK WITH???had 129 banks and 12,000 branches. In 2004, Germany, France, and Italy had more than 30,000branches each—more than double the 15,000 branches in the UK.Banks are susceptible to many forms of risk which have triggered occasional systemic crises.Risks include liquidity risk (the risk that many depositors will request withdrawals beyondavailable funds), credit risk (the risk that those who owe money to the bank will not repay), andinterest rate risk (the risk that the bank will become unprofitable if rising interest rates force it topay relatively more on its deposits than it receives on its loans), among others.Banking crises have developed many times throughout history when one or more risksmaterialize for a banking sector as a whole. Prominent examples include the U.S. Savings andLoan crisis in 1980s and early 1990s, the Japanese banking crisis during the 1990s, the bank runthat occurred during the Great Depression, and the recent liquidation by the central Bank ofNigeria, where about 25 banks were liquidated.Challenges within the banking industryThe banking industry is a highly regulated industry with detailed and focused regulators. Allbanks with FDIC-insured deposits have the FDIC as a regulator; however, for examinations, theFederal Reserve is the primary federal regulator for Fed-member state banks; the Office of theComptroller of the Currency (―OCC‖) is the primary federal regulator for national banks; and theOffice of Thrift Supervision, or OTS, is the primary federal regulator for thrifts. State non-member banks are examined by the state agencies as well as the FDIC. National banks have oneprimary regulator—the OCC.Each regulatory agency has their own set of rules and regulations to which banks and thrifts mustadhere.The Federal Financial Institutions Examination Council (FFIEC) was established in 1979 as aformal interagency body empowered to prescribe uniform principles, standards, and report formsfor the federal examination of financial institutions. Although the FFIEC has resulted in a greaterdegree of regulatory consistency between the agencies, the rules and regulations are constantlychanging.In addition to changing regulations, changes in the industry have led to consolidations within theFederal Reserve, FDIC, OTS and OCC. Offices have been closed, supervisory regions have beenmerged, staff levels have been reduced and budgets have been cut. The remaining regulators facean increased burden with increased workload and more banks per regulator. While banks 12
  13. 13. WHICH BANK TO BANK WITH???struggle to keep up with the changes in the regulatory environment, regulators struggle tomanage their workload and effectively regulate their banks. The impact of these changes is thatbanks are receiving less hands-on assessment by the regulators, less time spent with eachinstitution, and the potential for more problems slipping through the cracks, potentially resultingin an overall increase in bank failures across the United States.The changing economic environment has a significant impact on banks and thrifts as theystruggle to effectively manage their interest rate spread in the face of low rates on loans, ratecompetition for deposits and the general market changes, industry trends and economicfluctuations. It has been a challenge for banks to effectively set their growth strategies with therecent economic market. A rising interest rate environment may seem to help financialinstitutions, but the effect of the changes on consumers and businesses is not predictable and thechallenge remains for banks to grow and effectively manage the spread to generate a return totheir shareholders.The management of the banks‘ asset portfolios also remains a challenge in today‘s economicenvironment. Loans are a bank‘s primary asset category and when loan quality becomes suspect,the foundation of a bank is shaken to the core. While always an issue for banks, declining assetquality has become a big problem for financial institutions. There are several reasons for this,one of which is the lax attitude some banks have adopted because of the years of ―good times.‖The potential for this is exacerbated by the reduction in the regulatory oversight of banks and insome cases depth of management. Problems are more likely to go undetected, resulting in asignificant impact on the bank when they are recognized. In addition, banks, like any business,struggle to cut costs and have consequently eliminated certain expenses, such as adequateemployee training programs.Banks also face a host of other challenges such as aging ownership groups. Across the country,many banks‘ management teams and board of directors are aging. Banks also face ongoingpressure by shareholders, both public and private, to achieve earnings and growth projections.Regulators place added pressure on banks to manage the various categories of risk. Banking isalso an extremely competitive industry. Competing in the financial services industry has becometougher with the entrance of such players as insurance agencies, credit unions, check cashingservices, credit card companies, etc. 13
  14. 14. WHICH BANK TO BANK WITH???Banking RegulationsBank regulations are a form of government regulation which subject banks to certainrequirements, restrictions and guidelines, aiming to uphold the soundness and integrity of thefinancial system. The combination of the instability of banks as well as their importantfacilitating role in the economy led to banking being thoroughly regulated. The amount of capitala bank is required to hold is a function of the amount and quality of its assets. Major banks aresubject to the Basel Capital Accord promulgated by the Bank for International Settlements. Inaddition, banks are usually required to purchase deposit insurance to make sure smaller investorsare not wiped out in the event of a bank failure.Another reason banks are thoroughly regulated is that ultimately, no government can allow thebanking system to fail. There is almost always a lender of last resort—in the event of a liquiditycrisis (where short term obligations exceed short term assets) some element of government willstep in to lend banks enough money to avoid bankruptcy.ProfitabilityA bank generates a profit from the differential between the level of interest it pays for depositsand other sources of funds, and the level of interest it charges in its lending activities. Thisdifference is referred to as the spread between the cost of funds and the loan interest rate.Historically, profitability from lending activities has been cyclic and dependent on the needs andstrengths of loan customers. In recent history, investors have demanded a more stable revenuestream and banks have therefore placed more emphasis on transaction fees, primarily loan feesbut also including service charges on array of deposit activities and ancillary services(international banking, foreign exchange, insurance, investments, wire transfers, etc.). However,lending activities still provide the bulk of a commercial banks income.In the past 10 years in the United States, banks have taken many measures to ensure that theyremain profitable while responding to ever-changing market conditions. First, this includes theGramm-Leach-Bliley Act, which allows banks again to merge with investment and insurancehouses. Merging banking, investment, and insurance functions allows traditional banks torespond to increasing consumer demands for "one-stop shopping" by enabling cross-selling ofproducts (which, the banks hope, will also increase profitability). Second, they have expandedthe use of risk-based pricing from business lending to consumer lending, which means charginghigher interest rates to those customers that are considered to be a higher credit risk and thusincreased chance of default on loans. This helps to offset the losses from bad loans, lowers the 14
  15. 15. WHICH BANK TO BANK WITH???price of loans to those who have better credit histories, and offers credit products to high riskcustomers who would otherwise been denied credit. Third, they have sought to increase themethods of payment processing available to the general public and business clients. Theseproducts include debit cards, pre-paid cards, smart-cards, and credit cards. These products makeit easier for consumers to conveniently make transactions and smooth their consumption overtime (in some countries with under-developed financial systems, it is still common to dealstrictly in cash, including carrying suitcases filled with cash to purchase a home). However, withconvenience there is also increased risk that consumers will mismanage their financial resourcesand accumulate excessive debt. Banks make money from card products through interestpayments and fees charged to consumers and transaction fees to companies that accept the cards.The banking industrys main obstacles to increasing profits are existing regulatory burdens, newgovernment regulation, and increasing competition from non-traditional financial institutions.Banking Stats and Information1. Top ten bank holding companies in the world ranked by profit (Figures in US $)Rank Country Company Profit (US $)1 United States Citigroup 22.13 billion2 United States Bank of America 21.13 billion3 United Kingdom HSBC 22.086 billion4 United States JP Morgan Chase 14.44 billion5 United Kingdom Royal Bank of Scotland Group 12.1 billion6 Switzerland UBS 9.79 billion7 United States Goldman Sachs 9.34 billion8 United States Wells Fargo 8.48 billion9 United States Wachovia 7.79 billion10 United States Morgan Stanley 7.45 billion 15
  16. 16. WHICH BANK TO BANK WITH???2. Top ten banking groups in the world ranked by Tier 1 capital (Figures in US $)Rank Country Company Tier 1 Capital (US $)1 United Kingdom HSBC 79 billion2 United States Citigroup 75 billion3 United States Bank of America 73 billion4 United States JP Morgan Chase 72 billion5 Japan Mitsubishi UFJ Financial Group 64 billion6 France Credit Agricole Group 60 billion7 United Kingdom Royal Bank of Scotland 48 billion8 Japan Sumitomo Mitsui Financial Group 40 billion9 Japan Mizuho Financial Group 39 billion10 Spain Santander Central Hispano 38 billion3. Top ten banking groups in the world ranked by shareholder equity ($m)Rank Country Company Shareholder equity ($m)1 United States Citigroup 112537 $mln2 United States JPMorgan Chase 107211 $mln3 United States Bank of America 101224 $mln4 United Kingdom HSBC 98226 $mln5 Japan Mitsubishi UFJ Financial Group 83281 $mln6 France Credit Agricole Group 65137 $mln 16
  17. 17. WHICH BANK TO BANK WITH???7 United Kingdom Royal Bank of Scotland Group 64453 $mln8 France BNP Paribas 56610 $mln9 Spain Santander Central Hispano 53640 $mln10 Japan Mizuho Financial Group 52243 $mln4. Top ten banking groups in the world ranked by assetsRank Country Company Assets (US $)1 United Kingdom HSBC Holdings 1,861 billion2 Switzerland UBS 1,533 billion3 United States Citigroup 1,484 billion4 Japan Mizuho Financial Group 1,296 billion5 France Credit Agricole Group 1,243 billion6 France BNP Paribas 1,234 billion7 United States JPMorgan Chase & Co. 1,157 billion8 Germany Deutsche Bank 1,144 billion9 United Kingdom Royal Bank of Scotland 1,119 billion10 United States Bank of America 1,110 billion 17
  18. 18. WHICH BANK TO BANK WITH???5. Top ten banks in the world ranked by market capitalizationRank Country Company Market Capitalization (US $)1 United States Citigroup 275 billion2 China ICBC 250 billion3 United States Bank of America 230 billion4 United Kingdom HSBC 200 billion5 United States JPMorgan Chase 165 billion6 Japan Mitsubishi UFJ 145 billion7 Italy Unicredit 130 billion (2007)8 United States Wells Fargo 120 billion9 Switzerland UBS 110 billion10 United Kingdom Royal Bank of Scotland 100 billion 18
  19. 19. WHICH BANK TO BANK WITH???BANKING IN INDIABanking in India originated in the first decade of 18th century with The General Bank of Indiacoming into existence in 1786. This was followed by Bank of Hindustan. Both these banks arenow 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 likeCredit Lyonnais started their Calcutta operations in the 1850s. At that point of time, Calcutta wasthe most active trading port, mainly due to the trade of the British Empire, and due to whichbanking activity took roots there and prospered. The first fully Indian owned bank was theAllahabad Bank, which was established in 1865.By the 1900s, the market expanded with the establishment of banks such as Punjab NationalBank, in 1895 in Lahore and Bank of India, in 1906, in Mumbai - both of which were foundedunder private ownership. The Reserve Bank of India formally took on the responsibility ofregulating the Indian banking sector from 1935. After Indias independence in 1947, the ReserveBank was nationalized and given broader powers. 19
  20. 20. WHICH BANK TO BANK WITH???HistoryAt the end of late-18th century, there were hardly any banks in India in the modern sense of theterm. At the time of the American Civil War, a void was created as the supply of cotton toLancashire stopped from the Americas. Some banks were opened at that time which functionedas entities to finance industry, including speculative trades in cotton. With large exposure tospeculative ventures, most of the banks opened in India during that period could not survive andfailed. 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 thebeginning of the 20th century.At the beginning of the 20th century, Indian economy was passing through a relative period ofstability. Around five decades have elapsed since the Indias First war of Independence, and thesocial, industrial and other infrastructure have developed. At that time there were very smallbanks operated by Indians, and most of them were owned and operated by particularcommunities. 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 onmerged to form the Imperial Bank of India, and Imperial Bank of India, upon Indiasindependence, was renamed the State Bank of India. There were also some exchange banks, asalso a number of Indian joint stock banks. All these banks operated in different segments of theeconomy. The presidency banks were like the central banks and discharged most of the functionsof central banks. They were established under charters from the British East India Company. Theexchange banks, mostly owned by the Europeans, concentrated on financing of foreign trade.Indian joint stock banks were generally under capitalized and lacked the experience and maturityto compete with the presidency banks, and the exchange banks. There was potential for manynew banks as the economy was growing. Lord Curzon had observed then in the context of Indianbanking: "In respect of banking it seems we are behind the times. We are like some old fashionedsailing 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 wereset up at that time, a number of which have survived to the present such as Bank of India andCorporation Bank, Indian Bank, Bank of Baroda, and Canara Bank. The Bank of Bengal, which later became the State Bank of India 20
  21. 21. WHICH BANK TO BANK WITH???Pre-IndependenceThe 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 theIndian banking. The years of the First World War were turbulent, and it took toll of many bankswhich simply collapsed despite the Indian economy gaining indirect boost due to war-relatedeconomic activities. At least 94 banks in India failed during the years 1913 to 1918 as indicatedin the following table: Number of banks Authorised capital Paid-up CapitalYears that failed (Rs. Lakhs) (Rs. Lakhs)1913 12 274 351914 42 710 1091915 11 56 51916 13 231 41917 9 76 251918 7 209 1Post-IndependenceThe partition of India in 1947 had adversely impacted the economies of Punjab and West Bengal,and banking activities had remained paralyzed for months. Indias independence marked the endof a regime of the Laissez-faire for the Indian banking. The Government of India initiatedmeasures to play an active role in the economic life of the nation, and the Industrial PolicyResolution adopted by the government in 1948 envisaged a mixed economy. This resulted into 21
  22. 22. WHICH BANK TO BANK WITH???greater involvement of the state in different segments of the economy including banking andfinance. The major steps to regulate banking included:In 1948, the Reserve Bank of India, Indias central banking authority, was nationalized, and itbecame an institution owned by the Government of India.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."The Banking Regulation Act also provided that no new bank or branch of an existing bank maybe opened without a licence from the RBI, and no two banks could have common directors.However, despite these provisions, control and regulations, banks in India except the State Bankof India, continued to be owned and operated by private persons. This changed with thenationalization of major banks in India on 19th July, 1969.NationalizationBy the 1960s, the Indian banking industry has become an important tool to facilitate thedevelopment of the Indian economy. At the same time, it has emerged as a large employer, and adebate 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 theAll India Congress Meeting in a paper entitled "Stray thoughts on Bank Nationalization." Thepaper was received with positive enthusiasm. Thereafter, her move was swift and sudden, andthe GOI issued an ordinance and nationalized the 14 largest commercial banks with effect fromthe midnight of July 19, 1969. Jayaprakash Narayan, a national leader of India, described thestep as a "masterstroke of political sagacity." Within two weeks of the issue of the ordinance, theParliament passed the Banking Companies (Acquition and Transfer of Undertaking) Bill, and itreceived the presidential approval on 9th August, 1969.A second dose of nationalization of 6 more commercial banks followed in 1980. The statedreason for the nationalization was to give the government more control of credit delivery. Withthe second dose of nationalization, the GOI controlled around 91% of the banking business ofIndia.After this, until the 1990s, the nationalized banks grew at a pace of around 4%, closer to theaverage growth rate of the Indian economy. 22
  23. 23. WHICH BANK TO BANK WITH???LiberalizationIn the early 1990s the then Narasimha Rao government embarked on a policy of liberalizationand gave licenses to a small number of private banks, which came to be known as NewGeneration tech-savvy banks, which included banks such as UTI Bank(now re-named as AxisBank) (the first of such new generation banks to be set up), ICICI Bank and HDFC Bank. Thismove, along with the rapid growth in the economy of India, kick started the banking sector inIndia, 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 normsfor Foreign Direct Investment, where all Foreign Investors in banks may be given voting rightswhich could exceed the present cap of 10%,at present it has gone up to 49% with somerestrictions. 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. Thenew 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 alsoreceived more.Current situationCurrently (2007), banking in India is generally fairly mature in terms of supply, product rangeand reach-even though reach in rural India still remains a challenge for the private sector andforeign banks. In terms of quality of assets and capital adequacy, Indian banks are considered tohave clean, strong and transparent balance sheets relative to other banks in comparableeconomies in its region. The Reserve Bank of India is an autonomous body, with minimalpressure from the government. The stated policy of the Bank on the Indian Rupee is to managevolatility 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 time-especially inits services sector-the demand for banking services, especially retail banking, mortgages andinvestment services are expected to be strong. One may also expect M&As, takeovers, and assetsales.In March 2006, the Reserve Bank of India allowed Warburg Pincus to increase its stake in KotakMahindra Bank (a private sector bank) to 10%. This is the first time an investor has been allowedto hold more than 5% in a private sector bank since the RBI announced norms in 2005 that anystake exceeding 5% in the private sector banks would need to be vetted by them. 23
  24. 24. WHICH BANK TO BANK WITH???Currently, India has 88 scheduled commercial banks (SCBs) - 28 public sector banks (that iswith the Government of India holding a stake), 29 private banks (these do not have governmentstake; they may be publicly listed and traded on stock exchanges) and 31 foreign banks. Theyhave a combined network of over 53,000 branches and 17,000 ATMs. According to a report byICRA Limited, a rating agency, the public sector banks hold over 75 percent of total assets of thebanking industry, with the private and foreign banks holding 18.2% and 6.5% respectively Public Sector Banks v/s Private Sector Banks:PUBLIC SECTOR BANKS:Among the Public Sector Banks in India, United Bank of India is one of the 14 major bankswhich were nationalized on July 19, 1969. Its predecessor, in the Public Sector Banks, the UnitedBank of India Ltd., was formed in 1950 with the amalgamation of four banks viz. ComillaBanking Corporation Ltd. (1914), Bengal Central Bank Ltd. (1918), Comilla Union Bank Ltd.(1922) and Hooghly Bank Ltd. (1932).Oriental Bank of Commerce (OBC), a Government of India Undertaking offers Domestic, NRIand Commercial banking services. OBC is implementing a GRAMEEN PROJECT in DehradunDistrict (UP) and Hanumangarh District (Rajasthan) disbursing small loans. This Public SectorBank India has implemented 14 point action plan for strengthening of credit delivery to womenand has designated 5 branches as specialized branches for women entrepreneurs.List of Public sector banks in IndiaSBI group:State Bank of India, with its seven associate banks commands the largest banking resources inIndia. SBI and its associate banks are:  State Bank of India  State Bank of Bikaner & Jaipur  State Bank of Hyderabad  State Bank of Indore  State Bank of Mysore 24
  25. 25. WHICH BANK TO BANK WITH???  State Bank of Patiala  State Bank of Saurashtra  State Bank of TravancoreAfter the amalgamation of New Bank of India with Punjab National Bank, currently there are 19nationalized banks in India:  Allahabad Bank  Andhra Bank  Bank of Baroda  Bank of India  Bank of Maharashtra  Canara Bank  Central Bank of India  Corporation Bank  Dena Bank  Indian Bank  Indian Overseas Bank  Oriental Bank of Commerce  Punjab & Sind Bank  Punjab National Bank  Syndicate Bank  Union Bank of India  United Bank of India  UCO Bank  Vijaya Bank 25
  29. 29. WHICH BANK TO BANK WITH??? NET PROFIT:TOTAL OF 19 10022NATIONALISED BANKSTOTAL OF STATE BANK 5357GROUP.PRIVATE SECTOR BANKS:Private banking in India was practiced since the beginning of banking system in India. The firstprivate bank in India to be set up in Private Sector Banks in India was IndusInd Bank. It is one ofthe fastest growing Private Sector Banks in India. IDBI ranks the tenth largest development bankin the world as Private Banks in India and has promoted world class institutions in India.The first Private Bank in India to receive an in principle approval from the Reserve Bank ofIndia was Housing Development Finance Corporation Limited, to set up a bank in the privatesector banks in India as part of the RBIs liberalization of the Indian Banking Industry. It wasincorporated in August 1994 as HDFC Bank Limited with registered office in Mumbai andcommenced operations as Scheduled Commercial Bank in January 1995.ING Vysya, yet another Private Bank of India was incorporated in the year 1930. Bangalore hasa pride of place for having the first branch inception in the year 1934. With successive years ofpatronage and constantly setting new standards in banking, ING Vysya Bank has many credits toits account.List of Private sector banks in India  Axis Bank (formerly UTI Bank) 29
  30. 30. WHICH BANK TO BANK WITH??? Bank of Rajasthan Bharat Overseas Bank 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. Karur Vysya Bank Kotak Mahindra Bank Lakshmi Vilas Bank Lord Krishna Bank ( now Centurian Bank of Punjab) Nainital Bank Ratnakar Bank Rupee Bank 30
  31. 31. WHICH BANK TO BANK WITH???  Saraswat Bank  SBI Commercial and International Bank  South Indian Bank  Tamilnad Mercantile Bank Ltd.  Thane Janata Sahakari Bank  Bassein Catholic Bank  United Western Bank  YES Bank IMPORTANT TRANSACTIONS DURING THE YEAR 2006: (Figures in crores):DEPOSITS:TOTAL OF 21 OLD PVT 131372BANKSTOTAL OF 8 NEW PVT 291965BANKS 31
  34. 34. WHICH BANK TO BANK WITH???TOTAL EXPENSES:TOTAL OF 21 OLD PVT 9597BANKSTOTAL OF 8 NEW PVT 23333BANKS NET PROFIT:TOTAL OF 21 OLD PVT 820BANKSTOTAL OF 8 NEW PVT 4194BANKS In the Comparative Analysis which I am supposed to do, I have selected BANK OF BARODA from the Public Sector Bank and HDFC BANK form the Private Sector. 34
  35. 35. WHICH BANK TO BANK WITH??? BANK OF BARODA (BOB).History of the Bank:It all started with a visionary Maharajas uncanny foresight into the future of trade andenterprising in his country. On 20th July 1908, under the Companies Act of 1897, and with apaid up capital of Rs 10 Lacs started the legend that has now translated into a strong, trustworthyfinancial body, THE BANK OF BARODA.It has been a wisely orchestrated growth, involving corporate wisdom, social pride and the visionof helping others grow, and growing itself in turn.The founder, Maharaja Sayajirao Gaekwad, with his insight into the future, saw "a bank ofthis nature will prove a beneficial agency for lending, transmission, and deposit of money andwill be a powerful factor in the development of art, industries and commerce of the State andadjoining territories."These words are etched into the mind, body and soul of what has now become a banking legend.Following the Maharajas words, the emblem has been crafted to represent wealth, safety,industrial development and an inclination to better and promote the countrys agrarian economy.This emblem shows a coin, symbolizing wealth, embossed with an upraised palm, a safety cover 35
  36. 36. WHICH BANK TO BANK WITH???for the depositors money, with a cogwheel that promotes industrial growth in tandem with thetwo corn ears that stand for the progress of the staple agricultural growth in the country.Between 1913 and 1917, as many as 87 banks failed in India. Bank of Baroda survived thecrisis, mainly due to its honest and prudent leadership. This financial integrity, businessprudence, caution and an abiding care and concern for the hard earned savings of hard working 36
  37. 37. WHICH BANK TO BANK WITH???people, were to become the central philosophy around which business decisions would beeffected. This cardinal philosophy was over the 94 years of its existence, to become its biggestasset. It ensured that the Bank survived the Great War years. It ensured survival during the GreatDepression. Even while big names were dragged into the Stock Market scam and the CapitalMarket scam, the Bank of Baroda continued its triumphant march along the best ethicalpractices.No history is complete without mention of its heroes, mostly ordinary people, who turn in extra-ordinary performances and contribute to building an institution. Over the years, there have beenthousands of such people. The Bank salutes these "unknown soldiers" who passionatelyhelped to create the legend of Bank of Baroda.There were also the leaders, both corporate and royal, who provided the vision and guided theBank through trail blazing years, and departing, left behind footprints on the sands of time. ThisRoll of Honor will be incomplete without mention of men, of the stature of Maharaja SayajiraoGaekwad, Sampatrao Gaekwad, Ralph Whitenack, Vithaldas Thakersey, TulsidasKilachand and NM Chokshi.Bank of Baroda salutes these leaders whose vision helped to create an institution. 37
  38. 38. WHICH BANK TO BANK WITH???Various initiatives taken up by the Bank:Marketing InitiativesThe mid-eighties marked the beginning of the shift to a buyers` market. The Bank orchestratedits business strategies around the centrality of the customer. It diversified into areas of merchantbanking, housing finance, credit cards and mutual funds. A string of segment specific branchesentrenched operations in the profitable markets. Overseas operations were revamped andstructural changes intensified in the territories to cater to second generation NRIs. Slowly butsurely, the move to become a one stop financial supermarket had been set in motion. Servicedelivery standards were stipulated.Technology was adopted to add punch. Employees across the board were inculcated with themarketing concept. Aggressive marketing became the new business philosophy.People InitiativesBank of Baroda has always had an immense faith in the infinite potential of its people. This hasbeen historically demonstrated in its recruitment practices, developmental initiatives, placementprocesses and promotion policies. Strategic HR interventions like, according cross border andcross cultural work exposure to its managers, hiring diverse functional specialists to support linefunctionaries and complementing the technical competencies of its people by impartingconceptual, managerial and leadership skills, gave the Bank competitive advantage. Theelaborate man management policies also made the Bank a breeding ground for business leaders.The Bank provided around a dozen CEOs to the industry- men who went on to build other greatinstitutions. People initiatives were blended with IR initiatives to create an effectivelyharmonious workplace, where everyone prospered.Financial InitiativesNew norms for capital adequacy required new capital management strategies. In 1995 the Bankraised Rs 300 crores through a Bond issue. In 1996 the Bank tapped the capital market with anIPO of Rs 850 crores, despite adverse market conditions prevailing then, the issue was oversubscribed, reflecting the positive public perception of the Banks fundamental financial strength. 38
  39. 39. WHICH BANK TO BANK WITH???Digital InitiativesBank of Baroda pioneered the shift from manual operating systems to a computerized workenvironment. Starting with ledgers, to ledger posting machines, through ALPMs, the Bankgraduated to the use of Unix based systems to Mainframes, to client server based Total BranchMechanization Systems. Today, the Bank has 1918 computerized branches, covering 70% of itsnetwork and 91.64% of its business. Alive to the growing complexities of an intenselycompetitive marketplace and the mounting expectations of customers fuelled by this competition,the Bank reworked its distribution strategy. It ventured beyond the brick and mortar deliverychannel into ATMs and the OmniBOB range of anytime, anywhere electronic channels of PCbanking, telephone banking. The e-banking products used state of the art technologies like digitalcertificates, smart card authentication and secure networking.The new IT strategy, in the process of implementation will see the deployment of Core BankingSystems, Multi Service Transaction Switch, Payment Gateways - all geared to deliverconvenience banking.Quality InitiativesIn its relentless striving for quality perfection, the Bank secured the ISO 9001:2000 certificationfor 15 branches. By end of the current financial, the Bank is targeting 54 more branches for thisquality certification.The FutureRevolutionary and discontinuous changes in the operating environment are a stark reminder thatbusiness success is impermanent. The emergence of IT as a major driver for change, hasaccentuated the need to initiate a major transformation program. The conversion to an IT savvy,market driven bank will be a prerequisite to survival and growth. A major and strategic step inhi-tech, was the establishment of the Integrated Treasury branch, as a forerunner to full-fledgedglobal treasury operations. Towards creating a future Bank of Baroda, the Bank has adopted arevolutionary new business strategy that will be enabled by a revolutionary new IT strategy.Actioning this strategy will position Bank of Baroda as Indias uncontested premier bank.At Bank of Baroda, change is a journey. It has a beginning. There will be no end. It will be along and difficult march. And the Bank will emerge stronger, more resilient and positioned tobecome Indias first bank of truly global standards. The relocation to the imposing Baroda 39
  40. 40. WHICH BANK TO BANK WITH???Corporate Centre, is a true reflection of the Banks resolve to move ahead of the times. It will notbe out of place now, as it stands on the threshold of a digital era, to echo the same sentiments thatguided the Bank in its platinum jubilee year - a promising future is the sequel to a glorious past.The key business indicators and dividend paid (YoY):Key Business Indicators (Rs. in Crore) 31.03.2007 31.03.2006Total Deposits 1,24,915.98 93,661.99Total Advances 83,620.87 59911.78Total Investments 34943.63 35114.22Total Assets 143146.17 113392.53Net Profit 1026.47 826.96Capital Adequacy Ratio (percentage) 11.80 13.65Net Non Performing Loans to Net Advances (percentage) 0.60 0.87Operating profit to working funds (percentage) 1.94 1.81Business Per Employee (Lacs) 548 396.07Dividend History (Percentage)2007 602006 502005 50 40
  41. 41. WHICH BANK TO BANK WITH???2004 652003 602002 402001 402000 401999 301998 30The Network of BOB:Branch Network (as of 2/11/2007)Area No. of BranchesMetro 490Urban 495Semi-Urban 561Rural 1162Total (Indian) 2708Foreign (Overseas) 63Total (Global) 2771Controlling OfficesZonal Offices 10Regional Offices 43 41
  42. 42. WHICH BANK TO BANK WITH???Human Resources (Staff as of September 2006)Officers 13525Clerks 16497Sub - Staff 8041Total 38063Where the Bank functions (District/State/Countries):Banks Lead DistrictsState No. of Lead DistrictsGujarat 11Uttar Pradesh 14Uttaranchal 2Rajasthan 11Madhya Pradesh 1 42
  43. 43. WHICH BANK TO BANK WITH???BRANCHES SUBSIDIARIES - Bahamas - Bostwana - Belgium - Guyana - Fiji Islands - Kenya - Hong Kong - Tanzania - Mauritius - Trinidad and Tobago - South Africa - Uganda - Scychelles - Singapore JOINT VENTURE - Sultanate of Oman - Zambia - United Arab Emirates - United Kingdom - United States of AmericaREPRESENTATIVE OFFICE - Australia - China - Malaysia - Thailand 43
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  53. 53. WHICH BANK TO BANK WITH??? PRICE PLACEBank of Baroda is located in and around the country. It has a total of 2771 branches in andaround India, Its Head Office is located at Mandvi, Gujarat. PROMOTION TECHNIQUESBank of Baroda does a lot of Promotion about its products and services. That is the main reasonit‘s called INDIA‘S INTERNATIONAL BANK. It has RAHUL DRAVID, as its BrandAmbassador. 53
  54. 54. WHICH BANK TO BANK WITH??? HOUSING DEVELOPMENT AND FINANCE CORPORATION BANK LTD (HDFC BANK.)About the Bank:The Housing Development Finance Corporation Limited (HDFC) was amongst the first toreceive an in principle approval from the Reserve Bank of India (RBI) to set up a bank in theprivate sector, as part of the RBIs liberalization of the Indian Banking Industry in 1994. Thebank was incorporated in August 1994 in the name of HDFC Bank Limited, with its registeredoffice in Mumbai, India. HDFC Bank commenced operations as a Scheduled Commercial Bankin January 1995.HDFC is Indias premier housing finance company and enjoys an impeccable track record inIndia as well as in international markets. Since its inception in 1977, the Corporation hasmaintained a consistent and healthy growth in its operations to remain the market leader inmortgages. Its outstanding loan portfolio covers well over a million dwelling units. HDFC hasdeveloped significant expertise in retail mortgage loans to different market segments and alsohas a large corporate client base for its housing related credit facilities. With its experience in thefinancial markets, a strong market reputation, large shareholder base and unique consumerfranchise, HDFC was ideally positioned to promote a bank in the Indian environment.HDFC Banks mission is to be a World-Class Indian Bank. The objective is to build soundcustomer franchises across distinct businesses so as to be the preferred provider of bankingservices for target retail and wholesale customer segments, and to achieve healthy growth inprofitability, consistent with the banks risk appetite. The bank is committed to maintain thehighest level of ethical standards, professional integrity, corporate governance and regulatorycompliance. HDFC Banks business philosophy is based on four core values - OperationalExcellence, Customer Focus, Product Leadership and People. 54
  55. 55. WHICH BANK TO BANK WITH???In a milestone transaction in the Indian banking industry, Times Bank Limited (another newprivate sector bank promoted by Bennett, Coleman & Co./Times Group) was merged withHDFC Bank Ltd., effective February 26, 2000. As per the scheme of amalgamation approved bythe shareholders of both banks and the Reserve Bank of India, shareholders of Times Bankreceived 1 share of HDFC Bank for every 5.75 shares of Times Bank. The acquisition addedsignificant value to HDFC Bank in terms of increased branch network, expanded geographicreach, enhanced customer base, skilled manpower and the opportunity to cross-sell and leveragealternative delivery channels.Distribution Network of the Bank:HDFC Bank is headquartered in Mumbai. The Bank at present has an enviable network of over772 branches spread over 327 cities across India. All branches are linked on an online real-timebasis. Customers in over 120 locations are also serviced through Telephone Banking. The Banksexpansion plans take into account the need to have a presence in all major industrial andcommercial centres where its corporate customers are located as well as the need to build astrong retail customer base for both deposits and loan products. Being a clearing/settlement bankto various leading stock exchanges, the Bank has branches in the centres where the NSE/BSEhave a strong and active member base.Currently HDFC Bank has 753 branches, 1,716 ATMs, in 320 cities in India, and all branches ofthe bank are linked on an online real-time basis. The bank offers many innovative products &services to individuals, corporate, trusts, governments, partnerships, financial institutions, mutualfunds, insurance companies.It is a path breaker in the Indian banking sector.Management:Mr. Jagdish Capoor took over as the banks Chairman in July 2001. Prior to this, Mr. Capoor wasa Deputy Governor of the Reserve Bank of India.The Managing Director, Mr. Aditya Puri, has been a professional banker for over 25 years, andbefore joining HDFC Bank in 1994 was heading Citibanks operations in Malaysia.The Banks Board of Directors is composed of eminent individuals with a wealth of experiencein public policy, administration, industry and commercial banking. Senior executives 55
  56. 56. WHICH BANK TO BANK WITH???representing HDFC are also on the Board.Senior banking professionals with substantial experience in India and abroad head variousbusinesses and functions and report to the Managing Director. Given the professional expertiseof the management team and the overall focus on recruiting and retaining the best talent in theindustry, the bank believes that its people are a significant competitive strength.Technology:HDFC Bank operates in a highly automated environment in terms of information technology andcommunication systems. All the banks branches have online connectivity, which enables thebank to offer speedy funds transfer facilities to its customers. Multi-branch access is alsoprovided to retail customers through the branch network and Automated Teller Machines(ATMs).The Bank has made substantial efforts and investments in acquiring the best technology availableinternationally, to build the infrastructure for a world class bank. The Banks business issupported by scalable and robust systems which ensure that our clients always get the finestservices we offer.The Bank has prioritised its engagement in technology and the internet as one of its key goalsand has already made significant progress in web-enabling its core businesses. In each of itsbusinesses, the Bank has succeeded in leveraging its market position, expertise and technology tocreate a competitive advantage and build market share.Businesses:HDFC Bank offers a wide range of commercial and transactional banking services and treasuryproducts to wholesale and retail customers. The bank has three key business segments:  Wholesale Banking Services The Banks target market ranges from large, blue-chip manufacturing companies in the Indian corporate to small & mid-sized corporates and agri-based businesses. For these customers, the Bank provides a wide range of commercial and transactional banking services, including working capital finance, trade services, transactional services, cash 56
  57. 57. WHICH BANK TO BANK WITH??? management, etc. The bank is also a leading provider of structured solutions, which combine cash management services with vendor and distributor finance for facilitating superior supply chain management for its corporate customers. Based on its superior product delivery / service levels and strong customer orientation, the Bank has made significant inroads into the banking consortia of a number of leading Indian corporates including multinationals, companies from the domestic business houses and prime public sector companies. It is recognised as a leading provider of cash management and transactional banking solutions to corporate customers, mutual funds, stock exchange members and banks. Retail Banking Services The objective of the Retail Bank is to provide its target market customers a full range of financial products and banking services, giving the customer a one-stop window for all his/her banking requirements. The products are backed by world-class service and delivered to the customers through the growing branch network, as well as through alternative delivery channels like ATMs, Phone Banking, NetBanking and Mobile Banking. The HDFC Bank Preferred program for high net worth individuals, the HDFC Bank Plus and the Investment Advisory Services programs have been designed keeping in mind needs of customers who seek distinct financial solutions, information and advice on various investment avenues. The Bank also has a wide array of retail loan products including Auto Loans, Loans against marketable securities, Personal Loans and Loans for Two-wheelers. It is also a leading provider of Depository Participant (DP) services for retail customers, providing customers the facility to hold their investments in electronic form. HDFC Bank was the first bank in India to launch an International Debit Card in association with VISA (VISA Electron) and issues the Mastercard Maestro debit card as well. The Bank launched its credit card business in late 2001. By September 30, 2005, the bank had a total card base (debit and credit cards) of 5.2 million cards. The Bank is also one of the leading players in the "merchant acquiring" business with over 50,000 Point- of-sale (POS) terminals for debit / credit cards acceptance at merchant establishments. Treasury Within this business, the bank has three main product areas - Foreign Exchange and 57
  58. 58. WHICH BANK TO BANK WITH??? Derivatives, Local Currency Money Market & Debt Securities, and Equities. With the liberalisation of the financial markets in India, corporates need more sophisticated risk management information, advice and product structures. These and fine pricing on various treasury products are provided through the banks Treasury team. To comply with statutory reserve requirements, the bank is required to hold 25% of its deposits in government securities. The Treasury business is responsible for managing the returns and market risk on this investment portfolioRatings:  Credit Rating The Bank has its deposit programs rated by two rating agencies - Credit Analysis & Research Limited (CARE) and Fitch Ratings India Private Limited. The Banks Fixed Deposit programme has been rated CARE AAA (FD) [Triple A] by CARE, which represents instruments considered to be "of the best quality, carrying negligible investment risk". CARE has also rated the banks Certificate of Deposit (CD) programme "PR 1+" which represents "superior capacity for repayment of short term promissory obligations". Fitch Ratings India Pvt. Ltd. (100% subsidiary of Fitch Inc.) has assigned the "tAAA ( ind )" rating to the Banks deposit programme, with the outlook on the rating as "stable". This rating indicates "highest credit quality" where "protection factors are very high". The Bank also has its long term unsecured, subordinated (Tier II) Bonds rated by CARE and Fitch Ratings India Private Limited and its Tier I perpetual Bonds and Upper Tier II Bonds rated by CARE and CRISIL Ltd. CARE has assigned the rating of "CARE AAA" for the subordinated Tier II Bonds while Fitch Ratings India Pvt. Ltd. has assigned the rating "AAA (ind)" with the outlook on the rating as "stable". CARE has also assigned "CARE AAA [Triple A]" for the Banks Perpetual bond and Upper Tier II bond issues. CRISIL has assigned the rating "AAA / Stable" for the Banks Perpetual Debt programme and Upper Tier II Bond issue. In each of the cases referred to above, the ratings awarded were the highest assigned by the rating agency for those instruments.  Corporate Governance Rating The bank was one of the first four companies, which subjected itself to a Corporate Governance and Value Creation (GVC) rating by the rating agency, The Credit Rating Information Services of India Limited (CRISIL). The rating provides an independent assessment of an entitys current performance and an expectation on its "balanced value 58
  59. 59. WHICH BANK TO BANK WITH??? creation and corporate governance practices" in future. The bank has been assigned a CRISIL GVC Level 1 rating which indicates that the banks capability with respect to wealth creation for all its stakeholders while adopting sound corporate governance practices is the highest.Recognition:Over a decade of its operations, HDFC Bank has been recognized, rated andawarded by a number of organizations, which includes:  Best Domestic Bank in India in The Asset Triple A Country Awards 2005, 2004 and 2003.  ―Company of the Year‖ Award in The Economic Times Awards for Corporate Excellence 2004-05.  Asiamoneys Awards for Best Domestic Commercial Bank as well as Best Cash Management Bank - India in 2005.  The Asian Banker Excellence in Retail Banking Risk Management Award in India for 2004.  Finance Asia ―Best Bank - India‖ in 2005, "Best Domestic Commercial Bank – India‖ in 1999, 2000 and 2001 respectively and ―Best Local Bank – India‖ in 2002 and 2003.  Business Today ―Best Bank in India‖ in 2003, 2004, 2005 and 2006.  ―Best Overall Local/Domestic Bank – India‖ in the Corporate Cash Management Poll conducted by Asiamoney magazine.  Selected by BusinessWorld as "one of Indias Most Respected Companies" as part of The Business World Most Respected Company Awards 2004.  In 2004, Forbes Global named HDFC Bank in its listing of Best Under a Billion, 100 Best Smaller Size Enterprises in Asia/Pacific and Europe.  In 2004, HDFC Bank won the award for ―Operational Excellence in Retail Financial Services‖ - India as part of the Asian Banker Awards 2003. 59
  60. 60. WHICH BANK TO BANK WITH??? In 2003, Forbes Global named HDFC Bank in its ranking of ―Best Under a Billion, 200 Best Small Companies for 2003‖. The Financial Express named HDFC Bank the ―Best New Private Sector Bank 2003‖ in the FE-Ernst & Young Best Banks Survey 2003. Outlook Money named HDFC Bank the ―Best Bank in the Private Sector‖ for the year 2003. NASSCOM and have named HDFC Bank the ‗Best IT User in Banking‘ at the IT Users Awards 2003. Euromoney magazine gave HDFC Bank the award for "Best Bank – India‖ in 1999, ―Best Domestic Bank‖ in India in 2000, and ―Best Bank in India‖ in 2001 and 2002. Asiamoney magazine has named us ―Best Commercial Bank in India 2002‖ For its use of information technology, HDFC Bank has been recognized as a ―Computerworld Honors Laureate‖ and awarded the 21st Century Achievement Award in 2002 for Finance, Insurance & Real Estate category by Computerworld, Inc., USA. Its technology initiative has been included as a case study in their online global archives. Business India named HDFC Bank ―India‘s Best Bank‖ in 2000. In 2000, Forbes Global named HDFC Bank in its list of ―The 300 Best Small Companies‖ in the world and as one of the ―20 for 2001‖ best small companies in the world. 60
  61. 61. WHICH BANK TO BANK WITH??? Products offered by HDFC Bank Ltd: [1.] SAVINGS ACCOUNT I. SAVINGS ACCOUNT:An easy-to-operate savings account that allows you to issue cheques, draw Demand Drafts andwithdraw cash. Check up on your balances from the comfort of your home or office through NetBanking, Phone Banking and Mobile Banking.Need money urgently? Withdraw cash from any of the 1,740 ATM centers spread across thecountry. II. SAVINGS PLUS ACCOUNT:Introducing the best banking option for you with HDFC Bank Savings Plus Account. Now youcan get access to some of the finest banking facilities with HDFC Banks Savings Plus Account.All you have to do is maintain an Average Quarterly Balance of Rs. 10,000/- and experience thebenefits as mentioned below:III. SAVINGS MAX ACCOUNT: Welcome to a world of convenience. Presenting SavingsMax account, loaded with maximum benefits to make your banking experience a pleasure. By maintaining an average quarterly balance of just Rs. 25,000/- you get a host of premium services from HDFC Bank absolutely free. 61
  62. 62. WHICH BANK TO BANK WITH???IV. NO FRILLS SAVINGS ACCOUNT: In an effort to make banking simpler and more accessible for our customers, we have introduced the No Frills Savings Account, which offers you all the basic banking facilities. You can even avail of services like NetBanking, Mobilebanking free of cost. All this with a Zero Initial Pay-in and a Zero Balance account. V. RETAIL TRUST ACCOUNT: The Retail Trust Account is beneficial for Trusts and Societies as it earns them a higher interest as compared to a conventional Current Account that offers no interest. HDFC Banks Retail Trust now offers features and benefits previously offered only on Current Accounts.VI. KIDS ADVANTAGE ACCOUNT: Start saving for your child today and secure his/her future. Open a Savings Account and transfer money every month into his/her Kids Advantage Account. Watch the savings grow as your child grows. The accumulated savings in the Kids Advantage Account can over the years help in meeting your childs needs.VII. PENSIONS SAVINGS BANK ACCOUNT: A Pension Saving Account is a Zero Balance Account that accumulates your pension over the years. It comes with a free International Debit Card and facilities like Phone and Net Banking. You can access this Account from any branch within the HDFC network and also request for transfer to another bank. 62
  63. 63. WHICH BANK TO BANK WITH???VIII. FAMILY SAVINGS GROUP ACCOUNT: The Family Savings Group links together upto four individual HDFC Bank accounts (same family) under a single group. Take advantage of the group Average Quarterly Balance (AQB) and operate your individual accounts without worrying about minimum balance. IX. CLASSIC SALARY ACCOUNT: The Classic Salary account is a Zero Balance Account which earns you interest on your savings from salary at a competitive rate fixed by the bank from time to time. There is no fee applicable for branch transactions and you receive banking statements once every six months. X. PREMIUM SALARY ACCOUNT: A power-packed account for successful salaried professionals, the Premium Salary account comes with a free International Debit Card and add-on Debit card for life, with the option of choosing between a Silver or Gold credit card at preferential rates. XI. DEFENCE SALARY ACCOUNT: Are you defence personnel employed with the Indian Armed Forces or the Indian Navy? Then this account is for you. Rather than collecting your cheque/cash at the end of the month, you can instruct your salary wing to start crediting your salary to your Defence Salary Account. 63
  64. 64. WHICH BANK TO BANK WITH???XII. NO FRILLS SALARY ACCOUNT: As a financial inclusion initiative, we have introduced the "No Frills Salary" product specifically targeted at the "urban" poor and the low salaried class. This is a Zero Balance Salary Account![2.] CURRENT ACCOUNT: I. PLUS CURRENT ACCOUNT: In todays fast-paced world, your business regularly requires you to receive and send funds to various cities in the country. HDFC Bank Plus Current Account gives you the power of inter- city banking with a single account and access to more than 316 cities. From special cheques that get treated at par with local ones in any city where we have a branch, faster collection of outstation cheques (payable at branch locations), free account to account funds transfer between HDFC Bank accounts to Free inter-city clearing of up to 100 lakhs per month, our priority services have become the benchmark for banking efficiency. Plus Current Account requires you to maintain an average quarterly balance of Rs. 100,000. II. TRADE CURRENT ACCOUNT: In todays changing business requirements, you need to transfer funds across cities, and time is of the essence. HDFC Bank Trade Current Account gives you the power of inter-city banking with a single account. From special cheques that get treated at par with local ones in any city where we have a branch, to free account to account funds transfer between HDFC Bank accounts, to free inter- city clearing of up to 50 lakhs per month, our priority services have become the benchmark for banking efficiency. Trade Current Account requires you to maintain an average quarterly balance of Rs. 40,000. 64
  65. 65. WHICH BANK TO BANK WITH???III. PREMIUM CURRENT ACCOUNT: Your business needs a partner who can manage your finances while you concentrate on growing your business. You can avail benefits of inter-city banking account with Premium Current Account, that requires an average quarterly balance of only Rs. 25,000, offers Payable-At-Par cheque book facility & FREE inter-city clearing transactions across our network up to Rs.25 Lacs per month. A Current Account with the benefits of accessing your account from a large network of branches, and through direct access channels - the phone, mobile, Internet and through the ATM. Enter into a profitable relationship and access all the privileges flowing your way.IV. REGULAR CURRENT ACCOUNT: A Current account is ideal for carrying out day-to-day business transactions. With the HDFC Bank Regular Current Account, you can access your account anytime, anywhere, pay using payable at par cheques or deposit cheque at any HDFC bank branch. It also facilitates FREE NEFT transactions & FREE RTGS collections for faster collections in your account. Regular Current Account requires you to maintain an average quarterly balance of only Rs. 10,000. With a vast network of branches in cities all over the country, and access to a multitude of ATMs, you can keep track of all your transactions anytime. V. REIMBURSEMENT CURRENT ACCOUNT: No more paperwork, no more receipts to keep track of - a hassle-free account that allows you to deposit the reimbursements you receive from your company on a monthly basis.How to Open a Reimbursement Account  Procure an Account Opening Document (AOD) from HDFC Bank. (If you have just joined, first request your company to open up a Salary Account for you). 65
  66. 66. WHICH BANK TO BANK WITH???  Mention your Salary Account number and your Debit Card number on the AOD so that your Debit card can be linked to both, your Salary Account as well as your new Reimbursement Account. Request your company to directly credit cash payments to the Reimbursement Account.VI. RFC DOMESTIC ACCOUNT: Have you accumulated foreign currency from travelling abroad frequently? Received gifts from relatives in foreign currency? Or earned it by any other means as approved by the Reserve Bank of India? If so, open Resident Foreign Currency Domestic Account* and manage your foreign currency efficiently. You can choose to set up your account either in US Dollar, Great Britain Pound or Euro.How to Open a RFC Domestic AccountChoose the currency in which you wish to operate.Open your account with an initial amount as per the following-US Dollar = 250 | Great BritainPound = 200 | Euro = 250 and maintain an Average Quarterly Balance of the same amount. 66
  67. 67. WHICH BANK TO BANK WITH???[3.] FIXED DEPOSIT ACCOUNT: I. REGULAR FD ACCOUNT: If you believe in long-term investments and wish to earn higher interests on your savings, NOW is the time to invest your money in our Fixed Deposit. Get upto 9.00% on HDFC Bank Fixed Deposit with an additional 0.50% for Senior Citizens. Whats more NO PENALTY if you withdraw part of the FD in times of need? Flexibility, Security and High Returns all bundled into one offering. II. FIVE YEAR TAX SAVING FD ACCOUNT:Fixed Deposits at one time were the most popular investment avenue.However with the changing market scenario-booming financial markets, FDs lost their sheen.However today they have once again become attractive !! In 2006, it was announced for the firsttime that Bank fixed deposits booked by an Individual/HUF for 5 years & upto Rs. 1,00,000/-will be allowed exemption under Sec 80C of the Income Tax Act,1961 subject to necessarydeclarations taken from the Customer.III. SUPER SAVER FACILITY: Enjoy a high rate of interest along with the liquidity of a Savings Account by opting for a SuperSaver Facility on your savings account. Avail of an overdraft facility of up to 75% of the value of your Fixed Deposit.IV. SWEEP-IN FACILITY: Do you wish to avoid taking overdrafts, and still take advantage of your Fixed Deposits? Then what you need is a Sweep-In Facility on your savings account. Link your Fixed Deposit to your Savings or Current Account and use it to fall back on in case of emergencies. A deficit in your Savings or Current Account is taken care of by using up an exact value from your Fixed Deposit. Since deposits are broken down in units of Re 1/-, you will lose interest only for the actual amount that has been withdrawn. 67
  68. 68. WHICH BANK TO BANK WITH???[4.] DEMAT ACCOUNT: I. DEMAT ACCOUNT: HDFC BANK is one of the leading Depository Participant (DP) in the country with over 8 Lac demat accounts. HDFC Bank Demat services offers you a secure and convenient way to keep track of your securities and investments, over a period of time, without the hassle of handling physical documents that get mutilated or lost in transit. HDFC BANK is Depository particpant both with -National Securities Depositories Limited (NSDL) and Central Depository Services Limited (CDSL).II. SAFE DEPOSIT LOCKERS: A Safe Deposit Locker with HDFC Bank is the solution to your concern. Located at select branches in cities all over the country, our lockers ensure the safe keeping of your valuables. ADVANTAGES / KEY BENEFITS:  Wide Availability.  Lockers available in various sizes. i.e. Small, Medium, Large and Extra Large with varying rents.  Lockers are rented out for a minimum period of one year. Rent is payable in advance.  No deposits are required to avail a locker. Just open an account and get the locker facility OR the rent may be conveniently paid from your deposit account with us.  Direct debits for locker rentals from your account rid you of the hassles in writing out cheques.  There is a nominal annual charge, which depends on the size of the locker and the centre in which the branch is located. ELIGIBILITY: An individual (not minor), firms, limited company, associations, clubs, trusts, societies, etc may hire a locker. 68
  69. 69. WHICH BANK TO BANK WITH???NOMINATION FOR SAFE DEPOSIT LOCKER:  The Lockers and their contents can be nominated to people near and dear to you.  Nomination facility is available to individual hirer of Safe Deposit Locker.  In the case of a sole hirer of a safe deposit locker, nomination can be made in favour of only one individual.  Where the safe deposit locker is hired in the name of a minor, the nomination shall be made by a person lawfully entitled to act on behalf of the minor. TERMS AND CONDITIONS:  For obtaining a Locker at HDFC Bank you must be an account holder with our Bank.  Lockers can be allotted individually as well as jointly.  The Locker holder is permitted to add or delete names from the list of persons who can operate the Locker and can have access to it.  Loss of Key is to be immediately informed to the concerned Branch.  For Schedule of Rentals, please contact the branch nearest to you. 69