A

ProjectStudyReport

On

TrainingUndertakenat

Titled

“ComparativeAnalysisofSBI&HDFCBank
RegardingPersonalLoan”

SubmitedinpartialfulfilmentfortheAwardofdegree

Of

Bachelor'sofBusinessAdministration

2017-2020

Submitedby: SubmitedTo:

SudhanshuKumar MrAviralJaiswal
 ACKNOWLEDGEMENT

Thepathtosuccessisneversosmoothandsimpletoachieve.However,our
learning’sandmotivationbyourcloseonesandourmentorshelpsustoreach
beyondourpotential.MyProjectwouldremainpartialwithoutacknowledging
peoplewhoencouragedmetoachieveamilestone.

Iam privilegedtopaymysinceregratitudetowardsMr.AVIRALJAISWALfor
providingtheirvaluableguidanceandencouragementthroughouttheProjectfor
keepingmymoraleupandmakingitpossibletocompleteandsubmitthisreportin
time.Iamequalygratefultoalmyotherteachersfortheircompletesupport.
ItwouldbeunfaironmypartifIdonotthankmycolegesfortheircontinuoushelp
withoutwhichthisworkcouldneverhavebeenaccomplished.Theymademe
realizetheimportanceofteamworkandalsotheleadershipskils.Iamgratefulto
alofthemstandingwithmeandsupportingmeinthisproject.

2
 PREFACE

Thisprojectreporthasbeenpreparedaspertherequirementofthesylabusof
BBAcoursestructureunderwhichthestudentsaretherequiredtoundertake project.

Itwasafirsthandexperienceforusasthatwewereexposedtotheprofessional set-
upandwerefacingthemarket,whichwasrealyagreatexperience.

Duringprojectperiod,Ihadverytouchingexperiences.Whenbusinessisinvolved,
experiencescountsalot,asweknow,experienceareaninstrument,whichleads
towardssuccess.

NowItakethisopportunitytopresenttheprojectreportandsincerelyhopethatit
wilbeasmuchknowledgeenhancingtothereadersasitwastouseduringthe
fieldworkandthecompilationofthereport.

3
 EXECUTIVESUMMARY

ThershouldbecomparisonbetweentwobiggestbankofIndianamely
StateBankofIndia(SBI)and HousingDevelopmentFinancialCorporation
(HDFC)onPersonalloanprovidedbythem.

TodayPersonalloanisnecessityforfulfiltherequirementoffamilyand
providegoodlife.Everyonewantsalifeinwhichalfacilitiesarepresent
whicharesocostlysotheymovetowardstovariousbanksbothpublicas
welasprivatebankforloan.

SBIbanksisbasicalypreferbymostofthepeoplewhoareingovernment
jobs/publicsectorsbecauseof:-
1. Taxrebate
2. Lackofmuchfunds
3. Interestrate

HDFCBankalsochoiceofpeoplebecauseof:-
1. EasinessandLowdocumentation
2. Services
3. CooperativeandRelationship

Inthisprojectstudypeoplesaresatisfiedbyboththebanksbutalsowants
morethingslikeUpdatingofservices,technologicalenhancementand
ethics.Ifalthebanksfocusonthesethingstheygetbetergrowthin
PersonalloanaswelasbeterresponseofpeopleastodayPersonalloanis
requiredforfulfiltherequirementoflife.

4
 TABLEOFCONTENT

Contents:-
1.IntroductiontotheIndustry
2.HistoryofBankinginIndia
3.Introductiontotheorganization
4.ResearchMethodology
 TitleoftheStudy
 DurationoftheProject
 Objectiveofthestudy
 TypeoftheResearch
 SampleSizeandMethodofselectingSamples
 ScopeoftheStudy
 LimitationoftheStudy
5.FactsandFindings
6.AnalysisandInterpretation
7.SWOT
8.Conclusion
9.Appendix
10.Bibliography

5
 INTRODUCTIONOFBANKINGINDUSTRY

Bank

A bankislicensebyagovernment.Itsprimaryactivityistolendmoney.
Manyotherfinancialactivitieswerealowedovertime.Forexamplebanks
areimportantplayersinfinancialmarketsandofferfinancialservicessuch
asinvestmentfundsInsomecountriessuchasGermany,bankshave
historicalyownedmajorstakesinindustrialcorporationswhileinother
countriessuchastheUnitedStatesbanksareprohibitedfromowningnon-
financialcompanies.InJapan,banksareusualythenexusofacross-share
holdingentityknownasthezaibatsu.InFrance,bancassuranceisprevalent,
asmostbanksofferinsuranceservices(andnowrealestateservices)to theirclients.

Thelevelofgovernmentregulationofthebankingindustryvarieswidely,
withcountiessuchasIceland,theUnitedKingdom andtheUnitedStates
havingrelativelylightregulationofthebankingsector,andcountriessuch
asChinahavingrelativelyheavierregulation(includingstricterregulations
regardingthelevelofreserves).

History

Bankshaveinfluencedeconomiesandpoliticsforcenturies.Historicaly,the
primarypurposeofabankwastoprovideloanstotradingcompanies.
Banksprovidedfundstoalow businessestopurchaseinventory,and
colectedthosefundsbackwithinterestwhenthegoodsweresold.For
centuries,thebankingindustryonlydealtwithbusinesses,notconsumers.
Bankingserviceshaveexpandedtoincludeservicesdirectedatindividuals,
andriskinthesemuchsmalertransactionsarepooled.

6
Originoftheword

SilverdrachmcoinfromTrapezus,4thcenturyBC

Thenamebankderivesfrom theItalianwordbanco"desk/bench",used
duringtheRenaissancebyFlorentinebankers,whousedtomaketheir
transactionsaboveadeskcoveredbyagreentablecloth.However,thereare
tracesofbankingactivityeveninancienttimes.

ABOUTBANKING:-

Section5(b)oftheBankingRegulationAct,1949defines

bankingas‘theaccepting,for the purpose of lendingorinvestment,of deposits of

moneyfrom thepublic,repayableondemandorotherwise,and

withdrawalbycheque,draft,orderorotherwise.”

Section5(c)oftheBankingRegulationAct,1949definesabankingcompany’as

“anycompanywhichtransactsthebusinessofbankinginIndia”.

7
 DefinitionofBanking:-

Thedefinitionofabankvariesfromcountrytocountry.

UnderEnglishcommonlaw,abankerisdefinedasapersonwhocarieson
thebusinessofbanking,whichisspecifiedas:

 Conductingcurrentaccountsforhiscustomers
 Payingchequesdrawnonhim,and
 Colectingchequesforhiscustomers.

Theborrowing,raisingortakingupofmoney,thelendingoradvancingofmoney

eitherwithorwithoutsecurity;

Actingasagentsforanygovernmentorlocalauthorityoranyotherpersonor

persons.

Contractingforpublicandprivateloansandnegotiatingandissuingthesame.

Theeffecting,insuring,guaranteeing,underwriting,participatinginmanagingand

carryingoutofanyissue,publicorprivate,ofstate,municipalorotherloansorof

shares,stock,debenturesordebenturestockofanycompany,corporationor

associationandthelendingofmoneyforthepurposeofanysuchissue.

8
 Examplesofstatutorydefinitions:

 "bankingbusiness"meansthebusinessofreceivingmoneyoncurentor
depositaccount,payingandcolectingchequesdrawnbyorpaidinby
customers,themakingofadvancestocustomers,andincludessuchother
businessastheAuthoritymayprescribeforthepurposesofthisAct;
(BankingAct(Singapore),Section2,Interpretation).

 "bankingbusiness"meansthebusinessofeitherorbothofthefolowing:

1. Receivingfromthegeneralpublicmoneyoncurent,deposit,savingsor
othersimilaraccountrepayableondemandorwithinlessthan[3months].
orwithaperiodofcalornoticeoflessthanthatperiod;
2. Payingorcolectingchequesdrawnbyorpaidinbycustomers
3. SincetheadventofEFTPOS(ElectronicFundsTransferatPointOfSale),
directcredit,directdebitandinternetbanking,thechequehaslostits
primacyinmostbankingsystemsasapaymentinstrument.Thishasled
legaltheoriststosuggestthatthechequebaseddefinitionshouldbe
broadenedtoincludefinancialinstitutionsthatconductcurrentaccountsfor
customersandenablecustomerstopayandbepaidbythirdparties,evenif
theydonotpayandcolectcheques

9
 Commercialrole:-

Thecommercialroleofbanksisnotlimitedtobanking,andincludes:

 issueofbanknotes(promissorynotesissuedbyabankerandpayableto
bearerondemand)
 processingofpaymentsbywayoftelegraphictransfer,EFTPOS,internet
bankingorothermeans
 issuingbankdraftsandbankcheques
 acceptingmoneyontermdeposit
 lendingmoneybywayofoverdraft,instalmentloanorotherwise
 providingdocumentaryandstandbyletersofcredit(tradefinance),
guarantees,performancebonds,securitiesunderwritingcommitmentsand
otherformsofoff-balancesheetexposures
 safekeepingofdocumentsandotheritemsinsafedepositboxes
 curencyexchange
 actingasa'financialsupermarket'forthesale,distributionorbrokerage,
withorwithoutadvice,ofinsurance,unittrustsandsimilarfinancial products

10
 Economicfunctions:-

Theeconomicfunctionsofbanksinclude:

1. Issueofmoney,intheformofbanknotesandcurentaccountssubject
tochequeorpaymentatthecustomer'sorder.Theseclaimsonbankscan
actasmoneybecausetheyarenegotiableand/orrepayableondemand,
andhencevaluedatpar.Theyareeffectivelytransferablebymeredelivery,
inthecaseofbanknotes,orbydrawingachequethatthepayeemaybank orcash.

2. Netingandsetlementofpayments–banksactasbothcolectionand paying agents

forcustomers,participating in interbank clearing and
setlementsystemstocolect,present,bepresentedwith,andpaypayment
instruments.Thisenablesbanksto economiseonreservesheld for
setlementofpayments,sinceinwardandoutwardpaymentsoffseteach
other.Italsoenablestheoffsetingofpaymentflowsbetweengeographical
areas,reducingthecostofsetlementbetweenthem.
3. Creditintermediation–banksborowandlendback-to-backontheir
ownaccountasmiddlemen
4. Creditqualityimprovement–bankslendmoneytoordinarycommercial
andpersonalborrowers(ordinarycreditquality),butarehighquality
borrowers.Theimprovementcomesfrom diversificationofthebank's
assetsandcapitalwhichprovidesabuffertoabsorblosseswithout
defaultingonitsobligations.
5. Maturitytransformation–banksborrowmoreondemanddebtand shortterm
debt,butprovidemorelongterm loans.Inotherwords,they
borrowshortandlendlong.Withastrongercreditqualitythanmostother
borrowers,bankscandothisbyaggregatingissues(e.g.acceptingdeposits
andissuingbanknotes)andredemptions(e.g.withdrawals).

11
 Lawofbanking:-

Bankinglawisbasedonacontractualanalysisoftherelationshipbetween
thebank(definedabove)andthecustomer—definedasanyentityforwhich
thebankagreestoconductanaccount.

Thelawimpliesrightsandobligationsintothisrelationshipasfolows:

1. Thebankaccountbalanceisthefinancialpositionbetweenthebank
andthecustomer:whentheaccountisincredit,thebankowesthebalance
tothecustomer;whentheaccountisoverdrawn,thecustomerowesthe balancetothebank.
2. Thebankagreestopaythecustomer'schequesuptotheamount
standingtothecreditofthecustomer'saccount,plusanyagreedoverdraft
limit.
3. Thebankmaynotpayfrom thecustomer'saccountwithouta
mandatefromthecustomer,e.g.achequedrawnbythecustomer.
4. Thebankagreestopromptlycolectthechequesdepositedtothe
customer'saccountasthecustomer'sagent,andtocredittheproceedsto
thecustomer'saccount.
5. Thebankhasarighttocombinethecustomer'saccounts,sinceeach
accountisjustanaspectofthesamecreditrelationship.
6. Thebankhasalienonchequesdepositedtothecustomer'saccount,
totheextentthatthecustomerisindebtedtothebank.
7. Thebankmustnotdisclosedetailsoftransactionsthroughthe customer'saccount
—unlessthecustomerconsents,thereisapublicdutyto
disclose,thebank'sinterestsrequireit,orthelawdemandsit.

12
Entryregulation:-

Currently in mostjurisdictions commercialbanks are regulated by

governmententitiesandrequireaspecialbanklicencetooperate.

Usualythedefinitionofthebusinessofbankingforthepurposesof
regulationisextendedtoincludeacceptanceofdeposits,eveniftheyare
notrepayabletothecustomer'sorder—althoughmoneylending,byitself,is
generalynotincludedinthedefinition.

Unlikemostotherregulatedindustries,theregulatoristypicalyalsoa
participantinthemarket,i.e.agovernment-owned(central)bank.Central
banksalsotypicalyhaveamonopolyonthebusinessofissuingbanknotes.
However,insomecountriesthisisnotthecase.IntheUK,forexample,the
FinancialServicesAuthoritylicensesbanks,andsomecommercialbanks
(suchastheBankofScotland)issuetheirownbanknotesinadditionto
thoseissuedbytheBankofEngland,theUKgovernment'scentralbank.

Sometypesoffinancialinstitution,suchasbuildingsocietiesandcredit
unions,maybepartlyorwholyexemptfrombanklicencerequirements,and
thereforeregulatedunderseparaterules.

Therequirementsfortheissueofabanklicencevarybetweenjurisdictions

13
 buttypicalyinclude:

1. Minimumcapital
2. Minimumcapitalratio

'FitandProper'requirementsforthebank'scontrolers,owners,directors,
and/orseniorofficersTherequirementsfortheissueofabanklicencevary
betweenjurisdictionsbuttypicalyinclude:

3. 'FitandProper'requirementsforthebank'scontrolers,owners,
directors,and/orseniorofficers
4. Approvalofthebank's
5. Businessplanasbeingsufficientlyprudent.

Theeconomicfunctionsofbanksinclude:

6. Issueofmoney,intheform ofbanknotesandcurentaccounts
subjecttochequeorpaymentatthecustomer'sorder.Theseclaimson
bankscanactasmoneybecausetheyarenegotiableand/orrepayableon
demand,andhencevaluedatpar.Theyareeffectivelytransferablebymere
delivery,inthecaseofbanknotes,orbydrawingachequethatthepayee maybankorcash.
7. Netingandsetlementofpayments–banksactasbothcolection
andpayingagentsforcustomers,participatingininterbankclearingand
setlementsystemstocolect,present,bepresentedwith,andpaypayment
instruments.Thisenablesbanksto economiseonreservesheld for
setlementofpayments,sinceinwardandoutwardpaymentsoffseteach
other.Italsoenablestheoffsetingofpaymentflowsbetweengeographical
areas,reducingthecostofsetlementbetweenthem.
8. Creditintermediation–banksborowandlendback-to-backontheir
ownaccountasmiddlemen
9. Creditquality improvement– banks lend money to ordinary
commercialandpersonalborrowers(ordinarycreditquality),butarehigh
qualityborrowers.Theimprovementcomesfrom diversificationofthe
bank'sassetsandcapitalwhichprovidesabuffertoabsorblosseswithout

14
 defaultingonitsobligations.However,banknotesanddepositsaregeneraly
unsecured;ifthebankgetsintodifficultyandpledgesassetsassecurity,to
raisethefundingitneedstocontinuetooperate,thisputsthenoteholders
anddepositorsinaneconomicalysubordinatedposition.
10. Maturitytransformation:-Banksborowmoreondemanddebtand shortterm
debt,butprovidemorelongterm loans.Inotherwords,they
borrowshortandlendlong.Withastrongercreditqualitythanmostother
borrowers,bankscandothisbyaggregatingissues(e.g.acceptingdeposits
andissuingbanknotes)andredemptions(e.g.withdrawalsandredemptions
ofbanknotes),maintaining reservesofcash,investing inmarketable
securitiesthatcanbereadilyconvertedtocashifneeded,andraising
replacementfundingasneededfromvarioussources(e.g.wholesalecash
marketsandsecuritiesmarkets).

Bankinglawisbasedonacontractualanalysisoftherelationshipbetween
thebank(definedabove)andtheCustomer:-definedasanyentityforwhich
thebankagreestoconductanaccount.

Thelawimpliesrightsandobligationsintothisrelationshipasfolows:

11. Thebankagreestopromptlycolectthechequesdepositedtothe
customer'saccountasthecustomer'sagent,andtocredittheproceedsto
thecustomer'saccount.

12. Thebankshavearighttocombinethecustomer'saccounts,since
eachaccountisjustanaspectofthesamecreditrelationship.

13. Thebankhasalienonchequesdepositedtothecustomer'saccount,
totheextentthatthecustomerisindebtedtothebank.

14. Thebankmustnotdisclosedetailsoftransactionsthroughthe customer'saccount

—unlessthecustomerconsents,thereisapublicdutyto
disclose,thebank'sinterestsrequireit,orthelawdemandsit.

15. Thebanksmustnotcloseacustomer'saccountwithoutreasonable
notice,sincechequesareoutstandingintheordinarycourseofbusinessfor

15
severaldays.

Theseimpliedcontractualtermsmaybemodifiedbyexpressagreement
betweenthecustomerandthebank.Thestatutesandregulationsinforce
withinaparticularjurisdictionmayalsomodifytheabovetermsand/or
createnewrights,obligationsorlimitationsrelevanttothebank-customer
relationship.

Currently in mostjurisdictions commercialbanks are regulated by

governmententitiesandrequireaspecialbanklicencetooperate.

Usualythedefinitionofthebusinessofbankingforthepurposesof
regulationisextendedtoincludeacceptanceofdeposits,eveniftheyare
notrepayabletothecustomer'sorder—althoughmoneylending,byitself,is
generalynotincludedinthedefinition.

Unlikemostotherregulatedindustries,theregulatoristypicalyalsoa
participantinthemarket,i.e.agovernment-owned(central)bank.Central
banksalsotypicalyhaveamonopolyonthebusinessofissuingbanknotes.
However,insomecountriesthisisnotthecase.IntheUK,forexample,the
FinancialServicesAuthoritylicencesbanks,andsomecommercialbanks
(suchastheBankofScotland)issuetheirownbanknotesinadditionto
thoseissuedbytheBankofEngland,theUKgovernment'scentralbank.

Sometypesoffinancialinstitution,suchasbuildingsocietiesandcredit
unions,maybepartlyorwholyexemptfrombanklicencerequirements,and
thereforeregulatedunderseparaterules.

16
 HistoryofBankinginIndia

ThefirstbankinIndia,thoughconservative,wasestablishedin1786.From 1786

tiltoday,thejourneyofIndianBankingSystem canbesegregatedintothree

distinctphases.Theyareasmentionedbelow:-

Earlyphasefrom1786to1969ofIndianBanks

NationalizationofIndianBanksandupto1991priortoIndianbankingsector Reforms.

New phaseofIndianBankingSystem withtheadventofIndianFinancial&

Banking SectorReformsafter1991.
Tomakethiswrite-upmoreexplanatory,Iprefixthescenario asPhase ,Phase
andPhase.

Phase

TheGeneralBankofIndiawassetupintheyear1786.NextcameBankof
HindustanandBengalBank.TheEastIndiaCompanyestablishedBankofBengal
(1809),BankofBombay(1840)andBankofMadras(1843)asindependentunits
andcaleditPresidencyBanks.Thesethreebankswereamalgamatedin1920and
ImperialBankofIndiawasestablishedwhichstartedasprivateshareholders
banks,mostlyEuropeansshareholders.
In1865AlahabadBankwasestablishedandfirsttimeexclusivelybyIndians,

PunjabNationalBankLtd.wassetupin1894withheadquartersatLahore.

Between1906and1913,BankofIndia,CentralBankofIndia,BankofBaroda,

CanaraBank,IndianBank,andBankofMysoreweresetup.ReserveBankofIndia

17
camein1935.

Duringthefirstphasethegrowthwasveryslowandbanksalsoexperienced

periodicfailuresbetween1913and1948.Therewereapproximately1100banks,

mostlysmal.Tostreamlinethefunctioningandactivitiesofcommercialbanks,

theGovernmentofIndiacameupwithTheBankingCompaniesAct,1949which

waslaterchangedtoBankingRegulationAct1949asperamendingActof1965

(ActNo.23of1965).ReserveBankofIndiawasvestedwithextensivepowersfor

thesupervisionofbankinginIndiaastheCentralBankingAuthority.

Phase

GovernmenttookmajorstepsinthisIndianBankingSectorReform after

independence.In1955,itnationalizedImperialBankofIndiawithextensive

bankingfacilitiesonalarge

scaleespecialyinruralandsemi-urbanareas.ItformedStateBankofIndiatoact

astheprincipalagentofRBIandtohandlebankingtransactionsoftheUnionand

StateGovernmentsaloverthecountry.

SevenbanksformingsubsidiaryofStateBankofIndiawasnationalizedin1960on

19thJuly,1969,majorprocessofnationalizationwascariedout.Itwastheeffort

ofthethenPrimeMinisterofIndia,Mrs.IndiraGandhi.14majorcommercialbanks

inthecountrywerenationalized.

SecondphaseofnationalizationIndianBankingSectorReformwascariedoutin

1980withsevenmorebanks.Thisstepbrought80%ofthebankingsegmentin

IndiaunderGovernmentownership.

18
ThefolowingarethestepstakenbytheGovernmentofIndiatoRegulate Banking

Institutions in the Country:-

1949:EnactmentofBankingRegulationAct.

1955:NationalizationofStateBankofIndia.

1959:NationalizationofSBIsubsidiaries.

1961:Insurancecoverextendedtodeposits.

1969:Nationalizationof14majorbanks.

1971:Creationofcreditguaranteecorporation.

1975:Creationofregionalruralbanks.

1980:Nationalizationofsevenbankswithdepositsover200crore.

Afterthenationalizationofbanks,thebranchesofthepublicsectorbankIndia

raisedtoapproximately800%indepositsandadvancestookahugejumpby

11,000%.

BankinginthesunshineofGovernmentownershipgavethepublicimplicitfaith

andimmenseconfidenceaboutthesustainabilityoftheseinstitutions.

19
Phase 

Thisphasehasintroducedmanymoreproductsandfacilitiesinthebankingsector

initsreformsmeasure.In1991,underthechairmanshipof M

Narasimham,acommiteewassetupbyhisnamewhichworkedforthe liberalization

ofbanking practices.

ThecountryisfloodedwithforeignbanksandtheirATM stations.Effortsare

beingputtogiveasatisfactoryservicetocustomers.Phonebankingandnet

bankingisintroduced.Theentiresystem became moreconvenientandswift.

Timeisgivenmoreimportancethanmoney.

ThefinancialsystemofIndiahasshownagreatdealofresilience.Itissheltered from

anycrisistriggeredbyanyexternalmacroeconomicsshockasotherEast

AsianCountriessuffered.Thisisalduetoaflexibleexchangerateregime,the

foreignreservesarehigh,thecapitalaccountisnotyetfulyconvertible,andbanks

andtheircustomershave limited foreign exchange exposure.

20
 INTRODUCTIONTOTHEORGANIZATION

BANKINGSYSTEMININDIA

TheBankingSysteminIndiaconsistsof:

1.ReserveBank
2.DevelopmentBanks
3.PublicSectorBank.
4.ForeignBanks
5.PrivateSectorBanks
6.CooperativeBanks
7.RegionalRuralBanks

TheReserveBankofIndia:-

TheReserveBankofIndiaistheCentralBankoftheCountryandcameinto being
bytheReserveBankofIndiaAct1934.Itwasnationalizedin 1948.

ReserveBankofIndiaisthebankthatissuesandregulatestheissueofcurrency

in India.ThebankertotheGovernmentofIndiaandtheStategovernments.It

managesthepublicdebt.Ithastheobligationtotransactthebankingbusinessof

theCentralGovernment.Itundertakesto acceptmoneyon behalfofthe

Governmentandmakepaymentonitsbehalf.Thebanker’sbank.Commercial

21
banksmaintaintheircurrentaccountwiththeReserveBankofIndia.

Thebankthatmanagesthevolumeofcreditcreatedbythecommercialbanksto

ensurepricestability.

Thebankthatmanagestheexternalvalueofthecurency(Indianrupee).

DevelopmentBanks:-

Theseweresetuptogivelongtermfinanceforthedevelopmentofthecountry.

These are the IndustrialFinance Corporation ofIndia and the Industrial

DevelopmentBankofIndia,TheIndustrialReconstructionBankofIndiaandthe

NationalBankforAgricultureandRuralDevelopment.Aformerdevelopmentbank,

theIndustrialCreditandInvestmentCorporationofIndiaLtd.byareversemerger

in 2002,became a normalcommercialbank.Itis expected thatthe other

developmentbanks,havingoutlivedtheirutilitywouldalsobeeitherconvertedto

commercialbanksormergedwithcommercialbanks.

PublicSectorBanks:-

ThesearebankswhichtheGovernmenteitherownsorhasamajoritystakeinit.

ThelargestistheStateBankofIndiawhichwasformedbythemergerofthe

PresidencyBanks–theBankofBengal,theBankofBombay andtheBankof

Madrasin1921.ItwasthenknownastheImperialBank.Itwasnationalizedin

1955bythepassingoftheStateBankofIndiaAct,1955.It has seven subsidiaries

orassociates.

ForeignBanks:-

These are branches of banks incorporated outside India.In1995/96

22
manyotherforeignbanks(optimisticinview ofIndia’sliberalization)opened branches in

India.However,afterbanking began to become increasingly competitive and margins

began to be squeezed coupled with large non performing assets,manybanks closed

theirbranches

PrivateSectorBanks:-

Thesearebankswhicharenotgovernmentownedorcontroled.Their shares

are freelytraded inthe Stock Markets.

CooperativeBanks:-

CooperativeBanksarethosethatarecreatedbyagroupofindividualtosupport

eitheracommunityorareligiousgroup.Theyoperateinmetropolitan,urbanand

semiurbancenterstocatertotheneedsofsmalborrowers.

RegionalRuralBanks:-

ThesecameintobeingonOctober2,1975when5regionalrural bankswere

establishedunderwhatbecametheRegionalRuralBanksAct1975.Thesewereto

bridgethegapinruralcreditgrantingloansandadvancestosmalandmarginal

farmers,artisans,smalentrepreneurandpersonsofsmalmeansengagedin

trade,commerce,industryorotherproductive,activities within their area of

operation.

LocalAreaBanks:-

23
 LocalAreaBankscameintoexistencein1999andlicensesweregivenforthese

banksasitwasfeltthatregularcommercialbankswerenotfinancialtherural/

agriculturalsectoradequately.Licensesweregiventoopenbranchesinthree

districts.Branchesinurban/semiurbanareasweregrantedonlyafterten

brancheswereestablishedinruralareas/vilages.

Sectors Banks

CentralBank:- ReserveBankofIndia

Nationalized StateBankofIndia,AlahabadBank,AndhraBank,Bankof Banks:-

Baroda,BankofIndia,BankofMaharashtra,CanaraBank, CentralBankofIndia,
CorporationBank,DenaBank,Indian
Bank,IndianOverseasBank,OrientalBankofCommerce,Punjab
&SindBank,PunjabNationalBank,SyndicateBank,IDBIBank,
UnionBankofIndia,UnitedBankofIndia,UCOBank,VijayaBank.

PrivateBanks: AxisBank,BankofRajasthan·BharatOverseasBank·Catholic

- Syrian Bank· Centurion Bank of Punjab·City Union

Bank.DevelopmentCreditBank·DhanalakshmiBank·Federal Bank· Ganesh Bank of
Kurundwad· HDFC Bank·ICICI Bank·IndusInd Bank·ING Vysya Bank·Jammu & Kashmir
Bank·KarnatakaBankLimited·KarurVysyaBank·KotakMahindra
Bank·LakshmiVilasBank·NainitalBank·RatnakarBank·SBI
CommercialandInternationalBank·SouthIndianBank·Tamilnad MercantileBankLtd..

Citibank·HSBC·StandardChartered
Foreign

24
 Banks:-

Regional SouthMalabarGraminBank
RuralBanks:-

Cooperative TheAndamanandNicobarStateCo-operativeBankLtd.The
Banks:- ArunachalPradeshStateco-operativeApexBankLtd.TheAssam
Co-operativeApexBankLtdTheBiharStateCo-operativeBank
Ltd.TheChandigarhStateCo-operativeBankLtd.

INTRODUCTIONOFSBIBANK

HISTORYOFSBIBANK:-

TheevolutionofStateBankofIndiacanbetracedbacktothefirstdecadeofthe
19thcentury.ItbeganwiththeestablishmentoftheBankofCalcutainCalcuta,
on2June1806.ThebankwasredesignedastheBankofBengal,threeyearslater,
on2January1809.Itwasthefirsteverjoint-stockbankoftheBritishIndia,
establishedunderthesponsorshipoftheGovernmentofBengal.Subsequently,the
BankofBombay(establishedon15April1840)andtheBankofMadras
(establishedon1July1843)folowedtheBankofBengal.

AnimportantturningpointinthehistoryofStateBankofIndiaisthelaunchofthe
firstFiveYearPlanofindependentIndia,in1951.ThePlanaimedatservingthe
Indianeconomyingeneralandtheruralsectorofthecountry,inparticular.Until
thePlan,thecommercialbanksofthecountry,includingtheImperialBankofIndia,
confinedtheirservicestotheurbansector.Moreover,theywerenotequippedto
respondtothegrowingneedsoftheeconomicrevivaltakingshapeintherural
areasofthecountry.Therefore,inordertoservetheeconomyasawholeandrural
sectorinparticular.

TheAlIndiaRuralCreditSurveyCommiteeproposedthetakeoveroftheImperial
BankofIndia,andintegratingwithit,theformerstate-ownedorstate-associate
banks.Subsequently,anActwaspassedintheParliamentofIndiainMay1955.As

25
aresult,theStateBankofIndia(SBI)wasestablishedon1July1955.Thisresulted
inmakingtheStateBankofIndiamorepowerful,becauseasmuchasaquarterof
theresourcesoftheIndianbankingsystemwerecontroleddirectlybytheState.
Lateron,theStateBankofIndia(SubsidiaryBanks)Actwaspassedin1959.

TheStateBankofIndiaemergedasapaceseter,withitsoperationscarriedoutby
the480officescomprisingbranches,subofficesandthreeLocalHeadOffices,
inheritedfrom theImperialBank.Insteadofservingasmererepositoriesofthe
community'ssavingsandlendingtocreditworthyparties,theStateBankofIndia
cateredtotheneedsofthecustomers,bybankingpurposefuly.

StateBankofIndia(SBI)(LSE:SBID)isthelargestbankinIndia.

ThebanktracesitsancestrybackthroughtheImperialBankofIndiatothe
foundingin1806oftheBankofCalcuta,makingittheoldestcommercialbankin
theIndianSubcontinent.TheGovernmentofIndianationalisedtheImperialBank
ofIndiain1955,withtheReserveBankofIndiatakinga60%stake,andrenamedit
theStateBankofIndia.In2008,theGovernmenttookoverthestakeheldbythe
ReserveBankofIndia.

SBIprovidesarangeofbankingproductsthroughitsvastnetworkinIndiaand
overseas,includingproductsaimedatNRIs.Withanassetbaseof$126bilionand
itsreach,itisaregionalbankingbehemoth.SBIhaslaidemphasisonreducingthe
hugemanpowerthroughGoldenhandshakeschemes,whichledtoaflightofits
bestandbrightestmanagerswhichtooktoretirementalowancesandthenwent
onthebecomeseniormanagersatnewprivatesectorbanks,andcomputerizing
itsoperations.

TherootsoftheStateBankofIndiarestinthefirstdecadeof19thcentury,when
theBankofCalcuta,laterrenamedtheBankofBengal,wasestablishedon2June
1806.TheBankofBengalandtwootherPresidencybanks,namely,theBankof
Bombay(incorporatedon15April1840)andtheBankofMadras(incorporatedon
1July1843).Thesethreebanksreceivedtheexclusiverighttoissuepaper

26
 curencyin1861withthePaperCurrencyAct,arighttheyretaineduntilthe
formationoftheReserveBankofIndia.ThePresidencybanksamalgamatedon27
January1921,andthereorganizedbankingentitytookasitsnameImperialBank
ofIndia.TheImperialBankofIndiacontinuedtoremainajointstockcompany.

PursuanttotheprovisionsoftheStateBankofIndiaAct(1955),theReserveBank
ofIndia,whichisIndia'scentralbank,acquiredacontrolinginterestintheImperial
BankofIndia.On30April1955theImperialBankofIndiabecametheStateBank
ofIndia.In1959theGovernmentpassedtheStateBankofIndia(SubsidiaryBanks)
Act,enablingtheStateBankofIndiatotakeovereightformerState-associated
banksasitssubsidiaries.OnSept13,2008,StateBankofSaurashtra,oneofits
AssociateBanks,mergedwithStateBankofIndia.

Associatebanks:-

TherearesixassociatebanksthatfalunderSBI,andtogetherthesesixbanks
constitutetheStateBankGroup.Alusethesamelogoofabluekeyholeandalthe
associatesusethe"StateBankof"namefolowedbytheregionalheadquarters'
name.Originaly,thethensevenbanksthatbecametheassociatebanksbelonged
toprincelystatesuntilthegovernmentnationalizedthemin1959.Intunewiththe
firstFiveYearPlan,emphasizingthedevelopmentofruralIndia,thegovernment
integratedthesebanksintoStateBankofIndiatoexpanditsruraloutreach.There
hasbeenaproposaltomergealtheassociatebanksintoSBItocreatea"mega
bank"andstreamlineoperations.Thefirststepalongtheselinesoccuredin
September2008whenStateBankofSaurashtramergedwithStateBankofIndia,
whichreducedthenumberofstatebanksfromseventosix.

 StateBankofIndore
 StateBankofBikaner&Jaipur
 StateBankofHyderabad
 StateBankofMysore
 StateBankofPatiala
 StateBankofTravancore

27
 Growth:-

StateBankofIndiahasoftenactedasguarantortotheIndianGovernment,most
notablyduringChandraShekhar'stenureasPrimeMinisterofIndia.Withmore
than11,111branchesandafurther6500+associatebankbranches,theSBIhas
extensivecoverage.StateBankofIndiahaselectronicalynetworkedalofits
branchesunderCoreBankingSystem(CBS).ThebankhasoneofthelargestATM
networksintheregion.Morethan8500ATMsacrossIndia.TheStateBankofIndia
hashadsteadygrowthoveritshistory,thoughitwasmaredbytheHarshadMehta scam
in1992.Inrecentyears,thebankhassoughttoexpanditsoverseas
operationsbybuyingforeignbanks.ItistheonlyIndianbanktofeatureinthetop
100worldbanksintheFortuneGlobal500ratingandvariousotherrankings.Group
companies:-

 SBICapitalMarketsLtd
 SBIMutualFund(ATrust)
 SBIFactorsandCommercialServicesLtd
 SBIDFHILtd
 SBICardsandPaymentServicesPvtLtd
 SBILifeInsuranceCo.Ltd-Bancassurance(LifeInsurance)
 SBIFundsManagementPvtLtd
 SBICanada

Establishment:-
TheestablishmentoftheBankofBengalmarkedtheadventoflimitedliability,joint
-stockbankinginIndia.Sowastheassociatedinnovationinbanking,viz.the
decisiontoalowtheBankofBengaltoissuenotes,whichwouldbeacceptedfor
paymentofpublicrevenueswithinarestrictedgeographicalarea.Thisrightofnote
issuewasveryvaluablenotonlyfortheBankofBengalbutalsoitstwosiblings,
theBanksofBombayandMadras.Itmeantanaccretiontothecapitalofthebanks,
acapitalonwhichtheproprietorsdidnothavetopayanyinterest.

28
 Theconceptofdepositbankingwasalsoaninnovationbecausethe
practiceofacceptingmoneyforsafekeeping(andinsomecases,eveninvestment
onbehalfoftheclients)bytheindigenousbankershadnotspreadasageneral
habitinmostpartsofIndia.But,foralongtime,andespecialyuptothetimethat
thethreepresidencybankshadarightofnoteissue,banknotesandgovernment
balancesmadeupthebulkoftheinvestibleresourcesofthebanks.

Thethreebanksweregovernedbyroyalcharters,whichwererevisedfromtimeto
time.Eachcharterprovidedforasharecapital,four-fifthofwhichwereprivately
subscribedandtherestownedbytheprovincialgovernment.Themembersofthe
boardofdirectors,whichmanagedtheaffairsofeachbank,weremostly
proprietarydirectorsrepresentingthelargeEuropeanmanagingagencyhousesin
India.Therestweregovernmentnominees,invariablycivilservants,oneofwhom
waselectedasthepresidentoftheboard.

Business:-

Thebusinessofthebankswasinitialyconfinedtodiscountingofbilsofexchange
orothernegotiableprivatesecurities,keepingcashaccountsandreceiving
depositsandissuingandcirculatingcashnotes.LoanswererestrictedtoRs.one
lakhandtheperiodofaccommodationconfinedtothreemonthsonly.Thesecurity
forsuchloanswaspublicsecurities,commonlycaledCompany'sPaper,bulion,
treasure,plate,jewels,orgoods'notofaperishablenature'andnointerestcould
bechargedbeyondarateoftwelvepercent.Loansagainstgoodslikeopium,
indigo,saltwoolens,coton,cotonpiecegoods,muletwistandsilkgoodswere
alsograntedbutsuchfinancebywayofcashcreditsgainedmomentumonlyfrom
thethirddecadeofthenineteenthcentury.Alcommodities,includingtea,sugar
andjute,whichbegantobefinancedlater,wereeitherpledgedorhypothecatedto thebank.

Majorchangeintheconditions:-

AmajorchangeintheconditionsofoperationoftheBanksofBengal,Bombayand

29
Madrasoccurredafter1860.WiththepassingofthePaperCurencyActof1861,
therightofnoteissueofthepresidencybankswasabolishedandtheGovernment
ofIndiaassumedfrom 1March1862thesolepowerofissuingpapercurency
withinBritishIndia.Thetaskofmanagementandcirculationofthenewcurrency
noteswasconferredonthepresidencybanksandtheGovernmentundertookto
transfertheTreasurybalancestothebanksatplaceswherethebankswouldopen
branches.Noneofthethreebankshadtilthenanybranches(exceptthesole
atemptandthattooashort-livedonebytheBankofBengalatMirzaporein1839)
althoughthechartershadgiventhem suchauthority.Butassoonasthethree
presidencybandswereassuredofthefreeuseofgovernment

PresidencyBanksAct:-

ThepresidencyBanksAct,whichcameintooperationon1May1876,broughtthe
threepresidencybanksunderacommonstatutewithsimilarrestrictionson
business.TheproprietaryconnectionoftheGovernmentwas,however,terminated,
thoughthebankscontinuedtoholdchargeofthepublicdebtofficesinthethree
presidencytowns,andthecustodyofapartofthegovernmentbalances.TheAct
alsostipulatedthecreationofReserveTreasuriesatCalcuta,BombayandMadras
into which sumsabovethespecified minimum balancespromised to the
presidencybanksatonlytheirheadofficesweretobelodged.TheGovernment
couldlendtothepresidencybanksfrom suchReserveTreasuriesbutthelater
couldlookuponthemmoreasafavourthanasaright.

BankofMadras:-

ThedecisionoftheGovernmentto keepthesurplusbalancesinReserve

30
Treasuriesoutsidethenormalcontrolofthepresidencybanksandtheconnected

decisionnottoguaranteeminimum governmentbalancesatnewplaceswhere

branchesweretobeopenedeffectivelycheckedthegrowthofnewbranchesafter

1876.Thepaceofexpansionwitnessedinthepreviousdecadefelsharply

although,inthecaseoftheBankofMadras,itcontinuedonamodestscaleasthe

profitsofthatbankweremainlyderivedfromtradedispersedamonganumberof

porttownsandinlandcentersofthepresidency.

Indiawitnessedrapidcommercializationinthelastquarterofthenineteenth

centuryasitsrailwaynetworkexpandedtocoveralthemajorregionsofthe country.New

irrigationnetworksinMadras,PunjabandSindacceleratedthe

processofconversionofsubsistencecropsintocashcrops,aportionofwhich

founditswayintotheforeignmarkets.Teaandcoffeeplantationstransformed

largeareasoftheeasternTerais,thehilsofAssamandtheNilgirisintoregionsof

estateagricultureparexcelence.AltheseresultedintheexpansionofIndia's

internationaltrademorethansix-fold.

Thethreepresidencybankswerebothbeneficiariesandpromotersofthis

commercializationprocessastheybecameinvolvedinthefinancingofpracticaly

everytrading,manufacturingandminingactivityinthesub-continent.

WhiletheBanksofBengalandBombaywereengagedinthefinancingoflarge

modernmanufacturingindustries,theBankofMadraswentintothefinancingof

largemodernmanufacturing

industries,theBankofMadraswentintothefinancingofsmal-scaleindustriesin

31
awaywhichhadnoparalelelsewhere.Butthethreebankswererigorously

excludedfrom anybusinessinvolvingforeignexchange.Notonlywassuch

businessconsideredriskyforthesebanks,whichheldgovernmentdeposits,itwas

alsofearedthatthesebanksenjoyinggovernmentpatronagewouldofferunfair

competitiontotheexchangebankswhichhadbythenarivedinIndia.This

exclusioncontinuedtilthecreationoftheReserveBankofIndiain1935.

PresidencyBanksofBengal:-

ThepresidencyBanksofBengal,BombayandMadraswiththeir70brancheswere
mergedin1921toformtheImperialBankofIndia.Thetriadhadbeentransformed
intoamonolithandagiantamongIndiancommercialbankshademerged.The
newbanktookonthetripleroleofacommercialbank,abanker'sbankanda
bankertothegovernment.
Butthiscreationwasprecededbyyearsofdeliberationsontheneedfora'State
BankofIndia'.Whateventualyemergedwasa'half-wayhouse'combiningthe
functionsofacommercialbankandaquasi-centralbank.
TheestablishmentoftheReserveBankofIndiaasthecentralbankofthecountry
in1935endedthequasi-centralbankingroleoftheImperialBank.Thelater
ceasedtobebankerstotheGovernmentofIndiaandinstead

BecameagentoftheReserveBankforthetransactionofgovernmentbusinessat

32
centersatwhichthecentralbankwasnotestablished.
Butitcontinuedtomaintaincurrencychestsandsmalcoindepotsandoperate
theremitancefacilitiesschemeforotherbanksandthepublicontermsstipulated
bytheReserveBank.Italsoactedasabankers'bankbyholdingtheirsurpluscash
andgrantingthemadvancesagainstauthorizedsecurities.
Themanagementofthebankclearinghousesalsocontinuedwithitatmany

placeswheretheReserveBankdidnothaveoffices.Thebankwasalsothe

biggesttenderedattheTreasurybilauctionsconductedbytheReserveBankon

behalfoftheGovernment.

TheestablishmentoftheReserveBanksimultaneouslysawimportant

amendmentsbeingmadetotheconstitutionoftheImperialBankconvertingitinto

apurelycommercialbank.

ImperialBank:-

TheImperialBankduringthethreeandahalfdecadesofitsexistencerecordedan

impressivegrowthintermsofoffices,reserves,deposits,investmentsand

advances,theincreasesinsomecasesamountingtomorethansix-fold.

Thefinancialstatusandsecurityinheritedfromitsforerunnersnodoubtprovideda

firm anddurableplatform.ButtheloftytraditionsofbankingwhichtheImperial

Bankconsistentlymaintainedandthehighstandardofintegrityitobservedinits

operationsinspiredconfidenceinitsdepositorsthatnootherbankinIndiacould

perhapsthenequal.AltheseenabledtheImperialBanktoacquireapre-eminent

33
positionintheIndianbankingindustryandalsosecureavitalplaceinthecountry's

economiclife.

StampofImperialBankofIndia

Subsidiaries:-

TheStateBankGroupincludesanetworkofeightbankingsubsidiariesand

severalnon-bankingsubsidiaries.Throughtheestablishments,itoffersvarious

services including merchantbanking services,fund management,factoring

services,primarydealershipingovernmentsecurities,creditcards.

Theeightbankingsubsidiariesare:

34
 11.StateBankofBikanerandJaipur(SBBJ)
12.StateBankofHyderabad(SBH)
13.StateBankofIndia(SBI)
14.StateBankofIndore(SBIR)
15.StateBankofMysore(SBM)
16.StateBankofPatiala(SBP)
17.StateBankofSaurashtra(SBS)
18.StateBankofTravancore(SBT)

Products

PersonalBanking:-

 SBITermDepositsSBILoanForPensioners
 SBIRecurringDepositsLoanAgainstMortgageOfProperty
 SBIHousingLoanLoanAgainstShares&Debentures
 SBICarLoanRentPlusScheme
 SBIEducationalLoanMedi-PlusScheme

OtherServices:-

35
 Agriculture/RuralBanking
 NRIServices
 ATMServices
 DematServices
 CorporateBanking
 InternetBanking
 MobileBanking
 InternationalBanking
 SafeDepositLocker
 RBIEFT
 E-Pay
 E-Rail
 SBIVishwaYatraForeignTravelCard
 BrokingServices
 GiftCheques

NETWORKOFSBIBANK:-

SBIBankIndiahas52ForeignOfficesin34countries.SBIIndiaservesthe
internationalneedsofitsforeigncustomers,inadditiontoconductingretail
operations.ThefocusoftheofficesofSBIisIndia-relatedbusiness.Fewofthe
countrieswhereSBIBankhasbranchesareasunder:

 Australia
 Bahamas
 Bahrain
 Bangladesh
 Belgium
 Bhutan
 Canada
 France

36
 Germany
 HongKong
 Japan
 Maldives
 Mauritious
 Muscat
 Nepal
 Nigeria
 Oman
 Russia
 Singapore
 SriLanka
 SouthAfrica
 UK
 USA

StructureofOrganization:-

CentralBoardofStateBankofIndia
th
(Ason13 January2009)

BOARDOFDIRECTORS

Sec.ofSBIAct,
Sr.No. NameofDirector
1955

ShriO.P.Bhat
1. 19(a)
Chairman

2. ShriS.K.Bhatacharyya 19(b)
MD&CC&RO

ShriR.Sridharan
3. 19(b)
MD&GE(A&S)
37
 4. Dr.AshokJhunjhunwala 19(c)

5. ShriDileepC.Choksi 19(c)

6. ShriS.Venkatachalam 19(c)

7. Shri.D.Sundaram 19(c)

8. Dr.DevaNandBalodhi 19(d)

9. Prof.Mohd.SalahuddinAnsari 19(d)

10. Dr.(Mrs.)VasanthaBharucha 19(d)

11. Dr.RajivKumar 19(d)

12. ShriArunRamanathan 19(e)

Smt.ShyamalaGopinath
13. 19(f)

PERFORMANCEOFSBIBANK

INVESTORRELATIONS:-

StateBankofIndia,thecountry’slargestcommercialBankintermsofprofits,
assets,deposits,branchesand employees,welcomesyou to its‘Investors
Relations’Section.SBI,withitsheritagedatingbacktotheyear1806,strivesto
continuouslyprovidelatestanduptodateinformationonitsfinancialperformance.
Itisourendeavortowalkonthepathoftransparencyandalowcompleteaccess
toalthestakeholdersenablingtotalawarenessabouttheBank.TheBank
communicateswiththestakeholdersthroughavarietyofchannels,suchas throughe-
mail,website,conferencecal,one-on-onemeeting,analysts’meetand
atendanceatInvestorConferencethroughouttheworld.

Pleasefindbelow Bank’sfinancialresults,analysisofperformanceandother
highlightswhichwilbeofinteresttoInvestors,FundManagersandAnalysts.SBI
hasalwaysbeenfundamentalystronginitscorebusinesswhichismirrored
38
SBIFINANCIALHIGHLIGHTS:-

PAST5YEARS
TABLEI

STATEBANKOFINDIA-FINANCIALHIGHLIGHTS2002-07

Rs.inBilion FY2002 FY2003 FY2004 FY2005 FY2006 FY2007

Deposits 2705.62961.243186.193670.48 3800.46 4355.21

Advances 1208.061377.581579.342023.74 2618.01 3373.36

Investments 1451.42 1723.48 1856.76 1970.98 1625.34 1491.49

TotalAssets 3482.28 3758.76 4078.15 4598.83 4940.29 5665.65

InterestIncome 298.10 310.87 304.60 324.28 359.80 394.91

InterestExpenses 207.29 211.09 192.74 184.83 203.90 234.37

NetInterestIncome 90.81 99.78 111.86 139.45 155.89 160.54

39
 Non-InterestIncome 41.74 57.40 76.12 71.20 74.35 57.69

TotalOperatingIncome 132.55 157.18 187.98 210.65 230.24 218.23

StaffExpenses 51.53 56.89 64.48 69.07 81.23 79.33

OverheadExpenses 20.58 22.53 27.97 31.67 36.02 38.91

TotalOperatingExpenses 72.11 79.42 92.45 100.74 117.25 118.24

OperatingProfit
60.44 77.76 95.53 109.91 112.99 100.00

TotalProvisions
36.14 46.70 58.72 66.86 68.93 54.59

NetProfit 24.30 31.06 36.81 43.05 44.07 45.41

TABLEI

STATEBANKOFINDIA-FINANCIALHIGHLIGHTS2002-07

(INUS$)

InUS$Bilion FY2002 FY2003 FY2004 FY2005 FY2006 FY2007

Deposits 55.44 62.35 72.88 83.91 85.18 100.19

 Advances 24.76 29.01 36.13 46.26 58.68 77.60

Investments
29.74 36.29 42.47 45.06 36.43 34.31

TotalAssets
71.36 79.15 93.28 105.13 110.73 130.33

InterestIncome 6.11 6.55 6.97 7.41 8.06 9.08

40
 InterestExpenses
4.25 4.45 4.41 4.23 4.57 5.39

NetInterestIncome
1.86 2.10 2.56 3.18 3.49 3.69

Non-InterestIncome
0.86 1.21 1.74 1.63 1.66 1.33

TotalOperatingIncome 2.72 3.31 4.30 4.81 5.15 5.02

StaffExpenses
1.06 1.20 1.47 1.58 1.82 1.82

OverheadExpenses
0.42 0.47 0.64 0.72 0.81 0.90

TotalOperatingExpenses 1.48 1.67 2.11 2.30 2.63 2.72

OperatingProfit
1.24 1.64 2.19 2.51 2.52 2.30

TotalProvisions
0.74 0.98 1.34 1.53 1.54 1.26

NetProfit 0.50 0.66 0.85 0.98 0.98 1.04

TABLEI

STATEBANKOFINDIA

KEYFINANCIAL
FY2002FY2003FY2004FY2005FY2006FY2007
INDICATORS(%)

0.73 0.86 0.94 0.99 0.89 0.84

ROA
 15.97 18.05 18.19 18.10 15.47 14.24
ROE

EPS(Rs.) 46.20 59.00 69.94 81.79 83.73 86.29

BVS(Rs.) 289 327 384 450 525 606

DividendPayout Ratio 12.98 14.40 15.73 15.29 16.72 16.22

41
 Cost/IncomeRatio 54.40 50.53 49.18 47.83 58.70 54.18

13.35 13.50 13.53 12.45 11.88 12.34

CapitalAdequacyRatio

CostofDeposits 7.60 7.11 6.02 5.11 4.77 4.79

YieldonAdvances 9.66 8.97 8.17 7.68 7.78 8.67

YieldonResourcesDeployed 10.06 9.53 8.62 7.94 7.10 6.88

NetInterestMargin 2.91 2.95 3.04 3.39 3.40 3.31

GrossNPARatio 11.95 9.33 7.75 5.96 3.61 2.92

NetNPARatio 5.63 4.50 3.48 2.65 1.88 1.56

ProvisionCoverage 56 54 57 57 49 47

TABLEIV

SUMMARYOFSTATEBANKOFINDIA’SBALANCESHEET

(Rs.in
bilion) MARCHMARCHMARCHMARCHMARCH MARCH
2002 2003 2004 2005 2006 2007

Capital 5.26 5.26 5.26 5.26 5.26 5.26

Reserves&
Surplus 146.98 166.77 197.05 235.46 271.18 307.72

Deposits 2705.602961.233186.193670.483800.464355.21

Borrowings 93.24 93.04 134.31 191.84 306.41 397.03

42
 Other
Liabilities& 531.20 532.46 555.34 495.79 556.98 600.42
Provisions

Total
ASSETS 3482.283758.764078.154598.834940.295665.65

Cash&
balances
with
Reserve 218.73 127.38 190.41 168.10 216.53 290.76
Bankof
India

Balances
withbank
andmoney 430.58 324.43 245.25 225.12 229.07 228.92
atcal&
shortnotice

Investments 1451.421723.481856.761970.981625.341491.49

Advances 1208.061377.581579.342023.742618.013373.36

Fixed
Assets 24.15 23.89 26.45 26.98 27.53 28.19

Other
Assets 149.34 182.01 179.94 183.91 223.81 252.92

Total 3482.283758.74078.154598.834940.295665.65

Contingent1022.131061.061118.921593.972288.513065.90
Liabilities

Bilsfor 101.77 75.71 101.94 167.77 205.93 233.68

Colection
43
 TABLEV

SUMMARYOFSTATEBANKOFINDIA’SBALANCESHEET

(InUS$bilion) MARCHMARCH MARCH MARCH MARCH MARCH

20022003 2004 2005 2006 2007

0.11 0.11 0.12 0.12 0.12 0.12

Capital

3.01 3.51 4.51 5.38 6.08 7.08

Reserves&Surplus

55.44 62.35 72.88 83.94 85.18 100.19

Deposits

1.91 1.96 3.07 4.39 6.87 9.13

Borrowings

OtherLiabilities&Provisions 10.88 11.21 12.70 11.33 12.48 13.81

71.35 79.14 93.28 105.13 110.73130.33

TotalASSETS

Cash&balanceswith
4.48 2.68 4.35 3.84 4.85 6.69
ReserveBankofIndia

Balanceswithbanksand 8.82 6.83 5.61 5.15 5.13 5.27

moneyatcal&shortnotice

29.74 36.29 42.47 45.06 36.43 34.31

Investments

24.76 29.01 36.13 46.26 58.68 77.60

Advances

0.49 0.50 0.61 0.62 0.62 0.65

FixedAssets

3.06 3.83 4.11 4.20 5.02 5.82

OtherAssets

71.35 79.14 93.28 105.13 110.73130.33

Total
ContingentLiabilities 20.95 22.34 25.59 36.44 51.30 70.53

2.08 1.59 2.33 3.83 4.62 5.38

BilsforColection

44
 TABLEVI

STATEBANKOFINDIAMARKETRELATEDRATIOS

MARKETRELATEDRATIOS MAR03MAR04MAR05MAR06MAR07

MarketPrice(Rs) 270 606 657 968 993

(asonlastdayoftheyear/quarter)

0.83 1.58 1.44 1.84 1.64

PricetoBookRatio(%)

MarketCapitalization 142.05 318.78 345.75 509.48 522.56

(RsinBilion)

EarningPerShare 59.00 69.94 81.79 83.73 86.29

(Rs)

4.58 8.66 8.03 10.40 11.51

P/ERatio(%)
45
46
47
48
49
SBIPersonalLoans:-

SBIPersonalLoansalsoknownasStateBankofIndiapersonalfinanceschemes,

aimtoprovidethenecessaryfinancialassistancetoasmanypeopleaspossibleto

helpthemrealizetheirdreamsorcomeoutofsituationsoffinancialneed.State

BankofIndiabeingIndia'slargestbankisatrustednameandtheSBIpersonal

loanratesofinterestarekeptatthemostcompetitiveleveltomakeapersonal

loanasapproachable.

ThemostpopularSBIpersonalloansincludehousingloans,carloans,education

loan,loansagainstproperty,sharesordebentures,reversemortgageloansand

more.

StateBankofIndiaHousingLoanorSBIHomeLoanisavailableincomplete

transparencyandatnohiddencosts.Theinterestratesarechargedondaily

reducingbasis.

SBICarLoans offeralucrativedealoflow interestrates,easyrepayment

facilitiesandinclusionofaladditionalchargeslikevehicleregistration,insurance, one-

timeroadtaxandcaraccessories.StateBankofIndiaofferscarloansfor

purchaseofalkindsofpersonaluseandcommercialvehicles.

StateBankofIndiaoffersEducationLoantoIndiannationalsforpursuinghigher

studieswithinthecountryorabroad.TheSBIeducationloancoversthetravel

expenses,tuitionfees,examinationfees,costsofbooksandothercoursematerial
50
andstationery,refundablecautiondeposits,expensesforpurchaseofcomputers

necessaryforthecourseandalsoatwo-wheelerconveyanceuptoRs.50,000in

costsalongwithanyothermajorexpensesmandatorytothecourse.

PersonalLoanagainstThirdPartySecurityofNSC/IVP/RBIReliefBondsetc.:-

Tenure RateofInterest

Upto3years 1.00%aboveSBARi.e.13.25%p.a.

0.25%aboveSBARi.e.12.50%p.a.
Above3yearsupto6years

51
(FAQ)PERSONALLOAN

Q.Whataremyloanlimits?
A.Yourpersonalloanlimitwouldbedeterminedbyyourincomeandrepayment
capacity.NormalyyoucanavailaloanuptoRs.2.50lacs.However,ifinmetrosof
NewDelhi,Mumbai,Bangalore,Chennai,HyderabadandKolkata,salaried
individualsorself-employedprofessionalscanavailPersonalLoanuptoRs.5.00
lacs.Ifthesalaryofasalariedindividualiscreditedtohis/heraccountwithour Bankoraself-
employedprofessionalhasbeenmaintainingasatisfactorily
conductedaccountwithus,aPersonalLoanofuptoRs.10lacscanbesanctioned.

Q.Canmyspouse’sincomebeincludedforcalculatingthe loanamount?
A.Yes,yourspouse'sincomecanbeincludedprovidedhe/sheguaranteestheloan
ortheloanistakenjointly.

Q.WhataretheimportantdocumentsthatIneedtoprovide?
A.Youwilneedtofurnishonlythefolowingdocumentsifyouareanexisting
customeroftheBank:

-Passportsizephotograph

-Proofofofficialaddressforselfemployedindividualsandprofessionals.Thiscan
includeshopandestablishmentcertificate/Leasedeed/TelephoneBil
-LatestSalaryclipandForm16,inthecaseofsalariedpersons

Q.DoIhavetopledgesomeformofsecurity?
A.Nosecurityisrequired.

52
Q.Whatistherepaymentschedulelike?
A.TheminimumamountthatyouareexpectedtopayeverymonthistheEMI.You
arealowedtopaymorethantheEMIifyouwishto,andwedonotchargeany
prepaymentpenalty.

Q.WhatisEMI?
A.EMIstandsforEquatedMonthlyInstalments.Thisinstalmentcomprisesboth
principalandinterestcomponents.UsetheEMIcalculatortofindoutyourmonthly
paymentsbasedontheloanamount,therateofinterestandtherepaymentperiod.
Choosethecombinationthatbestmeetsyourfinancialresourcesand requirements.

Q.CanIprepaytheloan?Arethereanypenalties?
A.Yes,youcanprepaytheloanpartlyorfuly,atanystage,withoutanyprepayment
penalty.

Q.Whatistheprocessingfee?Arethereanyothercharges?
A.Processingchargesare1percentoftheloanamount.Thisisamongstthe
lowestfeesintheindustry.Processingfeeshavetobepaidupfront.Thereareno
hiddencostsorotheradministrativecharges.

Q.DoIhavetheoptionofchoosingafixedorfloatingratefortheloan?
A.Youhavetheoptiontoavailtheloanwitheitherafixedinterestrateorafloating
one.Inthecaseofafixedrateloan,theinterestrateontheloanwilremainfixed
throughtheentiretenureoftheloan,whereasinthecaseofafloatingrateloan,
theinterestratecoulddeclineorriseinlinewiththechangesintheBank'sMedium
TermLendingRate(SBMTLR).

Q.HowdoesSBIPersonalloancomparewiththoseofferedbyotherbanks?
A.Thereistotaltransparencywithregardtotherateofinterestandthefees
chargedbyus.
-Weofferpersonalloansatthecheapestratesofinterest,withnosecurityor
colateral
-Weofferloansforthelongesttenors(48months),withtheflexibilityprovidedto
reducethetenorbyprepayingtheloanwithoutanypenalty.

53
-Weprovidefinanceforanypersonalneedorrequirement,thetotalamountbeing
determinedonthebasisofrepayingcapacity.
-WithanSBIpersonalloanyoucanchoosebetweenfixedratesofinterestand
floatinginterestrates.

INTRODUCTIONOFHDFCBANK

Background

HDFCwasincorporatedin1977withtheprimaryobjectiveofmeetingasocial

Need–thatofpromotinghomeownershipbyprovidinglong-term financeto

householdsfortheirhousingneeds.HDFCwaspromotedwithaninitialshare

capitalofRs.100milion.

BusinessObjectives

TheprimaryobjectiveofHDFCistoenhanceresidentialhousingstockinthe

Countrythroughtheprovisionofhousingfinanceinasystematicandprofessional

Manner,andtopromotehomeownership.Anotherobjectiveistoincreasetheflow

ofresourcestothehousingsectorbyintegratingthehousingfinancesectorwith

theoveraldomesticfinancialmarkets.

OrganizationalGoals

HDFC’smaingoalsareto

a)Developcloserelationshipswithindividualhouseholds.

b)Maintainitspositionasthepremierhousingfinanceinstitutioninthecountry,

c)Transformideasintoviableandcreativesolutions.

54
d)Provideconsistentlyhighreturnstoshareholders.

e)TogrowthroughdiversificationbyleveragingofftheExistingclient.

HISTORYOFHDFCBANK

TheHousingDevelopmentFinanceCorporationLimited(HDFC)wasamongstthe

firsttoreceivean'inprinciple'approvalfromtheReserveBankofIndia(RBI)toset

upabankintheprivatesector,aspartoftheRBI'sliberalizationoftheIndian

BankingIndustryin1994.ThebankwasincorporatedinAugust1994inthename

of'HDFCBankLimited',withitsregisteredofficeinMumbai,India.HDFCBank

commencedoperationsAsaScheduledCommercialBankon16thJanuary1995.

Intheyear1998HDFCBankhadtiedupwiththeAhmadabadStockExchange(ASE)

toactasitsclearingbank

BusinessFocus:-

HDFCBank'smissionistobeaWorld-ClassIndianBank.Theobjectiveistobuild

soundcustomerfranchisesacrossdistinctbusinessessoastobetheprefered

providerofbankingservicesfortargetretailandwholesalecustomersegments,

andtoachievehealthygrowthinprofitability,consistentwiththebank'srisk

appetite.Thebankiscommitedtomaintainthehighestlevelofethicalstandards,

professionalintegrity,corporategovernanceandregulatorycompliance.

55
 SubsidiaryandAssociateCompanies

ThesubsidiariesofHDFCconsistsof

1.HDFCBank

2.HDFCMutualFund

3.HDFCStandardLifeInsuranceCompany

4.HDFCRealty

5.HDFCChubbGeneralInsuranceCompanyLimited.

6.IntelnetGlobalServicesLimited

7.CreditInformationBureau(India)Limited

8.OtherCompaniesCo–PromotedbyHDFC

 HDFCTrusteeCompanyLtd.

 GRUHFinanceLtd.

 HDFCDevelopersLtd.

 HDFCVentureCapitalLtd.

 HDFCVentureTrusteeCompanyLtd

 HDFCSecuritiesLtd.

 HDFCHoldingLtd.

 HomeLoanServicesIndiaPvt.Ltd.

56
 HDFCBANK

TheOrganization:-

TheHousingDevelopmentFinanceCorporationLimited(HDFC)wasamongstthe

firsttoreceivean'inprinciple'approvalfromtheReserveBankofIndia(RBI)toset

upabankintheprivatesector,aspartoftheRBI'sliberalisationoftheIndian

BankingIndustryin1994.ThebankwasincorporatedinAugust1994inthename

of'HDFCBankLimited',withitsregisteredofficeinMumbai,India.HDFCBank

commencedoperationsAsaScheduledCommercialBankon16thJanuary1995.

Intheyear1998HDFCBankhadtiedupwiththeAhmadabadStockExchange(ASE)

toactasitsclearingbank.

CapitalStructure:-

TheauthorizedcapitalofHDFCBankisRs.450crore(Rs.4.5bilion).Thepaid-up

capitalisRs.311.9crore(Rs.3.1bilion).TheHDFCGroupholds22.1%ofthe

bank'sequityandabout19.4%oftheequityisheldbytheADSDepository(in

respectofthebank'sAmericanDepositoryShares(ADS)Issue).Roughly31.3%of

theequityisheldbyForeignInstitutionalInvestors(FIs)andthebankhasabout

190,000shareholders.ThesharesarelistedontheTheStockExchange,Mumbai

andtheNationalStockExchange.

57
TimesBankAmalgamation:-

InamilestonetransactionintheIndianbankingindustry,TimesBankLimited

(anothernewprivatesectorbankpromotedbyBennet,Coleman&Co./Times

Group)wasmergedwithHDFCBankLtd.,effectiveFebruary26,2000.Asperthe

schemeofamalgamationapprovedbytheshareholdersofbothbanksandthe

ReserveBankofIndia,shareholdersofTimesBankreceived1shareofHDFCBank

forevery5.75sharesofTimesBank.Theacquisitionaddedsignificantvalueto

HDFCBankintermsofincreasedbranchnetwork,expandedgeographicreach,

enhancedcustomerbase,skiledmanpowerandtheopportunitytocross-seland

leveragealternativedeliverychannels.

58
ORGANIZATIONALSTRUCTUREOFHDFCBANK:-

BoardofDirectors:-

1.Mr.JagdishKapoor

2.AdityaPuri

3.RanuKamad

4.VineetJain

5.ArvindPande

6.GautamDivan

7.CMVasudav

Mr.JagdishKapoortookoverasthebank'sChairmaninJuly2001.Priortothis,

Mr.KapoorwasaDeputyGovernoroftheReserveBankofIndia.

TheManagingDirector,Mr.AdityaPuri,hasbeenaprofessionalbankerforover25

years,andbeforejoiningHDFCBankin1994washeadingCitibank'soperationsin

Malaysia.

TheBank'sBoardofDirectorsiscomposedofeminentindividualswithawealthof

experienceinpublicpolicy,administration,industryandcommercialbanking.

SeniorexecutivesrepresentingHDFCarealsoontheBoard.

59
ThemanagementconsistsoftheChairmanMrJagdishkapoorand9other

Directorsthatassisthiminachievingobjectivesofthebank.

MR.JagdishKapoor

Mr.JagdishKapoorholdsaMastersdegreeinCommerceandisaFelow member

ofIndianInstituteofBankingandFinance.PriortojoiningtheBank,Mr.Kapoor

wastheDeputyGovernoroftheReserveBankofIndia.HeretiredasDeputy

GovernorofReserveBankofIndiaafterservingfor39years.WhilewithReserve

BankofIndia,Mr.KapoorwastheChairmanoftheDepositInsuranceandCredit

GuaranteeCorporationofIndiaandBharatiyaReserveBankNoteMudranLimited.

HealsoservedontheboardsofExportImportBankofIndia,NationalHousing

Bank,NationalBankforAgricultureandRuralDevelopment(NABARD)andState

BankofINDIA.

60
 MR.AdityaPuri.

Mr.AdityaPuriholdsaBachelorsdegreeinCommercefromPunjabUniversityand

isanassociatememberoftheInstituteofCharteredAccountantsofIndia.Mr.

AdityaPurihasbeentheManagingDirectoroftheBanksinceSeptember1994.

Mr.KeKiM.Mistry

Mr.MistryisViceChairman&ManagingDirectorofHousingDevelopmentFinance

CorporationLimitedandChairmanofGRUHFinanceLimited.HeisalsoaDirector

ontheBoardofHDFCDevelopersLimited,HDFCStandardLifeInsuranceCo.Ltd,

HDFCGeneralInsuranceCompanyLimited,InfrastructureLeasing&Financial

ServicesLimited,SunPharmaceuticalIndustriesLimited,TheGreatEastern

ShippingCompanyLimited,NexGenPublishingLimited,IndiaValueFundAdvisors

PrivateLimited,HDFCAssetManagementCompanyLimited,Greatship(India)

Limited,GrihaInvestments-MauritiusandAssociationofLeasing& Financial

ServicesCompanies.

Mr.VineetJain

61
 Mr.JainisManagingDirectorofBennet,Coleman&Co.LimitedandDirectorin

TimesInfotainmentMediaLimited,EntertainmentNetwork(India)Limited,Optimal

MediaSolutionsLimited,ThePressTrustofIndiaLimited,TimesInternetLimited,

TimesGlobalBroadcastingCompanyLimited,BharatNidhiLimited,TimesJournal

IndiaPrivateLimited,WorldwideMediaPrivateLimited,.

Mrs.RenuKarnad

Mrs.KarnadisaJointManagingDirectorofHousingDevelopmentFinance

CorporationLimitedandChairpersonofHDFCVentureCapitalLimited,HDFC

PropertyVenturesLimitedandHomeLoanServicesIndiaPrivateLimited.Sheisa

DirectorofHDFCAssetManagementCompanyLimited,GRUHFinanceLimited,

HDFCRealtyLimited,CreditInformationBureau(India)Limited,HDFCGeneral

InsuranceCompanyLimited,ICIIndiaLimited,IndraprasthaMedicalCorporation

Limited,HDFCStandardLifeInsuranceCompanyLimited,SparshBPOServices

Limited,MotherDairyFruits&VegetablesPrivateLimited,FeedbackVentures

PrivateLimited,MotorIndustriesCo.Limited,EgyptianHousingFinanceCompany

andAscendasPte.Limited,Singapore.

62
 Mr.ArvindPande

HewasaJointSecretarytothePrimeMinisterofIndiaforEconomics,Science

andTechnologyissues.Mr.PandehasservedasaDirector,Departmentof

EconomicAffairs,MinistryofFinance,GovernmentofIndiaandhasdealtwith

WorldBankaidedprojects.Mr.PandehasalsoservedontheBoardofSteel

AuthorityofIndiaLimitedasitsChairmanandChiefExecutiveOfficer(CEO).

Mr.AshimSamanta

Hehasvastexperienceinthefieldofbulkdrugsandpharmaceuticalformulations.

HeisaDirectorofSamantaOrganicsPrivateLimited,NautilusTrading&Leasing

PrivateLimited,AshishRangUdyogPrivateLimited,SamantaMoviesPrivate

LimitedandShaktiCineStudiosPrivateLimited.Mr.Samantahasalsobeen

engagedinsetingupandrunningoffilmeditinganddubbingstudio.

Mr.GautamDivan

Mr.DivanisontheBoardofHDFCStandardLifeInsuranceCompanyLimited,

BalticConsultancy&ServicesPrivateLimited,BelCeramicsLimited,Brady&

MorrisEngineeringCompanyLimited,ChandanbhoyandJassoobhoyConsultants

63
PrivateLimited,SerendibInvestmentsPrivateLimitedandAscentHotelsPrivate

Limited.

Dr.PanditPalande

Dr.Palandehasextensiveexperienceofworkinginthefieldsofbusiness

administration,managementandagriculture.UndertheguidanceofDr.Palande,

YCMOUhasbecomeoneofthegreenuniversitiesinIndia.AsaprojectDirectorof

IndianSpaceResearchOrganisation(ISRO)GAP-3ofYCMOU,Dr.Palandehas

beenservingtheagriculturecommunityonalargescalethroughsatelite.

ProductsandServices–HDFCBank

Productrange:

ThefolowingistheproductrangeofferedatHDFC:Whilevariousdepositproducts

offeredbythebankareassigneddifferentnames,thedepositproductscanbe

categorizedbroadlyintothefolowingtypes.Definitionofmajordepositschemes

areasunder:-

1.Demanddeposits:

"DemandDeposits"meansadepositreceivedbythebankwhichiswithdrawnable
ondemand;
a)SavingsAccount:

"SavingsDeposits"meansaform ofDemandDepositwhichissubjectto

64
restrictionsastothenumberofwithdrawalsasalsotheamountsofwithdrawals

permitedbythebankduringanyspecifiedperiod;HDFCprovideswithsavingbank

accountwiththeusualfacilities,andonealsogetsafreeATM card,intrbranch

banking,bilpaymentfacilities,phonebankingandmobilebanking.

2.TermDeposits:

"TermDeposit"meansadepositreceivedbythebankforafixedperiodwithdraw
ableonlyaftertheexpiryofthefixedperiodandincludesdepositssuchas
Recurring/DoubleBenefitDeposits.

3.NoticeDeposit:

'NoticeDeposit'meansTerm Depositforaspecificperiodbutwhichcanbe

withdrawnongivingatleastonecompletebankingday'snotice.

4.CurrentAccount:

"CurrentAccount"meansaformofDemandDepositwherefromwithdrawalsare

alowedanynumberoftimesdependinguponthebalanceintheaccountoruptoa

particularagreedamountandwilalsoincludeotherdepositaccountswhichare

neitherSavingsDepositnorTermDeposit;Theaccountholdergetsapersonalized

chequebook,monthlyaccountstatements,andInter-branchbanking.

5.CorporateAccount:-

ThesearemorecommonlyknownasSalaryAccounts.TheseareaccountinHDFC

65
 bankwithzerobalance.Thesearegiventosalariedpeople.Theseaccountsare

openedbytheemployerfortheemployeestodepositthesalaryoftheemployee

directlytotheaccount.

6.HDFCBankPreferred:-

A preferentialSavingsAccountwherein,oneisassignedwithadedicated

RelationshipManager,who’syou’retheonepointcontact.Onealsogetprivileges

likefeewaivers,enhancedATM withdrawallimit,prioritylockeralotment,free

DematAccountandlowerinterestratesonloans.

7.Sweep-InAccount:-

AFixedDepositlinkedtoone’sSavingsAccount.So,evenifone’sSavingsAccount
runsabitshort,onecanissueacheque(oruseATMCard).

8.SuperSaverAccount:-

Itgivesoneanoverdraftfacilityupto75%ofone’sfixeddeposit.Inanemergency,

youcanaccessyourfundswhileyourfixeddepositcontinuestoearnhighinterest.

9.HDFCBankPlus:-

Apartfrom RegularandPremium CurentAccountsHDFCalsohasHDFCBank

Plus,aCurrentAccountandthensomethingextrafortheHDFCbankcustomers.
OnecantransferuptoRs.50lakheverymonthatnoextracharges,betweenthe
fourmetros.

11.DematAccount:

66
Onecanconducthassle-freetransactionsonthestockmarketforone’sshares.

Thesharesheldbythecustomerareprotectedfrom damage,lossandtheft,by

maintainingthesesharesinelectronicform.Thisaccountcanbeaccessed

throughInternettoo.

12.Loans:

Thereareavarietyofloanschemesofferedlikepersonalloans,newcarloans,

usedcarloans,loanagainstshares,consumerloans,twowheelerloans,andhome

loans.

PerformanceofHDFCBank

AwardsandAchievements:

HDFCBankbeganoperationsin1995withasimplemission:tobea"World-class

IndianBank".Werealisedthatonlyasingle-mindedfocusonproductqualityand

serviceexcelencewouldhelpusgetthere.Today,weareproudtosaythatweare

welonourwaytowardsthatgoal.

Itisextremelygratifyingthatoureffortstowardsprovidingcustomerconvenience

havebeenappreciatedbothnationalyandinternationaly.

67
 2009

Asian Banker 'AsianBankerBestRetailBankinIndiaAward2009'

Excelence in
Retail Financial
Services

2008

68
Finance Asia 'BestBankandBestCashManagementBank'
Country Awards
for Achievement
2008
CNN-IBN 'IndianoftheYear(Business)'
Nasscom ITUser 'BestITAdoptionintheBankingSector'
Award2008
BusinessIndia 'BestBank2008'
ForbesAsia Fab50companiesinAsiaPacific
Asian Banker BestRetailBank2008
Excelence in
Retail Financial
Services
Asiamoney BestlocalCash ManagementBank Award voted by
Corporates
Microsoft&Indian SecurityStrategistAward2008
ExpressGroup
World Trade For outstanding contribution to international trade
CenterAward of services.
honour
Business Today- OneofIndia's"MostInnovativeCompanies"
Monitor Group
survey
FinancialExpress- BestBankAwardinthePrivateSectorcategory
Ernst & Young
Award
Global HR 'EmployerBrandoftheYear2007-2008'Award-First
Excelence Runnerup,&manymore
Awards - Asia
Pacific HRM
Congress:

2007

69
Dun&Bradstreet 'CorporateBestBank'Award
– American
Express
Corporate Best
BankAward2007
The Bombay 'BestCorporateSocialResponsibilityPractice'Award
Stock Exchange
and Nasscom
Foundation's
Business for
Social
Responsibility
Awards2007
OutlookMoney& BestBankAwardinthePrivatesectorcategory.
NDTVProfit
TheAsianBanker BestRetailBankinIndia
Excelence in
Retail Financial
ServicesAwards
AsianBanker OurManagingDirectorAdityaPuriwinstheLeadership
AchievementAwardforIndia

70
CreditRating:-

HDFCBankhasitsdepositprogrammesratedbytworatingagencies-Credit

Analysis&ResearchLimited.(CARE)andFitchRatingsIndiaPrivateLimited.The

bank'sFixedDepositprogrammehasbeenrated'CAREAAA(FD)'[TripleA]by

CARE,whichrepresentsinstrumentsconsideredtobe"ofthebestquality,carying

negligibleinvestmentrisk".

CAREhasalsoratedthebank'sCertificateofDeposit(CD)programme"PR1+"

whichrepresents"superiorcapacityforrepaymentofshortterm promissory

obligations".FitchRatingsIndiaPvt.Ltd.(100% subsidiaryofFitchInc.)has

assignedthe"tAAA(ind)"ratingtothebank'sdepositprogramme,withthe

outlookontheratingas"stable".Thisratingindicates"highestcreditquality"where

"protectionfactorsareveryhigh".

HDFCBankalsohasitslongtermunsecured,subordinated(TierI)BondsofRs.4

bilionratedbyCAREandFitchRatingsIndiaPrivateLimited.CAREhasassigned

theratingof"CAREAAA"fortheTierIBondswhileFitchRatingsIndiaPvt.Ltd.has

assignedtherating"AAA(ind)"withtheoutlookontheratingas"stable".Ineach

ofthecasesreferredtoabove,theratingsawardedwerethehighestassignedby

theratingagencyforthoseinstruments.

71
 PersonalLoanPolicies

PersonalLoanFeatures&Benefits:-

1.BorowuptoRs15,00,000foranypurposedependingonyourrequirements.

2.FlexibleRepaymentoptions,rangingfrom12to60months.

3.RepaywitheasyEMIs.

4.Oneofthelowestinterestrates.

5.Hasslefreeloans-Noguarantor/security/colateralrequired.

6.Speedyloanapproval.

7.Convenienceofserviceatyourdoorstep

8.Customerprivileges

 IfyouareanHDFCBanksalaryaccountholder,wehaveaspecialofferfor you

 IfyouareanexistingAutoLoancustomerwithaclearrepaymentof12
monthsormorefrom anyofourapprovedfinanciersorus,youcangeta
hasslefreepersonalloan(withoutincomedocumentation).

 IfyouareanexistingHDFCBankPersonalLoancustomerwithaclear
repaymentof12monthsormore,wecanTop-Upyourpersonalloan.

72
 EligibilityCriteria:-

 MinimumageofApplicant:21years
 MaximumageofApplicantatloanmaturity:60years
 Minimum employment:Minimum 2yearsinemploymentandminimum 1
yearinthecurrentorganization
 MinimumNetMonthlyIncome:Rs.10,000permonth(Rs.15,000inMumbai,
Delhi,Bangalore,ChennaiandHyderabad&Rs.12,000inCalcuta,Ahmedabadand
Cochin)

Documentsrequired:-

 ProofofIdentity(PassportCopy/VotersIDcard/DrivingLicence)
 Address Proof(Ration card Tel/Elect.Bil/Rentalagr./Passport
copy/Tradelicence/Est./SalesTaxcertificate)
 BankStatements(latest3monthsbankstatement/6monthsbank
passbook)
 LatestsalarysliporcurrentdatedsalarycertificatewithlatestForm16

73
Fees&ChargesforPersonalLoan

DescriptionofCharges PersonalLoan
LoanProcessingCharges Upto2%oftheloanamount
Prepayment(upto6monthsofavailing Nopre-paymentpermited
loan)
Pre-paymentcharges(after6monthsof 4%ofthePrincipalOutstanding
availingloan)
No Due Certificate / No Objection NIL
Certificate(NOC)
Duplicatenoduecertificate/NOC Rs250/-
SolvencyCertificate Notapplicable
ChargesforlatepaymentofEMI @24%p.aonamountoutstandingfrom
dateofdefault

Charges forchanging from fixed to Notapplicable

floatingrateofinterest
Chargesforchangingfrom floatingto Notapplicable
fixedrateofinterest
StampDuty&otherstatutorycharges Asperapplicablelawsofthestate
Creditassessmentcharges Notapplicable
Nonstandardrepaymentcharges Notapplicable
Chequeswappingcharges Rs500/-perevent
Loan Re-booking charges / Re- Rs1000/-schedulingcharges

Loancancelationcharges Rs.1000/-
ChequeBounceCharges Rs450/-perchequebounce

StatementCharges (perstatement)/ Rs500/-RepaymentSchedule

Legal/incidentalcharges Atactual

74
FAQs:-

1.Ifyouhaveanyqueriesthatarenotansweredhere,pleasecalusor

Writetous.

2.WhatarethebenefitsofhavingaSalaryAccountformypersonalloan?

3.HowmuchloancanIavailof?

4.HowdoIrepaymyPersonalloan?

5.WhatsecuritydoIneedtoprovidetoobtainthisloan?

6.Whataretheloantenureoptions?

7.Howlongwilittakeformetogetmyloan?

8.CanIrepaytheloanearlier?

9.HowdoIgetaPersonalLoan?

75
 METHODOLOGYOFTHESTUDY

ResearchMethodology

Researchasameanofgetingknowledgecanbecariedouteitherarbitrarilyorin

asystematicfashion.Itisapurposiveinvestigation.

Researchmaybeameantoknowthesmalchangeandtimeforceduponusas

individualorasasociety.Researchasprocessinvolvesdefiningtheproblem,

formulatingthehypothesis,organizingandevaluatingthedata,derivinginference

andconclusionaftercarefultesting.

DataColection

Asdataisrequiredforanyresearchactivity,itiscolected(forthoseboththe

PrimaryandSecondary)asfolows:

PrimaryData:

Ihavecolectedthisdatathroughquestionnaire.

SecondaryData:

Thisdataiscolectedfrom differentsourcesavailableconsolidatedfrom book

publicationreports,websiteswhereusedasasourceofsecondarydatainorderto

dothisprojectandtocolectnecessarydata.Ihaveusedthemanualsandleaflets

oftheHDFC&S.B.Ibank.

76
Titleofthestudy:-

“ComparativeAnalysisofSBI&HDFCBankRegardingPersonalLoan”

Objectiveofstudy

Primary:-

1.Analysisandevaluationofcustomerssatisfactionwithrespecttopersonalloan

performance.

2.Todeterminethemaincharacteristicwhichcustomerslookuponwhiletaking

personalloan?

3.Todeterminetheotherbankthosearecompetingwiththesameproductrangin

personalloan.

Secondary:-

1.Servicelevelandchannelassociateapproach.

2.Tofindthelevelofbrandawareness.

3.Tofindoutthecompanymarketshare.

77
 Typesofresearch:-
Descriptiveresearch

Primarydatacolection
ThroughQuestionnairefiledbyrespondents.

Secondarydatacolection
Datacolectionthrough–Internet,Magazines.

Samplesize&Methodofselectingsample

Samplesize-: 200respondents
Methodofselectingsample:- Conveniencesampling,100customer
fromeachbank

Scopeofstudy

i.

Specialareatobefocusedforincreasingthesalesandforsales

promotionactivitiestobeadopted.

i. Tomakeproductmoreinnovativeandeasytounderstand

i. Forprovidingmaximum satisfactiontothecustomerbyknowingtheirneeds

andrequirementaboutproductandservices.

iv. Stepstobetakenatpresentforsurvivalandfacingthecompetitionwithother

equivalentproduct.

v. Continuesimprovementandforbetermanagement.

vi. Maintaininggoodrelationbetweenmanagerandcustomer.

78
Limitationsofthestudy

4.ThestudywaslimitedonlyJaipurcityHencefindingsmaybedifferfromotherpart ofcountry.

5.Manyformalitiesandrequirementsduringprocessoftakingpersonalloan.

5.Manytimesrespondentsweresobusythattheydidn’ttgivereply.Therewere
biasedrepliesalso.

79
 FACTSANDFINDINGS

1.45%customersareprefertheSBIBankwhentakingpersonalloanandonly30%
customers
preferHDFCBank.
2.Familymembersarecreatingmoreeffectondecisionsregardingpersonalloan.
3.Interestrateismainfactorconsiderbycustomerswhentakingloan.
4.Mostofthecustomerpreferstherepaymentofloaninhigherduration.
5.Mostofthecustomersconsiderthepoliciesofbankregardingpersonalloan.
6.50%customer’sgivethehigherratingtoSBIBank.
7.InHDFCBankonly30%customersgivethehigherratingtoHDFCBank
8OnlygovernmentsemployeesareprefertheSBIBank.

9.Similarlyselfemployed&businessman’sareprefertheHDFCBank.

10Lowincomeclasspeoplefacedifficultytotakingpersonalloan

80
 ANALYSISANDINTERPRETATION

Samplesize100

Q.1Typeofcustomers.

SBI HDFC
a) Businessman 12 20
b) Selfemployed 20 20 Working

c) professional 28 35 Govt.service
d) employee40 25

Interpretation:-
Asperthestudythegovt.employeesaremaincustomersofSBIbank
andbusinessmanarelessminimum.Ontheothersideworkingprofessionalaremain
customersofHDFCbank.

Q.2Bankpreferenceforpersonalloan.

81
 a) HDFC 30

b) SBI 45

c) OTHERS 25

Interpretation:-
Maximum numberofcustomerspreferSBIbankfortaking
personalloancomparetoHDFCbankbcozoflowinterestrate,goodimage,and
publicsectorbank.25%customerspreferotherbanklikeICICI,PNB,andBankof
Broad.

Q.3Soursofcommunication(Fromwherecustomersgetthe
Informationaboutbank).

82
a) Advertisement 3
 b) Friend 25
c) Familymember 35
d) Others10

Interpretation:-
Asperasmythestudythefamilymembersarethemainsourcesof
Communicationaboutbankandadvertisementisothersources.Familymembers
influencethedecisionrelatedtotakingpersonalloan.

Q.4Factorsconsiderbycustomerswhiletakingloan.

83
 a) Interestrate 70
b) Scheme 20
c) Duration 8
d) Others 2

Interpretation:-
Whenanycustomersplanningfortakingpersonalloanfrom any
bankthey mainlyconsidertheinterestrateoftheparticularbankandtheygive
secondpreferencetoduration&schemes.

Q.5Loandurationpreferredbycustomers.

84
a) 2years 12
 b) 3years 28

c) 4years 24
More than 5
d) years 36

Interpretation:-
Maximum customerspreferthemorethan5yearsdurationfor
personalloanbecauseoflongdurationmonthlyinstalmentcanbeaffordablebythe customers.

Q.6Considerationonpoliciesofbankregardingpersonalloanbycustomers.
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 a) YES 7

b) NO 2

Interpretation:-
Asperthemystudywhenanycustomersplanningfortaking
personalloantheyconsiderthepoliciesofbankregardingpersonalCustomerswant
toaboutthealformalitiesandcloserelatedwithloanprocess.

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Q.7RatingofHDFCbank.

a) Good 44

b) Verygood 30

c) Average 26

d) Belowaverage 0

Interpretation:-
Accordingtomystudy75%customersareagreethatHDFCbank
isverygood&goodbecauseofgoodservices,morenumbersofscheme.

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Q.8RatingtheSBIbank.

a) Good 50

b) Verygood 40

c) Average 10

d) Belowaverage 0

Interpretation:-
90% ofcustomersagreethatSBIbankisverygood&good.
becauseofgoodimage,publicsectorbank,lowinterestrate.CompressiontoHDFC
bankmorecustomersagreethatSBIbankisverygood.
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Q.9Overalpreferenceonthebasisofinterestrate,imageandscheme.

a) HDFC 35

b) SBI 65

Interpretation:-
65%ofcustomersprefertheSBIbankand35%preferHDFCbank
onthebasisofinterestrate,imageandschemes.ThemainreasonisthattheSBI
bankispublicsectorbanksocustomerstrustonSBIbankmorethanHDFCbank.

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Q.10Commentonbankformalitiesregardingtopersonalloan.

Interpretation:-

Maximumnumbersofcustomersgivethecommentthatthebankformalitiesshould
bereduce.Theyagreethatthebankformalitiesareverystrucksoitmustbeeasy.
Someofthecommentsarefolows

1.Reducetheloanformalities.
2.Bankformalitiesareveryhigh.

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 SWOTANALYSIS

Strengths:-

BrandName:-
SBIBankhasearnedareputationinthemarketovertheperiodoftime(Being
theoldestbankinIndiatracinghistorybackto1806)

MarketLeader:-
SBIisrankedat380in2008FortuneGlobal500list,andranked219in2008
ForbesGlobal2000.Withanassetbaseof$126bilionanditsreach,itisa
regionalbankingbehemoth.
WideDistributionNetwork:
Excelentpenetrationinthecountrywithmorethan10000corebranchesand
morethan5100branchesofassociatebanks(subsidiaries).

DiversifiedPortfolio
SBIBankhasaltheproductsunderitsbelt,whichhelpittoextendthe
relationshipwithexistingcustomer’sBankhasumbrelaofproductstooffer
theircustomers,ifoncecustomerhasrelationshipwiththebank.Some
Products,whichSBIBankisofferingare:RetailBankingBusinessBanking
MerchantEstablishmentServices(EDCMachine)Personalloans&Carloans
InsuranceHousingLoans

GovernmentOwned:-
Governmentowns60%stakeinSBI.ThisgivesSBIanedgeoverprivatebanks
intermsofcustomersecurity.
LowTransitionCosts-SBIoffersverylowtransitioncostswhichatractssmal

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customers.

Weaknesses:-

1.Theexistinghierarchicalmanagementstructureofthebank,although
strengthinsomerespects,isabariertochange.

2.ThoughSBIcardsarethe2ndlargestplayerinthecreditcardindustry,it
hasthehighestnonperformingassets(NPAs)intheindustry,whichstandout
tobeat16.28%(Dec2007).

3.Modernisation:SBIlagswithrespecttoprivateplayersintermsof
modernisationofitsprocesses,infrastructure,centralisation,etc.

Opportunities:-

1. MergerofassociatebankswithSBI:Mergerofaltheassociatebanks(like
SBH,SBM,etc)intoSBIwilcreateamegabankwhichstreamlinesoperations
andunlocksvalue.

2. Planningtoadd2000branchesand3000ATMsin2008-2009.Thiswil
furtherincreaseits reach.

3. Increasingtradeandbusinessrelationsandalargenumberofexpatriate
populationsoffersa greatopportunitytoexpandonforeignsoil.

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Threats:-

1. AdventofMNCbanks:LargenumbersofMNCbanksaremushroomingin
theIndianmarketduetothefriendlypoliciesadoptedbythegovernment.This
canincreasethelevelofcompetitionandproveapotentialthreatforthe
marketshareofSBIbank.

2 Consumerexpectationshaveincreasedmanyfoldsinlastfewyearsand
thebankhasnotbeenresponsiveenoughtomeetthemontime.

3 Privatebankshavestartedventuringintotheruralandsemi-urbansector,
whichusedtobethebastionoftheStateBankandotherPSUbanks

4. EmployeeStrike:Therewasanemployeestrikeintheyear2006which
disruptedSBI’sactivities.Thiscanberepeatedinthefuture.

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 SWOTANALYSISOFSBIBANK

STRENGTH WEAKNESSES

 BRANDNAME  LESSMODERNISATION

 MARKETLEADER  HIGHERNPA

 GOVERNMENTOWNED.  CUSTOMER HAVE NOT FULL

 DIVERSIFIEDPORTFOLIO INFORMATION ABOUT GETTING

FACILITIES

OPPURTUNITIES THREAT

 HIGHAPPROCHOFATM  EMPLOYEESTRIKE

 2000 BRANCHES COMING ON  OTHERNATIONALIZEDBANKAND

VARIOUSLOCATION PRIVATEBANKS

 MERGEDWITHASSOCITEDBANK  ADVENTOFMNCBANK

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 SWOTANALYSISOFHDFCBANK

STRENGTH WEAKNESSES

 SEGMENTATION  TIMINGSHORT

 PRODUCTFEATURES  MAINTENANCECHARGESHIGH

 WORKENVIRONMENT  HIGHINTERESTRATE

 LOWDOCUMENTATION  CUSTOMER HAVE NOT FULL

INFORMATION ABOUT GETTING

FACILITIES

OPPURTUNITIES THREAT

 MERGEDWITHCENTURIANBANK  SBIBANK

 1300 BRANCHES COMING ON  OTHERPRIVATEBANK(ICICI,AXSIS

VARIOUSLOCATION etc)

 NAMEANDLOGOWILLBENEW

CONCLUSION

AreasinResearch:-
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InmyreportIhavetriedtoshowthebasicdifferentbetweenthePersonalLoan ofHDFC
& SBIBanks.BoththeBanksaregoodintermsofcustomer
satisfaction’shasanedgebecauseitistheleadingGovernmentregulatedbank
inIndia.HDFCisnewtothissegment(whencomparedtoSBI).SBIisprefered
becauseit’sagovernmentbank.ProcedureofloanfinancingiseasyinHDFC
Bank.Familymembers&increasingstandardoflivingplaysanimportantrolein
influencingthedecisionoftakinghomeloan.

1.SBIBankisLeadingBankinthecountry,itprovidesavarietyofproductsand
servicestodifferentsegmentsofcustomers.

2.TheBankaimstoservecustomersfrom teenagerstoseniorcitizens,hence
differentproductsdesignedtosuitspecificrequirementsoftheabove.

3.Aimstoservealclassesofthesocietyfromthesalariedmiddleclasstothehigh
incomebusinessclass.Customersarecategorizedandsegmentedaccordingtotheir
requirementsandneeds.
ForExample,the SavingRegularandPlusAccountaimstoservemiddleclass
customerssominimumbalancerequiredtobemaintainedisRS.5,000/-orRS.10000.
WhiletheSavingMaxAccountistargetedathighincomecustomers,theminimum
balancerequirementisRS.25,000.

4.SBIBankprovidespersonalloanatlowinterestratewhichgoodforcustomers.

5.TheBankpridesitselfwiththeabilitytoprovidedifferentiateproductsinthecrowed
marketofsavingaccounts.Bankoffersfreeinsurance,specialco-brandeddebitcards
whichmakesit’sproductunique.

APPENDIX

PersonalDetails:
96
Name:-_____________________________________________
Address: -
____________________________________________________________________________________

________________________________________________________
Age:-__________________ contactno:-__________________

(1)Profileofrespondent
(a)Businessman (b)Selfemployed
(c)Workingprofessional (d)GovernmentServiceEmployee

(2)Whichbankwouldyoupreferforpersonalloan?
(a)HDFCBank
(b)SBIBank
(c)Others

(3)Whatmakeyoubelievetotakethepersonalloanfromanyparticularbank?
(a)Advertisement (b)friend
(c)Familymember (d)others

(4)Whatwilyouconsiderwhiletakingloan?
(a)Interestrate (b)scheme
(c)Duration (d)others

(5)Forwhattimeintervalyouhavetakenloan?
(A)1-2years (b)2-3years
(c)3-4years (d)morethan4years

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(6).Doyoufulyconsiderthepoliciesofthebankregardingpersonalloan?whentaking
loan.
(a)Yes (b)no

(7).Ratethehdfcbankamongfolowingonthebasisofbankschemeandservices?
(a)Good (b)verygood (c)average (d)belowaverage

(8).Ratethesbibankamongfolowingonthebasisofbankschemeandservices?
(a)Good (b)verygood (c)average (d)belowaverage

(9).How wilyouseetheformalitiesofthebankwhiletakingthepersonalloan?
Comment

(10)Onthebasisofinterestrate,services,image,scheme.Whichbankyouprefer
HDFC&SBIandwhy?

BIBLIOGRAPHY

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MAGAZINES

 Businessworld
 Businesstoday

NEWSPAPER

 Economictimes
 TimesofIndia
 TheHindu

WEBSITES

 www.hdfcbank.com
 www.sbibank.com
 www.google.com

KNOWLEDGETHROUGHT.V.:-

WatchedAd’sofBoththeBanks,theyhelpedusinKnowingaboutthebanks&raised
ourinterestinthetopic.ThisAd’swerethefirstsourceofinformationaboutthebanks.
Theyhelpedinchoosingthetopic.

TELEVISION
 NDTVPROFIT
 ZEEBUSINESS
 TIMESNOW
 IBN7

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