Ravishankar Project

Commercial and institutional advance schemes
CHAPTER 1.
INTRODUCTION TO FINANCE
Financial System of any country consists of financial markets, financial

intermediation and financial instruments or financial products. The term "finance" in
our simple understanding it is perceived as equivalent to 'Money'. We read about
Money and banking in Economics, about Monetary Theory and Practice and about
"Public Finance". But finance exactly is not money; it is the source of providing funds
for a particular activity. Thus public finance does not mean the money with the
Government, but it refers to sources of raising revenue for the activities and functions
of a Government.
Providing or securing finance by itself is a distinct activity or function, which results

in Financial Management, Financial Services and Financial Institutions. Finance
therefore represents the resources by way funds needed for a particular activity. We
thus speak of 'finance' only in relation to a proposed activity. Finance goes with
commerce, business, banking etc. Finance is also referred to as "Funds" or "Capital",
when referring to the financial needs of a corporate body. When we study finance as a
subject for generalising its profile and attributes, we distinguish between 'personal
finance" and "corporate finance" i.e. resources needed personally by an individual for
his family and individual needs and resources needed by a business organization to
carry on its functions intended for the achievement of its corporate goals.
FINANCIAL SYSTEM
The word "system", in the term "financial system", implies a set of complex and
closely connected or interlined institutions, agents, practices, markets, transactions,
claims, and liabilities in the economy. The financial system is concerned about
money, credit and finance-the three terms are intimately related yet are somewhat
different from each other. Indian financial system consists of financial market,
financial instruments and financial intermediation. These are briefly discussed below;
FINANCIAL MARKETS
A Financial Market can be defined as the market in which financial assets are created
or transferred. As against a real transaction that involves exchange of money for real
goods or services, a financial transaction involves creation or transfer of a financial
asset. Financial Assets or Financial Instruments represents a claim to the payment of a
sum of money sometime in the future and /or periodic payment in the form of interest
or dividend.
Money Market -
The money market ifs a wholesale debt market for low-risk, highly-liquid, short-term
instrument. Funds are available in this market for periods ranging from a single day
up to a year. This market is dominated mostly by government, banks and financial
institutions.
Capital Market -
The capital market is designed to finance the long-term investments. The transactions
taking place in this market will be for periods over a year.
Forex Market - The Forex market deals with the multicurrency requirements,
which are met by the exchange of currencies. Depending on the exchange rate that is
applicable, the transfer of funds takes place in this market. This is one of the most
developed and integrated market across the globe.
Credit Market- Credit market is a place where banks, FIs and NBFCs purvey
short, medium and long-term loans to corporate and individuals.
CONSTITUENTS OF A FINANCIAL SYSTEM

FINANCIAL INTERMEDIATION
Having designed the instrument, the issuer should then ensure that these financial
assets reach the ultimate investor in order to garner the requisite amount. When the
borrower of funds approaches the financial market to raise funds, mere issue of
securities will not suffice. Adequate information of the issue, issuer and the security
should be passed on to take place. There should be a proper channel within the
financial system to ensure such transfer. To serve this purpose, financial
intermediaries came into existence. Financial intermediation in the organized sector is
conducted by a wide range of institutions functioning under the overall surveillance of
the Reserve Bank of India. In the initial stages, the role of the intermediary was
mostly related to ensure transfer of funds from the lender to the borrower. This
service was offered by banks, FIs, brokers, and dealers. However, as the financial
system widened along with the developments taking place in the financial markets,
the scope of its operations also widened. Some of the important intermediaries
operating ink the financial markets include; investment bankers, underwriters, stock
exchanges, registrars, depositories, custodians, portfolio managers, mutual funds,
financial advertisers financial consultants, primary dealers, satellite dealers, self

regulatory organizations, etc. Though the markets are different, there may be a few
intermediaries offering their services in move than one market e.g. underwriter.
However, the services offered by them vary from one market to another.
Intermediary Market Role
Stock Exchange Capital Market Secondary Market to securities
Corporate advisory services,

Investment Bankers Capital Market, Credit Market
Issue of securities
Capital Market, MoneySubscribe to unsubscribed
Underwriters
Market portion of securities
Issue securities to the investors

Registrars, Depositories,
Capital Market on behalf of the company and
Custodians
handle share transfer activity
Primary Dealers Satellite Market making in government

Money Market
Dealers securities
Forex Dealers Forex Market Ensure exchange in currencies
FINANCIAL INSTRUMENTS
MONEY MARKET INSTRUMENTS
The money market can be defined as a market for short-term money and financial
assets that are near substitutes for money. The term short-term means generally a
period up to one year and near substitutes to money is used to denote any financial
asset which can be quickly converted into money with minimum transaction cost.
Some of the important money market instruments are briefly discussed below;
1. Call/Notice money
Call/Notice money is the money borrowed or lent on demand for a very short period.
When money is borrowed or lent for a day, it is known as Call (Overnight) Money.
Intervening holidays and/or Sunday are excluded for this purpose. Thus money,
borrowed on a day and repaid on the next working day, (irrespective of the number of
intervening holidays) is "Call Money".
When money is borrowed or lent for more than a day and up to 14 days, it is "Notice
Money". No collateral security is required to cover these transactions.
2. Inter-Bank Term Money
Inter-bank market for deposits of maturity beyond 14 days is referred to as the term
money market. The entry restrictions are the same as those for Call/Notice Money
except that, as per existing regulations, the specified entities are not allowed to lend
beyond 14 days.
3. Treasury Bills
Treasury Bills are short term (up to one year) borrowing instruments of the union
government. It is an IOU of the Government. It is a promise by the Government to
pay a stated sum after expiry of the stated period from the date of issue
(14/91/182/364 days i.e. less than one year). They are issued at a discount to the face
value, and on maturity the face value is paid to the holder. The rate of discount and
the corresponding issue price are determined at each auction.
4. Certificate of Deposits
Certificates of Deposit (CDs) is a negotiable money market instrument issued in

dematerialised form or as Promissory Note, for funds deposited at a bank or other
eligible financial institution for a specified time period. Guidelines for issue of CDs
are presently governed by various directives issued by the Reserve Bank of India, as
amended from time to time. CDs can be issued by (i) scheduled commercial banks
excluding Regional Rural Banks (RRBs) and Local Area Banks (LABs); and (ii)
select all-India Financial Institutions that have been permitted by RBI to raise short-
term resources within the umbrella limit fixed by RBI. Banks have the freedom to
issue CDs depending on their requirements. An FI may issue CDs within the overall
umbrella limit fixed by RBI, i.e., issue of CD together with other instruments viz.,
term money, term deposits, commercial papers and intercorporate deposits should not
exceed 100 per cent of its net owned funds, as per the latest audited balance sheet.
5. Commercial Paper
CP is a note in evidence of the debt obligation of the issuer. On issuing commercial

paper the debt obligation is transformed into an instrument. CP is thus an unsecured
promissory note privately placed with investors at a discount rate to face value
determined by market forces. CP is freely negotiable by endorsement and delivery. A
company shall be eligible to issue CP provided - (a) the tangible net worth of the
company, as per the latest audited balance sheet, is not less than Rs. 4 crore; (b) the
working capital (fund-based) limit of the company from the banking system is not less
than Rs.4 crore and (c) the borrowal account of the company is classified as a
Standard Asset by the financing bank/s. The minimum maturity period of CP is 7
days.
CAPITAL MARKET INSTRUMENTS
The capital market generally consists of the following long term period i.e., more than
one year period, financial instruments; in the equity segment Equity shares,
preference shares, convertible preference shares, non-convertible preference shares
etc and in the debt segment debentures, zero coupon bonds, deep discount bonds etc.
HYBRID INSTRUMENTS
Hybrid instruments have both the features of equity and debenture. This kind of
instruments is called as hybrid instruments. Examples are convertible debentures,
warrants etc.
INDIAN FINANCIAL SYSTEM
India has a financial system that is regulated by independent regulators in the sectors
of banking, insurance, capital markets, competition and various services sectors. In a
number of sectors Government plays the role of regulator.
Ministry of Finance, Government of India looks after financial sector in India.
Finance Ministry every year presents annual budget on February 28 in the Parliament.
The annual budget proposes changes in taxes, changes in government policy in almost
all the sectors and budgetary and other allocations for all the Ministries of
Government of India. The annual budget is passed by the Parliament after debate and
takes the shape of law.
India has commercial banks, co-operative banks and regional rural banks. The
commercial banking sector comprises of public sector banks, private banks and
foreign banks. The public sector banks comprise the ‘State Bank of India’ and its
seven associate banks and nineteen other banks owned by the government and
account for almost three fourth of the banking sector. The Government of India has
majority shares in these public sector banks.
India has a two-tier structure of financial institutions with thirteen all India financial
institutions and forty-six institutions at the state level. All India financial institutions
comprise term-lending institutions, specialized institutions and investment
institutions, including in insurance. State level institutions comprise of State Financial
Institutions and State Industrial Development Corporations providing project finance,
equipment leasing, corporate loans, short-term loans and bill discounting facilities to
corporate. Government holds majority shares in these financial institutions.
Non-banking Financial Institutions provide loans and hire-purchase finance, mostly

for retail assets and are regulated by RBI.
Insurance sector in India has been traditionally dominated by state owned Life
Insurance Corporation and General Insurance Corporation and its four subsidiaries.
Government of India has now allowed FDI in insurance sector up to 26%. Since then,
a number of new joint venture private companies have entered into life and general
insurance sectors and their share in the insurance market in rising. Insurance
Development and Regulatory Authority (IRDA) is the regulatory authority in the
insurance sector under the Insurance Development and Regulatory Authority Act,
1999.
CONCLUSION
In India money market is regulated by Reserve bank of India and Securities Exchange
Board of India (SEBI) regulates capital market. Capital market consists of primary
market and secondary market. All Initial Public Offerings comes under the primary
market and all secondary market transactions deals in secondary market. Secondary
market refers to a market where securities are traded after being initially offered to the
public in the primary market and/or listed on the Stock Exchange. Secondary market
comprises of equity markets and the debt markets. In the secondary market
transactions BSE and NSE plays a great role in exchange of capital market
instruments.
Reserve bank of India (RBI)
Reserve bank of India (RBI) established in 1935 is the Central bank. RBI is regulator
for financial and banking system, formulates monetary policy and prescribes
exchange control norms. The Banking Regulation Act, 1949 and the Reserve Bank of
India Act, 1934 authorize the RBI to regulate the banking sector in India.
Establishment
The Reserve Bank of India was established on April 1, 1935 in accordance with the
provisions of the Reserve Bank of India Act, 1934. The Central Office of the Reserve
Bank was initially established in Calcutta but was permanently moved to Mumbai in
1937. The Central Office is where the Governor sits and where policies are
formulated.
Though originally privately owned, since nationalisation in 1949, the Reserve Bank is
fully owned by the Government of India.
Preamble
"...to regulate the issue of Bank Notes and keeping of reserves with a view to
securing monetary stability in India and generally to operate the currency and
credit system of the country to its advantage."
Central Board
The Reserve Bank's affairs are governed by a central board of directors. The board is
appointed by the Government of India in keeping with the Reserve Bank of India Act
for a period of four years.
Functions
General superintendence and direction of the Bank's affairs
Local Boards
One each for the four regions of the country in Mumbai, Calcutta, Chennai and New
Delhi
Functions
To advise the Central Board on local matters and to represent territorial and economic
interests of local cooperative and indigenous banks; to perform such other functions
as delegated by Central Board from time to time.
FINANCIAL SUPERVISION
The Reserve Bank of India performs this function under the guidance of the Board for
Financial Supervision (BFS). The Board was constituted in November 1994 as a
committee of the Central Board of Directors of the Reserve Bank of India.
Objective
Primary objective of BFS is to undertake consolidated supervision of the financial

sector comprising commercial banks, financial institutions and non-banking finance
companies.
BFS meetings
The Board is required to meet normally once every month. It considers inspection
reports and other supervisory issues placed before it by the supervisory departments.
BFS through the Audit Sub-Committee also aims at upgrading the quality of the
statutory audit and internal audit functions in banks and financial institutions. The
audit sub-committee includes Deputy Governor as the chairman and two Directors of
the Central.
Umbrella Acts
Reserve Bank of India Act, 1934 governs the Reserve Bank functions
Banking Regulation Act, 1949 governs the financial sector
Main Functions:
Monetary Authority:
Formulates implements and monitors the monetary policy. Also maintains the price
stability and ensures adequate flow of credit to productive sectors.
Regulator and supervisor of the financial system:
Prescribes broad parameters of banking operations within which the country's banking
and financial system function, thus maintains public confidence in the system,
protect depositors' interest and provide cost-effective banking services to the
public.
Manager of Foreign Exchange:
Manages the Foreign Exchange Management Act, 1999 to facilitate external trade and
payment and promote orderly development and maintenance of foreign exchange
market in India.
Issue of currency:
Issues and exchanges or destroys currency and coins not fit for circulation thus
guarantees the public adequate quantity of supplies of currency notes and coins and in
good quality.
Developmental role:
Performs a wide range of promotional functions to support national objectives.
Banker to the Government:
Performs merchant banking function for the central and the state governments; also
acts as their banker.
Banker to banks:
Maintains banking accounts of all scheduled banks.
SUBSIDIARIES
Fully owned: National Housing Bank (NHB), Deposit Insurance and Credit
Guarantee Corporation of India (DICGC), Bharatiya Reserve Bank Note
Mudran Private Limited (BRBNMPL)
Majority stake: National Bank for Agriculture and Rural Development (NABARD)
and the Reserve Bank of India has recently divested its stake in State Bank of India to
the Government of India.
SECURITIES AND EXCHANGE BOARD OF INDIA

(SEBI)
ESTABLISHMENT OF SEBI
The Securities d Exchange Board of India was established on April 12, 1992 in
accordance with the provisions of the Securities and Exchange Board of India Act,
1992.
PREAMBLE
The Preamble of the Securities and Exchange Board of India describes the basic
functions of the Securities and Exchange Board of India as
“…..to protect the interests of investors in securities and to promote the development
of, and to regulate the securities market and for matters connected
therewith…’’Securities and Exchange Board of India (SEBI) established under the
Securities and Exchange aboard of India Act, 1992 is the regulatory authority for
capital markets in India. India has 23 recognized stock exchanges that operate under
government approved rules, bylaws and regulations. These exchanges constitute an
organized market for securities issued by the central and state governments, public
sector companies and public limited companies. The Stock Exchange, Mumbai and
National Stock Exchange are the premier stock exchanges. Under the process of de-
mutualisation, these stock exchanges have been converted into companies now, in
which brokers only hold minority
In addition to the SEBI Act, the Securities Contracts (Regulation) Act, 1956 and the
Companies Act, 1956 regulates the stock markets.
FUNCTIONS OF SEBI
1) Regulatory function
2) Developmental function
1) REGULATORY FUNCTION
 Regulations of exchange and self- regulatory obligations, registration and

regulation of stock brokers, registrar ton all issue, MBs, underwriters,
portfolio, managers and such other intermediaries who are associated with
securities market.
 Registration and regulation of the working capital of collective investment
scheme including mutual fund
 Prohibition of fraudulent and unfair trade practice relating to securities
market.
 Prohibits insider trading in securities.
 Regulating substantial acquisition of shares and takeover of company.

2) DEVELOPMENT FUNCTION
 Promote investors education

 Training intermediaries
 Conducting research and published information useful to all the market
participants.
 Promotion of fair practices code of conduct for self- regulatory
organization.
OBJECTIVES OF SEBI
According to preamble of the SEBI act, the primary objectives of the

SEBI is to promote healthy and orderly growth of securities market and serve
investment protection for this purpose, the SEBI monitors the activities of not only
stock exchange but also merchant bankers.
 To protect the interest of investors of that is a steady flow of savings in to the

capital market.
 To regulate the securities market and ensure fair practices by the issues of
securities so that they can raise resources at minimum cost.
 To promote efficient services by brokers, merchant bankers and other

intermediaries so that they become competitive and professional.
 Power of issue directions.
 Power of investigation.
 Registration of stock brokers, sub brokers and share transfer agents etc.
 Prohibition of manipulative and deceptive devices, insider trading and

substantial actuation of securities or control.
MEASURES TAKEN BY SEBI
The securities and exchange board of India has taken a number of measures of
healthy development and regulation of the capital market.
 Guidelines for disclosure and investors protection.

 Guideline for merchant bankers.
 Guideline for euro issue
 Guideline for market funds and asset management companies.
 Guideline for foreign institutional investors.
 Guideline to development financial institution for disclosure and investor

and protection.
 Guidelines for book building, employees stock option scheme(ESOS) and
employee stock purchase scheme(ESPS)
 Guideline for OTCEI issues
 Guidelines for preferential issues.
 Guidelines on external commercial borrowers.
 Regulatory measures for stock brokers and sub brokers, underwriters,

portfolio managers, registrars to an issue and share transfer agents, insider
trading bankers to an issue, depositors and participants, venture capital

funds etc.
BANKING
Banks play a significant role in the economic n social development of a country.

According to some authorities, the word Bank is derived from the words ‘bancus’ or
‘banquet’ i.e., a bench. The early bankers transacted their business on benches in the
market place. There are others who are of the opinion that the word ‘Bank’ is
originally derived from the German word ‘Back’ meaning a joint stock fund which
was Italianized into ‘Banco’ when the Germans were masters of a great part of Italy.
The history of banking can be traced back to Europe from the middle ages.
EVOLUTION OF BANKING INSTITUTIONS
As early as 2000B.C. the Babylonians had developed a banking system. The temples
of Babylon were used as banks and were the most powerful of the Greek banking
institutions. With the end of civilization of antiquity, and as a result of administrative
decentralization and demoralization of the government authority, with its unenviable
counterpart of commercial insecurity, banking degenerated for a period of some
securities into a system of financial makeshifts. However, upon the revival of
civilization, growing necessity forced the issue in the middle of the 12 th century, and
banks were established at Venice and Genoa, though in fact they did not become
banks as we understand them today. Again the origin of modern banking may be
traced to the money dealers in Florence, who receive money on deposit, and were
lenders of money in the 14th century.
DEFINITION OF BANKING
A Bank is an institution which deals in money. It means that a bank receives money in
the form of deposits from public and lends the money to the development of trade and
commerce.
Prof.Hart says that a banker is one who in the ordinary course of his
business receives money which he repays by honouring the cheques of
persons from whom or on whose account he receives it.
Prof. Kinley defines a bank as an establishment which makes to individuals such

advances of money as may be required and safely made and to which individuals
entrust money which is not required by them for use.
The Indian Companies Act defines the term bank as “the accepting for the purpose of
lending or investment of deposits of money from the public, repayable on demand or
otherwise and withdraw able by cheque, draft, order or otherwise”.
Section 6 of Banking Companies Act of 1949 specifies a good number of

business functions such as discounting, buying and selling, collecting and dealing
business instruments like bills of exchange, promissory notes, drafts, bills of lending,
warrants, debentures, securities and etc. Banks can also undertake buying and selling
of foreign exchange including notes. The banks can also acquire, hold, issue, and
underwrite shares, debentures of business companies etc. The bank is prohibited in

carrying out trading activities.
INTRODUCTION TO LOANS
One of the primary functions of the commercial bank is ‘lending’. Through lending
commercial banks meet their objective of making profits. The deposits collected from
the public cannot be kept idle. It has to be utilized in order to derive benefits out of it.
The bank collects deposits with the objective of lending and makes profits out of the
interest received and paid. Their main aim is to deal in money and provide for those
who need it. The banker performs the job of lending within the framework of status
governing the banking business, the government policy and guidelines issued by the
monitory authorities of the country (RBI in India).
The basic objective of nationalization of commercial banks was to provide funds to

the neglected sectors like agriculture, tiny industries and other weaker sectors of the
society. Today nearly 40% of the total commercial bank advances are in the priority
sectors.
Greater part of commercial bank funds are employed in the form of loans and
advances. Loans bring god money to the bank in the form of profit by charging
interest. Lending function of a commercial bank benefits the bank in the form of
profits and the one who takes loans enjoy the benefits of money required for their
activities. The wheels of industry cannot run without the bank advances. The bank
needs to assess the condition of industry or trade or any business enterprise while
making advances.
Loans:
When a bank makes an advance in lump-sum against some security it is called a loan.
Here a specified amount is sanctioned by the bank to the customers. The loan amount
so sanctioned is paid to the borrower either in cash or by credit to his account. A
certain amount of interest has to be paid by the borrower for the loan that he has
borrowed. A loan can be repaid in lump-sum or in instalments. Commercial banks
generally provide short-term loans Up to one year for meeting the working capital
requirements. But these days, term loans exceeding are also provided by banks. The
term loans may be either medium term or long term loans
SHORT TERM LOANS FINANCED BY COMMERCIAL BANKS
Commercial banks are the most important source of short term capital. The major
portion of working capital loans are provided by commercial banks. They provide a
wide variety of loans tailored to meet the specific requirements of o concern. The
different forms in which the banks normally provide loans and advances are loans,
cash credits, overdrafts, purchasing and discounting of bills.
TERM FINANCING BY COMMERCIAL BANKS
Commercial banks normally provide short term financial assistance to industry sector.
The assistance provided by them fulfilled the working capital requirements of the
industrial enterprises. A massive investment in industries during the second plan and
after changed the priority of bank lending. The industries required huge funds for long
term financing. The financial institutes failed to meet the increasing demands of the
industries. Then the entry of commercial banks came into existence and filled the gap
between the demand and supply of long term requirements. The banks started giving
term loans to meet the long term needs of the industry. The refinance scheme of IDBI
encouraged more term lending by commercial banks.
The commercial banks are assisting industrial units by granting term loans,
subscribing to shares and debentures of corporate units and underwriting securities
issued by those companies.
Some of the specialized financial institutions providing term loans are-
Industrial Finance Corporation of India (IFCI)
Industrial development bank of India (IDBI)
Industrial credit and Investment Corporation of India (ICICI)
Industrial Reconstruction Corporation of India (IRCI)
State Financial corporations (SFCs)
Unit trust of India (UTI)
Small Industries Development Bank of India (SIDBI).

C H A PTER 2.
RE SEAR CH D ESIG N
TITL E O F TH E STU D Y
“AN AN ALYSIS AN D CO M PARISON OF CO M M ERCIAL AN D INSTITUTIO NAL ADVANCE

SCH EM ES H
- DFC BA NK.”
IN TR O D U C TIO N
FINANCE is a discipline concerned with determining value and making decisions.

The finance function allocates resources, including the acquiring, investing and
managing, of resources. In other words, “Finance” is the process of raising funds or
capital for any kind of expenditure. Consumers, business firms, and governments
often do not have the funds they need to make purchases or conduct their operations,
while savers and investors have funds that could earn interest or dividends if put to
productive use. Finance is the process of channelling funds from savers to users in the
form of credit, loans, or invested capital through agencies including commercial
banks, savings and loan associations, and such non-bank organizations as credit
unions and investment companies. Finance can be divided into three broad areas:
business finance, personal finance, and public finance. All three involve generating
budgets and managing funds for the optimum results.
The word "system", in the term "financial system", implies the various elements in the
economy via, interlined institutions, markets, agents, practices, transactions, claims,
and liabilities all intertwined with each other. The financial system deals with money,
credit and finance. Indian financial system consists of financial market, financial
instruments and financial intermediation.
STATEMENT OF PROBLEMS
The post globalization era in Indian economy spurred an unprecedented growth in the
industrial as well as service sector. As such the commercial undertakings required a
vast amount of money to fund its long term as well short term needs. Consequently,
the financial institutions, especially the commercial banks played and have been
playing a pivotal role in the smooth financing of these growing sectors. In fact, major
portion of bank funds is employed by way of advances and are a major source of
profits for them. Commercial institutions have been a target of the banks to elevate
their profits level, and the banks have been attracting them with various schemes to
address their manifold needs. In light of this, here is the project where is addressed the
question how the commercial institutions are being financially supported through the
various advance (loan/overdraft) schemes of commercial banks with specific
reference to the HDFC BANK.
SCOPE OF THE STUDY
The study was limited to the advances by HDFC BANK to the commercial
institutions, viz,
Corporate /Industrial undertakings.
Traders, Owners of buildings and commercial properties.
Applicants engaged in trade, services activities.
To analyze the advance schemes provided by the bank with respect to advances limit,
Customer’s eligibility, Comparison of interest rate for different advance schemes, etc.
OBJECTIVES OF STUDY
To study the purpose for different advance schemes with comparison among the
various schemes (and their features) offered by HDFC BANK
To evaluate the customer’s eligibility, criterion and total advance (credit) limit
allowed.
To analyze and interpret the data to offer findings, suggestions & recommendations.
SOURCES OF DATA AND INFORMATION:
The collected data and information are the internal organization report.
The two sources of information’s are: -
Primary data
These are the data collected first hand by interviewing with the personnel and senior
officials of HDFC BANK and data collected through them.
Secondary data
Brochures and catalogs of the company.

Official reports.
Bank Website.
Intra bank websites of the bank.
Various other websites that offers information on various commercial institutions.
TOOLS FOR ANALYSIS
Data & information are analyzed and interpreted with the help of using the following
mentioned:
Tables
Graphs
Bar diagrams
METHODOLOGY
To fulfill the objectives of the study, the data acquired through primary and
secondary sources have been presented through the techniques of analysis namely,
tables, graphs and bar diagrams as appropriate. The data so tabulated has been
analyzed and proper inference supported by the findings has been drawn. The various
schemes have been then analyzed with respect to earlier stated criterion of the
advance schemes. Certain queries were tackled through discussions with the bank
officials and various commercial institutions.
LIMITATIONS OF THE STUDY
The accuracy of the study entirely depends upon the data provided by bank.
Time was one of the constraints during study.
Some data vital to the study could not be accessed due to the confidentially polices of
the bank.
Due to financial constrains advanced statistical techniques; modules could not be

learned and incorporated in the research.
CHAPTER SCHEME
INTRODUCTION
• Introduction to finance
• Indian Financial System
• Reserve bank of India
• Securities and Exchange board of India
• Banking
RESEARCH METHODOLOGY
• Title of the study

• Statement of the problems
• Objectives of the study
• Scope of the study
• Source of data and information
• Tools for analysis
• Methodology
• Limitations of the study
COMPANY PROFILE
• Origin
• Mission of SBM
• Organizational set up
• Financial profile
• Business profile
• Bank products
• Value added services
ANALYSIS AND INTERPRETATION
FINDINGS & RECOMMENDATIONS
ANNEXURE BIBLIOGRAPHY
CHAPTER. 3-
COMPANY PROFILE
ORIGIN
HDFC BANK was established in the year 1913 as Bank of Mysore Ltd. under the
patronage of the erstwhile Govt. of Mysore, at the instance of the banking committee
headed by the great Engineer-Statesman, Late Sir.M. Visvesvaraya. Subsequently, in
March 1960, the Bank became an Associate of State Bank of India. State Bank of
India holds 92.33% of shares. The Bank's shares are listed in Bangalore, Chennai, and
Mumbai stock exchanges.
Bharata Ratna Sir.M. Visvesvaraya:
“Remember, your work may be only to sweep a railway crossing, but it is your duty to
keep it so clean that no other crossing in the world is as clean as yours”.
An engineer by profession and a genius, Sir MV as he was affectionately and

respectfully addressed, was the architect of the Krishnarajasagara dam - or KRS or
Brindavan gardens - which has amazed and enchanted thousands of people from all
countries, one of the biggest dams in India which irrigates a hundred and twenty
thousand acres of land. The Bhadravati Iron and Steel Works, the Mysore sandal Oil
Factory and the Mysore soap factory, Mysore University, the HDFC BANK (it was
first named The Bank of Mysore) - all these were the gifts of one man, Sir MV - and
he gave these to his country, when it was still not free. Bharata Ratna (The gem of
India), the highest honour for a citizen of India was conferred on him.
COMPANY MISSION
A premier commercial Bank in Karnataka, with all India presence, committed to

provide consistently superior and personalized customer service backed by
employee pride and will to excel, earn progressively high returns for its
shareholders and be a responsible corporate citizen contributing to the well
being of the society.
Branch Network
The Bank has a widespread network of 671 branches (as on 31.01.2009) and 20
extension counters spread all over India which includes 6 specialized SSI branches, 4
Industrial Finance branches, 3 Corporate Accounts Branches, 4 specialized Personal
Banking Branches, 10 Agricultural Development Branches, 3 Treasury branches, 1
Asset Recovery Branch and 7 Service Branches, offering wide range of services to the
customers.
Human Resources
The Bank has a dedicated workforce of 9720 employees consisting of 3169

supervisory staff, 6551 non-supervisory staff (as on 31.03.2008). The skill and
competence of the employees have been kept updated to meet the requirement of our
customers keeping in view the changes in the environment
ORGANISATIONAL SET UP
While the Chairman of State Bank of India is also the Chairman of the Bank, The
Managing Director is assisted by a Chief General Manager and 6 General managers in
the areas of operation, commercial and international bank, planning and development,
finance and service, inspection and vigilance and it from the management team of the
bank. The bank has zonal offices headed by deputy general manager, while two zonal
officers are situated in Bangalore other the zonal officers are situated at Mysore and
Hubli respectively.
Management Committee of the Bank
Managing Director 91 80 22251855
Fax 080 22254753
Chief General Manager Mr. Dilip 91 80 22251570

Mavinkurve
Fax 080 22350563
General Manager Mr. Salil.K.Misra 91 80 30907236
(Technology)
Fax 080 22356472

General Manager Mr. P. Ram Kumar 91 80 22353487
(Operations) Fax 080 22353478
General Manager 91 80 22353471

(Commercial & Fax 080 22355978
Institutional Banking)
General Manager Mr K. Vijaya Kumar 91 80 22254040

(Treasury) Fax 080 22280682
General Manager Mr.Sebastian Chacko 91 80 22257149

(Planning & Fax 080 22353494
Development)
General Manager Mr.T.Thomas 91 80 22255617

(Vigilance & Inspection) Mathew Fax 080 22350562
Financial Profile
The paid up capital of the Bank is Rs.360 Millions as on 31.03.2008 out of which
State Bank of India holds 92.33%. The net worth of the Bank as on 31.03.2008 is
Rs.13778.10 Millions and the Bank has achieved a capital adequacy ratio of 11.73%
as at the end of March 2008. The Bank has an enviable track record of earning profits
continuously and uninterrupted payment of dividend since its inception in 1913. The
Bank earned a net profit of Rs.3188.60 Millions for the year ended March 2008 and
earning per share is at Rs.886.
Business Profile
Total deposits of the Bank as at the end of January 2009 is Rs.31817 Crores and the
total advances stood at Rs. 24713 Crores which include export credit of Rs. 10159.50
Millions. The Forex turnover of the Bank crossed Rs.336963.50 Millions during the
year March 2007 to March 2008 which is 44.66% higher.
VALUE ADDED SERVICE:
The following value added services are provided to the customers. They are-
• Core banking solution.

• Video conferencing
• Bank web-sites
• Internet banking:
Online HDFCis certified by VeriSign, the world leading internet

certification authority. Internet banking provides the following mentioned facilities to
the customers
a) Personal banking:
Under personal banking HDFCprovides-
I) Account statement
II) Bill payment
III) Demand draft
IV) Transaction enquire
V) User profile
b) Corporate banking
Safe online banking:
Online HDFCprovides several inbuilt features for safe and secure banking. You can
use the security options in the profile tab to:
Customize your Personal Profile:
Customer can set their display name, mobile number and email ID in your personal
profile. The display name is used in the Welcome message.
Manage Third Party:
Customers can define your own trusted third parties to

whom you wish to transfer funds. You can also add, delete or modify your list of
trusted third parties.
Define Limits:
Customers can set limits for demand draft and third party transfers,
in the profile section. It is advisable to set a lower limit. You can enhance the limit as
and when required.
d) There are the new internets banking services which are provided to the customers:
I) Profile enhancement
II) Inter bank transfer (account using RTGS/NEFT

facility)
III) Online Railway booking
IV) OLTAS (online tax accounting system)
Retail banking and Cross selling:
Under cross selling the services offered as follows:
I) Bancassurance
II) SBI life insurance

III) SBI Mutual Funds
IV) SBI Capital Market Ltd (SBICAP)
V) Dhanvanthari Bima Policy
Interest rates:
I) SBM’s prime lending rate
II) Interest rates on Domestic Deposits
III) Interest rates on personal segment advances
IV) Interest rates on NRE Deposit schemes, FCNR, RFC.
NRI services:
I) International banking
II) Performa for foreign currency remittance
III) Account opening system
IV) Money transfer to India
V) Remittance facility trough SBI, NY
VI) Forex Exchange facility-FAQ’s

Other related linked service:
I) RBI’s Financial Education Initiative
II) Reserve Bank of India (RBI)
III) State Bank ok of India (SBI)
IV) Indian Bank’s Association
Deposits:
New Deposit Schemes-
 Mybank surakshana
A unique deposit scheme linked with insurance cover has been introduced.
Insurance cover to a maximum of Rs. 5.00 lacs on deposits held for 5 years and
more......
 Saving Plus
In order to provide value added services to our Personal Segment customers, a

new specialized auto sweep product for Personal Segment savings bank
customers has been introduced. Click on the image for more details
 Saral Savings Bank account
This account comes with very low minimum balances as well as low / nil charges, to
cater to the needs of individual from the vast sections of population who are,
otherwise, not fulfilling certain conditions of our existing Savings Bank requirements.
 HDFCTax Saver Scheme
A Bank Term Deposit Scheme 2006 has been introduced by the Central Government
commencing from the financial year 2006-07 wherein time deposits made unto
Rs.1.00 lakh for a period of 5 years are exempted from payment of Income tax under
Sec 80C.
 Multi Option Deposit Scheme
A new deposit scheme combining the features of Current account, Savings Bank a/c,
TDR or RID a/c. The product proposes to give liquidity to the depositor with high
returns and convenience. It provides the depositor an automatic overdraft facility in
Current a/c and automatic withdrawal of Term deposits in units through SB a/c.
Depositor has to simultaneously open TDR / RID a/c for Rs.1000/-, SB a/c with
balance Rs.500/- and Current a/c.
 Savings Bank account

You can open an account with a deposit as low as Rs.100/- to Rs.300/-(Rs. 250/- for
chequebook facility and Rs.100/- without chequebook facility) depending upon the
area and earn interest at 3.5% (wef 01/03/2003) per annum. Computerised branches -
Rs.500/- and Specialised hi-tech branches - Rs.2000/-
 Term Deposits
Invest a lump sum amount for a specific period from 15 days up to 120 months and
collect interest at monthly (discounted), quarterly, half- yearly or yearly intervals.
 Reinvestment Deposits
Your investment and interest for the specified period will be paid together at the end
of the term. It gives you the highest yield of interest on your savings taking care of
your future needs like marriage, house construction, children’s higher education, etc.,
Period can be from 6 months up to 10 years.
 Power Money
A flexible term deposit scheme. Deposits are accepted in units of Rs.500/- each with a
minimum of Rs.5000/- (10 units) for a period of 1-10 years. Partial withdrawals are
permitted in units without loss of interest on premature withdrawal for the entire
deposit. Loans / Overdrafts can be availed up to 75% on the balance of units held.
 Recurring Deposits
Save bit by bit. Spend when the need is big and relax. Minimum monthly instalment
is Rs.100/- and is accepted in multiples of Rs.10/- thereafter. Deposits are accepted
from 12 months to 120 months.
 Harsha Deposit
Save with pleasure at your convenience. No penalty on your irregular remittance. You
may enhance your instalment up to 10 times your initial deposit. An ideal deposit
scheme for all, whose income is flexible and also for the salaried that may have to
incur unexpected expenditure.
HIGHLIGHTS OF THE FINANCIAL RESULTS FOR THE YEAR

ENDED 31st MARCH, 2008
The Board of Directors of HDFC BANK approved the financial results for the year
ended 31st March, 2008 at its meeting held in Mumbai on 23rd April 2008. The
highlights of the performance and working results are as under.
NET PROFIT:
The “Net Profit” of the Bank registered a growth of 28% to reach a level of Rs 318.86
Crores mainly backed by an increase of 20.35% in operating profit and lower
provisions towards bad debts.
The Bank’s Board has proposed/declared a dividend of 100% for the year 2007-08.
OPERATING PROFIT:
The Operating Profit increased to Rs.567.52 Crores as on 31st March 2008 from Rs.
471.58 Crores as on 31st March, 2007. The increase in Operating Profit is on account
of growth of 11.52% in net interest income and an increase of 20.53% in other
income. The Income from Sale and Purchase of Securities increased by over 105% to
Rs.79.91 Crores. Interest on Advances and Investments grew by 50% and 23.72%
respectively, year on year. Staff Expenses were contained at 6.29%, while other
Operating Expenses increased by 14.18%, year on year.
KEY FINANCIALS:
The Return on Assets was at 1.08%.
Return on Equity increased from 21.84% to 23.76%.
Net Worth of the Bank increased to Rs. 1341.09 Crores from Rs. 1121.56 Crores
representing a growth of 19.57%.
The Bank’s Capital Adequacy Ratio (CAR) which was at 11.47% as on 31st March,
2007 increased to 12.34% against the regulatory benchmark of 9%. The Bank has
complied with BASEL – II norms for Capital Adequacy as on 31st March 2008.
Capital to Risk Weighted Assets Ratio (CRAR) as per BASEL – II Norms was at
11.73%. Core CRAR was at 6.54%.
Earnings per Share (EPS) increased to Rs.886/- from Rs.692/- in March, 2007.
The Book Value of a share has increased to Rs.3725/- from Rs.3115/- in March 2007.
“Business per Employee” has risen from Rs.398 Lacs in March, 2007 to Rs.502 Lacs
in March, 2008.
DEPOSITS:
Aggregate deposits increased from Rs.21,395 Crores in March, 2007 to Rs.26781
Crores in March, 2008 registering a growth of 25.17% (Rs.5386 Crores).
ADVANCES:
The advances of the Bank increased from Rs.16,772 Crores in March 2007 to
Rs.21,315 Crores in March, 2008, registering a growth of Rs.4,543 Crores (27.10%)
during the year.
TOTAL BUSINESS:
The Total Business of the Bank increased by Rs.9,983 Crores to reach a level of
48,096 Crores.
CREDIT DEPOSIT RATIO:
The Credit Deposit ratio stood at 79.59% as against 78.39% in March, 2007.
PRIORITY SECTOR ADVANCES:
Priority sector advances increased by Rs.897 Crores to reach a level of Rs.6,960

Crores constituting 43% of Adjusted Net Bank Credit.
The Priority Sector Advances form 43.35% of the Adjusted Net Bank Credit (ANBC),
thereby the Bank has surpassed the bench-mark ratio of 40% to ANBC.
Impressive performance was achieved in Agricultural Segment which stood at

Rs.2,911 Crores (growth of 30.60%)
Small Business Segment which stood at Rs.709 Crores (growth of 45%) from Rs.489
Crores.
The Bank’s advances to SME sector have registered an increase of Rs.456 Crores to
reach a level of Rs.2261 Crores as on 31st March 2008 from Rs.1805 Crores in March
2007(at 3%). The growth is 25 % as against the Government of India guideline of
Year On Year growth of 20%.
Loans to Housing Sector increased from Rs.1,716 Crores to Rs.1,992 Crores (growth
of 16.09%) as at the end of March’08.
Educational Loans also witnessed increase of Rs.89 Crores (at 48%) from Rs.185
Crores to Rs.274 Crores.
AGRICULTURE FINANCE:
Agricultural advances continued to receive high priority and have recorded a growth
of 30.60% to reach Rs.2,911 Crores from Rs.2,229 Crores.
The Bank has achieved the benchmark ratio of 18% to Adjusted Net Bank Credit
(ANBC) under Agricultural Advances.
In Karnataka, Bank’s advances to agriculture sector stood at Rs.2,380 Crores and

constituted 24% of the total advances of the bank in the State.
Under the Special Agricultural Credit Plan (SACP), the bank disbursed Rs.2,243
Crores during 2007-08 as against Rs.1, 660 Crores disbursed in the previous year,
achieving a growth of 35% against the stipulated target of 24%.
FINANCING OF SELF HELP GROUPS:
12,447 groups were covered during the year with a credit assistance of Rs.108.89
Crores during the year, with a cumulative coverage of 35,025 groups and credit
assistance of Rs.278.29 Crores.
This represents a growth of 35.54 % in numbers and 39.13 % in terms of the amount
disbursed.
The Bank has been adjudged as the Second Best Bank in SHG Credit Linkage for the
year 2006-07 by NABARD.
INVESTMENTS:
The investments of the Bank in Securities, Debt and Equity stood at Rs.8,469.71
Crores.
With prudent management of the Investments portfolio, the Yield there on stood at
8% as on 31st March 2008.
FOREIGN EXCHANGE BUSINESS:
The Foreign Exchange turnover of the Bank stood at Rs.33,696 Crores recording an
increase of Rs.10,402 Crores (44.65%) over the last year.
Export Credit stood at Rs.1,015.95 Crores as against Rs.1026.95 Crores of the
previous year.
NPA MANAGEMENT:
Gross NPA was reduced from Rs. 384 Crores as on March, 2007 to Rs.359 Crores as
on March, 2008.
Gross NPA ratio declined from 2.29% in March, 2007 to 1.68% in March, 2008. Net
NPA ratio declined from 0.45% to 0.42% in the same period.
TECHNOLOGY:
Value added services such as e –payment of direct & indirect taxes and transfer of
funds through Real Time Gross Settlement, National Electronic Funds Transfer
extended at all branches.
ATMs:
Bank’s 319 ATM’s are networked with the State Bank Groups’ over 8400 ATMs
allowing easy access to anywhere anytime banking.
SERVICES:
Payment of Electricity Bills/Telephone Bills/Credit Card payment bills etc., are now
enabled in internet banking and through ATM’s of the Bank.
On Line Trading facilities for making investments in Capital Market, D-Mat and
Depository facilities have been launched during the year.
REGIONAL RURAL BANKS:
The Cauvery Kalpatharu Grameena Bank, sponsored by our Bank, has its Head Office
at Mysore, and is covering Tumkur, Mysore, Hassan, Chamarajanagar, Bangalore
Urban and Bangalore Rural Districts, having a network of 203 branches. The total
deposits and advances of the Regional Rural Bank, as on 31st March 2008, stood at
Rs. 1,240 Crores and Rs. 1,010 Crores respectively. The Regional Rural Bank has
been earning profit. The Bank has computerized all its 203 branches.
FUTURE PLANS:
The Bank proposes to reach a business level of over Rs.60, 000 Crores during the year
2008-09. Towards this end, the Bank has set a business target of Rs.7,000 Crores in
Deposits and Rs.5,500 Crores in advances during the year 2008-09, at a growth rate of
26%.
The Bank has obtained RBI’s approval to open 30 (thirty) new Branches to support
the envisaged growth.
The Bank would be setting up around 20 (twenty) Specialised Central Processing

Centres under BPR initiatives.
The Bank proposes to install 65 (sixty five) Automated Teller Machines (ATMs) of
which 43 (forty three) are Off-site and 22 (twenty two) are On-site.
Smart Cards: To promote Branch-less Banking, Smart Cards are being introduced
which will facilitate customers to transact banking business in remote places under the
Business Correspondent Model. The Smart Card scheme is being introduced in
Tumkur District on a pilot basis.
To emerge as the Bank of 1st Choice in Karnataka and to attract the young and new
customers and at the same time retain the existing customers, new IT enabled services
and products are being introduced to suit the needs of each category of customers.
Bank is aiming to achieve a higher mindshare of the customers to emerge as ‘Most

Preferred Bank in the State.
Audited Financial Results for the year ended 31st March 2008
CAPITAL & LIABILITIES 31.03.2007 31.03.2008
(Rs. in millions)
Capital 360.00 360.00
Reserves & Surplus 11053.28 13418.15
Deposits 220223.45 274623.97
Balance Sheet
Borrowings 9899.23 17315.32
Other liabilities & provisions 26890.54 24979.61
TOTAL 268426.50 330697.05
ASSETS (Rs. in millions) 31.03.2007 31.03.2008

Cash & Balance with RBI 20956.34 26615.48
Balances with banks & Money at 3427.59 2445.40
call and short notice
Investments (Net) 69897.49 84027.60
Advances (Net) 164655.36 210271.46
Fixed Assets 1333.83 1229.91
Other Assets 8155.89 6107.20
TOTAL 268426.50 330697.05
CHAPTER.4
Analysis, comparisons and Interpretation
Table 4.1
Interest rates for various Schemes
SCHEMES MINIMUM RATES Maximum Rate

Scheme for Traders 14.75 15.25
Handy Loans Scheme 12.25 15.25
Corporate Loan 14.25 15.5
Rent Plus 14.25 14.25
HDFC Paryatan Plus 14 15.5
HDFC School Plus 12.25 14.75
Analysis
The table clearly reveals that the minimum rate is 12.25 for each of Handy loan
scheme and HDFC School Plus, while it is 14 for HDFC Paryatan Plus and 14.25 for
Each corporate and rent plus. While it is highest, 14.75 for traders. Similarly,
maximum rate is highest for corporate, while in second comes scheme for traders and
Handy loan scheme with 15.25 and at last is rent plus with 14.25.
Graph 4.1
Interest rates for various Schemes
Interpretation
The graph shows that the Lowest minimum rate is for each of Handy loan scheme and
HDFCSchool Plus, while it is highest for traders. Similarly, maximum rate is highest
for corporate, while in second comes scheme for traders and Handy loan scheme and
is minimum for rent plus.
Table 4.2
Maximum amount allowed for advances
Schemes Maximum limit of loan in lacs

Scheme for Traders 50
Handy Loans Scheme 25
Rent Plus 750
HDFC Paryatan Plus 2
HDFC School Plus 25
Analysis
The maximum amount allowed for traders is 50 lacs, while it is 25 lacs for Handy
loans, it is 750 lacs for rent plus and 2 lacs for Paryatan plus and 25 lacs for school
plus.
Graph 4.2
Maximum amount allowed for advances
Interpretation
The maximum amount allowed is obviously Rent Plus while it is least for HDFC
Paryatan Plus. Second highest is enjoyed by Scheme for Traders while both Handy
Loans Scheme and HDFC School Plus hold third highest limit with same amount of
maximum loan provided.
Table 4.3
Margins of Loan in percentages
SCHEMES MARGINS IN %
Corporate Loan 75
HDFC School Plus 15
Analysis
The margin is 75 for each handy loans and the same for corporate loan, while it is 40
and 35 respectively for traders and Paryatan plus. It clearly is 15 for school plus.
Graph 4.3
Margins of Loan in percentages

Interpretation
The margin is the highest for both handy loans and the same for corporate loan, while
it is second highest for Paryatan plus and then comes traders it clearly is the least for
school plus.
Table 4.4
Period of loan repayment.

SCHEMES PERIOD OF PAYMENT IN YEARS

Corporate Loan 3
Current Account Plus 7
Rent Plus 7
HDFC School Plus 7
Analysis
Here scheme for traders has only 1 year for repayment of loans taken, whereas it is 5
years for handy loans scheme and 3 years for corporate loan, and it is 7 years for all
the other, viz, current account plus, rent plus, Paryatan plus and HDFC school plus.
Graph 4.4
Period of loan repayment

Interpretation
Here scheme for traders has the least time allotted for repayment of loans taken,
whereas it is highest for all- current account plus, rent plus, Paryatan plus and HDFC
school plus. It is moderate i.e., 5 years and 3 years for handy loans scheme and
corporate loan scheme respectively.
Table 4.5
Pattern of loans and advances according to type
Type of loan / advance As at 31.3.2009 As at 31.3.2010

Rs. Lacs % Rs. Lacs %
Bills purchased and discounted 96055 5.83% 108200 5.15%
Cash credits, overdrafts & loans 551600 33.50% 701223 33.35%
Term loans 998898 60.67% 1293291 61.51%
Total loans and advances 1646553 100.0% 2102714 100.0%
Analysis
Term loans made up the highest, i.e. 60.67% and 61.51% of total loans and advances
as at 31 March 2009 and 31 March 2010 respectively. Next to it are cash credits,
overdrafts and loans that make up 33.5% and 33.35% of total loans and advances as
on 31 March 2009 and 31 March 2010 respectively. Bills purchased and discounted
made up 5.83% and 5.15% of total loans and advances at 31 March 2009 and 31
March 2010 respectively.
Graph 4.5
Pattern of loans and advances according to type

Interpretation
A majority of the Loans and advances are term loans followed by cash credits,
overdrafts and loans. Bills purchased and discounted make up relatively a small
portion of total loans and advances.
Table 4.6
Pattern of loans and advances according to security

As at 31.3.2009 As at 31.3.2010
Type of security
Rs. Lakh % Rs. Lakh %
Secured by tangible assets 1392545 84.57% 1769114 84.13%
Covered by Bank/Govt.
63076 3.83% 48252 2.29%
Guarantees
Unsecured 190933 11.60% 285348 13.57%
Analysis
Loans and advances secured by tangible assets represented 84.57% and 84.13% of
total loans and advances as on 31 March 2009 and 31 March 2010 respectively. While
3.83% and 2.29% of loans and advance were covered by bank/Govt. guarantees on 31
March 2009 and 2010, 11.60% and 11.57% were unsecured.
Graph 4.6
Pattern of loans and advances according to security

Interpretation
A bulk of loans and advances are secured by tangible assets. A small portion of loans
and advances are covered by bank/Govt. guarantees but a sizable portion is unsecured.
The unsecured portion as a percentage of total loans and advances has increased.
Table 4.7
Pattern of loans and advances according to sector

As at 31.3.2009 As at 31.3.2010
Sector
Priority sectors 597827 36.31% 669698 31.85%
Public sectors 194265 11.80% 184464 8.77%
Others 854462 51.89% 1248553 59.38%
Analysis
Loans and advances to priority sectors were 36.31% and 31.85% of total loans and
advances as at 31 March 2009 and 31 March 2010. Loans and advances to the public
sector were 11.8% and 8.77as at 31 March 2009 and 31 March 2010 respectively.
Loans and advances granted to other sectors has increased from 51.89% of total loans
and advances to 59.38% of total loans and advances during the year ended 31 march
2008.
Graph 4.7
Pattern of loans and advances according to sector

Interpretation
It can be inferred that a majority of loans and advances are granted to sectors other
than the public sector and priority sectors. Loans and advances to other sectors are
followed by loans and advances to priority sectors in terms of percentage of total
loans and advances.
Table 4.8
Comparison of loans and advances according to type

Analysis
Term loans represent 61.51%, 58.88% and 61.23% of total loans and advances in
HDFC BANK, State bank of Indore and State bank of Hyderabad respectively while
State bank of State bank of
HDFC BANK
Indore Hyderabad
Type of loan / advance

As at 31.3.2010
As at 31.3.2010 As at 31.3.2010
Rs. Rs.
% % Rs. Lakh %
Lakh Lakh
Bills purchased and discounted 108200 5.15% 71519 3.92% 137095 3.82%
Cash credits, overdrafts &
701223 33.35% 677778 37.19% 1252603 34.94%
loans
Term loans 1293291 61.51% 1073136 58.88% 2195178 61.23%
Total loans and advances 2102714 1822433 3584876

the share of cash credits, overdrafts and loans was 33.35%, 37.19% and 34.94%. Bills
purchased and discounted accounted for 5.15% of total loans and advances provided
by HDFC BANK and this figure was 3.92% in State bank of Indore and 3.82% in
State bank of Hyderabad.
Graph 4.8
Comparison of loans and advances according to type

Interpretation
In all three banks the bulk of loans and advances are in the form of term loans but the
relative importance of term loans in the HDFC BANK was higher compared to the
other banks. Although cash credits, overdrafts and loans accounted for one third of
loans and advances, the percentage of cash credits, overdrafts and loans to total loans
was lower in HDFC BANK compared to the other two banks. HDFC BANK gives a
higher portion of bills purchased and discounted than the other two banks.
Table 4.9
Pattern of loans and advances according to maturity period

As at 31.3.2009 As at 31.3.2010
Maturity Period
1 - 14 days 45567 2.8% 63888 3.0%
15 - 28 days 19810 1.2% 22400 1.1%
29 days to 3 months 126400 7.7% 154313 7.3%
Over 3 months to 6 months 75444 4.6% 109564 5.2%
Over 6 months to one year 162647 9.9% 213205 10.1%
Over one year to 3 years 711203 43.2% 948281 45.1%
Over 3 years to 5 years 224866 13.7% 260674 12.4%
Over 5 years 280617 17.0% 330390 15.7%
Total Loans and advances 1646554 100.0% 2102715 100.0%
Analysis
As on 31 March 2010 loans with a maturity period of 1 – 14 days, 15 – 28 days, 29

days to 3 months, over 3 months to 6 months and over 6 months to one year were 3%,
1.1%, 7.3%, 5.2% and 10.1% respectively. As on the stated date loans and advances
with a maturity period of one year to 3 years, over 3 years to 5 years and over 5 years
made up 45.1%, 12.4% and 15.7% of total loans and advances.
Graph 4.9
Pattern of loans and advances according to maturity period

Interpretation
Although the loans and advances granted have a range of maturity periods a major
portion of loans and advances have a maturity period of over one year to 3 years.
More than two third of loans and advances are for over a year.
Table 4.10
Comparison of return on advances
State bank of
HDFC BANK State bank of Indore
Hyderabad
2009 2010 2009 2010 2009 2010

Interest/ discount
earned on advances / 126999 190494 221215 314462 119578 169646
bills (Rs. Lakh)
Average loans and
1411100 1874941 2449779 3199003 1361936 1678002
advances (Rs. Lakh)
Return on advances
9.00 10.16 9.03 9.83 8.78 10.11
(%)
Return on advances = Interest earned on advances *100 / Average loans & advances
Analysis
The return on loans and advances made by HDFC BANK is 10.16% in the year ended
31 March 2010 compared with 9.83% in State bank of Hyderabad and 10.11% in
State bank of Indore. The rate of return has increased from 9% to 10.16% in the
HDFC BANK during the year ended 31 March 2010.
Graph 4.10
Comparison of return on advances
Interpretation
The HDFC BANK enjoys the highest return on loans and advances compared to State
bank of Hyderabad and state bank of Indore. The rate of return has increased in the
year ended 31 March 2010. The incremental increase in return of HDFC BANK is
higher than State bank of Hyderabad but lower than State bank of Indore.
Table 4.11
Interest rates on commercial loans for various banks
Banks MINIMUM RATES (%) Maximum Rate (%)
HDFC BANK 12.25 15.25
State Bank of Indore 12.5 16
Bank of India 12 16
Bank of Maharastra 10 13.75
Corporate Bank 12.25 14.5
Analysis
Here, the table shows that HDFC BANK has 12.25 and 15.25 % rate of interest as
minimum and maximum interest rate. Similarly, State Bank of Indore has 12.2 %
Bank of India 12, Bank of Maharastra, 10 Corporate Bank, 12.25 % interest rate, while
maximum for them are 16, 16, 13.75, 14.5 respectively.
Graph 4.11
Interest rates on commercial loans for various banks

Interpretation
Here, the graph reveals that shows that Bank of Maharastra has the lowest minimum
rate of interest rate, while the highest is for State Bank of Indore. HDFC BANK, Bank
of India, Corporate Bank, have moderate rate. Maximum interest rate is for State Bank
of Indore and Bank of India, while minimum is for Bank of Maharastra, Corporate Bank
and HDFC BANK have moderate compared to other.
Table 4.12
Average Margin for loan for various Banks

Banks Margin
HDFC BANK
20
State Bank of Indore
35
Bank of India
25
Bank of Maharastra
25
Corporate Bank
30
Analysis
Here the table shows that the margin kept by bank as security measures are 20 for
HDFC BANK, 35 for state Bank of Indore, 5 for both bank of India and Bank of
Maharastra, while it is 30 for Corporate bank.
Graph 4.12
Average Margin for loan for various Banks

Interpretation
Here the graph clearly depicts that State Bank of Indore has the highest average
margin followed by Corporae Bank and then come bank of Maharastra and Bank of
India which are equal, while HDFC BANK has the lowest margin rate.
Table 4.13
Table showing the nature of advances for the schemes

SCHEMES INTEREST RATES

Scheme for Traders Term
Handy Loans Scheme Term
Corporate Loan Short term/ term
Rent Plus Term
HDFC Paryatan Plus Term/ Short term
HDFC School Plus Term
Analysis & Interpretation
Here the Table clearly depicts that most of the schemes, i.e. for Traders, Handy loan
scheme, Rent Plus and School Plus allows for long term while corporate loan and
Paryatan Plus can be availed for either short term or long term depending on the
purpose for which advance is taken.
Table 4.14
Table showing Insurance required for the advances…
SCHEMES INSURANCE REQUIRED

Scheme for Traders 100% of securities
Handy Loans Scheme 100% of securities

Rent Plus All assets covered
HDFC Paryatan Plus 100 % of the loan
HDFC School Plus Adequate
Here, we can see that Traders, Handy loan rent Plus and Paryatan Plus require cent
percent security with Insurance. While HDFC School Plus is little bit flexible with
adequate insurance required. Thus most of the loans can be considered safe.
Table 4.15
Table showing the mortgage required
SCHEMES MORTGAGE REQUIRED

Scheme for Traders Immovable property
Handy Loans Scheme Immovable property
Corporate Loan Financial assets, Guarantee
Rent Plus Receivables
HDFC Paryatan Plus Immovable property
HDFC School Plus Immovable property
We can see in the table that the mortgage required as securities are mostly
immovable. It is true for Scheme for traders, Handy loan scheme, Paryatan Plus and
School Plus. While corporate loan should get financial assets and guarantee as
mortgage, also, rent plus requires receivables as mortgage.
Table 4.16
Table showing the eligibility required for the loan
SCHEMES ELIGIBILITY
Scheme for Traders Under C&I segment only
Handy Loans Scheme For trade and Services Sector
Corporate Loan Corporate in C&I and SSI sector
Current Account Plus Existing and new accounts holders
Rent Plus Owners of buildings and commercial
properties
HDFC Paryatan Plus Involvement in tourism activities
HDFC School Plus Educational institution with adequate

income
The tale shows that the various schemes cover different eligibility. Obviously, the
cover the various dimensions of commercial purpose. It also covers Service sector and
real estate. Also hospitality and Education have been touched.
Table 4.17
Table showing the eligible purpose of loans
SCHEMES ELIGIBLE PURPOSES

Scheme for Traders Working Capital needs
Handy Loans Scheme Acquisition of Fixed Assets & General
Trade
Corporate Loan Genuine Commercial purpose in Regular
Business
Rent Plus Meet liquidity mis-match and other purpose
HDFC Paryatan Plus Construction & modernization for tourism
HDFC School Plus Construction/Renovation of school buildings
We can see that the purpose for which can be availed is for both long term and short
term requirement of the commercial institutions. It can be availed to meet the current
and future demand of the business and also for the purpose for real estate and schools
like development and renovation.
CHAPTER 5: FINDINGS, RECOMMEMDATION &

CONCLUSIONS
SUMMERY OF FINDING
 Schemes for corporate and Paryatan Plus have the highest interest rates among
the other schemes, while the lowest is for Handy loan scheme and Schools.
 The maximum amount of loan among all the schemes can be by real estate as
per Rent Plus while it is least for hospitality with HDFC Paryatan Plus.
 The margin is the highest for both handy loans and the same for corporate loan
thus they are the most secured loan for the banker. While it is the least for
school plus as such, it may not be as secured as the other schemes.

 Here scheme for traders has the least time allotted for repayment of loans
taken as they are mostly granted for short term purpose, whereas it is the
highest for all- current account plus, rent plus, Paryatan plus and HDFC school
plus which is obviously due to their long term nature.
 A majority of the Loans and advances are term loans followed by cash credits,
overdrafts and loans. Bills purchased and discounted make up relatively a
small portion of total loans and advances.
 A bulk of loans and advances are secured by tangible assets. A small portion
of loans and advances are covered by bank/Govt. guarantees but a sizable
portion is unsecured.
 The unsecured portion as a percentage of total loans and advances has
increased.
 It can be inferred that a majority of loans and advances are granted to sectors
other than the public sector and priority sectors. Loans and advances to other
sectors are followed by loans and advances to priority sectors.
 The percentage of cash credits, overdrafts and loans to total loans was lower in
HDFC BANK compared to the other two banks.
 More than two third of loans and advances are for over a year. A major of the
remaining portion of loans and advances have a maturity period of over one
year to 3 years.
 The HDFC BANK enjoys the highest return on loans and advances compared
to State bank of Hyderabad and state bank of Indore.
 Maximum interest rate is for State Bank of Indore and Bank of India, while
minimum is for Bank of Maharastra, Corporate Bank and HDFC BANK have
moderate compared to other.
 HDFC BANK has the lowest margin rate compared to State Bank of Indore,
Corporae Bank, Maharastra and Bank of India.
 The mortgage required as securities are mostly immovable.
 Obviously, the cover the various dimensions of commercial purpose. It covers
Service sector and real estate hospitality and Education.
RECOMMENDATIONS
 Since The Schemes for corporate and Paryatan Plus have the highest interest
rates among the other schemes, If the bank decreases it, it has potentiality to
attract even more customers.
 Only real estate can avail needful amount, i.e. 750 lacs, other can avail only as
low as 2 – 50 lacs, which should be increased to some extent.
 The margin for handy and corporate should be made little bit lower to be in
par with other banks and attract more customers.

 The traders scheme should get higher time limit to repay and renew the loan
availed and to meet their varied needs.
 Besides tangible assets, the securities like bank and government guarantee
should be encouraged, since it has got significantly less focus.
 The unsecured portion of advances that has increased over the last year needs
attention not to make it default.
 Public and priority sectors should get still more focus.
 Since HDFC BANK has the least average margin rate, it should be studied and
given more attention.
CONCLUSION
The project titled “An analysis of Commercial and Institutional Advance Schemes”
was undertaken to analyse and interpreter the various schemes that HDFC BANK has
come up to meet Commercial and institutional need.
All information has been collected from HDFC and other banks’ websites and
discussion with the bank officials who are well aware of the various advance schemes
to be able to tackle the confusions.

Overall, the various commercial and institutional schemes that HDFC offers for the
needing their various demands are appropriately thought of. They are framed to cover
a wide scope an area of business so that they could deal with their various short term
and long term needs.
Nevertheless, the bank needs always be careful about the margin it has for the loans
and the securities therein. Also it needs to keep on studying its interest rate and should
make it in par with the other banks. Also it should come up with new schemes to meet
the ever changing demand of the market.
BIBLIOGRAPHY
1) BOOKS REFERRED
S.NO BOOKS NAME AUTHORS PUBLISHER

.
C.R Kothari New Age International
1. Research Methodology
2. Financial Markets Gordon Himalaya Publishing
& House
Services &
Natarajan
3. Law and Practice Seven Hills Book
of Publications
Banking K.Venekataramana
2) Dailies / journals / reports:
Sl. no Title Publishers
1. Annual Report HDFC BANK
2. Statistical tables relating to banks in RBI

India 2009-2010
3. A profile of banks 2009 - 2010 RBI
4. A report on trend and progress of RBI

banking in India 2009 - 2010
WEB SITES
 www.hdfcbank.com
 www.economywatch.com
 www.rbi.org.in
 www.google.com
 Websites of the various banks concerned.
1
ANNEXURE

Ravishankar Project

Diunggah oleh

Informasi Dokumen

Deskripsi Asli:

Hak Cipta

Format Tersedia

Bagikan dokumen Ini

Bagikan atau Tanam Dokumen

Opsi Berbagi

Apakah menurut Anda dokumen ini bermanfaat?

Apakah konten ini tidak pantas?

Hak Cipta:

Format Tersedia

Ravishankar Project

Diunggah oleh

Hak Cipta:

Format Tersedia

Commercial and institutional advance schemes

Financial System of any country consists of financial markets, financial

Providing or securing finance by itself is a distinct activity or function, which results

CONSTITUENTS OF A FINANCIAL SYSTEM

financial advertisers financial consultants, primary dealers, satellite dealers, self

Intermediary Market Role

Stock Exchange Capital Market Secondary Market to securities

Corporate advisory services,

Issue securities to the investors

Primary Dealers Satellite Market making in government

MONEY MARKET INSTRUMENTS

2. Inter-Bank Term Money

Certificates of Deposit (CDs) is a negotiable money market instrument issued in

CP is a note in evidence of the debt obligation of the issuer. On issuing commercial

CAPITAL MARKET INSTRUMENTS

INDIAN FINANCIAL SYSTEM

Non-banking Financial Institutions provide loans and hire-purchase finance, mostly

Reserve bank of India (RBI)

General superintendence and direction of the Bank's affairs

Primary objective of BFS is to undertake consolidated supervision of the financial

Banking Regulation Act, 1949 governs the financial sector

Regulator and supervisor of the financial system:

Manager of Foreign Exchange:

Performs a wide range of promotional functions to support national objectives.

Banker to the Government:

Maintains banking accounts of all scheduled banks.

SECURITIES AND EXCHANGE BOARD OF INDIA

 Regulations of exchange and self- regulatory obligations, registration and

 Promote investors education

According to preamble of the SEBI act, the primary objectives of the

 To protect the interest of investors of that is a steady flow of savings in to the

 To promote efficient services by brokers, merchant bankers and other

 Power of issue directions.

 Prohibition of manipulative and deceptive devices, insider trading and

MEASURES TAKEN BY SEBI

 Guidelines for disclosure and investors protection.

 Guideline to development financial institution for disclosure and investor

 Regulatory measures for stock brokers and sub brokers, underwriters,

trading bankers to an issue, depositors and participants, venture capital

Banks play a significant role in the economic n social development of a country.

EVOLUTION OF BANKING INSTITUTIONS

Prof. Kinley defines a bank as an establishment which makes to individuals such

Section 6 of Banking Companies Act of 1949 specifies a good number of

underwrite shares, debentures of business companies etc. The bank is prohibited in

The basic objective of nationalization of commercial banks was to provide funds to

SHORT TERM LOANS FINANCED BY COMMERCIAL BANKS

TERM FINANCING BY COMMERCIAL BANKS

Some of the specialized financial institutions providing term loans are-

Industrial Finance Corporation of India (IFCI)

Industrial development bank of India (IDBI)

Industrial credit and Investment Corporation of India (ICICI)

Industrial Reconstruction Corporation of India (IRCI)

State Financial corporations (SFCs)

Unit trust of India (UTI)

Small Industries Development Bank of India (SIDBI).

“AN AN ALYSIS AN D CO M PARISON OF CO M M ERCIAL AN D INSTITUTIO NAL ADVANCE

FINANCE is a discipline concerned with determining value and making decisions.

SCOPE OF THE STUDY

Corporate /Industrial undertakings.

Traders, Owners of buildings and commercial properties.

Applicants engaged in trade, services activities.

SOURCES OF DATA AND INFORMATION:

Brochures and catalogs of the company.