APROJECT REPORT

ON

THE BANKING SECTOR : LOANSWITH REFERENCE TO HDFC BANK

SUBMITTED TO THE UNIVERSITY OF PUNE IN PARTIAL FULFILMENT OF

BACHELOR OF BUSINESS ADMINISTRATION FOR THE ACADEMIC

YEAR 2010-11

BYMR BURHANUDDIN SHOYAB ALI OF BBA (SEM VI) ROLL NO. 96 OF NESS WADIA

COLLEGE OF COMMERCE, PUNE-411001

UNDER THE GUIDANCE OF PROF. PINKY AGARWAL AND PROF. NEENA RANKA

PROFILE OF THE ORGANISATION HDFC BANK:-

Introduction:-

HDFC Bank Ltd. (is a major Indian financial services company based in India, incorporated in August 1994, after the Reserve Bank of India allowed establishing private sector banks. The Bank was promoted by the Housing Development Finance Corporation, a premier housing finance company (set up in 1977) of India. the Housing Development Finance Corporation Limited (HDFC) was amongst the first to receive an 'in principle' approval from the Reserve Bank of India (RBI) to set up a bank in the private sector, as part of the RBI's liberalisation of the Indian Banking Industry in 1994 HDFC Bank has 1,725 branches and over 4,232 ATMs, in 779 cities in India, and all branches of the bank are linked on an online real-time basis.

Promoter:

HDFC is India's premier housing finance company and enjoys an impeccable track record in India as well as in international markets. Since its inception in 1977, the Corporation has maintained a consistent and healthy growth in its operations to remain the market leader in mortgages. Its outstanding loan portfolio covers well over a million dwelling units. HDFC has developed significant expertise in retail mortgage loans to different market segments and also has a large corporate client base for its housing related credit facilities. With its experience in the financial markets, a strong market reputation, large shareholder base and unique consumer franchise, HDFC was ideally positioned to promote a bank in the Indian environment

Capital structure

As on 30th June, 2010 the authorized share capital of the Bank is Rs. 550 crore. The paid-up capital as on said date is Rs. 459,69,07,030/-

(45,96,90,703 equity shares of Rs. 10/- each). The HDFC Group holds 23.63 % of the Bank's equity and about 17.05 % of the equity is held by the ADS Depository (in respect of the bank's American Depository Shares (ADS) Issue). 27.45% of the equity is held by Foreign Institutional Investors (FIIs) and the Bank has about 4,33,078 shareholders.

The shares are listed on the Bombay Stock Exchange Limited and The National Stock Exchange of India Limited.

Distribution network:

HDFC Bank is headquartered in Mumbai. The Bank at present has an enviable network of 1,780 branches spread in 833 cities across India.All branches are linked on an online real-time basis. Customers in over 500 locations are also serviced through Telephone Banking. The Bank's expansion plans take into account the need to have a presence in all major industrial and commercial centres where its corporate customers are located as well as the need to build a strong retail customer base for both deposits and loan products. Being a clearing/settlement bank to various leading stock exchanges, the Bank has branches in the centres where the NSE/BSE have a strong and active member base.

The Bank also has 5,231 networked ATMs across these cities. Moreover, HDFC Bank's ATM network can be accessed by all domestic and international Visa/MasterCard, Visa Electron/Maestro, Plus/Cirrus and American Express Credit/Charge cardholders.

Management:

Mr. C.M. Vasudev has been appointed as the Chairman of the Bank with effect from 6th July 2010 subject to the approval of the Reserve Bank of India and the shareholders. Mr. Vasudev has been a Director of the Bank since October 2006. A retired IAS officer, Mr. Vasudev has had an illustrious career in the civil services and has held several key positions in India and overseas, including Finance Secretary, Government of India, Executive Director, World Bank and Government nominee on the Boards of many companies in the financial sector.

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

The Bank's Board of Directors is composed of eminent individuals with a wealth of experience in public policy, administration, industry and commercial banking. Senior executives representing HDFC are also on the Board.

Senior banking professionals with substantial experience in India and abroad head various businesses and functions and report to the Managing Director. Given the professional expertise of the management team and the overall focus on recruiting and

retaining the best talent in the industry, the bank believes that its people are a significant competitive strength.

Retail banking services:

the objective of the Retail Bank is to provide its target market customers a full range of financial products and banking services, giving the customer a one-stop window for all his/her banking requirements. The products are backed by world-class service and delivered to customers through the growing branch network, as well as through alternative delivery channels like ATMs, Phone Banking, Net Banking and Mobile Banking. HDFC Bank was the first bank in India to launch an International Debit Card in association with VISA and issues the Master card Maestro debit card as well. The Bank launched its credit card business in late 2001. By March 2009, the bank had a total card base (debit and credit cards) of over 13 million. The Bank is also one of the leading players in the “merchant acquiring” business with over 70,000 Point-of-sale (POS) terminals for debit / credit cards acceptance at merchant establishments. The Bank is well positioned as a leader in various net based B2C opportunities including a wide range of internet banking services for Fixed Deposits, Loans, Bill Payments, etc

Technology:

DFC Bank operates in a highly automated environment in terms of information technology and communication systems. All the bank's branches have online connectivity, which enables the bank to offer speedy funds transfer facilities to its customers. Multi-branch access is also provided to retail customers through the branch network and Automated Teller Machines (ATMs).

The Bank has made substantial efforts and investments in acquiring the best technology available internationally, to build the infrastructure for a world class bank. The Bank's business is supported by scalable and robust systems which ensure that our clients always get the finest services we offer.

The Bank has prioritised its engagement in technology and the internet as one of its key goals and has already made significant progress in web-enabling its core businesses. In each of its businesses, the Bank has succeeded in leveraging its market position, expertise and technology to create a competitive advantage and build market share

.Business :

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

• Wholesale Banking ServicesThe Bank's target market ranges from large, blue-chip manufacturing companies in the Indian corporate to small & mid-

sized corporates and agri-based businesses. For these customers, the Bank provides a wide range of commercial and transactional banking services, including working capital finance, trade services, transactional services, cash management, etc. The bank is also a leading provider of structured solutions, which combine cash management services with vendor and distributor finance for facilitating superior supply chain management for its corporate customers. Based on its superior product delivery / service levels and strong customer orientation, the Bank has made significant inroads into the banking consortia of a number of leading Indian corporates including multinationals, companies from the domestic business houses and prime public sector companies. It is recognised as a leading provider of cash management and transactional banking solutions to corporate customers, mutual funds, stock exchange members and banks.

• Retail Banking Services The objective of the Retail Bank is to provide its target market customers a full range of financial products and banking services, giving the customer a one-stop window for all his/her banking requirements. The products are backed by world-class service and delivered to customers through the growing branch network, as well as through alternative delivery channels like ATMs, Phone Banking, NetBanking and Mobile Banking.

The HDFC Bank Preferred program for high net worth individuals, the HDFC Bank Plus and the Investment Advisory Services programs have been designed keeping in mind needs of customers who seek distinct financial solutions, information and advice on various investment avenues. The Bank also has a wide array of retail loan products including Auto Loans, Loans against marketable securities, Personal Loans and Loans for Two-wheelers. It is also a leading provider of Depository Participant (DP) services for retail customers, providing customers the facility to hold their investments in electronic form.

HDFC Bank was the first bank in India to launch an International Debit Card in association with VISA (VISA Electron) and issues the Mastercard Maestro debit card as well. The Bank launched its credit card business in late 2001. By March 2010, the bank had a total card base (debit and credit cards) of over 14 million. The Bank is also one of the leading players in the “merchant acquiring” business with over 90,000 Point-of-sale (POS) terminals for debit / credit cards acceptance at merchant establishments. The Bank is

well positioned as a leader in various net based B2C opportunities including a wide range of internet banking services for Fixed Deposits, Loans, Bill Payments, etc.

• TreasuryWithin this business, the bank has three main product areas - Foreign Exchange and Derivatives, Local Currency Money Market & Debt Securities, and Equities. With the liberalisation of the financial markets in India, corporates need more sophisticated risk management information, advice and product structures. These and fine pricing on various treasury products are provided through the bank's Treasury team. To comply with statutory reserve requirements, the bank is required to hold 25% of its deposits in government securities. The Treasury business is responsible for managing the returns and market risk on this investment portfolio

Credit ratings

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

The Bank also has its long term unsecured, subordinated (Tier II) Bonds rated by CARE and Fitch Ratings India Private Limited and its Tier I perpetual Bonds and Upper Tier II Bonds rated by CARE and CRISIL Ltd. CARE has assigned the rating of "CARE AAA" for the subordinated Tier II Bonds while Fitch Ratings India Pvt. Ltd. has assigned the rating "AAA (ind)" with the outlook on the rating as "stable". CARE has also assigned "CARE AAA [Triple A]" for the Banks Perpetual bond and Upper Tier II bond issues. CRISIL has assigned the rating "AAA / Stable" for the Bank's Perpetual Debt programme and Upper Tier II Bond issue. In each of the cases referred to above, the ratings awarded were the highest assigned by the rating agency for those instruments.

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

PRODUCT STUDY :- LOANS

Types of loans provided by HDFC bank:-

1) personal loans features and benefits.

Borrow up to Rs 15,00,000 for any purpose depending on your requirements.

• Flexible Repayment options, ranging from 12 to 60 months.

• Repay with easy EMIs.

• One of the lowest interest rates.

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

• Speedy loan approval.

• Convenience of service at your doorstep.

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 CoverIn order to ensure that your family is taken care of we 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.750 will also be deducted at the time of disbursal. Please

note that service tax @ 10% and Education cess of 3% will also be charged.

2) Smartdraft:

SmartDraft is an unsecured overdraft facility offered to HDFC Bank's corporate salary account holders. The facility operates in the form of additional funds in the account, for use during short-term exigencies.

Our corporate salary account holders can avail of Overdraft facility of up to 3 times the salary.

Features and benefits:

• Overdraft limit up to 3 times the salary• Minimum documentation • No pre-closure charges • Easy-to-use and easy-to-pay facility• Freedom to use limit through Cheque book, ATM, online transfer,

etc.• Interest payable on the amount utilised • Credits in the account set-off utilisation and help save interest • Easy documentation• Limit will be set on the existing account

3) home loans

HDFC Bank brings, HDFC home loans to your doorstep. Over 3 decades of exclusive experience, a dedicated team of experts and a complete package to meet all your housing finance needs, HDFC Home Loans, help you realize your dream.

The HDFC Advantage

Pioneers of Housing Finance in India with over 33 years of lending experience.

Widest range of Home Loan Products.

Most experienced and empowered personnel to ensure smooth & easy processing.

Counseling and advisory services for acquiring a property. Loan from any office for purchase of home anywhere in India Loan approval even before a property is selected Flexible loan repayment options Free & safe document storage.

Features and 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 80% of the cost of the property (including the cost of the land) based on the repayment capacity of the customer.

Home Improvement Loan - The interiors of any home reflect the personal preferences and tastes of its owners making it imperative to constantly upgrade to keep up with changing times. HIL facilitates internal and external repairs and other structural improvements like Painting, Waterproofing and Roofing, Plumbing and Electrical Works, Tiling and Flooring, Grills, Aluminum Windows compound walls and much more. HDFC finances up to 85% of the cost of improvement. This is however subject to 80% of market value as assessed by HDFC.

Home Extension Loan - HEL for adding more space to your existing home for meeting the requirements of your growing family be it an extra bedroom for your children, a reading room for yourself or a cozy coffee corner. It is easy to extend your home anyway you like. HDFC finances up to 85% of the cost of extension. This is however subject to 80% of market value as assessed by HDFC.

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 80% of the cost /value of the land (Conditions Apply). Repayment of the loan can be done over a maximum period of 15 years.

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

Flexible repayment options to suit your 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 you repay your home loan making it a low cost premium insurance plan.*Insurance is the subject matter of solicitation. Automated Repayment of Home loan EMI - You can give us standing instructions to repay your Home Loan EMIs directly from your HDFC Bank Savings Account, thus, saving you the trouble of procuring, signing and tracking post-dated cheques. HDFC also offers In-house scrutiny of Property documents for your complete peace of mind. 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.

4) two wheeler loans

Flexible repayment options, ranging from 12 to 48 months available even at the point of purchase.

Repay through post-dated cheques with easy EMIs. Calculate your EMI.

Hassle free loans - No guarantor required.

Speedy loan approval.

Available for almost all models at attractive interest rates.

Free gifts from time to time on approval of your Two Wheeler Loan. (Watch this space for more details on the free gift promotion).

5) New car loans

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

Avail 100% finance on your favorite car.

Flexible repayment options, ranging from 12 to 84 months.

Borrow up to 3 times your annual salary (for salaried professionals) and 6 times your annual income (for self employed professionals)*.

• Speedy processing - within 48 hours. • Repay with easy EMIs. • Attractive Interest rates• Hassle-free documentation. • Customer Privileges

6) Cash back loans

cash Back is a new finance product from HDFC Bank that helps you improve cash flow management.Cash Back is priced lower than most unsecured Personal Loans and is payable via EMIs, giving you flexibility and convenient payment options.

Features and benefits:Borrow up to 85% of the final invoice value of the car purchased without a loan

• Receive funding on most vehicles• Repay over a period of up to 60 months• Attractive interest rate of 13.50% • Disbursement will be made in favour of the car owner (as is

reflected in RC copy and invoice)

7) loan against gold-term loan

• Avail Loan upto Rs.10,00,000 & upto 90% of value. • Safety & Security of your Gold Jewellery • ATL - Anytime Liquidity • No EMI, Service only Interest and enjoy the Loan facility • Lower Interest Rates - Your savings can be Invested in several

Investment Avenues

• If you are an HDFC Bank customer, we have special rates for you !!!

8) Loans for properties:

HDFC Bank brings to you Loan Against Property (LAP). You can now take a loan against your residential or commercial property, to expand your business, plan a dream wedding, fund your child's education and much more.

You can depend on us to meet all your business requirements even to purchase a new shop or office for your business. Loan to purchase Commercial Property (LCP) is a specially designed product to help you expand your business without reducing the capital from your business.

Features and benefits:

• Loans to expand your business or to meet any personal need• Residential & Commercial properties accepted• Maximum Loan to value* • Flexible product offerings - EMI based loan / Overdraft

facility available.• High tenure loans for ease of repayment.• Attractive interest rates. • Specially designed products for Self Employed.

9) loan for agriculture

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 our GDP. Keeping this in mind, we have 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 our technology edge we conceived 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.

Features and benefits:

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. We also meet 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.

10) Education loans

a) student loan for Indian education

• Student Loans Upto Rs. 15 Lakhs for education In India • Unsecured Lending Upto INR 7.5 Lakhs • No Collateral Or Third Party Guarantee• Wider Range Of Collateral For Loans Above INR 7.5 Lakhs • Loan available upto tenure of 7 years including moratorium period• Repayment to start 1 year after course completion / 6 months after

obtaining employment (whichever is earlier) • Loans available for short duration/ job oriented courses also

b) student loans for foreign education

• Student Loans Upto Rs. 20 Lakhs for education Abroad• Unsecured Lending Upto INR 7.5 Lakhs • No Collateral Or Third Party Guarantee • Wider Range Of Collateral For Loans Above INR 7.5 Lakhs • Loan available upto tenure of 7 years including moratorium period

Repayment to start 1 year after course completion / 6 months after obtaining employment (whichever is earlier)