Project Report Zuby

8/2/2019 Project Report Zuby

1/94

RESEARCH PROJECT REPORT

ON

A STUDY OF VARIOUS HOUSING FINANCE SCHEMES

PROVIDED BY HDFC

Submitted to Mahamaya Technical University, Noida for the partial

fulfillment of the requirement for the award of the degree of Master of

Business Administration .

Under the guidance of :- Submitted By:-

Miss Deepti Kumar Name- Zubia Sayyada

Roll No-1027870023

MBA IV Sem

Batch-2010-12

ARYAN INSTITUTE OF MANAGEMENT & COMPUTER STUDIES

AGRA (U.P.)

Code- 278

[1]


2/94

ACKNOWLEDGMENT

I am glad to present my Research project report on A study of various housing finance schemes

provided by HDFC. This formal piece of acknowledgement may not be sufficient to express my feeling of

gratitude towards people who have helped me in successfully completing my research project report.

I extremely grateful to my guide, for their valuable guidance and timely suggestions. I would like to thank

our director sir Dr.R.C. Gupta and all faculty members of Aryan institute of management and computer

studies for the valuable guidance support.

These past 3 months were of utmost importance as they added value towards my path of knowledge. I

would also like to extend my thanks to my members and friends for their support. And lastly, I would like

to express my gratefulness to the parents for seeing me through it all.

ZUBIA SAYYADA

MBA III SEM

[2]


3/94

DECLARATION

I, Zubia Sayyada student of Aryan institute of management & computer studies, Agra affiliated to

Mahamaya Technical University, Noida,I would like to declare that the project entitled on A study of

various housing finance schemes provided by HDFC is submitted in partial fulfillment of Master of

Business Administration, is my original work.

ZUBIA SAYYADA

CONTENTS

[3]


4/94

CHAPTER-1

AN OVERVIEW OF BANKING INDUSTRY

CHAPTER-2

INTRODUCTION OF HDFC

CHAPTER-3

A STUDY OF VARIOUS HOUSING FINANCE SCHEMES PROVIDED BY HDFC

CHAPTER-4. RESEARCH METHDOLOGY

OBJECTIVE OF THE STUDY

HYPOTHESIS TO BE TESTED

SIGNINIFICANCE OF STUDY

SAMPLING PROCEDURE

COLLECTION OF DATA

CHAPTER-5DATA ANALYSIS & INTERPRETATION

CHAPTER-6.FINDINGS & SUGGESION

CHAPTER-7.CONCLUSION

[4]


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ANNXEURES-

QUESTIONNAIRE

BIBILIOGRAPHY

[5]


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CHAPTER-1

AN OVERVIEW OF

BANKING

INDUSTRY

OVERVIEW OF BANKING INDUSTRY

[6]


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Banking in India

Banking in India originated in the last decades of the 18th century. The first banks were The

General Bank of India, which started in 1786, and Bank of Hindustan, which started in 1790;

both are now defunct. The oldest bank in existence in India is theState Bank of India, which

originated in the Bank of Calcutta in June 1806, which almost immediately became theBank of

Bengal. This was one of the three presidency banks, the other two being the Bank of Bombayand

the Bank of Madras, all three of which were established under charters from the British East

India Company. For many years the Presidency banks acted as quasi-central banks, as did their

successors. The three banks merged in 1921 to form theImperial Bank of India, which, upon

India's independence, became the State Bank of India in 1955.

[7]
http://en.wikipedia.org/w/index.php?title=Bank_of_Hindustan&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Bank_of_Hindustan&action=edit&redlink=1http://en.wikipedia.org/wiki/State_Bank_of_Indiahttp://en.wikipedia.org/wiki/State_Bank_of_Indiahttp://en.wikipedia.org/wiki/Bank_of_Calcuttahttp://en.wikipedia.org/wiki/Bank_of_Bengalhttp://en.wikipedia.org/wiki/Bank_of_Bengalhttp://en.wikipedia.org/wiki/Bank_of_Bengalhttp://en.wikipedia.org/wiki/Bank_of_Bombayhttp://en.wikipedia.org/wiki/Bank_of_Bombayhttp://en.wikipedia.org/wiki/Bank_of_Madrashttp://en.wikipedia.org/wiki/Imperial_Bank_of_Indiahttp://en.wikipedia.org/wiki/Imperial_Bank_of_Indiahttp://en.wikipedia.org/wiki/State_Bank_of_Indiahttp://en.wikipedia.org/wiki/File:Scheduled_banking_structure_in_India.pnghttp://en.wikipedia.org/wiki/File:Scheduled_banking_structure_in_India.pnghttp://en.wikipedia.org/w/index.php?title=Bank_of_Hindustan&action=edit&redlink=1http://en.wikipedia.org/wiki/State_Bank_of_Indiahttp://en.wikipedia.org/wiki/Bank_of_Calcuttahttp://en.wikipedia.org/wiki/Bank_of_Bengalhttp://en.wikipedia.org/wiki/Bank_of_Bengalhttp://en.wikipedia.org/wiki/Bank_of_Bombayhttp://en.wikipedia.org/wiki/Bank_of_Madrashttp://en.wikipedia.org/wiki/Imperial_Bank_of_Indiahttp://en.wikipedia.org/wiki/State_Bank_of_India


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History

Indian merchants inCalcutta established the Union Bank in 1839, but it failed in 1848 as a

consequence of the economic crisis of 1848-49. TheAllahabad Bank, established in 1865 and still

functioning today, is the oldest Joint Stock bank in India.(Joint Stock Bank: A company that

issues stock and requires shareholders to be held liable for the company's debt) It was not the first

though. That honor belongs to the Bank of Upper India, which was established in 1863, and which

survived until 1913, when it failed, with some of its assets and liabilities being transferred to the

Alliance Bank of Simla.

When the American Civil War stopped the supply of cotton to Lancashire from theConfederate

States, promoters opened banks to finance trading in Indian cotton. With large exposure to

speculative ventures, most of the banks opened in India during that period fey and lost interest in

keeping deposits with banks. Subsequently, banking in India remained the exclusive domain of

Europeans for next several decades until the beginning of the 20th century.

Foreign banks too started to arrive, particularly inCalcutta, in the 1860s. The Comptoire

d'Escompte de Paris opened a branch in Calcutta in 1860, and another in Bombay in 1862;

branches inMadras andPondicherry, then a French colony, followed.HSBC established itself in

Bengal in 1869. Calcutta was the most active trading port in India, mainly due to the trade of the

British Empire, and so became a banking center.

The first entirely Indian joint stock bank was the Oudh Commercial Bank, established in 1881 in

Faizabad. It failed in 1958. The next was the Punjab National Bank, established in Lahorein

1895, which has survived to the present and is now one of the largest banks in India.

Around the turn of the 20th Century, the Indian economy was passing through a relative period of

stability. Around five decades had elapsed since theIndian Mutiny, and the social, industrial and

other infrastructure had improved. Indians had established small banks, most of which served

particular ethnic and religious communities.

The presidency banks dominated banking in India but there were also some exchange banks and a

number of Indianjoint stock banks. All these banks operated in different segments of the

[8]
http://en.wikipedia.org/wiki/Calcuttahttp://en.wikipedia.org/wiki/Calcuttahttp://en.wikipedia.org/wiki/Allahabad_Bankhttp://en.wikipedia.org/wiki/Allahabad_Bankhttp://en.wikipedia.org/wiki/Allahabad_Bankhttp://en.wikipedia.org/wiki/Alliance_Bank_of_Simlahttp://en.wikipedia.org/wiki/American_Civil_Warhttp://en.wikipedia.org/wiki/Lancashirehttp://en.wikipedia.org/wiki/Confederate_Stateshttp://en.wikipedia.org/wiki/Confederate_Stateshttp://en.wikipedia.org/wiki/Confederate_Stateshttp://en.wikipedia.org/wiki/Kolkatahttp://en.wikipedia.org/wiki/Kolkatahttp://en.wikipedia.org/w/index.php?title=Comptoire_d%27Escompte_de_Paris&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Comptoire_d%27Escompte_de_Paris&action=edit&redlink=1http://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Chennaihttp://en.wikipedia.org/wiki/Chennaihttp://en.wikipedia.org/wiki/Pondicherryhttp://en.wikipedia.org/wiki/Pondicherryhttp://en.wikipedia.org/wiki/HSBChttp://en.wikipedia.org/wiki/HSBChttp://en.wikipedia.org/wiki/Bengalhttp://en.wikipedia.org/wiki/British_Rajhttp://en.wikipedia.org/wiki/Faizabadhttp://en.wikipedia.org/wiki/Punjab_National_Bankhttp://en.wikipedia.org/wiki/Lahorehttp://en.wikipedia.org/wiki/Lahorehttp://en.wikipedia.org/wiki/Indian_rebellion_of_1857http://en.wikipedia.org/wiki/Indian_rebellion_of_1857http://en.wikipedia.org/wiki/Joint_stock_companyhttp://en.wikipedia.org/wiki/Joint_stock_companyhttp://en.wikipedia.org/wiki/Calcuttahttp://en.wikipedia.org/wiki/Allahabad_Bankhttp://en.wikipedia.org/wiki/Alliance_Bank_of_Simlahttp://en.wikipedia.org/wiki/American_Civil_Warhttp://en.wikipedia.org/wiki/Lancashirehttp://en.wikipedia.org/wiki/Confederate_Stateshttp://en.wikipedia.org/wiki/Confederate_Stateshttp://en.wikipedia.org/wiki/Kolkatahttp://en.wikipedia.org/w/index.php?title=Comptoire_d%27Escompte_de_Paris&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Comptoire_d%27Escompte_de_Paris&action=edit&redlink=1http://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Chennaihttp://en.wikipedia.org/wiki/Pondicherryhttp://en.wikipedia.org/wiki/HSBChttp://en.wikipedia.org/wiki/Bengalhttp://en.wikipedia.org/wiki/British_Rajhttp://en.wikipedia.org/wiki/Faizabadhttp://en.wikipedia.org/wiki/Punjab_National_Bankhttp://en.wikipedia.org/wiki/Lahorehttp://en.wikipedia.org/wiki/Indian_rebellion_of_1857http://en.wikipedia.org/wiki/Joint_stock_company


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economy. The exchange banks, mostly owned by Europeans, concentrated on financing foreign

trade. Indian joint stock banks were generally under capitalized and lacked the experience and

maturity to compete with the presidency and exchange banks. This segmentation let Lord Curzon

to observe, "In respect of banking it seems we are behind the times. We are like some old

fashioned sailing ship, divided by solid wooden bulkheads into separate and cumbersome

compartments."

The period between 1906 and 1911, saw the establishment of banks inspired by the Swadeshi

movement. The Swadeshi movement inspired local businessmen and political figures to found

banks of and for the Indian community. A number of banks established then have survived to the

present such as Bank of India, Corporation Bank,Indian Bank, Bank of Baroda, Canara Bank

and Central Bank of India.

The fervour of Swadeshi movement lead to establishing of many private banks inDakshina

Kannada andUdupi district which were unified earlier and known by the name South Canara

( South Kanara ) district. Four nationalised banks started in this district and also a leading private

sector bank. Hence undivided Dakshina Kannada district is known as "Cradle of Indian Banking".

During theFirst World War (19141918) through the end of the Second World War(1939

1945), and two years thereafter until theindependence

of India were challenging for Indianbanking. The years of the First World War were turbulent, and it took its toll with banks simply

collapsing despite theIndian economygaining indirect boost due to war-related economic

activities. At least 94 banks in India failed between 1913 and 1918 as indicated in the following

table:

Yea

rs

Number of

banks

that failed

Authorized

capital

(Rs. Lakhs)

Paid-up

Capital

(Rs. Lakhs)

191 12 274 35

[9]
http://en.wikipedia.org/wiki/Swadeshihttp://en.wikipedia.org/wiki/Bank_of_Indiahttp://en.wikipedia.org/wiki/Corporation_Bankhttp://en.wikipedia.org/wiki/Indian_Bankhttp://en.wikipedia.org/wiki/Indian_Bankhttp://en.wikipedia.org/wiki/Bank_of_Barodahttp://en.wikipedia.org/wiki/Canara_Bankhttp://en.wikipedia.org/wiki/Central_Bank_of_Indiahttp://en.wikipedia.org/wiki/Dakshina_Kannadahttp://en.wikipedia.org/wiki/Dakshina_Kannadahttp://en.wikipedia.org/wiki/Dakshina_Kannadahttp://en.wikipedia.org/wiki/Udupi_districthttp://en.wikipedia.org/wiki/Udupi_districthttp://en.wikipedia.org/wiki/First_World_Warhttp://en.wikipedia.org/wiki/First_World_Warhttp://en.wikipedia.org/wiki/Second_World_Warhttp://en.wikipedia.org/wiki/Second_World_Warhttp://en.wikipedia.org/wiki/Indian_independence_movementhttp://en.wikipedia.org/wiki/Economy_of_Indiahttp://en.wikipedia.org/wiki/Economy_of_Indiahttp://en.wikipedia.org/wiki/Economy_of_Indiahttp://en.wikipedia.org/wiki/Swadeshihttp://en.wikipedia.org/wiki/Bank_of_Indiahttp://en.wikipedia.org/wiki/Corporation_Bankhttp://en.wikipedia.org/wiki/Indian_Bankhttp://en.wikipedia.org/wiki/Bank_of_Barodahttp://en.wikipedia.org/wiki/Canara_Bankhttp://en.wikipedia.org/wiki/Central_Bank_of_Indiahttp://en.wikipedia.org/wiki/Dakshina_Kannadahttp://en.wikipedia.org/wiki/Dakshina_Kannadahttp://en.wikipedia.org/wiki/Udupi_districthttp://en.wikipedia.org/wiki/First_World_Warhttp://en.wikipedia.org/wiki/Second_World_Warhttp://en.wikipedia.org/wiki/Indian_independence_movementhttp://en.wikipedia.org/wiki/Economy_of_India


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3

191

442 710 109

1915

11 56 5

191

613 231 4

191

79 76 25

191

87 209 1

Post-Independence

Thepartition of India in 1947 adversely impacted the economies ofPunjab and West Bengal,

paralyzing banking activities for months. India'sindependence marked the end of a regime of the

Laissez-faire for the Indian banking. The Government of India initiated measures to play an active role

in the economic life of the nation, and the Industrial Policy Resolution adopted by the government

in 1948 envisaged amixed economy. This resulted into greater involvement of the state in different

segments of the economy including banking and finance. The major steps to regulate banking

included:

The Reserve Bank of India, India's central banking authority, was established in April 1934, but

was nationalized on January 1, 1949 under the terms of the Reserve Bank of India (Transfer to

Public Ownership) Act, 1948 (RBI, 2005b).[Reference www.rbi.org.in]

In 1949, the Banking Regulation Act was enacted which empowered the Reserve Bank of India

(RBI) "to regulate, control, and inspect the banks in India."

The Banking Regulation Act also provided that no new bank or branch of an existing bank could

be opened without a license from the RBI, and no two banks could have common directors.

[10]
http://en.wikipedia.org/wiki/Partition_of_Indiahttp://en.wikipedia.org/wiki/Punjab,_Indiahttp://en.wikipedia.org/wiki/Punjab,_Indiahttp://en.wikipedia.org/wiki/West_Bengalhttp://en.wikipedia.org/w/index.php?title=Indian_independence_goverment&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Indian_independence_goverment&action=edit&redlink=1http://en.wikipedia.org/wiki/Laissez-fairehttp://en.wikipedia.org/wiki/Government_of_Indiahttp://en.wikipedia.org/wiki/Mixed_economyhttp://en.wikipedia.org/wiki/Mixed_economyhttp://en.wikipedia.org/wiki/Reserve_Bank_of_Indiahttp://en.wikipedia.org/wiki/Partition_of_Indiahttp://en.wikipedia.org/wiki/Punjab,_Indiahttp://en.wikipedia.org/wiki/West_Bengalhttp://en.wikipedia.org/w/index.php?title=Indian_independence_goverment&action=edit&redlink=1http://en.wikipedia.org/wiki/Laissez-fairehttp://en.wikipedia.org/wiki/Government_of_Indiahttp://en.wikipedia.org/wiki/Mixed_economyhttp://en.wikipedia.org/wiki/Reserve_Bank_of_India


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Nationalization

Banks Nationalisation in India: Newspaper Clipping,Times of India, July 20, 1969

Despite the provisions, control and regulations ofReserve Bank of India, banks in India except the

State Bank of Indiaor SBI, continued to be owned and operated by private persons. By the 1960s,

the Indian banking industry had become an important tool to facilitate the development of the

Indian economy. At the same time, it had emerged as a large employer, and a debate had ensued

about the nationalization of the banking industry. Indira Gandhi, then Prime Minister of India,

expressed the intention of the Government of India in the annual conference of the All India

Congress Meeting in a paper entitled "Stray thoughts on Bank Nationalisation."The meeting

received the paper with enthusiasm.

Thereafter, her move was swift and sudden. The Government of India issued an ordinance and

nationalised the 14 largest commercial banks with effect from the midnight of July 19, 1969.

Jayaprakash Narayan, a national leader of India, described the step as a "masterstroke of political

sagacity."Within two weeks of the issue of the ordinance, theParliament passed the Banking

Companies (Acquisition and Transfer of Undertaking) Bill, and it received thepresidential approval

on 9 August 1969.

A second dose of nationalization of 6 more commercial banks followed in 1980. The stated

reason for the nationalization was to give the government more control of credit delivery. With

the second dose of nationalization, the Government of India controlled around 91% of the

banking business of India. Later on, in the year 1993, the government mergedNew Bank of India

withPunjab National Bank. It was the only merger between nationalized banks and resulted in the

[11]
http://en.wikipedia.org/wiki/Times_of_Indiahttp://en.wikipedia.org/wiki/Times_of_Indiahttp://en.wikipedia.org/wiki/Reserve_Bank_of_Indiahttp://en.wikipedia.org/wiki/State_Bank_of_Indiahttp://en.wikipedia.org/wiki/State_Bank_of_Indiahttp://en.wikipedia.org/wiki/Indian_economyhttp://en.wikipedia.org/wiki/Indira_Gandhihttp://en.wikipedia.org/wiki/Prime_Minister_of_Indiahttp://en.wikipedia.org/wiki/Prime_Minister_of_Indiahttp://en.wikipedia.org/wiki/Government_of_Indiahttp://en.wikipedia.org/wiki/Nationalisationhttp://en.wikipedia.org/wiki/Jayaprakash_Narayanhttp://en.wikipedia.org/wiki/Parliament_of_Indiahttp://en.wikipedia.org/wiki/Parliament_of_Indiahttp://en.wikipedia.org/wiki/President_of_Indiahttp://en.wikipedia.org/wiki/President_of_Indiahttp://en.wikipedia.org/w/index.php?title=New_Bank_of_India&action=edit&redlink=1http://en.wikipedia.org/wiki/Punjab_National_Bankhttp://en.wikipedia.org/wiki/Punjab_National_Bankhttp://en.wikipedia.org/wiki/File:Bank_Nationalisation_-_India.JPGhttp://en.wikipedia.org/wiki/File:Bank_Nationalisation_-_India.JPGhttp://en.wikipedia.org/wiki/Times_of_Indiahttp://en.wikipedia.org/wiki/Reserve_Bank_of_Indiahttp://en.wikipedia.org/wiki/State_Bank_of_Indiahttp://en.wikipedia.org/wiki/Indian_economyhttp://en.wikipedia.org/wiki/Indira_Gandhihttp://en.wikipedia.org/wiki/Prime_Minister_of_Indiahttp://en.wikipedia.org/wiki/Government_of_Indiahttp://en.wikipedia.org/wiki/Nationalisationhttp://en.wikipedia.org/wiki/Jayaprakash_Narayanhttp://en.wikipedia.org/wiki/Parliament_of_Indiahttp://en.wikipedia.org/wiki/President_of_Indiahttp://en.wikipedia.org/w/index.php?title=New_Bank_of_India&action=edit&redlink=1http://en.wikipedia.org/wiki/Punjab_National_Bank


12/94

reduction of the number of nationalised banks from 20 to 19. After this, until the 1990s, the

nationalised banks grew at a pace of around 4%, closer to the average growth rate of the Indian

economy.

Liberalisation

In the early 1990s, the then Narasimha Rao government embarked on a policy ofliberalization ,

licensing a small number of private banks. These came to be known asNew Generation tech-

savvy banks, and included Global Trust Bank (the first of such new generation banks to be set

up), which later amalgamated with Oriental Bank of Commerce, Axis Bank(earlier as UTI Bank),

ICICI BankandHDFC Bank. This move, along with the rapid growth in theeconomy of India,

revitalized the banking sector in India, which has seen rapid growth with strong contribution from

all the three sectors of banks, namely, government banks, private banks and foreign banks.

The next stage for the Indian banking has been set up with the proposed relaxation in the norms

for Foreign Direct Investment, where all Foreign Investors in banks may be given voting rights

which could exceed the present cap of 10%,at present it has gone up to 74% with some

restrictions.

The new policy shook the Banking sector in India completely. Bankers, till this time, were used tothe 4-6-4 method (Borrow at 4%;Lend at 6%;Go home at 4) of functioning. The new wave

ushered in a modern outlook and tech-savvy methods of working for traditional banks.All this led

to the retail boom in India. People not just demanded more from their banks but also received

more.

Currently (2010), banking in India is generally fairly mature in terms of supply, product range

and reach-even though reach in rural India still remains a challenge for the private sector and

foreign banks. In terms of quality of assets and capital adequacy, Indian banks are considered to

have clean, strong and transparent balance sheets relative to other banks in comparable economies

in its region. The Reserve Bank of India is an autonomous body, with minimal pressure from the

government. The stated policy of the Bank on the Indian Rupee is to manage volatility but

without any fixed exchange rate-and this has mostly been true.

[12]
http://en.wikipedia.org/wiki/Narasimha_Raohttp://en.wikipedia.org/wiki/Liberalizationhttp://en.wikipedia.org/wiki/Axis_Bankhttp://en.wikipedia.org/wiki/UTI_Bankhttp://en.wikipedia.org/wiki/ICICI_Bankhttp://en.wikipedia.org/wiki/HDFC_Bankhttp://en.wikipedia.org/wiki/HDFC_Bankhttp://en.wikipedia.org/wiki/Economy_of_Indiahttp://en.wikipedia.org/wiki/Economy_of_Indiahttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Narasimha_Raohttp://en.wikipedia.org/wiki/Liberalizationhttp://en.wikipedia.org/wiki/Axis_Bankhttp://en.wikipedia.org/wiki/UTI_Bankhttp://en.wikipedia.org/wiki/ICICI_Bankhttp://en.wikipedia.org/wiki/HDFC_Bankhttp://en.wikipedia.org/wiki/Economy_of_Indiahttp://en.wikipedia.org/wiki/India


13/94

With the growth in the Indian economy expected to be strong for quite some time-especially in its

services sector-the demand for banking services, especially retail banking, mortgages and

investment services are expected to be strong. One may also expect M&As, takeovers, and asset

sales.

In March 2006, the Reserve Bank of India allowed Warburg Pincus to increase its stake in Kotak

Mahindra Bank (a private sector bank) to 10%. This is the first time an investor has been allowed

to hold more than 5% in a private sector bank since the RBI announced norms in 2005 that any

stake exceeding 5% in the private sector banks would need to be vetted by them.

In recent years critics have charged that the non-government owned banks are too aggressive in

their loan recovery efforts in connection with housing, vehicle and personal loans. There are press

reports that the banks' loan recovery efforts have driven defaulting borrowers to suicide. [1][2][3]

Adoption of banking technology

The IT revolution had a great impact in the Indian banking system. The use of computers had led

to introduction of online banking in India. The use of the modern innovation and computerisation

of the banking sector of India has increased many fold after the economic liberalisation of 1991 as

the country's banking sector has been exposed to the world's market. The Indian banks werefinding it difficult to compete with the international banks in terms of the customer service

without the use of the information technology and computers.

[13]
http://en.wikipedia.org/wiki/Retail_bankinghttp://en.wikipedia.org/wiki/Banking_in_India#cite_note-0http://en.wikipedia.org/wiki/Banking_in_India#cite_note-1http://en.wikipedia.org/wiki/Banking_in_India#cite_note-2http://en.wikipedia.org/wiki/File:NUMBER_OF_BRANCHES.pnghttp://en.wikipedia.org/wiki/Retail_bankinghttp://en.wikipedia.org/wiki/Banking_in_India#cite_note-0http://en.wikipedia.org/wiki/Banking_in_India#cite_note-1http://en.wikipedia.org/wiki/Banking_in_India#cite_note-2


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Number of branche of scheduled banks of India as of March 2005

The RBI in 1984 formed Committee on Mechanisation in the Banking Industry (1984) [4] whose

chairman was Dr C Rangarajan, Deputy Governor, Reserve Bank of India. The major

recommendations of this committee was introducing MICR[5] Technology in all the banks in the

metropolis in India.This provided use of standardized cheque forms and encoders.

In 1988, the RBI set up Committee on Computerisation in Banks (1988)[6] headed by Dr. C.R.

Rangarajan which emphasized that settlement operation must be computerized in the clearing

houses of RBI in Bhubaneshwar, Guwahati, Jaipur, Patna and Thiruvananthapuram.It further

stated that there should be National Clearing of inter-city cheques at

Kolkata,Mumbai,Delhi,Chennai and MICR should be made Operational.It also focused on

computerisation of branches and increasing connectivity among branches through computers.It

also suggested modalities for implementing on-line banking.The committee submitted its reports

in 1989 and computerisation began form 1993 with the settlement between IBA and bank

employees' association.[7]

In 1994, Committee on Technology Issues relating to Payments System, Cheque Clearing and

Securities Settlement in the Banking Industry (1994)[8]

was set up with chairman Shri WS Saraf,Executive Director, Reserve Bank of India. It emphasized on Electronic Funds Transfer (EFT)

system, with the BANKNET communications network as its carrier. It also said that MICR

clearing should be set up in all branches of all banks with more than 100 branches.

Committee for proposing Legislation On Electronic Funds Transfer and other Electronic

Payments (1995)[9] emphasized on EFT system. Electronic banking refers to DOING BANKING

by using technologies like computers, internet and networking,MICR,EFT so as to increase

efficiency, quick service,productivity and transparency in the transaction.

[14]
http://en.wikipedia.org/wiki/Banking_in_India#cite_note-3http://en.wikipedia.org/wiki/Banking_in_India#cite_note-4http://en.wikipedia.org/wiki/Banking_in_India#cite_note-5http://en.wikipedia.org/wiki/Banking_in_India#cite_note-autogenerated1-6http://en.wikipedia.org/wiki/Banking_in_India#cite_note-7http://en.wikipedia.org/wiki/Banking_in_India#cite_note-8http://en.wikipedia.org/wiki/File:NUMBER_OF_BRANCHES.pnghttp://en.wikipedia.org/wiki/Banking_in_India#cite_note-3http://en.wikipedia.org/wiki/Banking_in_India#cite_note-4http://en.wikipedia.org/wiki/Banking_in_India#cite_note-5http://en.wikipedia.org/wiki/Banking_in_India#cite_note-autogenerated1-6http://en.wikipedia.org/wiki/Banking_in_India#cite_note-7http://en.wikipedia.org/wiki/Banking_in_India#cite_note-8


15/94

Number of ATMs of different Scheduled Commercial Banks Of India as on end March 2005

[7]

Apart from the above mentioned innovations the banks have been selling the third party products

like Mutual Funds, insurances to its clients.Total numbers of ATMs installed in India by various

banks as on end March 2005 is 17,642.[10]The New Private Sector Banks in India is having the

largest numbers of ATMs which is fol off site ATM is highest for the SBI and its subsidiaries and

then it is followed by New Private Banks, Nationalised banks and Foreign banks. While on site ishighest for the Nationalised banks of India. [7]

BANK GROUPNUMBER OF

BRANCHES

ON SITE

ATM

OFF SITE

ATM

TOTAL

ATM

NATIONALISED BANKS 33627 3205 1567 4772

STATE BANK OF INDIA 13661 1548 3672 5220

OLD PRIVATE SECTOR

BANKS 4511 800 441 1241

NEW PRIVATE SECTOR

BANKS1685 1883 3729 5612

FOREIGN BANKS 242 218 579 797

[15]
http://en.wikipedia.org/wiki/Banking_in_India#cite_note-autogenerated1-6http://en.wikipedia.org/wiki/Banking_in_India#cite_note-9http://en.wikipedia.org/wiki/Banking_in_India#cite_note-autogenerated1-6http://en.wikipedia.org/wiki/File:NUMBER_OF_ATM.pnghttp://en.wikipedia.org/wiki/File:NUMBER_OF_ATM.pnghttp://en.wikipedia.org/wiki/Banking_in_India#cite_note-autogenerated1-6http://en.wikipedia.org/wiki/Banking_in_India#cite_note-9http://en.wikipedia.org/wiki/Banking_in_India#cite_note-autogenerated1-6


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I. EVOLUTION OF BANKING IN INDIA

Modern banking in India could be traced back to the establishment of Bank of Bengal (Jan 2,

1809), the first joint-stock bank sponsored by Government of Bengal and governed by the royal

charter of the British India Government. It was followed by establishment of Bank of Bombay

(Apr 15, 1840) and Bank of Madras (Jul 1, 1843). These three banks, known as the presidency

banks, marked the beginning of the limited liability and joint stock banking in India and were also

vested with the right of note issue.

In 1921, the three presidency banks were merged to form the Imperial Bank of India, which had

multiple roles and responsibilities and that functioned as a commercial bank, a banker to the

government and a bankers bank. Following the establishment of the Reserve Bank of India (RBI)

in 1935, the central banking responsibilities that the Imperial Bank of India was carrying out

came to an end, leading it to become more of a commercial bank. At the time of independence of

India, the capital and reserves of the Imperial Bank stood at Rs 118 mn, deposits at Rs 2751 mn

and advances at Rs 723 mn and a network of 172 branches and 200 sub offices spread all over the

country.

In 1951, in the backdrop of central planning and the need to extend bank credit to the rural areas,

the Government constituted All India Rural Credit Survey Committee, which recommended the

creation of a state sponsored institution that will extend banking services to the rural areas.

Following this, by an act of parliament passed in May 1955, State Bank of India was established

in Jul, 1955. In 1959, State Bank of India took over the eight former state-associated banks as its

subsidiaries. To further accelerate the credit to fl ow to the rural areas and the vital sections of the

economy such as agriculture, small scale industry etc., that are of national importance, Social

Control over banks was announced in 1967 and a National Credit Council was set up in 1968 to

assess the demand for credit by these sectors and determine resource allocations. The decade of

1960s also witnessed significant consolidation in the Indian banking industry with more than 500

banks functioning in the 1950s reduced to 89 by 1969.

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For the Indian banking industry, Jul 19, 1969, was a landmark day, on which nationalization of 14

major banks was announced that each had a minimum of Rs 500 mn and above of aggregate

deposits. In 1980, eight more banks were nationalized. In 1976, the Regional Rural Banks Act

came into being, that allowed the opening of specialized regional rural banks to exclusively cater

to the credit requirements in the rural areas. These banks were set up jointly by the central

government, commercial banks and the respective local governments of the states in which these

are located.

The period following nationalization was characterized by rapid rise in banks business and helped

in increasing national savings. Savings rate in the country leapfrogged from 10-12% in the two

decades of 1950-70 to about 25 % post nationalization period. Aggregate deposits which

registered annual growth in the range of 10% to 12% in the 1960s rose to over 20% in the 1980s.Growth of bank credit increased from an average annual growth of 13% in the 1960s to about

19% in the 1970s and 1980s. Branch network expanded significantly leading to increase in the

banking coverage.

Indian banking, which experienced rapid growth following the nationalization, began to face

pressures on asset quality by the 1980s. Simultaneously, the banking world everywhere was

gearing up towards new prudential norms and operational standards pertaining to capital

adequacy, accounting and risk management, transparency and disclosure etc. In the early 1990s,

India embarked on an ambitious economic reform programme in which the banking sector

reforms formed a major part. The Committee on Financial System (1991) more popularly known

as the Narasimham Committee prepared the blue print of the reforms. A few of the major aspects

of reform included (a) moving towards international norms in income recognition and

provisioning and other related aspects of accounting (b) liberalization of entry and exit norms

leading to the establishment of several New Private Sector Banks and entry of a number of new

Foreign Banks (c) freeing of deposit and lending rates (except the saving deposit rate), (d)

allowing Public Sector Banks access to public equity markets for raising capital and diluting the

government stake,(e) greater transparency and disclosure standards in financial reporting (f)

suitable adoption of Basel Accord on capital adequacy (g) introduction of technology in banking

operations etc. The reforms led to major changes in the approach of the banks towards aspects

such as competition, profitability and productivity and the need and scope for harmonization of

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global operational standards and adoption of best practices. Greater focus was given to deriving

efficiencies by improvement in performance and rationalization of resources and greater reliance

on technology including promoting in a big way computerization of banking operations and

introduction of electronic banking.

The reforms led to significant changes in the strength and sustainability of Indian banking. In

addition to significant growth in business, Indian banks experienced sharp growth in profitability,

greater emphasis on prudential norms with higher provisioning levels, reduction in the non

performing assets and surge in capital adequacy. All bank groups witnessed sharp growth in

performance and profitability. Indian banking industry is preparing for smooth transition towards

more intense competition arising from further liberalization of banking sector that was envisaged

in the year 2009 as a part of the adherence to liberalization of the financial services industry.

II. STRUCTURE OF THE BANKING INDUSTRY

According to the RBI definition, commercial banks which conduct the business of banking in

India and which (a) have paid up capital and reserves of an aggregate real and exchangeable value

of not less than Rs 0.5 mn and (b) satisfy the RBI that their affairs are not being conducted in a

manner detrimental to the interest of their depositors, are eligible for inclusion in the Second

Schedule to the Reserve Bank of India Act, 1934, and when included are known as ScheduledCommercial Banks. Scheduled Commercial Banks in India are categorized in five different

groups according to their ownership and/or nature of operation. These bank groups are (i) State

Bank of India and its associates, (ii) Nationalised Banks, (iii) Regional Rural Banks, (iv) Foreign

Banks and (v) Other Indian Scheduled Commercial Banks (in the private sector). All Scheduled

Banks comprise Schedule Commercial and Scheduled Co-operative Banks. Scheduled

Cooperative banks consist of Scheduled State Co-operative Banks and Scheduled Urban

Cooperative Banks.

Banking Industry at a Glance

In the reference period of this publication (FY06), the number of scheduled commercial banks

functioning in India was 222, of which 133 were regional rural banks. There are 71,177 bank XIV

offices spread across the country, of which 43 % are located in rural areas, 22% in semi-urban

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areas, 18% in urban areas and the rest (17 %) in the metropolitan areas. The major bank groups

(as defined by RBI) functioning during the reference period of the report are State Bank of India

and its seven associate banks, 19 nationalised banks and the IDBI Ltd, 19 Old Private Sector

Banks, 8 New Private Sector Banks and 29 Foreign Banks.

Table 1: Indian Banking at a Glance

Source: Reserve Bank of India

Table 2: Number of Banks, Group Wise

Source: Indian Banks Association/ Reserve Bank of India.

* Includes Industrial Development Bank of India Ltd.

Table 3: Group Wise: Comparative Average

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Source: Reserve Bank of India.

Table 4: Bank Groups: Key Indicators

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Mergers & Acquisitions

During FY06, two domestic banks were amalgamated - Ganesh Bank of Kurundwad with Federal

Bank Ltd and Bank of Punjab Ltd with Centurion Bank Ltd to become Centurion Bank of Punjab

Ltd, while one Foreign bank UFJ Bank Ltd merged with Bank of Tokyo-Mitsubishi Ltd. ING

Bank NV closed its business in India. In Sept, 2006, The United Western Bank Ltd was placed

under moratorium leading to its amalgamation with Industrial Development Bank of India Ltd. in

Oct, 2006. On Apr 1, 2007, Bharat Overseas Bank an old private sector bank was taken over by

Indian Overseas Bank and on Apr 19, 2007, Sangli Bank, another old private sector bank was

merged with ICICI Bank, a new private sector bank.

Shareholding Pattern

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As of Mar 2006, only four Nationalized Bank had 100% ownership of the Government. These are

Central Bank of India, Indian Bank, Punjab and Sind Bank and United Bank of India. As of Mar

2006, the government shareholding in the State Bank of India stood at 59.7% and in between 51-

77% in other nationalized banks. In Feb 2007, Indian Bank came out with a public issue thus

leaving only three nationalized banks having 100% government ownership. Foreign institutional

holding up to 20% of the paid up is allowed in respect of Public Sector Banks including State

Bank of India and many of the banks have reached the threshold level for FII investment. In

respect of Private Sector Banks where higher FII holding is allowed, threshold limit has been

reached in the leading banks.

III. INDIAN BANKING AND INTERNATIONAL TRENDS

When compared to other emerging markets, the growth of Indian banking has been impressive

and compares favorably on several counts. A recent study by Bank for International Settlements

on the progress and the prospects of banking systems in emerging countries highlights the

following features of the performance of Indian banks:

Average growth rate of real aggregate credit in India rose from 6.1% during the

period 1995- 99 to 14.6 % in 2000-04.

The average growth rate of real aggregate credit in India during 2000-04 in India ishigher as compared to major countries and regions in the emerging markets, such as China

(13.3%), Other Asia (4.7%), Latin America (4.5%), and Central Europe (9.6%).

Commercial banks in India account for a major share of the bank credit (97%) as

compared to Latin America (68%), Other Asia (74%) and Central Europe (83%).

Real bank credit to the private sector has shown sustained growth in India, and has

moved from 3.9% a year in 1990-94 to 6.9% a year in 1995-99 to 13.5 % a year in 2000-

04. In 2005, real bank credit to the private sector in India showed a growth of 30% year-

on-year as against 9.4% in China and 15.8% in emerging markets.

In India, during the period 1999 and 2004, non-performing loans as a percentage of

total commercial bank assets came down from 6.1% to 3.3%, capital asset ratios moved

up from 11.3% to 12.9% and operating costs as a percentage of total assets reduced from

2.4% to 2.3%. NPAs in China in 2004 stood at 6%.

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In India, return on assets of banks during the period 1999-2004 moved up from

0.4% to 1.1%, and return on equity from 8.5% to 20.9% where as in China the former rose

from 0.1% to 0.3%.

IV. BUSINESS OF COMMERCIAL BANKS

1. Balance Sheet Growth

In FY06, the aggregate balance sheet of the scheduled commercial banks increased by

18.4%, over a 19.3 % growth registered in FY05. The ratio of bank assets to GDP rose to

86.9% as compared to 82.8% in FY05. Banking industry gained from the by rapid rise in

the real economy, leading to surge in several areas of business.

2. Capital and Reserves

The capital of the scheduled commercial banks as on Mar 31, 2006 stood at Rs 252040

mn. During FY06, reserves and surplus of all scheduled commercial banks rose by 27.6%.

Revenue and other reserves nearly doubled for the banks as a whole, with SBI reporting

four fold increase in this regard.

3. Deposits and Advances

Deposits of SCBs grew by 17.8 % in FY06 as against 16.6% in FY05, but the advances

growth outstripped this pace with a rise of 31.8% in FY06, over a 33.2% growth in FY05.

As per a recent RBI report, FY06 was the second consecutive year, when increase in

credit in absolute terms was more than the absolute increase in aggregate deposits.

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Table 5: Deposits/Advances/Investments of Bank Groups in India (In Rs mn)


4. Group-wise Performance

The growth in deposits across the different bank groups showed substantial variation.Public Sector Banks with a deposit growth of 12.9% and Old Private Sector Banks with

11.4% showed a relatively subdued growth in deposits where as the New Private Sector

Banks with 50.7% and Foreign Banks with 31.7% showed a sharp rise. Borrowings of the

Public Sector Banks grew at 24%, but that of the Foreign Banks was much higher (30%).

Due to redemption of the India Millennium Deposits in Dec 2005, banks non-resident

foreign currency deposits showed a sizeable decline. Loans and advances growth too was

on similar trends. For Public Sector Banks, loan growth was 29.5% as compared to 34.9%

in FY05, for Old Private Sector Banks, it was 21.5% as against 22.7% in the previous

year, for New Private Sector Banks it was 50.2 % as against 33% in FY05, and for

Foreign Banks it was 29.5% as against 24 % in FY05. In the non-food credit, apart from

retail credit which grew at 40.9%; infrastructure (24%), basic metals (14.1%) and textiles

(11.2%) were the other major sectors that received higher levels of incremental credit.

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5. Growth in Retail Lending

While total credit of the SCBs grew at 31% in FY06, credit to the new segments in the

retail banking showed still higher growth rates. In FY06, loans to housing rose by 33.4%,

credit card receivables by 47.9%, auto loans by 75%, and other personal loans by 39.1%

taking the growth of retail loans during the FY06 to 40.9%. Retail loans in FY06

constituted 25.5% of the total loans and advances of scheduled commercial banks.

Lending to sensitive sectors also rose significantly. Loans to capital market rose by

39.2%, to real estate markets by 81.78% and to commodities by 85.56% with the growth

in these three segments reaching to 77.65% in FY06.

Table 6: Advances to Sensitive Sectors as a percentage to Total Loans


6. Priority Sector Advances

Credit to priority sector increased at a robust rate of 33.7% in FY06 on the top of 40.3%

in the previous year. A major portion of the credit growth in the priority sector is

accounted by agriculture and housing. Credit to SSI also grew size ably.

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Table 7: Priority Sector Lending


Figures in brackets are annual growth rate in %

7. Market Share

The share of Public Sector Banks showed deceleration in respect of major areas of

business, where as that of the new private sector and Foreign Banks earned higher share

of business. The market share of the Old Private Sector Banks too came under pressure.

Public Sector Banks hold 75% market share in major areas of business.

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Table 8: Major Components of Business, Bank GroupWise (in %)


* Industrial Development Bank of India Ltd

** Includes Industrial Development Bank of India Ltd

8. Access to Equity Markets

Banks have been increasingly accessing primary equity capital markets for raising

resources. In FY06, resource mobilization of banks through public equity markets rose by

24%. Resources raised by banks from public equity markets showed continuous increase,

from Rs 24560 mn in FY04 to Rs 89220 mn in FY05 to Rs 110670 mn in FY06.

Encouraged by the response to banks stocks, eleven banks, six in the public sector and

five in the private sector, raised Rs 110670 mn from the equity markets. The Public Sector

Banks which raised equity from the capital markets included Allahabad Bank, OrientalBank of Commerce, Syndicate Bank, Andhra Bank, Bank of Baroda and Union Bank of

India. The five Private Sector Banks were Lakshmi Vilas Bank Ltd, Yes Bank Ltd, ICICI

Bank Ltd., The South Indian Bank Ltd and The United Western Bank Ltd. The size of the

share issue of these banks was Rs 6270 mn where as the premium was at Rs 104400 mn.

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Banks also tapped private placement market for resource mobilization in a big way by

raising Rs 301510 mn of which Public Sector Banks accounted for 74%.

Bank stocks also emerged as an important portfolio for investment giving significant

returns. Returns from bank stocks as measured through BSE Bankex rose from 28.6% in

FY05 to 36.8 % in FY06 as compared to the benchmark index. Bank stocks still have

scope for further growth with lower valuation prevailing at present in many banks.

Source : Bombay Stock Exchange.

9. Asset QualityThere is a perceptible increase in the quality of bank assets. Standard assets as percent of

all assets for scheduled commercial banks moved from 94.9% in FY05 to 96.7% in FY

06, with decline in reported sub standard, doubtful and loss assets. The proportion of

standard assets rose across all the bank groups in FY06, showing improved management

of assets by banks. According to a report of the Reserve Bank of India, the gross non

performing assets of the scheduled commercial banks declined by Rs 73090 mn over and

above the decline of Rs 65610 mn in FY05.

As on 31 Mar 2006, gross NPAs of scheduled commercial banks stood at Rs 518150 mn

of which 26.4% are with State Bank group, 53% with the nationalised banks, 7.1% with

the Old Private Sector Banks, 7.3% with the New Private Sector Banks and 3.7% with the

Foreign Banks.

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Scheduled commercial banks stepped up recovery efforts through numerous methods. In

addition to their own internal recovery processes, banks recovered to the tune of Rs 6080

mn through one-time settlement and compromise schemes, Rs 2230 mn though Lok

Adalats, Rs 47100 mn through Debt Recovery Tribunals and Rs 34230 mn through

SARFAESI Act. Asset Reconstruction Company of India Ltd (ARCIL) acquired 559

cases amounting to Rs 211260 mn from banks.

Table 9: Asset Classification in Banks (as % of Total Assets)


10. Distribution of Network

The expansion in the distribution network of the banks is increasingly evident from the

growth of the automated teller machines. There is a surge in the growth of off-site ATMs

with their share in the total ATMs rising to 32% in respect of Public Sector Banks, 67% in

State Bank group, 32% in Old Private Sector Banks, 63% in New Private Sector Banks

and 73% in Foreign Banks. Computerisation of public sector bank branches is also

moving at rapid pace. In 2007 the pace of computerization progressed much further.

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Public Sector Banks have 93 branches operating abroad in 26 countries. All scheduled

commercial banks together have 106 branches abroad.

Table 10: Branches/ATMs/Staff in Banks (Number)


11. Major Trends in Business

Indian banking, in addition to improvements in performance and efficiency, has also

experienced significant changes in the structure of asset and liabilities. The major changes

on the liabilities side include relatively higher growth of demand deposits over time

deposits, and also, within time deposits, greater preference for short term over the longer

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term deposits. The share of demand deposits in total deposits increased from 14.7% in

FY01 to 17% in FY06. The share of short term deposits in total time deposits increased

from 43.8% in FY00 to 58.2% in FY06. The narrowing of interest rate spread between

short and long term deposits has reduced the preference for long term deposits.

Banks are moving away from investments to loans due to more lending opportunities

offered by the higher economic growth. The rate of bank credit growth which was at

14.4% in FY03 rose sharply to reach 30% each in the FY05 and FY06. Bank credit has

picked up momentum on the back of rising growth of real economy. A period of low

interest rates induced banks to shift their preference from investments to advances, which

led to the share of gross advances in total assets of all commercial banks reaching 54.7%

in FY06 from 45% in two years prior to that.

The sectors towards which the bank credit was directed has also shown significant

changes. Retail loans witnessed growth of over 40% in the last two years, and began

driving the credit growth to a significant extent. Retail loans as a percentage of Gross

Advances rose from about 22% in FY04 to 25.5% in FY06. Within the retail loans,

housing segment showed the highest growth of 50% in FY05 and 34% in FY06. As per

the RBI data, banks direct exposure to commercial real estate more than doubled in FY06.

Despite sharp rise in the credit growth, improved risk management processes and procedures of

banks contained the surge in bad debts which is evident from the lower levels of incremental

nonperforming assets reported by the banks as also the rise in the proportion of standard assets.

Further improvement in risk management systems could provide banks with more opportunities in

expanding credit and pursuing higher levels of growth in retail lending.

Banking System - Banks In India

Public Sector Banks in India

|Private Sector Banks in India|

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Cooperative Banks in India

| Regional Rural Banks in India

|Foreign Banks in India|

Upcoming Foreign Banks in India

Public Sector Banks In India

Allahabad Bank

| Andhra Bank|

Bank of Baroda

|Bank of India|

Bank of Maharashtra

|Canara Bank|

Central Bank of India|

Corporation Bank

|Dena Bank|

IDBI Bank

|Indian Bank|

Indian Overseas Bank|

Oriental Bank of Commerce|

Punjab & Sind Bank

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|Punjab National Bank|

State Bank of India|

Syndicate Bank|

UCO Bank

|United Bank of India

|Union Bank of India

|Vijaya Bank

Private Banks in India

Bank of Punjab

Bank of Rajasthan

Catholic Syrian Bank

Centurion Bank

City Union Bank

Dhanalakshmi Bank

Development Credit Bank

Federal Bank

HDFC Bank

ICICI Bank

IndusInd Bank

ING Vysya Bank

Jammu & Kashmir Bank

Karnataka Bank

Karur Vysya Bank

Laxmi Vilas Bank

South Indian Bank

United Western Bank

UTI Bank

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CHAPTER-2

INTRODUCTION OFHDFC

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Housing Development Finance Corporation Limited

HDFC

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. The

bank was incorporated in August 1994 in the name of 'HDFC Bank Limited', with its registered

office in Mumbai, India. HDFC Bank commenced operations as a Scheduled Commercial Bank

in January 1995.

HDFC is a professionally managed organization with a board of directors consisting of eminent

persons who represent various fields including finance, taxation, construction and urban policy &

development. The board primarily focuses on strategy formulation, policy and control, designed

to increasing value to shareholders.

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About HDFC:

HDFC is Indias leading housing finance institution and has helped build more than 23, 00,000

houses since its incorporation in 1977.

In Financial Year 2003-04 its assets under management crossed Rs. 36,000 Cr.

As at March 31, 2004, outstanding deposits stood at Rs. 7,840 crores. The depositor base now

stands at around 1 million depositors.

Rated AAA by CRISIL and ICRA for the 10th consecutive year

Stable and experienced management

High service standards

Awarded The Economic Times Corporate Citizen of the year Award for its long-standing

commitment to community development.

Presented the Dream Home award for the best housing finance provider in 2004 at the third

Annual Outlook Money Awards.

It entered into various sectors and offering services like banking, mutual funds etc, and with the

privatization in insurance sector, it also entered into insurance mark.

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MD Mr. Aditya Puri of HDFC receives the Bloomberg UTV Best

Bank award from the Union Finance Minister, Mr. Pranab

Mukherjee.

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

We realised that only a single-minded focus on product quality and service excellence would help

us get there. Today, we are proud to say that we are well on our way towards that goal.

It is extremely gratifying that our efforts towards providing customer convenience have beenappreciated both nationally and internationally.

2012

5th Loyalty

Summit award

Customer and Brand Loyalty

Skoch foundation

2012

SHG/JLG linkage programme

ICAI Awards 2011 Excellence in Financial Reporting

2011

Outlook Money

Best Bank Award

2011

- Best Bank - Runner Up

Best Commercial - Driving Positive Change

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Vehicle Financier

Businessworld

Best Bank award

- Best Bank

BCI Continuity &

Resilience Award

- Most Effective Recovery of the Year

Financial Express

Best Bank Survey

2010-11

- Best in Strength and Soundness

- 2nd Best in the Private Sector

CNBC TV18's Best

Bank & FinancialInstitution Awards

- Best Bank

- Mr. Aditya Puri, Outstanding Finance Professional

Dun & Bradstreet

Banking Awards

2011

Best Private Sector Bank - SME Financing

ISACA 2011

award for IT

Governance

Best practices in IT Governance and IT Security

IBA Productivity

Excellence

Awards 2011

New Channel Adopter (Private Sector)

DSCI (Data

Security Council

of India)

Excellence

Awards 2011

Security in Bank

Euromoney

Awards for

Excellence 2011

Best Bank in India

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FINANCE ASIA

Country Awards

2011: India

- BEST BANK

- BEST CASH MANAGEMENT BANK

- BEST TRADE FINANCE BANK

Asian Banker Strongest Bank in Asia Pacific

BloombergUTV's

Financial

Leadership

Awards 2011

Best Bank

IBA Banking

Technology

Awards 2010

Winner -

1) Technology Bank of the Year

2) Best Online Bank

3) Best Customer Initiative

4) Best Use of Business Intelligence

5) Best Risk Management System

Runners Up -

Best Financial Inclusion

IDC FIIA Awards

2011

Excellence in Customer Experience

2010

Outlook Money

2010 Awards

Best Bank

Businessworld

Best Bank Awards

2010

Best Bank (Large)

Teacher's

Achievement

Awards 2010

Mr. Aditya Puri

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(Business)

The Banker and

PWM 2010 Global

Private Banking

Awards

Best Private Bank in India

Economic Times

Awards for

Corporate

Excellence 2010

Business Leader of the Year - Mr. Aditya Puri

Forbes Asia Fab 50 Companies - 5th year in a row

NDTV Business

Leadership

Awards 2010

Best Private Sector Bank

The Banker

Magazine

World's Top 1000 Banks

MIS Asia IT

Excellence Award

2010

BEST BOTTOM-LINE I.T. Category

Dun & Bradstreet

Banking Awards

2010

Overall Best Bank

Best Private Sector Bank

Best Private Sector Bank in SME Financing

Institutional

Investor

Magazine Poll

HDFC Bank MD, Mr. Aditya Puri among "Asian Captains of

Finance 2010"

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IDRBT

Technology 2009

Awards

Winner - 1) IT Infrastructure 2) Use of IT within the Bank

Runners-up - IT Governance (Large Banks)

ACI Excellence

Awards 2010

Highly Commended - Asia Pacific HDFC Bank

FE-EVI Green

Business

Leadership Award

Best performer in the Banking category

Celent's 2010

Banking

Innovation Award

Model Bank Award

Avaya Global

Connect 2010

Customer Responsiveness Award - Banking & Financial

Services category

Forbes Top 2000

Companies

Our Bank at 632nd position and among 130 Global High

Performers

Financial Express

- Ernst & Young

Survey 2009-10

Best New Private Sector Bank

Best in Growth

Best in strength

Asian Banker

Excellence

Awards 2010

Best Retail Bank in India

Excellence in Automobile Lending

Best M&A Integration

Technology Implementation

The Asset Triple A

Awards

Best Cash Management Bank in India

Euromoney 1) Best Local Bank in India (second year in a row) 2) Best

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Private Banking

and Wealth

Management Poll

2010

Private Banking Services overall (moved up from No. 2 last

year)

Financial Insights

Innovation

Awards 2010

Innovation in Branch Operations - Server Consolidation

Project

Global Finance

Award

Best Trade Finance Provider in India for 2010

2 Banking

Technology

Awards 2009

1) Best Risk Management Initiative and 2) Best Use of

Business Intelligence.

SPJIMR Marketing

Impact Awards

(SMIA) 2010

2nd Prize

Business Today

Best Employer

Survey

Listed in top 10 Best Employers in the country

We are aware that all these awards are mere milestones in the continuing, never-

ending journey of providing excellent service to our customers. We are confident,

however, that with your feedback and support, we will be able to maintain and

improve our services.

Financial Information

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The last seventeen years have been very fulfilling. We can of course wax eloquent about it in so

many ways, but they say, figures don't lie, so we will let the figures do all the talking. They will

give you a fair idea of how we have grown in the past few years .

Financial Results

RBI Order of Amalgamation - CBoP

Scheme of Amalgamation - CBoP (as approved by RBI)

Annual Reports

Investor Presentation

Contact points for shareholders:Kamala Mills Compound,

Legal & Secretarial Department,

2nd Floor, Senapati Bapat Road,

Lower Parel (West),

Mumbai - 400 013

Telephone No. 24988484 Ext. 3463 Fax No. 2496 5235.

Email:[email protected]

Counter Timing: 10.30 a.m. to 3.00 p.m between Monday to Friday

(except on Bank holidays

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

as a key factor in attaining fairness for all stakeholders and achieving organizational efficiency.

This Corporate Governance Policy, therefore, is established to provide a direction and framework

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for managing and monitoring the bank in accordance with the principles of good corporate

governance.

TypePrivateTraded asBSE: 500180

NSE: HDFCBANK

NYSE: HDB

BSE SENSEX Constituent

Industry Banking, Financial services

Founded August 1994

Headquarters Mumbai, Maharashtra, India

Area served Worldwide Key people Aditya Puri(MD)

Products Credit cards,consumer banking, corporate banking,finance and insurance,

investment banking, mortgage loans,private banking, private equity,wealth management[1]

Revenue US$ 05.585 billion (2011)[2]

Profit US$ 0923.8 million (2011)[2]

Total assets US$ 65.483 billion (2011)[2]

Total equity US$ 07.769 million (2011)[2]Employees 55,752 (2011)[2]

WebsiteHDFCBank.com

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CHAPTER-3

A STUDY OF

VARIOUS HOUSINGFINANCE SCHEMES

PROVIDED BY

HDFC

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Meaning Of Housing Finance

Housing finance is the provision of finance or capital for housing. There are three ways of

interpreting this: housing finance can be taken to mean the capital required for the construction of

housing or housing projects, the resources required to acquire or access housing by households, or

the credit supplied by (housing) finance institutions.

The first of these interpretations is really project finance, except that it happens to be for housing

projects. The third interpretation could best be termed financial institutions, focusing on those that

supply or deal with housing. In this Manual, we shall not be dealing directly with either of these

sorts of housing finance except insofar as they influence and interact with housing finance in the

sense of capital for access to housing.

To purchase housing, households might have to layout as much as four times their annual income,

and, therefore, few are in a position to buy a house from their own current resources. One obvious

solution is to accumulate or save small amounts of capital and defer house purchase until the

required total is reached. Even assuming that 20 per cent of current income could be devoted to

such savings, this procedure might imply a wait of 20 years or more, provided that costs do not

inflate more than the interest accrued on savings in the meantime.

Individual saving, therefore, is not a very attractive proposition. A way to overcome this is not

only to use one's own savings but also to borrow the savings of others, to acquire the capital to

purchase a house now, and to repay the borrowed amount back over time. For this, a group of

prospective house-purchasers could get together and pool savings. Provided .not all the members

wanted to borrow from the pool at the same time, we could have a workable system, and the larger

the pool, the more workable it would be. This is, of course, the basis of mutual savings-and-loansassociations that exist in many forms in many countries for a variety of purposes, not just housing.

However, to get a sizeable operation going, an association of savers alone will not suffice, and

other savers must be attracted who do not have house-purchase in view. Such savers need not only

be other households but may include institutions as well. Over time, a number of specialized

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institutions have emerged that can play the intermediary role necessary to run such an operation,

bringing savers and borrowers together. Often, governments provide incentives for savers to invest

their money with such institutions, which makes them attractive.

A large part of housing finance in the developed countries consists of transactions of specialized

institutions, in the form of building societies or housing banks. However, the impact of these

institutions in developing countries has been rather limited. That housing-finance institutions do

not work well in developing countries can be mostly attributed to low levels and high disparity of

incomes.

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HDFC Housing Finance

HDFC Housing Finance, a division of HDFC bank, which has got a few housing finance schemes

for the customers. With more than 25 years of experience in financial market, HDFC stands head

and shoulder above its competitors in the home loan segment. HDFC Housing Finance has got a

strong impact on the customers who are looking for some housing finance.

HDFC Housing Finance Corporation

HDFC Housing Finance Corporation of India provides Home Loans for the individuals to

purchase fresh or resale house/flat as well as to construct houses. Home Improvement Loans are

for facilitating internal and external repairs and other structural improvements like painting,

waterproofing, plumbing and electric works, tiling and flooring, grills and aluminum windows.

Home Extension Loan is for the extension of an existing dwelling unit.HDFC Housing Finance

has got 3 types of housing finance for their customers.

You can apply for HDFC Home Finance individually or jointly. Adding up the income of the co-

applicant would enhance your eligibility for the home loan. However, the co-applicant need not to

be a co-owner of the house.

HDFC Housing Finance pays a maximum of 85% of the total project cost. The maximum loan

amount is based on the repayment capacity of the applicant. You have to repay the loan amount

within 20 years, subject to your retirement age. You can definitely go for some lesser term loan.

There is an 'Adjustable Rate Home Loan' plan available in HDFC Housing Finance, where the

loan is linked to HDFC's Retail Prime Lending Rate (RPLR). Here the rate on the loan would be

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revised every three months from the date of first disbursement. If there is a change in RPLR, the

rate of loan may change.

There are Multiple Repayment Option available in HDFC Housing Finance. Step Up Repayment

Facility, Flexible Loan Installment Plan, and Accelerated Repayment Scheme are there to give

you a wide range of options to choose your plan from.

When you go for HDFC Housing Finance, you have to pay a fee of 1% of the loan amount.

Service taxes are extra as applicable. There is no charges for prepayment. In order to learn more

about housing finance companies in India browse through the site.

Home loan

It is important to choose a good housing finance company which can handhold the customer right

through his home buying process. Since a home loan is a long term commitment of 15-20 years,

several factors like expertise, quality of service, in-depth domain knowledge and the companys

level of commitment and transparency right through, the loan procedures, the fine print, quality of

services offered and safe retrieval of the title deed are critical.

How do you benefit?

HDFC Home Loan Advantages

Counselling and advisory services for acquiring a property

Instant Home Loan Approval

Widest range of home loan products & services like Home Loans,Home Improvement

Loans,Home Extension Loans,Loans to professionals for office or clinic , Home Equity

Loans (Loan against Property),Short Term Bridging Loanetc.

Loan from any office for purchase of home anywhere in India

Loan approval even before a property is selected

Flexible loan repayment options like Step Up Repayment Faci

Documents

Project Report Zuby