“TREND ANALYSIS OF FINANCIAL

STATEMENTS OF HDFC BANK”

For the partial fulfillment of the degree of Master of Business

Administration

COMPANY GUIDE FACULTY GUIDE

Mr.Pratyush Singh Bhati Dr. Rakesh Kumar Srivastava
Manager, Head of Department,(M.B.A)
HDFC Bank, United Institute of Management,
New Delhi. Allahabad.
SUBMITTED BY
Aneeta Rathore
Roll No.0901170022
MBA 3rd semester

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 ACKNOWLEDGEMENT

No task is single man’s effort. Any job in this world however trivial or tough cannot be

accomplished without the assistance of others. An assignment puts the knowledge and

experience of an individual to litmus test. There is always a sense of gratitude that one

likes it express towards the persons who helped to change an effort in a success. The

opportunity to express my indebtedness to people who have helped me to accomplish this

task.

I deem it a proud privilege to extend my great sense of gratitude to my guide Mr.

Pratyush Singh Bhati (BRANCH MANAGER, HDFC BANK NEW DELHI) for the

keen interest, inspiring guidance, continuous encouragement, valuable suggestions and

constructive criticism throughout the pursuance of this report.

I am thankful to Sir Dr.Rakesh Kumar Srivastava (HOD, UNITED INSTITUTE OF

MANAGEMENT), my mentor for granting me the permission to undertake the study

and his valuable suggestions while preparing for this project report. Last but not least it

would be unfair if I don’t extend my indebtedness to my parents and all my friends for

their active cooperation which was of great help during the course of my training project.

ANITA RATHORE

Roll No.0901170022.

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 PREFACE

Using a new pattern based on proper integration of formal teaching and actual practice

the M.B.A. program of GAUTAM BUDDHA TECHNICAL UNIVERSITY(GBTU),

LUCKNOW has it course for six weeks industrial training, after the second semester, so

as the students could begin to have the feeling of business environment right in the

beginning. Practical training constitutes an integral part of management studies. Training

gives an opportunity to the students to expose themselves to the industrial environment,

which is quite different from the classroom teaching. The practical knowledge is an

important suffix to the theoretical knowledge. One cannot rely merely upon theoretical

knowledge. Is has to be coupled with practical for it to be fruitful. The training also

enables the management students to themselves see the working conditions under which

they have to work in the future.

After Liberalization of Indian economy sense is changed because of Multi National

Companies continuously coming with their technical expertise and improved

management concepts. Industrial activity in India has become a thing to watch and I

really wanted to be a part of it and it is essential for me being a finance student.

I consider myself lucky to get my summer training in HDFC BANK NEW DELHI .I

underwent six weeks of training. It really helped me to get a practical insight into the

actual business environment and provide me an opportunity to make my Financial

Management concepts more clear. The advantage of this sort of integration which

promotes guided adjustment to corporate culture, functional, social and other norms with

formal teaching are:

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· To bridge the gap between theory and practice

· To install feeling of belongingness and acceptance

· To cultivate proper temperament & to generate much morale

· To help students identify their strong & weak points in the following & appreciating

organization activities

· To acquaints students with job performance standards I believe that this knowledgeable

endeavor of mine has prepared me slowly but surely for taking up new challenging

opportunities in future.

ANITA RATHORE

Roll No.0901170022

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 DECLARATION

I, undersigned hereby declare that the project report entitled “Trend analysis of financial
statements of HDFC bank” is written and submitted by me under the guidance of Mr.
Pratyush Singh Bhati(Branch Manager , HDFC Bank, New Delhi)

This is my original work. The findings and suggestions in this report are based
on the information collected by me during the project work. I have not copied from
any previous report submitted at University/ Industry.

ANITA RATHORE

Roll no. 0901170022

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 EXECUTIVE SUMMARY

“Undertake something is difficult,

It will do you good,

Unless you try to do something

Beyond what you have already mastered

You will never grow”.

RONALDE. OSBORN

I did my training in HDFC BANK, NEW DELHI. The concept of this project is to check
whether HDFC BANK is performing well year after year or lacking in performance. The
performance can be evaluated by doing Financial Analysis of Financial Statements of
Bank. The purpose of this project is to evaluate the performance of HDFC BANK. It
primarily aims at learning the various factors that can help I evaluation process. I have
tried to find out the reasons or ground where it is lacking. I have also tried to find out the
areas of improvement.

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 CONTENTS
SERIAL NO. TOPICS PAGE NO .

.1. BANKING SYSTEM 9 - 16

1.1 Meaning and Definition 9
1.2 Origin of Word Bank 10
1.3 Banking System in India 10-11
1.4 Functions of Banks 11-12
1.5 Classification of Banks 14-16
2. COMPANY PROFILE 17- 47
2.1 Breif history of Organisation. 17-18
2.2 Sructure. 19
2.3 Performance of Organisation. 20-24
2.4 Product and Services. 25-41
2.5 Problems . 42
2.6 Swot Analysis. 43-47
3. THEORITICAL ASPECTS 48 - 69
3.1 Study of Balance Sheet and Profit and Loss 49 -58
Account.
3.2 Financial Analysis Tools. 59-62
3.3 Basis of Preparation. 63-67
4. OBJECTIVE OF STUDY. 68
5. RESEARCH METHODOLOGY. 69
6. DATA ANALYSIS AND INTERPRETATION. 70-93
7. FINDINGS 94-95
8. CONLUSION AND RECOMMENDATION. 96
9. LIMITATION. 97
10. ANNEXURE. 98-103
11. BIBLIOGRAPHY. 104

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 FIGURES
Fig 1.1 CLASSIFICATION OF BANKS 13
Fig.2.1 ORGANISATIONAL STRUCTURE 19
TABLES
1. AWARDS(2009) 22
2. COMPETITIVE STRATEGY 44

CHAPTER 1

BANKING SYSTEM

INTRODUCTION OF BANKING

1.1MEANING AND DEFINITION:

Bank is an institution that deals in money and its substitutes and provides crucial
financial services. The principal type of baking in the modern industrial world is
commercial banking & central banking. Banking Means "Accepting Deposits for the
purpose of lending or Investment of deposits of money from the public, repayable on
demand or otherwise and withdraw by cheque, draft or otherwise."
-Banking Companies (Regulation) Act, 1949
The concise oxford dictionary has defined a bank as "Establishment for custody of money
which it pays out on customers order." Infact this is the function which the bank
performed when banking originated. "Banking in the most general sense, is meant the

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business of receiving, conserving & utilizing the funds of community or of any special
section of it."
-By H.Wills & J. Bogan

"A banker of bank is a person, a firm, or a company having a place of business where
credits are opened by deposits or collection of money or currency or where money is
advanced and waned.
-By Findlay Sheras
Thus A Bank :
· Accept deposits of money from public,
· Pays interest on money deposited with it.
· Lends or invests money
· Repays the amount on demand,
· Allow the money deposited to be withdrawn by cheque or draft.

1.2ORIGIN OF WORD BANK:

The origin of the word bank is shrouded in mystery. According to one view point the
Italian business house carrying on crude form of banking were called banchi bancheri"
According to another viewpoint banking is derived from German word "Branck" which
mean heap or mound. In England, the issue of paper money by the government was
referred to as a raising a bank.
ORIGIN OF BANKING :
Its origin in the simplest form can be traced to the origin of authentic history. After
recognizing the benefit of money as a medium of exchange, the importance of banking
was developed as it provides the safer place to store the money. This safe place ultimately
evolved in to financial institutions that accepts deposits and make loans i.e., modern
commercial banks.

1.3BANKING SYSTEM IN INDIA

HISTORICAL PERSPECTIVE :
We can identify their distinct phases in the history of Indian banking:
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1. Early phase from 1786-1969.
2. Nationalization of banks and up to 1991 prior to banking sector reforms.
3. New phase of Indian banking with the advent of financial banking.

Banking in India has its origin as early or Vedic period. It is believed that the transitions
from many lending to banking must have occurred even before Manu, the great Hindu
furriest, who has devoted a section of his work to deposit and advances and laid down
rules relating to the rate of interest. During the mogul period, the indigenous banker
played a very important role in lending money and financing foreign trade and
commerce.
During the days of the East India Company it was the turn of agency house
to carry on the banking business. The General Bank of India was the first joint stock bank
to be established in the year 1786. The other which followed was the Bank of Hindustan
and Bengal Bank. The Bank of Hindustan is reported to have continued till 1906. While
other two failed in the meantime. In the first half of the 19th century the East India
Company established there banks, The bank of Bengal in 1809, the Bank of Bombay in
1840 and the Bank of Bombay in1843. These three banks also known as the Presidency
banks were the independent units and functioned well. These three banks were
amalgamated in 1920 and new bank, the Imperial Bank of India was established on 27th
January, 1921.
With the passing of the State Bank of India Act in 1955 the
undertaking of the Imperial Bank of India was taken over by the newly constituted SBI.
The Reserve Bank of India (RBI) which is the Central bank was established in April,
1935 by passing Reserve bank of India act 1935. The Central office of RBI is in Mumbai
and it controls all the other banks in
the country. In the wake of Swadeshi Movement, number of banks with the Indian
management were established in the country namely, Punjab National Bank Ltd., Bank of
India Ltd., Bank of Baroda Ltd., Canara Bank. Ltd. on 19 th July 1969, 14 major banks of
the country were nationalized and on 15 th April 1980, 6 more commercial private sector
banks were taken over by the government
1.4FUNCTIONS OF BANKS
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 I. PRIMARY FUNCTIONS
· Acceptance of Deposits
· Making loans & advances
· Loans
· Overdraft
· Cash Credit
· Discounting of bills of exchange
II. SECONDARY FUNCTIONS
· Agency functions
· Collection of cheques & Bills etc.
· Collection of interest and dividends.
· Making payment on behalf of customers
· Purchase & sale of securities
· Facility of transfer of funds
· To act as trustee & executor.
III. UTILITY FUNCTIONS :

· Safe custody of customers’ valuable articles & securities.

· Underwriting facility
· Issuing of travelers cheque letter of credit
· Facility of foreign exchanges
· Providing trade information
· Provide information regarding credit worthiness of their customer.

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Page 12
 Fig No.1.1CLASSIFICATION OF BANKS

1.5CLASSIFICATION OF BANKS

ON BASIS OF OWNERSHIP
1. On the basis of ownership banks are of the following types

1. PUBLIC SECTOR BANK

Public sector banks are those banks which are owned by the Government. The Govt. runs
these Banks. In India 14 banks were nationalized in 1969 & in 1980 another 6 banks were
also nationalized. Therefore,in 1980 the number of nationalized bank 20. But at present
there are 9 banks are nationalized. All these banks are belonging to public sector
category. Welfare is their principle objective.

2. PRIVATE SECTOR BANKS

These banks are owned and run by the private sector. Various banks in the country such
as ICICI Bank, HDFC Bank etc. An individual has control over their banks in preparation
to the share of the banks held by him.

3. CO-OPERATIVE BANKS
Co-operative banks are those financial institutions. They provide short term & medium
term loans to there members. Co-operative banks are in every state in India. Its branches
at district level are known as the central co-operative bank. The central co-operative bank
in turn has its branches both in the urban & rural areas. Every state co-operative bank is
an apex bank which provides credit facilities to the central cooperative bank. It mobilized

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financial resources from richer section of urban population by accepting deposit and
creating the credit like commercial bank and borrowing from the money mkt. It also gets
funds from RBI.

ii ACCORDING TO RESERVE BANK OF INDIA ACT 1935

Banks are classified into following two categories son the basis of reserve bank Act.
1934.
1. SCHEDULED BANK
These banks have paid up capital of at least Rs. 5 lacks. These are like a joint stock
company. It is a co-operative organization. These banks find their mention in the second
schedule of the reserve bank.
2. NON SCHEDULED BANK
These banks are not mentioned in the second schedule of reserve bank paid up capital of
these banks is less then Rs.5 lacs. The no. such bank is gradually tolling in India.

iii CLASSIFICATION ACCORDING TO FUNCTION

On the basis of functions banks are classified as under:-
1. COMMERCIAL BANKS
The commercial banks generally extend short-term loans to businessmen & traders. Since
their deposits are for a short-period only. They cannot lend money for a long period.
These banks reform various types or agency job for their customers. These banks are not
in a position to grant long-term loans to industries because their deposits are only for a
short period. The majority of joint stock banks in India are commercial banks which
finance trade & commerce only.
2. SAVING BANKS
The principle function of these banks is to collect small saving across the country and put
them into productive use. These banks have shown marked development in Germany &

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Japan. These banks are established in HAMBURG City of Germany in 1765. In India a
department of post offices functions as a saving bank.
3. FOREIGN EXCHANGE BANKS
These are special types of banks which specialize in financing foreign trade. Their main
function is to make international payments through purchase & sale of exchange bills. As
it well known, the exporters of a country prefer to receive the payments for exports in
their own currency. Thus these banks convert home currency into foreign currency and
vice versa. It is on this account that these banks have to keep with themselves stock of the
currency of various countries. Along with that, they have to open branches in foreign
countries to carry on their business.
4. INDUSTRIAL BANKS
The industrial banks extends long term loans to industries. In fact, they also help
industrials firms to sell their debentures and shares. Some times, they even underwrite the
debentures & shares of big industrial concerns.
5. INDIGENIOUS BANKS
These banks found their origin in India. These banks made a significant contribution to
the development of agricultural and industries before independence. Mahajans, rural
moneylenders have been the forerunner of these banks in India.
6. CENTRAL BANK
The central bank occupies a pivotal position in the monetary and banking structure of the
country. The central bank is the undisputed leader of the money market. As such it
supervises controls and regulates the activities of commercial banks affiliated with it. The
central bank is also the higher monetary institution in the country charged with the duty
& responsibility of carrying out the monetary policy formulated by the government.
India's central bank known as the reserve bank of India was set up in 1935.
7. AGRICULTURAL BANK
The commercial and the industrial banks are not in a position to meet the credit
requirements of agriculture. Hence, there arises the need for setting up special type of
banks of finance agriculture. The credit requirements of the farmers are two types. Firstly
the farmers require short term loans to buy seeds, fertilizers, ploughs and other inputs.
Secondly, the farmers require long-term loans to purchase land, to effect permanent
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improvements on the land to buy equipment and to provide for irrigation works. There
are two types of agriculture banks.
1. Agriculture co-operative banks, and
2. Land mortgage banks. The farmer provide short-term credit, while the
letter extend long-term loans to the farmer

CHAPTER 2
COMPANY PROFILE

2.1BRIEF HISTORY OF ORGANISATION

The Housing Development Finance Corporation Limited (HDFC) was amongst the first
to receive an 'in principle' approval from the Reserve Bank of India (RBI) to set up a
bank in the private sector, as part of the RBI's liberalization of the Indian Banking
Industry in 1994. The bank was incorporated in August 1994 in the name of 'HDFC Bank
Limited', with its registered office in Mumbai, India. HDFC Bank commenced operations
as a Scheduled Commercial Bank in January 1995. HDFC is India's premier housing
finance company and enjoys an impeccable track record in India as well as in
international markets. Since its inception in 1977, the Corporation has maintained a
consistent and healthy growth in its operations to remain the market leader in mortgages.
Its outstanding loan portfolio covers well over a million dwelling units HDFC has
developed significant expertise in retail mortgage loans to different market segments and
also has a large corporate client base for its housing related credit facilities. With its
experience in the financial markets, a strong market reputation, large shareholder base
and unique consumer franchise, HDFC was ideally positioned to promote a bank in the
Indian environment.

HDFC Bank began operations in 1995 with a simple mission : to be a “ World Class
Indian Bank.” We realized that only a single minded focus on product quality and service
excellence would help us get there. Today, we are proud to say that we are well on our

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 way towards that goal. HDFC Bank Limited (the Bank) is an India-based banking
company engaged in providing a range of banking and financial services, including
commercial banking and treasury operations. The Bank has a network of 1412 branches
and 3295 automated teller machines (ATMs) in 528 cities and total employees is 52687

2.1.2BUSINESS FOCUS
HDFC bank's mission is to be a world class Indian bank. The bank has aim to build sound
customer franchises across district business so as to be the prefer provider of banking
services in the segment that the bank operates in and to achieve healthy growth in
profitability, consistent with the bank's risk appetite. The bank is committed to maintain
the highest level of ethical standards, professional integrity and regulatory compliance.
HDFC bank's business philosophy is based on four core values:
1. Operational Excellence
2. Customer Focus
3. Product Leadership
4. People.

2.1.3BUSINESS STRATEGY
I. Increasing market share in India’s expanding banking
II. Delivering high quality customer service
III. Maintaining current high standards for asset quality through disciplined credit risk
management
IV. Develop innovative products and services that attract targeted customers and address
inefficiencies in the Indian financial sector.

Page 17
2.2ORGANISATIONAL STRUCTURE(Fig2.1)

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 MANAGING DIRECTOR
(Mr.Aditya Puri)
(Mr.Aditya Puri)

CHAIRMAN OF THE BOARD

( Mr. C .Vasudev)

DIRECTOR
(Mr. Ashim Samanta)

DIRECTOR
(Mr.Pandit Palande)

DIRECTOR
(Mr.Arvind Pande)

DIRECTOR
(Mr.Partho Datta)

DIRECTOR
(Mrs.Renu Karnad)

2.3PERFORMANCE OF THE ORGANISATION

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2.3.1 PROMOTOR
HDFC is India's premier housing finance company and enjoys an impeccable track record
in India as well as in international markets. Since its inception in 1997, the corporation
has maintained a consistent and healthy growth in its operations to remain a market
leader in mortgage. Its outstanding loan portfolio covers well over a million dwelling
units. HDFC has developed significant expertise in retail mortgage loans to different
market segments and also has a large corporate client base for its housing related credit
facilities. With its experience in the financial markets, a strong franchise, HDFC was
ideally positioned to promote a bank in the Indian environment.

2.3.2 TIMES BANKS AMALGAMATION

In a mile stone transaction in Indian banking industry, Times bank limited (another new
private sector bank promoted by Bennett, Coleman & Co. times group) was merged with
HDFC bank ltd., effective February 26, 2000. As per the scheme of amalgamation
approved by the share holders of both banks and Reserve bank of India.

2.3.3 DISTRIBUTION NETWORK

HDFC bank has its Headquarters in Mumbai. The bank at present has an enviable
network of 761branches spread over 327 cities across the country. All branches are linked
on an online real time basis. Customer in 189 locations is also serviced through phone
banking. The banks expansion plans take into account the need to have a presence in all
major industrial and commercial centers where its corporate customers are located as well
as the need to build a strong retail customer base for both deposits and loans products.
Being a clearing settlement bank to various leading stock exchanges, the bank has
branches in centers where the NSE/BSE have a strong and active member base. The bank
also have a network of 1977 ATM's across there cities.

2.3.4TECHNOLOGY
HDFC bank operates in a highly automated environment in terms of information
technology and communication systems. All the bank's branches have connectivity which
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enables the bank to offer speedy funds transfer facility to its customers. Multi branch
access is also provided to retail customers through the branch network and automated
teller machines (ATMs). The bank has made substantial efforts and investments in
acquiring the best technology available internationally to build the infrastructure for a
world class bank has prioritized its engagement in technology and the internet as one of
its key goals and has already made significant progress in web enabling its core business.
In each office its business, the Bank has succeeded in leveraging its market position,
expertise and technology to create a competitive advantage and build market share.

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2.35 MILESTONES IN THE HISTORY

HDFC Bank began its operations in 1995 with a simple mission to be a "World-class
Indian Bank". They realized that only a single-minded focus on product quality and
service excellence would help us get there. Today, they are proud to say that they are well
on our way towards that goal. It is extremely gratifying that their efforts towards
providing customer convenience have been appreciated both nationally and
internationally.

Table 1.
2009

Asia Money 2009 Awards 'Best Domestic Bank in India'

IBA Banking Technology Awards 'Best IT Governance Award - Runner up'

2009

Global Finance Award 'Best Trade Finance Bank in India for 2009

IDRBT Banking Technology 'Best IT Governance and Value Delivery'

Excellence Award 2008

Asian Banker Excellence in Retail 'Asian Banker Best Retail Bank in India Award 2009
Financial Services '

Page 22
2.36MERGER

HDFC Bank and Centurion Bank of Punjab merger at share swap ratio of 1:29 The
Boards of HDFC Bank and Centurion Bank of Punjab met on 25 February, 2008 and
approved, subject to due diligence, the share swap ratio for the proposed merger of
Centurion Bank of Punjab with HDFC Bank. The Scheme of Amalgamation envisages a
share exchange ratio of one share of HDFC Bank for twenty nine shares of Centurion
Bank of Punjab. The combined entity would have a nationwide network of 1,148
branches (the largest amongst private sector Banks) a strong deposit base of around Rs.
1,200 billion and net advances of around Rs. 850billion. The balance sheet size of the
combined entity would be over Rs. 1,500 billion. Commenting on the proposed merger,
Mr. Deepak Parekh, Chairman, HDFC said, “We were amongst the first to get a banking
license, the first to do a merger in the private sector with Times Bank in 1999, and now if
this deal happens, it would be the largest merger in the private sector banking space in
India. HDFC Bank was looking for an appropriate merger opportunity that would add
scale, geography and experienced staff to its franchise. This opportunity arose and we
thought it is an attractive route to supplement HDFC Bank’s organic growth. We believe
that Centurion Bank of Punjab would be the right fit in terms of culture, strategic intent
and approach to business.” Mr. Aditya Puri, Managing Director, HDFC Bank said,
“These are exciting times for the Indian banking industry. The proposed merger will
position the combined entity to significantly exploit opportunities in a market globally
recognized as one of the fastest growing. I’m particularly bullish about the potential of
business synergies and cultural fit between the two organizations. The combined entity
will be an even greater force in the market.” Mr. Rana Talwar, Chairman, Centurion
Bank of Punjab stated, “Over the last few years, Centurion Bank of Punjab has set
benchmarks for growth. The bank today has a large nationwide network, an extremely
valuable franchise, 7,500 talented employees, and strong leadership positions in the
market place. I believe that the merger with HDFC Bank will create a world class bank in
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quality and scale and will set the stage to compete with banks both locally as well on a
global level.”
Mr. Shailendra Bhandari, Managing Director and CEO, Centurion Bank of Punjab said,
“We are extremely pleased to receive the go ahead from our board to pursue this
opportunity.

Page 24
 2.4PRODUCTS AND SERVICES OF HDFC BANK

2.4.1 ACCOUNT & DEPOSITS SERVICE

Banking should be effortless. With HDFC Bank, the efforts are rewarding. No matter
what a customer's need and occupational status, we have a range of solutions that are
second to none. Whether you're employed in a company and need a simple Savings
account or run your own business and require a robust banking partner, HDFC Bank not
only has the perfect solution for you, but also can recommend products that can augment
your planning for the future. It includes these services: -

 Saving accounts.
 Current accounts.
 Fix deposits
 .Demat account
 Safe deposits lockers.

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i. Savings Accounts

These accounts are primarily meant to inculcate a sense of saving for the future,
accumulating funds over a period of time. Whatever person’s occupation, bank have
confident that person will find the perfect banking solution. There some saving accounts
like: -

a. Regular Saving Account:

An easy-to-operate savings account that allows you to issue cheques, draw Demand
Drafts and withdraw cash. Check up on your balances from the comfort of your home or
office through Net Banking, Phone Banking and Mobile Banking. If you need money
urgently then you can take money from the ATM machine. There are 1977 ATM centers
across the country.

b. Saving plus Account

Introducing the best banking option for you with HDFC Bank Savings plus Account.
Now you can get access to some of the finest banking facilities with HDFC Bank's
Savings plus Account. All you have to do is maintain an Average Quarterly Balance of
Rs. 10,000/-.

c.Saving Max Account

Welcome to a world of convenience. Presenting Savings Max account, loaded with

maximum benefits to make your banking experience a pleasure. By maintaining an
average quarterly balance of just Rs. 25,000/- you get a host of premium services from
HDFC Bank absolutely free.

d.Senior Citizen Account

HDFC Bank appreciates your needs and endeavors, which is why, they present an
account especially dedicated to customer, which like a dutiful child will help you fulfill
your needs in the best manner possible.

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 d.No frills Account

In an effort to make banking simpler and more accessible for customers, bank has
introduced the 'No Frills' Savings Account, which offers customer all the basic banking
facilities. Customer can even avail of services like Net Banking, Mobile banking free of
cost. In this customer can put Zero Initial Pay-in and a Zero Balance account

e. Institutional saving accounts

A specially designed account that offers twin benefits of a savings as well as a current
account. Customer’s funds continue to earn you interest while he enjoys hassle-free
banking & a host of other features. All this and more in a Zero Balance account.

f. Salary Accounts

In this account customer can get salary from where he/she doing such job and
organization or company at where the customer of the bank in doing job deposit their
salary in to the salary account a person can get salary.

g. Kid’s advantage account

Start saving for your child today and secure his/her future a sentence tells by the HDFC
bank. Open a Savings Account and transfer money every month into customer’s Kids
Advantage Account and watch the savings grow as customer’s child grows. The
accumulated savings in the Kids Advantage Account can over the years help in meeting
customer child's needs

ii. Current accounts

HDFC Bank Current Account gives the power of inter-city banking with a single account
and access to more than cities. From special cheques that get treated at par with local
ones in any city where branch, faster collection of outstation cheques (payable at branch
locations), free account to account funds transfer between HDFC Bank accounts to Free
inter-city clearing of up to 100lakhs per month, bank’s priority services have become the
Page 27
benchmark for banking efficiency. Now, with an HDFC Bank Current Account,
experience the freedom of multi-city banking. Person can have the power of multi-
location access to his account from any of our 761 branches in 327 cities. Not only that,
he can do most of his banking transactions from the comfort of his office or home
without stepping out. There are various kinds of current account in this bank like:

a. Plus current account

-Plus current account HDFC Bank plus Current Account gives the power of inter-city
banking with a single account and access to more than cities. Plus Current Account
requires maintaining an average quarterly balance of Rs. 100,000.

b. Trade current account

In today's changing business requirements, you need to transfer funds across cities, and
time is of the essence. HDFC Bank Trade Current Account gives power of inter-city
banking with a single account. From special cheques that get treated at par with local
ones in any city where bank have a branch, to free account to account funds transfer
between HDFC Bank accounts, to free inter-city clearing of up to 50 lakhs per month,
bank’s priority services have become the benchmark for banking efficiency. Trade
Current Account requires maintaining an average quarterly balance of Rs. 40,000.

c. Premium current account

Business needs a partner who can manage finances while concentrate on growing
business. Form this account customer can avail benefits of inter-city banking account that
requires an average quarterly balance of only Rs. 25,000, offers Payable-At-Par cheque
book facility & FREE intercity clearing transactions across our network up to Rs.25 Lacs
per month. A Current Account with the benefits of accessing account from a large
network of branches, and through direct access channels - the phone, mobile, Internet and
through the ATM.

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d.Regular current account

A Current account is ideal for carrying out day-to-day business transactions. With the
HDFC Bank Regular Current Account, customer can access account anytime, anywhere,
pay using payable at par cheques or deposit cheque at any HDFC bank branch. It also
facilitates FREE NEFT transactions & FREE RTGS collections for faster collections in
account. Regular Current Account requires to maintain an average quarterly balance of
only Rs. 10,000. With a vast network of branches in cities all over the country, and access
to a multitude of ATM's, customer can keep track of all transactions anytime.

e.Reimbursement Current Account

No more paperwork, no more receipts to keep track of - a hassle-free account that allows
deposit the reimbursements receive from company/organization on a monthly basis. To
open this account a person has to follow these processes:

Procure an Account Opening Document (AOD) from HDFC Bank. (If person has just
joined, first request to company to open up a Salary Account for particular person).
Mention Salary Account number and Debit Card number on the AOD so that Debit card
can be linked to both, Salary Account as well as new Reimbursement Account. Request
company to directly credit cash payments to the Reimbursement Account.

f. Flexi current account

Tired of static transaction limits during peak seasons? HDFC Bank Flexi Current
Account is the answer to changing banking needs during peak seasons. With HDFC Bank
Flexi Current Account Cash Deposit and Anywhere Transaction limits are a multiple of
the balance you maintain in Current Account. So, during peak seasons, customer get the
benefit of higher transaction limits due to the higher average balances maintained in
account. What’s more, during lean seasons, person need not worry about maintaining
huge balances to enjoy high transaction limits, which person anyway may not need. Flexi
Current Account requires maintaining a minimum Average Monthly Balance (AMB) of
just Rs. 75,000.

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 g.Apex current account

The top position is always the desirable position. With the Apex current account, take
business to a new high. On maintaining an average quarterly balance of Rs. 10 lakhs, this
account makes sure person make the most of every business opportunities coming his
way. Unlimited, free, anywhere Banking experience at the APEX is reserved for person
who joints this.

.h. Max current account

Maximum benefits and minimum hassles for customer with Max Current Account with a
Rs. 5lakhs average quarterly balance requirement, bank present to world of privileges that
helps business expand and grow. Features, like, maximum free transaction limits
including other beneficial features on this current account truly enhances business
potential to the Maximum.

i.RFC – Domestic Account

Full name of this account is Resident foreign currency account. Have you accumulated
foreign currency from travelling abroad frequently Received gifts from relatives in
foreign currency? Or esarned it by any other means as approved by the Reserve Bank of
India? If so, open Resident Foreign Currency Domestic Account and manage foreign
currency efficiently. Person can choose to set up your account either in US Dollar, Great
Britain Pound or Euro. To open this accounts a person as to follow this process: - Choose
the currency in which person wish to operate. Open account with an initial amount as per
the following-US Dollar = 250 Great Britain Pound = 200 Euro = 250 and maintain an
Average Quarterly Balance of the same amount.

iii. Fix deposits service

Long-term investments form the chunk of everybody's future plans. An alternative to

simply applying for loans, fixed deposits allow to borrow from own funds for a limited
period, thus fulfilling needs as well as keeping savings secure. People can invest his/her
money into either in security market or gold or mutual fund or into a fix deposits. People

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always go to that way where he/she can get more benefits and minimum risks. So, for this
purpose he has a better chance to deposits money in to the fix deposit. If people believe in
long-term investments and wish to earn higher interests on his/her savings, now is the
time to invest money in HDFC bank Fixed Deposit. Get up to 9.75% on HDFC Bank
Fixed Deposit with an additional 0.50% for Senior Citizens. What's more NO PENALTY
if withdraw part of the FD in times of need. Flexibility, Security and High Returns all
bundled into one offering.

a.Regular fix deposit

As per the rules and regulation of the bank a person can deposit their money in to a fix
deposit in the bank and can get the benefits of these facilities.

.b.Five year tax saving fix deposit

In 2006, it was announced for the first time that Bank fixed deposits booked by an
Individual/HUF for 5 years & up to Rs. 1,00,000/- will be allowed exemption under Sec
80C of the Income Tax Act,1961 subject to necessary declarations taken from the
Customer.

c.Supper saver facility

Customer can enjoy a high rate of interest along with the liquidity of a Savings Account
by opting for a Super Saver Facility on his or her savings account. Avail of an overdraft
facility of up to 75% of the value of his or her Fixed Deposit.

d.Sweep-in facility

Do you wish to avoid taking overdrafts, and still take advantage of your Fixed Deposits?
Then what you need is a Sweep-In Facility on savings account. Link Fixed Deposit to
Savings or Current Account and use it to fall back on in case of emergencies. A deficit in
Savings or Current Account is taken care of by using up an exact value from Fixed

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 Deposit. Since deposits are broken down in units of Re 1/-, customer will lose interest
only for the actual amount that has been withdrawn.

iv. Demat account service

Nowadays share market is becoming is the main occupation of the person. So to avoid
faulty processes demat account is really most important for the share market and for the
safety of shares it is most important. HDFC BANK is one of the leading Depository
Participant (DP) in the country with over 8 Lac demat accounts. HDFC Bank Demat
services offers a secure and convenient way to keep track of securities and investments,
over a period of time, without the hassle of handling physical documents that get
mutilated or lost in transit. HDFC BANK is Depository participant both with -National
Securities Depositories Limited (NSDL) and Central Depository Services Limited
(CDSL).

v. Safe deposit locker

A Safe Deposit Locker with HDFC Bank is the solution to person’s fear. Located at
select branches in cities all over the country, bank’s lockers ensure the safe keeping of
valuables. Eligibility An individual (not minor), firms, limited company, associations,
clubs, trusts, societies, etc may hire a locker. Advantages of safe deposit locker in HDFC
bank, Wide Availability Lockers available in various sizes. i.e. Small, Medium, Large
and Extra Large with varying rents. Lockers are rented out for a minimum period of one
year. Rent is payable in advance.No deposits are required to avail a locker. Just open an
account and get the locker facility. There is a nominal annual charge, which depends on
the size of the locker and the centre in which the branch is located. Nomination for Safe
Deposit Locker The Lockers and their contents can be nominated to people near and dear
to you. Nomination facility is available to individual hirer of Safe Deposit Locker. In the
case of a sole hirer of a safe deposit locker, nomination can be made in favor of only one

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individual. Where the safe deposit locker is hired in the name of a minor, the nomination
shall be made by a person lawfully entitled to act on behalf of the minor.

Terms & Conditions For obtaining a Locker at HDFC Bank you must be an account
holder with Bank. Lockers can be allotted individually as well as jointly. The Locker
holder is permitted to add or delete names from the list of persons who can operate the
Locker and can have access to it. Loss of Key is to be immediately informed to the
concerned Branch.

2.4.2 LOAN SERVICES

In today’s competitive world everything happens only with the help of money or through
the money every person need money. But some time a person has not cash on hand at that
time he needs lone either from any friend or from any financial institute. Lone does not
mean that only lower class person needs it but also upper class person it is needed. As per
the requirement of the every person there are much type of loans are there in the HDFC
bank.

a. Personal loans

A person has so many dreams but some time due to scarcity of money a dream can’t be
satisfy. So, here one solution for that person this is personal loan. From this he/she can
fulfill their needs or requirement. It can be anything either a dream of vacation or
son/daughter’s admission to college or any wedding, so personal loan can be helpful in
this entire requirement. As person ordered in the hotel for tea or coffee and it is
immediately came fast, same over here any person want to get a personal loan with the
nominal documents he can get the loan.

b.Home loan
HDFC Bank brings, HDFC home loans to doorstep. With over 30 years of experience, a
dedicated team of experts and a complete package to meet all housing finance needs,
HDFC Home Loans, help people realize dream.

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 c.Vehicles loan
Nowadays the life is being so fast, time value is becoming more important so to reach at
the destination of any business related occasion or for a boy to reach college or anywhere
at the fix time there are so many requirement of vehicles. But every people have no
capacity to purchase vehicles with cash so for that here in the HDFC bank vehicles loan
is available. There are many types of vehicles loan.

Types of vehicles loan:

 Two wheeler loans.

 New car loan.
 Used car loan.
 Tractor loan (for agree culture business)
 .Commercial vehicle loan.
So, as per the requirement of the person there are these types of loans are available this
are at the chip rate and hassle free from more documentation and other procedure. And
commercial businessman can get the benefits of the commercial vehicles loans. Thus as
per the need of different people there are vehicle loans available. And also terms and
condition are different as per the requirement.

d.Express loan plus

Bank offer Express Loans Plus at person Doorstep to help fulfill all his/her needs. The
procedure is simple, documentation is minimal and approval is quick. It is helpful to
person in repairing of house, School admission or also in the family holiday.

e.Gold loan

With HDFC Bank's Gold Loan, person can get an instant loan against gold jewellery and
ornaments. The procedure is simple, documentation is minimal and approval is quick. A
person can get 70% loan on the value of the gold jewellery and ornaments. There is also
availability of the overdraft on the gold jewellery. With this a customer can get free

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additional services like free personalized cheque book, free international debit card, and
free net banking phone banking services.

f.Educational loan

Nowadays important of education becoming very high. ASs it important becoming high it
is becoming costly. So in the higher education some time people cannot effort a high
price at a same time. So, there is education loan is also available for the student. A person
can get loan up to 10 lakhs to study in India and 20 lakhs if he wants to study in abroad.
Loan available up to tenure of 7 years including moratorium period. Loans disbursed
directly to the educational institution. It is released as per fee schedules of institutes.
Exclusive Telegraphic Transfer facility available for courses abroad. Loans available for
short duration/ job oriented courses also.

g.Loan against security

With HDFC Bank's Loan against Securities, person can get an overdraft against securities
like Equity Shares, Mutual Fund Units(Equity, Debt, FMPs), Gold Exchange Traded
Fund(ETF),NABARD's Bhavishya Nirman Bonds, Policies issued by LIC & Select
Private Insurance Companies, NSC, KVP, UTI Bonds (ARS & US64 Bonds) and Gold
Deposit Certificates, while still retaining ownership. And the best part is that he can
continue to enjoy all his shareholder benefits such as rights, dividends and bonuses Loan
available to NRIs against Shares, Mutual Funds (equity, Debt, FMPs), US64 Bonds,
Insurance Policies, NSC, and KVP.

h.Loan against property

HDFC Bank brings Loan Against Property (LAP). Person can now take a loan against
residential or commercial property, to expand his business, plan a dream wedding, and
fund his child's education and much more. He can depend on bank to meet all his
business requirements even to purchase a new shop or office for business. Loan to
purchase Commercial Property (LCP) is a specially designed product to help person
expand his business without reducing the capital from his business. These are loans
services providing by HDFC bank which are very hassle free and really benefits for most
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 of customer and most of customer are satisfied by the loan services providing by the
bank.

2.4.3 CARD SERVICES

In today’s competitive and fast time card services providing by the banks are really very
important to every person and every business needs or to take meal in to the hotel or to
purchase jewellery from the jewelers shops cards are playing good role in the banking
sectors. Bank ranges of Cards help to meet financial objectives. So whether persons are
looking to add to his buying power, conducting cashless shopping, or budgeting his
expenditure, he will find a card that suits him.

a. Credit cards

A person wants many things like, a trip to Bali, a diamond ring for wife's dreams. Some
dreams can't wait. If there's something person has always wanted. If a person wanted
fulfill his wants he can get benefits from the HDFC bank’s credit cards facilities.

different types of credit

 Classic cards
 Silver Credit Card.
 Value plus Credit Card.
 Health Plus Credit Card.
 Premium Cards:
 Gold Credit Card
 Titanium Credit Card
 Woman's Gold Card
 Platinum Plus Credit Card

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 b. Debit card

HDFC Bank Debit Cards give person complete and instant access to the money in his
accounts without the risk or hassle of carrying cash.

Types of debit card: -

 Classic card
 Easy shop international Debit card.
 Premium card
 Easy shop gold Debit card.
 Easy Shop International Business Debit Card.
 Easy Shop Woman's Advantage Debit Card.
 Kisan Card.

2.4.4 INVESMENT AND INSURANCE SERVICE

Nowadays a ward investment is becoming more popular. Person invest their money in to
various schemes or in to the gold or share market etc. but some time he is in to the
difficult situation, for that bank help person invest wisely through financial and
investment services.

Types of investment: -

a. Mutual Funds
Invest through the Mutual Fund route to meet varied investment objectives.

b. Insurance

Traditional Plans Unit Linked Plans

 HDFC children's PLAN. HDFC Unit Linked Young Star Plus II.
 HDFC Money Back Plan. HDFC Unit Linked Young Star Suvidha.
 HDFC Savings Assurance Plan. HDFC Unit Linked Young Star Suvidha Plu

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 HDFC Assurance Plan. HDFC Unit Linked Pension.
 HDFC Term Assurance Plan. HDFC Unit Linked Pension Plus.
 HDFC Loan Cover Term Assurance Plan. HDFC Unit Linked Endowment
Plus II

 HDFC Endowment Assurance Plan. HDFC Unit Linked Endowment Suvidha.

 HDFC Single Premium Whole of Life Insurance HDFC Unit Linked Endowment
Suvidha
 HDFC Unit Linked Enhanced Life Protection
GENERAL AND HEALTH INSURANCE
Complete protection for business, health, travel & more.

c. Bonds
A secure investment avenue giving stable returns with tax benefits. financial Planning
Start Now Plan investments to meet financial goals Knowledge Centre Profit from
research and make informed investment decisions. Equities & Derivatives Leverage
bank’s vast information repository and transact online. Mudra Gold Bar Buy 24 Karat
gold bars made in Switzerland and certified by Assay.

2.4.5 FOREX AND TRADE SERVICE

Nowadays businesses becoming worldwide e.g. India to America but main problems are
about monitory transaction because at every country the currency become changed so for
that banks are playing a very important for the businesses. If people need to deal in
foreign currency and keep tabs on exchange rates every now and then, transfer monies to
India, make payments etc., HDFC Bank has a range of products and services that people
can choose from to transact smoothly, efficiently and in a timely manner. Bank offering
following Foreign Exchange Products and Services. Foreign Exchange and Trade
Services The following are different methods of transacting in Foreign Exchange and
remitting money.

 Travelers Cheques.
 Foreign Currency Cash.
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 Foreign Currency Drafts.
 Cheque Deposits.
 Cash to Master.
 .
Important guidelines and schedules All Foreign Exchange transactions are conducted by
strictly adhering to RBI guidelines. Depending on the nature of transaction or point of
travel, people will need to understand his Foreign Exchange limits.RBI Guidelines. Forex
Limits .Non HDFC Bank Account Holders.

2.46PAYMENT SERVICE

Nowadays life of a person become very stressful and he/she becoming busy with their
own business, but they have to payment for something so for that reason bank’s payment
services become started. With HDFC Bank's payment services, person can bid goodbye
to queues and paper work. Bank’s range of payment options make it easy for pay for a
variety of utilities and services.

a. Verified By Visa

Do you want to be worry free for your online purchases? Now you can shop securely
online with your existing Visa Debit/Credit card.

b. Net Safe

Now shop online without revealing your HDFC Bank Credit Card number. What more,
you can now use your HDFC Bank Debit Card also for online purchases.

c.Merchant Services

Accept all Visa, MasterCard, credit and Debit cards at your outlets through state of the art
POS Machines or through your website and experience hassle free payment acceptance.
Prepaid Mobile Refill If you are an HDFC Bank Account holder, you can now recharge
your Prepaid Mobile Phone with this service.

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d.Bill Pay

Pay your telephone, electricity and mobile phone bills at your convenience. Through the
Internet, ATMs, your mobile phone and telephone - with Bill Pay, our comprehensive bill
payments solution.

e.Visa Bill Pay

Pay your utility bills from the comfort of your home! Pay using your HDFC Bank Visa
credit card and forget long queue and late payments forever

f.Pay Now

Use your HDFC Bank Credit Card to pay your utility bills online, make subscriptions and
donations; no registration required. Enjoy credit free period and reward points as per your
credit card features.

g.Insta Pay

Pay your bills, make donations and subscribe to magazines without going through the
hassles of any registration.

h.Direct Pay

Shop or Pay bills online without cash or card. Debit your account directly with our Direct
Pay service!

2.4.7 IMPERIA/PREFERRED/CLASSIC BANKING

As a special customer bank providing a TAJ to customer with name imperia/preferred

customer. For that bank provide a special service to their customer. HDFC Bank's
preferred/imperia Programme is the royal decree that enhances the exclusivity that you
are accustomed to. It makes you feel special at every step, pampering with services those
others can only dream about. This service goes beyond the obvious, rises above the
expected, so that the whole world can see, that even today, the grandeur and
magnificence of royalty is alive and well. Thus as retail banking service bank providing

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really good and beneficial services to their customer and as family member they are
providing good services to every customer either they are came business related or
anything. So for this reason,HDFC bank playing a good role in the customer’s life for
their monitory transaction.

2.4.8 NRI BANKING

With a view to attract the savings and other remittance into India through banking
channels from the person of Indian Nationality / Origin who are residing abroad and
bolster the balance of payment position, the Government of India introduced in 1970
Non-Resident(External) Account Rules which are governed by the Exchange Control
Regulations. The funds held in Non-Resident (External) Accounts (NRE Accounts)
qualify for certain benefits like exemptions from taxes in India, free repatriations
facilities, etc. Deposit types NRI-Banking facilitate the NRI customer to open the
following account types. NRE (Non Resident External Accounts) it can be in the form of
Savings, Current or fixed deposits in Indian rupees. The funds in this account are fully
repatriable. NRO (Non Resident Ordinary Accounts) It can be in the form of Savings,
Current or Fixed Deposits in Indian Rupees. The funds in this account are not repatriable
(only interest accrued is repatriable). FCNR (Foreign Currency Non Resident Accounts)
it can be in the form of fixed Deposits only, in the five major currencies, namely US
Dollars, GBP, DM, Euro, and Japanese Yen. The funds in this account are fully
repatriable

2.4.9 WHOLESALE BANKING

Wholesale banking is the provision of services by banks to the like of large corporate
clients, mid-sized companies, real estate developers and investors, international trade
finance businesses and institutional customers, such as pension funds and government
entities/agencies. Also included is banking services offered to other financial institutions.
In essence, wholesale banking services usually involve high value transactions.
Wholesale banking compares with retail banking, which is the provision of banking
services to individuals.

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2.5PROBLEMS ENCOUNTERED BY HDFC BANK:

In increasing market share in India’s through expanding banking and financial
services industry by following a disciplined growth strategy focusing on quality and not
on quantity and delivering high quality customer service.

In maintaining the leverage between technology platform and open scale systems to
deliver more products to more customers and to control operating costs.

In maintaining current high standards for asset quality through disciplined credit risk
management.

In developing innovative products and services that attract the target customers and
address inefficiencies in the Indian financial sector.

In continuous development of products and services that reduces bank’s cost of
funds.

On focusing high earnings growth with low volatility.

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2.6 SWOT ANALYSIS OF HDFC BANK
STRENGTHS:
* It has an extensive distribution network comprising of 319 branches in 166 cities & one
international office in Dubai this provides a competitive edge over the competitions.
* The Bank has a strong retail depository base & has more than million customers.
* Bank boasts of strong brand equity.
* ISO 9001 certification for its depository & custody operations & for its backend
processing of retail operation & direct banking operations.
* The bank has a near competitive edge in area of operations.
* The bank has a market leader in cash settlement service for the major stock exchanges
in its country.
* HDFC Bank is one of the largest private sector banks working in India.
* It has a highly automated environment in terms of information technology &
communication system.
* Infrastructure is best.
* It has many innovative products like kids Advantage scheme, NRI services.
WEAKNESS:
* Account opening and delivery of cheque book take comparatively more time.
* Lack of availability of different credit products like CC Limit, Bill discounting facilities
.OPPORTUNITY:
* Branch expansion
* Door step services
* Greater liberalization in foreign ownership via FDI in Indian Pvt. Sector Banks.
* CC/ OF Facilities.
* Infrastructure improvements & better systems for trading & settlement in the govt.
securities & foreign exchange markets.

THREATS:

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The bank has started facing competition from players like SBI, PNB Bank in the finance
market itself. This reduces the profit margins in the future..
Competitive strategy

STRENGTHS WEAKNESSES

OPPORTUNITIES S – O Strategies W – O Strategies

Strength: Large Capital Weakness: Workforce

base.
Responsiveness.
Opportunity: Market
Opportunity: Outsourcing of Non –
Expansion.
Core Business.
Strategy: Deep Penetration
into Strategy: Outsource Customer

Rural Market. Care & other E-Helps.

THREATS S – T Strategies W – T Strategies

Strength: Low operating Weakness: Not Equal to

costs
International Standards.
Threat: Increased
Threat: Entry of many Foreign
Competition
Banks.
from others Pvt. Banks.
Strategy: Consider additional
Strategy: Steps to Ensure
Benefits
Loyalty by old Customers.

TABLE 2

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i Strength - Opportunity Analysis .

Strength:

It is well know that HDFC Bank has the largest Authorized Capital Base in the Banking
System in India i.e. having a total capacity to raise Rs. 19,000,000,000 (Non – Premium
Value).

Opportunity:

Seeing the present financial & economic development of Indian Economy and also the
tremendous growth of the Indian Companies including the acquisition spree followed by
them,

it clearly states the expanding market for finance requirements and also the growth in
surplus disposal income of Indian citizens has given a huge rise in savings deposits –
from the above point it is clear that there is a huge market expansion possible in banking
sector in India.

Strategy:

From the analysis of Strength & Opportunity the simple and straight possible strategy for
HDFC Bank could be - to penetrate into the rural sector of India for expanding its market
share as well as leading all other Pvt. Banks from a great gap.

ii. Strength - Threat Analysis .

Strength:

HDFC Bank is not only known for large capital but also for having a low operations cost
though having huge number of branches and services provided.

Threat:

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After showing a significant growth overall, India is able to attract many international
financial & banking institutes, which are known for their state of art working and keeping
low operation costs.

Strategy:To ensure that HDFC Bank keeps going on with low operation cost & have
continuous business it should simply promote itself well & provide quality service so as
to ensure customer loyalty, therefore guaranteeing continuous business.

iii. Weakness - Opportunity Analysis .

Weakness:

It is well known that workforce responsiveness in banking sector is Very low in Indian
banking sector, though HDFC Bank has better responsible staff but it still lacks behind its
counterparts like HSBC, HDFC BANK, CITI BANK, YES BANK etc.

Opportunity:

In the present world, India is preferred one of the best places for out – sourcing of
business process works and many more.

Strategy:

As international companies are reaping huge benefits after out- Sourcing there customer
care & BPO’s, this same strategy should be implemented by HDFC Bank so as to have
proper customer service without hindering customer expectations.

iv. Weakness - Threat Analysis .

Weakness:

Though having a international presence, HDFC Bank has not been able to keep up the
international standards in providing customer service as well as banking works

Threat:

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In recent times, India has witnessed entry of many international banks like CITI Bank,
YES Bank etc which posses an external entrant threat to HDFC Bank – as this Banks are
known for their art of working and maintain high standards of customer service.

Strategy:

After having new entrants threat, HDFC Bank should come up with more additional
benefits to its customer or may be even reduce Some fees for any additional works of
customers.

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 CHAPTER 3

THEORITICAL ASPECTS

3.1 .STUDY OF BALANCESHEET AND PROFIT AND LOSS

A/C
3 .2 .FINANCIAL STATEMENT ANALYSIS
(TOOLS AND TERMS)
3.3 .BASIS OF PREPARATION

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3 .1 a .STUDY OF PROFIT& LOSS A/C

MEANING It is a financial statement, which shows net loss of a company for a specified
period. The accounting year means calendar year of 12 months or less or more than 12
months.

CONTENTS: This presents the revenues and expenses of a company and shows the
excess of revenues over expenses for profit and vice versa for a loss.

FORMAT: The Companies act does not provide any specific format or this account.
However it is required to be prepared on the basis of the instructions given in part ii of
schedule (vi) of the companies act.

MAIN ITEMS OF PROFIT AND LOSS ACCOUNT

 Turnover or sales: The aggregate amount of sales and connected item with the sales
such as commission paid to sole-selling agents and other selling agents and brokerage
and discounts on sales other than usual trade discount.

 Depreciation: The amount of depreciation of fixed assets and the arrears of

depreciation as per section 205(2) shall be disclosed by way of foot- note.

 Interest on loans and debentures: Interest on loans and debentures has to be

stated separately. It will include the amount of interest paid as well as outstanding.

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 Miscellaneous expenses: In this head items such as rates and taxes, insurance
premium etc., must be stated separately.

 Preliminary expenses: Such expenses include the costs of formation of a

company and since their amount is usually large, it is not desirable to write off them in
one year.

 Provision taxation: The profit and loss account of a company must be debited
with the estimated liabilities for tax on the current profits at current rates of taxation.

 Unclaimed dividends: It is shown on the liabilities side of the balance sheet under
the heading ‘current liabilities ‘.

 Interim dividends: It is an item of appropriation. It is transferred to the debit side

of the Profit and loss appropriation account.

 Final dividend as an item of the trial balance: This is shown in the debit side of
the appropriation section of the profit and loss account.

 Proposed dividend or final dividend proposed: Since it is an adjustment item, it

has to be shown at two places- In the debit side of the profit and loss appropriation
account and on the liabilities side of the balance sheet under the head ‘current liabilities
and provisions’.

 Political donations: It must be shown as a separate item in the profit and loss
account.

 Dividend on interest income: This item is transferred to the credit side of the
profit and loss account.

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 Payment to auditors: It must be stated separately. This will include consultancy
fee, auditing fees management services etc.

 Managerial remuneration: This includes the payments made to managerial

remuneration director’s fee, pension, other allowances and commission.

3.1 b STUDY OF BALANCE SHEET

MEANING:
The balance sheet is a financial snapshot of a company's condition at a single point in
time. A balance sheet contains a listing of the company's asset, liability and Capital
accounts. When someone,whether a creditor or investor, asks you how your company is
doing, you'll want to have the answer ready and documented. The way to show off the
success of your company is a balance sheet. A balance sheet is a documented report of
your company's assets and obligations, as well as the residual ownership claims against
your equity at any given point in time. It is a cumulative record that reflects the result of
all recorded accounting transactions since your enterprise was formed. You need a
balance sheet to specifically know what your company's net worth is on any given date.
With a properly prepared balance sheet, you can look at a balance sheet at the end of each
accounting period and know if your business has more or less value, if your debts are
higher or lower, and if your working capital is higher or lower. By analyzing your
balance sheet, investors, creditors and others can assess your ability to meet short-term
obligations and solvency, as well as your ability to pay all current and long-term debts as
they come due. The balance sheet also shows the composition of assets and liabilities, the
relative proportions of debt and equity financing and the amount of earnings that you
have had to retain. Collectively, external parties to help assess your company’s financial
status, which is required by both lending institutions and investors before they will allot
any money toward your business, will use this information.

A.LEARN THE DIFFERENT ASSETS

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1. Current assets
Current assets include cash and other assets that in the normal course of events are
converted into cash within the operating cycle. For example, a manufacturing enterprise
will use cash to acquire inventories of materials. These inventories of materials are
converted into finished products and then sold to customers. Cash is collected from the
customers. This circle from cash back to cash is called an operating cycle. In a
merchandising business one part of the cycle is eliminated. Materials are not purchased
for conversion into finished products. Instead, the finished products are purchased and are
sold directly to the customers. Several operating cycles may be completed in a year, or it
may take more than a year to complete one operating cycle. The time required to
complete an operating cycle depends upon the nature of the business. It is conceivable
that almost all of the assets that are used to conduct your business, such as buildings,
machinery, and equipment, can be converted into cash within the time required to
complete an operating cycle. However, your current assets are only those that will be
converted into cash within the normal course of your business. The other assets are only
held because they provide useful services and are excluded from the current asset
classification. If you happen to hold these assets in the regular course of business, you
can include them in the inventory under the classification of current assets. Current assets
are usually listed in the order of their liquidity and frequently consist of cash, temporary
investments, accounts receivable, inventories and prepaid expenses.

 Cash: Cash is simply the money on hand and/or on deposit that is available for
general business purposes. It is always listed first on a balance sheet. Cash held for some
designated purpose, such as the cash held in a fund for eventual retirement of a bond
issue, is excluded from current assets.

 Marketable Securities: These investments are temporary and are made from
excess funds that you do not immediately need to conduct operations. Until you need
these funds, they are invested to earn a return.

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 Accounts Receivable: Simply stated, accounts receivables are the amounts owed
to you and are evidenced on your balance sheet by promissory notes. Accounts receivable
are the amounts billed to your customers and owed to you on the balance sheet's date.
You should label all other accounts receivable appropriately and show them apart from
the accounts receivable arising in the course of trade. If these other amounts are currently
collectible, they may be classified as current assets.

 Inventories: Your inventories are your goods that are available for sale, products
that you have in a partial stage of completion, and the materials that you will use to create
your products. The costs of purchasing merchandise and materials and the costs of
manufacturing your various product lines are accumulated in the accounting records and
are identified with either the cost of the goods sold during the fiscal period or as the cost
of the inventories remaining.

 Prepaid expenses: These expenses are payments made for services that will be
received in the near future. Strictly speaking, your prepaid expenses will not be converted
to current assets in order to avoid penalizing companies that choose to pay current
operating costs in advance rather than to hold cash. Often your insurance premiums or
rentals are paid in advance.

Investments: Investments are cash funds or securities that you hold for a designated
purpose for an indefinite period of time. Investments include stocks or the bonds you may
hold for another company, real estate or mortgages that you are holding for income-
producing purposes. Your investments also include money that you may be holding for a
pension fund.

2. Plant Assets: Often classified as fixed assets, or as plant and equipment, your plant
assets include land, buildings, machinery, and equipment that are to be used in business
operations over a relatively long period of time. It is not expected that you will sell these
assets and convert them into cash. Plant assets simply produce income indirectly through
their use in operations.
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3. Intangible Assets: Your other fixed assets that lack physical substance are referred to
as intangible assets and consist of valuable rights, privileges or advantages. Although
your intangibles lack physical substance, they still hold value for your company.
Sometimes the rights, privileges and advantages of your business are worth more than all
other assets combined.

4. Other Assets: During the course of preparing your balance sheet you will notice other
assets that cannot be classified as current assets, investments, plant assets, or intangible
assets. These assets are listed on your balance sheet as other assets. Frequently, your
other assets consist of advances made to company officers, the cash surrender value of
life insurance on officers, the cost of buildings in the process of construction, and the
miscellaneous funds held for special purposes.

B.LEARN THE DIFFERENT LIABILITIES

1. Current Liabilities:
On the equity side of the balance sheet, as on the asset side, you need to make a
distinction between current and long-term items. Your current liabilities are obligations
that you will discharge within the normal operating cycle of your business. In most
circumstances your current liabilities will be paid within the next year by using the assets
you classified as current. The amount you owe under current liabilities often arises as a
result of acquiring current assets such as inventory or services that will be used in current
operations. You show the amounts owed to trade creditors that arise from the purchase of
materials or merchandise as accounts payable. If you are obligated under promissory
notes that support bank loans or other amounts owed, your liability is shown as notes
payable. Other current liabilities may include the estimated amount payable for income
taxes and the various amounts owed for wages and salaries of employees, utility bills,
payroll taxes, local property taxes and other services.

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2. Long-Term Liabilities: Your debts that are not due until more than a year from the
balance sheet date are generally classified as long-term liabilities. Notes, bonds and
mortgages are often listed under this heading. If a portion of your long-term debt is due
within the next year, it should be removed from the long- term debt classification and
shown under current liabilities.

3. Deferred Revenues: Your customers may make advance payments for merchandise or
services. The obligation to the customer will, as a general rule, be settled by delivery of
the products or services and not by cash payment. Advance collections received from
customers are classified as deferred revenues, pending delivery of the products or
services.

4. Owner's Equity: Your owner's equity must be subdivided on your balance sheet: One
portion represents the amount invested directly by you, plus any portion of retained
earnings converted into paid-in capital. The other portion represents your net earnings
that are retained. This rigid distinction is necessary because of the nature of any
corporation. Ordinarily, stockholders, or owners, are not personally liable for the debts
contracted by a company. A stockholder may lose his investment, but creditors usually
cannot look to his personal assets for satisfaction of their claims. Under normal
circumstances, the stockholders may withdraw as cash dividends an amount measured by
the corporate earnings. The distinction in this rule gives the creditors some assurance that
a certain portion of the assets equivalent to the owner's investment cannot be arbitrarily
withdrawn. Of course, this portion could be depleted from your balance sheet because of
operating losses. The owner's equity in an unincorporated business is shown more
simply. The interest of each owner is given in total, usually with no distinction being
made between the portion invested and the accumulated net earnings. The creditors are
not concerned about the amount invested. If necessary, creditors can attach the personal
assets of the owners.

C.BALANCE-SHEET STRUCTURE

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Basis of balance-sheet: Assets = Liability + Equity
The following Balance sheet structure is just an example. It does not show all possible
kind of assets, equity and liabilities, but it shows the most usual ones. It could be a
consolidated balance sheet. Monetary values are not shown and summary (total) rows are
missing as well.
Assets

Current Assets -:
Cashandcashequivalents
Inventories
Accountreceivable
Investmentheldfortrading
other current assets
Non-Current Assets -:
Property,plant,andequipment
Goodwill
Otherintangiblefixedassets
Investmentinassociates
Deferredtaxassets
Miscellaneous Expenditure

Equity and Liabilities

Capital & Reserve
Share capital reserve
Revaluationreserve
Translationreserve
Retained earnings
Minority interest
Non-Current Liabilities
Bank loan
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Issued debt securities
Deferred tax liability
Current Liabilities
Accountspayable
Currentincometaxliability
Short-termpartofbankloans
Short-term provisions

EQUITY VALUATION:
The real value to a purchaser of the business or a shareholder may be different from the
net assets shown by the balance sheet. This is because factors that affect the value of a
business may not be recorded yet. For example, a purchaser will be interested in the
future earnings of the business, whether assets such as property have been revalued
recently, and whether there are potential liabilities in the future such as lawsuits. The
value of the assets in the balance has also been based on the assumption that the business
is a going concern; otherwise the break-up value of the assets may be far less than the
value in the balance sheet.

D.PREPAIRING A BALANCE-SHEET
 Title and Heading: In practice, the most widely used title is Balance Sheet;
however Statement of Financial Position is also acceptable. Naturally, when the
presentation includes more than one time period the title "Balance Sheets" should be
used.

 Heading: In addition to the statement title, the heading of your balance sheet
should include the legal name of your company and the date or dates that your statement
is presented. For example, a comparative presentation might be headed:

XYZ CORPORATION
BALANCE SHEETS
December 31, 2008

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 Format: There are two basic ways that balance sheets can be arranged. In Account
Form, your assets are listed on the left-hand side and totaled to equal the sum of liabilities
and stockholders' equity on the right-hand side. Another format is Report Form, a running
format in which your assets are listed at the top of the page and followed by liabilities
and stockholders' equity. Sometimes total liabilities are deducted from total assets to
equal stockholders' equity.

 Captions: Captions are headings within your statement that designate major
groups of accounts to be totaled or subtotaled. Your balance sheet should include three
primary captions: Assets, Liabilities and Stockholders' Equity. In the report form of
presentation, the placement of your primary captions would be as follows:

2006 ASSETS,LIABILITIES AND STOCKHOLDERS EQUITY.

 Order of Presentation of Captions: First, start with items held primarily for
conversion into cash and rank them in the order of their expected conversion. Then,
follow with items held primarily for use in operations but that could be converted into
cash, and rank them in the order of liquidity. Finally, finish with items whose costs you
will defer to future periods or that you cannot convert into cash.

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 3.2FINANCIAL STATEMENT ANALYSIS

3.21MEANING:
Financial statement analysis is the process of examining relationships among financial
statement elements and making comparisons with relevant information. It is a valuable
tool used by investors and creditors, financial analysts, and others in their decision-
making processes related to stocks, bonds, and other financial instruments. With a great
understanding of the balance sheet & profit and loss account and how it is constructed,
we can look at some techniques to analyze the information contained within the balance
sheet & profit and loss account.

PURPOSE:
The main purposes of analyzing the financial statement are the following:-
 To assess past performance and current financial position.
 To make predictions about the future performance of a company.

3.22TOOLS FOR ANALYSING

1. PERCENTAGE CALCULATION
There are two popular methods by which we can analyze the financial statement by
calculating percentage as taking a common base.

a. Horizontal Analysis

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When an analyst compares financial information for two or more years for a single
company, the process is referred to as horizontal analysis, since the analyst is reading
across the page to compare any single line item, such as sales revenues. In addition to
comparing dollar amounts, the analyst computes percentage changes from year to year
for all financial statement balances, such as cash and inventory. Alternatively, in
comparing financial statements for a number of years, the analyst may prefer to use a
variation of horizontal analysis called trend analysis. Trend analysis involves calculating
each year's financial statement balances as percentages of the first year, also known as the
base year. When expressed as percentages, the base year figures are always 100 percent,
and percentage changes from the base year can be determined.
If we want to calculate % change in sales then we apply the following formula:
Percentage=change in sales /Base Year Sales*100

b. Vertical Analysis
When using vertical analysis, the analyst calculates each item on a single financial
statement as a percentage of a total. The term vertical analysis applies because each year's
figures are listed vertically on a financial statement. The total used by the analyst on the
income statement is net sales revenue, while on the balance sheet it is total assets. This
approach to financial statement analysis, also known as component percentages, produces
common-size financial statements. Common-size balance sheets and income statements
can be more easily compared, whether across the years for a single company or across
different companies. If we want to calculate % change of current assets then we apply the
following formula:
Percentage: current assets/total assets*100

2. RATIO ANALYSIS

Financial ratio analysis uses formulas to gain insight into the company and its operations.
For the balance sheet, using financial ratios (like the debt-to-equity ratio) can show you a
better idea of the company’s financial condition along with its operational efficiency. It is
important to note that some ratios will need information from more than one financial

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 statement, such as from the balance sheet and the income statement. Ratio analysis
facilitates inter-firm and intra-firm comparison. Ratios are often classified using the
following terms:

a.LIQUIDITY RATIO
Liquidity ratios are measures of the short-term ability of the company to pay its debts
when they come due and to meet unexpected needs for cash.
 Current Ratio:
The current ratio is a rough indication of a firm ability to service its current obligations.
Generally the higher the current ratio , the greater the cushion between current
obligations and a firm ability to pay them. The stronger ratio reflects a numerical
superiority of current assets over current liabilities Current ratio is calculated as follows:
Current ratio= Current Assets/Current Liabilities
Quick Ratio:
It is also known as the “acid test” ratio, this is a refinement of the current ratio and is a
more conservative measure of liquidity. The quick ratio expresses the degree to which a
company’s current liabilities are recovered by the most liquid current assets. quick ratio is
calculated as follows:
Quickratio=(cash+marketablesecurities+Receivables)/currentlibilities

b.SOLVENCY RATIO
Solvency ratios indicate the ability of the company to meet its long-term obligations on a
continuing basis and thus to survive over a long period of time.
 Debt/Worth Ratio:
This ratio expresses the relationship between capital contributed by creditors and that
contributed by owners. It expresses the degree of protection provided by the owners for
the creditors. The higher the ratio, the greater the risk being assumed by creditors. Lower

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 the ratio, the greater the long-term financial safety. A firm with a low debt/worth ratio
usually has a greater flexibility to borrow in the future. A more highly leveraged
company has a more limited debt capacity.
Debt/worth ratio=Total Liabilities / Tangible Net Worth
c. PROFITABILITY RATIO
Profitability ratios are gauges of the company's operating success for a given period of
time.

 Return On Assets:
Return on assets is a measure of how effectively the firm’s assets are being used to
generate profit. It is calculated as follows:
Return On Assets= Net Income/Total Assets

 Return On Equity:
Return on equity is the bottom line measure for the shareholders, measuring for the
profits earned for each rupee invested in business. It is calculated as follows:
Return on Equity= Net income/shareholder’s equity

Investment in fixed assets in relation to net worth is a better cushion for creditors in case
of liquidation. Similarly, a higher ratio would indicate the opposite situation. The
presence of substantial leased fixed assets (not shown on the balance-sheet) may
deceptively lower this ratio.

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 3.3BASIS OF PREPARATION

The financial statements have been prepared and presented under the historical cost
convention and accrual basis of accounting, unless otherwise stated and are in accordance
with Generally Accepted Accounting principles, statutory requirement prescribed under
the Banking Regulation Act1949, circulars and guidelines issued by the Reserve Bank of
India .

1 .INVESTMENTS

In accordance with the RBI guidelines, investments are classified on the date of purchase
into:-

 Held for trading(HFT)

 Available for sale(AFS)
 Held to maturity(HTM)
Held for trading – Investments that are held principally for resale within 90 days from
the date of purchase

Held to maturity – Investments which the banks hold till maturity

Available for sale – Investments that are not classified under above category.

.REPO AND REVERSE REPO TRANSACTIONS

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 In repo transaction, the bank borrows money against pledge of securities and in reverse
repo transaction; the bank lends money against pledge of securities. It is a kind of
Liquidity Adjusted Facility (LAF).

2. ADVANCES

Advances are classified as performing and non- performing based on the RBI guidelines
stated net of bills rediscounted, specific provisions, floating provisions, interest in
suspense for non – performing advances and claims received from export credit
Guarantee Corporation.

3. FIXED ASSETS AND DEPRECIATION

Fixed assets are classified at cost less accumulated depreciation as adjusted for
impairment. Cost includes cost of purchase and all expenditure like site preparation,
installation costs and professional fees incurred on the assets before it is ready to use.
Depreciation is charged over the estimated useful life of the fixed assets on a straight line
basis .The rates on certain key assets are fixed:-

 Owned premises at 1.63% per annum.

 Improvements to lease hold premises are charged off over the remaining primary
period of lease.
 ATMs at 10%
 Office equipments at16.21% per annum.
 Computers at 33.33% per annum.
 Motor cars at25% per annum asset at residence of executives of the banks at 25%
per annum.

4. TRANSACTION INVLVING FOREIGN EXCHANGE

Foreign currency items and expenditure items of domestic operations are translated at
the exchange rate prevailing on the date of the transaction, and income and expenditure

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 items of integral foreign operations(representative offices)and non- integral foreign
operations (foreign branch) are translated at the monthly average closing cost.

5. EMPLOYEES BENEFITS

 EMPLOYEE STOCK OPTION SCHEME (ESOP)

The scheme provides for the grant of equity shares of the banks to its employees. The
scheme provides that employees are granted an option to acquire equity shares of the
bank that vests in a graded manner.

 Gratuity
 Superannuation
 Provident fund
 Pension

6. DERIVATIVE CONTRACTS

The banks recognizes all derivatives contracts at fair value , on the dates on which the
derivatives contracts are entered into and are re measured at fair value as at the balance
sheet or reporting dates . Derivatives are classified as assets when the net fair value is
positive and as liabilities when the net fair value is negative

7. EARNING PER SHARE

The bank reports basic and diluted earning per equity share in accordance with the AS20,
earning per share, issued by the institute of Chartered Accounted of India.

 Basic earning per share has been computed by dividing net profit for the year by
the weighted average number of equity share outstanding for the period.
 Diluted earning per share reflects the potential dilution that could occur if
securities other contracts to issue equity shares were exercised or converted during the
year

Page 65
8. BULLION
The banks imports bullion including precious metals bars on a consignment basis for
selling to its wholesale and retail customers. The imports are typically on a back to back
basis and are priced quoted by the suppliers. The banks earns fee on such wholesale
bullion transaction and the fee is classified as commission income

NOTES APPENDED TO AND FORMING PART OF THE FINANCIAL

STATEMENTS FOR THE YEAR 2010

1. MERGER OF THE CENTURIAN BANK OF PUNJAB

During the year ended march31 2009, the Centurian bank of Punjab got merged with
HDFC bank ltd. As per the scheme of Amalgamation, the entire undertaking of CBoP
including all its assets and liabilities stood transferred to and vest in HDFC Bank. As per
the scheme, in consideration of the transfer of and vesting of the undertaking of CBoP,
one equity share of HDFC Bank of the face value of Rs 10/ - each fully paid up was
issued to members of the CBoP for every twenty –nine equity share of the face value of
Re 1/- each of CBoP held by them on the record date.

Accordingly, 69883,956 equity share of Rs10 /- each of HDFC bank were allotted at
par to the shareholder of CBoP vide board resolution dated June 24, 2008.

2. CAPITAL INFUSION

During the year , the bank allotted 2,62,00,220 equity share of Rs 10/- each at a premium
of Rs 152013 per share to HDFC ltd , on their exercising the warrants issued to them in
June 2008.As a result equity share capital increased by Rs 2620 lacs and share premium
by Rs 398277 lacs .

3. CAPITAL ADEQUACY RATIO

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 Capital adequacy ratios are a measure of the amount of a bank's capital expressed as a
percentage of its risk weighted credit exposures.

An international standard which recommends minimum capital adequacy ratios has been
developed to ensure banks can absorb a reasonable level of losses before becoming
insolvent.

Applying minimum capital adequacy ratios serves to protect depositors and promote the
stability and efficiency of the financial system.

Two types of capital are measured - tier one capital which can absorb losses without a
bank being required to cease trading, e.g. ordinary share capital, and tier two capital
which can absorb losses in the event of a winding-up and so provides a lesser degree of
protection to depositors, e.g. subordinated debt.

The minimum capital adequacy ratios that apply are:

 tier one capital to total risk weighted credit exposures to be not less than 4
percent;
 total capital (tier one plus tier two less certain deductions) to total risk weighted
credit exposures to be not less than 8 percent.

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 CHAPTER 4
OBJECTIVE OF STUDY

Objective Of Study
The main objectives of this project are the following:

 To study about HDFC BANK and its related aspects like its products & services,
history, organizational structure, subsidiary companies etc.

 To analyze the financial statement i.e. P&L account and Balance sheet of HDFC
BANK.

 To learn about P&L Account, Balance-sheet and different type of Assets&

Liabilities.

 To understanding the meaning and need of Balance Sheet and profit and loss
account.

 The purpose is to portray the financial position of HDFC BANK with the help of
Balance sheet and profit and loss account.
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 To evaluate the financial soundness, stability and liquidity of HDFC BANK with the
help of trend analysis.

CHAPTER 5

RESEARCH METHODOLOGY

Research Methodology refers to search of knowledge .one can also define research
methodology as a scientific and systematic search for required information on a specific
topic. The word research methodology comes from the word “advance learner‘s
dictionary meaning of research as a careful investigation or inquiry especially through
research for new facts in my branch of knowledge for example some author have define
research methodology as systematized effort to gain new knowledge.

ANALYTICAL RESEARCH-:

Under this research the researchers analyze the facts and figures which are already
available. Researchers have to use these facts and information already available and
analyze it to make a critical evaluation of the material.

Basic Characteristic of Analytical Research

The researchers have no control over variables, he can only report and analyses the
available information.

METHODS OF DATA COLLECTION

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Secondary sources of data: Analytical research is fully based on secondary source of
information like( (Internet, magazine, books, and journals) has been used.

s CHAPTER 6

DATA ANALYSIS AND INTERPRETATION

CHART NO. 1

Interpretation 1:-

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As interest income is increasing every year and greater than expenses so net result is
interest income which is reflecting increasing trend and interest income declining in FY
2009 because of merger related expenses of the bank.

CHART NO. 2

Interpretation 2:

Net revenue is incraesing at slow rate till FY2005 and after 2005 it is increasing at faster
rate.

Page 71
 Net Revenue

2000-01
2001-02
13.83%
2002-03
42.61% 30.16%
31.10% 2003-04
50.68% 39.45% 2004-05
2005-06
29.94% 2006-07
45.55% 52.52%
2007-08
2008-09
2009-10

CHART NO.3

Interpretation3:-
Net revenue is increasing at lower rate till2005 and in FY2005-2006 it is increased by
52.52% and then after percentage change in net revenue is declining.

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 Profit before tax(in lacs)

500000
450000
400000
350000
300000
250000
200000
150000
100000
50000
0

profit before tax 2 per. Mov. Avg. (profit before tax)

CHART NO .4

Interpretation 4

Profit before tax is increasing every year at increasing rate from 2001 -2010.

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 CHART NO. 5

Interpretation 5:-

Profit before tax is increasing every year but change in percentage in PBT is fluctuating,
it is minimum in 28.04% in FY06 because of micro, small and medium development
Act 2006.

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 CHART NO.6

Interpretation 6
Profit after tax is increasing every year from 2001 to 2010 and the rate is increasing after
06.

Page 75
 CHART NO.7

Interpretation7

Percentage change in profit after tax is not constant, it is declining till 2007 and then it is
increasing.

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 Tax provision
2%
2000-01
3% 2001-02
4% 4% 2002-03
28% 6%
2003-04
8%
2004-05
2005-06
10% 2006-07
21%
14% 2007-08
2008-09
2009-10

CHART NO.8

Interpretation8:-
Profit after tax is increasing every year but percentage change in PAT is declining as tax
provision is increasing continuously.

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FUNDS:

Deposits(in lacs)

18000000
16000000
14000000
12000000
10000000
8000000
6000000
4000000
2000000
0

Deposits 2 per. Mov. Avg. (Deposits)

CHART NO. 9

Interpretation 9:-

Deposits are increasing every year and % change in deposits in 05-06 is highest which is
53.48% .

Page 78
 Investment (in lacs)

7000000

6000000

5000000

4000000

3000000

2000000

1000000

Investments 2 per. Mov. Avg. (Investments)

CHART NO.10

Interpretation 10:-

Investments are increasing at slow rate till the FY 07and then increased with higher rate
and further decline in FY2010

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 Working funds(in lacs)

25000000

20000000

15000000

10000000

5000000

Working funds 2 per. Mov. Avg. (Working funds)

CHART NO.11

Interpretation 11:-

Working fund are also reflecting the increasing trend but percentage change is fluctuating
and it is highest in year 2007 i.e. 45.96%.

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 Stockholders' equity(in lacs)

2500000
2000000

1500000
1000000

500000
0

Sockholders' 2 per. Mov. Avg. (Sockholders')

CHART NO.12

Interpretation 12:-

Shareholders’equity is growing with increasing rate and percentage change in it is highest

in FY07 i.e. 78.71%.

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 Subordinated debts(lacs)

700000

600000

500000

400000

300000

200000

100000

subordinated 2 per. Mov. Avg. (subordinated)

CHART NO.13

Interpretation13:-

Subordinated debts is increasing but not at constant rate and percentage change is highest
in FY 09 i.e. 99.37.%

Page 82
 CAMPARISON OF VARIOUS FUNDS

25000000

20000000
Deposits
15000000 SUB ORD DEBTS
NET WORTH
10000000 WF
Investments
5000000

0
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10

CHART NO.14

Interpretation 14:-

Contribution of subordinated debts is minimum in total fund as compared to other funds

and working funds are major components of total funds.

Page 83
 CHART NO.15

Interpretation 15

Earning per share is increasing every year with almost constant rate

Page 84
 EPS(% change)

2000-01
27.90% 27.43% 2001-02
14.34% 2002-03
24.88%
2003-04
27.36% 2004-05
2005-06
30.54%
2006-07
29.97% 2007-08
27.68% 2008-09
21.81%
2009-10

CHART NO. 16

EPS= EAT/Number of shares outstanding

Interpretation 16:-

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EPS is increasing every year and percentage change in EPS is minimum in FY08-09. In
years2003, 2006and 2009 it shows good performance as % change in respective years is
good.

CHART NO.17

Interpretation17
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Dividend per share is increasing from FY2001-10 in continous manner.

DPS(% change)

2000-01
2001-02
20% 25% 2002-03
17.64%
20% 2003-04
21.42% 2004-05
2005-06
16.66%
2006-07
27.27% 28.57% 2007-08
22.22%
2008-09
2009-10

CHART NO.18

Page 87
Interpretation 18:-

Dividend per share is increasing every year and percentage change in DPS is minimum in
FY2008-09 because of increased retention ratio to meet out merger related expenses.

CHART NO.19

Page 88
Interpretation 19

BVPS is showing fluctuating trend though it is increasing but in a very abrupt manner.

BVPS(Rs)(% change)

2000-01
36.53% 2001-02
2002-03
6.14% 84%
2003-04
61.05%
2004-05
2005-06
15.30% 2006-07
19.01%
18.74% 2007-08
16.02% 54.31%
2008-09
2009-10

CHART NO.20

Book value per share= NW-Preference share capital/Outstanding equity share

Interpretation20:- This ratio indicates the share of equity share holders after the
company has paid all its liabilities, creditors and debt holders. And percentage change in
BVPS is highest in FY2000-0,then it is declining till2007and and it is again it is increased
in FY08 by 61.05% because of merger with Centurian Bank of Punjab.

Page 89
CHART NO.21

Interpretation 21

Market price per share is almost costant till 07 then it is increased till 2008 , in 2009
drastic fall in market price per share and in 2010 there is tremendous increase in market
share.

Page 90
 CHART NO.22

Interpretation:-22

Market price per share is declining, it is increased by 61.47%in FY2003-04 again it is

declined till07 and in 08 it is increased, percentage change in market price per share is
highest in 2010which is 98.63%. It is very important from investors’ point of view so as
to evaluate the company’s present performance and its growth prospect

Page 91
 CHART NO.23

P/E=Market price per share/Earning per share

Interpretation 23
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Price to earning ratio is showing random trend,it is declining till 03 then it is increasing
till08,and again decreased to 18.4 then further increased to 28.6.

CHART NO. 24

P/E ratio= Market price per share/ Earning per share

Interpretation:- 24

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 P/E ratio is declining from FY2002-04, then it is increasing tillFY2007-08 and it is
minimum in2008-09 and rate of percentage change in P/E ratio is increased by 55.37% as
market price of share increased by 98.63% that means company has good future prospec

CHAPTER 7

FINDINGS

Findings

Banking sector in India has contributed for about 52% in the GDP .the scope for
this sector is rising day by day, HDFC being the leading pvt. Bank has shown a
significant remark in this area.

As per the project the trend analysis helps the investor to understand the
direction of changes in overall activities of the company on the basis of historical data.

During the analysis of financial results it is observed that macro factors have
greater impact on company performance.

1. Till 2005, company was showing good performance as net revenue was 55.80% because
of net interest income and commission has increased.

But in 2006, though the book value per share was increased by 19.01% but Dividend
payout ratio declines, P/E ratio declines by 5.22%as well as MP also declines by 23.23%
this was all because of change in macro conditions, with the inception of Micro, Small
and Medium Enterprise Development Act 2006., there have been no reported cases of
delays in payment to micro and small enterprise or of interest payment dues to delay in
such payment.

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2. At the same time due to sharp increase in short term yields in the debt market in March
2006, the bank incurred net losses on sale /revaluation of investments.

3. In F.Y. 2006-07 started with the banking system remaining surplus in liquidity till mid
December 2006. However due to tightening of monitory policy by way increase in CRR
and advanced tax outflows, bank remain net borrower of funds from RBI, so bench mark
prime lending rate increases results in tight liquidity position .

4. In past years 2007, 08, 09 cyclical economic outlooks deteriorated sharply over the
years or so will all the advanced economy like US, Europe, Japan have firmly gone to
recession. India too has been affected, an economic activity slows down and demand
dampens for goods and services. Thus growth of service sector also declines

5. Merger between HDFC Bank and Centurian Bank of Punjab

In 2008-09 net revenue declined by 41.95% from

previous year as net interest income is declining because of increased merger related
expenses of the bank, such as expenses due to the increased liabilities like ESOP issued
by the centurian bank.

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 CHAPTER 8

CONCLUSION AND RECOMMENDATION

Conclusion

Bank has good growth prospects in future as in FY 2009-10 , its P/E ratio is showing
positive trend .Thus, market is also moving upward and has good future .

As , current market price is increased by 98.36% thus the P/E ratio is also increased by
55.37%.High P/E ratio indicates ;

 Higher growth rate of the bank.

 Greater stability of earnings.

 Large asset turnover profit means optimum utilization of assets by bank.

Recommendations

1.Bank should focus on innovative structuring of credit solution as lenient credit norms in
past have led to increase in nonperforming assets .

2. Bank should develop strong and prudent risk management process.

3. As market will continue to grow and mature led ton produced differentiated product
and services, so bank should try to produce products that can be easily differentiated.

4. People are the key element of an organization to drive growth an competitiveness,

thus it must try to focus on talent acquisition.

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 CHAPTER 9

LIMITATIONS

Every work has its own limitations. Limitations are extent to which the process should
not exceed. Limitations of this project are:

 The project report is constrained by time limit of two months.

 As the project report deals with past data only so there are chances of uncertainty in
evaluation of data.

 We have no control over variables so we can only report and analyze the information.

 Mindset of people may vary depending upon their age and perception.

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 CHAPTER 10

ANNEXURE
Financial highlights

%change in % change in
2000-01 2001-02 2001 2002-03 2002
Interest income 125504 168118 33.95% 196317 16.77%
Inerest expense 75375 107374 42.45% 119196 11.01%
Net interset income 50129 60744 21.17% 77121 26.96%
Other income 17657 33590 90.23% 46555 38.59%
net revenues 67786 94334 39.16% 123676 31.10%
Operating costs 30959 41795 35.00% 57705 38.06%
operating result 36827 52539 42.66% 65971 25.56%
profit before tax 31506 42538 35.01% 57085 34.19%
profit after tax 21012 29704 41.36% 38760 30.48%
116581 223760
deposits 1 1765381 51.42% 7 26.74%
subordinated debts 20000 20000 0.00% 20000 0.00%
stock holder equity 91309 194228 112.70% 224483 15.57%
156173 304240
working fund 3 2378738 52.31% 8 27.90%
117548
loans 463666 681372 46.95% 6 72.51%
investment 714514 1200402 68.00% 133880 11.52%
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 8
key ratios
earning per share 8.64 11.01 27.43% 13.75 24.88%
Return on average net
worth 24.53% 18.30% -6.23% 18.10% 0.20%
Tier1 capital ratio 8.69% 10.81% 2.12% 9.49% -1.32%
Total capital ratio 11.09% 13.93% 2.84% 11.12% -2.81%
2. 2. 3.0
dividend per share 00 50 25.00% 0 20.00%
Dividend payout ratio 25.55% 23.68% -1.87% 24.72% 1.04%
37. 69. 79.6
Book value per share 50 00 84.00% 0 15.30%
26. 21. 17.0
price to earning ratio 43 50 -18.65% 6 -20.65%
228. 236. 234.5
Market price per share 35 60 3.61% 5 -86.00%

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Financial highlights

% change in %change in % change in

2003-04 2003 2004-05 2004 2005-06 2005
245571 25.08% 290543 18.31% 423018 45.59%
121105 1.60% 131556 8.62% 192950 46.66%
124466 61.39% 158987 27.73% 230068 44.70%
48003 3.11% 65134 35.68% 112398 72.56%
172469 39.45% 224121 29.94% 342466 52.80%
81000 40.36% 108540 34.00% 169109 55.80%
91469 38.65% 115581 26.36% 173357 49.98%
71896 25.94% 97894 36.16% 125351 28.04%
50950 31.44% 66556 30.63% 87078 30.83%
304088 363542 557968
6 35.89% 5 19.55% 2 53.48%
60000 66.66% 50000 -16.60% 170200 240.00%
269188 19.91% 451985 67.90% 529953 17.25%
423069 514290 735063
9 39.05% 0 21.56% 9 42.92%
177445 255663 350612
1 50.95% 0 44.08% 6 37.13%
192567 193498 283939
9 43.83% 1 0.48% 6 46.74%

17.95 30.54% 22.92 27.68% 27.92 21.81%

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20.14% 2.04% 20.44% 0.30% 17.47% -2.97%
8.03% -1.46% 9.60% 1.57% 8.55% -1.05%
11.66% 0.54% 12.16% 0.50% 11.41% -0.75%
3.5 4.5 5.5
0 16.66% 0 28.57% 0 22.22%
22.15% -2.57% 24.00%. 1.87% 22.55% -1.45%
94.5 145.8 169.2
2 18.74% 6 54.31% 4 16.02%
21.1 25.0 27.7
0 23.68% 3 18.62% 4 10.82%
378.7 573.6 774.2
5 61.47% 4 51.45% 5 34.97%

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Financial highlights

2006- %change in %change in %change in

07 2006 2007-08 2007 2008-09 2008

664793 57.15% 1011500 52.15% 1633226 61.46%

317945 64.78% 488712 53.70% 891110 82.33%
346848 50.75% 522788 50.72% 742116 41.95%
151623 34.89% 228315 50.58% 329060 44.12%
498471 45.55% 751103 50.68% 1071176 42.61%
242080 43.15% 374562 54.72% 553281 47.71%
256391 47.89% 376541 46.86% 517895 37.54%
163875 30.73% 228063 39.16% 329924 44.66%
114145 31.08% 159018 39.31% 224493 41.17%
682979 1007686 1428115
4 22.40% 0 47.54% 8 41.72%
328260 92.86% 324910 -1.02% 647780 99.37%
643315 21.39% 1149723 78.71% 1464633 27.38%
912356 1331766 1832707
1 24.11% 0 45.96% 7 37.61%
469447
8 33.89% 6342690 35.10% 9888305 55.90%

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305648
0 7.64% 4939354 61.60% 5881755 19.07%

36.29 29.97% 46.22 27.36% 52.85 14.34%

19.40% 1.93% 16.05% -3.35% 16.12% 0.07%
8.58% 0.03% 10.30% 1.72% 10.58% 0.28%
13.08% 1.67% 13.60% 0.52% 15.69% 2.09%
7.0 10.0
0 27.27% 8.5 21.42% 0 17.64%
22.92% 0.37% 22.17% -0.75% 22.17% 0.00%
201.4 344.3
2 19.01% 324.39 61.05% 1 6.14%
26.2 18.4
9 -5.22% 28.9 9.54% 2 -36.04%
954.1 973.4
5 23.23% 1331.25 39.52% 0 -26.88%

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 BIBLIOGRAPHY
Websites

 www.hdfcbank.com

 www.google.com

 www.rediff.com

Books

 Pandey.I .M (Financial Management)

 Kothari. C.R(Research Methodology)

 Pandian Punithavathy(security analysis Portfolio Analysis).

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