HDFC Financial Statments

Project on Financial Analysis of HDFC & SBI Bank
CHAPTER I
1.1 MEANING AND DEFINITION:

Bank is an institution that deals in money and its substitutes and provides crucial financial
services. The principal type of baking in the modern industrial world is commercial banking
& central banking.
Banking Means "Accepting Deposits for the purpose of lending or Investment of
deposits of money from the public, repayable on demand or otherwise and withdraw by
cheque, draft or otherwise."
-Banking Companies (Regulation) Act,1949
The concise oxford dictionary has defined a bank as "Establishment for custody of money
which it pays out on customers order." Infact this is the function which the bank performed
when banking originated.
"Banking in the most general sense, is meant the business of receiving, conserving &
utilizing the funds of community or of any special section of it."
-By H.Wills & J. Bogan
"A banker of bank is a person, a firm, or a company having a place of business where
credits are opened by deposits or collection of money or currency or where money is
advanced and waned.
-By Findlay Sheras
Thus
A Bank :
 Accept deposits of money from public,
 Pays interest on money deposited with it.
 Lends or invests money
 Repays the amount on demand,
 Allow the money deposited to be with drawn by cheque or draft.
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1.2 ORIGIN OF WORD BANK:

The origin of the word bank is shrouded in mystery. According to one view point the
Italian business house carrying on crude from of banking were called banchi bancheri"
According to another viewpoint banking is derived from German word "Branck" which mean
heap or mound. In England, the issue of paper money by the government was referred to as a
raising a bank.
1.3 ORIGIN OF BANKING :

Its origin in the simplest form can be traced to the origin of authentic history. After
recognizing the benefit of money as a medium of exchange, the importance of banking was
developed as it provides the safer place to store the money. This safe place ultimately evolved
in to financial institutions that accepts deposits and make loans i.e., modern commercial
banks.
1.4 BANKING SYSTEM IN INDIA
A HISTORICAL PERSPECTIVE :
We can identify there distinct phases in the history of Indian banking:
1. Early phase from 1786-1969.
2. Nationalization of banks and up to 1991 prior to banking sector reforms.
3. New phase of Indian banking with the advent of financial banking. Banking in India
has its origin as early or Vedic period. It is believed that the transitions from many
lending to banking must have occurred even before Manu, the great Hindu furriest,
who has devoted a section of his work to deposit and advances and laid down rules
relating to the rate of interest. During the mogul period, the indigenious banker played
a very important role in lending money and financing foreign trade and commerce.
During the days of the East India Company it was the turn of agency house to carry
on the banking business. The General Bank of India was the first joint stock bank to
be established in the year 1786. The other which followed was the Bank of Hindustan
and Bengal Bank. The Bank of Hindustan is reported to have continued till 1906.
While other two failed in the meantime. In the first half of the 19th century the East
India Company established there banks, The bank of Bengal in 1809, the Bank of
Bombay in 1840 and the Bank of Bombay in1843. These three banks also known as
the Presidency banks were the independent units and functioned well. These three
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banks were amalgamated in 1920 and new bank, the Imperial Bank of India was
established on 27th January, 1921.
With the passing of the State Bank of India Act in 1955 the undertaking of the
Imperial Bank of India was taken over by the newly constituted SBI. The Reserve Bank of
India (RBI) which is the Central bank was established in April, 1935 by passing Reserve
bank of India act 1935. The Central office of RBI is in Mumbai and it controls all the other
banks in the country.
In the wake of Swadeshi Movement, number of banks with the Indian management
were established in the country namely, Punjab National Bank Ltd., Bank of India Ltd., Bank
of Baroda Ltd., Canara Bank. Ltd. on 19th July 1969, 14 major banks of the country were
nationalized and on 15th April 1980, 6 more commercial private sector banks were taken
over by the government.
1.5 FUNCTIONS OF BANKS
PRIMARY FUNCTIONS
 Acceptance of Deposits
 Making loans & advances
 Loans
 Overdraft
 Cash Credit
 Discounting of bills of exchange
SECONDARY FUNCTIONS
 Agency functions
 Collection of cheques & Bills etc.
 Collection of interest and dividends.
 Making payment on behalf of customers
 Purchase & sale of securities
 Facility of transfer of funds
 To act as trustee & executor.
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UTILITY FUNCTIONS :
 Safe custody of customers valuable articles & securities.
 Underwriting facility
 Issuing of traveller's cheque letter of credit
 Facility of foreign exchanges
 Providing trade information
 Provide information regarding credit worthiness of their customer.
1.6 CLASSIFICATION ON BASIS OF OWNERSHIP
On the basis of ownership banks are of the following types :
1. PUBLIC SECTOR BANK

Public sector banks are those banks which are owned by the Government. The Govt. runs
these Banks. In India 14 banks were nationalized in 1969 & in 1980 another 6 banks were
also nationalized. Therefore in 1980 the number of nationalized bank 20. But at present there
are 9 banks are nationalized. All these banks are belonging to public sector category. Welfare
is their principle objective.
2. PRIVATE SECTOR BANKS

These banks are owned and run by the private sector. Various banks in the country such as
ICICI Bank, HDFC Bank etc. An individual has control over there banks in preparation to the
share of the banks held by him.
3. CO-OPERATIVE BANKS
Co-operative banks are those financial institutions. They provide short term & medium term
loans to there members. Co-operative banks are in every state in India. Its branches at district
level are known as the central co-operative bank. The central co-operative bank in turn has its
branches both in the urban & rural areas. Every state co-operative bank is an apex bank
which provides credit facilities to the central co-operative bank. It mobilized financial
resources from richer section of urban population by accepting deposit and creating the credit
like commercial bank and borrowing from the money mkt. It also gets funds from RBI.
ii ACCORDING TO RESERVE BANK OF INDIA ACT 1935
Banks are classified into following two categories son the basis of reserve bank Act. 1934.
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1. SCHEDULED BANK
These banks have paid up capital of at least Rs. 5 lacks. These are like a joint stock company.
It is a co-operative organization. These banks find their mention in the second schedule of the
reserve bank.
2. NON SCHEDULED BANK
These banks are not mentioned in the second schedule of reserve bank paid up capital of
these banks is less then Rs.5 lacs. The no. such bank is gradually tolling in India.
iii CLASSIFICATION ACCORDING TO FUNCTION
On the basis of functions banks are classified as under :-
1. COMMERCIAL BANKS
The commercial banks generally extend short-term loans to businessmen & traders.
Since their deposits are for a short-period only. They cannot lend money for a long
period. These banks reform various types or agency job for their customers. These
banks are not in a position to grant long-term loans to industries because their deposits
are only for a short period. The majority of joint stock banks in India are commercial
banks which finance trade & commerce only.
2. SAVING BANKS
The principle function of these banks is to collect small saving across the country and
put them into productive use. These banks have shown marked development in
Germany & Japan. These banks are established in HAMBURG City of Germany in
1765. In India a department of post offices functions as a saving banks.
3. FOREIGN EXCHANGE BANKS

These are special types of banks which specialize in financing foreign trade. Their
main function is to make international payments through purchase & sale of exchange
bills. As it well known, the exporters of a country prefer to receive the payments for
exports in their own currency. Thus these banks convert home currency into foreign
currency and vice versa. It is on this account that these banks have to keep with
themselves stock of the currency of various countries. Along with that, they have to
open branches in foreign countries to carry on their business.
4. INDUSTIRAL BANKS
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The industrial banks extends long term loans to industries. In fact, they also help
industrials firms to sell their debentures and shares. Some times, they even underwrite
the debentures & shares of big industrial concerns.
5. INDIGENIOUS BANKS
These banks found their origin in India. These banks made a significant contribution to the
development of agricultural and industries before independence. Mahajans, rural
moneylenders have been the forerunner of these banks in India.
6. CENTRAL BANK
The central bank occupies a pivotal position in the monetary and banking structure of the
country. The central bank is the undisputed leader of the money market. As such it supervises
controls and regulates the activities of commercial banks affiliated with it. The central bank is
also the higher monetary institution in the country charged with the duty & responsibility of
carrying out the monetary policy formulated by the government. India's central bank known
as the reserve bank of India was set up in 1935.
7. AGRICULTURAL BANK
The commercial and the industrial banks are not in a position to meet the credit requirements
of agriculture. Hence, there arises the need for setting up special type of banks of finance
agriculture. The credit requirement of the farmers are two types. Firstly the farmers require
short term loans to buy seeds, fertilizers, ploughs and other inputs. Secondly, the farmers
require long-term loans to purchase land, to effect permanent improvements on the land to
buy equipment and to provide for irrigation works. There are two types of agriculture banks.
1. Agriculture co-operative banks, and
2. Land mortgage banks. The farmer provide short-term credit, while the letter extend
long-term loans to the farmers.
1.7 TYPES OF BANKS
CentralBank
The Reserve Bank of India is the central Bank that is fully owned by the Government. It is
governed by a central board (headed by a Governor) appointed by the Central Government. It
issues guidelines for the functioning of all banks operating within the country.
CO-OPERATIVESECTOR::---
The co-operative sector is very much useful for rural people. The co-operative banking sector
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is divided into the following categories.
a. State co-operative Banks
b. Central co-operative banks
c. Primary Agriculture Credit Societies
Development Banks/Financial Institutions
 IFCI
 IDBI
 ICICI
 IIBI
 SCICI Ltd.
 NABARD
 Export-Import Bank of India
 National Housing Bank
 Small Industries Development Bank of India
 North Eastern Development Finance Corporation
1.8 PRIVATE SECTOR BANKS
Private Sector Banks
1. HDFC Bank
2. ICICI Bank
3. Federal Bank
4. ING Visas Bank
5. Axis Bank (formerly UTI Bank)
6. Yes Bank
7. Bank of Rajasthan
8. Bharat Overseas Bank
9. Catholic Syrian Bank
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10. Centurion Bank of Punjab
11. City Union Bank
12. Development Credit Bank
13. Dhanalakshmi Bank
14. Ganesh Bank of Kurundwad
15. IndusInd Bank
16. Jammu & Kashmir Bank
17. Karnataka Bank Limited
18. Karur Vysya Bank
19. Kotak Mahindra Bank
20. Lakshmi Vilas Bank
21. Nainital Bank
22. Ratnakar Bank
23. SBI Commercial and International Bank
24. South Indian Bank
1.9 MAJOR PLAYERS IN PRIVATE SECTOR BANKS:
HDFC Bank :---- HDFC Bank is headquartered in Mumbai Bank at present has an enviable
network of over 495 branches spread over 218 cities across India. All branches are linked on
an online real-time basis. Customers in over 120 locations are also serviced through
Telephone 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 leading stock exchanges, the Bank has
branches in the centers where the NSE/BSE has a strong and active member base. The
authorized capital of HDFC Bank is Rs.450 core (Rs.4.5 billion). The paid-up capital is
Rs.309.9 core (Rs.3.09 billion). The HDFC Group holds 22.2% of the bank’s equity and
about 19.5% of the equity is held by the ADS Depository. The Bank has made substantial
efforts and investments in acquiring the best technology available internationally, to build the
infrastructure for a world class bank.
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PUBLIC SECTOR BANKS
a. State Bank of India and its associate banks called the State Bank Group
b. 20 nationalized banks
c. Regional rural banks mainly sponsored by public sector banks
PUBLIC SECTOR BANKS (NATIONALIZED BANKS):
1. State Bank of India (SBI)
2.State Bank of Bikaner & Jaipur
3.State Bank of Hyderabad
4.State Bank of Indore
5.State Bank of Mysore
6.State Bank of Patiala
7.State Bank of Saurashtra
8. State Bank of Travancore
9. Bank of India
10. Canara Bank
11. Central Bank of India
12. Corporation bank
13. Indian Bank
14. Indian overseas bank
15.Syndicate Bank
16.UCO Bank
17. Allahabad Bank
18.Andhra Bank
19.Bank of Baroda
20. Bank of Maharashtra
21. Dena Bank
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22.Oriental Bank of Commerce
23. Punjab & Sind Bank
24. Union Bank of India
Public sector banks
Banking is one of the most important elements of economy. Indian banking system over past
few decades has played a very effective role in mobilization of savings of the economy
spreading in banking habit to the furthest corner of the country and enlarged entrepreneurial
base. Indian banks have multiplied their activities in volume variety and geographical
coverage to meet the growing needs of society, the old methods and techniques of viability
growth based formation of finance schemes of marketing. Instead of working for profits, they
are required to participate in the nation building activities and help in bringing socio-
economic change.
Banking transactions carried on by any individual or firm engaged in providing financial

services to consumers, businesses or government enterprises. In the broad sense, a bank is a
financial intermediary that performs one or more of the following functions: safeguards and
transfer of funds, guarantees credit worthiness and exchange money. Such institutions as
commercial banks, central banks, organizational banks, trust companies, finance companies,
life insurers and investment bankers provide these services. A normal end mean common
definition of a bank is a financial intermediary that accepts, transfer and most important
creates deposits. This includes such deposits institutes as central banks, commercial banks,
savings and loan associates and mutual savings bank.
Banks are most frequently organized in corporate form and owned by either private
individual, government interests. Although non corporate bank that single proprietorship and
partnership are find in other countries since 1863 all federally chartered bank in the US must
be corporations. Only a few states permit formation of non corporate bank. All countries
subject their banks, however owned to government regulations and supervision, normally
implemented by central banks authorities. Bank in India should develop appropriate strategy
and ensure proper marketing strategy and mistaking into account the economic, cultural, legal
and political environment. As toady in the changes word the needs are changed as regards to
bank as foreign players.
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Marketing concept should be followed where we talk about 4 Ps marketing tools in regards to
banks; we should include to more 2 Ps more, People and Procedures as well. An introduction
of ATM 24 hours online banking transactions etc their goal should not be of profit it should
be “growth and development with profit”The service sector of the economy is going through
a period of almost revolutionary proportions in which established ways of doing business
continue to be shunted aside. It has been said that the only person in the world who
appreciates changes is wet baby.The service sector can be best characterized by its diversity.
Service organization range in size from huge International Corporation in such fields as
airlines, banking, insurance, telecommunications, and hotel chain and freight transportation to
a vast array of locally owned and operated small business and numerous business to business
services. As currently defined by the government statistics, services account for the two third
to three quarters of the gross national product. Not only in US but also in many other highly
develop industrial nations.In the banking and financial services business: this area comprises
many different types of businesses, commercial and retail, with a common denomination, of
being in business to help customer to make or manage money. A high level of trust is implicit
and is even more critical in the wake of the savings and loan scandals of the 1980s. The retail
banking industry has found its historic image of aloofness, a managementThe public sector
banks largely dominate the Indian banking industry. These banks till early 90s were involved
in the traditional banking business of deposits and credit lending. They performed a
supporting role in the overall growth of economy. While most of these banks used to focus on
growth of balance-sheet profitability was not a significant competition. In most of the banks
government has holding of 100% whereas in the few banks the state has fallen because of
public issue in the post liberalization period. Some of other leading banks in the segment also
proposed to come out with an equity issue to raise further capital.The public sector banks
have a strong distribution network all over the country. But the strength of earlier periods has
now coming out with VRS to bring down number of employees and improve their efficiency
ratio.The public sector banks still control a major share in banking operation of the country.
Private sector Banks
The banking regulation act was amended in 1993 permitting the entry of new private sector
banks. The act also specified certain criteria for establishing new private sector banks. The
criteria are as follows-
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1. the banks should have a minimum net worth of Rs. 1 billion

2. The promoters holding should be minimum 25% of paid up capital.
The last decade witnessed the maturity of India’s financial markets. Since 1991, every
governments of India took major steps in reforming the financial sector of the country. The
important achievements in the following fields are achieved in following heads:
Financial Markets
In the last decade, private sector banks / institutions played an important role. They grew
rapidly in commercial banking and asset management business. With the openings in the
insurance sector for these institutions, they started making debt in the market.
Regulators
The Finance Ministry continuously formulated major policies in the field of financial sector
of the country. The Government accepted the important role of regulators. The Reserve Bank
of India (RBI) has become more independent. Opinions are also that there should be a super-
regulator for the financial services sector instead of multiplicity of regulators.
The banking system

Almost 80% of the business is still controlled by the Public Sector Banks (PSBs). PSB are
still dominating the commercial banking system. Shares of the leading PSBs are already
listed on the stock exchanges.
The RBI has given licenses to new private sector banks as part of the liberalization process.
The RBI has also been granting licenses to industrial houses. Many banks are successfully
running in the consumer segments, industrial finance, retail trade, small business and
agriculture finances.
Overall approach to reforms

The last ten years have seen major improvements in the working of various financial market
participants. The government and the regulatory authorities followed the step by step
approach, not a bang one. The entry of foreign banks has assisted in the introduction of
international practices and systems. On the whole, the cumulative effect of the developments
since 1991 has been quite encouraging.
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Deregulation of Banking System

In order to reach the stipulated capital adequacy norms, substantial capital were provided by
the Government and RBI.
Government pre-emption of banks’ resources through statutory liquidity ratio (SLR) and cash
reserve ratio (CRR) brought down in steps. Interest rates on the deposits and lending sides
almost entirely were deregulated.
New private sector banks allowed promoting and encouraging competition. PSBs were
encouraged to approach the public for raising resources. Recovery of debts due to banks and
the Financial Institutions Act 1993 were passed, and special recovery tribunals set up to
facilitate quicker recovery of loan arrears.
Consolidation imperative
Another aspect of the financial sector reforms in India is the consolidation of existing
institutions which is especially applicable to the commercial banks. In India the banks are
huge quantity. First, there is no need for 27 PSBs with branches all over India. A number of
them can be merged. The merger of Punjab National Bank and New Bank of India was
difficult one, but the situation is different now. No one expected so many employees to take
voluntary retirement from PSBs, which at one time were much sought after jobs. Private
sector banks will be self consolidated while co-operative and rural banks will encouraged for
consolidation, and anyway play only a niche role
Global Competencies
The progress and growth of Indian banking sector is in the line with the twin objective of
financial stability and growth. Banking in India has increased its size by capitalizing on all
the business opportunity available. The capital adequacy ratio of Indian banks has increased
and is now in a much better position in relation to the other emerging market economies. The
ratio is well in line with the proposed new Basel norms. Several banks raised capital and
some more banks are on the way.
Guidelines and Governance

Meeting capital adequacy norms in the recent times gained importance with the deadline for
the implementation of Basel II Accord approaching closer. The average Capital Adequacy
Ratio (CAR) of Indian banks stood at 12.8% at March 31, 2005, much above the prescribed
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norms. In order to enhance capital adequacy ratio, seven banks including ICICI bank and
Punjab National bank, have raised capital in primary markets to the tune of Rs.12, 000 crores
during the year 2005. it has been decided that banks which have maintained capital at least
9% of the risk weighted assets for both credit risk and market risks of both ‘Held For
Trade’(HFT) and ‘Available For Sale’(AFT) categories as on March 31, 2006, would be
permitted to treat the entire balance in the Investment Fluctuation Reserve as tier-I capital.
This will help banks to enhance their CAR. Reserve bank Of India (RBI) has given guidelines
to have minimum net worth of Rs. 300 crores for private banks.
New guidelines have been introduced in the Indian banking system to measure up to the
international banking practices. The Indian Bankers Association (IBA) has come up with
‘Fair Practices Code’ to improve corporate governance. Banks in India should now explicitly
state their governance philosophy in their Annual Reports as part of ‘Notes on Accounts’ to
their balance sheets. Risk based supervision was introduced in some selected banks.
Guidelines have been issued to banks not to outsource core-banking functions.
Emphasis has been placed on the role of bank boards. In a move to give freedom in the
functioning of private banks, RBI has withdrawn its nominee directors from almost all the
private sector banks. Amendments have also been proposed to remove the provisions of
having nominated officers of RBI in public sector banks in order to bring their functioning at
par with private banks.
Government’s shareholding in several Public Sector Banks (PSBs) reached close to 51%. To
continue government’s stipulated minimum shareholding in PSBs, the finance ministry asked
the RBI to come up with the guidelines on ‘hybrid’ instruments, which can be treated as
capital.
Performance
The year 2005 has been good for the Indian banking. There was robust growth in credit flow
during the year. Credit deposit ratio increased by more than 10% and substantial part of the
bank’s commercial credit went to large borrowers at sub-PLR rates. Government wants to
further push up the loan to GDP ratio from 43% to 50%. The most significant jump in credit
was to real estate sector. Credit to agriculture has been in line with the government’s
objective of doubling its credit in the coming five years.
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The banking industry has managed to improve its operating profit ratio by reducing its
operating costs/staff expenses. The asset quality in Indian banking sector has shown
considerable improvement. The gross Non Performing Assets (NPAs) to advances ratio for
the sector declined to 5% in FY05 from 16% in FY97
The Indian banking has improved efficiency in its operations. Cost to income has come
down. Interest income of the entire banking sector has increased. The returns on assets of the
foreign banks have been highest, followed by the private sector banks. Revenue sources of
banks been diversified. They have entered into the business of selling third-party products to
increase their income. Banks are trying to increase fee-based income as interest income
continues to be under pressure and profits from tradi8ng keep declining. Investments in
Statutory Liquidity Ratio
(SLR) securities of
banks have declined;
however, the ratio is in
excess of the statutory
limit. RBI reduced the
reverse repo rate
during the year to
direct the funds to the
needed areas. Most of
the investments held
by private sector banks
were in the maturity
bucket of a less than a
year while the public
sector banks’ investments were ranging from one-year to five-year maturity buckets.
At the same time, technological development in the sector helped the banks in diversifying
their business activities to offer different services to customers. Introduction of core banking
solutions has enabled the banks to segregate the credit sourcing (front office) and appraisal
(back office) functions. Many banks will aggressively position themselves on an end-to-end
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solution. The total Real Time Gross Settlement (RTGS) transactions increased from 1, 91,792
in March 2005 to 3, 84,176 in September 2005.
1.10 PROFILE OF THE ORGANISATION
HOUSING DEVELOPMENT FINANCE CORPORATION
(HDFC BANK)
The housing development finance corporation limited (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 RBI liberalization of Indian banking industry in 1994. The bank was
in corporate in Aug. 1994 in the name of HDFC Bank Ltd. With its registered office in
Mumbai, India, HDFC Bank commenced operations as scheduled commercial bank in
January 1995.
PROMOTOR
HDFC is India's premier housing finance company and enjoys an impeccable track record in
India as well as in international markets. Since its inception in 1997, the corporation has
maintained a consistent and healthy growth in its operations to remain a market leader in
mortgage. Its outstanding loan portfolio covers well over a million dwelling units. 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 franchise, HDFC was ideally positioned to promote a bank in
the Indian environment.
BUSINESS FOCUS
HDFC bank's mission is to be a world class Indian bank. The bank has aim to build sound
customer franchises across district business so as to be the prefer provider of banking services
in the segment that the bank operates in 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 and regulatory compliance. HDFC bank's business
philosophy is based on four core values:
1. Operational Excellence
2. Customer Focus
3. Product Leadership
4. People.
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CAPITAL STRUCTURE
The authorized capital of HDFC bank is Rs. 45000 Lakhs. The issued, subscribed and paid-
up capital is divided into 836,46 lacks equity shares @ Rs.10/- each.
TIMES BANKS AMALGAMATION

In a mile stone transaction in 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. As per the scheme of amalgamation approved
by the share holders of both banks and Reserve bank of India.
DISTRIBUTION NETWORK
HDFC bank has its Headqarters in Mumbai. The bank at present has an enviable network of
535branches spread over 312 cities across the country. All branches are linked on an online
real time basis. Customer in 189 locations are also serviced through phone banking. The
banks 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 loans products. Being a clearing settlement
bank to various leading stock exchanges, the bank has branches in centers where the
NSE/BSE have a strong and active member base.The bank also have a network of
1323ATM's across there cities.
TECHNOLOGY
HDFC bank operates in a highly automated environment in terms of information technology
and communication systems. All the bank's branches have connectivity which enables the
bank to offer speedy funds transfer facility to its customers. Multi branch access is also
provided to retail customers through the branch network and automated teller machines
(ATMs)The bank has made substantial efforts and investments in acquiring the best
technology available internationally to build the infrastructure for a world class bank has
prioritized its engagement in technology and the internet as one of its key goals and has
already made significant progress in web enabling its core business. In each office its
business, the Bank has succeeded in leveraging its market position, expertise and technology
to create a competitive advantage and build market share.
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1.11 BUSINESS PROFILE

HDFC Bank caters to wide range of banking services covering both commercial and
investment banking on the wholesale side and transactional branch banking on the retail side.
The bank three key business areas
1. WHOLESALE BANKING SERVICES

The Bank's target is primary large blue-chip manufacturing companies in the Indian corporate
sector and to a lesser extent, emerging mid sized corporate. For these corporate the Bank
provides a wide range of commercial and transactional Banking services including working
capital finance trade services, transactional services, cash management etc. The Bank is also a
leading provider of structure solution which combine cash management services with vendors
and distributor finance for facilitating superior supply chain management for its corporate
customers. Based on its superior product delivery service levels and strong customer
orientation, the Bank has made significant in roads into the Banking consortia of a number of
leading India corporate including Multinationals, Companies from the domestic business
house and prime public sector companies. It is recognized as a leading provider of cash
management and transactional Banking solutions to corporate customers, Mutual Funds,
Stock Exchange Members and Bank.
2. RETAIL BANKING SERVICES:

The objective of retail bank is to provide its target market customer a full range of financial
products and banking service, giving the customer a one-stop window for all his/her banking
requirements. The products are backed by world-class services and delivered to the customers
through the growing branch network as well as though alternative delivery channels like
ATMs, phone banking, net banking and mobile banking. The HDFC bank preferred programs
for high net worth individuals, the HDFC bank plus and the investment advisory services
program have been designed keeping in mind heads of customers who seek distinct financial
solutions information and advice on various investment avenues. The also had a wide array of
retail ban products including auto loans, loans against marketable securities, personal loans
and loans for two wheelers. It is also a leading provider of depository service to retail
customers offering customers the facility to hold their investments in electronic form. HDFC
Bank was the first bank in India to launch an international debit card in association with
VISA ( Visa election) and issue the master card Maestro debit card as well. The debit card
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allows the use to directly debit his account at the point of purchase at a merchant
establishment, in India and overseas. The bank launch its credit card in association with
VISA in November 2002. The bank is also one of the leading players in the "merchant
acquiring" business with 26,400 point of sale (pos) terminals for debit/credit cards acceptance
at merchant establishments. The bank is well positioned as a leader in various net based B2C
opportunities including a wide range of interest banking services for fixed deposit, loans, bill
payments etc.
3. TREASURY OPERATIONS
Within this business the bank has three main product areas foreign exchange and derivative,
local currency, money market & debt securities and equities. With the liberalization of the
financial market in India, corporate need more sophisticated risk management information
advice and product structure. These and find pricing on various treasury product are provided
through the bank treasury team.
BOARD OF DIRECTOR
Mr. Jagdish kapoor, (Chairman)
Mr. Aditya Puri, (Managing Director)
Mr. Keki Mistry
Dr. Venkat Rao Gadwal
Dr. Vineet Jain
Mrs. Renu Karnad
Mr. Arvind Pande
Mr. Ranjan Kapoor (Resigned w.e.f. 29th March, 2016)
Mr. Bobby Parikh (w.e.f. Jan. 9, 2004)
Mr. Ashim Samanta
VICE PRESIDENT AND COMPANY SECRETARY

Mr. Sanjany Dongre
AUDITOR
M/s P.C Hansotia & Co.
Chartered Accountant
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REGISTERED OFFICE
HDFC BANK HOUSE
Senapati Bapat Mart,
Lower Parel,
Mumbai 40013
Tel. No. 66521000
Fax No. 24960737
Website : www. hdfcbank.com
1.12 MEANING OF FINANCIAL STATEMENTS:-
Financial statements refer to such statements which contains financial information about an
enterprise. They report profitability and the financial position of the business at the end of
accounting period. The team financial statement includes at least two statements which the
accountant prepares at the end of an accounting period. The two statements are: -
1. The Balance Sheet
2. Profit And Loss Account
They provide some extremely useful information to the extent that balance Sheet
mirrors the financial position on a particular date in terms of the structure of assets, liabilities
and owners equity, and so on and the Profit And Loss account shows the results of operations
during a certain period of time in terms of the revenues obtained and the cost incurred during
the year. Thus the financial statement provides a summarized view of financial positions and
operations of a firm.
MEANING OF FINANCIAL ANALYSIS

The first task of financial analysis is to select the information relevant to the decision under
consideration to the total information contained in the financial statement. The second step is
to arrange the information in a way to highlight significant relationship. The final step is
interpretation and drawing of inference and conclusions. Financial statement is the process of
selection, relation and evaluation.
Features of Financial Analysis

 - To present a complex data contained in the financial statement in simple and
understandable form.
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 - To classify the items contained in the financial statement in convenient and rational
groups.
 To make comparison between various groups to draw various conclusions.
1.13 Purpose of Analysis of financial statements

 To know the earning capacity or profitability.
 To know the solvency.
 To know the financial strengths.
 To know the capability of payment of interest & dividends.
 To make comparative study with other firms.
 To know the trend of business.
 To know the efficiency of mgt.
 To provide useful information to mgt
1.14 Procedure of Financial Statement Analysis

The following procedure is adopted for the analysis and interpretation of financial
statements:-
 The analyst should acquaint himself with principles and postulated of accounting. He
should know the plans and policies of the management so that he may be able to find
out whether these plans are properly executed or not.
 The extent of analysis should be determined so that the sphere of work may be
decided. If the aim is find out. Earning capacity of the enterprise then analysis of
income statement will be undertaken. On the other hand, if financial position is to be
studied then balance sheet analysis will be necessary.
 The financial data be given in statement should be recognized and rearranged. It will
involve the grouping similar data under same heads. Breaking down of individual
components of statement according to nature. The data is reduced to a standard form.
 A relationship is established among financial statements with the help of tools &
techniques of analysis such as ratios, trends, common size, fund flow etc.
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 The information is interpreted in a simple and understandable way. The significance

and utility of financial data is explained for help in decision making.
 The conclusions drawn from interpretation are presented to the management in the
form of reports.
1.15 PRODUCTS AND SERVICES PROVIDED BY HDFC BANK

SAVINGS ACCOUNTS
 Regular Savings Account
 Savings Plus Account
 Savings Max Account
 No Frills Account
 Retail Trust Account
 Salary Accounts
 Payroll
 Classic
 Regular
 Premium
 Defense Salary Account
 Kid's Advantage Account
 Pension Saving Bank Account
 Family Savings Group
CURRENT ACCOUNTS
 Plus Current Account
 Trade Current Account
 Premium Current Account
 Regular Current Account
 Reimbursement Current Account
 RFC - Domestic Account
FIXED DEPOSITS
 Regular Fixed Deposit
 Super Saver Account
 Sweep-in Account
LOANS
 Personal Loans
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 Home Loans
 Two Wheeler Loans
 New Car Loans
 Used Car Loans
 Overdraft Against Car
 Express Loans
 Gold Loan
 Educational Loan
 Loan Against Securities
CARDS
 Credit Cards
 Silver Credit Card
 Gold Credit Card
 Platinum Plus Credit Card
 Debit Cards
 Easy Shop International Debit Card
 Easy Shop Gold Debit Card
 Easy Shop International Business Debit Card
ACCESS YOUR BANK
 Net Banking
 Mobile Banking
 ATM
 Phone Banking
 Organizational Goals:
HDFC's main goals are to:
 Develop close relationships with individual households,
 Maintain its position as the premier housing finance institution in the country,
 Transform ideas into viable and creative solutions,
 Provide consistently high returns to shareholders, and
 To grow through diversification by leveraging off the existing client base.
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 HDFC Founder:
MAN WITH A MISSION: Hasmukhbhai Parekh If ever there was a man with a mission it
was Hasmukhbhai Parekh, their Founder and Chairman-Emeritus, who left this earthly abode
on November 18, 1994.
Born in a traditional banking family in Surat, Gujarat, Mr. Parekh started his financial career
at Harkisandass Lukhmidass - a leading stock broking firm. The firm closed down in the late
seventies, but, long before that, he went on to become a towering figure on the Indian
financial scene.
In 1956 he began his lifelong financial affair with the economic world, as General Manager
of the newly-formed Industrial Credit and Investment Corporation of India (ICICI). He rose
to become Chairman and continued so till his retirement in 1972. At the ripe age of 60,
Hasmukhbhai started his second dynamic life, even more illustrious than his first. His vision
for mortgage finance for housing gave birth to the Housing Development Finance
Corporation - it was a trend-setter for housing finance in the whole Asian continent.
He was a true development banker. His building up HDFC without any government
assistance is itself a brilliant chapter in financial history. His wisdom and warmth drew
people from all walks of life to him, for advice, guidance and inspiration soft spoken man of
few words, Mr. Parekh nevertheless held strong and definite views with a quiet conviction.
He was always concerned with building bridges, improving and encouraging communication
between people.
 Organization & Management:

HDFC is a professionally managed organization with a board of directors consisting of
eminent persons, professionals who represent various fields including finance, taxation,
construction and urban policy & development. The board primarily focuses on strategy
formulation, policy and control, designed to deliver increasing value to stakeholders.
HDFC has a staff strength of 1490 (as on 31st March, 2009), which includes professionals
from the fields of finance, law, accountancy, engineering and marketing. Click here for
details of Senior Management.
TYPES OF FINANCIAL ANALYSIS
A) Classification on the basis of natural used
a) External Analysis
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Outsiders, who don’t have access to the detailed internal accounting records of the
business firm, do this analysis. These outsiders parties are potential investor,
creditors, government agencies, credit agencies & general public.
b) Internal Analysis:
The analysis conducted by person who has access to the internal accounting
records of a business firm is known as internal analysis.
B) On the basis of modus operand:
a) Horizontal Analysis:
Horizontal analysis refers to the comparison of financial data of a company for

several years. The figures of this type of analysis are presented horizontally over a
no. of columns. This type of analysis is also called “Dynamic Analysis”.
b) Vertical Analysis:
This analysis refers to the study of relationship of the various items in the
financial statements, of one accounting period. It is also known as “Static
analysis”.
1.18 FUNCTIONS OF FINANCE DEPARTMENT

The functions of finance department include the following areas:
1) Effective management of financial resources of the company.
2) Coordinates & Monitors the functions of accounts activities in the units/marketing

offers.
3) Establish and maintain systems of financial control, internal check and render advice
on financial & accounting matters including examination of feasibility report and
detailed project reports.
4) Establish and maintain proper system of budgetary control, cost control and
management reporting.
5) Maintain financial accounts and compile annual periodical accounts in accordance

with the companies Act, 1956, ensuring the audit of accounts as per law/Govt.
directions.
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6) Looks after overall funds management and arranges funds required for the capital
schemes and working capital form govt., banks and financial institutions etc.
7) Timely payment of all taxes, levies & duties under the Law, Maintenance of records
and filing returns statements connected with such taxes, levies and duties with the
appropriate authorities , as per law.
All the power involving financial implications are to e exercised in prior consultation with
head of concerned finance department. In the event of any difference of opinion between the
General Manger and the Head of Finance Dept., the matter shall be referred to Managing
Director who after consulting Director (Finance) shall issue appropriate instruction after
following the prescribed procedures.
1.19 METHODS OF FINANCIAL ANALYSIS
A number of methods can be used for the purpose of analysis of financial statements. These
are also termed as techniques or tools of financial analysis. Out of these, and enterprise can
choose those techniques which are suitable to its requirements. The principal techniques of
financial analysis are:
1. Comparative Financial Statements.
2. Common – size Statements
3. Trend Analysis
4. Funds Flow statements
5. Cash Flow Statement
COMPARATIVE FINANCIAL STATEMENTS
When financial statements figures for two or mote years are placed side-side to facilitate
comparison, these are called ‘comparative Financial Statements’. Such statements not only
show the absolute figures of various years but also provide for columns to indicate to increase
ort decrease in these figures from one year to another. In addition, these statements may also
show the change from one year to another on percentage form. Such cooperative statements
are of great value in forming the opinion regarding the progress of the enterprise.
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PURPOSE OR UTILITY OR IMPORTANCE OF COMPARATIVE STATEMENTS
1. To make the Data simpler and more understandable
2. To indicate the Trend
3. To indicate the strong points weak points of the concern
4. To compare the firms performance with the average performance of the industry
5. To help in forecasting
FORMS OF PRESENTING COMPARATIVE STATEMENTS

1. To show only the absolute data of various items or in other words to show only rupee
amounts of various items.
2. To show the increases and decreases in data in terms of money values
3. To show the increases and decreases in data in terms of percentages
4. Comparison expressed in ratios
5. Use of cumulative figures and averages
COMPARATIVE BALANCE SHEET

The Comparative Balance Sheet as on two or more different dates can be prepared to show
the increase or decrease in various assets, liabilities and capital. Such a comparative Balance
Sheet is very useful in studying the trends in a business enterprise.
ADVANTAGES OF COMPARATIVE BALANCE SHEET
1. Helpful for comparison.
2. Helpful in knowing changing in the size of items.
3. Helpful in knowing trends.
4. Link between income statement and Balance sheet
COMPARATIVE PROFIT & LOSS ACCOUNT

Profit and loss account shows the net profit or net loss of a particular year whereas
comparative profit and loss account for a number of years provides the following information
1. Rate of increase or decrease in gross profit.
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2. Rate of increase or decrease in operating profit.
3. Rate of increase or decrease in cost of goods sales
4. Rate of increase or decrease in net profit
5. Rate of increase or decrease in sales.
TREND ANALYSIS
Trend percentage are very useful is making comparative study of the financial statements for
a number of years. These indicate the direction of movement over a long tine and help an
analyst of financial statements to form an opinion as to whether favorable or unfavorable
tendencies have developed. This helps in future forecasts of various items.
For calculating trend percentages any year may be taken as the ‘base year’. Each item of
bease year is assumed to be equal to 100 and on that basis the percentage of item of each year
calculated.
1.20 RATIO ANALYSIS

Absolute figures expressed in financial statements by themselves are meaningfulness. These
figures often do not convey much meaning unless expressed in relation to other figures.
Thus, it c an be say that the relationship between two figures, expressed in arithmetical terms
is called a ratio.
“According to R.N. Anthony.”

“A ration is simply one number expressed in terms of another. It is found by
dividing one number into the other.”
TYPES OF RATIOS
 Proportion or Pure Ratio or Simple ratio.
 Rate or so many Times.
 Percentage
 Fraction.
OBJECTS AND ADVANTAGES OR USES OF RATIO ANALYSIS
 Helpful in analysis of financial statements.
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 Simplification of accounting data.
 Helpful in comparative study.
 Helpful in locating the weak spots of the business.
 Helpful in forecasting
 Estimate about the trend of the business
 Fixation of ideal standards
 Effective control
 Study of financial soundness.
1.21 CLASSIFICATION OF RATIOS

In view of the financial management or according to the tests satisfied, various ratios have
been classifieds as below
I. Liquidity Ratios: These are the ratios which measure the short-term solvency or
financial position of a firm. These ratios are calculated to comment upon the short-term
paying capacity of a concern or the firm’s ability to meet its current obligations.
II. Long –Term Solvency and Leverage Ratios : Long-term solvency ratios convey a
firm’s ability to meet the interest cost and repayment schedules of its long-term
obligation e.g. Debit Equity Ratio and Interest Coverage Ration. Leverage Ratios.
III. Activity Ratios: Activity ratios are calculated to measure the efficiency with which
the resource of a firm have been employed. These ratios are also called turnover ratios
because they indicate the speed with which assets are being turned over into sales e.g.
debtors turnover ratio.
IV. Profitablity Ratios: These ratios measure the results of business operations or overall
performance and effective of the firm e.g. gross profit ratio, operating ratio or capital
employed. Generally, two types of profitability ratios are calculated.
(a) In relation to Sales, and
(b) In relation in Investment
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FUNCTIONAL CLASSIFICATION IN VIEW OF FINANCIAL

MANAGEMENT OR CLASSIFICATION
ACCORDING TO TESTS
Liquidity Ratios Long-term Solvency Activity Ratios Profitability Ratios

and Leverage Ratios
(A) 1. Current Ration Financial Operating 1. Inventory Turnover (A) In Relation to Sales.
2. Liquid Ration (Acid) Composite Ratio. 1. Gross Profit Ratio.
Test or Quick Ratio. 2. Debtors Turnover 2. Operating Ratio.
3. Absolute liquid or 3. Fixed Assets 3. Operating Profit Ratio.
Cash Ratio. 1. Debt. Equity Turnover Ratio 4. Net Profit Ratio.
4. Internal Measure Ratio 4. Total Asset 5. Expenses Ratio
(b) 1. Debtors Turnover 2. Debt to Total Turnover Ratio (B) In relation to investments
Ratio Capital Ratio 5. Working Capital 1. Return on Investments.
2. Creditors Turnover 3. Interest Turnover Ratio. 2. Return on capital.
Ratio Coverages 6. Payables Turnover 3. Return on Equity Capital.
3. Inventory Turnover 4. Cash Flow/ Ratio 4. Return on total Resources
Ratio Debt 7. Capital Employed 5. Earning per share.
5. Capital Gearing Turnover 6. Price Earning Ratio.
Show the proportions of debt and equity in financing of the firm. These ratios measure the
contribution of financing by owner as compared to financing by outsiders. The leverage ratios
can further be classified as: (i) Financial Leverages, (ii) Operating Leverage, (iii) Composite
Leverages
1.22 CASH-FLOW STATEMENT

A cash – flow statement is a statement showing inflows (receipts) and outflows (payments) of
cash during a particular period. In other words, it is a summary of sources and applications of
each during a particular span of time.
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JUSTIFICATION OF THE STUDY

Financial Statements are prepared primarily for decision-making. They play a dominant role
in setting the framework of managerial decisions. But the information in the financial
statement is not an end in itself as no meaningful can be drawn from these statements alone.
The information provided in the financial statement is of immense use in making decisions
through analysis and interpretation of financial statements. The financial analysis is the
process of identifying the financial strength and weakness of the firm by properly
establishing relationship between the items of the balance sheet and P&L A/C.There are
various methods or techniques used in analyzing financial statement such as comparative
statement, trend analysis, common size statement, schedule of changes in working capital,
fund flow and cash flow analysis, cost volume profit analysis and “RATIO
ANALYSIS”.Ratio analysis is one of the most powerful tool of financial analysis. It is a
process of establishing and interpreting various ratios that the financial statements can be
analysed more clearly and decisions made from such analysis.Just like a DOCTOR examines
his patient by recording his body temperature, blood pressure etc before making his
conclusion regarding the illness and before giving his treatment, a financial analyst analysis
the financial statement with various tools of analysis before commenting upon the financial
health or weaknesses of an enterprise.The purpose of financial analysis is to diagnose the
information contained in financial statements so as to judge the profitability and financial
soundness of the firm. Financial statement analysis is an attempt to determine the significance
and meaning of financial statement data so that forecast may be made of the future earning,
ability to pay interest and debt maturities and profitability of a sound dividend policy.A
financial ratio is the relationship between two accounting figures expressed mathematically
ratio provide clues to the financial position of the concern. These are the pointers and
indicators of financial strength, soundness, position or weakness of an enterprise. One can
draw conclusions about the exact financial position of a concern with the help of ratios.
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SWOT ANALYSIS
STRENGHTS :
* It has an extensive distribution network comprising of 319 branches in 166 cities &
one international office in Dubai this provides a competitive edge over the
competitions.
* The Bank has a strong retail depository base & has more than million customers.
* Bank boasts of a strong brand equity.
* ISO 9001 certification for its depository & custody operations & for its backend
processing of retail operation & direct banking operatiosn.
* The bank has a near competitive edge in area of operations.
* The bank has a market leader in cash settlement service for the major stock exchanges
in its country.
* HDFC Bank is one of the largest private sector bank working in India.
* It has a highly automated environment in terms of information technology &
communication system.
* Infrastructure is best.
* It has many innovative products like kids Advantage scheme, NRI services.
WEAKNESS :
* Account opening and delivery of cheque book take comparatively more time.
* Lack of availability of different credit products like CC Limit, Bill discounting
facilities.
OPPORTUNITY :
* Branch expansion
* Door step services
* Greater liberalization in foreign ownership via FDI in Indian Pvt. Sector Banks.
* CC/ OF Facilities.
* Infrastructure improvements & better systems for trading & settlement in the govt.
securities & foreign exchange markets.
THREATS:
* The bank has started facing competition from players like SBI, PNB Bank in the
finance market itself. This reduce the profit margins in the future.
* Some Pvt. Banks have 7 days banking.
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CHAPTER II
2.1 RESEARCH METHODOLOGY
The procedure adopted for conducting the research requires a lot of attention as it has direct
bearing on accuracy, reliability and adequacy of results obtained. It is due to this reason that
research methodology, which we used at the time of conducting the research, needs to be
elaborated upon. Research Methodology is a way to systematically study and solve the
research problems. If a researcher wants to claim his study as a good study, he must clearly
state the methodology adapted in conducting the research the research so that it way be
judged by the reader whether the methodology of work done is sound or not.
The Research Methodology here includes.

1. Meaning of Research.
2. Research Problem.
3. Research Design.
4. Sampling Design.
5. Data Collection method.
6. Analysis and interpretation of Data.
2.2 Meaning Research:

Research is defined as “a scientific and systematic search for pertinent information on a
specific topic”. Research is an art of scientific investigation. Research is a systematized
effort to gain now knowledge. It is a careful investigation or inquiry especially through
search for new facts in any branch of knowledge. Research is an academic activity and this
term should be used in a technical sense. Research comprises defining and redefining
problems, formulating hypothesis or suggested solutions. Making deductions and reaching
conclusions to determine whether they if the formulating hypothesis. Research is thus, an
original contribution to the existing stock of knowledge making for its advancement. The
search for knowledge through objective and systematic method of finding solutions to a
problem is research.
2.3 Research Problem

The first step while conducting research is careful definition of Research Problem. “To ERR
IS THE HUMAN” is a proverb which indicates that no one is perfect in this world. Every
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researcher has to face many problems which conducting any research that’s why problem
statement is defined to know which type of problems a researcher has to face while
conducting any study. It is said that,
“Problem well defined is problem half solved.”
Basically, a problem statement refers to some difficulty, which researcher experiences in the
context of either a theoretical or practical situation and wants to obtain the solution for the
same.
The problem statement here is:
2.4 Research Design

A research designs is the arrangement of conditions for collection and analysis data in a
manner that aims to combine relevance to the research purpose with economy in procedure.
Research Design is the conceptual structure with in which research in conducted. It
constitutes the blueprint for the collection measurement and analysis of data. Research
Design includes and outline of what the researcher will do form writing the hypothesis and it
operational implication to the final analysis of data. A research design is a framework for the
study and is used as guide in collection and analyzing the data. It is a strategy specifying
which approach will be used for gathering and analyzing the data. It also include the time and
cost budget since most studies are done under these two cost budget since most studies are
done under theses tow constraints.
The design is such studies must be rigid and not flexible and most focus attention on the
following.
1. What is the study about?
2. Why is the study being made?
3. Where will the study be carried out?
4. What type of data is required?

5. Where can be required data be found?
6. What period of time will the study include?
7. What will be sample design?
8. What techniques of data collection will be used?
9. How will the data be analyzed?
10. In what style will the report be prepared?
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2.5 TYPES OF RESEARCH DESIGN:
 EXPERIMENTAL RESEARCH DESIGN

 EXPLORATORY RESEARCH DESIGN
 DESCRIPTIVE& DIAGNOSTIC RESEARCH
Exploratory Research Design: This research design is preferred when researcher has a
vague idea about the problem the researcher has to explore the subject.
Experimental Research Design – The research design is used to provide a strong basis for
the existence of casual relationship between two or more variables.
Descriptive Research Design – It seeks to determine the answers to who, what, where, when
and how questions. It is based on some previous understanding of the matter.
Diagnostic Research Design It determines the frequency with which something occurs or its
association with something else.
Research Design Used in this Project

Research Design chosen for this study is Descriptive Research Design. Descriptive study is
based on some previous understanding of the topic. Research has got a very specific objective
and clear cut data requirements.
Sampling Design
Sampling is necessary because it is almost impossible to examine the entire parent population
(i.e. the entire universe) various factors such as time available cost, purpose of study etc.
make it necessary for the researchers to choose a sample. It should neither be too small nor
too big. It should be manageable. THE sample size of past 3 years is taken for present study
due to time limitation.
DATA COLLECTIONS
The process of data collection begins after a research problem has been defined and research
design ahs been chalked out. There are two types of data –
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2.6 METHODS OF PRIMARY DATA
 OBSERVATION METHOD
 INTERVIEW METHODS
 QUESTIONAIRE METHOD
 SCHEDULE METHOD
PRIMARY DATA -
It is first hand data, which is collected by researcher itself. Primary data is collected by
various approaches so as to get a precise, accurate, realistic and relevant data. The main tool
in gathering primary data was investigation and observation. It was achieved by a direct
approach and observation from the officials of the company.
SECONDARY DATA - it is the data which is already collected by someone else.

Researcher has to analyze the data and interprets the results. It has always been important for
the completion of any report. It provides reliable, suitable, adequate and specific knowledge.
I took data comprise annual reports and post records. Bank has provided me annual reports
from 2004-05 to 2017-08 by help of which, I prepared my report.
The valuable cooperation extended by staff members contributed a lot to fulfill the
requirements in the collection of data in order to complete the project. Various statistical
tools are applied depending on the research problem. In this study ratio analysis, comparative
financial statements analysis, common size statements and Trend Analysis has been used for
analyzing and interpreting the result.
2.7 OBJECTIVE OF THE STUDY
Objectives are the ends that states specifically how goal be achieved. Every study must have
an objective for which all the efforts have been done. Without objective no research can be
conducted and no result can be obtained. On the basis of objective all the research process is
followed. Objectives are the main aspect of every study. The objective of the study gives
direction to go through the research problem. It guides the researcher and keeps him on track.
I have two objectives regarding my research project. These are shown below :-
1. Primary objective
2. Secondary objective
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1. Primary objective :-
1) To study the software used in HDFC Bank
2) To analyse the financial statements of the corporation to it’s
true financial position by the use of ratios
2. Secondary objective :-
1) To find out the shortcomings in HDFC Bank

2) To see whether HDFC is going well or not in different areas
3) To inform the management about the financial condition of HDFC
4) To inform the investor, enabling them to take the investment
decision.
2.8 LIMITATION OF RATIO ANALYSIS
 False accounting data gives false ratios
 Comparisons not possible of different firms adopt different accounting

policies.
 Ratio analysis becomes less effective due to price level

change
 Ratios may be misleading in the absence of absolute data.
 Limited use of a single Ratio.
 Window-Dressing
 Lack of proper standards.
 Ratio alone are not adequate for proper conclusions
 Effect of personal ability and bias of the analyst.
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CHAPTER III
3.1 Literature Review

Debasish (2003), in his research paper titled, “Prime Discriminants of Profitability in
the Indian Commercial Banks” tried to develop a discriminant function for bank
profitability using the most significant ratios/parameters. The validity of the model
was assessed by calculating the analysis sample (78 banks). The hit ratio for analysis
sample was 49/78 = 62.82 per cent. The efficiency was judged on four major
parameters: Liquidity of the bank, Return performance, Expense parameters, and
Operational efficiency. As per step-wise discriminant analysis, out of various
measures, i.e., smallest Ratio, Mahalnobis Distance, and Wilk Lambda, the study
employs Wilk Lambda with minimum value required for entry as 3.84 and maximum
value for removal of the independent variable as 2.71. At each step the variable that
minimizes the overall Wilk Lambda is entered. The computation ends when any
further entry of variables fails to minimize the Wilk Lambda.
Krishana et al. (2003), in their research paper, “Performance of Regional
Rural Banks in Karnataka − An Application of Principal Components and
Discriminant Function Analysis” tried to identify the important discriminating
characteristics of the two identified groups of Regional Rural Banks in the state of
Karnataka. They used the discriminate function approach and sought to obtain linear
discriminate coefficient, such that the squared difference between the mean Z-score
for the one group and the mean Z-score for the other group was as large as possible in
relation to the variation of scores within the groups. They concluded that the number
of employees per branch had maximum discriminating power to the extent of
55%, followed by amount of borrowings (18%), credit deposit ratio (14%) and
income to expenditure ratio (13%).
Nair (2004) in his paper titled, “Village Co-operatives − A Century of Service to the
Nation” observed that by 2004, the formal institutionalized co-operative sector
completed a century of its service to the nation. Analysing the progress of Primary
Agricultural Co-operative Societies, he observed that during the half century spread
over 1951-2001, the PACs made rapid strides in membership, owned funds, deposits,
and channelising production credit for farmers. They were versatile in the sense; they
can take up any type of rural financing and rural service activity at short notice and at
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lowest transaction cost. But besides excelling on all fronts, the co-operatives are
feeling handicapped due to mounting NPAs. The overdue loans of PACs increased to
`95,899.60 million in 2000-01 as compared to `63.79 million indicated in 1950-51,
thereby subjecting them to a sustained and systematic process of reviews,
reorganisation and restructuring.
Carlos et al. (2015) studied productivity changes in European co- operative banks
and concluded that an effective use of technology between 1996 and 2003 had
increased productivity for majority of the European co-operative banks under study.
An appropriate policy recommendation by the researchers was for larger or
centralized co-operative banks to develop and franchise technology to smaller co-
operatives.
NABARD (2015) conducted a study “Development in Co-operative Banking”, to
evaluate the financial performance of 1872 urban co-operative banks and 1, 06,919
rural co-operative credit institutions. The findings of the study revealed that in all
financial institutions in the rural sector (SCBs, DCCBs, SCARDBS, and PCARDBS),
percentage of NPAs in the substandard category declined, while it had increased in
doubtful category. NABARD was worried about deterioration in asset quality of these
banks. However, all the institutions were able to meet the necessary
provisioning requirements. It further highlighted that NPAs ratio in DCCBs
varied significantly across the states from 5% to 68% at the end March 2004.
Only in four states(Haryana, Himachal Pradesh, Punjab and Uttranchal), the NPA
ratio was less than 10%. NABARD suggested that co-operative banks should
implement One Time Settlement system (OTS) and refer small value advances to Lok
Adalats and high value advances to Debt Recovery Tribunals (DRTS). Further,
State Governments were requested to help co-operative banks in reducing NPAs
by taking special recovery derives.
Mr. Joseph (2015) studied the performance of Lead Bank Scheme in Kerala, the
mobilisation of bank deposits in Kerala by commercial Banks. He observed that
competition from co-operative and other institutions was the main obstacles to
achieving the deposit mobilisation target. The popularity of private financial
institutions was due to their personal relations with local people. 56.4 percent of the
customers (self employed) surveyed had their first percent dealing with banks for
taking loans.
Page 39
Mr. Laurent (2016) studied the perception of customers on five competing banks in a
medium size city in UK for private deposits. He observed that these five banks
differed from each other as a result of oligopolistic market situation only on seven
attributes i.e., friendliness, quality of service, community spirit, modem facilities,
convenience, range of services and ownership. These seven attributes accounted for
91 percent of the overall differences between the five banks. The study revealed that
on the basis of perception of overall image of the five banks relative to each other,
there existed the different market segments.
K. Avadhani (2017) studied the performance of rural branches of some commercial
banks in order to identify the factors influencing deposit mobilisation in rural areas in
different states. He came out with the opinion that there existed sufficient relationship
between the deposits of a rural branch and its age. The growth of deposits is at a faster
rate in the first six years and tapers off subsequently. The growth rate in deposits of
commercial banks cannot be explained in terms of price differentials as co-operatives
offer high rates of interest. Therefore product differentials would offer a better
explanation of the disparate growth rates in deposits.
Mr. Nag and Mr. Shivaswamy (2018) studied the comparative performance of
foreign and Indian banks and observed that there was a distinct preference of bank
customers to bank with foreign banks notwithstanding the fact that foreign banks
stipulate relatively high levels of minimum amounts to be maintained as deposits and
charge relatively high interest rates and service costs. In respect of deposit supplies,
their strategy had been to procure from a segmented part of the total supplies of
deposits of large size from a relatively small number of depositors. Large accretion of
non-resident deposits with foreign banks was mainly because of the familiarity of the
names of foreign banks operating in India to banks abroad.
Raju (2009) studiedthe levels of savings and the manner of their distribution among
different physical and financial assets of household sector in Kerala and identified the
factors influencing their savings behaviour. He found that major portions of the
savings of households in Kerala were in the form of financial savings and that too in
the form of bank deposits.
Subramanian (2010) analyzedthe empirical analysis on dis-intermediation from the
household sectors portfolio preferences point of view based on demand model of
five assets including bank deposits The study revealed that the household sectors
Page 40
preferences between bank deposits and lending to private corporate sector tended to
be in favour of the latter and against the former.
Nalini (2011) studied on the impact of mutual funds on the deposit mobilisationof
commercial banks examined the awareness level and adoption level of mutual funds
among household investors in Thiruvananthapuram district. She found that the advent
of mutual funds has brought in expected changes in the growth of bank deposits and
their ownership pattern, but the changes were not of a significant magnitude.
Satyanarayane (1996) studied productivity beyond per employee business, and

suggested a model to measure overall efficiency of the banks. He emphasised that the
size of the bank should be squared off while measuring efficiency of bank. According
to him, Productivity of bank = (Average index market share of all the output
factors/Average index market share of all the input factors) X 100 where, output
factors were deposits, non-deposit working funds, loans & advances, investments,
interest spread, non-interest income and the net profit. The input factors were network
of branches, numb of staff, wage bill, non-wage operating expenses, etc. In order to
facilitate comparison of one bank with the other, irrespective of size, the market share
of each factor in percentage terms has to be taken into account instead of absolute
levels.
Niranjanraj and Chitanbaram (2000), in their study titled, “Measuring the

Performance of DCCBs” observed that suitable models should be developed to
evaluate the performance of co-operative banks. They considered 23 parameters
falling into four major groups for measuring the performance of District Central Co-
operative Banks and assigned appropriate weights to each parameter. They ranked 14
District Central Co-operative Banks of Kerala based on composite marks. They
suggested that performance of co-operative banks should not be measured in terms of
financial/ economic achievements only but their performance as co-
operative organizations (social achievements) should also be evaluated.
Satyasai and Badatya (2000) conducted a study regarding restructuring Rural Credit
Co-operative Institutions. They analysed performance of rural co-operative credit
Page 41
institutions on the basis of borrowings and lending operations, cost structure, financial
viability, etc. and found that co-operative system, in general, had failed to perform its
functions properly. They advised the co-operative banks to diversify their
business and also to overcome internal (rising transaction cost, declining
business level, mismanagement of overdues) and external (excessive
bureaucratization, politicization) weaknesses.
Verma and Reddy (2000), conducted a study analyzing the causes Overdues in Co-
operatives under SWOOD, to assess recovery and NPAs position in these banks.
Policy distortions in liberalized economy and inefficient management were identified
as main reasons for poor recovery. Misutilisation of credit, political interference at
every level, successive crop failures, non-remunerative prices of agriculture produce,
inadequate income and natural calamities, were some other factors, which affect the
working culture of co-operative banks considerably. To improve the working of these
banks, the study suggested that available credit size should be need based and
production-oriented. Effective supervision of loans to minimize misutilisation
and close social relations with loanee members were two other suggestions to improve
the profitability and productivity of these banks.
Das (2001) in his study titled, “A Study on the Repayment Behaviour of

Sample Borrowers of Arunachal Pradesh State Co-operative Apex Bank Limited”,
examined the repayment behaviour of loanees, covering a period of 1994-95 to 1998-
99. On the basis of primary data collected, researchers concluded that incidence of
default was highest among borrowers for agriculture allied activities loans.
Agriculture loanees, horticulture loanees, small business loanees and service sector
loanees were ranked 2nd, 3rd, 4th and 5th in a descending order on the basis of
percentage defaulters. Study further revealed that the number of defaulter loanees was
highest in government sponsored schemes.
Page 42
CHAPTE IV
4.1 RATIO ANALYSIS
DATA ANALYSIS AND INTERPERTATION
4.1The Ratio Analysis

Ratio analysis involves establishing a comparative relationship between the components
of financial statements. It presents the financial statements into various functional areas,
which highlight various aspects of the business like liquidity, profitability and assets
turnover, financial structure. It is a powerful tool of financial analysis, which recognizes a
company’s strengths as well as its potential trouble spots.
It can be further classified as in different categories of Ratio.
 Liquidity Ratios
 Profitability Ratios
 Asset Turnover Ratios
 Finance Structure Ratios
 Valuation Ratios
Liquidity Ratio
Liquidity refers to the existence of the assets in the cash or near cash form. This ratio
indicates the ability of the company to discharge the liabilities as and when they mature.
The financial resources contributed by owners or supplemented by outside debt primarily
come in the cash form as under in the balance sheet form.
The following Liquidity Ratios are calculated for the company.
 Current Ratio
 Quick Ratio
 Net Working Capital
Page 43
1. Current Ratio
The current ratio is a financial ratio that shows the proportion of a company's current assets to
its current liabilities. The current ratio is often classified as a liquidity ratio and a larger
current ratio is better than a smaller one. However, a company's liquidity is dependent on
converting the current assets to cash in time to pay its obligations.
Curent Ratio = Curent Assets
CurentLabilités
Table 1
HDFC BANK
Current Ratio
Year 2018 2017 2016
Current Assets 6907.52 6388.19 5343.70
Current Liabilities 12243.49 10962.65 8838.78
Ratios 0.56 0.58 0.68
SBI BANK
Current Ratio
Year 2018 2017 2016
Current Assets 10814.10 8804.63 8841.23
Ratios 2.82 2.60 1.13
Source: Done by researcher
Page 44
Graph 1
Chart Title
3
2.5
1.5
0.5
0
HDFC Ratios SBI Ratios
2018 2017 2016
Interpretation
 Current ratio is always 2:1 it means the current assets two time of current liability.
 After observing the figure the current ratio is fluctuating.
 In the year 2018 ratio has been decreased
 Company’s current ratio is increasing from the year 2017; this signifies decreasing
short term solvency.
 Current Ratio can be improved by having more current assets or by reducing current
liabilities.
INTER FIRM COMPARISION

 The current ratio of the both company is increasing from last 3 years the ratio of the
company has been increased from 2016 to 2018
 The ratio of HDFC BANK has decreased from last 3 years and is less than the ratio of
SBI BANK
2. Quick Ratio
Page 45
The quick ratio is an indicator of a company’s short-term liquidity position and measures a
company’s ability to meet its short-term obligations with its most liquid assets. Since it
indicates the company’s ability to instantly use its near-cash assets (that is, assets that can be
converted quickly to cash) to pay down its current liabilities, it is also called as the acid test
ratio. An acid test is a quick test designed to produce instant results—hence, the name.
Quick Ratio = Quick Assets

Quick Liabilities
Table 2
HDFC BANK
Quick Ratio
Year 2018 2017 2016
Quick Assets 4771.88 4079.91 3211.54
Quick
Liabilities 12243.49 10962.65 8838.78
Ratios 0.38 0.37 0.36
SBI BANK
Quick Ratio
Year 2018 2017 2016
Quick Assets 6769.4 5319.35 5033.18
Quick
Liabilities 3832.22 3373.70 7776.05
Ratios 1.76 1.57 0.64
Graph 2
Page 46
Chart Title
2
1.8
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
HDFC BANK Ratios SBI Ratios
2018 2017 2016
Interpretation
 Standard Ratio is 1:1
 Company’s Quick Assets are less than Quick Liabilities in recent year.
 The company have immediatesolvency as the ratios of the company are more than
standard ratio in 2017 and 2018.
 The quick ratio is at its highest in year 2018, while it was lowest in year 2016
 The quick ratio of the company was not so good in 2016 but it has been seen that it
has increased in 2018
 The ratio of HDFC BANK is constant for past 3 years and as of SBI BANK seems to
be increased from 2016 to 2018
.
Page 47
3. Cash Ratio
The cash ratio is the ratio of a company's total cash and cash equivalents to its current
liabilities. The metric calculates a company's ability to repay its short-term debt with readily-
liquidated cash resources. This information is useful to parties such as creditors when they
decide how much debt, if any, they would be willing to extend to the asking party. The cash
ratio is generally a more conservative look at a company's ability to cover its liabilities than
many other liquidity ratios because other assets, including accounts receivable, are left out of
the equation.
Cash Ratio = Cash & Bank Balance
Current Liabilities
Table 3
HDFC BANK
Cash Ratio
Year 2018 2017 2016
Cash and Bank Balance 155.27 170.28 169.39
Ratios 0.012 0.015 0.019
SBI BANK
Cash Ratio
Year 2018 2017 2016
Cash and Bank Balance 965.61 624.21 871.40
Ratios 0.25 0.18 0.11
Page 48
Graph 3
Chart Title
0.3
0.25
0.2
0.15
0.1
0.05
0
2018 2017 2016
Interpretation
 Standard Ratio is 1:1
 Company’s Quick Assets are less than Quick Liabilities in recent year.
 The company have immediatesolvency as the ratios of the company are more than
standard ratio in 2017 and 2018.
 The quick ratio is at its highest in year 2018, while it was lowest in year 2016
 Cash ratio of HDFC BANK it seems not so be good as it has been constant since last
3 years no growth has been seemed from last 3 year in the cash ration
 The cash ratio of SBI BANK has been increasing from 2016 to 2018
Page 49
4. Interest Coverage Ratio

The interest coverage ratio is a debt ratio and profitability ratio used to determine how easily
a company can pay interest on its outstanding debt. The ICR is commonly used by lenders,
creditors, and investors to determine the riskiness of lending capital to a company. The
interest coverage ratio is also called the “times interest earned” ratio.
Interest Coverage Ratio = EBIT
INTEREST
TABLE 4
HDFC BANK
Interest Coverage
Ratio
Year 2018 2017 2016
EBIT -88.23 146.69 390.69
INTEREST 388.31 223.57 530.64
Ratios -0.22 0.66 0.73
SBIBANK
Interest Coverage
Ratio
Year 2018 2017 2016
EBIT 1787.1 1389.01 1925.45
INTEREST 114.23 159.38 206.63
Ratios 15.64 8.71 9.31
Page 50
GRAPH 4
Chart Title
18
16
14
12
10
0
-2
2018 2017 2016
Interoperation
 The ratio isnegative in the year 2018.
 This shows that the company is not in progress since last one year.
 Company had a better ratio in year 2016

 The above ratio of both the companies has decreasing from last 3years
 The ratio of HDFC BANK is in negative as compare to that of SBI BANK has growth
in the ratio
Page 51
5. Proprietary Ratio
Proprietary ratio (also known as Equity Ratio or Net worth to total assets or shareholder
equity to total equity). Establishes relationship between proprietor's funds to total resources
of the unit. Where proprietor's funds refer to Equity share capital and Reserves, surpluses and
Tot resources refer to total assets.
Proprietary Ratio = Proprietary Fund
Total Assets
TABLE 5
HDFC BANK
Proprietary Ratio
Year 2018 2017 2016
Proprietary Fund 19970.10 21012.47 2148.09
Total Assets 12340.18 11527.32 9679.6
Ratios 1.60 1.82 2.21
SBI BANK
Proprietary Ratio
Year 2018 2017 2016
Proprietary Fund 14229.19 12573.66 11516.22
Total Assets 18930.86 17282.92 17565.92
Ratios 0.75 0.72 0.65
Page 52
GRPAH 5
Chart Title
2.5
1.5
0.5
0
2018 2017 2016
Interoperation
 The ideal ratio is 1.60
 By observing the ratios the company shows high financial involvement of the owners
and therefore low financial leverage and risk.
 The ratios of the company are fluctuating.
 The ratio is at peak in the year 2016
 The above ratio of the company seems to be good in case of HDFC BANK and has a
down fall in SBI BANK proprietary ratio
 So here the ratio of both companies is equal
Profitability Ratios
Page 53
A company should earn profits to survive and grow over a long period of time. It would be
wrong to assume that every action initiated by management of company should be aimed at
maximizing profits, irrespective of social as well as economic consequences. It is a fact that
sufficient must be earned to sustain the operation of the business to be able to obtain funds
from investors for expansion and growth and to contribute towards the responsibility for the
welfare of the society in business environment and globalization. The profitability ratios are
calculated to measure the operating efficiency of the company.
The following Profitability Ratios are calculated for the company.
• Gross Profit Ratio
• Operating Profit Ratio
• Net Profit Ratio
• Rate of Return on Investment
• Rate of Return on Equity
Page 54
6. NET PROFIT RATIO

Net profit ratio (NP ratio) is a popular profitability ratio that shows relationship between net
profit after tax and net sales. It is computed by dividing the net profit (after tax) by net sales.
The relationship between net profit and net sales may also be expressed in percentage form.
When it is shown in percentage form, it is known as net profit margin. The formula of net
profit margin is written as follows:
Net Profit Ratio = Net profit x 100
Net sales
TABLE 6
HDFC BANK
Net Profit Ratio

Year 2018 2017 2016
Net Profit 494.59 22.84 1073.36
Net Sales 7923.84 7683.96 7614.46
Ratios -6.2 0.29 -14.09
SBI BANK
Net Profit Ratio

Year 2018 2017 2016
Net Profit 1413.31 1013.38 1395.44
Net Sales 15155.71 14394.29 13790.10
Ratios 9.23 7.04 10.11
Page 55
GRAPH 6
Chart Title
15
10
0
-5
-10
-15
-20
2018 2017 2016
Interpretation
 After observing the figure the ratio is fluctuating.
 Though the company’s sale is continuously decreasing but the net profit is not so
much increased.
 Ratio has been decreasing since last three years there is no growth in the ratio
 The overall ratio is showing not so good position of the company.
 The ratio can be improved by increasing sales and controlling the cost of goods sold
and operating expenses.

 The net profit of HDFC BANK Company is being decreasing from past 3 years and
whereas the net profit of SBI BANK has also decreased from 2016 to 2018.
 So net profit ratio is not performing well of both the companies
Page 56
7. Operating Profit Ratio

Operating profit ratio establishes a relationship between operating Profit earned and net
revenue generated from operations (net sales). Operating profit ratio is a type of profitability
ratio which is expressed as a percentage.Net sales include both Cash and Credit Sales, on the
other hand, Operating Profit is the net operating profit i.e. the Operating Profit before interest
and taxes. Operating Profit ratio helps to find out Operating Profit earned in comparison to
revenue earned from operations
Operating Profit Ratio = Operating profit x 100
Net sales
TABLE 7
HDFC BANK
Operating Profit
Year 2018 2017 2016
Operating Profit 123.02 113.97 434.98
Net sales 7923.84 7683.96 7614.46
1.55 1.55 1.48 -5.7
SBI BANK
Operating Profit
Year 2018 2017 2016
Operating Profit 2826.38 2775.79 2479.67
Net sales 15155.71 14630.24 13790.10
Ratio 18.64 16.92 17.98
GRAPH 7
Page 57
Chart Title
20
15
10
0
-5
-10
2018 2017 2016
Interpretation
 After observing the figure the ratio is fluctuating.
 The ratio is lowest in the year 2017 and it is at peak in year 2018
 The company has also negative in the year 2016 , which shows company growth has
been not so good in year 2016

 The net profit of HDFC BANK Company is being decreasing from past 3 years and
whereas the net profit of SBI BANK has also decreased from 2016 to 2018.
 So net profit ratio is not performing well of both the companies
Page 58
. RETURN ON INVESTMENT
Return on investment (ROI) measures the gain or loss generated on an investment relative to
the amount of money invested. ROI is usually expressed as a percentage and is typically used
for personal financial decisions, to compare a company's profitability or to compare the
efficiency of different investments.
Return on Investment = EBIT x 100
Total Assets
TABLE 8
HDFC BANK
Return on
Investment
Year 2018 2017 2016
EBIT -88.23 146.69 390.69
Total Assets 33924.37 33869.27 34189.93
Ratios -260.07 433.10 1.142
SBI BANK
Return on
Investment
Year 2018 2017 2016
EBIT 1787.1 1389.01 1925.45
Total Assets 22860.55 21037.07 21128.18
Ratios 7.81 6.60 9.11
Page 59
GRAPH 8:
Chart Title
500
400
300
200
100
0
-100
-200
-300
2018 2017 2016
Interpretation
 In the year 2017 Rate of Return on Investment is at peak as compared to all years.
 Ratio is decreasing from 2018 at a decreasing rate because of assets increased
compared to sales
 It shows a recession in the year 2018

•Sunpharma Company is being decreasing from past 3 years and whereas the net profit of
SBI BANK has also decreased from 2016 to 2018.
• The ratio is decreasing due to the less returns the company has the investment are more and
returns are less.
Page 60
9. Fixed Assets Turnover

The fixed asset turnover ratio (FAT) is, in general, used by analysts to measure operating
performance. This efficiency ratio compares net sales (income statement) to fixed assets
(balance sheet) and measures a company’s ability to generate net sales from its fixed-asset
investments, namely property, plant, and equipment (PP&E).
Fixed Assets Turnover Ratio = Net Sales
Fixed Assets
Table 9
HDFC BANK
Fixed Assets Turnover Ratio

Year 2018 2017 2016
Net Sales 7923.84 7683.96 7614.46
Fixed Assets 5432.66 5139.13 4335.90
Ratios 1.45 1.49 1.75
SBI BANK
Fixed Assets Turnover Ratio

Year 2018 2017 2016
Net Sales 15155.71 14394.29 13790.10
Fixed Assets 8116.76 8778.29 8724.69
Ratios 1.86 1.69 1.75
Page 61
GRAPH 9
Chart Title
2
1.8
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
HDFCRatios SBI Ratios
2018 2017 2016
Interpretation:-
 The graph indicates that the ratios are fluctuating.

 The ratio is at its peak in the year 2016
 The ratio is declining every year from 2017 to 2018.

 The above ratio of both the company is increasing from past 3years
 The ratio is highest of the both companies in year 2018
Page 62
10. WORKING CAPITAL TURNOVER

Working capital turnover is a ratio that measures how efficiently a company is using its
working capital to support a given level of sales. Also referred to as net sales to working
capital, work capital turnover shows the relationship between the funds used to finance a
company's operations and the revenues a company generates as a result.
Working Capital Turnover Ratio = Net Sales
Working Capital
TABLE 10
HDFC BANK
Working Capital
Turnover Ratio
Year 2018 2017 2016
Net Sales 7923.84 7683.96 7614.46
Working Capital -5335.97 -4574.46 2270.76
Ratios -1.48 -1.67 3.35
SBI BANK
Working Capital
Turnover Ratio
Year 2018 2017 2016
Net Sales 15155.7 14394.29 13790.10
Working Capital 6981.88 5430.93 1065.18
Ratios 2.17 2.65 12.94
Page 63
GRAPH 10
Chart Title
14
12
10
0
-2
-4
2018 2017 2016
Interpretation:
 The ratios of the company are fluctuating.
 The ratio is at its peak in the year 2016 and lowest in the year 2018.
 The efficiency of the company is low
 As the current liabilities of the company are more than the current assets so the
working capital of the company is in negative from last 2 years

• The above ratio of both the company is decreasing from past 3years in HDFC BANK.
• The above ratio was highest of SBI BANK ltd was in year 2016.
Page 64
11. CAPITAL TURN OVER RATIO

Capital turnover compares the annual sales of a business to the total amount of its
stockholders' equity. The intent is to measure the proportion of revenue that a company can
generate with a given amount of equity. It is also a general measure of the level of capital
investment needed in a specific industry in order to generate sales
Capital Turnover Ratio = Net Sales
Capital Employé
TABLE 11
HDFC BANK
Capital Turn Over Ratio
Year 2018 2017 2016
Net Sales 7923.84 7683.96 7614.46
Capital
Employed 6907.52 6388.19 53.43.70
Ratios 1.14 0.68 0.65
SBI BANK
Capital Turn Over Ratio
Year 2018 2017 2016
Net Sales 15155.71 14394.29 13790.10
Capital
Employed 14229.19 12543.66 11516.22
Ratios 1.07 1.15 1.19
Source: Done by researche
Page 65
GRAPH 11
Chart Title
14%
12%
10%
8%
6%
4%
2%
0%
-2% HDFC SBI
-4%
-6%
2018 2017 2016
Interpretation
 The ratios have a fluctuating trend
 The ratios indicate the efficiency of the company.
 The ratio is at peak in the year 2016 and lowest in the year 2018

 The above ratio of both the company is increasing from past 3years in HDFC BANK.
It was highest in 2018
 The above ratios constant in SBI BANK ltd.
Page 66
12. Debt-Equity Ratio

This ratio is only another form proprietary ratio and establishes relation between the outside
long term liabilities and owner funds. It shows the proportion of long term external equity &
internal Equities.
Debt Equity Ratio = Total Long Term debt
Shareholder equity
Table 12
SUNPHARMA
Debt Equity Ratio
Year 2018 2017 2016
Debt 1564.69 760.64 1929.2
Equity 239.93 239.93 240.66
Ratios 6.5 3.1 8.0
SBI BANK
Debt Equity Ratio
Year 2018 2017 2016
Debt 1564.69 760.64 1929.2
Equity 239.93 239.93 240.66
Ratios 6.5 3.1 8.0

Graph 12
Page 67
Chart Title
9
8
7
6
5
4
3
2
1
0
HDFC SBI
2018 2017 2016
Interpretation
 It shows companies accumulated more equity than required company has to refocus to
its strategic policies and plans and try to accumulate more debt funds in future so as to
make the balance between debt and equity.
 There is only current year ratio is not so sufficient.

• The above ratio has performing well in HDFC BANK from last 3years.
• The ratio of SBI BANK ltd has been decreasing.
Page 68
13. RETURN ON EQUITY

ROE is considered a measure of how effectively management is using a company’s assets to
create profits. ROE is expressed as a percentage and can be calculated for any company if net
income and equity are both positive numbers. Net income is calculated before dividends paid
to common shareholders and after dividends to preferred shareholders and interest to lenders.
Return on Equity = Profit after Tax x 100
Share Holder Funds
TABLE 13
HDFC BANK
Return on Equity
Year 2018 2017 2016
PAT -494.59 -22.84 -1073.36
SHF 19770.10 12543.66 11516.22
Ratios -2% 0% -4%
SBI BANK
Return on Equity
Year 2018 2017 2016
PAT 1413.31 1013.38 1395.44
SHF 14229.19 12543.66 11516.22
Ratios 9% 8% 12%
Page 69
GRAPH 13
Chart Title
14%
12%
10%
8%
6%
4%
2%
0%
-2% HDFC SBI
-4%
-6%
2018 2017 2016
Interpretation:
 Return of equity is in negative since last 3 years
 The returns on equity are decreasing from 2016, till year 2018.
 It shows that the business was not able to successfully utilize the resources provided
by its equity investors and the company’s accumulated loss in generating income

• The ratio has decreased from last 3 years and it is 0 in year 2017.
• The ratio of SBI BANK ltd seems to be good in compare of HDFC BANK.
Page 70
CHAPTER VI
CONCLUSION
Based on the study conducted it can be concluded that responsiveness, assurance and
reliability are the critical dimensions of service quality of HDFC bank and they are directly
related to overall service quality. The factors that may delight customers tend to be concerned
more with the intangible nature of the service, commitment, attentiveness, friendliness, care,
and courtesy.
The employees give prompt services, always are ready to answer the questions
and are trustworthy. The main sources of dissatisfaction appear to be cleanliness, up to date
technology modern equipments, and neatly dressed up employees. The Tangibility dimension
of service quality of HDFC bank is highly disappointing and serious steps are needed to be
taken to enhance this dimension. Customers of the bank are dissatisfied with the empathy
dimension. To satisfy these customers, the management can take some attempts, noted earlier
as recommendations.
The study brings about the areas which require urgent attention of the
employees, the management, and the policy makers of the industry. These are areas in which
customers are hugely dissatisfied with the services of the banks against their expectation.
This high degree of dissatisfaction resulting from the services received clearly questions the
design of services or subsequent response of the bank employees. These limitations are too
serious to be avoided as these question the front-line people dealing with the customers and
the approach of the management in taking customers seriously.
The management should understand the benefits of service quality. It include increased
customer satisfaction, improved customer retention, positive word of mouth, reduced staff
turnover, decreased operating costs, enlarged market share, increased profitability, and
improved financial
performance. In the days of intense competition, superior service is the only differentiator left
before the banks to attract, retain and partner with the customers. Superior service quality
enables a firm to differentiate itself from its competition, gain a sustainable competitive
advantage, and enhance efficiency. Thus, improving service quality leads to the customer
satisfaction and, ultimately, to customer loyalty.
Page 71
BIBLIOGRAPHY
References
Kotler Philip, marketing management, (Pearson education, 12th edition)

Malhotra K. Naresh, marketing research (An applied orientation), Research design,
(Prentice hall of India pvt. 5th edition)
Zeithmal V. A., Grembler D.D., Bitner M.j., and Pandit A.: Service Marketing Integrated
customer Focus across the Firm” (4th Edition)
M.K. Rampal : Service Marketing
Websites
www.hdfcbank.com
www.hdfcindia.com
www.wikipedia.org
www.marketresearch.com
Page 72
ANNEXURE
HDFC BANK
Standalone Balance ------------------- in Rs. Cr. -------------------
Sheet
Mar 18 Mar 17 Mar 16
12 mths 12 mths 12 mths
EQUITIES AND LIABILITIES
SHAREHOLDER'S FUNDS
Equity Share Capital 239.93 239.93 240.66
Total Share Capital 239.93 239.93 240.66
Reserves and Surplus 19,530.17 20,772.54 21,242.43
Total Reserves and Surplus 19,530.17 20,772.54 21,242.43
Total Shareholders’ Funds 19,770.10 21,012.47 21,483.09
Equity Share Application 0.00 0.00 0.67
Money
Share Capital Suspense 0.00 0.00 0.00
NON-CURRENT LIABILITIES
Long Term Borrowings 1,564.69 760.64 1,929.27
Deferred Tax Liabilities [Net] 0.00 0.00 0.00
Other Long Term Liabilities 0.91 0.68 13.57
Long Term Provisions 345.18 1,132.83 1,924.55
Total Non-Current Liabilities 1,910.78 1,894.15 3,867.39
CURRENT LIABILITIES
Short Term Borrowings 5,213.81 4,054.04 3,733.72
Trade Payables 2,489.94 2,072.60 1,772.44
Other Current Liabilities 2,114.25 2,988.58 1,906.83
Short Term Provisions 2,425.49 1,847.43 1,425.79
Total Current Liabilities 12,243.49 10,962.65 8,838.78
Total Capital And Liabilities 33,924.37 33,869.27 34,189.93
ASSETS
NON-CURRENT ASSETS
Tangible Assets 4,375.65 3,869.35 3,512.90
Page 73
Intangible Assets 182.88 169.28 55.27

Capital Work-In-Progress 830.39 1,055.11 767.73
Intangible Assets Under 43.74 45.39 0.00
Development
Fixed Assets 5,432.66 5,139.13 4,335.90
Non-Current Investments 18,310.50 19,293.29 22,283.11
Deferred Tax Assets [Net] 751.70 749.06 0.00
Long Term Loans And 3.42 4.87 2,165.47
Advances
Other Non-Current Assets 2,518.57 2,294.73 61.75
Total Non-Current Assets 27,016.85 27,481.08 28,846.23
CURRENT ASSETS
Current Investments 44.76 40.01 82.49
Inventories 2,135.64 2,308.28 2,132.16
Trade Receivables 2,846.96 2,714.70 2,016.81
Cash And Cash Equivalents 155.27 170.28 169.39
Short Term Loans And 52.05 13.85 745.03
Advances
OtherCurrentAssets 1,672.84 1,141.07 197.82
Total Current Assets 6,907.52 6,388.19 5,343.70
Total Assets 33,924.37 33,869.27 34,189.93
OTHER ADDITIONAL INFORMATION
CONTINGENT LIABILITIES,
COMMITMENTS
Contingent Liabilities 6,015.09 6,060.34 3,697.86
CIF VALUE OF IMPORTS
Raw Materials 0.00 0.00 588.46
Stores, Spares And Loose Tools 0.00 0.00 39.32
Trade/Other Goods 0.00 0.00 59.22
Capital Goods 0.00 0.00 201.22
EXPENDITURE IN FOREIGN
EXCHANGE
Page 74
Expenditure In Foreign 3,014.34 2,448.41 1,270.04

Currency
REMITTANCES IN FOREIGN
CURRENCIES FOR DIVIDENDS
Dividend Remittance In Foreign - - -
Currency
EARNINGS IN FOREIGN EXCHANGE
FOB Value Of Goods 4,081.64 4,411.81 3,957.17
Other Earnings - - 259.93
BONUS DETAILS
Bonus Equity Share Capital 183.81 183.81 184.37
NON-CURRENT INVESTMENTS
Non-Current Investments 190.14 123.53 54.19
Quoted Market Value
Non-Current Investments 17,931.48 19,226.77 22,871.37
Unquoted Book Value
CURRENT INVESTMENTS
Current Investments Quoted - - 11.23
Market Value
Current Investments Unquoted 42.07 40.01 73.56
Book Value
Page 75
HDFC BANK
Standalone Profit & Loss
------------------- in Rs. Cr. -------------------
account
Mar '18 Mar '17 Mar '16
Income
Sales Turnover 7,947.60 7,793.20 7,744.89
Excise Duty 23.76 109.24 130.43
Net Sales 7,923.84 7,683.96 7,614.46
Other Income 220.98 455.00 361.69
Stock Adjustments -159.26 167.86 68.48
Total Income 7,985.56 8,306.82 8,044.63
Expenditure
Raw Materials 3,803.96 3,894.28 3,550.23
Power & Fuel Cost 376.17 349.23 370.48
Employee Cost 1,617.69 1,499.88 1,480.51
Miscellaneous Expenses 1,843.74 1,994.46 2,716.70
Total Expenses 7,641.56 7,737.85 8,117.92
Mar '18 Mar '17 Mar '16
Operating Profit 123.02 113.97 -434.98
PBDIT 344.00 568.97 -73.29
Interest 388.31 223.57 530.64
PBDT -44.31 345.40 -603.93
Depreciation 432.23 422.28 463.98
Profit Before Tax -476.54 -76.88 -1,067.91
PBT (Post Extra-ord Items) -476.54 -76.88 -1,067.91
Page 76
Tax -25.39 6.04 5.45
Reported Net Profit -494.59 -22.84 -1,073.36
Total Value Addition 3,837.60 3,843.57 4,567.69
Equity Dividend 797.74 240.68 240.68
Corporate Dividend Tax 0.34 7.47 7.47
Per share data (annualised)
Shares in issue (lakhs) 23,993.23 23,992.61 24,066.05
Earnings Per Share (Rs) -2.06 -0.10 -4.46
Equity Dividend (%) 200.00 350.00 100.00
Book Value (Rs) 82.40 87.58 89.27
Page 77
SBI
Consolidated Balance Sheet ------------------- in Rs. Cr. -------------------
Mar 18 Mar 17 Mar 16
EQUITIES AND LIABILITIES
SHAREHOLDER'S FUNDS
Equity Share Capital 161.02 160.90 160.68
Total Share Capital 161.02 160.90 160.68
Revaluation Reserves 0.00 0.00 0.00
Reserves and Surplus 14,068.17 12,382.76 11,355.54
Total Reserves and Surplus 14,068.17 12,382.76 11,355.54
Total Shareholders’ Funds 14,229.19 12,543.66 11,516.22
Equity Share Application Money 0.00 0.00 0.00
Minority Interest 352.44 438.23 350.09
NON-CURRENT LIABILITIES
Long Term Borrowings 3,662.11 3,645.36 221.88
Deferred Tax Liabilities [Net] 503.31 756.89 975.73
Other Long Term Liabilities 143.36 138.71 143.53
Long Term Provisions 137.92 140.52 144.68
Total Non-Current Liabilities 4,446.70 4,681.48 1,485.82
CURRENT LIABILITIES
Short Term Borrowings 435.87 467.23 4,969.67
Trade Payables 2,119.12 1,571.14 1,475.82
Other Current Liabilities 650.12 932.96 1,019.71
Short Term Provisions 627.11 402.37 310.85
Total Current Liabilities 3,832.22 3,373.70 7,776.05
Page 78
Total Capital And Liabilities 22,860.55 21,037.07 21,128.18
ASSETS
NON-CURRENT ASSETS
Tangible Assets 5,316.38 5,010.43 4,604.85
Intangible Assets 1,819.05 1,784.88 2,057.90
Capital Work-In-Progress 512.35 719.23 741.01
Intangible Assets Under

468.98 963.75 1,319.86
Development
Other Assets 0.00 0.00 1.07
Fixed Assets 8,116.76 8,478.29 8,724.69
Non-Current Investments 156.63 135.62 175.28
Deferred Tax Assets [Net] 187.65 168.13 78.69
Long Term Loans And Advances 41.66 39.48 41.84
Other Non-Current Assets 729.01 714.25 560.88
Total Non-Current Assets 12,046.45 12,232.44 12,286.95
CURRENT ASSETS
Current Investments 1,102.21 837.39 582.34
Inventories 4,044.70 3,485.28 3,808.05
Trade Receivables 3,102.45 2,563.05 2,356.27
Cash And Cash Equivalents 965.61 624.21 871.40
Short Term Loans And Advances 19.91 9.53 10.92
OtherCurrentAssets 1,579.22 1,285.17 1,212.25
Total Current Assets 10,814.10 8,804.63 8,841.23
Total Assets 22,860.55 21,037.07 21,128.18
OTHER ADDITIONAL INFORMATION
CONTINGENT LIABILITIES,
Page 79
COMMITMENTS
Contingent Liabilities 1,002.86 1,441.90 1,150.11
BONUS DETAILS
Bonus Equity Share Capital 151.66 151.66 151.66
NON-CURRENT INVESTMENTS
Non-Current Investments
147.01 123.22 158.46
Unquoted Book Value
CURRENT INVESTMENTS
Current Investments Unquoted

1,102.21 837.39 582.34
Book Value
Page 80
SBI
Consolidated Profit & Loss
------------------- in Rs. Cr. -------------------
account
Mar '18 Mar '17 Mar '16
Income
Sales Turnover 15,219.25 14,630.24 13,790.10
Excise Duty 63.54 235.95 0.00
Net Sales 15,155.71 14,394.29 13,790.10
Other Income 283.54 236.15 200.00
Stock Adjustments 232.94 -110.96 -63.55
Total Income 15,672.19 14,519.48 13,926.55
Expenditure
Raw Materials 5,814.32 5,334.05 5,164.16
Power & Fuel Cost 298.82 251.73 245.92
Employee Cost 2,690.10 2,633.82 2,434.01
Other Manufacturing Expenses 0.00 0.00 361.82
Selling and Admin Expenses 0.00 0.00 390.69
Miscellaneous Expenses 3,759.03 3,587.94 2,650.28
Total Expenses 12,562.27 11,807.54 11,246.88
Mar '18 Mar '17 Mar '16
Operating Profit 2,826.38 2,475.79 2,479.67
PBDIT 3,109.92 2,711.94 2,679.67
Interest 114.23 159.38 206.63
PBDT 2,995.69 2,552.56 2,473.04
Page 81
Depreciation 1,322.82 1,322.93 754.22
Profit Before Tax 1,672.87 1,229.63 1,718.82
PBT (Post Extra-ord Items) 1,672.87 1,229.63 1,718.82
Tax 250.11 179.76 331.59
Reported Net Profit 1,413.31 1,013.38 1,395.44
Minority Interest 0.00 0.00 23.43
Share Of P/L Of Associates 2.78 6.99 12.02
Net P/L After Minority Interest &

1,494.09 1,035.42 1,359.99
Share Of Associates
Total Value Addition 6,747.95 6,473.49 6,082.72
Equity Dividend 189.27 193.58 180.92
Corporate Dividend Tax 0.00 0.00 0.00
Per share data (annualised)
Shares in issue (lakhs) 8,051.19 8,045.10 8,033.84
Earnings Per Share (Rs) 17.55 12.60 17.37
Book Value (Rs) 176.73 155.92 143.35
Page 82

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HDFC Financial Statments

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Project on Financial Analysis of HDFC & SBI Bank

1.1 MEANING AND DEFINITION:

1.2 ORIGIN OF WORD BANK:

1.3 ORIGIN OF BANKING :

1. PUBLIC SECTOR BANK

2. PRIVATE SECTOR BANKS

3. FOREIGN EXCHANGE BANKS

is divided into the following categories.

a. State co-operative Banks

b. Central co-operative banks

c. Primary Agriculture Credit Societies

Development Banks/Financial Institutions

 Export-Import Bank of India

 National Housing Bank

 Small Industries Development Bank of India

 North Eastern Development Finance Corporation

1.8 PRIVATE SECTOR BANKS

Private Sector Banks

4. ING Visas Bank

5. Axis Bank (formerly UTI Bank)

8. Bharat Overseas Bank

9. Catholic Syrian Bank

10. Centurion Bank of Punjab

11. City Union Bank

12. Development Credit Bank

13. Dhanalakshmi Bank

14. Ganesh Bank of Kurundwad

15. IndusInd Bank

16. Jammu & Kashmir Bank

17. Karnataka Bank Limited

18. Karur Vysya Bank

19. Kotak Mahindra Bank

20. Lakshmi Vilas Bank

21. Nainital Bank

22. Ratnakar Bank

23. SBI Commercial and International Bank

24. South Indian Bank

1.9 MAJOR PLAYERS IN PRIVATE SECTOR BANKS:

PUBLIC SECTOR BANKS

c. Regional rural banks mainly sponsored by public sector banks

PUBLIC SECTOR BANKS (NATIONALIZED BANKS):

1. State Bank of India (SBI)

2.State Bank of Bikaner & Jaipur

3.State Bank of Hyderabad

4.State Bank of Indore

5.State Bank of Mysore

6.State Bank of Patiala

7.State Bank of Saurashtra

8. State Bank of Travancore

10. Canara Bank

11. Central Bank of India

12. Corporation bank

13. Indian Bank

14. Indian overseas bank

17. Allahabad Bank

20. Bank of Maharashtra

21. Dena Bank

22.Oriental Bank of Commerce

23. Punjab & Sind Bank

24. Union Bank of India

Public sector banks

Banking transactions carried on by any individual or firm engaged in providing financial

1. the banks should have a minimum net worth of Rs. 1 billion