1

Summer Project CertificateThis is to certify that Mr. / Ms.

_____________________________ Roll No. _________ a student

of PGDM has worked on a summer project titled

____________________________________________

__________________________________________________________

____________ at ______________________ after Trimester-III in

partial fulfillment of the requirement for the Post

Graduate Diploma in Management programme. This is

his/her original work to the best of my knowledge. Date:___________ Signature ________________

(_________________________)

Name of Faculty

2

BIMTECH SEAL

ACKNOWLEDGEMENT

The purpose of this project report is not whose name appears but to acknowledge the value

additions ant contributions. Success can never be achieved through individual effort but through

guidance and teamwork.

I would like to take this opportunity to thank my industry guide Mr. RACHIT SRIVASTAV,

BRANCH MANAGER (DWARKA) and my faculty guide Prof R.J. MASILAMANI who

helped me to complete this challenging task. I would like to extend my gratitude to Mrs.

MANISHA VARMA, Personal Banker, HDFC bank (Dwarka) and MR. VIVEK PATHAK

Personal Banker Authorizer, HDFC bank (Dwarka) who went out of their way to guide me

throughout my project and gave varied insights. I am grateful to MR. SHUBHANKAR BOSE,

BRANCH MANAGER (ANAND NIKETAN) for his constant interest, involvement and

support.

Besides, I thank all those invisible hands without whose contribution this project would not have

been possible.

I would like to thank all the concerned executives and staff members of HDFC bank and other

bank staff members who acted as a constant support for me and also helped by providing

valuable insights.

3

I would like to express my gratitude towards my parents for their moral and financial support in

completion of this project. Last but not least I would like to thank my colleagues and friends for

their valuable support during my summer internship.

TABLE OF CONTENTS

Page No

EXECUTIVE

SUMMARY……………………………………………………………………………… 4

INTRODUCTION……………………………………………………………………….6

COMPANY OVERVIEW...……………………………………………………………..9

OBJECTIVE OF THE STUDY………………………………………………………..17

HDFC BANK PRODUCT PORTFOLIO……………………………………………..19

STRATEGIES OF HDFC BANK ……………….…………………………………….28

RETAIL BANKING- ANALYSIS…………………………………………………….35

HDFC BANK RETAIL PRODUCTS…………………………………………………37

COMPETATIVE ANALYSIS………………………………………………………...50

SERVICE MARKETING-SERVQUAL MODEL ON HDFC BANK……………..77

ANALYSIS & RECOMMENDATIONS……………………………………………..86

REFERENCES

4

EXECUTIVE SUMMARY

The pace of development for the Indian banking industry has been tremendous over the past

decade. As the world reels from the global financial meltdown, India’s banking sector has been

one of the very few to actually maintain resilience while continuing to provide growth

opportunities, a feat unlikely to be matched by developed markets around the world. Transition

from class banking to mass banking and increased customer focus is drastically changing the

landscape of Indian banking. Expansion of retail banking has a lot of potential as retail assets are

just 22% of the total banking assets and the contribution of retail loans to GDP is a mere 6% in

India compared to 15% in China. This report discusses the retail products available with HDFC

bank and compares them with the products of competitor banks. This paper describes work

undertaken to determine both retail customer and staff perceptions of those factors which

determine service quality. The paper presents some conclusions of significance for retail

banking in particular, and service providers in general. It provides a useful comparison of

different banks with its key competitors i.e. ICICI bank, AXIS bank, KOTAK MAHINDRA

bank and PUNJAB NATIONAL bank and presents the attributes of service marketing with the

help of SERVQUAL model. It outlines the implementation of the SERVQUAL model in the

bank’s subsequent quality improvement programme, as evidenced through the bank’s customer

satisfaction endeavors and also what information I receive through customer interaction and by

interaction in different banks. With time it has emerged consistently in the recent services 5

marketing literature is the importance of frontline employees in service delivery. The internal

marketing concept is based on the belief that a firm’s internal market/employees can be

motivated to strive for customer-consciousness, market orientation and sales-mindedness through

the application of accepted external marketing approaches and principles. This project considers

that the objectives of the firm could be achieved by aligning them with the values to frontline

employees as well as with the customers. The information was gained after continuous

interaction from the customers and the different banks and analyzing their culture.

.

6

INTRODUCTION

Introduction to banking

Changing face of banking as a service industry

Banking in India has changed with time, it has seen a revolution and it has been growing. India

has experienced tremendous reform in financial and banking sector. The jump of economy from

the manufacturer industry, which used to be the most revenue generating industry, to the service

industry has seen the makeover of the banking sector. The banking sector is one of the largest

service providing sectors in India. These services are of utmost importance to the customers as it

takes care of their financial needs, in fact even maintain them. Now this concept of banks as the

service provider has underwent transformation as the concept of services is growing and has

become more and more complex. In India the banking sector is segregated as public or private

sector banks, cooperative banks and regional rural banks. Foreign banks have been given a

different head followed by upcoming foreign banks in this section. Due to this the customers

demand has seen a major rise.

These changes has given rise to the need of the banking industry to analysis their competition

and to have a defined marketing strategy , to become the leader in providing the bouquet of

services at customers end as well as giving them the best financial advice. The Indian banking

industry with time has achieved an astonishing and tremendous growth rate. When asked from

bank executives or rather the expert in the field, the revenue from the banks has been growing

and has recorded positive results for the year 2009-10. According to them the growth must have

been around 15-20% and is expected to grow more than 20% in the upcoming years.

7

Figure- Projected growth rate for banks

New approach

The development of technology has led to a more convenient retail banking system. ATM,

Mobile banking, SMS banking and most popular these days net banking facilities are available to

and being increasingly availed of by customers. With more persons open to the concept of easy

banking, all the leading banks have started strategizing on the concept of convenient banking

looking at the fast growing needs of the customers. Now the banks are striving to achieve this by

having a cost effective approach, which means that to achieve maximum of profit but with

minimum of cost. The banks now have such a close competitive angle in almost all of its

products and services within the banking area that it has become difficult for the customers to

distinguish between them. A progressively growing balance sheet, higher pace of credit

expansion, expanding profitability and productivity akin to banks in developed markets, lower

incidence of nonperforming assets and focus on financial inclusion have contributed to making

Indian banking vibrant and strong. Indian banks have begun to revise their growth approach and

re-evaluate the prospects on hand to keep the economy rolling. The way forward for the Indian

banks is to innovate to take advantage of the new business opportunities and at the same time

ensure continuous assessment of risks.8

Global linkage Our country with time has seen many collaborations in this sector with foreign banks taking

large stakes in Indian banks. This has widened the horizons for banking services considerably

and enabled operations on a much higher scale to meet the growing demands of customers. Some

of the foreign banks operating successfully in India are ABN-AMRO, Citi Bank, Deutsche

Bank, HSBC, Standard Chartered Bank and etc.

The Indian banks have now become focused on being customer centric and the future challenge

in front of them is to become a global brand example by providing an exhilarating experience to

the customers in the service industry without compromising on the profit. For this the banks need

to have a competition analysis of their competitive banks and by being able to develop unique

marketing strategy for penetrating within the market.

9

HDFC BANK– company overview

About HDFC

HDFC bank was among the few private banks to have started their operations in 1994 after the

government of India allowed new private banks to emerge in Indian banking sector. Housing

development and Finance Corporation of India has been credited with being one of the best

financial bank in India with the track record of giving the best financial advice to its customers

and offering the best products and services in banking area. Due to its impeccable service offered

to the customer as per their demand and convenience, HDFC bank has become one of the leading

banks in India offering customer service. In fact customers credit it for being one of the finest in

customer service leading to easy and convenient banking. With its experience in the financial

markets, a strong market reputation, large shareholder base and unique consumer franchise,

HDFC has positioned itself as being the bank that cares for the customers. HDFC Bank provides

a variety of wholesale, retail, and depository financial services through more than 1,400 branches

and some 3,000 ATMs throughout India. Established by the Housing Development Finance

Corporation in 1994, the bank offers deposit accounts, loans, credit cards, insurance,

investments, and related services. HDFC Bank targets individual customers in the middle and

upper-class, as well as trusts, small businesses.

Company profile

HDFC bank is a leading private sector bank and financial services company in India. The bank

aspires to be the preferred provider of financial services to upper- and middle-income individuals

and leading corporations in India. The strategy of the bank over the years have been to provide a

comprehensive range of financial products and services for the customers through multiple

distribution channels, with high quality service and superior execution of the services offered.

The bank principally deals into mainly three business activities which can be categorized as:

retail banking, wholesale banking and treasury operations.

The bank has achieved tremendous growth since it started its operations in January 1995. Over

the last five years it has expanded operations from 231 branches and 732 ATMs in 122 cities to

1,412 branches and 2,890 ATMs in 527 cities in India as on December 31, 2008. Additionally

10

the Bank has a branch in Bahrain and representative offices in the U.A.E and Kenya. During the

five years, bank‘s customer base grew from 3.40 million customers to over 17 million customers.

As with time the HDFC bank expanded its geographical reach and market penetration, with this

the bank’s assets also increased, and it grew from Rs. 30,424 crore as of March 31, 2003 to Rs.

183,185 crore as of December 31, 2008. The net income also recorded an increase from Rs. 388

crore for the fiscal year 2003 to Rs. 1,590 crore for the fiscal year 2008 at a compounded annual

growth rate of 32.60%.

Notwithstanding the pace of growth, the bank has maintained a strong balance sheet and a low

cost of funds. As of December 31, 2008 net non-performing assets constituted 0.6% of net

advances. The average non-interest bearing current accounts and low-interest savings accounts

represented 51.70% of total deposits for fiscal 2008. These low-cost deposits, which include the

cash float associated with bank’s transactional services, led to an average cost of funds including

equity for fiscal 2008 of 4.10%.

HDFC bank is a part of the HDFC group of companies founded by our principal shareholder,

Housing Development Finance Corporation Limited (“HDFC Limited”), which is a public

limited company established under the laws of India. HDFC Limited and its subsidiaries owned

19.38% of bank’s outstanding equity shares as of February 06, 2009.

The Bank has two subsidiaries: HDFC Securities Limited (“HSL”) and HDB Financial Services

Limited (“HDBFS”). HSL is primarily in the business of providing brokerage services through

the internet and other channels. HDBFS is a non-deposit taking non-bank finance company

(“NBFC”), for the establishment of which the Bank received Reserve Bank of India (“RBI”)

approval during the fiscal year 2008.

HDFC bank is a commercial bank of India, promoted by the housing development finance

corporation, a premier housing finance company of India. The company headquarters are situated

in Mumbai and has around all the branches in 528 cities which are all linked on an online real-

time basis. HDFC bank is a type of public company and was founded by Mr. Deepak Parekh.

The bank has approximately total assets of INR 1006.82 billion. For the fiscal year 2008-09, the

bank has reported net profit of Rs.2, 244.9 crore, up 41% from the previous fiscal. Total annual

earnings of the bank increased by 58% reaching at Rs.19, 622.8 crore in 2008-09.

11

The chairman of HDFC is Mr. Jagdish capoor and Mr. Aditya Puri serves as the company

managing director. They have been responsible for making the company people’s company with

their efforts. The company revenue in 2009 Rs. 197.5 billion and its profit has been Rs. 2.24

billion. The company now has total assets of Rs. 1.8 trillion and has 52,687 employees currently

working with HDFC. The bank has about 570,000 shareholders. The shares are listed on the

Stock Exchange, Mumbai and the National Stock Exchange. The bank's American Depository

Shares are listed on the New York Stock Exchange (NYSE) under the symbol 'HDB'.

Acquisitions and Mergers

In a milestone transaction in the Indian banking industry, Times Bank Limited (promoted by

Bennett, Coleman & Co. / Times Group) was merged with HDFC Bank Ltd., in 2000. This was

the first merger of two private banks in India. As per the scheme of amalgamation approved by

the shareholders of both banks and the Reserve Bank of India, shareholders of Times Bank

received 1 share of HDFC Bank for every 5.75 shares of Times Bank.

In 2008 HDFC Bank acquired Centurion Bank of Punjab taking its total branches to more than

1,000. The amalgamated bank emerged with a strong deposit base of around Rs. 1, 22,000 crore

and net advances of around Rs. 89,000 crore. The balance sheet size of the combined entity is

over Rs. 1, 63,000 crore. The amalgamation added significant value to HDFC Bank in terms of

increased branch network, geographic reach, and customer base, and a bigger pool of skilled

manpower. The mergers can be termed as a quest for growth in the Indian banking environment.

Board committees

The Board has constituted committees of Directors to take informed decisions in the best interest

of the Bank. These committees monitor the activities falling within their terms of reference.

Various committees of the Board were reconstituted during the year due to induction of

additional Director namely; Mr. Pandit Palande. The Board's Committees are as follows: The

Board's Committees are as follows:

Audit and Compliance Committee

Compensation Committee

12

Investors' Grievance (SHARE) Committee

Risk Monitoring Committee

Credit Approval Committee

The Premises Committee

Nomination Committee

Fraud Monitoring Committee

Compensation Committee

The Compensation Committee reviews the overall compensation structure and policies of the

Bank with a view to attract, retain and motivate employees, consider grant of stock options to

employees, reviewing compensation levels of the Bank's employees vis-à-vis other banks and

industry in general. The Bank's compensation policy is to provide a fair and consistent basis for

motivating and rewarding employees appropriately according to their job / role size,

performance, contribution, skill and competence. The Committee met 3 (three) times during the

year.

The Premises Committee

The Premises Committee approves purchases and leasing of premises for the use of Bank's

branches, back offices, ATMs and residence of executives in accordance with the guidelines laid

down by the Board. The Committee is chaired by Mrs. Renu Karnad. The Committee met 4

(four) times during the year.

Fraud Monitoring Committee

Pursuant to the directions of the Reserve Bank of India, the Bank has constituted a Fraud

Monitoring Committee, exclusively dedicated to the monitoring and following up of cases of

fraud amounting to Rs.1 crore and above. The objective of this Committee is the effective

detection of frauds and immediate reporting thereof to regulatory and enforcement agencies and

actions taken against the perpetrators of frauds. 13

Customer Service Committee

Committee monitors the quality of services rendered to the customers and also ensures

implementation of directives received from RBI in this regard. The terms of reference of the

Committee are to formulate comprehensive deposit policy incorporating the issues arising out of

death of a depositor for operations of his account, the product approval process, and the annual

survey of depositor satisfaction and the triennial audit of such services. The Committee met 4

(four) times during the year.

Corporate governance

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

corporate governance.

Code of corporate governance

The Bank believes in adopting and adhering to best recognized corporate governance practices

and continuously benchmarking itself against each such practice. The Bank understands and

respects its fiduciary role and responsibility to shareholders and strives hard to meet their

expectations. The Bank believes that best board practices, transparent disclosures and

shareholder empowerment are necessary for creating shareholder value. The Bank has infused

the philosophy of corporate governance into all its activities. The philosophy on corporate

governance is an important tool for shareholder protection and maximization of their long term

values. The cardinal principles such as independence, accountability, responsibility,

transparency, fair and timely disclosures, credibility etc. serve as the means for implementing the

philosophy of corporate governance in letter and spirit.

14

Progress

The Bank’s staffing needs continued to increase during the year particularly in the retail banking

businesses in line with the business growth. Total number of employees increased from 14878

as of March31, 2006 to 21477 as of March 31, 2007. The Bank continues to focus on training its

employees on a continuing basis, both on the job and through training programs conducted by

internal and external faculty. The Bank has consistently believed that broader employee

ownership of its shares has a positive impact on its performance and employee motivation. The

Bank’s employee stock option scheme so far covers around 9000 employees.

HDFC Bank has demonstrated very consistent delivery of performance over the last so many

years and has already notched up its place as the one of the largest private sector bank in the

country and the growth momentum is expected to continue. The bank has stepped up to retail

customer acquisition with deposit accounts increasing from 6.2 million to 8.7 million and total

cards issued (debit and credit cards) increasing from 7 million to 9.2 million (approx). Not only

the retail banking of HDFC is blooming day by day but its services offered in wholesale banking

has also given tremendous growth to the bank. The online banking system i.e. net banking has

been an eye attraction for the customers as it gives them fast and convenient banking. As already

mentioned about its growing distribution network the bank is continually planning for expansion

of the branches of the bank. Customers are efficiently serviced through telephone banking also.

The Bank's expansion plans take into account the need to have a presence in all major industrial

and commercial centers where its corporate customers are located as well as the need to build a

strong retail customer base for both deposits and loan products. Being a clearing/settlement bank

to various leading stock exchanges, the Bank has branches in the centers where the NSE/BSE has

a strong and active member base. With the excellent distribution network HDFC aspires to have

as strong position in the market and with the customers.

HDFC bank has always aspired to become a world class bank and has been trying to adopt an

efficient and effective approach to understand the ever changing customer demands and to offer

them superior service. HDFC thus has been marketing itself with the tagline saying “we

understand your world”.

15

Now if one observes the revenue earned by HDFC during last year than it can be said that

revenue growth was driven principally by an increase in net income. The other income (non

interest revenue) increased primarily due to fees and commissions, profit/ (loss) on revaluation /

sale of investment and income from foreign exchange and derivates income. Operating (non-

interest) expenses increased due to higher infrastructure and staffing expenses in relation to the

expansion in the branch network, and growth in the retail loan and credit card businesses.

Figure- HDFC bank revenue breakdown

Awards and achievements

HDFC has earned several awards for its growth and progressive services offered to the

customers. A few are listed below:

Corporate best bank award – Dun and Bradstreet –American Express corporate best bank

award 2007

Best Bank Award in the private sector category- outlook money and NDTV profit

Best Retail Bank in India – The Asian banker excellence in retail financial services

awards.

Euromoney Awards 2009 -'Best Bank in India'16

Economic Times Brand Equity & Nielsen Research annual survey 2009 Most Trusted

Brand - Runner Up

Asia Money 2009 Awards - 'Best Domestic Bank in India'

IBA Banking Technology Awards 2009-'Best IT Governance Award - Runner up'

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

OBJECTIVE OF THE STUDY

17

The objective of this study is to study the products available with HDFC bank in the retail

category and to understand and analyze the marketing. Another objective is to compare them

with products provided by other banks in the retail category. The banks chosen for competitive

analysis are –

ICICI bank

AXIS bank

KOTAK MAHINDRA bank

PUNJAB NATIONAL bank

The study also aims to understand how HDFC bank works in the service marketing by using the

servqual model. The study will help to understand the following objectives:-

It will also help to understand and analyze the dimensions of the awareness and

satisfaction level of customers with regard to the services provided by the selected

branches of the major banking customers.

The study will help to identify and differentiate the best banking sector among the above

banks in terms of customer satisfaction,

To ascertain the relevant dimensions of service quality in banks, and,

To offer suggestions, if needed, based on the analytical results of the current study.

Hence, the study seeks to develop a common understanding of service quality in the banking

industry across different customer segments. The models of marketing like servqual model have

18

been used to analyze services of HDFC and strategic marketing of HDFC bank. It helps HDFC

bank to maintain a competitive edge.

The data was collected through two sources which help me understand the working of HDFC

bank and also make analysis for the project. The data was collected through following ways:-

Secondary sources- Secondary data provide a starting point for study and offer the valuable

source of information. The secondary data was the most important source for my project because

it helped in collecting desired information

Primary sources- Primary data are data freshly gathered for a specific purpose. The various

sources of primary data for my project are as follows.

Banks.

Customers of different banks

People from industries

HDFC BANK PRODUCT PORTFOLIO

Products and services at a glance

19

HDFC Bank mainly provides three kinds of banking services:

Personal Banking

NRI Banking

Wholesale Banking

Figure- product breakup according to the customer preferences

If the customer needs to deal in foreign currency and keep tabs on exchange rates, transfer funds

to India, make payments etc, HDFC Bank has a range of products and services that a customer

can choose from to transact smoothly, efficiently and in a timely manner. HDFC Bank offers

quick, economical and convenient options to remit and transfer funds to India.

With HDFC Bank’s payment services, one can bid goodbye to queues and paper work. HDFC’s

range of payment options make it easy to pay for a variety of utilities and services. Bank offers

Private Banking services to high net worth individuals and institutions.

20

Corporate Banking reflects HDFC Bank’s strengths in providing corporate clients, a wide array

of commercial, transactional and electronic banking products. HDFC Bank acts as an active

medium between the government and the customers by means of various services.

HDFC deals with basically three areas which can be segmented as:-

Wholesale banking services

Retail banking services

Treasury

It has entered the banking consortia of over 50 corporate for providing working capital finance,

trade services, corporate finance and merchant banking. It is also providing sophisticated product

structures in areas of foreign exchange and derivatives, money markets and debt trading and

equity research.

Wholesale Banking Services

The Bank's target market ranges from large, blue-chip manufacturing companies in the Indian

corporate to small & mid-sized corporate 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. HDFC Bank has made significant inroads into the banking consortia of a number of

leading Indian corporate including multinationals, companies from the domestic business houses

and prime public sector companies. It is recognized as a leading provider of cash management

and transactional banking solutions to corporate customers, mutual funds, stock exchange

members and banks.

21

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 (VISA Electron) and issues the MasterCard 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.

Treasury

Within this business, the bank has three main product areas - Foreign Exchange and Derivatives,

Local Currency Money Market & Debt Securities, and Equities. These services 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.

PERSONAL BANKING

22

Savings

account

Current

account

Fixed

deposits

Loans Investments

& Insurance

Cards

- Regular

Savings

Account

Plus

current

account

Regular

fixed deposit

Personal

Loans

Mutual

Funds-

Insurance

Silver Credit

Card

- Savings Plus

Account

Trade

current

account

5 year Tax

savings

fixed

deposits

Two

Wheeler

Loans

Bonds Gold Credit Card

SavingsMax

Account

Premium

current

account

Super saver

facility

New Car

Loan

Financial

Planning

Woman's Gold

Credit Card

- Senior

Citizens

Account

Regular

current

account

Sweep in

facility

Used Car

Loans

Equities &

Derivatives

Platinum plus

Credit Card

- No Frills

Account

RFC-

domestic

account

Overdraft

against Car

Mudra Gold

Bar

Titanium Credit

Card

- Institutional

Savings

Account

Flexi

current

account

Express

Loans

Value plus

Credit Card

23

- Payroll Salary

Account

Apex

current

account

Loan against

Securities

Health plus

Credit Card

- Classic Salary

Account

Max

current

account

Loan against

Property

HDFC Bank Idea

Silver Card

- Regular Salary

Account

Merchant

advantage

current

account

Commercial

Vehicle

Finance

HDFC Bank Idea

Gold Card

- Premium

Salary Account

Merchant

advantage

plus

current

account

Construction

Equipment

Finance

Debit Cards

- Defense

Salary Account

Recurring

deposits

Working

Capital

Finance

Easy

ShopInternational

Debit Card

- Kid's

Advantage

Account

Demat

account

Easy Shop Gold

Debit Card

- Pension

Saving Bank

Safe

deposits

- Easy

ShopInternational

24

Account lockers Business

Debit Card

- Family

Savings

Account

Easy Shop

Woman’s

Advantage

Debit Card

- Kisan No

Frills Savings

Account

Prepaid Cards

- Kisan Club

Savings

Account

Forex plus card

Kisan card

WHOLESALE BANKING AND OTHER SERVICES

25

Corporate

banking

Small and

medium

enterprises

Financial

institution trusts

and bank

FOREX

Services

NRI Services

Funded

Services

Funded

Services

Clearing Sub-

Membership

RTGS – sub

membership

Fund Transfer

ATM Tie-ups

Corporate Salary

a/c

Tax Collection

Trade Finance Accounts & Deposits

•Rupee Saving a/c

•Rupee Current a/c

•Rupee Fixed Deposits

•Foreign Currency

Deposits

•Accounts for Returning

Indians

Non Funded

Services

Non- funded

services

Mutual funds Travelers’

Cheques

Accounts & Deposits

Remittances

Value added

services

Specialized

services

Stock brokers Foreign

Currency

Cash

Other services like

-Private Banking

-Portfolio Investment

Scheme

-home Loans

-Loans Against Securities

-Loans Against Deposits

-Gold Credit Card

-Payment

Services Access

To Bank

26

-NetSafe

-BillPay

-InstaPay

-DirectPay

-Visa Money

-Online Donation

-Net Banking

-One View

-InstaAlert

-ATM

Phone Banking

-Email Statements

-Branch Network

Internet

banking

Internet

banking

Foreign

Currency

Drafts

Foreign

Currency

Cheque

Deposits

Foreign

Currency

Remittances

ForexPlus

27

Card

STRATEGIES OF HDFC BANK28

Operational strategy

HDFC bank has been a consistent player in the banking industry and has always been trying to

produce the well balanced and right mix of products and services for both of its customers in

retail base and corporate base. HDFC 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

the clients always get the finest services bank offer. The Bank has prioritized its engagement in

technology and the internet as one of its key goals and has already made significant progress in

web-enabling its core 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.

In the era of globalization each and every sector faced the stiff competition from their

rivals. And world also converted into the flat from the globe. Private sector banks today used the

latest technology for the different transaction of day to day banking life. As we know that

Information Technology plays the vital role in the each and every industries and gives the

optimum return from the limited resources. Banks are service industries and today IT gives the

innovative Technology application to Banking industries. HDFC bank is the leader in the

industries and today IT and HDFC bank together combined they reached the sky. New

technology changed the mind of the customers and changed the queue concept from the history

banking transaction. Today there are different channels which are available for the banking

transactions.

There are drastically changes seen in the use of Internet banking, in a year 2001 (2%) and in the

year 2008 (25%). This type of technology gives the freedom to retail customers. New and

29

improved technology results in the advantageous functioning of the bank smoothly and

efficiently.

HDFC BANK is the very consistent player in the new private sector banks. New private sector

banks to withstand the competition from public sector banks came up with innovative products

and superior service. Customer segments (retail & wholesale) account for 84% of Net revenue

(FY 2009) .Higher retail revenues partly offset by higher operating and credit costs. HDFC has

tried to equally well position itself to grow both segments.

Competitive StrengthsThe bank attributes its growth and continuing success to the following competitive strengths:

a) HDFC bank is a leader among Indian banks in the use of technology

Since the bank’s inception, it has made substantial investments in technology platform and

systems. Bank has built multiple distribution channels, including an electronically linked branch

network, automated telephone banking, Internet banking and banking by mobile phone, to offer

customers convenient access to our products. Technology platform has driven the development

of innovative products and reduced operating costs.

b) HDFC bank delivers high quality service with superior execution

Bank tries to deliver efficient service with rapid response time. Bank’s focus on personalized

service tries to draws customers to the products and increases existing customer loyalty.

c) HDFC offer a wide range of products

Whether in retail or wholesale banking, the bank tries to be a “one-stop shop” for the Customers’

banking needs. The wide range of products creates multiple cross-selling opportunities for bank

and improves customer retention rates.

d) HDFC claims to have an experienced management team

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According to HDFC, many of the members of senior management team who have been with the

bank; since inception seem to have substantial experience in multinational banking.

Business strategyHDFC BANK mission is to be “a World Class Indian Bank”, benchmarking themselves against

international standards and best practices in terms of product offerings, technology, service

levels, risk management and audit & compliance. The objective is to build sound customer

franchises across distinct businesses so as to be a preferred provider of banking services for

target retail and wholesale customer segments, and to achieve a healthy growth in profitability,

consistent with the Bank's risk appetite. Bank is committed to do this while ensuring the highest

levels of ethical standards, professional integrity, corporate governance and regulatory

compliance. Continue to develop new product and technology is the main business strategy of

the bank. Maintain good relation with the customers is the main and prime objective of the bank.

HDFC BANK business strategy emphasizes the following:

•Increase market share in India’s expanding banking and financial services industry by

following a disciplined growth strategy focusing on quality and not on quantity and

delivering high quality customer service.

•Leverage our technology platform and open scalable systems to deliver more products to more

customers and to control operating costs.

•Maintain current high standards for asset quality through disciplined credit risk management.

•Develop innovative products and services that attract the targeted customers and address

inefficiencies in the Indian financial sector.

•Continue to develop products and services that reduce bank’s cost of funds.

•Focus on high earnings growth with low volatility

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SWOT ANALYSIS

STRENGTH

Support of various promoters

High level of services

Knowledge of Indian market

Right strategy for the right products.

Superior customer service vs. competitors

Great Brand Image

Products have required accreditations.

High degree of customer satisfaction.

Good place to work

Lower response time with efficient and effective service.

Dedicated workforce aiming at making a long-term career in the

field.

.

WEAKNESSES

Some gaps in range for certain sectors.

Problems of sales staff.

Processes and systems, etc.

Not been fully able to position it correctly

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Opportunities

Profit margins will be good.

Could extend to overseas broadly.

New specialist applications.

Could seek better customer deals

Fast-track career development opportunities on an industry-wide

basis.

An applied research centre to create opportunities for developing

techniques to provide value-added services.

Growing Indian banking sector

People are becoming more service oriented

global market opportunity

Threats

•Legislation could impact.

•Great risk involved

•Very high competition prevailing in the industry.

•Vulnerable to reactive attack by major competitors

•Lack of infrastructure in rural areas could constrain investment.

•High volume/low cost market is intensely competitive.

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Marketing strategies

Distribution

Choice of channels for services

Modern technology

Maintaing public relationship

Internet services

Advertising

Strong marketing position

Personal banking for the customers

Focus on Relationship banking

Bank tries to establish a customer relationship management in almost every branch.

Customer centric technologies

Marketing campaigns launched by HDFC bank

HDFC Bank has launched neighborhood marketing initiatives in tier-two cities and towns to

create awareness about its various products and services. These initiatives are especially targeted

at those consumers who are not aware about the bank's various value-added services such as

direct banking facilities. These campaigns demonstrated the advantages of net banking and

mobile banking, as these concepts are relatively new to people living in smaller towns and cities. 

The bank has also launched another initiative called “Business Ki Baten”, which is targeted at

areas where the bulk of the population comprises small businessmen. The bank would get 34

experts to talk on a number of issues such as value-add tax and sales tax. According to an article

in Hindu business line dated November 4, 2008, these campaigns provide bank with information

about customer preferences that can be used for mass media communication, making it more

effective. HDFC can measure the result of a campaign through the sales that they generate and

the customers that are added. There is a clear return on investment, which from a functional point

of view gives the team a stronger voice. HDFC has also been able to reduce ad spends by about

10-15 per cent and has also reduced the cost of acquisition. HDFC wants to create an

environment that is required to support customer intelligence that leads to database marketing.

HDFC bank has invested in many cross- selling activities. HDFC strategy has been not only the

acquisition of new customers but at creating product awareness, enhancing usage and also

providing value-added services to customers to reward them for their faith and loyalty. HDFC

also sends personalized mailers about their various products to the data base which they acquire.

HDFC tries to sell itself as one- stop financial super market.

Customers and Marketing- how is it done for retail products of the bankThe target market for retail services comprises upper- and middle-income persons and high net

worth customers. HDFC also target small businesses, trusts and non-profit corporations. The

marketing of products is done through branches, telemarketing and a dedicated sales staff for

niche market segments. HDFC also use third-party agents and direct sales associates to market

certain products and to identify prospective new customers. Additionally, bank obtains new

customers through joint marketing efforts with our wholesale banking department, such as our

Corporate Salary Account package. The marketing of auto loan and two-wheeler loan products

are done through joint efforts with relevant manufacturers and distributors.

There are programs that target other particular segments of the retail market. For example, the

private and preferred banking programs provide customized financial planning to high net worth

individuals in order to preserve and enhance their wealth. Private banking customers receive a

personal investment advisor who serves as their single-point HDFC Bank contact, and who

compiles personalized portfolio tracking products, including mutual fund and equity tracking

statements. HDFC bank private banking program also offers equity investment advisory

products. While not as service-intensive as the private banking program, preferred banking offers

35

similar services to a slightly broader target segment. Top revenue-generating customers of the

preferred banking program are channeled into bank’s private banking program.

RETAIL BANKING: AN ANALYSIS

RETAIL BANKINGRetail banking is typical mass-market banking where individual customers use local branches of

larger commercial banks. Services offered include: savings and checking accounts, mortgages,

personal loans, debit cards, credit cards, and so forth. This is very different from wholesale

banking.

RETAIL BANKING IN INDIAIndia is poised to become the world's fourth largest economy in the span of two decades.

Economic prosperity is providing many in this populous nation with real purchasing power; it

simply is an opportunity that cannot be overlooked by global banks. During the last decade, India

has emerged as one of the biggest and fastest growing economies in the world. The strengthening

economy in India has been fueled by the convergence of several key influences: liberalization

policies of the government, growth of key economic sectors, development of an English-

speaking, well-educated work force and the emergence of a middle class population.

REASONS FOR THE CHANGE OVER FROM CORPORATE BANKING

TO RETAIL BANKING: The financial sector reforms undertaken by the Government since the year 1991 have

accelerated the process of disintermediation which has encouraged blue chip corporate to

access cheaper funds to meet their working capital requirements directly from investors

in India. The deregulation of markets and interest rates has lead to cut throat competition

among Banks for corporate loans and offer other valued services at comparatively

36

cheaper rates to big and high value corporate. In the process, most of the banks have

experienced substantial reduction in interest spreads and drain on their profitability.

The risks involved in corporate loans are very high as corporate have to keep all their

eggs in one basket. The risks involved in retail Banking advances are comparatively less

and well diversified as loan amounts are relatively small ranging from Rs. 5000 to Rs.

100 lack and repayable normally in short period of 3-5 years except housing loans

(where repayment period is long up to 15 years in some cases) and from fixed source of

income like salaries.

Whereas corporate loans give average return of just 0.5 to 1.5 percent only, the retail

advances offer attractive interest spread of 3to 4 percent, because retail borrowers are less

interest rate sensitive than the Corporate. Another reason for large interest spreads on

retail advances is that the retail customers are too fragmented to bargain effectively.

While corporate loans are subject to ups and downs in trade frequently, retail loans are

comparatively independent of recession and continue to deliver even during the sluggish

phase of economy.

Retail Banking gives a lot of stability and public image to banks as compared to

corporate banking.

The greater amount of consumerism in the country with upswing in income levels of

burgeoning middle class, which has propensity to consume to raise their standard of

living, is enlarging the retail markets. Given the easy liquidity scenario in the country the

growth rate in this sector is likely to go up manifold in the years come.

Retail Banking clients are generally loyal and tend not to change from one Bank to

another very often. Large numbers of Retail clients facilitate marketing, mass selling and

ability to categorize/select clients using scoring system and data mining. Banks can cut

costs and achieve economies of scale and improve their bottom-line by robust growth in

retail business volume.

Through product innovations and competitive pricing strategies Banks can foster business

relationship with customers to retain the existing clients and attract new ones.

Innovative products like asset securitization can open new vistas in sustaining optimal

capital adequacy and asset liability management for banks.

37

Retail Banking offers opportunities to banks to cross sell other retail products like credit

card, insurance, mutual fund products and demat facilities etc. to depositors and

investors.

HDFC BANK RETAIL PRODUCTS: PERSONAL BANKING

HDFC bank principal banking activities consist of retail banking, wholesale banking and

treasury operations. The retail banking operations of the HDFC bank have been discussed below.

Retail Banking: OverviewHDFC bank considers itself a one-stop shop for the financial needs of upper- and middle-income

individuals. It provide a comprehensive range of financial products including deposit products,

loans, credit cards, debit cards, third-party mutual funds and insurance products, investment

advice, bill payment services and other services. It offers high quality service and greater

convenience by leveraging our technology platforms and multiple distribution channels. HDFC

bank goal is to provide banking and financial services to our retail customers on an “anytime,

anywhere, anyhow” basis. HDFC bank market services aggressively through its branches and

direct sales associates, as well as through the bank’s relationships with automobile dealers and

corporate clients. What the bank does is to establish a relationship with a retail customer and

then expand it by offering more products and expanding their distribution channels so as to make

it easier for the customer to do business with bank. Bank believes in this strategy, so that it can

lead to general growth of the Indian economy and the Indian upper and middle classes, can

afford bank’s significant opportunities for growth.

HDFC ‘s plan is to continue to expand their branch and ATM network as well as their other

distribution channels, subject to receiving regulatory approvals.

Retail Loans and Other Asset Products

38

HDFC Bank offers a wide range of retail loans, including loans for the purchase of

automobiles, personal loans, retail business banking loans, loans for the purchase of

commercial vehicles and construction equipment finance, two-wheeler loans, credit cards

and loans against securities. The retail loans were 59.6% of bank’s gross loans as of

December 31, 2008. Apart from the branches of the bank, HDFC use their ATM screens

and the Internet to promote its loan products and they also employ additional sales

methods depending on the type of products. HDFC bank themselves performs credit

analyses of the borrowers and the value of the collateral. The bank also buys mortgage

and other asset-backed securities and invests in retail loan portfolios through

assignments. In addition to taking collateral in many cases, HDFC bank obtains post-

dated checks covering all payments at the time a retail loan is made. It is a criminal

offense in India to issue a bad check. Though through my observation in bank I have seen

that bank also sometimes obtain irrevocable instructions to debit the customer’s account

directly for the making of payments. EMI calculator- The bank offers proper details on

how it is done in fact the bank makes sure that the customers are aware about its use and

how is it relevant. It makes use of amortization table for its calculation. The term and

EMI has been explained below.

Equated Monthly Installment (EMI)

An equated monthly installment (EMI) is the fixed monthly payment made by a borrower

to the lender each calendar month. The amount of the EMI depends upon the loan

amount, interest rate charged for the loan and the duration in which the loan is to be

repaid. The EMI is made up of two parts, the principal amount and the interest on the

principal amount divided across each month in the loan tenure. The EMI is always paid

up to the lender on a fixed date each month until the loan is paid off in full at the end of

the tenure. The benefit of an EMI for borrowers is that they know precisely how much

money they will need to pay toward their loan each month, making the personal

budgeting process easier.

Amortization Tables and Why They Are Useful

39

Now, one might assume that the EMI is applied in equal parts towards the principal and

the interest every month, however this not the case. During the initial years the interest

component repaid is higher and during the latter years of repayment the principal

component is higher. While a portion of every payment is applied towards both the

interest and the principal balance of the loan, the exact amount applied to principal each

time varies (with the remainder going to interest). An amortization schedule reveals the

amount applied towards interest, as well as the amount paid towards the principal

balance, with each payment. Initially, a large portion of each payment is devoted to

interest. As the loan matures, larger portions go towards paying down the principal. In

addition to breaking down each payment into interest and principal portions, an

amortization schedule also reveals the remaining principal balance on each payment date.

Loan repayment calculator

The following table shows the value and share of our retail loan products (net of loans

securitized out):

(Rs. crore)

Particulars As at December 31, 2008 % of total value

Auto Loans 15,124 25.4%

Commercial Vehicle and Construction

Equipment

8,321 13.9%

Personal Loans 8,917 14.9%

Loans Against Securities 699 1.2%

Two Wheeler Loans 2,092 3.5%

Credit Cards 4,053 6.8%

Other Retail Loans 6,881 11.5%

40

Total Retail Loans 59,647 100.00%

HDFC bank offer secured loans at fixed interest rates for financing new and used automobile

purchases. In addition to their general marketing efforts for retail loans, HDFC market this

product through building their relationships with car dealers, corporate packages and joint

promotion programs with automobile manufacturers.

Commercial Vehicles and Construction Equipment FinanceHDFC bank provides secured financing for commercial vehicles and provides working capital,

bank guarantees and trade advances to customers who are transportation operators. In addition to

funding domestic assets, bank also finance imported assets for which they open foreign letters of

credit and offer treasury services such as forward exchange cover. To do this smoothly bank

coordinates with manufacturers to jointly promote their financing options to their clients.

Personal LoansThe bank offer unsecured personal loans at fixed rates to specific customer segments, including

salaried individuals and self-employed professionals. In addition, they offer unsecured personal

loans to small businesses and individuals.

Loans against SecuritiesIt also offers loans against equity shares, mutual fund units, bonds issued by the RBI and other

securities that are on our approved list. HDFC bank limits their loans against equity shares to Rs.

20 lacks per retail customer in line with regulatory guidelines and limits the amount of their total

exposure secured by particular securities. Bank lend only against shares in book-entry

(dematerialized) form, which ensures that they obtain perfected and first-priority security

interests. The minimum margin for lending against shares is prescribed by the RBI.

41

Two Wheeler LoansHDFC offer loans for financing the purchase of scooters or motorcycles. The bank markets this

product in ways similar to their marketing of auto loans.

Retail Business BankingHDFC bank address the borrowing needs of the community of small businessmen near the bank

branches by offering facilities such as credit lines, term loans for expansion or addition of

facilities and discounting of credit card receivables. The bank classifies these business banking

loans as a retail product. Such lending is typically secured with current assets as well as

immovable property and fixed assets in some cases. The bank also offer letters of credit,

guarantees and other basic trade finance products and cash management services to such

businesses.

Credit CardsHDFC bank offer credit cards from the VISA and MasterCard stable including gold, silver,

corporate, platinum and titanium credit cards. As per the information gained from bank, the bank

had approximately 45 lacks cards outstanding as of December 31, 2008 as against 38 lacks as of

March 31, 2008.

Other Retail LoansSuch loans primarily include overdrafts against time deposits, health care equipment financing

loans, tractor loans, loans against gold and ornaments and small loans to farmers. Currently other

loans also include home loans disbursed by the erstwhile Centurion Bank of Punjab Ltd.

Retail Deposit ProductsRetail deposits provide the bank with a low cost, stable funding base and have been a key focus

area for HDFC since commencing operations. Retail deposits represented 67% of bank’s total

deposits as of December 31, 2009. The following chart shows the value of our retail deposits by

our various deposit products as of the same date:

42

Type of Deposit Value (Rs. crore) % of Total

Savings 30,761 31.67%

Current 14,001 14.41%

Fixed deposits 52,372 53.92

Total 97,135 100.00%

HDFC bank’s individual retail account holders have access to the benefits of a wide range of

direct banking services, including debit and ATM cards, access to the growing branch and ATM

network, access to other distribution channels and eligibility for utility bill payments and other

services. The retail deposit products include the following:

a) Savings accounts, which are demand deposits in checking accounts designed primarily for

individuals and trusts. These accrue interest at a fixed rate set by the RBI (currently 3.50% per

annum).

b) Current accounts, which are non-interest bearing checking accounts designed primarily for

small businesses. Customers have a choice of regular and premium product offerings with

different minimum average quarterly account balance requirements.

c) Time deposits, which pay a fixed return over a predetermined time period.

Bank also offers special value-added accounts, which offer the customers added value and

convenience. These include a time deposit account that allows for automatic transfers from a

time deposit account to a savings account, as well as a time deposit account with an automatic

43

overdraft facility. E-Broking accounts are offered as current accounts to customers of stock

brokers where all transactions are routed electronically between the broker and beneficiaries.

Other Retail Services and Products

Debit CardsThe debit cards may be used with more than 400,000 merchant point-of-sale machines and over

30,000 ATMs in India and more than 2.90 crore merchant outlets and 10 lacs ATMs worldwide.

HDFC was the first in India to issue international Visa Electron debit cards on a nationwide basis

and currently issue both Visa and MasterCard debit cards.

Individual Depositary AccountsBank provides depositary accounts to individual retail customers for holding debt and equity

instruments. Securities traded on the Indian exchanges are generally not held through a broker’s

account or in street name. Instead, an individual will have his own account with a depositary

participant for the particular exchange. Depositary participants, including us, provide services

through the major depositaries established by the two major stock exchanges. Depositary

participants record ownership details and effectuate transfers in book-entry form on behalf of the

buyers and sellers of securities. We provide a complete package of services, including account

opening, registration of transfers and other transactions and information reporting.

Mutual Fund SalesHDFC offer retail customers units in most of the large and reputable mutual funds in India. For

this bank earns front-end commissions for new sales and in some cases additional fees in

subsequent years. Bank distributes mutual fund products primarily through branches and private

banking advisors.

Insurance

44

HDFC has arrangements with HDFC Standard Life Insurance Company and Bajaj Allianz

General Insurance Company to distribute their life insurance products and general insurance

products to the customers. For this also bank earns upfront commissions on new premiums

collected as well as some trailing income in subsequent years while the policy is still in force.

Precious MetalsHDFC bank also import gold bars for sale to retail customers through branch network.

Investment AdviceBank offer customers a broad range of investment advice including advice regarding the

purchase of Indian debt, equity shares, and mutual funds. Bank provides private banking

customers with a personal investment advisor who can consult with them on their individual

investment needs.

Bill Payment ServicesBesides bank also offer customers utility bill payment services for leading utility companies

including electricity, telephone, mobile telephone and Internet service providers. Customers can

also review and access their bill details through direct banking channels. This service is valuable

to customers because utility bills must otherwise be paid in person in India. These services ARE

offered to customers through multiple distribution channels—ATMs, telephone banking, Internet

banking and mobile telephone banking.

Corporate Salary AccountsHDFC offer Corporate Salary Accounts, which allow employers to make salary payments to a

group of employees with a single transfer. Bank then transfer the funds into the employees’

individual accounts, and offer them preferred services, such as preferential loan rates, and in

some cases lower minimum balance requirements.

Non-Resident Indian ServicesNon-resident Indians are an important target market segment for Indian banking industry given

their relative affluence and strong ties with family members in India.

Retail Foreign Exchange

45

HDFC bank purchase foreign currency from and sell foreign currency to retail customers in the

form of cash, traveler’s checks, demand drafts and other remittances. Banks also provide out

foreign currency check collections.

HDFC Bank has been one of the pioneers in extending internet banking services to cater to

anytime, anywhere banking needs of its customers by leveraging on to its state-of-the-art

technology platforms. Internet Banking has also been exploited by hackers and fraudsters to

deceive the bank's customer and commit frauds. While the bank has best-of-the-breed solutions,

processes and people deployed to extend secure banking to its customers, it is important for our

customers to know that "SecUrity is incomplete without U".

Citizens’ charter

HDFC bank’s Citizen's Charter offers relevant information about the products, facilities and

services we provide. Customers can also find out about the time norms for various banking

transactions, our policy on customer information, and the process followed for redressal of

grievances.

Types of Deposit Accounts

While various deposit products offered by the bank are assigned different names, the deposit products

can be categorized broadly into the following types. Definition of major deposit schemes are as under : -

"Demand Deposits " means a deposit received by the bank which is withdraw able on

demand;

"Savings Deposits" means a form of Demand Deposit which is subject to restrictions

as to the number of withdrawals as also the amounts of withdrawals permitted by the

bank during any specified period;

"Term Deposit" means a deposit received by the bank for a fixed period withdraw able

only after the expiry of the fixed period and includes deposits such as Recurring /

Double Benefit Deposits / Short Deposits / Fixed Deposits / Monthly Income

Certificate / Quarterly Income Certificate etc.

46

''Notice Deposit'' means Term Deposit for a specific period but withdraw able on

giving at least one complete banking day's notice;

"Current Account" means a form of Demand Deposit wherefrom withdrawals are

allowed any number of times depending upon the balance in the account or up to a

particular agreed amount and will also include other deposit accounts which are

neither Savings Deposit nor Term Deposit; 

Account Opening & Operation of Deposit Account

Before opening any Deposit Account, the bank will carry out due diligence as required under

"Know Your Customer" (KYC) guidelines issued by RBI and or such other norms or procedures

adopted by the bank. If the decision to open an account of a prospective depositor requires

clearance at a higher level, reasons for any delay in opening of the account will be informed to

him and the final decision of the bank will be conveyed at the earliest to him.

The account opening forms and other material would be provided to the prospective depositor by

the bank. The same will contain details of information to be furnished and documents to be

submitted for verification and / or for record. It is expected of the bank official to explain the

procedural formalities and provide necessary clarifications sought by the prospective depositor

when he approaches the bank for opening a Deposit Account.

For deposit products like Savings Bank Account and Current Deposit Account, the bank will

normally stipulate certain minimum/average balances to be maintained as a part of the terms and

conditions governing operation of such accounts. Failure to maintain stipulated minimum/

average balance in the account will attract levy of charges as specified by the bank. For Savings

Bank Account, the bank may also restrict the number of transactions, cash withdrawals, etc., for

a given period. Similarly, the bank may specify charges for issue of cheque books, additional

statement of accounts, duplicate pass book, folio charges, etc. All such details, regarding terms

and conditions for operation of the accounts and schedule of charges for various services

provided will be communicated to the prospective depositor while opening the account.

47

Savings Bank Accounts can be opened for eligible person / persons and certain organizations /

agencies (as advised by Reserve Bank of India (RBI) from time to time).These accounts are

designed to help the individual (personal customers) to inculcate the habit of saving money and

to meet their future requirement of money. The amounts can be deposited/withdrawn from these

accounts by use of cheques/ATM. It helps customers to keep minimum cash at home besides

earning interest.

Current Accounts can be opened by Individuals / Partnership firms / Private and Public Limited

Companies / HUFs / Specified Associates / Societies / Trusts, etc.

Term Deposit Accounts can be opened by Individuals / Partnership firms / Private and Public

Limited Companies / HUFs/ Specified Associates / Societies / Trusts, etc. Bank has tailored

various deposit schemes to suit the needs and expectations of investing people in every walk of

life.

The due diligence process, while opening a Deposit Account will involve satisfying about the

identity of the person, verification of address, satisfying about his occupation and source of

income. Obtaining introduction of the prospective depositor from a person acceptable to the bank

and obtaining recent photographs of the person/s opening / operating the account are part of the

due diligence process.

In addition to the due diligence requirements, under KYC norms(i.e. know your customers) the

bank is required by law to obtain Permanent Account Number (PAN) or General Index Register

(GIR) Number or alternatively declaration in Form No. 60 or 61 as specified under the Income

Tax Act / Rules.

Deposit Accounts can be opened by an individual in his own name (status: known as account in

single name) or by more than one individual in their own names (status: known as Joint

Account). Savings Bank Account can also be opened by a minor jointly with natural guardian or

with mother as the guardian (Status: known as Minor's Account). Minors above the age of 12

will also be allowed to open and operate Saving Bank Account independently.

48

Operation of Joint Account: The Joint Account opened by more than one individual can be

operated by single individual or by more than one individual jointly. The mandate for operating

the account can be modified with the consent of all account holders. The Savings Bank Account

opened by minor jointly with natural guardian / guardian can be operated by natural guardian

only.

The joint account holders choose any of the following options for the disposal of balance in the

above accounts:

Either or Survivor : If the account is held by two individuals say, A & B, the final balance

along with interest, if applicable, will be paid to survivor on death of any one of the

account holders.

Anyone or Survivor/s : If the account is held by more than two individuals say, A, B and

C, the final balance along with interest, if applicable, will be paid to the survivor on death

of any two account holders.

The above mandates will be applicable to or become operational only on or after the date of

maturity of term deposits. This mandate can be modified by the consent of all the account

holders.

At the request of the depositor, the bank will register the mandate / power of attorney given by

him authorizing another person to operate the account on his behalf.

The term deposit account holders at the time of placing their deposits can give instructions with

regard to closure of deposit account or renewal of deposit for further period on the date of

maturity

A statement of account will be provided by the bank to Savings Bank as well as Current Deposit

Account Holders periodically as per terms and conditions of opening of the account. Passbook

facility is available to all savings account holders free of cost.

49

Nomination Facility

Nomination Facility: Bank offers nomination facility in deposit accounts, safe deposit lockers,

articles in safe custody etc. Nomination facility is available on all deposit accounts opened by the

individuals. Nomination is also available to a sole proprietary concern account. Nomination can

be made in favor of one individual only. Nomination so made can be cancelled or changed by the

account holder/s any time. While making nomination, cancellation or change thereof, it is

required to be witnessed by a third party. Nomination can be modified by the consent of account

holder/s. Nomination can be made in favor of a minor also subject to other major individual

being named appointee(s) during the minority period. The bank recommends that all depositors

avail nomination facility. The nominee, in the event of death of the depositor/s, would receive

the balance outstanding in the account as a trustee of legal heirs.

Interest Payments

Minor's Accounts

The minor can open a savings bank account and the same can be operated by the natural

guardian or by the minor himself / herself, if he/she is above the age of 12 years. The account

can also be opened jointly. On attaining majority, the erstwhile minor should confirm the balance

in his/her account and if the account is operated by the natural guardian / guardian, fresh

specimen signature of erstwhile minor duly verified by the natural guardian would be obtained

and kept on record for all operational purposes.

50

COMPETITIVE ANALYSIS

ICICI bank

ICICI Bank is India's second-largest bank with total assets of Rs. 3,634.00 billion (US$ 81

billion) at March 31, 2010 and profit after tax Rs. 40.25 billion (US$ 896 million) for the year

ended March 31, 2010. The Bank has a network of 2,009 branches and about 5,219 ATMs in

India and presence in 18 countries. ICICI Bank offers a wide range of banking products and

financial services to corporate and retail customers through a variety of delivery channels and

through its specialized subsidiaries in the areas of investment banking, life and non-life

insurance, venture capital and asset management. The Bank currently has subsidiaries in the

United Kingdom, Russia and Canada, branches in United States, Singapore, Bahrain, Hong

Kong, Sri Lanka, Qatar and Dubai International Finance Centre and representative offices in

United Arab Emirates, China, South Africa, Bangladesh, Thailand, Malaysia and Indonesia. Our

UK subsidiary has established branches in Belgium and Germany. The bank has a presence in

around 18 countries across the globe. They offer a wide gamut of retail products to its retail

customers and as well as other banking products related to the corporate segment. These

include ICICI personal loan, ICICI home loan, ICICI car loan, ICICI credit cards, ICICI

LAP etc. They also offer financial services that span asset management, venture capital,

investment banking, life and non-life insurance. ICICI equity shares find a place in the Bombay

Stock Exchange and National Stock Exchange in India with its American depositary receipts

listed in the New York Stock Exchange. ICICI Bank is one of the most popular banks in recent

times with its presence felt through a huge network of 1,495 branches and 4,816 ATMs across

51

the country, with profits running into 8.8 billion in the quarter ended June 2009. The bank also

has a presence in around 18 countries across the globe. They offer a wide gamut of retail

products to its retail customers and as well as other banking products related to the corporate

segment.

Milestones In 1999, ICICI become the first Indian company and the first bank or financial institution

from non-Japan Asia to be listed on the NYSE.

Merger of ICICI Bank with Bank of Madura Limited in fiscal 2001 and 2002.

In October 2001, ICICI Personal Financial Services and ICICI Capital Services wholly

owned by ICICI Limited were allowed to be merged with ICICI Bank, which was

formally approved by the RBI in April 2002.

K.V. Kamath is the Chairman of the ICICI group. Chanda D. Kochhar, the Managing

Director & CEO of ICICI Bank was recently named in Forbes list of the World’s 100

Most Powerful Women and ranked in the top 20 of the list compiled by Forbes, sharing

the honor with Sonia Gandhi, Congress President who ranked 13th.

ICICI bank retail products

Accounts and deposits

Savings account

ICICI bank savings account offers the customers following features:-

Debit-cum-ATM Card

Money Multiplier Facility

Internet Banking52

Customer Care

Mobile Banking

Standing Instructions

Nomination facility

DD Call and Collect

Debit-cum-ATM Card - With ICICI Bank Savings Account the customers will get a debit card

that one can use to withdraw cash from any ATM. Customers may also use their debit card to

directly make purchases through a Visa/MasterCard POS (Point of Sale) machine available at

most stores, according to the bank this will help customers access their money from anywhere.

The ICICI Bank International debit card is a debit-cum-ATM card providing customers with the

convenience of acceptance at merchant establishments and cash withdrawals at ATMs. If the

customers want to withdraw cash from their ICICI Bank Savings account, they can walk into any

bank's ATM and use their ICICI Bank ATM-cum-Debit card for free. The above benefit is

available free of cost for the first 5 transaction per month upto Rs 10,000 per transaction.

Money Multiplier Facility-The Money Multiplier feature gives customer the liquidity of a

Savings Account coupled with high earnings of a Fixed Deposit. This is achieved by creating a

Fixed Deposit linked to customers Savings Account providing them the following facilities.

Maximum returns – According to the bank the customer’s money is never idle. Creation

of a linked FD ensures higher rate of interest on their Savings Bank Deposits. One can

issue instructions through any channel such as the ICICI Bank Branch, ICICI Bank Phone

Banking and ICICI Bank's Internet Banking for creation of Fixed Deposit(s) from the

surplus funds in your Savings Bank Account (subject to a minimum of Rs. 10,000). The

Fixed Deposits will be created in multiples of Rs. 5,000 for tenure of one year or more as

instructed by the customer. 

53

Maximum Liquidity – The customers can withdraw the funds from their savings

account through any channel such as the ICICI Bank ATM, ICICI Bank Internet Banking

or by issuing a cheque etc. All linked Fixed Deposits will be enabled for automatic

Reverse Sweep in multiples of Rs. 5000 on a Last-In-First-Out (LIFO) basis when the

balance in the Savings Account falls below Rs.10, 000. The amount reverse swept will

earn interest rates at the applicable rate for the period that the deposit was held with the

Bank. The remaining amount will continue to earn higher interest at the original rate

applicable to the fixed deposit. 

Auto Renewal - Under this facility, when their deposits fall due, the bank will

automatically renew the principal and accrued interest for the same tenure as the original

deposit.

Internet Banking-For internet banking the customers need to log in with their user ID and

password and make banking a hassle-free routine. It is offered free of cost.

Customer Care – The bank has 24-hour Customer Care service always available to answer any

query or take their instructions.

Mobile Banking – The customers have an option of mobile banking through which they can do

Transferring of funds or getting to know their balance.

Standing Instructions - ICICI Bank accepts and supports Standing Instructions. According to

them the customers don't have to worry about the chore of carrying out a routine transaction.

They can just set up a Standing Instruction and then the bank will manage.

Nomination Facility – The customers may nominate a person as beneficiary to their account

proceeds. Nomination facility available for bank deposits.

There can be only one Nominee for a deposit account whether held singly or jointly.

A person legally empowered to operate a minor's account can file a nomination on behalf

of the minor.

54

Applicants can make nomination by filling up the Form prescribed under the Banking

Companies (Nomination) Rules 1985

The nomination details can be changed during the subsistence of the account relationship

by filling up the Form prescribed under the Banking Companies (Nomination) Rules

1985.

DD Call and Collect – according to the bank the customers need to wait in bank to collect DD

they can do so on the way to the branch, by just calling Customer Care and providing them

details of the DD to be prepared and collect it ready and signed at the branch.

Salary accounts

ICICI Bank Salary Account is a benefit-rich payroll account for Employers and Employees. As

an organization, one can opt for Salary Accounts to enable easy disbursements of salaries and to

have access to other benefits too. According to the bank with ICICI Bank Salary Accounts

employees will enjoy the convenience of having the largest network of ATMs, free 24 hour

phone banking and free internet banking. What the customers would require to do is to send

ICICI Bank an advice (in form of a cheque/debit instruction, ecs, etc) for the total salary amount

along with the salary details of the designated employees in a soft and hard copy format and

bank will credit the respective employees' accounts as per the company’s statement of advice.

ICICI Bank Salary Accounts has the benefits of reduce paper work and saves remittance costs

and also the employees receive instant credit of salaries. Besides all of the above, employees will

automatically become ICICI Bank account holders with special benefits and privileges of 8-8

banking, Investment advisory and much more. ICICI Bank also has a special offering: Defense

Banking Services designed exclusively for the armed forces.

Fixed deposits

55

The ICICI bank fixed deposits offer following advantages:-

Wide range of tenures.

Choice of investment plans.

Partial withdrawal permitted.

Safe custody of fixed deposit receipts.

Auto renewal possible.

Loan facility available.

Features The customers can deposit any amount of money in Fixed Deposit for as long as they

wish between 15 days to 10 years. All fixed deposits come with a set choice of

investment plans. Fixed Rate Deposit accounts also provide Fixed Loans. Re-investment

Fixed Deposit rates do not change but works like a Recurring Debit Account transaction.

In other words, Re-investment Plans are compounded over traditional deposits and hence

are more lucrative over different time periods. Other features include:

Minimum Balance Customers can avail of ICICI Bank Fixed Deposits for a minimum deposit of Rs 10,000.

Nomination

Nomination facility available for bank deposits.

There can be only one Nominee for a deposit account whether held singly or jointly.

A person legally empowered to operate a minor's account can file a nomination on behalf

of the minor.

Applicants can make nomination by filling up the Form prescribed under the Banking

Companies (Nomination) Rules 1985.

56

The nomination details can be changed during the subsistence of the account relationship

by filling up the Form prescribed under the Banking Companies (Nomination) Rules

1985.

Choice of two investment plans:

Traditional

Interest payable monthly or quarterly as per your convenience

Maturity period ranges from 15 days to 10 years

Reinvestment

Interest is compounded quarterly and reinvested with principal amount

Maturity period ranges from 6 months to 10 years

Benefits

Fixed Deposits at ICICI Bank comes with nomination facility. The bank also offers online access

to Fixed Deposits through their Internet Banking channel. Internet Banking at ICICI Bank allows

customers to connect to their Credit Card, Loan and their Fixed Deposit with their savings

account. In re-investment deposits, the interest is compounded quarterly and reinvested with the

principal. Traditional term deposits provide tax shelter and shield you from factors affecting

fixed deposits in India over longer periods of fixed time.

All the facilities available with ICICI bank can be listed as follows.

Channels

ICICI Bank has the following channels through which it offers its products and services to its

customers.

57

Branches

ATMs

Internet Banking

Mobile Banking

Phone Banking

Products and services

ICICI Bank offers a host of products and services to its clients, which include Deposits, Loans,

Cards, Investments, Insurance, Demat, NRI Services and Online Services etc.

Deposits

Following deposits are offered:

Savings Account

Advantage Deposit

Special Savings Account

Life Plus Senior Citizens Savings Account

Fixed Deposits

Security Deposits

Recurring Deposits

Tax-Saver Fixed Deposit

Young Stars Savings Account

Child Education Plan

58

Bank@Campus

Salary Account

Advantage Woman Savings Account

EEFC Account

Resident Foreign Currency (Domestic) Account

Privilege Banking

No Frills Account

Rural Savings Account

People's Savings Account

Self Help Group Accounts

Outward Remittance

Freedom Savings Account

Family Banking

Loans

ICICI Bank offers following loan facilities:

Home Loans

Loan Against Property

Personal Loans

Car Loans59

Two Wheeler Loans

Commercial Vehicle Loans

Loans Against Securities

Loan Against Gold Ornaments

Pre-approved Loans

Cards

ICICI Bank is India's largest issuer of credit cards. It also offers other types of cards. The various

cards offered by ICICI bank are as below:

Consumer Cards

Credit Cards

Travel Cards

Debit Cards

Commercial Cards

Corporate Cards

Prepaid Cards

Purchase Cards

Distribution Cards

Business Cards

Axis bank

Axis Bank, previously known as UTI Bank, is one of the leading Banks of India along with

HDFC Bank and ICICI Bank. Established in 1994, it's the first of the new private sector banks in

60

India to start its operations, when Government of India opened the gate for the private banks to

flock into the Indian financial market. Though the bank started its operation with the name UTI

Bank, but later, in order to avoid ambiguities and confusion with other discrete entities carrying

the same name, it changed its name to its current form (Axis Bank) in April 2007. Axis Bank

Limited recorded a total income of Rs. 13,745.04 crore as on the year ended March 31, 2009. It

also made a net profit of Rs. 1,812.93 crore in the same financial year. Axis Bank offers a range

of financial products and services to its clients throughout the country. It also has special strength

in retail and corporate banking. Axis Bank offers following services:

Personal Banking

Corporate Banking

NRI

Priority Banking

Personal banking

The Personal Banking of Axis Bank includes following services:

Accounts

Zero Balance Savings Account

Krishi Savings Account

Easy Access Savings Account

Prime Savings Account

Corporate Salary Account

Women's Savings Account

Demat Account

Senior Citizen's Account

61

Defence salary Account

Trust/NGO Savings Account

RFC(D) Account

Azzadi - No Frills

Pension Savings Account

Deposits

Fixed Deposits

Recurring Deposits

Encash 24

Tax Saver Fixed Deposit

Loans

Home Loan

Car Loan

Personal Loan

Loan Against Shares

Loan Against Property

Loan Against Security

Study Loan

Consumer Loan

Cards

62

Credit Cards

Debit Cards

Prepaid Cards

Payments

Bill Pay

Electronic Clearing Service

Tax Payments

Tax e-Payments

Direct Tax Payments

Pension Disbursement

Other Services

Mobile Refill

Locker

Online Shopping

IPOS mart

E-Statement

Credit

Large Corporate

63

Working Capital Finance

Term Loans

Trade Services

Structured Finance

Supply Chain Management

Overseas Transactions

Agri Business

Kisan Power

Powertrac

Commodity Power

Contract Farming

Arthia Power

SME Standard

SME Fast Track

Microfinance

Priority banking

Following services are offered under this category:

Accounts

Resident

64

NRI

Deposits

Fixed Deposits

Recurring Deposits

Encash 24

Loans

Home Loan

Personal Loan

Loan Against Property

Loan Against Security

Car loans

Consumer Power

Study Power

Cards

Priority Debit Card

Credit Cards

Platinum Credit Card

Gold Plus Credit Card

Gold Credit Card

Silver Credit Card

65

Secured Credit Card

eShop Card

Travel Currency Card

Remittance Card

Gift Card

Other Services

o Mobile Refill

o Locker

o Online Shopping

24 hour banking services

Following services are offered under 24 x 7 Banking:

Internet Banking

Mobile Banking

Savings Account

NRI Account

Current Account

Phone Banking

Visa Money Transfer

Power Transfer

ATM

66

KOTAK MAHINDRA BANK

Kotak Mahindra is among the leading financial organization of India, with a range of

financial services that caters to all customers' day to day requirements. Their products

spans from commercial banking, to stock broking, to mutual funds, to life insurance, to

investment banking – diverse needs of individuals and corporate are catered to. The Kotak

group has a net worth of more than Rs. 6,799 crore with the branches, franchisees,

representative offices and satellite offices spread across cities and towns in India. They

also have global offices in New York, London, San Francisco, Dubai, Mauritius and

Singapore. The Kotak Group offers their services to approximately 6.4 million customers. 

The Kotak Mahindra Group got incepted in 1985 in the form of Kotak Capital

Management Finance Limited, being promoted by Uday Kotak, Sidney A. A. Pinto and

Kotak & Company. A stake in the group was taken in by industrialists Harish Mahindra

and Anand Mahindra and this is the time when the company changed its name to Kotak

Mahindra Finance Limited.

Kotak Group Products & Services

1. Bank

2. Credit Cards

3. Life Insurance

4. Mutual Funds

5. Car Finance

6. Securities

7. Institutional Equities

8. Investment Banking67

9. International Business

10. Kotak Private Equity

11. Kotak Realty Fund

12. Wealth Management

About Kotak Mahindra Bank

The flagship company of Kotak Mahindra Group, Kotak Mahindra Finance Ltd was established

in 1985. The same got converted into a bank - Kotak Mahindra Bank Ltd in March 2003. Kotak

Mahindra bank has presence in commercial vehicles, retail finance, corporate banking, treasury

and housing finance. 

Services of Kotak Mahindra Bank

Deposit Accounts  Savings account

Current Account

Term Deposits

Loans Personal Loans

Home Loans

Loan Against Property

Investment Services68

Demat

Mutual Fund

Insurance

Gold

Convenience Banking Net Banking

Mobile Banking

Phone Banking

ATM Network

PUNJAB NATIONAL BANK

The Punjab National Bank or PNB is one of the well known commercial and banking

institutions in India. It is the second largest government owned and regulated commercial

bank in the country and offers specialized solutions and financial services in a number of

sectors. Around 37 million customers are served by the bank on an average basis. The

customized facilities and services make it a trusted name in the domain of banking.

Growth of Punjab National Bank

Punjab National Bank was registered under the Indian Companies Act on 19 May in the year

1894 and its first office was set up at Anarkali Bazaar in Lahore. Since then, the bank has

become a great name in the field of banking and is very much preferred by the customers for the

wide range of its services. Today, the bank has around 4,904 branches in around 764 cities. Due

to its facilities and services of high standards, Punjab National Bank has also been the recipient

69

of a number of prestigious awards. It has been adjusted as the 248th biggest bank across the

globe according to a recent survey made by Bankers Almanac in London. The Economic Times

has also listed the bank as 38th among the premier 500 companies and the 9th among the most

trusted brands in India. The total asset value of the bank amounts to around US$60 billion. There

is also a subsidiary of the PNB in the United Kingdom. In addition the bank also has branches in

some other cities like:

Kabul

Honk Kong

Oslo

Shanghai

Dubai

Services of Punjab National Bank

Punjab National Bank offers financial solutions and services in an array of sectors. All these

services that are offered keep pace with the changing market trends in order to fulfill the needs

and preferences of the customers. Some of the well known sectors on which the main functions

of the bank are based are:

Personal Banking

Corporate Banking

Agriculture finance services

Industrial finance services

Trade financial services

International banking services

70

PNB also has commercial relationship with more than 200 prestigious international banks across

the globe. It has the provisions of Rupee Drawing Arrangements with around 15 exchange

companies in the UAE and 1 in Singapore. In case of the personal banking segment, the bank

offers customized solutions to take care of almost all financial needs of the customers. Some of

the well known services that are offered in the bank are:

Savings Fund Account

Fixed Deposit scheme

Current account

Loan services

Punjab National Bank is also a well known name in housing loan benefits. The bank offers both

short term and long term loans. The rates are also affordable and can be paid within a particular

time. The housing loans are given for a number of purposes such as:

Construction of a building

Purchase of a new house or a flat

Purchase of flat or house on a First Power of Attorney basis

For the purpose of repair or renovation of a house or a building

The PNB Housing Finance sanctions around 80% of the cost of the project. However, the

maximum amount is around Rs 50 lakh. The maximum loan amount for the purpose of

renovation and repair is Rs 5 lakh. In most cases, the loan is available for a period between 5

and 20 years before one becomes 65 years of age. The interest of the loan is based on the

reducing balance and the principal amount of the loan is also based on the repaying capability

of the borrower. 

Mutual funds of Punjab National BankThe mutual funds of Punjab National Bank are covered under the Principal PNB Asset

Management Company. Some of the well known schemes of mutual funds are: 

71

Principal Growth Scheme

Principal balanced Fund

Principal Income Fund

Principal government Securities Fund

Principal Income Fund – Short Term Debt

Principal Cash management Fund

Principal Index Fund

Table showing analysis on different parameters:-

S.NO PARAMETE

RS

HDFC

BANK

ICICI

BANK

AXIS BANK KOTAK

MAHINDR

A

BANK

PUNJAB

AND

NATIONA

L

BANK

1. BRANCHES 1412

(INDIA)

141(DELHI

)

2009

(INDIA)

109

( Delhi)

1700+

(INDIA)

78(DELHI)

245

(INDIA)

66(DELHI)

3850(INDI

A)

213(DELH

I)

2. ATMs 5219

(INDIA)

4055

(INDIA)

117approx.

(INDIA)

3. CHEQUE

DEPOSIT

BOX

YES YES YES YES YES

4. EASY

INTERNET

YES YES YES YES YES

72

BANKING

5. AVERAGE

QUARTERLY

BALANCE

SAVINGS

ACCOUNT

VALUE

ADDED

SAVINGS

REGULAR-

Rs.10,000

(URBAN

/METRO)

Rs. 5,000

(SEMI

URBAN)

SAVINGS

MAX

ACCOUNT

Rs. 25,000

SENIOR

CITIZENS

Rs. 5000

NO

FRILLS-

NIL

KID’S

ADVANTA

GE

ACCOUNT

Rs. 5000

SUPER

Rs. 10,000

(URBAN

/METRO)

Rs. 5000

(SEMI

URBAN)

ZERO

BALANCE-

Rs.5,500

EASY

ACCESS-

Rs. 5,000 in

metro or urban

centers,

Rs. 2,500 in

semi urban

centers and Rs.

1,000 in rural

centers.

PRIME

SAVINGS

ACCOUNT-

Rs 5,000 (urban

& metropolitan

branches) or Rs

2,500 (rural &

semi-urban

branches)

ACE:

Rs.50,000

PRO:

Rs.20,000

EDGE:

RS.10,000

PNB

PRIDENT

SWEEP-

Rs.10,000

(URBAN

/METRO)

Rs. 5,000

(SEMI

URBAN)

TOTAL

FREEDO

M

SAVINGS

FUND

SALARY

ACCOUN

T-

Rs. 0

73

SAVINGS

ACCOUNT

Rs. 25000

6. RATE

APPLICABLE

ON SAVINGS

ACCOUNT

Saving A/c3.50% on regular savings account

Saving A/c3.50% and

interest paid Half Yearly

3.50% and interest paidQuarterly on easy access

account

3.5% pa

3.50%

7. Gold debit card Yes yes yes Yes Yes

8. Statement

charges

FreeQuarter

FreeQuarter

FreeQuarter

FreeQuarter

Free

monthly

9. 24 hour phone

banking

Yes yes yes Yes Yes

The following list of the fixed deposits that was created by interacting with the customers as

what they prefer most of the listed banks. The customers said that they are not aware about the

FDs of Kotak Mahindra bank and don’t mind Punjab national bank as they trust the bank with all

of its products. The comparison is made on the basis of what customers think was beneficial.

FIXED DEPOSITS

Account

name

Bank

Name

Type of

account

Rate Minimum

balance/deposits

Interest paid

Fixed Deposit

ICICI BANK FIXED

DEPOSITS

9.5% Rs.10,000 QUARTERLY

Regular Fixed

HDFC FIXED 8.75% RS. 10,000 QUARTERLY

74

Deposit BANK DEPOSITS

Fixed Deposit

AXIS BANK FIXED

DEPOSITS

2.50% RS. 10,000 QUARTERLY

ANALYSIS –

When discussed with customers regarding their preference for the various Private Banks the

analysis from that was that ICICI Bank and HDFC are the two leading private banks of the city.

This is mainly because.

These two banks are the first private banks which has opened their branches in the city.

ICICI and HDFC brands name, play an important part in their success in the city because

people usually go through the name the company.

The difference lies within the few parameters that seem to differ with in the banking structure of

different banks especially public sector bank i.e. Punjab national bank and private sector banks

i.e. HDFC, ICICI, AXIS and KOTAK MAHINRDA bank. If one closely observes there is not

major difference between the services offered in these banks what differs is their banking culture

and how they offer their services. The factors which distinguish are-

Business process re-engineering

Proper and timely management of changes

Large number of transactions and changes

Internal commitment

Availability of adequate finance

Strategic Human Resources changes

PSU banks which are a dominating force in the Indian banking system have lacked a

proactive HR environment. However, much has changed with the opening of other 75

sectors and increased competition from newer banks in the system. So Punjab national

bank has undergone a drastic change with in time and has been giving a serious

competition to HDFC bank. There is a realization that skill development is extremely

important for staff retention as well as the quality of manpower, and all banks whether

HDFC or any other bank had in place a system of continuous professional learning. A

few banks like Kotak Mahindra are time and again in the process of revamping their

training processes and their emphasis is being laid on hard as well as soft skills. Banks

are keen to tie up with external training agencies for in-house training. Now if one look

at the retail products offered at different banks then the savings account facility offered

at Punjab national bank finds more takers in the middle level earning group of people

like for example the total freedom savings account of PNB where there is no need to

maintain an average quarterly balance and even the fees that is deducted for other

accounts where the customers are not able to maintain average balance is much less than

HDFC, ICICI, AXIS and KOTAK MAHINDRA bank. Kotak Mahindra bank seems to

target customers of higher league as they don’t have many branches in Delhi as

compared to HDFC, ICICI, and AXIS bank. They have their own exclusive class of

customers and they market their products like that only. The current and savings account

of Kotak Mahindra bank is marketed with terms like” the power” to have an exclusive

banking service. Now HDFC bank has a very special way of treating its customers by

giving them the convenience of imperia customer programme, classic customer

programme and preferred customer programme. This helps the banks in attracting more

and more customers for the retail products. This is referred as priority banking. The plus

current account of HDFC bank is preferred more by the customers the minimum balance

required to be paid is RS. 1, 00,000 and the interest paid are nil. Punjab national bank

actually has been able to develop a more trustworthy relation with the customers since

it’s a public bank and does not charge much for not maintaining AQB. HDFC bank has

been a leader clearly among the private banks and has its own strong and loyal customer

base ICICI bank has been giving a close competition to HDFC bank as told by the

customers. After the customers were contacted Bank FD emerges out to be the most

76

preferred option for the clients to invest in the market after real estate. This is also

dependant on various reasons which are given as under:

o Easy loans available against the Bank Fixed Deposits.

o Clients can withdraw their money at almost any time giving them the option of

maintaining Liquidity.

o With all this Bank FD also provides a decent return concerned the minimum of

the risk in any of the available investment instruments.

o We have seen above in the analysis of nationalized vs. private banks that

nationalized banks are the more preferred ones, this also adds weight to clients

preferring Bank FDs due to trust build during all these years.

Then, next preferred option for the clients is Unit link plan/Insurance. Another thing that

was noted were that majority of clients preferred the short term fixed deposits as their favorite

option. Most of the clients use the ideal money which they have to meet the uncertainty or short

term requirement. Now if we talk about insurances the preference of the people who had invested

in the insurance sector, it is very clear that LIC is the leading company in this field, because of

many factors such as:-.

LIC is leading in this field mainly, because it is the first mover in the insurance sector and

thereby had captured most of the market.

LIC had a very good network of agents, who can be seen as the back bone of the

company.

LIC had provided better service in the past which had made trust in the mind of the

people and for that reason they feel more comfortable.

HDFC and ICICI are the second in this field mainly because they had opened their

branches recently but have made progress in capturing a significant share of the market

77

and in the future the ratio is decrease, because there are many opportunity to cash in by

both the company .

The features that distinguish HDFC bank from other banks, according to the customers are:-

1. The customers feel that services across different branches of the HDFC bank differs since they

have different branches for various departments for example Dwarka sector 22 which deals with

visa services because of this the customer have an advantage of convenience banking

2. Customers having long relationship with bank rely a lot on the investment services and

advices offered by the bank since bank through one or the other way try to give some benefits to

such customers, the bank named them as “classic customers”.

3. Customers call HDFC bank as friendly and reliable bank because of its CRM services

4. HDFC bank is also regarded as a leader in deploying technology in its services which makes it

different from other banks.

5. HDFC bank has become relatively large especially by the virtue of introducing various

schemes for the benefits of the customer.

6. HDFC bank has created a brand equity that reflects trust and integrity.

7. HDFC bank has also targeted kids by opening accounts for them and by introducing kid’s

advantage plan under mutual funds. Due to these efforts of HDFC bank lots of kids have become

loyal customers of HDFC already.

8. HDFC bank has positioned itself more than just bank. It is already perceived as

“comprehensive financial supermarket”. According to the customers they have created a virtual

market place on the net.

9. HDFC bank ATM services have been considered remarkable by the customers. The bank tries

to handles the complaints it receives regarding ATMs and DEBIT card as efficiently and

78

effectively as possible. This is because one will find maximum takers of HDFC bank’s ATM

cards.

10. In a nutshell what differentiates HDFC bank is “the ability to add- value”, the “global image”

and the personality of the bank i.e. being dynamic, innovative and vibrant .

FINDINGS-

Sales Staff differ in their information and Telephone Calling by the HDFC bank, ICICI

bank and ICICI prudential and HDFC standard life Advisors are disturbing the clients-

There is excess calling by the employee of the HDFC and ICICI banks and by the Advisors of

insurance, and this is one of the reasons why they are not interested in the bank sometimes, and

the other reason is that most of the time the sales staff does not give what they promise, their

information generally differs from the bankers in the bank this create a bad impression about the

company.

In the banking sector Punjab national bank is the bank many customers prefer -

PNB is the most preferred bank because of its brand equity and also because it has an old and

loyal customer which has proved to be a great advantage.. There are several things which favor

them including:

The company’s image in the mind of the people

The company’s successful track record in providing life long services to its customers

A very good agent base

Excellent relationship with clients

79

A large Part of the Market yet to be covered by Mutual Funds-

Large parts of the people do not know about the mutual funds investment and insurance and

other retail products schemes but they have the power of Money. These clients should be cash in

by the HDFC bank.

SERVICE MARKETING: ANALYTICAL STUDY ON THE

BASIS OF HDFC BANK

ServQual model of marketing

The Service Quality Model or ServQual model is used to measure the differences between

consumers’ perception and expectation of service quality.

According to the servqual model there are five gaps:

I Gap - refers to the difference between customers’ expected service and management’s

perceptions of customers’ expectations.

This gap means that management may not correctly perceive customer expectations.

II Gap - refers to the difference between management perceptions of customers’ expectations

and service quality specifications.

This gap means that although the people in management level may perceive the correct

expectations of the customers, they may not have suitable and sufficient service quality

specifications.

III Gap - refers to the difference between service quality specifications and the real service

delivery.

This gap means that although the service providers may have suitable and sufficient service

quality specifications, they may not have the satisfactory service delivery in the real situation.

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That may be because service providers lack well-trained employees to deliver satisfactory

service.

IV Gap - refers to the difference between the service delivered and external communication

about the service with customers.

That is, the service providers may not have suitable and sufficient communication with the

customers or the service providers may have commitments that exceed what they can do or they

may not sufficiently inform the customers of what they have done.

V Gap - is the difference between consumer expectation and their perception of service quality -

measured by the difference between what customers expect and what customers perceive about

the service. In addition, gap 5 is a function of gap 1, gap 2, gap 3, and gap 4; that is, Gap 5= f

(gap1, gap2, gap3, gap4).

This means that the service quality is closely related to management perception, marketing,

personnel management, communications with customers, service specifications and delivery.

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Figure - ServQual model

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GAP I- As explained before, this gap means that the management is not able to correctly meet

the customers’ expectations. HDFC bank main service focus is delivering excellent service for

the customers. Infact when inquired from the customers of the branch most of them claim that

HDFC bank service is at par than other banks. Many of the bank customers have been with the

bank since a long time. The customers have their loyalty towards the bank and even have trust

with the bankers in the bank. Another good point about the service is that management is always

there for customer’s service in most of the branches of the bank one would easily find the branch

managers available. In my view the management is able to correctly perceive customers

expectations. The customers of the HDFC bank have been able to develop their expectation from

the bank on the basis of mostly word of mouth communication from their relationship managers

in HDFC bank or through their own relatives like for example many of the customers of the

branch came to invest in the endowment plan, one of the insurance scheme offered by HDFC

bank, because they were given references by their senior citizens in the family. Though if one

observes Punjab National bank then their customers develops their expectations more on the

basis of their needs and past experience. HDFC bank is able to have more or less a clearer

perception of customer expectations.

GAP II- Customer value is perceived as one of the principal drivers of customers satisfaction

which in turn act as a key determinant of repurchase and ultimately of customer retention and

loyalty. Though HDFC bank has clear perceptions about what customers expect from them what

this gap discusses is that whether HDFC bank has suitable specifications in the service basically

it talks about the service design. Now in order to deliver customer satisfaction HDFC bank has

personal banking provisions for the customers, there is a “relationship manager” assigned to the

customers who look into the customers banking needs also almost every branch of HDFC bank

has a “teller” who guides the customers. However, it cannot be denied that there is no scope for

improvements. When contacted the customers they seems to be satisfied with the customer

service they experience in the bank.

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GAP III- Most of the complaints that banking industry receives is in reference with this gap.

There seems to be a discrepancy within the sales staff. The sales staff of the bank seems to make

promises which they fail to deliver later. So what is required is to be able to have a more trained

sales staff which has a more clear understanding about each and every product area in which

he/she deals so that they can deliver a more satisfactory service to the customers. HDFC bank

seems to suffer from this gap at certain level.

GAP IV- HDFC standard life has a very strong external communication but most of the retail

products of the bank lacks in this. Though HDFC bank’s fixed deposits seems to be a pull

product rest most of the products are push products. HDFC bank with time has made

considerable efforts to market its products to the customers with advertising like big vans having

LCD screens displaying the products of the bank. Recently HDFC bank has been trying to get

more and more customers for its loan products. It is looking for a customer base in retail as well

as in corporate. HDFC bank has involved itself into this type of marketing but there are not much

advertisements one find about HDFC bank retail products on television as compared to ICICI

bank which carefully markets it savings account as well as the personal banking experience for

the customers.

With customer and the bank people interaction I was able to identify certain key words which the

customers look for while fulfilling their banking needs and what most of the banks promises

about. These are basically the parameters by which the customers as well as the bank

management measures service. These are as follows:-

Reliable (consistently do what bank say)

Responsive (cheerfully do what bank say)

Competent (bank management has knowledge and expertise)

Accessible (bank management is available to talk to)

Courteous (treat with respect)

Communication (listens carefully and explains carefully)

Credible (honest and trustworthy)

Security (information of customers kept private and confidential)

Empathy (understands customers views and show genuine interest)

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Tangible (maintains good bank environment and good staff)

Survey needs (asks and understands needs and expectations)

Need fulfillment (needs and expectations are identified and met)

Mistakes (mistakes are properly corrected)

Treatment (treat the customers the way they should be)

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FOUR Quadrant Diagram

The diagram is used to explain the relation of the various employees with the bank. It helps to understand that who proves to be star for the bank and who proves to be a dud.

Stars Duds

Personal bankers

Relationship managers

Sales staff

Staff outside bank looking for current

account and savings account

customers

Teller

ATM and Debit card service

employees

not applicable

Good people negative employees

Stars-

The diagram puts personal bankers and relationship managers as stars for the company because

they have been providing HDFC bank with revenue. By maintaing a healthy relation with the

customers they attract the customers for new investments and new schemes infact in some cases

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it was observed that the customers enter into investment deal because of their relationship

manager or personal banker.

Good people-

Now the teller and the bankers which help customers in ATM and Debit card services have been

regarded as good people because they are willing to help the customers in any way possible.

Some of the branches of HDFC bank like the one in Connaught place have a larger customer

base for the ATM and Debit card services. The stars and good people are important for HDFC

bank because they are the one bringing customers, basically their main function is acquisition of

new customers and retaining them.

Duds –

Duds are basically referred to those employees who are not working properly or are not

successful. The sales staff and the staff exclusively working for current and savings account does

not have correct knowledge of information required for opening the accounts in the bank and it

results in dissatisfaction of customers. This happens because of the difference of opinion

between those in the bank and those outside the bank. There have been lots of complaints

regarding that sales staff promised something and it did not happened.

Negative employees-

Negative employees are basically those who work against the nature of banking or who are not

interested in attracting customers. Duds are different from them because though they do not work

properly but they have all intentions to attract new customers and give revenue to bank but they

lack in the way they work and their knowledge about their work. But negative employees on the

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other hand are not interested in giving any business to the bank. I personally did not find any

employee with those intentions in the bank.

This diagram was constructed in order to make an observation about who are the employees that

are most important for the bank. Since bank is one of the important examples of service industry,

and these employees becomes the first encounter with the customers, representing bank. This

encounter helps customer in deciding whether he/she wants to a investment relation with the

bank or not.

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ANALYSIS AND RECOMMENDATIONS

The service sector has assumed greater economic importance over the past decade. India is

fifteenth in services output. Currently, 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 elimination of this waste and meeting customer

expectations are the major challenges facing managers these days in the service sector. This is

why quality improvement is a vital concern for many service organizations. The servqual model

represents a different approach to quality improvement. Quality is increasingly being seen as a

key strategic differentiator within the financial services sector, with most major players

undertaking some form of quality initiative.

From the customers’ perspective, service quality significantly influences customer satisfaction

and customer satisfaction has direct influences on purchase intentions. Research findings indicate

that service quality influences purchase intentions more than does customer satisfaction. It is

therefore imperative on the part of bankers to stress upon both service quality and customer

satisfaction, in order to raise the purchase intentions of customers.

Service Quality and Customer Satisfaction:

The customer satisfaction paradigm posits that confirmed standards lead to moderate

satisfaction; positively disconfirmed (exceeded) standards lead to high satisfaction, and

negatively disconfirmed (underachieved) standards lead to dissatisfaction. The subject of

continued (and considerable) debate in the marketing literature, the distinction and association

between service quality and customer satisfaction remains at the forefront of many academic-

and practitioner-oriented research endeavors.

Service quality and customer satisfaction do exhibit independence and are indeed different

constructs from the customer’s point of view. A small step in unearthing and understanding the

constructs of service quality and customer satisfaction and their implications on competitive

fruition has been put forward in a study on banking services. The comparative analysis on the

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services among the major banking segments revealed that the HDFC and ICICI banks have

topped the list in terms of delivering qualitative customer service. It has also been observed that

the private sector banks compete successfully with foreign banks and make efforts to provide

better banking services in tune with the changing global competitive scenario. However Punjab

national bank has been credit by the customers as being the most trustworthy banks as it provides

various features for the larger segment of customers.

Through continuous interaction with the customers and the bank people it has been observed that

customers of banks such as ICICI, AXIS, HDFC, PNB and KOTAK MAHINDRA were either in

service or self employed. Many customers of PNB were found to be retired from their respective

profession. Thus they recommended that banks should envisage a strategy to serve customers

with different occupations & educational backgrounds. Banks must also advance their customer-

centric strategies by providing satisfaction through services leading to better relationship

building and earning profits for the banks.

However it also depends on the location of the branch like for example a branch situated in the

residential area will have more customers for pensions like in Dwarka they were more customers

for pensions and other senior citizens services while in branches like Connaught place or K.G.

Marg one will find customers for other needs as well.

It has been observed that poor service quality in public sector banks is mainly because of

deficiency in tangibility, lack of responsiveness and empathy. Private sector banks, on the other

hand, were found to be more reformed in this regards. Above all, the HDFC bank is relatively

close to the expectations of their customers with regard to various dimensions of service quality.

Further, the study revealed that there existed service quality variation across demographic

variables, and suggested that management of banks should pay attention to potential failure

points and should be responsive to customer problems.

Now in order to deliver excellent service the necessity of employee contacts and evaluation of

service experiences has been very effective. The problem of reliability in various measures of

service quality, and the perception responses has high reliability as compared to expectation

responses. Service quality in banking implies consistently anticipating and satisfying the needs

and expectations of customers. However, evaluating service quality sometimes is not an easy

task due to the intangible nature of services.

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Measurement of Expectation and Perception of Service Quality:There are many reasons for poor service quality across industries. One reason may be an inability

to collect or use collected data. For example, in direct opposition to consumer opinion, bank

executives perceive themselves and their companies to be doing an excellent job. This apparent

discrepancy of opinion creates questions about banking service information-gathering

effectiveness.

Because perceived quality is conceptualized as the customer's overall attitude towards the

excellence of service, many researchers have relied on a single overall quality question,

measured on a scale ranging from poor to excellent .More generally, however, service quality

perception is thought to be based on several quality attributes . These are: reliability - reflecting

the technical quality of the outcome of the service encounter, i.e. what is received by the

customer; and tangibles, responsiveness, assurance and empathy - reflecting the functional

quality of the process itself, i.e. how the service is provided. SERVQUAL was deemed "to be

applicable to retail and business services and relevant for banking services".

RecommendationsThe bank needs to work in a way that it can communicate the features of its products to the

customers in the most profitable way which would be cost effective for the bank.

Housewives as the target customers-The housewives can be targeted by the sales staff by explaining them to earn money from their

monthly day to day expenses money by opening saving account in HDFC bank. This is possible

as with effect from 1st April 2010 that the bank interest rate is earned on daily balance. Earlier it

uses to be half early on the lowest balance maintained during the period. Under this scheme a

housewife\customer will open a bank account with initial deposit of Rs. 10000 along with an

amount equal to total expected expenses to be incurred by him\her during the month. As a

sample model the target customers\families of Dwarka residents have been taken into account on

an average the expenses incurred by a family in Dwarka having own house or rented have been

worked out separately as under:-

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S.no. Details of Expenses (expected) Family on rent Family having own

house

1. Rent 16,000 -

2. Electricity, water& maintenance

charges

3000 3000

3. Sweeper charges 150 150

4. Maid charges 700 700

5. Car wash 150 150

6. Groceries and toiletries 3000 3000

7. School fees of two kids to be paid

quarterly (10000*3)

30000 30000

8. Vegetables and fruits 3000 3000

9. Milk (@Rs.30*2) 1800 1800

10. Petrol\transport 3000 3000

11. Miscellaneous expenses 4500 4500

TOTAL 65300 49300

The above table clearly reveals that expenses mentioned at serial no. 1 to 6 are too incurred once

in a month and expense at serial no. 7 will be incurred quarterly where as remaining expenses are

to be incurred on day to day basis. Accordingly a family on an average will initially deposit in its

saving account Rs. 70000 which will include minimum balance of 10000 i.e. AQB for HDFC

bank. The interest earned on above deposits after taking into account the expenses incurred by

the family once in a month, quarterly and on day to day basis are projected as under:

a) Interest on minimum balance of Rs 10,000: Rs 28.77

b) Interest on item at serial number 7: Rs 86.30

c) Interest on expenses incurred once in a month: Rs 66.16

d) The other expenses which are to be incurred on day to day basis, it would be advised to

concerned family/customer to withdraw money on weekly basis so that interest can be earned as

under:

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(1) First week (Rs 9430 after withdrawing Rs 2870 for weekly expenses): Rs 5.42

(2) Second week (Rs 6560 Balance): Rs 3.77

(3) Third week (Rs 3690 Balance): Rs 2.12

(4) Fourth week (Rs 820 Balance): Rs 0.47

* Interest has been calculated by using daily balance multiplied by no. of days multiplied by

interest rate of saving account i.e. 3.5/36500

This way a family will earn Rs 193.01 per month i.e. 193.01 * 12 = 2316.12 per year out off the

expenses incurred by family. This scheme can be named as “EARNED WHILE SPENDING”.

The concept is required to be advertised properly among the dwarka families for which sales

personnel can specially be deputed to visit personally to the families and motivate them for

opening accounts and explaining them the benefits.

The dwarka sub city provides for housing for about 5 lakh families. Many of these families have

not yet been able to move into their flats because of one or the other reason, however with the

inception of metro rail system, thousands of families have been residing in the sub city. This

clearly suggests there is huge scope for targeted customers. To be on safer side it is presumed

that at least 1% of the clientage could be convinced for opening the account under above scheme

which would amount to 5000 customers/saving accounts.

Viability for HDFC Bank for this:1) Initial deposit per customer: Rs 70,000 and expected number of customers i. e. is 5000, bank

will get deposit of Rs 350000000.

2) Bank will give interest to customers @ 3.5%:12250000

3) Salary of sales person\ administrative expenses: 15000(approx.)

4) Total expenses of bank (2+3):12265000

5) The bank can generate revenue by investing the initial deposit amount of Rs. 350000000 by

choosing the best revenue generating scheme. As a role model it is presumed that this amount

will be invested in loan scheme @ 8.25%, thus would generate Rs. 10106250000000000.

6) Bank will earn (5-4): Rs 10106249987735000.

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NOTE: - the figures taken for this mathematical calculation are all approximation value and are

expected but it clearly reveals that it is a beneficial scheme for the HDFC bank.

Looking for the other potential customersThe owners of “kirana” stores or groceries stores have lot of money but have little knowledge of

as to how to invest them productively for this the sales staff should go to them instead of waiting

for them to come to the bank. The sales staffs that generally wait for the customers can actually

prepare a database of the customers and try to explain them the products that best suit their needs

rather randomly calling people. Thus they can be the other target customer and can be worked

upon the above mentioned way.

Giving incentives for all retail products to employeesThe employees should be given incentives for every customer conversion in retail products

depending upon how much have invested by the customer. This will motivate the employees to

attract customers not only for insurance but other products also.

ATMs / exclusive small branches HDFC bank can place its ATM machines or open small branches exclusively in the corporate

organizations this will increase their market penetration in the wholesale customers as well. This

actually will help the bank spread a word about its retail products to the customers by placing

small brochures of retail products for the target customers. By opening small branch exclusive

for the organizations might results in spreading the features of the insurances or other accounts

of HDFC bank.

CRMnext ProfilesThe CRMnext Profiles can be used in a way to encourage more and more customers. The

database can be properly created by carefully making note and observations from the profiles of

the customers.

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More investment in Plastic money customer’s baseThe idea behind this is that the bank gives credit card swipe machines to the wholesalers and

retailers so that they use the credit card of the bank. As a result bank gets the wide list of

customers of wholesalers and retailers. This will surely result in bulk sales for the bank. Through

this bank can create group transactions by selling products to wholesalers and retailers both. This

will encourage retail products of the banks i.e. credit cards and debit cards and bank will get new

customers. This will work by meeting the wholesalers first and getting details about their

retailers and then explaining the benefits of using this transaction. This is actually indirect

marketing. It means communicating benefits of your products to its customers.

Start Making Link with the Nationalized Banks to get more BusinessWhen we look at the Small city, most of the customers prefer and have their account in

nationalized banks, because this banks are giving good service for many years and If HDFC can

make tie-up with the employees of this banks then they can be able to get more business from

this contact.

Rural banking Rural markets are seen as the new profitable investment for banks in India with banks like ICICI

bank have been able to popularized micro financing in which they did a tie up with the SHG but

what needs to look into is that how successful the banks have been in doing so. This type of

banking is increasingly being popularized as social marketing. Infact even HDFC bank started

with BUSINESS CORRESPONDENT MODEL to make the viability of banks branches in the

unbanked areas of India and did a tie up with NGO’S and post offices. But the success of these

models is still questioned. What HDFC needs to do is o try to penetrate more into rural banking

so that it will be able to acquire a larger customer base.

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Opportunities and Challenges for PlayersThe bar for what it means to be a successful player in the sector has been raised.

Four challenges must be addressed before success can be achieved. First, the market is seeing

discontinuous growth driven by new products and services that include opportunities in credit

cards, consumer finance and wealth management on the retail side, and in fee-based income and

investment banking on the wholesale banking side. These require new skills in sales &

marketing, credit and operations. Second, banks will no longer enjoy windfall treasury gains that

the decade-long secular decline in interest rates provided. This will expose the weaker banks.

Third, with increased interest in India, competition from foreign banks will only intensify.

Fourth, given the demographic shifts resulting from changes in age profile and household

income, consumers will increasingly demand enhanced institutional capabilities and service

levels from banks.

Need to Create a Market-Driven Banking Sector with Adequate Focus on

Social

DevelopmentThe term “policy makers” used in this thesis, refers to the Ministry of Finance and the RBI and

includes the other relevant government and regulatory entities for the banking sector. I believe a

co-ordinate effort between the various entities is required to enable positive action. This will spur

on the performance of the sector as a whole.

Other suggestions could be:-

Every bank should take precautions to keep customers experience safe. It should take

continued efforts to safeguard online banking transactions.

The bank should provide more customer awareness and need of transparency in their

dealings.

The banks should come up with innovative ways of service at their door steps this may be

a costly affair but will surely give positive results in the long run.

The banks should take the initiative of training the advisors about the new schemes from

time to time which also makes the advisors connected to the bank.96

The banks should also emphasis on the monitoring of EMI which directly relates to the

returns of a loan amount.

The company should come up with proper fixed deposit plans at this point of time where

the market is highly volatile and the investors become very cautious at this level.

The banks should use brand ambassadors for example the CEO’s of major companies

where the company allocate the funds. This will probably ensure proper results.

The banks should focus on the advertising strategy and also the marketing of the bank

product.

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ConclusionHDFC bank has been the strong arm of HDFC and with continual focus on the customer service

has taken the bank to new heights in the banking industry. It is on the brim of increasing its

customers through attractive schemes and offers. The project highlighted the strategies adopted

by the bank and how it targets customers for retail products. It also explains the products HDFC

offers with its comparison to the close competitors and their retail products. Since banking

industry now days focuses on service marketing so the project was able to identify the gaps with

the HDFC bank.

However it cannot be denied that HDFC bank has been a pioneer in delivering excellent service

to its customers which leads to customer satisfaction ration higher and higher day by day.

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Referenceswww.wikipedia.com

www.hdfcbank.com

www.icicibank.com

www.axisbank.com

www.kotakmahindrabank.com

www.punjanbationalbank.com

www.google.com

Books

Arturo Molina, David Martin- Consuegra, Agueda Esteban, “Relational Benefits and Customer

Satisfaction in Retail banking”, International journal of Bank

Marketing, Vol.25, No.4, 2007, 253-271.

G.S. Suresh Chander, Chandrasekharan Rajendran, R.N. Anantharaman,

“Customer Perceptions of Service quality in the Banking Sector of a Developing

Economy: A Critical Analysis”, International Journal of Bank Marketing, Vol 21,

No5, 2003, pp.233-242.

Allred, A. and H.L. Addams, 2001. Service quality at banks and credit unions: what do their

customers say? Managing service quality, 10:52-60

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