GENERAL MANAGEMENT PROJECT ON

“ANALYSIS OF BANKING INDUSTRY - HDFC BANK”

Submitted in the partial fulfilment of the requirement for the award of

the degree in

MASTER’S IN MANAGEMENT STUDIES (MMS)

SUBMITTED BY

Mandar Gajanan Zagde

Roll No. 152

PROJECT GUIDE

Prof. Kavita Kanabar

VIVEKANAND EDUCATION SOCIETY INSTITUTE OF

MANAGEMENT STUDIES& RESEARCH, MUMBAI

(AY-2020-22)
 CERTIFICATE

This is to certify that project titled “ANALYSIS OF BANKING INDUSTRY -

HDFC BANK” is successfully completed by Mr. Mandar Gajanan Zagde
during the II SEMESTER, in partial fulfilment of the Master’s degree in
Management Studies recognized by the University of Mumbai for the academic
year 2020-2022 through Vivekanand Education Society Institute of
Management Studies and Research (VESIM).

This Project work is original and not submitted earlier for the award of any
degree/diploma or associate ship of any other University/Institution.

Name: Prof. Kavita Kanabar

Date: 10/06/2021

(Signature of the Guide)

 DECLARATION

I hereby declare that this project report submitted by me to Prof. Kavita

Kanabar, Faculty mentor at Vivekanand Education Society's Institute of
Management Studies and Research is a bonafide work undertaken by me and
it is not submitted to any other University or Institution for the award of any
degree or diploma certificate or published any time before.

Name: Mandar Gajanan Zagde

Date: 10/06/2021

(Signature of the Guide)

 ACKNOWLEDGEMENT

I would like to express my profound gratitude to my guide Prof. Kavita

Kanabar for her invaluable support, encouragement, supervision, and useful
suggestions. Her moral support and continuous guidance enabled me to
complete my work successfully.

Special thanks to The University of Mumbai for giving me an opportunity to

undertake the project “ANALYSIS OF BANKING INDUSTRY - HDFC
BANK”.

Last but not the least, I want to express my gratitude to my family, siblings, and
friends for their invaluable contributions.

I am thankful and indebted to all those who have helped me in completion of

my project.
 TABLE OF CONTENT

Sr No. Topics Page No

1 EXECUTIVE SUMMERY 1

2.0 Industry Analysis

2.1 Introduction of Banking industry 3

2.2 Customer profile of the industry 6

2.3 Supplier profile of the Industry 7

2.4 Structure of Indian Banking System 8
2.5 Competitors profiling of the Industry 14
2.6 Industry Financials 20
2.7 Challenges based by the industry 22
2.8 Government Regulations 24
2.9 PESTEL Analysis for Banking Industry 26
3.0 Company Analysis
3.1 Genesis of the company and its vision and mission 29
3.2 Product and services 31
3.3 Position in the industry 36
3.4 Stake holders detail 38
3.5 Company Financials 39
3.6 Locational and operational details 42
3.7 Challenges faced by the company 43
3.8 Porter’s Five Forces model of the Company 44
3.9 SWOT Analysis of the company 46
4 Suggestion and Recommendation 48
5 Conclusion 49
6 References 50
 1 . EXECUTIVE SUMMERY
The Financial sector is that sector which has a lot of growth opportunities in the coming
years. It has growth opportunities because slowly and gradually people are realizing the
importance of investments. It is also said that financial sector plays a very important role in
the functioning of economy. Banking industry is a network of financial institutions licensed
by the state to supply banking services. The banking sector handles accounts in a nation
including money and credit. Banks acknowledge stores and award credit to the elements.
Along these lines bank assumes a significant job in keeping up the monetary height of a
nation. Given their importance in the economy, banks are held under severe guideline in the
greater part of the nations. The growth of banking sector in India at present is considered to
be around 8.5% per year. Nearly 7.7% of the national GDP is contributed by banking
industry. In India, the Reserve Bank of India is the apex banking organization that manages
the financial approach in the nation. The central bank issues and regulates currency notes. It
is known as RBI is the banker to banks because it retains reserves in order to ensure
monetary stability. It is in charge of overseeing and regulating banks and other financial
institutions. The Reserve Bank of India (RBI) is critical to the country's economic growth and
price stability. After the new entry of banks in the market banking industry is facing serious
competition but it affects positively to Indian economy. Although public sector banks
dominate the Indian banking industry as compared to private sector banks, private sector
banks are gaining popularity and public trust due to their customer-centric attitude, efficient
financial services, and effective use of technology. Innovative banking concepts such as
payments and small finance banks have lately been introduced in the Indian banking market.
The RBI's new policies may go a long way toward assisting the domestic banking industry's
reform. The banking sector has improved over time as a result of the government's
continuous efforts to promote banking technology and expand into unbanked and non-
metropolitan areas.

HDFC bank is the subject of this project. The study's main goal is to analyse HDFC bank and
their total influence on India's banking industry. How they operates and how they are leading
private sector bank India. The ultimate objective of the project was to compare HDFC bank
and its services with some of the leading banks in the Indian market from both public and
private sector. During the analysis, some of the key objectives were achieved, including
expansion of digital services and online banking. The financial performance of HDFC bank is

1
satisfactory in terms of liquidity, profitability, operating efficiency and managerial efficiency.
The main conclusion of the study is that India's Banking sector has grown extremely
competitive, with a huge number of competitors competing in the market. Different
organizations are proposing various programs in order to retain clients and meet their overall
demands to the best of their abilities.

2
 2. Industry Analysis

2.1 Introduction of Banking industry

There has been an impressive change within the banking sector of India. In India Banking
emerged in the last decade of the 18th century. However, the scenario was completely
different before 1990s. In India Banking emerged in the last decade of the 18 th century. In
initial days banks were heavily nationalized within the name of sustainable economic
process. At initial stage banking sector was managed by private companies with a versatile
supervision by British Government. After some year this sector came under total control of
Government especially after India got its liberation from Britain. Government was keener to
use banking funds within the development of society and other projects. Initially,
Government decided to prevent controlling banks and instead, they wanted to go away the
banks to work as per the market and customer demands. Simultaneously, Indian economic
structure was liberalized almost at an equivalent time. Therefore, government initiatives
including financial liberalization resulted a huge reform within the Indian banking sector. The
primary phase of banking reform happened in India by the recommendations of a
Governmental committee – Narashimam Comittee. However, the second reformation
happened almost 7-8 years back. These phases of reformation resulted an efficient, market
driven, customer focused banking sector in India.

History of Banking in India

Phase – I

In the year 1786, the General Bank of India was formed. Banks in Bengal and Hindustan
have since been established. In 1809, the East India Company was called the Presidential
Banks in 1843, when the bank of Mumbai and Bank of Madras were established as
independent banks in 1840. In 1920, these three banks emerged. Imperial Bank of Indi
launched and founded European shareholders and individual shareholders. The first exclusive
bank in India was the Allahabad Bank and was founded in 1965. The Punjab National Bank
Ltd. was founded in 1894 and is headquartered in Lahore. The Indian Bank, Canara Bank,
Indian Bank, Mysore Central Bank in India and Baroda Bank were established between 1906
and 1913, in 1935 the Reserve Bank of India was established. The growth at this phase was
very slow and faced periodic failures between the years 1913 and 1948. In 1949, the Indian
Government proposed the Banking Companies Act to simplify the functions and activities of

3
commercial banks. This law was later amended to become the Banking Regulations Act of
1949, in accordance with the amended Act of 1965. The Reserve Bank of India is authorized
with wide power to supervise the banks in India. At that time the public had low confidence
in the bank. The mobilization of deposits was very slow in the wake. The postal service
offered a better savings bank and was relatively safe. Merchants also received more money.
The growth at this phase was very slow and faced periodic failures between the years 1913
and 1948. In 1949, the Indian Government proposed the Banking Companies Act to simplify
the functions and activities of commercial banks. This law was later amended to become the
Banking Regulations Act of 1949, in accordance with the amended Act of 1965. The Reserve
Bank of India is authorized with wide power to supervise the banks in India. At that time the
public had low confidence in the bank. The mobilization of deposits was very slow in the
wake. The postal service offered a better savings bank and was relatively safe.

Phase - II
After independence, the reform of the Indian banking sector by the government has
reached important milestones. In 1955, in the urban and rural areas the Imperial
Bank of India was nationalized through large scale banking facilities. The State Bank
of India was created to manage federal and provincial government banking across
the country and served as a key agent for RBI. On July 19, 1960, the seven banks
constituting the subsidiaries of the State Bank of India werenationalized. Former
Indian Prime Minister Indira Gandhi has made considerable efforts to nationalize the
country's commercial banks. Seven banks that continued the reform of the banking
sector in 1980 were carried out during thesecond stage of nationalization. In India,
80% of the banking sector belongs to the government.
To regulate the banking system in India the Indian government has taken the following steps:
 The decree implementing the Banking Regulation Act dates from 1949.
 The State Bank of India was nationalized in 1955.
 The State Bank of India subsidiary was nationalized in 1959.
 In 1969, 14 major banks were nationalised.
 In 1971 credit guarantee companies were established.
 Local rural bank was created in 1975.
 Seven banks with more than 200 deposits were nationalized in 1980.

4
After nationalization of banks public sector agencies grew to about 800 percent of deposits,
and a substantial increase of 11,000 percent thereafter, public banks have a lot of confidence
in sustainability.

Phase III

There was an introduction to banking facilities with more products at this era. The
committee was created in 1991 and was working on the liberalization of banking
practices under the chairmanship of Mr. Narasimham. Foreign banks and ATMs flood
the country. More important than money over time, we have implemented more
convenient online and telephone banking. We endeavour to deliver excellent service to
our clients. The Indian financial system is highly resilient. It is protected from crises
caused by external macroeconomic shocks, as has been the case for other East Asian
countries. Indeed, they all have flexible exchange rate, high foreign exchange, capital
accounts but are not yet fully convertible. Banks and their clients have limited exposure
to currency risk.

In addition to Cooperative credit institutions, the Indian banking system includes 12

public sector banks, 22 private sector banks, 46 foreign banks, 56 regional rural banks,
1485 urban cooperative banks, and 96,000 rural cooperative banks as of Nov, 2020 . The
total number of ATMs in India has climbed to 209,282 as of November 2020.

5
2.2 Customer profile of the industry

 Personal entity-

An entity is a legal or accounting concept that distinguishes an organisation from

its owners, other organisations, and individuals. This comprises all types of salary,
pension, stock, and insurance policy holders who fall under the category of
personal banking.

 Public entities-

The public sectors are the largest earning source for the banks. Bank charges
highest interest for day to day transactions on this type of companies. And it is
also a beneficial for public companies to get loans easily from banks as per
required conditions. In includes companies like ONGC, Indi oil corporation
Limited and also Governments departments.

 Private entity-

A private entity can be a partnership, corporation, individual, nonprofit

organization, company, or any other organized group which is not government-
affiliated. Under this companies like Reliance Industries Limited, Tata
Consultancy Services, Infosys Technologies limited, Wipro limited, Hindustan
Lever limited etc who invests in banks. It also includes SME’s.

 Organisation/Institute-

An organisation is a group of people who work together to achieve a set of goals.

Under this charity organisation, orphanage and institutes like School, colleges, etc
are included.

 Co-operative Societies-

It is a form of business where individuals belonging to the same class join their
hands for the promotion of their common goals. Cooperative societies also
maintain the accounts with bank. From day to day activities to occasional
activities all transactions are done by the cooperative societies.

6
2.3 Supplier profile of the Industry

 RBI
The RBI acts as a regulator and supervisor of the overall financial system. bank that
issues currency notes and coins in the country. It is the banker to commercial banks
and other banks like co-operative banks in the country. Reserve bank of India
regulates money, remittance, exchange and banking transactions occurs in all the
banks.

 Depositors
A depositor is an individual who makes a deposit with a bank. The depositor is the
one who lends the money, which will be returned to him or her at the completion of
the term. Depositors include general public and corporate clients who deposits money
in the bank for safe keeping and financial institutions who provide loans to the bank.
It includes the investments like Fixed Deposit (FD), Recurring deposit (RD), term
deposit done by the people.

 Institutes
When a bank needs a loan to carry out some services, they take loans from other
banks or from some financial institution. This way the banks and financial institution
help each other when there in need of money. The educational institutes which have
tie up with the banks for purpose like educational loan.

 Legal Act
Income tax acts promote the use of banking service by making it necessary for having
bank account to filing return and pay tax. The income tax act is a comprehensive
statute that focuses on the different rules and regulations that govern taxation in
country. It provides for levying, administering, collecting and recovering the income
tax. They promote the use of banking service by making it necessary for having bank
account to filing return and for payment of tax.

7
2.4 Structure of Indian Banking System

Fig 2.3: Structure of Banking Industry in India

 Reserve Bank of India (RBI)

The Indian banking sector is regulated by the Reserve Bank of India Act 1934 (RBI
Act). The Reserve Bank of India is the central Bank that is fully owned by the
Government. It is governed by a central board (headed by a Governor) appointed by
the Central Government. Reserve Bank of India was established and started

8
 functioning from 1st April, 1935. RBI was nationalised in 1949. It issues guidelines
for the functioning of all banks which are operating within the country. Central Bank
is the bank of issue. i.e. bank that issues currency notes and coins in the country. It is
the banker to commercial banks and other banks like co-operative banks in the
country. Reserve Bank of India (RBI) main role is to maintain liquidity, in case of
shortage of funds or due to some statutory measures. Being the leader of the monetary
and banking system in the country, the Central Bank controls credit creation and
manages money in the interest of the country.

 Commercial Banks
A commercial bank are financial organisation which play the functions of accepting
deposits from the general public and giving loans for investment with the aim of
earning profit. Commercial Banks have significant role in country’s economy as these
organization fulfil the short-term and mid-term financial requirements of the
industries.
 Public Sector Bank-
Public sector banks are ones in which the government owns more than half of the
company. The government oversees the financial norms with these banks. Most
depositors assume that their money is safer in public sector banks since they are
owned by the government. As a result, the majority of public sector banks have a
sizable clientele. In India, at present there are only 12 public sector banks.
1. State Bank of India (SBI)
2. Bank of India (BOI) -
3. Central Bank of India -
4. Punjab National Bank (PNB) - The Oriental bank of commerce and the
United bank of India has been merged with Punjab national bank they are
second largest public sector bank in India.
5. Union Bank of India - Andhra Bank and Corporation Bank have merged
with Union Bank of India, making it the fifth-largest bank of India.
6. Bank of Baroda -
7. Bank of Maharashtra -
8. Canara Bank, etc.

9
 Private Sector Bank-
Private sector banks are ones in which private persons or businesses own a
significant portion of the bank's stock. As a result, it covers all for-profit firms that
aren't government-owned or operated. With compare to public sector banks,
private sector banks offer more innovative goods and better services, but typically
demand a premium charges for them. It's been seen that the financial performance
of private banks has remained better than that of public banks as they need to have
managed their Net Interest Margin (NIM) and Non-Performing Assets (NPA) very
well. As of April, 2021 there are 22 private sectors banks across India. Examples
of private sector banks are ICICI Bank, HDFC Bank, IndusInd Bank, and Axis
Bank, etc.

 Regional Rural Bank-

The Regional Rural Banks Act of 1976 established Regional Rural Banks (RRBs)
in 1975. They are rural lending institutions that operate in several states across
India. Its goal is to ensure that the agricultural and other rural industries have
enough finance. Regional Rural Banks can only operate in regions that the
government has approved. The Regional Rural Bank is owned by a group of
banks. These banks were founded in the middle of the 1970s. As of April 2021
there are 56 Regional Rural Banks across India. Eg, Maharashtra Gramin Bank,
Central Madhya Pradesh Gramin Bank, Andhra Pradesh Gramin Vikas Bank, etc.

 Foreign Banks-
A foreign bank is a sort of foreign bank that is required to obey both the home and
host country's legislation. The Reserve Bank of India (RBI) is these banks'
regulator, and it establishes all of the policies that govern their activities in India.
These foreign banks are categorised as banks based in another country that have
branches in India. The largest foreign bank in India is Standard Chartered, a UK
based bank. Standard Chartered Bank manages around 100 branches in India. As
of April, 2021 there are 46 Foreign banks are present across India. These are some
names of Foreign Banks
1. Citi Bank
2. Standard Chartered

10
 3. HSBC India
4. Deutsche Bank
5. Barclays Bank
6. DBS Bank, etc.

 Co-operative Banks:
These banks are named as Co-operative Banks because they're organized under the
provisions of the Co-operative Credit Societies Act of the States. Co-operative Banks
work on the target of cooperation, self-help and mutual help. Co-operative Banks in
India protect the agricultural people from the clutches of cash lenders and from
exploiting the poor population. Agricultural sector and rural sector especially are the
beneficiaries of those banks. They need a far better local reach as they're intimately
conversant in the local area. They need in-depth knowledge of the local areas, their
conditions and problems existing there. As of April, 2021 there are 1,485 urban co-
operative banks and 96,000 rural co-operative banks present across India.
 State Co-operative Banks-
The state cooperative bank are federation of the central cooperative bank and acts
as custodian of the cooperative banking structure within the State. Its funds are
obtained from the social capital, deposits, loans and overdrafts of the Federal
Reserve Bank of India. These banks don't accept deposits from the overall public.
Every state features a state cooperative bank. State cooperative banks are mainly
curious about providing loans and advances to the cooperative societies.

 District Co-operative Banks

The District central co-operative banks are located at the district headquarters or
some prominent town of the district. One in each district and affiliated to State
Co-operative bank .This is apex bank for all societies in each district.
Example, For Mumbai district there is Mumbai District Central Co-operative
Bank Ltd.

 Primary Co-operative Banks

11
 Primary Co-operative Bank or societies also known as Urban Co-operative Bank.
This bank is for the public or members of a particular marked area. Members get
direct loans from primary societies.

 Development banks
Development banks are those which are established mainly to produce infrastructure
facilities for the economic growth of the country. They gives financial assistance for
both public and private sector industries. The future requirements of business
concerns are provided by industrial banks, and therefore the various long run lending
institutions which are created by government. In India these long term financial
lending institutions are collectively referred as development banks. They are
 State Finance Corporation (SFC), 1951
State Finance Corporations (SFCs) are an important aspect of a country's
institutional finance framework. SFC helps to ensure that regional growth is
balanced, that more investment is made, that more jobs are created, and that varied
industries are owned by a diverse group of people.

 Small Industries Development Bank of India (SIDBI), 1990

The government has spent tons of time and energy in developing and promoting
these small and micro industries. The Small Industries Development Bank of
India (SIDBI) was found out for an equivalent reasons. SIDBI makes use of the
present banking network to increase credit facilities to the tiny business and micro
industries sector. It provides direct financial assistance to such banks and institutes
which are comes under the MSME sector.

 Export Import Bank (EXIM),1981

Export Import Bank (Exim Banks) are government or semi government agencies
that make sure the safety and growth of a country’s foreign trade.The main
function of the Export and Import Bank of India is to supply financial and other
assistance to importers and exporters of the country. And it oversees and
coordinates the working of other institutions that comes under the import-export
sector.

12
 Small Industries Development Corporation (SIDCO), 1971
In Tamilnadu, India, Small Industries Development Corporation (SIDCO) was
found out in 1971. They supply infrastructure facilities to small scale industries.
Because of SIDCO, many backward areas in most of the states are developed. The
most objective of SIDCO is to stimulate the expansion of industries within the
small scale sector. They to supply infrastructure facilities like roads, drainage,
electricity, water system, etc is one among the first objective of SIDCO.

 National Bank for Agriculture and Rural Development (NABARD), 1982

A major a part of the population in India comes under the agricultural sector so for
Indian government it is important to develop rural financial activities. This is the
government have found out NABARD. NABARD is development bank focussing
mainly on the agricultural sector of the country. It is, actually India’s apex
development bank. It's one among the foremost important institutions within the
country. NABARD is liable for the event of the tiny industries, cottage industries,
and the other such village or rural projects.

13
2.5 Competitor’s profile of the industry

Competition within the financial sector matters for variety of reasons. As in other industries,
the degree of competition within the financial sector can affect the efficiency of the assembly
of monetary services. Also, again as in other industries, it can affect the standard of monetary
products and therefore the degree of innovation within the sector. Specific to the financial
sector it is the link between competition and stability that has long been recognized in
theoretical and research and, most significantly, within the actual conduct of prudential policy
towards banks. In August 2019, the goverment announced the most important mergers of
public sector banks including United Bank of India and Oriental Bank of Commerce to be
merged with Punjab commercial bank, Allahabad Bank are going to be amalgamated with
Indian Bank and Andhra Bank and Corporation Bank are going to be consolidated with
Union Bank of India.

Following are the top 10 private and public banks in India.

 State Bank of India (SBI) -

SBI is India’s largest public sector bank and is ranked 232nd on the Fortune Global
500 list of the world’s biggest corporations. The bank is additionally the country’s
biggest lender. It recently joined the list of top 50 banks globally in terms of asset
distribution, following its merger with other associate banks As of March 2017, the
entire combined network of the above mentioned associate banks is 17,170 branches
in India, additionally to 198 offices in 37 countries and 301 correspondents in 72
countries, and a workforce of 209,567 employees. The combined net income of
bank was Rs.14,488 crores as of March 2021.

14
 ICICI Bank (Industrial Credit and Investment Corporation of India)
ICICI Bank is India’s largest private sector bank. The bank, which was a wholly-
owned subsidiary of ICICI Limited, it is a multinational banking and financial
company based in Mumbai, Maharashtra, India with its registered office in
Vadodara, Gujarat. ICICI Bank was the first Indian bank to list on the NYSE in
2000, along side its 5 million American Depository Shares, which was
oversubscribed 13 times the offer size. The bank operates a network of 5,275
branches and 15,589 ATMs across India and dealing with presence 17 bank across
worldwide.

 HDFC Bank
HDFC Bank was founded in 1994, HDFC Bank has it’s headquarter in Mumbai,
Maharashtra. HDFC is India’s largest private sector bank with respect to assets and
market capitalization. It employs around 1,16,971 staff as of March 2020 and
operates a distribution network of 4,727 branches and 14,533 ATMs across 2,666
cities. The bank is also present in foreign countries like Bahrain, Hong Kong, and
Dubai.

15
 Axis Bank
After ICICI and HDFC, Axis Bank is India's third largest private sector bank. The
bank was founded in December 1993 as UTI Bank, Life Insurance Corporation of
India (LIC), General Insurance Corporation of India (GIC). It manages 4,800
branches and 11333 ATMs and 5,710 cash recyclers across the country as of March
2021.

 Kotak Mahindra Bank

Kotak Mahindra Bank is one of India's up-and-coming commercial banks, and it is
the country's fourth largest private-sector bank by market value. Uday Kotak
established the bank in 1985. It operates a network of 1,369 branches across 689
locations and 2519 ATMs in the country. It is third highest Indian private sector
bank by market capitalization. It employs 46,500 staff following its Rs 15,000 crore
(US$2.3 billion) merger with ING Vyasa Bank in 2015.

16
 IndusInd Bank
Hinduja Group established the bank in 1994. Known for its strong remittance
business, IndusInd Bank’s market capitalization is Rs 50,100 crores (US$7.8
billion). Through a network of 1,000+ locations and 2,000 ATMs around the world,
the bank employs over 15,500 people.

 Bank of Baroda
The Bank of Baroda, often known as India's International Bank, is based in
Vadodara (previously Baroda) in Gujarat, India. According to the latest data, the
bank is ranked 1,145th on Forbes Global 2000 list. It has a total value of Rs 3.58
trillion in assets. It operates through a network of 8.250 branches in India and 96
across the world and manages around 10,441 ATMs as of 2020. It is ranked 1145
on Forbes Global 2000 list based on 2019 data.

 Punjab National Bank (PNB)

Punjab National Bank was established in 1894 and was one of the earliest banks to
operate in India. Their Headquartered is in Delhi, the bank’s market capitalization is
INR 30,312 crores (US$4.7 billion). It employs 70,801 staff as of March 2016. It
operates more than 10,925 branches and manages around 13,914 ATMs across India
as of December 2020. PNB, popularly known as India's First "Swadeshi Bank," is
owned by the Indian government. It is second largest public sector bank of India.

17
 YES Bank
It was Founded in 2004 by Mr. Rana Kapoor and Mr. Ashok Kapoor. YES Bank is
known as a “Full-Service Commercial Bank”. The bank is known for its excellent
Non-Performing Assets (NPA) ratio, On 5 March 2020 in order to keep the bank
from collapsing, which had an excessive amount of bad loans, the Reserve Bank of
India (RBI) took control of it. RBI later reconstructed the board and named Prashant
Kumar as new MD Yes Bank has interests in syndicated loans and corporate
banking. Yes Bank, Yes Capital, and Yes Asset Management Services are its three
subsidiaries. It operates 1000 branches across India and manages 1800 ATMs across
India.

 IDBI Bank (Industrial Development Bank of India)

Headquartered in Mumbai, IDBI Bank was established in 1964 by an act of
Parliament to provide credit and was owned by the Central Government. IDBI is the

18
currently the tenth largest development bank in the world, operating 3,700 ATMs
and 1,995 branches, and employing around 17,570 individuals as of March 2016.

 Non- Banking Financial Institutions:

 Power Finance Corporation Limited.
 Bajaj Finance Limited.
 Mahindra & Mahindra Financial Services Limited.
 Muthoot Finance Ltd.
 Tata Capital Financial Services Ltd.
 L & T Finance Limited.
 Aditya Birla Finance Ltd.

19
2.6 Industry financial -

 Recently as per Reserve Bank of India (RBI), India’s foreign exchange

reserves were approximately US$ 490.04 billion as of May 22, 2020.
 Asset of public sector banks were approx. Rs 107.83 lakh crore (US$ 1.52
tillion) in FY20.
 It has been found that Non-Performing Assets (NPAs) of commercial banks
has donea recovery of Rs. 4, 00,000 crores in FY19.
 Bank accounts opened under the Government’s flagship financial inclusion
drive Pradhan Mantri Jan Dhan Yojana (PMJDY) reached 40.05 crore and
deposits in Jan Dhan bank accounts stood at more than Rs. 1.30 lakh crore
(US$ 18.44 billion) as of April,2021
 The number of debit and credit cards issued as of March 31, 2019 was 925
million and 47 million, respectively.
 India stands on 28th position on the government's adoption of e-payments
ranking in 2018.
 United Bank of India and Oriental Bank of Commerce will be combined with
Punjab National Bank, Allahabad Bank will be merged with Indian Bank, and
Andhra Bank and Corporation Bank would be consolidated with Union Bank of
India, according to a government announcement in August 2019.
 In 2018-19, overall equity capital in the microfinance sector increased by 42
percent year on year to Rs.14,206 crore (US$ 2.03 billion).

 Under the Budget 2019-20, government has proposed Rs.70,000 crore

(US$ 10.2billion) to the public sector bank.
 The number of transactions through IMPS increased to 346.55 million in volume
and amounted to Rs. 2.88 trillion in value till January 2021.
 According to the RBI, India’s foreign exchange reserve reached US$ 574.82
billion as of November 27, 2020
 During FY16–FY20, it has been found that deposits grew at a CAGR of 13.93
percent and reached US$ 1.90 trillion by FY20. The main elements impacting
deposit growth are strong savings growth and rising disposable income levels.
According to the Reserve Bank of India, the performance of the Indian banking
sector improved in FY20, with lenders reporting a profit after two years of losses.

20
 
Fig. 2.5.1: Growth in deposits

Source: IBEF

 During FY16-FY20, bank credit grew at a CAGR of 3.75%. As of FY20, total

credit extended surged to US$ 1,698.97 billion. Demand has grown for both
corporate and retail loans. Services, real estate, consumer durables and agriculture
allied sectors have led the growth in credit.

Fig. 2.5.2: Growth in Bank credit

Source: IBEF

21
2.7 Challenges faced by industry :

 Increasing Competition :

It has been found that the competition in the banking industry is rising day by
day. Competition is a fact of business life. However, due to the unique role of
banks in the financial system, competition in banking is quite unlike that in
other sectors of the economy. Banks compete with each other majority on the
following things:
 Availability of ATMs.

 Digital Services.

Earlier Interest rates were considered for the competition. Other factor for
competition is profitability of the bank and also NPAs.

 Employee and Technology :

It has been found that the younger generation is replacing the elder ones which
are more experienced than them. The reason could be the retirement of elder
ones. In this digital era, it is necessary for the banks to improve the technology
to provide the services easily to their customers. It has also been found that
people who are not good at technology are finding it difficult to cope up with it.
Therefore, there are also chances that the respective person might get replaced
with the one who is familiar with the technology. Hence, employee and
technology is also a challenge for the banking industry.

 Improving Profitability :

The most important challenge is to improve the profitability of the bank. It

has been difficult for the banks to improve the profits due to rise in provision
of NPAs, lower interest rates, high competition and so on. Many banks try to
do mergers with other banks so as to increase their profitability. Also the
banks should keep a check on balance sheet efficiency so as to get proper
idea of profitability.

22
 Greater Customer Orientation :

In today’s competitive environment, banks have to attract the new prospects

and retain the old customers. This can be done through introducing
innovative products for them, increasing the quality of customer services.
Prospects can also be attracted by marketing variety of products and services
through different channels of communication.

 Regulatory Conditions :

Regulations to be followed by each and every bank are compulsory. Hence, for
this purpose banks have to spend a good amount of money on systems and
processes that help them to be in regulations as mentioned. This is a challenge
for traditional banksthat are not comfortable with this technology phase.

 Security Breaches:

Security has been considered as one of the most challenge for the banking
industry. So, banking industry considers it as a major concern for themselves as
well as for their customers. Hence, banks invest in such high standard
technology which makesthem feel secure that their data will be stored safely.

 Capital Adequacy:

Banks have to keep aside certain amount to ensure themselves from bad loans.
The amount which has been set aside cannot be used for any other purpose.
Also as per RBI, all banks have to keep a certain amount with the central bank
in the form of reserves. Because of all this, banks have lower amount of capital
to be used in various operations. Hence, this is considered as one of the
challenge for the banking industry.

23
2.8 Goverement Regulations

 Banking Regulation Act, 1949, The banking regulation acts (BR) Act establishes
a framework for bank supervision and regulation. It also gives the RBI the
authority to issue bank licences and oversee their operations. The objective of BR
act is to introduce specific legislation for the banking business in India. To ensure
that the banking industry grows in a healthy and balanced way. To reduce bank
competition.
 The Reserve Bank of India (RBI), India's central bank, regulates the banking
sector by issuing various guidelines, notifications, and regulations from time to
time. RBI act grants the RBI powers to regulate the monetary policy of India and
lays down the constitution, incorporation, capital, management, business and
functions of the RBI.
 The Foreign Exchange Management Act of 1999 (FEMA) governs cross-border
exchange operations involving Indian organisations, such as banks. The Foreign
Exchange Management Act (FEMA) is India's primary exchange control
legislation. It grants the Central Government the authority to control the flow of
money to and from those living outside the country.
 The Securities Exchange Board of India (SEBI) is the Indian securities market's
regulatory body. On April 12, 1988, the Securities and Exchange Board of India
(SEBI) was formally established as the regulatory authority for India's financial
markets. SEBI serves as a regulator for all capital market participants, with the
primary goal of creating an environment for financial market enthusiasts that
promotes integrated and convenient operation of the securities market.
 The Insurance Regulatory and Development Authority of India (IRDAI)
oversees the insurance industry in India. The Insurance Regulatory and
Development Authority (IRDA) regulates the investment of funds by insurance
companies and the protection of solvency margins. IRDA issues a certificate of
registration to the life insurance company and also renews, modifies, withdraws,
suspends and cancels the registration.
 The Insolvency and Bankruptcy Board of India (IBBI) is responsible for
enforcing the Insolvency and Bankruptcy Code's (IBC) insolvency procedures. Its
responsibilities include the registration of insolvency professional agencies, as

24
 well as the certification and monitoring of insolvency resolution specialists. IBBI
is also in charge of developing and renewing information utilities as needed.
 In February 27, 2021, the number of bank accounts opened under the
government’s flagship financial inclusion drive ‘Pradhan Mantri Jan Dhan
Yojana (PMJDY)’ reached 41.93 crore and deposits in Jan Dhan bank accounts
at more than Rs. 1.70 lakh crore.
 Whatsapp began accepting UPI payments in India on November 6, 2020, after
gaining authorisation from the National Payments Corporation of India to ‘Go
Live' on UPI in a systematic way.
 In February 2020, the Cabinet Committee on Economic Affairs has given its
approval for continuation of the process of recapitalization of Regional Rural
Banks by providing minimum regulatory capital to RRBs for another year beyond
2019-20.
 The Government of India launched India Post Payments Bank (IPPB) as on
September, 2008 and has opened branches across 650 districts to achieve the
objective of financial inclusion.
 To improve infrastructure in villages, 204,000 point of sale terminals have been
sanctioned from the Financial Inclusion Fund by National Bank for Agriculture &
Rural Development (NABARD).

25
 2.9 PESTEL Analysis for Banking Industry:
Here is a PESTEL analysis of the Banking industry that analyses the impact of these
forces on the industry and its growth.
 Political factors:
In the banking and financial services industries, political influence plays a
significant role. Banks used to have a lot of power and influence. The
government, on the other hand, has enacted stringent laws to oversee financial
firms. It is because they collect a large quantity of public savings. As a result,
banks must comply the state legislation. The banking sector is influenced by
government and RBI policy. Sometimes, in order to attract farmers to vote for a
particular party, the government declares various measures to their benefit, such
as the remission of short-term agricultural debts. As a result, the bank's profits
are impacted. Various cooperative banks have opened and are governed by
politicians. They take use of these banks for their own interests. Occasionally,
the government appoints various bank chairmen. The RBI has formulated a
number of measures in response to the country's current condition in order to
gain stronger control over banks.

 Economic factors:
The managing an account industry and the economy are tied. How salary
streams, regardless of whether the economy is succeeding or scarcely getting by
amid times of subsidence, influences how much capital banks can get to. Ways
of managing money, and the explanations for them, influence when clients get or
spend assets at banks. The Union budget also has an impact on the banking
industry in order to stimulate the economy by providing particular privileges or
privileges. If savings are encouraged in the budget, more deposits will be
attracted to banks, allowing them to lend more money to the agricultural and
industrial sectors. Therefore, booming the economy If the FDI limits are relaxed,
then more FDI are brought in India through banking channels.

 Sociocultural factors:
Social impacts, for example, purchasing practices and necessities, influence how
individuals see and utilize managing an account choices. Bankers were directed

26
 to support economically lower sections of society as well as provide need-based funding
to all sectors of the economy with a flexible and liberal attitude, keeping both national
and social aims in mind. Farmers, working women, professionals, and traders can
now get a variety of loans from banks. They also provide students school loans,
as well as home and consumer loans. Banks with large clients or enterprises
must provide individual banking services to their customers because these
customers do not believe in rushing around and waiting in lines to get their work
done. Banks have transformed the culture of human life in India and made
people's lives considerably easier.

 Technological factors:
Customers' asset management is changing as a result of innovation. Internal
bank control is heavily influenced by the technological environment. The most
recent advancements in technology, such as computer and telecommunications,
have prompted bankers to abandon the concept of branch banking in place of
anywhere banking. Numerous banks offer a versatile application to observe
accounts, exchange assets, and pay charges on cell phones. Cell phones can
examine checks, and the bank can process it from their end, at their area. This
change spares paper and the need to drive straightforwardly to the branch to deal
with these issues. The usage of ATMs and Internet banking has made it possible
to conduct banking transactions at any time and from any location. Simple
questions are being answered by automatic voice recordings, currency
accounting computers make the job easier, and self-service counters are
becoming more popular.

 Environmental Factors:
Environmentally friendly and sustainable approaches have become significantly
important in the business world. Some commercial banks are also making
significant investments in the development of renewable energy sources. Many
banks have gone paperless, and solar ATMs with rechargeable lithium-polymer
batteries have been introduced. Many organizations have already taken
significant measures toward eliminating paper-based transactions. HDFC has
also developed solar ATMs in order to reduce its environmental impact. Banks
also provide annual environmental reports that highlight their significant
27
 accomplishments in this area over the past year. It promotes a positive image
while simultaneously lowering expenses in a variety of operational areas.

 Legal Factors:
Several laws affect the banking business around the world. It is also a large
employer and is affected by the labour laws. Because of the high level of
oversight and regulation in this industry, legal risks are tremendous. Concerns
about customer service and social responsibility have also prompted the
government to pass many legislation. Banking is a highly regulated industry that
needs a great deal of attention and money. The government has also introduced
many other laws for the safety and protection of customers like Safety and
Health Laws, Discrimination Law, Employment legislation, Consumer Law, etc.

28
 3.Comapany Analysis

3.1 Genesis of the HDFC Bank and its vision and mission

 The Housing Development Finance Corporation Limited (HDFC Bank) was

incorporated on 30th August 1994. HDFC Bank is the first of its kind to receive an in-
principle approval from the Reserve Bank of India (RBI) for establishment of Bank in
private sector.
 It’s headquarter is located in Mumbai, Maharashtra. It is India's largest private sector
lender by assets and the largest bank in India by market capitalization. Mr. Sashidhar
Jagdishan is the Managing Director and Chief Executive Officer of HDFC Bank.
 The Bank's distribution network had 5,485 branches in 2,866 cities as of December
31, 2020. The Bank also has a network of 14,533 ATMs across India.
 All branches are linked on an online real–time basis. Through Telephone Banking
Customers in over 500 locations are also serviced. Across these cities, the Bank also
has a network of about over networked ATMs.
 With its experience in the financial markets, a strong market reputation, large
shareholder base and unique consumer franchise, HDFC was ideally positioned to
promote a bank in the Indian environment.
 The Bank has two subsidiary companies namely HDFC Securities Ltd and HDB
Financial Services Ltd.
 The shares of HDFC Bank are listed on the Bombay Stock Exchange Limited and the
National Stock Exchange of India Limited.

29
 HDFC Bank was the first bank in India to launch an International Debit Card in
association with VISA (VISA Electron) and issues the Mastercard Maestro debit card
as well.

Vision
"To be the premier financial partner in ensuring sustainable housing and living
standards"
Mission
HDFC banks mission is to provide financial solutions for sustainable living and assist
entrepreneurs in value addition.

Company Name HDFC Bank

Official website https://www.hdfcbank.com/
Founder/ Owener Hasmukh Bhai Parekh
Founded Augest 1994
CEO/ Director Mr. Sashidhar Jagdishan
Key People Mr. Atanu Chakraborty
Mr.Kaizad Bhurucha
Status Active
Head Office Mumbai
Address Shiv sagar Estate, Dr Annie Besant Road,
Worli, Mumbai 400018
Customare care 61606161, 6160616

30
3.2 Products and services

3.2.1 Retail products of HDFC bank

The goal of retail banking is to deliver a broad variety of financial products and banking
services to its target market clients, offering them a one-stop shop for all of their banking
needs.

 Accounts & deposits- Basic account and deposit products include Current Account,
Salary Account, Savings Account, Deposits, Safe Deposit Locker, Rural Account,
Pension Account.

 Loans- Loans include Auto Loan, Personal Loan, Business Loan, Loan against
property, Education Loan, Home Loan, Loan against Security etc.

 Cards- Cards of different types are offered to the customers which include Credit
Cards, Debit Cards, Prepaid Cards, Forex Cards etc.

 Investment & insurance- Investments options like Mutual funds, HDFC Bond are
offered to customers also Insurance like motor insurance, travel insurance, life
insurance, health & accident insurance is some of the insurance products of the
bank.

 Forex- In Forex, forex cards, exchange facility, travel solutions etc. are some of the
services offered to customers

3.2.2 Wholesale Banking Services

HDFC Bank offers an honest gamut of economic and transactional banking services
to businesses and organizations of all sizes. Our services include capital finance,
trade services, transactional services and cash management. The Bank's target
market includes everything from large, blue-chip manufacturing organizations to
small and mid-sized corporations and agro-based businesses in India. For these
customers, the Bank provides an honest range of economic and transactional
banking services, including capital finance, trade services, transactional services,

31
 cash management, etc. The bank is additionally leading provider of structured
solutions, which combine cash management services with vendor and distributor
finance for facilitating superior supply chain management for its corporate
customers. They supported its superior product delivery / service levels and
powerful customer orientation, the Bank has made significant inroads into the
banking consortia of sort of leading Indian corporates including multinationals,
companies from the domestic business market and prime public sector companies.

3.2.3 Treasury
The bank has three main product areas - exchange and Derivatives, Local Currency
market & Debt Securities, and Equities. With the liberalization of the financial
markets in India, corporates need more sophisticated risk management information,
advice and merchandise structures. These fine pricing on various treasury products are
provided through the bank's Treasury committee. To suits statutory reserve
requirements, the bank is required to carry 25% of its deposits in government
securities. The Treasury business is liable for managing the returns and market risk on
this investment portfolio. The Treasury is that the custodian of the Bank’s cash/liquid
assets and manages its investments in securities and other market instruments. It
manages the liquidity and rate of interest risks on the record and is additionally liable
for meeting statutory reserve requirements.
 Foreign exchange & derivatives.
 Solutions on hedging strategies.
 Trade solutions - domestic and cross border.
 Bullion.
 Debt capital markets.
 Equities.
 Research - Reports & commentary on markets and currencies.
 Asset liability management
 Statutory reserve

32
3.2.4 Digital Products of HDFC

PayZapp App-

PayZapp App is a one stop mobile app for making purchases, recharge, booking
tickets, making payments and many more activities with great discounts and
cashback offers. One can link Debit or Credit card of any bank with PayZapp for
making payments. PayZapp Card combines convenience, safety and rewards in one
compelling app.
 Safe: PayZapp Card is a safe mode of payment, with increased levels of security
to prevent unauthorized use. Moreover, it gets regularly updated, providing the
best protection against new or evolving threats.
 Convenience: Carrying cash or tendering exact change are worries of the past.
With just a few swipes on your mobile phone, pay for your shopping, transfer
funds to friends and family.
 Rewards: PayZapp Card is a rewarding way to pay with loads of discounts, sign-
on bonuses, loyalty points and cash backs.

SmartBUY-

SmartBUY is an e-commerce portal specially designed to give customers an

exclusive platform to get the best deals and transactions in town. SmartBuy is a
platform only for display of offers extended by Merchants to HDFC Bank's
Customers, and HDFC Bank is not selling/rendering any of these Products or
Services. Some features of SmartBUY are one can find the best shopping deals in
town, book hotels at best prices, discover nearby restaurants, spas etc. and get great

33
 deals and offers and many more. If the Customer proceeds from here, any purchase
of a Product/Service will only be through the HDFC Bank's credit/debit cards/net

banking facility.

Net Banking-

HDFC Bank offers the net banking facility to its customers, where various details of
the account can be accessed online. HDFC Bank customers will just need to login to
their accounts in order to access a vast range of features among many products. Net
Banking of HDFC Bank is a user friendly and convenient digital banking platform
where one can login and get access to so many options like booking Fixed Deposits
or Recurring Deposits online, Automatic BillPay facility, transfer funds in no time
etc. The net banking facility is fast and easy to access.

34
Mobile Banking -
HDFC Bank offers mobile banking services to keep up with the demands of the
customers. HDFC Bank also has its Mobile Banking App which is available on both
Android and IOS Platforms. The bank has been updating the app with newer
features and security measures every now and then to ensure the easy and safe
customer experience. It is a very user friendly, simple and convenient app. It also
has an extra safety feature of Face ID Unlock and ensures high security. With the
help of Mobile, Banking user can transfer funds, and pay bills, checking account
balance, study your recent transaction, block your ATM card, etc. Mobile Banking
is cost-effective, and Banks offer this service at less cost to the customers.

35
3.3 Position in industry

 Market capitalization of HDFC is Rs.(in Rs.cr) 8,21,029 of March 2021. It is highest

among all other private banks in India.

Market Capitalisation(in Rs.cr)

Induslnd, 78068
Kotak
Mahindra,
358851
HDFC, 821029
AXIS, 227446

ICICI, 445020

Fig 3.3.1: Market Capitalization

Source: Money control

 Net profit of HDFC bank for Mar 2021 (in Rs. Cr) 31,116. It is also highest among
all other private bank. Profit of the company is increasing since last 5 years.

Net Profit(in Rs.cr)

Induslnd,
Kotak 2836
Mahindra
, 6964
AXIS,
6588 HDFC,
31116

ICICI,
16192

Fig 3.3.2: Net Profit

Source: Money Control

36
 Some Notable Achievement of the bank
 The total number of customers the bank catered to as on 31 March 2020 was over
5.60 crore up from 4.90 crore in the previous year.
 Awarded the “India’s Best Bank for SMEs 2021” by Asiamoney Best Bank
Awards 2021.
 Awarded “Best Large Bank” by 25th Business Today – KPMG Best Bank Study
2021.
 HDFC Bank ranks No. 1 in Mass Affluent category by Euromoney Private
Banking and Wealth Management Survey 2021.
 Awarded “Best Bank in India” by FinanceAsia Country Awards 2020
 HDFC Bank wins Gold Shield Award for 2019-2020 by ICAI Award for
Excellence in Financial Reporting.
 HDFC Bank - Outstanding Company of the year award by CNBC-TV18 India
Business Leader Awards (IBLA) 2019-20.
 Awarded as the “Best Private Sector Bank Award-Gold” by Outlook Money
awards, 2019.
 Awarded the “Best Digital Bank” by Asiamoney Best Bank Awards 2019, India.
 Awarded the “Company of the Year” award by The Economic Times (ET)
Corporate Excellence Awards 2018.
 Awarded as “Best Bank- New Private Sector Category” by Financial Express
India’s Best Banks Awards 2017-2018.

37
3.4 Stake holders detail

The Bank accepts that it is critical to have significant organizations with partners and be
receptive to their points of view in its journey to make esteem. HDFC Bank has a solid ethos
of straightforward and moral relationship with all partners and draws in with them through
numerous mediums. The Bank holds standard connections with speculators, representatives,
clients, controllers and draws in with networks and banking relationship to stay educated
regarding issues important to partners.

 21.13% stakes are hold by promoters.

 Foreign Institution have 32.37% of shareholding which has been increasing for years
in quarterly. HDFC bank has been a darling share within the investor community.
 General public has 8.28% of the shareholding.
 Government Of India has 0.19% of shareholding.
 Stake holders via Mutual funds are 13%.
 21.70% of shares are owned by DIIs as of December Quarter 2020. Although it's but
the Sept Q2020 (22.90%), it's still far above the year-ago quarter (21.07).
 Financial Institutions has 6.33% of the shareholding.

Stakeholder Pattern
6.32%
8.28% 21.13% Promotor

10% Foreign Institution

0.19% DII

Government
21.7% 32.33% Mutual Funds

Fig 3.4 Pie Chart of Stakeholder Pattern

Source: Money control

38
3.5 Company Financials

 48% of the entire revenue for HDFC bank comes from Retail Banking, followed by
Wholesale Banking (27%), Treasury (12%), and 13% of the entire comes from other
sources.
 Net Worth 170,986.03 Rs. crore as per Mar 2020.
 As of FY20, internet margin of profit for the bank stands at 22.87%, which has seen
endless rise for the last 4 fiscal years. this is often a really positive sign for the bank’s
profitability. Net income as per Mar 2021, 31,116.53 Rs.crore.
 Market Capitalization as of HDFC bank (Rs.cr) 821,029.
 Public holding in HDFC bank is 12.95% as of Dec Q2020, which has tanked from the
year-ago quarter (14.83%) as FIIs increasing their share, which is clear from the rising
share prices.
 Capital Adequacy Ratio, which may be a vital figure for any bank stands at 18.52%
for HDFC Bank.
 HDFC Bank is again at the second spot within the market share of Bank deposits
with 8.6%. SBI leads with an almost 24.57% market share. PNB holds 7.5% of the
market share during this category, beginning because the third followed by Bank of
Baroda with 6.89%.
 As of Sept 2020 HDFC, is at the second position in bank advances with a 1% market
share, which has shown an increase from 9.25% a year ago.

39
 Profit and Loss statement of HDFC bank

Fig 3.5.1: Profit & Loss Statement

Source: Money Control

40
 Balance Sheet of HDFC Bank

Fig 3.5.2: Balance sheet of HDFC Bank

Source: Money Control

41
3.6 Locational and operational details

 HDFC Headquarter located in Worli, Mumbai

 During the FY2019, the bank added 316 Banking Outlets and taking the total to 5,416
across 2,803 cities and towns. The share of semi-urban and rural outlets in the total
network is 53%.
 As of 31 December 2020, the bank's distribution network stood at 5,485 branches and
15,541 ATMs & Cash Deposit Machines (CDMs) across 2,866 cities and towns.
 HDFC Bank also has one overseas wholesale banking branch in Bahrain, a branch in
Hong Kong and two representative offices in UAE and Kenya
 The number of ATMs also increased to 13,160 from 12,635.
 A large number of operations like requesting for new cheque books, updating the
registered mobile number, changing ATM and net banking pins etc. can be carried out
at ATMs along with cash withdrawals.
 Through a banking ERP system called Flexcube, all branches are linked online in real
time. Customers in India can use a variety of delivery methods, including Phone
Banking, Net Banking, Mobile Banking, and SMS-based banking.
 The Bank's development plans consider the requirement to have a presence in all
major industrial and commercial locations where its corporate customers are situated,
as well as the need to have a strong retail client base for both deposits and loan
products. The Bank has branches in centres where the NSE / BSE have a substantial
presence as a clearing or settlement bank for different prominent stock exchanges.

42
3.7 Challenges faced by HDFC Bank

 The bank has to limited revenue from rural, semi-urban branches.

 New players like Kotak Mahindra and Indusland bank are spreading their wings in
retail banking.
 Due to slowdown in economy corporate banking opportunities are few and far, they
need have to scale up in wholesale banking.
 Large employee base is considered as a challenge because some of the employees
are resistance to change, which means they are not comfortable with the
computerized system.
 The capacity to pull in, rouse and hold talented professionals and the accessibility of
talented administration is basic for effectively executing the Bank's procedure and
contending viably. The loss of key qualified youthful experts or senior
administrators and inability to supplant them in a period bound way could affect the
business of the bank.
 Lack of experience in implementing centralized systems.
 Improvements in the Indian economy could materially affect development and worth
creation in the Bank's business.
 Creating awareness is difficult due to a huge customer base.
 The upcoming challenge for the bank is the emergence of new public sector banks
generated after the merger of various banks. Small Finance Banks are also in the
battle to generate more market share.
 The bank is embarking on a massive digital transformation since it is the only way
to stay afloat in the market and remain operational during the nationwide shutdown.
In the digital banking arena, the challenge would be to address Cyber Security and
Data Privacy concerns.

43
3.8 Porter’s Five Forces model of the HFDC Bank :
 Threat of new entrants : “HIGH”
 Banks run during a highly regulated sector. Strict regulatory norms, huge
initial capital requirements and winning the trust of individuals make it
very tough for brand spanking new players to return out as a national level
bank in India. However, if a corporation enters as a distinct segment
player, there are relatively fewer entry barriers.
 For any new entrants permission should be granted from RBI. Hence, it's
tough to possess the permission. LOW chance of entrants.

 Bargaining power of customer : “MEDIUM”

 In modern days, customers not only expect proper banking but also the
standard and faster services. With the arrival of digitalization and therefore the
entry of latest private banks and foreign banks, the bargaining power of
consumers has increased day by day.
 Customer can switch to any other bank very easily if service is not good
because switching cost is low. But most of time customers are having their
accounts in most of the banks and they know that every bank provide similar
service. MEDIUM bargaining power of customers.

 Bargaining power of supplier : “LOW”

 The products provided by these suppliers are fairly standardized, less
differentiated and have low switching costs. It makes easy for buyers like
HDFC Bank Limited to switch suppliers.
 Financial Institutions got to hedge inflation, and banks are susceptible to the
principles and regulations of the RBI which makes them a safer. Hence, this
makes bargaining power of supplier LOW.

 Threat of new substitute : “HIGH”

 Banks are no longer the sole option for services such as mutual funds,
investments, insurance, categorized loans, and so on, because plenty of other

44
 niche competitors have entered the specialized area, posing a threat to banks.
 Also competition from the non-banking financial sector is increasing rapidly.
As a result there is a HIGH threat of substitute.

 Degree of rivalry : “HIGH”

 In the banking industry, there is a lot of competition. In the industry, there are
several commercial, public, cooperative, and other non-financial institutions.
They are competing for the same clients. The banking system has been more
open to everyone as a result of the government's liberalization, privatization,
and globalization policies. As a result, a growing number of private and
foreign companies are establishing operations in India.

 The switching cost is also low and the services provided by all banks are
same. Hence, HIGH degree of rivalry.

45
3.9 SWOT Analysis of the HDFC Bank :

 Strengths
 HDFC bank is among the top five private sectors banks in India. Also it is
largest private sector bank in the banking industry of India in terms of maeket
capitalisation and net profit.
 Annual net profits is improving for last 2 years.
 Rising net cash flow and net profit from Operating activity.
 HDFC Bank is currently the market leader in the retail lending area (personal,
automobile, and home loans) as well as in credit card business, with its market
share expanding year after year.
 The HDFC name has become a sign of trust in the people as HDFC has come
out as a pioneer not only in banking, but loans, insurances, mutual funds, AMC
and brokerage.
 HDFC Bank is successful in maintaining good customer relationship this would
lead to increase in the customer base of the bank. They have maintain high
degree of customer satisfaction.
 Its major strength is its good financial condition in the market and also having
strong and transparent balance sheet.

 Weakness
 HDFC bank doesn’t have a big rural presence as compared to its peers. Since
its inception, it's focused mainly on high-end clients. However, the main target
is shifting within the recent period as nearly 50% of its branches are now in
semi-urban and rural areas.
 HDFC bank Service charges to its customers are comparatively higher than
other banks.
 Promoter decreasing their shareholding.
 Unlike ICICI, HDFC doesn't have as active a marketing strategy.

 Opportunities
 Digital services like mobile banking, internet banking etc can be a huge boon
for HDFC's business.

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  Focusing more on rural areas can be done by HDFC.
 HDFC bank has an opportunity to acquire non performing banks due to
its strongfinancial position in the market.
 Meeting the ever-increasing demands of the industry with more complicated
products.
 Big enterprises and Small and medium sized enterprises (SMEs) are
increasing at a very rapid rate. So they can also focus on these enterprises.

 Threats
 Public sector banks in India are moving towards improving its capacities.
This may result in more customers are moving towards it.
 Competitors increasing their business can adversely affect HDFC's business.
HDFC bank is getting a tough competition from ICICI bank. Also other
private sector banks in the industry like AXIS, Kotak Mahindra are major
threat for HDFC bank.
 Foreign banks that offer complex products.
 Lack of infrastructure in rural areas could contain constrain investment.
 Vulnerable to reactive attack by major competitors.
 Increase in the NPA in the recent.

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4 Suggesation And Recommendation :

The Bank should focus more on how to improve its day-to-day operations
and should take more steps to improve customer satisfaction, so that their
customers are happy with the services. This will also improve bank’s
reputation in the market. They need to build up a strong network in the rural
area, for that they have to create awareness about the products and services
offers by it to the people living in rural area. Also it has to open new
branches in that region to make strong network across India. Most of the
customer came to know about Digital Banking services offered by bank
officials hence bank should pay more attention in marketing this products
and services through social media, print media, Television and radio
Advertisement etc.

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5 Conclusion :

The financial sector reforms have brought about significant

improvements in the financial strength and the competitiveness of the
Indian banking system. We can say that banking sector contributes Indian
economic development. From the conducted financial analysis of the
HDFC Bank, it is determined that the bank is performing well as compare
to other players in the market. As it is one of the leading bank in private
sector and also their overall performance is acceptable. They have highest
market capitalization as compare to other private banks. Also increasing
use of digital platform has affect performance tremendously as HDFC
bank offers most of its products digitally through its online banking
platforms. The digital initiatives of the bank have been giving the
consumers a totally new user experience. Loan products such as personal,
Auto loan, Home Loan, Education loan can now be applied through
digital platform. HDFC bank became the first bank to start 10 second
personal loan disbursement. Also HDFC bank is providing loans to various
sectors like agriculture, education also for business purpose, so interest on
these loan is a major part of its revenue for bank and also for the industry.
So to conclude we can say that the steps taken by HDFC to provide
services to customers and to incorporate latest technology and in its
offerings has proved to be a major factor for making it the market leader in
the private banking sector in India.

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5 References :

Website Links:

 https://www.ibef.org/industry/banking-india.aspx

 https://www.hdfcbank.com/

 https://www.equitymaster.com/research-it/sector-
info/bank/Banking-Sector-Analysis-Report.asp

 https://economictimes.indiatimes.com/hdfc-bank-ltd

 https://www.moneycontrol.com/

 https://www.rbi.org.in/

 https://www.hdfcbank.com/personal/about-us/overview/awards

 https://en.wikipedia.org/wiki/HDFC_Bank

 https://www.investopedia.com/

 https://tradebrains.in/hdfc-bank/

Research Papers :

 Indian Banking Industry: Challenges And Opportunities

Authors : Krishna Goyal , Vinay Joshi

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