A Project Report OnCustomers Perception Towards The Products and Services Offered by HDFC Bank And Comparative Analysis

By (RAJEEV KUMAR)

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DAV INSTITUTE OF MANAGEMENTA REPORT ON

Customers Perception Towards The Products and Services Offered by HDFC Bank And Comparative

Analysis

BY By (RAJEEV KUMAR) DAV INSTITUTE OF MANAGEMENT Under the guidance ofMr. D. Gopala Krishna (Branch Manager, HDFC Bank, NOIDA )&

DR. sunita bishnoi (DAV institute of management) During the Academic Year (2007-2010)A REPORT SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENT OF BBA(BE) PROGRAMME OF DAV INSTITUTE OF MANAGEMENT

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ACKNOWLEDGEMENTIt is our duty to acknowledge with gratitude the generous help that I have received from Mr. D. Gopala Krishna Branch manager, HDFC BANK LTD.We have had the advantages of his critical advice from his profound knowledge in Marketing (sales). He has indeed taken personal interest in preparing an innovative Report on Customers Perception Towards The Products and Services Offered by HDFC Bank And Comparative Analysis He has helped us a lot in preparing the questionnaire. I also want to thank Mr. E.Dheeraj who is the Relationship Manager-Corporate Salary of this branch, my company guide for his enduring patience, valuable guidance and constant encouragement during the course of project work. Special thanks to Deputy Manager Mr Aswin Nayak He helped me in every step when I required. My sincere thanks are due to all the officers of HDFC Bank for their worthy help and cooperation. Finally, its my pleasure to acknowledge the kind help and cooperation of all the respondents of NOIDA with whom I met throughout the duration of this project.

Head Of The Organization Mr. Gopala Krishna Branch manager, HDFC BANKLTD. K-Block,Sector 18, Noida - 201301 Uttar Pradesh

Tel 0120-4664301 / 328 / 335 / 336 Fax 0120 - 2514534

Company Guide - Mr. E.Dheeraj-Relationship Manager-Corporate Salary Faculty Guide Dr. Sunita Bishnoi

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(RAJEEV KUMAR)

DECLARATIONI hereby declare that this project report entitled as CUSTOMERS PERCEPTION

TOWARDS THE PRODUCTS AND SERVICES OFFERED BY HDFC BANK & COMPARATIVE ANALYSIS, submitted to, DAV Institute of Management, AU in partial fulfillment of the requirement of BBA (BE) is a bonfire work done by me and it was not submitted to any other university or institution previously.

(RAJEEV KUMAR)

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EXECUTIVE SUMMARYThe bases of the project was to understand the customers perception about the various schemes like Personal loans, Home loans, Car loans under asset products and saving bank account, Current account and Salary account under liability products for retail banking.

The project also encompasses, identifies the scope and various parameters, a customer would look into while transacting with bank for certain scheme.

Overall analysis has been done, keeping in mind the various customer segments like businessmen, salaried people, students and others, consideration while opting for any deposits or borrowings.

The SWOT analysis shows the pitfalls and identifies the opportunities available for HDFC Bank and competitor analysis has been done by considering four other close competing commercial banks like ICICI, SBI, UTI, IDBI banks at noida, analysis has been done by taking the profitability and performance indicator, it says there are several potentials available for HDFC bank to be the market favorite. After the analysis it is found that the major part of the deposits from HDFC Bank, Noida is formed by businessmen followed by salaried people and professionals and its nearest competitors are ICICI Bank & SBI.

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CONTENTS

SI.N O 1 2

DESCRIPTION Introduction to HDFC Bank Products & Services Personal Banking NRI Banking Wholesale Banking

PAGE NO 1 32 33 53 53

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Market Research Problem Definition & Objectives Research Methodology Data Analysis & Observation Recommendations & Limitations SWOT Analysis A Comparative Study Among the Emerging Commercial Banks Conclusion Bibliography Annexure Questionnaire 95

59 59 61 81 84 88

4 5

6 7 8

91 93 94

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Introduction to HDFC Bank..

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HDFC BANKHDFC Bank was amongst the first to receive an 'in-principle' approval from the Reserve Bank of India (RBI) to set up a bank in the private sector from Housing Development Finance Corporation Limited (HDFC), in 1994 during the period of liberalization of the banking sector in India. HDFC India was incorporated in August 1994 in the name of 'HDFC Bank Limited'. HDFC Bank , one amongst the firsts of the new generation, techsavvy commercial banks of India, was set up in august 1994 after the Reserve Bank of India allowed setting up of Banks in the private sector .The Bank was promoted by the Housing Development Finance Corporation Limited, a premier housing finance company (set up in 1977) of India. Net Profit for the year ended March 31, 2007 was up Rs. 1,141.5 crores, up 31.1%. Headquartered in Mumbai,

HDFC Bank has a network of over 684 branches spread over 316 cities across India. All branches are linked on an online real-time basis. Customers in over 120 locations are serviced through Telephone Banking. The Bank also has a network of about over 1605 networked ATMs across these cities.

History of the company1994 The Bank was Incorporated on 30th August. A new private sector Bank promoted by housing Development Corporation Ltd. (HDFC), a premier housing finance company. The bank is the first of its kind to receive an in-principle approval from the RBI for establishment of a bank in the private sector. Certificate of Commencement of Business was received on 10th October 1994 from RBI.

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- The Bank transacts both traditional commercial banking as well as investment banking. HDFC, the promoter of the bank has entered into an agreement with National Westminister Bank Pc. and its subsidiaries (Natwest Group) for subscribing 20% of the banks issued capital and providing technical assistance in relation to the banks proposed banking business.

1995 70 No. of equity shares issued to subscribers to the Memorandum & Articles of Association on 30th August 1994. On the same date 500,00,000 equity shares were allotted to HDFC promoters. 509,20,000 shares were allotted to HDFC Employees Welfare Trust and HDFC Bank Employees Welfare Trust on 22nd December, 1994. 1On 16.1.1995, 90,79,930 No. of equity shares were allotted to Jarrington Pvt. Ltd. Another 400,00,000 equity shares were allotted on private placement basis to Nat west Group on 9.5.1995. 500,00,000 shares were allotted to the public on 9.5.95 (all were taken up).

216th.

The Bank opened its first branch in Ramon House at Church gate, Mumbai on January

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The Bank has created an efficient operating system using well tested state-of-the-art software.

1996 4HDFC Bank has entered the banking consortia of over 50 corporates, including some leading multinational companies, flagship companies of local business houses and strong public sector companies. 561997 78The bank is one of the largest mobilisers of retail deposits through its network of The bank has set up a ultra-modern hub at Powai in Mumbai where the bank's 20 branches. Its credit deposits ratio was 53.8%. central computer is housed. This hub housed in 35,000 square feet of space, houses HDFC Bank has set up a state-of-the-art dealing room to handle all transactions The Certificates of Deposits were awarded a PP1+ rating which is the highest possible in Indian financial markets. rating for short term instruments indicating superior capacity for repayment.

data of all the branches and facilitates the introduction of new products and services.

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HDFC has installed state-of-the-art systems to facilitate inter-connectivity The bank has also recently signed up as a depository participant, under the

between branches and link up with on line system. newly set up NSDL, wherein the members clearing accounts settlement for dematerialized shares can be done through the bank. 3456789HDFC Bank, one of the nine new-generation private sector banks, has planned HDFC Bank proposed to launch tele-banking for the first time in June in Mumbai HDFC Bank has drawn up plans to become a niche player in corporate banking HDFC Bank has become the first private sector bank to conclude a structured HDFC Bank has launched its Versova branch, the 11th branch in Mumbai. to set up an all-India on-line automated teller machine (ATM) network. at its Chandiveli branch. by sticking to top-rung corporate. interest rate option deal.HDFC Bank, as part of its expansion plans in the South, has opened another branch in Chennai.

HDFC Bank has entered into strategic alliances with 10 overseas banks to provide

customers with a wide range of derivatives including interest rate and foreign currency swaps.

10HDFC Bank on October 14 introduced ATMs that converse in a regional language. 11HDFC Bank has introduced the Freedom Account for the average retail customer located in the major metros as a means to wean away the middle-income market from nationalised banks.

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HDFC Bank has launched an account in all its 28 branches across India that

seeks to free depositors from minimum balance requirement, for the first time in the country. 13HDFC has introduced a new loan product for the payment of betterment fees announced

by the Bangalore Mahanagar Palike. - HDFC Bank is all set to launch its debit card by April 1998.

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1bank.

HDFC Bank has tied up with the Ahmedabad Stock Exchange (ASE) to act as its clearing

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HDFC Bank proposes to strengthen its branch network in Calcutta with the

addition of two new branches in the first quarter of the next fiscal.

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HDFC Bank has signed an agreement with the National Stock Exchange (NSE)

which will give it a second charge over the brokers deposit for providing loan against share facility to NSE brokers. 2The bank has also entered into a similar understanding with the Bombay Stock Exchange (BSE) whereby the bourse will provide support for recovery of money against the card for loan against share facility. 34The bank has also entered into `Cirrus' arrangements by which all master cardThe bank will also provide phone-banking facility in Bangalore. HDFC has tied up

holders across the globe will be able to transact at HDFC Bank in India.with Visa International to offer its Debit Card. - HDFC Bank Ltd has entered into a memorandum of understanding for a strategic business collaboration with Chase Manhattan Bank.

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HDFC Bank has become the first bank in India to link up its automated teller HDFC Bank will be the first bank in the Asia-Pacific region to connect the The HDFC Bank is expanding its ATM network to connect to American Express

machine (ATM) network with all the three major payment systems world-wide. American Express (Amex) payment system. Interchange based in Phoenix, Arizona, USA. With this connectivity, HDFC Bank has become the first bank in the Asia-pacific region to connect to the Amex Interchange. 89HDFC Bank was the first to sign up with AMEX in December of 1998.The Bank has tied up with ITC Thread needle Mutual Fund to provide its investors

with the High Interest Fund (HIF), a facility to en cash their units through the bank's Automated Teller Machines in addition to a cheque book facility also to be provided by the bank.

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Sony India Ltd (SIL) has joined hands with HDFC Bank to work out an innovative

car finance package under which a Sony car audio system would be installed to a new car for no additional upfront cash outflow. 1112The bank has decided to issue 1,33,10,000 equity shares of Rs. 10 each to The bank will also issue 13,70,000 equity shares to India Private Equity Fund HDFC and a wholly-owned subsidiary of it at a price of Rs. 94 per share. and 51,20,000 shares to Indocean Financial Holding, the two equity funds controlled by

Chase Manhattan Bank.11

122000

HDFC Bank, has tied up with BPL Ltd to offer Internet-enabled supply-chain Hutchison Max Telecom and HDFC Bank introduced the country's first-ever

management and business-to-consumer (B2C) e-commerce services to corporate. mobile-banking services in the city.HDFC Bank also signed a memorandum of understanding with Singapore Telecom's ecommerce arm Sesami.Com Pvt Ltd. - The Bank latter also entered into a partnership agreement with National Computer Systems, the e-commerce unit of Singtel.

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A new company called SESAMi.com (India) has been formed by a strategic

alliance between HDFC Bank and Singapore Telecom's e-commerce company SESAMi.com, to offer e-commerce solutions for the Indian market. 2said. 3HDFC Bank is also launching an online electronic banking solution called Enet which will allow corporate to access their accounts over the net and carry out trade related transactions and cash management functions. 4HDFC Bank entered into a tie-up with Telco by which the bank would provide preferential financing options for Tata's range of passenger cars including the Indica, Sumo, Safari, Estate and Sierra. 56HDFC Bank allotted 1.98 crore shares of Rs 10 each at an issue price of Rs 94 HDFC Bank is also set to become the first bank in the country to offer wirelessSky Cell Communications Ltd, one of the two cellular service providers in Chennai, has launched `Sky Banking', for which the company has tied up with ICICI Bank and HDFC Bank.

HDFC Bank has a tie-up with Maxtouch for giving the facility to the latter's

customers in Mumbai. This is the first and only service of this sort in the country, he

per share to promoters and strategic investors on March 29. application protocol (WAP) services to customers.

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The bank has tied up with 12 utility companies nationwide including BSES,The Bank has tied up with financial portals, e-brokerages and the National Stock

MSEB, BEST, Orange, BPL and MTNL.

Exchange to enable broker payments for e-broking ventures. - The Bank has set up 100 new electronic data capture (EDC) terminals in Mumbai. - HDFC Bank has launched its first B2C

payment gateway which allows Visa and MasterCard credit card-holders to do transaction online and real time. 12

CYBERITMALL.COM has joined hands with HDFC Bank to provide VISA/MasterCard users with an online payment gateway solution to enable them to have a secure shopping experience. - HDFC Bank plans to extend its mobile phone banking services introduced in select metros to mobile phone broking when it introduces its Internet on-line trading in July. - HDFC Bank and portal clickforsteel.com have signed a memorandum of understanding for offering online credit and services to facilitate `post transaction' activities through the portal's `allied services providers' programme. - Indianfoline.com signed an agreement with HDFC bank for the use of payment gateway to enable online financial transactions.

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HDFC Bank, in association with cellular service provider Orange, has launched

the entire range of mobile banking services and mobile commerce services using wireless application protocol (WAP) technology. 23The Company has introduced a new scheme whereby it will provide loans toThe Foreign Investment Promotion Board has cleared the proposal of the HDFC

individuals for payment of self assessment tax on their properties in Bangalore.Group to enter into a joint venture with Singapore Telecom's e-commerce company for providing a comprehensive range of business-to-business e-commerce solutions to companies in India.

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The Company proposes to pick up an equity stake in Softcell Trade and

Technologies Ltd., a Mumbai-based software company.BPL Mobile has tied up with HDFC Bank to offer Internet banking through the mobile phone.

HDFC Bank launched `Instant Car Loans' a new scheme for offering customers a HDFC Bank launched depository services on the net.HDFC Bank tied up with NSE.IT, a wholly owned subsidiary of the National Stock

range of net-enabled loan products.

Exchange, for providing payment gateway services for the latter's Internet trading operations.

9- HDFC Bank has been identified as the best domestic commercial bank for the secondconsecutive year by FinanceAsia.com, which provides a network for financial decision makers.

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The Mumbai-based Geojit Securities Ltd. has tied up with HDFC Bank for

Internet trading of shares.

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Calcutta's cellular services provider Modi Telstra, and HDFC Bank have entered

into a collaboration to provide mobile commerce in Calcutta.13

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HDFC Bank has got the Kerala-based Nedungadi Bank as its first customer for HDFC Bank has set a target of attaining a business of over Rs 15,000 crore this HDFC Bank, in association with Tata Cellular, has launched Mobile Commerce HDFC Bank has tied up with about 25 equity brokerages for enabling third party The Bank has entered into an alliance with Deloitte Haskins and Sells, a member

its new joint venture company with I-Flex Solutions. fiscal mainly through expansion and new product launches, including a credit card. Service, for customers in Hyderabad and Vishakaptnam. transfer of funds and securities through its business-to-business portal -- `e-Net'. firm of Deloitte and Touch, to offer banking services to its non-resident Indian customers. 67HDFC Bank has launched its 123rd outlet at Delhi Stock Exchange building at Asaf Ali Road.

The Bank proposes to acquire up to 24.5 per cent stake in the MIEL e-Security

Pvt. Ltd., which is engaged in the business of developing and marketing of security products and services for a range of e-commerce and enterprises security applications. 8The Bank has tied up with Rajan Raheja-owned Hathway for providing banking at home as part of the Net-over-cable initiative of the latter in Mumbai. - HDFC Bank launched its on-line bill payment facility in alliance with the Maharashtra State Electricity Board has also begun to offer bridge loans against fixed deposits of parent Housing Development Finance Corporation the financial institution. 9HDFC Bank has tied up with portal brainvisa.com to retail education loans to students. - The Gujarat Cellular operator Fascel, has signed up with the HDFC Bank to introduce mobile commerce for the first time in the State. 1011HDFC Bank has tied up with BPL Mobile for mobile commerce facility. CricketNext.com, a sports e-commerce site has tied up with HDFC Bank to

provide an on-line payment gateways and marketing opportunities for a wide range of cricket sports gear on its on-line shop BatNext. 12Singapore-based Growasia.com has entered into an understanding with HDFC Bank and credit rating agency Icra, for picking up equity in the company's Indian subsidiary Gasia.com.

13The Bank has launched `Freedom - The e-Age Savings Account' for cellular phone users. 14Spice Cell has tied up with Citibank N A, HDFC Bank and ICICI Bank for mobile

bill settlements.14

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HDFC Bank and Cosmos Bank launched a co-branded ATM card.

2- The Chatterjee Group-promoted Captech Online Ltd. has signed memorandum of understanding with HDFC Bank and UTI Bank for setting up a payment gateway for its debt negotiation platform, Riskxpress.com. 3HDFC Securities Ltd., promoted by the HDFC group with equity participation from the Housing Development Finance Corporation Ltd., HDFC Bank and Chase Capital Partners, has launched its brokerage services for retail investors in the Capital. 4The HDFC Bank and Airtel launched their mobile-banking service through WAP in Delhi. 52001 678Card.

HDFC Bank has launched wireless application protocol-based mobile-banking in

Coimbatore and Trichy in association with Aircel. The Bank has opened its first branch in Aurangabad. HDFC Standard Life Insurance has entered into a memorandum of

understanding with the Chennai-based Indian Bank.The Bank has launched the international Maestro debit card in association with Master

9HDFC Bank will launch its credit card in June through link-ups with MasterCard and Visa. 101112131415LTtrade.com has entered into a strategic tie-up with HDFC Bank to provide Net Standard Chartered Bank, HDFC Bank and Bharat Petroleum Corporation have HDFC Bank has launched a new campaign for its eage savings account. HDFC Bank entered into a strategic tie-up with Tally Solutions Pvt. Ltd. to offer The Bank has opened four ATMs outlets in Bangalore at Coles Road, RT Nagar,HDFC Standard Life Insurance has launched a `Development Insurance Plan' a low cost

banking services to online investors. joined the eCash Forum which has been set up by the Smart Card Forum of India.

online real time accounting services to small and medium enterprises. Rajaji Nagar and Jaya Nagar on March 26.life insurance product developed specifically to meet the needs of economically weaker sections.

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Two Directors, Mr. S.S. Thakur and Mr. Amit Judge, have resigned from the

board of the bank effective from March 30. 17HDFC Bank files with US regulators to list more than 11 million American Depositary Shares on the New York Stock Exchange.15

2002 123456789HDFC Bank unveiled a new online account aggregation service `OneView'. HDFC launched 'One View' service to customers HDFC Bank launched its 9th branch in Karnataka. HDFC opens its branch in Mangalore. HDFC Bank unveils Silver card in Hyderabad. HDFC Bank opens first overseas representative office. HDFC Bank unveils gold card Mediclaim facilities to HDFC Bank gold cardholders. HDFC Bank Ltd has informed BSE that Mr Deepak Satwalekar has submitted his

resignation as Director of the Bank. The Board of Directors has accepted the same. The Board of Directors has co-opted Mrs Renu Karnad as Additional Director of the Bank. 10Mrs. Renu Karnad has been co-opted as an Additional Director of the Bank. Mrs Karnad shall represent the promoters of the bank i.e. HDFC Ltd. Also Mr. Deepak Satwalekar, Managing Director of HDFC Standard Life Insurance Company Ltd, has been on the Board of the Bank as nominee of HDFC Ltd since September 12, 1994 and shall complete the period of 8 yrs before the next scheduled board meeting. In view of the provisions of the Banking Regulation Act, 1949, Mr. Satwalekar has submitted his resignation as Director of the Bank and the Board has accepted the same. 11HDFC Bank launched new products to its wealth management programme to increase its customer base. The bank introduced a non-interactive product named "Financial Planner", which would be available for all its customers for an annual fee starting from Rs 10,000. The bank is offering fee based advisory programme to the "mass affluent" segment, which was earlier offered to high net worth customers. The wealth management programme would cater to individual needs taking into account various factors such as customer's age, financial goals and risk profile, which includes equity, MFs and debt instruments such as RBI Relief Bonds.

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Orange JV with HDFC Bank. HDFC Bank unveils resident foreign currency account. HDFC Bank unveils co-branded credit card with e-Seva.

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The Board of Directors of HDFC Bank Ltd at their meeting held on January 15,

2003 approved the appointment of Mr. Arvind Pande as an Additional Director pursuant to section 260 of the Companies Act, 1956. 2345678910EPFO JV with HDFC Bank for its pension distribution. HDFC enters into agreement with HDFC Bank to source housing loans. HDFC Bank, IRCTC in tie up for online railway booking. HDFC Bank inks pact with ANB for remittance service HDFC Bank introduces 'HDFC Bank Health Plus Credit Card'. Uma Krishnan resigns HDFC Bank as country head. Escotel ties up with HDFC Bank for Global Debit Card. HDFC Bank launches India's first mobile payment solution. HDFC Bank's debt programme of Rs 400-crore has received triple A (ind) rating

from CREDIT rating agency FITCH. -Mumbai - HDFC Bank in collaboration with Tally Solutions is planning to launch electronic data interchange (EDI) system for small and medium enterprises (SMEs). -Warburg Pincus sells 2% stake in HDFC for Rs 235 cr 11HDFC Bank began selling home loans of its promoter Housing Development Finance Corporation (HDFC). -Board approved to allot 4,16,400 equity shares to the employees of the Bank under the Employee Stock Option Scheme 2004-Mr Ranjan Kapur & Mr Bobby Parikh appointed as Additional Directors -NMCE inks pact with HDFC Bank for warehouse receipts

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HDFC Bank has entered into an alliance with Clearing Corporation of India Ltd

(CCIL). The tie-up offers the latter's collateral borrowing and lending obligation (CBLO) product to cooperative banks that are not direct members of the negotiated dealing system (NDS).

-HDFC Bank repurchases HDFC loans worth Rs 208 cr -Launches Quickremit, a unique online service that enables NRIs in the US to send money to their relatives in India from the comfort of their homes. -Andhra Bank has entered into an alliance with HDFC Bank for sharing its network of

automated teller machines (ATMs). On March 29, 200417

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HDFC Bank and Bahraini Saudi Bank (BSB) have announced an alliance to cater HDFC bank Ltd has informed that Dr (Mrs) Amla Samanta has ceased to be a

to service the needs of the non-resident Indians (NRIs) in Bahrain. director of the Bank with effect to April 25, 2004.

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HDFC Bank launches new scheme for Maruti 800 buyers, providing 85 per cent

finance on the on-road price of the car for seven years. -HDFC Bank wins Asia money award for Best Domestic Bank -HDFC Bank managing director Aditya Puri has been awarded the management man of the year by the Bombay Management Association (BMA) -HDFC Bank has entered into an agreement with Shrachi Securities Ltd, the flagship company of the Kolkata-based Rs 300-crore Shrachi Group, for financing of multi-utility vehicles all over India -HDFC Bank has launched an online bill payment facility for its customers who are also subscribers to Tata Teleservices -HDFC Bank join hands with NCR Corporation to offer managed ATM services 4Ltd 2005-TMB forges alliance with HDFC Bank -HDFC Bank inaugurates first ATM in Hotel

IKF Finance Ltd has entered in to a Joint Lending Arrangement with HDFC Bank

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HDFC Bank ties up with the International Bank of Qatar (IBQ) to launch banking HDFC Bank launches loyalty rewards programme for its debit and credit

services in Qatar. cardholders under the name InstaWonderz. -HDFC Bank along with MasterCard International launched credit card targeted at small and medium-sized enterprises -HDFC Bank has tied up with US-based WL Ross and company LLC for investing in corporate restructuring

-HDFC Bank unveils credit card for farmers 200618

-HDFC sets up two more branches in AP 2007 -HDFC Bank has signed an agreement with Tata Pipes to offer credit facilities to farmers across the country. -Hdfc Bank Ltd has appointed Mr. Pandit Palande as an additional Director of the Bank at the Board Meeting held today i.e. on 24th April 2007.- HDFC Bank Ltd has informed that the Board of Directors of the Bank at its meeting held on October 12, 2007, has been appointed Mr. Paresh Sukthankar & Mr. Harish Engineer as Executive Directors on the Board of Directors of the bank. Mr. Sukthankar & Mr. Engineer have been senior employees of the Bank since 1994 and have held various positions of responsibility

Organizational Structure

Chairperson (Jagdish Capoor)

Managing Director (Aditya Puri)

Executive director (Harish Engineer )

Executive director (Paresh Sukthankar)

Direct or (Keki Mistry )

Director (C.M Vasudev)

Director (Pandit Palande)

Director (Vineet Jain)

Director (Arvind Pande)

Directo r (Gauta m Divan)

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

BUSINESS FOCUSHDFC Bank's mission is to be a World-Class Indian Bank. The objective is to build sound customer franchises across distinct businesses so as to be the preferred provider of banking services for target retail and wholesale customer segments, and to achieve healthy growth in profitability, consistent with the bank's risk appetite. The bank is committed to maintain the highest level of ethical standards, professional integrity, corporate governance and regulatory compliance. HDFC Bank's business philosophy is based on four core values - Operational Excellence, Customer Focus, Product Leadership and People.

TIMES BANK AMALGAMATIONIn a milestone transaction in the Indian banking industry, Times Bank Limited (another new private sector bank promoted by Bennett, Coleman & Co./Times Group) was merged with HDFC Bank Ltd., effective February 26, 2000. As per the scheme of amalgamation approved by the shareholders of both banks and the Reserve Bank of India, shareholders of Times Bank

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received 1 share of HDFC Bank for every 5.75 shares of Times Bank. The acquisition added significant value to HDFC Bank in terms of increased branch network, expanded geographic reach, enhanced customer base, skilled manpower and the opportunity to cross-sell and leverage alternative delivery channels.

TECHNOLOGYHDFC 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. In terms of software, the Corporate Banking business is supported by Flexcube, while the Retail Banking business by Finware, both from i-flex Solutions Ltd. The systems are open, scaleable and web-enabled.

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

DISTRIBUTION NETWORKHDFC Bank is headquartered in Mumbai. The Bank at present has an enviable network of over 593 branches spread over 263 cities across India. All branches are linked on an online real-time basis. Customers in over 120 locations are also serviced through Telephone Banking. The Bank's expansion plans take into account the need to have a presence in all major industrial and commercial centres where its corporate customers are located as well as the need to build a strong

retail customer base for both deposits and loan products. Being a clearing/settlement bank 21

to various leading stock exchanges, the Bank has branches in the centres where the NSE/BSE have a strong and active member base.The Bank also has a network of about over 1131 networked ATMs across these cities. Moreover, HDFC Bank's ATM network can be accessed by all domestic and international Visa/MasterCard, Visa Electron/Maestro, Plus/Cirrus and American Express Credit/Charge cardholders.

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

Wholesale Banking ServicesThe Bank's target market ranges from large, blue-chip manufacturing companies in the Indian corporate to small & mid-sized 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. Based on its superior product delivery / service levels and strong customer orientation, the Bank has made significant inroads into the banking consortia of a number of leading Indian 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.

Retail Banking ServicesThe 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 the customers

through the growing branch network, as well as through alternative delivery channels like22

ATMs, Phone Banking,

Net-Banking

and

Mobile Banking.

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

HDFC Bank was the first bank in India to launch an International Debit Card in association with VISA (VISA Electron) and issues the Mastercard Maestro debit card as well. The Bank launched its credit card business in late 2001. By September 30, 2005, the bank had a total card base (debit and credit cards) of 5.2 million cards. The Bank is also one of the leading players in the "merchant acquiring" business with over 50,000 Point-of-sale (POS) terminals for debit / credit cards acceptance at merchant establish.

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

AWARDS and ACHIEVEMENTS- BANKING SERVICESHDFC Bank began operations in 1995 with a simple mission: to be a "World-class Indian Bank". We realized that only a single-minded focus on product quality and service excellence would help us get there. Today, we are proud to say that we are well on our way towards that

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goal. The Asset magazine named HDFC Bank "Best Cash Management Bank" and "Best Trade Finance Bank" in India, in 2006.HDFC Bank named the "Most Customer Responsive

Company - Banking and Financial Services in The Economic Times - Avaya Global Connect Customer Responsiveness Awards 2005". HDFC Bank has been named Best Domestic Bank in India in The Asset Triple A Country Awards 2005. In 2004, HDFC Bank was selected by Business World as " One of India's Most Respected Companies" as part of The Business World Most Respected Company Awards 2004. In 2004, HDFC Bank won the award for "Operational Excellence in Retail Financial Services" - India as part of the Asian Banker Awards 2003.

Asia money AWARDS:2006 Business Today Forbes Magazine Business world The Asset Magazine's Triple A Country Awards Asia money Awards Euro money Awards Best Bank in India. One of Asia Pacific's Best 50 companies. Best listed Bank of India. Best Domestic Bank.

Best Local Cash Management Bank in Large and Medium segments. "Best Bank" in India.

CREDIT RATINGHDFC Bank has its deposit programmes rated by two rating agencies - Credit Analysis & Research Limited. (CARE) and Fitch Ratings India Private Limited. The bank's Fixed Deposit programme has been rated 'CARE AAA (FD)' [Triple A] by CARE, which represents instruments considered to be "of the best quality, carrying negligible Investmentrisk".CARE has also rated the bank's Certificate of Deposit (CD) programme "PR 1+" which

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represents "superior capacity for repayment of short term promissory obligations". Fitch Ratings India Pvt. Ltd. (100% subsidiary of Fitch Inc.) has assigned the "tAAA ( ind )" rating to the bank's deposit programme, with the outlook on the rating as "stable". This rating indicates "highest credit quality" where "protection factors are very high".HDFC Bank also has its long term unsecured, subordinated (Tier II) Bonds of Rs.4 billion rated by CARE and Fitch Ratings India Private Limited. CARE has assigned the rating of "CARE AAA" for the Tier II Bonds while Fitch Ratings India Pvt. Ltd. has assigned the rating "AAA( ind )" with the outlook on the rating as "stable". In each of the cases referred to above, the ratings awarded were the highest assigned by the rating agency for those instruments.

CORPORATE GOVERNANCE RATINGThe bank was among the first four companies, which subjected itself to a Corporate Governance and Value Creation (GVC) rating by the rating agency, The Credit Rating Information Services of India Limited (CRISIL). The rating provides an independent assessment of an entity's current performance and an expectation on its "balanced value creation and corporate governance practices" in future. The bank has been assigned a 'CRISIL GVC Level 1' rating, which indicates that the bank's capability with respect to wealth creation for all its stakeholders while adopting sound corporate governance practices is the highest.We are aware that all these awards are mere milestones in the continuing, never-ending journey of providing excellent service to our customers. We are confident, however, that with your feedback and support, we will be able to maintain and improve our services.

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Annual Balance Sheet Fiscal Year End for HDFC BANK LTD falls in the month of March. All items in Millions except Per Share data. 03/31/0 8 Assets 96,304.4 Cash & Equivalents 2 Receivables Notes Receivable Inventories Other Current Assets Total Current Assets Net Property & Equipment Investments & Advances Other Non-Current Assets Deferred Charges Intangibles Deposits & Other Assets Total Assets Liabilities & Shareholder's Equity Notes Payable Accounts Payable Current Portion Long-Term Debt Current Portion Capital Leases Accrued Expenses Income Taxes Payable Other Current Liabilities Total Current Liabilities Mortgages Deferred Taxes/Income Convertible Debt Long-Term Debt 0 25,192. 15 0 0 0 0 0 25,192. 15 0 0 0 1,119.7 2,458. 70 15,831. 70 0 0 2,910. 30 0 0 21,200. 70 0 0 0 779.60 1,701. 40 12,529. 30 0 0 1,921. 50 0 0 16,152. 20 0 0 0 382.80 1,423. 20 8,334. 30 0 0 1,134 0 0 10,891. 50 0 0 0 115.30 554.5 0 7,006 0 0 1,414. 90 0 0 8,975. 40 0 0 0 140.2 0 0 0 0 3,694.5 8 293.78 28,205. 11 0 0 0 1,100.6 0 33,294. 15 03/31/ 07 03/31/ 06 03/31/ 05 03/31/ 04

1,968. 20 12,818. 50 0 0 297.40 15,084. 10 241.20 7,059 0 0 0 1,123. 40 23,507. 70

1,536. 40 9,081. 30 0 0 0 10,617. 70 195.90 6,147. 90 0 0 0 821.10 17,782. 60

1,090. 20 5,992. 60 0 0 0 7,082. 80 162.40 4,683. 50 0 0 0 209.20 12,137. 90

1,220. 30 4,190. 30 0 0 82.10 5,492. 70 142.1 0 4,052. 40 0 0 0 147.7 0 9,834. 90

Non-Current Capital Leases Other Non-Current Liabilities Minority Interest (Liabilities) Total Liabilities Shareholder's Equity

1 0 4,107.9 7 0 30,419. 84

0 0 7.50 21,987. 80

0 0 5 16,540

0 0 0 11,006. 80

0 0 0 0 9,115. 60

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