MBA HDFC bank Porject

EXECUTIVE SUMMARY
Banks have become one of the most attractive ways for the average person to
invest their money. It is said that bank investment is the first priority of people to invest their
savings and the second place is for investments in mutual funds and other avenues. A bank
pools recourses from thousands of investors and then diversifies its investment into many
different holdings such as stocks, bonds, or government securities in order to provide high
relative safety and returns.
The Housing Development Finance Corporation Limited (HDFC) was amongst
the first to receive approval from the Reserve Bank of India (RBI) to set up a bank in the
private sector, as part of RBI’s liberalization of the Indian Banking Industry. HDFC Bank
was incorporated in August 1994 and commenced operation as a Commercial Bank in
January 1995.Currently, HDFC Bank has a nation spread over 110 cities across the country
and operates in three segments - Wholesale banking, retail banking and treasury services.
HDFC banks are called as deposit banks as they accept deposits from the public
and lend them for short period. HDFC banks encourage savings among general public and
supply financial needs of modern business. These banks are purely meant to finance traders
and others. It accepts deposits and lend to needy customers from short terms.
The Project is a “FINANCE PROJECT” which tries to explain in layman’s
language about the history & growth of banking industry and the second part of it deals with
‘‘THE COMPARITIVE STUDY OF RATIO ANALYSIS OF ICICI BANK WITH
SELECTED PRIVATE BANKS’’ which tries to explain about the comparative financial
performance of ICICI BANK with HDFC BANK, ING VYSYA BANK, CITI BANK, and
KOTAK MAHINDRA BANK.
The main objective of the project was to get an Overview of Banking Industry,
its set up, it’s working and to find out the bank’s relative strengths and weaknesses, analyze
the financial performance, analyze and compare various ratios in comparison with selected
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private banks viz. ICICI BANK, ING VYSYA, CITI BANK, KOTAK MAHENDRA & to
suggest appropriate measures for enhancing financial performance of the bank.
The research methodology used is primary and secondary data. Primary data has been
collected from the books of accounts of the bank i.e. trading and profit and loss account,
balance sheet, cash flow statement. Direct information was collected from the interaction
with executive of various levels. Secondary data has been collected from magazines, related
books, IBA web page and newspapers.
Analysis done by using Current Ratio, Proprietary Ratio, Solvency Ratio, Return on
Total Resource, Earnings per share, Fixed Asset to Net worth Ratio & Return on equity.
FINDINGS:
The current assets of HDFC BANK are very low compared to ICICI BANK current
assets i.e., Rs.3605.48 as against ICICI’S Rs.23551.85. As inferred by the above ratios HDFC
BANK has 1.49 ratios and it is higher than the standard level i.e., 0.5:1. Compared to HDFC
BANK with CITI BANK. As inferred by the above the HDFC BANK has 3.48 ratios it is not
satisfactory. To maintain stability in the firm for the long term the solvency position should
be lowered. To reduce the solvency ratio of HDFC BANK it has to decrease its deposits and
increase loans in the form of Home loans, Land loans, loan on phone, Home improvement
loan, Home equity loans etc. As HDFC BANK is getting 10.88 ratio of return on total
resources. And it is satisfactory. When compared to all other bank ICICI bank is very low
ratio of return on total resources.
SUGGESTIONS:
The short-term solvency position of the bank is not satisfactory. Bank has to increase
current assets or reduce current liabilities to strengthen its liquidity position and bring current
ratio nearer to the standards. Bank has to provide effective services to customers for
maintaining and building the brand image that helps the banks to have a competitive edge
over the other banks. The bank can enter into Mobile Banking aggressively in order to
capture young customers. The bank has to reduce its solvency ratio in order to maintain
stability in long term period. To reduce the solvency ratio of HDFC BANK it has to decrease
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its deposits and increase loans in the form of Home loans, Land loans, loan on phone, Home
improvement loan, Home equity loans etc.,
CONCLUSIONS:
The current assets of HDFC BANK are very low compared to ICICI BANK current assets
i.e., Rs.3605.48 as against ICICI’S Rs.23551.85. As inferred by the above the HDFC BANK
has 3.48 ratios it is not satisfactory. To maintain stability in the firm for the long term the
solvency position should be lowered. As HDFC BANK is getting 10.88 ratio of return on
total resources. It can increase the Net profit by reducing the interest on deposits of products
like Internet Banking, Mobile Banking, Standing Institutions, Debit- Cum-ATM Cards etc., It
can also reduce the salaries of the employees. Bank has to provide effective services to
customers for maintaining and building the brand image that helps the banks to have a
competitive edge over the other banks. The bank can enter into Mobile Banking aggressively
in order to capture young customers.
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INDUSTRY PROFILE
INTRODUCTION:
Financial sector reforms set in motion in 1991 have greatly changed the face of
Indian Banking. The banking industry has moved gradually from a regulated environment to
a deregulated market economy. The market developments kindled by liberalization and
globalization have resulted in changes in the intermediation role of banks. The pace of
transformation has been more significant in recent times with technology acting as a catalyst.
While the banking system has done fairly well in adjusting to the new market dynamics,
greater challenges lie ahead. Financial sector would be opened up for greater international
competition under WTO. Banks will have to gear up to meet stringent prudential capital
adequacy norms under Basel II. In addition to WTO and Basel II, the Free Trade Agreements
(FTAs) such as with Singapore, may have an impact on the shape of the banking industry.
Banks will also have to cope with challenges posed by technological innovations in banking.
Banks need to prepare for the changes. In this context the need for drawing up a Road Map to
the future assumes relevance. The idea of setting up a committee to prepare a vision for the
Indian Banking industry came up in IBA, in this background.
Managing Committee of Indian Bank’s Association constituted a committee
under the Chairmanship of Shri S C Gupta, Chairman & Managing Director, Indian Overseas
Bank to prepare a vision report for the Indian Banking Industry. The composition of the
committee is given at the end of the report.
The committee held its first meeting on 23rd
June, 2003 at Mumbai. Prior to the
meeting, the members were requested to give their thoughts on the future landscape of the
banking industry. A discussion paper based on the responses received from members was
circulated along with a questionnaire eliciting views of members on some of the specific
issues concerning anticipated changes in the banking environment. In the meeting, which
served as a brainstorming session, members gave their vision of the future. A second meeting
of the committee was held at Chennai on 7th
August, 2003 to have further discussions on the
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common views, which emerged in the first meeting, and also to examine fresh areas to be
covered in the study.
The vision statement prepared by the committee is based on common thinking that
crystallized at the meetings. In the Chennai meeting it was decided to form a smaller group
from among the members to draft the report of the committee. The group met thrice to
finalize the draft report. The report was adopted in the final meeting of the committee held at
Mumbai.
Vision is to evolve into a strong, sound and globally competitive financial system,
providing integrated services to customers of all segments, leveraging on technology and
human resources, adopting the best accounting and ethical practices and fulfilling corporate
and social responsibilities towards all stakeholders. The vision is of an integrated banking and
finance system catering to all financial intermediation requirements of customers. Strong
market players will strive to uncover markets and provide all services, combining innovation,
quality, personal touch and flexibility in delivery. The growing expectations of the customers
are catalyst for our vision. The customer would continue to be the centre-point of our
business strategy. In short, you lose touch with customer, and you lose everything.
HISTORY OF BANKS:
The organized banking system in India is broadly divided into three categories, i.e. the central
bank known as the Reserve bank of India, the commercial banks and the Co-operative banks.
The reserve bank of India is the supreme monetary and banking authority in the country and
has the responsibility to control the banking system in country. It is known as the “RESERVE
BANK” as it keeps the reserve of all commercial banks. Banking Regulation Act of India,
1949 defines banking as “accepting, for the purpose of lending or investment of deposits of
money from the public, repayable on demand or otherwise and withdrawal by cheques, draft,
and order.”
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Most of the activities a bank performs are derived from the above definition. In addition,
Banks are allowed to perform certain activities, which are ancillary to this business of
accepting deposits and lending. A bank’s relationship with the public therefore revives
around accepting deposits and lending money. Another activity, which is assuming increasing
importance, is transfer of money – both domestic and foreign –from one place to another.
This activity is generally known as “remittance business” in banking parlance. The so-called
forex (foreign exchange) business is largely a part of remittance. It involves the buying and
selling of foreign currencies.
The law governing banking Activities in India is called “Negotiable Instruments Act 1881”.
The banking activities can be classifies as:
 Accepting Deposits from public /others (deposits)
 Lending money to public (Loans)
 Transferring money from one place to another (Remittance)
 Acting as trustees
 Acting as intermediaries
 Keeping valuable in safe custody
 Collection business
 Government Business
Commercial banks have been in existence for many decades. After1969 commercial banks
are broadly classified into nationalized or public sector and private sector banks. The state
bank of India and associate banks along with another 20 banks are the public sector banks.
The private sector banks include a number of Indian scheduled banks, which have not been
nationalized, and branches of foreign banks operating in India.
The Regional Rural banks (RRB’s) came into existence since the Middle of 1970s
with the specific objective of providing credit and deposit facilities particularly to the small
and marginal farmers, agricultural laborers and artisans and the small entrepreneurs.
Primary Co-operative credit societies or banks were originally set up in villages to
promote thrift and saving of the farmers and to meet their credit needs for cultivation. The
central or district co-operative banks above them state co-operative banks were established.
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The funds of RBI meant for agricultural sector actually pass through the State co-operative
banks and central co-operative banks. These have now spread to the urban areas.
Under the RBI Act 1934, banks were classified as scheduled banks and non-scheduled
banks. The scheduled banks are those, which are entered in the second schedule of RBI Act,
1934.they are banks, which have paid up capital and reserves of an aggregate value of not
less than 5 lakhs and which satisfy RBI that their affairs are carried out in the interests of the
depositors. All commercial banks – Indian and foreign, regional rural banks and state co-
operative banks are scheduled banks. Non-scheduled banks are those, which have not been
including in the second schedule of RBI Act1934.
The present banking scenario in the country looks extremely promising. For the past
few years most of the banks have posted very good results quarter after quarter and are
displaying their ability for high growth.
Banks are classified into several types based on the functions they perform.
 Commercial Bank.
 Investment or industrial Banks.
 Exchange Banks.
 Co-operative Banks.
 Land Development Banks.
 Savings Banks.
 Central Banks.
 COMMERCIAL BANKS
Commercial banks perform all the business transaction of a typical bank. Commercial Banks
accept three types of deposits, Like Savings Bank Deposit, Fixed Deposit and Current
Deposit. They accept these deposit, which are payable on demand or in short notice. As such
they lend or invest only for short duration. They funds for short-term needs of trade of
commerce.
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 INVESTMENT OR INDUSTRIAL BANK
Investment Banks are those banks, which provide funds on long term for industries.
These Banks have specialized in providing long term loans to industries with a view to buy
plant of machinery. The investment Banks obtain funds through share capital, Debentures and
long term deposits from the public. They float bonds for the sake of mobilizing funds to
provide funds for big industries corporations. These banks also under write or issue new
shares of debentures of industrial concerns.
 EXCHANGE BANKS
Exchange Banks are known as foreign Banks or foreign exchange Banks. The foreign
exchange banks provide exchange for imports trade. Their main function is to make
international payment through purchased sake of exchange bills.
 CO-OPERATIVE BANKS
Co-operative Banks are promoted to meet the banking requirements of consumers.
They are established not only in the urban areas but also in the rural areas. In the rural areas
these banks supply finances to agriculture, while in the urban areas they provide finance to
consumer goods.
 LAND MORTGAGE BANKS
Whenever agriculturist require investment loans, they have to approach land
development Banks. Where loans are given on long-term basis. It is based on the security of
the land.
 SAVINGS BANKS
Savings Banks are specialized financial institutions established to mobilize savings
from the people. The primary object of the commercial Banks is to promote thrift among the
low and middle-income groups. The Banks also offer interest on these deposits.
 CENTRAL BANKS.
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Central Bank in an apex Bank in the country, which keeps the entire banking system
unified, controlled and regulated. In fact, the central bank is the Bank, which formulates the
monetary policy. It regulates the notice issue. In India, the Reserve Bank of India is the
central Bank of India.
STRUCTURE OF BANKING SYSTEM IN INDIA
C o -o p e r a tiv e
B a n k s
S ta te B a n k o f In d ia
&
its a s s o c ia te s
O th e r N a t io n a lis e d
B a n k s
R e g io n a l R u r a l
B a n k s
P u b lic S e c to r
B a n k s
P r iv a te S e c to r
B a n k s
In d ia n
B a n k s
F o r e ig n
B a n k s
C o m m e r c ia l
B a n k s
S c h e d u le d
B a n k s
C o -o p e r a tiv e
B a n k s
C o m m e r c ia l
B a n k s
N o n -S c h e d u le d
B a n k s
R B I
Banking Regulation Act, 1949
As per Section 5(c) of Banking Regulation Act, 1949 a "Banking Company" means any
company which transacts the business of banking in India.
Explanation: Any company which is engaged in the manufacture of goods or carries on any
trade and which accepts the deposits of money from public merely for the purpose of
financing its business as such manufacturer or trader shall not be deemed to transact the
business of banking within the meaning of this clause.
As per Section 5(b) of Banking Regulation Act, 1949, banking means the accepting, for the
purpose of lending or investment, of deposits of money from the public, repayable on demand
or otherwise, and withdraw able by cheque, draft, order or otherwise.
As per Section 5(d) of Banking Regulation Act, 1949, company means any company as
defined in Section 3 of the Companies Act, 1956 and includes a foreign company within the
meaning of Section 591 of that Act.
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As per section 51 of Banking Regulation Act, 1949, certain provisions of the Banking
Regulation Act are also applicable to the State Bank of India, any corresponding new bank, a
regional rural bank and any subsidiary bank. "Corresponding new bank" has been defined
under clause of section 2 of the DICGC Act to mean a corresponding new bank constituted
under the Banking Companies (Acquisition and Transfer of Undertakings) Acts of 1970 or
1980.
Meaning of Bank
According to banking regulation act of 1949 defines the term banking as accepting for the
purpose of lending or investment of deposits of money from the public, repay on demand or
otherwise and withdraw by cheques, draft or otherwise.
Kinds or types of bank: -
 Commercial bank
 Industrial bank
 Foreign exchange bank
 Co-operative bank
 Agricultural bank
 Land and development bank
 Saving bank
 Central bank
Commercial bank
These banks are also called as deposit banks as they accept deposits from the public and lend
them for short period. Commercial banks encourage savings among general public and
supply financial needs of modern business. These banks are purely meant to finance traders
and others. Thus commercial bank accepts deposits and lend to needy customers from short
terms.
Function of commercial banks
There are two functions namely primary and secondary function:
 Primary function includes acceptance of deposits, advancing of loans.
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 Secondary function includes agency function General, utility services.
PRIMARY FUNCTIONS
Acceptance of deposits
Banks accept deposits from the public. People keep deposit of money for safety, interest, easy
to transfer cheques. So they accept following types of deposit.
Current Account Deposits
These deposits constitute major portion of banks circulating medium of exchange. Normally
business people keep money in his accounts as they can withdraw and issues cheques any
number of times. Banks does not pay any interest for these deposits.
Saving Bank Account Deposits
People with steady and monthly income save their excess earning through this account. There
are certain restrictions in the withdrawals. Bank pays interest at a nominal rate. Small savings
are encouraged in this account.
Fixed Deposit Account
Money is accepted a fixed period it cannot be withdrawn before expiry of fixed period. The
interest rate is higher than other accounts. The longer the period is the rate of interests.
Advancing of Loans
The deposits received are invested by advancing loans to needy borrowers for higher rate of
interest. This function is source of profit for banks.
Overdrafts
This facility is extended to current account holders where they are allowed to overdraw more
than the credit standing in their account. Since the facility is only for respectable and reliable
customers, bank may not insist on security. The security will also be taken in the form of
fixed deposits, NSC’S, shares, LIC policy and so on.
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Cash Credit
Under this account bank gives loans to borrowers against certain security. The entire loan
amount will not be given at one time. It will allow the borrower to withdraw from time to
time depending on the values of stocks debt in the go-down. The interest rate is charged on
the amount withdrawn.
Discounting of the Bills of Exchange
This is a popular type of lending. If the holder of an exchange of bills needs money
immediately he can get it discounted by the bank.
The bank pays the present price of bills after deducting commission and when the bills
mature the banks can receive the payment form the party who accepted the bill.
Direct/Term Loans
Bank also gives loans to individuals or firms against collateral security. The amount
sanctioned will be credited to his requirements. Normally, industrialists, agriculturists and
others borrow these loans to start industries and for his working capital.
SECONDARY FUNCTIONS
Agency function
Transfer of Funds
 Banks help customers in transferring of funds from one place to the other through
drafts and other instruments, collect cheques, bills, salaries, pensions, dividends, and
rents on behalf of customers from other agencies.
 Undertake the payments of subscription, insurance, premiums, rents, etc.
 Undertake to buy and sell securities, acts as representative for customers in other
banks or financial institutions, acts as a trustee, execute and administrator to manage
trust.
 Carry out deceased customers desire, signs, transfer forms and document
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 Banks give advice to customers on income tax matters.
General Utility Service
The banks will safe keep valuables and documents. It collects credit information regarding
customers, transfer of foreign exchange, providing advisory services to industry, commerce,
trade, project, prospectus, order writing the issue of shares and debentures of companies.
HISTORY OF BANKING IN INDIA:
Without a sound and effective banking system in India it cannot have a healthy
economy. The banking system of India should not only be hassle free but it should be able to
meet new challenges posed by the technology and any other external and internal factors
For the past three decades India banking system has several outstanding achievements
to its credit. The most striking is its extensive reach. It is no longer confined to only
metropolitans or cosmopolitans in India. In fact Indian banking systems has reached even to
the remote corners of the country. This is one of the main reasons of Indian growth process.
The government regular policy for Indian bank since 1969 has paid rich dividends
with the nationalization of 14 major private banks in India.
Not long ago, an account holder had to wait for hours at the banks counter for getting
a draft of for withdrawing his own money. Today he has a choice. One is days when the most
efficient bank transferred money from one branch to other in two days. Now it is simple as
instant messaging of dial a pizza. Money has become the order of the day.
The first bank in India, through conservative, was established in1786. From 1786 till
today, the journey of Indian banking system can be segregated into three distinct phase. They
areas mentioned below.
 Early phase from 1786 to1969 of Indian banks
 Nationalization of Indian banks and up to 1991 prior to Indian banking sector reforms.
 New phase of Indian banking system with the advent of Indian financial and banking
services reforms in1991.
Phase I
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The general bank of India was set up in the year 1786. Next came bank of Hindustan
and banal bank. The East Indian company establishment bank of Bengal (1809), Bank of
Bombay (1840), and Bank of Madras (1843) as independent units and called it presidency
banks. These three banks were amalgamated in 1920 and imperial bank of India was
established which starred as private shareholders banks mostly Europeans share holder.
In 1865 Allahabad bank was established and first time exclusively by Indians, Punjab
national bank ltd. Was set up in 1894 with headquarters at Lahore. Between 1906and 1913,
bank of India, Central bank of India, bank of Baroda, Canara bank, Indian bank, bank of
Mysore were set up. Reserve bank of India came in 1935.
During the first phase the growth was very slow and banks also experienced
periodic failures between 1913 and 1948. There were approximately 1100 banks mostly
small. To streamline the functioning and activates of commercial banks the government of
India came up with the banking companies act, 1949 which was later changed to banking
regulation act 1949 as per amending act of 1965. Reserve bank of India was vested with
extensive owners for the supervision of banking in India as the central banking authorities.
During those day’s public has lesser confidence in the banks. As an aftermath deposit
mobilization was slow. Abreast of it the savings banks facility provided by the postal
department was comparatively safer. Moreover funds were largely given to traders.
Phase II
Government took major steps in this Indian banking sector reforms after
independence. In 1955 ,it nationalization imperial bank with extensive banking facilities
on a large scale specially in rural and semi urban areas. It formed state bank of India to act
as the principal agent of RBI and to handle banking transaction of the union and state
government all over the country.
Seven banks forming subsidiary of state bank of India was nationalized in 1960 on
19th
July 1969 major process of nationalization was carried out. It was the effort of the then
prime minister of India, Mrs. Indira Gandhi, and 14 major commercial bank in the country
were nationalized.
Second phase of nationalization Indian banking sector reform was carried out in 1980
with seven more banks. This step brought 80% of the banking segment in India under
government ownership.
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The following are the steps taken by the government of India to regulate banking
institution in the country:
 .1949: Enactment of banking regulation act.
 1955: Nationalization of state bank of India.
 1959: Nationalization of SBI subsidiaries.
 1961: Insurance cover extended to deposits.
 1969: Nationalization of14 major banks
 1971: Creation of credit guarantee corporation.
 1975: Creation of regional rural bank.
 1975: Nationalization of seven banks with deposits over 200 corers.
After the nationalization of bank the branches of the public sector bank India rose to
approximately 800% deposits and advance took a huge jump by 11000.
Banking in the sunshine of government ownership gave the public implicit faith
and immense confidence about the sustainability of these institutions.
Phase III
This has introduced many more products and facilities in the banking sectors in its
reforms measure. In 1991 under the chairmanship of M Narasimham, a committee was set
up his name which worked for the liberalization of banking practices.
The country is flooded with foreign banks and their ATM stations. Efforts are being
put to give a satisfactory service to customers. Phone banking and net banking is introduced.
The entire system became more convenient and swift .time is given more important than
money.
The financial system of Indian has shown a great deal of resilience .it is sheltered
from any crisis triggered by any external macroeconomics shock as other east Asian
countries suffered. This is all due to a flexible exchange rate regime the foreign resave
are high, the capital account is not yet fully convertible, and banks their customers have
limited foreign exchange exposure.
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COMPANY PROFILE
ORIGIN OF THE BANK
The Housing Development Finance Corporation Limited (HDFC) was amongst the first to
receive approval from the Reserve Bank of India (RBI) to set up a bank in the private sector,
as part of RBI’s liberalization of the Indian Banking Industry. HDFC Bank was incorporated
in August 1994 and commenced operation as a Commercial Bank in January 1995. Currently,
HDFC Bank has a nation spread over 110 cities across the country and operates in three
segments. Wholesale banking, retail banking and treasury services
Demerger
Demerger means the transfer, by the demerged company, of one or more of its undertakings
to any resulting company in such a manner that:
i) All the property/liabilities of the undertaking, being transferred by the demerged
company, immediately before the merger become the property/liabilities of the resulting
company by virtue of the demerger;
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ii) The property and the liabilities of the undertaking(s) being transferred by the
demerged company immediately before the demerger are transferred at values appearing in
its books of account;
iii) The resulting company issues , in consideration of the demerger, its shares on a
proportionate basis to the shareholders of the demerged company;
iv) Shareholders holding not less than three-fourths in value of the shares in the
demerged company (other than shares already held therein immediately before the demerger,
or by a nominee for the resulting company or, its subsidiary) become shareholders of the
resulting company or companies by virtue of the demerger;
v) The transfer of the undertaking is on a going concern basis;
vi) The demerger is in accordance with the conditions, if any, notified in this behalf under
section 72A (5) by the central government.
Unlike the merger in which all assets are sold, a divestiture/demerger involves selling
of some of the assets only. These assets may be in the form of a plant, division, product line,
subsidiary and so on. Although divestiture causes contraction from the perspective of selling
firm, it may not, however, entail decrease in its profits. On the contrary, it is believed by the
selling firm that its value will be enhanced by parting/divesting/demerging some of its
assets/divisions/ operating units. By selling such unproductive/non-performing assets and
utilizing cash proceeds in expanding/rejuvenating other leftover assets/operating units, the
firm is likely to augment the profits of the demerged/divesting firm.
HDFC BANK PRODUCTS:
Accounts and deposits • Savings account
• Current account
• Fixed deposit
Loans • Personal loan
• Home loan
• Educational loan
• Loan against property
• Commercial vehicle financial
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• Express loan plus
Cards • Credit card
• Debit card
• Prepaid card
Investment and insurance • Mutual funds
• Bonds
• Equities & derivatives
Forex services • Trade finance
• Foreign currency cash
• Payments &service
 ACCOUNTS AND DEPOSITS:
Banking should be effortless and in HDFC Bank, the efforts are rewarding. No matter what a
customer's need and occupational status, the bank range of solutions those are second to
none. Whether the customer is employed in a company and need a simple savings account or
run his/her own business and requires a robust banking partner, HDFC Bank not only has the
perfect solution for them, but also can recommend products that can augment their planning
for the future.
 Savings account:
These accounts are primarily meant to inculcate a sense of saving for the future,
accumulating funds over a period of time. Whatever be the occupation, the bank is confident
that the customer will find the perfect banking solution.
 Current account:
The HDFC Bank Current Account offers multi-city banking. The customer can have the
power of multi-location access to their account from any of the bank’s 746 branches in 329
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cities. Besides the customer can do most of their banking transactions from the comfort of
their office or home without stepping out.
The bank’s ultimate aid is to help their in their business by offering their current
account with all the benefits they need to stay ahead of their competition.
At HDFC Bank, customer business needs are constantly evolving. The bank provides
customers with a choice of Current Account options to exclusively suit customer businesses -
whatever the size or scope. If a customer opens an HDFC Bank Current Account it can
control customer business operations centrally.
 Fixed deposits:
Long-term investments form the chunk of everybody's future plans. An alternative to simply
applying for loans, fixed deposits allow the customer to borrow from their own funds for a
limited period, thus fulfilling their needs as well as keeping your savings secure.
 LOAN:
• Personal loan:
During occasion, our range of Personal Loans can help. The procedure is simple,
documentation is minimal and approval is quick.
Features & benefits:
 Borrow up to Rs 10, 00,000 for any purpose depending on your requirements.
 Flexible Repayment options, ranging from 12 to 48 months.
 Repay with easy EMIs.
 One of the lowest interest rates.
 Hassle free loans - No guarantor/security/collateral required.
 Speedy loan approval.
 Convenience of service at their doorstep.
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Customer privileges
The HDFC Bank offers special rates for their customers.
 An existing Auto Loan customer with a clear repayment of 12 months or more from any
of the bank approved financiers, customer can get a hassle free personal loan (without
income documentation).
 An existing HDFC Bank Personal Loan customer with a clear repayment of 12 months or
more, bank can Top-Up customer personal loan.
Credit shield:
In case of death or total permanent disability of the loanee, the loanee/nominee can avail of
the Payment Protection Insurance (Credit Shield) which insures the principle outstanding on
the loan up to a maximum of the loan amount. Principle outstanding is defined as the amount
of loan outstanding (not including any arrears in payment or interest thereon) at the Date of
Loss, having accounted for payments made and interest accruing as determined in the Policy.
Hence, the amount covered does not include any principal added because of non - payment of
EMI and also will not include interest/ accrued charges.
Personal Accident Cover
In order to ensure that the customer’s family is taken care of the bank also offer a Personal
Accident cover of Rs.2, 00,000 at a nominal premium.
Premium will be charged for both these products which will be deducted from the loan amount
at the time of disbursal. A transaction fee of Rs.350 is deducted at the time of disbursal. The service tax @ 12.36% is being
charged.
• Home Loan:
HDFC Bank brings HDFC home loans to the customer doorstep. With over 25 years of
experience, a dedicated team of experts and a complete package to meet all the customer housing finance
needs, HDFC Home Loans, help them realize their dream.
Feature & benefits:
• Home Loan - Home loans for individuals to purchase (fresh / resale) or construct
houses. Application can be made individually or jointly. HDFC finances up to 85%
maximum of the cost of the property (Agreement value + Stamp duty +
Registration charges).
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• Home Improvement Loan - HIL facilitates internal and external repairs and other
structural improvements like painting, waterproofing, plumbing and electric works,
tiling and flooring, grills and aluminum windows. HDFC finances up to 85% of the
cost of renovation (100% for existing customers).
• Home Extension Loan - HEL facilitates the extension of an existing dwelling unit.
All the terms are the same as applicable to Home Loan.
• Land Purchase Loan - Be it land for a dream house, or just an investment for the
future, HDFC Land Purchase Loan is a convenient loan facility to purchase land.
HDFC finances up to 70% of the cost of the land (Conditions Apply). Repayment of
the loan can be done over a maximum period of 10 years.
• Choose from Fixed Rate or Floating Rate with options to structure the customer
loan as Partly Fixed or Partly Floating.
• Flexible repayment options to suit their individual needs.
• Loan cover Term Assurance Plan - HDFC Standard Life Insurance Company Ltd.
offers an insurance plan which is designed to ensure that life's uncertainties do not
affect your family's interests and your precious home. LCTAP provides a lump-sum
payment on the unfortunate demise of the life assured.
This pure risk plan is designed in a way that the cover decreases as the customer repay
their home loan making it a low cost premium insurance plan. Insurance is the subject
matter of solicitation.
• Automated Repayment of Home loan EMI – the customer can give us standing
instructions to repay their Home Loan EMIs directly from their HDFC Bank Savings
Account, thus, saving you the trouble of procuring, signing and tracking post-dated
cheques.
HDFC also offers In-house scrutiny of Property documents for your complete
peace of mind.
R.Y.M.E.C Page 21

Customer privileges - If you are an existing HDFC Home Loan customer, you can
avail of other loans (such as Personal Loans, Car Loans, Two-wheeler Loans and
Loan against securities) at lower interest rates.
• Educational loan:
Features and benefits:
• Loans up to Rs.10 Lakhs for Education in India and up to Rs.20 Lakhs for Education
abroad.
• Attractive interest rates.
• Repayment to start 1 year after course completion / 6 months after obtaining
employment (whichever is earlier)
• Loan available up to tenure of 7 years including moratorium period.
• Tax Benefits available under Section 80E of the IT Act
• Hassle free loans and speedy approvals.
• Convenience of service at their doorstep.
• Loans available for other course related expenses also.
special privileges:
• Loans disbursed directly to the educational institution.
• Loan to be released as per fee schedules of institutes.
• Exclusive Telegraphic Transfer facility available for courses abroad.
• Loans available for short duration/ job oriented courses also.
• Loan against property
HDFC Bank brings to the customer Loan against Property (LAP). The customer can now
take a loan against their residential or commercial property, to expand their business, plan a dream wedding, and
fund your child's education and much more.
R.Y.M.E.C Page 22

The customer can depend on us to meet all their business requirements even to purchase a new
shop or office for their business. Loan to purchase Commercial Property (LCP) is a specially
designed product to help the customer expand their business without reducing the capital from your business.
• Loans from Rs. 2 Lacs on wards depending on their needs.
• Borrow up to 60% of market value of the property.
• Flexibility to choose between an EMI based loan or an Overdraft –the bank
also offer to the customer overdraft against their self-occupied residential or
commercial property and the customer can save money by paying interest only
on the amount utilized.
• High tenure loans for ease of repayment.
• Attractive interest rates.
• Simple and speedy processing.
• Specially designed products for Self Employed
• Loan commercial financial
Overview:
The customers are looking at the right place. Bank offer hassle-free commercial vehicle loans
with the best terms for funding at the most attractive rates in India.
Loans are extended for the purchase of:
Commercial Vehicles - Loans for commercial vehicles (this includes buses, trucks, tempos,
tippers), LCVs (light commercial vehicles, HCVs (heavy commercial vehicles), MCVs
(medium commercial vehicles) and three wheelers.
We provide funding for all models of Telco, Ashok Leyland, Swaraj Mazda, Eicher, Bajaj
Tempo, Volvo etc.
Types of loan:
• New Vehicles
• Used Vehicle / Refinance
• Balance Transfer
• Top-Up loans
R.Y.M.E.C Page 23

• Express loan:
The HDFC bank offer Express Loans Plus at your Doorstep to help fulfill all their needs. The
procedure is simple, documentation is minimal and approval is quick.
• Borrow up to Rs. 100,000/- for any purpose depending on their needs.
• Flexible repayment options, ranging from 12 to 36 months.
• Loans at their Doorstep.
• Repay with easy EMIs.
• One of the lowest interest rates in the market.
• Hassle free loans - No guarantor/security/collateral required.

 CARDS:
The bank range of Cards helps the customer meet their financial objectives. So whether the
customers are looking to add to their buying power, conducting cashless shopping, or
budgeting their expenditure, the customer will find a card that suits you.
• Credit card :
R.Y.M.E.C Page 24

Besides arming the customer with unmatched spending power, the bank’s Credit Cards are
designed to meet their unique needs. Choose one that's tailored for the customer. The best
credit cards are available here, including even the online credit cards service Net safe.
 Silver credit card:
The best features the customer could ask for in a credit card. Combined with all the
services offered by a world-class bank. Get all with the HDFC Bank International Silver
Credit Card. Spending money was never so rewarding.
All –purpose credit card the HDFC bank silver credit card can be used for all their
requirements, is it shopping, eating out, fuelling, up their vehicle, railway ticket reservation-
just about any financial requirement, planned or on impulse.
Earn while customer spend with us, money spent is money earned. For every Rs. 150
spend, the customer earn 1 reward points. The customer can redeem these accumulated points
for exciting gifts and offers from the bank exclusive rewards program.
Add on cards get up to 3 add-on cards for the customer spouse, parents,
siblings(own brother/sister), son and/or daughter (over 18 years) and allow them to
enjoy the many benefits of the HDFC bank international silver credit card.
• Zero liability on lost card: In case their credit card gets lost, report it immediately to the
bank 24-hour call centre. After the customer carry zero liability on any fraudulent
transactions on their card.
• Widely accepted
R.Y.M.E.C Page 25

Accepted at over 110,000 merchant establishments across India and Nepal and close to 18
million merchant establishments around the world.
• Gold credit card:
It's overloaded with travel benefits - discounts, cash back offers, air miles redemption.
Get an HDFC Bank International Gold Card and get introduced to a whole new world
of privileges.

 Up to 5% cash back on air ticketing
5% cash back on domestic air transactions above Rs.10000 through domestic
air line websites (2.5% on transactions below Rs.10000).
 5% cash back on train ticketing
Get 5% cash back on railway tickets purchased with HDFC Bank Gold Credit
Card at the Indian Railways.
Note: The customer can earn up to Rs 1000/- cash back in a month on their Gold Credit Card.
Special Offers from HDFC Bank
 8 paise discount on foreign exchange selling rates.
 Locker facility at 20% discount on applicable rates.
 4% off on applicable rates of Gold bars.
 Waiver of 1st year Annual Maintenance Charges on Demat account and 50% waiver
in subsequent years.
 0.25% off on applicable Auto loan rates.
R.Y.M.E.C Page 26

Note: Offers are applicable only on new loans/lockers/ Demat accounts opened (or forex
transactions done) between 1 April 2007and 31 March 2008. To avail these offers, fill up the
applicable vouchers, attach them with the application forms of respective products and
present at the nearest HDFC Bank branch with a photocopy of your HDFC Bank Gold Credit
Card membership.
 Greater reward points
Earn 2 reward points per Rs 150 spent on the Gold Credit Card and redeem them
against air miles across leading airlines. The air and train transactions earning cash back will
not be eligible for reward points.
 Rewards point’s redemption
After earning all those reward points on your HDFC Bank Gold Credit Card, redeem
them for exciting gifts and services. The customer could even convert them to airline miles
with India's leading airlines through the My Rewards programme.
 Worldwide acceptance
Accepted at over 23 million Merchant Establishments around the world, including
110,000 Merchant Establishments in India.
 Revolving credit facility
Pay a minimum amount, which is 5% (subject to a minimum amount of Rs.200) of
their total bill amount or any higher amount whichever is convenient and carry forward the
balance to a better financial month. For this facility the customer pay a nominal charge of just
2.95% per month (35.4% annually) (2.90% per month 34.8% annually for HDFC Bank
Account Holders).
 Free Add- on Card
R.Y.M.E.C Page 27

The customer can share these wonderful features with their loved ones too – the bank
offers the facility of an add-on card for their spouse, children or parents. Allow us to offer
add-on cards to the customer FREE OF COST with bank compliments.
• Women’s gold credit card:
Presenting a Gold credit card exclusively for the new age woman. Another
proud offering from HDFC Bank Credit Cards replete with discounts, cash back programmes,
rewards and more.
 5% cash back on your Monthly household purchases
Get whopping 5% cash back on all grocery/ supermarket & select departmental store
purchases on their woman's card. Here's more good news - there is no upper limit on this cash
back. It functions as the ideal household credit card.
Notes: The customer can earn up to Rs 1000 cash back in a month on their Woman's Gold Credit Card.
 5% cash back on mobile bill payments through smart pay
Pay their monthly mobile bills through HDFC Bank's "Smart pay" facility on their card, and
get 5% of their bill as cash back.
 Accelerated rewards programme
Rewards simply multiply with Woman's Gold card. Get 5 reward points for every Rs.100
spent above Rs.5, 000 in a month. For spends up to Rs 5000 in a month the customer get 2
reward points per Rs 100 spent.
 Wide choice of redemption
R.Y.M.E.C Page 28

The bank gives reward to customer an array of redemption opportunities for their Points -
From microwaves to refrigerators, from Barbie dolls to latest Fashion labels, bank takes pride
in giving one of the widest options for getting rewarded. The customer can also redeem their
accumulated reward points for air miles on leading airlines like Jet Airways, Air India,
Kingfisher Airlines and Air Sahara.
 Discounts galore just for you
Get amazing discounts at select partner outlets like Kaya Skin clinic & Hide sign when the
customer uses HDFC Bank Woman's Gold Card.
 Worldwide acceptance
Accepted at over 23 million merchant establishments around the world, including 110,000
merchant establishments in India.
• Platinum plus credit card:
India's only platinum plus Credit Card offering exclusive travel and preferential
benefits. The HDFC Bank Platinum plus Credit Card is the best Platinum offering in the
market. It is the recognition of those who have "arrived in life". Enjoy a world of exclusive
privileges on the HDFC Bank Platinum plus Credit Card.
 Exclusive travel benefits
Discounts at over 28,000 hotels and resorts worldwide
Enjoy discounts at over 28000 hotels and resorts across the world through a
complimentary Travel Club holiday membership (powered by RCI).
5% Cash back on Airline Bookings through HRG-SITA
Get 5% Cash back when the customer books their domestic air tickets for India's top
airlines (Air India, Jet Airways, Air Sahara and Kingfisher Airlines) through HRG-Sita.
 Worldwide Concierge Services:
R.Y.M.E.C Page 29

A toll free service to assist their needs any time during the day. The offering allows the
customer to avail of the following benefits:
• Golf Course Referral and Reservation
• Car Rentals, Limousine Referral and Reservation
• Hotel Referral and Reservation
• Special Events and Performance Assistance
• Flowers and Gift Delivery Service
• Dining Referral and Reservation Service
• Movie Tickets delivery
• Estate / Tax Planning referral Service
• Pretrip Information Services (including visas and inoculation requirements)
• Embassy Referrals
• Lost Luggage Assistance
• Lost Passport Assistance
All these services available to the customer anytime, anywhere.
 Accelerated Rewards Program - earn as you spend
The unique Rewards program on the Platinum plus Credit Card now let the customer
accumulate more reward points on using their card frequently.
- 2 points per Rs 150 up to Rs 10,000 spend p.m.
- 50% incremental (1 increment+2 normal=3 points per Rs 150) on incremental spend above
Rs 10,000 p.m.
 0% Fuel surcharge
The customer can now fuel up as and when their want, without worrying about the surcharge
- enjoy complete freedom from fuel surcharge when the customer purchase fuel between Rs
400 and Rs 5000 with their Platinum Plus Credit Card.
 Low interest rate
R.Y.M.E.C Page 30

The customer can enjoy the Revolving Credit Facility of the Platinum plus Credit Card with
the remarkably low interest rate of 2.65% per month.
 Balance Transfer
The customer can transfer the balances from their other credit cards to the Platinum plus
Credit Card, and enjoy an interest-free period of 3 whole months on the transferred amount.
 Utility bills through your credit card
Register their Platinum plus Credit Card with Smart Pay, HDFC Bank's Utility Bill payment
service. Ensure that all their utility bills are paid on time, without any hassle for the customer.
• Debit card:
Easy shop international debit card:
HDFC Bank Easy Shop International Debit Card brings to the customer a world of
convenience.
 Daily Limits: Rs. 15000 at ATMs for Withdrawal and Rs. 25000 at merchant
establishments for shopping
 Access their bank account at over 8, 00,000 Visa/Maestro/Cirrus ATMs in India and
abroad.
 0 % petrol surcharge at select BPCL Petrol pumps: As a Debit Card holder, any
surcharge levied on their Card at select BPCL petrol pumps would be reversed in the
subsequent month.
 Shop at more than 3, 50,000 outlets in India and 13 million worldwide. The amount is
debited directly to their account.
 Use their card overseas. HDFC bank account is debited in Rupees regardless of the
currency in which the customer spends.
 Zero Liability on fraudulent Point Of Sale usage on lost or stolen cards. Cl now gets
an Alert on their mobile phone or email for every purchase transaction done using
R.Y.M.E.C Page 31

their Debit Card at a merchant outlet. All the customer need to do is register for Insta
Alerts.
 Worldwide assistance from Visa and MasterCard on their card.
• Easy shop women’s advantage debit card:
HDFC Bank Easy Shop Woman's Advantage Debit Card is India's first Woman's Debit Card
of its kind. Not only does it replace their ATM card, it also opens a world of privileges that
match their status and lifestyle.
 Cash Back of Re. 1 for every Rs. 200 spent:
For every Rs. 200 that the customer will spend and will receive Re. 1 as cash back .This cash
back is valid on all purchases made through the card, at all times of the year.
 Specialized Services:
A unique service number will be available for Woman's Debit Card customers to avail
information / booking for the services listed ahead. Just call, quote your card number and
use any of the services. These services are subject to availability and rendered on a best
effort basis.
 Entertainment assistance :
 Dining Referral and Reservation Assistance
 Flower & Gift Delivery
 Movie Tickets
 Home assistance:
 Financial Planning & Advisory Services Assistance
 Electrical & Electronic Gadget Repair Assistance
 Pest Control Assistance
 Home Cleaning Assistance
R.Y.M.E.C Page 32

 Wellness :
 Medical Checkup Packages
 Nursing Care Arrangement
 50% discount on locker fee:
The customer will be entitled to a 50% discount on locker fee for the 1st year. This waiver
would be applicable for only one locker per card. In order to avail of the discount, please
show their Woman's Advantage Debit Card at the branch.
 Special discount on purchase of Gold Bars:
Preferential pricing will be given to the customer on purchase of Gold Bars. In order to avail
of the special discount, pleas show their Woman's Advantage Debit Card at the branch.
 Insurance cover:
The customer will be entitled to Personal Accident insurance cover of 2 lacks.
 Zero Liability:
The customer will not have any liability to any fraudulent Point of Sale transactions on the
debit card, which take place up to 30 days prior to reporting the card loss.
 Free Bill Pay: the customer will not be charged for Bill Pay Service, normally chargeable
at Rs. 100 p.a.
 Daily Limits:
Rs. 20,000 at ATMs for Withdrawal and Rs. 30,000 at merchant establishments for shopping.
(Effective July 25, 2007)
• Kisan card:
Agriculture is the main occupation of the people of India. Nearly 2/3rd of our country's population is
directly or indirectly engaged in agriculture. It contributes to 21% of the bank GDP. Keeping this in mind, the bank
has designed the Kisan Gold Card to envisage a convenient and hassle-free loan to the farmer for meeting his
production and investment requirements. Banks have been giving these loans, but with technology edge bank
R.Y.M.E.C Page 33

conceives a real plastic for the farmer for giving him the convenience to bank anywhere, anytime and not being
restricted to a 10am-2pm banking culture. The card, launched in association with Visa International, can also be
used at POS terminals globally.
 The Kisan Gold Card is aimed at meeting the production and investment needs of the
farming community. Production needs broadly cover crop production requirements,
including funds for all related inputs to grow a crop. Bank also meets Post Harvest and
Domestic consumption requirements.
 The Card caters to investment needs such as purchase of agricultural related
equipment/implements, irrigation requirements, construction of farm related buildings, and
investment in agriculture related activities such as Dairy, Piggery, Beekeeping and the like
 The credit limit on the card, sanctioned for three years, is based on the production
requirements of the farmer. The limit will be renewed every three years.
• 24-hour Banking Facility
 The Card can be used at any HDFC Bank ATM across the country and all Visa
establishments worldwide.
 Personal Accident Insurance Cover of Rs. 2 Lakh, free to all cardholders.
 Daily withdrawal limit through the card is Rs. 15,000 at ATMs and Rs. 25,000 for
usage at merchant outlets.
 The return on investments is the best in the industry.
 The Debit Card is backed by line of credit.
 Prepaid cards:
It is a unique card wherein, the customer pay first and spend later. HDFC bank offers prepaid cards
also. Like the name suggests, a prepaid credit card requires the customer to pay first and use
later.
• Forex plus card:
 When you travel abroad, leave your worries behind
HDFC Bank brings the customer Forex plus Travel Card - a pre-paid traveler’s card designed to give the
customer a secure and hassle-free travel experience.
R.Y.M.E.C Page 34

No more chasing moneychangers. Or paying transaction charges for shopping abroad. The
Forex plus Travel Card is ideal for travelers since it can be blocked if stolen and reloaded, while the customers
are still abroad. In fact, it is the perfect answer to all their foreign exchange needs.
The Forex Plus Travel Card is:
 Accepted at all Visa Merchant outlets worldwide
 Can be used to withdraw cash at all VISA ATMs worldwide.
 Reloadable anytime, anyplace
 Available in Australian Dollar, Canadian Dollar, Euro, GBP, US Dollar and Japanese
Yen Currencies
 Comes with Personal Accident Insurance Cover of Rs 2 lacks.
 Includes Loss of Checked Baggage & Passport reconstruction insurance cover
 Protection against Foreign Exchange fluctuation
The basic denomination of this card is in AUD / CAD/ Euro / GBP / US Dollars / Japanese
Yen. But the customer can withdraw cash or use the card at POS in any currency, anywhere
in the world. For withdrawals, which are in the card currency i.e. AUD / CAD/ Euro / GBP /
US Dollars / Japanese Yen, the customer don't lose out on foreign exchange due to
fluctuating market rates.
 Safer and more secure
This card is accepted at all Visa Merchant outlets and 24 hour VISA ATMs worldwide. So no
more carrying the bulk of cash or travelers’ cheques. And no more hassle of chasing money
changers, paying commissions and tracking expenses. Their Card is protected against misuse
at ATMs with a PIN. In case their card gets lost or stolen, all the customer have to do is call
HDFC Bank Phone Banking number at Mumbai (91-22-28561818) immediately and report
the loss of their card.
 Reloadable anytime, anyplace
HDFC Forex plus card is valid up to the last day of the month indicated on their card. Within
this period the customer can use their card as often as the customer like. In case their money
gets exhausted, this card offers the facility to reload even in the middle of their journey.
 Available in Australian Dollar, Canadian Dollar, Euro, GBP, US Dollar and
Japanese Yen Currencies
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Each of these currencies are accepted worldwide and can be changed into the currency of the
country that the customer are in.
 Ease of tracking
Get online access to their card account and track their spends, check their balance, Change
their IPIN and log an online request for PIN change. What more, we'll also send the customer
a statement of account to their mailing address at the end of every month during which any
card transaction takes place.
 Insurance Cover
Enjoy a travel experience free of financial worries with card insurance covers such as
Personal Accident Insurance (Death cover only) of Rs.2,00,000, loss of checked baggage
cover up to Rs.20,000 and passport reconstruction cover (actual cost of passport
reconstruction only).
• Gift plus card:
Gift the freedom to choose - Gift an HDFC Bank Gift plus card - the perfect gift for every occasion.
Walk into any HDFC bank branch and walk away with a loaded Gift card, ready to be gifted
and used
The card has been packaged to suit any gifting occasion and is available for any
denomination of their choice. It gives gifting the personal touch that we all desire and also gives the
beneficiary the freedom to choose the way they want to use it.
So go ahead, visit any bank branch and gift this unique gift to their relatives, friends, and
colleagues...anybody that the customer ever gift.
 More personal than cash
Most often than not, we run short of time or ideas to gift - we then make do with gifting
cash. This card with its occasion-based packaging is more personal than cash, as it reflects
the thought and effort that has gone behind the gift.
 Freedom of choice
While the card is more personal than cash, it also allows the cardholder (the beneficiary) the
freedom to choose their own gift. Shop, dine, party - the cardholder can use the card just the
way he/she wants. This is the freedom this card gifts the user.
 Ease of usage
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Gift plus card is a Visa card and can hence be used at any Visa affiliated merchant outlet,
both in India and abroad. This gives worldwide usage access to over more than 13 million
merchant establishments.
 Ease of tracking
 Gift plus card has an ATM PIN and also an IPIN in the card kit. The ATM PIN allows the
card holder the access to any HDFC Bank ATM for balance enquiry on the card. The
IPIN gives further access even to the transaction history. The card holder can use this
option and even download the usage statements. Also, the cardholder can call up the local
Phone Banking number for any further query
• Food plus card:
HDFC Bank brings the customer most convenient way of giving regular meal allowances to their employees.
 Personalized Visa Card
 Card can be reloaded as per the corporeity’s instruction
 Card can be used at all Visa "Food & Beverage" merchant outlets in India
 If lost, the Card can be hot listed to protect the value on the Card
 Balance Inquiry is allowed at all HDFC Bank ATMs
 Net Banking access to every Card account
 24 X 7 accesses to Phone Banking
 Card Statement for tracking the usage
 INVESTMENT AND INSURANCE:
• Mutual funds:
Mutual funds are funds that pool the money of several investors to invest in equity or debt
markets. Mutual Funds could be Equity funds, Debt funds or balanced funds.
R.Y.M.E.C Page 37

Funds are selected on quantitative parameters like volatility, FAMA Model, risk adjusted
returns, and rolling return coupled with a qualitative analysis of fund performance and
investment styles through regular interactions / due diligence processes with fund managers.
 Advantages of investing into a mutual fund:
The reason that mutual funds are so popular is that they offer the ability to easily invest in
increasingly more complicated financial markets. A large part of the success of mutual funds
is also the advantages they offer in terms of diversification, professional management and
liquidity
 Flexibility
Mutual Fund investments also offer the customer a lot of flexibility with features such as
systematic investment plans, systematic withdrawal plans & dividend reinvestment
 Affordability
They are available in units so this makes it very affordable. Because of the large corpus, even
a small investor can benefit from its investment strategy.
 Liquidity
In open ended schemes, you have the option of withdrawing or redeeming their money at any
point of time at the current NAV
 Diversification
Risk is lowered with Mutual Funds as they invest across different industries & stocks.
 Professional Management
Expert Fund Managers of the Mutual Fund analyse all options based on experience &
research
 Potential of return
The fund managers who take care of their Mutual Fund have access to information and
statistics from leading economists and analysts around the world. Because of this, they are in
a better position than individual investors to identify opportunities for their investments to
flourish.
 Low Costs
R.Y.M.E.C Page 38

The benefits of scale in brokerage, custodial and other fees translate into lower costs for
investors.
 Regulated for investor protection
The Mutual Funds sector is regulated to safeguard the investor's interests. Their relationship
managers will help the customer to determine their investment profile, which will be based
on their needs, possibilities and expectations. Their investment profile will help the customer
choose the type of investments that suits the customer best.
 Bonds:
Just as people need money, so do companies and governments. A company needs funds to
expand into new markets, while governments need money for everything from infrastructure
to social programs. The problem large organizations run into is that they typically need far
more money than the average bank can provide. The solution is to raise money by issuing
bonds (or other debt instruments) to a public market. Thousands of investors then each lend a
portion of the capital needed. A bond is nothing more than a loan for which the customers are
the lender. The organization that sells a bond is known as the issuer. The customer can think
of a bond as an IOU given by a borrower (the issuer) to a lender (the investor).
For example, say an investor buys a bond with a face value of Rs 1,000, a coupon of 8%, and
a maturity of 10 years. This means the investor receives a total of Rs 80 (Rs 1,000 * 8%) of
interest per year for the next 10 years. Actually, because most bonds pay interest semi-
annually, the investor receives two payments of Rs 40 a year for 10 years. When the bond
matures after a decade, the investor gets their Rs 1,000 back.
The different types of bonds include government securities, corporate bonds, commercial
paper, treasury bills, strips etc. These bonds are either fixed interest bonds or floating rate
bonds. In fixed interest bonds, the interest component remains the same throughout the tenure
of the security. Say a 10-year bond issued today bears 8% interest. Even if 5 years hence, the
interest rate in the economy goes down to 5%, this 8% bond will continue to earn the investor
8% interest. In a floating rate bond, the interest rate varies depending on the interest rate of a
security that the bond chooses to benchmark its interest rate to.
 Equities & derivatives:
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In financial markets, the only constant thing is change. At such
times, HDFC Securities offers the customer a unique gamut of services designed to put the
customer in charge of their finances and lets the customer trade in the comfort of their home
or office. Finally, the customer can trade with complete ease.
• Empower yourself today:
Making things simple the customer has always been the bank foremost Endeavour. The latest
effort includes a unique setup which allows the customer to trade seamlessly either through
the Internet model or the Dial-a-Share model.
• Online Trading
Simplified trading is just a few clicks away. To trade online, all the customers have to do is
Confirm the order placed .Check their mail for an email confirmation of their order.
Once the customers have completed these simple steps, the customer can sit back and watch
their shares and money being credited and debited online.
• Now the customer can quickly and seamlessly apply to the latest public offerings.
• Dial-a-share
The dial-a-share facility gives the customer convenience to trade in shares over the telephone
and the ease of settlement of traders as an electronic process.
• Invest right with the 3-in-1 advantage:
The HDFC securities trading account has a unique 3-in-1 feature that integrates their HDFC
securities trading account with their existing HDFC bank savings account and existing demat
account. At their instructions, funds/shares can be seamlessly moved from their linked
Demat/Bank account to execute their transactions.
• Get the extra advantage:
When the customers choose to trade through HDFC securities, the customer can be assured of
the following benefits:
 Seamless transactions:
By integrating their accounts, we ensure minimal waste of time during movement of their
funds and shares.
 Speed
Orders are placed electronically, so proceeds are available instantly.
R.Y.M.E.C Page 40

 No manipulation
To prevent any mismanagement, we will send the customer an email confirmation, the
minute their order is executed.
 Safety and Security
HDFC Securities offer the highest level of security such as 128-bit encryption technology.
 Dedicated and Separate contact numbers
For trading over the phone as well as for customer care.
 Forex services:
• Foreign currency travelers cheques:
Travelers Cheques are a safe and easy way to protect their money when the customer travel.
The customer can encase them only when the customer need to, and only against their
signature, unlike cash which can be stolen and misused by anybody, immediately. Loss of
Travelers Cheque can be reported anywhere in the world by making a single phone and the
pre-fixed amount on the cheques are made refundable.
Travelers Cheques are offered in major currencies like USD, GBP, Euro, CAD, AUD and
JPY. These are available in various denominations to suit their needs. At present HDFC Bank
offers American Express Travelers Cheques which are widely accepted at Merchant
Establishments and Financial Institutions across more than 200 countries
• Foreign currency cash:
Foreign Currency Cash is a convenient way of meeting personal expenses along their
journey, paying for taxis / internal travel, food expenses etc. The customer could avail of
Foreign Currency Cash in USD, GBP, EURO, AUD and CAD from the HDFC bank branches
offering Foreign Exchange facilities.
• Foreign currency demand draft:
The customer can now avail of the customer FCY DD facility to make payments for various
purposes like:
 Payment of University fees abroad
 Making a gift remittance to a friend or relative
 Payment of application fees for various exams like TOEFL, GMAT etc.
 Payment for medical treatment abroad
R.Y.M.E.C Page 41

 And all other permitted purposes as per the RBI guidelines.
FCY Demand Drafts are issued in seven currencies like United States Dollars (USD), Great
Britain Pounds (GBP), EURO, Japanese Yen (JPY), Australian Dollars (AUD), Canadian
dollars (CAD) and New Zealand Dollars (NZD).
• Foreign currency cheque deposits:
The customer can directly deposit their foreign currency cheques in to their saving or current
account. HDFC Bank will then have the cheques sent for collection and the funds will be
credited to their account in Indian Rupees. We accept cheques of various currencies like
USD, GBP, Euro, JPY, Australian Dollars, Canadian Dollars, UAE Dirham’s, Hong Kong
Dollars and Swiss Francs.
Clearing Timings for cheques payable in US Dollars: 6 International working days for cheque
payable in New York and 16 international working days for Non-New York from the date of
lodgment at clearing house.
Clearing Timings for cheques payable in Euro: 8 International working days for cheque
payable in Germany and 18 international working days for Non-Germany from the date of
lodgment at clearing house.
DESIGN OF THE STUDY
INTRODUCTION:
Finance is the life-blood of business. It is rightly termed as the science of money.
Finance is very essential for the smooth running of the business. Finance controls the
policies, activities and decision of every business.
“Finance is that business activity which is concerned with the organization and conversation
of capital funds in meeting financial needs and overall objectives of a business enterprise.”-
Wheeler
Financial management is that managerial activity which is concerned with the planning and
controlling of a firm financial reserve. Financial management as an academic discipline has
R.Y.M.E.C Page 42

undergone fundamental changes as regards its scope and coverage. In the early years of its
evolution it was treated synonymously with the raising of funds. In the current literature
pertaining to this growing academic discipline, a broader scope so as to include in addition to
procurement of funds, efficient use of resources is universally recognized.
Financial analysis can be defined as a study of relationship between many factors as
disclosed by the statement and the study of the trend of these factors.
The objective of financial analysis is the pinpointing of strength and weakness of a business
undertaking by regrouping and analyzing of figures obtained from financial statement and
balance sheet by the tools and techniques of management accounting. Financial analysis is as
the final step of accounting that result in the presentation of final and the exact data that helps
the business managers, creditors and investors.
Based on this reasoning, this project is an attempt to “comparative study of ratio analysis
of HDFC bank with selected private banks”.
Accounting ratios are relationships expressed in the mathematical terms between
figures that are connected with each other in the same manner. The information contained in
the balance sheet, profit and loss account or the income statements are used by the
management, creditors investors and others to form judgment about the operating
performance and the financial strengths and weaknesses of the firm if we properly analysis
the information reported in the statement.
B.STATEMENT OF THE PROBLEM:
“The project deals with the comparative study of ratio analysis of HDFC BANK with
selected private banks”.
R.Y.M.E.C Page 43

In the financial analysis a ratio is used as an index for evaluating the financial position
and performance of the firm. The absolute accounting figures reported in the financial
statement do not provide a meaningful understanding of the performance and the financial
position of a firm. A relative study with the peer group reveals the bank’s strength, weakness,
competitive position and the overall performance.
C.OBJECTIVES OF THE STUDY:
Based on the information furnished in the financial statements, the various objectives of
the ratio analysis are:
 To identify the bank’s relative strengths and weaknesses.
 To analyse the financial performance of the bank.
 To analyse and compare various ratios in comparison with selected private banks viz.
ICICI BANK, ING VYSYA, CITI BANK, KOTAK MAHENDRA.
 To suggest appropriate measures for enhancing financial performance of the bank.
D. NEED OF THE STUDY:
The comparative study of ratio analysis of HDFC BANK with selected private banks
will enable us to know the liquidity position, financial leverage, solvency position of HDFC
BANK with that of their peers. The study reveals the financial performance of the bank and
also its future prospects.
E.SCOPE OF THE STUDY:
 The scope is limited to published information received from various bank website.
 The study was limited to few important ratios of the bank.
 It covers the comparative study of ratio analysis of HDFC BANK with ICICI, ING
VYSYA, KOTAK MAHINDRA and CITI BANKS only.
 The study covers 2006-07 P&L a/c and balance sheet items only.
 The study limits to 5 major private banks only.
F. LIMITATIONS OF THE STUDY:
R.Y.M.E.C Page 44

 The study was limited to select financial parameters of HDFC BANK, ICICI, ING
VYSYA, KOTAK MAHINDRA and CITI BANKS.
 The study covers previous one year of balance sheet only (2006-07). It may not
adequately represent fail picture of the bank performance.
 Time duration for the study was very short as it was restricted to just six weeks.
 The study was limited to analysis of selected ratios only.
G. RESEARCH DESIGN:
Research design means a search of facts, answers to question and solution to the problems. It
is a prospective investigation. Research is a systematic logical study of an issue or problem
through scientific method. It is a systematic and objective analysis and recording of
controlled observation that may lead to the development of generalization, principles,
resulting in prediction and possibly ultimate control of events.
Research design is the arrangement of conditions for the collection and analysis of
data in manner that aims to combine relevance to the research purpose with relevance to
economy. There are various designs, which are descriptive and helpful for analytical
research.
Research design used in the specific study includes the following:
 Identifying the statement of the problem.
 Collection of the company’s specific literature i.e., annual reports for the study period
and the profile of the company.
 Scanning through standard books to understand the theory behind the financial
performance evaluation.
 Collection of information from various journals to understand the industrial
background of the study
 Decision regarding study period in this case it was decided to be one year’s i.e., from
2006-2007.
R.Y.M.E.C Page 45

 Identification of financial ratios likely to reflect the capital adequacy, resources
deployed, assets quality, management quality, earning quality and liquidity of the
organization. In this case it was decided to be:
• Profitability Ratio
• Liquidity Ratio
• Activity Ratio
 Calculation of the above ratios over the study period and analyzing it.
 Forwarding certain recommendation and conclusion to the bank.
H.THE THEORETICAL CONCEPT
Ratio Analysis:
A ratio is defined as ‘the indicated quotient of two mathematical expressions’ and as ‘the
relationship between two quantitative terms between figures which have a cause and effect
relationship or which are connected with each other in some manner or the other. A
noticeable point is that a ratio reflecting a quantitative relationship helps to perform a
qualitative judgment. Such is the nature of all financial ratios.
Ratio analysis is a widely used technique in financial analysis. It is defined as systematic use
of ratio to interpret the financial statements so that the strengths and weaknesses of the
organization, its historical performance and current financial condition, can be determined.
TYPES OF RATIO
1. Current Ratio
It may be defined as the relationship between the current assets and current liabilities.
The ratio is a measure of general Liquidity of the firm for a short period of time. A ratio of 2:
1 is considered satisfactory as a rule of thumb
Current Assets (CA)
Current Ratio =
Current Liabilities (CL)
2. Proprietary Ratio
R.Y.M.E.C Page 46

This ratio establishes the relationship between the shareholders funds and the total
assets of the firm. It establishes the claims of the shareholders on the firm’s assets. It usually
is expressed as a pure ratio.
Shareholder’s Fund
Proprietary Ratio = X 100
Total Assets
3. Solvency Ratio
It can be defined as the relationship between total liabilities and total assets.
Total Liabilities
Solvency Ratio = X 100
Total Assets
Generally lower the solvency ratio, more satisfactory or stable is the long-term
solvency position of a firm.
4. Return on Total Resource
Return on total resource or total assets ratio is the ratio of net profit to total resources
or total assets. Return here means net profit after taxes and total resources mean all realizable
assets including intangible assets, if they are realizable. This ratio measures the productivity
of the total resources of a concern.
Formulae
Net Profit
Return On Total Resource = ______________ X 100
Total Asset
5. Earnings per Share
R.Y.M.E.C Page 47

The ratio establishes the relationship between profits after tax to number of equity shares.
Profit after Tax
Earnings per Share = ___________________
Number of Equity Shares
6. Fixed Asset to Net worth Ratio
This ratio establishes the relationship between fixed asset and shareholders fund. This
ratio indicates the extent to which shareholder’s funds are sunk in the fixed asset. Generally,
the purchase of fixed assets should be financed by the shareholders equity, which includes
reserve, surpluses and retained earnings.
Fixed Asset (After Dep)
Fixed Assets Ratio = X 100
Net Worth
7. Return on equity:
It indicates how the firm has used the resources of owners. This ratio is one of the most
important ratios in financial analysis. The earnings of a satisfactory return are one of the most
desirable objectives of a business. The ratio of the net profit to owner’s equity reflects the
extent to which the objective has been accomplished.
Profit after tax
Return on Equity = X 100
Equity share capital
LIMITATIONS OF THE RATIO:
R.Y.M.E.C Page 48

Limited use of a single ratio:
A single ratio, usually, does not convey much of a sense. To make a better interpretation a
number of ratios have to be calculated which is likely to confuse the analyst than help him in
making any meaningful conclusion.
Lack of adequate standards:
There are no well-accepted standards or rules of thumb for all ratios, which can be accepted
as norms. It renders interpretation of the ratios difficult.
Inherent limitation of accounting:
Like financial statements, ratios also suffer from the inherent weakness of accounting records
such as theirs historical nature.
Window Dressing:
Financial statements can easily be window dressed to present a better picture of its financial
and profitability position to outsiders. Hence, one has to be very careful in making a decision
from ratios, calculated from such financial statements. But it may be very difficult for an
outsider to know about the window dressing made from a firm.
Personal Bias:
Ratios are only means of financial analysis and not an end of itself. Ratios have to be
interpreted and different people may interpret the same ratio in different ways.
Incomparable:
Not only industries differ in their nature but also the firms of the similar business widely
differ in their size and accounting procedures, etc. it makes comparison of ratios difficult and
misleading. Moreover comparisons are difficult due to differences in definitions of various
financial terms used in the ratio analysis.
Absolute Figures Distortive:
Ratios devoid of absolute figures may prove distortive, as ratio analysis is primarily a
quantitative analysis and not a qualitative analysis.
Price Level Changes:
While making ratio analysis, no consideration is made to the changes in price levels and this
makes the interpretation of ratios invalid.
R.Y.M.E.C Page 49

METHODOLOGY OF DATA COLLECTION:
SOURCES OF DATA
Data is defined as group of non-random symbols in the form of text, image, or voice
representing quantities, actions as objects. Data is processed into a form that is meaningful to
the recipient and is of real and perceived value in the current or prospective actions or
decisions of the recipient.
Data are mainly classified into two groups:
 Primary data
 Secondary data
 Primary data
Primary data has been collected from the books of accounts of the bank i.e trading
and profit and loss account, balance sheet, cash flow statement. Direct information was also
collected by the interaction with executive of various levels.
 Secondary data
Secondary data was collected from magazines, relative’s books, website and in IBA
(INDIAN BANK ASSOCIATION), newspapers, economics times, mint, business
line.
R.Y.M.E.C Page 50

ANALYSIS & INTERPRETATION OF DATA
Financial Analysis:
Financial analysis is the analysis of financial statement of a Company to assess its financial
health and soundness of its management. ‘Financial Statement Analysis’ involves a study of
the financial statements of a company to ascertain its prevailing state of affairs and the
reasons thereof. Such a study would enable the public and the investors to ascertain whether
one company is more profitable than the other and also to state the causes and factors that are
probably responsible.
Ratio Analysis:
Ratio analysis is a technique of analysis and interpretation of financial statements. It
is the process of establishing and interpreting various ratios for helping in making certain
decisions.
A ratio indicates a quantitative relationship, which can be in term used to make a
judgment
.
1. Current Ratio:
Current Assets (CA)
Current Ratio =
Current Liabilities (CL)
R.Y.M.E.C Page 51

Interpretation
Current ratio establishes the relationship between current assets and current liabilities. The
analysis reveals that the HDFC BANK is current ratio is not satisfactory. The table
reveals the current assets are very low in comparison with ICICI bank. The HDFC’s
current asset is Rs.3605.48 crores as against ICICI’s Rs.23551.68 crores.
The current liability position of HDFC is quite satisfactory but ICICI’s position is too
high.
R.Y.M.E.C Page 52
BANKS
CURRENT ASSETS
(Rupees in crores))
CURRENT LIABILITIES
(Rupees in crores)
RATIO
IOB 3605.48 13689.13 0 .26
ICICI 23551.85 38228.64 0.61
KOTAK
MAHINDRA
692.33 2135.65 0 .32
ING VYSYA 794.65 1920.87 0.41
CITI 3911.92 5447.64 0.71

GRAPH SHOWING CURRENT RATIO
2. Proprietary Ratio
Shareholder’s Fund
Proprietary Ratio = X 100
Total Assets
R.Y.M.E.C Page 53
C URRE NT RATIO
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
HDFC IC IC I K OTAK
MAHINDRA
ING VY S Y A C ITI
RATIO

Interpretation
As inferred by the above ratios HDFC BANK has 1.49 ratios and it is higher than the
standard level i.e., 0.5:1. Compared to HDFC BANK with CITI BANK, CITI has higher ratio
i.e., 5.19. KOTAK MAHINDRA BANK has a comfortable proprietary ratio of 5.88. The
asset size of KOTAK MAHINDRA is one fourth of the asset sizes of HDFC BANK.
Shareholders fund can be increased if the proprietary ratio has to increases.
GRAPH SHOWING PROPRIETARY RATIO
R.Y.M.E.C Page 54
BANKS
SHAREHOLDER’S
FUND (Rs. In crores)
TOTAL ASSETS
(Rs. in crores)
RATIO IN
PERCENTAGE
IOB
319.39 21447.82 1.49
ICICI
899.34 80694.15 1.11
KOTAK
MAHINDRA
326,16 5541.73 5.88
ING VYSYA
90.90 3686.78 2.46
CITI
454.39 87505.24 5.19

3. Solvency Ratio
Total Liabilities
Solvency Ratio = X 100
R.Y.M.E.C Page 55

Total Assets
BANKS
TOTAL
LIABILITIES
(Rs. in crores)
TOTAL ASSETS
(Rs. in crores)
RATIO IN
PERCENTAGE
HDFC
74731.09 21447.82 3.48
ICICI
255173.45 80694.15 3.16
KOTAK
MAHINDRA
12662.02 5541.73 2.28
ING VYSYA
16411.09 3686.78 4.451
CITI
82961.32 87505.24 0.94
Interpretation
As inferred by the above the ratio HDFC BANK has 3.48 ratios it is not satisfactory for long
term solvency position for the banks. Compared to above banks CITI BANK has lower
solvency ratio and it is good symbol for long term solvency position and maintain stability in
the firm. HDFC BANK and ICICI BANK’s are same in size of operation. HDFC has 3.48
ratio of liabilities on total assets, where as ICICI has 3.16 ratio of liabilities.
To reduce the solvency ratio of HDFC BANK it has to decrease its deposits
and increase loans in the form of Home loans, Land loans, loan on phone, Home
improvement loan, Home equity loans etc.,
Liabilities can be reduced by giving less interest rates on the deposits and
increase the service charges.
GRAPH SHOWING SOLVENCY RATIO
R.Y.M.E.C Page 56

4. Return on Total Resource
Net Profit
Return On Total Resource = ______________ X 100
Total Asset
R.Y.M.E.C Page 57

BANKS
NET PROFIT
(Rs. in crores)
TOTAL ASSETS
(Rs. in crores)
RATIO IN
PERCENTAGE
HDFC
2334.55 21447.82 10.88
ICICI
2349.39 80694.15 2.91
KOTAK
MAHINDRA
617.74 5541.73 11.14
ING VYSYA
88.91 3686.78 2.41
CITI
1446.80 87505.24 1.65
Interpretation
This ratio indicates the return on fixed assets and current assets. As HDFC BANK is
getting 10.88 ratio of return on total resource and it is earning more returns compared to other
banks.
This ratio indicates the return on fixed assets and current assets. As HDFC BANK has
10.88 ratio and it is earning more returns compared to other banks. As HDFC invested less
amount in purchasing assets and hence it has good returns on investment. Compared to above
banks CITI BANK has less return on investment.
GRAPH SHOWING RETURN ON TOTAL RESOURCE
R.Y.M.E.C Page 58

5. Earnings per Share
R.Y.M.E.C Page 59

Profit after Tax
Earnings Per Share = ___________________
Number of Equity Shares
BANKS
NET PROFIT
(Rs. In crores)
NUMBER OF EQUITY SHARES
(Rs. in crores)
EARNING
PER SHARE
HDFC
1142.50 31.939 35.77
ICICI
2995.00 89.934 33.30
KOTAK
MAHINDRA
140.82 32.616 4.32
ING VYSYA
83.92 9.090 9.23
CITI
1560.80 45.43 34.35
Interpretation
The earnings per share of HDFC bank are highest among other 5 banks. Though the
net profit of ICICI is higher than HDFC bank its EPS is lower because outstanding equity
shares are higher. KOTAK MAHINDRA as the lowest EPS.
Graph Showing Earning Per Share
R.Y.M.E.C Page 60

6.
Fixed Asset to Net worth Ratio
Fixed Asset (After Dep)
Fixed Assets Ratio = X 100
Net Worth
BANK FIXED ASSETS
AFTER DEP(RS in
Crores)
NET WORTH
(Rs. in crores)
RATIOIN
PERCENTAGE
HDFC 966.67 6433.15 15.02
ICICI 2375.14 24313.26 9.77
KOTAK
MAHINDRA
141.09 1661.93 8.48
ING VYSYA 176.69 2008.73 8.79
R.Y.M.E.C Page 61
0
5
10
15
20
25
30
35
40
HDFC ICICI KOTAK
MAHINDRA
ING VYSYA CITI
EARNINGPER SHARE RATIO
RATIO

CITI
4313.99 82961.32 5.20
Interpretation
Fixed assets ratio establishes the relation between how much the shareholders fund were
invested in fixed assets. HDFC BANK has utilized its fund in purchasing fixed assets more
compare to other banks and HDFC’s net worth is Rs.6433 as against ICICI’s net worth of
Rs.24313.26. CITI bank fixed asset ratio is the lowest. This ratio CITI bank has utilized only
5.2% of net worth in fixed asset.
Graph Showing Fixed Asset to Net worth Ratio
R.Y.M.E.C Page 62
0
2
4
6
8
10
12
14
16
HDFC ICICI KOTAK
MAHINDRA
ING VYSYA CITI
Fixed asset to net worth ratio
RATIO

7. Return on Equity
Profit after tax
Return on Equity = X 100
Equity share capital
BANKS
NET PROFIT
(Rs. in crores)
SHAREHOLDERS
FUND
(Rs. in crores)
RATIO IN
PERCENTAGE
HDFC
2372.55 6433.15 36.88
ICICI
2502.49 24313.26 10.29
KOTAK
MAHINDRA
621.63 1661.93 37.40
ING VYSYA
218.74 2008.73 10.89
CITI
190.20 454.39 41.85
Interpretation
Return on equity ratio establishes the relationship between how effectively the funds were
utilized in resources to get more profits to achieve its objective. HDFC BANK is getting good
returns on its funds invested it creates good image in public to invest in bank and it is safety
to investors. Compare to other banks ING VYSYA BANK is giving least returns.
Graph Showing return on equity
R.Y.M.E.C Page 63

SUMMARY OF FINDINGS
The research project was done about Five Private Banks and the data collected for the project
was or a period of forty days i.e. from 24th
Dec 2007 to 2nd
Feb 2008. And on the collected,
study was done and the followings:
Name of the
banks
Current
ratio
Proprietary
ratio
Solvency
Ratio
Return
on total
resources
ratio
Earnings
per share
ratio
Fixed
asset to
net
worth
ratio
Return
on
equity
ratio
HDFC 0 .26
1.49 3.48 10.88 35.77 15.02 36.88
ICICI 0.61
1.11 3.16 2.91 33.30 9.77 10.29
R.Y.M.E.C Page 64
0
5
10
15
20
25
30
35
40
45
HDFC ICICI KOTAK
MAHINDRA
ING VYSYA CITI
RETURNON EQUITY
RATIO

KOTAK
MAHINDRA
0 .32
5.88 2.28 11.14 4.32 8.48 37.40
ING VYSYA 0.41
2.46 4.451 2.41 9.23 8.79 10.89
CITI 0.71
5.19 0.94 1.65 34.35 5.20 41.85
 The current assets of HDFC BANK are very low compared to ICICI BANK current assets
i.e., Rs.3605.48 as against ICICI’S Rs.23551.85. The current liability position of ICICI’S is
too high compared to HDFC BANK. Hence ICICI BANK has to reduce the exposure in
current liabilities.
 As inferred by the above ratios HDFC BANK has 1.49 ratios and it is higher than the
standard level i.e., 0.5:1. Compared to HDFC BANK with CITI BANK, CITI has higher ratio
i.e., 5.19. KOTAK MAHINDRA BANK has a comfortable proprietary ratio of 5.88. The
asset size of KOTAK MAHINDRA is one fourth of the asset sizes of HDFC BANK.
Shareholders fund can be increased if the proprietary ratio has to increases.
 As inferred by the above the HDFC BANK has 3.48 ratios it is not satisfactory. To maintain
stability in the firm for the long term the solvency position should be lowered. To reduce the
solvency ratio of HDFC BANK it has to decrease its deposits and increase loans in the form
of Home loans, Land loans, loan on phone, Home improvement loan, Home equity loans etc.
Liabilities can be reduced by giving less interest rates on the deposits and increase the service
charges.
 As HDFC BANK is getting 10.88 ratio of return on total resources. And it is satisfactory.
When compared to all other bank ICICI bank is very low ratio of return on total resources.
 It can reduce the Non performing assets like taking actions against customer who have not
repaid loans or getting into settlement that if the customer pays the entire loan at a time they
will get some subsidy and sanction new loan.
R.Y.M.E.C Page 65

 It can increase the Net profit by reducing the interest on deposits of products like Internet
Banking, Mobile Banking, Standing Institutions, Debit- Cum-ATM Cards etc., It can also
reduce the salaries of the employees.
 As inferred by the above table HDFC BANK‘s EPS is highest among other five banks.
Though the net profit of ICICI is higher than HDFC bank its EPS is lower because
outstanding equity shares are higher. KOTAK MAHINDRA as the lowest EPS.
 HDFC BANK has utilized its fund in purchasing fixed assets more compare to other banks.
HDFC BANK net worth is Rs.6433.15 as against ICICI BANK net worth Rs.24313.26. And
CITI BANK has utilized its net worth only 5.2 ratios for fixed assets. As more fixed assets
purchased through net worth it’s less exposed to risk.
 HDFC BANK is giving different services to its customers through its different products like
accounts and deposits, loans, cards, demat account, investment services and for-ex services.
SUGGESTIONS
The short-term solvency position of the bank is not satisfactory. Bank has to increase current
assets or reduce current liabilities to strengthen its liquidity position and bring current ratio
nearer to the standards.
 Bank has to provide effective services to customers for maintaining and building the brand
image that helps the banks to have a competitive edge over the other banks. The bank can
enter into Mobile Banking aggressively in order to capture young customers.
The bank has to enter into the rural markets by opening branches and extension counters. It
also needs to open ATM facilities in educational institutions, government offices, theaters
etc. It has to concentrate in Micro finance lending using NGOs, cooperative societies.
R.Y.M.E.C Page 66

The bank has to reduce its solvency ratio in order to maintain stability in long term period. To
reduce the solvency ratio of HDFC BANK it has to decrease its deposits and increase loans in
the form of Home loans, Land loans, loan on phone, Home improvement loan, Home equity
loans etc.,
The bank has lower returns on fixed assets. The bank has to increase the profitability by (i)
reduce the NPAs (ii) improve recovery mechanism (iii) increase treasury profits (iv) decrease
administrative expenses –salary, overhead etc.
The bank has less ratio of return on equity funds. The bank has to concentrate on Asset
Liability Management (ALM) aspect effectively to increase the return on equity.
CONCLUSIONS
 The current assets of HDFC BANK are very low compared to ICICI BANK current assets
i.e., Rs.3605.48 as against ICICI’S Rs.23551.85. The current liability position of ICICI’S is
too high compared to HDFC BANK. Hence ICICI BANK has to reduce the exposure in
current liabilities.
 As inferred by the above the HDFC BANK has 3.48 ratios it is not satisfactory. To maintain
stability in the firm for the long term the solvency position should be lowered.
 As HDFC BANK is getting 10.88 ratio of return on total resources. And it is satisfactory.
When compared to all other bank ICICI bank is very low ratio of return on total resources.
 It can increase the Net profit by reducing the interest on deposits of products like Internet
Banking, Mobile Banking, Standing Institutions, Debit- Cum-ATM Cards etc., It can also
reduce the salaries of the employees.
R.Y.M.E.C Page 67

 Bank has to provide effective services to customers for maintaining and building the brand
image that helps the banks to have a competitive edge over the other banks. The bank can
enter into Mobile Banking aggressively in order to capture young customers.
The bank has to enter into the rural markets by opening branches and extension counters. It
also needs to open ATM facilities in educational institutions, government offices, theaters
etc. It has to concentrate in Micro finance lending using NGOs, cooperative societies.
The bank has lower returns on fixed assets. The bank has to increase the profitability by (i)
reduce the NPAs (ii) improve recovery mechanism (iii) increase treasury profits (iv) decrease
administrative expenses –salary, overhead etc.
The bank has less ratio of return on equity funds. The bank has to concentrate on Asset
Liability Management (ALM) aspect effectively to increase the return on equity.
R.Y.M.E.C Page 68

MBA HDFC bank Porject

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