EXECUTIVE SUMMARY

The Project report is prepared on Retail Banking at HDFC Bank. It is on a

research to find out weather people of Rajkot city prefer to deal with private sector
banks or nationalized banks. It is also to find out the reasons why they deal with their
bank and the most frequently services by them
This was basically to find out for what reason they deal with particular bank
and to know their level of satisfaction with the services of their bank.
I have collected the research by collecting the primary data. This research was
conducted with the employees of private and government sector, businessman,
professionals and students in equal numbers.
This report gives a brief idea about the banking industry and the tough
competition faced by the banks. Secondly it gives an overview of the company, its
history, its products, its various marketing strategy and much more.
Then the main part of the project comes wherein the research and the analysis
is included. Stratified random sampling was adopted where the people of various
occupations were selected at random from different part of the city. The sampling size
selected was 50.
Data analysis was done as per the questions through various techniques as per
requirement. Finally findings and the data collected concluded that the most preferred
bank was HDFC Bank, and the most people were highly satisfied with the services of
HDFC Bank where ATM was the most frequently used services. It was found that for
what reason private and government employees, students, professionals and
businessman deal with the bank and how frequently they visit the bank. Through this
research the company can know the choice of different occupational groups and the
research for how satisfied they are with the bank they deal with. They can also know
the most frequently used services so that they can improve further improve it or
encourage the use of their services.

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 INTRODUCTION AND HISTORY OF
BANKING
Without a sound and effective banking system in India it cannot have a healthy
economy. The banking system of India should not only be hassle free but it should be
able to meet new challenges posed by the technology and any other external and
internal factors.

For the past three decades India's banking system has several outstanding
achievements to its credit. The most striking is its extensive reach. It is no longer
confined to only metropolitans or cosmopolitans in India. In fact, Indian banking
system has reached even to the remote corners of the country. This is one of the main
reason of India's growth process.

The government's regular policy for Indian bank since 1969 has paid rich dividends
with the nationalization of 14 major private banks of India.

Not long ago, an account holder had to wait for hours at the bank counters for getting
a draft or for withdrawing his own money. Today, he has a choice. Gone are days
when the most efficient bank transferred money from one branch to other in two days.
Now it is simple as instant messaging or dial a pizza. Money have become the order
of the day.

The first bank in India, though conservative, was established in 1786. From 1786 till
today, the journey of Indian Banking System can be segregated into three distinct
phases. They are as mentioned below:

• Early phase from 1786 to 1969 of Indian Banks

• Nationalizations of Indian Banks and up to 1991 prior to Indian banking sector
Reforms.
• New phase of Indian Banking System with the advent of Indian Financial &
Banking Sector Reforms after 1991.

To make this write-up more explanatory, I prefix the scenario as Phase I, Phase II and
Phase III.

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Phase I

The General Bank of India was set up in the year 1786. Next came Bank of Hindustan
and Bengal Bank. The East India Company established Bank of Bengal (1809), Bank
of Bombay (1840) and Bank of Madras (1843) as independent units and called it
Presidency Banks. These three banks were amalgamated in 1920 and Imperial Bank
of India was established which started as private shareholders banks, mostly
Europeans shareholders.

In 1865 Allahabad Bank was established and first time exclusively by Indians, Punjab
National Bank Ltd. was set up in 1894 with headquarters at Lahore. Between 1906
and 1913, Bank of India, Central Bank of India, Bank of Baroda, Canara Bank, Indian
Bank, and Bank of Mysore were set up. Reserve Bank of India came in 1935.

During the first phase the growth was very slow and banks also experienced periodic
failures between 1913 and 1948. There were approximately 1100 banks, mostly small.
To streamline the functioning and activities of commercial banks, the Government of
India came up with The Banking Companies Act, 1949 which was later changed to
Banking Regulation Act 1949 as per amending Act of 1965 (Act No. 23 of 1965).
Reserve Bank of India was vested with extensive powers for the supervision of
banking in India as the Central Banking Authority.

During those day’s public has lesser confidence in the banks. As an aftermath deposit
mobilization was slow. Abreast of it the savings bank facility provided by the Postal
department was comparatively safer. Moreover, funds were largely given to traders.

Phase II

Government took major steps in this Indian Banking Sector Reform after
independence. In 1955, it nationalized Imperial Bank of India with extensive banking
facilities on a large scale especially in rural and semi-urban areas. It formed State
Bank of India to act as the principal agent of RBI and to handle banking transactions
of the Union and State Governments all over the country.

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Seven banks forming subsidiary of State Bank of India was nationalized in 1960 on
19th July, 1969, major process of nationalization was carried out. It was the effort of
the then Prime Minister of India, Mrs. Indira Gandhi. 14 major commercial banks in
the country were nationalized.

Second phase of nationalization Indian Banking Sector Reform was carried out in
1980 with seven more banks. This step brought 80% of the banking segment in India
under Government ownership.

The following are the steps taken by the Government of India to Regulate Banking
Institutions in the Country:

• 1949 : Enactment of Banking Regulation Act.

• 1955 : Nationalisation of State Bank of India.
• 1959 : Nationalisation of SBI subsidiaries.
• 1961 : Insurance cover extended to deposits.
• 1969 : Nationalisation of 14 major banks.
• 1971 : Creation of credit guarantee corporation.
• 1975 : Creation of regional rural banks.
• 1980 : Nationalisation of seven banks with deposits over 200 crore.

After the nationalisation of banks, the branches of the public sector bank India rose to
approximately 800% in deposits and advances took a huge jump by 11,000%.

Banking in the sunshine of Government ownership gave the public implicit faith and
immense confidence about the sustainability of these institutions.

Phase III

This phase has introduced many more products and facilities in the banking sector in
its reforms measure. In 1991, under the chairmanship of M Narasimham, a committee
was set up by his name which worked for the liberalization of banking practices.

The country is flooded with foreign banks and their ATM stations. Efforts are being
put to give a satisfactory service to customers. Phone banking and net banking is

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introduced. The entire system became more convenient and swift. Time is given more
importance than money.

The financial system of India has shown a great deal of resilience. It is sheltered from
any crisis triggered by any external macroeconomics shock as other East Asian
Countries suffered. This is all due to a flexible exchange rate regime, the foreign
reserves are high, the capital account is not yet fully convertible, and banks and their
customers have limited foreign exchange exposure.

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DEVELOPMENTS IN BANKING SECTOR

During the year 2003-04, the banking sector witnessed strong growth in deposits and
advances. The aggregate deposits of scheduled commercial banks (SCBs) grew by
17.5 per cent compared to 13.4 per cent in 2002-03. Credit and investments by SCBs
increased by 15.3 per cent and 25.1 per cent, respectively in 2003-04 compared to
16.1 per cent and 23.3 per cent respectively in 2002-03. These developments coupled
with a decline in gross NPAs enabled SCBs to improve their financial performance,
despite a lower income growth consequent upon low interest rates. Ratio of net profits
to total assets of SCBs improved marginally from 1.0 per cent to 1.1 per cent. Ratio of
operating profits to total assets improved from 2.4 per cent in 2002-03 to 2.7 per cent
in 2003-04. The total income of SCBs increased by 6.6 per cent to Rs. 1,83,767 crore
in 2003-04 as compared to an increase of 14.0 per cent in 2002-03.

Banks and consumer finance

Private banks are on an ascending trend. In 2003-04, they made huge inroads into the
over Rs 1,00,000 crore ($21.5 billion) retail business market that has so far been
dominated by PSU banks.

• Banks such as ICICI Bank, HDFC Bank, UTI Bank and IDBI Bank registered
a 62 per cent growth and offered retail loans worth over Rs 11,743 crore ($2.5
billion) in FY04. On the other hand, PSU banks such as SBI, PNB, Canara
Bank, Bank of Baroda and Bank of India together posted 36 per cent growth in
personal loans at over Rs 80,813 crore ($17.4 billion).
• PSU banks showed a growth figure of 50.44 per cent in the home loans
category at over Rs 40,000 crore ($8.6 billion), but private banks surged ahead
of them with 58 per cent growth at Rs 3,437 crore ($742 million).
• In consumer durable loans, private banks listed a marginal growth of 7.72 per
cent at Rs 291 crore ($62.8 million) during the year, while PSU banks
recorded nearly a 15 per cent drop in credit at Rs 1,838 crore ($396.8 million).
• Private Banks grew significantly in the rest of the personal loan category at 67
per cent (Rs 8,015 crore or $1.7 billion), while PSU banks witnessed 26.84 per
cent (Rs 4,801.55 crore or $1 billion) in 2003.

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An annual survey of India's best banks places a local concern, Mumbai-based HDFC
Bank, as the country's No. 1 pick in the large-bank category. But other names on the
list will no doubt be familiar to U.S. investors -- especially a number of global players
that Standard & Poor's considers attractive.

HSBC Holdings (HBC; S&P investment rank 3 STARS, hold)) moved to No. 2
among the large banks, from No. 7 a year earlier. Citigroup (C; 5 STARS, strong
buy), a multinational with scale and size but limited exposure to India, dropped to the
sixth slot, from its No. 2 showing a year earlier.

"India is a bastion of growth where financial-services firms are looking to leverage

and allocate capital," says U.S.-based S&P equity analyst Mark Hebeka, noting he
expects expansion in dynamic emerging markets in general in 2006 and beyond. "We
view the larger firms as having an advantage due to their ability to invest more capital
and sustain longer periods of building," Hebeka explains. "We view their diverse
product offerings and the many relationships that most currently have as competitive
advantages as well."

Hebeka views the rapid development of businesses in India as offering strong

potential for commercial lending, as well as a large retail base with growing wealth
and buying power. Some banks can't expand fast enough. JPMorgan, which admitted
it was strapped for human resources in India, said it plans to expand in India by hiring
4,500 employees on the subcontinent over the next two years.

Half of India's population of roughly 1.2 billion is under the age of 25. So for at least
the next 20 years, India will have a growing population of people in their prime
working years -- unlike emerging-market rival, China, which has a rapidly aging
population. Many businesses appear likely to benefit from the boom, including
financial services. There were close to 300 foreign, public-sector, and regional banks
-- up from about 60 in 1997 -- doing business in India last year. Not surprisingly, it
was a year in which total bank loans alone grew about 30%, and consumer lending
grew 8%.

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India's low interest-rate environment is spurring a borrowing boom among the nation's
consumers. As a result, Indians are buying homes, cars, and other products at rates
never before seen on the subcontinent. India, which bills itself as the world's fastest-
growing democracy, has a growing consumer base -- the latest estimates place its
middle class between 250 million and 300 million strong. That's an eye-catching
number for growth-minded global banks.

There's still room for Indian consumers to increase their debt load, according to a
2004 report by Merrill Lynch . Indian household debt was a mere 4% of gross
domestic product -- the lowest among a group of south Asian countries including
South Korea and Taiwan, each of which reported household debt exceeding 60% of
GDP, and Malaysia and Thailand, with 25% each.

What's evident is that India, along with China and the rest of South Asia, is one of the
fastest-growing consumer bases for credit-, debit-, and cash-card services from Visa,
MasterCard, and American Express (AXP; 3 STARS). The $150 billion credit-card
market in Asia is projected by Boston Consulting Group to grow at about 15% to 20%
yearly for the next three years.

Private Banking boom: However, the size of the Indian credit-card market is
estimated to be about $4 billion and growing at 35% yearly, according to GE Money,
which was formed when GE Capital, the finance arm of conglomerate General
Electric (GE; 3 STARS) partnered in 1998 with State Bank of India, provider of a
quarter of all loans in India. GE Money states that it has experienced double-digit
growth since then. In January, the company reached a big milestone, signing its 2-
millionth cardholder.

GE's goal is to have $10 billion in consumer-finance assets on the Asian subcontinent
by 2010. In August, 2005, Vishal Pandit, the head of GE Money, claimed to have the
equivalent of $1.3 billion in Indian consumer-finance assets. He said he also plans to
make acquisitions to increase growth after 2009, when foreign-investment rules for
banking investment are scheduled to be relaxed.

India is the second-largest new-growth market for private banking -- after China -- in
terms of the number of wealthy households

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 MAJOR PLAYERS

STANDARD CHARTERED BANK

Standard Chartered Bank in India is the largest international banking Group in India.
The Combined Balance Sheet (as at March 31, 2001) of SCB India is Rs. 24515.9 cr.
The key businesses of Standard Chartered Bank in India include consumer banking -
primarily credit cards, mortgages, personal loans and wealth management - and -
wholesale banking, where the Bank specializes in the provision of cash management,
trade, finance, treasury and custody services.

BANK OF INDIA

Bank of India, founded on 7th September in the year 1906 was nationalized along
with 13 other banks in July 1969. Then its paid-up capital was Rs.50 lakh with only
50 employees and the only office in Mumbai.

Today Bank of India has been spread with 2594 branches including 93 specialized
branches controlled by 48 Zonal Offices.

Bank of India was the first fully computerized branch among the nationalized banks
with ATM facility at the Mahalaxmi Branch, Mumbai is the year 1989.

It is an association that has blossomed into a joint venture with BSE, called the BOI
Shareholding Ltd. to extend depository services to the stock broking community.

CANARA BANK IN INDIA

Canara Bank in India has a history of nine decades and is the largest public sector
banks in India. Canara Bank India has a deposit advance base of Rs.640 bn and Rs
332 bn (figure in the year 2002).

Canara Bank of India has a total of 47,843 employees and is spread with 2409
branches throughout the country. Canara Bank India has an exposure to petroleum,
engineering, infrastructure, factoring, investment management, venture capital, home
finance and securities.

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CENTRAL BANK

Central Bank of India (CBI) was established in 1911. This was the first Indian
commercial bank to be wholly owned and managed by Indians. The establishment of
the Central Bank of India was the ultimate realization of the dream of Sir Koradji
Pochkhanawala, founder of the Bank. Sir Pherozesha Mehta was the first Chairman of
a truly 'Swadeshi Bank'.

Among the Public Sector Banks, Central Bank of India can be truly described as an
All India Bank, due to distribution of its large network in 27 out of 28 States as also in
4 out of 7 Union Territories in India. Central Bank of India holds a very prominent
place among the Public Sector Banks on account of its network of 3146 branches and
275 extension counters at various centers throughout the length and breadth of the
country.

In view of its large network of branches as also number of savings and other
innovative services offered, the total customer base of the Bank at over 25 million
account holders is one of the largest in the banking industry.

ALLAHABAD BANK

Allahabad Bank is the oldest public sector bank in India with branches all over India.
Allahabad Bank India was established in the year 1865. Apart from serving to
domestic customers, Allahabad Bank NRI section also provides a wide range of
attractive Deposit Schemes to Non-Resident Indians.

Allahabad Bank has more than 1800 branches all over the country. In Uttar Pradesh
alone Allahabad Bank has approximately 600 branches and approximately 500 in
West Bengal. Allahabad Bank also has 7 days banking branches. They are as under:

UTI BANK

UTI Bank India, the first bank to begin operations as new private banks in 1994 after
the Government of India allowed new private banks to be established. UTI Bank was

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jointly promoted by the Administrator of the specified undertaking of the Unit Trust
of India (UTI-I), Life Insurance Corporation of India (LIC) and General Insurance
Corporation Ltd. Also with associates viz. National Insurance Company Ltd., The
New India Assurance Company, The Oriental Insurance Corporation and United
Insurance Company Ltd.

AMERICAN EXPRESS BANK

American Express India was established in 1921 providing high quality travel and
financial services. American Express in India is the largest company to have wide
network of travel locations in the country.

American Express Card division also tops upon other credit card issuer. American
Express Credit Cards in India is of basic two varieties, namely International Gold
Amex Card and International Green Amx Card.

CITIBANK

Citibank India is since 1902. Citibank India was the first bank to lend actively to
individuals. Citibank is the largest Consumer Finance lender in the world.

With Citibank online banking one can enjoy the following services from anywhere in
the world. For Citibank online banking one has to log on to www.citibank.co.in

• Redeem your rewards points

• Pay Bills Online
• Send Demand Draft anywhere in India
• Get statements by e-mail
• Register for Instant alerts
• Mobile Banking
• Citibank online Security Tips

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CORPORATION BANK

Since 1906, Corporation Bank in India is dedicated to give vast, varied and versatile
services to the nation with a comfort and zeal stealing the common say in the Banking
Sector, "The Bank of Pride". Close to hit the mark '100 years at your service',
Corporation Bank India has regularly tried to keep a personal touch with customers.

Corporation Bank India is one of the well-run Public Sector Bank in India. The key
factor of the success of Corporation Bank India is its young and dynamic manpower
which gives service with efficiency and dedication. Even in this era of technology and
stiff competition, Corp Bank is rapidly growing confidence among its clients.

HSBC BANK

HSBC Bank is the largest bank in Hong Kong and second largest group in the world
after Citicorp. Before moving its headquarter to London in 1990, it was headquartered
in Hong Kong. HSBC India is having branches in Ahmedabad, Bangalore, Chennai,
Chandigarh, Coimbatore, Gurgaon, Hyderabad, Jaipur, Kochi, Kolkata, Ludhiana,
Mumbai, New Delhi, Noida, Pune, Thane, Trivandrum and Visakhapatnam.

HSBC NRI centres are located in Asia-Pacific, the Middle East, Europe and North
America. HSBC NRI centre provide full range of personal and private banking
products in India and overseas. HSBC Internet banking adds to the services of HSBC
India abroad.

HSBC India, along with HSBC Investment product and HSBC Insurance, it offers
international Gold Card and Classic Credit Cards from VISA and MasterCard and
debit cards from Visa. HSBC in India gives 24 hour banking services, extensive
network of ATMs, integrated Call Centre and also HSBC e-banking.

ICICI BANK

ICICI Limited, was established in 1955 by the World Bank, the Government of India
and the Indian Industry, for the promotion of industrial development in India by

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giving project and corporate finance to the industries in India.

ICICI Bank has grown from a development bank to a financial conglomerate and has
become one of the largest public financial institutions in India. ICICI Bank has
financed all the major sectors of the economy, covering 6,848 companies and 16,851
projects. As of March 31, 2000, ICICI had disbursed a total of Rs. 1,13,070 crores,
since inception.

INDIANOVERSEAS BANK

Indian Overseas Bank (IOB) is a one of the major bank based in Chennai, with over
1,400 domestic branches and 6 branches abroad.

India Overseas Bank was established in 1937 to encourage overseas banking and
foreign exchange operations. The Indian Overseas Bank started simultaneously with
three branches. They are:

• Indian Overseas Bank Chennai

• Indian Overseas Bank Rangoon
• Indian Overseas Bank Singapore

Oriental Bank of Commerce India was established in the year 1943 on 19th February
in Lahore. After partition, Oriental Bank of Commerce shifted its Registered Office
from Lahore to Amritsar paying every rupee to its departing customers.

ORIENTAL BANK OF COMMERCE

Oriental Bank of Commerce was nationalised on 15th April in 1980. Then OBC bank
had 307 branches with Rs. 282.61 crores as deposits and as advance Rs. 152.69. The
National Institute of Bank Management (NIBM), rated OBC Bank as "Customer
Friendly" Bank.

Punjab National Bank with 4497 offices and the largest nationalised bank is serving
its 3.5 crore customers with the following wide variety of banking services:

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 • Corporate banking
• Personal banking
• Industrial finance
• Agricultural finance
• Financing of trade
• International banking

PUNJAB NATIONAL BANK

Punjab National Bank has been ranked 38th amongst top 500 companies by The
Economic Times. PNB has earned 9th position among top 50 trusted brands in India.

Punjab National Bank India maintains relationship with more than 200 leading
international banks world wide. PNB India has Rupee Drawing Arrangements with 15
exchange companies in UAE and 1 in Singapore.

STATE BANK OF INDIA

State Bank of India (SBI) was nationalised in July 1955 under the SBI Act of 1955.
Seven banks of SBI formed subsidiary and was nationalised on 19th July, 1960.

The State Bank of India is India's largest commercial bank and is ranked one of the
top five banks worldwide. It serves 90 million customers through a network of 9,000
branches and it offers -- either directly or through subsidiaries -- a wide range of
banking services.

IDBI BANK

Industrial Development Bank of India (IDBI) is the tength largest bank in the world in
terms of development. The National Stock Exchange (NSE), The National Securities
Depository Services Ltd. (NSDL), Stock Holding Corporation of India (SHCIL) are
some of the institutions which has been built by IDBI. IDBI is a strategic investor in a
plethora of institutions which have revolutionized the Indian Financial Markets.

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IDBI Bank, promoted by IDBI Group started in November 1995 with a branch at
Indore with an equity capital base of Rs. 1000 million.

ANDHRA BANK

Andhra Bank was founded by Dr.Bhogaraju Pattabhi Sitaramayya. The Bank was
registered on 20th November 1923 and commenced business on 28th November 1923
with a paid up capital of Rs 1.00 lakh and an authorised capital of Rs 10.00 lakhs.

The Bank has entered into ATM sharing arrangements with IDBI, UTI Bank, SBI,
Indian Bank, HDFC Bank, thus offering over 9,000 ATMs spread across the country
for use by Customers. Instant Funds Transfer Facility is provided through 566
Branches.

UNITED BANK OF INDIA

Headquartered in Calcutta, United Bank of India continues to grow from strength to

strength, adding not only to profits but also to Capacities to undertake new business.
Total business increased by 19.3% from Rs 31,179 crore to Rs 37,187 crore.

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 INDUSTRY ANALYSIS

Currently 2005 ,overall banking in India is considered as fairly mature in terms of

supply, product range and reach-even though reach in rural India still remains a
challenge for the private sector and foreign banks. Even in terms of quality of assets
and capital adequacy, Indian banks are considered to have clean, strong and
transparent balance sheets-as compared to other banks in comparable economies in its
region. The Reserve Bank of India is an autonomous body, with minimal pressure
from the government. The stated policy of the Bank on the Indian Rupee is to manage
volatility-without any stated exchange rate-and this has mostly been true.

With the growth in the Indian economy expected to be strong for quite some time-
especially in its services sector, the demand for banking services-especially retail
banking, mortgages and investment services are expected to be strong. M&As,
takeovers, asset sales and much more action (as it is unravelling in China) will happen
on this front in India.

Recently (March 2006), the Reserve Bank of India allowed Warburg Pincus to
increase its stake in Kotak Mahindra Bank (a private sector bank) to 10%. This is the
first time an investor has been allowed to hold more than 5% in a private sector bank
since the RBI announced norms in 2005 that any stake exceeding 5% in the private
sector banks would need to be vetted by them.

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 RESERVE BANK OF INDIA

ESTABLISHMENT

The Reserve Bank of India was established on April 1, 1935 in accordance with the
provisions of the Reserve Bank of India Act, 1934.

The Central Office of the Reserve Bank has been in Mumbai since inception. The
Central Office is where the Governor sits and is where policies are formulated.

Though originally privately owned, since nationalisation in 1949, the Reserve Bank is
fully owned by the Government of India.

MAIN FUNCTIONS

Monetary Authority:

• Formulates, implements and monitors the monetary policy.

• Objective: maintaining price stability and ensuring adequate flow of credit to
productive sectors.

Regulator and supervisor of the financial system:

• Prescribes broad parameters of banking operations within which the country's

banking and financial system functions.
• Objective: maintain public confidence in the system, protect depositors'
interest and provide cost-effective banking services to the public.

Manager of Foreign Exchange

• Manages the Foreign Exchange Management Act, 1999.

• Objective: to facilitate external trade and payment and promote orderly
development and maintenance of foreign exchange market in India.

Issuer of currency:

• Issues and exchanges or destroys currency and coins not fit for circulation.

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 • Objective: to give the public adequate quantity of supplies of currency notes
and coins and in good quality.

Developmental role

• Performs a wide range of promotional functions to support national objectives.

Related Functions

• Banker to the Government: performs merchant banking function for the

central and the state governments; also acts as their banker.
• Banker to banks: maintains banking accounts of all scheduled banks.

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 COMPANY OVERVIEW

HISTORY

The Housing Development Finance Corporation Limited (HDFC) was amongst the
first to receive an 'in principle' approval from the Reserve Bank of India (RBI) to set
up a bank in the private sector, as part of the RBI's liberalization of the Indian
Banking Industry in 1994. The bank was incorporated in August 1994 in the name of
'HDFC Bank Limited', with its registered office in Mumbai, India. HDFC Bank
commenced operations as a Scheduled Commercial Bank in January 1995.

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 core (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".

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DISTRIBUTION NETWORK

HDFC Bank is headquartered in Mumbai. The Bank at present has an enviable

network of over 531 branches spread over 228 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 centres where the NSE/BSE have a
strong and active member base.

The Bank also has a network of about over 1054 networked ATMs across these cities.
Moreover, HDFC Bank's ATM network can be accessed by all domestic and
international Visa/MasterCard, Visa Electron/Maestro, Plus/Cirrus and American
Express Credit/Charge cardholders.

MANAGEMENT

Mr. Jagdish Capoor took over as the bank's Chairman in July 2001. Prior to this, Mr.
Capoor was a Deputy Governor of the Reserve Bank of India.

The Managing Director, Mr. Aditya Puri, has been a professional banker for over 25
years, and before joining HDFC Bank in 1994 was heading Citibank's operations in
Malaysia.

The Bank's Board of Directors is composed of eminent individuals with a wealth of

experience in public policy, administration, industry and commercial banking. Senior
executives representing HDFC are also on the Board.

Senior banking professionals with substantial experience in India and abroad head
various businesses and functions and report to the Managing Director. Given the
professional expertise of the management team and the overall focus on recruiting and
retaining the best talent in the industry, the bank believes that its people are a
significant competitive strength.

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BUSINESSES

HDFC Bank offers a wide range of commercial and transactional banking services
and treasury products to wholesale and retail customers. The bank has three key
business segments:

Wholesale Banking Services

The Bank's target market ranges from large, blue-chip manufacturing companies in
the Indian corporate to small & mid-sized corporates 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 corporates including multinationals, companies from the
domestic business houses and prime public sector companies. It is recognised as a
leading provider of cash management and transactional banking solutions to corporate
customers, mutual funds, stock exchange members and banks.

Retail Banking Services

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

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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 MasterCard Maestro debit card
as well. The Bank launched its credit card business in late 2001. By September 30,
2005, the bank had a total card base (debit and credit cards) of 5.2 million cards. The
Bank is also one of the leading players in the "merchant acquiring" business with over
50,000 Point-of-sale (POS) terminals for debit / credit cards acceptance at merchant
establishments.

Treasury

Within this business, the bank has three main product areas - Foreign Exchange and
Derivatives, Local Currency Money Market & Debt Securities, and Equities. With the
liberalization of the financial markets in India, corporates 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.

CREDIT RATING

HDFC Bank has its deposit programmes rated by two rating agencies - Credit
Analysis & Research Limited. (CARE) and Fitch Ratings India Private Limited. The
Bank's Fixed Deposit programme has been rated 'CARE AAA (FD)' [Triple A] by
CARE, which represents instruments considered to be "of the best quality, carrying
negligible investment risk". CARE has also rated the Bank's Certificate of Deposit
(CD) programme "PR 1+" which represents "superior capacity for repayment of short
term promissory obligations". Fitch Ratings India Pvt. Ltd. (100% subsidiary of Fitch
Inc.) has assigned the "tAAA (ind)" rating to the Bank's deposit programme, with the
outlook on the rating as "stable". This rating indicates "highest credit quality" where

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"protection factors are very high". HDFC Bank also has its long term unsecured,
subordinated (Tier II) Bonds of Rs.4 billion rated by CARE and Fitch Ratings India
Private Limited. CARE has assigned the rating of "CARE AAA" for the Tier II Bonds
while Fitch Ratings India Pvt. Ltd. has assigned the rating "AAA(ind)" with the
outlook on the rating as "stable". In each of the cases referred to above, the ratings
awarded were the highest assigned by the rating agency for those instruments.

Corporate Governance Rating

The bank was one of the first four companies, which subjected itself to a Corporate
Governance and Value Creation (GVC) rating by the rating agency, The Credit Rating
Information Services of India Limited (CRISIL). The rating provides an independent
assessment of an entity's current performance and an expectation on its "balanced
value creation and corporate governance practices" in future. The bank has been
assigned a 'CRISIL GVC Level 1' rating which indicates that the bank's capability
with respect to wealth creation for all its stakeholders while adopting sound corporate
governance practices is the highest.

AWARDS

HDFC Bank began operations in 1995 with a simple mission: to be a "World-class

Indian Bank". We realised 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.

It is extremely gratifying that our efforts towards providing customer convenience

have been appreciated both nationally and internationally.

2005

Asia money Awards

“Best Domestic Commercial Bank”
Asia money Awards
“Best Cash Management Bank - India .”

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The Asian Banker Excellence
“Retail Banking Risk Management Award in India for 2004”
Hong Kong-based Finance Asia magazine
“Best Bank – India”
The Asian Banker Excellence
“Retail Banking Risk Management Award for 2004”
Hong Kong-based Finance Asia magazine
"Best Bank in India"
Asia money Awards
“Best Domestic Commercial Bank Best Cash Management Bank - India.”
Economic Times Awards
"Company of the Year" Award for Corporate Excellence 2004-05.

Asia money also named the bank:s

• Best Local Cash Management Bank in India 2004 - US$11-100m

• Best Local Cash Management Bank in India 2004 - >US$501m
• Best Local Cash Management Bank in India 1989-2004 (poll of polls)
• Best Overall Domestic Trade Finance Services in India 2004
• Most Improved Company for Best Management Practices in India 2004

The Business Today-KPMG Survey published in the leading Indian business

magazine Business Today has named HDFC Bank "Best Bank in India" for the third
consecutive year in 2005.

The Asset magazine named HDFC Bank "Best Cash Management Bank" and "Best
Trade Finance Bank" in India, in 2006.

HDFC Bank named the "Most Customer Responsive Company - Banking and
Financial Services in The Economic Times - Avaya Global Connect Customer
Responsiveness Awards 2005"

HDFC Bank has been named Best Domestic Bank in India in The Asset Triple A
Country Awards 2005.

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HDFC Bank has been named Best Domestic Bank in India Region in The Asset Triple
A Country Awards 2004 and 2003.

In 2004, HDFC Bank was selected by Business World as "One of India's Most
Respected Companies" as part of The Business World Most Respected Company
Awards 2004.

In 2004, Forbes Global again named us in its listing of Best Under a Billion, 100 Best
Smaller Size Enterprises in Asia/Pacific and Europe, in its November 1, 2004 issue.

In 2004, HDFC Bank won the award for "Operational Excellence in Retail Financial
Services" - India as part of the Asian Banker Awards 2003.

In 2003, Forbes Global named us in its ranking of "Best Under a Billion, 200 Best
Small Companies for 2003".

Leading business newspaper The Financial Express named HDFC Bank the "Best
New Private Sector Bank 2003" in the FE-Ernst & Young Best Banks Survey 2003.

Leading Personal Finance Magazine in India Outlook Money named HDFC Bank the
"Best Bank in the Private Sector" for the year 2003.

Leading Indian business magazine Business Today in a survey rated us "Best Bank in
India" 2003, and "Best Private Sector Bank" in India in 1999.

NASSCOM and economictimes.com have named us the 'Best IT User in Banking' at

the IT Users Awards 2003.

CORPORATE GOVERNANCE

HDFC Bank recognizes the importance of good corporate governance, which is

generally accepted as a key factor in attaining fairness for all stakeholders and
achieving organizational efficiency. This Corporate Governance Policy, therefore, is
established to provide a direction and framework for managing and monitoring the
bank in accordance with the principles of good corporate governance.

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The bank believes in adopting and adhering to the most superior corporate governance
practices and continuously benchmarking itself against each such practice in the
industry. The bank understands and respects its fiduciary role and responsibility to
shareholders and continually strives to fulfill their expectations. We strongly believe
that the best board practices, transparent disclosures and shareholder empowerment
are necessary for creating shareholder value.

The bank has infused the philosophy of corporate governance in all its activities. The
philosophy on corporate governance is an important tool for shareholder protection
and maximization of their long term values. The cardinal principles such as
independence, accountability, responsibility, transparency, fair and timely disclosures,
credibility etc. serve as the means for implementing the philosophy of corporate
governance in letter and in spirit.

BUSINESS UPDATE

As of December 31, 2005, the Bank’s distribution network was at 535 branches and
1326 ATMs in 228 cities from 425 branches and 1069 ATMs in 195 cities as of
December 31, 2004. As of December 2005, the number of debit cards issued by the
bank touched 3.7 million while credit cards issued crossed the 2 million mark.
Portfolio quality as of December 31, 2005 remained healthy with net non-performing
assets at 0.4% of net advances as against 0.3% of net advances as of December 31,
2004. In September 2005, the Bank had filed a shelf registration for raising long-term,
unsecured, subordinated bonds qualifying as Tier II capital upto Rs.1000 crores and
had got a AAA rating for such bonds. During the quarter ended December 31, 2005,
the Bank raised Rs. 414 crores as Tier II capital in the form of such subordinated
bonds having a maturity of around 9.5 years and at an interest rate of 7.5% per
annum. As a result, the Bank’s Capital Adequacy Ratio (CAR) was at 10.3% as of
December 31, 2005.

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 PRODUCTS

Some of the important products of the HDFC Bank are:

SAVINGS ACCOUNTS

These Accounts are primarily meant to inculcate a sense of saving for the future,
accumulating funds over a period of time. Whatever your occupation, we are
confident that you will find the perfect banking solution. Open an account in your
name or register for one jointly with a family member today.

CURRENT ACCOUNTS

Now, with an HDFC Bank Current Account, experience the freedom of multi-city
banking! You can have the power of multi-location access to your account from any
of our 500 branches in 220 cities. Not only that, you can do most of your banking
transactions from the comfort of your office or home without stepping out.

We make it our business, to help you with your business, by offering you a Current
Account with all the benefits you need, to stay ahead of your competition.

At HDFC Bank, we understand that running a business requires time and money, also
that your business needs are constantly evolving. That's where we come in. We
provide you with a choice of Current Account options to exclusively suit your
business - whatever the size or scope.

Open an HDFC Bank Current Account & control your business operations centrally.

Choose the product most suitable for you:

Download a Product comparison document (Excel format)

FIXED DEPOSITS

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Long-term investments form the chunk of everybody’s future plans. An alternative to
simply applying for loans, fixed deposits allow you to borrow from your own funds
for a limited period, thus fulfilling your needs as well as keeping your savings secure.

DEMAT

The perfect complement to your equity investments, our Demat account comes with
Zero account opening fees and low maintenance costs.

As per the finance (No 2) Act 2004, all fees & charges mentioned in the Tarriffs,
Charges or Fees Brochures will attract Service Tax @10% & Education Cess @2% of
the service tax amount effective 10th September 2004. The same will appear as
separate debits in the statements.

PERSONAL LOANS

Borrow up to Rs 10,00,000 for any purpose depending on your requirements.

• Flexible Repayment options, ranging from 12 to 48 months.

• Repay with easy EMIs.
• One of the lowest interest rates.

• Hassle free loans - No guarantor/security/collateral required.

• Speedy loan approval.
• Convenience of service at your doorstep.
• Customer privileges

If you are an HDFC Bank account holder, we have special rates for you.

If you are an existing Auto Loan customer with a clear repayment of 12 months or
more from any of our approved financiers or us, you can get a hassle free personal
loan (without income documentation).

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 If you are an existing HDFC Bank Personal Loan customer with a clear repayment
of 12 months or more, we can Top-Up your personal loan.

HOME LOANS

a. Home Loan - We offer home loans for individuals to purchase (fresh / resale)
or construct houses. Home loans can be applied for jointly. HDFC finances up
to 90% of the cost of the property (Agreement value + Stamp duty +
Registration charges).

b. Home Improvement Loan - HIL facilitates internal and external repairs and
other structural improvements like painting, waterproofing, plumbing and
electric works, tiling and flooring, grills and aluminium windows. HDFC
finances up to 85% of the cost of renovation (100% for existing
customers).

c. Home Extension Loan - HEL facilitates the extension of an existing dwelling

unit. All the terms are the same as applicable to Home Loan.

d. Land Purchase Loan - Be it land for a dream house, or just an investment for
the future, HDFC Land Purchase Loan is a convenient loan facility to
purchase land. HDFC finances up to 70% of the cost of the land (Conditions
Apply). Repayment of the loan can be done over a maximum period of 10
years.

e. Choose from Fixed Rate or Floating Rate with options to structure your
loan as Partly Fixed or Partly Floating.

f. Flexible repayment options to suit your individual needs.

g. E-age saving account - As a special offer you can open an HDFC Bank E-
Age Savings Account at a lower Average Quarterly Balance of Rs. 2,500,

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 instead of the regular Rs. 5,000. You can avail of benefits like free Phone
Banking, Free Net Banking, 24-Hour ATM access, Inter-branch/Inter-city
banking, a personalized cheque book and much more.

h. Free International credit card - Enjoy a waiver on the fees for the first year
on International Credit Card from HDFC Bank. The credit card is accepted
world-wide and comes with the most comprehensive insurance coverage. You
can even withdraw 30% of your entire credit limit through the ATM.

i. Automated Repayment of Home loan EMI - You can give us standing

instructions to repay your Home Loan EMIs directly from your HDFC Bank
Savings Account, thus, saving you the trouble of procuring, signing and
tracking post-dated cheques.

j. Customer privileges - If you are an existing HDFC Bank Home Loan

customer, you can avail of other loans (such as Personal Loans, Car Loans,
Two-wheeler Loans and Loan against securities) at lower interest rates.
Apply Now
CAR LOANS

• Covers the widest range of cars and multi-utility vehicles in India.

• Borrow up to 90% of the car's invoice value.
• Flexible repayment options, ranging from 12 to 84 months.
• Borrow up to 3 times your annual salary (for salaried professionals) and 6
times your annual income (for self employed professionals)*.
• Speedy processing - within 48 hours.
• Repay with easy EMIs.
• Attractive car loan plans - To Fastrack your loan, just choose the plan that
is right for you.
• Among the lowest interest rates.
• Hassle-free documentation.
• Prepayment option - prepay the loan anytime after 6 months at a small
charge.

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Customer Privileges
• If you are an HDFC Bank account holder, we have special rates for you.

• If you have had a Preferred Account or a Corporate Salary Account with

HDFC Bank for more than six months, you can get fast approvals on your
loans with minimal documentation.

• If you are an existing HDFC Bank Car Loan customer with a clear
repayment of 12 months or more we can Top-Up your car loan at a reduced
interest rate.

VALUE PLUS CREDIT CARD

Cash Back Of Up to 5%
Get up to 5% of your spends as cash back to your Credit Card Statement.

Hospitals, Medical Stores and Railways 5 %

Groceries, Supermarket, Apparels and Utility Payments 250%
All other Category Spends 1.25%
Applicable on utility payments through SmartPay

Children Future Secured

The Happiness and the Well-being of your children is your most important
responsibility. HDFC Bank values your Commitment and has designed a
comprehensive insurance package of Rs1 Lakh enabling your children to continue
their education in the unfortunate event of loss of your life due to accident.

House hold Insurance

HDFC Bank Value Plus Credit Card also comes with a comprehensive House Hold
Insurance Policy that covers damage caused to household contents by fire and
burglary up to a value of Rs 1 Lakh.

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Worldwide acceptance
The HDFC Bank International Value Plus Credit Card is accepted at over 23 million
Merchant Establishments around the world, including 110,000 Merchant
Establishments in India.

Cash Advance
Just step into any one of our ATMs or VISA Member ATMs and withdraw cash up to
30% of your credit limit at a very nominal charge (Please refer to the Schedule of
charges).

Revolving credit facility

This feature allows you to pay a minimum amount, which is 5% (subject to a
minimum amount of Rs.200) of your total bill amount or any higher amount
whichever is convenient for you. You can then carry forward the balance to a better
financial month, for which you pay a charge of 2.95% (2.75% for existing HDFC
Bank customers), per month.

Interest Free Credit Period

Free Credit Period of up to 50 days from the date of purchase (subject to the
submission of the charge by the Merchant). Subsequently, if you carry forward your
outstanding balance you just pay a nominal interest of 2.95% (2.75% for existing
HDFC Bank customers) per month.

Balance Transfer Option

If you have any other credit card and wish to transfer their balances to your HDFC
Bank International Value Plus Card, those balances will attract a nominal charge for a
period of six months from the transfer date. The outstanding amount transferred can
be up to 50% of your HDFC Bank International Value Plus Card Credit Limit.

Comprehensive Insurance
With the HDFC Bank Value Plus Credit Card comes an unmatched feeling of
security, its carefully crafted insurance package offers comprehensive coverage
against the various risks like accidental death, Hospitalization expenses due to an
accident

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Accidental Death
In case of death in an air accident your nominated next of kin will receive a
compensation of Rs.2,00,000. And in case of death in a rail or road accident, your
nominated next of kin will receive a compensation of Rs.1,00,000.

Lost Card Liability

If you happen to lose your Card, don't panic. The first thing to do is Call us at any of
our 24-Hour Customer Call Centers and report the loss. Please make sure that you file
a Lost report for the Lost/ Stolen Card at the nearest police station and send us the
acknowledgement copy.

DEBIT CARDS

• Daily Limits: Rs. 25000 at ATM's and Rs. 50000 at merchant establishments

• Cash Back: For every Rs. 100 that you will spend, you will receive Re. 1 as
cash back. This cash back is valid on all purchases made through the card, at
all times of the year.
• 0 % petrol surcharge at select Petrol pumps* : As a Gold Card holder, no
surcharge would be levied on you at the petrol pumps.

• Zero Liability of fraudulent usage on lost and stolen cards* : If it's not your
purchase you don't have to pay for it!! Your Debit Card is safer than ever!
• In case you lose your Debit Card, call us on our phonebanking numbers or
visit the nearest HDFC Bank branch. Click here for more details.

• Now get an Alert on your mobile phone or email for every purchase
transaction done using your Debit Card at a merchant outlet !! All you need to
do is register for Insta Alerts!

• Insurance cover* : The following are included in the insurance covers:

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 o Death Cover by Air / Road - Sum assured Rs. 5,00,000
o Fire & Burglary for the items purchased under Debit Card (upto 6
months) - Sum assured Rs. 50,000
o Loss of Baggage Insurance - Sum assured Rs. 20,000

BONDS
Just as people need money, so do companies and governments. A company needs
funds to expand into new markets, while governments need money for everything
from infrastructure to social programs. The problem large organizations run into is
that they typically need far more money than the average bank can provide. The
solution is to raise money by issuing bonds (or other debt instruments) to a public
market. Thousands of investors then each lend a portion of the capital needed. A bond
is nothing more than a loan for which you are the lender. The organization that sells a
bond is known as the issuer. You can think of a bond as an IOU given by a borrower
(the issuer) to a lender (the investor).

For example, say an investor buys a bond with a face value of Rs 1,000, a coupon of
8%, and a maturity of 10 years. This means the investor receives a total of Rs 80 (Rs
1,000 * 8%) of interest per year for the next 10 years. Actually, because most bonds
pay interest semi-annually, the investor receives two payments of Rs 40 a year for 10
years. When the bond matures after a decade, the investor gets your Rs 1,000 back.

The different types of bonds include government securities, corporate bonds,

commercial paper, treasury bills, strips etc. These bonds are either fixed interest
bonds or floating rate bonds. In fixed interest bonds, the interest component remains
the same throughout the tenure of the security. Say a 10-year bond issued today bears
8% interest. Even if 5 years hence, the interest rate in the economy goes down to 5%,
this 8% bond will continue to earn the investor 8% interest. In a floating rate bond, the
interest rate varies depending on the interest rate of a security that the bond chooses to
benchmark its interest rate to.

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MARKETING STATEGIES OF HDFC BANK

Indian banking, a conservative club with exclusive membership, was forced to open
its doors to some new members in the id-’90s. These new members—the private
banks, helped by the winds of liberalization—changed the face of banking as we
knew it, forever.
Earlier, the banking sector had just two types of players. On the one hand, there were
the foreign banks, which were choosy and decided who to accept as a customer. At
the other extreme were the public sector banks which catered to the masses but which
were seriously found wanting in terms of products and services. Then there were the
old private sector banks and co-operative banks, but they were mainly community-
oriented. A large number of middle-class customers, though a tolerant lot, were
looking for a change. This was the scenario when the new private banks stepped into
the picture in 1995, HDFC Bank being the first.

MARKET ANALYSIS

When HDFC Bank entered the scene, market shares were skewed heavily in favour of
public sector banks. They held 86.19 per cent of the deposits, with the foreign banks
holding
7.14 per cent and the old private banks holding 6.67 per cent share.
The public sector banks did not believe in pursuing customers, preferring instead to
wait for them to come to the banks. Given the width of distribution, most customers
had virtually no choice. Foreign banks, meanwhile, concentrated primarily on the
large metros and the immediate vicinity of their branches. While most foreign banks
were happy waiting for their customers to come to the branches, some American
banks had begun developing Direct Sales Agents to go to the customer’s doorstep and
solicit deposits.

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EVOLVING INDIAN CUSTOMER

While the banking industry was in a state of flux, the customers were evolving too.
With liberalisation and the entry of international brands into the country, customer
expectations had begun to change in terms of quality and service. The media boom
and the advent of several satellite channels changed attitudes further. Indians had
begun to travel internationally either on work or for leisure and had become more
discerning. No longer were they willing to wait in long queues or tolerate
condescending behaviour. This change began to reflect itself in terms of expectations
from banks too. Players would be benchmarked against global standards, while
services would be compared to the best of other industries as well. There seemed to be
an opportunity for a bank that served customers well at a reasonable price.

CONSUMER BEHAVIOUR ANALYSIS

Research conducted amongst customers of foreign and public sector banks revealed
the following:

Customers perceived banks to be trustees of the money they had deposited with them.
However, when they dealt with public sector banks, they felt the bank staff behaved
like they were doing them a favour. On the other extreme, the foreign banks seemed
to emerge as fair-weather friends who dealt with them with clinical efficiency. Actual
consumer statements of dissatisfaction with both segments are detailed below:

Reasons for dissatisfaction with public sector banks:

• I cannot stand the rush and noise. It looks like a railway platform.
• Nobody cares whether a customer’s work is done or not.
• The whole attitude is that of a government employee.
• The whole bank is a mess with people shouting and files all over.

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 Influencing factors for relationships

How are relationships built? REPSTM Intensity of relationships

Interactions that lead to bonding

• Their standard is to give cash in five minutes. It always takes 30 minutes.

• They do not treat you as a customer, more like a beggar.

Reasons for dissatisfaction with foreign banks:

• They suddenly raised the minimum balance and asked me to either

increase the balance or go.
• The whole atmosphere is artificial.
• They look for posh people.
• They charge you for everything.
• They talk to you nicely but you know that it is unnatural.
• They are trained. Their smiles are synthetic.

Consumer perception of the HDFC Brand

The favourable image that the parent company has amongst the burgeoning middle
class, having disbursed housing loans for over two decades, also helped greatly.

Associations with HDFC

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 • Consumers connected emotionally with the brand, as it had helped them buy
homes
• While they had lent money, they treated consumers with grace, trust and
professional service

HDFC Bank could ride on this image

The Opportunity:
In the polarised banking scenario, with a large unfulfilled need gap, a bank that
offered the best of both worlds had a ready and waiting market.

ACQUISITION STRATEGIES

An effective Acquisition Strategy is based on acquiring profitable customers at a low

cost and is based on an effective business plan that covers a host of activities:

 Customer segmentation as an Acquisition Strategy

Research revealed that there were basically two types of customers: those who were
willing to pay for service and those who weren’t. These customers lay in two buckets,
either with public sector banks or foreign banks . What was revealing was that there
were several customers who were willing to pay for service but currently banked with
public sector banks, as they had no choice. This was the market that appealed to
HDFC Bank and was consciously targeted for conversion with success. Those
customers who were unwilling to pay for service with public sector banks and those
who associated with foreign banks for the status attached to them were not targeted as
it would have been a waste of resources.

 Value proposition as an Acquisition Strategy

Addressing the need gap, HDFC Bank decided to offer ‘international levels of service
at a reasonable price’. This proposition was relevant to a vast and statistically
significant middle-class market. Given the fact that this was what the market was

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waiting for, it met with great success and helped make acquisition an easier task, as it
addressed consumer needs.

 Pricing as an Acquisition Strategy

Consumers. One could choose between a foreign bank with an opening balance of Rs
10,000 and upwards or a public sector bank at Rs 500, with polarised levels of
service. HDFC Bank decided to offer international levels of service and technology at
Rs 5,000, thus suddenly growing the market as a huge chunk of public sector bank
customers who were willing to pay for service found an alternative.

 Distribution as an Acquisition Strategy

It is also important to know where your most important markets are, and thus focus on
those for best results. RBI data (July 2000), for example, shows that the top 10 cities
account for 38 per cent of the all-India market in deposits. It therefore enables us to
concentrate on getting maximum market share in those markets by offering a wide
range of products and services. Once the top ten centres were covered, focus was
shifted to the next 20 cities. This focus on the top 30 cities covered 49 per cent of the
deposit market.

HDFC bank also consciously decided to have a ‘Centralised Processing Unit (CPU)’
that took care of all back-office functions and thus left branches to concentrate on
selling. This allowed the bank to set up smaller branches at a lower cost

 Technology as an Acquisition Strategy

‘Harnessing enabling technology to provide convenience and

quality service through multiple channels at value for money price points’ has been
the bank’s mission from inception. To this end the bank invested in open systems and
a scalable architecture that allowed it to ramp up easily and handle the rapidly
growing volume of customers, apart from reducing costs.

 Product range as an Acquisition Strategy

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A complete range of products, from a basic savings account to value-added services,
loans, NRI and depository services, enables the bank to straddle the full product
spectrum that fulfills any financial need. Thus we provide a customer the choice to
start a relationship with several options.

Products Value-added services:

Savings Accounts Internet Banking

Current Accounts Phone Banking, Mobile Banking, ATMs

Loans cars, Personal, LAS

Demat International Debit Card

NRI Services Bill Payment through channels

 Choice of Channels for servicing as an Acquisition Strategy

HDFC Bank offers multiple channels to customers to access their bank. There are
customers who prefer to deal with the bank by coming to branches...and we have 126
of them in 46 cities. There are others who prefer to bank from electronic channels like
ATMs, phone, Internet or even the mobile. This choice helps in acquiring customers
with varying behaviour patterns.

 Value propositions as an Acquisition Strategy

Different segments have different needs, and to offer a value proposition that appeals
to each of these segments, the bank has launched various products. Younger, tech-
savvy customers who are comfortable with direct banking channels like ATM, mobile
phone, Internet and debit card can open a Freedom Account with just Rs. 1,000.
Those who seek the familiarity of branch banking can avail of the basic savings
account at Rs. 5,000. While High Net worth Customers (HNW) are invited by the
bank to start a relationship through the Preferred Account when their relationship size
exceeds Rs. 5 lakh.

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  People as an Acquisition Strategy

While one may talk of technology, access channels and products, one simply cannot
ignore the human element. A human face and personal relationships are still
imperative for growth. Therefore, getting the right kind of people at the right positions
becomes crucial. At HDFC Bank, we have people who understand servicing, and our
front-office staff belongs to various service sectors such as travel, hospitality, credit
cards, etc.

 Data Management as an Acquisition Strategy

To enable the bank to understand the customer and consequently service him better,
we have invested huge amounts to implement a data-warehousing and data-mining
solution. This helps us analyze customer behaviour and thus develop relevant
products and services for prospects.

 Cross-Selling as an Acquisition Strategy

With a wide network and multiple channel access, customers deal with the bank in
several ways. Each interaction is an opportunity to cross-sell another product. After
all, historically it has always been cheaper to sell to an existing customer than to
acquire a new one. More banks are also leveraging routine communication such as
account statements to carry marketing messages and cross-sell products while driving
down communication costs.

 Micro Marketing as an Acquisition Strategy

Given the nature of the banking sector, customers always operate in a micro market
which revolves around their residence. As bank branches are spread across the city,
each branch vies for customers with competition in the vicinity. This also varies
within a city and most certainly between larger metros and smaller metros due to the

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difference in competitive presence, service benchmarks and customer expectations.
Acquiring customers requires different propositions and consequently every branch
needs to draw up its own marketing plan. There also needs to be tight co-ordination of
all sales channels — DSAs, phone, DM, Mass media etc, for greater efficiency and
optimum results.

 Alliances as an Acquisition Strategy

Several corporates focus on the same type of customer even though they may not be
competing in the same business category. For example an ISP, a car manufacturer, a
cellular services provider, or a computer seller may be targeting the same SEC A
customer. There is great merit in leveraging customer bases and making joint offers to
customer bases and acquiring them.

 Internet as an Acquisition Strategy

While one may talk of various strategies and products etc. one needs to be alert to the
changes that the Internet is bringing about. It has already challenged established
paradigms, and will also force us to change our thinking. The medium obviously
affords a wide reach and it is a boon, especially in reaching out to our NRI customers.
Also, the interactivity of the medium offers an opportunity to have a one-to-one
dialogue with the customers and get their feedback instantaneously. As and when web
cams become a norm in most homes, one can also envision a virtual relationship
manager (like Anna Nova the virtual web caster).

 Mergers an Acquisition Strategy

However, finally, organic growth has its limitations. Toady’s dynamic environment is
forcing organisations to grow and reap the benefits of economies of scale at speeds
hitherto unheard of. HDFC Bank set the tone for another first in the banking industry
by acquiring TimesBank and overnight grew its customer base by over 3 lakh in 38
branches. With this precedent, mergers might just become the norm for rapid growth
and customer acquisition in the banking industry.

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 RESEARCH METHODOLOGY

RESEARCH OBJECTIVES

• To find out how frequently does the respondent visits his/her bank.

• To find out whether the respondent prefers to deal with a nationalized bank or
a private bank.

• To find out how the respondents rank the banks of Rajkot city on the basis
their overall performance.

• To find out with which bank they deal with and the reasons for the same.

• To find out the level of satisfaction of the services provided by the banks.

• To find out the most frequently used services of the banks.

• To find out whether they would like to change the bank with which they
regularly deal with.

• To find out the reasons because of which the respondents would change the
bank with which they deal with regularly.

HYPOTHESIS

- 43 -
NULL HYPOTHESIS:
HDFC BANK is not the most preferred bank of Rajkot City.And most of the
customers are not highly satisfied with the services provided by the bank.

ALTERNATE HYPOTHESIS:
HDFC BANK is the most preferred bank of Rajkot City .And most of the customers
are highly satisfied with the services provided by the bank.

SCOPE OF THE STUDY

• This research can be used to find out which is the most preferred bank
amongst private & nationalized.

• This research is helpful to know the most frequently used services by the the
customers.

• This research is used to find out the reasons why they would like to change
their banks.

• This research would also help to find out what the respondents expect from
their bank.

• The banks could use this research to rectify their pitfalls tin order to satisfy
and hold on to their customers.

- 44 -
DATA COLLECTION

PRIMARY DATA:

As far as our research is concerned primary data is the main source of information. I
have collected the primary data through the use of questionnaires and some
information from the respondents.

MODE OF DATA COLLECTION:

Data was collected by face-to-face conversation with the respondents and was
recorded in the questionnaires.

SAMPLING DESIGN

SAMPLE SIZE:
The sample size taken is 50 .

SAMPLING TECHNIQUES
I have used the stratified random sampling technique.

SAMPLING UNIVERSE
I have taken Rajkot city as the sampling universe.

LIMITATIONS

- 45 -
• LIMITATION OF TIME
The duration for conducting the survey was very limited and even the people
who were interviewed personally had a very limited time to share their views ,
mainly because of March ending i.e. when research was conducted. So overall
information was collected in a limited time period.

• LIMITATION OF SAMPLE SIZE

The sample size selected was too less as compared to the actual target
audience.So it may not be enough representative of the population to a large
extent.

• LIMITATION OF MANPOWER
It is very difficult to cover this huge target audience by a single person.

• LIMITATION OF RESPONDENT INDISPOSITION

Respondents might not have given correct information or might have hesitated
in giving correct information. therefore, respondent’s indisposition is a major
limitation of any research.

• LIMITATION OF SKILL
Being a student, there is a lack of experience and skill of conducting a
marketing research.The expertise needed is not available to high extent at this
level.

- 46 -
DATA ANALYSIS AND INTERPRRETATION

SAMPLE DISTRIBUTION

10
8
6
4
2
0
employees

employees

professionls

students
businessman
Private

govt.

As stratified sampling has been used, 10 respondents from each

occupation category has been selected.

- 47 -
 FREQUENCY OF USING THE BANK BY THE RESPONDENTS

Frequency Private Government Businessman Professionals Students TOTAL

Employees Employees
Daily 0 0 5 0 0 5
Weekly 1 1 3 5 4 14
Fortnightly 1 3 1 2 3 10
Monthly 8 6 1 3 3 21

8
8
7
6
6
5 5
5
4
4
3 3 3 33 Daily
3
2 Weekly
2 11 1 1 1 Fortnightly
1 0 0 0
0 Monthly
0
businessman

students
employees

professionals
Employees

govt.
Pvt.

From the data that was collected regarding the frequency of using the
bank by the respondents it was found that private employees and
government employees mostly use the bank on monthly basis. Most
businesssman uses bank daily, most professionals and students use it
weekly.

- 48 -
And from the data collected it can also be interpreted that most of the
people uses their on monthly basis.

TYPE OF THE BANK WITH WHICH THE RESPONDENTS WOULD LIKE

TO DEAL WITH.

35
30
25
20
15
10
5
0
private nationalised

From the above given graph we could see that most of the
respondents would like to deal with the private banks rather than the
nationalized banks. There are 35 respondents out of 50 who prefers to
deal with private banks.

- 49 -
RANKING OF DIFFERENT BANKS OF RAJKOT CITY BY THE
RESPONDENTS BASED ON THEIR OVERALL PERFORMANCE.

RANK 1 RANK 2 RANK 3

HDFC 18 8 5
ICICI 15 12 4
KM 2 6 12
CORP.BANK 2 4 5
BOI 1 1 3
BOB 7 9 16
SBS 2 7 0
CENT. 0 0 1
BANK
IDBI 2 0 2
PNB 0 1 2
SBI 1 2 0

18 HDFC
16 ICICI
14 KM
12 CORP.BANK
10 BOI
8 BOB
6 SBS
4 CENT. BANK
2 IDBI
0 PNB
RANK 1 RANK 2 RANK 3
SBI

The respondents were asked to rank the banks on the basis of their overall
performance. Above given is the data that was collected. It was found that
most of the respondents ranked 1 to HDFC Bank followed by ICICI Bank

- 50 -
with a minimal difference of just 3 votes. Most of them ranked 2 to ICICI
Bank. Most of them ranked 3 to Bank of Baroda .

THE BANKS WITH WHICH MOST OF THE RESPONDENTS DEAL WITH

16
16
14
14
12
10
8
6
4 4 4
4 3
1 2 2 1
2
0
0
BOI

Bank of
ICICI

SBI
HDFC

Central
KM

CB

SBS

PNB
IDBI bank
Baroda

Bank

From the above collected data we can say that majority of the
respondents deal with HDFC Bank followed by ICICI Bank. Since the
difference between the votes for 2 banks is very minimal, we can say that
ICICI Bank proves to be a tuff competitor for the HDFC Bank.

- 51 -
 THE REASONS FOR DEALING WITH A PARTICULAR BANK.

10 9
8 8 7
7
8 Services
5 6 6 5 6
Location
6
4 4 4 Staff attitude
4 3 Am bience
3
2 2
2 1 1
0
0
pvt. emp gvt. emp businessman professionals students

On asking the respondents regarding the reasons for dealing with a

particular bank the respondents showed the above shown results.It can be
seen from the graph that private employees , businessman and professionals
mostly look for services while dealing with a particular bank.whereas, it has
been found that government employees and students would look for the
convenient location first and then for the services.
However overally we can interpret that most of the respondents gives the
bank services as their prior preference for dealing with a particular bank and
secondly the location of the bank.

- 52 -
MOST FREQUENTLY USED SERVICES OF THE BANK.

30
25
20
15
10
5
0

locker

insta alert
ATM/deb/cre
Loan

liab.prod

ph. Banking
Netbanking
card

When the respondents were asked about the MOST frequenlty used
service by them form their banks we came up with the above shown
graph. It shows very distinctively that maximum number of respondents
use the ATM/debit card services of the bank. Secondly, few customers
would mostly use liability products. However, some of the serices like
phone banking, insta alert, etc are NOT MOSTLY used by the
respondents.

- 53 -
ARE THE RESPONDENTS SATISFIED WITH THE BANKS THEY DEAL
WITH?

10
8
6
4
2
0

S.B.I
ICICI

B.O.I

IDBI
K.M

S.B.S

P.N.B
B.O.B

C.B
CORP. BANK
HDFC

highly satisfied satisfied not satisfied

On inquiring about the satisfaction level of the respondents with the

banks with which they deal with, we got the above results. From the
graph thus formed we can interpret that the level of satisfaction by the
respondents dealing with HDFC Bank is maximum as out of 16
respondents dealing with HDFC Bank 8 of them are highly satisfied
whereas in IDBI Bank 2 out of 4 are highly satisfied.

- 54 -
WOULD THE RESPONDENTS CHANGE THE BANK WITH WHICH THEY
ARE CURRENTLY DEALING?

35
30
25
20
15
10
5
0
YES NO

From the above graph we can see that out of the 50 respondents there
were 33 of them who are satisfied with the banks with which they deal.
But, there were 17 of them who for some or the other reason would like
to change the bank with which they deal regularly.

- 55 -
REASONS FOR THE CHANGE OF BANK.

13 15
16
convinient location
14
12 9 staff sttitude
10
physical ambience
8
6 3
services
4
2 0 features promised for a/c
were different
0

From the above graph we can interpret that out of 17 respondents who
would like to change their bank, maximum of them wanted to change as
they were unsatisfied with the services provided by their bank.And the
second reason for which they would like to change the bank is because of
the inconvenient location of the bank.

SUGGESTIONS

- 56 -
 On the basis of the analysis of the research done they were few
recommendations for the company by the respondents.
When the respondents were asked for what reason they would change the bank
they deal with, most of them were of the opinion that they would change if :
1)They are dissatisfied with the services for that the company should fulfill the
expectations of the customers and try to lend best services.
2)Inconvenient location was another reason to consider as the customers who
are frequently visiting the bank for them it becomes difficult if the location is
not in the city area.
These were reasons for which a person can change their bank. So the bank
should try to open branches at prime locations and provide the best of the services to
have competitive advantage.
3).Most of the people use ATM services more frequently.
a).So bank should open more ATM’s at various locations for
customer’s convenience
b).People also use liability products such as savings account and fixed
deposits considering that the bank should give interest at competitive
rates to attract more people.

People should be provided with the true information for all the products of the bank
when they apply for it the false information can lead to bad reputation of the company
and the staff attitude towards the customers should be very polite and satisfying .This
is helpful to sustain in the competitive era .

CONCLUSION

- 57 -
Liberalisation has really changed the banking industry. It is no longer enough for
banks to just manage money efficiently; they also have to manage customers, who
now have a wide choice of alternatives. The future promises to be even more exciting,
interesting and challenging, thanks to technology.

No longer will banks, or any large organisation, treat customers as a group and
segment them into just some demographic and psychographic profiles. The Internet
has enabled us to talk to each customer as an individual, with different needs and
requirements. Products will need to be developed to meet those needs, and services
will become the crucial diffrentiator. For years, customers were part of the banks’
Fixed Assets; now they have moved into the Current Assets category, and it will be a
task keeping them there.

From the research we can derive many useful conclusions like:

1) Most of the people deal with private sector banks.

2) Mostly the businessman visit the bank daily otherwise private employees visit
it monthly or fortnightly.
3) Most of the people use ATM morefrequently followed by liability products
and loans.
4) Most of the people deal with HDFC Bank followed by ICICI Bank and Bank
of Baroda.
5) Most of the customers of HDFC Bank IDBI Bank are highly satisfied.
6) Most of the customers deal with the bank due to the services provide to the m
and secondly due to convenient location.

- 58 -
 BIBLIOGRAPHY

www.google.com
www.rbi.org.in
www.rbi.org.in

www.hdfcbank.com

www.indiainfoline.com

www.indiamart.com

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