Credit card special preference to hdfc bank

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PROJECT ON CREDIT CARD SPECIAL
PREFERENCE TO HDFC BANK
- By Shweta. N. Bhosle

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Project Report On
CREDIT CARD WITH SPECIAL PREFERENCE HDFC BANK
Submitted to
University of Mumbai, under the partial fulfilment of
degree of B. Com (Banking and Insurance)
Submitted By
SHWETA. N. BHOSLE
Roll No: 1582303
Under the Guidance of
Prof: MRS. SHRUTI SHOUCHE
VPM’S R.Z Shah College of Arts, Science &
Commerce, MumbaiUniversity
Academic Year
2015-16

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Declaration
I am Shweta. N. Bhosle Student Of T.Y.B.Com (Banking &
Insurance) Semester V (2015-16) hereby declares that I have
completed the project on credit card special preference to hdfc
bank.
The information submitted is true and original to best of my
knowledge.
Signature of student
Shweta. N. Bhosle
Roll no. 1582303

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ACKNOWLEDGEMENT
I owe many to the great people my parents, sister and friends who supported me
during the writing of the book.
My deepestthanks to my guide. PROF.MRS. SHRUTISHOUCHE for guiding
and correcting with attention and care. She made me confident to choosethis
project and made necessary correction as and when needed.
I express my thanks to the principal of my college MRS KAVITA SHARMA
For extending her support. My deep sense of gratitude towards to courseco-
coordinator. PROF . MR. OM DEWANI for supportand guidance.
My deep sense of gratitude to the branch manager of HDFC bank. I thank her for
her supportand permission for survey.
I would also thank my institute and my faculty members without whom this project
would have been a distance reality. I also extend my heartfelt thanks to my family
and well-wishers.

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INDEX
CONTENTS Pg no.
Chapter 1 1.1 History 11-12
1.2 Global View 13
1.3 Indian View 14-16
Chapter 2 2.1 Meaning Of Credit Card 17
2.2 Specification Of Credit Cards 17-18
2.3 Classification Of Credit Cards 19-22
2.4 Characteristics Of Credit Cards 23-24
2.5 Features Of Credit Cards 25-29
Chapter 3 3.1 Types Of Credit Cards 30-33
3.2 Types Of Hdfc Credit Cards 34-49
3.3 Benefits / Demerits Of Credit Cards 50-56
3.4 Advantages / Disadvantages Of Credit Cards 57-58
Chapter 4 Primary Data
4.1 Introduction Of Hdfc Bank 59
4.2 How Credit Card Works 60-65
4.3 Problems Of Credit Cards 66
4.4 Marketing And Promotional Strategies 67-72
4.5 Credit Card Management System 73
Chapter 5 5.1 Case Study
74-76
Webliography 77
Bibliography 78
Questionnaire 79
Conclusion 80

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INTRODUCTION
HDFC is an Indian banking and finance Services Company headquartered in
Mumbai Maharashtra Incorporated in 1994, it is the fifth largest bank (private
sector)in India. (Housing Development Finance Corporation) a premier housing
finance company of India promoted the bank. HDFC was ranked 45th on the list of
top 50 banks in the world in terms of their market capitalization.
Credit cards are fundamentally different from the others payment methods in that
they involve extending credit rather than drawing on an existing store funds. Banks
in conjunction with credit card association suchas Visa and Master card, issue
general purposecredit cards department stores also issues credit card to be used for
purchases at that particular store. Like Electronic Fund Transfer, payment by credit
card is not anonymous. Since paying with a credit card does not involve a store of
Funds, deposit insurance and reserve requirements are not directly relevant. The
bank that issues the card is label and thus merchants paid if the cardholders default
.If the issuing bank fails, the credit card association guarantees payment to
merchants with outstanding transaction.

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OBJECTIVES
 To Study The Classification And Features Of Credit Card
 To Study The Types Of Credit Card With Special Preference to HDFC
 To Study Credit Card Payment Processing And How It Works
 To Study Problems and prospects OfCredit Card With Special To HDFC
 To Understand The Marketing And Promotional Strategies
 To Study Credit Card Management System

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SCOPE
This project work cover’s one private sectorbank HDFC (Housing Development
Finance Corporation). It focuses on the credit cards services provided by
commercial bank. It also highlights the credit card facilities offered to customers.
This study is done with the help of a questionnaire, which contains questions,
which probe into the details to find the reason of their choice. The study will help
to know the features. The study helps to know about the usage pattern of credit
card users. The study also helps to find the bestpossible way of reaching the
customers. The study will also helps in choosing a bestcredit card bank. All these
results will help the consumer to know the features, functions and to create
awareness of using credit card.

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LIMITATIONS
 Limited time for acquisition of primary data
 Limited primary data
 Co-operation of the personnel in the bank was limited
 The sample size is small due to the specified reasons
 Findings are based on survey through questionnaire.

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RESEARCH METHODOLOGY
The present study, which considered both data primary and secondary data.
Research methodology is a method of collecting all sorts of information and data
pertaining to the subject in question. The primary data has been collected with the
help of questionnaire as well as personal observation, book, magazine, journals etc.
It covers the overview of the credit cards special preference to HDFC bank
customers and performance of credit card awareness and usage of plastic money.
Research Methodology
Primary data
 Interviews
 Questionnaire
Secondary data
 Books
 Internet websites
 Magazines
 Newspaper

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CHAPTER 1
1.1 HISTORY
In 1994, HDFC was incorporated as a private sectorwith the approval of RBI with
certificate of commencement of Business was received on 10 October1994 from
RBI. Hereby Credit card conceptwas introduced by Edward Bellamy in his
utopian novel “Looking Backward”. The early charge cards were issued by
Western Union to its frequent customers in 1921. The charge cards from this time
were printed on paper card stock. In 1938, several companies started to accept each
other’s card. In the 1940’s, oil companies in USA used to sell them fuel and other
oils for growing number of automobile owner. Later there were many types of
credit card for different services. Which are as Follows:-
In India according to Manas Ratha (1997), the credit card model studied usage of
credit card and its conceptualization of credit card system and stockflow in the
credit card. James in 2008 in the article Growth of Plastic Money had discussed the
problems, prospectsofeconomic, and business, which involved in the plastic
Year Type of card Uses
1928 Charga – plate Purchasing goods from
particular store.
1934 Air travel card For transportation.
1958 Master card Transaction

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money market. In 2009, Ram lingam in his paper usage pattern of credit card
holders had analyzed the purposeand use of credit card behavioral changes of
credit card holders. In 2010 Swati Anand in their article they discussed the current
I.T tools applicabilities in the banking such as Electronic Clearing and Clearing
system , Credit Clearing , Plastic Money. The study has focused the service of
credit card throughout the worldwide history.

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1.2 Global View
The HDFC bank was incorporated on 30th august 1994. A new private sectorbank
promoted by Housing Development Corporation Ltd. HDFC a premier housing
finance company. The Bank has set up 100 new electronic data capture (EDC)
terminals in Mumbai-HDFC bank launched its first B2C payment gateway which
allows Visa/Master card .The company has introduced a new scheme whereby it
will provide loans. The foreign Investment Promotion Board has cleared the
proposalof the HDFC Group to enter into a joint venture with Singapore.
Telecom’s e-commerce company for providing a comprehensive range of B2B. As
HDFC launched the Master Card for easy payment for customer. Credit Card is
used not only in India but also in other country. As the concept of using, Edward
Bellamy described a card for purchase in 1887. Bellamy used the term credit card
eleven times in Looking Backward novel; although this referred to a card for
spending a citizen’s dividend from the government, rather than borrowing.
In September 1958, Bank of America launched bankamericard in Fresno,
California, which become the first successfulrecognizably modern credit card. It is
eventually licensed to other banks around the United States. The MasterCard
secure code/verified by visa is an easy and secure online payment service from
hdfc bank that enhances the security of any online purchase that you make. With
this service, you are protected against any authorized purchases from credit card. It
has to do it confirm identity with a unique password for every online purchase.
Also can be reassured of the authenticity of the online store with the help of a
personal assurance message. As the cards plays vital role in banking sector for
online purchases.

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1.3 Indian View
The first credit card to enter India was the diner’s club card in the year 1964. The
first Indian banks to launch credit cards were Andhra bank was VISA classic in the
year 1981, followed by central bank of India’s credit card in collaboration with
Master Card Corporationin the same year. Gradually introduced their credit cards
in India only later. Apart from these Indian banks, many foreign banks such as citi
bank, standard chartered bank, and ANZ Grind lays bank, bank of America and
American express bank have also introduced their proprietary and other franchised
cards through their Indian branches. The Reserve Bank of India is taking special
measures to promote the use of alternate payment systems like credit cards, debit
cards, etc. to ease the pressure on currency printing and the use of cheques. On the
legal front too, the developments in India are becoming favorable to the card
industry. Banks can now file summary suits against defaulters for quicker recovery
of credit card dues. This has made an increasing number of Indian banks realize the
credit card potential and spurred them to enter the ever-expanding card business.
Prepaid/stored value cards are also gaining popularity in the Indian market. For
instance, oil companies issue “petrocards”for easier payment at the company’s
petrol stations. Similarly, the Mahanagar Telephone Nigam Limited (MTNL) has
already introduced its “virtual calling card “and has recently launched a co-branded
telecom credit card to facilitate payment of telephone bills. Credit card lending has
surged to such an extent that average loan amounts ($32,400 in2004) made to
small businesses with revenues greater than $1 million were actually smaller than
average loan amounts ($42,600) made to the smallest businesses with revenues
under $1 million12. The larger small businesses are receiving a greater portion of
credit card loans than the smallest small businesses. Some Indian banks have made
an entry into the smart card business too. Here hdfc bank credit card facility to

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customers like a app which would be convenient to customers for credit card
transaction the app name “pay app” it consistpre-loaded wallets which are good
alternatives , they may not be the best long term solution . As Indian customers are
happy with the schemes and discounts. The best long-term solution would be for
banks to provide digital wallet services. For 2014-15, hdfc noticed that 63% of all
their transactions were conducted. As there various credit cards are been used by
people in India.
• RBI - 17.4%(2012 – up to Apr) 16.2 %(2011)

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• State Bank of India & Punjab National Bank Contributes More for
the Growth.
• Card base of public sector banks expanded 7.4 % to 3.09mn.
• Private and foreign banks declined 1.5 % to 14.7 million.
• New Entrance - IndusInd Bank acquired Deutsche Bank’s Standard
Chartered Bank bought Barclays’ card business in India Credit
Cards in India - 17.77 million
• In private sector ICICI bank and HDFC bank contributes more for
the growth

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CHAPTER 2
2.1 Meaning
Any card plate or couponbookthat may be used to borrow the money or product
and service on credit is called credit card.
Definition of a credit card
Credit is a method of selling goods orservices without the buyer having cash in
hand. A credit card is only an automatic way of offering credit to a consumer.
Today, every credit card carries an identifying number that speeds shopping
transactions.
2.2 SPECIFICATION OF CREDIT CARDS
The size of most credit cards is 3 3⁄8 × 2 1⁄8 in (85.7 × 54.0 mm), conforming to the
ISO/IEC7810 ID-1 standard. Credit cards have a printed] or embossed bank
credit card number complying with the ISO/IEC 7812numbering standard. Both of
these standards are maintained and further developed by ISO/IEC JTC 1/SC
17/WG 1. Before magnetic stripe readers came into widespread use, plastic credit
cards issued by many department stores were produced onstock("Princess" or
"CR-50") slightly longer and narrower than 7810. Many modern credit cards have
a computer chip embedded in them for security reasons.

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An example of the front in a typical credit card:
1. Issuing Bank Logo
2. EMV chip (only on "smart cards")
3. Hologram
4. Card number
5. Card Network Logo
6. Expiration Date
7. Card Holder Name
8. Contactless Chip
An example of the reverse side of a typical credit card:
1. Magnetic Stripe
2. Signature Strip
3. Card Security Code

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Credit Card Number Structuring
• 1ST – 6 No’s – Bank of Credit Card.
• Next – 9 No’s – Individual A/c No.
• Final Digit – Validity Check Code.
• Extra Codes - Will be Issue & Security Codes.
Role of Payment –Networking Organizations
Cardholders travel and use card anywhere. It is not feasible for each player
(banker) to establish worldwide clearing network for payments to merchants and
to get billing information for cardholders. It’s cheaper to be member of big
clearing systems. Visa and MasterCard are the most popular ones. They offer
following advantages:
1. Brand image: customers prefer these brands and hence sale of cards is more.
2. Worldwide acceptanceby merchants
3. Payment transactions clearing network worldwide.
4. Assistance in risk management and dispute management.
Discover and diners club are other popular networks

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2.3 CLASSIFICATION OF CREDIT CARD

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1. BASED ON MODE OF CREDIT RECOVERY
 Charge Card
A card that charges no interest but requires the user to pay his/her balance in
full upon receipt of the statement, usually on a monthly basis. While it is similar
to a credit card, the major benefit offered by a charge card is that it has much
higher, often unlimited, spending limits.
 Revolving credit card
A line of credit where the customer pays a commitment fee and is then
allowed to use the funds when they are needed. It is usually used for
operating purposes, fluctuating each month depending on
the customer's current cash flow needs
2. BASED ON STATUS OF CREDIT CARD
 Standard Card
It is a generally issued credit card
 Business Card
(Executive cards)it is issued to small partnership firms, solicitors, tax-
consultants, for use by executives on their business trips.
 Gold Card
A credit card issued by credit-card companies to favoured clients, entitling
them to high unsecured overdrafts, some insurance cover, etc

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3. BASED ON GEOGRAPHICAL VALIDITY
 Domestic card
Cards that are valid only in India and Nepal are called domestic cards.
 International Card
Credit Cards that are valid internationally are called international cards.
4. BASED ON FRANCHISE/ TIE-UP
 Proprietary card
A bank issues such cards under its own brands. E.g., SBI card can card of
canara bank
 Master Card
This card is issued under the umbrella of “MasterCard International”
 Visa Card
It is issued by any bank having tie up with “VISA international”
 Domestic Tie-up Card
It is issued by any bank having tie up with domestic credit card brands such
as Can Card and IndCard.
5. BASED ON ISSUER CATEGORY
 Individual Cards
Non-corporate cards that are issued to individuals
 Corporate Cards
Issued to corporateand business firms.

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2.4 CHARACTERISTICS OF CREDIT CARD
1. Credit Limit
All banks have different limits set for customers depending upon the types of
cards in their possession. Even within a particular type of card, limits may vary
depending upon the credit worthiness of the individual. This depends on the
gross income of the individual and the period for which the personis using the
card. However, some banks have a card, which has no set credit limit.
2. Interest Charges
This is the biggest source of revenue for the issuing banks. The interest rates
generally range from 1.99% - 3%per month. This is equivalent to around 24% -
35% per year. The interest charges are also applicable on accrued interest.
Therefore, a customer can end paying up heavily for the credit taken
Characteristics
Of Credit Card
Credit
Limit
Interest
Charges
Annual
Charges
Grace
Period
Value
Added
Benefits

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3. Annual Charge
This is a fixed amount, which has to be paid every year irrespective of the extent of
usage. Over the past few years, with increase in competition a general decline in
these charges can be observed
4. Grace Period
This is the extra period, which is offered to the consumer for repaying the
credit. In the Indian scenario, the first warning is given at the end of three
months, and a black mark is put against the customer in case of non-payment
for more than seven months. Further grace period is decided on a case to case
basis .
5. Value Added Benefits
These include airline ticket booking and insurance benefits on lost luggage and
accidental deaths for e.g.: offers discounts of 3.5% on domestic airfares and 6.5%
on international ones if tickets are charged to their cards. The latest in line of value
added features are the rewards programs. Here a cardholder earns a certain number
of points by spending a particular sum of money from their credit cards.

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2.5 FINANCIAL FEATURES OF CREDIT CARDS
1. Annual membership
Most members are expected to pay annual membership fee to issuing authority.
This is towards maintenance of the card account by the bank or ‘service charges’.
These waived off to some customers who transact significant value through their
credit card. Bankers’ earnings is by interest income on credit cards. More the usage
of card , more the income to the bank .
2. Minimum payment
All the issuers insist upon minimum payment by the cardholder for every billing
cycle. This is usually 5% merchant transaction bills. Full amount is to be paid for
EMI’s of the loan. It is payable within 20 days of billing. This is a tree credit
period i.e. no interest is payable. Amount unpaid and rolled over to the next billing
cycle attracts interest rates as decided by bank.
Financial Features Of
Creditcards
Annual Membership
Minimum Payment
Rate Of Interest
EMI's conversations
Balance Transfer
PersonalLoan
Insurance

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3. Rate of interest ( annual percentage rate)
Rate of interest for the amount rolled over to the next billing cycle is usually high.
In India, it is around 2.5% to 3% per month. Hence its very costly to rollover such
amount. For the cardholder, it is much cheaper to pay on time.
4. EMI’s Conversations
When outstanding amount on the card is high or when purchase is for high value (
for e.g. TV set , laptop etc) then it is not possible to pay full amount within one
billing cycle. Carrying forward is expensive as interest rate is prohibitive. Banks
offer to convert such purchase / outstanding to equated monthly installment
(EMIs). Rate of interest to these schemes is relatively lower (around 16% p.a) but
still high in absolute terms.
5. Balance transfer
Bankers encourage cardholders to transfer their outstanding dues to other issuers’
cards to their bankcard. This transfer is again at a concessionrate of interest.
6. Personal loan
Issuers extend personal loan facility to the cardholders. it may be noted that EMI or
balance transfer or personal loan are all in the form of loan only . A cheque
favoring the cardholder or nominated beneficiary is issued by the bank in all these
cases. EMI payable is charged to the card in monthly billing statements.

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7. Insurance
Most bankers (issuers) insure the life of cardholders at concessionalrate and assign
insurance proceeds towards outstanding bills on card. In case of eventuality,
insurance proceeds meet banker’s outstanding dues and remainder amount is paid
to the heirs of the cardholders.
BENEFITS
Issuers provide some add on benefits to their card members such as:
 Privileged access to airport vip lounges
 Discount at select outfits for purchases or dining bills.
 Discount offer for purchase of exclusive items from big brands
 Reward points for each spending on the card. These points can be cashed for
discounts in select purchases as indicated by the issuer.

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FEATURES OF MODERN CREDIT CARD
1. Wide Coverage
• Bank credit is most widely used payment device issued by bank
• It is based on system of revolving credit
• The credit cardholder can use card at merchant establishments to buy
goods and services.
2. Technology dependent
• The dependence on technology is inevitable to keep the operating costto the
minimum.
Features Of Modern
Credit Card
Wide Coverage
Technology
Dependent
Owner
Identification
Credit Limit

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3. Owner Identification
• A credit card identifies its owner and the one who is entitled to purchase
goods and services without the physical money and is eligible for credit
from merchant establishments.
4. Credit Limit
• The issuer for the purposeof convenience and security sets a credit limit for
a cardholder and a floor limit for a merchant establishment
• It is convenient medium of exchange which enables the cardholder to buy
goods and services without using money
• Bank bears the risk of default on the part of the cardholder
• Credit card helps the holder to buy when and pay he can, i.e., bank pays to
the seller immediately but collects from the card holder from 30-45days

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CHAPTER 3
3.1 TYPES OF CREDIT CARD
Credit card products comein a wide assortment these days. Some credit card
programs will ease their terms and conditions and offer perks for people with
stellar credit, such as travel insurance, concierge service and free entertainment.
Other credit card program may help a personre-establish their credit.
Not all cards are for everyone. The ability to get a credit card will depend on
whether you qualify. This is determined by whether you have a history of
establishing credit and your ability to pay bills on time. Credit card issuers learn
about your credit history by pulling your credit report from one of the three
major credit bureaus - Equifax, Experian and TransUnion. Before you even begin
applying for a credit card, check the status of your credit report and make sure it
does not have any errors that could prevent you from getting the card you want.
Types Of
Credit
Card
Standard
Credit
Cards
Reward
Cards
Airline/Fre
quent Flier
Miles
Cash Back
Points
Cards
Premium
Credit
Cards
Specialty
Credit
Cards

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Here are the most common types of credit cards:
1. Standard Credit Cards
Standard credit cards are the general-purpose cards that have revolving credit
lines. They are marketed to people above the age of 18 who meet or exceed the
financial institution's minimum credit criteria. No deposits are needed and the
credit limit is established by the credit card issuer.
2. Reward Cards
Many credit cards have reward programs that can influence your spending. The
perks may come in the form of cash, points or discounts. Points that accumulate,
for instance, can be traded off for free hotel stays, merchandise, air travel car
rentals and certificates. However, these credit cards can come with complex
rules, limits and restrictions. The key is to try to make sure that annual fees don't
end up eliminating all the benefits. Rewards cards are typically best for people
who pay their balances off every month
3. Airline/Frequent Flier Miles
Using these cards can earn airline miles. The miles accumulate and can be put
toward future flights. Some programs partner with hotels, car rentals and other
travel services. However, you don't want to hold on to the tickets for too long.
You will need to stay aware of the expiration date on the miles offered.

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4. Cash Back
Cash back cards literally give some of the money you have spent back to you in
cash. Credits range from 1-5%. However, this is usually capped at $500 of
spending in "appropriate" categories, depending on the card. When you collect
a minimum amount of cash or credit, such as $20 to $50, you can ask to receive
it through a check or use the money for a purchase at a designated store. Some
cards give a flat amount of money based on all your purchases regardless of
how much you spend, while other have tiers with different levels of rewards
depending on how much you spend and where the money is spent.
5. Points Cards
These cards let you earn reward points that can be redeemed for merchandise,
entertainment and gift cards. These include points that can be put toward gas,
hotel stays and home improvement purchases.
6. Premium Credit Cards
These are the "gold" and "platinum cards". They are generally referred to as
"upscale". They are offered to consumers with excellent credit, which means
they've retained this standing for few years, and can afford high credit limits of at
least $10,000. These consumers typically have huge salaries and are heavy spenders
and travelers. Some cards are offered by invitation only. The interest and annual
fees, however, tend to be high. The cards' perks may include 24-hour concierge
services or a personal assistant, access to exclusive airline lounges, and worldwide
travel and auto assistance.

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7. Secured Credit Cards
Secured credit cards are known as pay-as-you-go cards. Upon opening the account,
the cardholder deposits a few hundred to a couple of thousand dollars. This
determines the cardholder’s credit line. This limit is often based on a percent of the
deposit, which is usually 50-100% of what you put into the account. The cards have
an annual fee and higher annual interest rates. Most often, these cards are used to
reestablish credit. A person can use the card to make small purchases that they can
easily repay. Getting a card with a conversion option makes it easier to switch to a
standard credit card, which should be possible after several months of good
payment history
8. Specialty Credit Cards
Specialty cards typically are offered through affiliations, partnerships, major brand
retailers or service providers. Many specialty credit cards share a partnership
between organizations that support a social cause, professional organization or an
alumni association. A small portion of the purchase goes
toward the intended organization.

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3.2 TYPES OF HDFC CARDS
1. Featured card
a. Jetprivilege Hdfc Bank World
The bestairline co-brand exclusive travel privileges
Benefit of up to 10,000 Bonus JPMiles and one way base fare waived Jet Airways
ticket 6 JPMiles for every Rs. 150 spent and 18 JPMiles on every flight booked on
www.jetairways.comDedicated Check-in with 10 kg additional baggage allowance
Types Of Hdfc
Credit Cards
Featured
card
super
premium
co-
brand
professio
nal
premium
travel
premium
women
premium regular commercial cashback

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b. Titanium Times Card
Great entertainment card with flat 25% off on movie tickets and up to 15% off on
dining, 365 days of the year. 25% off on movies and up to 15% off on dining. (At
participating outlets)Bouquet of discount vouchers as welcome gift 2 Reward
Points (RP) on Rs. 150 spent. 5 RP on dining spends on weekdays (Mon-Fri)
c. Platinum Times Card
dining, 365 days of the year. 25% off on movies and up to 15% off on dining. (at
participating outlets)Bouquet of discount vouchers as welcome gift 2 Reward

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d. Diners Club Black
Best International Credit Card with exclusive life style benefits.
Gain access to select Golf Clubs in India as Green Fee player. Earn Rs 750 Travel
Vouchers for every 1000 Reward Points earned. Redeem for Airline Tickets,
Hotels at our Travel and Entertainment portal
2. Super Premium
a. Infinia
Powered by exclusivity. Pampered with exquisiteness. Experience the Infinite now.
Infinia Card with the No Pre Set Spend Limit*five Reward Points for every Rs.150
spends. Complimentary Priority Pass and Taj Epicure Inner Circle Gold
Membership

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b. Regalia
Best Super Premium Credit Card with travel and luxury benefits. Welcome Benefit
- 2500 Reward Points*4 Reward Points for every Rs.150 spends. Complimentary
Priority Pass and Taj Epicure Inner Circle Gold Membership
c. Diners Club Black
Best International Credit Card with exclusive life style benefits.
Gain access to select Golf Clubs in India as Green Fee player. Earn Rs 750 Travel
Vouchers for every 1000 Reward Points earned. Redeem for Airline Tickets,
Hotels at our Travel and Entertainment portal

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d. Jetprivilege Hdfc Bank Diners Club Credit Card
Fly faster to finer experiences
Avail Welcome Benefit of up to 30,000 Bonus JPMiles and 15 Jetprivilege Tier
points within first 90 days*. Earn 8 JPMiles for every Rs. 150 spent and 3X
JPMiles on every flight booked on www.jetairways.com. Unlimited
Complimentary Lounge access to over 600+ airport lounges globally.
3. Co- Brand
a. Jetprivilege Hdfc Bank World
The bestairline co-brand offering exclusive travel privileges. Welcome Benefit of
up to 10,000 Bonus JPMiles and one way base fare waived Jet Airways ticket.
Earn 6 JPMiles for every Rs. 150 spent and 18 JPMiles on every flight booked on
www.jetairways.com. Dedicated Check-in with 10 kg additional baggage
allowance

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b. Maruti Suzuki Nexa Hdfc Bank AllMiles
One Card. Multiple Destinations. Best in class travel co-brand card with exclusive
benefits for NEXA Car owners. Welcome Benefit of 1000 Reward Points. Earn 6
RP per Rs.150 all spends made on MyNEXA section of www.nexaexperience.com.
3RP per Rs.150 on retail purchases. Complimentary priority passes membership.
c. Titanium Times Card
dining, 365 days of the year. 25% off on movies and up to 15% off on dining. (At
participating outlets). Bouquet of discount vouchers as welcome gift. Two Reward

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d. Snapdeal HDFC Bank Card
Shop Free Faster with Snapdeal HDFC Bank Card - India's first co-brand Credit
Card with an online partner. Welcome Benefit of 500 Reward Points. Earn 6 RP
per Rs.150 on all spends made on www.snapdeal.com. 4 RP per Rs.150 on any 1
category of your choice. 2 Reward Points per Rs.150 spent on all purchases.
Exciting offers from Cleartrip, Freecharge & Ola
4. Professional
b. Doctor's Superia
 HDFC Bank's doctor's Superia credit card has been exclusively designed for
doctors offering exclusive travel benefits

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b. Teacher's Platinum
 HDFC Teachers platinum card is exclusively designed for teachers and
proffers. The card offers 500 bonus reward points on teacher's day each year
while giving the users freedom to fill fuel across any fuel station.
5. Premium Travel
a. Superia
Premium Credit Card that allows you to redeem your reward points as air miles.
Welcome Benefit of 1000 Reward Points.3 Reward Points (RP) on Rs 150 spent.
50% more RP on dining spends
 Complimentary Priority Pass Membership and VISA/MasterCard Lounge program

43
b. Allmiles
Premium Card that offers Double reward points on ALLMILES. Welcome Benefit
of 1000 Reward Points.3 Reward Points (RP)on Rs 150 spent.Complimentary
Priority Pass Membership and VISA/MasterCard Lounge program
c. Maruti Suzuki Nexa Hdfc Bank All Miles
One Card. Multiple Destinations. Best in class travel co-brand card with exclusive
benefits for NEXA Car owners. Welcome Benefit of 1000 Reward Points Earn 6
RP per Rs.150 all spends made on MyNEXA section of 3RP per Rs.150 on retail
purchases. Complimentary priority passes membership

44
6. Women Premium
a. Solitaire
Only exclusive premium Solitaire Credit Card for women rewarding spends with
Shoppers Stop gift vouchers. Get Rs. 1,000/- Shoppers Stop vouchers on Rs.
75,000/- spends every 6 months. 50% more Reward Points on dining and grocery
spends. 3 Reward Points on Rs. 150 spent.
7. Premium
a. World master card
Enjoy the privileges of both worlds, waiver of fuel surcharge at all fuel stations and
access to premium airport lounges. 2 Reward Points on Rs. 150 spent . Fuel
Surcharge Waiver capped at Rs. 250 every billing cycle (ST applicable). Get
complimentary Airport lounge access under Master Card lounge program.

45
b. Diners club premium
Best Premium Lifestyle Card with unlimited domestic lounge access.4Reward
Points for every Rs. 150 spends. Unlimited Golf Lessons
Earn Rs 600 E Vouchers for every 1000 Reward Points earned. Redeem for Airline
Tickets, Hotels and Movies at our Travel and Entertainment portal
c. Diners Club Rewardz
The card with maximum travel rewards.3 Reward Points for every Rs. 150 spends.
Exclusive 24/7 Concierge to make airline reservations, books a hotel room,
schedule a dinner reservation or send a gift. Get double the Reward Points on our
Travel and Entertainment portal

46
d. Visa Signature
Enjoy the privileges of both worlds, waiver of fuel surcharge at all fuel stations and
access to premium airport lounges.2 Reward Points on Rs. 150 spent. Fuel
Surcharge Waiver capped at Rs. 250 every billing cycle (ST applicable). Get
Complimentary airport lounge access under VISA Lounge program - signature
8. Regular
a. Platinum plus
 HDFC bank Platinum Plus Credit Card is a regular credit card offering 50
day interest free credit window along with revolving credit facility and zero
liability on lost card

47
9. Commercial
a. Business money back
Your Business spends are now 3 times more rewarding with Business MoneyBack
Credit Card. 2 Reward Points (RP) on Rs 150 spent. 3 X Reward Points on
business related spends. Redeem Reward points as CashBack on your Business
MoneyBack Credit Card (100 Reward Points = Rs 40). Zero Lost Card liability
postreporting of the loss of card
b. Business Regalia
Best Super Premium Business Credit Card with travel & luxury benefits. Now with
every Rs. 150 that you spend, you get:8 Reward Points on all purchases. 6 Reward
Points on all your dining spends. 4 Reward Points on all other spends

48
c. Corporate Platinum
Enjoy the privilege of access to domestic airport lounge and freedom to fill fuel
across all fuel station. 2 Reward Points for every Rs. 150 spends. Petrolsurcharge
waiver. Lounge access at select airports across Indi
d. Corporate Card
A Premium Corporate Card with unparalleled travel and entertainment benefits.
24x7 online MIS availability. Helps integrate with existing accounting systems.
Helps minimize paperwork and simplify reconciliation and compliance tasks.

49
10. CashBack
a. Platinum Edge
Enjoy CashBack on everyday spends only with Platinum Edge Credit Card.2
Reward Points for every Rs. 150 spends and 50% additional Reward Points on
dining spends. Redeem Reward Points as CashBack against outstanding amount on
your Credit Card. Zero fuel surcharge
b. Titanium Edge
Enjoy CashBack on everyday spends only with Titanium Edge Credit Card. 2
Reward Points for every Rs. 150 spends and 50% additional Reward Points on
dining spends. Redeem Reward Points as CashBack against outstanding amount on
your Credit Card. Zero fuel surcharge

50
c. MoneyBack
Enjoy CashBack on everyday spends only with MoneyBack Credit Card. 2 Reward
Points for every Rs. 150 spends. 3 X Reward Points on online spends. Redeem
Reward points as CashBack on your MoneyBack Credit Card (100 Reward Points
= Rs 40. Zero fuel surcharge

51
3.3 Benefits/ Demerits Of Credit Cards Benefits
Benefits to cardholders, issuers and payment networks are as follows:
To Cardholders:
1. Convenience
It is very convenient to carry a card as compared to cash. Its acceptance is better
than cheques. Risk of theft is less and if stolen, stoppageand recovery is better
than cash and cheque. It is even more convenient for unplanned purchases and
needs as one may not carry enough cash every time.
2. Spot Credit
As and when needed, credit is available. It’s pre- negotiated (decided) credit limit,
which can be availed of whenever desired. Credit is free of interest till first
immediate billing cycle. This improves purchasing power.
Benefits Of
Credit Card
To
Cardholder
convenience
Spot
Credit
Easy
Payments
ATM cash
Rewards
Points And
Discounts
Privileges
Other
Loans

52
3. Easy Payments
Minimum balance payment for each bill is a must. Over and above this, it is
cardholder’s ability and willingness to pay for each card bill.
4. ATM Cash
Cash can be withdrawn from ATMs as and when required. This is very important
feature in countries like India where cash usage is more as compared to other
modes of payments. Thus, card improves liquidity and credibility of the
cardholder.
5. Reward Points And Discounts
These are additional benefits provided by issuer for usage of card. Reward points
can be converted to discounts and gifts as per the catalogue of the issuer.
6. Privileges
Access to VIP lounges at the airport and star hotels is an additional privilege for
the cardholders.
7. Other Loans
Bankers provide personal loans, car loans, etc. with some priority and ease if
cardholders’ payment history is good.

53
TO ISSUERS
1. Profit
APR is high on credit cards as these are high-risk unsecured loans. If cards are
issued with proper due diligence then defaults is less and bankers; profits in the
card business are high.
2. New Customers
New customers get hooked to bankers as cardholders. It is easy to sell them other
products suchas housing loans, auto loans, and bancassuranceproducts later on.
3. Brand Image
Card issuing bank creates better brand image in the minds of its customers as
compared to other banks.
Benefits Of
Credit Cards
To Issuers
Profit
New
Customers
Brand
Image
ATM sharing
fees

54
4. ATM sharing fees
Bankers who establish their own ATMs get sharing fees from other banks if other
banks customers use their ATM. This is additional income for them.
To Payment Networks (Visa/ MasterCard)
1. Profit
These networks charge fees for their usage of name and network. Hence, it is a
profit for them.
2. Brand Image
With every new user, brand grows. With every new merchant establishment-
accepting brand, global image scores somepoints

55
Demerits of Credit Cards
To Cardholders
1. Cost
Costof card is high. Annual fee, APR, penalties, ATM usage charges, lost card
replacement charges is significant.
2. Overspending
As purchasing power is not limited to cash, people tend to spend more. It’s a
machine to provoke consumerism in the society. It’s in favor of capitalism and
against socialism.
Demerits Of
Credit Cards
To
Cardholders
Cost
Overspending
Habitual
Borrowings

56
3. Habitual Borrowing
With popularity of cards, stigma on loans as negative feature of life has vanished.
Borrowing and enjoying life is no longer looked down upon. Unknowingly
everyone has becomea habitual borrower.
To Issuers
1. Risk
Cards are unsecured loans. Recovery mechanism does not have any recourse on
assets. Legal backup thus is limited. Establishing a recovery system within these
limitations is a high costaffair.
2. Servicing cost
Cards are technology oriented. Cards are costly. Issuance process,billing and
payment processing is laborious and costly affair.
Demerits Of
Credit Card
To Issuers
Risk
Servicing
Cost
Utilization
Dependency
Payment
Habits

57
3. Utilization dependency
Bank earns well on cards if the holders use cards frequently. Indian psycheis not
very tuned to careless use. Cards, which are not used much, are in fact costburden
on the banks.
4. Payment habits
APR Interest earnings are significant provided part of billed amount is rolled over
to the next billing. If many customers pay full bill every time, there is no APR
earnings for banks.
To Payment Networks
Payments networks do share some responsibility and risks. Even if member bank
defaults or delays, these networks have to own up timely payments to merchant
establishments so as to maintain their brand image.

58
3.4 ADVANTAGES/ DISADVANTAGES OF A
CREDIT CARD
Advantages
• Flexible spending limit
• Most features of a debit card such as withdrawal of cash are available on
credit cards as well.
• Wider acceptance and recognition, especially in online transactions.
• Greater security measures and checks than debit card.
• Credit cards allow for cash back and bonus points schemes that a debit card
is not eligible.
• A credit card can be used as a convenient way to check and record your
spending.
• There is a fixed credit limit; a cardholder cannot overstretch his purchases.

59
Disadvantages
• Hidden costs.
• A debt trap for the cardholder.
• Cases of fraud are extremely common today.
• Credit cards can be used at ATM cards, but considerable processingfee
required.
• Credit cards provide access to ready money in a more convenient and less
invasive form than cheques, and allow for a faster withdrawal of cash.
• Debit card users who are not qualify for a credit card, the advantage is spent
on money he/she possesses in their accounts.

60
Security Problems and Solutions
• Credit card security relies on the physical security of the plastic card as well
as the privacy of the credit card number.
• Whenever a person other than the card owner has access to the card or its
number, security is potentially compromised.
• Merchants would often acceptcredit card numbers without additional
verification for mail order purchases.
• Many require the card and also requires signature for security purpose.
• A lost or stolen card can be cancelled, if this is done quickly, will greatly
limit the fraud that can take place in this way.
• Code10 calls are made when merchants are suspicious about accepting a
credit card.
• The operator then asks the merchant a series of YES or NO questions to find
out whether the merchant is suspicious of the card or the cardholder.

61
CHAPTER 4
PRIMARY DATA
Introduction of Hdfc Bank
HDFC Bank Limited is an Indian financial services company based
in Mumbai, Maharashtra that was incorporated in August 1994.The first
largest bank by Market Capitalization as of November 1, 2012.As on May
2013, HDFC Bank has 3,062 branches and 10,743 ATMs, in 1,568 cities in
India. It was among the first companies to receive an 'in principle' approval
from the Reserve Bank of India (RBI) to set up a bank in the private sector.
Times Bank Limited (owned by Bennett, Coleman & Co. The Times Group)
was merged with HDFC Bank Ltd., on February 26, 2000. This was the first
merger of two private banks in India. On May 23, 2008, HDFC Bank
acquired Centurion Bank of Punjab taking its total branches to more than
1,000.HDFC Bank was the first bank in India to launch an International
Debit Card in association with VISA (Visa Electron) and issues the Master
Card Maestro debit card as well.

62
4.1 How credit card works?
 Credit cards are issued by a credit card issuer, such as a bank or credit union,
after an account has been approved by the credit provider, after which
cardholders can use it to make purchases at merchants accepting that card.
 When a purchase is made, the credit card user agrees to pay the card issuer.
The cardholder indicates consent to pay by signing a receipt with a record of
the card details and indicating the amount to be paid or by entering
a personal identification number (PIN).
 Many merchants now accept verbal authorizations via telephone and
electronic authorization using the Internet, known as a card not present
transaction (CNP). Forcard not present transactions where the card is not
shown (e.g., e-commerce, mail order, and telephone sales), merchants
additionally verify that the customer is in physical possessionofthe card and
is the authorized user by asking for additional information such as

63
the security codeprinted on the back of the card, date of expiry, and billing
address.
 Each month, the credit card user is sent a statement indicating the purchases
undertaken with the card, any outstanding fees, and the total amount owed.
 After receiving the statement, the cardholder may dispute any charges that
he or she thinks are incorrect. Otherwise, the cardholder must pay a defined
minimum proportion of the bill by a due date, or may chooseto pay a higher
amount up to the entire amount owed.
 The credit issuer charges interest on the amount owed if the balance is not
paid in full (typically at a much higher rate than most other forms of debt).
 In addition, if the credit card user fails to make at least the minimum
payment by the due date, the issuer may impose a "late fee" and/or other
penalties on the user.
 To help mitigate this, some financial institutions can arrange for automatic
payments to be deducted from the user's bank accounts, thus avoiding such
penalties altogether as long as the cardholder has sufficient funds.

64
Parties Involved
1. Cardholder: The holder of the card used to make a purchase;
the consumer.
2. Card-issuing bank: The financial institution or other organization that
issued the credit card to the cardholder. This bank bills the consumer for
repayment and bears the risk that the card is used fraudulently. American
Express and Discover were previously the only card-issuing banks for
their respective brands, but as of 2007, this is no longer the case. Cards

65
issued by banks to cardholders in a different country are known
as offshore credit cards.
3. Merchant: The individual or business accepting credit card payments for
products orservices sold to the cardholder.
4. Acquiring bank: The financial institution accepting payment for the
products orservices on behalf of the merchant.
5. . Independent sales organization:Resellers (to merchants) of the
services of the acquiring bank.
6. Merchantaccount: This could refer to the acquiring bank or the
independent sales organization, but in general is the organization that the
merchant deals with.
7. Credit Card association: An association of card-issuing banks such
as Discover, Visa, MasterCard, American Express, etc. that set
transaction terms for merchants, card-issuing banks, and acquiring banks.
8. Affinity partner: Some institutions lend their names to an issuer to attract
customers that have a strong relationship with that institution, and get paid
a fee or a percentage of the balance for each card issued using their name.
Examples of typical affinity partners are sports teams, universities,
charities, professional organizations, and major retailers.

66
Card Transaction Process
When paying for purchases with a card, the transaction appears to happen almost
instantaneously after the PIN is entered. However, there is a complex payments
infrastructure behind the scenes making sure that the transaction is processed
correctly. The following diagram sets out the steps, numbered from 1 to 8, in a
card transaction’s payments cycle for a typical face–to–faceor card present
transaction; there are five stakeholders in the process.
1. Cardholder
This is a personwith a debit, credit or charge card issued to them by a financial
institution. The cardholder may be asked to place their card into the chip and PIN
reader (PIN pad or terminal) himself or herself, or hand the card to the merchant

67
who will do this for them. Alternatively, if the card does not have a chip (only a
magnetic stripe) or the merchant does not have a chip and PIN terminal, the
merchant will swipe the card through the terminal or use a paper voucher. The
customer will then key in their PIN, or sign, to indicate their agreement to proceed
with the transaction. An authorization codewill be given to the merchant for the
transaction by the cardholder’s card issuer that will appear on the terminal receipt
that is handed to the cardholder. The card issuer will debit the transaction to the
cardholder’s account.
2. Retailer / Merchant
A merchant sells goods or services to their customer (the cardholder). This can be
face-to-face in a shop on the high street, where both the cardholder and their card
are present, or when taking orders remotely e.g. over the phone for a restaurant
take away, a mail order from a catalogue, or a purchase over the internet. In this
example, it is a card not present transaction. The card transaction’s details are
entered into the merchant’s terminal, usually, sent via the telephone line to their
acquiring bank who will process the transaction and send it on to the relevant card
issuer for authorization and settlement.
3. Acquirer
A merchant, will have negotiated a Merchant Service Agreement with their
acquiring bank to process payment card transactions on their behalf. Typically, this
agreement will also include the acquiring bank providing one of its own terminals,
known as a bank owned terminal. An acquiring bank is responsible for receiving
the card transaction details from the merchant’s terminal, passing these through to
the card issuer (the cardholder’s bank or building society) via the card scheme for
authorization and completing the processing of the transaction. An acquiring bank

68
will arrange the card transaction’s settlement and will, typically, credit the
merchant’s nominated bank account with the funds within four working days. An
acquiring bank will also deal with any chargeback or requests for information
(RFI) that they may receive from card issuers on any of their merchant’s
transaction
4. Card Scheme
Card Schemes are organisations who manage and control the operation and
clearing of card payment transactions according to card scheme rules. The Card
Schemes are responsible for passing card transaction details from the acquiring
bank to the issuer and for passing payment back to the acquiring bank who in turn
pays this to the merchant. American Express, Diners Club, JCB, Maestro,
MasterCard and Visa (including Electron or Debit) are the card schemes that
operate in the UK.
5. Issuer
The issuer is the bank, building society or financial organization that provides a
payment card (debit, credit, pre-paid or charge card) to their customer or
cardholder. The issuer has responsibility for transactions made on cards that they
have issued, and will be responsible for debiting funds from the relevant
cardholder's account.
Note: For American Express and Diners Club - the transaction process is slightly
different as they act as card scheme, issuer and acquiring bank at the same time.
An acquiring bank will be able to explain more about accepting these card types.

69
4. 2 Problems of Credit Card
Credit cards have changed the way people look at money. Gone are the
days when only the rich sported them at limited counters in select cities.
Today, they are a way of life for the middle class too, even in smaller
locations across the country. However, this boomhas brought in a lot of
complications like credit card fraud, payment defaulting, unsolicited card,
uncontrolled spending etc. Rapid credit card growth has increased
transaction efficiency. Till recently, the Indian consumer was using the
credit card during the crunch season, but things have changed in the recent
past with the consumers using it for as small a sum as Rs.100 to over one
lakh rupees. The most common feature among the credit card holders is
that they carry forward their payment. Postponing payments multiplies
bills that too at a whopping rate of 50 to 60 per cent per year, pushing the
card holders into a debt trap. The utility of cards varies from person to
persondepending on their profile. In the initial years, the consumers deem
it a privilege to hold credit cards. However, there is a feeling among card
holders that the banks are charging hefty interest and other fees. Credit
card issuers charge interest which works out to roughly 42 per cent per
annum. Delays or defaults result in payment of penal interest on all
incremental usage of the card till the payments are made. Once the
outstanding piles up, it can be a serious hazard to one‟s financial security.
Today, competition among credit card players is intense. Offering benefits
like reward points is just another way of luring customers into debt trap.
The biggest problems arise when one gets into what is called revolver
mode of repayment.

70
4.3 Marketing and Promotional strategies of Credit
Cards
"It plans to send personalized mailers about various products to all those HDFC
come in contact with during these mass promotions." The bank has also tied up
with Business Today, to sponsor10,000 copies of the magazine in each metro. The
cover of the sponsored copies would be the December issue of Business Today,
which rated HDFC Bank as the bestbank in the country. On the oppositeside,
would be an advertorial, which would talk about HDFC as a `one-stop financial
supermarket'. Gold Credit card:
For providing the better services to the customers and promoting their business,
HDFC has launched the Gold Credit Cards. It's overloaded with travel benefits -
discounts, cash back offers, air miles redemption.
Gold Credit Card Features & Benefits
Attractive RewardPoints
Earn 1 reward point per Rs 150 spent on the Gold Credit Card.
Rewards points redemption

71
After earning all those reward points on your HDFC Bank Gold Credit Card,
redeem them for exciting gifts and services! You could even convert them to
airline miles with India's leading airlines through the My Rewards programme.
Worldwide acceptance
Accepted at over 23 million Merchant Establishments around the world,
including 110,000 Merchant Establishments in India.
Revolving credit facility
Pay a minimum amount, which is 5% (subject to a minimum amount of Rs.200)
of your total bill amount or any higher amount whichever is convenient and
carry forward the balance to a better financial month. For this facility, you pay a
nominal charge of just 3.25% per month (39.0% annually).
Free Add-on card
You can share these wonderful features with your loved ones too - we offer the
facility of an add-on card for your spouse, children or parents. Allow us to offer
add-on cards to you FREE OF COST with our compliments.
Interest free credit facility
Avail of up to 50 days of interest free period from the date of purchase (subject
to the submission of the charge by the Merchant).
Zero liability on lost card
If you happen to lose your Card, report it immediately to our 24-hour call
centre. After reporting the loss, you carry zero liability on any fraudulent
transactions on your card

72
Platinum Cards Get Additional Benefits
HDFC Bank Platinum Card Customers Get Additional Benefits compared to Gold /
silver or other entry level cards. For instance, consider this; HDFC Cards has a Co-
Branded Online Shop with Surat Diamonds. By virtue of being HDFC Bank
Customer, you are already getting big discount. Now add any item to your cart and
enter 558818 [6 Starting Digits of Platinum Card], you get additional discount.
This is just one such instance. You also get Petrol Surcharge Waiver, IRCTC
Charges Waived, etc.

73
Times Hdfc Launched Credit Card
Times Internet, the digital arm of The Times of India Group, has partnered
with HDFC Bank to launch Times Card, a cobranded card that provides special
offers such as 25% discount on movie tickets and 20% off on dining.
"The Times Group has created an entertainment universe through our supplements
like Bombay Times, Delhi Times and times city .comand these are
all platforms for fun, food and films. The Times Card gives a unique opportunity
to create a productthat leverages this breadth in the
entertainment space. The card will make entertainment easy on the wallet in the di
ning and movie category," said Vineet Jain, MD, Times Group.
The features of the card include a welcome benefit comprising a bouquet of gift vo
uchers for shopping and dining. In addition, there will be round the year discounts
at movie and dining outlets. Cardholders will not have to pay any surcharge
on purchase of fuel for amounts ranging between Rs 400 and Rs 5,000. Aditya
Puri, MD, HDFC
Bank, said, "Our association with the Times Group extends from the time Times

74
Bank merged with HDFC Bank. The way we see India moving today is that we ha
ve a very young demographic, 50% of population will be
below 25 and 60% will be below 35. According to a
'Here's India's first entertainment card'
study done by our bank, the youth segment has a strong work
life balance association and they define entertainment as life, friends and fun. So
we both want to catch them young and give them a productthat will
help them lead a good life. This card is India's first entertainment
credit card." It will be available in two variants, Platinum and Titanium,
which will be offered exclusively on the MasterCard platform. The Platinum card
comes for an annual fee of Rs 1,500 plus taxes while Titanium card
for Rs 500 and taxes.
Balance Transfer and Promotional Rate Marketing
Promotional rate marketing attracts new customers and/or induces new and
existing customers to transfer balances by offering a reduced interest rate for a
limited time on certain charges and transactions. The reduced rate is also often
subject to other material limitations. Without adequate controls, promotional rates
may disguise a borrower’s repayment capacity when qualification is based on the
reduced rate rather than the re-set rate. In addition, higher attrition may occur
when promotional rates expire. Like “up to” marketing, promotional rate
marketing in and of itself is not contrary to law, but, if not administered properly,
can warrant criticism. Forexample, the lack of full and prominent disclosure of
material limitations or applicable fees may be problematic. Examiners should
closely review promotional rate marketing programs and consult with their
compliance counterparts if concerns are identified.

75
Banks often offer a balance transfer option as part of a pre-approved or application
strategy and often in conjunction with promotional rate marketing. With a balance
transfer, a consumer transfers all or a portion of their credit card debt with other
entities onto the credit card extended by the bank. The consumer is often enticed
to transfer the balances by receiving a lower interest rate than what they might
have on their existing accounts. The characteristics of the debt transferred can
vary depending on the bank’s program. Forexample, some banks offer to take
transfers of bad debt. Balance transfer strategies can result in rapid growth of
receivables, and as such, should be carefully monitored and managed. For
example, rapid growth could exceed the level of available funding capacity.
Furthermore, the immediate booking of relatively large balances can distort
performance ratios. Profitability can also be easily impacted depending on
consumer behavior. Forexample, some consumers pay off the balance or move
the balance to yet another card before or at the time the promotional rate on the
existing card expires. The cycle may occurover and over, with the consumer able
to take advantage of extremely low interest rates for an extended period of time.
Promotional rate and balance transfer marketing are responsible for some degree of
customer loyalty erosion that has occurred in the industry.

76
4.4 Credit Card Management System
HDFC SELECTS NEUTRALTECHNOLOGY
HDFC bank, one of India's premier banks, today announced that it is using neural
predictive models from Neural Technologies for risk management in its Credit
Cards and other Retail Assets portfolios.
HDFC bank selected Neural Technologies following a comprehensive proofof
conceptstudy, aimed at finding a supplier who could provide them with a superior
analytical and scientific approachto reduce the delinquency rates in their credit
card and retail assets portfolio.
Following selection, Neural Technologies worked alongside HDFC bank's
personnel to develop models for Credit Card Collections, Credit Card Recovery
and Retail Assets (Personal Loans) Collections.
The models are proving to be very successful. Rajesh Kumar, Sr Vice President of
HDFC bank said "We selected Neural Technologies based upon the performance
of their models and the predicted return on investment, and we are extremely
satisfied with the results achieved so far."
HDFC bank has plans to expand its relationship with Neural Technologies and
explore new areas in their business where they might benefit from NT’s expertise.
Arinjay Jain, Director of Neural Technologies' Indian operation said, "Neutral
predictive analytics is an ideal risk management tool, providing valuable decision-
supportto businesses looking to manage and reduce credit risk and fraud losses. A
pioneer in this field among the Indian banks, HDFC bank has enthusiastically
embraced the conceptand is now starting to reap the benefits. We look forward to
a long and mutually beneficial relationship between our two companies".

77
CHAPTER 5
5.1 Case study
HDFC bank has launched a corporate credit card for the small and medium
enterprises (SME), jointly with mastercard.The card, named HDFC bank
Powerplus Business Card can be used to pay for business expenses, and is linked to
thecash credit account of the company . Since the card is used solely for business
purposes, any finance charges incurred would be tax – deductible. The monthly
statements will clearly show the businessexpenses and helpcompanies claim tax
exemptions. The creditlimit for the card has been set at Rs. 25 lakh per company.
Each company will get five individual cardsfortheir employees. Each individual
card has a maximum limit of Rs.5lakh and minimum limit Rs. 2 lakh. The anuual
fee is Rs. 25000 and joining fee isrs. 500. The interest rate on the card is 1.5 per
cent per month. Other benefits include 50 per cent discount on 10,000 hotels
worldwise, and an insurance cover of up to Rs.1 lakh in the case oflost or stolen
cards . for this card,the bank is looking at spending andpenetration, both absolute
numbers.
HDFC has identified three three kinds o SME customers in terms of the size and
the nature of their business – The small traders or businessmen; Idustria; entitles
with an annual turn over of upto Rs.200 crore; and Supply chain management
companies which deal wiyh most the large corporateportfolio. While the corporate
portfolio is expected to grow at 50 percent. Therefore, the SME segments presents
immense potential for HDFC.

78
Q1. What are SME’s and why are theysaid to be the key drivers in organisational
buying market ?
Basically, (SME) means small and medium enterprises The market for
international payments services is rapidly expanding as SME’s search for a
reliable platform that can serve their international payments needs.
Innovative payment solutions such as beneficiary management are not
currently supported by any global or regional banks , there are three kinds of
business It aims at delivering quality, innovative and efficient products and
services to the SME customers through its professional teams.The bank
develops flexible lending policies that meet the market needs. It also
continues to streamline the approval procedures to improve SME lending
efficiency.It aims to becomea first-class domestic bank with leading
performance in retail banking, credit card and SME, etc. as well as advanced
international standard management.The Bank provides its SME customers
with an extensive service platform in helping them solving financial
problems and improving efficiency of their capital utilization through
integration of service platforms of outlets, Internet banking and phone
banking,etc the small traders or businessmen , industrial entities with an
annual turnover of upto Rs.200 crore & supply chain management
companies which deal with the most large coporatenowadays the banks
SME is growing fast 12% is the running portfolio of all corporatebank, they
are now expecting to grow upto 20-25% on a year. Therefore SME drives in
organisational buying market segment is likely to grow upto 50%.

79
Q2. What is strategy used by hdfc bank to promote powerplus business
card?
This is highly effective if it is marketed to consumers, but can also be used
business to business. How about placing them with a graphic artist if you are a sign
company or a realtor if you are a mortgage broker? Keep your eyes open for
opportunities to get your business cards in front of your target audience. The single
most important thing you can do as part of your marketing strategy is add value to
your business cards. Augment the typical boilerplate name, title and contact
information with something that your target audience will appreciate, enjoy, and
reference time and again. You can use the back of your mini business cards to
make mini calendars, athletic or event schedules, and handy conversion charts
(such as a dining out tip chart) that align with the interests, hobbies and professions
of your targeted prospects. Adding value in this manner puts your brand in front of
customers repeatedly, builds trust and credibility in your methods, and proves to
prospects that you “get them.” The back of your business cards represents valuable
real estate – do not waste it on a simple logo or other graphic. Put it to work to
motivate customers into action. The card, named HDFC bank Powerplus Business
Card can be used to pay for business expenses, and is linked to thecash credit
account of the company . Since the card is used solely for business purposes, any
finance charges incurred would be tax – deductible. The monthly statements will
clearly show the businessexpenses and helpcompanies claim tax exemptions. The
creditlimit for the card has been set at Rs. 25 lakh per company. Each company
will get five individual cardsfortheir employees. Each individual card has a
maximum limit of Rs.5lakh and minimum limit Rs. 2 lakh. The anuual fee is Rs.
25000 and joining fee isrs. 500. The interest rate on the card is 1.5 per cent per
month. Other benefits include 50 per cent discount on 10,000 hotels worldwise,
and an insurance cover of up to Rs.1lakh in the case oflost or stolen cards . for this
card,the bank is looking at spending andpenetration, both absolute numbers.

80
WEBLIOGRAPHY
 http://en.wikipedia.org/wiki/credit_card
 www.capitalmind.in
 “plasticcards–specifications“customplasticcard.com
 http://www.hdfcbank.com
 www.investopedia.com/creditcards

81
BIBLOGRAPHY
 Financial Service Management , Author; Dipak Abhyankar (Vipul
Prakashan) Pg No: 175-190
 Know your banking -2 credit cards by indian institute of banking & finance (
author)

82
QUESTIONNAIRE
6. What type of credit card you issue the most to the customers ?
7. What are charges for credit card ?
8. Will customer get an additional card in case of joint a/c ?
9. What should customer do on the receipt of credit card?
10.What is PIN ?
11.What Is Mode Of Payment ?
12.How credit card works in your bank ?
13.Procedurein caseloss of credit card?
14.Is there any problems faced during and after transaction of credit card ?
15.How is credit card management system in hdfc ?
16.Is there apps which would be convinent for payments?
17.How credit card & cash payments received from your customers , for
every receipts , the number of payments received through card?
18.Do you take every measure possible to prevent duplicate transactions?
19.How credit cards & cash payments received from your customers the
percentage of transaction (value) through credit cards?
20.Do you store cardholder info ( hard copy/electronic)?

83
CONCLUSION
HDFC develops various plans for credit cards which would be convenient
according to the requirements of its targeted market or customer and is thus
beneficial to its customer in various ways. It provides various technology
which increases the satisfaction level of its customers. Therefore the HDFC
is one of the top 300 banks in the world. It is the 3rd bank amongst 17 banks
of india.

Credit card special preference to hdfc bank

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