Research Report

On

A Comparative study of LKB Bank and HDFC Bank

Submitted to:Mrs. Shweta Singh (Director Acad.)
C-MAT, Gr. Noida

Submitted by: Vinay Kumar Srivastava ROLL NO. 0514970045 (MBA 2nd year, 2005)

Centre for Management Technology

Greater Noida
(Uttar Pradesh Technical University) Lucknow

Chapter Pages
1. Introduction LKB and HDFC 1.1 Lord Krishna Bank Ltd. 1.2 Mission 1.3 Born to Serve 1.4 Location 1.5 Banks in Pitampura 1.6.1 The working of staff. 1.6 Milestones in Reaching Out to the Customers 1.7 Lord Krishna Bank launches international debit cum ATM card 1.9 HDFC Bank: Other income surprise 1.9.1 Introduction to Results 1.9.2 Branch Network 2. Factors influencing Consumer Behaviour 2.1 Consumer behavior and marketing 2.2 Consumer Behavior and factors affecting consumer behavior 2.3 Consumer Behavior and Marketing Strategy 2.4 Customers dealing 2.4.1 Definition: 2.4.2 Behaviour and banking businesses 3. Banking Strategies: -An introduction of various Banks 3.1 Lord Krishna Bank records 3.2 HDFC Bank starts Silver Card in Hyderabad 4. Research Methodology 4.1 Statement of the problem 4.2 Importance of the problem 4.3 Purpose of the study 4.3.1 Factors to be considered. 4.4 Review of literature 4.5 Objectives of Study 4.6 Scope of Study 4.7 The Sample 4.8 Data Collection 4.9 Presentation of data

5. Analysis of data
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5.1 Age group analysis 5.2 Occupation analysis 5.3 Income analysis 5.4 Cost analysis 5.5 After deposit analysis 5.6 Risk and Return analysis 5.7 Security and safety of future analysis 5.8 Presentation of study report 5.9 Limitations of the Study 5.10 Interpretation of data 6. Conclusions and Suggestions 6.1 Conclusions 6.2 Suggestions 7. Bibliography 8. Annexure

Profile

1.LORD KRISHNA BRIEF HISTORY

Established in 1940 at Kochi. Household name in southern INDIA- particularly KERALA. 112 branches in 11 states of India.

1.1 Lord Krishna Bank Ltd. striding ahead in the business of banking.
Weve spread our wings. Broadened our horizons. And scaled new heights in consumer services and reaching out to more and more customers.* Today our wide range of products and services help people across the country, live their dreams. Backed by state-of-the-art technology and experienced professionals adept in financial management, we strive to make banking, simple, fast and customer friendly. Just the way you like it. Take a few moments to go through our website. Were sure youll see a whole new side to banking.

1.2 Our Mission

Keeping the customer as the central focus, Lord Krishna Bank is committed to provide excellence in banking services through a well-matched mix of trained professionals and state-of-the-art technology.

* www.lkb.com.

To follow the strategy of speedy and aggressive branch network expansion throughout India, to be a truly National Bank. To offer a technology driven, well diversified range of services to cater to both the retail segment as well as large and medium sized corporates.

1.3 Born to Serve

The year was 1940. In a quaint little hamlet called Kodungallur in Trichur district of Kerala, a humble initiative was taken, to serve the people of the region with honesty, commitment and dynamism. And thus was born Lord Krishna Bank. While the seeds of expansion were sown in the 60s when 3 commercial banks merged with LKB, the turning point came in 1992 when the reputed Puri group took substantial stake in the equity of the bank. Today, while the bank continues to retain its trademark values of personalised customer care, it has grown rapidly in size and scope, from a local to a national player. From a traditional bank to an ultra-modern, technology driven entity that is redefining relationship banking with an ideal partnership of man and machine. As a result of plough back of a part of profit, the Net Worth of the Bank has increased from Rs. 119.28 crores as on 31.03.2006 to Rs. 139.25 crores as on 31.03.2007.

1.4 Location
Branch office Pitampura is located at Main Road connected with Ring Road and WazirpurBus Terminal . This is primarily residential area with commercial activities conducted and grown in haphazard manner in and around the area. There are 3 Industrial
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belts on the three sides of pitampura namely Wazirpur Industrial belt, Samaipur Badli/ Narela and Udyog Vihar, Rohat Road. In addition Azad Pur Subzi Mandi , Moti Bagh AutoMarket are also located on other parts of this area. Pitampura itself has two divisions on either side of the road. Our branch is located in Kohat Enclave with 8 other enclaves and approximately 10 societies. On other side of the road there are DDA flats and approximately 20 residential colonies.The total population is more than one lakh and if we take into account the population of Rohini the total Population is more than five lakhs.

1.5 Banks in Pitampura

There are more than 15 branches of different banks of various sizes having their business established from 1 year-15 year.The total deposit in the area in all banks could be approx. 700 Cores and Rs100 crores as advances. The main banks are nationalised , new private Banks and others. We have taken 4 different Banks for discussion as follow: -

Name of the bank:HDFC Bank Period of Establishment 1 year SB Account 25 Crores CA Account 10 Crores Corporate Deposit 4-5 Crores Fds &other 5 Crores Deposit Total Deposits 45 Crores Advances: 5-6 Crores

ICICI Bank The Nanital 5 years 15 Crores 15 Crores 2 Crores 38 Crores 70 Crores NIL

PNB Bank

LKB Bank 2 years 3 Crore 2 Crore NIL 50 Crores 54 crores 13 crores

8 Years 15 Years 12 Crores 44 Crores 2 Crores 6 Crores NIL NIL 16 Crores 34 Crores 30 crores 5 Crores 84 Crores 10 Crores

Table: - 1.6(a) From the above it may be noted that average deposit level in this area is from 30 crores to 84 crores and advances from Nil to 13 crores. (Source of data: - personal Interaction with concerned Branch Staff members)
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The branch deposit as on date is Rs 54 crore

with 2 year of establishment. So

performance wise the deposit level is upto mark, but combination of deposit in our branch is not good comparing to banks shown in above chart . Our level of deposit in savings and current account is very small comparing to average deposit in the category with 25-40 %maintained by other banks. This is the thrust area and needs to be strengthened not only to increase the low cost deposit but also to increase the

profitability of the branch. Our Branch is to achieve a deposit level of Rs 60 crore & Advances Rs 30 Crore by 31.03.2006 & to achieve Rs 100 Crores (Deposit) and Rs50 Crores (Advances) by 31.03.07.Though we are confident of achieving deposit target of Rs60 crores by 31.03.2006, the target fixed and given to be achieved by 31.03.074 may be considered by taking all factors in to consideration. The manpower at present of branch is sufficient to cater its customers. We are having Branch Manager, Manager, Five

Assistant Managers, Ten Clerks and Two Sub-Staff. This branch is working Seven days a week and handling foreign exchange business as B Category. 1.6.1 The working of staff is as follows: A) Branch Manager: He is looking after Hall Administration and daily routine matters.

B) Manager: He is looking after Foreign Exchange

A) Five Assistant Managers:

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-One is looking after Hall work along with Manager -One is looking after Loans section -One is looking after Retail Loans/Foreign Exchange business -One is acting as DBA/Checking of books and other miscellaneous Work. -One is looking after Receipt and payment Department. B) Ten Clerks: -Four are on service front counter. -One is in cash section. -Four are in Locker/Marketing. -One is with Loan section/statement & miscellaneous work. Being seven days branch, we have to adjust 3 clerks and 2 officers for Sunday working also by rotating one person on daily basis for all days functioning.

As there is a good scope of Foreign Exchange business, we are concentrating more on this area and have been able to generate enough business in last six months. We are hopeful to achieve a Rs.50Crores turnover by 31.03.06 with non fund Income of Rs.15 lacs. We have to achieve Rs.200Crores business with Rs.60lacs income by2006-07. Keeping in view this we may by allowed to have an officer in addition for foreign exchange business and to be able to achieve our targets of foreign exchange business.

1.7 Milestones in Reaching Out to the Customers *

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LKB is a pan-Indian Bank with network of 112 branches spread across 11 States. LKB is poised to have 114 branches across 13 States / Union Territories at the earliest.

LKB has reached out at the doorsteps of Schools, Colleges etc. through its 11 Extension Counters in major cities. This network is planned to be increased to about four times shortly.

LKB's 100% business is computerised. LKB believes in offering the latest in banking technology to its clients. As a part of this strategy, the present thrust is on providing "ANYTIME, ANYWHERE BANKING" with 44 ATM. In this direction, interconnectivity of branches and ATMs is already established successfully.

LKB has, as a part of an on-going process, re-structured its various products to cater to the retail segment.

The newly structured products cover : Personal Loan, Consumer Loan, Education Loan, Loan against Rent, Home Loan, Car Loan and Trade Loan.LKB apart from banking services, offers popular financial products like: Life and non-life insurance, Mutual Funds, Infrastructure /Tax saving/Relief Bonds.
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LKB has established its International Banking Division (IBD) fully capable to handle varied forex transactions with centralized, full-fledged dealing room driven by state of the art technology.

LKB has 21 full-fledged authorised branches offering forex business services. Bank has expanded correspondent relationships across the globe with 230 banks in 95 countries and are fully capable to handle bilateral transactions like advising letters of credit, negotiating/discounting LCs, remittances etc. with various overseas banks.

LKB has, in order to ensure seamless services to NRI customers, tied up with Western Union for quick money transfer of NRIs. The Bank has entered into Rupee drawing arrangement with two well-known exchange houses in UAE viz Al- Ansari Exchange Est, Abudhabi and UAE Exchange Centre LLC, Abudhabi. Recently LKB has signed another Rupee Drawing arrangement with Wall Street Exchange Centre LLC, Dubai. Similar arrangements are also in the offing with more Exchange Houses in Saudi Arabia, Qatar, Bahrain and Sultanate of Oman.

* Annual report of LKB bank.

LKB has undertaken a restructuring and re-engineering exercise to emerge as a modern, market driven and high-tech bank.

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1.8 Lord Krishna Bank launches international debit cum ATM card
Lord Krishna Bank today announced the launch of the LKB International ATM cum Debit card that will offer customers the convenience of making cash withdrawals and balance enquiries across 8.7 lakh Visa Plus and ATMs and 13 million merchant locations worldwide. The card can be used at over 10,000 VISA Plus ATMs including 43 LKB ATMs in the country. Customers can also use the card to make purchases at 120,000 merchant locations that display the VISA logo. There are currently only 23 banks in India, including Lord Krishna Bank, that are part of the VISA Plus and Mastercard global ATM networks. Announcing the launch, the CEO and MD of Lord Krishna Bank, Shri RM Nayak said , " For the past few months, we have been aggressively pursuing to achieve 100% computerisation and inter-connectivity among all our branches. We are glad that our customers will be able to benefit from all the IT initiatives that we have taken. Our tie-ups with VISA ATM networks will offer our customers the benefit of using our services anytime-anywhere in the world, added Shri Nayak. The 64-year-old Kerala based bank has today 111 branches spread in 11 States and in the U.T of Chandigarh. To reach out to more customers and offer them innovative services and financial products, the bank is opening more fully automated branches across the country. The bank has

initiated steps for business re-engineering to remain highly competitive in the changing banking scenario and to forge ahead in the growth path. Lord Krishna Bank has registered impressive business volumes and scaled new heights in
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customer services and IT initiatives. One of the fastest growing private sector banks in India, the bank has registered strong business growth of 33% during the fiscal 2006-07. Total deposit of the Bank registered an impressive growth of 39% during the year (from Rs.1663 crores to Rs.2311 crores). Advances of the Bank also showed growth during the fiscal from Rs.915 crores to Rs.1118 crores, an increase of 22%. Net worth of the Bank, which was Rs.119.28 crores as of 31.03.2006 has gone up to Rs.139.24 crores as of 31.03.2007 against the bench mark of Rs.100 crores fixed by RBI. The bank has all banking products, both deposits and advances, to cater the needs of corporate and retail segments. The bank has made retail finance as the key focus area. To leverage the vast potential under this segment, the retail products and the delivery process are fine tuned and made most customer friendly. The bank has its International Banking Division (IBD) at Delhi; fully capable to handle varied forex transactions with centralized, full-fledged dealing room driven by state of the art technology. The bank has expanded correspondent relationships across the globe with 230 banks in 95 countries and is fully capable to handle bilateral transactions like advising letters of credit, negotiating/discounting LCs, remittances, etc. with various overseas banks. The bank has scaled new heights in customer service through IT initiatives. Sustained efforts are made to nurture traditional values blended with modern technologies. 90% of the transactions are already captured under automation. The bank has entered into a strategic Alliance with Flexcel International (P) Ltd for Centralised Banking Solutions and networking by using the best

available technology. Against the target of inter-linking 56 branches representing about 95% of
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business, 52 branches are already networked. This will enable a customer of any of these branches to operate account from any of these 56 centres. All new branches are launched under CBS platform. Currently, the bank has 43 ATMs spread across various locations. With a view to offer multiple products to the customers and increase fee based income, alliances for sale of third party products have been entered into. The bank has entered into tie-up with ICICI Prudential and Bajaj Allianz for marketing life and non-life insurance products. Also, distribution alliances are made with top mutual funds of the country viz. SBI Mutual Fund, LIC Mutual Fund, Prudential ICICI, HDFC Mutual Fund, Franklin Templeton, Standard Chartered Mutual Fund and DSP Merryll Lynch, Tata Mutual Fund, Reliance Mutual Fund, Escorts Mutual Fund. LKB Expands presence in the Capital- Opens 111th 11 November 1 2 3 4 5 in the year 2003-04 Hikes rates on FCNR, GBP, EURO, NRE deposits; reduces rates on Domestic Term Deposits New Delhi, June 16, 2004: Lord Krishna Bank has revised the interest rates on Foreign Currency Non-Resident (FCNR) deposits accepted in all permitted currencies with effect from June 12, 2004 to record a high of 3.59% p.a. on US dollars for a period of 3 years. Interest rates on Great Britain Pound (GBP) and EURO have been increased to 5.33% p.a. and 3.11% p.a. for the same period respectively. As stipulated by the RBI, interest
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branch at Paschim Vihar Lord Krishna Bank expands presence in the Capital Lord Krishna Bank expands presence in Mumbai Lord Krishna Bank to revise Interest Rates Lord Krishna Bank registers 33% business growth

2004 25 October 2004 21 October 2004 16 June 2004 15 May 2004

rates on Non-Resident External Account (NRE) deposits were also revised on June 1 st, 2004 offering a maximum of 3.52% p.a. for 3-year deposits. For Domestic Term Deposits, Lord Krishna Bank has reduced the interest rates by 25 basis points or 0.25 % on maturity bands of '181 days to less than 1 year' and '3 years and above' with effect from June 21 st, 2004. Interest rates on deposits in all other maturity bands remain unchanged. The revised rates are applicable only in respect of fresh deposit and renewal of existing deposits. The interest rates on Saving Bank deposits remain unchanged at 3.5%.

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Interest rates on Domestic Term Deposits (Effective June 21 st, 2004) Period Less than Rs. 15 lakhs 7 days 14 days 15 days 29 days 30 days 45 days 46 days 90 days 91 days 180 days 181 days < 1 year 1 year < 3 years 3 years and Rs. 15 lakhs Nil (Nil) 4.00% (4.00%) 4.50% (4.50%) 5.00% (5.00%) 5.25% (5.25%) 5.50% (5.75%) 6.00% (6.00%) 6.00% and above 3.75% (3.75%) 4.25% (4.25%) 4.75% (4.75%) 5.25% (5.25%) 5.50% (5.50% 5.75% (6.00%) 6.25% (6.25%) 6.25%

above (6.25%) (6.50%) * Figures in brackets are previous rates Table: - 1.8(a)

The bank will offer special rate of interest on all term deposits of senior citizens, which is 0.50% higher than the normal interest rates. "The revision is in sync with the current market trends. Our customers will be delighted to learn that our interest rates on FCNR deposits are the best rates available in the

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market. The revision on interest rates on Domestic Term Deposits have also been kept very attractive," said Shri. R.M. Nayak, MD & CEO, Lord Krishna Bank. The bank has recently concluded a Rupee Drawing Arrangement with Arabian Exchange in Doha, facilitating remittances from Indian expatriates in the State of Qatar. With inward money transfer arrangements already existing in other countries in the Middle East viz. Al Ansari Exchange, UAE Exchange, Wall Street Exchange, Federal Exchange, and with banks all over the world, the bank expects to garner sizeable volume of deposits both on their FCNR and NRE segments in the near future. The bank also executes payments from 192 countries favouring the resident beneficiaries in India through a separate tie-up with Western Union Financial Services, USA. Lord Krishna Bank Ltd. registered strong business growth of 33% during the fiscal 2006-07. The net profits of the bank increased by 14.32% to reach Rs 26.35 crores. Total deposits of the Bank registered impressive growth of 39% during the year (from Rs.1663 crores to Rs.2311 crores). Advances of the Bank also showed growth during the fiscal from Rs.941 crores to Rs.1146 crores, an increase of 22%, according to its annual results for the fiscal 2006-07 that was declared today. 12 The bank has scaled new heights in customer services and IT initiatives. 90% of the business of the bank is captured under computerisation. The implementation of the Core Banking Solution (CBS) on the Flexcube platform for inter-connectivity is progressing according to schedule. Already CBS has been introduced in 42 branches. All new branches are launched with CBS.
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Apart from putting total 56 branches, all Regional Offices and Administrative Office in CBS platform in this fiscal, all remaining ALPM and manual branches shall be converted to ISBS by December 2004. In addition to banks` 39 ATMs, Bank has also entered into MOU with HDFC Bank for sharing of their ATMs, which will facilitate the bank`s customers to have access to more than 700 ATMs throughout the country and make anywhere-anytime banking a reality. With a view to offer multiple products to the customers and increase fee based income, alliances for sale of third party products have been entered into. The tie up with ICICI Prudential and Bajaj Allianz for marketing life and non-life insurance products have started paying dividends. Also, the Bank has distribution alliances with top mutual funds of the country viz. SBI Mutual Fund, LIC Mutual Fund, Prudential ICICI, HDFC Mutual Fund, Franklin Templeton, Standard Chartered Mutual Fund and DSP Merryll Lynch. The 64-year-old Kerala based bank has today 106 branches spread in 11 States and U.T of Chandigarh. To reach out more customers and offer them innovative services and financial products, the bank is opening more fully automated branches across the country.

The Bank has opened 10 branches since March 31, 2007. Further the bank holds license for opening 8 more new branches spread over India during the current fiscal.

Senior Management Team

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1. 2. 3. 4. 5. 6. 7.

Mr. S Rajagopal, Senior Vice President, Cluster Head (Mumbai) Mr. R Venkataraman, General Manager (Inspection, Forex & IBD) Mr. S M Lal Goel, General Manager, Regional Head (RO South) Mr. Vipin C Marwah, General Manager, Connaught Place Branch Mr. Rm Subbiah, Vice President, Head - Liability Products Mr. Seetharama Bhat, Vice President - HRD Mr. Arvind Garg, Vice President, Regional Head (RO Delhi)

Performance Highlights
The Bank has registered an impressive growth during fiscal 2006-07. The Bank's business grew to Rs 3,429.12 crores from Rs 2,578.33 crores last year, and was driven by significant increase in both the assets as well as liabilities portfolio growth. Consequently, the Bank's Net Profit for the year grew to Rs 26.35 crores from the level of Rs 23.05 crores during the previous year. The highlights of the financial performance of your Bank are listed below :

Total business up by 33% Total deposits up by 39% Total advances up by 22% Net profit up by 14.32% Net worth up by 16.74% Business per Employee increased 17% Capital to Risk Assets Ratio (CRAR) increased to 16.68% from 12.82%

1. Key Performance Indicators (Rs. '000 omitted)

Particulars Capital & Reserves 31st March 2006 119,28,00 31st March 2007 139,24,54
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% of Growth 16.74%

Aggregate Deposits Advances Investments Working Funds CRAR 2. Profits

1663,28,83 915,03,75 662,67,54 1857,67,10 12.82%

2311,21,83 1117,89,51 1047,14,45 2604,56,14 16.68%

38.95% 22.17% 58.02% 40.21%

& Profitability
(Rs. '000 omitted) 31st March 2006 31st March 2007 26,35,39 20.54% 1,166 3,08,94 % of Growth 14.32% 1.48% 19.46% 16.95%

Particulars Net Profit 23,05,30 Return on Equity 20.24% No. of Employees 976 Business per 2,64,17 Employee

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3. Appropriations of Net Profit

Particulars Net Profit Profit brought forward Excess provision for dividend/dividend tax last year Sub Total 31st March 2006 23,05,30 1,49,96 6,12 24,61,38 NIL 27,05,29 7,74,12 6,27,92 4,00,00 4,00,00 72,56 2,64,40 (Rs. '000 omitted) 31st March 2007 26,35,39 69,90 NIL 27,05,29

Less Deferred tax liability Balance Available for Appropriations Appropriations Transfer to Statutory Reserves Transfer to Capital Reserves Transfer to Investment Fluctuation Reserve Proposed Dividend Tax on Dividend Balance Carried to Balance Sheet Table: - 1.8(b)

80,00 23,81,38 4,61,06 2,30,50 4,70,00 10,19,32 1,30,60 69,90

4. Net Worth

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The Bank has increased its Net Worth by more than 16.7% over its previous year's levels, from Rs. 119.28 crores to Rs 139.25 crores. This has come about through prudent financial management and a conscious effort to grow the intrinsic value and Balance Sheet strength of the Bank.

Exhibit: - 1.8(a)

5. Capital Adequacy (CRAR)

The Bank's CRAR as on 31st March 2007 stands at a very comfortable level of 16.68%, compared to 12.82% as on the same date in the previous year. Reserve Bank of India stipulates a minimum requirement of 9%. The Bank has brought out unsecured, nonconvertible, redeemable, non-cumulative Subordinated Bonds for Tier 2 capital, for an amount of Rs 50 crores in March 2004, which was rated CARE A by Credit Analysis &

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Research Ltd (CARE). The issue was oversubscribed. The Bonds have been duly listed on the Mumbai Stock Exchange (BSE) for trading.

6. Deposits
Aggregate deposits of the Bank grew from Rs 1,663.29 crores to Rs 2,311.22 crores, reflecting a rise of 38.95% over the previous fiscal. It is noteworthy to mention that aggregate deposits of scheduled commercial banks (SCB s) increased only by 17.1% during fiscal 2006-07. Your Bank has recorded more than double the industry growth rate in this regard. During the year, the Bank not only concentrated on increasing the deposit portfolio, but also put focused efforts in reducing the average cost of deposits, which has

been brought down by over 135 basis points from 8.85% to 7.47%. Exhibit: - 1.8(b)

7. Advances
Net Advances during the year increased from Rs 915.04 crores to Rs 1,117.89 crores, representing a growth of 22.17%. This performance is much above the industry growth

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rate of 18.2%. The quality of advances was also significantly improved during the year. The Bank's priority sector advances showed quantum growth in both absolute terms, as also percentage to the net Advances portfolio. The growth in absolute terms was from Rs 244.65 crores in 2005-06 to Rs 529.68 crores in 2006-07, whereas as a percentage of the net Advances, the share of priority sector lending increased from 28.65% to 48.52%. Exhibit: - 1.8(c)

8. Non Performing Assets (NPA)

Net NPA of the Bank stood at 6.05% for the year ended 31st March 2007, as compared to 6.33% for the previous fiscal. This has been achieved after accounting for 90 days' norm (as against the earlier norm of 180 days) to reckon the delinquency of loan assets.

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9. Investments
Investments of your Bank grew sharply from Rs 663 crores as on 31st March 2007 to Rs 1,047 crores at the end of the last fiscal a growth of 58.02%.

Exhibit: - 1.8(d)

10. Forex / NRI Activity

The Bank recorded 54.65% growth in foreign exchange Merchant Turnover from Rs 783 crores for the year ended 31st March 2007 to Rs 1,132 crores during the year under review. The exports, imports and remittances segments have shown increase of 83%, 16% and 80% respectively. During the year, the Bank finalised tie-ups with various correspondent banks overseas in order to expand its reach and offer a more wide-ranging geographical spread to its customers. At the end of the year, your Bank had correspondent relations with 210 banks, spread over 94 countries across the world.

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In 2006-07, the Bank concluded Rupee drawing arrangements with Wall Street Exchange Co LLC, Dubai. This arrangement adds to the ones that had been previously concluded with two exchange houses in UAE during 2005-06, viz. UAE Exchange Centre LLC, Abu Dhabi and Al Ansari Exchange Est., Abu Dhabi. These tie-ups, besides the one with Western Union Financial Services Ltd, help in fund remittances by the NRI population, especially in the Gulf and are a part of the Bank's continuous process of offering value added services to its customers.

11. Profit & Profitability

The Net Profit of the Bank has increased from Rs 23.05 crores in fiscal 2005-06to Rs 26.35 crores during the year under review. The corresponding EPS for the Bank was Rs 4.67 as opposed to Rs 4.07 for the previous year. It is worth mentioning here that the Bank has succeeded in generating this increased Net Profit in spite of having provided for an additional Rs 14.02 crores in compliance with AS 15 of the ICAI. Exhibit: - 1.8(e)

1.9 HDFC Bank: Other income surprise

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1.9.1 Introduction to Results HDFC Bank has sustained its robust financial
performance despite losses on its investment portfolio. Strong growth in the company's assets continues to be the main driver. For 2QFY05, while the topline has risen by 15% YoY, the bottomline has increased at a faster rate (30% YoY). The bank continues to keep its interest costs low and this has significantly helped the growth in net interest income. Other income has improved indicating that the bank has managed to improve its fee-based income and has more than compensated for the losses from its investment portfolio.

1.9.2 Branch Network

Welcome to the networked world of HDFC Bank. You can open an account at any branch nearest to your residence or office and access it at any branch in the city or anywhere in the country. The sophisticated computerised network gives you the flexibility of accessing your savings or current account from any of our across India. (Rs m) Income from operations Other Income Interest expense Net interest income Other expenses Operating Profit Operating Profit Margin (%) Provisions and contingencies Profit before Tax Tax Profit after Tax/(Loss) 2QFY06 2QFY07 Change 1HFY06 1HFY07 Change 6,447 7,447 15.5% 12,217 14,473 18.5% 863 1,227 42.3% 2,185 2,308 5.6% 3,024 3,191 5.5% 6,018 6,229 3.5% 3,422 4,256 24.4% 6,199 8,244 33.0% 1,991 2,473 24.2% 3,811 4,781 25.5% 1,431 1,783 24.6% 2,388 3,463 45.0% 22.2% 23.9% 19.5% 23.9% 638 758 18.9% 1,339 1,448 8.1% 1,656 2,253 36.0% 3,234 4,323 33.7% 485 730 50.6% 989 1,400 41.5% 1,171 1,523 30.0% 2,244 2,923 30.2%
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468 branches and over

1054 ATMs

Net profit margin (%) No. of Shares (m) Diluted earnings per share (Rs)* P/E ratio (x) *(annualised)

18.2% 283.5 16.5

20.4% 286.2 21.3

18.4% 283.5 15.8

20.2% 286.2 20.4 19.7

What is the companys business?

HDFC Bank, India's premier private sector bank, promoted by HDFC, has established a strong presence in both retail and corporate finance. The bank also has active treasury and capital market operations. The bank has a wide reach across the country with a branch network of 379 branches and over 900 ATMs. It is acknowledged as one of the most efficient private sector banks in the country. The bank has recently entered in to an agreement with parent HDFC to retail the home loans product of the latter.

What has driven the performance in 2QFY07?

Kicker from retail advances: The bank continues to rapidly grow its advances portfolio (38% YoY), with retail assets growing at a faster rate of 69%. Retail assets now account for over 42% of the total advances of the bank (32% in 2QFY06). The topline growth has been slower in 2QFY07 compared to its earlier quarters. This may be due to lower yields on incremental advances that the bank is disbursing. Going forward, with non-food credit growing at a faster pace, we believe that the corporate advances side will gain momentum.

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Operating margins: Due to reducing deposit costs, the bank continues to maintain its net interest income growth (savings deposits account for over 29% of total deposits as compared to 24% in 2QFY06). Net interest margins (NIM), on the other hand, have remained steady at 3.8%, which is likely to have peaked, in our view for the reason that follows. The fall in the cost of deposits is likely to have bottomed out, as HDFC Bank has one of the lowest cost of deposits. We believe that it may be difficult for the bank to further improve upon its NIM from the current levels, going forward. On the other hand, we continue to witness improvement in the bank's operating margins despite higher growth in its operating expenses. The bank has added 67 new branches, taking the tally to 379. Since corporate advances are likely to grow at a faster clip, there will some support to the overall margins, as these typically have a better margin profile.

Exhibit: - 1.9(a)

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Higher fee-based income protects the bottomline:

The main highlight of the bank's performance in the September quarter has been the strong growth in its other income despite losses in its investment portfolio. The bank's fee and commission income have risen by over 71% in 2QFY07, while its forex exchange and derivatives revenues have fallen. HDFC Bank's losses on its investment portfolio stood at Rs 266 m in 2QFY07 (around 17% of net profits) as compared to 188 m in the same period last year. The growth in HDFC Bank's other income is indicative of its extremely low reliance on profits from its investment portfolio. The losses are mainly on account of the transfer of securities to the HTM (Held to Maturity) category from the AFS (Available for Sale) category. The RBI permitted this transfer for the banking sector in order to mitigate the adverse effect of any rise in interest rates on the investment portfolio of banks. The net NPA to advances ratio has been maintained at 0.2%, which is one of the lowest in the industry. Due to the strong growth in the topline, higher other income and improving operational efficiencies, HDFC Bank has managed to once again post a 30% rise in net profits for the September quarter. In the process, it has outperformed most of the other banks.

What to expect?
At the current market price of Rs 403, HDFC Bank is trading at a price to book value

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multiple of 3.8 times adjusted book value. The bank's valuations more than reflect its growth potential in the medium term. However, due to the news regarding the bank's expected ADS (American Depository Shares), the stock price has risen sharply in the last two weeks. The banks' ADS issue (US$ 300 m) will enable the bank to fund its expansion plans as well as increase the book value. HDFC Bank Q4 rides on retail, net up 31% HDFC Bank has posted a handsome 30.8 per cent growth YoY on its bottom line for 4QFY07. Net Income from operations has grown 30.2 HDFC Bank net profit up HDFC Bank today reported a 30.6 per cent growth in net profit at Rs 665.5 crore for the fiscal ended March 31, 2007. HDFC Bank expects to maintain good showing HDFC Bank came out with an impressive set of fourth quarter numbers today, with net profits up more than 30%. HDFC Bank net profit up 30.6% HDFC Bank has announced a 30.6 per cent growth in net profit at Rs 665.5 crore for the fiscal ended March 31, 2007. Retail loans buoy HDFC Bank HDFC Bank Ltds report card in the fourth quarter of 2006-07 was in line with its expectations. HDFC Bank Q4 net up 31 pct, meets forecast HDFC Bank Ltd., India's third-most valuable bank, reported on Wednesday its quarterly profit jumped 31 percent in line with expectation.
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HDFC Bank net rises 23% HDFC Banks quarterly net profit jumped by 31% to Rs 202.37 crore in March 2006 as against Rs 154.72 crore in the corresponding quarter. HDFC Bank's Q4 net rises 31%, payout set at 45% Buoyed by higher earnings on retail loans and fee income, HDFC Bank has reported a 30.8% rise in net profit to Rs 202.4 crore in the fourth quarter. HDFC Bank profit increases 30% HDFC Bank Ltd has reported a 30 per cent increase in its net profit for the year ended March 2005 at Rs 665.56 crore as against Rs 509.50. HDFC Bank FY05 net up 31% HDFC Bank has reported a 30.63% increase in net profit at Rs 665.56 crore for the year ended March 31, 2007 when compared with Rs 509.50 crore.

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2.1 Consumer Behavior and factors affecting consumer behavior:

Research Methods Segmentation Culture Demographics and Social Stratification Family Decision Making Social Influences Diffusion of Innovation Perception Motivation Newsletter Learning and Memory Attitudes Self Concept/ Lifestyle Decision Making Consumer Outlet Selection Guest Book Autism Information

* Kotlar Philip, Marketing Management.

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2.2 Consumer Behavior and Marketing Strategy

The study of consumers helps firms and organizations improve their marketing strategies by understanding issues such as how

The psychology of how consumers think, feel, reason, and select between different alternatives (e.g., brands, products);

The psychology of how the consumer is influenced by his or her environment (e.g., culture, family, signs, media);

The behavior of consumers while shopping or making other marketing decisions; Limitations in consumer knowledge or information processing abilities influence decisions and marketing outcome;

How consumer motivation and decision strategies differ between products that differ in their level of importance or interest that they entail for the consumer; and

How marketers can adapt and improve their marketing campaigns and marketing strategies to more effectively reach the consumer.

Understanding these issues helps us adapt our strategies by taking the consumer into consideration. For example, by understanding that a number of different messages compete for our potential customers attention, we learn that to be effective, advertisements must usually be repeated extensively.

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We also learn that consumers will sometimes be persuaded more by logical arguments, but at other times will be persuaded more by emotional or symbolic appeals. By understanding the consumer, we will be able to make a more informed decision as to which strategy to employ. One "official" definition of consumer behavior is "The study of individuals, groups, or organizations and the processes they use to select, secure, use, and dispose of products, services, experiences, or ideas to satisfy needs and the impacts that these processes have on the consumer and society." Although it is not necessary to memorize this definition, it brings up some useful points:

Behavior occurs either for the individual, or in the context of a group (e.g., friends influence what kinds of clothes a person wears) or an organization (people on the job make decisions as to which products the firm should use).

Consumer behavior involves the use and disposal of products as well as the study of how they are purchased. Product use is often of great interest to the marketer, because this may influence how a product is best positioned or how we can encourage increased consumption. Since many environmental problems result from product disposal (e.g., motor oil being sent into sewage systems to save the recycling fee, or garbage piling up at landfills) this is also an area of interest.

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Consumer behavior involves services and ideas as well as tangible products. The impact of consumer behavior on society is also of relevance. For example, aggressive marketing of high fat foods, or aggressive marketing of easy credit, may have serious repercussions for the national health and economy.

There are four main applications of consumer behavior:

The most obvious is for marketing strategyi.e., for making better marketing campaigns. For example, by understanding that consumers are more receptive to food advertising when they are hungry, we learn to schedule snack advertisements late in the afternoon. By understanding that new products are usually initially adopted by a few consumers and only spread later, and then only gradually, to the rest of the population, we learn that (1) companies that introduce new products must be well financed so that they can stay afloat until their products become a commercial success and (2) it is important to please initial customers, since they will in turn influence many subsequent customers brand choices.

A second application is public policy. In the 1980s, Accutane, a near miracle cure for acne, was introduced. Unfortunately, Accutane resulted in severe birth defects if taken by pregnant women. Although physicians were instructed to warn their female patients of this, a number still became pregnant while taking the drug. To get consumers attention, the Federal Drug Administration (FDA) took the step of

35

requiring that very graphic pictures of deformed babies be shown on the medicine containers.

Social marketing involves getting ideas across to consumers rather than selling something. Marty Fishbein, a marketing professor, went on sabbatical to work for the Centers for Disease Control trying to reduce the incidence of transmission of diseases through illegal drug use. The best solution, obviously, would be if we could get illegal drug users to stop. This, however, was deemed to be infeasible. It was also determined that the practice of sharing needles was too ingrained in the drug culture to be stopped. As a result, using knowledge of consumer attitudes, Dr. Fishbein created a campaign that encouraged the cleaning of needles in bleach before sharing them, a goal that was believed to be more realistic.

As a final benefit, studying consumer behavior should make us better consumers. Common sense suggests, for example, that if you buy a 64 liquid ounce bottle of laundry detergent, you should pay less per ounce than if you bought two 32 ounce bottles. In practice, however, you often pay a size premium by buying the larger quantity. In other words, in this case, knowing this fact will sensitize you to the need to check the unit cost labels to determine if you are really getting a bargain.

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2.3 CUSTOMERS DEALING

Target customers/clients: Corporate, institutions, schools colleges, Associations, trusts, public sector undertakings, clubs, hospitals, social bodies. A customer is the most important visitor on our premises. He is not dependent on us. We are dependent on him. He is not an interruption on our business. He is part of it. He is doing us a favour by giving us an opportunity to do so. Mahatma Gandhi. WHO IS A CUSTOMER A Visitor?, A Guest?, A Problem?, A Friend?, An Opportunity?, An Income? An Expense? An Asset? A Liability OR WHAT A KING! Banking Industry & Customer Customer Vs Consumer

2.3.1 Definition:
BRA49[5(b)]: Banking is accepting for the purpose of lending or investing of deposits of Money from the public, repayable on demand or otherwise and withdrawable by cheque or otherwise. BRA49: Sec 6: [Functions]: Raising Deposits, Lending, Discounting/collecting bills, hundies, RR, LR, BL, other NIsIssuing LCs, BGs, Dealing in Forex, Merchant Bkg,

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Providing services like vaults, safe deposits, Insurance services, Indemnity & Guarantee business, Can act as agent of Govt to undertake various activities that the Govt may assign. Etc Customer is not defined by Law but relationship of a person for the activites of a banker determines whether he is a customer or Not. Dealings must be of the nature of banking business and must have an Account.

2.3.2 CUSTOMER VS CUSTOMER

* Examples of Deficiency in Bkg Service: Dishonour DD for want of second signatures SBI V N Raveendran Nair 199310CLA Dishonour of cheque despite balance in account PSB V Manprett singh 1994 CTJ733 Failure of honouring BG BOI V HCL 1993(3)CPR30 Advancing loan is a service of the bank- South Indian Bank V President TN consumer forum. In view of the above situation in BRA & CPA it is evident that customer service has prime importance in Banking industry and any deficiency would be punishable in Law and least of all Loss of Business, Reputation and Income. Hence we may safely render our services treating the Customer as a KING In case of consumer forums orders not being complied with : Imprisonment from 1 month to 3 years with/without fine from Rs2000 to Rs.10000. Every order of the forum is a decree of civil court and only one appeal lies. CAN WE AFFORD POOR OR DEFICIENT SERVICE ?
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* Prasad .L.N Organisational Behaviour

BEHAVIOUR AND BANKING BUSINESSES

Having understood the position of a customer, knowing the competition and our goal of growth what is most urgent and important is To realise the behavioural part of service that leads to either a compailnt or building up of lasting and evergrowing business relationship with the customer. Banking business is that of Money Raising/lending /earning. To prepare the customer to part with money have trust on the bank wait for some tenure to get the same back Give him incentive for this trust in the form of interest keep him assuring the availability of his money & also giving him the options to use his money any time . Behaviour with the customer from time to time builds/breaks his confidence over this trust. Hence the key to success in banking is : Customer relationship behaviour . BEHAVIOUR AND BANKING BUSINESSES Transactional Analysis (TA): It is a technique to understand ones own and others behaviour in interpersonal communication. Ego States: Ego state is a pattern of behaviour which a person develops as a result of cumulative network of his memories and experiences since birth. Three Ego states: Child- Emotional Spontaneous - Impulsive Adult Assertive Self-Thinking Fact Finding Rational Problem Solving.
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Parental Judgmental Admonitional Advisory Dos &Donts

BEHAVIOUR AND BANKING BUSINESSES The crux of TA is that any transaction (communication), which crosses the Ego states, creates conflict and disharmony and all parallel communications between similar Ego state develops harmony, trust and faith. In view of the Banking business also being that of building trust and faith, it is essential that we understand the customers ego state before reacting and we must try to communicate and transact in his ego state. A customer is the most important visitor on our premises. He is not dependent on us. We are dependent on him. He is not an interruption on our business. He is part of it. We are not doing him a favour by serving him. He is doing us a favour by giving us an opportunity to do so. Mahatma Gandhi 2.3.3 BEHAVIOUR AND BANKING BUSINESSES To the bank for specific performance of the obligations and even announcing compensation for any loss. - The order is binding on the bank only if the customer accepts the same. Time Schedule: To make recommendation Customer can accept within If customer accepts Bank has to comply within If not accepted by customer, can pass award in Award binding on customer if accepted in Bank to comply with award in
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1 month 2 weeks 2 weeks 2 months 1 month 15 days.

3. BANKING STRATIGIES* Canara Bank to raise Rs 300 cr via Tier-II debt

Canara Bank intends to come out with a Rs 300-crore Tier-II debt issue to augment its capital base during the current fiscal.

SBI attaches Nav Maharashtra's 6 properties

The State Bank of India's (SBI) industrial finance branch here has attached six properties in Pune and Chakan of the Nav Maharashtra Chakan Oil Mills, Ahmednagar for recovery of Rs 10.4 crore. This follows the orders of the Debt Recovery Tribunal (DRT), Pune, passed on October 29. Warrant for seizure of property was issued on December 18.

Small is beautiful: Banks get down to micro-finance

Banks are doing what they know best as part of their social initiatives: lending money. And micro-credit is emerging as the social face of banks with HDFC Bank, ICICI Bank and Citibank having launched their respective micro-finance programmes.

LGF to sell LIC products

Lakshmi General Finance Ltd, part of the TVS group, will distribute products of Life Insurance Corporation of India. The non-banking finance company has already entered into an agreement with LIC for the marketing arrangements. Full story

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* www.google.com.

Crisil Q3 net rises to Rs 5.48 crore

The Credit Rating Information Services of India on Friday announced a net profit of Rs 5.48 crore for the quarter ended December 31, 2002, against Rs 5.42 crore in the corresponding quarter last year.

ICRA accords MAAA (SO) to Telco PTCs

Credit rating agency Icra on Friday assigned a conditional rating of MAAA to the senior pass-through certificates under Rs 200 crore Asset Backed Securitisation programme originated by Telco.

UTI Bank to set up 16 more ATMs in Mumbai

The Credit Rating Information Services of India on Friday announced a net profit of Rs 5.48 crore for the quarter ended December 31, 2002, against Rs 5.42 crore in the corresponding quarter last year. 03 Jan 2007.

Bajaj Allianz unveils housing loan cover for jobless

Mumbai: An insurance cover that pays your housing loan instalments when you lose your job. This is the latest product to be introduced into the market by Bajaj Allianz General Insurance. The product is essentially a cover that protects the mortgage in the event of death or disability with an extension to cover unemployment. The policy also has fire and burglary
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insurance cover bundled in along with mortgage protection.

SBI to share technology platform with arms

Mumbai: State Bank of India (SBI) has drawn up ambitious plans to exploit synergies with its seven associate banks. The first step towards leveraging the group strength has already been taken with the decision to have a common technology platform for SBI and all its associate banks.

Sabre Cap completes due diligence on Centurion

Mumbai: Rana Talwar's Sabre Capital Worldwide has completed its due diligence exercise on Centurion Bank. Sabre Capital has teamed up with a CDC fund and Chrysalis Capital to launch a formal bid for Centurion Bank. Sabre Capital is expected to place its offer proposal to the bank by mid- January. According to sources, if things go according to plans, the Centurion board would take up Sabre's proposal before the end of January.

SBI raises sanctioning power of circle office

Mumbai: In a bid to speed up the credit flow to the commercial sector, State Bank of India (SBI) has hiked the sanctioning power of its circle office from Rs 30 crore to Rs 50 crore with effect from January 1, '07.

PNB introduces video-conferencing to connect offices

New Delhi: In a bid to achieve quick decision-making and increase productivity, Punjab National Bank introduced video conferencing to connect the head office and regional

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offices

HDFC Bank Floats Resident Forex Deposit Scheme

Mumbai: HDFC Bank has announced on Thursday the launch of a resident foreign currency account, which will enable resident Indians to open and operate foreign currency accounts.

ICICI Bank to issue Rs 400-crore Bond

Mumbai: ICICI Bank on Wednesday, announced the first public offering of unsecured redeemable bonds in the nature of debentures aggregating Rs 400-crore with a right to retain oversubscription of up to Rs 400 crore called 'ICICI Bank Bonds - January 2007'. The bonds are being issued under the umbrella prospectus approved by the Securities and Exchange Board of India (Sebi) for the year 2006-2007.

Corporation Bank To Seek RBI Nod For Tax-free Bonds Issue

Mumbai: Corporation Bank is planning to seek the Reserve Bank of India (RBI) nod for issue of tax-free bonds, taking cue from ICICI Bank, which has got the apex bank's nod for raising Rs 2,500 crore over the next one year, with a greenshoe option for the same amount.

Vijaya Bank, LIC In Pact To Offer Cover To Deposit-holders

Mumbai: Vijaya Bank has tied up with Life Insurance Corporation of India (LIC) to offer life insurance cover to all its existing as well as new deposit- holders. Under the
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scheme 'Vijaya Raksha', deposit holders of the bank will get a life cover of Rs one lakh for a annual premium of Rs 325 (for the age-group 18 to 44 and half years).

KMFL Shareholders Okay Change In Authorised Capital To Rs 100 Crore

Mumbai: The shareholders of Kotak Mahindra Finance Ltd (KMFL), at an extraordinary general meeting held recently, approved the proposal to change the company's name to "Kotak Mahindra Bank Ltd". The shareholders also cleared proposals to change authorised capital to 100 crore divided into 10 crore shares of Rs 10 each was also approved by shareholders and articles of association and memorandum of association.

India Insure gets broking licence

India Insure Risk Management Services Pvt Ltd, specialising in insurance services, has said that it has received in-principle approval from the Insurance Regulatory and Development Authority (IRDA) for setting up operations as an insurance broker.

Over 180 Corpn Bank officers opt for VRS

Mumbai: Over180 officers of Corporation Bank have opted for the bank's first voluntary retirement scheme. When most other public sector banks had offered a VRS about two years ago, Corporation Bank did not go for it. "We wanted to assess the number of superfluous staff in the bank before going in for one,'' said a senior bank official.

Bank Of India Launches Mobile ATM In Mumbai

Bank of India (BoI) on Wednesday launched its mobile ATM (automated teller machine)
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service in Mumbai. The service, first of its kind launched by a state-owned bank, will be available for the customers in the posh localities at south Mumbai.

LIC Housing Fin launches project for elderly

Mumbai: LIC Housing Finance Ltd has launched its latest venture `LIC HFL Care Homes' whereby residential complexes will be built especially to cater to the needs and comforts of the senior citizens.

SIDBI lowers rates on capital gains bonds

Mumbai: Small Industries Development Bank of India (SIDBI) has lowered the interest rates on its capital gains bonds by 50 basis points to 5.75 per cent effective from January 1. SIDBI had launched an on-tap issue of capital gain bonds on private placement basis on.

IDBI, IFCI packages ready; banks, FIs to take a big hit

The Finance Ministry has finalised the restructuring package for IDBI and IFCI. As per the plan, banks and financial institutions will take a big hit as they are the stakeholders in both the institutions.

Corporation Bank revises deposit rates

Mangalore: Corporation Bank has revised the rate of interest on domestic and NRE term deposits from January 1. For the maturity band between 7 days and 14 days the rate of interest will henceforth be 4 per cent while for a period of 15 days to 29 days it will be 4.5 per cent.

Syndicate Bank's new deposit scheme

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Mumbai: Syndicate Bank has launched the resident foreign currency (domestic) deposits scheme, for its resident Indian customers. As per the scheme, resident Indians can now open accounts in dollars, pounds and euro and credit the proceeds of foreign exchange acquired in the form of currency notes, bank notes and travellers cheques, said a press release.

I-flex to target US community banks

Bangalore: I-flex Solutions Ltd, a financial software services and products company, is in talks with IT majors such as IBM, EDS and CSC to offer its flagship banking product Flexcube on an application service provider (ASP) platform to community banks in the US, the Caribbean and Latin America.

Vijaya Bank to launch 'Vijaya Raksha'

Hyderabad: Vijaya Bank is planning to launch a new value-added scheme, Vijaya Raksha, beginning January 1, 2003, for its customers.

10-yr yield dips to 6.08 per cent, repos cut hopes gain pace
Mumbai: : The benchmark 10-year yield fell to a life-low of 6.0852 per cent in intra-day trades on Monday, even as hopes of a technical correction gained ground. A 25 basis points repos rate cut is widely expected in the market.

LIC losing market share, says ORG-MARG

Mumbai: Third quarter brand tracking by ORG-MARG has found that the state-owned Life Insurance Corporation is losing its earlier preferred position while private life insurers like ICICI Prudential, HDFC Standard Life and Tata AIG have managed to

47

increase their share among customers.

Ashok Leyland Finance to securitise vehicle receivables

Mumbai: Ashok Leyland Finance Ltd, part of the Hinduja Group, is planning to securitise vehicle receivables of Rs 200-250 crore during the last quarter of this fiscal.

BoR in consolidation mode; buys 16 per cent in Bharat Overseas Bank

Mumbai: In a bid to consolidate its operations, the Bank of Rajasthan is in the process of acquiring an additional 16 per cent stake in the ailing Bharat Overseas Bank.

ICICI Pru teams up with LKB

New Delhi: ICICI Pru Life Insurance which has tied up with Kerala-based Lord Krishna Bank is generating 15 per cent of its business from bancassurance channel.

TCS solution for City Union Bank

Mumbai: Tata Consultancy Services (TCS) has bagged an Rs 15-crore order from City Union Bank (CUB) for implementing its core banking and market risk solution for the bank.

Mediclaim premiums to be hiked 6 pc

Bangalore: Mediclaim policy premiums are to be hiked effective January 1 by about six per cent by the four public sector insurance companies - New India Assurance Company
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Ltd, National Insurance Company Ltd, United India Insurance Company Ltd and the Oriental Insurance Company Ltd.

MSRDC redeeming Regular Return Bonds

Mumbai: The Maharashtra State Road Development Corporation (MSRDC) on Monday commenced redemption of its Rs 800-crore Regular Return Bonds series - I by issuing a cheque of Rs 175 crore to the Unit Trust of India.

Canara Bank may recover Rs 279 cr in second half

Mumbai: The spurt in bad loans recall is likely to help the bank compress its nonperforming asset (NPA) ratio to 3.50 per cent by March-end from 3.84 per cent, as reported on September-end.

Netravati Grameena hikes deposit rates

Mangalore: Netravati Grameena Bank has increased its interest rates on term deposits invested for a period of over one year to 8 per cent, with effect from December 27.

ICICIdirect plan to reach remote areas

New Delhi: ICICIdirect.com, online trading service from ICICI, has launched `DirectLink', which seeks to provide trading access to remote parts of the country through a local partner.

Insurers, PFs active in bond markets

Mumbai: Bond markets remained firm, with the Reserve Bank of India reiterating its
49

commitment to a soft interest rate regime. The ten-year yield to maturity (YTM) on a weighted average basis ended the week at close to 6.24 per cent.

Banks told to form task force for risk-based internal audits

Mumbai: The Reserve Bank of India has asked banks to form a task force to put in place risk-based internal audit systems. The central bank has, in its finalised guidelines issued on December 28, also asked banks to submit to it a quarterly audit policy reports.

BOB Cards ties up with Cholamandalam

Mumbai: BOB Cards, a subsidiary of Bank of Baroda, and Cholamandalam Investment and Finance Company have announced a tie-up to issue co-branded credit cards to Cholamandalam's vehicle finance customers.

Bank loan disbursals below target in Dakshina Kannada

Mumbai: Banks have disbursed crop loans to the tune of Rs 86.60 crore during the first six months of the year, registering an achievement of 89 per cent.

Bank credit up Rs 1,652 crore

Mumbai:Bank credit increased by Rs 1,652 crore to touch Rs 6,84,042 crore for the fortnight ended December 13, 2002, as compared to Rs 6,82,390 crore in the previous half-month.

GIC Housing special schemes for women

Chennai: GIC Housing Finance Ltd (GICHFL) will soon be introducing new schemes
50

with flexibility in terms of repayment and interest rates, says GICHFL chief executive N Sowmyan. Sowmyan says the schemes will be made available for women and people on the verge of retirement. The mode of repayment could be chosen according to ones

financial capability. The new products will be introduced in a fortnight and even the existing customers could change over, if they wish. The free personal accident policy for women will provide better cover, he says. GICHFL had sanctioned approximately Rs 260 crore as loans and disbursed around Rs 230 crore last year. During the current year, the sanctions and disbursements targets have been fixed at Rs 400 crore and Rs 300 crore, respectively.

Can Fin Homes plans to lend Rs 540 crore

Kochi: Can Fin Homes Ltd, one of the largest bank-sponsored housing finance companies in India, is planning to sanction loans amounting to Rs 540 crore and disburse Rs 475 crore in the current financial year. The company had achieved a profit after tax of Rs 19.81 crore for 2001-02, which is an all-time record. The loan sanctions in Kerala amount to Rs 135 crore and disbursements Rs 120 crore, of which sanctions amounting to Rs 30 crore and disbursements amounting Rs 27 crore have been made through its Kochi branch, says Mr Can Fin Homes managing director G Umesh Shenoy. During this financial year, the company plans to sanction Rs 50 crore and disburse Rs 45 crore in the state, of which sanctions of Rs 18 crore and disbursements of Rs 16 crore will be done through the Kochi branch.

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Birla Sun Life finishes one year in business

Mumbai: Birla Sun Life has crossed the one-year milestone since commencing its operations. The company has sold over 20,000 policies with a total sum assured of Rs 1,600 crore, earning an average premium of Rs 15,000 per policy.

The company had singled out the top three income segments for its individual life business and the top corporates for its group business. Retaining its focus on investment-linked insurance products, the company has been able to garner annualised investment returns of 9.03 per cent for the protector option (low risk), 12.37 per cent for the builder option (medium risk) and 20.24 per cent for the high-risk enhancer option. These returns are net of investment management fees.

All pension schemes to come under one roof

New Delhi: The finance ministry is planning to constitute an empowered group, consisting of representatives from various ministries, to chart out a roadmap that can bring all the pension schemes in the government and private sectors under one umbrella.

3.1 Lord Krishna Bank records 294% growth

Kochi: Lord Krishna Bank has achieved a 294-per cent growth in net profit during the last fiscal. The banks net profit in 2001-02 had increased to Rs 19.71 crore from Rs 5 crore in the previous year, says Lord Krishna Bank director A K Puri.

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"Our operating profits rose to 233 per cent to Rs 50.5 crore. As a long-term corporate goal the bank is eyeing a business level of Rs 10,000 crore by the end of 2007," he says. "Our focus will be to bring state-of-the-art services and convenience banking to our customers. Towards this end we will aggressively expand our branch networks in north and western India. "We plan to add 22 more branches across India to extend our reach extensively in north

India, as we are a well established bank in parts of south India," Puri says. "These branches will further strengthen our existing network of 94 branches spread across 10 states."

3.2 HDFC Bank starts Silver Card in Hyderabad

Hyderabad: HDFC Bank, the private sector bank promoted by Housing Development Finance Corporation, has launched its new Silver Credit Card in Hyderabad. The bank says Hyderabad is the sixth city in India where its credit card has been launched. "This will enable our customers in Hyderabad to avail of the widest range of financial products and services." Says HDFC Bank managing director Aditya Puri: "The credit card was one product that was missing from our portfolio; it has been filled now. We now have a good product - a card that people can carry, flash, use and rely upon, as it is brought to them by a bank that they trust." Currently HDFC Bank has a network of 171 branches and 479 ATMs in 77 cities spread across the country, offering anywhere and anytime banking services to its customers.
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Banks told to keep track of big transactions

Mumbai: In a recent communication to all commercial banks, the Reserve Bank of India (RBI) said some banks have not been strictly following instructions, particularly in connection with record-keeping of cash deposits and withdrawals of Rs 10 lakh and above. The RBI also mentioned that managers are not closely monitoring cash withdrawals for

large amounts and are not regular in reporting such transactions to the controlling offices. The RBI has asked all commercial banks to ensure that no new accounts are opened by banned organisations and advised them to strictly adhere to guidelines of opening and monitoring accounts. The central bank has also called for a closed-door meeting next week with bank chiefs to discuss measures for preventing frauds. The RBI has instructed banks to adopt best practices as per the suggestion of the Dr N L Mitra committee in 31 August 2006 on the legal aspect of bank frauds. The committee said: "Every bank, financial institution and financial intermediary should be required to develop best practice code (BPC) within a time-frame and submit the same to the regulator." The panel also pointed out the need for effective measures to internalise BPC among staff, effectively supervise the functionalisation of BPC, control and monitor variation from BPC, enforce BPC in the use of discretionary power and make documentation of the same, periodically review the use of discretionary power, conduct periodical legal system, audit and obtain compliance certification.
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RBI advances 50 bps cut in CRR to 1 June

Mumbai: The Reserve Bank of India (RBI) has decided to effect the 50-basis points cut in the cash reserve ration (CRR) from 1 June 2006, a fortnight ahead of its earlier scheduled date. In the monetary and credit policy for 2006-07, the RBI had announced that the CRR be reduced by 50 basis points from the fortnight beginning 15 June 2006. But the RBI has

advanced the date after a review of the present liquidity situation. The reduction in the CRR will release funds to the tune of Rs 6,000 crore to the system. A section of bond-dealers believe that the RBI has decided to advance the reduction in the CRR because there were signs of interest rates hardening. Indications of a revival in the US economy may result in the increase of Fed rates, pushing up interest rates globally, said an analyst.

RBI advances 50 bps cut in CRR to 1 June

Mumbai: The Reserve Bank of India (RBI) has decided to effect the 50-basis points cut in the cash reserve ration (CRR) from 1 June 2006, a fortnight ahead of its earlier scheduled date. In the monetary and credit policy for 2006-07, the RBI had announced that the CRR be reduced by 50 basis points from the fortnight beginning 15 June 2006. But the RBI has advanced the date after a review of the present liquidity situation. The reduction in the CRR will release funds to the tune of Rs 6,000 crore to the system.

55

A section of bond-dealers believe that the RBI has decided to advance the reduction in the CRR because there were signs of interest rates hardening. Indications of a revival in the US economy may result in the increase of Fed rates, pushing up interest rates globally, said an analyst.

HDFC cuts interest rates on housing loans

Mumbai: HDFC has cut interest rates on its housing loans - both fixed and adjustable. On fixed rate loans, the cut ranges 25-to-75 basis points.

On adjustable rate loans, the cut is 50 basis points. For loans in excess of Rs 2 lakh, the new rates will be 10 per cent per year for up to five years; 11 per cent for six-to-10 years; 11.25 per cent for11-to-15 years. For adjustable rate loans with one-to-20 year tenure, the rate on offer is 11 per cent. These new rates are applicable from 15 May 2006. There is a processing and administration fee of 1 per cent. HDFC has also cut the interest rates on term deposits and trust deposits by 25 basis points (0.25 per cent per year). For senior citizens, an increment of 0.50 per cent is available over the normal rates.

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Does the retail investor easily understand the sector, its dynamics and its prospects? Since we are discussing about the banking sector, the investor needs to first understand the sector dynamics thoroughly before making any investment decision. A detailed article on how the banking industry functions, has been carried by us. The current status as well as the prospects of the industry has to be analysed well. Is track record of the bank important? The performance history of the bank is a very important factor that needs to be considered when analyzing any company. The history indicates the strategies adopted by the bank, its success or failures and whether it is a laggard or a leader. The financial performance of the company indicates the effects of the decisions it has taken in the past. It also indicates the financial health of the bank. The history of the bank should also be analysed well enough to understand the position of the bank in the sector as a whole. Further, in case of banks it is imperative that one looks in to the quality of assets (NPA levels) that the bank has in its books. This will indicate whether the bank will be able to survive in case of any sudden pullout by customers. This is because the bank is responsible towards its depositors to ensure a good quality of assets, which will essentially protect their interests. The past should also be studied to analyse the performance of the banks and their management. Management performance and corporate governance are key factors that need to be looked in to, especially for banks, as they deal with a large quantum of retail
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money and hence they are more accountable to the same. Transparency and disclosure levels are other key areas that need to be looked in to. A bank that has been unable to shield the depositors' monies, is unlikely to do justice to its shareholders funds. How relevant is competition in case of banks? Competition plays a key role in any sector. Competition is intense in the banking sector, which in the Indian context is highly fragmented. Competition in the banking sector determines the spreads that individual banks earn over their lending portfolios. When one analyses competition in case of this sector, the emphasis has to be on a thorough analysis of the bank's relative standing in the sector. One needs to analyse whether the bank is a follower or a leader (as far as strategies are concerned) in the sector. What role does management background play in the analysis? Apart from all these factors the management standing and expertise of the bank is also an important factor that needs to be looked into. Management and its composition in relation to the promoter holding in the bank needs to be carefully looked into. The analysis of the management is important, as one may be able to assess the probability of the bank keeping to its targets, based on the management's capabilities. The assessment of the management capabilities can be done only if one delves deeper in to the track record of the bank, and the management's role in the same. Where does the money go? Investors need to know what is the stated objective of the bank as far as the IPO is concerned. Banks need to raise capital for various reasons and one of the foremost
58

among them are for augmenting capital (for growing the quantum of business). An IPO will augment the Tier-I capital of the bank, which will help the bank to do more business. How do you put all the above in a snapshot? The questions above will help the investor to assess the nature of the banking industry and the bank's position and performance relative to competition. Investors now need to look deeper in to what all this means for the stock price of the bank. The stock price or the valuation of the bank is dependent on almost all the factors that have been mentioned above. A detailed analysis of the bank's financial performance over the years would help us compile certain key ratios relevant to the sector. These ratios when compared to that of other banks will give us an idea of the relative financial standing of the bank among its peers. Once this is done we will be in a better position to try and arrive at a fair valuation for the bank stock. This will give us an indication of the fairness of the IPO in terms of pricing of the issue. A lot of investors jump into the IPO bandwagon in a market bull run, hoping to make a killing when the IPO lists, even if they understand that the concerned bank may not be a worthwhile investment. The idea is that in a bull run, everything will fly, irrespective of the fundamentals. Such a strategy seems to rely on the `bigger fool' theory. But one must remember, this strategy could backfire. Research is the key to successful investing, whether in a bull or a bear run.

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In continuation to enlighten investors on how to analyse a sector and identify stocks, here is our analysis on the banking sector this time. To start of with, unlike any other manufacturing or service company, a banks accounts are presented in a different manner (as per banking regulations). The analysis of a bank account differs significantly from any other company. The key operating and financial ratios, which one would normally evaluate before investing in company, may not hold true for a bank (like say operating margins).

Exhibit: - 3(a)

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4. Research Methodology
4.1 Statement of the problem: The Lord Krishna Bank one of the most prestigious bank, dealing in retail banking and treasury operation, established in 1940 at Kochi and having 112 branches in state of India. This is with concern to the LKB Pitampura branch established in 2002 and HDFC Pitampura branch, established in 2003, inspite of this fact that LKB was come in to existence one year before as with the HDFC bank. Still LKB Pitampura branch has lower S/B A/C, Corporate deposits and fixed deposits. To overcome this problem the bank has launched its special product, mutual fund in the market to retain improve its deposit share. But still the bank has not succeeded in improving its market share in fixed deposits to desire level. Hence the proposed study is an attempt to identify the problem area.

4.2 Importance of the problem

The proposed study aims towards studying the pros and cons of various marketing practices and problems related to behavioural analysis of depositors in LKB bank. In this study an effort would be made to analyze the satisfaction level of LKB customers and its impact on behaviour of the potential customers. As it is universally accepted fact that the customer satisfaction directly affects the behaviour of the customers and this is

61

why this study become more important for different persons, groups institutions, researchers etc.

4.3 Purpose of the study: The purpose of the proposed study is to analyze in depth the various attributes, which affects the customer depositing behavior and highlights the shadow area of the customer satisfaction in the bank, to suggest guidelines for future. It is confined with the key findings of behavioural analyses of depositors in banks.

4.3.1 Factors to be considered: (a) Front sitting staff (b) Dealing with the customers (c) Habitual of doing same task without taking any initiatives for innovative techniques to attack the prospective customers. (d) Facilities are not up to the mark to approach the best output. (e) Due to non-permanency of the staff, the customers feel irritative to adopt the changing environment. (f) Workings are not up to the satisfaction level for the customers i.e, feeling of utilization of money as well as right destination of their money.

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4.4 Review of Literature: Customer need satisfaction and bank need profit, if both the condition fulfills then there is no problem but if even one of the line will blocked then the problem will arise because every penny has its importance, so no customer will ready to give to the bank a single penny, if it will not convert in to meaning full thing.This research deals with the reasons for the shortage of the deposits, current A/Cs and saving A/Cs with the lord Krishna Bank than the HDFC bank. The proposed study deals with the pros and cons of various marketing practices, which has been adopted by Lord Krishna Bank during this period. Mainly the research is conducted to judge the behaviour of the depositors for the money to be deposited with the particular bank. The sample is collected from different sources like face to face interactions, magazines, websites, annual report and , obviously from customers.

4.5 Objectives of the study: (a) Judging the behaviour of the depositors. (b) Priority of banks for the money to be deposited. (c) Factors, which the customers have in their mind before dealing with other banks. (d) Safety and security be the ultimate factors for the depositors. (e) Satisfaction and contemplation be the reasons for depositors.

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4.6 Scope of the study: The proposed study is confined to Pitampura and Kohat enclave with 8 Enclaves, 10 Societies, D.D.A flats and 20 residential colonies. The various analyzed of the study would be based on data collected from these places. To conduct the study and to reach to a reasonable research, two types of data are used: Primary data Secondary data

4.7 The Sample: Banks includes a number of banks such as: - LKB bank, HDFC bank, ICICI bank, PNB bank, The Nanital bank, SBI bank. Out of these banks, a sample of two namely LKB bank and HDFC bank only was selected, due to limitations of time, money and energy. During the course of selection of sample, only those banks were included in the sample which are private sector banks. The sample was selected in this manner so that it could represent the banks established and managed by RBI.

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4.8 Data Collection: Basically the data collected from the different sources is analyzed in to different ways so that proper interpretation and analysis could be possible. Initially the researchers were intending to collect data from both the sources i.e, from primary as well as secondary sources. The main sources of secondary data was annual reports of LKB and HDFC bank but primary data could be collected with the help of questionnaires, interview schedule only. This was decided that the questionnaire / interview schedules would include such questions, the answers to which were not traceable from secondary data i.e, the annual reports. During the courses of analysis with the help of secondary data collected from annual reports of banks. The researchers came across a number of relevant and important results which helped in preparing and administrating a courses questionnaire / interview schedule regarding all aspects. -For micro level study: - for micro level study i.e, study of individual banks , their past performance, and financial A/Cs of last two years. Apart from tabular presentation , data have been translated in to pictorial presentation also so as to make the study more comprehensive. - For macro level study: - for macro level study i.e, the study of the sample banks as a whole , data of all the sample banks were consolidated with a view to study the financial performance of the tabular as well as pictorial forms both. Data is collected from two sources: 1. Primary data: - Face to face interactions with the customers and staff members. 2. Secondary data: - Magazines
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India today Business world Websites: - LKB and HDFC and the relevant one. Annual report

5. Analysis of data
5.1 Age group analysis.
Passage of time over age makes the person to make their money safe and secure for the better future. It increase the feeling of available of the money at the time of need because after retirement the PPF and fixed deposit are the true friends at the time The questions, which are asked to person, are having the age between 0 to 65 years.

(a) Which type of tool that will be preferred for the safety of money?

Age PPF FD Both

0 20 10% 80% 10%

21 35 15% 70% 15%

36 50 30% 60% 10%

51 65 65% 25% 10%

Table: - 5.1(a) Table: -5.1(a) revealed that persons having the age between 0 20 preferred PPF by 10%, 21 35 by 15%, 36 50 by 30%, 51 65 by 65% whereas 80%, 70%, 60%, 25%, preferred FD respectively and rest of them go for both the options. So
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it is concluded that as the age will increase, people go for the PPF than the FD for the safety of money. (b) At this time which option do you want to go with, risk to earn or peaceful life Age RISK TO EARN PEACE FULL LIFE CANT SAY 0 20 88% 10% 2% 21 35 65% 30% 5% 36 50 10% 85% 5% 51 65 5% 90% 5%

Table: - 5.1(b) Table: - 5.1(b) revealed that persons having the age between 0 20 preferred risk to earn by 88%, 21 35 by 65%, 36 50 by 10%, 51 65 by 5% whereas 10%, 30%, 85%, 90%, go for the peace full life respectively and rest of them have no opinion in this regard. So it is concluded that as the age of the person will increase, they go for the peace full life rather risk earning.

5.2 Occupation analysis

At the time of advancement and era of technology. Satisfaction cant be compensated with limited money because needs cant be fulfilled completely with the limited money. Whatever is earned is less as compared too needs, which the person has. Hussy and rush time make the person to think only of earning of money and nothing else because it is not the question of himself but his complete family.

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The questions, which are asked to the person of occupational levels like Business, Service, Student, Other, are: (a) Which option do you want to go with money or safety of life?

Particulars MONEY SAFETY OF LIFE BOTH

Business 80% 10% 10%

Service 70% 15% 15%

Student 90% 5% 5%

Other 55% 10% 35%

Table: - 5.2(a) Table: - 5.2(a) revealed that persons related with the business preferred to earn money by 80%, service class preferred it by 70%, student preferred it by 90% and the remaining are related with other class. 10%, 15%, 5%, 10%, preferred safety of life respectively and the rest of classes go for the both. So it is concluded that Student class has more eagerness to earn as compare to the other class.

(b) Which factors do you have in their mind while depositing money with bank? Bank loyalty Brand image Interest rate Risk with the bank Performance highlights for the safety and security of the money

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Time utilization as per the location of the bank Behavior of the staff i.e. how to deal with prospective customer in giving right guidelines for the money to be deposited

5.3 Income analysis

Money makes money is the general principle of the life. Person having the money can only thinks of double their money or loss their money. Income analysis deal with the factors related with the income of finding the relation between the income and person with special reference to deposit made by the person in the banks. The question, which are asked to the person having the income between Rs 0 to Rs 10,000 or above Per Month. (a) Is there any relation between income and risk? Heavy risk heavy profit Money give the option to think of earning

(b) Is there any relation between income and deposit? More income give the option to make deposit Fluctuations of interest rate give direction of taking risk and to make deposits.

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5.4 Cost analysis

It includes the cost, which is beard by the customers, or the cost, which is beard by the bank. Cost to customers includes transaction cost, cheque cost, etc.cost to bank include interest rate offer to the customers, etc. The question, which is asked to the persons (a) Is the transaction cost like cheque cost etc change the decision of deposit in banks NO CANT SAY 90% 10%

Table: - shows that 90% of the people said that transaction cost has no impact for the depositing of money whereas 10% of the people has no opinion about the consideration of the transaction cost while depositing money to the bank.

5.5 After deposit analyses: When the person think of the feature benefits and services of the products after purchase. The customer thinks of the facilities after deposit in the bank. The question, which is asked to the person: -

(a) Is facilities matter after deposit?

YES
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90%

NO (OTHER FACTORS) CANTSAY

Table: - 5.5(a)

5% 5%

Table: - 5.5(a) revealed that 90% of the people has the opinion that facilities should be considered while depositing money in the bank whereas 5% has though that it is due to other factors as well and rest of them has no opinion. So it is concluded that facilities should be considered while depositing money in the bank.

5.6 Risk and return analysis

It is well said that risk and return go side by side i.e. high risk, high profit. Risk can of two types systematic risk, which is uncontrollable, and unsystematic risk, which is controllable. Every penny, which is invested by the customers, should give something to motivate them to invest further. The question, which is asked to the person (a) Which option do you want to go with, equity shares, preference share, and fixed deposits?

EQUITY SHARES PREFERNCE SHARE FIXED DEPOSITS

Table: - 5.6(a)

65% 15% 20%

Table: - 5.6(a) revealed that 65% persons preferred equity shares whereas 15% of the people go for the preference shares and rest of them preferred fixed

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deposit. So it is concluded that most of the people preferred equity shares due to high returns.

5.7 Security and safety of future analysis

As we know that future is uncertain and unpredictable so, many instrument and tools are used by the customers to have the security and safety of the future. The person earns is to secure a future which is only than possible when the money which is invested or deposited is safe. The question, which is asked to the person: (a) Which option do you want to with, enjoy of life, safe future?

ENJOY OF LIFE SAFE FUTURE BOTH

Table: - 5.7(a)

10% 80% 10%

Table: - 5.7(a) revealed that 10% of the people preferred enjoy of life whereas 80% preferred safe future and rest of them go for both the options. So it is concluded that security and safety of life should be on the first rank.

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5.8 Limitation of the Study: 1. Customer could to biased while filling the questionnaire because most of the customers are related with the D.D.A flats and societies. 2. Unsatisfied customers can not approach to the right conclusions and result. 3. The data is collected in the month of Feb. and March when the share market is in depression.

4. LKB has launched its new product, mutual fund that will also change the opinion of the customers.
5.

Most of the report is based on the primary data so; the reliability of the primary data should be there.

5.9 Interpretation of data: The proposed study aim is studying the pros and cons of various marketing practices and problems related to Behavioural analyses of depositors in banks in LKB Bank. In this study and effort would be made to analyses the satisfaction level of LKB customers and its impact of behaviour of the potential customers.

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5.9.1 Findings: LKB pitampura branch has lower S/B A/C, Corporate Deposits and fixed deposits due to the following reasons:(a) Brand loyalty (b) Expected and dealt behaviour are not same i.e. what the customer want is not up to the behaviour, dealt by the staff. (c) The front line staff does not take initiatives. (d) Sometimes, same bahaviour can irritate the customers. (e) Computer failure has the direct Impact on the customers deposits for the future. (f) Risk, return and uncertainty play an important role for the customers deposit.

Given Below are the remedies, which has been taken by the Bank and improved the following: 1. Proper remedies give the branch a boom of 33% in business. 2. Total deposits increased by 39%. 3. CRAR increased from 12% to 16%. 4. Net profit increased by 14% to 27%. 5. Productivity per employee increased from 2 crs to 3 crs.
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6. EPS up from Rs 4 to 4.65. 7. Average cost of deposit brought down to 7% from 8% 8. Net NPA reduced from 6.33% to 6.05 %

80 70 60 50 40 30 20 10 0 0-20 21-35 36-50 51-65

PPF FD BOTH

AGE

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100 80

60 40 20 0 0-20 21-35 36-50 51-65

RISK TO EARN PEACE FULL LIFE CAN'T SAY

AGE
100 80

60 40 20 0 BUSSINESS SERVICE STUDENT OTHER

MONEY SAETY OF LIFE BOTH

OCCUPATION

6. Conclusions and suggestions: 6.1 Suggestions: 1. Permanency should be the criteria for the bank at least for 4 to 5 years 2. A fine blend of state of the art technology with age-old values of the relationship banking. 3. All the counters should be computerized 4. Branches should have CBS (core banking solution) as the HDFC have in its branches
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5. System and security administration department should be established for all the branches as HDFC have for its branches 6. Aiming 100 % computerization in fiscal 2005-06 7. Introduce value-added services for the retail customer such as debit cards; demat services, bank assurance, mutual fund etc. 8. Customized existing products and develop new products in order to attract specific group.

6.2 Conclusions: 1. Around 55% customers are not satisfied with the non- permanency of the staff. 2. 85% customers have attached their satisfaction with the safety and security of the money. 3. Among all of the factors, brand loyalty be the depositors for their deposits. 4. 95% customers have wanted satisfaction and contemplation for the money to be deposited in other banks.

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5. Depositors behaviour will be changed with the situation to be dealt at that time of depositing the money with the bank. 6. 80% customers want satisfaction, as per their money to be deposited, in the sense of behaviour to be dealt with be deposited, in the sense of behaviour to be dealt with. 7. Facilities should be considered first by the banks. 8. 85% customers have the priority of three factors i.e, risk, return and uncertainty.

7.Bibliography
Kotler Philip, marketing management Khan and Jain, Financial Management Kothari C.R, quantitative technique, Ed: 1988, New Delhi, Vikash publishing house Pvt. Ltd.1978. CFA magazines. Newspapers: -Financial Express -Times of India
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-Hindustan Times -Economic Times Journals (Investors perception): -Business World -India Today www.lordkrishnabank.com www.hdfc.com

8. Annexure
Questionnaire: Name: Age:

0 20 21 35 36 50 51 - 65 0 3,000 3,001 5,000 5,001 10,000 Above 10,000

Income:

Occupation:

Business Service Student Other

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Designation: - .

1. Which type of tool that will be preferred for the safety of money? Public Provident Fund Fixed Deposit Both 2. At this time which option do you want to go with, risk to earn or peace Fulfil life? Risk to earn Peaceful life Cant Say

3. Which factors do you have in their mind while depositing money with Bank? .. .. .. 4. Is the transaction cost like cheque cost etc change the decision of deposit in banks.

No Cant Say

5. Is facilities matter after deposit?

Yes No (Other Factors) Cant Say

6. Which option do you want to go with for the Safety of money?

Equity shares Preference share Fixed deposits

7. Does the retail investor easily understand the sector, its dynamics and its Prospects?
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.. .. .. 8. Is track record of the bank important? . . . 9. How relevant is competition in case of banks? . . . 10. What role does management background play in the analysis? 11. Where does the money go?
.. .. ...

12. How do you put all the above in a snapshot?

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CHAPTER 1
INTRODUCTION: LKB
AND

HDFC

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CHAPTER 2
FACTORS INFLUENCING CONSUMER BEHAVIOUR

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CHAPTER 3
BANKING STRATEGIES: AN INTRODUCTION OF VARIOUS BANKS

84

CHAPTER 4
RESEARCH METHODOLOGY

85

CHAPTER 5
ANALYSIS OF DATA

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