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    This document provides an overview and analysis of HDFC Bank in India. It begins with acknowledgements and preface sections. It then introduces banking definitions and the importance of studying HDFC Bank. The organization profile section details HDFC Bank's history, promoters, business focus, capital structure, and distribution network. It established that HDFC Bank is one of the first private sector banks in India, with over 1,200 branches across the country. The document appears to be a student project report analyzing the financial performance of HDFC Bank through various tools like ratio analysis and statistical analysis.

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    This document provides an overview and analysis of HDFC Bank in India. It begins with acknowledgements and preface sections. It then introduces banking definitions and the importance of studying HDFC Bank. The organization profile section details HDFC Bank's history, promoters, business focus, capital structure, and distribution network. It established that HDFC Bank is one of the first private sector banks in India, with over 1,200 branches across the country. The document appears to be a student project report analyzing the financial performance of HDFC Bank through various tools like ratio analysis and statistical analysis.

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    471 views75 pages

    A Project Report ON "A Comprehensive Study On Financial Analysis"

    Uploaded by

    tanu2011
    This document provides an overview and analysis of HDFC Bank in India. It begins with acknowledgements and preface sections. It then introduces banking definitions and the importance of studying HDFC Bank. The organization profile section details HDFC Bank's history, promoters, business focus, capital structure, and distribution network. It established that HDFC Bank is one of the first private sector banks in India, with over 1,200 branches across the country. The document appears to be a student project report analyzing the financial performance of HDFC Bank through various tools like ratio analysis and statistical analysis.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOCX, PDF, TXT or read online from Scribd
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    of 75

    A

    PROJECT REPORT
    ON
    “A Comprehensive Study On
    Financial Analysis”

    1
    ACKNOWLEDGEMENT
    No task is single man’s effort. Any job in this world however trivial or
    tough cannot be accomplished without the assistance of others. An
    assignment puts the knowledge and experience of an individual to litmus test.
    There is always a sense of gratitude that one likes it express towards the
    persons who helped to change an effort in a success. The opportunity to
    express my indebtedness to people who have helped me to accomplish
    this task.
    I deem it a proud privilege to extend my greatest sense of gratitude to
    my guide MISS SONIA MITTAL (ASSISTANT MANAGER, HDFC
    BANK KURUKSHETRA) for the keen interest, inspiring guidance,
    continuous encouragement, valuable suggestions and constructive criticism
    throughout the pursuance of this report.
    My sincere thanks are due to my MR. GOURAV SHARMA
    (BRANCH MANAGER) for their valuable support in helping me to gain
    this opportunity of being associated with an organization of such esteem.
    I am thankful to director sir DR. VIKAS DARYAL, MS. DEEPIKA
    KOHLI FACULTY TIMT (HOD), for granting me the permission to
    undertake the study. I would like to convey thanks to MISS RASHMI
    KANSAL FACULTY TIMT for ready assistance, keen interest and
    valuable suggestions.
    Last but not least it would be unfair if I don’t extend my indebtedness to
    my parents and all my friends for their active cooperation which was of great
    help during the course of my training project

    2
    PREFACE
    Using a new pattern based on proper integration of formal teaching and
    actual practice the M.B.A. program of DDCE Sambalpur University , (Nice
    Cuttack) has it course for eight weeks industrial training of second year , so
    as the students could begin to have the feeling of business environment right
    in the beginning. Practical training constitutes an integral part of management
    studies. Training gives an opportunity to the students to exposé themselves to
    the industrial environment, which is quite different from the classroom
    teaching. The practical knowledge is an important suffix to the theoretical
    knowledge. One cannot rely merely upon theoretical knowledge. Is has to be
    coupled with practical for it to be fruitful. The training also enables the
    management students to themselves see the working conditions under which
    they have to work in the future.
    After Liberalization of Indian economy sense is changed because of
    Multinational Companies continuously coming with their technical expertise
    and improved management concepts. Industrial activity in India has become a
    thing to watch and I really wanted to be a part of it and it is essential for me
    being a finance student.
    I consider myself lucky to get my summer training in HDFC. I underwent
    eight weeks of training. It really helped me to get a practical insight into the
    actual business environment and provide mean opportunity to make my
    Financial Management concepts more clear. The advantage of this sort of
    integration which promotes guided adjustment corporate culture, functional,
    social and other norms with formal teaching are:
    •To bridge the gap between theory and practice
    • To install feeling of belongingness and acceptance
    • To cultivate proper temperament & to generate much morale
    • To help students identify their strong & weak points in the following
    & appreciating organization activities
    3
    EXECUTIVE SUMMARY
    “Undertake something is difficult, It will do you good, Unless you try to do
    something Beyond what you have already mastered You will never grow”.
    RONALDE. OSBORN
    The concept of this project is to check whether HDFC BANK is performing well
    year after year or lacking in performance. The performance can be evaluated
    by doing Financial Analysis of Financial Statements of Bank. The purpose of
    this project is to evaluate the performance of HDFC BANK. It primarily aims at
    learning the various factors that can help I evaluation process. I have tried to
    find out the reasons or ground where it is lacking. I have also tried to find out
    the areas of improvement.
    In order to do financial analysis of co. the various tools like RATIO ANALYSIS,
    COMPARATIVE FINANCIAL STATEMENT ANDTREND PERCENTAGES 
    have been used. In statistical tools, I’ve used CORRELATION, TIME SERIES
    ANALSIS (TREND VALUES).In Hypothesis testing, I’ve used ANOVA TEST.
    The project also includes objective of study, Research Methodology, Analysis
    and Interpretation, findings recommendations limitation of study conclusion
    bibliography and annexure.

    4
    INTRODUCTION OF BANKING
    MEANING AND DEFINITION:
    Bank is an institution that deals in money and its substitutes and
    provides crucial financial services. The principal type of baking in the modern
    industrial world is commercial banking & central banking.
    Banking Means "Accepting Deposits for the purpose of lending or
    Investment of deposits of money from the public, repayable on demand or
    otherwise and withdraw by cheque, draft or otherwise."
    -Banking Companies (Regulation) Act,1949
    The concise oxford dictionary has defined a bank as "Establishment for
    custody of money which it pays out on customers order." Infect this is the
    function which the bank performed when banking originated.
    "Banking in the most general sense, is meant the business of receiving,
    conserving & utilizing the funds of community or of any special section of it."
    -By H.Wills & J. Bogan.

    "A banker of bank is a person, a firm, or a company having a place of


    business where credits are opened by deposits or collection of money or
    currency or where money is advanced and waned.
    -By Findlay Sheras.
    A Bank :
    • Accept deposits of money from public,
    • Pays interest on money deposited with it.
    • Lends or invests money
    • Repays the amount on demand,
    • Allow the money deposited to be with drawn by cheque or draft.

    5
    IMPORTANCE TO THE COMPANY:
    The ultimate purpose of giving me this topic was to know about the customer’s
    perceptions about the different products of the bank, and to know about
    operational process. how these products can attract them and how the
    company can generate maximum profit by convincing them through personal
    banker and to better understand customer requirement and to understand
    operational methodology.
    LEARNING FROM THE STUDY:
    The process of bank related transaction, bank related various terms, work
    environment of HDFCBank. Different products and services provided by the
    bank. Customers’ perception about the different products. The brand image of
    the bank. What are the problems faced by customer on daily basis. How to
    communicate with the customers. Different techniques of dealing with the
    customers. How to convince and convert a customer into a real customer. and
    at the last how to better response to the customer problem.
    CHAPTER 2-ORGANIZATION PROFILE
    COMPANY HISTORY: 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 of 'HDFC Bank
    Limited', with its registered office in Mumbai, India. HDFC Bank commenced
    operations as a
    Scheduled Commercial Bank in January 1995

    6
    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 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.
    BUSINESS FOCUS
    HDFC Bank's mission is to be a World-Class Indian Bank. The objective is to
    build sound customer franchises across distinct businesses so as to be the
    preferred provider of banking services for target retail and wholesale customer
    segments, and to achieve healthy growth in profitability, consistent with the
    bank's risk appetite. The bank is committed to maintain the highest level of
    ethical standards, professional integrity, corporate governance and regulatory
    compliance. HDFC Bank's business philosophy is based on four core values -
    Operational
    Excellence, Customer Focus, Product Leadership and People.
    CAPITAL STRUCTURE
    The authorized capital of HDFC Bank is Rs550 crore (Rs5.5 billion). The paid-
    up capital isRs424.6 crore (Rs.4.2 billion). The HDFC Group holds 19.4% of
    the bank's equity and about17.6% of the equity is held by the ADS Depository
    (in respect of the bank's American Depository Shares (ADS) Issue). Roughly
    28% of the equity is held by Foreign Institutional Investors (FIIs)and the bank
    has about 570,000 shareholders. The shares are listed on the Stock

    7
    Exchange, Mumbai and the National Stock Exchange. The bank's American
    Depository Shares are listed onthe New York Stock Exchange (NYSE) under
    the symbol 'HDB'.
    DISTRIBUTION NETWORK
    HDFC Bank headquartered is in Mumbai. The Bank at present has an
    enviable network of over1229 branches spread over 444 cities across India.
    All branches are linked on an online real-time basis. Customers in over 120
    locations are also serviced through Telephone Banking. The Bank' expansion
    plans take into account the need to have a presence in all major industrial and
    commercial centers where its corporate customers are located as well as the
    need to build a strong retail customer base for both deposits and loan
    products. Being a clearing/settlement bank to various leading stock
    exchanges, the Bank has branches in the centers where the NSE/BSE has a
    strong and active member base. The Bank also has a network of about over
    2526 net worked ATMs across these cities. Moreover, HDFC Bank's ATM
    network can be accessed by all domestic and international Visa/MasterCard,
    Visa Electron/Maestro, Plus/Cirrus and American Express Credit/Charge
    cardholders.
    FIVE “S” PART OF KAIZEN
    Focus on effective work place organization believe in“Small changes lead to
    large improvement”
    Every successful organization have their own strategy to win the race in the
    competitive market. They use some technique and methodology for smooth
    running of business. HDFC BANK also acquired the Japanese technique for
    smooth running of work and effective work place organization.
    Five ‘S’ Part of Kaizen is the technique which is used in the bank for easy and
    systematic work place and eliminating unnecessary things from the work
    place.

    8
    BENEFIT OF FIVE “S”
    • It can be started immediately.
    • Every one has to participate.
    • Five “S” is an entirely people driven initiatives.
    • Brings in concept of ownership.
    • All wastage are made visible
    1. SORT:
    It focus on eliminating unnecessary items from the work place. It is excellent
    way to free up
    valuable floor space. It segregate items as per “require and wanted”
    2. SYSTEMATIZE:
    Systematize is focus on efficient and effective Storage method. That means it
    identify, organize and arrange retrieval. It largely focus on good labeling and
    identification practices.
    Objective: “A place for everything and everything in its place”.
    3. SPIC- n - SPAN:
    Spic-n-Span focuses on regular clearing and self inspection. It brings in the
    sense of ownership.
    4. STANDERDIZE:
    It focuses on simplification and standardization. It involves standard rules and
    policies. It establish checklist to facilitate autonomous maintenance of
    workplace. It assigns responsibility for doing various jobs and decides on Five
    S frequency.
    5. SUSTAIN:
    It focuses on defining a new status and standard of organized work place.
    Sustain means regular training to maintain standards developed under S-4. It
    brings in self- discipline and commitment towards workplace organization.

    9
    COLOR CODING
    In the HDFC BANK each department has their different color coding apply on
    the different file. Due to this everyone aware about their particular color file
    which is coding on it and they save their valuable time. It is a part of Kaizen
    and also included in the system of the Five ‘S’. Logic behind it that, the color
    coding are always differentiate the things from the similar one.
    particularly in the retail banking businesses in line with the business growth.
    Total number of employees increased from 14878 as of March31, 2006 to
    21477 as of March 31, 2008.The Bank continues to focus on training its
    employees on a continuing basis, both on the job and through training
    programs conducted by internal and external faculty.
    The Bank has consistently believed that broader employee ownership of its
    shares has a positive impact on its performance and employee motivation.
    The Bank’s employee stock option scheme so far covers around 9000
    employees.
    MANAGEMENT
    Mr. Jagdish Capoor took over as the bank's Chairman in July 2001. Prior to
    this, Mr. Capoor wasa Deputy Governor of the Reserve Bank of India. The
    Managing Director, Mr. Aditya Puri, has been a professional banker for over
    25 years and before joining HDFC Bank in 1994 was heading Citibank's
    operations in Malaysia. The Bank's Board of Directors is composed of eminent
    individuals with a wealth of experience in public policy, administration, industry
    and commercial banking. Senior executives representing HDFC are also on
    the Board. Senior banking professionals with substantial experience in India
    and abroad head various businesses and functions and report to the
    Managing Director. Given the professional expertise of the management team
    and the overall focus on recruiting and retaining the best talent in the industry,
    the bank believes that its people are a significant competitive strength.

    10
    TECHNOLOGY
    HDFC Bank operates in a highly automated environment in terms of
    information technology and communication systems. All the bank's branches
    have online connectivity, which enables the bank to offer speedy funds
    transfer facilities to its customers. Multi-branch access is also provided to retail
    customers through the branch network and Automated Teller
    Machines(ATMs). The Bank has made substantial efforts and investments in
    acquiring the best technology available internationally, to build the
    infrastructure for a world class bank. The Bank's business is supported by
    scalable and robust systems which ensure that our clients always get the
    finest services we offer. The Bank has prioritized its engagement in technology
    and the internet as one of its key goals and has already made significant
    progress in web-enabling its core businesses. In
    each of its businesses, the Bank has succeeded in leveraging its market
    position, expertise and
    technology to create a competitive advantage and build market share.
    HDFC BANK business strategy emphasizes the following:
    Increase market share in India’s expanding banking and financial services
    industry by following a disciplined growth strategy focusing on quality and not
    on quantity and delivering high quality customer service. Leverage our
    technology platform and open scale able systems to deliver more products to
    more customers and to control operating costs. Maintain current high
    standards for asset quality through disciplined credit risk management.
    Developed innovative products and services that attract the targeted
    customers and address inefficiencies in the Indian financial sector. Continue to
    develop products and services that reduce bank’s cost of funds. Focus on high
    earnings growth with low volatility.

    11
    PRODUCT SCOPE:
    HDFC Bank offers a bunch of products and services to meet the every need of
    the people. The company cares for both, individuals as well as corporate and
    small and medium enterprises. For individuals, the company has a range
    accounts, investment, and pension scheme, different types of loans and cards
    that assist the customers. The customers can choose the suitable one from a
    range of products which will suit their life-stage and needs. For organizations
    the company has a host of customized solutions that range from funded
    services, Non-funded services, Value addition services, Mutual fund etc.
    These affordable plans apart from providing long term value to the employees
    help in enhancing goodwill of the company. The products of the company are
    categorized into various sections which are as follows:

    Accounts and deposits.


    • Loans.
    • Investments and Insurance.
    • Forex and payment services.
    • Cards.
    • Customer center.

    12
    PRODUCTS AND SERVICES AT A GLANCE
    1. PERSONAL BANKING SERVICES
    A.Accounts & Deposits
    Savings Account
    • Regular Savings Account
    • Savings Plus Account
    • Savings Max Account
    • Senior Citizens Account
    • No Frills Account
    • Institutional Savings Account
    • Payroll Salary Account
    • Classic Salary Account
    • Regular Salary Account
    • Premium Salary Account
    • Defence Salary Account
    • Kid's Advantage Account
    • Pension Saving Bank Accoun
    • Family Savings Account
    • Kisan No Frills Savings Account
    • Kisan Club Savings Account
    Current Account
    • Plus Current Account
    • Trade Current Account
    • Premium Current Account
    • Regular Current Account
    • Apex Current Account
    • Max Current Account
    • Reimbursement Current Account

    13
    Fixed Deposit
    • Regular Fixed Deposit
    • Super Saver Account
    • Sweep-in Account
    Recurring Deposit
    Demat Account
    Safe Deposit Locker
    B. Loans
    • Personal Loans
    • Home Loans
    • Two Wheeler Loans
    • New Car Loans
    • Used Car Loans
    • Overdraft against Car
    • Express Loans
    • Loan against Securities
    • Loan against Property
    • Commercial Vehicle Finance
    • Working Capital Finance
    • Construction Equipment Finance
    C. Investments & Insurance
    • Mutual Funds
    • Insurance
    • Bonds
    • Financial Planning
    • Knowledge Centre
    • Equities & Derivatives
    • Mudra Gold Bar

    14
    D. Forex Services
    • Trade Finance
    • Traveler’s Cheques
    • Foreign Currency Cash
    • Foreign Currency Drafts
    • Foreign Currency Cheque Deposits
    • Foreign Currency Remittances
    • Forex Plus Card
    E. Payment Services
    • Net Safe
    • Prepaid Refill
    • Bill Pay
    • Direct Pay
    • Visa Money Transfer
    • E-Monies Electronic Funds Transfer
    • Excise & Service Tax Payment
    F. Access Your Bank - One View
    • Insta Alerts
    • Mobile Banking
    • AT M
    • Phone Banking
    • Branch Network
    G. Cards
    • Silver Credit Card
    • Gold Credit Card
    • Woman's Gold Credit Card
    • Platinum plus Credit Card
    • Titanium Credit Card
    15
    • Value plus Credit Card
    • Health plus Credit Card
    • HDFC Bank Idea Silver Card
    • HDFC Bank Idea Gold Card
    2. WHOLESALE BANKING SERVICES
    • Funded Services
    • Non Funded Services
    • Value Added Services
    • Internet Banking
    • Clearing Sub-Membership
    • RTGS – sub membership
    • Fund Transfer
    • ATM Tie-ups
    • Corporate Salary a/c
    • Tax Collection
    • Financial Institutions
    • Mutual Funds
    • Stock Brokers
    • Insurance Companies
    • Commodities Business
    •Trusts
    3. NRI BANKING SERVICES
    • Rupee Saving a/c
    • Rupee Current a/c
    • Rupee Fixed Deposits
    • Foreign Currency Deposits
    • Accounts for Returning Indians
    • Payment Services
    • Net Safe
    16
    • Bill Pay
    • Insta Pay
    • Direct Pay
    • Visa Money
    • Online Donation
    • Remittances
    MILESTONES IN THE HISTORY
    HDFC Bank began its operations in 1995 with a simple mission to be
    a "World-class Indian Bank". They realized that only a single-minded focus on
    product quality and service excellence would help us get there. Today, they
    are proud to say that they are well on our way towards that goal. It is
    extremely gratifying that their efforts towards providing customer convenience
    have been appreciated both nationally and internationally.
    2009
    Asia Money 2009 Awards
    'Best Domestic Bank in India'
    IBA Banking Technology Awards 2009
    'Best IT Governance Award - Runner up'
    Global Finance Award
    'Best Trade Finance Bank in India for 2009
    IDRBT Banking Technology
    Excellence Award 2008
    'Best IT Governance and Value Delivery'
    Asian Banker Excellence in Retail
    Financial Services
    'Asian Banker Best Retail.
    Finance Asia Country Awards for Achievement 2008
    'Best Bank and Best Cash Management Bank'
    CNN-IBN
    17
    'Indian of the Year (Business)'
    Nasscom IT User Award 2008
    'Best IT Adoption in the Banking Sector'
    Business India
    'Best Bank 2008'
    Forbes Asia
    Fab 50 companies in Asia Pacific
    Asian Banker Excellence in Retail
    Financial Services
    Best Retail Bank 2008
    Asiamoney
    Best local Cash Management Bank
    Award voted by Corporates
    Microsoft & Indian Express Group
    Security Strategist Award 2008
    World Trade Center Award of honor
    For outstanding contribution to
    international trade services.
    Business Today-Monitor Group survey
    One of India's "Most Innovative Companies"
    Financial Express-Ernst & Young Award
    Best Bank Award in the Private
    2007
    Dun & Bradstreet – American Express
    Corporate Best Bank Award 2007
    'Corporate Best Bank' Award
    The Bombay Stock Exchange and
    Nasscom Foundation's Business for
    Social Responsibility Awards 2007

    18
    'Best Corporate Social
    Responsibility Practice' Award
    Outlook Money & NDTV Profit
    Best Bank Award in the Private sector category.
    The Asian Banker Excellence in Retail
    Financial Services Awards
    Best Retail Bank in India
    Asian Banker
    Our Managing Director Aditya Pur

    MERGER

    HDFC Bank and Centurion Bank of Punjab merger at share swap ratio of 1:29
    The Boards of HDFC Bank and Centurion Bank of Punjab met on 25 February,
    2008 and approved, subject to due diligence, the share swap ratio for the
    proposed merger of Centurion Bank of Punjab with HDFC Bank. The Scheme
    of Amalgamation envisages a share exchange ratio of one share of HDFC
    Bank for twenty nine shares of Centurion Bank of Punjab. The combined entity
    would have a nationwide network of 1,148 branches (the largest amongst
    private sector Banks) a strong deposit base of around Rs. 1,200 billion and net
    advances of around Rs. 850billion. The balance sheet size of the combined
    entity would be over Rs. 1,500 billion. Commenting on the propose demerger,
    Mr. Deepak Parekh, Chairman, HDFC said, “We were amongst the first to get
    a banking license, the first to do a merger in the private sector with Times
    Bank in 1999, and now if this deal happens, it would be the largest merger in
    the private sector banking space in India. HDFC Bank was looking for an
    appropriate merger opportunity that would add scale, geography and
    experienced staff to its franchise. This opportunity arose and we thought it is
    an attractive route to supplement HDFC Bank’s organic growth. We believe
    19
    that Centurion Bank of Punjab would be the right fit in terms of culture,
    strategic intent and approach to business.” Mr. Aditya Puri, Managing Director,
    HDFC Bank said, “These are exciting times for the Indian banking industry.
    The proposed merger will position the combined entity to significantly exploit
    opportunities in a market globally recognized as one of the fastest growing. I’m
    particularly bullish about the potential of business synergies and cultural fit
    between the two organizations. The combined entity will be an even greater
    force in the market.” Mr. Rana Talwar, Chairman, Centurion Bank of Punjab
    stated, “Over the last few years, Centurion Bank of Punjab has set
    benchmarks for growth. The bank today has a large nationwide network, an
    extremely valuable franchise,7,500 talented employees, and strong leadership
    positions in the market place. I believe that the merger with HDFC Bank will
    create a world class bank in quality and scale and will set the stage to
    compete with banks both locally as well on a global level.”
    Mr. Shailendra Bhandari, Managing Director and CEO, Centurion Bank of
    Punjab said, “We are extremely pleased to receive the go ahead from our
    board to pursue this opportunity. A merger between the banks provides
    significant synergies to the combined entity. The proposed merger would
    further improve the franchise and customer proposition offered by the
    individual banks.”

    20
    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
    NTEGRITY CUSTOMER CENTRIC PEOPLE CARE “ONE FOR ALL AND ALL
    FOR ONE”
    TEAM WORK JOY AND SIMPLICITY
    CHAPTER 3- RESEARCH OBJECTIVES AND SCOPE OF RESEARCH
    PROJECT
    PROBLEM DEFINATION:
    Personal Banker were with good background human being and through
    rigorous process of recruitment but still not able to perform up to the
    expectation level of company, HR is not able to sort out the problem why the
    performance is not coming even after giving the full marketing and operational
    support. The communication technique and dealing with the customers is also
    a problem to the personal banker.

    21
    ORIGIN OF WORD BANK:
    The origin of the word bank is shrouded in mystery. According to one
    view point the Italian business house carrying on crude from of banking were
    called banchi bancheri" According to another viewpoint banking is derived
    from German word "Branck" which mean heap or mound. In England, the
    issue of paper money by the government was referred to as a raising a bank.

    ORIGIN OF BANKING :
    Its origin in the simplest form can be traced to the origin of authentic
    history. After recognizing the benefit of money as a medium of exchange, the
    importance of banking was developed as it provides the safer place to store
    the money. This safe place ultimately evolved in to financial institutions that
    accepts deposits and make loans i.e., modern commercial banks.

    BANKING SYSTEM IN INDIA


    A HISTORICAL PERSPECTIVE :
    We can identify there distinct phases in the history of Indian banking:
    1.Early phase from 1786-1969.
    2.Nationalization of banks and up to 1991 prior to banking sector reforms.
    3.New phase of Indian banking with the advent of financial banking. Banking in
    India has its origin as early or Vedic period. It is believed that the transitions
    from many lending to banking must have occurred even before Manu, the
    great Hindu furriest, who has devoted a section of his work to deposit and
    advances and laid down rules relating to the rate of interest. During the mogul
    period, the indigenous banker played a very important role in lending money
    and financing foreign trade and commerce.
    During the days of the East India Company it was the turn of agency house to
    carry on the banking business. The General Bank of India was the first joint
    stock bank to be established in the year 1786. The other which followed was
    22
    the Bank of Hindustan and Bengal Bank. The Bank of Hindustan is reported to
    have continued till 1906. While
    other two failed in the meantime. In the first half of the 19th century the East
    India Company established there banks, The bank of Bengalin 1809, the Bank
    of Bombay in 1840 and the Bank of Bombayin1843. These three banks also
    known as the Presidency banks were the independent units and functioned
    well. These three banks were amalgamated in 1920 and new bank, the
    Imperial Bank of India was established on 27th January, 1921.
    With the passing of the State Bank of India Act in 1955 the undertaking
    of the Imperial Bank of India was taken over by the newly constituted SBI. The
    Reserve Bank of India (RBI) which is the Central bank was established in
    April, 1935 by passing Reserve bank of India act 1935.The Central office of
    RBI is in Mumbai and it controls all the other banks in the country.
    In the wake of Swadeshi Movement, number of banks with the Indian
    management were established in the country namely, Punjab National Bank
    Ltd., Bank of India Ltd., Bank of Baroda Ltd., Canara Bank. Ltd. on 19thJuly
    1969, 14 major banks of the country were nationalized and on 15thApril 1980,
    6 more commercial private sector banks were taken over by the government.

    FUNCTIONS OF BANKS
    PRIMARY FUNCTIONS
    • Acceptance of Deposits
    • Making loans & advances
    • Loans
    • Overdraft
    • Cash Credit
    • Discounting of bills of exchang

    23
    SECONDARY FUNCTIONS
    • Agency functions
    • Collection of cheques & Bills etc.
    • Collection of interest and dividends.
    • Making payment on behalf of customers
    • Purchase & sale of securities
    • Facility of transfer of funds
    • To act as trustee & executor

    ACCORDING TO RESERVE BANK OF INDIA ACT 1935


    Banks are classified into following two categories son the basis of
    reserve bank Act. 1934.
    1. SCHEDULED BANK
    These banks have paid up capital of at least Rs. 5 lacks. These are likea joint

    stock company. It is a co-operative organization. These banksfind their

    mention in the second schedule of the reserve bank.


    2. NON SCHEDULED BANK
    These banks are not mentioned in the second schedule of reserve bankpaid
    up capital of these banks is less then Rs.5 lacs. The no. such bankis gradually
    tolling in India.
    UTILITY FUNCTIONS :
    • Safe custody of customers valuable articles & securities.
    • Underwriting facility
    • Issuing of traveller's chequeletter of credit
    • Facility of foreign exchanges
    • Providing trade information
    • Provide information regarding credit worthiness of their customer.

    24
    CLASSIFICATION ON BASIS OF OWNERSHIP
    On the basis of ownership banks are of the following types :
    1. PUBLIC SECTOR BANK
    Public sector banks are those banks which are owned by the Government.
    The Govt. runs these Banks. In India 14 banks were nationalized in 1969 & in
    1980 another 6 banks were also nationalized. Therefore in 1980 the number of
    nationalized bank 20.But at present there are 9 banks are nationalized. All
    these banks are belonging to public sector category. Welfare is their
    principle objective.
    2. PRIVATE SECTOR BANKS
    These banks are owned and run by the private sector. Various banks in the
    country such as ICICI Bank, HDFC Bank etc. An individual has control over
    there banks in preparation to the share of the banks held by him.

    .3. CO-OPERATIVE BANKS


    Co-operative banks are those financial institutions. They provide short term &
    medium term loans to there members. Co-operative banks are in every state
    in India. Its branches at district level are known as the central co-operative
    bank. The central co-operative bank in turn has its branches both in the urban
    & rural areas. Every state co-operative bank is an apex bank which provides
    credit facilities to the central co-operative bank. It mobilized financial resources
    from richer section of urban population by accepting deposit and creating the
    credit like commercial bank and borrowing from the money mkt. It also gets
    funds from RBI.

    25
    2. SAVING BANKS
    The principle function of these banks is to collect small saving acrossthe
    country and put them into productive use. These banks haveshown marked
    development in Germany & Japan. These banks areestablished in HAMBURG
    City of Germany in 1765. In India adepartment of post offices functionsas a
    saving banks.
    3. FOREIGN EXCHANGE BANKS
    These are special types of banks which specialize in financing foreigntrade.
    Their main function is to make international payments throughpurchase & sale
    of exchange bills. As it well known, the exporters of acountry prefer to receive
    the payments for exports in their owncurrency. Thus these banks convert
    home currency into foreigncurrency and vice versa. It is on this account that
    these banks have tokeep with themselves stock of the currency of various
    countries.Along with that, they have to open branches in foreign countries
    tocarry on their business.

    4. INDUSTIRAL BANKS
    The industrial banks extends long term loans to industries. In fact,they also
    help industrials firms to sell their debentures and shares.Some times, they
    even underwrite the debentures & shares of bigindustrial concerns.
    5. INDIGENIOUS BANKS
    These banks found their origin in India. These banks made asignificant
    contribution to the development of agricultural andindustries before
    independence. Mahajans, rural moneylenders havebeen the forerunner of
    these banks in India.

    26
    6. CENTRAL BANK
    The central bank occupies a pivotal position in the monetary andbanking
    structure of the country. The central bank is the undisputedleader of the
    money market. As such it supervises controls andregulates the activities of
    commercial banks affiliated with it. The central bank is also the higher
    monetary institution in the country charged with the duty & responsibility of
    carrying out the monetary

    policy formulated by the government. India's central bank known as


    the reserve bank of India was set up in 1935.
    7. AGRICULTURAL BANK
    The commercial and the industrial banks are not in a position to meet the
    credit requirements of agriculture. Hence, there arises the need foresting up
    special type of banks of finance agriculture. The credit requirement of the
    farmers are two types. Firstly the farmers require short term loans to buy
    seeds, fertilizers, ploughs and other inputs. Secondly, the farmers require
    long-term loans to purchase land, to effect permanent improvements on the
    land to buy equipment and to provide for irrigation works. There are two types
    of agriculture banks.
    1. Agriculture co-operative banks, and
    2. Land mortgage banks. The farmer provide short-term credit, while the letter
    extend long-term loans to the farmers

    27
    PROFILE OF THE ORGANISATION
    HOUSING DEVELOPMENT FINANCE CORPORATION
    (HDFC BANK)

    INTRODUCTION
    The housing development finance corporation limited (HDFC) was amongst
    the first to receive an "in-principle" approval from the reserve bank of India
    (RBI) to set up a bank in the private sector, as part of RBI liberalization of
    Indian banking industry in 1994. The bank was in corporate in Aug. 1994 in the
    name of HDFC Bank Ltd. With its registered office in Mumbai, India, HDFC
    Bank commenced operations as scheduled commercial bank in January 1995.

    PROMOTOR

    HDFC is India's premier housing finance company and enjoys an impeccable


    track record in India as well as in international markets. Since its inception in
    1997, the corporation has maintained a consistent and healthy growth in its
    operations to remain a market leader in mortgage. Its outstanding loan
    portfolio covers well over a
    million dwelling units. HDFC has developed significant expertise inertial
    mortgage loans to different market segments and also has a large corporate
    client base for its housing related credit facilities. With its experience in the
    financial markets, a strong franchise, HDFC was ideally positioned to promote
    a bank in the Indian environment.

    28
    BUSINESS FOCUS
    HDFC bank's mission is to be a world class Indian bank. The bank has aim to
    build sound customer franchises across district business so as to be the prefer
    provider of banking services in the segment that the bank operates in and to
    achieve healthy growth in profitability, consistent with the bank's risk appetite.
    The bank is committed to maintain the highest level of ethical standards,
    professional integrity and regulatory compliance. HDFC bank's business
    philosophy is based on four core values:
    1.Operational Excellence
    2.Customer Focus
    3.Product Leadership
    4.People.

    CAPITAL STRUCTURE
    The authorized capital of HDFC bank is Rs. 45000 Lakhs. The issued,
    subscribed and paid-up capital is divided into 836,46 lacks equity shares @
    Rs.10/- each.
    TIMES BANKS AMALGAMATION
    In a mile stone transaction in Indian banking industry, Times bank limited
    (another new private sector bank promoted by Bennett, Coleman & Co. times
    group) was merged with HDFC bank ltd., effective February 26, 2000. As per
    the scheme of amalgamation approved by the share holders of both banks
    and Reserve bank of India.

    DISTRIBUTION NETWORK
    HDFC bank has its Headquarters in Mumbai. The bank at present has an
    enviable network of 535branches spread over 312 cities across the country.
    All branches are linked on an online real time basis. Customer in 189 locations
    29
    are also serviced through phone banking. The banks expansion plans take
    into account the need to have a presence in all major industrial and
    commercial centers where its corporate customers are located as well as the
    need to build a strong retail customer base for both deposits and loans
    products. Being a clearing settlement bank to various leading stock
    exchanges, the bank has branches in centers where the NSE/BSE have a
    strong and active member base. The bank also have a network of 1323ATM's
    across there cities.

    TECHNOLOGY
    HDFC bank operates in a highly automated environment in terms of
    information technology and communication systems. All the bank's branches
    have connectivity which enables the bank to offer speedy funds transfer facility
    to its customers. Multi branch access is also provided to retail customers
    through the branch network and automated teller machines (ATMs)
    The bank has made substantial efforts and investments in acquiring the best
    technology available internationally to build the infrastructure for a world class
    bank has prioritized its engagement in technology and the internet as one of
    its key goals and has already made significant progress in web enabling its
    core business. In each office its business, the Bank has succeeded in
    leveraging its market position ,expertise and technology to create a
    competitive advantage and build market share.

    30
    BUSINESS PROFILE
    HDFC Bank caters to wide range of banking services covering both
    commercial and investment banking on the wholesale side and transactional
    branch banking on the retail side. The bank three key business areas
    1.WHOLESALE BANKING SERVICES
    The Bank's target is primary large blue-chip manufacturing companies in the
    Indian corporate sector and to a lesser extent, emerging midsized corporate.
    For these corporate the Bank provides a wide range of commercial and
    transactional Banking services including working capital finance trade
    services, transactional services, cash management etc. The Bank is also a
    leading provider of structure solution which combine cash management
    services with vendors and distributor finance for facilitating superior supply
    chain management for its corporate customers. Based on its superior product
    delivery
    service levels and strong customer orientation, the Bank has made significant
    in roads into the Banking consortia of a number of leading India corporate
    including Multinationals, Companies from the domestic business house and
    prime public sector companies. It is recognized as a leading provider of cash
    management and transactional Banking solutions to corporate customers,
    Mutual Funds, Stock Exchange Members and Bank.
    2.RETAIL BANKING SERVICES:
    The objective of retail bank is to provide its target market customer a full range
    of financial products and banking service, giving the customer a one-stop
    window for all his/her banking requirements. The products are backed by
    world-class services and delivered to the customers through the growing
    branch network as well as though alternative delivery channels like ATMs,
    phone banking, net banking and mobile banking. The HDFC bank preferred
    programs for high net worth individuals, the HDFC bank plus and the

    31
    investment advisory services program have been designed keeping in mind
    heads of customers who seek distinct financial solutions information and
    advice on various investment avenues. The also had a wide array of

    retail ban products including auto loans, loans against marketable securities,
    personal loans and loans for two wheelers. It is also a leading provider of
    depository service to retail customers offering customers the facility to hold
    their investments in electronic form. HDFC Bank was the first bank in India to
    launch an international debit card in association with VISA ( Visa election) and
    issue the master card Maestro debit card as well. The debit card allows the
    use to directly debit his account at the point of purchase at a merchant
    establishment, in India and overseas. The bank launch its credit cardin
    association with VISA in November2002. The bank is also one of the leading
    players in the "merchant acquiring" business with 26,400point of sale (pos)
    terminals for debit/credit cards acceptance at merchant establishments. The
    bank is well positioned as a leader in various net based B2C opportunities
    including a wide range of interest banking services for fixed deposit, loans, bill
    payments etc.
    3.TREASURY OPERATIONS
    Within this business the bank has three main product areas foreign exchange
    and derivative, local currency, money market & debt securities and equities.
    With the liberalization of the financial market
    in India, corporate need more sophisticated risk management information
    advice and product structure. These and find pricing on various treasury
    product are provided through the bank treasury team.

    32
    BOARD OF DIRECTOR
    Mr. Jagdish kapoor, (Chairman)
    Mr. Aditya Puri, (Managing Director)
    Mr. Keki Mistry
    Dr. Venkat Rao Gadwal
    Dr. Vineet Jain
    Mrs. Renu Karnad
    Mr. Arvind Pande
    Mr. Ranjan Kapoor (Resigned w.e.f. 29th March, 2006)
    Mr. Bobby Parikh (w.e.f. Jan. 9, 2004)
    Mr. Ashim Samanta
    VICE PRESIDENT AND COMPANY SECRETARY
    Mr. Sanjany Dongre
    AUDITOR
    M/s P.C Hansotia & Co.
    Chartered Accountant
    REGISTERED OFFICE
    HDFC BANK HOUSE
    Senapati Bapat Mart,
    Lower Parel,
    Mumbai-40013
    Tel. No.66521000
    Fax No.24960737
    Website : www. hdfcbank.com

    33
    SWOT ANALYSIS
    STRENGHTS :
    *It has an extensive distribution network comprising of 319 branches in166 cities
    & one international office in Dubai this provides a competitive edge over the
    competitions.
    *The Bank has a strong retail depository base & has more than million
    customers.
    *Bank boasts of a strong brand equity.
    *ISO 9001 certification for its depository & custody operations & for its
    backend processing of retail operation & direct banking operations.
    *The bank has a near competitive edge in area of operations.
    *The bank has a market leader in cash settlement service for the major
    stock exchanges in its country.
    *HDFC Bank is one of the largest private sector bank working in India.
    *It has a highly automated environment in terms of information
    technology & communication system.
    *Infrastructure is best.
    *It has many innovative products like kids Advantage scheme, NRI
    services.

    WEAKNESS :
    *Account opening and delivery of cheque book take comparatively
    more time.
    *Lack of availability of different credit products like CC Limit, Bill
    discounting facilities.

    34
    OPPORTUNITY :
    * Branch expansion
    *Door step services
    *Greater liberalization in foreign ownership via FDI in Indian Pvt.
    Sector Banks.
    *CC/ OF Facilities.
    *Infrastructure improvements & better systems for trading & settlement
    in the govt. securities & foreign exchange markets.
    THREATS:
    *The bank has started facing competition from players like SBI, PNB Bank in the
    finance market itself. This reduce the profit margins in the future.
    *Some Pvt. Banks have7 days banking.

    JUSTIFICATION OF THE STUDY


    Financial Statements are prepared primarily for decision-making. They
    play a dominant role in setting the framework of managerial decisions. But the
    information in the financial statement is not an end in itself as no meaningful
    can be drawn from these statements alone.
    The information provided in the financial statement is of immense usein
    making decisions through analysis and interpretation of financial statements.
    The financial analysis is the process of identifying the financial strength and
    weakness of the firm by properly establishing relationship between the items
    of the balance sheet and P&L A/C.
    There are various methods or techniques used in analyzing financial
    statement such as comparative statement, trend analysis, common size
    statement, schedule of changes in working capital, fund flow and cash flow
    analysis, cost volume profit analysis and “RATIO ANALYSIS”.

    35
    Ratio analysis is one of the most powerful tool of financial analysis. It is a
    process of establishing and interpreting various ratios that the financial
    statements can be analyzed more clearly and decisions made from such
    analysis. Just like a DOCTOR examines his patient by recording his body
    Temperature, blood pressure etc before making his conclusion regarding the
    illness and before giving his treatment, a financial analyst analysis the financial
    statement with various tools of analysis before commenting upon the financial
    health or weaknesses of an enterprise.
    The purpose of financial analysis is to diagnose the information
    contained in financial statements so as to judge the profitability and financial
    soundness of the firm. Financial statement analysis is an attempt to determine
    the significance and meaning of financial statement data so that forecast may
    be made of the future earning, ability to pay interest and debt maturities and
    profitability of a sound dividend policy.
    A financial ratio is the relationship between two accounting figures
    expressed mathematically ratio provide clues to the financial position of the
    concern. These are the pointers and indicators of financial strength,
    soundness, position or weakness of an enterprise. One can draw conclusions
    about the exact financial position of a concern with the help of ratios.

    OBJECTIVE OF THE STUDY


    Objectives are the ends that states specifically how goal be achieved.
    Every study must have an objective for which all the efforts have been done.
    Without objective no research can be conducted and no result can be
    obtained. On the basis of objective all the research process is followed.
    Objectives are the main aspect of every study. The objective of the study gives
    direction to go through the research problem. It guides the researcher and
    keeps him on track.

    36
    I have two objectives regarding my research project. These are shown
    below :-
    1.Primary objective
    2.Secondary objective
    1.Primary objective :-
    1)To study the software used in HDFC Bank
    2)To analyse the financial statements of the corporation to it’s
    true financial position by the use of ratios
    2.Secondary objective :-
    1)To find out the shortcomings in HDFC Bank
    2)To see whether HDFC is going well or not in different areas
    3)To inform the management about the financial condition ofHDFC
    4)To inform the investor, enabling them to take the investment decision.

    LITERARURE REVIEW
    *KothariC.R., “Quantitative Techniques1” ,Pg10-20,“Ihave takenknowledge
    about research design ,sample design & sampling. In this Igot what type of
    sample can be choosen and more about sample design”
    *KhanM.Y, JainP.K“Management Accounting2”,Pg 67 , Ratios and
    there formulations”.
    * Bruch Lev, “Financial Statement Analysis-A new approach3”,p-11,2006, “How
    ratio can be analysed and about the interpretation ofthese ratios.”
    *GuptaS.P., “Business Statistics4”, Pg 378-418“From here I found
    the information regarding correlation , trend and statistical tools”.
    * GoelD.K.“Management Accounting and FinancialManagement5”,Pg 78 “In
    this I found the different types of ratios andthere formulas and about thumb
    rule and all basic concept”.
    *Pandey , I.M “Financial Management6”Pg-143-145 “How to prepare
    comparative balance sheet and how can we evaluate”. *Maheshwari ,S.N ,
    37
    ‘Advanced Accounting7” pg b40-b48, “It explainsratio analysis as a tool to
    analyze the financial statements oforganization. Different ratios depict the
    position of firm in market”.
    *Mittal R.K , “Management Accounting& Financial Management8” pg28-30
    “from this I have how to prepare comparative balance sheet andhow to
    interpret it”
    *Jain T.R. , “Statistics forMBA9” Pg part C 135-138, “Information about the
    calculation of chi square test”.
    * Berry G.C., “Marketing Research10” pg15
    “Some theoretical
    knowledge about the type of data”.
    *S.C Gupta, “Fundamentals of Statistics11” pg112, “From here I found
    the definitions that are the base for the statistical tools”.
    *HoodaR.P.“Statistics for Business and Economics12”pg209-212
    “Calculation of trend analysis and its interpretation”.
    * Horne James.c.Van, “Fundamental of Financial Management13”
    pg125-130 “From this I got how to analyse the financial condition”
    * Chandra Prasanna , “Fundamental of Financial Management14”,pg103-108
    “this book help me to analyse the balance sheet , how canwe say that the firm
    is going well or not”.
    *CooperR.Donald , “Business Research Methods17”,pg176-180 “all
    about sampling design, its meaning”

    38
    INTRODUCTION OF THE TOPIC
    MEANING OF FINANCIAL STATEMENTS:-
    Financial statements refer to such statements which contains financial
    information about an enterprise. They report profitability and the financial
    position of the business at the end of accounting period. The team financial
    statement includes at least two statements which the accountant prepares at
    the end of an accounting period. The two statements are: -
    1.The Balance Sheet
    2.Profit And Loss Account
    They provide some extremely useful information to the extent that
    balance Sheet mirrors the financial position on a particular date in terms of the
    structure of assets, liabilities and owners equity, and so on and the Profit And
    Loss account shows the results of operations during a certain period of time in
    terms of the revenues obtained and the cost incurred during the year. Thus the
    financial statement provides a summarized view of financial positions and
    operations of a firm.

    MEANING OF FINANCIAL ANALYSIS


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

    39
    FEATURES OF FINANCIAL ANALYSIS
     - To present a complex data contained in the financial statement in
    simple and understandable form.
     - To classify the items contained in the financial statement in
    convenient and rational groups.
     To make comparison between various groups to draw various
    conclusions.
    Purpose of Analysis of financial statements
     To know the earning capacity or profitability.
     To know the solvency.
     To know the financial strengths.
     To know the capability of payment of interest & dividends.
     To make comparative study with other firms.
     To know the trend of business.
     To know the efficiency of mgt.
     To provide useful information to mgt

    PROCEDURE OF FINANCIAL STATEMENT ANALYSIS


    The following procedure is adopted for the analysis and interpretation of
    financial statements:-
     The analyst should acquaint himself with principles and postulated of
    accounting. He should know the plans and policies of the managements that
    he may be able to find out whether these plans are properly executed or not.

    40
    The extent of analysis should be determined so that the sphere of work
    may be decided. If the aim is find out. Earning capacity of the enterprise then
    analysis of income statement will be undertaken. On the other hand, if
    financial position is to be studied then balance sheet analysis will be
    necessary.
     The financial data be given in statement should be recognized and
    rearranged. It will involve the grouping similar data under same heads.
    Breaking down of individual components of statement according to nature. The
    data is reduced to a standard form.
     A relationship is established among financial statements with the help
    of tools & techniques of analysis such as ratios, trends, common size,
    fund flow etc.
     The information is interpreted in a simple and understandable way.
    The significance and utility of financial data is explained for help in
    decision making.
     The conclusions drawn from interpretation are presented to the
    management in the form of reports.

    TYPES OF FINANCIAL ANALYSIS


    A)Classification on the basis of natural used
    a) External Analysis
    Outsiders, who don’t have access to the detailed internal accounting records
    of the business firm, do this analysis. These outsiders parties are potential
    investor, creditors, government agencies, credit agencies & general public.
    b)Internal Analysis:
    The analysis conducted by person who has access to the internal
    accounting records of a business firm is known as internal analysis.

    41
    B)On the basis of modus operand:
    a) Horizontal Analysis:
    Horizontal analysis refers to the comparison of financial data of accompany for
    several years. The figures of this type of analysis are presented horizontally
    over a no. of columns. This type of analysisis also called “Dynamic Analysis”.
    b) Vertical Analysis:
    This analysis refers to the study of relationship of the various itemsin the
    financial statements, of one accounting period. It is alsoknown as “Static
    analysis”.

    FUNCTIONS OF FINANCE DEPARTMENT


    The functions of finance department include the following areas:
    1)Effective management of financial resources of the company.
    2) Coordinates & Monitors the functions of accounts activities in the
    units/marketing offers.
    3)Establish and maintain systems of financial control, internal check andrender
    advice on financial & accounting matters includingexamination of feasibility
    report and detailed project reports.
    4)Establish and maintain proper system of budgetary control, cost
    control and management reporting.
    5)Maintain financial accounts and compile annual periodical accounts
    inaccordance with the companies Act, 1956, ensuring the audit ofaccounts as
    per law/Govt. directions.
    6)Looks after overall funds management and arranges funds required forthe
    capital schemes and working capital form govt., banks andfinancial institutions
    etc.

    42
    7)Timely payment of all taxes, levies & duties under the Law, Maintenance of
    records and filing returns statements connected with such taxes, levies and
    duties with the appropriate authorities , as per law.
    All the power involving financial implications are to e exercised in prior
    consultation with head of concerned finance department. In the event of any
    difference of opinion between the General Manger and the Head of Finance
    Dept., the matter shall be referred to Managing Director who after consulting
    Director (Finance) shall issue appropriate instruction after following the
    prescribed procedures.
    METHODS OF FINANCIAL ANALYSIS
    A number of methods can be used for the purpose of analysis of financial
    statements. These are also termed as techniques or tools of financial analysis.
    Out of these, and enterprise can choose those techniques which are suitable
    to its requirements. The principal techniques of financial
    analysisare:1.Comparative Financial Statements.
    2.Common – size Statements
    3. Trend Analysis
    4.Funds Flow statements
    5.Cash Flow Statement

    COMPARATIVE FINANCIAL STATEMENTS


    When financial statements figures for two or mote years are placed side-side
    to facilitate comparison, these are called ‘comparative Financial Statements’.
    Such statements not only show the absolute figures of various years but also
    provide for columns to indicate to increase ort decrease in these figures from
    one year to another. In addition, these statements may also show the change
    from one year to another on percentage form. Such cooperative statementsare
    of great value in forming the opinion regarding the progress of theenterprise.

    43
    PURPOSE
    OR
    UTILITY
    OR
    IMPORTANCE
    OF
    COMPARATIVE STATEMENTS

    1.To make the Data simpler and more understandable


    2.To indicate the Trend
    3.To indicate the strong points weak points of the concern
    4.To compare the firms performance with the average performance of
    the industry
    5.To help in forecasting

    COMPARATIVE PROFIT & LOSS ACCOUNT


    Profit and loss account shows the net profitor net loss of a particular year
    whereas comparative profit and loss account for a number of years provides
    the following information
    1.Rate of increase or decrease in gross profit.
    2.Rate of increase or decrease in operating profit.
    3.Rate of increase or decrease in cost of goods sales
    4.Rate of increase or decrease in net profit
    5.Rate of increase or decrease in sales.

    44
    TREND ANALYSIS
    Trend percentage are very useful is making comparative study of thefinancial
    statements for a number of years. These indicate the direction ofmovement
    over a long tine and help an analyst of financial statements toform an opinion
    as to whether favorable or unfavorable tendencies havedeveloped. This helps
    in future forecasts of various items.
    For calculating trend percentages any year may be taken as the ‘base
    year’.Each item of bease year is assumed to be equal to 100 and on that basis
    thepercentage of item of each year calculated.

    RATIO ANALYSIS
    MEANING :
    Absolute figures expressed in financial statements by themselves are
    meaningfulness. These figures often do not convey much meaning unless
    expressed in relation to otherfigures.
    Thus, it c an be say that the relationship between two figures, expressed in
    arithmetical terms is called a ratio.
    “According to R.N. Anthony.”
    “A ration is simply one number expressed in terms of
    another. It is found by dividing one number into the other.”
    TYPES OF RATIOS
     Proportion or Pure Ratio or Simple ratio.
     Rate or so many Times.
     Percentage
     Fraction.

    45
    OBJECTS AND ADVANTAGES OR USES OF RATIO ANALYSIS
     Helpful in analysis of financial statements.
      Simplification of accounting data.
    Helpful in comparative study.
     Helpful in locating the weak spots of the business.
     Helpful in forecasting
     Estimate about the trend of the business
     Fixation of ideal standards
     Effective control
     Study of financial soundness.

    LIMITATION OF RATIO ANALYSIS


     False accounting data gives false ratios
     Comparisons not possible of different firms adopt different accounting
    policies.
     Ratio analysis becomes less effective due to price levelchange
     Ratios may be misleading in the absence of absolute data.
     Limited use of a single Ratio.
     Window-Dressing
     Lack of proper standards.
     Ratio alone are not adequate for proper conclusions
     Effect of personal ability and bias of the analyst.

    46
    CLASSIFICATION OF RATIOS
    In view of the financial management or according to the tests satisfied,
    various ratios have been classifieds as below
    I. Liquidity Ratios: These are the ratios which measure the short-term
    solvency or financial position of a firm. These ratios are calculated to
    comment upon the short-term paying capacity of a concern or the firm’s
    ability to meet its current obligations.
    II. II. Long –Term Solvency and Leverage Ratios:  Lo n g - term solvency
    ratios convey a firm’s ability to meet the interest cost and repayment
    schedules of its long-term obligation e.g. Debit Equity Ratioand Interest
    Coverage Ration. Leverage Ratios.
    III. Activity Ratios:Activity ratios are calculated to measure theefficiency
    with which the resource of a firm have been employed. These ratios are
    also called turnover ratios because they indicate the speed with which
    assets are being turned over into sales e.g. debtors turn over ratio.
    I V. Profitablity Ratios: These ratios measure the results of business
    operations or overall performance and effective of the firm e.g. gross
    profit ratio, operating ratio or capital employed. Generally, two types of
    profitability ratios are calculated.
    (a)In relation to Sales, and
    (b)In relation in Investment

    47
    FUNCTIONAL CLASSIFICATION IN VIEW OF
    FINANCIAL
    MANAGEMENT OR CLASSIFICATION
    ACCORDING TO TESTS

    CASH-FLOW STATEMENT
    A cash – flow statement is a statement showing inflows (receipts) andoutflows
    (payments) of cash during a particular period. In other words, it is asummary
    of sources and applications of each during a particular span of time.
    Objectives of Cash Flow Statement :
    • Useful for Short-Term Financial Planning.
    • Useful in Preparing the Cash Budget.
    • Comparison with the Cash Budget.
    • Study of the Trend of Cash Receipts and Payments.
    • It explains the Deviations of Cash from Earnings.
    • Helpful in Ascertaining Cash Flow from various Separately.
    • Helpful in Making Dividend Decisions.

    RESEARCH METHODOLOGY
    The procedure adopted for conducting the research requires a lot of attention
    as it has direct bearing on accuracy, reliability and adequacy of results
    obtained. It is due to this reason that research methodology, which we used at
    the time of conducting the research, needs to be elaborated upon. Research
    Methodology is a way to systematically study and solve the research
    problems. If a researcher wants to claim his study as a good study, he must
    clearly state the methodology adapted in conducting the research the research

    48
    so that it way be judged by the reader whether the methodology ofwork done
    is sound or not.
    The Research Methodology here includes.
    1.Meaning of Research.
    2. Research Problem.
    3. Research Design.
    4. Sampling Design.
    5.Data Collection method.
    6.Analysis and interpretation of Data.
    Meaning Research:
    Research is defined as “a scientific and systematic search for pertinent
    information on a specific topic”. Research is an art of scientific
    investigation. Research is a systematized effort to gain now knowledge. It isa
    careful investigation or inquiry especially through search for new facts inany
    branch of knowledge. Research is an academic activity and this term

    should be used in a technical sense. Research comprises defining and


    redefining problems, formulating hypothesis or suggested solutions. Making
    deductions and reaching conclusions to determine whether they if the
    formulating hypothesis. Research is thus, an original contribution to the
    existing stock of knowledge making for its advancement. The search for
    knowledge through objective and systematic method of finding solutions to a
    problem is research.

    49
    Research Problem
    The first step while conducting research is careful definition of Research
    Problem. “To ERR IS THE HUMAN” is a proverb which indicates that no one is
    perfect in this world. Every researcher has to face many problems which
    conducting any research that’s why problem statement is defined to know
    which type of problems a researcher has to face while conducting any study. It
    is said that,
    “Problem well defined is problem half solved.”
    Basically, a problem statement refers to some difficulty, which research
    experiences in the context of either a theoretical or practical situation or wants
    to obtain the solution for the same.
    The problem statement here is:
    “To make a Financial Analysis of Financial statements of HDFC BANK
    BHUBANESWAR

    Research Design
    A research designs is the arrangement of conditions for collection and analysis
    data in a manner that aims to combine relevance to the research purpose with
    economy in procedure. Research Design is the conceptual structure with in
    which research in conducted. It constitutes the blueprint for the collection
    measurement and analysis of data. Research Design includes and outline of
    what the researcher will do form writing the hypothesis and it operational
    implication to the final analysis of data. A research design is a frame work for
    the study and is used as guide in collection and analyzing the data. It is a
    strategy specifying which approach will be used for gathering and analyzing
    the data. It also include the time and cost budget since most studies are done
    under these two cost budget since most studies are done under theses tow
    constraints.

    50
    The design is such studies must be rigid and not flexible and most focus
    attention on the following.
    1.What is the study about?
    2.Why is the study being made?
    3.Where will the study be carried out?
    4.What type of data is required?
    5.Where can be required data be found?
    6.What period of time will the study include?
    7.What will be sample design?
    8.What techniques of data collection will be used?
    9.How will the data be analyzed?
    10.In what style will the report be prepared?

    TYPES OF RESEARCH DESIGN :


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

    51
    Research Design Used in this Project
    Research Design chosen for this study is Descriptive Research Design.
    Descriptive study is based on some previous understanding of the topic.
    Research has got a very specific objective and clear cut data requirements.

    SAMPLING DESIGN
    Sampling is necessary because it is almost impossible to examine the entire
    parent population (i.e. the entire universe) various factors such as time
    available cost, purpose of study etc. make it necessary for the researchers to
    choose a sample. It should neither be too small nor too big. It should be
    manageable. THE sample size of past 3 years is taken for present study due
    to time limitation.
    DATA COLLECTIONS
    The process of data collection begins after a research problem has been
    defined and research design has been chalked out. There are two types
    of data –
    METHODS OF PRIMARY DATA
     OBSERVATION METHOD
     INTERVIEW METHODS
     QUESTIONAIRE METHOD
     SCHEDULE METHOD

    52
    PRIMARY DATA -
    It is first hand data, which is collected by researcher itself. Primary data is
    collected by various approaches so as to get a precise, accurate, realistic and
    relevant data. The main tool in gathering primary data was investigation and
    observation. It was achieved by a direct approach and observation from the
    officials of the company.
    SECONDARY DATA - it is the data which is already collected by
    someone else. Researcher has to analyze the data and interprets the results.
    It has always been important for the completion of any report. It provides
    reliable, suitable, adequate and specific knowledge .I took data comprise
    annual reports and post records. Bank has provided me annual reports from
    2007-08to 2009-10 by help of which, I prepared my report. The valuable
    cooperation extended by staff members contributed a lot to fulfill the
    requirements in the collection of data in order to complete the project. Various
    statistical tools are applied depending on the research problem. In this study
    ratio analysis, comparative financial statements analysis, common size
    statements and Trend Analysis has been used for analyzing and interpreting
    the result.

    53
    STATISTICAL TOOLS
    Introduction:
    An educated citizen needs an understanding of basic
    statistical tools to function in a world that is becoming increasingly dependent
    on quantitative information. Statistics means numerical description to most
    people.
    In fact the term statistics is generally used to mean numerical facts
    and figures such as agricultural production during a year, rate of inflation
    and so on. However as a subject of study, statistics refers to the body of
    principles and procedures developed for collection, classification,
    summarization and interpretation of numerical data and for the use of such
    data.
    Meaning: Broadly speaking the term statistics has been generally used in
    two senses:
    • Singular Sense
    • Plural sense
    The term statistics in its PLURAL SENSE, refers to the numerical data
    or statistical data. In its SINGULAR SENSE, the term refers to a science
    in which we deal with the techniques or methods of collecting, classifying,
    presenting, analyzing and interpreting the data. In other words, the concept
    in its singular sense, refers to statistical methods.
    Purpose
    Without the assistance of statistical methods an organization would find it
    impossible to make a sense of huge data.
    The purpose of statistics is to-
    -Manipulate
    -Summarize
    -Investigate

    54
    The data so that useful making information results could be found out. In
    fact every business manager needs a sound background of statistics.

    Statistics is a set of Decision Making Techniques, Which aids businessmen


    in drawing inferences from the available data
    STATISTICAL TOOLS
    Statistical tools are the basic measures, which help in defining the relation
    between different items, present, past and future trend of particular business
    etc. A wide variety of statistical tools are available and businessmen
    depending upon the nature of his trade can use any of them. Various
    statistical tools are-
    1. Correlation
    2.Time series
    3. Factor analysis
    4.Principal component analysis
    5.Multiple correlation
    Here I am using correlation statistical tool to define the relationship between
    sales and profit of company, Trend analysis in order to project future trend
    values and ANOVA TEST as Hypothesis testing. So, before using the tool
    one should have the knowledge about that statistical tool. Therefore this tool
    is defined as under-
    CORRELATION
    Correlation analysis is basically used to determine the degree of relationship
    between different variables. It refers to the statistical technique that is used
    in measuring the closeness of relationship between two or more variables,
    with the help of correlation analysis we can measure-
    -The degree of relationship in one figure
    -The mutual relationship between two variables.

    55
    -economic relationship between demand and supply
    -The estimation of costs, sales, prices etc. is possible for a trader with
    the help of correlation.

    TYPES OF CORRELATION
    Positive and negative correlation
    When two variables X and Y move in same direction i.e. positive correlation
    and when both variables move in opposite direction, which is negative
    correlation.
    Linear and Curvy-linear Correlation
    When the ratio of change of two variables X and Y remains constant
    throughout, then they said to be linearly correlated and when the ratio of
    change between the two variables is not constant but changing, then
    correlation is said to be curvy-linear.
    Simple, Partial and Multiple Correlation
    When we study the relationship up to variables only, then it is called simple
    correlation.
    When three or ore variables are taken but relationship between any two of
    the variables as constant, then it is called partial correlation and when we
    study the relationship among three or more variables, it is called multiple
    correlation.

    56
    DEGREE OF CORRELATION
    WHY TO USE CORRELATION
    Different types of statistical tools are available but for using specifically
    correlation is of having a major reason i.e. only this statistical tool was
    giving the satisfactory results.

    DECISION
    At the level of significance Alpha=0.050 the decision is to reject the null
    hypothesis of absence of correlation.
    In other words, the correlation
    is significant.
    Interpretation:
    1.There is a high degree of correlation between sales & profit of NLL.
    2.There is a positive correlation between sales & profit of NLL.
    This shows that as the sales of NLL increases profit also moves in the same
    direction.
    1. SCHEDULED BANK
    These banks have paid up capital of at least Rs. 5 lacks. These are likea joint
    stock company. It is a co-operative organization. These banksfind their
    mention in the second schedule of the reserve bank.
    2. NON SCHEDULED BANK
    These banks are not mentioned in the second schedule of reserve bankpaid
    up capital of these banks is less then Rs.5 lacs. The no. such bankis gradually
    tolling in India.

    57
    CLASSIFICATION ACCORDING TO FUNCTION
    On the basis of functions banks are classified as under :-
    1. COMMERCIAL BANKS
    The commercial banks generally extend short-term loans to businessmen &
    traders. Since their deposits are for a short-period only. They cannot lend
    money for a long period. These banks reform various types or agency job for
    their customers. These banks are not in a position to grant long-term loans to
    industries because their deposits

    are only for a short period. The majority of joint stock banks in India
    are commercial banks which finance trade & commerce only.
    2. SAVING BANKS
    The principle function of these banks is to collect small saving across the
    country and put them into productive use. These banks have shown marked
    development in Germany & Japan. These banks are established in
    HAMBURG City of Germany in 1765. In India a department of post offices
    functions as a saving banks.
    3. FOREIGN EXCHANGE BANKS
    These are special types of banks which specialize in financing foreign trade.
    Their main function is to make international payments through purchase & sale
    of exchange bills. As it well known, the exporters of a country prefer to receive
    the payments for exports in their own currency. Thus these banks convert
    home currency into foreign currency and vice versa. It is on this account that
    these banks have to keep with themselves stock of the currency of various
    countries. Along with that, they have to open branches in foreign countries to
    carry on their business.

    58
    4. INDUSTIRAL BANKS
    The industrial banks extends long term loans to industries. In fact, they also
    help industrials firms to sell their debentures and shares. Some times, they
    even underwrite the debentures & shares of big industrial concerns.
    5. INDIGENIOUS BANKS
    These banks found their origin in India. These banks made a significant
    contribution to the development of agricultural and industries before
    independence. Mahajans, rural moneylenders have been the forerunner of
    these banks in India.
    6. CENTRAL BANK
    The central bank occupies a pivotal position in the monetary and banking
    structure of the country. The central bank is the undisputed leader of the
    money market. As such it supervises controls and regulates the activities of
    commercial banks affiliated with it. The central bank is also the higher
    monetary institution in the country charged with the duty & responsibility of
    carrying out the monetary

    policy formulated by the government. India's central bank known as


    the reserve bank of India was set up in 1935.
    7.AGRICULTURAL BANK
    The commercial and the industrial banks are not in a position to meet the
    credit requirements of agriculture. Hence, there arises the need foresting up
    special type of banks of finance agriculture. The credit requirement of the
    farmers are two types. Firstly the farmers require short term loans to buy
    seeds, fertilizers, ploughs and other inputs. Secondly, the farmers require
    long-term loans to purchase land, to effect permanent improvements on the

    59
    land to buy equipment and to provide for irrigation works. There are two types
    of agriculture banks.
    1. Agriculture co-operative banks, and
    2. Land mortgage banks. The farmer provide short-term credit, while the
    letter extend long-term loans to the farmers.

    PROFILE OF THE ORGANISATION


    HOUSING DEVELOPMENT FINANCE CORPORATION
    (HDFC BANK)
    INTRODUCTION
    The housing development finance corporation limited (HDFC) was amongst
    the first to receive an"in-principle" approval from the reserve bank of India
    (RBI) to set up a bank in the private sector, as part of RBI liberalization of
    Indian banking industry in 1994. The bank was in corporate in Aug. 1994 in the
    name of HDFC Bank Ltd. With its registered office in Mumbai, India, HDFC
    Bank commenced operations as scheduled commercial bank in January 1995.
    PROMOTOR
    HDFC is India's premier housing finance company and enjoys an impeccable
    track record in India as well as in international markets. Since its inception in
    1997, the corporation has maintained consistent and healthy growth in its
    operations to remain a market leader in mortgage. Its outstanding loan
    portfolio covers well over a

    million dwelling units. HDFC has developed significant expertise in retail


    mortgage loans to different market segments and also has a large corporate
    client base for its housing related credit facilities. With its experience in the
    financial markets, a strong franchise, HDFC was ideally positioned to promote
    a bank in the Indian environment.
    BUSINESS FOCUS

    60
    HDFC bank's mission is to be a world class Indian bank. The bank has aim to
    build sound customer franchises across district business so as to be the prefer
    provider of banking services in the segment that the bank operates in and to
    achieve healthy growth in profitability, consistent with the bank's risk appetite.
    The bank is committed to maintain the highest level of ethical standards,
    professional integrity and regulatory compliance. HDFC bank's business
    philosophy is based on four core values:
    1. Operational Excellence
    2. Customer Focus
    3. Product Leadership
    4. People.
    CAPITAL STRUCTURE
    The authorized capital of HDFC bank is Rs. 45000 Lakhs. The issued,
    subscribed and paid-up capital is divided into 836,46 lacks equity shares @
    Rs.10/- each.
    TIMES BANKS AMALGAMATION
    In a mile stone transaction in Indian banking industry, Times bank limited
    (another new private sector bank promoted by Bennett, Coleman & Co. times
    group) was merged with HDFC bank ltd., effective February 26, 2000. As per
    the scheme of amalgamation approved by the share holders of both banks
    and Reserve bank of India.
    DISTRIBUTION NETWORK
    HDFC bank has its Head quarters in Mumbai. The bank at present has an
    enviable network of 535branches spread over 312 cities across the country.
    All branches are linked on an online real time basis. Customer in 189 locations
    are also serviced through phone banking. The banks expansion plans take
    into account the need to have a presence in all major industrial and
    commercial centers where its

    61
    corporate customers are located as well as the need to build a stronger tail
    customer base for both deposits and loans products. Being a clearing
    settlement bank to various leading stock exchanges, the bank has branches in
    centers where the NSE/BSE have a strong and active member base.
    The bank also have a network of 1323ATM's across there cities.
    TECHNOLOGY
    HDFC bank operates in a highly automated environment in terms of
    information technology and communication systems. All the bank's branches
    have connectivity which enables the bank to offer speedy funds transfer facility
    to its customers. Multi branch access is also provided to retail customers
    through the branch network and automated teller machines (ATMs)
    The bank has made substantial efforts and investments in acquiring the best
    technology available internationally to build the infrastructure for a world class
    bank has prioritized its engagement in technology and the internet as one of
    its key goals and has already made signi fiat progress in web enabling its core
    business. In each office its business, the Bank has succeeded in leveraging its
    market position, expertise and technology to create a competitive advantage
    and build market share.
    BUSINESS PROFILE
    HDFC Bank caters to wide range of banking services covering both
    commercial and investment banking on the wholesale side and transactional
    branch banking on the retail side. The bank three key business areas
    1. WHOLESALE BANKING SERVICES
    The Bank's target is primary large blue-chip manufacturing companies in the
    Indian corporate sector and to a lesser extent, emerging midsized corporate.
    For these corporate the Bank provides a wide range of commercial and
    transactional Banking services including working capital finance trade
    services, transactional services, cash management etc. The Bank is also a
    leading provider of structure solution which combine cash management

    62
    services with vendors and distributor finance for facilitating superior supply
    chain management for its corporate customers. Based on its superior product
    delivery
    service levels and strong customer orientation, the Bank has made significant
    in roads into the Banking consortia of a number of leading India corporate
    including Multinationals, Companies from the domestic business house and
    prime public sector companies. It is recognized as a leading provider of cash
    management and transactional Banking solutions to corporate customers,
    Mutual Funds, Stock Exchange Members and Bank.
    2. RETAIL BANKING SERVICES:
    The objective of retail bank is to provide its target market customer a full range
    of financial products and banking service, giving the customer a one-stop
    window for all his/her banking requirements. The products are backed by
    world-class services and delivered to the customers through the growing
    branch network as well as though alternative delivery channels like ATMs,
    phone banking, net banking and mobile banking. The HDFC bank preferred
    programs for high net worth individuals, the HDFC bank plus and the
    investment advisory services program have been designed keeping in mind
    heads of customers who seek distinct financial solutions information and
    advice on various investment avenues. The also had a wide array of

    retail ban products including auto loans, loans against market able securities,
    personal loans and loans for two wheelers. It is also a leading provider of
    depository service to retail customers offering customers the facility to hold
    their investments in electronic form. HDFC Bank was the first bank in India to
    launch an international debit card in association with VISA ( Visa election) and
    issue the master card Maestro debit card as well. The debit card allows the
    use to directly debit his account at the point of purchase at a merchant
    establishment, in India and overseas. The bank launch its credit Cardin

    63
    association with VISA in November2002. The bank is also one of the leading
    players in the "merchant acquiring" business with 26,400point of sale (pos)
    terminals for debit/credit cards acceptance at merchant establishments. The
    bank is well positioned as a leader in various net based B2C opportunities
    including a wide range of interest banking services for fixed deposit, loans, bill
    payments etc.
    3. TREASURY OPERATIONS
    Within this business the bank has three main product areas foreign exchange
    and derivative, local currency, money market & debts crudities and equities.
    With the liberalization of the financial market
    in India, corporate need more sophisticated risk management information
    advice and product structure. These and find pricing on various treasury
    product are provided through the bank treasury team.

    CAPITAL STRUCTURE
    As on 30th June, 2010 the authorized share capital of the Bank is Rs. 550
    crore. The paid-up capital as on said date is Rs. 459,69,07,030/-
    (45,96,90,703 equity shares of Rs. 10/- each). The HDFC Group holds 23.63
    % of the Bank's equity and about 17.05 % of the equity is held by the ADS
    Depository (in respect of the bank's American Depository Shares (ADS)
    Issue). 27.45% of the equity is held by Foreign Institutional Investors (FIIs) and
    the Bank has about 4,33,078 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.

    64
    HDFC BANK LTD. - FINANCIAL RESULTS
    (INDIAN GAAP)
    FOR THE PERIOD APRIL TO JUNE 2010

    The Board of Directors of HDFC Bank Limited approved the Bank’s (Indian
    GAAP) accounts for the quarter ended June 30, 2010 at its meeting held in
    Mumbai on Monday, July 19, 2010. The accounts have been subjected to a
    limited review by the Bank’s statutory auditors.

    FINANCIAL RESULTS:

    Profit & Loss Account: Quarter ended June 30, 2010

    For the quarter ended June 30, 2010, the Bank’s total income was Rs. 5,360.0
    crores as against Rs. 5,136.8 crores for the quarter ended June 30, 2009. Net
    revenues (net interest income plus other income) were Rs. 3,341.0 crores for
    the quarter ended June 30, 2010, an increase of 15.2% over Rs. 2,899.2
    crores for the corresponding quarter of the previous year. Interest earned (net
    of loan origination costs and amortization of premia on investments held in the
    Held to Maturity (HTM) category) increased from Rs. 4,093.1 crores in the
    quarter ended June 30, 2009 to Rs. 4,420.2 crores in the quarter ended June
    30, 2010. Net interest income (interest earned less interest expended) for the
    quarter ended June 30, 2010 grew by 29.4% to Rs. 2,401.1 crores, driven by
    average asset growth of 23.2% and a net interest margin (NIM) of 4.3% as
    against a core NIM of 4.2% for the quarter ended June 30, 2009. Other
    income (non-interest revenue) for the quarter ended June 30, 2010 was at
    Rs.939.9 crores, primarily contributed by fees and commissions of Rs. 745.7
    crores (up 14.9% over Rs. 649.3 crores in the quarter ended June 30, 2009)
    and foreign exchange/derivative revenues of Rs. 171.8 crores (up 24.7% over
    65
    Rs. 137.8 crores in the quarter ended June 30, 2009). Profit on
    revaluation/sale of investments for the quarter ended June 30, 2010 was
    significantly lower at Rs. 21.5 crores as against Rs. 256.0 crores for the
    quarter ended June 30, 2009. Operating expenses for the quarter ended June
    30, 2010 were up 15.3% to Rs. 1,592.3 crores and were stable at 47.7% ofnet
    revenues. On account of the improvement in asset quality, provisions and
    contingences reduced from Rs. 658.8 crores for the quarter ended June 30,
    2009 to Rs. 555.0 crores (including loan loss provisions of Rs. 365.1 crores)
    for the quarter ended June 30, 2010. Profit before tax for the quarter ended
    June 30, 2010 increased by 38.8% over the corresponding quarter ended
    June 30, 2009 to Rs. 1,193.7 crores. After providing Rs. 382.0 crores for
    taxation, the Bank earned a Net Profit of Rs. 811.7 crores, an increase of
    33.9% over the corresponding quarter ended June 30, 2009Balance Sheet:
    As of June 30, 2010 The Bank’s total balance sheet size increased by 25.3%
    to touch Rs. 233,253 crores as of June 30, 2010. Total deposits were Rs.
    183,033 crores, up by 25.6% over June 30, 2009. With Savings account
    deposits at Rs. 53,869 crores and Current account deposits at Rs. 36,169
    crores as of June 30, 2010, CASA deposits registered a growth of 37% over
    June 30, 2009. The CASA mix was therefore at 49.2% of total deposits as at
    June 30, 2010. Gross advances grew by 40.2% over June 30, 2009 to Rs.
    147,620 crores. Of this, around 10% increase in advances was due to short-
    term, one-off movements in wholesale loans. Retail loans grew by 24.4%
    over June 30, 2009 to Rs. 76,068 crores and constituted 51.5% of gross
    advances.

    66
    Capital Adequacy:

    The Bank’s total Capital Adequacy Ratio (CAR) as at June 30, 2010
    (computed as per Basel 2 guidelines) remained strong at 16.3%, as against
    15.4% as of June 30, 2009 and against the regulatory minimum of 9%. Tier-I
    CAR was 12.4% as of June 30, 2010 as against 10.6% as of June 30, 2009.

    BUSINESS UPDATE:

    As of June 30, 2010, the Bank’s distribution network was 1,725 branches and
    4,393 ATMs in 780 cities as against 1,416 branches and 3,382 ATMs in 550
    cities as of June 30, 2009. Portfolio quality as of June 30, 2010 remained
    healthy with gross non-performing assets (NPAs) at 1.2% of gross advances
    and net non-performing assets at 0.3% of net advances (as against 2.1%
    gross NPA and 0.6% net NPA ratios as of June 30, 2009). The Bank’s
    provisioning policies for specific loan loss provisions remained higher than
    regulatory requirements. The NPA provision coverage ratio (excluding
    writeoffs) was at 77% as of June 30, 2010 as compared to 70% as of June 30,
    2009. Total restructured assets, including applications received for loan
    restructuring were 0.3% of the bank’s gross advances as of June 30, 2010. Of
    this amounts categorized as standard assets were 0.2% of the bank’s gross
    advances.

    67
    RESEARCH METHODOLOGY
    The procedure adopted for conducting the research requires a lot of attention
    as it has direct bearing on accuracy, reliability and adequacy of results
    obtained. It is due to this reason that research methodology, which we used at
    the time of conducting the research, needs to be elaborated upon .Research
    Methodology is a way to systematically study and solve the research
    problems. If a researcher wants to claim his study as a good study ,he must
    clearly state the methodology adapted in conducting the research the research
    so that it way be judged by the reader whether the methodology of work done
    is sound or not.

    The Research Methodology here includes.


    7.Meaning of Research.
    8. Research Problem.
    9. Research Design.
    10.Sampling Design.
    11.Data Collection method.
    12.Analysis and interpretation of Data.
    Meaning Research:
    Research is defined as “a scientific and systematic search for pertinent
    information on a specific topic”. Research is an art of scientific
    investigation. Research is a systematized effort to gain now knowledge. It is a
    careful investigation or inquiry especially through search for new facts in any
    branch of knowledge. Research is an academic activity and this term

    should be used in a technical sense. Research comprises defining and


    redefining problems, formulating hypothesis or suggested solutions. Making
    deductions and reaching conclusions to determine whether they if the
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    formulating hypothesis. Research is thus, an original contribution to the
    existing stock of knowledge making for its advancement. The search fork
    knowledge through objective and systematic method of finding solutions to a
    problem is research.
    Research Problem
    The first step while conducting research is careful definition of Research
    Problem. “To ERR IS THE HUMAN” is a proverb which indicates that no one is
    perfect in this world. Every researcher has to face many problems which
    conducting any research that’s why problem statement is defined to know
    which type of problems a researcher has to face while conducting any study. It
    is said that,
    “Problem well defined is problem half solved.”
    Basically, a problem statement refers to some difficulty, which researcher
    experiences in the context of either a theoretical or practical situation and
    wants to obtain the solution for the same.
    The problem statement here is:
    “To make a Financial Analysis of Financial statements of HDFC BANK
    BHUBANESWAR

    Research Design
    A research designs is the arrangement of conditions for collection and analysis
    data in a manner that aims to combine relevance to the research purpose with
    economy in procedure. Research Design is the conceptual structure with in
    which research in conducted. It constitutes the blueprint for the collection
    measurement and analysis of data. Research Design include sand outline of
    what the researcher will do form writing the hypothesis and it operational
    implication to the final analysis of data. A research design is a frame work for
    the study and is used as guide in collection and analyzing the data. It is a
    strategy specifying which approach will be used for gathering and analyzing
    69
    the data. It also include the time and cost budget since most studies are done
    under these two cost budget since most studies are done under theses tow
    constraints.
    The design is such studies must be rigid and not flexible and most focus
    attention on the following.
    11.What is the study about?
    12.Why is the study being made?
    13.Where will the study be carried out?
    14.What type of data is required?
    15.Where can be required data be found?
    16.What period of time will the study include?
    17.What will be sample design?
    18.What techniques of data collection will be used?
    19.How will the data be analyzed?
    20.In what style will the report be prepared?

    TYPES OF RESEARCH DESIGN :


     EXPERIMENTAL RESEARCH DESIGN
     EXPLORATORY RESEARCH DESIGN
     DESCRIPTIVE& DIAGNOSTIC RESEARCH
    Exploratory Research Design: This research design is preferred when
    researcher has a vague idea about the problem the researcher has to explore
    the subject.
    Experimental Research Design – The research design is used to provide a
    strong basis for the existence of casual relationship between two or more
    variables.
    Descriptive Research Design – It seeks to determine the answers to who,
    what, where, when and how questions. It is based on some previous
    understanding of the matter.

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    Diagnostic Research Design It determines the frequency with which
    something occurs or its association with something else.
    Research Design Used in this Project
    Research Design chosen for this study is Descriptive Research Design.
    Descriptive study is based on some previous understanding of the topic.
    Research has got a very specific objective and clear cut data requirements.

    Sampling Design
    Sampling is necessary because it is almost impossible to examine the entire
    parent population (i.e. the entire universe) various factors such as time
    available cost, purpose of study etc. make it necessary for the researchers to
    choose a sample. It should neither be too small nor too big. It should be
    manageable. THE sample size of past 3 years is taken for present study due
    to time limitation.
    All the findings and conclusions obtained are based on the survey done in the
    working are within the time limit. I tried to select the sample representative of
    the whole group during my summer training. I have collected data from people
    linked with different professional at Gorakhpur.
    4.1 RESEARCH PLAN: PRELIMINARY INVESTIGATION:

    • In which data on the situation surrounding the problems shall be gathered to


    arrive at.
    • The correct definition of the problem. An understanding of its environment.
    EXPLORATORY STUDY:
    To determine the approximate area where the problem lies.

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    RESEARCH DESIGN:
    Research was initiated by examining the secondary data to gain insight into
    the problem. By analyzing the secondary data, the study aim is to explore the
    short comings of the present system and primary data will help to validate the
    analysis of secondary data besides on unrevealing the areas which calls for
    improvement.
    DEVELOPING THE RESEARCH PLAN:
    The data for this research project has been collected through self
    Administration. Due to time limitation and other constraints direct personal
    interview method is used. A structured questionnaire was framed as it is less
    time consuming, generates specific and to the point information, easier to
    tabulate and interpret. Moreover respondents prefer to give direct answers.
    In questionnaires open ended and closed ended, both the types of questions
    has been used.
    COLLECTION OF DATA:
    1: SECONDARY DATA: It was collected from internal sources. The secondary
    data was collected on the basis of organizational file, official records, news
    papers, magazines, management books, preserved information in the
    company’s database and website of the company.
    2: PRIMARY DATA: All the people from different profession were personally
    visited and interviewed. They were the main source of Primary data. The
    method of collection of primary data was direct personal interview through a
    structured questionnaire.
    SAMPLING PLAN: Since it is not possible to study whole universe, it becomes
    necessary to take sample from the universe to know about its characteristics.
    •Sampling Units: Different professionals. Chartered Accountants, Tax
    Consultants, Lawyers, Business Man, Professionals and House Wives of
    Bhubaneswar.

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    • Sample Technique: Random Sampling
    • Research Instrument: Structured Questionnaire.
    •Contact Method: Personal Interview.
    SAMPLE SIZE: My sample size for this project was 50 respondents. Since
    it was not possible to cover the whole universe in the available time period, it
    was necessary for me to take a sample size of 50 respondents.
    DATA COLLECTION INSTRUMENT DEVELOPMENT: The
    mode of collection of data will be based on Survey Method and Field Activity.
    Primary data collection will base on personal interview. I have prepared the
    questionnaire according to the necessity of the data to be collected.
    RESEARCH LIMITATIONS:
    It was not possible to understand thoroughly about the different marketing
    aspects of the Financial Consultant within 60 days. As stipend, money was not
    given it was difficult to continue the project work. All the work was limited in
    some limited areas of Gorakhpur so the findings should not be generalized.
    The area of research was Gorakhpur and it was too vast an area to cover
    within 60 days.
    CONCLUSIONS AND SUGGESTIONS
    CONCLUSIONS:
    HDFC Bank, the banking arm of HDFC is expected to go on stream. The bank
    already has good number of employees on board and is recruiting personal
    banker heavily to take the headcount to many more. It is on the brim of
    increasing its customers through its attractive schemes and offer.
    The project opportunities provided was market segmentation and identifying
    prospective customers in potential geographical location and convincing them
    to attract more customers so that new business opportunities of the bank can
    be explored. Through this project, it could be concluded that people are not
    much aware about the various products of the bank and many of them not
    73
    interested to open an account, to invest money at all. services was considered
    as unsought good which require hard core selling, but in changing trend in
    income and people becoming financially literate, the demand for banking
    sector is increasing day by day.
    So, at last the conclusion is that there is tough competition ahead for the
    company from its major competitors in the banking sector. Last but not the
    least I would like to thank HDFC Bank forgiving me an opportunity to work in
    the field of Marketing and Operation. I hope the company finds my analysis
    relevant.
    SUGGESTIONS:
    Finally some recommendations for the company are as fallows:-
    •To make people aware about the benefit of becoming a customer of HDFC
    Bank,
    following activities of advertisement should be done through
    1. Print Media.
    2. Hoarding & Banners.
    3. Stalls in Trade Fares
    4. Distribution of leaflets containing details information.
    Other facilities must be provide to the customer:
    • The bank should provide life time valid ATM card to all its customers.
    • Minimum balance for savings account should be reduced from Rs 10000 to
    Rs 1000, so
    that people who are not financially strong enough can maintain their account
    properly.
    • The company should provide a pass book to all its customers.
    • Make people understand about the various benefits of its products.
    • Company should organize the program in the society, so that people will be
    aware about the company and different products of the bank.
    • Company should open more branches in different cities.
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    LIMITATIONS
    Every work has its own limitation. Limitations are extent to which the process
    should not
    exceed. Limitations of this project are:
    • The project was constrained by time limit of two months.
    • Mindset of people may very depending upon their age, gender, income etc.
    • Getting appointment from the concern person was very difficult.
    • People mind set about the survey was obstacles in acquiring complete
    Respondents were very busy in their schedule. So it was very time consuming
    for information & positive interaction, them to answer all the questions
    properly.

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