Financial Institutions
Financial Institutions
Financial Institutions
MEANING
Financial institutions provide means and mechanism of transferring resources from those who have an excess of income over expenditure to those who can make productive use for the same.
DEFINITION
Financial Institutions:1. A financial institution is an institution that provides financial services for its clients or members act as
financial intermediaries. 2. Institution which collects funds from the public and places them in financial assets, such as deposits, loans, and bonds, rather than tangible property. In financial economics, a financial institution is an institution that provides financial services for its clients or members. Probably the most important financial service provided by financial institutions is acting as financial intermediaries. Most financial institutions are highly regulated by government bodies. Broadly speaking, there are three major types of financial institution: 1. Deposit -taking institutions that accept and manage deposits and make loans (this category includes banks, credit union, trust companies and mortgage loan companies); 2. Insurance companies and pension funds; and 3. Brokers, underwriters and investment fund.
The first function of financial institutions is the transformation of assets, which are acquired through markets, into a wider and more preferable form, which becomes their liability this function is performed mainly by financial intermediaries, which is undeniably the most important category of financial institutions.
Also financial institutions are involved in exchanging of assets on behalf of their customers. Other than that, exchanging of assets for their own personal accounts is also part of their job. Furthermore, financial institutions create financial assets for their customers and sell those assets to other market participants for a definite emolument. In addition to all these functions, financial institutions are also involved in providing investment advice to market participants and managing the portfolios of market participants.
Financial follows:-
institutions
can
be
categorized
as
Deposit Taking Institutions Finance and Insurance Institutions Investment Institutions Pension Providing Institutions Risk Management Institutions
At the same time, there are several governmental financial institutions assigned with regulatory and supervisory functions. These institutions have played a distinct role in fulfilling the financial and management needs of different industries, and have also shaped the national economic scene. Deposit taking financial organizations is known as commercial banks, mutual savings banks, savings associations, and loan associations and so on. The primary functions of financial institutions of this nature are as follows: Accepting Deposits Providing Commercial Loans Providing Real Estate Loans Providing Mortgage Loans
Finance companies provide loans, business inventory financing and indirect consumer loans. These companies get their funds by issuing bonds and other obligations. These companies operate in a number of countries. On the other hand, there are insurance companies that provide coverage for a variety of risk factors and they also provide several investment options. Insurance companies provide loans for a number of purposes and create investment products.
The functions of financial institutions, such as stock exchanges, commodity markets, futures, currency, and options exchanges are very important for the economy. These institutions are involved in creating and providing ownership for financial claims. These institutions are also responsible for maintaining liquidity in the market and managing price change risks. As part of their various services, these institutions provide investment opportunities and help businesses to generate funds for various purposes.
The functions of financial institutions like investment banks are also vital and related to the investment sector. These companies are involved in a number of financial activities, such as underwriting securities, selling securities to investors, providing brokerage services, and fund raising advice.
Financial institutions provide service as intermediaries of the capital and debt markets.
They are responsible for transferring funds from investors to companies, in need of those funds. The presence of financial institutions facilitates the flow of money through the economy. To do so, savings are pooled to mitigate the risk brought to provide funds for loans. Such is the primary means for depositary institutions to develop revenue. Should the yield curve become inverse, firms in this area will offer additional fee-generating services including securities underwriting, and prime brokerage.
OBJECTIVES
Planning for the future it is important to have clear idea about the objective of finance i.e. provision of financial services at prices that reflect their cost. Being a management student the future prospectus are to get in to the field of business before that it is important to know about financial institutions as they are the sources of a finance then may it be for setting up of business or for a development of business. So this was the main objective to select this topic for my project and to know about the various aspects of the financial institutions.
more widely
by financial intermediaries, the most important type of financial institution. To exchange financial assets on behalf of customers. To exchange of financial assets for their own accounts.
To assist in the creation of financial assets for their customers, and then selling those financial assets
to other
market participants.
To provide investment advice to other market participants. To manage the portfolios of other market participants.
Financial institutions are the firms that provide financial services and advices to its clients. Commercial banks, credit unions, stock brokerage firms and asset management firms are the major types of financial institutions. Insurance companies, finance companies, building societies and retailers are the other types of
financial institutions. The financial institutions are generally regulated by the financial laws of government authority. The various financial institutions generally act as the intermediaries between the capital market and debt market. But the service provided by financial institution depends on its type. The financial institutions are also responsible to transfer funds from investors to the companies. Typically, these are the key entities that control the flow of money in the economy. The services provided by the various types of financial institutions may vary from one institution to another. For example, the services offered by the commercial banks are - insurance services, mortgages, loans and credit cards. The services provided by the brokerage firms, on the other hand, are different and they are - insurance, securities, mortgages, loans, credit cards, money market and check writing. The insurance companies offer - insurance services, securities, buying or selling service of the real estates, mortgages, loans, credit cards and check writing. The credit union is co-operative financial institution, which is usually controlled by the members of the union. The major difference between the credit unions and banks is that the credit unions are owned by the members having accounts in it. The stock brokerage firms are the other types of financial institutions that help both the corporations and individuals to invest in the stock market. Another type of financial institution is the asset management firms. The prime functionality of these firms is to manage various securities and assets to meet the financial goals of the investors. The firms also offer fund management advice and decisions to the corporations and individuals.
g. Oriental Insurance
Banks Stock Brokerage Firms Non Banking Financial Institutions Building Societies Asset Management Firms Credit Unions Insurance Companies
Regulators watch the markets, players and modes of transactions. Regulators design the market system, create and enforce regulations and rules for the market.
FINANCIAL INTERMEDIARIES
Financial intermediaries are a special group of financial institutions that obtain funds by issuing claims to market participants and use these funds to purchase financial assets. Intermediaries transform funds they acquire into assets that are more attractive to the public. By doing so, financial intermediaries do one or more of the following:
Provide maturity intermediation. Provide risk reduction via diversification at lower cost. Reduce the cost of contracting and information processing. Provide payments mechanism.
Market risk Liquidity risk One of the principal objectives of the management of financial institutions is to maintain a balance between return and risk. Of late, it has been witnessed that the methods and techniques used by the financial institutions for managing the different risks faced by their managers are getting more and more similar in nature. This is irrespective of the financial institution being a savings bank, commercial bank, insurance company, or an investment bank. This might be a consequence of globalization.
Reduction of information and transaction costs Grant long-term loans Provide liquid claims and pool risks. Financial intermediaries economize costs of borrowers and lenders. Banks are set up to mobilize savings of many small depositors, which are insured.
Taking the financial benefits as the ultimate commodity, which is traded in the financial market, the buyer and the seller should be able to achieve a win-win situation for any transaction to be through successfully. The market players in any financial markets are the banks, financial institutions, intermediaries, funds and treasury. In a healthy economy the market is engineered, intermediate and well supervised. To say finally, all the transaction embodied in the system as well protected and saved from number of risks.
Process, project, and vendor management Leadership and organizational management Reporting Measurement Feedback and control systems For the selling purpose of the financial products and services, financial institutions often take the assistance of various advertising firms. They provide valuable marketing advices and techniques to numerous banks, credit unions, and various other financial services providers.
Various techniques that are implemented for enhancing sales of financial products and services include the following: Cross selling of equity and debt capital market products, such as stocks, bonds, and CDOs (Collateralized Debt Obligations) Formulation of marketing plans and market research Assessment of client financing and other facilities and recommendation of suitable action Supervision of the functions of the relationship managers Keep informed and cover capital market activities and corporate finance Advising and training staff For marketing the financial products and services, the various forms of advertisements that are
utilized include the following: Consumer media print advertisements Web banner advertisements Annual report Logo Informational brochures and displays Consumer radio advertisements Poster Newspaper advertisements Usually, a common trend is seen in the marketing of financial products which is a product launched by a company is immediately followed by another company. However, this is not beneficial all the time.
All financial institutions need to abide by certain accepted standards. Financial institution compliance is all about regulating the activities of these organizations as per the given standards. The performance of the financial institutions is assessed by certain regulators. These regulators are specially designed to boost up the productivity level of the financial organizations. Financial institution compliance aims at improving the efficiency level of these organizations.
competition in the global market, the task of financial institution compliance is becoming more complicated. However, financial institution compliance opens up new opportunities of product diversification. Besides controlling the activities of financial service providers, the financial institution compliance also takes into account many other factors like management of IT operations risk, management of information life cycle and management of enterprise risk.
educational programs
Eliminating financial crime: The financial regulations are designed for the purpose of reducing
The regulatory principles that are followed by the regulators of financial institutions include the following:
Role of management: Regulatory measures on the senior management of the financial institutions
so that they do not take decisions that are detrimental to the financial market
Innovation: Innovation should be facilitated with restriction so that the financial products and
International aspects: Strict monitoring should be there to see whether the international standards
Efficiency and economy: The financial resources of a country should be used in the most prudent
Proportionality: The financial regulations that are imposed should be proportional to the
Competition: There should be strict supervision on the financial market for the purpose of
Criminal investigation agencies are usually employed to reduce the incidence of financial institution fraud. The investigating officers enquire the staffs and management personnel to identify the fraudulent employees. The investigation agencies work in association with legal bodies to combat the financial institution fraud.
The reports of suspicious activity and currency transaction are the two tools, which are commonly used to get the relevant information about the financial institution crime. From the statistics of financial institution fraud one can get a clear about the extent of fraudulent activity taking place in the global financial sector.
As the incidence of financial institution fraud is increasing over the years, the need for crime insurance is also growing in the insurance market. The crime insurance deal should be carefully selected. Most of the crime insurance deals for the financial and commercial organizations offer financial coverage to the first party whenever they face any asset loss due to fraud. The incidence of financial institution fraud can be significantly reduced by strictly enforcing the strategies for risk management.
becoming increasingly important over the passage of time. Financial organizations face different types of operational risks. Business risks may arise due to several reasons like production loss, theft, fire, natural calamities like flood and earthquake. Reputational risk is another major threat faced by all popular financial service providers.
accountability mechanisms, CIEL seeks to improve the social and environmental practices of these institutions to promote a more sustainable paradigm of development. Press Releases Read recent announcements related to the work of the IFI Program.
How Does CIEL Affect the Policies of International Financial Institutions? CIEL is one of the leading organizations dedicated to obtaining and maintaining independent citizen-based accountability mechanisms.
What is the World Bank Group? The World Bank Group is a multilateral development bank that provides loans and credits to developing countries to stimulate social and economic development, yet it often support projects that have significant negative social and environmental impacts.
Private Sector Funding: IFC & MIGA The International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA) give loans to promote private sector, corporate investment in developing countries, under the theory that such investment will provide economic growth. The IFC and MIGA are not subject to the jurisdiction of the World Bank Inspection Panel, but they are subject to review by the Compliance Advisor/Ombudsman (CAO)...
The World Bank Group developed most of its social and environmental policies under pressure from civil society in the late 80s when local peoples and international NGOs highlighted problems with various projects...
The World Bank Inspection Panel The World Bank Inspection Panel is a quasi-independent mechanism that was created under pressure from non-governmental organizations and donor governments concerned about the Banks history of policy violations... Read about past Claims to the Inspection Panel.
Controversial Projects at the World Bank Two of the most egregious recent projects at the World Bank include the China Western Poverty Reduction Project and the Chad/Cameroon Oil Pipeline Project. Both have been the focus of organized debates and protests by a variety of human and indigenous rights groups, and have even alarmed some of the World Bank Group's own member states.
Read "Profiling Problem Projects", a collection of case studies of misguided International Finance Corporation projects.
Export Credit Agencies Export Credit Agencies and Investment Insurance Agencies, commonly known as ECAs, are public agencies that provide government-backed loans, guarantees and insurance to corporations from their home country that seek to do business overseas in developing countries and emerging markets...
International Financial Institutions Publications Proceed to view CIEL's publications regarding IFIs.
International Financial Institutions Links Proceed to view CIEL's links regarding IFIs.
The international financial institutions (IFI) are easily due to various international laws. It is widely
getting involved in the conflicting situations very believed that structural and political concerns of the
countries cause obstacles to the development of roles of international financial institutions. This is caused mainly due to the international humanitarian laws. On the other hand, it is also believed that the roles of international financial institutions in the international community help them to make contribution to the enforcement and implementation of the international humanitarian laws. The involvement of IFI in international humanitarian law can also be helpful to the United Nations in supporting its efforts to prevent violations of the international humanitarian law. It is also helpful to enforce the law against those who are suspected of committing atrocities. The International Monetary Fund (IMF) and World Bank are the specialized financial agencies of the United Nations that function as independent international organizations. Their functionalities are not bound by the UN decisions but are regulated by the UN Security Council resolutions. The decisions made by the IFIs may be significantly influenced by the international humanitarian law violations. The humanitarian law violations are licit economic concern to the IFIs and that should not be excluded from its consideration as political issues It is also argued that IFIs need to consider international humanitarian law issues in some circumstances to fulfill their authorizations. The violations of rights under humanitarian laws can give insight into how the governments will handle the international obligations like loan agreements with the IMF or the World Bank. It is also seen that human rights violations during the conflicts can affect the economic growth of a country.
That has been incorporated for a definite purpose. These institutions include the insurance companies, the housing finance companies, mutual funds, merchant banks, credit reporting and debt collection companies and many more. Apart from these, there are several other financial institutions that are existing in the country. These are the stock brokers and sub-brokers, portfolio managers, investment advisors, underwriters, foreign institutional investors and many more..
Apart from the Regulatory bodies, there are the Intermediaries that include the banking and nonbanking financial institutions. Some of the specialized are as follows:
Unit Trust of India (UTI) Securities Trading Corporation of India Ltd. (STCI) Industrial Development Bank of India (IDBI) Industrial Reconstruction Bank of India (IRBI), now (Industrial Investment Bank of India) Export - Import Bank of India (EXIM Bank) Small Industries Development Bank of India (SIDBI) National Bank for Agriculture and Rural Development (NABARD) Life Insurance Corporation of India (LIC) General Insurance Corporation of India (GIC) Shipping Credit and Investment Company of India Ltd. (SCICI) Housing and Urban Development Corporation Ltd. (HUDCO) National Housing Bank (NHB)
The banking institutions of India play a major role in the economy of the country. The banking institutions are the providers of depository and transaction services. These activities are the major sources of creating money. The banking institutions are the major sources of providing loans and other credit facilities to the clients.
The Financial Institutions in India mainly comprises of the Central Bank which is better known as the Reserve Bank of India, the commercial banks, the credit rating agencies, the securities and exchange board of India, insurance companies and the specialized financial institutions in Ind
participation certificates and bills discounted. The banks also deal in treasury bills that are sold on tap by the RBI. The RBI acts the last resort to the market.
INSTRUMENTS
Traditionally when a borrower takes a loan from a lender, he enters into a agreement with the lender specifying when he would repay the loan and what return (interest) he would provide the lender for providing the loan. This entire structure can be converted into a form wherein a loan can be made tradable by converting it into smaller units with pro rata allocation of interest and principal. This tradable form of the loan is termed as debt instruments. Therefore, debt instruments are basically obligations undertaken by the issuer of the instrument as regards certain future cash flows representing interest and principal, which the issuer would pay to the legal owner of the instrument. Debt instruments are of various types. The key terms that distinguish one instrument from another are as follows: Issuer of the instrument. Face value of the instrument. Interest rate. Repayment terms (and therefore maturity period/tenure).
Following are the different debt instruments and their key terms and characteristics are discussed below.
Private sector companies:Private sector companies issues commercial papers and short and long term debentures. Capital investments in the private sector was booming on the back of a strong capital market and private sector
companies used to raise loans by way of debentures in order to meet their overall fund requirements. Sometimes, debentures were issued along with equity shares in the form of partly convertible debentures which laid to :
Overall decline in the invest meant spending by the private corporate sector leading to a decline in
demand for raising money in all forms. Increased demand for top quality debentures. Banks were allowed to invest in private sector debentures, which indirectly gave term loans to other companies. Most of the debentures issued by the private sector banks are privately placed with institutional investors. It is not feasible for a company to have a public issue of debentures because the cost of making public issue is very high.
Government owned or quasi government non corporate entities:This is a new class of issuers which has emerged in last 5 years. The origin of these issuers lives in the inability of state-governments to execute large infrastructure projects. These state governments have created special purpose vehicles for executing these projects. These special purpose vehicles issue bonds/debentures of typical maturity of the instruments ranging from 3-7 years. The first prominent issue of this type was made in 1993 for Sardar sarovar Narmada nigam ltd by the government of Gujarat to execute this project and then, Krishna Bhagya Jala Nigam, Maharashtra Krishna
Valley Development Corporation, Maharashtra State Road Development Corporation etc came with larger issues for funding such ambitious infrastructure projects. The actual subscribers of these instruments are largely institutional because there is a brief that the state government behind the issuance would not be willing to face a large number of retail investors. Many of the private developers have come forward to sponsor infrastructure projects.
DEVELOPMENTAL
FINANCIAL
INSTITUTION
INTRODUCTION
Financial institutions play an important role in the financial system. The financial intermediaries taking place outside the banks attributed to the operation of the financial institution. Financial institutions provide project finance to the needy Corporate and Government institution and perform an important role in development of infrastructure of the country. Broadly these financial institutions can be classified in to two broad categories depending on the basis of incorporation and operation. The All India institutions like IDBI or Regional /state financial corporations and thirdly other institution like DICGE and ECGC. The ALL India financial institution is IDBI, ICICI, SIDBI, IIBI and IFCI; Specialized financial institutions are EXIM Bank, ICICI Venture; Investments institutions are UTI, LIC, GIC and subsidiaries and refinance institution are NABARD and NHB; State level institutions are SFCs (18) and SIDCs (28);
WHAT IS A BANK ?
A bank as an institution which accepts deposits from the public and in turn advances loans by creating credit. It is different from other financial institutions in that they cannot create credit though they may be accepting deposits and making advances.
Functions Banks
of
Primary Functions
Agency Functions
General Utility
Primary Functions
Agency Functions
Collection and payment of cheques
Collection and payment of bills Remittance of funds Collections of government taxes Undertaking administration of estates as executors and trustees
Dealing with bullion, foreign exchange, merchant banking, safe custody of articles, etc,
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 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. HDFC is Indias 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. HDFC Bank began operations in 1995 with a simple mission: to be a World Class Indian Bank. We realized that only a single minded focus on product quality and service excellence would help us get there. Today, we are proud to say that we are well on our way towards that goal. HDFC Bank Limited (the Bank) is an India-based banking company engaged in providing a range of banking and financial services, including
commercial banking and treasury operations. The Bank has a network of 1412 branches and 3295 automated teller machines (ATMs) in 528 cities and total employees are 52687.
COMPANY PROFILE
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.
Promoters
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.
CAPITAL STRUCTURE
The authorized capital of HDFC Bank is Rs.450 crore (Rs.4.5 billion). The paid-up capital is Rs.311.9 crore (Rs.3.1 billion). The HDFC Group holds 22.1% of the bank's equity and about 19.4% of the equity is held by the ADS Depository (in respect of the bank's American Depository Shares (ADS) Issue). Roughly 31.3% of the equity is held by Foreign Institutional Investors (FIIs) and the bank has about 190,000 shareholders. The shares are listed on the The Stock Exchange, Mumbai and the National Stock Exchange. The bank's American Depository Shares are listed on the New York Stock Exchange (NYSE) under the symbol "HDB".
HISTORY
HDFC BANK LTD. 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. HDFC BANK LTD was amongst the first to set up a bank in the private sector. The bank was incorporated on 30th August 1994 in the name of HDFC Bank Limited, with its registered office in Mumbai. It commenced operations as a Scheduled Commercial Bank on 16th January 1995. The bank has grown consistently and is now amongst the leading players in the industry . 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 In a milestone transaction in the Indian banking industry, Times Bank was merged with HDFC Bank Ltd., effective February 26, 2000.
The authorized capital of HDFC Bank is Rs.450 crore (Rs.4.5 billion). The paid-up capital is Rs.311.9 crore (Rs.3.1 billion). The HDFC Group holds 22.1% of the bank's equity and about 19.4% of the equity is held by the ADS Depository (in respect of the bank's American Depository Shares (ADS) Issue). Roughly 31.3% of the equity is held by Foreign Institutional Investors (FIIs) and the bank has about 190,000 shareholders. The shares are listed on the The Stock Exchange, Mumbai and the National Stock Exchange. The bank's American Depository Shares are listed on the New York Stock Exchange (NYSE) under the symbol "HDB".
RESEARCH METHODOLOGY
A research design is the detailed blueprint used to guide a research study towards its objectives. It is series of advanced decisions taken together comprising a master plan or a model for the conduct of research in consonance with the research objectives. It details the procedures necessary for obtaining the information needed to structure or solve the marketing research problem .
1. Direct Interview:
In this we directly will interview the Customer dealing with HDFC BANK.
Sampling Size
40
Date Collection
BOARD OF DIRECTORS
Mr. Jagdish Capoor, Chairman Mr. Keki Mistry
Mr. Vineet Jain Mrs. Renu Karnad Mr. Arvind Pande Mr. Ashim Samanta Mr. C. M. Vasudev Mr. Gautam Divan Dr. Pandit Palande Mr. Aditya Puri, Managing Director Mr. Harish Engineer, Executive Director (w.e.f. 12.10.2007 subject to approval of RBI) Mr. Paresh Sukthankar, Executive Director (w.e.f. 12.10.2007 subject to approval of RBI)
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. In terms of software, the Corporate Banking business is supported by Flex cube, while the Retail Banking business by Fin ware, both from i-flex Solutions Ltd. The systems are open, scaleable and web-enabled. The Bank has prioritised 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.
DISTRIBUTION NETWORK
HDFC Bank is headquartered in Mumbai. The Bank at present has an enviable network of over 761 branches spread over 327 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's expansion plans take into account the need to have a presence in all major industrial and commercial centres 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 have a strong and active member base. The Bank also has a network of about over 1977-networked ATMs across these cities. Moreover, all domestic and international Visa/MasterCard, Visa Electron/Maestro, Plus/Cirrus and American Express Credit/Charge cardholders can access HDFC BANKs ATM network.
compliance.
The objective of the HDFC Bank is to provide its target market customers a full range of financial products and banking services, giving the customer a one-step window for all his/her requirements. The HDFC Bank plus and the investment advisory services programs have been designed keeping in mind needs of customers who seeks distinct financial solutions, information and advice on various investment avenues.
BUSINESS STRATEGY
Increasing market share in Indias expanding banking. Delivering high quality customer service. Maintaining current high standards for asset quality through disciplined credit risk management. Develop innovative products and services that attract targeted customers and address inefficiencies in
Financial Express- Ernst Youn Survey 2009-10 Asian Banker Excellence Awards 2009 Global Finance Award Euromoney Private Banking and Wealth Management Poll 2010 Financial Insights Innovation Awards 2010 Business Today Best Employer Survey 2 Banking Technology Awards 2009 SPJIMR Marketing Impact Awards (SMIA)2010
YEAR-2009
EUROMONEY AWARDS 2009 'BEST BANK IN INDIA' Economic Times
Brand Equity &Nielsen Research annual survey 2009 Most Trusted Brand - Runner Up 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 Bank in India Award 2009
BUSINESS SEGMENT
HDFC Bank offers a wide range of commercial and transactional banking services and treasury products to wholesale and retail customers.
WHOLESALE BANKING SERVICES :The Bank's target market ranges from large, blue-chip manufacturing companies in the Indian corporate to small & mid-sized corporate and agri-based businesses. For these customers, the Bank provides a wide range of commercial and transactional banking services, including working capital finance, trade services, transactional services, cash management, etc. The bank is also a leading provider of structured solutions, which combine cash management services with vendor and distributor finance for facilitating superior supply chain management for its corporate customers. Based on its superior product delivery / service levels and strong customer orientation, the Bank has made significant inroads into the banking consortia of a number of leading Indian corporate including multinationals, companies from the domestic business houses and prime public sector companies. It is recognized as a leading provider of cash management and transactional banking solutions to corporate customers, mutual funds, stock exchange members and banks.
The objective of the Retail Bank is to provide its target market customers a full range of financial products and banking services, giving the customer a one-stop window for all his/her banking requirements. The products are backed by world-class service and delivered to the customers through the growing branch network, as well as through alternative delivery channels like ATMs, Phone Banking, Net Banking and Mobile Banking. The HDFC Bank Preferred program for high net worth individuals, the HDFC Bank Plus and the Investment Advisory Services programs have been designed keeping in mind needs of customers who seek distinct financial solutions, information and advice on various investment avenues. The Bank also has a wide array of retail loan products including Auto Loans, Loans against marketable securities, Personal Loans and Loans for Two-wheelers. It is also a leading provider of Depository Participant (DP) services for retail customers, providing 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 Electron) and issues the Master card Maestro debit card as well. The Bank launched its credit card business in late 2001. By September 30, 2005, the bank had a total card base (debit and credit cards) of 5.2 million cards. The Bank is also one of the leading players in the "merchant acquiring" business with over 50,000 Point-of-sale (POS) terminals for debit / credit cards acceptance at merchant establishments.
TREASURY :Within this business, the bank has three main product areas - Foreign Exchange and Derivatives, Local Currency Money Market & Debt Securities, and Equities. With the liberalization of the financial markets in India, corporate need more sophisticated risk management information, advice and product structures. These and fine pricing on various treasury products are provided through the bank's Treasury team. To comply with statutory reserve requirements, the bank is required to hold 25% of its deposits in government securities. The Treasury business is responsible for managing the returns and market risk on this investment portfolio.
Savings Accounts
These accounts are primarily meant to inculcate a sense of saving for the future, accumulating funds over a period of time. Whatever persons occupation, bank have confident that person will find the perfect banking solution. There some saving accounts like: -
Introducing the best banking option for you with HDFC Bank Savings plus Account. Now you can get access to some of the finest banking facilities with HDFC Bank's Savings plus Account. All you have to do is maintain an Average Quarterly Balance of Rs. 10,000/-.
No frills Account
In an effort to make banking simpler and more accessible for customers, bank has introduced the 'No Frills' Savings Account, which offers customer all the basic banking facilities. Customer can even avail customer can put Zero Initial Pay-in and a Zero Balance account
Salary Accounts
In this account customer can get salary from where he/she doing such job and organization or company at where the customer of the bank in doing job deposit their salary in to the salary account a person can get salary. There are various kinds of saving accounts in the HDFC Bank like: -
Pay roll account. Classic salary account. Regular salary account. Premium salary account. Defense salary account. No frills salary account. Reimbursement salary account.
Free Education Insurance cover of Rs. 1, 00,000/- in the event of death of the parent / guardian through vehicular accident by road, rail or air to safeguard the future of your child. ATM/International Debit Card will be issued for children between 7-18 years of age in the child's name with your permission. The amount your child is able to withdraw is Rs. 2,500/- at ATMs or spend Rs. 2,500/- at merchant locations. Free cash withdrawals on any other Bank's ATM*.
1 free Personalised cheque book for your child.
Monitor the transactions of your child's account with the free quarterly physical statement of account or free monthly Email Statement of account. Free Net Banking for you to monitor your child's account. Free SMS/Email alerts informing you about the account transactions.
Current accounts
HDFC Bank Current Account gives the power of inter-city banking with a single account and access to more than cities. From special cheques that get treated at par with local ones in any city where branch, faster collection of outstation cheques (payable at branch locations), free account to account funds transfer between
HDFC Bank accounts to Free inter-city clearing of up to 100 lakhs per month, banks priority services have become the benchmark for banking efficiency. Now, with an HDFC Bank Current Account, experience the freedom of multi-city banking. Person can have the power of multi-location access to his account from any of our 761 branches in 327 cities. Not only that, he can do most of his banking transactions from the comfort of his office or home without stepping out. There are various kinds of current account in this bank like: -
Business needs a partner who can manage finances while concentrate on growing business. Form this account customer can avail benefits of inter-city banking account that requires an average quarterly balance of only Rs. 25,000, offers Payable-At-Par cheque book facility & FREE inter-city clearing transactions across our network up to Rs.25 Lacs per month. A Current Account with the benefits of accessing account from a large network of branches, and through direct access channels - the phone, mobile, Internet and through the ATM.
Mention Salary Account number and Debit Card number on the AOD so that Debit card can be linked to both, Salary Account as well as new Reimbursement Account. Request company to directly credit cash payments to the Reimbursement Account.
which person anyway may not need. Flexi Current Account requires to maintain a minimum Average Monthly Balance (AMB) of just Rs. 75,000.
Fix Deposits
Long-term investments form the chunk of everybody's future plans. An alternative to simply applying for loans, fixed deposits allow to borrow from own funds for a limited period, thus fulfilling needs as well as keeping savings secure. People can invest his/her money into either in security market or gold or mutual fund or into a fix deposits. People always go to that way where he/she can get more benefits and minimum risks. So, for this purpose he has a better chance to deposits money in to the fix deposit. If people believe in long-term investments and wish to earn higher interests on his/her savings, now is the time to invest money in HDFC bank Fixed Deposit. Get up to 9.75% on HDFC Bank Fixed Deposit with
an additional 0.50% for Senior Citizens. What's more NO PENALTY if withdraw part of the FD in times of need. Flexibility, Security and High Returns all bundled into one offering.
Super Saver Facility on his or her savings account. Avail of an overdraft facility of up to 75% of the value of his or her Fixed Deposit.
Sweep-in facility
Do you wish to avoid taking overdrafts, and still take advantage of your Fixed Deposits? Then what you need is a Sweep-In Facility on savings account. Link Fixed Deposit to Savings or Current Account and use it to fall back on in case of emergencies. A deficit in Savings or Current Account is taken care of by using up an
exact value from Fixed Deposit. Since deposits are broken down in units of Re 1/-, customer will lose interest only for the actual amount that has been withdrawn.
Demat Account
Nowadays share market is becoming is the main occupation of the person. So to avoid faulty
processes demat account is really most important for the share market and for the safety of shares it is most important. HDFC BANK is one of the leading Depository Participant (DP) in the country with over 8 Lac Demat accounts. HDFC Bank Demat services offers a secure and convenient way to keep track of securities and investments, over a period of time, without the hassle of handling physical documents that get mutilated or lost in transit. HDFC BANK is Depository participant both with -National Securities Depositories Limited (NSDL) and Central Depository Services Limited (CDSL).
Eligibility
An individual (not minor), firms, limited company, associations, clubs, trusts, societies, etc may hire a locker. Advantages of safe deposit locker in HDFC bank
Lockers available in various sizes. i.e. Small, Medium, Large and Extra Large with varying rents.
Lockers are rented out for a minimum period of one year. Rent is payable in advance. No deposits are required to avail a locker. Just open an account and get the locker facility. There is a nominal annual charge, which depends on the size of the locker and the centre in which the branch is located.
Nomination for Safe Deposit Locker The Lockers and their contents can be nominated to people near and dear to you. Nomination facility is available to individual hirer of Safe Deposit Locker. In the case of a sole hirer of a safe deposit locker, nomination can be made in favor of only one individual. Where the safe deposit locker is hired in the name of a minor, the nomination shall be made by a person lawfully entitled to act on behalf of the minor. Terms & Conditions For obtaining a Locker at HDFC Bank you must be an account holder with Bank. Lockers can be allotted individually as well as jointly. The Locker holder is permitted to add or delete names from the list of persons who can operate the Locker and can have access to it.
LOAN
In todays competitive world every thing happens only with the help of money or through the money every person need money. But some time a person has not cash on hand at that time he needs lone either from any friend or from any financial institute. Loan does not mean that only lower class person needs it but also upper class person it is needed. As per the requirement of the every person there are much type of loans are there in the HDFC bank.
Personal loan
A person has so many dreams but some time due to scarcity of money a dream cant be satisfy. So, here one solution for that person this is personal loan. From this he/she can fulfill their needs or requirement. It can be any thing either a dream of vacation or son/daughters admission to college or any wedding, so personal loan can be helpful in this entire requirement. As person ordered in the hotel for tea or coffee and it is immediately came fast, same over here any person want to get a personal loan with the nominal documents he can get the loan.
Home loan
HDFC Bank brings HDFC home loans to doorstep. With over 30 years of experience, a dedicated team of experts and a complete package to meet all housing finance needs, HDFC Home Loans, help people realize dream.
Vehicles loan
Nowadays the life is being so fast, time value is becoming more important so to reach at the destination of any business related occasion or for a boy to reach college or any where at the fix time there are so many requirement of vehicles. But every people have no capacity to purchase vehicles with cash so for that here in the HDFC bank vehicles loan is available. There are many types of vehicles loan.
Commercial vehicle loan. So, as per the requirement of the person there are these types of loans are available in this are at the chip rate and hassel free from more documentation and other procedure. And commercial businessman can get the benefits of the commercial vehicles loans. Thus as per the need of different people there are vehicle loans available. And also terms and condition are different as per the requirement.
Gold loan
With HDFC Bank's Gold Loan, person can get an instant loan against gold jewellery and ornaments. The procedure is simple, documentation is minimal and approval is quick. A person can get 70% loan on the value of the gold jewellery and ornaments. There is also availability of the overdraft on the gold jewellery. With this
a customer can get free additional services like free personalized cheque book, free international debit card, and free net banking phone banking services.
Educational loan
Nowadays important of education becoming very high. As it important becoming high it is becoming costly. So in the higher education some time people can not effort a high price at a same time. So, there is education loan is also available for the student. A person can get loan up to 10 lacs to study in India and 20 lacs if he wants to study in abroad. Loan available up to tenure of 7 years including moratorium period. Loans disbursed directly to the educational institution. It is released as per fee schedules of institutes. Exclusive Telegraphic Transfer facility available for courses abroad. Loans available for short duration/ job oriented courses also.
CARD SERVICES
In todays competitive and fast time card services providing by the banks are really very important to every person and every business needs or to take meal in to the hotel or to purchase jewellery from the jewellery shops cards are playing good role in the banking sectors. Bank ranges of Cards help to meet
financial objectives. So whether persons are looking to add to his buying power, conducting cashless shopping, or budgeting his expenditure, he will find a card that suits him.
Credit cards
A person wants many things like, a trip to Bali, a diamond ring for wife's dreams. Some dreams can't wait. If there's something person has always wanted. If a person wanted fulfills his wants he can get benefits from the HDFC banks credit cards facilities.
Premium Cards: Gold Credit Card Titanium Credit Card Woman's Gold Card Platinum Plus Credit Card Visa Signature Credit Card World MasterCard Commercial Cards Corporate Credit Card
Debit cards
HDFC Bank Debit Cards give person complete and instant access to the money in his accounts without the risk or hassle of carrying cash.
Types of debit card: Classic card Easy shop international Debit card. Premium card Easy shop gold Debit card. Specialized card
Easy Shop International Business Debit Card . Easy Shop Woman's Advantage Debit Card . Easy Shop NRO Debit Card . Kisan Card .
Prepaid card
Besides offering convenience, Prepaid Cards have been tailored to answer travel and gifting needs.
Forex Plus Cards
Prepaid Travel Card. Gift Plus Cards Prepaid Gift Card. Food Plus Cards Prepaid Food Plus card. Money Plus Card The Corporate Payment card
SHARE PRICE OF
HDFC
MEANS OF COMMUNICATION
The quarterly and half-yearly unaudited financial results are published in 'Business Standard' in English and 'Mumbai Sakal' in Marathi (regional language). The results are also displayed on the Banks website at www.hdfcbank.com. The shareholders can visit the Banks web-site for financial information, shareholding information, dividend policy, key shareholders agreements, Memorandum and Articles of Association of the Bank, etc. The web-site also gives a link to www.sec.gov where the investors can view statutory filings of the Bank with the Securities and Exchange Commission, USA.
222459 183271
2009
2010
2009
2010
72271
61154
2009
2010
167404 142812
2009
2010
49877 34915
2009
2010
16.80%
16.20%
2009
2010
RUPEE EARNED
RUPEE SPENT
SWOT ANALYSIS
strategy.
HDFC has been highly proactive in passing on the cost and benefit to customers. Besides the core business, HDFCs insurance, AMC, banking, BPO, and real estate private equity
businesses are also growing at a rapid pace and the estimated value of its investments/subsidiaries explains ~30% of HDFCs market capitalization. High degree of customer satisfaction. Lower response time with efficient and effective service. Dedicated workforce aiming at making a long-term career in the field.
Superior customer service vs. competitors.
Large share of low-cost deposits, higher net interest margin. Better quality of assets, NPA of 0.4 per cent. Free float available, FIIs can buy its stock. Higher profitability.
WEAKNESSES
High dependence on individual loans.
Major stake held by American financial groups which are under stress due to economic slowdown.
for staff.
Marginal international presence. No next line of leadership. Not very aggressive in M&A space, growing only organically. Possible takeover target.
OPPORTUNITIES
Fast growing insurance business in the country. Untapped rural markets.
Could extend to overseas broadly.
services.
Unique partnership to create job opportunities for IFBIs PGDBO students. HDFC bank automates business processes with Staff ware; HDFC Bank anticipates major cost savings
whilst maintaining high levels of customer service thanks to new enterprise software agreement.
HDFC Bank plans to set up a non-banking finance company (NBFC) to undertake fund-based
activities.
In recent times, India has witnessed entry of many international banks like CITI Bank, YES Bank etc
which posses an external entrant threat to HDFC Bank as this Banks are known for their art of working and maintain high standards of customer service.
After showing a significant growth overall, India is able to attract many international financial &
banking institutes, which are known for their state of art working and keeping low operation costs.
THREATS
Loss of market share to commercial banks and HFCs Higher than expected increase in funding cost Risk of fraud and NPA accretion due to increase in interest rates and fall in property prices is inherent to the mortgage business Lack of infrastructure in rural areas could constrain investment. High volume/low cost market is intensely competitive. Very high competition prevailing in the industry Extension overseas holds a lot of risk! Threat from credit card collections dept. Varying and In-Convenient ECS dates. Unlike Government Banks, an account needs a minimum balance ofRs.10,000
EUROMONEY DECLARES HDFC BANK BEST PRIVATE BANKING SERVICES OVERALL IN INDIA
-Also adjudged Best Local Bank in India for the 2nd year in a rowMumbai, February 17, 2010: HDFC Bank, one of Indias premier banks, has been declared the Best Private Banking Services overall in the Euromoneys annual global Private Banking and Wealth Management Poll - 2010. The survey also recognized HDFC Bank as the Best Local Bank in India for the second consecutive year. According to Euromoney, HDFC Bank's nomination as Best Private Banking Services indicates the Banks excellence in both advisory and portfolio management across a range of asset classes and investment
styles. The rankings are based on qualitative and quantitative survey supported by quantitative data provided by the participating banks. The survey also includes competitors' perceptions of the best performing providers in defined client and product categories. Commenting on this recognition, Abhay Aima, Group Head Equities, Private Banking, Third Party Products, NRI & International Consumer Business said It is an honor for us to be conferred with these awards. At HDFC Bank, we understand the challenges in the market and strongly believe that we have the right business strategy to address the growing market needs and capitalize on opportunities to build partnerships for mutual development with our clients. The growth in private banking in India is inclusive and we are witnessing growth from Tier 2 and Tier 3 cities also. He further added In the process we have also outperformed all global private banks operating in India. Interestingly even in Asia, in the private bank category, we have moved up in rankings, to 10th position in the current year from 23rd in the previous year. The survey results reflect a global trend where new regional/ national players along with a few leading international banks are now making good inroads in the global Private Banking space. Euromoney Private Banking and Wealth Management Services is the global industry benchmark for the wealth management industry and cover over 60 countries every year, as well as global and regional awards. The results are based on combinations of performance figures and nominations. The year Euromoney received a total of 1800 votes, up almost 10% on last years poll. Votes cast represented $6.8 trillion of assets under management.
sell and targeted marketing to the customers. The customers can also do other transactions on the ATM like credit card payment, cheque status enquiry, transfer funds between accounts, viewing account balances and mini statements. Speaking on the occasion Mr. Rahul Bhagat, Country Head - Retail Liabilities, Marketing & Direct Banking Channels said, We have always believed in using technology to enhance customer experience and the fact that over 80% of our regular customers transact at the ATM is proof that adoption of such innovations is very high. It is a matter of great satisfaction for us that we have 4,000 such ATMs in service today and will continue to expand in future.
More than 130 retail financial institutions participated from 22 countries across the Asia Pacific, Gulf and Central Asian regions Mumbai, March 29, 2010: HDFC Bank, one of Indias premier banks, has won The Asian Banker's Best Retail Bank in India award this year. Beating a host of other competitors in Asia Pacific, Gulf Cooperation Council (GCC) and Central Asia on a range of parameters, the Bank has won the Best Retail Bank in India award for the fourth year in a row. The Bank also emerged best in the Automobile Lending sector. Some of the parameters that winners were measured on:
Outstanding annual performance of the retail banking unit Sustainability as a franchise over a long period of time and across economic cycles
A well-defined franchise in the chosen marketplace Transparency and accountability of business model
Ethical banking Rigorous risk management capabilities Superior business and operational processes and technology Strong penetration and efficiency of distribution channels Focus on developing human resources to support the banks strategy
Announcing the Asian Banker Excellence awards 2009, the publication has observed in its communication to the company, HDFC Bank has passed all stringent screening and requirements throughout the Excellence in Retail Financial Services evaluation process and been granted the awards.
The Asian Banker Excellence in Retail Financial Services Programme was instituted in 2001 on the premise that an outstanding player in the retail financial services industry should build business franchises that are sustainable, competitive and profitable over a period of time.