INDUSTRIAL EXPOSURE PROJECT

ON

“A STUDY OF BANKING INDUSTRY HDFC

BANK”

SUBMITTED IN THE PARTIAL FULFILLMENT FOR

THE AWARD OF DEGREE OF BACHELOR IN
BUSINESS ADMINISTRATION 2016-2018

UNDER THE GUIDANCE OF:

MR. SHAKTI SHARMA

SUBMITTED BY:

RAJAT KHANDELWAL
PRN NO. - 1628100673

BHARATI VIDYAPEETH DEEMED

UNIVERSITY
SCHOOL OF DISTANCE EDUCATION

Academic Study Center-BVIMR, New Delhi

An ISO 9001:2008 Certified Institute

NAAC Accredited Grade “A” University

1
 STUDENT UNDERTAKING

I RAJAT KHANDELWAL (BBA 4SEM) would like to declare

that the Project report entitled “A STUDY OF BANKING
INDUSTRY HDFC BANK”. Submitted to Bharati
Vidyapeeth Deemed University School of Distance Education,
Academic Study Centre-BVIMR, and New Delhi in partial
fulfillment of the requirement for the award of the degree.

It is an original work carried out by under the guidance of

MR.SHAKTI SHARMA. All respected guides, faculty member
and other sources have been properly acknowledged and the
report contains no plagiarisms.

To the best of my knowledge and belief the matter embodies in

this project is a genuine work done by me and it has been neither
submitted for assessment to the university nor to any other
University for the fulfillment of the requirement of the course of
study.

RAJAT KHANDELWAL

2
 ACKNOWLEDGEMENT

No task can be achieved alone, particularly while attempting to finish a

project of such magnitude. It took many special people to facilitate it and
support it. Hence, I would like to acknowledge of their valuable support and
convey my humble gratitude to them.

I would like to express my sincere gratitude to MR.SHAKTI SHARMA for

guiding me on the project of “A STUDY OF BANKING
INDUSTRY HDFC BANK”.

I would like to thank him as he had always been open to discussion and
frequently enquired about the project and any problems faced etc. he has
also given me valuable guidance as to how to go about the project.

I have put my best effort to make this project as informative and

understandable as possible. I have done the best I could do and have been
honest to the company, and most importantly to myself.

Thank you SIR for supporting me in making this project.

RAJAT KHANDELWAL

3
 PREFACE

Practical knowledge is an important suffix of theoretical knowledge. One

cannot rely solely on theoretical knowledge. Classroom lectures clarify the
fundamental aspects of management, but they must be correlated with the
practical training situations. It is that ideology that practical knowledge
should be made mandatory for the curriculum and has a significant role to
play in the fields of business management.

I have put in my sincere efforts to make this INDUSTRIAL EXPOSURE

project a real success. My project is on “A STUDY OF BANKING
INDUSTRY HDFC BANK”, its impact on the market as the largest IT
player and on the economy. This study would help to understand the
position and the growth of the company.

4
CONTENTS

Chapter 1: Introduction to Company

1. Nature of Business
2. Type & ownership Pattern
3. Organizational Structure
4. Production Lay out
5. Organizational Policies

Chapter 2: Industrial Analysis

1. Industry Overview
2. Current Issues
3. Key Competitors
4. Environmental Scanning
5. Porters five forces model of competition –Michael Porter

Chapter 3: Marketing Strategies

1. Products of Company
2. 4 Ps (Product: Price, Place & Promotion)
3. STP (Segmentation, Targeting and Positioning)
4. Distribution Channels
5. Promotion Strategies

Chapter 4: Financial Analysis

1. Sources of Finance
2. Ratio Analysis
3. Net Profit/ Balance sheet

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Chapter 5: Key Learning’s from the Company and Recommendations
1. Performance Analysis of the Company
2. Reasons for the expansion/diversification of Company
3. Comment on Organizational Leadership
4. Market share/growth rate of Company
5. SWOT Analysis of the Company

Chapter 6: Findings

Chapter 7: Conclusions and Suggestions

Bibliography

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 CHAPTER – 1

INTRODUCTION TO COMPANY

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
the RBI's liberalization of the Indian Banking Industry in 1994. The bank
was incorporated in August 1994 in the name o f ' H D F C B a n k L i m i t e d ' ,
w i t h i t s r e g i s t e r e d o f f i c e i n M u m b a i , I n d i a . H D F C B a n k commenced
operations as a Scheduled Commercial Bank in January 1995. 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 1977, the Corporation h a s
maintained a consistent and healthy growth in its operations to
r e m a i n t h e market leader in mortgages. 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 market reputation, large shareholder base and
unique consumer franchise, HDFC was ideally positioned to promote a bank in the
Indian environment. HDFC Bank began operations in 1995 with a simple
mission: to be a “World Class Indian Bank.”  We realized that only a single

7
mined focus on product quality and service excellence would help us get
there. Today, we are proud to say that we are well on our way towards that goal.
HDFC Bank Limited (the Bank) is an India-based banking company
e n g a g e d i n providing a range of banking and financial services, including
commercial banking a n d treasury operations. The Bank has a
n e t w o r k o f 1 4 1 2 b r a n c h e s a n d 3 2 9 5 automated teller machines (ATMs) in
528 cities and total employees are 52687

History

HDFC (Housing Development Financial Corporation) Bank Limited is

an Indian banking and financial services company headquartered
in Mumbai, Maharashtra. It has 84,325 employees and has a presence in Bahrain, Hong
Kong and Dubai. HDFC Bank is India’s largest private sector lender by assets. It is the
largest bank in India by market capitalization as of February 2016. It was ranked 69th in
2016 BrandZ Top 100 Most Valuable Global Brands.

In 1994 HDFC Bank was incorporated, with its registered office in Mumbai, India. Its
first corporate office and a full service branch at Sandoz House, Worli were inaugurated
by the then Union Finance Minister, Man Mohan Singh.

As of June 30, 2017, the bank's distribution network was at 4,715 branches and 12,260
ATMs across 2,657 cities and towns. The bank also installed 4.30 Lacs POS terminals
and issued 235.7 Lacs debit cards and 85.4 Lacs credit card in FY 2017.

HDFC BANK LTD was amongst the first to set up a bank in the private sector.
The bank was incorporated on 30th August 1994 in the name of ‘HDFC Bank
Limited’, with its registered office in Mumbai. It commenced
o p e r a t i o n s a s   a S c h e d u l e d Commercial Bank on 16th January 1995. The
bank has grown consistently and is now amongst the leading players in the

8
i n d u s t r y . 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 1977, the C o r p o r a t i o n h a s m a i n t a i n e d a c o n s i s t e n t a n d
healthy growth in its operations to remain the market leader in
mortgages. Its outstanding loan portfolio covers well over a million dwelling
units. H D F C h a s d e v e l o p e d s i g n i f i c a n t e x p e r t i s e i n r e t a i l m o r t g a g e
l o a n s t o d i f f e r e n t market segments and also has a large corporate client
base for its housing
relatedc r e d i t   f a c i l i t i e s . W i t h   i t s   e x p e r i e n c e   i n   t h e   f i n a n c i a l   m a r
k e t s ,   a   s t r o n g   m a r k e t r e p u t a t i o n ,   l a r g e   s h a r e h o l d e r   b a s e   a n d   u n i q u e 
consumer franchise, HDFC wasi d e a l l y   p o s i t i o n e d   t o p r o m o t e   a   b a
n k   i n   t h e   I n d i a n   e n v i r o n m e n t   i n   a   m i l e s t o n e transaction in the Indian
banking industry, Times Bank was merged with HDFC Bank Ltd., effective February 26,
2000.

Background

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’s liberalisation of the Indian Banking Industry in
1994. The bank was incorporated in August 1994 in the name of 'HDFC Bank Limited',
with its registered office in Mumbai, India. HDFC Bank commenced operations as a
Scheduled Commercial Bank in January 1995.

Promoter

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 1977, the Corporation
has maintained a consistent and healthy growth in its operations to remain the market
leader in mortgages. Its outstanding loan portfolio covers well over a million dwelling

9
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, strong market reputation, large
shareholder base and unique consumer 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 objective is to build
sound customer franchises across distinct businesses so as to be the preferred provider of
banking services for target retail and wholesale customer segments, and to achieve
healthy growth in profitability, consistent with the bank’s risk appetite. The bank is
committed to maintain the highest level of ethical standards, professional integrity,
corporate governance and regulatory compliance. HDFC Bank’s business philosophy is
based on five core values: Operational Excellence, Customer Focus, Product Leadership,
People and Sustainability.

Capital Structure
As on 31st March, 2015 the authorized share capital of the Bank is Rs. 550 crore. The
paid-up share capital of the Bank as on the said date is Rs501, 29, 90,634/- (2506495317 )
equity shares of Rs. 2/- each). The HDFC Group holds 21.67 % of the Bank's equity and
about 18.87 % of the equity is held by the ADS / GDR Depositories (in respect of the
bank's American Depository Shares (ADS) and Global Depository Receipts (GDR)
Issues). 32.57 % of the equity is held by Foreign Institutional Investors (FIIs) and the
Bank has 4, 41,457 shareholders. 

The shares are listed on the Bombay Stock Exchange Limited and The National Stock
Exchange of India Limited. The Bank's American Depository Shares (ADS) are listed on
the New York Stock Exchange (NYSE) under the symbol 'HDB' and the Bank's Global
Depository Receipts (GDRs) are listed on Luxembourg Stock Exchange under ISIN No
US40415F2002.

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Amalgamation of time bank & centurion bank Punjab with HDFC Bank

On May 23, 2008, the amalgamation of Centurion Bank of Punjab with HDFC Bank was
formally approved by Reserve Bank of India to complete the statutory and regulatory
approval process. As per the scheme of amalgamation, shareholders of CBoP received 1
share of HDFC Bank for every 29 shares of CBoP.

The amalgamation added significant value to HDFC Bank in terms of increased branch
network, geographic reach, and customer base, and a bigger pool of skilled manpower.

In a milestone transaction in the Indian banking industry, Times Bank Limited (another
new private sector bank promoted by Bennett, Coleman & Co. / Times Group) was
merged with HDFC Bank Ltd., effective February 26, 2000. This was the first merger of
two private banks in the New Generation Private Sector Banks. As per the scheme of
amalgamation approved by the shareholders of both banks and the Reserve Bank of India,
shareholders of Times Bank received 1 share of HDFC Bank for every 5.75 shares of
Times Bank.

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 TYPES AND OWNERSHIP PATTERN

Shareholding pattern

Holder's Name No of Shares % Share Holding

Promoters 543216100 20.97%

Foreign Institutions 859021195 33.17%

GDR 472988149 18.26%

NBanks Mutual Funds 250483956 9.67%

General Public 231914935 8.95%

Others 166890620 6.44%

Financial Institutions 62961312 2.43%

Central Govt. 2647350 0.1%

ORGANIZATION STRUCTURE

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The organization structure of the company HDFC is such that it comprises of the
departments and the employees in the hierarchical order so that they are able to perform
their functions and duties smoothly and effectively doing their job in a manner in which it
should be done. The organization is headed by the administrative department which
coordinates and controls the executive department. The executive department is a link
from the top and the bottom comprising of the lower level employees such that they work
together to fulfil the common objective of getting business from the persons who get in

13
touch with them and see to it that they are provided with the best of the bank which
constitute giving financial advice to providing Account to the customers. The lower level
employees and the corporate financial consultants work together to see to it that the
database for providing financial bank t-o sufficient number of people is made.

SERVICE LAYOUT

Here we are taking a look at 9 such big steps and initiatives of the bank during the recent
months:

1. Change in norms for premium customers

HDFC Bank has recently changed its norms for premium customers. As per the new
norms, effective from 9th December 2017, its ‘Classic’ customers will now have to
maintain a minimum average monthly balance of Rs 1 lakh in the savings account/s or a
minimum average monthly balance of Rs 5 lakh in a combination of savings accounts and
fixed deposits. Earlier they were required to maintain a minimum average quarterly
balance of Rs1 lakh in a savings bank account (to be maintained across savings bank
accounts held by the customer and his/her immediate family) or a minimum average
monthly balance of Rs 5 lakh in a combination of savings sank accounts and term
deposits.

2. Cut in interest rate on savings bank accounts

Soon after interest rate on savings account deposits was slashed by SBI, Bank of Baroda
and Axis Bank, HDFC Bank Ltd reduced interest rate on savings bank accounts by 50
basis points to 3.5 per cent for deposits up to Rs 50 lakh, effective from August 19, 2017.
However, the bank said that it will continue to pay 4 per cent interest on deposits of
above Rs 50 lakh. The revised rates are applicable to both resident and non-resident
customers.

3. Linking of Aadhaar number to HDFC Bank accounts

14
HDFC Bank last month advised its customers to link their Aadhaar number to their
HDFC Bank account before 31st December 2017 to keep their account active. “As
directed by the Government of India, please ensure that you link your Aadhaar to your
HDFC Bank account before 31st Dec’17 to keep your account active,” it tweeted in
November. According to HDFC Bank, “as per the amendment in PMLA rules by the
government, all bank accounts should be linked with Aadhaar by 31st Dec’17, failing
which the accounts will become inoperative till the time the Aadhaar number is submitted
and linked to the accounts.”

4. Launch of Smart Up Zones for start-ups

HDFC Bank some time back announced the launch of SmartUp Zones in its branches
across India. A SmartUp Zone is an exclusive area inside the branch dedicated to start-
ups. In the first phase, SmartUp Zones will be launched in over 65 branches in 30 cities
across India, including Tier 2 and 3 cities that are emerging as start-up hubs. Through
these zones, specially trained bank staff will offer tailor-made banking and advisory
solutions to entrepreneurs.

5. Launch of Easy EMI on Debit Cards

HDFC Bank sometime back announced the launch of EasyEMI on Debit Cards. With
this, HDFC Bank customers are now able to make payments for items purchased using
their debit card in easy installments. Customers will have a pre-approved loan amount
available to them 24×7 and the entire process of making a purchase using debit cards in
easy installments is completely paperless. Customers can simply swipe their debit card
and select the EasyEMI option when making payment at offline as well as online
merchants. Eligible customers will be informed by the bank on email as well as SMS.

6. Launch of all-in-one DigiPOS machines

HDFC Bank became the first bank in India in August this year to launch DigiPOS, a
Point of Sale (POS) machine that offers a complete suite of digital payment options.
DigiPOS offers customers various digital payment options such as UPI, Bharat QR, SMS

15
Pay and PayZapp, in addition to the facility to pay through debit / credit cards. HDFC
Bank has plans to convert its entire network of over 4 lakh PoS machines to DigiPOS
without any investment by the merchants.

7. Launch of ‘Industry Academia’ for start-ups

HDFC Bank’s Centre of Digital Excellence (CODE) launched ‘Industry Academia’ in
September. The initiative, first-of-its-kind in the country, aims at mentoring and hand-
holding fintechs and start-ups incubated at country’s top technical and B-schools. In all,
over 50 such partnerships with institutes are envisaged in phase one of the initiative
beginning with IIT-Bombay, IIT-Roorkee and CIIE at IIM-Ahmedabad. The objective is
to identify potential fintech ideas at Incubation and Entrepreneurship cells in these
institutes at a nascent stage, and help them evolve into a consumer-ready product.

8. Launch of UPI on Chillr

HDFC Bank this year launched its UPI on Chillr. With this launch, HDFC Bank UPI
became available on Chillr, in addition to the bank’s Mobile Banking app. Launch of
HDFC Bank UPI on Chillr was aimed at benefiting customers of 44 banks that are now
able to conduct digital transactions seamlessly using the Chillr app. These transactions
conducted on Chillr go through HDFC Bank’s UPI platform.

9. Launch of Digital Loan against Securities

In a first in the country, HDFC Bank this year launched an instant Digital Loan against
Securities (LAS). With this, customers can now avail of a loan against shares in just 3
easy steps on Net Banking. HDFC Bank became the first bank in India to completely
automate the entire process of creating an overdraft facility in a separate current account
for loan against shares. The bank collaborated with NSDL to create a seamless customer
experience.
ORGANIZATIONAL POLICIES

HUMAN RESOURCES POLICY

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POLICY STATEMENT

We believe that our employees are our most valuable asset. We make an effort to develop
the abilities and productivity of our staff. We encourage a work culture, foster
relationship with them at every level in the organization. And make them to express their
views and share their ideas to bring about improvements in the organization towards the
achievement of the common goal described in our vision and mission statements.
Our employees take pride in their work as they are given due respect, and by being
empathetic and sensitive to each other’s needs. We could make every endeavor to foster a
productive culture throughout the Bank.
The Bank is a team –focused organization that is characterized by
 Collaborative relationships;
 Approachable and open communications;
 Courteous, efficient and effective services; and
 Flexibility and fairness

QUALITY POLICY
SECURITY: The bank provides long term financial security to their policy. The bank
does this by offering life insurance and pension products.

TRUST: The bank appreciates the trust placed by their policy holders in the bank.
Hence, it will aim to manage their investments very carefully and live up to this trust.

INNOVATION: Recognizing the different needs of our customers, the bank offers a
range of innovative products to meet these needs.
INTEGRITY CUSTOMER CENTRIC PEOPLE CARE “ONE FOR ALL AND ALL
FOR ONE” TEAM WORK JOY AND SIMPLICITY

CHAPTER- 2

INDUSTRY OVERVIEW

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We are a leading private sector bank and financial services company in India. Our
principal business activities are retail banking, wholesale banking and treasury
operations. Our retail banking division provides a variety of deposit products, loans,
credit cards, debit cards, third-party mutual funds and insurance products, investment
advice, bill payment services and other services. Through our wholesale banking
operations we provide loans, deposit products, documentary credits, guarantees, bullion
trading, debt syndication services and foreign exchange and derivative products. We also
provide cash management services, clearing and settlement services for stock and
commodity exchanges, tax and other collections for the government, custody services and
correspondent banking services. Our Treasury Group manages our balance sheet and our
foreign exchange and derivative products.

Since fiscal 2003, we have experienced significant growth in our customer and
geographical base, expanding from 3.4 million customers in 122 cities as of March 31,
2003 to 18.4 million customers in 528 cities as of March 31, 2009. In line with this
increase, we have increased our loans to customers from Rs. 120.2 billion in fiscal 2003
to Rs. 1,011.0 billion in fiscal 2009. Our merger with Centurion Bank of Punjab Ltd.
(CBoP) became effective on May 23, 2008. Accordingly, our financial condition at
March 31, 2009 and our results of operations for the year then ended reflect our merger
with CBoP. The figures for fiscal 2009 reflect the operations of the merged entity for the
313 day period ended March 31, 2009 and are hence not comparable with those for fiscal
2008. See “Merger of Centurion Bank of Punjab” for a discussion of the merger.

Our revenue consists of interest and dividend revenue as well as non-interest revenue.
Our interest and dividend revenue is primarily generated by interest on loans, dividends
from securities and other activities. We offer a wide range of loans to retail customers
and offer working capital and term loans to corporate customers. The primary
components of our securities portfolio are statutory liquidity ratio investments, credit
substitutes and other investments. Statutory liquidity ratio investments principally consist
of Government of India treasury securities. Credit substitutes, principally consisting of
our investments in commercial paper, debentures and preference shares issued by
corporations, are part of the financing products we provide to our customers. Other

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investments include investment grade bonds issued by public sector undertakings and
public financial institutions principally to meet RBI directed lending requirements, asset
backed securities, mortgage-backed securities as well as equity securities and units of
mutual funds. Interest revenue from other activities consists primarily of interest from
inter-bank loans and interest paid by the RBI on cash deposits to meet our statutory cash
reserve ratio requirements. Effective March 31, 2007 the RBI has discontinued the
practice of paying interest on deposits to meet the cash reserve ratio.

Two important measures of our results of operations are net interest revenue, which is
equal to our interest and dividend revenue net of interest expense, and net interest
revenue after allowance for credit losses. Interest expense includes interest on deposits as
well as on borrowings. Our interest revenue and expense are affected by fluctuations in
interest rates as well as volume of activity. Our interest expense is also affected by the
extent to which we fund our activities with low-interest and non-interest bearing deposits
(including the float on transactional services), and the extent to which we rely on
borrowings. Our allowance for credit losses includes our loan loss provision.
Impairments of credit substitutes are not included in our loan-loss provision, but are
included as realized losses on securities.

We also use net interest margin and spread to measure our results. Net interest margin
represents the ratio of net interest revenue to average interest-earning assets. Spread
represents the difference between yields on average interest-earning assets and cost of
average interest-bearing liabilities including current accounts which are non-interest
bearing.

Our non-interest revenue includes fee and commission income, realized gains and losses
on sales of securities and spread from foreign exchange and derivative transactions,
income from affiliates and profit on securitization of assets. Our principal sources of fee
and commission revenue are retail banking services, retail asset fees and charges, credit
card fees, cash management services, documentary credits and bank guarantees,
distribution of third party mutual funds and insurance products and capital market
services.

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 CURRENT ISSUES

HDFC Bank, Tech Mahindra, Pfizer hit 52-week high in weak market

31/01/2018

HDFC Bank, Tech Mahindra, Pfizer, Ester Industries and Healthcare Global

Enterprises from the S&P BSE 500 and Smallcap index hitting their respective 52-week
highs on BSE in otherwise weak market.

At 03:08 PM; the S&P BSE Midcap (down 1.4%) and S&P BSE Smallcap index (down
0.83%) were down nearly 1%, while S&P BSE 500 and S&P BSE Sensex were trading
lower by 0.47% and 0.20%, respectively, on BSE.

HDFC Bank hit a new high of Rs 2,011 on BSE in intra-day trade, gaining 7.5% in past
two weeks. The private lender reported a net profit of Rs 46.4 billion in December 2017
quarter, up 20% year-on-year, backed by rise in interest and fee income.

The bank's net interest income, or the interest earned minus interest expended, rose 24%
on a year-on-year basis to Rs 103 billion. The net interest margin, the difference between
the yield on advances and cost of fund, stood at 4.3%.

IIFL Wealth Management retain ‘buy’ rating on the stock with price target of Rs 2,300.

“Robust product franchise in the retail segment and improvement in corporate credit
demand should drive 24%-25% per annum loan growth for HDFC Bank over FY17-20.
With NIMs remaining firm, the revenue growth would outpace cost growth and thus the
robust trend in core PPOP growth will continue. We expect credit cost to normalize from
next year giving fillip to earnings growth,” the brokerage firm said in result update.

Ester Industries locked in upper circuit for the second straight day, up 10% at Rs 74 after
the company said on Tuesday that it has entered into long term agreement with Shaw

20
Industries Group Inc, USA to supply circa 2,500 tonnes per annum of stain resistant
master batch to world’s leading carpet manufacturer.

“The total size of this single order is estimated to be around Rs 900 million per year
which is more than double the Company’s FY2017 speciality polymer revenues which
amounted to Rs 430 million. The agreement is open ended with the first purchase order
received and shipment slated to commence in February 2018,” Ester Industries said in a
press release.

Shaw Industries Group, Inc. supplies carpet, resilient, hardwood, laminate, tile and stone
flooring products and synthetic turf to residential and commercial markets worldwide. It
is a wholly owned subsidiary of Berkshire Hathaway, Inc. with approximately 20,000
associates across the globe

Find people responsible for leaking earnings on WhatsApp: SebitoHDFC Bank

23/02/2018

Sebi today asked HDFC Bank to identify individuals, including bank officials responsible

for leakage of its financial results, as the markets regulator has found inadequate controls
at the lender as 'prima facie' reason for the leak.

In the high-profile leakage case where sensitive financial details of various companies,
including HDFC Bank, got leaked on WhatsApp before their formal
announcement, Sebi virtually censured the top private sector lender and asked it to
strengthen the systems and controls to check any such leak in future.

In an order, the Securities and Exchange Board of India (Sebi) said it can prima facie be
inferred that the unpublished price sensitive information (UPSI) relating to financials
of HDFC Bank was leaked.

"Such leakage is prima facie attributable to the inadequacy of the processes/ controls/
systems that HDFC Bank as a listed company had put in place," the Securities and
Exchange Board of India (Sebi) said.

21
Last year in December, the regulator had, in a similar ruling, ordered Axis Bank to
strengthen its systems and conduct an internal probe after finding that the company's
results for the June 2017 quarter were "either identical or matched closely with the
figures" that were in circulation on WhatsApp prior to an official announcement.

"HDFC Bank shall strengthen its processes/ systems/ controls forthwith to ensure that
such instances of leakage of unpublished price sensitive information do not recur in
future," Sebi said in its latest order.

Sebi has also directed the bank to submit a report on the present systems and controls and
how they have been strengthened, who are the persons responsible for monitoring such
systems and the periodicity of monitoring.

"HDFC Bank shall conduct an internal inquiry into the leakage of unpublished price
sensitive information relating to its financial figures including NPA (non-performing
asset) results and take appropriate action against those responsible for the same, in
accordance with law," Sebi said.

As per the order, the scope of inquiry should not be limited to role of persons, including
members of committees involved in generation of the original data for the purpose of
determination of key figures pertaining to financial figures including gross non-
performing assets (GNPA).

Sebi said the purview of inquiry should also go beyond those involved in the
consolidation of the figures for the financial results, preparation of board notes and
presentations as well as dissemination of information relating to financial results in the
public domain.

HDFC Bank has to complete the inquiry within three months and file a report
to Sebi within seven days thereafter, the regulator said.

Sebi had initiated a preliminary examination in the matter of circulation of UPSI

through WhatsApp groups.

22
 KEY COMPETITOR

State Bank of India (SBI)

State Bank of India (SBI) is an Indian multinational, public sector banking and financial

services company. It is a government-owned corporation with its headquarters
in Mumbai, Maharashtra. On April 1, 2017, the State Bank of India, which was India's
largest bank, merged with five of its associate banks (State Bank of Bikaner & Jaipur,
State Bank of Hyderabad, State Bank of Mysore, State Bank of Patiala and State Bank of
Travancore), and with the Bharatiya Mahila Bank.

ICICI

ICICI Bank, stands for Industrial Credit and Investment Corporation of India, is

an Indian multinational banking and financial services company headquartered
in Mumbai, Maharashtra, India, with its registered office in Vadodara. In 2017, it is the
third largest bank in India in terms of assets and fourth in term of market capitalization.

Bank of Baroda

Bank of Baroda (Bob) is an Indian state-owned International banking and financial

services company headquartered in Vadodara (earlier known as Baroda) in Gujarat, India.
It has a corporate office in Mumbai

ENVIRONMENTAL SCANNING

23
 Political

Political factors play a significant role in determining the factors that can impact HDFC
Bank Limited's long term profitability in a certain country or market. HDFC Bank
Limited is operating in Foreign Regional Banks in more than dozen countries and expose
itself to different types of political environment and political system risks. The achieve
success in such a dynamic Foreign Regional Banks industry across various countries is to
diversify the systematic risks of political environment. HDFC Bank Limited can closely
analyze the following factors before entering or investing in a certain market-

 Political stability and importance of Foreign Regional Banks sector in the

country's economy.
 Risk of military invasion
 Level of corruption - especially levels of regulation in financial sector.
 Bureaucracy and interference in Foreign Regional Banks industry by government.
 Legal framework for contract enforcement
 Intellectual property protection

24
 Trade regulations & tariffs related to Financial
 Favored trading partners
 Anti-trust laws related to Foreign Regional Banks
 Pricing regulations – Are there any pricing regulatory mechanism for Financial
 Taxation - tax rates and incentives
 Wage legislation - minimum wage and overtime
 Work week regulations in Foreign Regional Banks
 Mandatory employee benefits
 Industrial safety regulations in the financial sector.
 Product labeling and other requirements in Foreign Regional Banks

Economic

The Macro environment factors such as – inflation rate, savings rate, interest rate, foreign
exchange rate and economic cycle determine the aggregate demand and aggregate
investment in an economy. While micro environment factors such as competition norms
impact the competitive advantage of the firm. HDFC Bank Limited can use country’s
economic factor such as growth rate, inflation & industry’s economic indicators such as
Foreign Regional Banks industry growth rate, consumer spending etc to forecast the
growth trajectory of not only --sectoryname-- sector but also that of the organization.
Economic factors that HDFC Bank Limited should consider while conducting PESTEL
analysis are -

 Type of economic system in countries of operation – what type of economic

system there is and how stable it is.
 Government intervention in the free market and related Financial
 Exchange rates & stability of host country currency.
 Efficiency of financial markets – Does HDFC Bank Limited needs to raise capital
in local market?
 Infrastructure quality in Foreign Regional Banks industry

25
 Comparative advantages of host country and financial sector in the particular
country.  
 Skill level of workforce in Foreign Regional Banks industry.
 Education level in the economy
 Labor costs and productivity in the economy
 Business cycle stage (e.g. prosperity, recession, recovery)
 Economic growth rate
 Discretionary income
 Unemployment rate
 Inflation rate
 Interest rates

Social

Society’s culture and way of doing things impact the culture of an organization in an
environment. Shared beliefs and attitudes of the population play a great role in how
marketers at HDFC Bank Limited will understand the customers of a given market and
how they design the marketing message for Foreign Regional Banks industry consumers.
Social factors that leadership of HDFC Bank Limited should analyze for PESTEL
analysis are -  

 Demographics and skill level of the population

 Class structure, hierarchy and power structure in the society.
 Education level as well as education standard in the HDFC Bank Limited ’s
industry
 Culture (gender roles, social conventions etc.)
 Entrepreneurial spirit and broader nature of the society. Some societies encourage
entrepreneurship while some don’t.
 Attitudes (health, environmental consciousness, etc.)

26
 Leisure interests

Technological

Technology is fast disrupting various industries across the board. Transportation industry
is a good case to illustrate this point. Over the last 5 years the industry has been
transforming really fast, not even giving chance to the established players to cope with
the changes. Taxi industry is now dominated by players like Uber and Lyft. Car industry
is fast moving toward automation led by technology firm such as Google &
manufacturing is disrupted by Tesla, which has stated an electronic car revolution. 

A firm should not only do technological analysis of the industry but also the speed at
which technology disrupts that industry. Slow speed will give more time while fast speed
of technological disruption may give a firm little time to cope and be profitable.
Technology analysis involves understanding the following impacts -

 Recent technological developments by HDFC Bank Limited competitors

 Technology's impact on product offering
 Impact on cost structure in Foreign Regional Banks industry
 Impact on value chain structure in Financial sector
 Rate of technological diffusion

Environmental

Different markets have different norms or environmental standards which can impact the
profitability of an organization in those markets. Even within a country often states can

27
 have different environmental laws and liability laws. For example in United States –
Texas and Florida have different liability clauses in case of mishaps or environmental
disaster. Similarly a lot of European countries give healthy tax breaks to companies that
operate in the renewable sector. 

Before entering new markets or starting a new business in existing market the firm should
carefully evaluate the environmental standards that are required to operate in those
markets. Some of the environmental factors that a firm should consider beforehand are -

 Weather
 Climate change
 Laws regulating environment pollution
 Air and water pollution regulations in Foreign Regional Banks industry
 Recycling
 Waste management in Financial sector
 Attitudes toward “green” or ecological products
 Endangered species
 Attitudes toward and support for renewable energy

Legal

In number of countries, the legal framework and institutions are not robust enough to
protect the intellectual property rights of an organization. A firm should carefully
evaluate before entering such markets as it can lead to theft of organization’s secret sauce
thus the overall competitive edge. Some of the legal factors that HDFC Bank Limited
leadership should consider while entering a new market are -

 Anti-trust law in Foreign Regional Banks industry and overall in the country.
 Discrimination law
 Copyright, patents / Intellectual property law

28
 Consumer protection and e-commerce
 Employment law
 Health and safety law
 Data Protection

PORTER’S FIVE FORCE ANALYSIS

Threats of New Entrants

New entrants in Foreign Regional Banks brings innovation, new ways of doing things
and put pressure on HDFC Bank Limited through lower pricing strategy, reducing  costs,
and providing new value propositions to the customers. HDFC Bank Limited has to
manage all these challenges and build effective barriers to safeguard its competitive edge.

29
 How HDFC Bank Limited can tackle the Threats of New Entrants

 By innovating new products and services. New products not only brings new
customers to the fold but also give old customer a reason to buy HDFC Bank Limited‘s
products.
 By building economies of scale so that it can lower the fixed cost per unit. 
 Building capacities and spending money on research and development. New
entrants are less likely to enter a dynamic industry where the established players such as
HDFC Bank Limited keep defining the standards regularly. It significantly reduces the
window of extraordinary profits for the new firms thus discourage new players in the
industry.

Bargaining Power of Suppliers

All most all the companies in the Foreign Regional Banks industry buy their raw material
from numerous suppliers. Suppliers in dominant position can decrease the margins HDFC
Bank Limited can earn in the market. Powerful suppliers in financial sector use their
negotiating power to extract higher prices from the firms in Foreign Regional Banks
field. The overall impact of higher supplier bargaining power is that it lowers the overall
profitability of Foreign Regional Banks. 

How HDFC Bank Limited can tackle Bargaining Power of the Suppliers

 By building efficient supply chain with multiple suppliers.

 By experimenting with product designs using different materials so that if the
prices go up of one raw material then company can shift to another.
 Developing dedicated suppliers whose business depends upon the firm. One of the
lessons HDFC Bank Limited can learn from Wal-Mart and Nike is how these companies
developed third party manufacturers whose business solely depends on them thus
creating a scenario where these third party manufacturers have significantly less
bargaining power compare to Wal-Mart and Nike.

30
 Bargaining Power of Buyers

Buyers are often a demanding lot. They want to buy the best offerings available by
paying the minimum price as possible. This put pressure on HDFC Bank Limited
profitability in the long run. The smaller and more powerful the customer base is of
HDFC Bank Limited the higher the bargaining power of the customers and higher their
ability to seek increasing discounts and offers. 

How HDFC Bank Limited can tackle the Bargaining Power of Buyers

 By building a large base of customers. This will be helpful in two ways. It will
reduce the bargaining power of the buyers plus it will provide an opportunity to the firm
to streamline its sales and production process.
 By rapidly innovating new products. Customers often seek discounts and
offerings on established products so if HDFC Bank Limited keep on coming up with new
products then it can limit the bargaining power of buyers.
 New products will also reduce the defection of existing customers of HDFC Bank
Limited to its competitors.

Threats of Substitute Products or Services

When a new product or service meets a similar customer needs in different ways,
industry profitability suffers. For example services like Dropbox and Google Drive are
substitute to storage hardware drives. The threat of a substitute product or service is high
if it offers a value proposition that is uniquely different from present offerings of the
industry.

31
 How HDFC Bank Limited can tackle the Treat of Substitute Products / Services

 By being service oriented rather than just product oriented.

 By understanding the core need of the customer rather than what the customer is
buying.
 By increasing the switching cost for the customers.
Rivalry among the Existing Competitors

If the rivalry among the existing players in an industry is intense then it will drive down
prices and decrease the overall profitability of the industry. HDFC Bank Limited operates
in a very competitive Foreign Regional Banks industry. This competition does take toll
on the overall long term profitability of the organization. 

How HDFC Bank Limited can tackle Intense Rivalry among the Existing Competitors in
Foreign Regional Banks industry

 By building a sustainable differentiation

 By building scale so that it can compete better
 Collaborating with competitors to increase the market size rather than just
competing for small market.

Implications of Porter Five Forces on HDFC Bank Limited

By analyzing all the five competitive forces HDFC Bank Limited strategists can gain a
complete picture of what impacts the profitability of the organization in Foreign Regional
Banks industry. They can identify game changing trends early on and can swiftly respond
to exploit the emerging opportunity. By understanding the Porter Five Forces in great
detail HDFC Bank Limited's managers can shape those forces in their favor.

32
 CHAPTER- 3

PRODUCT OF COMPANY

Wholesale Banking Services

The Bank's target market ranges from large, blue-chip manufacturing companies in the
Indian corporate to small & mid-sized corporate and agro-based businesses. For these
customers, the Bank provides a wide range of commercial and transactional banking
services, including working capital finance, trade services, transactional services, cash
management, etc. The bank is also a leading provider of structured solutions, which
combine cash management services with vendor and distributor finance for facilitating
superior supply chain management for its corporate customers. Based on its superior
product delivery / service levels and strong customer orientation, the Bank has made
significant inroads into the banking consortia of a number of leading Indian corporate
including multinationals, companies from the domestic business houses 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 banks.

Retail Banking Services

The objective of the Retail Bank is to provide its target market customers a full range of
financial products and banking services, giving the customer a one-stop window for all

33
his/her banking requirements. The products are backed by world-class service and
delivered to the customers through the growing branch network, as well as through
alternative delivery channels like ATMs, Phone Banking, Net Banking and Mobile
Banking. The HDFC Bank Preferred program for high net worth individuals, the HDFC
Bank Plus and the Investment Advisory Services programs have been designed keeping
in mind needs of customers who seek distinct financial solutions, information and advice
on various investment avenues. The Bank also has a wide array of retail loan products
including Auto Loans. HDFC Bank was the first bank in India to launch an International
Debit Card in association with VISA (VISA Electron) and issues the MasterCard Maestro
debit card as well. The Bank launched its credit card business in late 2001. By September
30, 2005, the bank had a total card base (debit and credit cards) of 5.2 million cards. The
Bank is also one of the leading players in the "merchant acquiring" business with over
50,000 Point-of-sale (POS) terminals for debit / credit cards acceptance at merchant
establishments.

Treasury

Within this business, the bank has three main product areas - Foreign Exchange and
Derivatives, Local Currency Money Market & Debt Securities, and Equities. With the
liberalization of the financial markets in India, corporate need more sophisticated risk
management information, advice and product structures. These and fine pricing on
various treasury products are provided through the bank's Treasury team. To comply with
statutory reserve requirements, the bank is required to hold 25% of its deposits in
government securities. The Treasury business is responsible for managing the returns and
market risk on this investment portfolio.

MARKETING MIX

Marketing Mix of HDFC Bank analyses the brand/company which covers 4Ps (Product,
Price, Place, Promotion) and explains the HDFC Bank marketing strategy. The article
elaborates the pricing, advertising & distribution strategies used by the company.

34
 4PS

Product:

HDFC Bank is one of the leading banks in India. HDFC offers a wide range of products
in its marketing mix strategy, namely in personal and enterprise sector. The various
services offered by HDFC Bank are summarized as follows. Accounts and deposits
which covers savings accounts, salary accounts, current accounts, deposits, safe deposit
lockers, rural accounts and pension accounts. HDFC Bank offers loans to meet the
diverse needs and it cover personal loans, car loans, business loans etc. HDFC offers
cards which includes credit cards, debit cards, prepaid cards, credit card reward programs
and loan on credit card. Demat options for investors which includes demat account, 2 in 1
account, 3 in 1 account and investment assist. Investment options covering Invest Track,
investment products, investment advisory group reports, PPF (public provident fund) and
sukanyasamriddhi account are provided to HDFC customers. Insurances for various
options like life, health, motor insurance, travel, home, two wheeler and student travel -
suraksha. Forex includes travel solutions, remittance products, other forex services for
help and purchase.

HDFC Bank also includes online payment options like Pay bills and shop online, Fund
transfer options, bill payments, tax payment, donate online etc. The premier options
include direct equity, Mutual funds, fixed income products, Insurance, Private Equity
funds, structured products and Estate planning

35
Price:

HDFC Bank follows a competitive pricing strategy in its marketing mix but maintains a
premium level at the same time. It is clearly visible that it enjoys maximum market
capital in terms of shares in India. The other domestic competitors are either PSUs or
national bank, HDFC Bank is always priced higher in terms of minimum cap required to
open a new account. RBI controls and regulates the pricing policies, like for any other
bank in India.

Place:

HDFC banks has got a strong presence all across India. Till 2016, HDFC outreached
4500+ branches in approx. 2600 cities/towns with 12000 ATMs. HDFC Bank makes sure
that its presence is felt in each and every corner of the nation and every individual should
avail its facilities equally. HDFC has its major offices in cities and towns for smooth

36
operation process. Its website is well designed and well maintained. It facilitates ease of
net banking, online payment options, etc.

Promotion:

HDFC Bank focuses a lot on the promotional strategy in its marketing mix. HDFC is
involved in large number of CSR activities for sustainable livelihood, financial literacy,
education, training and community initiatives. HDFC has always made its presence feel
in the media through advertisements, hoardings, posters, ads in newspapers, magazines,
promotional events, sponsorships, etc. HDFC also has shareholdings in corporate bodies,
mutual funds, financial institutions, etc which creates a sense of value and trust amongst
the shareholders and customers towards this particular brand.

STP (Segmentation, Targeting and Positioning)

Segmentation strategy: Demographics variables Location - Metros & divisional cities

Occupation - Business person - Salaried class (both govt. & private) Age - Senior citizens
- Minor psychographic variables Lifestyle - People who believes in modern banking with
higher set of service i. e. internet banking (in contact, mobile refill, travel currency card
etc.)

Targeting strategy: Target market corporate banking market: this market target the
industries & fulfill their financial needs. Capital market: this segment is targeted on the
long term needs of the individual as well as of industries. Retail banking market: this
segment is for retail investors & provide them short term financial credit for their
personal, house hold needs.

37
Positioning strategy: HDFC Bank has positioned itself as a bank which gives higher
standard of services through product innovation for the diverse need of individual &
corporate clients. So they want to highlight following points in their positioning segment:
-Customer centric -Service oriented -Product innovation.

SERVICE CHANNEL

We deliver our products and services through a variety of distribution channels, including
branches, ATMs, telephone and mobile telephone banking and internet banking.

ATM

 24 hour access to cash

 Personalize cash withdrawals

 View account statements and mini-statement
 Change ATMPIN
 Order cheque book/account statement
 Make HDFC bank credit card payments
 Transfer funds between accounts linked to the same ATM / DEBIT card
 Refil prepaid mobile
 Pay utility bills
 Request for net banking password
 Register for mobile
 Banking

38
  Personal loan 10 seconds
 Mobile banking registration for other bank customer

Mobile

HDFC Bank's Mobile Banking is the most Convenient and easy way to stay connected to
your bank..always! You can do over 125 plus transactions on your smart phone
through our Mobile Banking App or mobile browser. Go Digital - Bank Aapki
Mutthi Mein
With Mobile Banking you can access your account on your mobile in a safe and secure
manner. Now, check your account balance, pay bills, transfer funds and make credit card
payments anywhere, anytime with Mobile Banking.

Net Banking

Net Banking is HDFC Bank's Internet banking service. Through Net Banking, you can
perform all your transactions online without leaving the comfort of your own home.
So just log in to Net Banking and conduct 200 + transactions from the comfort of your
home or office.
You can check your Account Balance, book Fixed and Recurring Deposits, Download
A/c Statement up to 5 years, pay your Bills, Recharge your Mobile/ DTH connection, and
much more in a secure environment.
Log in to Net Banking using your Customer ID and IPIN (password).

Retail Distribution through Co-op Banks/ Credit Co-op Societies

HDFC Bank provides Co-operative banks and co-operative societies the opportunity to
earn fee based income by distributing HDFC Bank products which they may not be
offering their customers. Acting as Business Facilitators or Business Correspondents they
may distribute products such as Vehicle Loans, Kissan Card, Tractor Loan, Foreign
Exchange services, mutual funds, Credit card etc.

39
 PROMOTION STRATEGIES

From doing cross-selling exercises to organizing school-level painting competitions,

promotional activities are going to be the main focus of HDFC Bank's marketing strategy
this year.

Speaking to Business Line, Mr Ajay Kelkar, Vice-President and Head, Marketing, HDFC
Bank, said, "We are looking at positioning HDFC as a one-stop financial supermarket
and the objective of the promos is not just acquisition of new customers, but we are also
looking at creating product awareness, enhancing usage and also providing value-adds to
our customers to reward them for their faith and loyalty."

The first promo this year is titled Wheels of Fortune, which will be on during the month
of January. "This promo is targeted at all those customers who avail a personal loan, car
or two-wheeler loan. There will be a lucky draw at the end of the promo and the winners
would get exotic prizes."

Also on the cards is a school-level painting competition on wildlife across cities to

promote the Kids Advantage account.

The next step to these mass promos, according to Mr Kelkar, would be more personalized
promos. "We plan to send personalized mailers about our various products to all those we
come in contact with during these mass promotions."

The bank has also tied up with Business Today, to sponsor 10,000 copies of the magazine
in each metro. The cover of the sponsored copies would be the December 2003 issue of
Business Today, which rated HDFC Bank as the best bank in the country. On the
opposite side, would be an advertorial which would talk about HDFC as a `one-stop
financial supermarket'. "These copies would be circulated among top corporates and our
high-profile customers," said Mr Kelkar.

40
 He said that below-the-line promotions constitute a major part of the bank's overall
marketing plans this year, and therefore, a large percentage of the marketing budget is
allocated to promos. "These promotions are conducted based on the results thrown up by
data analysis and data mining. Therefore, they are intended to have maximum impact on
our target audience."

CHAPTER- 4

FINANCIAL ANALYSIS

SOURCE OF FINANCE

Capital Structure (HDFC Bank)

Period Instrument Authorized Issued -PAIDUP-
Capital Capital
From To (Rs. cr) (Rs. cr) Shares (nos) Face Value Capital
2016 2017 Equity Share 650 512.51 2562545717 2 512.51
2015 2016 Equity Share 550 505.64 2528186517 2 505.64
2014 2015 Equity Share 550 501.3 2506495317 2 501.3
2013 2014 Equity Share 550 479.81 2399050435 2 479.81

41
 2012 2013 Equity Share 550 475.88 2379419030 2 475.88
2011 2012 Equity Share 550 469.34 2346688270 2 469.34

RATIO ANALYSIS

Key Financial Ratios of HDFC Bank ------------------- in Rs. Cr. -------------------

Mar 17 Mar 16 Mar 15 Mar 14 Mar 13
Per Share Ratios
Basic EPS (Rs.) 57.18 48.84 42.15 35.47 28.49
Diluted Eps (Rs.) 56.43 48.26 41.67 35.21 28.18
Cash EPS (Rs.) 60.03 51.43 43.38 38.14 31.01
Book Value [Excl.
Reval Reserve]/Share 349.12 287.47 247.39 181.23 152.20
(Rs.)
Book Value [Incl.
Reval Reserve]/Share 349.12 287.47 247.39 181.23 152.20
(Rs.)
Dividend/Share (Rs.) 11.00 9.50 8.00 6.85 5.50
Operating Revenue / 270.46 238.20 193.38 171.47 147.37

42
Share (Rs.)
Net Profit/Share (Rs.) 56.78 48.64 40.76 35.34 28.27

Per Employee Ratios

Interest Income/
8,218,909.91 6,878,127.47 6,353,708.99 6,034,700.15 5,077,082.98
Employee (Rs.)
Net Profit/ Employee
1,725,424.39 1,404,398.73 1,339,160.38 1,243,801.97 973,906.44
(Rs.)
Business/ Employee
(Rs.) 142,094,024.12 115,472,348.91 107,003,994.66 98,340,460.49 77,603,363.18

Per Branch Ratios

Interest Income/
146,990,366.49 133,233,285.62 120,752,128.55 120,880,204.53 114,516,242.98
Branch (Rs.)
Net Profit/ Branches
30,858,199.79 27,204,011.28 25,450,719.73 24,914,416.99 21,966,965.38
(Rs.)
Business/ Branches
2,541,267,992.3 2,236,765,820.5 2,033,609,052.5 1,969,843,517.1 1,750,384,153.4
(Rs.)
6 8 7 9 9

Net Profit Margin (%) 20.99 20.41 21.07 20.61 19.18

Operating Profit
3.25 2.56 2.51 1.35 -0.36
Margin (%)
Return on Assets (%) 1.68 1.73 1.73 1.72 1.68
Return on Equity /
16.26 16.91 16.47 19.50 18.57
Networth (%)
Net Interest Margin
3.83 3.89 3.79 3.75 3.94
(X)
Cost to Income (%) 37.84 36.69 36.84 36.53 38.02
Interest Income/Total
8.02 8.49 8.20 8.36 8.75
Assets (%)
Non-Interest
Income/Total Assets 1.42 1.51 1.52 1.61 1.71
(%)
Operating Profit/Total 0.26 0.21 0.20 0.11 -0.03

43
Assets (%)
Operating
Expenses/Total Assets 2.28 2.39 2.36 2.44 2.80
(%)
Interest
Expenses/Total Assets
4.18 4.60 4.41 4.60 4.80
(%)

Valuation Ratios
Enterprise Value (Rs.
1,049,367.58 840,203.70 724,875.64 561,083.74 463,125.72
Cr)
EV Per Net Sales (X) 15.14 13.95 14.96 13.64 13.21
Price To Book Value
4.13 3.73 4.13 4.13 4.10
(X)
Price To Sales (X) 5.33 4.50 5.29 4.37 4.23
Retention Ratios (%) 100.00 80.46 80.37 80.61 80.53
Earnings Yield (X) 0.04 0.05 0.04 0.05 0.05

BALANCE SHEET

Standalone (Rs. cr.)

Mar 2017 Mar 2016

Total Share Capital 512.51 505.64

Equity Share Capital 512.51 505.64

Share Application Money 0.00 0.00

44
Preference Share Capital 0.00 0.00

Reserves 88,949.84 72,172.13

Revaluation Reserves 0.00 0.00

Networth 89,462.35 72,677.77

Deposits 643,639.66 546,424.19

Borrowings 74,028.87 53,018.47

Total Debt 717,668.53 599,442.66

Other Liabilities and Provisions 56,709.32 36,725.13

Total Liabilities 863,840.20 708,845.56

Cash and Balances with RBI 37,896.88 30,058.31

Balance with Banks, Money at Call 11,055.22 8,860.53

Advances 554,568.20 464,593.96

Investments 214,463.34 163,885.77

Gross Block 3,626.74 3,343.16

Accumulated Depreciation 0.00 0.00

Net Block 3,626.74 3,343.16

Capital Work in Progress 0.00 0.00

Other Assets 42,229.82 38,103.84

Total Assets 863,840.20 708,845.57

45
Contingent Liabilities 848,717.62 876,808.11

Bills for collection 0.00 0.00

Book Value (Rs) 349.12 287.47

Consolidated (Rs. cr.)

Mar 2017 Mar 2016

Total Share Capital 512.51 505.64

Equity Share Capital 512.51 505.64

Share Application Money 0.00 0.00

Preference Share Capital 0.00 0.00

Reserves 91,281.44 73,798.49

Revaluation Reserves 0.00 0.00

Networth 91,793.95 74,304.13

Deposits 643,134.25 545,873.29

Borrowings 98,415.64 71,763.45

Total Debt 741,549.89 617,636.74

Other Liabilities and Provisions 58,708.88 38,140.33

Total Liabilities 892,052.72 730,081.20

46
Cash and Balances with RBI 37,910.55 30,076.58

Balance with Banks, Money at Call 11,400.57 8,992.30

Advances 585,480.99 487,290.42

Investments 210,777.11 161,683.34

Gross Block 3,814.70 3,479.70

Accumulated Depreciation 0.00 0.00

Net Block 3,814.70 3,479.70

Capital Work in Progress 0.00 0.00

Other Assets 42,960.24 38,739.48

Total Assets 892,344.16 730,261.82

Contingent Liabilities 849,132.32 877,017.38

Bills for collection 0.00 0.00

Book Value (Rs) 358.21 293.90

47
 CHAPTER – 5

KEY LEARNING’S FROM THE COMPANY AND

RECOMMENDATIONS

PERFORMANCE ANALYSISOFTHE COMPANY

A comparative analysis of HDFC bank financial performance before and after

acquisition with centurion bank of Punjab”. The HDFC Bank was incorporated on
August 1994 by the name of 'HDFC Bank Limited', with its registered office in
Mumbai, India. India's third-largest lender, HDFC Bank, is acquiring Centurion Bank
of Punjab for about 95.1 billion rupees ($2.4 billion) in stock, extending its network
before foreign institutions are allowed larger access to the Indian banking market next
year. Centurion Bank merged with Bank of Punjab (at swap ratio to 4:9) to form
Centurion Bank of Punjab. Finally on May 23, 2008, the one of India's most renowned

48
 banks - HDFC Bank acquired Centurion Bank of Punjab Methodology is defined to
study of methods by which we again knowledge, it deals with cognitive processes
imposed on research the problems arising from the nature of its subject matter. Ratio
analysis is the calculation and comparison of various financial ratio derived company’s
financial statements. Total Debt Ratio, Efficiency Ratio, Return on Average Asset
Ratios, Asset Utilization, Return on assets (ROA), Equity Multiplier, Tax Ratio, Profit
Margin The total share capital for the year 2010 is 457.7 is higher than the other year
total share capital value. The company should increase the profit margin after the
acquisition the profit margin it’s continually lower then following years. The HDFC
Bank should take necessary steps to improve the return on asset. The HDFC Bank is
performing well after the acquisition but some of the variable like profit margin, tax
ratio, returns on asset, borrowing. If all these variables are rectified then the company
gets more profit.

REASONS FOR THE CONTRACTIONOF COMPANY

Shares of HDFC Bank BSE -0.09 % were trading higher in Wednesday's trade after
reports that the bank is expanding its Smart Up zones across niche branches in the IT
capital following in the footsteps of RBL and SBI who launched dedicated branches last
year. 

Following the development, the stock advanced 0.41 per cent to Rs 1,816.30 on BSE. It
opened at Rs 1,810 and touched an intraday high and low of Rs 1,826.20 and Rs 1,810
respectively, in the first hour of trade.

More than 35 per cent of all the startup accounts opened after Smart Up launch and are
based in Bengaluru, said HDFC Bank in a statement. 

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It will also be launching the service in 65 branches across 30 cities including states like
Bihar, UP and in the North-East region. These zones will exclusively cater to startup
requirements including legalities and other compliances and speed up the overall process
for the companies by specially trained staff, ET reported Promoters held 25.73 per cent
stake in the company as of September 2017.

For the quarter ended September 30, 2017, the company reported total revenue at 19,
670.28 crore and net profit stood at 4,151.03 crore. 

The scrip touched its fresh 52-week high of Rs 1,876.95 on October 24, 2017 and its 52-
week low of Rs 1,159.30 on November 25, 2016. 

ORGANIZATIONAL LEADERSHIP

Name Designation Role

Aditya Puri Managing director He has worked in banking sector for
40 years, in india and other countries,
and become CEO of Citibank,
Malaysia in 1992. In September 1994
he returned to india as Managing
Director of HDFC Bank.
He presided over HDFC’s acquisitions
of Times Bank Limited in 2000 and of
Centurion Bank of Punjab in 2008.
Mr. NavinPuri Branch Banking Mr. NavinPuri serves as Country Head

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 of Retail Banking Branch at HDFC
Bank Limited and served as its Head
of Retail Current Accounts and Head
of Branch Banking - Western India.
Mr. Puri has been with HDFC Bank
since February 1999 and has 18 years
of banking experience. Mr. Puri
served as a Vice President of Projects
& Business Development at Forbes &
Company Ltd. Mr. Puri holds a
Bachelor of Commerce from Calcutta
University and is a member of the
Institute of Chartered
Mr. AbhayAima Equities and Private Mr. AbhayAima serves as the Head of
Banking Global Consumer Business, Private
Banking & Distribution, Direct &
Digital Banking and Retail Liabilities
at HDFC Bank Limited and served as
its Head of Equities and Private
Banking for Third Party Products &
NRI Banking and Head of Equities
and Private Banking and Third Party
Products. Mr. Aima serves as a Non-
Executive Director of HDFC
Securities Limited. He is a graduate of
the National Defence Academy.
Mr. Parag Roa Retail Assest and Mr. Parag Rao served as Group Head
Credit Cards for Marketing, Credit Cards and
Payments Business at HDFC Bank
Limited. Mr. Rao has nearly 26 years
of experience and joined HDFC Bank
Limited from IBM Global Services in

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 April 2002. He serves as Head of
Payments Business at HDFC Bank
Limited. Mr. Rao holds a Masters in
Management Studies degree from S.P.
Jain Institute of Management, Mumbai
University and a Bachelor of
Engineering from Regional
Engineering College, Jamshedpur.

MARKET GROWTH RATE OF COMPANY

Revenue and Net Income, EPS Growth Rate

Revenue or turnover or top line is income that a company receives from its normal
business activities. Revenue Growth is used to measure how fast a company's business is
expanding. The figure shows the annual rate of increase/decrease in a company's revenue
or sales growth in terms of percentage change from the previous year.

An ideal company should have a steady upward trend. Year-over-year performance is

frequently used by investors seeking to gauge whether a company's financial performance
is improving or worsening.

Compound Annual Growth Rate of HDFC Bank Ltd.

1 year

Revenue 16.01%
Net Income 19%
EPS Basic 18%

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If Sales Revenue shows a moderate or stable growth while EPS shows an explosive
growth, it could possibly be due to accounting manipulation.

Reserves, Dividends Growth

Retained Earnings Growth is the percent increase / decrease of a company's retained net
income or reserves/surplus over time. A company can use retained earnings to maintain
current operations, or to invest in new ventures. Generally speaking, retained earnings
growth is accompanied by subsequent increases in sales and profitability. 

Dividend Growth HDFC Bank Ltd.

A company paying dividends is generally a good sign. Well established companies offer
dividends back to its shareholders while high growth companies usually do not pay
dividends since they reinvest the profits back in the business. If a dividend paying
company stops paying dividends then that is a big red flag. Dividend per share is better
metric compared to looking at just the dividends because DPS takes intoaccount the
number of shares as well. 

SWOT ANALYSIS

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Strengths

 HDFC bank is the second largest private banking sector in India having 2,201

branches and 7,110 ATM’s
 HDFC bank is located in 1,174 cities in India and has more than 800 locations to
serve customers through Telephone banking
 The bank’s ATM card is compatible with all domestic
and international Visa/Master card, Visa Electron/ Maestro, Plus/cirus
and American Express. This is one reason for HDFC cards to be the most preferred
card for shopping and online transactions
 HDFC bank has the high degree of customer satisfaction when compared to other
private banks
 The attrition rate in HDFC is low and it is one of the best places to work in private
banking sector
 HDFC has lots of awards and recognition, it has received ‘Best Bank’ award from
various financial rating institutions like Dun and Bradstreet, Financial express,
Euromoney awards for excellence, Finance Asia country awards etc.
 HDFC has good financial advisors in terms of guiding customers towards right
investments 

Weaknesses

 HDFC bank doesn’t have strong presence in Rural areas, where as ICICI bank its
direct competitor is expanding in rural market
 HDFC cannot enjoy first mover advantage in rural areas. Rural people are hard
core loyal in terms of banking services.
 HDFC lacks in aggressive marketing strategies like ICICI
 The bank focuses mostly on high end clients
 Some of the bank’s product categories lack in performance and doesn’t have
reach in the market
 The share prices of HDFC are often fluctuating causing uncertainty for the
investors
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Opportunities

 HDFC bank has better asset quality parameters over government banks, hence the
profit growth is likely to increase
 The companies in large and SME are growing at very fast pace. HDFC has good
reputation in terms of maintaining corporate salary accounts
 HDFC bank has improved it’s bad debts portfolio and the recovery of bad debts
are high when compared to government banks
 HDFC has very good opportunities in abroad
 Greater scope for acquisitions and strategic alliances due to strong financial
position

Threats

 HDFC’s nonperforming assets (NPA) increased from 0.18 % to 0.20%. Though it

is a slight variation it’s not a good sign for the financial health of the bank
 The non-banking financial companies and new age banks are increasing in India
 The HDFC is not able to expand its market share as ICICI imposes major threat
 The government banks are trying to modernize to compete with private banks
 RBI has opened up to 74% for  foreign banks to invest in Indian market

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 CHAPTER- 6

FINDINGS

 The bank has good relation with its customers. The customers are satisfied
with the relationship manager service provided by HDFC Bank.
 The bank and its customers have a long term relationship.
 HDFC bank has the tendency to retain its customers at any cost. They believe
that the old customer is more profitable instead of a new one that’s why they
try to maintain good and long term relations to their customers.
 Less number of customer use mobile banking or net banking.
 ICICI Bank has more AT M’s than HDFC Bank.
 The customers of HDFC bank are satisfied with their savings and salary
accounts.

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 CHAPTER-7

CONCLUSIONS AND SUGGESTIONS

Suggestions

 HDFC Bank needs to promote and encourage people to use internet banking.
 In terms of ease of access HDFC Bank needs to increase the number of ATM’s.
 The bank should be more flexible in order to compete with its competitors like
ICICI bank.
 Mostly service class persons prefer the HDFC Bank in the comparison of business
and students and other class persons thus it needs to promote its product and
services that are offered mainly for the business class people and students because
these two class forms major users of the banking services.
 Bank should go in for branding exercise comprising of two parts brand Logo i.e.
to make more catchy and easy so customer could relate to it and secondly by
focusing on service since whether in bank or at the ATM service is a key. Hence
it should be incorporated in branding.

Conclusion

 The study mainly was on marketing strategies of HDFC Bank that how they
manage their marketing activities

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  In this study I found that HDFC Bank has used all the methods, channels,
media and analysis related to marketing in order to achieve its marketing
objectives.
 This study finds that however HDFC Bank is not the leading private sector
bank but its vast range of products and availability of options make it one of
the better banks in India.
 HDFC Bank has taken the advantage of the marketing strategies in order to
place its product in the market.

BIBLIOGRAPHY

 http://en.wikipedia.org/wiki/HDFC_Bank
 http://documents.scribd.com.s3.amazonaws.com/docs/5oe3oj2v5s2klg7n.pdf?
t=1372842071
 http://www.hdfcbank.com/assets/pdf/Investor_Presentation.pdf
 http://www.scribd.com/doc/30849414/HDFC-Bank-Summer-project

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