ASSIGNMENT-1

BANKING AND INSURANCE

TOPIC:- Comparative analysis of SBI and

HDFC
 INTRODUCTION OF THE BANKS

HDFC
HDFC Bank was amongst the first to receive an 'in-principle' approval
from the Reserve Bank of India (RBI) to set up a bank in the private
sector from Housing Development Finance Corporation Limited
(HDFC), in 1994 during the period of liberalization of the banking
sector in India. HDFC India was incorporated in August 1994 in the
name of 'HDFC Bank Limited'. HDFC Bank , one amongst the firsts of
the new generation, tech-savvy commercial banks of India, was set up in
august 1994 after the Reserve Bank of India allowed setting up of Banks
in the private sector
. The Bank was promoted by the Housing Development Finance
Corporation Limited, a premier housing finance company (set up in
1977) of India.
HDFC Bank, has a network of over 684 branches spread over 316 cities
across India. All branches are linked on an online real-time basis.
Customers in over 120 locations are serviced through Telephone
Banking. The Bank also has a network of about over 1605 networked
ATMs across these cities.
SBI
State Bank of India (SBI) is India's largest commercial bank. SBI has a
vast domestic network of over 9000 branches (approximately 14% of all
bank branches) and commands one-fifth of deposits and loans of all
scheduled commercial banks in India.The State Bank Group includes a
network of eight banking subsidiaries and several non-banking
subsidiaries offering merchant banking services, fund management,
factoring services, primary dealership in government securities, credit
cards and insurance.

The eight banking subsidiaries are:

1-State Bank of Bikaner and Jaipur (SBBJ)
2-State Bank of Hyderabad (SBH)
3-State Bank of India (SBI)
4-State Bank of Indore (SBIR)
5-State Bank of Mysore (SBM)
6-State Bank of Patiala (SBP)
7-State Bank of Saurashtra (SBS)
8-State Bank of Travancore (SBT)
The origins of State Bank of India date back to 1806 when the Bank of
Calcutta (later called the Bank of Bengal) was established. In 1921, the
Bank of Bengal and two other Presidency banks (Bank of Madras and
Bank of Bombay) were amalgamated to form the Imperial Bank of India.
In 1955, the controlling interest in the Imperial Bank of India was
acquired by the Reserve Bank of India and the State Bank of India (SBI)
came into existence by an act of Parliament as successor to the Imperial
Bank of India.

SCHEMES PROVDED BY SBI:-

 Terms deposit scheme

 Recurring deposits scheme

 Loans

 SBI SARAL Personal loan

 Education loan

 Car loan

 Home loan

 Medi-Plus loan

TERM DEPOSITS

 Provide security, trust and competitive rate of interest.

  Flexibility in period of term deposit from 15 days to 10 years

 Flexibility in choosing the amount one wish to invest and the maturity period.

RECURRING DEPOSIT:-
Recurring deposit refers to a little investment by an investor to meet his financial goals of future.
Recurring deposit provides the element of compulsion to save at high rates of interest, wide
choice in period of deposit.

Features:-
 Flexibility in period of deposit with maturity ranging from 12 months to 120 months.
 Low minimum monthly deposit amount.
 One can start a Recurring Deposit with SBI for a monthly instalment of Rs.100/- only.

SCHEMES PROVDED BY HDFC:-

 DEPOSITS

 CARDS

 ONLINE INVESTEMENT

 Loans

 Personal loan

 Education loan

 Car loan

 Home loan

 Property loan
 Some of the HDFC deposit products are:-

A Savings Account for everyone with a host of convenient features and banking channels to
transact through. So now you can bank at your convenience, without the stress of waiting in
queues.

CARDS :-

HDFC Bank offers a variety of cards to suit your different transactional needs. One can use these
cards for shopping, traveling or any other type of payments. These cards are of many types and
used for different purpose.

The different types of cards are:-

1. Credit cards: - Credit Cards give a smart way to shop, and offer flexibility and
convenience in managing finances. HDFC credit cards provide a lot of exciting offers
like low interest rate and high cash and credit limit.

2. Travel cards: - Travel cards give a flexibility to travel around the world. One can pay in
currency of various countries for traveling with the help of this card.

3. Debit Card: - this is a most common card. This can be used for shopping, billing of
electricity and telephony.

 Loans:-

HDFC provides various loan schemes. It is a no. one home loan and car loan provider. Along
with this it provides personal and education loan.

Balance Sheet of State Bank of ------------------- in Rs. Cr. -------------------

India
Mar '06 Mar '07 Mar '08 Mar '09 Mar '10
 12 mths 12 mths 12 mths 12 mths 12 mths

Capital and Liabilities:

Total Share Capital 526.30 526.30 631.47 634.88 634.88
Equity Share Capital 526.30 526.30 631.47 634.88 634.88
Share Application Money 0.00 0.00 0.00 0.00 0.00
Preference Share Capital 0.00 0.00 0.00 0.00 0.00
Reserves 27,117.79 30,772.26 48,401.19 57,312.82 65,314.32
Revaluation Reserves 0.00 0.00 0.00 0.00 0.00
Net Worth 27,644.09 31,298.56 49,032.66 57,947.70 65,949.20
Deposits 380,046.06 435,521.09 537,403.94 742,073.13 804,116.23
Borrowings 30,641.24 39,703.34 51,727.41 53,713.68 103,011.60
Total Debt 410,687.30 475,224.43 589,131.35 795,786.81 907,127.83
Other Liabilities & Provisions 55,538.17 60,042.26 83,362.30 110,697.57 80,336.70
Total Liabilities 493,869.56 566,565.25 721,526.31 964,432.08 1,053,413.73
Mar '06 Mar '07 Mar '08 Mar '09 Mar '10

12 mths 12 mths 12 mths 12 mths 12 mths

Assets
Cash & Balances with RBI 21,652.70 29,076.43 51,534.62 55,546.17 61,290.87
Balance with Banks, Money at Call 22,907.30 22,892.27 15,931.72 48,857.63 34,892.98
Advances 261,641.53 337,336.49 416,768.20 542,503.20 631,914.15
Investments 162,534.24 149,148.88 189,501.27 275,953.96 285,790.07
Gross Block 7,424.84 8,061.92 8,988.35 10,403.06 11,831.63
Accumulated Depreciation 4,751.73 5,385.01 5,849.13 6,828.65 7,713.90
Net Block 2,673.11 2,676.91 3,139.22 3,574.41 4,117.73
Capital Work In Progress 79.82 141.95 234.26 263.44 295.18
Other Assets 22,380.84 25,292.31 44,417.03 37,733.27 35,112.76
Total Assets 493,869.54 566,565.24 721,526.32 964,432.08 1,053,413.74

Contingent Liabilities 191,819.34 259,536.57 736,087.59 614,603.47 429,917.37

Bills for collection 57,618.44 70,418.15 93,652.89 152,964.06 166,449.04
Book Value (Rs) 525.25 594.69 776.48 912.73 1,038.76

Key Financial Ratios of State Bank of India ------------------- in Rs. Cr. -------------------
 Mar
Mar '07 Mar '08 Mar '09 Mar '10
'06

Investment Valuation Ratios

Face Value 10.00 10.00 10.00 10.00 10.00
Dividend Per Share 14.00 14.00 21.50 29.00 30.00
124.7
Operating Profit Per Share (Rs) 147.72 173.61 230.04 229.63
7
719.5
Net Operating Profit Per Share (Rs) 833.38 899.83 1,179.45 1,353.15
4
178.3
Free Reserves Per Share (Rs) 184.43 356.61 373.99 412.36
3
Bonus in Equity Capital -- -- -- -- --
Profitability Ratios
Interest Spread 4.31 4.20 4.32 4.34 3.82
Adjusted Cash Margin(%) 13.06 11.43 12.81 13.04 -42.79
Net Profit Margin 11.21 10.12 11.65 12.03 10.54
Return on Long Term Fund(%) 97.89 99.20 86.83 100.35 23.26
Return on Net Worth(%) 15.94 14.50 13.72 15.74 13.89
Adjusted Return on Net Worth(%) 15.93 14.47 13.70 15.74 -57.84
Return on Assets Excluding 525.2
594.69 776.48 912.73 1,038.76
Revaluations 5
Return on Assets Including 525.2
594.69 776.48 912.73 1,038.76
Revaluations 5
Management Efficiency Ratios
Interest Income / Total Funds 7.94 8.27 8.82 8.88 8.52
Net Interest Income / Total Funds 3.71 3.85 3.87 3.79 3.82
Non Interest Income / Total Funds 0.30 0.19 0.14 0.11 0.10
Interest Expended / Total Funds 4.23 4.42 4.96 5.09 4.69
Operating Expense / Total Funds 2.34 2.39 2.16 2.06 2.38
Profit Before Provisions / Total Funds 1.52 1.54 1.74 1.75 1.46
Net Profit / Total Funds 0.92 0.86 1.04 1.08 0.91
Loans Turnover 0.16 0.15 0.15 0.16 0.15
Total Income / Capital Employed(%) 8.24 8.46 8.96 8.99 8.62
Interest Expended / Capital
4.23 4.42 4.96 5.09 4.69
Employed(%)
Total Assets Turnover Ratios 0.08 0.08 0.09 0.09 0.09
Asset Turnover Ratio 5.10 5.44 6.32 7.20 7.26
Profit And Loss Account Ratios
Interest Expended / Interest Earned 56.32 59.35 65.23 67.28 66.66
Other Income / Total Income 3.60 2.25 1.56 1.18 1.21
Operating Expense / Total Income 28.37 28.19 24.13 22.91 27.61
Selling Distribution Cost Composition 0.28 0.20 0.30 0.33 0.26
Balance Sheet Ratios
Capital Adequacy Ratio 11.88 12.34 13.47 14.25 13.39
Advances / Loans Funds(%) 65.66 76.16 78.31 78.34 74.22
Debt Coverage Ratios
Credit Deposit Ratio 62.11 73.44 77.51 74.97 75.96
Investment Deposit Ratio 48.14 38.22 34.81 36.38 36.33
Cash Deposit Ratio 5.15 6.22 8.29 8.37 7.56
Total Debt to Owners Fund 13.75 13.92 10.96 12.81 12.19
Financial Charges Coverage Ratio 1.40 1.37 1.37 1.36 0.33
Financial Charges Coverage Ratio
1.25 1.22 1.23 1.23 1.21
Post Tax
Leverage Ratios
Current Ratio 0.05 0.05 0.07 0.04 0.04
Quick Ratio 5.50 6.52 6.15 5.74 9.07
Cash Flow Indicator Ratios
Dividend Payout Ratio Net Profit 19.06 18.98 22.64 22.90 23.36
Dividend Payout Ratio Cash Profit 16.35 16.75 20.56 21.13 21.20
Earning Retention Ratio 80.93 80.97 77.33 77.11 105.61
Cash Earning Retention Ratio 83.64 83.21 79.41 78.88 78.82
AdjustedCash Flow Times 74.03 84.87 72.64 75.05 79.54

Mar
Mar '07 Mar '08 Mar '09 Mar '10
'06

Earnings Per Share 83.73 86.29 106.56 143.67 144.37

525.2
Book Value 594.69 776.48 912.73 1,038.76
5
Balance Sheet of HDFC ------------------- in Rs. Cr. -------------------
Bank
Mar '05 Mar '06 Mar '07 Mar '08 Mar '09

12 mths 12 mths 12 mths 12 mths 12 mths

Capital and Liabilities:

Total Share Capital 309.88 313.14 319.39 354.43 425.38
Equity Share Capital 309.88 313.14 319.39 354.43 425.38
Share Application Money 0.43 0.07 0.00 0.00 400.92
Preference Share Capital 0.00 0.00 0.00 0.00 0.00
Reserves 4,209.97 4,986.39 6,113.76 11,142.80 14,226.43
Revaluation Reserves 0.00 0.00 0.00 0.00 0.00
Net Worth 4,520.28 5,299.60 6,433.15 11,497.23 15,052.73
Deposits 36,354.25 55,796.82 68,297.94 100,768.60 142,811.58
Borrowings 5,290.01 4,560.48 2,815.39 4,478.86 2,685.84
Total Debt 41,644.26 60,357.30 71,113.33 105,247.46 145,497.42
Other Liabilities & Provisions 5,264.46 7,849.49 13,689.13 16,431.91 22,720.62
Total Liabilities 51,429.00 73,506.39 91,235.61 133,176.60 183,270.77
Mar '05 Mar '06 Mar '07 Mar '08 Mar '09

12 mths 12 mths 12 mths 12 mths 12 mths

Assets
Cash & Balances with RBI 2,650.13 3,306.61 5,182.48 12,553.18 13,527.21
Balance with Banks, Money at Call 1,823.87 3,612.39 3,971.40 2,225.16 3,979.41
Advances 25,566.30 35,061.26 46,944.78 63,426.90 98,883.05
Investments 19,349.81 28,393.96 30,564.80 49,393.54 58,817.55
Gross Block 1,290.51 1,589.47 1,917.56 2,386.99 3,956.63
Accumulated Depreciation 582.19 734.39 950.89 1,211.86 2,249.90
Net Block 708.32 855.08 966.67 1,175.13 1,706.73
Capital Work In Progress 0.00 0.00 0.00 0.00 0.00
Other Assets 1,330.57 2,277.09 3,605.48 4,402.69 6,356.83
Total Assets 51,429.00 73,506.39 91,235.61 133,176.60 183,270.78

Contingent Liabilities 84,585.95 138,898.60 202,126.73 582,835.94 396,594.31

Bills for collection 5,342.70 5,239.26 7,211.88 17,092.85 17,939.62
Book Value (Rs) 145.86 169.24 201.42 324.38 344.44

Key Financial Ratios of ------------------- in Rs. Cr. -------------------

HDFC Bank

Mar
Mar '06 Mar '07 Mar '08 Mar '09
'05

Investment Valuation Ratios

Face Value 10.00 10.00 10.00 10.00 10.00
Dividend Per Share 4.50 5.50 7.00 8.50 10.00
Operating Profit Per Share (Rs) 41.65 52.56 86.19 107.32 92.36
Net Operating Profit Per Share (Rs) 120.17 177.80 259.98 348.57 464.77
Free Reserves Per Share (Rs) 99.78 132.01 155.69 269.89 252.37
Bonus in Equity Capital -- -- -- -- --
Profitability Ratios
Interest Spread 5.39 5.25 5.47 7.08 6.98
Adjusted Cash Margin(%) 26.63 23.11 19.07 15.01 13.15
Net Profit Margin 17.77 15.55 13.57 12.82 11.35
Return on Long Term Fund(%) 50.77 60.06 74.91 62.34 83.31
Return on Net Worth(%) 23.67 22.73 23.57 13.83 15.32
Adjusted Return on Net Worth(%) 14.72 16.42 17.75 13.82 15.29
Return on Assets Excluding
1.66 1.52 1.52 324.38 344.44
Revaluations
Return on Assets Including
1.66 1.52 1.52 324.38 344.44
Revaluations
Management Efficiency Ratios
Interest Income / Total Funds 7.95 8.91 10.08 11.01 12.50
Net Interest Income / Total Funds 5.14 5.82 6.22 6.66 6.86
Non Interest Income / Total Funds 0.04 0.05 0.13 0.04 --
Interest Expended / Total Funds 2.81 3.09 3.86 4.36 5.63
Operating Expense / Total Funds 2.38 3.19 2.88 3.27 4.38
Profit Before Provisions / Total Funds 2.09 2.01 2.91 3.19 2.26
Net Profit / Total Funds 1.82 1.79 1.68 1.42 1.42
Loans Turnover 0.17 0.18 0.20 0.22 0.24
Total Income / Capital Employed(%) 7.99 8.96 10.21 11.05 12.50
Interest Expended / Capital
2.81 3.09 3.86 4.36 5.63
Employed(%)
Total Assets Turnover Ratios 0.08 0.09 0.10 0.11 0.13
Asset Turnover Ratio 2.89 3.50 4.33 5.18 5.00
Profit And Loss Account Ratios
Interest Expended / Interest Earned 42.53 43.11 46.15 48.32 54.56
Other Income / Total Income 0.55 0.56 1.22 0.35 --
Operating Expense / Total Income 29.84 35.58 28.21 29.55 35.06
Selling Distribution Cost Composition 1.47 1.45 0.90 0.92 0.54
Balance Sheet Ratios
Capital Adequacy Ratio 12.16 11.41 13.08 13.60 15.69
Advances / Loans Funds(%) 68.21 68.75 71.41 71.93 78.87
Debt Coverage Ratios
Credit Deposit Ratio 64.87 65.79 66.08 65.28 66.64
Investment Deposit Ratio 57.83 51.81 47.51 47.29 44.43
Cash Deposit Ratio 7.78 6.46 6.84 10.49 10.71
Total Debt to Owners Fund 8.04 10.53 10.62 8.76 9.75
Financial Charges Coverage Ratio 2.00 1.87 1.90 1.79 1.44
Financial Charges Coverage Ratio
1.76 1.67 1.50 1.38 1.29
Post Tax
Leverage Ratios
Current Ratio 0.03 0.04 0.04 0.04 0.04
Quick Ratio 5.61 5.18 4.07 4.89 5.23
Cash Flow Indicator Ratios
Dividend Payout Ratio Net Profit 23.99 22.55 22.91 22.16 22.16
Dividend Payout Ratio Cash Profit 16.00 15.17 16.32 18.93 19.10
Earning Retention Ratio 76.00 77.44 77.11 77.83 77.79
Cash Earning Retention Ratio 83.99 84.83 83.69 81.07 80.87
AdjustedCash Flow Times 36.45 43.11 42.60 54.14 54.91

Mar
Mar '06 Mar '07 Mar '08 Mar '09
'05

Earnings Per Share 27.55 35.64 43.29 44.87 52.77

Book Value 145.86 169.24 201.42 324.38 344.44

COMPARISON OF FINANCIAL PERFORMANCE INDICATORS OF SBI AND HDFC

ADVANTAGES OF SBI OVER HDFC:

 SBI is the largest and oldest bank of India. Its major stocks are held by government of
India. So this bank enjoys the trust of its Customers a lot.
 SBI offers flexible tenures of loan repayment.

 State bank of India has vast experience in the field of SME

(Small and Medium Enterprises) Financing.

 As it is the oldest name so it enjoys public trust a lot.

SBI have four national level Apex Training Colleges and 54

Learning Centers spread all over the country the Bank is

Continuously engaged in skill enhancement of its employees.

Some of the training programs are attended by bankers from

banks in other countries.

 SBI group, which has over 10,000 branches, is planning to add another 3,000 branches.

 It is also set to become the largest issuer of debit cards and is the second largest credit
card issuer.
Comparison

PERIOD OF DEPOSIT
SBI – Flexibility in period of deposit with maturity ranging from 6 months to 10 years.
HDFC - The minimum period is 6 months, and thereafter-in multiples of 3 months.

MINIMUM DEPOSIT AMOUNT

You can open a Recurring Deposit with SBI for a nominal amount of Rs. 100/- only. The
minimum balance of deposit in HDFC Bank is Rs. 500 per month and thereafter, in
multiples of Rs. 100.

DEFAULT PAYMENT
Delayed monthly installments in SBI attract minimal penalty at the rate of Rs. 1.50/- for
every Rs. 100/- per month for deposits up to 5 years and Rs. 2/- per Rs. 100/- in case of
longer maturities. Installments payable in multiples of Rs.10/-.

MATURITY PERIOD
SBI – Minimum maturity period is 46 days.
HDFC – Minimum maturity is 91 days.

STATE BANK OF INDIA

1. Strengths

Convenience to reach-It is the oldest bank of the country. Having nationwide coverage,
each and every part of the country has at least one branch.

Minimum amount required to open the account: For SBI it is only Rupees100 to open
the account making RD account more affordable.

Minimum period for renewing the account: It is not necessary to renew the account in
multiples of 3 as in case of HDFC.

Reputation: Having the reputation of being the India’s largest branch is the biggest
strength of HDFC.

2. Weakness

Government sector image-It is general perception that government sectors lack in

customer orientation.

Lack of automation in all the branches, hindering the facility of any -where accessibility.

Lack of Customer Orientation among the employees.

Less effort in maintaining Customer Relationship.

In-Branch facilities are also not up to the mark.

3. Opportunities

Maintaining strong Customer Relationship with the customers so that their government
sector image can be changed.

Through automating its each and every branch, it can take better advantage of its
nationwide coverage.

4. Threats

Opening Banking Sector for FDI pose major threat for Nationalized Banks. Its major
competitors are HDFC and ICICI

HDFC

1. Strengths

Customer Orientation Approach among the employees

Automation of each and every branch

Good ambience and In-Branch services

Strong Advertising and sales force team.

Enjoy the image of being private sector bank.

Customer satisfaction is high.

Bank believes in Retaining Acquisition than Customer Acquisition.

2. Weakness

Lack of Nationwide Coverage

Minimum account required to open the account is comparatively high.

3. Opportunity

Should aim at nationwide coverage specially the small towns and villages.

Introducing more flexibility in Minimum amount required to open the account and period
of renewal.
4. Threats

All the new private sector banks and nationalized banks that are moving towards
Customer Orientation. Major competitor is SBI and PNB.

CONCLUSION:

The gap between SBI and the rest of the bank is so wide that SBI comes out as number
one on almost all counts. This includes assets, branch network, ATM network, number of
employees, and size of profits. The only place that HDFC Bank has been able to upset the
monolith has been in the area of market capitalization.

One reason why SBI has lagged in market cap despite its size has been its inability to
unlock value from its various businesses. However, there are signs that this is changing
and the bank is making attempts to realize the value of its investments in the life
insurance and asset management business.
SBI and HDFC are both India’s largest banks. Their growth means India’s growth. And
by this competition customers will be benefited and Indian economy will get a boost.