CHAPTER I

Introduction of Banking

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INTRODUCTION OF BANKING

INDUSTRY

History

Banks have influenced economies and politics for centuries. Historically,

the primary purpose of a bank was to provide loans to trading companies.

Banks provided funds to allow businesses to purchase inventory, and

collected those funds back with interest when the goods were sold. For

centuries, the banking industry only dealt with businesses, not consumers.

Banking services have expanded to include services directed at individuals,

and risk in these much smaller transactions are pooled.

A bank is license by a government. Its primary activity is to lend money.

Many other financial activities were allowed over time. For example banks

are important players in financial markets and offer financial services such

as investment funds in some countries such as Germany, banks have

historically owned major stakes in industrial corporations while in other

countries such as the United States banks are prohibited from owning non-

financial companies. In Japan, banks are usually the nexus of a cross-share

holding entity known as the zaibatsu. In France, banc assurance is

prevalent, as most banks offer insurance services .

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Origin of the word

Silver drachms’ coin from Trapezes, 4th century BC

The name bank derives from the Italian word banco "desk/bench", used

during the Renaissance by Florentine bankers, who used to make their

transactions above a desk covered by a green tablecloth. However, there are

traces of banking activity even in ancient times.

Definition of Banking:-

The definition of a bank varies from country to country.

Under English common law, a banker is defined as a person who carries on

the business of banking, which is specified as:

Conducting current accounts for his customers

Paying cheques drawn on him, and

Collecting cheques for his customers.

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The borrowing, raising or taking up of money, the lending or

advancing of money either with or security acting as agents for any

government or local authority person

Examples of statutory definitions:

"banking business" means the business of receiving money on current or

deposit account, paying and collecting cheques drawn by or paid in by

customers, the making of advances to customers, and includes such other

business as the Authority may prescribe for the purposes of this Act;

(Banking Act (Singapore), Section 2, Interpretation).

"Banking business" means the business of either or both of the following:

1. Receiving from the general public money on current, deposit, savings

or other similar account repayable on demand or within less than [3

months] ... or with a period of call or notice of less than that period;

2. Paying or collecting cheques drawn by or paid in by customers

3. Since the advent of EFTPOS (Electronic Funds Transfer at Point Of

Sale), direct credit, direct debit and internet banking, the cheque has lost its

primacy in most banking systems as a payment instrument. This has led

legal theorists to suggest that the cheque based definition should be

broadened to include financial institutions that conduct current accounts for

customers and enable customers to pay and be paid by third partie

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Commercial role:

The commercial role of banks is not limited to banking, and includes:

issue of banknotes ( promissory notes issued by a banker and

payable to bearer on demand)

processing of payments by way of telegraphic transfer, EFTPOS,

internet banking or other means issuing bank drafts and

bank cheques

accepting money on term deposit

lending money by way of overdraft, installment loan or

otherwise

providing documentary and standby letters of credit ( trade

finance),

guarantees, performance bonds, securities underwriting

commitments and other forms of off-balance sheet

exposures

safekeeping of documents and other items in safe deposit boxes

currency exchange

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Economic functions:-

The economic functions of banks include:

1. Issue of money, in the form of banknotes and current accounts subject

to cheque or payment at the customer's order. These claims on banks can

act as money because they are negotiable and/or repayable on demand, and

hence valued at par. They are effectively transferable by mere delivery, in

the case of banknotes, or by drawing a cheque that the payee may bank or

cash.

2. Netting and settlement of payments – banks act as both collection and

paying agents for customers, participating in interbank clearing and

settlement systems to collect, present, be presented with, and pay payment

instruments. This enables banks to economies on reserves held for

settlement of payments, since inward and outward payments offset each

other. It also enables the offsetting of payment flows between geographical

areas, reducing the cost of settlement between them.

3. Credit intermediation – banks borrow and lend back-to-back on their

own account as middle men .

4. Credit quality improvement – banks lend money to ordinary

commercial and personal borrowers (ordinary credit quality), but are high

quality borrowers. The improvement comes from diversification of the

bank's assets and capital which provides a buffer to absorb losses without

defaulting on its obligations.

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5. Maturity transformation – banks borrow more on demand debt and

short term debt, but provide more long term loans. In other words, they

borrow short and lend long. With a stronger credit quality than most other

borrowers, banks can do this by aggregating issues (e.g. accepting deposits

and issuing banknotes) and redemptions (e.g. withdrawals).

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Law of banking:-

Banking law is based on a contractual analysis of the relationship between

the bank (defined above) and the customer—defined as any entity for which

the bank agrees to conduct an account.

The law implies rights and obligations into this relationship as follows:

1. The bank account balance is the financial position between the bank and

the customer: when the account is in credit, the bank owes the balance to

the customer; when the account is overdrawn, the customer owes the

balance to the bank.

2. The bank agrees to pay the customer's cheques up to the amount

standing to the credit of the customer's account, plus any agreed overdraft

limit.

3. The bank may not pay from the customer's account without a mandate

from the customer, e.g. a cheque drawn by the customer.

4. The bank agrees to promptly collect the cheques deposited to the

customer's account as the customer's agent, and to credit the proceeds to the

customer's account.

5. The bank has a right to combine the customer's accounts, since each

account is just an aspect of the same credit relationship.

6. The bank has a lien on cheques deposited to the customer's account, to

the extent that the customer is indebted to the bank.

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Entry regulation:-

Currently in most jurisdictions commercial banks are regulated by

government entities and require a special bank license to operate.

Usually the definition of the business of banking for the purposes of

regulation is extended to include acceptance of deposits, even if they are

not repayable to the customer's order—although money lending, by itself, is

generally not included in the definition.

Unlike most other regulated industries, the regulator is typically also a

participant in the market, i.e. a government-owned (central) bank. Central

banks also typically have a monopoly on the business of issuing banknotes.

However, in some countries this is not the case. In the UK, for example, the

Financial Services Authority licenses banks, and some commercial banks

(such as the Bank of Scotland) issue their own banknotes in addition to

those issued by the Bank of England, the UK government's central bank.

Some types of financial institution, such as building societies and credit

unions may be partly or wholly exempt from bank license.

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The requirements for the issue of a bank license vary between jurisdictions

but typically include:

1. Minimum capital

2. Minimum capital ratio

'Fit and Proper' requirements for the bank's controllers, owners, directors,

and/or senior officers The requirements for the issue of a bank license vary

between jurisdictions but typically include:

3. 'Fit and Proper' requirements for the bank's controllers, owners, directors,

and/or senior officers

4. Approval of the bank's

5. Business plan a being sufficiently

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The economic functions of banks include:

Issue of money, in the form of banknotes and current accounts

subject to cheque or payment at the customer's order. These

claims on banks can act as money because they are negotiable

and/or repayable on demand, and hence valued at par. They are

effectively transferable by mere delivery, in the case of

banknotes, or by drawing a cheque that the payee may bank or

cash.

Netting and settlement of payments – banks act as both collection

and paying agents for customers, participating in interbank

clearing and settlement systems to collect, present, be presented

with, and pay payment instruments. This enables banks to

economies on reserves held for settlement of payments, since

inward and outward payments offset each other. It also enables

the offsetting of payment flows between geographical areas,

reducing the cost of settlement between them.

Credit intermediation – banks borrow and lend back-to-back on

their own account as middle men

Credit quality improvement – banks lend money to ordinary

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History of Banking in India

The first bank in India, though conservative, was established in 1786. From

1786 till today, the journey of Indian Banking System can be segregated

into three distinct phases. They are as mentioned below:-

Early phase from 1786 to 1969 of Indian Banks

Nationalization of Indian Banks and up to 1991 prior to Indian banking

sector Reforms.

New phase of Indian Banking System with the advent of Indian Financial

& Banking Sector Reforms after 1991.

To make this write-up more explanatory, I prefix the scenario as Phase ,

Phase and Phase

Phase (i)

The General Bank of India was set up in the year 1786. Next came Bank of

Hindustan and Bengal Bank. The East India Company established Bank of

Bengal (1809), Bank of Bombay (1840) and Bank of Madras (1843) as

independent units and called it Presidency Banks. These three banks were

amalgamated in 1920 and Imperial Bank of India was established which

started as private shareholders banks, mostly Europeans shareholders.

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In 1865 Allahabad Bank was established and first time exclusively by

Indians, Punjab National Bank Ltd. was set up in 1894 with headquarters at

Lahore. Between 1906 and 1913, Bank of India, Central Bank of India,

Bank of Baroda, Canara Bank, Indian Bank, and Bank of Mysore were set

up. Reserve Bank of India came in 1935.

During the first phase the growth was very slow and banks also experienced

periodic failures between 1913 and 1948. There were approximately 1100

banks, mostly small. To streamline the functioning and activities of

commercial banks, the Government of India came up with The Banking

Companies Act, 1949 which was later changed to Banking Regulation Act

1949 as per amending Act of 1965 (Act No. 23 of 1965). Reserve Bank of

India was vested with extensive powers for the supervision of banking in

India as the Central Banking Authority.

Phase (II)

Government took major steps in this Indian Banking Sector Reform after

independence. In 1955, it nationalized Imperial Bank of India with

extensive banking facilities on a large scale especially in rural and semi-

urban areas. It formed State Bank of India to act as the principal agent of

RBI and to handle banking transactions of the Union and State

Governments all over the country.

Seven banks forming subsidiary of State Bank of India was nationalized in

1960 on 19th July, 1969, major process of nationalization was carried out.

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Second phase of nationalization Indian Banking Sector Reform was carried

out in 1980 with seven more banks. This step brought 80% of the banking

segment in India under Government ownership.

The following are the steps taken by the Government of India to Regulate

Banking Institutions in the Country:-

1949: Enactment of Banking Regulation Act.

1955: Nationalization of State Bank of India. 1959: Nationalization of SBI

subsidiaries. 1961: Insurance cover extended to deposits. 1969:

Nationalization of 14 major banks.

1971: Creation of credit guarantee corporation. 1975: Creation of regional

rural banks.

1980: Nationalization of seven banks with deposits over 200 crore.

After the nationalization of banks, the branches of the public sector bank

India raised to approximately 800% in deposits and advances took a huge

jump by 11,000%

Banking in the sunshine of Government ownership gave the public implicit

faith and immense confidence about the sustainability of these institutions.

.

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INTRODUCTION TO THE ORGANIZATION

BANKING SYSTEM IN INDIA

The Banking System in India consists of:

1. Reserve Bank

2. Development Banks

3. Public Sector Bank.

4. Foreign Banks

5. Private Sector Banks

6. Cooperative Banks

7. Regional Rural Banks

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The Reserve Bank of India:-

The Reserve Bank of India is the Central Bank of the Country and came

into being by the Reserve Bank of India Act 1934. It was nationalized in

1948.

Reserve Bank of India is the bank that issues and regulates the issue of

currency in India .The banker to the Government of India and the State

governments. It manages the public debt. It has the obligation to transact

the banking business of the Central Government. It undertakes to accept

money on behalf of the Government and make payment on its behalf. The

banker‘s bank. Commercial banks maintain their current account with the

Reserve Bank of India.

The bank that manages the volume of credit created by the commercial

banks to ensure price stability. The bank that manages the external value of

th currency (Indian rupee).

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Development Banks:-

These were set up to give long term finance for the development of the

country. These are the Industrial Finance Corporation of India and the

Industrial Development Bank of India, The Industrial Reconstruction Bank

of India and the National Bank for Agriculture and Rural Development. A

former development bank, the Industrial Credit and Investment Corporation

of India Ltd. by a reverse merger in 2002, became a normal commercial

bank. It is expected that the other development banks, having outlived their

utility would also be either converted to commercial banks or merged with

commercial banks.

Public Sector Banks:-

These are banks which the Government either owns or has a majority stake

in it. The largest is the State Bank of India which was formed by the merger

of the Presidency Banks – the Bank of Bengal, the Bank of Bombay and the

Bank of Madras in 1921. It was then known as the Imperial Bank. It was

nationalized India

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Foreign Banks:-

These are branches of banks incorporated outside India. In 1995/ 96

many other foreign banks (optimistic in view of India‘s liberalization)

opened branches in India. However, after banking began to become

increasingly competitive and margins began to be squeezed coupled with

large non performing assets, many banks closed their branches

Private Sector Banks:-

These are banks which are not government owned or controlled. Their

shares are freely traded in the Stock Markets.

Cooperative Banks:-

Cooperative Banks are those that are created by a group of individual to

support either a community or a religious group. They operate in

metropolitan, urban and semi urban centers to cater to the needs of small

borrowers.

Regional Rural Banks:-

These came into being on October 2, 1975 when 5 regional rural banks

were established under what became the Regional Rural Banks Act 1975.

These were to bridge the gap in rural credit granting loans and advances to

small and marginal farmers, artisans, small entrepreneur and persons of

small means engaged in trade, commerce, industry or other

productive ,activitiewithin their area of operation.

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HISTORY OF SBI BANK:-

The evolution of State Bank of India can be traced back to the first decade

of the 19th century. It began with the establishment of the Bank of Calcutta

in Calcutta, on 2 June 1806. The bank was redesigned as the Bank of

Bengal, three years later, on 2 January 1809. It was the first ever joint-stock

bank of the British India, established under the sponsorship of the

Government of Bengal. Subsequently, the Bank of Bombay (established on

15 April 1840) and the Bank of Madras (established on 1 July 1843)

followed the Bank of Bengal.

An important turning point in the history of State Bank of India is the

launch of the first Five Year Plan of independent India, in 1951. The Plan

aimed at serving the Indian economy in general and the rural sector of the

country, in particular. Until the Plan, the commercial banks of the country,

including the Imperial Bank of India, confined their services to the urban

sector. Moreover, they were not equipped to respond to the growing needs

of the economic revival taking shape in the rural areas of the country.

Therefore, in order to serve the economy as a whole and rural sector in

particular.

The All India Rural Credit Survey Committee proposed the take over of the

Imperial Bank of India, and integrating with it, the former state-owned or

state-associate banks. Subsequently, an Act was passed in the Parliament of

India in May 1955. As a result, the State Bank of India (SBI) was

established on 1 July 1955. This resulted in making the State Bank of India

more powerful, because as much as a quarter of the resources of the Indian

banking system were controlled directly by the State. Later on, the State

Bank of India (Subsidiary Banks) Act was passed in 1959.

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State Bank of India.

There are six associate banks that fall under SBI, and together these six

banks constitute the State Bank Group. All use the same logo of a blue

keyhole and all the associates use the "State Bank of" name followed by the

regional headquarters' name. Originally, the then seven banks that became

the associate banks belonged to princely states until the government

nationalized them in 1959. In tune with the first Five Year Plan,

emphasizing the development of rural India, the government integrated

these banks into State Bank of India to expand its rural outreach. There has

been a proposal to merge all the associate banks into SBI to create a "mega

bank" and streamline operations. The first step along these lines occurred in

September 2008 when State Bank of Saurashtra merged with State Bank of

India, which reduced the number of state banks from seven to six.

State Bank of Indore

State Bank of Bikaner & Jaipur

State Bank of Hyderabad

State Bank of Mysore

State Bank of Patiala

State Bank of Travancore

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Growth:-

State Bank of India has often acted as guarantor to the Indian Government,

Most notably during Chandra Shekhar's tenure as Prime Minister of India

. With more than 11,111 branches and a further 6500+ associate bank

The SBI has extensive coverage. State Bank of India has electronically

Networked all of its branches under Core Banking System(CBS). The bank

Has one of the largest ATM networks in the region. More than 8500 ATMs

Across India. The State Bank of India has had steady growth over its

history, though it was marred by the Harshad Mehta scam in 1992. In recent

years, The bank has sought to expand its overseas operations by buying

foreign100 world banks in the Fortune Global 500 rating and various other

rankings.

Group companies:-

Establishment:-

Liability, joint-stock banking in India. So was the associated innovation in

banking, viz. the decision to allow the Bank of Bengal to issue notes, which

would be accepted for payment of public revenues within a restricted

geographical area. This right of note the establishment of the Bank of

Bengal marked the advent of limited issue was very valuable not only for

the Bank of Bengal but also its two siblings, the Banks of Bombay and

Madras.

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Business:-

The business of the banks was initially confined to discounting of bills of

exchange or other negotiable private securities, keeping cash accounts and

receiving deposits and issuing and circulating cash notes. Loans were

restricted to Rs.one lakh and the period of accommodation confined to three

months only. The security for such loans was public securities, commonly

called Company's Paper, bullion, treasure, plate, jewels, or goods 'not of a

perishable nature' and no interest could be charged beyond a rate of twelve

per cent. Loans against goods like opium, indigo, salt woollens, cotton,

cotton piece goods, mule twist and silk goods were also granted but such

finance by way of cash credits gained momentum only from the third

decade of the nineteenth century. All commodities, including tea, sugar and

jute, which began to be financed later, were either pledged or hypothecated

to the bank.

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Major change in the conditions:-

A major change in the conditions of operation of the Banks of Bengal,

Bombay and Madras occurred after 1860. With the passing of the Paper

Currency Act of 1861, the right of note issue of the presidency banks was

abolished and the Government of India assumed from 1 March 1862 the

sole power of issuing paper currency within British India. The task of

management and circulation of the new currency notes was conferred on

the presidency banks and the Government undertook to transfer the

Treasury balances to the banks at places where the banks would open

branches. None of the three banks had till then any branches (except the

sole attempt and that too a short-lived one by the Bank of Bengal at

Mirzapore in 1839) although the charters had given them such authority.

But as soon as the three presidency bands were assured of the free use of

government

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Presidency Banks Act:-

The presidency Banks Act, which came into operation on 1 May 1876,

brought the three presidency banks under a common statute with similar

restrictions on business. The proprietary connection of the Government

was, however, terminated, though the banks continued to hold charge of the

public debt offices in the three presidency towns, and the custody of a part

of the government balances. The Act also stipulated the creation of Reserve

Treasuries at Calcutta, Bombay and Madras into which sums above the

specified minimum balances promised to the presidency banks at only their

head offices were to be lodged. The Government could lend to the

presidency banks from such Reserve Treasuries but the latter could look

upon them more as a favour than as a right.

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Stamp of Imperial Bank of India

Subsidiaries: -

The State Bank Group includes a network of eight banking subsidiaries an

Several non-banking subsidiaries. Through the establishments, it offers

various service including merchant banking service funds management

services, primary dealership in government securities, credit cards.

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The eight banking subsidiaries are:

State Bank of Bikaner and Jaipur (SBBJ)

State Bank of Hyderabad (SBH)

State Bank of India (SBI)

State Bank of Indore (SBIR)

State Bank of Mysore (SBM)

State Bank of Patiala (SBP)

State Bank of Saurashtra (SBS)

State Bank of Travancore (SBT)

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Products

Personal Banking:-

SBI Term Deposits SBI Loan For Pensioners

SBI Recurring Deposits Loan Against Mortgage Of Property

SBI Housing Loan Against Shares & Debentures

SBI Car Loan Rent Plus Scheme

SBI Educational Loan Medi-Plus Scheme

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Other Services:-

Agriculture/Rural Banking

NRI Services

ATM Services

Demit Services

Mobile banking

Internet banking

Corporate banking

International Banking

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NETWORK OF SBI BANK:-

SBI Bank India has 52 Foreign Offices in 34 countries. SBI India serves

the international needs of its foreign customers, in addition to conducting

retail operations. The focus of the offices of SBI is India-related business.

Few of the countries where SBI Bank has branches are as under:

Australia

Bahamas

Bahrain

Bangladesh

Belgium

Bhutan

Canada

France

Germany

Hong Kong

Japan

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BOARD OF DIRECTORS

List of Directors on the Central Board of State Bank of

India as on 04.10.2015

Sl.No Name Designation

Under

Section of

SBI Act

1955

1. Smt. Arundhati Bhattacharya Chairman 19(a)

2. Shri P. Pradeep KumarManaging

Director19 (b)

3. Shri B. SriramManaging

Director19 (b)

4. Shri.V.G.KannanManaging

Director19 (b)

5. Shri Rajnish KumarManaging

Director19 (b)

6. Shri Sanjiv Malhotra Director 19 (c)

7. Shri Sunil Mehta Director 19 (c)

8. Shri M.D. Mallya Director 19 (c)

9. Shri Deepak I. Amin Director 19 (c)

10.Shri

TribhuwanNathChaturvediDirector 19 (d)

11. Ms. Anjuly Chib Duggal Director 19 (e)

12. Dr. Urjit R. Patel Director 19 (f)

Award and recognition

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SBI is having an asset value which is higher than the total reserves

of RBI.

SBI is having an asset value which is more than that of LIC.

SBI was ranked 73rd largest bank in the world, according to 2014

SNL financial data.

SBI won the Best Bank award in the 'Asia MONEY FX POLL OF

POLLS 2014’ for best overall performance as domestic provider of

Forex services over the last 10 years

SBI was ranked as the top bank in India based on tier 1 capital by

The Banker magazine in a 2014 ranking

SBI was ranked 298th in the Fortune Global 500 rankings of the

world's biggest corporations for the year 2012.

SBI won "Best Public Sector Bank" award in the D&B India's study

on 'India's Top Banks 2013'.

State Bank of India won three IDRBT Banking Technology

Excellence Awards 2013 for “Electronic Payment Systems”, “Best

use of technology for Financial Inclusion”, and “Customer

Management & Business Intelligence” in the large bank category.

SBI won National Award for its performance in the implementation

of Prime Minister’s Employment Generation Programmer (PMEGP)

scheme for the year 2012

Best Online Banking Award, Best Customer Initiative Award & Best

Risk Management Award (Runner Up) by IBA Banking Technology

Awards 2010

SKOCH Award 2010 for Virtual corporation Category for its e-

payment solution

SBI was the only bank featured in the "top 10 brands of India" list in

an annual survey conducted by Brand Finance and The Economic

Times in 2010

The Bank of the year 2009, India (won the second year in a row) by

The Banker Magazine

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Best Bank – Large and Most Socially Responsible Bank by the

Business Bank Awards 2009

Best Bank 2009 by Business India

The Most Trusted Brand 2009 by The Economic Times.

SBI was named the 29th most reputed company in the world

according to Forbes 2009 rankings Most Preferred Bank & Most

preferred Home loan provider by CNBC

Visionaries of Financial Inclusion By FINO

Technology Bank of the Year by

SBI was 50th Most Trusted brand in India as per the Brand Trust

Report 2013,[an annual study conducted by Trust Research

Advisory, a brand analytics company and subsequently, in the Brand

Trust Report 2014, SBI finished as India's 19th Most Trusted Brand

in India.

INTRODUCTION OF HDFC BANK

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Background

HDFC was incorporated in 1977 with the primary objective of meeting a

social Need – that of promoting home ownership by providing long-term

finance to households for their housing needs. HDFC was promoted with an

initial share capital of Rs. 100 million.

Business Objectives

The primary objective of HDFC is to enhance residential housing stock in

the Country through the provision of housing finance in a systematic and

professional Manner, and to promote home ownership. Another objective is

to increase the flow of resources to the housing sector by integrating the

housing finance sector with the overall domestic financial markets.

Organizational Goals

HDFC‘s main goals are to

a) Develop close relationships with individual households.

b) Maintain its position as the premier housing finance institution in the

country,

c) Transform ideas into viable and creative solutions.

d ) Provide consistently high returns to shareholders.

HISTORY OF HDFC BANK

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The Housing Development Finance Corporation Limited (HDFC) was

amongst the first to receive an 'in principle' approval from the Reserve

Bank of India (RBI) to set up a bank in the private sector, as part of the

RBI's liberalization of the Indian Banking Industry in 1994. The bank was

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

registered office in Mumbai, India. HDFC Bank commenced operations As

a Scheduled Commercial Bank on 16th January 1995. In the year 1998

HDFC Bank had tied up with the Ahmadabad Stock Exchange (ASE) to act

as its clearing bank

Business Focus:-

HDFC 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.

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Subsidiary and Associate Companies

The subsidiaries of HDFC consists of

HDFC Bank

HDFC Mutual Fund

HDFC Standard Life Insurance Company

HDFC Realty

HDFC Chubb General Insurance Company Limited.

Intel net Global Services Limited

Credit Information Bureau (India) Limited

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Other Companies Co – Promoted by

HDFC HDFC Trustee Company Ltd.

GRUH Finance Ltd.

HDFC Developers Ltd.

HDFC Venture Capital Ltd

HDFC Venture Trustee Company Ltd

HDFC Securities Ltd.

HDFC Holding Ltd.

Home Loan Services India Pvt. Ltd.

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HDFC BANK

The Organization:-

The Housing Development Finance Corporation Limited (HDFC) was

amongst the first to receive an 'in principle' approval from the Reserve

Bank of India (RBI) to set up a bank in the private sector, as part of the

RBI's liberalization of the Indian Banking Industry in 1994. The bank was

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

registered office in Mumbai, India. HDFC Bank commenced operations As

a Scheduled Commercial Bank on 16th January 1995. In the year 1998

HDFC Bank had tied up with the Ahmadabad Stock Exchange (ASE) to act

as its clearing bank.

Capital Structure:-

The authorized capital of HDFC Bank is Rs.450 corer (Rs.4.5 billion). The

paid-up capital is Rs.311.9 crore (Rs.3.1 billion). The HDFC Group holds

22.1% of the bank's equity and about 19.4% of the equity is held by the

ADS Depository (in respect of the bank's American Depository Shares

(ADS) Issue). Roughly 31.3% of the equity is held by Foreign Institutional

Investors (FIIs) and the bank has about 190,000 shareholders. The shares

are listed on the The Stock Exchange, Mumbai and the National Stock

Exchange.

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Times Bank Amalgamation:-`

In 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

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.

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Management - HDFC Bank

Name Designation

Shyamala GopinathChairperson

Paresh SukthankarDeputy Managing Director

A N RoyDirector

Keki MistryDirector

Renu KarnadDirector

Name Designation

Aditya PuriManaging Director

Kaizad BharuchaExecutive Director

Bobby ParikhDirector

Partho DattaDirector

Malay PatelAdditional Directo

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Products and Services – HDFC Bank

Product range:

The following is the product range offered at HDFC: 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:

"Demand Deposits" means a deposit received by the bank which is withdrawn

able on demand;

a) Savings Account

"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; HDFC

provides with saving bank account with the usual facilities, and one also

gets a free ATM card, into branch banking, bill payment facilities

40

Term Deposits:

"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 .

Notice Deposit:

''Notice Deposit'' means Term Deposit for a specific period but which can

be withdrawn on giving at least one complete banking day's notice.

Current Account:

"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; The account holder gets a personalized cheque book, monthly

account statements, and Inter-branch banking.

41

HDFC Bank Preferred:-

A preferential Savings Account where in, one is assigned with a dedicated

Relationship Manager, who‘s you‘re the one point contact. One also get

privileges like fee waivers, enhanced ATM withdrawal limit, priority locker

allotment, free Demat Account and lower interest rates on loans.

Sweep-In Account:-

A Fixed Deposit linked to one‘s Savings Account. So, even if

one‘s Savings account runs bit shortly one a cheque

Super Saver Account:-

It gives one an overdraft facility up to 75% of one‘s fixed deposit. In an

emergency, you can access your funds while your fixed deposit continues

to earn high interest

HDFC Bank plus:-

Apart from Regular and Premium Current Accounts HDFC also has HDFC

Bank Plus, a Current Account and then something extra for the HDFC bank

customers. One can transfer up to Rs. 50 lakh every month at no extra

.

42

Award and Achievement of HDFC

Euro money - HDFC Bank wins Best Private

Banking Services for Super

affluent clients for 5 years in a

row at Euro money Awards

Euro money Private Banking and

Wealth Management Survey 2015

- Best Private Banking Services

award for Net-worth-specific

services category for Super

affluent clients (US$ 1 million to

US$ 5 million).

- Best Private Banking Services

award Asset Management

FE Best Bank Awards - Best Bank in the New Private

sector

- Winner - Profitability

- Winner - Efficiency

Business Today - KPMG Study 2014 - Best Large Bank - Overall

- Best Large Bank - Growth

Business world-PwC India Best Banks

Survey 2014

- Best Large Bank

- Fastest Growing Large Bank

The Asian Banker Strongest Bank in India in the

Asian Banker 500 (AB 500)

Strongest Bank by Balance Sheet

43

Ranking 2014

Dun & Bradstreet - Polaris Financial

Technology Banking Awards 2014

- Best Bank - Managing IT Risk

(Large Banks)

- Best Bank - Mobile Banking

(Large Banks)

- Best Bank - Best IT Team

(Private Sector Banks)

Forbes Asia Fab 50 Companies List for the 8th

year

Brand Z TM Top 50 Most Valuable

Indian Brands study by Mill ward

Brown

India's Most Valuable Brand

Finance Asia Country Awards 2014

and poll on India's Top Companies

- Best Bank - India

- Best CEO- Rank 1

- Best CSR - Rank 1

- Best CFO - Rank 2

Asia money Best of Best Domestic Banks -

India

Dun & Bradstreet - Manappuram

Finance Limited Corporate Award

2014

Best Corporate in Banking Sec

Credit Rating:-

44

HDFC Bank has its deposit programmers rated by two rating agencies -

Credit Analysis & Research Limited. (CARE) and Fitch Ratings India

Private Limited. The bank's Fixed Deposit programmed has been rated

'CARE AAA (FD)' [Triple A] by CARE, which represents instruments

considered to be "of the best quality, carrying negligible investment risk".

CARE has also rated the bank's Certificate of Deposit (CD) programmer

"PR 1+" which represents "superior capacity for repayment of short term

promissory obligations". Fitch Ratings India Pvt. Ltd. (100% subsidiary of

Fitch Inc.) has assigned the "taka” (india )" rating to the bank's deposit

programmed, 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

45

Chapter II

About The Topic

Personal loan

Personal Loans are unsecured loans provided by banks and non-banking

financial companies without taking any collateral, though some public

46

sector banks may insist on a guarantorAs the name suggest, Personal Loan

can be availed for any personal reason ranging from purchasing of lifestyle

products, marriage, holidaying, medical emergencies, etc. getting a personal

loan is a very simple hassle free process with easy documentation and

generally sanctioned within 2-3 working days on submission of all

necessary document

Personal Loan amount and interest rate is dependent on borrower's income,

the company for which the borrower is Personal loans are one of many

types of loans you can borrow from a bank. These loans are typically

general purpose loans that you can use at your discretion. Personal loans are

often more difficult to get and have strict qualification requirements. If

you're thinking about borrowing a personal loan, here are some things you

know about them

Personal loans are unsecured.

That means the loan doesn't require you to use an asset as collateral. So, if

you default on a personal loan, the lender can't automatically take a piece of

your property as payment for the loan. This is the primary reason that

personal loans are more difficult to get. The lender doesn't have any asset to

seize if you decide you can't make loan payments anymore. Even though

the lender can't automatically take your house or car, it can take other

collection actions.

Working and his past repay Personal loans have a fixed

amount.

The amount of personal loans ranges anywhere from $1,000 to $50,000 and

depends on your credit rating. The better your credit score, the more money

you can borrow for a personal loan. Some banks have a low cap on the

amount of personal loan you can borrow. For example, you may be able to

47

borrow only a maximum of $10,000 personal loan. You may be able to take

out higher loan amounts at a bank you already have a relationship with.

Personal loans usually have fixed interest rates.

The interest rate is locked and doesn't change for the life of the loan Like

the loan amount, interest rates on personal loans are based on credit rating.

The better your credit score, the lower your interest rate. Lower interest

rates are ideal because it means you pay a lower cost for borrowing the

loan. Some personal loans come with a variable interest rate that changes

periodically.

Personal loans a fixed repayment period.

You have a set period of time to repay your personal loan. Loan periods are

stated in months, e.g. 12, 24, 36, 48, and 60. Longer repayment periods

lower your monthly but they also mean you pay more in interest than if you

shorter repayment period. Your interest rate may also be tied to your

repayment

Applying for a Personal Loan

It may be easier to get a personal loan from a bank you already have an

account with. The bank will probably want to know what you're going to

48

use the money for and may even have a better loan for your needs. As with

any other loan, it's important to choose personal loans wisely and only

borrow what you can afford to repay

SBI PERSONAL LOAN

SBI Personal Loans also known as State Bank of India personal finance

schemes, aim to provide the necessary financial assistance to as many

people as possible to help them realize their dreams or come out of

situations of financial need. State Bank of India being India's largest bank is

a trusted name and the SBI personal loan rates of interest are kept at the

most competitive level to make a personal loan as approachable. The most

popular SBI personal loans include housing loans, car loans, education

loan, loans against property, shares or debentures, reverse mortgage loans

and more.

State Bank of India Housing Loan or SBI Home Loan is available in

complete transparency and at no hidden costs. The interest rates are charged

on daily reducing basis.

SBI Car Loans

Offer a lucrative deal of low interest rates, easy repayment facilities and

inclusion of all additional charges like vehicle registration, insurance, one-

time road tax and car accessories. State Bank of India offers car loans for

purchase of all kinds of personal use and commercial vehicles. State Bank

of India offers:

49

Education Loan

To Indian nationals for pursuing higher studies within the country or

abroad. The SBI education loan covers the travel expenses, tuition fees,

examination fees, costs of books and other course material and stationery,

refundable caution deposits, expenses for purchase of computers.

SBI Personal Loan Interest Rates up date on 20oct2015

SBI Personal Loan Details

50

Interest Rate (Floating)BR + 8.50%

Base Rate - 9.30%

Processing Fees 2.02%-3.03% of the loan amount

Loan Tenure 4 years

Pre-closure Charges Nil

Guarantor Requirement No guarantor required

Different types of SBI Personal Loans

The State Bank of India has long been known for providing personal loans

for you that are designed to be easy for you to apply for and, most

51

importantly, easy for you to pay back. SBI offers people four different

types of personal loans that have to be tailored to suit individuals and their

individual needs. So, without further ado, these are four of the personal

loans that you can avail from SBI.

Xpress Credit Personal Loan

As the name suggests, this loan has been designed to get you cash when

you need it in a hurry. The processing charges are low, there are no hidden

charges and there is minimal documentation required. There aren’t any pre-

payment charges either

SBI Saral Personal Loan

The SBI Saral Personal Loan is meant to provide people with the

opportunity to have access to money for various things like payments for

vacations, medical bills or even clearing financial liabilities. As long as the

the applicant has a valid reason to apply for the loan, it might get approved

subject to the banks terms and conditions. The processing charges will be

anywhere between 2.02% to 3.03% of the loan amount.

SBI Pension Loan / Jai Jawan Pension Loan

This type of a personal loan is provided to pensioners who are drawing their

pensions from the central or the state government. If you apply for this loan

then you will have to pay a nominal processing fee and there will be no

extra charges levied for early payments

52

SBI Festival Personal Loan

In case there is a festival coming up and your plans for celebrating it are

threatened by a shortage of money you can go in for a Festival Loans.

SBI Personal Loan Interest Rate

SBI Xpress Credit Personal Loan Interest Rate

The base interest rate will be 10% as of the 7th of of Nov, 2013

53

In case of a full check off, your interest rate will be base rate plus an

additional 3% to 3.5%. This means your interest rate will actually be

13% to 13.5%

If you go for a partial check off then the interest rate will be 4% to

4.5% added to the base rate. In this case the interest charged will be

14% to 14.5%

If you don’t plan to go in for a check off then the interest rate will be

5% to 5.5% added to the base rate of 10%. Which means that the

interest charged will be 15% to 15.5%

SBI Saral Personal Loan Interest Rates

The interest rate will be 8.5% added to the current floating base rate of 10%

per annum so your actual interest will be 18.5% p.a.

SBI Pension Loan / Jai Jawan Pension Loan Interest

Rates

The interest rate for the Jai Jawan Pension Loan scheme will be 4.75%

added to the base rate of 10%, bringing it to a total of 14.75% per annum.

SBI Festival Personal Loan Interest Rates

The interest rate will be the base rate of 10% with an additional 6.75%

added to it making it a total of 16.75% per annum.

54

Minimum Loan AmountRs.24,000/- in metro and urban centers Rs.10,000/- in

rural/semi-urban centers

Maximum Loan Amount

12 times Net Monthly Income for salaried individuals

and pensioners subject to a ceiling of Rs.10 Lakhs in

all centers

Tenure: 12 to 48 Months

Processing Fee: 2.02% - 3.03% of the loan amount.

Prepayment Charges: Nil

Interest Rates:

Personal Loans Scheme (SBI Saral): 8. 50% above

Base Rate floating, currently 18.50% per annum. SBI

Loan to Pensioners (all variants): 4.75% above Base

Rate, currently 14.75% p.a. #Base Rate 10.00% w.e.f.

07.

SBI Personal Loan Eligibility

State Bank of India offers personal loans to all applicants fulfilling the

basic eligibility criteria. State Bank of India personal loans are available to

all salaried individuals of good quality corporate as well as self employed

55

individuals and working professionals including engineers, doctors,

architects, chartered accountants and MBA’s with a minimum 2 years of

standing period.

SBI Xpress Credit Personal Loan Eligibility

Net Monthly Income must be at least Rs. 7,500 per month

The applicants EMI/NMI (Equated Monthly Installments / Net

Monthly Income) ratio must not exceed 50

SBI Saral Personal Loan Eligibility

If you fall into any of the following categories then you can apply for this

personal loan.

Self employed engineer

Doctor

MBA grad with a minimum of 2 years worth of experience

Chartered Accountant

Architect

SBI Pension Loan / Jai Jawan Pension Loan Eligibility

The person applying for the pension loan must not be over 76 years

of age

The person must be drawing a pension from the central or state

governments and have his/her pension account with SBI

56

If the family pensioner is the spouse of a pensioner who is

authorised to receive the pension then they too must not be over 76

years of age.

SBI Festival Personal Loan Eligibility

Government employees or those working for PSU’s or even private

or public institutions/establishments are eligible for this loan as long

as they have a minimum of 2 years of service.

If the applicant is self-employed then a minimum of 3 years of

experience is a must

In case the applicant does not meet the first condition then they can

be eligible if they have a verifiable source of regular income like

pension or interest from TDR or NSC or Govt Securities.

The applicant must have a net monthly income of Rs.3000 or more

If the applicant wants the spouse’s income also to be considered then

the spouse should guarantee the loan or turn it into a joint loan.

Eligibility Criteria for Salaried Individuals

Age Minimum: 21 Years Maximum: 58 Years

Minimum IncomeSalaried individuals with minimum monthly

income Rs.5000

57

Total years in

job/profession 2 Years

Years in current residence 1 Year

Eligibility Criteria for Self Employed Individuals and

Working Professionals:

Age Minimum: 21 Years Maximum: 65 Years

Minimum Income

Self Employed individuals or working

professionals earning a minimum of Rs. 7000 per

month

Total years in Profession 2 Years

Documentation needed to apply for an SBI Personal Loan

Signed application form with photograph

.Proof of identity: Passport/voter ID card/driving license

Processing fee cheque

58

Last 3 months bank statement/6 months bank passbook

Documentation for salaried applicants:

o Latest salary slip

o Current dated salary certificate with the latest Form 16

o Documentation for self-employed applicants:

o Latest Bank statement

HDFC Personal Loan

HDFC Bank personal loans can help meet all your financial needs

effectively. With simplified documentation and speedy approvals,

availing personal loans couldn't get easier.

59

FEATURES

Highly competitive personal loan interest rates

Special offers, interest rates and charges for HDFC Bank account

holders

Personal loan eligibility in 1 minute available online and across all

branches

Special Benefits

Simplified documentation

Competitive pricing

Transparency

Personal loans available for various needs

HDFC Bank Personal Loan Interest Rates

Oct 2015 offers for salaried and Self-Employed

Interest Rates 11.49% to 18.50% for salaried. Get lower rate offers for

employees of large reputed companies

Personal loans for businessmen and self employed at 15.75% to 20.00%

Lowest EMI of Rs. 2199 per lakh

Processing fee of 0.25% to 1.50%; Min - Rs. 999, Max - Rs. 25000

60

Loans up to Rs. 1,500,000 for salaried and up to Rs. 1,500,000 for self

employed

Assured Flip kart e-cash voucher of up to Rs. 4,999/- from My Loan

Care for applications during scheme period on disbursement from

partner banks

Terms & Conditions Apply

HDFC Bank Personal Loan Eligibility

You are eligible for HDFC Bank personal loan if:

You are between 21 and 60 years of age

In case you are salaried, you are in a full time job for at least 24

months of which not less 12 months must be with your current

company

In case you are self-employed, you must be in current profession or

business for at least 4 years and should preferably be owning either

your office or your place of residence. Minimum turnover and

minimum net income criteria may apply

HDFC Bank does not specify any particular CIBIL score for being

eligible for a personal loan, it is observed that a score of 750 and

above is desirable

Prepayment, Foreclosure, Balance Transfer, Top up

Personal Loan

Part prepayment of HDFC Bank personal loan is not permitted

Foreclosure or full prepayment is allowed after 12 EMIs's.

Prepayment charges vary by year: 2nd year - 4%; 3rd year - 3%,

after 3 years - 2%

61

HDFC Bank offers personal loan balance transfer from another bank

if you have paid at least 12 EMIs regularly on your existing loan.

This is subject to your meeting other eligibility criteria of HDFC

Bank

You can avail additional top-up personal loan from HDFC Bank,

subject to your eligibility

Documents required - Salaried

Filled up loan application form

2 Passport Size Photo

Copy of Income Tax PAN

Identity Proof - Passport/ Driving License/ Voter ID/ PAN

Residential Address Proof - Leave and License/ Registered Rent

Agreement/ Utility Bill (up to 3 months old), Passport

Income Documents – 3 months pay slip, 2 years Form 16, 3 months

bank statement showing salary credit and any EMI debit

Documents required - Self-Employed

Filled up loan application form

2 Passport Size Photo

Copy of Income Tax PAN

Identity Proof - Passport/ Driving License/ Voter ID/ PAN

62

Residential Address Proof - Leave and License/ Registered Rent

Agreement/ Utility Bill (up to 3 months old), Passport

Income Documents – 2 years audited financials, 6 months bank

statement

Business proof such as VAT/ service tax registration, incorporation

details in case of companies, business address proof

Objective of study

1. To Analysis the perception of people towards personal loan of different

bank

2. To study the awareness people regarding terms and condition upon

which personal is extended

3. To determine the difficulties faced by people which getting their

Personal loan passed .

SWOT OF BANKS

Strengths:-

63

Brand Name:-

SBI Bank has earned a reputation in the market over the period

of time(Being the oldest bank in India tracing history back to

1806)

Market Leader:-

SBI is ranked at 380 in 2008 Fortune Global 500 list, and ranked 219 in

2008 Forbes Global 2000. With an asset base of $126 billion and its reach,

it is a regional banking behemoth.

Wide Distribution Network:

Excellent penetration in the country with more than 10000 core branches

and more than 5100 branches of associate banks (subsidiaries).

Diversified Portfolio

SBI Bank has all the products under its belt, which help it to extend the

relationship with existing customer‘s Bank has umbrella of products to

offer their customers, if once customer has relationship with the bank.

Some Products, which SBI Bank is offering are: Retail Banking

BusinessBanking Merchant Establishment Services (EDC Machine)

Personal loans & Car loans Insurance Housing Loans

Government Owned:-

Government owns 60% stake in SBI. This gives SBI an edge

over private banks in terms of customer security.

64

Low Transition Costs-SBI offers very low transition costs which

attracts small customers.

Weakness

The existing hierarchical management structure of the bank,

although strength in some respects, is a barrier to change.

Though SBI cards are the 2nd largest player in the credit card

industry, it has the highest nonperforming assets (NPAs) in the

industry, which stand out to be at 16.28 % (Dec 2007).

Modernization: SBI lags with respect to private players in terms of

modernization of its processes, infrastructure, centralization, etc.

Opportunities:-

Merger of associate banks with SBI: Merger of all the associate

banks (like SBH, SBM, etc) into SBI will create a mega bank which

65

streamlines operations and unlocks value.

Planning to add 2000 branches and 3000 ATMs in 2008-2009.

This will further increase its reach.

Increasing trade and business relations and a large number of

expatriate populations offers a great opportunity to expand on

foreign soil.

Threats

1. Advent of MNC banks: Large numbers of MNC banks are

mushrooming in the Indian market due to the friendly policies adopted by

the government. This can increase the level of competition and prove a

potential threat for the market share of SBI bank.

2 Consumer expectations have increased many folds in last few years

and the bank has not been responsive enough to meet them on time.

3 Private banks have started venturing into the rural and semi-urban

sector, which used to be the bastion of the State Bank and other PSU

banks

4. Employee Strike: There was an employee strike in the year 2006

which disrupted SBI‘s activities. This can be repeated in the future.

SWOT ANALIYS OF SBI

Strength 1.  The biggest bank in the country

2.   Has a separate act for itself. Thus, a special

privilege.

3.  Biggest branch network in the country

66

4.  First public sector to move to CBS

Weakness

1.  Huge amount of staff

2.  Expected to experience high level of attrition

due to retirement of its top management

3.  Still carries the image of the old Govt. sector

bank

Opportunity

1.  Pool in talent to replace the going top

management to serve the next generation

2.  Make better use of its CRM

3.  Expansion into rural areas

Threats

1.  Consolidation among private banks

2.  New bank licenses by RBI

3.  Foreign banks that have sophisticated products

SWOT ANALYSIS OF HDFC

STRENGHTS

67

HDFC bank is the second largest private banking sector in India

having 2,201 branches and 7,110 ATM’s

HDFC bank is located in 1,174 cities in India and has more than

800 locations to serve customers through Telephone banking

The bank’s ATM card is compatible with all domestic and

international Visa/Master card, Visa Electron/ Maestro, Plus/cirrus

and American Express. This is one reason for HDFC cards to be the

most preferred card for shopping and online transactions

HDFC bank has the high degree of customer satisfaction when

compared to other private banks

The attrition rate in HDFC is low and it is one of the best places to

work in private banking sector

HDFC has lots of awards and recognition, it has received ‘Best

Bank’ award from various financial rating institutions like Dun and

Bradstreet, Financial express, Euro money awards for excellence,

Finance Asia country awards etc

HDFC has good financial advisors in terms of guiding customers

towards right investments 

Weakness

HDFC bank doesn’t have strong presence in Rural areas, where as

ICICI bank its direct competitor is expanding in rural market

HDFC cannot enjoy first mover advantage in rural areas. Rural people

are hard core loyal in terms of banking services.

HDFC lacks in aggressive marketing strategies like ICICI

Opportunities

HDFC bank has better asset quality parameters over government

banks, hence the profit growth is likely to increase

68

The companies in large and SME are growing at very fast pace.

HDFC has good reputation in terms of maintaining corporate salary

accounts

HDFC bank has improved it’s bad debts portfolio and the recovery

of bad debts are high when compared to government banks

HDFC has very good opportunities in abroad

Greater scope for acquisitions and strategic alliances due to strong

financial position

Threats

HDFC’s nonperforming assets (NPA) increased from 0.18 % to

0.20%. Though it is a slight variation it’s not a good sign for the

financial health of the bank

The non banking financial companies and new age banks are

increasing in India

The HDFC is not able to expand its market share as ICICI imposes

major threat

The government banks are trying to modernize to compete with

private banks

RBI has opened up to 74% for  foreign banks to invest in Indian

market

69

CHAPTER-III

Research Methodology

METHODOLOGY OF THE STUDY

Research Methodology

Research as a mean of getting knowledge can be carried out either

arbitrarily or in a systematic fashion. It is a purposive investigation.

70

Research may be a mean to know the small change and time forced upon us

as individual or as a society. Research as process involves defining the

problem, formulating the hypothesis, organizing and evaluating the data,

deriving inference and conclusion after careful testing.

Data Collection

As data is required for any research activity, it is collected (for those both

the Primary and Secondary) as follows:

Primary Data:

I have collected this data through questionnaire.

Secondary Data:

This data is collected from different sources available consolidated from

book publication reports, websites where used as a source of secondary data

in order to do this project and to collect necessary data. I have used the

manuals and leaflets of the HDFC & S.B.I bank.

71

Title of the study:-

“Comparative Analysis of SBI & HDFC Bank Regarding Personal

Loan”

Duration of the Study:-

1 Oct to 30 oct 2015

Objective of study

Primary: -

1. To Analysis the perception of people towards personal loan of different

bank

2.To study the awareness people regarding terms and condition upon which

personal is extended

3.To determine the difficulties faced by people which getting their

Personal loan passed .

Secondary: -

1. Service level and channel associate approach.

2. To find the level of brand awareness.

3. To find out the company market share.

72

Types of research:-

Descriptive research

Primary data collection

Through Questionnaire are filled by respondents.

Secondary data collection

Data collection through – Internet, Magazines.

Sample size & Method of selecting sample

Sample size-:100 respondents

Method of selecting sample: Convenience sampling, 50 customers from

each bank

73

Scope of study

i Special area to be focused for increasing the sales and for sales

Promotion activities to be adopted.

ii. To make product more innovative and easy to understand

iii. For providing maximum satisfaction to the customer by knowing

their needs and requirement about product and services.

iv. Steps to be taken at present for survival and facing the competition

with other equivalent product.

v. Continues improvement and for better management.

vi. Maintaining good relation between manager and customer.

74

Data Analysis & Interpretation

Chapter IV

75

Q.1. Which age group do you belong to?

Age Group Number of Person

18-25 36

25-35 24

35-45 26

Above 45 14

18-25 25-35 35-45 Above 450

5

10

15

20

25

30

35

40

Number of Person

Interpretation

As per the study most of people taking a loan from age between

18- 28

Above 45 person age do not taken a personal loan 25-35 people belong to

25% and 35-45 only 16 % people taking loan

76

Q.2 Which occupation do you belong ?

Students 25 Other 25

Professor 36

Business 14

25%

36%

14%

25%

studentsprofessorbusinessother

Interpretation:-

As per the study there main customers of SBI bank and businessman On the

other side working professional are main customers of HDFC bank.

77

Q3. What kind of loan you have taken?

Type of loan No of person

Personal 44

Home 06

Education 15

Corporate 18

Car 12

Other 05

Interpretation

As per study 44% taking personal loan from bank and 12% car loan 15%

education loan 5% other6% home and 18% corporate

78

18%

6%

44%

15%

12%

5%

Corporatehomepersonaleducationcarother

Q4. From which bank have you taken loan?

Bank No of Respond

HDFC 44

SBI 36

OTHER 20

44%

36%

20%hdfc sbi other

Interpretation:-

Maximum number of customers prefers HDFC bank for taking personal

loan compare to SBI bank because of low interest rate, good image, and

public sector bank. 20% customers prefer other bank like ICICI, PNB, and

Bank of Broad.

79

Q5. If you have multiple loan which type of loan do you prefer most?

corporate 26

home 14

car 10

education 12

personal 30

other 08

24%

13%

9%11%

27%

16%

loan corporate home careducation personal other

Interpretation

As per study 27% of people taking a loan from bank Personal

loan because full fill their needs and wants 9% people are taking a car loan

24% corporate 16% 11% education 13% home loan

80

Q6. How much time do you get as grace period?

One week 10 days 15 days 20 days More than 20

days

10 25 15 20 30

Interpretation

As per study more than 20% people get a grace period 10% people

are one week 25% people are say 10 days grace period 20 % people are say

only 20 dyas for grace period

81

10%

25%

15%20%

30%

one week 10 days 15 days 20 days more than 20 days

Q7 Do you want your bank to give more time grace period?

Yes 55

No 45

yes no0

10

20

30

40

50

60

Interpretation

As per the study 55% people want to grace period from bank 45 % people

are not want to grace period more people want to grace period

82

Q8. How much time does your bank take to sanction loan?

One week 10 days 15 days 20 days More than 20

days

15 20 25 15 25

15%

20%

25%

15%

25%

one week 10days 15 days 20 days more than 20 days

Interpretation

As per the study 25% people are bank sanction 25 %people want to

days and 15% people says 10 days most of the people want to

sanction loan

83

Q9. Do you understand different terminologies of loan?

Yes 65

No 35

65%

35%

yes no

Interpretation

As per study 65 say term logy 35 % people are say no termologie

Most of the people are think about termonologies

84

Q10. What attributes do you consider while taking personal loan?

Attributes 1 2 3 4 5

1. Update Information 25 35 22 10 8

2. Smooth service 20 25 30 15 10

3. Object Handling 15 30 45 5 5

4. Office Auto 10 20 40 15 15

5. Location 5 25 25 35 10

6. Customization 25 35 10 15 15

7. EMI 10 5 25 35 25

8. Skilled Employee 15 30 15 35 5

9. Brand 25 05 25 45 0

85

25%

35%

22%

10% 8%

Update Information1 2 3 4 5

Interpretation

As per study 35% give rank update information rank 2 and

22% fill rank3and 8% people fill rank 4 and 10 % people fill rank 4 all

customer want to updated information

86

20%

25%

30%

15%

10%

Smoth Service1 2 3 4 5

Interpretation

As per study 30% people are fill rank 3 and 25% people fill rank 2 20%fill

rank 4 and 10 % rank 1 fill .people want to good service from bank

87

15%

30%45%

5%5%

Object Handling1 2 3 4 5

Interpretation

As per study 45% people rank4 and 30% people fill rank 2and 4and 5 fill

by 55 only most of people think about the object handling

10%

20%

40%

15%

15%

office auto1 2 3 4 5

Interpretation

88

As per study 4 and 5 rank fill by people given same40% people fill

rank 4 and 10% people rank 1Most of the people are want to office auto

5%

25%

25%

35%

10%

Location 1 2 3 4 5

Interpretation

As per the study 35% people given the rank 4 are considered location at

the time taking a loan personal loan 5% people fill the rank one 25% people

also given the rank 2

89

25%

35%

10%

15%

15%

customization 1 2 3 4 5

Interpretation

As per study 35% people are say customization 4and 5 people are fill

rank same percentage 25% people given the rank in one less people want

change in bank

90

10%5%

25%

35%

25%

Emi1 2 3 4 5

Interpretation

As per study 60% people are fill rank 4and 5 they cannot considered

EMI at the time taking loan 25% people thing about EMI at the time taking

a loan

91

115%

230%

315%

435%

5%

Skilled employes

Interpretation

As per study 40% people are not considered skilled employees

people are considered skilled employees most people are considered

skilled employees

92

25%

5%

25%

45%

Brand1 2 3 4 5

Interpretation

AS per study 45 % people taken loan brand name of bank 4and 5

rank are same less minimum 5% people taking loan from their brand

name

93

Facts and finding

1. The people are age 18 and 25 taking personal loan from bank most

2. Most students fill by the questiaire

3. 44% people taking a personal loan from bank

4. 44% people taken a loan from HDFC bank

5. 30% people prefer a personal loan

6. More 20 days than 20% people want to grace period

7. 55% people want to more grace period

8. 25% people want to more sectional time

9. 65% people are understand terminologies

10. Attribute

a) 35% people want to updated information

b) 30% people want to smooth service

c) 45% people taking a personal loan to object handling

d) 40 % people want to office auto

e) 35 % people fill rank 4 for location

f) 35% people fill rank 2 for customization

g) 35% fill rank for EMI

h) 35% people want to skilled employees

I) 35% people want taking a loan for brand name

94

CHAPER V

CONCLUSION, SUGEESTION

AND LIMILATION

CONCLUSION95

Areas in Research:-

In my report I have tried to show the basic different between the Personal

Loan of HDFC & SBI Banks. Both the Banks are good in terms of

customer satisfaction‘s has an edge because it is the leading Government

regulated bank in India. HDFC is new to this segment (when compared to

SBI) .SBI is preferred because it‘s a government bank. Procedure of loan

financing is easy in HDFC Bank. Family members & increasing standard of

living plays an important role in influencing the decision of taking home

loan.

1. SBI Bank is Leading Bank in the country, it provides a variety of products

and services to different segments of customers.

2. The Bank aims to serve customers from teenagers to senior citizens, hence

different products designed to suit specific requirements of the above.

3. Aims to serve all classes of the society from the salaried middle class to the

high income business class. Customers are categorized and segmented

according to their requirements and needs.

4. For Example , the Saving Regular and Plus Account aims to serve middle

class customers so minimum balance required to be maintained is

RS1.5,000/- or RS. 15000. While the Saving Max Account is targeted at

high income customers, there requirement is RS.30,000.

5. SBI Bank provides personal loan at low interest rate which good for

customers.

6. The Bank prides itself with the ability to provide differentiate products in

the crowded market of saving accounts. Bank offers free insurance, special

co-branded debit cards which makes its product unique.

96

Limitations of the study

The study was limited only Mathura city Hence findings may be differ from

other part of country.

Many formalities and requirements during process of taking personal loan.

Many times respondents were so busy that they didn‘t t give reply. There

were biased replies also.

97

BIBLIOGRAPHY

1. MAGAZINE

Business world

Business today

2. NEWSPAPER

Economic times

Times of India

The Hindu

3. WEBSITES

www.hdfcbank.com

http://www.hdfcbank.com/nri_banking/money_transfer/MiddleEast/

IndiaLink/IndiaLink.htm

http://www.hdfcbank.com/wholesale/fit/financial_institutions/indialink/

IndiaLink.htm

http://www.hdfcbank.com/personal/ways-to-bank/bank-online/loan-

accounts-online

www.sbibank.com

https://www.sbi.co.in/portal/web/personal-banking/personal-loans

https://www.sbi.co.in/portal/web/personal-banking/personal-finance

98

Knowledge through T.V:-

Watched Ad‘s of Both the Banks, they helped us in Knowing about the banks &

raised our interest in the topic. This Ad‘s were the first source of information

about the banks. They helped in choosing the topic.

Television

NDTV PROFIT

ZEE BUSINESS

TIMES NOW

IBN7

99

Questionnaire

Name:

Sex: Male [ ] Female [ ]

Q1. Which group age do you belong?

a. Less 18-25 b. 25-35 c. 25-45 d. 45-above.

Q2. Which occupation do you belong?

a. Student b. Business c. Serviceman d.

other

Q3. What kind of loan you have taken?

a. Corporate Loan b. Personal Loan c. Car Loan

d. Educational Loan e. Home Loan f. other Loan

Q4. From which bank have you taken loan?

a. HDFC b. SBI c. other

Q5. If you have multiple loan which type of loan do you prefer most?

a. Corporate Loan b. Personal Loan c. Car Loan

d. Educational Loan e. Home Loan f. other Loan

Q6. How much time do you get as grace period?

a. One week b. 10 Days c. 15 Days

d. 20 Days e. More than 20 days

Q7 Do you want your bank to give more time grace period?

a. Yes b. No

100

Q8. How much time does your bank take to sanction loan?

a. One week b. 10 Days c. 15 Days

d. 20 Days e. More than 20 days

Q9. Do you understand different terminologies of loan?

a. Yes b. No

Q10. What attributes do you judge while taking?

Attributes 1 2 3 4 5

1 Update Information

2 Smooth service

3 Object Handling

4 Office Auto

5 Location

6 Customization

7 EMI

7 Skilled Employee

8 Brand

101