SHIVAJIRAO KADAM INSTITUTE OF TECHNOLOGY AND MANAGEMENT

AN INTERNSHIP REPORT

ON

TOPIC: Mitigating Risks with KYC and Anti-Money Laundering Processes

Submitted To: Dr Manish Jain Submitted By: Yash Khurana

Designation: Professor Enrollment No. 0875MA18MA39
 OVERVIEW OF THE ORGANIZATION

HDFC Bank
HDFC Bank is one of the largest private sector banks in India. It is an Indian banking and financial services companies which was
incorporated in 1994 as a subsidiary of HDFC (Housing Development Finance Corporation). It is India’s largest private banks by market
capitalization. It provides wide range of products and services under the business segments of banking, wholesale banking and treasury.
Banking is the retail banking which focuses on providing general banking services to the public like raising deposits and lending loans.
Wholesale banking includes the banking services which the bank provides to its large customers, brokers, and large corporate clients. The
bank engages in underwriting, consultancy, mergers and acquisitions etc. The treasury segment in the bank focuses on managing the
available funds like collection, disbursement and investing of funds.
 Objectives

 To know and explore about KYC and AML process at HDFC Bank

 To know management’s role in mitigating the risks of money laundering

 To explore how banking can be increased in branch’s catchment area with the help of KYC AML process

 To obtain the practical insights of KYC AML process

 To understand how customer experience can be enhanced using KYC AML processes

 To provide optimal recommendations to bank to rectify existing issues in KYC and AML process (if any)
 SOURCES

Primary Sources:
• Discussing and interviewing the staff and employees of the bank. Interviewing personal bankers, Ms. Priya Manglani, Ms.
Disha Jethwani and Mr. Ankit Namjoshi.
• Using HDFC Bank’s intranet circulars about KYC and AML

• Interacting with customers to understand their view on the process

Secondary Sources:
• Journals and articles available on internet

• HDFC bank’s official website

• Reserve Bank of India’s official website

 SWOT Analysis Of HDFC Bank

Strengths
• HDFC have brand goodwill in banking and other industries.
• They have established network of branches across country
• Satisfied customers due to better services than competitors leading to customer loyalty

Weaknesses

• The bank is present in only urban areas and not in rural areas
• The bank uses less aggressive marketing tactics which may lead to competitors gaining more market share.

Opportunities
• The bank is able to recover its bad debts quickly compared to competitors
• The bank has opportunity to expand in foreign markets by the means of mergers and acquisitions.

Threats
• There is increase in Non-Performing Assets of the bank
• In banking industry there is increasing number of players leading to competition in the sector.
• There is increase in number of new age banks and NBFCs creating competition for the bank.
 What I Have Learned

HDFC Bank is one of the largest private banks in India which was incorporated in 1994 after approval of Reserve Bank of India. The bank has
more than 6000 branches across India. It was truly my privilege to be part of institution and work for three months. During my stay at HDFC Bank
I learned and observed various retail banking workings. In retail banking majorly operational work is performed. I was assigned to limited
operational work to perform. Along with this I was responsible to bring business to bank through Personal Banker Authorizer. Personal Banker
Authorizer (PB Authorizer) at bank is responsible for conducting various responsibilities like conducting KYC processes of customers,
opening/closing of accounts, bringing business to bank etc. PB Authorizer is also responsible for maintaining good relations with customers and
look into various activities of branch. All the employees at branch had meetings regularly with branch manager and with their direct supervisor to
provide updates of ongoing activities and business at the branch. These meeting were given most importance as it helped managers to keep track of
targets and process of work that is being conducted and activities which needed to be given utmost importance. These meeting were mandatory as
they are the one who are performing various banking activities and are in direct contact with customers. I was provided an opportunity to work
with such an institution and under the supervision of branch manager and could add value to relationship manager’s and personal banker’s day to
day work along with assigned work.
 Know Your Customer and Anti-Money Laundering

Know Your Customer

To overcome the problem of money laundering the Central Bank of India (RBI) started with the process of Know Your Customer (KYC). The
objective to overcome the problem of money laundering is to overcome the financial terrorism. With the help of KYC financial institutions can
monitor and control the fraudulent transactions that can happen. To prevent money laundering the central bank of India (RBI) issues and monitors
the KYC and AML processes for financial institutions time to time. Anti-Money laundering process focuses to prevent the money laundering
activities and monitoring the suspicious transactional activities. Know Your Customer (KYC) process involves identification and screening the
customers of the bank to understand the risk involved. The KYC process is done by verifying the customer’s identity then identifying and screening
the customer against prohibited lists. After screening, the assessment of customer’s risk profile is determined and then monitoring of the risk profile
is done to determine that the risk profile of the customer has changed or not.

Money Laundering
Money laundering is the process of showing illegal money as legitimate money. This process is conducted in order to carry any sort of criminal
activity and have personal gain. Criminals carry this money laundering process by changing the sources and the money form which leads to
difficulty in tracing and attracting attention of the authorities. Money laundering is a criminal activity as this process can lead to financial terrorism
and frauds in any country. Banking sector is one of the common sources where people try to convert their illicit money into legitimate money.

Anti-Money Laundering
Anti-Money Laundering is the process where banks take actions to combat the financial terrorism. It aims to detect, monitor and respond to
financial fraudulent and terrorism activities. For this they work on improvising the key processes such as accounts management in order to reduce
the chances of money laundering.
 Difficulties and Challenges

During my work at HDFC Bank I faced some challenges. Some of them are:

• Corporate Culture: As working with HDFC Bank is my first corporate work place experience I faced difficulty in
understanding and coping with the culture.

•  Facing customers: When I started working in the operations department at bank I was facing difficulty in solving the
problems of walk-in customers. But I gradually learned and tried to cope it.

•  Timely assistance from team: The employees at bank are very busy with their daily work and therefore whenever I had
any query I had to wait for them to get free and have some leisure time. This had delayed my level of productivity at work.
 Learning Outcomes

• Confidence: While working at bank was a wholly new experience for me. While working with the authorities of HDFC Bank Limited
and customers on daily basis helped me boost my confidence and get acquainted to the corporate culture.

• Responsibility and maintain confidentiality: During my internship my organizational guide provided me to work on some important
data which was of bank’s internal use. Apart from this maintaining confidentiality of internal data and contents in bank is very
important. This created the sense of responsibility within me and provided me lifetime learning.

• Team Work: In some tasks at bank, I was supposed to work with a bunch of people of different department. At first, I used to work on
my own to get the perfection however by working continuously with people I understood the importance of team work as the work
efficiency and effectiveness increased eventually.

• Time Management: Working at HDFC Bank helped me learn the skill of time management as there were times when I was given
multiple tasks which needed to be performed in similar timelines. This encouraged me to manage my tasks according to the needs
and preferences of work. This helped me in learning to deal with multitasking.

• Banking and Finance: The Internship helped me in getting to know about the key banking and financial terms and terminologies
which I was not aware of earlier. This will help me in taking any financial decisions in future, resulting in boosting my confidence.
 Recommendation

Government is trying to boost the financial inclusion in the country and in order to do that they have also adopted many practices. One of the
methods to do that is to ease the way of performing Customer Due Diligence for various banking and financial practices. The use of automation and
digitalization is one of the ways which RBI and SEBI are working towards for instance introducing e-KYC and Video KYC

Conclusion
HDFC Bank Limited has been working in India for past many decades by with holding the trusts of its existing and potential customers. It is
able to be one of the leading private banks in India by reducing and mitigating the risks which its customers can possess. It is important for
banks to safeguard the money and trust of its customers and therefore there are some of the risks which banks are anticipated to encounter. One
of the major risks is of money laundering. To protect the interests of stakeholders of financial system Reserve Bank of India focuses and
provides rules and guidelines to banks in India for Anti-Money Laundering. HDFC Bank Limited gives due importance on conducting
Customer Due Diligence of their existing and potential customers. An informal survey suggested that customers faces and finds the process of
Know Your Customer lengthy and troublesome. As banks provide similar products and services in the market it is difficult for banks to
differentiate itself from competitors. But there are ways in which bank can improve its customer experience and satisfaction like reducing the
process length and providing services to customers online.
Apart from this HDFC Bank currently holds top position in the banking sector of India but it has been observed that it do not focuses on
marketing whereas its competitors have adopted and uses aggressive marketing techniques to increase the presence in the target market. For
instance, most of the customers of the bank currently do not know much about HDFC Bank’s own payment mobile application PayZapp. This
limits the use of products and services of the bank by the customers. Even when the bank is a leading bank it is advisable to focus on
marketing domain to make its existing and potential customers aware about the banking services
THANK YOU