INDEX

CONTENTS PAGE NO.

TOPICS : HDFC BANK

1. INTRODUCTION
2. HISTORY OF HDFC BANK
3. REVIEW OF LITEATURE
4. ORGANISATION & MANAGEMENT OF HDFC BANK
5. SERVICE & PRODUCTS OFFER
6. CUSTOMER APPROACH & EMPLOYEE
7. CSR
8. AWARDS & REWARDS
9. RECENT DEVELEPOMENTS IN HDFC BANK
10. CONCLUSION
11. BIBLIOGRAPHY

84
85
INTRODUCTION OF HDFC BANK

HDFC Bank was amongst the first to receive an ‘in-principle’ approval from
the Reserve Bank of India (RBI) to set up a bank in the private sector from
Housing Development Finance Corporation Limited (HDFC), in 1994 during the
period of liberalisation of the banking sector in India. HDFC India was
incorporated in August 1994 in the name of ‘HDFC Bank Limited’. HDFC India
commenced operations as a Scheduled Commercial Bank in January1995.

HDFC India deals in varieties of products like home loan, standard life insurance,
mutual fund, securities, credit cards, etc. HDFC has branch offices in all major
cities in India like Calcutta, Chennai, Delhi, Bangalore, Hyderabad, Ahmedabad
apart from HDFC Mumbai.
Business Objectives

The primary objective of HDFC is to enhance residential housing stock in the

Country through the provision of housing finance in a systematic and professional
Manner, and to promote home ownership. Another objective is to increase the
flow of resources to the housing sector by integrating the housing finance sector
with the overall domestic financial markets

Organizational Goals

Develop close relationships with individual households.

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

c) Transform ideas into viable and creative solutions.

d) Provide consistently high returns to shareholders.

e) To grow HDFC’s main goals are

a) Through diversification by leveraging off the Existing client.

Business Focus

HDFC Bank’s mission is to be a World-Class Indian Bank. The objective is to

build sound customer franchises across distinct businesses so as to be the preferred
provider of banking services for target retail and wholesale customer segments, and
to achieve healthy growth in profitability, consistent with the bank’s risk appetite.
The bank is committed to maintain the highest level of ethical standards,
professional integrity, corporate governance and regulatory
compliance. HDFC Bank’s business philosophy is based on four core values –
Operational Excellence, Customer Focus, Product Leadership and People.

86
HDFC BANK MERGE WITH CENTURION BANK OF PUNJAB

The Reserve Bank of India has sanctioned the Scheme of Amalgamation of

Centurion Bank of Punjab Ltd. with HDFC Bank Ltd. The Scheme has been
sanctioned in exercise of the powers contained in Sub-section (4) of Section 44A of
the Banking Regulation Act, 1949. All the branches of Centurion Bank of Punjab
will function as branches of HDFC Bank with effect from May 23, 2008. With
RBI’s approval, all requisite statutory and regulatory approvals for the merger have
been obtained. The combined entity would have a nationwide network of 1,167
branches; a strong deposit base of around Rs. 1, 22,000 crores and net advances of
around Rs. 89,000 crores. The balance sheet size of the combined entity would be
over Rs. 1, 63,000 crores. HDFC Bank Board on 25th February 2008 has approved
the acquisition of Centurion Bank of Punjab (CBOP) for Rs 9,510 crore in one of
the largest merger in the financial sector in India. CBOP shareholders will get one
share of HDFC Bank for every 29 shares held by them.

ISSUES AFTER MERGER HDFC BANK WITH CBOP

After merger HDFC bank with CBOP (Centurion Bank Of Punjab) the main issue
was arise that was the labour turnover, It was the big problem which the bank is
facing . The main issue of labour turnover is overload of work on employees due to
merger because HDFC bank is the largest bank in private sector and the work level
was standardised and it was already uploaded but was satisfactory. But after merger
it gone to unsatisfactory level due to this problem most of the employees feel very
stressful and under pressure that’s why labour turnover problem arise and by it is
also a matter of human resource department and mostly this problem is arise in
wholesale banking operation (WBO ) because the most of the operation is based on
WBO and all the financial transaction are related to the WBO. The employee of
CBOP was took by HDFC bank but there was also a software problem because
every bank software is different from each other. After merger employees was
unknown to the different software of the bank that was also a big problem for the
bank. It was also a big issue and a barrier in this problem. (Khatri, 2011)

REASON FOR CHIOCE THIS ISSUE

This issue is related to the human resource problem. Employees are the
main resource in any organisation. The reason for choose this issue is to
show the organisation human is not like a machine. Organisations never
feel they are worker they treat like a machine. So the reason is to show the
organisation how u can maintain the balance between the work and
between the employees satisfaction from this how can you reduce the
employee’s turnover.

COMMUNICATION METHOD

87
• Culture

Gareth Morgan has described organizational culture as: “The set of the set
of beliefs, values, and norms, together with symbols like dramatized events
and personalities that represents the unique character of an organization,
and provides the context for action in it and by it.” Beliefs and values are
words that will pop up frequently in other definitions, as well. Norms might
be described as traditions, structure of authority, or routines.

• Motivation

The definition of motivation is to give reason, incentive, enthusiasm, or

interest that causes a specific action or certain behaviour. Motivation is
present in every life function. Simple acts such as eating are motivated by
hunger. Education is motivated by desire for knowledge. Motivators can be
anything from reward to coercion.

• Customer Relation

A customer relation, or customer service, is the front line between an

organization and its customers. How customers are initially greeted and
treated can influence their decisions to do business with your company.
Effective customer relations strategies include listening skills, oral and
written communication, analytical and problem solving skills and teamwork
based on the organization’s commitment to meet customer needs while making
customers feel welcome and valued. (lawson, 2010)

• Public Relation

Public relations (PR) are a field concerned with maintaining a public image for
business, non-profit organization or high-profile people, such as celebrities and
politicians.

CHOOSEN METHOD OF COMMUNICATION

In this issue which related to the human resource management, I related this issue
with the method of motivation. Because this is the problem of employee’s
dissatisfaction so motivation is necessary in this situation every employee feels
very stressful so the motivation is very necessary in this situation. Whether they
will leave the organization and the financial crises will come in the bank.

The chosen method will be used for reduce the labour turnover motivation will help
the employees to work as their maximum efficiency with the help of effective
communication. When the choosen method will be related to the issues then it will
88
work and will be implemented at proper level. Motivation is also solution of human
resource problem so the problem is also related to the human resource management
that’s why I choose the motivation method of communication and it will
implemented. (Ashbaugh, 2009)

REFLECTION OF THE COMMUNICATION METHOD

As per the proposal of communication to the managing director of the co, the
various steps which are described in the proposal it described from learning
experience through the merger. It is based on the banking issue. The issue was
related to the overload of work after merging the CBOP bank into the HDFC bank.
It was the issue of human resource management. Every work in any organization is
depend upon the employees how they efficiently work this is the successful reason
for any organization what way their employees is doing. But in this issue
employees feel very pressurize and very stressful by this they gone to leaving the
organization . In this situation the theory of motivation by FREDERICK
HERZBERG which describe how you can motivate to the employee which they
can stay with the organization for the long run through satisfaction . Herzberg
believed that businesses should motivate employees by adopting a democratic
approach to management and by improving the nature and content of the actual job
through certain methods. Some of the methods managers could use to achieve this
are:

Job enlargement – workers being given a greater variety of tasks to perform (not
necessarily more challenging) which should make the work more interesting.

Job enrichment – involves workers being given a wider range of more complex,
interesting and challenging tasks surrounding a complete unit of work. This should
give a greater sense of achievement.

Empowerment means delegating more power to employees to make their own

decisions over areas of their working life.

HISTORY OF HDFC BANK

The HDFC Bank was incorporated on August 1994 by the name of
'HDFC Bank Limited', with its registered office in Mumbai, India.
HDFC Bank commenced operations as a Scheduled Commercial Bank in
January 1995. The Housing Development Finance Corporation (HDFC)
was amongst the first to receive an 'in principle' approval from the
Reserve Bank of India (RBI) to set up a bank in the private sector, as
part of the RBI's liberalization of the Indian Banking Industry in 1994.
HDFC Bank is headquartered in Mumbai. The Bank at present has an
enviable network of over 1416 branches spread over 550 cities across
89
India. All branches are linked on an online real–time basis. Customers in
over 500 locations are also serviced through Telephone Banking. The
Bank also has a network of about over 3382 networked ATMs across
these cities.The promoter of the company HDFC was incepted in 1977 is
India's premier housing finance company and enjoys an impeccable track
record in India as well as in international markets. HDFC has developed
significant expertise in retail mortgage loans to different market
segments and also has a large corporate client base for its housing related
credit facilities. With its experience in the financial markets, a strong
market reputation, large shareholder base and unique consumer
franchise, HDFC was ideally positioned to promote a bank in the Indian
environment.The shares are listed on the Bombay Stock Exchange
Limited and The National Stock Exchange of India Limited. The Bank's
American Depository Shares ( ADS ) are listed on the New York Stock
Exchange (NYSE) under the symbol 'HDB' and the Bank's Global
Depository Receipts (GDRs) are listed on Luxembourg Stock Exchange.
On May 23, 2008, the amalgamation of Centurion Bank of Punjab with
HDFC Bank was formally approved by Reserve Bank of India to
complete the statutory and regulatory approval process. As per the
scheme of amalgamation, shareholders of CBoP received 1 share of
HDFC Bank for every 29 shares of CBoP .The merged entity now holds
a strong deposit base of around Rs. 1,22,000 crore and net advances of
around Rs. 89,000 crore. The balance sheet size of the combined entity
would be over Rs. 1,63,000 crore. The amalgamation added significant
value to HDFC Bank in terms of increased branch network, geographic
reach, and customer base, and a bigger pool of skilled manpower.In a
milestone transaction in the Indian banking industry, Times Bank
Limited (another new private sector bank promoted by Bennett, Coleman
& Co. / Times Group) was merged with HDFC Bank Ltd., effective
February 26, 2000. This was the first merger of two private banks in the
New Generation Private Sector Banks. As per the scheme of
amalgamation approved by the shareholders of both banks and the
Reserve Bank of India, shareholders of Times Bank received 1 share of
HDFC Bank for every 5.75 shares of Times Bank.
HDFC Bank offers a wide range of commercial and transactional
banking services and treasury products to wholesale and retail
customers. The bank has three key business segments:

90
Wholesale Banking Services – The Bank's target market ranges from
large, blue–chip manufacturing companies in the Indian corporate to
small & mid–sized corporates and agri–based businesses.
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.
Treasury – Within this business, the bank has three main product areas
Foreign Exchange and Derivatives, Local Currency Money Market &
Debt Securities, and Equities. The Treasury business is responsible for
managing the returns and market risk on this investment portfolio.
HDFC Securities (HSL) and HDB Financial Services (HDBFSL) are its
subsidiaries.
Services offered by the company:
Personal Banking
• Accounts & Deposits
• Loans
• Cards
• Forex
• Investments & Insurance
NRI Banking
• Accounts & Deposits
• Remittances
• Investments & Insurance Loans Payment Services
Wholesale Banking
• Corporate
• Small & Medium Enterprises

91
• Financial Institutions & Trusts
• Government Sector
Achievements/ recognition:–
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. 2013 IBA Banking Technology
Awards 2012–13 – Best Technology Bank of the year Winner
– Best Internet Bank Winner
– Best Customer Management Initiative Winner
– Best use of Mobility Technology in Banking
Business Standard Mr Aditya Puri Banker of the Year 2013
Business Today KPMG Best Banks Survey 2013 Best Bank 2013
Business India Best Bank 2013
Global Finance Survey –World's Best Banks 2013 Best Bank in India
Outlook Money Awards 2013 Best Bank in Large Banks Category
IBA Innovation Awards Most Innovative use of Technology
Dun & Bradstreet Polaris Financial Technology Banking Award 2013
Best Private Sector Bank Technology Adoption Best Private Sector
Bank Retail Overall Best Private Sector Bank
Institutional Investor Best Bank in Asia Best CEO Forbes Asia Fab 50
Companies List for the 7th year Sunday Standard Best Banker Awards
Best Private Sector Bank: Large Safest Bank: Large Mr. Aditya Puri:
Top Achiever UTI Mutual Fund CNBC TV 18 Financial Advisory
Awards 2012 Best Performing Bank Private . Asia Money 2013 Best
Domestic Bank in India Mr. Aditya Puri: Best Executive in India
MCCIA Awards 2013 Best in Financial Services Bank Category
Dun & Bradstreet Corporate Awards 2012 Best in Banking sector
NDTV Profit Business Leadership Awards 2012 Winner in the banking
category NASSCOM CNBC–TV18 IT Innovation Award Best IT Driven
Innovation in Banking (COMMERCIAL) The National Quality
Excellence Awards Best Customer Service Result FE Best Bank Awards
Best Bank: New Private sector
Best in Strength & Soundness Mr. Aditya Puri: Best Banker
Skoch Financial Inclusion Awards 2013 Organisation of the Year 2011

92
Financial Express Best Bank Survey 2010–11 – Best in Strength and
Soundness and 2nd Best in the Private Sector
CNBC TV18's Best Bank & Financial Institution Awards – Best Bank
and Mr. Aditya Puri, for outstanding finance professional
Dun & Bradstreet Banking Awards 2011 – Best private sector bank –
SME Financing
ISACA 2011 award for IT Governance – Best practices in IT
Governance and IT Security
IBA Productivity Excellence Awards 2011 – New Channel Adopter
(Private Sector)
DSCI (Data Security Council of India) Excellence Awards 2011 –
Security in bank
FINANCE ASIA Country Awards 2011: India – Best bank, best cash
management bank and best trade finance bank Asian Banker – Strongest
bank in Asia Pacific Bloomberg UTV's Financial Leadership Awards
2011 – Best bank IBA Banking Technology Awards 2010 – Technology
bank of the year, best online bank, best customer initiative, best use of
business intelligence, best risk management system and runners up –
best financial inclusion IDC FIIA Awards 2011 – Excellence in
customer experience 2010 Outlook Money 2010 Awards But Bank
Businessworld Best Bank Awards 2010 Best Bank (Large) Teacher's
Achievement Awards 2010 (Business)Mr. Aditya Puri
The Banker and PWM 2010 Global Private Banking Awards – Best
Private Bank in India Economic Times Awards for Corporate Excellence
2010 Business Leader of the Year Mr. Aditya Puri Forbes Asia – Fab 50
Companies 5th year in a row NDTV Business Leadership Awards 2010
Best private sector bank The Banker Magazine World's Top 1,000 Banks
MIS Asia IT Excellence Award 2010 – BEST BOTTOM–LINE I.T.
Category Dun & Bradstreet Banking Awards 2010 – Overall best bank,
Best private sector bank, Best private sector bank in SME Financing
Institutional Investor Magazine Poll HDFC Bank MD, Mr. Aditya Puri
among ‘Asian Captains of Finance 2010 IDRBT Technology 2009
Awards – IT Infrastructure, Use of IT within the Bank and Runners–up –
IT Governance (Large Banks) ACI Excellence Awards 2010 – Highly
93
Commended – Asia Pacific HDFC Bank FE–EVI Green Business
Leadership Award – Best performer in the banking category Celent's
2010 Banking Innovation Award – Model bank Award Avaya Global
Connect 2010 – Customer Responsiveness Award – Banking &
Financial Services category Forbes Top 2000 Companies – HDFC Bank
at 632nd position and among 130 global high performers Financial
Express – Ernst & Young Survey 2009–10 – Best new private sector
bank, Best in growth and Best in strength Asian Banker Excellence
Awards 2010 – Best retail bank in India, Excellence in automobile
lending, Best M&A integration and technology implementation The
Asset Triple A Awards – Best cash management bank in India
Euromoney Private Banking and Wealth Management Poll 2010 – Best
local bank in India (second year in a row), Best private banking services
overall (moved up from No. 2 last year) Financial Insights Innovation
Awards 2010 – Innovation in branch operations – server consolidation
project Global Finance Award – Best trade finance provider in India for
2010 Banking Technology Awards 2009 – Best risk management
initiative and Best use of business intelligence SPJIMR Marketing
Impact Awards (SMIA) 2010Business Today Best Employer Survey –
Listed in top 10 best employers in the country 2009 Business Standard
Best Banker Award – Mr. Aditya Puri, MD, HDFC Bank Fe Best Bank
Awards 2009 – Best Innovator of the year award for its MD Mr. Aditya
Puri – Second Best Private Bank in India – Best in Strength and
Soundness Award Euromoney Awards 2009 – 'Best Bank in India'
Economic Times Brand Equity & Nielsen Research annual survey 2009
Most Trusted Brand – Runner Up Asia Money 2009 Awards – 'Best
Domestic Bank in India IBA Banking Technology Awards 2009 – 'Best
IT Governance Award – Runner up' Global Finance Award – 'Best
Trade Finance Bank in India for 2009 IDRBT Banking Technology
Excellence Award 2008 – 'Best IT Governance and Value Delivery
Asian Banker Excellence in Retail Financial Services – 'Asian Banker
Best Retail Bank in India Award 2009 – 2008 Finance Asia Country
Awards for Achievement 2008 – 'Best Bank and Best Cash
Management Bank
CNN–IBN – 'Indian of the Year (Business) Nasscom IT User Award
2008 – 'Best IT Adoption in the Banking Sector Business India – 'Best
Bank 2008 Forbes Asia – Fab 50 companies in Asia Pacific Asian
Banker Excellence in Retail Financial Services – Best Retail Bank 2008
94
Asiamoney – Best local Cash Management Bank Award voted by
Corporates Microsoft & Indian Express Group – Security Strategist
Award 2008 World Trade Center Award of honour – For outstanding
contribution to international trade services. Business Today–Monitor
Group survey – One of India's 'Most Innovative Companies Financial
Express–Ernst & Young Award – Best Bank Award in the Private Sector
category Global HR Excellence Awards – Asia Pacific HRM Congress:
Employer Brand of the Year 2007 –2008' Award – First Runner up, &
many more Business Today – 'Best Bank' Award2007 Dun & Bradstreet
– American Express Corporate Best Bank Award 2007 – 'Corporate
Best Bank' Award The Bombay Stock Exchange and Nasscom
Foundation's Business for Social Responsibility Awards 2007 – 'Best
Corporate Social Responsibility Practice' Award Outlook Money &
NDTV Profit – Best Bank Award in the Private sector category.The
Asian Banker Excellence in Retail Financial Services Awards – Best
Retail Bank in India Asian Banker – Its Managing Director Aditya Puri
wins the Leadership Achievement Award for India
REVIEW OF LITERATURE
On May 23, 2008, the amalgamation of Centurion Bank of Punjab with HDFC
Bank was formally approved by Reserve Bank of India to complete the statutory
and regulatory approval process. As per the scheme of amalgamation, shareholders
of CBoP received 1 share of HDFC Bank for every 29 shares of CBoP. The
amalgamation added significant value to HDFC Bank in terms of increased branch
network, geographic reach, and customer base, and a bigger pool of skilled
manpower.In a milestone transaction in the Indian banking industry, Times Bank
Limited (another new private sector bank promoted by Bennett, Coleman & Co.
Times Group) was merged with HDFC Bank Ltd., effective February 26, 2000.
This was the first merger of two private banks in the New Generation Private
Sector Banks. As per the scheme of amalgamation approved by the shareholders of
both banks and the Reserve Bank of India, shareholders of Times Bank received 1
share of HDFC Bank for every 5.75 shares of Times Bank.
HDFC Bank is headquartered in Mumbai. As of September 30, 2019, the Bank's
distribution network was at 5,314 branches across 2,768 cities. All branches are
linked online on a real-time basis. Customers across India are also serviced through
multiple delivery channels such as Phone Banking, Net Banking, Mobile Banking,
and SMS based banking. The Bank's expansion plans take into account the need to
have a presence in all major industrial and commercial centers, where its corporate
customers are located, as well as the need to build a strong retail customer base for
both deposits and loan products. Being a clearing settlement bank to various
95
leading stock exchanges, the Bank has branches in centres where the NSE / BSE
have a strong and active member base. The Bank also has a network of 13,514
ATMs across India. HDFC Bank's ATM network can be accessed by all domestic
and international Visa / MasterCard, Visa Electron / Maestro, Plus / Cirrus and
American Express Credit / Charge cardholders. The new private banks have emerged as a
model to the banking industry in terms of service levels, ambience, technology etc. As the public
sector banks have already established a huge customer base, they become complacent and are slow
to become customer friendly. They are also less innovative in the use of technology-assisted
customer service. Because of their huge customer base they feel that they can withstand
competitions from new generation banks. Review of Literature 19 N. S. Varghese (2000)is of the
opinion that new generation private sector banks with their latest technology are able to implement
e-banking and are highlypreferred by investors in the stock market. He also points out that
prominent new generation private sector banks like HDFC and ICICI have entered into
internetbanking through which greater convenience is offered with lower transaction cost. The
study carried out by P Verma (2000)10 is in tune with the findings of Varghese. Analysing the
impact of information technology on new generation banks Verma feels that new generation banks
are far ahead of traditional public sector banks. He finds that information technology is posing a
threat to the public sector banks. He observes that the business per employee of major public sector
banks in India is a mere fraction of the business per employee of new generation banks. So the
public sector banks have to improve their productivity and efficiency to compete with the new
generation banks which are fully computerized. But Eapen Varghese (2001) finds no such difference
between the services rendered by public sector and private sector banks. Mini Joseph’s (2001) view
is that new generation banks have created a spirit of competition in the banking industry by fully
utilizing the facilities and amenities available from technology and computerization, and by
accepting customer satisfaction as the core aspect. For preventing the erosion in the market share of
old private sector banks and public sector banks, they are also providing quality service now in a
competitive spirit. Anantha Swamy (2001) makes an appraisal of the performance of different bank
groups in India in the backdrop of competition, deregulation and changes in the field of banking.
He classifies banks into public sector, old private sector, new Review of Literature 20 private sector
and foreign banks. His focus has been on profitability, NPA,contingent liabilities, spread etc. for the
last five years and arrives at the conclusion that the new private sector banks are performing better
than the banks in other sectors. Jamal and Naser (2002) makes a study on “The factors influencing
customer satisfaction in the retail banking sector of Abu Dhabi”. He collected the Necessary data
using structured questionnaire. Customer response to questionnaire shows that the customer
expectations from the bank and service quality provided by the banks are the major determinants
of customer satisfaction. Their investigation on factors influencing customer satisfaction in the
Pakistan retail banking sector15 also reveals that service quality is the important determinant of
customer satisfaction. P. D. Jeromi (2002)16 who studied “The trends and issues of bank credit in
Kerala” finds that the absolute rate of growth of credit is reasonably good. But in relation to
deposits, percapitacredit, credit per account, disbursement by all India Financial Institutions the
level of credit is lower. He also observes that more should be given to mobilization of deposits than
to expansion of credit. Pushpangadharan’s (2002)17 study on “The quality of customer service in

96
sector banks” also shows that public sector banks lag behind private sector
banks in customer service. The parameters he used in the study are facilitiesand
amenities, speed in completing transactions and providing deposit related and credit
related services. The customers of public sector banks are not much satisfied with
branch managers’ and employees’ attitudes. The public sector banks are very poor
in respect of customer feedback system and redress of grievances. Review of
Literature 21 Bharathi Pathak (2003)18 makes a study of “The financial operations
of new eneration private sector banks in India”. Five banks (Indusind bank,
Centurion bank, HDFC bank, ICICI bank and UTI bank) are taken up for financial
analysis for a period of five years from 1996-97 to 2000-01. Their financial
performance is studied under four different parameters – financial, operating,
profitability and productivity. His conclusion is that the working of all banks is
satisfactory but HDFC bank comes at the top closely followed by ICICI bank.
Bikram De (2003)19 makes a study on the effects of ownership on bank
performance. He compared old private sector banks and new generation banks in
terms of profitability, efficiency, liquidity etc. Gilotra (2003)20, in his study on retail
lending, views that the success of retail lending of a bank depends on factors like
marketing efficiency, proper appraisal and follow-up. He also finds that HDFC has
become very excellent in housing finance solely due to the long term strategies
adopted by them. R.Kumar (2003)21 in his study “Retail banking growth drivers and
analysis of associated risks” views that banks should review the retail loan portfolio
at periodical intervals in a structured manner for identifying the risks and upgrading
the strategies for the reduction of risk. V.S. Murthy (2003)22 in his study views that
in India the banking industry has very high competition particularly in the retail
sector. In this competition only the fittest will survive. It is expected that the banks
are well equipped to succeed in the retail journey. Review of Literature 22 Qamar
(2003) 23 has done a comparative study on the “Profitability and resource use
efficiency in scheduled commercial banks in India”. He finds that efficiency of new
private banks and foreign banks is better though marginally than the old private
sector banks and public sector banks. Velayudham (2003)24 in his article “Banking
for corporate new directions”he new private banks have emerged as a model to the
banking industry in terms of service levels, ambience, technology etc. As the public
sector banks have already established a huge customer base, they become
complacent and are slow to become customer friendly. They are also less innovative
in the use of technology-assisted customer service. Because of their huge customer
base they feel that they can withstand competitions from new generation banks.
Review of Literature 19 N. S. Varghese (2000)9 is of the opinion that new generation
private sector banks with their latest technology are able to implement e-banking and
are highly preferred by investors in the stock market. He also points out that
prominent new generation private sector banks like HDFC and ICICI have entered
into internet banking through which greater convenience is offered with lower
transaction cost.

97
The study carried out by P Verma (2000)10 is in tune with the findings of Varghese.
Analysing the impact of information technology on new generation banks Verma
feels that new generation banks are far ahead of traditional public sector banks. He
finds that information technology is posing a threat to the public sector banks. He
observes that the business per employee of major public sector banks in India is a
mere fraction of the business per employee of new generation banks. So the public
sector banks have to improve their productivity and efficiency to compete with the
new generation banks which are fully computerized. But Eapen Varghese (2001)11
finds no such difference between the services rendered by public sector and private
sector banks. Mini Joseph’s (2001)12 view is that new generation banks have created
a spirit of competition in the banking industry by fully utilizing the facilities and
amenities available from technology and computerization, and by accepting
customer satisfaction as the core aspect. For preventing the erosion in the market
share of old private sector banks and public sector banks, they are also providing
quality service now in a competitive spirit. Anantha Swamy (2001)13 makes an
appraisal of the performance of different bank groups in India in the backdrop of
competition, deregulation and changes in the field of banking. He classifies banks
into public sector, old private sector, new Review of Literature 20 private sector and
foreign banks. His focus has been on profitability, NPA, contingent liabilities, spread
etc. for the last five years and arrives at the conclusion that the new private sector
banks are performing better than the banks in other sectors. Jamal and Naser (2002)
14 makes a study on “The factors influencing customer satisfaction in the retail
banking sector of Abu Dhabi”. He collected the necessary data using structured
questionnaire. Customer response to questionnaire shows that the customer
expectations from the bank and service quality provided by the banks are the major
determinants of customer satisfaction. Their investigation on factors influencing
customer satisfaction in the Pakistan retail banking sector15 also reveals that service
quality is the important determinant of customer satisfaction. P. D. Jeromi (2002)16
who studied “The trends and issues of bank credit in Kerala” finds that the absolute
rate of growth of credit is reasonably good. But in relation to deposits, per capita
credit, credit per account, disbursement by all India Financial Institutions the level
of credit is lower. He also observes that more attention should be given to
mobilization of deposits than to expansion of credit. Pushpangadharan’s (2002)17
study on “The quality of customer service in public sector banks” also shows that
public sector banks lag behind private sector banks in customer service. The
parameters he used in the study are facilities and amenities, speed in completing
transactions and providing deposit related and credit related services. The customers
of public sector banks are not much satisfied with branch managers’ and employees’
attitudes. The public sector banks are very poor in respect of customer feedback
system and redress of grievances. Review of Literature 21 Bharathi Pathak (2003)18
makes a study of “The financial operations of new generation private sector banks
in India”. Five banks (Indusind bank, Centurion bank, HDFC bank, ICICI bank and
UTI bank) are taken up for financial analysis for a period of five years from 1996-
97 to 2000-01. Their financial performance is studied under four different parameters

98
– financial, operating, profitability and productivity. His conclusion is that the
working of all banks is satisfactory but HDFC bank comes at the top closely followed
by ICICI bank. Bikram De (2003)19 makes a study on the effects of ownership on
bank performance. He compared old private sector banks and new generation banks
in terms of profitability, efficiency, liquidity etc. Gilotra (2003)20, in his study on
retail lending, views that the success of retail lending of a bank depends on factors
like marketing efficiency, proper appraisal and follow-up. He also finds that HDFC
has become very excellent in housing finance solely due to the long term strategies
adopted by them. R.Kumar (2003)21 in his study “Retail banking growth drivers and
analysis of associated risks” views that banks should review the retail loan portfolio
at periodical intervals in a structured manner for identifying the risks and upgrading
the strategies for the reduction of risk. V.S. Murthy (2003)22 in his study views that
in India the banking industry has very high competition particularly in the retail
sector. In this competition only the fittest will survive. It is expected that the banks
are well equipped to succeed in the retail journey. Review of Literature 22 Qamar
(2003) 23 has done a comparative study on the “Profitability and resource use
efficiency in scheduled commercial banks in India”. He finds that efficiency of new
private banks and foreign banks is better though marginally than the old private
sector banks and public sector banks. Velayudham (2003)24 in his article “Banking
for corporate new directions”The new private banks have emerged as a model to the
banking industry in terms of service levels, ambience, technology etc. As the public
sector banks have already established a huge customer base, they become
complacent and are slow to become customer friendly. They are also less innovative
in the use of technology-assisted customer service. Because of their huge customer
base they feel that they can withstand competitions from new generation banks.
Review of Literature 19 N. S. Varghese (2000)9 is of the opinion that new generation
private sector banks with their latest technology are able to implement e-banking and
are highly preferred by investors in the stock market. He also points out that
prominent new generation private sector banks like HDFC and ICICI have entered
into internet banking through which greater convenience is offered with lower
transaction cost. The study carried out by P Verma (2000)10 is in tune with the
findings of Varghese. Analysing the impact of information technology on new
generation banks Verma feels that new generation banks are far ahead of traditional
public sector banks. He finds that information technology is posing a threat to the
public sector banks. He observes that the business per employee of major public
sector banks in India is a mere fraction of the business per employee of new
generation banks. So the public sector banks have to improve their productivity and
efficiency to compete with the new generation banks which are fully computerized.
But Eapen Varghese (2001)11 finds no such difference between the services
rendered by public sector and private sector banks. Mini Joseph’s (2001)12 view is
that new generation banks have created aspirit of competition in the banking industry
by fully utilizing the facilities and

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amenities available from technology and computerization, and by accepting
customer satisfaction as the core aspect. For preventing the erosion in the market
share of old private sector banks and public sector banks, they are also providing
quality service now in a competitive spirit. Anantha Swamy (2001)13 makes an
appraisal of the performance of different bank groups in India in the backdrop of
competition, deregulation and changes in the field of banking. He classifies banks
into public sector, old private sector, new Review of Literature 20 private sector and
foreign banks. His focus has been on profitability, NPA, contingent liabilities, spread
etc. for the last five years and arrives at the conclusion that the new private sector
banks are performing better than the banks in other sectors. Jamal and Naser (2002)
14 makes a study on “The factors influencing customer satisfaction in the retail
banking sector of Abu Dhabi”. He collected the necessary data using structured
questionnaire. Customer response to questionnaire shows that the customer
expectations from the bank and service quality provided by the banks are the major
determinants of customer satisfaction. Their investigation on factors influencing
customer satisfaction in the Pakistan retail banking sector15 also

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reveals that service quality is the important determinant of customer satisfaction. P.
D. Jeromi (2002)16 who studied “The trends and issues of bank credit in Kerala”
finds that the absolute rate of growth of credit is reasonably good. But in relation to
deposits, per capita credit, credit per account, disbursement by all India Financial
Institutions the level of credit is lower. He also observes that more attention should
be given to mobilization of deposits than to expansion of credit. Pushpangadharan’s
(2002)17 study on “The quality of customer service in public sector banks” also
shows that public sector banks lag behind private sector banks in customer service.
The parameters he used in the study are facilities and amenities, speed in completing
transactions and providing deposit related and credit related services. The customers
of public sector banks are not much satisfied with branch managers’ and employees’
attitudes. The public sector banks are very poor in respect of customer feedback
system and redress of grievances. Review of Literature 21 Bharathi Pathak (2003)18
makes a study of “The financial operations of new generation private sector banks
in India”. Five banks (Indusind bank, Centurion bank, HDFC bank, ICICI bank and
UTI bank) are taken up for financial analysis for a period of five years from 1996-
97 to 2000-01. Their financial performance is studied under four different parameters
– financial, operating, profitability and productivity. His conclusion is that the
working of all banks is satisfactory but HDFC bank comes at the top closely followed
by ICICI bank. Bikram De (2003)19 makes a study on the effects of ownership on
bank performance. He compared old private sector banks and new generation banks
in terms of profitability, efficiency, liquidity etc. Gilotra (2003)20, in his study on
retail lending, views that the success of retail lending of a bank depends on factors
like marketing efficiency, proper appraisal and follow-up. He also finds that HDFC
has become very excellent in housing finance solely due to the long term strategies
adopted by them. R.Kumar (2003)21 in his study “Retail banking growth drivers and
analysis of associated risks” views that banks should review the retail loan portfolio
at periodical intervals in a structured manner for identifying the risks and upgrading
the strategies for the reduction of risk. V.S. Murthy (2003)22 in his study views that
in India the banking industry has very high competition particularly in the retail
sector. In this competition only the fittest will survive. It is expected that the banks
are well equipped to succeed in the retail journey. Review of Literature 22 Qamar
(2003) 23 has done a comparative study on the “Profitability and resource use
efficiency in scheduled commercial banks in India”. He finds that efficiency of new
private banks and foreign banks is better though marginally than the old private
sector banks and public sector banks. Velayudham (2003)24 in his article “Banking
for corporate new directions”Yeole (2004) 30 in her article “Problems of NPA” deals
with the NPA problems of commercial banks. She feels that the public sector banks
are facing the NPA problem more often than the private and foreign banks. The NPA
of public sector banks is growing due to external and internal factors and affects the
profitability and liquidity of the banks adversely. Review of Literature 24 Zhou’s
(2004)31 study is on “The dimensions of custom
ORGANISATION AND MANAGEMNET OF HDFC

101
HDFC banks are in the business of providing banking services to individuals, small
businesses and large organization With the consolidation of HDFC banking, it is
worth noting that far more people are employed in this field than in any other part
of the financial services industry. Jobs in banking can be exciting, and they offer
excellent opportunities to learn about business, interact with people, and build up
clientele. Today's HDFC banks are more diverse than ever. There is a tremendous
range of opportunities in HDFC banking, from the branch level where you might
start out as a teller to a wide variety of other services such as leasing, credit card
banking, international finance and trade credit. If you are well prepared and
enthusiastic about entering the field, you are likely to find a variety of opportunities
open to you. It is HDFC banks are banks engaged in classic business of accepting
deposits and giving loans as against merchant banking where the primary
responsibility is to help business find money. Merchant banking helps companies
raise capital through issue of equity, bonds, etc. HDFC banks hold customers'
money and supply loans in exchange for cheque-writing fees and interest collected
from loans."1 Their work is critical retail consumers get their credit lines extended,
their accounts upgraded and their mortgages, cars and home or vehicle loans
approved. HDFC banks can either be a retail bank or a wholesale bank, or both.
Retail banking involves high street branches dealing with the general public, shops
and very small businesses

102
 It covers current accounts, cheque facilities, savings accounts, and loan
facilities such as overdraft, personal loans and mortgages. Wholesale banking
covers banks lending to larger entities such as corporate and governments. It
includes activities such as money markets, foreign exchange and finance for
trade. Small businesses are highly dependent on the goodwill of HDFC bankers.
Even as dot corns, angel investors, and VCs monopolise the news, most small
businesses continue to fund their growth with HDFC loans. Such loans allow
them to secure new inventory, cover payroll, remodel their stores, buy registers,
and manage their overseas accounts receivables. HDFC bankers perform core
financial analysis to assess risk, creditworthiness, and the likelihood that a
business will succeed. They play a key part in deciding the best business
initiatives, expanding existing businesses, developing new markets and clients,
and creating new products for e-commerce, the Internet, international markets,
and consumers."2 In addition, HDFC bankers have to combine business
acumen with strong accounting and interpersonal skills. After all, they are at
the front lines of the banking business. Ideally, they know their clients' business
intimately and can recommend additional products and services.

STRUCTURE OF BANKING ;The banking structure in India consists of:

Scheduled banks

Unscheduled banks

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 Fig.-1 Structure of banks.

The scheduled banks constitute those banks which have been included in the
Second Schedule of the Reserve Bank of India (RBI) Act, 1934. RBI, in turn,
includes only those banks in this Schedule which
satisfy the criteria laid Section
42(6)(a)the
scheduled HDFC banks comprise the State bank of India (SBI) and it Associates, the nationalised
banks, private sector banks, foreign banks, cooperative banks, and regional rural banks. The
unscheduled banks are those banking companies as define

104
considers the four Local Area Banks (LABs) as non-scheduled HDFC banks:

The Costal Area Bank Ltd., Vijayawada

Capital Local Area Bank Ltd., Phagwara, Naysari

Krishna Bhima Samrudhi Local Area Bank Ltd., Mehabub Nagar

Subhadra Local Area Bank Ltd., Kolhapur

Some cooperative banks are scheduled HDFC banks albeit not all of them. Being
a part of the Second Schedule confers some benefits to a bank in terms of access
to accommodation RBI during the times of liquidity constraints. At the same time,
however, this status also objects the bank to certain conditions and obligations
towards the reserve regulations of RBI. The scheduled banks can broadly be
classified into:
Public sector banks
Private sector banks
Foreign banks
These are now briefly descried.

Public Sector Banks- Public sector banks have either the Government of India or
the Reserve Bank of India as the majority shareholder. This segment comprises:

The State Bank of India (SBI) and its Associates

Other nationalised banks : The State Bank of India (SBI) is India's largest
bank amongst all public and private sector banks operating in India. It
measured by the number of HDFC Bank branch offices. It is the second
largest bank in the world. The bank provides various domestic, international
and NRI products and services through its vast network in India and overseas.

105
With an asset base of $126 billion and its reach, it is a regional banking
behemoth. Among the public sector banks the United Bank of India is one of
the 14 major banks nationalised on July 19, 1969. Its predecessor, the United
Bank of India Ltd. was formed in 1950 with the amalgamation of four banks,
viz. Comilla Banking Corporation Ltd. (1914), Bengal Central Bank Ltd.
(1918), Comilla Union Bank Ltd. (1922), and Hooghly Bank Ltd. (1932). The
Oriental Bank of Commerce (OBC), a Government of India Undertaking,
offers domestic, NRI and HDFC banking services. It is implementing a
"Grameen Project" in Dehradun (UP) and Hanumangarh (Rajasthan)
disbursing small loans. It has implemented a 14-point action plan for
strengthening of credit delivery to women and has designated five specialised
branches for women entrepreneurs.

Private Sector Banks- Private sector banking in India has been practised since the
beginning of banking system in the country. The first private bank in India to be
set up in the private sector was the IndusInd Bank. It is one of the fastest growing
private sector banks in India. The first financial institute in India to receive an
"in principle approval" from RBI was the Housing Development Finance
Corporation Limited (HDFC), as part of RBI's liberalisation of the Indian
banking industry. Thus HDFC Bank Limited was incorporated as a private bank
with its registered office in Mumbai, and commenced operations as a scheduled
HDFC bank in January 1995. ING Vysya bank, yet another private bank of
India, was incorporated as a private bank in 1930. Bangalore has a pride of place
for having the first branch inception of the

106
 Bank in the year 1934. With successive years of patronage and constantly
setting new standards in banking, ING Vysya has many credits to its account.
Table gives the list of all private sector banks operating in India.

TABLE - 2.1 Private sector HDFC banks in India

Old private sector banks New private sector banks

1 Bank of Rajastan Ltd 22 Bank of Punjab Ltd.

2 Bharat Overseas Bank Ltd. 23 Centurion Bank Ltd.

3 Catholic Syria20n Bank Ltd 24 HDFC Bank Ltd.

4 City Union Bank Ltd. 25 ICICI Bank Ltd.

5 Development Credit Bank Ltd. 26 IDBI Bank Ltd.

6 Dhanalekshmi Bank Ltd. 27 IndusInd Bank Ltd.

7 Federal Bank Ltd. 28 Kotak Mahindra Ltd.

8 Ganesh Bank of Kurundwad 29 Axis Bank Ltd.

Ltd.

9 Jammu and Kashmir Bank 30 Yes Bank Ltd.

Ltd.

10 Karnataka Bank Ltd.

11 Karur Vysya Bank Ltd.

12 Lakshmi Vilas Bank Ltd.

13 Lord Krishna Bank Ltd.

14 Nainital Bank Ltd.

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 15 Ratnakar Bank Ltd.

16 Sangli Bank Ltd.

17 SBI Comm. and International

Bank Ltd.

18 South Indian Bank Ltd.

19 Tamilnad Mercantile Bank

Ltd.

20 United Western Bank Ltd.

21 ING Vysya Bank

Foreign Banks- The foreign banks have brought the latest technology and banking
practices in India and have helped make the Indian banking system more
competitive and efficient."4 The government has come up with a road map for
expansion of foreign banks in India. The road map has two phases. During the first
phase, between March 2005 and March 2009, the foreign banks may establish a
presence by way of setting up a wholly owned subsidiary (WOS) or conversion of
the existing branches into a WOS . The second phase will commence in April 2009 after a
review of the experience gained after due consultation with all the stakeholders in the banking sector.
The review would examine issues concerning extension of national treatment to WOS, dilution of stake
and permitting mergers/acquisitions of any private sector banks in India by a foreign bank.

108
ORGANIZATION STRUCTURE OF HDFC BANK

ORGANIZATION STRUCTURE

GENERAL BODY

BOARD OF DIRECTORS CHAIRMAN CUM CED

EXECUTIVE DIRECTOR CHIEF GENERAL MANAGER

GENERAL MANAGER

AGM AGM

AT THE HEAD OFFICE AT THE REGIONAL OFFICE

LEVEL LEVEL

MANAGER MANAGER

ASST, MANAGER ASST, MANAGER

109
FUNCTIONS OF HDFC BANKS

The functions of HDFC banks are of three types:

Primary functions
Secondary functions
General utility functions.
Let us discuss in detail about these functions. The primary functions of a HDFC
bank include the following
Acceptance of Deposits- The most important activity of a HDFC bank is to
mobilise deposits from the public. People who have surplus income and savings
find it convenient to deposit the amounts with banks. Depending upon the nature of
deposits, funds deposited with a bank also earn interest. Thus, deposits with the
bank grow along with the interest earned. If the rate of interest is higher, the public
are motivated to deposit more funds with the bank. There is also safety of funds
deposited with the bank. Banks are called custodians of public money. Basically,
the money is accepted as deposit for safe keeping. But since the banks use this
money to earn interest from people who need money, they share a part of this
interest with the depositors. The quantum of interest depends upon the tenure
length of time for which the depositor wishes to keep the money with the bank and
the ease of withdrawal.The thumb rule is: the longer the tenure, the higher the rate
of interest, and the lesser the restrictions on withdrawal, the lesser the interest.
Exceptions, however, exist.

110
Deposits are accepted from both resident (domestic) and non- resident Indian
customers. It is the business of the banker to accept deposits so that he can lend it
to others and earn interest. The earnings can vary, depending upon the liquidity
position of the market and the size of deposit, and if the size of the deposit is big
enough, it is advisable to shop around and get the best rate.

Types of Deposits-

Fixed deposit accounts: The term "fixed" here denotes tenure. Fixed deposit,
therefore, presupposes a length of time for which the depositor decides to keep
the money with the bank, and the rate of interest payable to the depositor is
decided by this tenure.

The rate of interest differs from bank to bank. Generally, the rate is highest for
deposits for three–five years. However, the depositor does not lose any of his rights
over the money during the tenure decided."5 Deposits can be withdrawn before the
period is over. In such a case, the amount of interest payable to the depositor goes
down.

Demand deposits- This type of deposits are of two types:

Savings account. As the name denotes, this account is ideal for parking temporary
savings. It gives a nominal rate of interest, and money can be withdrawn as and when
the need arises. The position of account is depicted in a small book called Pass Book.
Such accounts should be treated as a temporary "parking area" because the rate of interest of a saving
account is much less than Fixed Deposits. As soon as the savings accumulate to an amount which can be
spared for a certain length of time (even three months), if this money is shifted to fixed deposit we can
get a higher return.

111
It should be understood that the returns on the money kept in Savings Bank account
are the least, but the flexibility to withdraw it is the highest. The rate of interest on
Savings Account is fixed by RBI and it is currently 4 per cent. Current account. It
is an account with minimum amount of restrictions. Most individuals do not need
this account. This account is needed only if one makes a number of deposits and
withdrawals in a single day, and many of the deposits are drawn on outstation
banks. Banks accept deposits in current account and allow unlimited withdrawals
subject to a minimum balance this minimum balance differs from one bank to
another. No interest is payable on this account. Opening of a current account is
indicated in the case of a business enterprise or high net worth individuals (HN1)
who deal with a lot of third party cheques, drafts, etc. or who may at times need to
borrow money from the bank against some security. In addition to the above, there
are also other products offered by the banks, viz. Recurring Deposit Account,
Multi option Deposit Account, Special Term Deposit Accounts, Current Fixed
Account, etc. Most of them are essentially combinations of the above basic types
of accounts, and are packaged by different banks to attract different groups of
customers.

Granting Loans and Advances-

The second important function of a HDFC bank is to grant loans and advances.
The banks accept deposit from public for safe-keeping, and pay interest to them.
They then lend this money to earn interest on it. In a way, the banks act as
intermediaries between the people who have the money to lend and those who
need money to carry out business

112
transactions. The difference between the rate of interest paid on deposits and
charged on loans is called spread.The loans and advances are given to members of
the public and to the business community at a higher rate of interest than that
allowed on various deposit accounts. The rate of interest charged on loans and
advances varies according to the purpose and period of loan and the mode of
repayment. A loan is granted for a specific time period. Generally, HDFC banks
provide short-term loans. But they may also grant term loans, i.e. loans for more
than a year. A loan may be given in lump sum or in instalments. It is generally
granted against the security of certain assets and is normally repaid in instalments.
However, it may also be repaid in lump sum . An advance is a credit facility
provided by the bank to its customers. It differs from a loan in the sense that the
latter may be granted for a longer period. Advances are normally granted for a
short period of time. Further, the purpose of granting advances is to meet the day-
to-day requirements of business. The rate of interest charged on advances varies
from bank to bank. The interest is charged only on the amount withdrawn and not
on the sanctioned amount. Banks lend money in various forms and on various
bases, for practically every activity. Let us first look at the lending activity from
the point of view of security. Loans are given against or in exchange of the
ownership (physical or constructive) of various types of tangible items. Some of
the securities are: commodities, debts, financial instruments, real estate,
automobiles, consumer durable goods, and documents of title. The banks also lend

113
money to people on the basis of their perceived personal worth. Such loans are
called clean loans and the banks are understandably cagey about extending them.
The credit card arms of various banks, however, fill up this void."6

Cash credit account- Cash credit is an arrangement in which the bank allows the borrower to
withdraw an amount up to a specified limit as and when he requires. The amount is credited to the account
of the customer. The interest is charged only on the amount withdrawn. Cash credit is granted as per the
terms and conditions agreed with the customers.

Overdraft- The word overdraft means "the act of overdrawing from a bank
account. In overdraft, the account holder withdraws more money from a bank
account than deposited in it. The difference between overdraft and cash credit is
very subtle, and relates to the operation of the account.
In the case of cash credit, a proper limit is sanctioned which, normally, is a certain
percentage of the value of the commodities/debts pledged by the account holder
with the bank. Overdraft, on the other hand, is allowed against a host of other
securities including financial instruments such as shares, units of mutual funds,
surrender value of LIC policy, and debentures. Some overdrafts are even granted
against the perceived "worth" of an individual. Such overdrafts are called clean
overdrafts.

Bill discounting- It is a major activity with some smaller banks. Under this type
of lending the HDFC bank takes the bill drawn by the borrower on his

114
(borrower's) customer and pays him immediately deducting some amount as
discount/commission. The bank then presents the bill to the borrower's customer
on the due date of the bill, and collects the total amount. If the bill is delayed, the
borrower or his customer pays the bank a predetermined interest depending upon
the terms of transaction.

Term loan - It is the counterpart of a fixed deposit in the bank. Term loans are
made when the repayment is sought to be made in fixed, predetermined
instalments. This type of loan is normally given to the borrowers for acquiring
long-term assets, i.e. assets which will benefit the borrower over a long period
(exceeding at least one year) . Loans given for purchases of plant and machinery,
constructing building for a factory, setting up new projects, for purchase of
automobiles, consumer durables, real estate, and for creation of infrastructure
etc. fall in this category. In addition to the primary functions of accepting
deposits and lending money, banks perform a number of other functions, which
are called secondary functions. These are as follows:

Agency Services- Agency services are those services that are rendered by HDFC
banks as agents of their customers. These services include:

Collection and payment of cheques and bills on behalf of customers.

Collection of dividends, interest, rent etc. on behalf of customers, if so instructed

by them.Purchase and sale of shares and securities on behalf of customers

115
 Payment of rent, interest, insurance premium, subscriptions, on behalf of
customers, if so instructed . Acting as a trustee or executor.
Acting as agents or correspondents on behalf of customers for other banks and
financial institutions at home and abroad.

Payment and Collection of Cheques - Apart from transferring money from one
place to another, banks are also in the business of collecting the client's money
from other places. For instance, if you have received a payment by way of a
cheque or DD drawn or payable at any station other than your own, you can
deposit it in your account with your local banker, and request for collection of
the amount. The bank will send the cheque to its branch at that centre and get
the amount collected for a small fee . The amount of cheque/draft will be
deposited in your account, and the fee will be deducted separately from the
account. Banks also undertake collection of bills of exchange both usance and
demand—for their business clientele. There are RBI norms for the time expected
to be taken for collection business, and these norms are prominently displayed in
all banks. If your collection is delayed beyond this period, the bank is expected to
pay interest on the amount. Retain the counterfoil of all deposits made in the
bank as this is the only proof of deposit made till your amount is credited.

It is your business involves a number of such payments, it is advisable to open an

account with a bank which has a large network of branches. Charges for each of
these activities differ from bank to

116
bank."7 While selecting a bank for opening an account, these charges are an
important parameter which one should keep in mind.

Bill of Exchange and Promissory Notes- A bill of exchange is a written order by

the drawer to the drawer to pay money to the payee. The most common type of bill
of exchange is the cheque. A cheque is a term of a bill of exchange drawn on a
banker and payable on demand. Bills of exchange are written orders by one person
to his bank to pay the bearer a specific sum on a specific date may be sometime in
the future. These are primarily used in international trade. Prior to the advent of
paper currency, bills of exchange were a significant part of trade.

117
 References : Hawari, M., and Ward, T. (2006). The impact of automated service
quality on financial performance and the mediating role of customer retention.
Journal of Financial Service Marketing 10(3): p.43.Davies, F., Moutinho, L., and
Curry, B. (1996). "ATM users attitudes: a neural network analysis". Marketing
intelligence and Planning 14(2): p.32. Moutinho, L. (1989); (1992). Customer
satisfaction measurements prolonged satisfaction with ATMs. International
Journal of Bank Marketing 10(7): p.37. Stemper, R.G. (1990).The Guide to
Successful Consumer Banking Strategy, John Wiley & Sons, Chichester and
Toronto Cabas, M. G. (2001). A History of the Future of Banking: Predictions
and Outcomes. Greenwood Publishing Group, p 49. Marshall, J., and Heslop, L.
(1988).Technology acceptance in Canadian retail banking: a study of consumer
motivations and use of ATMs. In: Barker, T. (Eds.), Financial Services
Marketing in Canada, p.41. Mariappan, V. (2006). Changing the Way of Banking
in India Vinimaya 26(2): p. 34.

SERVICES AND PRODUCT OFFER

In many countries service sector plays dominant role in the markets According to
(Kotler, 2003), in the US economy, nearly 80 per cent of the employment
opportunities provided and 76 per cent of the GDP contributed by the service sector.
In India also service sector playing greater role in the nation's economy by
contributing nearly 64 per cent of the GDP, having higher share in exports, 42 per
cent of total exports from India, and providing high number employment
opportunities. This indicates that the growing importance of the service sector. That
is the reason why, companies well recognized the need for the better service quality
and are looking for ways to perform better and attract and retain their customers in a
high competitive manner (Wang. Y., 2003). Many researchers have been focused on
this area of service quality for the last few years and recognized as one of the most
important strategy of the business firms in the service Sector to improve financial as
well as marketing performance.(Newmn, 2001) Service quality has been defined as
the degree and direction between customer service expectations and perceptions.
Perceived service quality is defined as how well a service satisfies the expectations of
customers. Service quality has an impact on profitability and costs, as service quality
influences customer satisfaction; it impacts customer retention, reduces costs and
increases profitability.
Service quality is considered as the most critical determinant of competitiveness for
establishing and sustaining satisfying relationship with customers (Lewis, 1989).
Business firms including banks have recognized the fact that the only one best way to
manage the competition is the quality differentiation. Advance technology, customer
oriented corporate culture, a well designed service-system and excellent information
system are the major factors that decide the superior quality of service of an organization.
Providing excellent service quality and maintaining the high customer satisfaction is the
important issue and the challenge facing contemporary service industry (Hung, 2003).
Thus Service Quality is an important subject in both public and private sectors business
firms and service industries. Banking sector is not an exception to this.
Before independence the banking system in India was in private sector and in very weak
position. To strengthen the banking system then government established Reserve Bank
India (RBI) in 1935 and empowered to regulate banking companies by issue of directive,
inspection, amalgamation, mergers etc. Major action was taken 1949 by passing the
Banking regulation Act which was very important in respect of structural reforms in the
banking sector. This act had given extensive regulatory powers to RBI over the banks in
India. Nationalization of banks was another major step of the government (14 banks on
19th July, 1969 and 6 banks on 15th April, 1980) to constitute the public sector banks.
These public sector banks occupied a vital role in Indian economy in general and
banking sector in particular. Government implemented many social welfare schemes
through these banks. Prior to globalization there was very little competition in the
banking sector and the public sector banks played dominating role in terms of size of
assets? Due to changing global scenario, the government recognized the need to
introduce reforms to make banking industry more competitive. Thus, the government
had made policy changes like deregulation of interest rates and dilution of consortium
lending requirement. Moreover, banking sector had been opened up to the private sector.
With this, new banks have been set up in private sector, called as new private sector
banks, foreign banks have entered the Indian banking sector and existing banks in
private sector (old private sector banks) changed their level of operations. All these
increased the competition among the banks and efficiency of the banking industry.
 CUSTOMER APPROACH / EMPLOYEES.

Introduction: IBA vide its letter dated 5th February, 2015 advised the banks to have a
Board approved Customer Rights Policy to be formulated as per the Model Customer
Rights Policy approved by RBI vide its letter dated 27th January, 2015. The
Customer Rights Policy enshrines basic rights of the customers of the bank regulated
by the Reserve Bank of India. It spells out the rights of the customer and also the
responsibilities of the bank. The Policy applies to all products and services offered by
the bank or its agents, whether provided across the counter, over phone, by post,
through interactive electronic devices, on internet or by any other method .

Details of Customer Rights: Right to Fair TreatmentBoth the customer and the
Bank have a right to be treated with courtesy. The customer should not be unfairly
discriminated against on grounds such as gender, age, religion, caste and physical
ability when offering and delivering financial products.In pursuance of the above
Right, bank will: Promote good and fair banking practices by setting minimum
standards in a ll dealings with the customers.Promote a fair and equitable relationship
bet ween the bank and the customer. Train bank staff attending to the customers ,
adequately and appropriately.Ensure that staff members attend to customers and their
bus iness promptly and courteously.Treat all customers fairly and not discriminate
against any customer on grounds such as gender, age, religion, caste, literacy,
economic status physical ability, etc.. Bank may, however, have special schemes or
products which are specifically designed for members of a target market group or
may use defensible, commercially acceptable economic rationale for customer
differentiation. Bank may also have schemes or products as part of an affirmative
action such as for women or backward classes. Such schemes / products will not
tantamount to unfair discrimination. The rationale for such special schemes or terms
will be explained by bank wherever required . Ensure that the above principle is
applied while offering all products and services Ensure that the products and services
offered are in accordance with relevant laws and regulations While it shall be the
endeavor of the bank to provide their custom ers with hassle free and fair treatment,
bank would expect their customers to behave courteously and honestly in their
dealings with the bank. It shall also be the bank’s endeavor to encourage their
customers to approach the bank’s internal grievance redressal machinery and
approach alternate fora after exhausting all their remedies under bank’s internal
grievance mechanism.
Right to Transparency, Fair and Honest Dealing Bank will make every effort to
ensure that the contracts or agreements it frames are transparent, easily understood by
and well communicated to, the common person. The product’s price, the associated
risks, the terms and conditions that govern use over th.3e product’s life cycle and the
 responsibilities of the customer and the Bank , will be clearly disclosed. The
customer will not be subject to unfair business or marketing practices, coercive
contractual terms or misleading representations. Over the course of their relationship,
the Bank will not threaten the customer with physical harm, exert undue influence, or
engage in blatant harassment.

In pursuance of the above Right, the bank will: Ensure complete transparency so that the
customer can have a better understanding of what he or she can reasonably / fairly
expect from the bank. Ensure that the bank’s dealings with the customer rest on ethical
principles of equity, integrity and transparency. Provide customers with clear
information about its products and services, terms and conditions, and the interest rates /
service charges in si mple and easily understandable language, and with sufficient
information so that the customer could be reasonably expected to make an appropriate
and informed choice of produce
 .
Ensure that all terms and conditions are fair and set out the respective right s,
liabilities and obligations clearly and as far as possible in plain and simple
language; v) Make known the key risks associated with the product as well as
any features that may especially disadvantage the customer to him/her. Most
Important Terms and C onditions (MITC) associated with the product or service
will be clearly brought to the notice of the customer while offering the product.
In general, it will be ensured that such terms will not inhibit a customer’s future
choice. Provide information on interest rates, fees and charges either on the
Notice Board in the branches or website or through help-lines or help-desk and
where appropriate the customer will be informed directly. Display the tariff
schedule on the website and a copy of it will be made a vailable at every branch
for customer’s perusal. Also will display in its branches a notice about the
availability of the Tariff Schedule at the branch .Give details, in their Tariff
Schedule, of all charges, if any, applicable to the products and services chosen
by customer. Inform the customer of any change in the terms and conditions
through a letter or Statement of Account, SMS or email as agreed by the
customer at least one month prior to the revised terms and conditions becoming
effective. Ensure that such changes are made only with prospective effect after
giving notice of one month. If the bank will make any change without giving
such notice which is favorable to the customer, it will notify the change within
30 days of such change. If the change is adverse to the customer, prior notice of
minimum 30 days will be provided and the customer may be provided options,
to close the account or switch to any other eligible account without having to
pay the revised charge or interest within 60 days of such notice. Provide
information about the penalties leviable in case of non -observance / breach of
any of the terms and conditions governing the product / services chosen by the
customer. Display on public domain the Banks’ Policies on Deposits, Cheque
Collecti on, Grievance Redressal, Compensation and Collection of Dues and
Security Repossession. Make every effort to ensure that staff dealing in a
particular product is properly trained to provide relevant information to
customers fully, correctly and honestly. Ensure to communicate to the applicant
within a reasonable time period as decided by the bank about the acceptance /
non -acceptance of applications submitted for availing a product / service and
convey in writing the reasons for not accepting / declining th e application.
Such period will be notified in the bank’s website and also in the application of
the particular product or service . Communicate unambiguously the
information about: Discontinuation of particular products Relocation of their
offices Changes in working hours Change in telephone numbers Closure of any
office or branch with advance notice of at least 30 days. Also affirms that
disclosure of information is an on-going process through the life-cycle of the
product / relation ship and will be diligently followed by them. Ensure to use all
possible channels of communication, including web - site, to ensure that
information on all changes is made known to the customer upfront Advise the
customer at the time of selling the produc t of the rights and obligations
embedded in law and/or banking regulation including the need to report any
critical incidents that the customer suspect, discover or encounter. The bank’s
staff members will, when approached by the customer for availing a product or
service, provide all relevant information related to the product / service and also
provide direction to informational resources on similar products available in the
market with a view to enable the custome r to make an informed decision.Not
terminate a customer relationship without giving reasonable or contractu al
prior notice to the customer.
Assist the customer in all available ways for managing his/her account,
financial relationship by providing regular inputs in the bank’s realms such a
s account statements/passbooks, alerts, timely information about the
product’s performance, term deposits maturity etc .Ensure that all marketing
and promotional materi al is clear and not misleading .Not threaten the
customer with physical harm, exert infl uence or engage in behavior that
would reasonably be construed as unwarranted harassment. Ensure
adherence only to the normal appropriate business practices.Ensure that the
fees and charges on products/services and its structure are not unreasonable
to the customer.
Right to Suitability : The products offered will be appropriate to the needs
of the customer and based on an assessment of the customer’s financial
circumstances and understanding. In pursuance of the above Right, the bank
will: Ensure that it has a Board approved policy for assessing suitability of
produc ts for customers prior to sale.
Endeavour to make sure that the product or service sold or offered is
appropriate to the customer’s needs and not inappropriate to the
customer’s financia l standing and understanding based on the assessment
made by it. Such assessment will be appropriately documented in it s
records.Sell third party products only if it is authorized to do so, after
putting in place a Board approved policy for marketing and distributing
third party financial products.Not compel a customer to subscribe to any
third party products as a quid -pro-quo for any service availed from the
bank.Ensure that the products being sold or service being offered,
including third party products, are in accordance with extant rules and
regulations. Inform the customer about his responsibility to promptly and
honestly provide all relevant and reasonable information that is sought by
bank to enable them to determine the suitability of the pro duct to the
customer .
Right to Privacy : Customers’ personal information will be kept
confidential unless they have offered specific consent to the Bank or such
information is required to be provided under the law or it is provided for a
mandated business purpose (for example, to credit information
companies). The customer should be informed upfront about likely
mandated business purposes.
Customers have the right to protection from all kinds of communications,
electronic or otherwise, which infringe upon their privacy.

In pursuance of the above Right, bank will:Treat customer's personal information

as private and confidential (even when the customer is no longer banking with us),
and, as a general rule, not disclose such information to any other indi
vidual/institutions including it’s subsidiaries / associates, tie-up instituti ons etc.
for any purpose unless:
The customer has authorized such disclosure explicitly in writing
Disclosure is compelled by law / regulation
Bank has a duty to the public to disclose i.e. in public interest
Bank has to protect its interests through disclosure
It is for a regulatory mandated business purpose such as disclosure of default to
credit information companies or debt collection agencies.
Ensure such likely mandated disclosures be communicated immediately to the
customer in writing.
Will not use or share customers er’s personal information for marketing purpose,
unless the customer has specifically authorized it.
will adhere to Telecom Commercial Communications Customer Preference
Regulations, 2010 (National Customer Preference Registry) issued by Telecom
Regulatory Authority of India, while communicating with customers.
Right to Grievance Redress and Compensation : The customer has a right to
hold th e Bank accountable for the products offered and to have a clear and easy
way to have any valid grievances redressed. The Bank will also facilitate redress
of grievances stemming from its sale of third party products. The Bank will
communicate its policy for compensating mistakes, lapses in conduct, as well as
non - performance or delays in performance, whether caused by the Bank or
otherwise. The policy will lay out the rights and duties of the customer when such
events occur.

In pursuance of the above Right, bank will: Deal sympathetically and expeditiously
with all things that go wrong.
Correct mistakes promptly.
Cancel any charge that has been applied wrongly and by mistake.
 Compensate the customer for any direct financial loss that might have been incu rred by the
customer due to its lapses. The bank will also:
Place in public domain its Customer Grievance Redressal Policy, including the grievance
redressal procedure available for the customer.
Place in public domain the compensation policy for delays / lapses in conducting / settling
customer transactions within the stipulated time and in accordance wit h the agreed terms
of contract.
Ensure to have a robust and responsive grievance redressal procedure and clearly indicate
the grievance resolution aut hority who shall be approached by the customer.
Make grievance redressal mechanism easily accessible to customers.
Advise the customer about how to make a complaint, to whom such a complaint is to be
made, when to expect a reply and what to do if the custo mer is not satisfied with the
outcome.
Display name, address and contact details of the Grievance Redressal Authority / Nodal
Officer. The time limit for resolution of complaints will be clearly displayed / accessible at
all service delivery locations.
Inform the complainant of the option to escalate his complaint to the Banking Ombudsman
if the complaint is not redressed within the pre -set time.
Place in public domain information about Banking Ombudsman Scheme.
Display at customer contact points the na me and contact details of the Banking
Ombudsman under whose jurisdiction the bank’s branch falls.
Further, the bank will:
Acknowledge all formal complaints (including complaints lodged through electronic
means) within three working days and work to resol ve it within a reasonable period, not
exceeding 30 days (including the time for escalation and examination of the complaint by
the highest ranking internal official responsible for grievance redressal). The 30 day period
will be reckoned after all the necessary information sought from the customer isr eceived.
Provide aggrieved customers with the details of the Banking Ombudsman Scheme for
resolution of a complaint if the customer is not satisfied with the resolution of a dispute, or
with the outcome of a dispute handling process.
In addition, the bank will a) clearly spell out, at the time of establishing a customer
relationship, the liability for losses, as well as the rights and responsibilities of all parties, In
the event of products not performing as per specifications or things going wrong. However, the
bank will not be liable for any losses caused by extraneous circumstances that are beyond its
reasonable control (such as market changes, performance of the product due to market
variables, etc.). b) E nsure the customer is refunded without delay and demur, if it cannot
show beyond reasonable doubt to the customer on any disputed transaction (along with
interest/charges).
 CORPORATE SOCIAL RESPONSIBILITIES(CSR)

Preamble : CSR covers the entire process by which an organization approaches, defines
and develops its relationships with stakeholders for the common good, and demonstrates
its commitment in this regard by adoption of appropriate strategies and projects. Thus
CSR is not charity or mere donations but a way of going beyond business as usual,
creating shared value and contributing to social and environmental good.

Purpose : HDFC Bank is committed to identifying and supporting programs aimed at:
• Developing and advancing the community and in particular, those at the bottom of
the pyramid who are unequally endowed/enabled, and also
• Reducing negative impact of its operations on the environment

This policy will serve as a guiding document to help identify, execute and monitor CSR
projects in keeping with the spirit of the policy.

The CSR policy would function as a self-regulating mechanism for the Bank’s CSR
activities and enable adherence to laws, ethical standards, and international practices in this
regard.

2. Policy Statement /Vision

The Bank’s CSR mission is to contribute to the social and economic development of the
community. Through a series of interventions the bank seeks to mainstream economically,
physically and socially challenged groups and to draw them into the cycle of growth,
development and empowerment. At the core of this is its commitment to reach out to
marginalized communities through its Sustainable Livelihood Initiatives.
The Bank’s strategy is to integrate its activities in community development, social
responsibility and environmental responsibility and encourage each business unit or
function to include these considerations into its operations.
3. Scope

This policy will apply to all projects/programs undertaken as part of the Bank’s Corporate
Social Responsibility activities and will be developed, reviewed and updated by reference
to relevant codes of corporate governance and international standards or best practices. This
policy is also in line with the CSR Rules (Sec.135 of Companies Act, 2013).

4. Governance

Overall governance of CSR and approving of the CSR Policy will be the responsibility of
the CSR Committee of the Board. The CSR Department of the Bank will be responsible for
administering and executing the policy. As the Bank’s CSR activities evolve further, the
policy may be revised with the approval of the CSR Committee of the Board.

5. CSR Committee

The Bank will institute a CSR Committee of the Board consisting of three or more directors
including at least one Independent Director. The Committee will meet at least three times
in a year.The following shall be the terms of reference of the Committee.

• To formulate the Bank’s CSR strategy, policy and goals

• To monitor the Bank’s CSR policy and performance
• To review the CSR projects/initiatives from time to time
• To ensure legal and regulatory compliance from a CSR viewpoint
• To ensure reporting and communication to stakeholders on the Bank’s CSR projects/initiatives

Consistent with the above, the CSR Committee of the Board currently has the following members:

1. Mr. Umesh Chandra Sarangi, Chairman (Independent Director)

2. Mr. Bobby Parikh (Independent Director)
3. Mr. Partho Datta (Independent Director)
4. Mr. Aditya Puri
5. Mr. Paresh Sukthankar
6. Mr. Malay Patel (Independent Director)
7. CSR Budget

The overall amount to be committed to CSR will be approved by the Board as part of the
Bank’s overall Annual Budget/Plan. Within the budgeted amount, specific CSR
initiatives/projects will be approved in line with the process approved by the CSR
Committee of the Board. All projects undertaken by the Bank will be approved / ratified by
the Banks CSR Committee.

8. Supervision

The Bank’s CSR activities will be driven by a dedicated CSR team under the guidance
and support of senior functionaries, in particular, the DMD/MD. The CSR Committee and
CSR Department would play a significant role in ensuring that the CSR policy is
embedded across the Bank’s operations and the CSR initiatives are in line with the policy.

9. Implementation

The Bank will undertake CSR projects which are closely linked with the principles of
sustainable development and shared value, with the involvement of local institutions and
the community at large.

The CSR Department would assist in implementation and monitoring of the CSR
projects/initiatives. The actual implementation of various initiatives will be broad-based
with the involvement of various Bank employees/units or through implementing agencies
like NGOs, Trusts, Societies, Section 8/ Section 25 companies, DST certified incubation
centers or through collaborative projects with other corporates. In case of the implementing
agency being a ‘not for profit’ organization, the entity should typically have not less than
three years of experience in implementing projects in the respective area. The
implementation partner will also be screened based on the Bank’s internal screening criteria
to ascertain the entity’s credibility and its ability to execute the proposed projects.

10. Disbursement

The disbursal of funds will be either in tranched drawdown form or one-time payment
depending on the nature and requirement of the project. The terms, conditions and timing
of disbursement will be discussed and agreed to with the CSR Department and project
teams, and will typically form part of the Memorandum of Understanding with the entity
implementing the project.
11. Monitoring

The CSR Committee will ensure a transparent monitoring mechanism for ensuring effective
implementation of the projects / programs/ activities proposed to be undertaken by the Bank.

The CSR Department would have the responsibility of monitoring approved projects and
funds disbursals for such projects. Monitoring mechanisms will include visits, meetings and
progress/status reporting by the project teams. The Bank’s CSR activities will be reviewed
by the CSR Committee. A system will be put in place to maintain a transparent monitoring
and reporting mechanism across all the stakeholders involved in the CSR activities of the
Bank, as desired by the CSR Rules (Section 135, Companies Act, 2013).

12. Reporting

Significant CSR activities and achievements will be reported as part of the Director’s Report
in the Bank’s Annual Report and also as per any other statutory and regulatory reporting
requirements.

13. CSR Programs/Projects

The Bank is highly supportive of the involvement of its employees in its CSR initiatives
and in community activities/charities of their choice, and will therefore proactively engage
with employees and other key stakeholders to solicit their active involvement in the Bank’s
CSR programs.

To provide a focused and structured approach to the program, the Bank will focus its support
and CSR spends on specific pre-determined causes and areas of intervention as outlined in
the Annexure to the policy. The CSR Department would put up to the Committee
appropriate details of proposed projects including implementation year, modalities of
execution in the areas/sectors chosen, implementation schedules for the same etc. The CSR
Committee will consider and approve (in line with the guidelines given below), CSR
projects/programs to be undertaken during the year.

a) The Bank will ensure that its CSR projects are non-discriminatory in nature and do not have any restrictive political
or religious affiliations.
b) The programs/ projects will be within the areas recommended / listed by the CSR Committee and mentioned in the
Policy.
c) The programs/ projects will be beyond business as usual.
d) The programs/projects will be implemented within the country and preferably in areas where the Bank has its
presence.
e) The Bank will actively consider Programs/Projects that have been identified by
employees and also those where employees are directly involved through
volunteering efforts
f) Programs/Projects that integrate business models with social and environmental
priorities and processes in order to create shared value will be encouraged.
g) The Bank will consider Programs/Projects closely linked with the principles of
sustainable development.
h) Programs/Projects should not be exclusively for the benefit of employees of the
company or their family members or those that are conducted /undertaken
exclusively in pursuance of the normal course of business.
i) Any surplus, generated out of the CSR activities of the Bank, will be ploughed back
to the CSR Initiatives of the Bank.
 AREAS OF CSR INTERVENTION (Annex. 1)

Enumerated below are the areas under which the Bank will implement its CSR Projects.
This will be reviewed from time to time by the CSR Committee of the Board and specific
initiatives under these will be undertaken in line with the CSR Policy to meet the overall
objectives of these interventions.

1. Empowering through Sustainable Livelihood Initiatives (SLI)

Category: Companies Act- 2013, Schedule VII (i) Eradicating Hunger, Schedule VII (ii)
Livelihood Enhancing Projects, Schedule VII (ii) Empowering Women

HDFC Bank’s Sustainable Livelihood Initiatives are designed to empower thousands of

people, particularly women in rural parts of India. Through this initiative, the Bank reaches
out to the un-banked and the under-banked segments of society and in doing so, it seeks to
help as many people as possible at the bottom of the pyramid by providing them with
livelihood finance.

Under this project the Bank will continue to support people (primarily woman) who are
financially excluded through a holistic approach that will also offer training for enhancing
occupation skills, credit counseling, financial literacy and market linkages.

2. Financial Literacy and Inclusion

Category: Companies Act -2013, Schedule VII (i) Promoting Education, Schedule VII (ii)
Livelihood Enhancing Projects

The Bank believes that absence of financial knowledge can lead to poor financial decisions
that can have an adverse effect on the financial health of an individual. The Bank will
endeavor to provide familiarity with and understanding of financial products, especially of
rewards and risks, in order to better equip the financially excluded to make informed
choices. These projects will endeavor to promote financial literacy amongst various
segments such as students, senior citizens and others in the communities, directly or
through implementing partners.

The Bank will organize financial literacy awareness programs and through multiple media
to create financial awareness and promote inclusion in the marginalized communities.

3. Promoting Education

Category: Companies Act -2013, Schedule VII (i) Promoting Education

Education is one of the building blocks of any nation. With the aim of having ‘every child
in school and learning’ the Bank’s interventions will aim at mainstreaming children and
improving the quality of education they receive. A multitude of interventions such as
educational sponsorships to students belonging to economically/socially/physically
challenged categories, training programs for teachers, supporting the infrastructure or
running cost of reading programs, libraries, supportive classes, computers, science
laboratories, physical education etc. will be undertaken to create a conducive learning
environment and to promote learning.

Within the scope of education, programs aimed at bridging the skill gap, in particular in the
banking industry, and transforming candidates into job ready professionals will also be
covered.
 4. Skill Training and Livelihood Enhancement

Category: Companies Act -2013, Schedule VII (ii) Employment Enhancing Vocational
Skills and Livelihood Enhancing projects

A growing economy like India requires a large and skilled workforce. The Bank’s skill
training initiatives will aim at training and capacity development of youth and women from
economically weaker sections of society, and to empower them to gain access to
opportunities for sustainable livelihood and growth.

The Bank will support technical training courses, Skill Development Centers, non formal
vocational programs aimed at creating livelihood opportunities, soft skill training aimed to
facilitate integration into mainstream and soft loans for self- financing of training. Under
the scope of this initiative, the Bank will also support upgrading skills and capacity building
of farmers by introducing innovative methods of cultivation and creating market linkages.

5. Promoting Healthcare

Category: Companies Act -2013, Schedule VII (i) Promoting Preventive Healthcare

The Bank will address the healthcare needs of the community through innovative products
and services. One of the Bank’s largest initiative currently addresses the shortage of blood
and storage of the same. This is an area in which the Bank and its employees are actively
engaged. The Bank will continue to conduct Blood Donation Drives and support the setup
of ‘Blood Storage Units’ in rural locations that do not have a blood banks, to ensure supply
of blood.

The Bank recognizes the difficult conditions under which our defence/police force operate
in and will extend support though special products to provide them with a security cover.

6. Environmental Sustainability
Category: Companies Act -2013, Schedule VII (iv) Ensuring Environmental Sustainability,
Conservation of Natural Resources and Maintaining the quality of soil.

Sustainability is one of the core values of the Bank and climate change mitigation and
environmental improvements are essential elements of its strategy for sustainability. The
Bank will initiate multiple projects implemented directly or through consultant partners to
manage its emissions and to introduce environmental friendly practices. Social
Communication will be used as an effective tool in influencing behavior and creating a
sustainable environment for the community.

The Bank will encourage investment in energy efficient technology, developing socially
and environmentally friendly products and services, improving access to water by
creating/sponsoring irrigation and water storage structures, promoting public transport by
creating appropriate infrastructure, benchmarking and reporting on Sustainability projects.

7. Eradicating Poverty

Category: Companies Act -2013, Schedule VII (i) Eradicating Poverty, Hunger and
Malnutrition
The Bank recognizes the need to reach out to those at the bottom of the pyramid by
providing them with need based assistance. The Bank will also encourage employees to
continue to contribute to society by undertaking projects in their respective areas.

The Bank’s Payroll Giving Program will encourage employees to donate a part of his/her
salary. This amount may be matched by the Bank and the combined amount donated by the
employee to a cause of his/her choice. These causes may include providing
rations/nutrition, medical care, supporting education, etc.

8. Rural Development

Category: Companies Act -2013, Schedule VII (x) Rural Development

With the objective of contributing to the improvement of the economic and social well-
being of people in rural areas, the Bank will initiate programs that empower the rural
population. These will range from making financial services and products available to these
areas and bringing them within the banking fold, to creating innovative products to suit the
requirements of the rural population. The Bank will support projects providing
electrification through solar or alternate methods, improving access to water, healthcare &
sanitation, and construction & running cost of schools and health centers, amongst others.

AWARDS

6. Preamble

CSR covers the entire process by which an organization approaches, defines and develops
its relationships with stakeholders for the common good, and demonstrates its commitment
in this regard by adoption of appropriate strategies and projects. Thus CSR is not charity or
mere donations but a way of going beyond business as usual, creating shared value and
contributing to social and environmental good.

7. Purpose

HDFC Bank is committed to identifying and supporting programs aimed at:

Developing and advancing the community and in particular, those

at the bottom of the pyramid who are unequally endowed/enabled,
and also
• Reducing negative impact of its operations on the environment

This policy will serve as a guiding document to help identify, execute and monitor CSR
projects in keeping with the spirit of the policy.

The CSR policy would function as a self-regulating mechanism for the Bank’s CSR
activities and enable adherence to laws, ethical standards, and international practices in this
regard.

8. Policy Statement /Vision

The Bank’s CSR mission is to contribute to the social and economic development of the
community. Through a series of interventions the bank seeks to mainstream economically,
physically and socially challenged groups and to draw them into the cycle of growth,
development and empowerment. At the core of this is its commitment to reach out to
marginalized communities through its Sustainable Livelihood Initiatives.

The Bank’s strategy is to integrate its activities in community development, social

responsibility and environmental responsibility and encourage each business unit or
function to include these considerations into its operations.
9. Scope

This policy will apply to all projects/programs undertaken as part of the Bank’s Corporate
Social Responsibility activities and will be developed, reviewed and updated by reference
to relevant codes of corporate governance and international standards or best practices. This
policy is also in line with the CSR Rules (Sec.135 of Companies Act, 2013).

10. Governance

Overall governance of CSR and approving of the CSR Policy will be the responsibility of
the CSR Committee of the Board. The CSR Department of the Bank will be responsible for
administering and executing the policy. As the Bank’s CSR activities evolve further, the
policy may be revised with the approval of the CSR Committee of the Board.

11. CSR Committee

The Bank will institute a CSR Committee of the Board consisting of three or more directors
including at least one Independent Director. The Committee will meet at least three times
in a year.The following shall be the terms of reference of the Committee.

• To formulate the Bank’s CSR strategy, policy and goals

• To monitor the Bank’s CSR policy and performance
• To review the CSR projects/initiatives from time to time
• To ensure legal and regulatory compliance from a CSR viewpoint
• To ensure reporting and communication to stakeholders on the Bank’s CSR projects/initiatives

Consistent with the above, the CSR Committee of the Board currently has the following members:

14. Mr. Umesh Chandra Sarangi, Chairman (Independent Director)

15. Mr. Bobby Parikh (Independent Director)
16. Mr. Partho Datta (Independent Director)
17. Mr. Aditya Puri
18. Mr. Paresh Sukthankar
19. Mr. Malay Patel (Independent Director)
20. CSR Budget

The overall amount to be committed to CSR will be approved by the Board as part of the
Bank’s overall Annual Budget/Plan. Within the budgeted amount, specific CSR
initiatives/projects will be approved in line with the process approved by the CSR
Committee of the Board. All projects undertaken by the Bank will be approved / ratified by
the Banks CSR Committee.

21. Supervision

The Bank’s CSR activities will be driven by a dedicated CSR team under the guidance
and support of senior functionaries, in particular, the DMD/MD. The CSR Committee and
CSR Department would play a significant role in ensuring that the CSR policy is
embedded across the Bank’s operations and the CSR initiatives are in line with the policy.

22. Implementation

The Bank will undertake CSR projects which are closely linked with the principles of
sustainable development and shared value, with the involvement of local institutions and
the community at large.

The CSR Department would assist in implementation and monitoring of the CSR
projects/initiatives. The actual implementation of various initiatives will be broad-based
with the involvement of various Bank employees/units or through implementing agencies
like NGOs, Trusts, Societies, Section 8/ Section 25 companies, DST certified incubation
centers or through collaborative projects with other corporates. In case of the implementing
agency being a ‘not for profit’ organization, the entity should typically have not less than
three years of experience in implementing projects in the respective area. The
implementation partner will also be screened based on the Bank’s internal screening criteria
to ascertain the entity’s credibility and its ability to execute the proposed projects.

23. Disbursement

The disbursal of funds will be either in tranched drawdown form or one-time payment
depending on the nature and requirement of the project. The terms, conditions and timing
of disbursement will be discussed and agreed to with the CSR Department and project
teams, and will typically form part of the Memorandum of Understanding with the entity
implementing the project.
24. Monitoring

The CSR Committee will ensure a transparent monitoring mechanism for ensuring effective
implementation of the projects / programs/ activities proposed to be undertaken by the Bank.

The CSR Department would have the responsibility of monitoring approved projects and
funds disbursals for such projects. Monitoring mechanisms will include visits, meetings and
progress/status reporting by the project teams. The Bank’s CSR activities will be reviewed
by the CSR Committee. A system will be put in place to maintain a transparent monitoring
and reporting mechanism across all the stakeholders involved in the CSR activities of the
Bank, as desired by the CSR Rules (Section 135, Companies Act, 2013).

25. Reporting

Significant CSR activities and achievements will be reported as part of the Director’s Report
in the Bank’s Annual Report and also as per any other statutory and regulatory reporting
requirements.

26. CSR Programs/Projects

The Bank is highly supportive of the involvement of its employees in its CSR initiatives
and in community activities/charities of their choice, and will therefore proactively engage
with employees and other key stakeholders to solicit their active involvement in the Bank’s
CSR programs.

To provide a focused and structured approach to the program, the Bank will focus its support
and CSR spends on specific pre-determined causes and areas of intervention as outlined in
the Annexure to the policy. The CSR Department would put up to the Committee
appropriate details of proposed projects including implementation year, modalities of
execution in the areas/sectors chosen, implementation schedules for the same etc. The CSR
Committee will consider and approve (in line with the guidelines given below), CSR
projects/programs to be undertaken during the year.

a) The Bank will ensure that its CSR projects are non-discriminatory in nature and do not have any restrictive political
or religious affiliations.
b) The programs/ projects will be within the areas recommended / listed by the CSR Committee and mentioned in the
Policy.
c) The programs/ projects will be beyond business as usual.
d) The programs/projects will be implemented within the country and preferably in areas where the Bank has its
presence.
e) The Bank will actively consider Programs/Projects that have been identified by employees and also those where
employees are directly involved through volunteering efforts
f) Programs/Projects that integrate business models with social and environmental priorities and processes in order to
create shared value will be encouraged.
g) The Bank will consider Programs/Projects closely linked with the principles of sustainable development.
h) Programs/Projects should not be exclusively for the benefit of employees of the company or their family members
or those that are conducted /undertaken exclusively in pursuance of the normal course of business.

i) Any surplus, generated out of the CSR activities of the Bank, will be ploughed
back to the CSR Initiatives of the Bank.
 AREAS OF CSR INTERVENTION (Annex. 1)

Enumerated below are the areas under which the Bank will implement its CSR Projects.
This will be reviewed from time to time by the CSR Committee of the Board and specific
initiatives under these will be undertaken in line with the CSR Policy to meet the overall
objectives of these interventions.

9. Empowering through Sustainable Livelihood Initiatives (SLI)

Category: Companies Act- 2013, Schedule VII (i) Eradicating Hunger, Schedule VII (ii)
Livelihood Enhancing Projects, Schedule VII (ii) Empowering Women

HDFC Bank’s Sustainable Livelihood Initiatives are designed to empower thousands of

people, particularly women in rural parts of India. Through this initiative, the Bank
reaches out to the un-banked and the under-banked segments of society and in doing so,
it seeks to help as many people as possible at the bottom of the pyramid by providing
them with livelihood finance.

Under this project the Bank will continue to support people (primarily woman) who are
financially excluded through a holistic approach that will also offer training for
enhancing occupation skills, credit counseling, financial literacy and market linkages.

10. Financial Literacy and Inclusion

Category: Companies Act -2013, Schedule VII (i) Promoting Education, Schedule VII (ii)
Livelihood Enhancing Projects

The Bank believes that absence of financial knowledge can lead to poor financial decisions
that can have an adverse effect on the financial health of an individual. The Bank will
endeavor to provide familiarity with and understanding of financial products, especially
of rewards and risks, in order to better equip the financially excluded to make informed
choices. These projects will endeavor to promote financial literacy amongst various
segments such as students, senior citizens and others in the communities, directly or
through implementing partners.

The Bank will organize financial literacy awareness programs and through multiple
media to create financial awareness and promote inclusion in the marginalized
communities.

11. Promoting Education

Category: Companies Act -2013, Schedule VII (i) Promoting Education

Education is one of the building blocks of any nation. With the aim of having ‘every child
in school and learning’ the Bank’s interventions will aim at mainstreaming children and
improving the quality of education they receive. A multitude of interventions such as
educational sponsorships to students belonging to economically/socially/physically
challenged categories, training programs for teachers, supporting the infrastructure or
running cost of reading programs, libraries, supportive classes, computers, science
laboratories, physical education etc. will be undertaken to create a conducive learning
environment and to promote learning.

Within the scope of education, programs aimed at bridging the skill gap, in particular in
the banking industry, and transforming candidates into job ready professionals will also
be covered.
 12. Skill Training and Livelihood Enhancement
Category: Companies Act -2013, Schedule VII (ii) Employment Enhancing Vocational
Skills and Livelihood Enhancing projects

A growing economy like India requires a large and skilled workforce. The Bank’s skill
training initiatives will aim at training and capacity development of youth and women
from economically weaker sections of society, and to empower them to gain access to
opportunities for sustainable livelihood and growth.

The Bank will support technical training courses, Skill Development Centers, non formal
vocational programs aimed at creating livelihood opportunities, soft skill training aimed
to facilitate integration into mainstream and soft loans for self- financing of training.
Under the scope of this initiative, the Bank will also support upgrading skills and
capacity building of farmers by introducing innovative methods of cultivation and
creating market linkages.

13. Promoting Healthcare

Category: Companies Act -2013, Schedule VII (i) Promoting Preventive Healthcare

The Bank will address the healthcare needs of the community through innovative
products and services. One of the Bank’s largest initiative currently addresses the
shortage of blood and storage of the same. This is an area in which the Bank and its
employees are actively engaged. The Bank will continue to conduct Blood Donation
Drives and support the setup of ‘Blood Storage Units’ in rural locations that do not have
a blood banks, to ensure supply of blood.

The Bank recognizes the difficult conditions under which our defence/police force
operate in and will extend support though special products to provide them with a
security cover.
 14. Environmental Sustainability
Category: Companies Act -2013, Schedule VII (iv) Ensuring Environmental
Sustainability, Conservation of Natural Resources and Maintaining the quality of soil.

Sustainability is one of the core values of the Bank and climate change mitigation and
environmental improvements are essential elements of its strategy for sustainability. The
Bank will initiate multiple projects implemented directly or through consultant partners
to manage its emissions and to introduce environmental friendly practices. Social
Communication will be used as an effective tool in influencing behavior and creating a
sustainable environment for the community.

The Bank will encourage investment in energy efficient technology, developing socially
and environmentally friendly products and services, improving access to water by
creating/sponsoring irrigation and water storage structures, promoting public transport
by creating appropriate infrastructure, benchmarking and reporting on Sustainability
projects.

15. Eradicating Poverty

Category: Companies Act -2013, Schedule VII (i) Eradicating Poverty, Hunger and
Malnutrition
 NEWS RELEASE HDFC Bank Ltd.
HDFC Bank House,
Senapati Bapat Marg,
Lower Parel,
Mumbai - 400 013.

The Bank recognizes the need to reach out to those at the bottom of the
pyramid by providing them with need based assistance. The Bank will also
encourage employees to continue to contribute to society by undertaking
projects in their respective areas.

The Bank’s Payroll Giving Program will encourage employees to donate a

part of his/her salary. This amount may be matched by the Bank and the
combined amount donated by the employee to a cause of his/her choice.
These causes may include providing rations/nutrition, medical care,
supporting education, etc.

16. Rural Development

Category: Companies Act -2013, Schedule VII (x) Rural Development

With the objective of contributing to the improvement of the economic and

social well-being of people in rural areas, the Bank will initiate programs
that empower the rural population. These will range from making
financial services and products available to these areas and bringing them
within the banking fold, to creating innovative products to suit the
requirements of the rural population. The Bank will support projects
providing electrification through solar or alternate methods, improving
access to water, healthcare & sanitation, and construction & running cost of
schools and health centers, amongst others.

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HDFC Bank House,
Senapati Bapat Marg,
Lower Parel,
Mumbai - 400 013.

RECENT DEVELOPMENT IN HDFC BANK.

FINANCIAL RESULTS (INDIAN GAAP) FOR THE QUARTER ENDED

JUNE 30, 2019

The Board of Directors of HDFC Bank Limited approved the Bank’s

(Indian GAAP) results for the quarter ended June 30, 2019, at their meeting
held in Mumbai on Saturday, July 20, 2019. The accounts have been
subjected to a 'Limited Review' by the statutory auditors of the Bank.

STANDALONE FINANCIAL RESULTS:

Profit & Loss Account: Quarter ended June 30, 2019

The Bank’s total income for the quarter ended June 30, 2019 at `
32,361.8 crore grew by 22.7% from ` 26,367.0 crore for the quarter ended
June 30, 2018. Net revenues (net interest income plus other income)
increased by 24.8% to ` 18,264.5 crore for the quarter ended June 30, 2019
from ` 14,631.6 crore in the corresponding quarter of the previous year. Net
interest income (interest earned less interest expended) for the quarter ended
June 30, 2019 grew by 22.9% to ` 13,294.3 crore, from ` 10,813.6 crore for
the quarter ended June 30, 2018, driven by asset growth and a core net interest
margin for the quarter of 4.3%.

Other income (non-interest revenue) at ` 4,970.3 crore was 27.2% of the net
revenues for the quarter ended June 30, 2019 and grew by 30.2% over `
3,818.1 crore in the corresponding quarter ended June 30, 2018. The four
components of other income for the quarter ended June 30, 2019 were fees
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HDFC Bank House,
Senapati Bapat Marg,
Lower Parel,
Mumbai - 400 013.
& commissions of ` 3,551.6 crore (` 3,171.0 crore in the corresponding
quarter of the previous year), foreign exchange & derivatives revenue of `
576.7 crore (` 499.6 crore for the corresponding quarter of the previous year),
gain on revaluation / sale of investments of ` 212.0 crore (loss of `
283.2 crore in the corresponding quarter of the previous year) and
miscellaneous income, including recoveries and dividend, of ` 630.0 crore (`
430.7 crore for the corresponding quarter of the previous year).

Operating expenses for the quarter ended June 30, 2019 were ` 7,117.3 crore,
an increase of 18.9% over ` 5,983.9 crore during the corresponding quarter
of the previous

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 NEWS RELEASE HDFC Bank Ltd.
HDFC Bank House,
Senapati Bapat Marg,
Lower Parel,
Mumbai - 400 013.

year. The core cost-to-income ratio for the quarter was at 39.4% as against
40.1% for the corresponding quarter ended June 30, 2018.

Provisions and contingencies for the quarter ended June 30, 2019 were `
2,613.7 crore as against ` 1,629.4 crore for the quarter ended June 30, 2018.
The key components therein for the quarter ended June 30, 2019 were
specific loan loss and contingent provisions of ` 2,413.5 crore (as against `
1,432.2 crore for the corresponding quarter of the previous year) and general
provisions ` 200.2 crore (as against ` 183.2 crore for the corresponding
quarter of the previous year). General provisions include additional
provisions of ` 85.9 crore for standard advances to the NBFC / HFC sector.
Profit before tax (PBT) for the quarter ended June 30, 2019 was up 21.6% to
` 8,533.6 crore. After providing ` 2,965.4 crore for taxation, the Bank earned
a net profit of ` 5,568.2 crore, an increase of 21.0% over the quarter ended
June 30, 2018.

Balance Sheet: As of June 30, 2019

Total balance sheet size as of June 30, 2019 was ` 1,265,253 crore as against
`1,080,409 crore as of June 30, 2018.

Total deposits as of June 30, 2019 were ` 954,554 crore, an increase of 18.5%
over June 30, 2018. CASA deposits grew by 12.8% with savings account
deposits at ` 253,338 crore and current account deposits at ` 125,663 crore.
Time deposits were at ` 575,553 crore, an increase of 22.5% over the previous
year, resulting in CASA deposits comprising 39.7% of total deposits as of
June 30, 2019. The Bank’s continued focus on deposits helped in the
maintenance of a healthy liquidity coverage ratio at 126%, well above the
regulatory requirement.
156
Total advances as of June 30, 2019 were ` 829,730 crore, an increase of
 NEWS RELEASE HDFC Bank Ltd.
HDFC Bank House,
Senapati Bapat Marg,
Lower Parel,
Mumbai - 400 013.
17.1% over June 30, 2018. Advances to the vehicle loan segment, where sales
volumes have seen some moderation, grew at 8.3% over the previous year.
Domestic advances grew by 17.9% over June 30, 2018. As per regulatory
[Basel 2] segment classification, domestic retail loans grew by 16.5% and
domestic wholesale loans grew by 19.6%. The domestic loan mix as per
Basel 2 classification between retail:wholesale was 54:46. Overseas
advances constituted 3% of total advances.

Capital Adequacy:

The Bank’s total Capital Adequacy Ratio (CAR) as per Basel III
guidelines was at 16.9% as on June 30, 2019 (14.6% as on June 30,
2018) as against a regulatory

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HDFC Bank House,
Senapati Bapat Marg,
Lower Parel,
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requirement of 11.075% which includes Capital Conservation Buffer of

1.875%, and an additional requirement of 0.20% on account of the Bank
being identified as a Domestic Systemically Important Bank (D-SIB). Tier 1
CAR was at 15.6% as of June 30, 2019 compared to 13.1% as of June 30,
2018. Common Equity Tier 1 Capital ratio was at 14.8% as of June 30, 2019.
Risk-weighted Assets were at ` 965,635 crore (as against ` 844,894 crore as
at June 30, 2018).

DIVIDEND

The Board of Directors has declared a special interim dividend of ₹ 5 per

equity share of ₹ 2 to commemorate 25 years of the Bank’s
operations.

NETWORK

As of June 30, 2019, the Bank’s distribution network was at 5,130 banking
outlets and 13,395 ATMs across 2,764 cities / towns as against 4,804 banking
outlets and 12,808 ATMs across 2,700 cities / towns as of June 30, 2018. Of
the total banking outlets, 53% are in semi-urban and rural areas. Number of
employees were at 104,154 as of June 30, 2019 (as against 89,550 as of June
30, 2018).

ASSET QUALITY

Gross non-performing assets were at 1.40% of gross advances as on June 30,

2019 (1.17% excluding NPAs in the agricultural segment) as against 1.33%
as on June 30, 2018 (1.09% excluding NPAs in the agricultural segment). Net

158advances as on June 30, 2019. The

non-performing assets were at 0.4% of net
Bank held floating provisions of ` 1,451 crore as on June 30, 2019. Total
 NEWS RELEASE HDFC Bank Ltd.
HDFC Bank House,
Senapati Bapat Marg,
Lower Parel,
Mumbai - 400 013.
provisions (comprising specific provisions, general provisions and floating
provisions) were 115% of the gross non-performing loans as on June 30,
2019.

SUBSIDIARIES

The financial results of the Bank’s subsidiary companies have been

prepared in accordance with notified Indian Accounting Standards ('Ind-
AS').

HDFC Securities Limited (HSL) is amongst the leading retail broking firms in India. As on June 30,
2019, the Bank held 97.3% stake in HSL.

For the quarter ended June 30, 2019, HSL’s total income was ` 189.3 crore
as against
` 193.5 crore for the quarter ended June 30, 2018. Profit after tax
before other

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 NEWS RELEASE HDFC Bank Ltd.
HDFC Bank House,
Senapati Bapat Marg,
Lower Parel,
Mumbai - 400 013.

comprehensive income for the quarter was ` 66.5 crore, as against ` 72.6 crore
in the previous quarter.

As on June 30, 2019 HSL had 269 branches across 161 cities / towns in the
country.

HDB Financial Services Limited (HDBFSL) is a non-deposit taking non-

bank finance company (‘NBFC’) offering wide range of loans and asset
finance products to individuals, emerging businesses and micro enterprises.
As on June 30, 2019, the Bank held 95.5% stake in HDBFSL.

As on June 30, 2019, HDBFSL’s balance sheet size was at ` 58,833 crore.
The gross loan book grew by 22.7% to ` 56,287 crore as on June 30, 2019 (as
against ` 45,889 crore as of June 30, 2018).

For the quarter ended June 30, 2019, HDBFSL’s net interest income grew
by 12.9% to 962.7 crore (as against ` 852.4 crore in the previous quarter).
Profit after tax before other comprehensive income for the quarter ended June
30, 2019 was ` 221.9 crore compared to ` 228.0 crore in the previous quarter.
As on June 30, 2019, HDBFSL had 1,381 branches across 996 cities / towns.

Gross impaired loans were at 2.3% of gross loans and net impaired loans
were at 1.7% of net loans as on June 30, 2019. Total CAR was at 18.1% with
Tier-I CAR at 12.5%.

CONSOLIDATED FINANCIAL RESULTS

The Bank’s consolidated financial results include the financial results of

its subsidiary companies based on the recognition and measurement
principles as per Indian GAAP.

The c

160 June 30, 2019 was ` 5,676 crore,

onsolidated net profit for the quarter ended
up 18.0%, over the quarter ended June 30, 2018. Consolidated advances
 NEWS RELEASE HDFC Bank Ltd.
HDFC Bank House,
Senapati Bapat Marg,
Lower Parel,
Mumbai - 400 013.
grew by 17.2%
from ` 751,386 crore as on June 30, 2018 to ` 880,939 crore as on June 30,

2019. Note:

` = Indian
Rupees 1 crore
= 10 million
All figures and ratios are in accordance with Indian GAAP unless otherwise
specified.

161
 HDFC Bank Ltd.
NEWS RELEASE HDFC Bank House,
Senapati Bapat Marg,
Lower Parel,
BSE: 500180 Mumbai - 400 013.

NSE:
HDFCBANK
NYSE: HDB

Certain statements are included in this release which contain words or phrases such as “will,” “aim,” “will likely result,” “believe,” “expect,” “will
continue,” “anticipate,” “estimate,” “intend,” “plan,” “contemplate,” “seek to,” “future,” “objective,” “goal,” “project,” “should,” “will pursue” and
similar expressions or variations of these expressions, that are “forward-looking statements.” Actual results may differ materially from those suggested
by the forward-looking statements due to certain risks or uncertainties associated with our expectations with respect to, but not limited to, our ability
to implement our strategy successfully, the market acceptance of and demand for various banking services, future levels of our non-performing loans,
our growth and expansion, the adequacy of our allowance for credit and investment losses, technological changes, volatility in investment income,
our ability to market new products, cash flow projections, the outcome of any legal, tax or regulatory proceedings in India a nd in other jurisdictions
we are or become a party to, the future impact of new accounting standards, our ability to pay dividends, the impact of changes in banking regulations
and other regulatory changes on us in India and other jurisdictions, our ability to roll over our short-term funding sources and our exposure to market
and operational risks. By their nature, certain of the market risk disclosures are only estimates and could be materially different from what may
actually occur in the future. As a result, actual future gains, losses or impact on net income could materially differ from those that have been estimated.
In addition, other factors that could cause actual results to differ materially from those estimated by the forward-looking statements contained in this
document include, but are not limited to: general economic and political conditions, instability or uncertainty in India and the other countries which
have an impact on our business activities or investments caused by any factor, including terrorist attacks in India, the United States or elsewhere, anti-
terrorist or other attacks by the United States, a United States-led coalition or any other country, tensions between India and Pakistan related to the
Kashmir region or between India and China, military armament or social unrest in any part of India; the monetary and interest rate policies of the
government of India, natural calamities, inflation, deflation, unanticipated turbulence in interest rates, foreign exchange rates, equity prices or other
rates or prices; the performance of the financial markets in India and globally, changes in Indian and foreign laws and regulations, including tax,
accounting and banking regulations, changes in competition and the pricing environment in India, and regional or general changes in asset valuations.

For more information please log on to: www.hdfcbank.com

For media queries please contact:

Neeraj Jha
Head, Corporate
Communication HDFC
Bank Ltd., Mumbai.
Tel: 91 - 22 - 6652 1308 (D) / 6652 1000 (B)
Fax: 91 - 22 - 2490 3168
Mobile: +91 93236 20828
 HDFC Bank Ltd.
NEWS RELEASE HDFC Bank House,
Senapati Bapat Marg,
Lower Parel,
Mumbai - 400 013.
 HDFC Bank Ltd.
NEWS RELEASE HDFC Bank House,
Senapati Bapat Marg,
eraj.jha@hdfcbank.com Lower Parel,
Mumbai - 400 013.
For investor queries please contact:

Ajit Shetty
HDFC Bank Ltd., Mumbai.
Tel: 91 - 22 - 6652 1083 (D) / 6652 1000 (B)
Mobile: +91 74983 51730
ajit.shetty@hdfcbank.com
 HDFC Bank Ltd.
NEWS RELEASE HDFC Bank House,
Senapati Bapat Marg,
Lower Parel,
Mumbai - 400 013.
 HDFC Bank Ltd.
NEWS RELEASE HDFC Bank House,
Senapati Bapat Marg,
Lower Parel,
Mumbai - 400 013.