A Project Report On Financial Performance Based On Ratios at HDFC Bank Simran PDF

MAJOR PROJECT REPORT
ON
“A Study on Analysis the Financial Performance of HDFC
Banks”
SUBMITTED IN FULFILLMENTS FOR THE AWARD OF THE DEGREE OF

BACHELORS OF BUSINESS ADMINSTRATION (BANKING &
INSURANCE)
2015-2018
TO
GURU GOBIND SINGH INDRAPRASTHA UNIVERSITY, DELHI
SUBMITTED BY:-
SIMRAN
03714901815
MAHARAJA SURAJMAL INSTITUTE

C-4 JANAKPURI , NEW DELHI-110058
(G.G.S.I.P. UNIVERSITY)
“A Study on Analysis the Financial Performance of HDFC Banks”
Certificate

I, Ms. Simran Roll No. 03714901815 certify that the Major Project Dissertation BBA(B&I)-314
entitled “A study on analysis the financial performance of HDFC banks “ is done by me and it
is an authentic work carried out by me. The matter embodied in this project work has not been
submitted earlier for the award of any degree or diploma to the best of my knowledge and belief.

Signature of the Student
Date:

Certified that the Major Project Report/Dissertation BBA(B&I)-314 entitled “A study on analysis
the financial performance of HDFC banks “done by Ms. SIMRAN, Roll No. 03714901815, is
completed under my guidance.

Signature of the Guide
Date:
Name of the Guide: Ms. Shailza Dutt
Designation:

Countersigned
Director / Project Coordinator
ACKNOWLEDGEMENT
It is pleasure to acknowledge many people who knowingly and unwittingly helped me, to
complete my project. First of all let me praise God for all the blessings, which carried me through
all those years.
First & foremost , I would like to express my regards to Ms. Shailza Dutt for her constant
encouragement and support. I would also like to express my immense gratitude towards all the
lecturers of our college for providing the invaluable knowledge, guidance , encouragement
extended during the completion of this project.
I extend my sincere gratitude to all my teachers and guide who made unforgettable contribution.
Due to their sincere efforts I was able to excel in the work entrusted upon me.
Signature of the student.

Contents
Sl. No. Titles Page No.
I Chapter 1
▪ Executive summary
▪ Introduction
▪ Statement of the Problem
▪ Purpose of the Study
▪ Scope of the study
▪ Objectives of the Study
▪ Data Collection Method
▪ Measuring tools
II Chapter 2
▪ Organization Profile
III Chapter 3
▪ Analysis and interpretation
▪ Findings
▪ Suggestions
▪ Conclusion
IV Chapter 4
Appendix
▪ Bibliography
▪ Questionnaire
Chapter -1
Introduction
EXECUTIVE SUMMARY
Finance is a life blood of business it is required from the establishment of the business to liquidity
or winding up of a business, so financial institutions played a very important role on the operation
of the business.
In the early days banking business was been confined to receiving of deposits and lending of
money. But now a modern banker under take wide variety of functions to assist their customers.
They provide various facilities to customers which makes the transaction easy and comfortable.
Financial institutions such as banks, financial service companies, insurance companies, securities
firms and credit unions have very different ways of reporting financial information. Running a
bank is just difficult as analyzing it for investment purposes.
In this report I made an effort to know the financial position of the HDFC Bank .My topic is
“A study of financial performance based on ratio analysis” which means that a process to identify
the financial performance of a firm by properly establishing the relationship between the items of
balance sheet and profit or loss account. Thus, we can say that, Financial Analysis is a starting
point for making plans before using any sophisticated forecasting and planning.
Introduction
When we observed the financial statement comprising the balance sheet and profit or loss account
is that they do not give all the information related to financial operations of firm, they can provide
some extremely useful information to the extent that the balance sheet shows the financial
position on a particular date in terms of structure of assets, liabilities and owner’s equity and
profit or loss account shows the results of operation during the year. Thus the financial statements
will provide a summarized view of the firm. Therefore in order to learn about the firm the careful
examination of an valuable reports and statements through financial analysis or ratio is required.
Meaning and Definition

Ratio analysis is one of the powerful techniques which are widely used for interpreting
financial statements. This technique serves as a tool for assessing the financial soundness of the
business. it can be used to compare the risk and return relationship of firms of different sizes. The
term ratio refers to the numerical or quantitative relationship between two items/ variables.
The idea of ratio analysis was introduced by Alexander Wall for the first time in 1919.
Ratios are quantitative relationship between two or more variables taken from financial
statements.
Ratio analysis is defined as, “the systemic use of ratio to interpret the financial statement so
that the strength and weakness of the firm a well as its historical performance and current
financial condition can be determined.
In the financial statement we can find many items are co-related with each other for
example current assets and current liabilities, capital and long term debt, gross profit and net
profit purchase and sales etc
Basis of comparison
Ratios are relative figures reflecting the relationship between variables. They enable analysts to
draw conclusions regarding financial operations. The use of the ratios, as a tool of financial
analysis involves their comparison, for a single ratio like absolute figures, fails to reveal the true
position. For example, if in the case of a firm, the return on capital employed is 15 percent in a
particular year, what does it indicate? Only if the figure is related to the fact that in the preceding
year the relevant return was 12 per cent or 18 percent, it can be inferred whether the profitability
of the firm has declined or improved. Alternatively, if we know that the return for the industry as
a whole is 10 percent or 20 percent, the profitability of the firm in question can be evaluated.
Comparison with related facts is, therefore, the basis of ratio analysis. Four types of comparison
are involved
i. Trend ratio
Trend ratios involve a comparison of the ratios of a firm over time, that is, present ratios
are compared with the past ratio of the same firm. Trend ratio indicates the direction of
change in the performance, improvement, deterioration or constancy- over the years. This
kind of ratio particularly applicable to the items of profit and loss account. It is advisable that
trends of the sales and the net income may be studied in the light of two factors: the rate of
fixed expansion or secular trend in the growth of the business and the general price level. it
might be found in practice that a number of firms would show a persistent growth over the
period of the years.
ii. Intra firm comparison

Intra firm comparison involving comparison of the ratio of the firm with those of the others
in the same line of business or for the industry as a whole reflects its performance in relation
to its competitors.
iii. comparison of items within a single year’s financial statement of a firm

iv. Comparison with standard or plans.
Research methodology
RESEARCH DESIGN:
The purpose of the methodology is to design the research procedure. This includes the overall design,
the sampling procedure, the data collection method and analysis procedure.
Marketing research is the systematic gathering recoding and analyzing of data about problem
retaining to the marketing of goods and services.
The essential purpose of marketing research is to provide information, which will facilitate the
identification of an opportunity of problem situation and to assist manager in arriving at the best
possible decisions when such situations are encountered.

Basically there are two types of researches, which according to their applicability, strength,
weaknesses, and requirements used before selecting proper type of research, their suitability must
be seen with respect to a specific problem two general types of researches are exploratory and
conclusive.
1. Conclusive Research:
It is also known as quantitative research; it is designed to help executives of action that is to make
decision.
When a marketing executive makes a decision are course of action is being selected from among a
number of available. The alternatives may be as few as two or virtually infinite. They may be well
defined or only vaguely glimpsed.
Conclusive research provides information, which helps the executives make a rational decision. In
some instances, particularly if any experiment is run, the research may come close to specifying
the precise alternatives to choose, in their cases especially with descriptive studies the research
will only particularly clarify the situation and much will be left to the executive’s judgment.
The type of research here is “Descriptive Research Design”. This kind of design is used for
more precise investigation or of developing the working hypothesis from an operational point of
view. It has inbuilt flexibility, which is needed because the research problem, broadly defined
initially, is transformed into one with more precise meaning in exploratory studies, which in fact
may necessitate changes in research procedure for gathering relevant data.
The characteristic features of research are as follows: –

➢ Flexible Design
➢ Non-Probability Sampling Design
➢ No pre-planned design for analysis
➢ Unstructured instruments for collection of data
➢ No fixed decisions about the operational procedures
Sample Size
Sample size refers to the numbers of respondents researcher have selected for the survey.
I have selected 100 sample units from market and individual customers.
Sampling Technique
The sample design provides information on the target information and final sample sizes. I used conveyed
convenient sampling surveyed in research.
Sampling Area:
Delhi Ncr
Data collection tool
I have used Questionnaire, as the research instrument to conduct the market survey. The
questionnaire consisted closed ended questions designed in such a way that it should gather
maximum information possible.
If choices are given it is easier for the respondent to respond from the choices rather they think
and reply also it takes lesser time. Because the keep on responding and one has tick mark the right
choice accordingly.
Data was collected through two sources:

Primary Source: Primary data was collected directly from the customers through a questionnaire.
Secondary Source: The secondary source was the company website and my colleagues.
Method of sampling
Convenient sampling is used to do sampling as all the customers in the sites are Surveyed..
Data Analysis
Data analysis was done mainly from the data collected through the customers. The data Collected
from secondary sources is also used to analyse on one particular parameter. Qualitative analysis
was done on the data collected from the primary as well as secondary Sources.
TOOLS AND TECHNIQUES OF ANALYSIS
Tools for analysis
➢ Bar chart (Bar charts will be used for comparing two or more values that will be taken
over time or on different conditions, usually on small data set )
➢ Pie-chart (Circular chart divided in to sectors, illustrating relative magnitudes or
frequencies)
Tools and Techniques
As no study could be successfully completed without proper tools and techniques, sames with my
project. For the better presentation and right explanation I used tools of statistics and computer
very frequently. And I am very thankful to all those tools for helping me a lot. Basic tools which I
used for project from statistics are-
- Bar Charts
- Pie charts
- Tables
Bar charts and pie charts are really useful tools for every research to show the result in a well
clear, ease and simple way. Because I used bar charts and pie cahrts in project for showing data in
a systematic way, so it need not necessary for any observer to read all the theoretical detail,
simple on seeing the charts any body could know that what is being said.
Technological Tools
Ms- Excel
Ms-Access
Ms-Word
Above application software of Microsoft helped me a lot in making project more interactive and
productive.
QUESTIONNAIRE
Name :
Age :.
Contact No.
Address :
Gender :
□ Male
□ Female
Age:-
□ 18-24
□ 25-30
□ 30 and above
Occupation:-
□ Student
□ Service
□ Business
Income Level:-
□ 1 lakh – 5 lakhs
□ 5 lakhs – 10 lakhs
□ 10 lakhs and above
Q. 1 Do you know HDFC in india?
a) Yes b) No
Q. 2 Do you think that HDFC make impact on banking sector?
a) Yes b) No
Q3. What is your Preferences towards mode of payments during online transactions in
india?
a) Debit Card
b) Credit Card
c) E-Wallet
d) Any Other
Q. 3. Awareness about online payment gateways?
a) Hearing about it for the 1st time.
b) Heard about it and used.

c) Heard about it but never used it.
Q4.: Awareness and Preferences about online payment service providers?
a) Paytm
b) Mobikwik
c) Citrus
d) Oxigen
e) Freecharge
f) Any other
Q. 5. Preference towards using online payment for completing the following transactions
during HDFC cards in india?
a) Recharge
b) Utility Bill Payments
c) Transportation
d) Food/Movie tickets
e) Online Shopping
f) Transfer money
g) Any other
Q.6. Reasons for using online payment payment gateway services?
a) Strongly Agree b) Agree
a) Neutral b) Disagree
a) Strongly Disagree
Q.7. Reduced frequency of traditional payment system due to online payment ?
a) Yes b) No
Q.7. Frequency of usage of online payment (per month):?
a) Once
b) Twice
c) Thrice
d) More than thrice
Q. 8. Satisfaction of the users towards usage of online payment services?
a) Highly satisfied
b) Satisfied
c) Neutral
d) Dissatisfied
Q. 9 Obstacles faced while using the online payment ?
a) Yes
b) No
Q. 10. Preference to continue using online payment ?
a) Very likely
b) Likely
c) Neutral
d) Unlikely
e) I stopped using E-Wallets
Q. 11. If problems are addressed, preference of non-users to use online payment ?

a) Definitely will use
b) Probably will use
c) Probably will not use
d) Definitely will not use
Q12. Which item you shop online?
a) Apparels
b) Books
c) Electronics
d) Food
e) Games
f) Music
g) Any other(Please specify)
Q13. How much money do you spent in online shopping? (Rupees)
a) 100 – 500
b) 500 – 1000
c) 1000 – 5000
d) 5000 & above
Q14. While shopping what affects your satisfaction the most?
a) Website User Friendly
b) Cash on delivery
c) Credit/Debit Card payment
d) Offers & Discounts
e) Free Shipping
STATE Of THE PROBLEM

Importance of the ratio analysis

As a tool of financial management, ratios are of crucial significance. The importance of the ratio
analysis lies in the fact that it presents facts on a comparative basis and enables the drawing of
inference regarding the performance of a firm. Ratio analysis is relevant in assessing the
performance of a firm in respect of the following aspects
1. liquidity position
With the help of ratio analysis conclusion can be drawn regarding the liquidity position of
the firm. The liquidity position of the firm would be satisfactory if it is able to meet its current
obligation when they become due. a firm can be said to have the ability to meet its short term
liabilities if it has sufficient liquidity funds to pay the interest on its short maturing debts
usually within a year as well as to repay the principal.
2. Long term solvency

Ratio analysis is equally useful for assessing the long term viability of a firm. This
aspect of the financial position of a borrower is of concern to long term creditor, security
analysts and the present and potential owners of a business. The long term solvency is
measured by the leverage/ capital structure profitability ratio which focus on earning power
and operating efficiency. Ratio analysis reveals the strength and weakness of the firm in this
respect.
3. Operating efficiency
Yet another dimension of the usefulness of the ratio analysis, relevant from the view
point of the management, is that it throws light on the degree of the efficiency in the
management and utilization of its assets. The various activity ratios measure this kind of
operational efficiency. In fact, the solvency of a firm is, in the ultimate analysis, dependent
upon the sales generated by the use of its assets-total as well as its components.
4. Overall profitability
Unlike the outside parties which are interested in one aspect of the financial position of a
firm, the management is constantly concerned about the overall profitability of the enterprise.
That is, they are concerned about the ability of the firm to meet its short term as well as long
term obligations to its creditors, to ensure a reasonable return to its owners and secure
optimum utilization of the assets of the firm. This is possible if an integrated view is taken and
all the ratios are considered together.
5. Inter-firm comparison
Ratio analysis not only throws the light on the financial position of a firm but also serves
as a stepping stone to remedial measures. This is made possible due to interfirm comparison
and comparison with the averages. A single figure of a particular ratio is meaningless unless it
is related to some standard or norm. One of the popular techniques to compare the ratio of the
firm with the industry average. It should be reasonably expected that the performance of a
firm should be in broad conformity with that of the industry to which it belongs. An interfirm
comparison would demonstrate the firm’s position vis-à-vis its competitors.
6. Trend analysis
Finally, ratio analysis enables a firm to take the time dimension into account. In other
words, whether the financial position of a firm is improving or deteriorating over the years.
This is made possible by the use of the trend analysis. The significance of a trend analysis of
the ratio lies in the fact that the analyst can know the direction of movement, that is, whether
the movement is favourable or unfavourable.
Guidelines for the financial statement analysis
1. Use ratio to get clues to ask the right questions: By themselves ratios rarely provide answers,
but they definitely help you to raise the right questions.
2. Be selective in the choice of the ratios you can compute scores of the different ratios and
easily drown yourself into the confusion. For most purposes a small set of the ratios- three to
seven- would suffice. Few ratios, aptly chosen, would capture most of the information that
you can derive from the financial statements.
3. Employ proper benchmarks: It is a common practice to compare the ratios (calculated from
the set of financial statements) against some benchmarks. This benchmark may be the
average ratios of the industry or the ratios of the industry leaders or the historic ratios of the
firm itself.
4. Know the tricks used by accountants since firms tend to manipulate the reported income, you
should learn about the devices employed by them.
5. Read the footnotes: Footnotes sometimes contain valuable information. They may reveal the
things that the management may try to hide. The more difficult it to read a footnote, the more
information- laden it may be.
6. Remember that financial statement analysis is an odd mixture of art and science financial
statement analysis cannot be regarded as a simple, structured exercise. It is a process
requiring care, thought, common sense, and business judgment – a process for which there
are no mechanical substitutes.
7.
ADVANTAGES AND DISADVANTAGES OF RATIO ANALYSIS:
Advantages:
❖ Simplifies financial statements: Ratio Analysis simplifies the comprehension of

financial statements. Ratios tell the story of changes in financial condition of the
business.
❖ Facilitates inter firm comparison: Ratio analysis provides data for inter company
comparison. Ratio highlights the association with successful and unsuccessful firms.
They also reveal strong and weak companies, overvalued and undervalued company’s.
❖ Makes intra firm comparison possible: Ratio analysis also makes possible
comparison of the performance of different division of the company. The ratio helpful
in deciding about their efficiency.
❖ Helps in planning: Ratio Analysis helps in planning and forecasting over period of
time a company develops certain norms that may indicates future success/ failure. If
relationship changes in firms data over different time periods. The ratio may provide
clues on trends and future problems.
❖ Liquidity position: With the help of ratio analysis conclusions can be drawn
regarding liquidity position of the company. The liquidity position of a company could
be satisfactory if it is able to meet its current obligations when they become due.
❖ Long term solvency: Ratio analysis equally useful for assessing the long-term
financial viability of a firm. The long-term solvency is measured by the leverage /
capital structure and profitability ratios, which focus on earning power and operating
efficiency.
Disadvantages:
Ratio analysis is a widely used tool of financial analysis. Yet, it suffers from various limitations.
The operational implication of this is that while using ratios, the conclusion should not been taken
on their face value. Some of the limitation which characterize ratio analysis are
1. Difficulty in comparison
One serious limitation of ratio analysis arises out of the difficulty associated with their
comparability. One technique that is employed is interfirm comparison. But such comparisons
are vitiated by different procedures adopted by various firms. The difference may relate to
● Difference in the basis of inventory valuation
● Different depreciation methods (i.e. straight line vs. written down basis)
● Estimated working life of the assets, particularly of plant and equipment
● Amortization of intangible assets like goodwill, patents and so on.
● Amortization of deferred revenue expenditure such as preliminary expenditure and
discount on issue of shares
● Capitalization of lease
● Treatment of extraordinary items of income and expenditure and so on
Secondly, apart from different accounting procedures, companies may have different
accounting periods, implying differences in the composition of the assets, particularly the current
assets. For these reasons, the ratios of two firms may not be strictly comparable.
2. Impact of inflation
The second major limitation of the ratio analysis as a tool of financial analysis is
associated with price level changes. This, in fact is a weakness of the traditional financial
statement which are based on historical cost. An implication of this feature of the financial
statement as regards ratio analysis is that assets acquired at different periods are, in effect,
shown at different prices in the balance sheet, as they are not adjusted for changes in the price
level. As a result, ratio analysis will not yield strictly comparable and therefore, dependable
results.
3. Conceptual Diversity
Yet another factor which affects the usefulness of ratios is that there is difference of
opinion regarding the various concepts used to compute the ratios. there is scope for diversity
of opinion as to what constitutes shareholders’ equity, debt, asset, profit and so on. Different
firms may use these terms in different senses or the same firm may use them to mean different
things at different times.
Reliance on a single ratio for a particular purpose may not be a conclusive indicator. for
instance, the current ratio alone is not a adequate measure of short-term financial strength; it
should be supplemented by the acid test ratio, debtors turnover ratio and inventory and
inventory turnover ratio to have a real insight into the liquidity aspect.
Classification of ratio
1. Profitability Ratios
a. Ratio of profit to total income
b. Ratio of profit to deposits
c. Return on equity
d. Return on Capital
e. Ratio of return on assets
f. Net interest margin
g. Ratio of interest income to average working fund
h. Ratio of non-interest income
i. Cash dividend
j. EPS
2. Operating Ratios
a. Ratio of interest earned to interest paid
b. ratio of interest paid to total income
c. Ratio of staff expenses to total expenses
d. Ratio of total expenses to total income.

e. Ratio of operating expenses to average working fund
f. Ratio of interest expenses to average working fund
3. Solvency ratios
a. ratio of cash to deposit
b. ratio of investment to deposits
c. Credit deposit ratio
d. ratio of fixed assets to net worth
e. Current assets ratio
f. Quick ratio
g. Fixed assets ratio
4. Safety ratio
a. ratio of Net NPA to Net advance
b. Capital adequacy ratio
DESIGN OF THE STUDY
Title of the project:

“A Study of Financial Performance Based On Ratios” at HDFC Bank Belgaum
Statement of the problem

Ratios are very useful to draw the conclusion so management wants to know what are the factor
contributing for the future growth and also wants to maintain the same in the longer run and also
improve the profitability and liquidity of the organization.
Research problem
To know the financial performance of the organization through ratio analysis, by comparing three
years financial performance of the bank
Purpose of the study

A financial services sector plays a critical role in fulfilling the needs of growing and increasingly
diverse economy, offering high quality services to business and individual alike. Though Indian
banking system registered commendable progress in terms of geographical and functional
coverage, its performance in terms of operational efficiency and viability still leaves considerable
room for improvement
A bank’s balance sheet and income statement are valuable information sources for
identifying risk taking and assessing risk management effectiveness. Although amounts found on
these statements does not provide valuable insights of performance so ratio analysis is required
for determining good or bad performance of bank and also for determining its causes. The study
includes the calculation of different financial ratios. It compares three years financial statements
of the company to know its performance in these different years.
Scope of the study

The scope of the study is limited to financial aspects of HDFC bank
OBJECTIVES OF STATEMENT
• To know the financial performance of the organization
• To study different ratios in HDFC bank
• To determine the profitability and liquidity of the bank through ratios analysis
• To compare the present and previous years performance of HDFC bank
Chapter -2
Organizational profile
ORGANIZATIONAL PROFILE
HDFC is India's premier housing finance company and enjoys an impeccable track record in
India as well as in international markets. Since its inception in 1977, the Corporation has
maintained a consistent and healthy growth in its operations to remain the market leader in
mortgages. Its outstanding loan portfolio covers well over a million dwelling units. HDFC has
developed significant expertise in retail mortgage loans to different market segments and also has
a large corporate client base for its housing related credit facilities. With its experience in the
financial markets, a strong market reputation, large shareholder base and unique consumer
franchise, HDFC was ideally positioned to promote a bank in the Indian environment.
The Housing Development Finance Corporation Limited (HDFC) was amongst the first to receive
an 'in principle' approval from the Reserve Bank of India (RBI) to set up a bank in the private
sector, as part of the RBI's liberalization of the Indian Banking Industry in 1994. The bank was
incorporated in August 1994 in the name of 'HDFC Bank Limited', with its registered office in
Mumbai, India. HDFC Bank commenced operations as a Scheduled Commercial Bank in January
1995.
BROAD AREAS IN WHICH IT OPERATES
The Bank operates in three segments: retail banking, wholesale banking and treasury services.
The retail banking segment serves retail customers through a branch network and other delivery
channels. The wholesale banking provides loans and transaction services to corporate and
institutional customers. The treasury services segment undertakes trading operations on the
proprietary account, foreign exchange operations and derivatives trading. The Bank operates in
India.
Retail Banking
This segment raises deposits from customers and makes loans and provides advisory services to
such customers. The objective of the Retail Bank is to provide its target market customers a range
of financial products and banking services, giving the customer a one-stop window for all his/her
banking requirements. The products are backed by service and delivered to the customers through
the growing branch network, as well as through alternative delivery channels like automated teller
machines (ATMs), phone banking, net banking and mobile banking.
The HDFC Bank Preferred program for high net worth individuals, the HDFC Bank Plus and the
Investment Advisory Services programs have been designed keeping in mind needs of customers
who seek distinct financial solutions, information and advice on various investment avenues. The
Bank also has an array of retail loan products, including auto loans, loans against marketable
securities, personal loans and loans for two-wheelers. It is also a provider of depository
participant (DP) services for retail customers, providing customers the facility to hold their
investments in electronic form.
HDFC Bank has launched an international debit card in association with VISA (VISA Electron)
and also issues the MasterCard Maestro debit card. The Bank launched its credit card business
during the fiscal year ended March 31, 2001. By September 30, 2005, the bank had a total card
base (debit and credit cards) of 5.2 million cards. The Bank is also engaged in the merchant
acquiring business with over 50,000 point-of-sale (POS) terminals for debit/credit cards
acceptance at merchant establishments.
Wholesale Banking
, The Bank's target market ranges from large, blue-chip manufacturing companies in the Indian
corporate to small and mid-sized corporates and agri-based businesses. For these customers, the
Bank provides a range of commercial and transactional banking services, including working
capital finance, trade services, transactional services and cash management. The bank is also a
provider of structured solutions, which combine cash management services with vendor and
distributor finance for facilitating superior supply chain management for its corporate customers.
It provides cash management and transactional banking solutions to corporate customers
Treasury Services
Within this business, the bank has three main product areas: Foreign Exchange and Derivatives,
Local Currency Money Market & Debt Securities, and Equities. Risk management information,
advice and product structures, as well as fine pricing on various treasury products are provided
through the Bank's Treasury team. The Treasury business is responsible for managing the returns
and market risk on this investment portfolio.
MISSION
HDFC Bank's mission is to be “a World-Class Indian Bank” which is benchmarked against

international standards and best practices in terms of product offerings, technology, service levels,
risk management and audit compliance.
Objectives of HDFC bank

The objective is to build sound customer franchises across distinct businesses so as to be the
preferred provider of banking services for target retail and wholesale customer segments, and to
achieve healthy growth in profitability, consistent with the bank's risk appetite. The bank is
committed to maintain the highest level of ethical standards, professional integrity, corporate
governance and regulatory compliance. HDFC Bank's business philosophy is based on four core
values - Operational Excellence, Customer Focus, Product Leadership and People.
BUSINESS STRATEGY
➢ Increase our market share in India’s expanding banking and financial services industry by
following a disciplined growth strategy and delivering high quality customer service.
➢ Leverage our technology platform and open, scaleable systems to deliver more products to
more customers and to control operating costs.
➢ Maintain our current high standards for asset quality through disciplined credit risk
management.
➢ Develop innovative products and services that attract our targeted customers and address
inefficiencies in Indian financial sectors.
➢ Continue to develop products and services that reduce our cost of funds and
➢ Focus on healthy earnings growth with low volatility.
CAPITAL STRUCTURE
Authorized capital of HDFC Bank is Rs.450 crore (Rs.4.5 billion). The paid-up capital is
Rs.311.9 crore (Rs.3.1 billion). The HDFC Group holds 22.1% of the bank's equity and about
19.4% of the equity is held by the ADS Depository (in respect of the bank's American Depository
Shares (ADS) Issue). Roughly 31.3% of the equity is held by Foreign Institutional Investors (FIIs)
and the bank has about 190,000 shareholders. The shares are listed on the The Stock Exchange,
Mumbai and the National Stock Exchange. The bank's American Depository Shares are listed on
the New York Stock Exchange (NYSE) under the symbol "HDB
VARIOUS SERVICES
FOREX AND TRADE SERVICES
., HDFC Bank has a range of products and services that one can choose from to transact
smoothly.
The following are different methods of transacting in foreign exchange and remitting money.
➢ Travelers cheques
➢ Foreign currency cash.
➢ Foreign currency drafts
➢ Cheque deposits
➢ Remittances
➢ Cash to master
➢ Trade services
➢ Foreign services branch locator
Important guidelines and schedules
All Foreign Exchange transactions are conducted by strictly adhering to RBI guidelines.
Depending on the nature of your transaction or point of travel, you will need to understand your
Foreign Exchange limits.
LOANS
➢ Home Loans
➢ Personal Loans
➢ Two Wheeler Loans
➢ New Car Loans
➢ Used Car Loans
➢ Overdraft Against Car
➢ Express Loans
➢ Loans Against Securities
➢ Loans Against Property
PERSONAL BANKING
Savings Accounts
These Accounts are primarily meant to inculcate a sense of saving for the future, accumulating
funds over a period of time. Whatever may be the occupation, bank is confident that customer
will find the perfect banking solution. Open an account in your name (customer’s name) or
register for one jointly with a family member today.
Current Accounts
Now, with an HDFC Bank Current Account, experience the freedom of multi-city banking!
Customer can have the power of multi-location access to his account from any of banks 500
branches in 220 cities. Not only that, he can do most of his banking transactions from the
comfort of his office or home without stepping out.
At HDFC Bank, it understands that running a business requires time and money, also that
customers business needs are constantly evolving. That's where it comes in. It provides him with a
choice of Current Account options to exclusively suit his business - whatever the size or scope.
Fixed Deposits
Long-term investments form the chunk of everybody's future plans. An alternative to simply
applying for loans, fixed deposits allow the customer to borrow from his own funds for a limited
period, thus fulfilling his needs as well as keeping his savings secure.
As per the finance (No 2) Act 2004, all fees & charges mentioned in the Tariffs, Charges or
Fees Brochures will attract Service Tax @10% & Education Cess @2% of the service tax amount
effective 10th September 2004. The same will appear as separate debits in the statements.
PRIVATE BANKING
HDFC Bank offers Private Banking services to high net worth individuals and institutions. Banks
team of seasoned financial and investment professionals provide objective guidance backed by
thorough research and in-depth analysis keeping in mind customer’s financial goals.
Multiple Recognition from Euro money

At HDFC Bank, they have always strived towards providing exceptional service to each of their
esteemed customers. As testament to this dedication, they have earned the following ranks in a
recently conducted Euromoney Survey.
➢ Rated as the best private bank in the super effluent category in India
HDFC Bank Investment Advisory Services - Helping you take your Investment portfolio further.
➢ Dedicated investment advisor
HDFC Private Banking service involves a high degree of personalization. When customer avail
of this facility, a dedicated Investment Advisor serves him. This seasoned finance professional
adds value to his portfolio by keeping him up to date with financial markets and investment
opportunities
MUTUAL FUNDS PRODUCTS SCHEMES
Equity fund
HDFC growth fund
HDFC long term Advantage fund
HDFC Index fund
HDFC Capital Builder fund
HDFC tax saver
HDFC top 200 funds
HDFC core & satellite fund
HDFC premier multi-Cap fund
HDFC long term equity fund
Balanced Fund
HDFC Children’s gift fund investment plan
HDFC children’s gift fund saving plan
HDCF Balanced Fund
HDCF Prudence Fund
Debt Fund
HDCF Income fund
HDCF liquid fund
HDCF gift fund short term plan
HDCF gift fund long term plan
HDCF short term plan
HDCF floating rate income fund short term plan
HDCF floating rate income fund long term plan
HDCF liquid fund- premium plan
HDCF liquid fund- premium plus plan
HDCF high interest fund
HDCF high interest fund short term plan
HDCF cash management fund saving plan
HDCF cash management fund call plan
HDCF MF monthly plan
PAYMENT SERVICES
With HDFC Bank's payment services, one can bid goodbye to queues and paper work. Its range
of payment options make it easy for customer to pay for a variety of utilities and services.
➢ Verified by visa
If one wants to be worry free for his online purchases. Now he can shop securely online with his
existing Visa Debit/Credit card.
➢ Net safe
Now shop online without revealing your (customers) HDFC Bank Credit Card number.
➢ Prepaid refill
If a person is a HDFC Bank Account holder and a prepaid customer, he can now refill his Prepaid
Mobile card with this service.
➢ Bill pay
One can pay his telephone, electricity and mobile phone bills at his convenience. Through the Internet,
ATMs, his mobile phone and telephone - with Bill Pay, bank’s comprehensive bill payments solution
➢ Visa Bill Pay

One can pay his utility bills from the comfort of his home! Pay using his HDFC Bank Visa credit
card and forget long queue and late payments forever
➢ Insta pay
One can Pay his bills, make donations and subscribe to magazines without going through the
hassles of any registration.
➢ Direct pay
Shop or Pay bills online without cash or card. Debit your(customers ) account directly with
bank’s Direct Pay service!
➢ Smart pay(with credit cards)
With Smart Pay, paying customer’s electricity, telephone, mobile phone, water bills, gas and
insurance premia payments becomes easy like never before.
➢ Visa money transfer

One can transfer funds to any Visa Card (debit or credit) within India at his own convenience
through HDFC Bank's Net Banking facility.
➢ e-Monies Electronic Funds Transfer
Transfer funds from customers account to any account in any Bank in India at 15 locations -
FREE of cost!
➢ Online payment of excise and service tax
One can make his Excise and Service Tax payments at his own convenience.
PREFFERED/CLASSIC BANKING
If a customer expects more from everything, even HDFC bank, will invite him into the world of
exclusive banking. Where he will never again have to wait to be served. With HDFC Bank
Preferred Programme, his comfort always comes first.
Ideal for seasoned professionals or businessmen, this programme will provide him with a
banker dedicated to take care of all his banking and investment needs. It also means he get
preferential rates on various banking products and other exclusive benefits.
HDFC BANK CLASSIC BANKING

If a person wants to experience banking beyond the ordinary, our HDFC Bank Classic
Programme is just for him. Becoming an HDFC Bank Classic customer entitles him to a host
of benefits, including a bouquet of preferentially priced products and specialized wealth
management solutions.
AWARDS AND ACHIEVMENTS

HDFC Bank began operations in 1995 with a simple mission: to be a "World-class Indian Bank".
They realized that only a single-minded focus on product quality and service excellence would
help them get there. Today, they are proud to say that they are well on the way towards that
goal.
2006
Business Today
Forbes Magazine
Businessworld
The Asset
Magazine's Triple A
Country Awards
Asiamoney Awards
Euromoney Awards
2005
Asia money Awards

Asia money Awards
The Asian Banker

Excellence
Hong Kong-based
Finance Asia
magazine
Economic Times
Awards
Asiamoney also named the bank:
Best Local Cash Management Bank in India 2004 - US$11-100m
Best Local Cash Management Bank in India 2004 - >US$501m
Best Local Cash Management Bank in India 1989-2004 (poll of polls)
Best Overall Domestic Trade Finance Services in India 2004
Most Improved company for Best Management Practices in India 2004
The Business Today-KPMG Survey published in the leading Indian business magazine Business
Today has named HDFC Bank "Best Bank in India" for the third consecutive year in 2005.
The Asset magazine named HDFC Bank "Best Cash Management Bank" and "Best Trade Finance
Bank" in India, in 2006.
HDFC Bank named the "Most Customer Responsive Company - Banking and Financial Services
in The Economic Times - Avaya Global Connect Customer Responsiveness Awards 2005"
HDFC Bank has been named Best Domestic Bank in India in The Asset Triple A Country Awards
2005.
HDFC Bank has been named Best Domestic Bank in India Region in The Asset Triple A Country
Awards 2004 and 2003.
In 2004, HDFC Bank was selected by BusinessWorld as "One of India's Most Respected
Companies" as part of The Business World Most Respected Company Awards 2004.
In 2004, Forbes Global again named us in its listing of Best Under a Billion, 100 Best Smaller
Size Enterprises in Asia/Pacific and Europe, in its November 1, 2004 issue.
In 2004, HDFC Bank won the award for "Operational Excellence in Retail Financial Services" -
India as part of the Asian Banker Awards 2003.
In 2003, Forbes Global named us in its ranking of "Best Under a Billion, 200 Best Small
Companies for 2003".
Leading business newspaper The Financial Express named HDFC Bank the "Best New Private
Sector Bank 2003" in the FE-Ernst & Young Best Banks Survey 2003.
Leading Personal Finance Magazine in India Outlook Money named HDFC Bank the "Best Bank
in the Private Sector" for the year 2003.
Leading Indian business magazine Business Today in a survey rated us "Best Bank in India"
2003, and "Best Private Sector Bank" in India in 1999.
NASSCOM and economictimes.com have named us the 'Best IT User in Banking' at the IT Users
Awards 2003.
There have been some other proud moments as well:

London-based Euromoney magazine gave us the award for "Best Bank - India" in 1999, "Best
Domestic Bank" in India in 2000, and "Best Bank in India" in 2001 and 2002
Asiamoney magazine has named us "Best Commercial Bank in India 2002".
For our use of information technology we have been recognized as a "Computerworld Honors
Laureate" and awarded the 21st Century Achievement Award in 2002 for Finance, Insurance
& Real Estate category by Computerworld, Inc., USA.
Our technology initiative has been included as a case study in their online global archives.The
Economic Times has conferred on us The Economic Times Awards for Corporate Excellence
as the Emerging Company of the Year 2000-01.
Leading Indian business magazine Business India named us "India's Best Bank" in 2000.
In the year 2000, leading financial magazine Forbes Global named us in its list of "The 300
Best Small Companies" in the world and as one of the "20 for 2001" best small companies in
the world.
CORPORATE GOVERNARCE
HDFC Bank recognizes the importance of good corporate governance, which is generally
accepted as a key factor in attaining fairness for all stakeholders and achieving organizational
efficiency. This Corporate Governance Policy, therefore, is established to provide a direction and
framework for managing and monitoring the bank in accordance with the principles of good
corporate governance.
BOARD OF DIRECTORS
➢ Mr. Deepak S. Parekh, Chairman

➢ Ms. Renu Sud Karnad , Managing Director
➢ Mr. Keki Mistry
➢ Mr. D. M. Sukthankar
➢ Mr. B. S. Mehta
➢ Mr. Nasser Munjee
➢ Mr.Vineet Jain
➢ Renu Karnad
➢ Mr.Aravind Pande
➢ Mr. Ranjan Kanpur(w.e.f January 9, 2004)
➢ Mr. Bobby Parikh (w.e.f.January 9,2004)
VICE PRESIDENT(LEGAL)& COMPANY SECRETARY

➢ Mr. Sanjay Dongre
AUDITOTS
➢ Mr. P.C. Hansotia&Co
(Chartered accountants)
REGISTERED OFFICE
HDFC BANK House
Senapati Bapat Marg
Lower Parel
Mumbai 400013
Tel No: 56521000
Fax No: 24960739
Web –site : www.hdfcbank.com
Methodology
Data Collection method

• Primary Data : The information Collected from Personnel Interaction with manager and
other staff
• Secondary:- Annual report of HDFC bank and websites
Measurement technique/ Statistical tool

1. Accounting ratio
2. Financial statement of the company
Analytical technique
Statistical technique used for calculation of ratios is in terms of percentage method.
Chapter -3
Review of literature
LITERATURE REVIEW
Ashish Das, and Rakhi Agarwal, (2010) studied the cashless payment system in India. They
suggested that the cash payment is an expensive proposition to the government and so the nation
must step towards the cashless payment system which reduced the track transactions, currency
management cost, eliminates tax avoidance, fraud etc. Moreover, it widens and encourages
financial inclusion and integrate the parallel economy to the main steam.
Alvares, Cliford (2009) reported the problems pertinent to the fake currency in India. It is
explained in the report that many fake notes are going undetected and the battle against the fake
note is harder.
Annamalai, S. and Muthu R. Iiakkuvan (2008) studied the future of plastic money in retail
transaction. The growth of the debit and credit cards in retail transactions were projected by them
in their study. The popularity leading growth factors, the obstacles faced by the banks, future and
scope of the plastic money were explained in their study.
Jain, P.M (2006) studied about the e-payments and e-banking. With the help of technological
advancement, rapid payment options and other features, there will be an optimal use of funds for
banks, other financial institutions, and business houses and so on. He also elaborated the
importance and need for e-payments and modes of e-payments and communication networks
Neeharika P & V N Sastry (2014), conducted a study on “A Novel Interoperable Mobile Wallet
Model with Capability based access control framework”, this study makes an important
contribution towards the development of a mobile wallet that can work across various platforms.
As security is the major concern when it comes to finance related information, the study addresses
the security issues by giving access control model that works towards interoperable mobile
wallet..
Shwetu Kumar, Vijay Yadav,Atiqu-Ur-Rahman, Aditi Bansal(2014), made a study on
“Paytm”, it studied about its achievements, technical architecture of paytm, working and
technologies of paytm which include a study on supply chain management, web technologies of
paytm ,web based tool of paytm and also described about electronic payment system.
Ngoc Doan (2014), conducted a study on “Consumer adoption in Mobile wallet (A study of
consumers in Finland)”, this study was undertaken to understand about the consumer adoption
status of mobile wallet with research area limited in Finland. It also examines the market situation
of mobile consumers toward mobile wallet. The study states that the adoption of E-Wallet among
consumers in Finland is only at the beginning stage & the success of E-Wallet s depends on the
marketing strategies of E-Wallet companies as well as the financial policy makers in Finland.
Nitika Rai, Anurag Ashok, Janhvi Chakraborty, Prajakta Arolker, Saumeel Gajera (2012),
made a study on “E-Wallet : An SMS based payment system”, This paper describes about
replacing the current payment solutions like credit card, debit cards and cash with a simple short
Messaging services (SMS) based on solution that would work on all mobile phones irrespective
of the network carrier and the manufacturer. Transactions can also take place between consumers
that have subscribed to the service and merchants irrespective of their subscription. The study
concludes that it is safer, faster and network independent mode of payment.
Amit Lakhotia, Vice President, Paytm said, “Mobile wallet adoption is growing rapidly in india
and people are becoming more and more comfortable using the same. Consumers are becoming
comfortable saving their cards and keeping money in these wallets. We now have more than
20000 merchants where the user can pay with paytm wallet.” Further talking about its adoption he
said, “This being a new product, consumer education is important. We are making it easier for
consumers to use wallet at more locations. Till now we have focused a lot on online merchants
and now we are expanding the scope to include the offline merchants as well. Similarly we are
also making it easier for users to add money in wallet using cash as well.”
Target Audience
Mobile Wallet target audience is mainly young tech savvy people. It could be an existing banking
customer or an aspirational rural consumer who wants to transact digitally.
Udit Sharma, Vice President, Oxigen said, “Users can be classified into four categories. First
category is of people who have credit/debit cards and are at ease using that mode of payment.
Second category people who have cards but still prefer using COD. Third category is people who
do not have cards, so they have to use COD. And the fourth category is of people who want to use
COD but merchants do not deliver products to their pin codes. Mobile wallets addresses issues of
all four categories of people. It caters to users convenience over using cards. Availability of a
person to make COD is mandatory, however with the wallet this problem also gets solved. It a
tough pull for the industry to get all COD users to mobile wallet but ultimately it holds an
immense scope.”
Chapter-4
Analysis and
Interpretation
I. Profitability Ratio
This ratio shows the earning ability of organization. The operating efficiency of the firm and
its ability to ensure adequate return to its shareholders depends ultimately on the profits earned by
it. The profitability of the firm can be measured by its profitability ratio. In other words
profitability ratios designed to provide answers to questions such as
a) Is profit earned by the firm adequate?
b) What rate of return does it represents?
c) What is the rate of profit for various divisions and segments of the firm?
d) What is the rate of return to equity shareholders?
The profitability of the firm can be determined on the following ratios
1. Ratio of Net profit to total income
This ratio implies that the percentage of profit earned by the organization
Out of its income.
= Net profit
X 100
Total income
(Rupees in lakhs)
Year 2006-2007 2007-2008 2008-2009
Profit (Rs) 50950 66556 87078
Total income(Rs) 302896 374483 559932
Ratio (%) 16.82% 17.7% 15.55%
Interpretation
The ratio of profit to total income in the first year (2006-07) was 16.8% and in 07-08 ratio
increased 17.7% due to increase in interest income and non interest
income but in 2008-09 ratio decreased 15.55% because there was loss on revaluation of
investment and increase in expenses.
2. Ratio of Net profit to total deposit

This ratio shows organization earning on deposits
(Rupees in lakhs)
Year 2006-2007 2007-2008 2008-2009
Profit (Rs) 50950 66556 87078
Total Deposit (Rs) 3040886 3635425 5579682
Ratio (%) 1.67% 1.83% 1.56%
Interpretation
The ratio of profit to deposits in the year 06-07 was 1.67% it was increased in 07-08 by 1.83%
and it decreased to 1.56% compared to last year it was more. This shows that the deposits have
increased at a faster rate than income.
3. Ratio of return on equity

This ratio measures the return on the owners (both equity and preference shareholders)
invested in the firm.
= PAT
Net worth (rupees in lakhs)
Year 2006-2007 2007-2008 2008-2009
Profit (Rs) 50950 66556 87078
Net worth (Rs) 181580 340238 444855
Ratio (%) 28.05% 19.56% 19.57%
Interpretation
Return on equity in the first year was 28.05% it has decreased to 19.56% to 19.57% in the year
07-08 and 08-09 compared to first year. Return on equity is constant for the year. This indicates
generation of return for capital invested by owner of the company is constant for last two year.
Major portion of net profit is transfer to general reserve which leads to decrease in the return of
shareholder.
4. Return on Asset
An indicator of how profitable a company is relative to its total assets. ROA gives an idea as
to how efficient management is at using its assets to generate earnings. Calculated by dividing net
income by its total assets
= Net income
Total Assets (rupees in lakhs)
Year 2006-2007 2007-2008 2008-2009
Profit (Rs) 50950 66556 87078
Total Assets (Rs) 4230699 5142900 7350639
Ratio (%) 1.20% 1.29% 1.18%
Interpretation
Ratio of return on asset in first year was 1.20% and in second year it increased to 1.29% it
indicates that company is better at converting its investment into profit but in third year earning
generated from invested capital has been reduced to 1.18% this indicates company is slow in
converting its investment into profit.
5. Return on capital employed
This ratio shows the return on capital employed (share capital, reserve, retained earning
and long term borrowings) used in the organization.
= PBT (profit before tax)
Capital employed (rupees in lakhs)
Year 2006-2007 2007-2008 2008-2009
PBT (Rs) 71896 97894 125351
Capital employed 412362 819239 730703
(Rs)
Ratio (%) 17.43% 11.94% 17.15%
Interpretation
Return on capital for the first year 06-07 was 17.43% which was decline in second year and
increased in third year by 17.15%. This indicates that earning capacity of the capital employed is
satisfactory because of borrowing and long term debts are increased.
6. Net interest Margin

Net interest margin is the gross margin on a bank’s lending and investment activities. It
tells you the average interest margin that the bank is receiving by borrowing and lending funds. It
is determined as.
Net interest income = total interest income- total interest expense
= Net interest income X 100
Total earning assets
Year 2006-2007 2007-2008 2008-2009

Net interest 133788 177793 254584
income (Rs)
Total asset (Rs) 4230699 5142900 7350639
Ratio (%) 3.16% 3.45% 3.46%
Interpretation
Ratio of net interest margin in first year was 3.16% it has increased in constant rate by 3.45% and
3.46% in second and third year. This indicates that average interest margin the bank is receiving
by borrowing and lending fund is constant and satisfactory.
7. Ratio of interest income to average working fund

It is a ratio of interest income to average working fund. It shows how income is
earned from average asset.
Average working fund= opening total asset + closing total asset / 2
Interest income
= X 100
Average working fund
(Rupees in lakhs)
Year 2006-2007 2007-2008 2008-2009

Interest income(Rs) 254893 309349 447534
Average working 3636553.5 4686799.5 6246769.5

fund (Rs)
Ratio (%) 7.0% 6.6% 7.16%
Interpretation
Ratio of interest income to AWF in first year was 7.0% in second year it was 6.60% and it
increased in third year by 7.16% compared to previous year. Increase in interest income due to
increase in interest/ discount on advance, income from investment. This also indicates interest
earned is more.
8. Ratio of non-interest income to Average working fund
This ratio is determined by dividing non-interest income by AWF. This tells how much
is the non-interest income (other income) from average working fund.
= Non-interest income X 100
(Rupees in lakhs)
Year 2006-2007 2007-2008 2008-2009
Non interest 48003 65134 112398
income(Rs)
AWF (Rs) 3636553.5 4686799.5 6246769.5
Ratio (%) 1.32% 1.38% 1.79%
Interpretation
Ratio of non interest income to AWF in 06-07 was 1.32% and it increased to 1.38% to 1.79% in
07-08 and 08-09 because of increase in profit on sale of investment, commission, exchange &
brokerage, Miscellaneous income etc.increase in non interest income increase the profitability of
the firm. There is significant growth in non operating income in year 2009.
9. Ratio of Cash Dividend to Net income
A cash dividend to net income indicates how much of earnings are paid out to
shareholders. Conversely, it indicates how much of earnings are retained to build the bank’s
capital account. Smaller banks, because they have limited capital market access, tend to rely
more heavily on earnings retention to build capital.
Cash Dividend
Net income
(Rupees in lakhs)
Year 2006-2007 2007-2008 2008-2009
Cash dividend __ 26 __
(Rs)
Net income(Rs) 50950 66556 87078
Ratio (%) __ __
Cash dividend for 06-07 is not paid. Dividend of previous is paid in 07-08 26Lac is paid out of
net income. In 2008-2009 dividend is not declared
10. EPS (earning per share)

It measures the profit available to equity shareholders on a per share basis, that is, the
amount that they can get on every share held. It is calculated by dividing the profits available
to shareholders by the number of outstanding shares. The profits available to the ordinary
shareholders are represented by net profits after taxes and preference dividend. Thus
EPS = PAT (profit after tax)
Number of shares outstanding
Year 2006-2007 2007-2008 2008-2009

PAT (Rs) 50950 66556 87078
No. of shares 283806538 290383946 311939366
outstanding (Rs)
Ratio (Rs) 17.95 22.91 27.91
Interpretation
Earning per share in 06-07 was 17.95 Rs. it increased by 22.91 and 27.91 Rs. for last two years.
EPS simply shows the profitability of the firm on a per share basis.
II. Operating ratio
This ratio gives the operation efficiency of the organization. The efficiency can be determined by
following ratios.
1. Ratio of interest earned to interest paid

This ratio shows the percentage of interest earned on loans and advances and interest
paid on deposits.
= Interest earned
Interest paid
(Rupees in lakhs)
Year 2006-2007 2007-2008 2008-2009
Interest earned 254893 309349 447534
(Rs)
Interest paid (Rs) 121105 131556 192950
Ratio (times) 2.10 2.35 2.31
Interpretation
Ratio of interest earned to interest paid in first was 2.10% that was very less compared to second
year it grew to 2.35% and third year decline by 4% because interest paid on borrowing was more.
Firms earning capacity is satisfactory.
2. Ratio of interest paid to total income

This ratio shows the percentage of interest paid to deposits accepted.
= interest paid
X 100
Total income
(Rupees in lakhs)
Year 2006-2007 2007-2008 2008-2009

Interest paid (Rs) 121105 131556 192950
Total income (Rs) 302896 374483 559932
Ratio (%) 39.98% 35.13% 34.45%
Interpretation
Ratio of interest paid on total income in first year was 39.98% and second and third year was
constant. In first interest paid on borrowing was more by this even the interest earned was
decline. Second and third year, firm’s interest paid is constant it is satisfactory.
3. Ratio of staff expense to total expense
This ratio shows the percentage of staff expense to total expense.
= Staff expense
X 100
Total expense
(Rupees in lakhs)
Year 2006-2007 2007-2008 2008-2009

Staff expenses (Rs) 20409 27667 48682
Total expenses (Rs) 251946 307927 472854
Ratio (%) 8.10% 8.98% 10.29%
Interpretation
Ratio of staff expenses to total expenses in the year 06-07 was 8.10% it has been increased to
8.98% to 10.29% in the last two year. This indicates payment for the employees are increasing.
Hence profit per employee is increasing.
4. Ratio of total expenditure to total income

This shows the percentage of total expenses to total income
= Total expenditure
X 100
Total income
Year 2006-2007 2007-2008 2008-2009

Total expenditure 251946 307927 472854
(Rs)
Total income (Rs) 302896 374483 559932
Ratio (%) 83.17% 82.22% 84.44%
Interpretation
The ratio of total expenditure to total income in the year 06-07 was 83.17% and it was decreased
in the second year by 82.22% but in third year total expenditure increased to 84.44% because of
increase in interest expenses , operating expenses and there was loss on revaluation of
investments.
5. Ratio of operating expenses to Average working fund
Operating expense are those expenses which are connected to running of the
organization it includes staff salary, rent, taxes, printing and stationary, advertisement etc. this
ratio shows the percentage of operating expenses to AWF.
= Operating Expenses X 100

Year 2006-2007 2007-2008 2008-2009

Operating 81000 108540 169109
expenses(Rs)
Average working 3636553.5 4686799.5 6246769.5
fund (Rs)
Ratio (%) 2.22% 2.31% 2.70%
Interpretation
Ratio of operating expenses to AWF in first year was 2.22% it has increased to 2.31% to 2.70%
in 07-08 and 08-09 due to increase in Rent, taxes, lightning, printing & stationary, Advertisement
and publicity, Repairs and maintenance etc.Along with interest income and non interest income
even operating expenses is growing year by year. By this percentage of profit will decrease.
6. Ratio of interest expenses to Average working fund

This ratio is determined by dividing interest expenses to AWF. It indicates what
percentage or rate of interest is paid from working fund.
= Interest Expenses X 100
Year 2006-2007 2007-2008 2008-2009
Interest exp(Rs) 121105 131556 192950
Average working 3636553.5 4686799.5 6246769.5

fund (Rs)
Ratio (%) 3.33% 2.80% 3.08%
Interpretation
Ratio of interest expenses to AWF in 06-07 was 3.33% and in second year it decrease to
2.80% and in third year it increased to 3.08% compared to last year due to increase in interest
expenses and operating expense. If we compare interest income and interest expense, the
percentage of interest paid is more than interest earned so it is unfavorable.
III. Solvency ratio
This ratio helps to know the liquidity of the firm i.e. ability to meet its short term obligations or
current liabilities. The solvency of the firm can be determined in the following ratios.
1. Ratio of Total cash to total deposits

This ratio helps to find what extent the deposits used and cash balance in hand. The
conversion into cash while payment of deposits is very important for any bank. If there is more
need of deposit liquidity the bank as to keep more funds in cash. This ratio can be calculated with
the following formula.
= Total Cash
X 100
Total deposits
(Rupees in lakhs)
Year 2006-2007 2007-2008 2008-2009
Total cash (Rs) 254198 265013 330661

Total deposits (Rs) 3040886 3635425 5579682
Ratio (%) 8.35% 7.28% 5.92%
Interpretation
Ratio of cash to total deposits in the first year 06-07 was 8.35% it was decreased by 7.28% to
5.92% in 07-08 and 08-09. Compared to the first year ratio has reduced year by year it indicates
that firm has no idle fund in bank. But still firm has to maintain cash reserve to meet its current
obligation.
2. Ratio of investment to total deposits
This ratio shows at what extent the firm invested its deposits on securities from its total
deposits.
= Total investment
X 100
Total deposits
Year 2006-2007 2007-2008 2008-2009
Total investment 1936346 1934981 2839396
(Rs)
Total deposits (Rs) 3040886 3635425 5579682
Ratio (%) 63.32% 53.22% 50.88%
Interpretation
Ratio of total investment to total deposits for the first year stood at healthy i.e. 63.32% and in
second and third year it decreased to 53.22% to 50.88% because of decreased shares received,
other approved securities and decreased in certificate of deposits.
3. Credit deposits ratio

This ratio shows the percentage of loans and advances provided by bank from its
deposits. This ratio is purely depending upon the lending policy of the bank and also the loan
requirements of bank customer. If there is increase in loans demand higher then the likely rise in
deposits the bank has to keep more of its funds in liquid assets to meet the increase in the loan
demand and this is also depending upon the nature of loan and type of deposit of the bank.
= loans and advances
Total deposits
Year 2006-2007 2007-2008 2008-2009
Loan and 1774451 2556630 3506126
advance (Rs)
Total deposits 3040886 3635425 5579682
(Rs)
Ratio (times) 0.58 0.70 0.62
Interpretation
Ratio of credit to deposits in 06-07 was 0.58 times and it was increased in 07-08 by 0.70 times but
in 08-09 it decreased to 0.62 times compare to previous year it was more. This indicates that
banker has lag behind in the loan and advances. Therefore measures are to taken to increase
the loan and advance to the customer.
4. Ratio of loans to Total assets
The loans to total assets ratio measures the total loans as a percentage of total
assets. The higher this ratio indicates a bank is loaned up and its liquidity is low. The higher the
his figure is determined as follows:

ratio more risky the bank may be to higher defaults. T
= Loans X 100
Total asset
Year 2006-2007 2007-2008 2008-2009
Total loan (Rs) 1455054 2091063 3368449
Total Assets (Rs) 4230699 5142900 7350639
Ratio (%) 34.39% 40.65% 45.82%
Interpretation
Ratio of loans to total assets in first year was 34.39% it increased to 40.65% to 45.82% in last two
year. Increase in loan out of total asset indicates bank is loaned up and its liquidity is low.
This show that bank is at risk side by this NPA also increases over a period of time. This may
also affect the earning of the bank and bank may not be able to recover interest and principal
amount.
5. Ratio of provision for loan losses to Average assets
The provision for loan losses to average assets is a charge to current earnings to build
the allowance for loan and lease losses. The ALL is a general reserve kept by the bank to
absorb loan losses. This important figure is a reserve account to cover unexpected default on
loans by borrowers. These are generally referred to as nonperforming loans.
= Provision for loan loss X 100
Average assets
Year 2006-2007 2007-2008 2008-2009

Provision for loan 17828 17622 47976
loss (Rs)
Average 3636553.5 4686799.5 6246769.5
Assets(Rs)
Ratio (%) 0.49% 0.37% 0.76%
Interpretation
Ratio of provision for loan loss to average asset in 06-07 was 0.49% and in second year it was
0.37% and it increased in third year by o.76% loan loss on average assets (its means if one
Hundred Rupees is average asset 0.76 paise is loan loss). Moreover, there is sufficient loan
loss reserve to absorb probable loan losses.
IV. Safety Ratio

1. Ratio of Net NPA to Net Advances
The ratio of NPAs to advances reflects the quality of a bank’s loan portfolio. A distinction
is often made between gross NPA and net NPA. Net NPA, which is obtained by deducting from
gross NPA items like interest due but not recovered, part payment received and kept in suspense
account, etc. is internationally accepted as the more relevant indicator of financial health of banks.
If the NPA is increasing it shows Bad sign to the organization.
= Net NPA X100

Net advances
Year 2006-2007 2007-2008 2008-2009
Net NPA (Rs) 2795 6063 15518
Net Advances(Rs) 1774451 2556630 3506126

Ratio (%) 0.15% 0.23% 0.44%
Interpretation
Ratio of Net NPA to Net Advances in 06-07 was 0.15% and in second and third year
Has increased to 0.23% to 0.44% because of increase in total loan even NPA has increased over a
period of time. However this ratio is satisfactory with industry norms where on an average this
ratio is 3-5%. This ratio tells the credit quality of the bank.
2. Capital Adequacy Ratio

Capital adequacy is a key element in maintaining the stability of banking corporations. A
crucial - though not the only - tool for testing capital adequacy is the maintenance of a minimum
ratio of capital to the weighted risk elements of banking business. However, it must be
emphasized that the minimum ratio required in this regulation is not necessarily the optimum
ratio, and most banking corporations are expected to maintain a higher ratio.
The following are the current minimum capital adequacy ratios:
● Tier one capital to total risk weighted credit must not be less than 4%.
● Total capital (tier one plus tier two less certain deductions) to total risk weighted credit
exposures must not be less than 8%.
Tier 1 Capital: In relation to the capital adequacy ratio, tier one capital can absorb losses
without a bank being required to cease trading. This is core capital, and includes equity capital
and disclosed reserves. In other words, this ratio is designed to indicate the amount of equity
or capital support or assets that can protect the bank from unexpected events.
Tier 2 Capital: In relation to the capital adequacy ratio, tier two capital can absorb losses in the
event of a winding-up, and so provides a lesser degree of protection to depositors. It includes
items such as undisclosed reserves, general loss reserves, and subordinated term debt.
Tier 1 Capital
Capital = includes paid up capital, statutory reserve, general reserve, balance in profit and loss
account and amalgamation reserve. Deferred asset if any deducted
Tier 1 Capital X 100

Total Risk Weighted Asset
Year 2006-2007 2007-2008 2008-2009
Capital (Rs) 222970 396216 514991
Total Risk 2777382 4127103 6021762
weighted asset
(Rs)
Ratio (%) 8.03% 9.60% 8.55%
Tier 2
Capital = includes general loss reserve, investment fluctuation reserve and subordinated debt.
Tier 2 Capital X100
Total Risk Weighted Asset
Year 2006-2007 2007-2008 2008-2009

Capital (Rs) 100812 105473 172071
Total Risk 2777382 4127103 6021762

weighted asset
(Rs)
Ratio (%) 3.62% 2.56% 2.86%
Year Tier 1 Capital Tier 2 Capital Total Capital

Adequacy Ratio
2006-2007 8.03% 3.62% 11.66%
2007-2008 9.60% 2.56% 12.16%
2008-2009 8.55% 2.86% 11.41%
Interpretation
Total capital adequacy ratio for 2006-2007 was 11.66% which is not less 8% and in second year it
increased to 12.16% and third year it decreased to 11.41% compared to second year but capital
adequacy ratio is more than 8% so it can absorb losses in the event of a winding-up, and also
provide protection to depositors. It indicates that bank is maintaining a sound and efficient
financial system.
Findings
I. Profitability Ratio
1. Ratio of net profit to total income has been decreased from 17.70% to 15.55% in last year
i.e. 08-09 compared to first two years.
2. Ratio of net profit to total deposit has been decreased in last year by 1.56%.as compared to
previous years.
3. Return on equity of firm is constant for last two year.

4. Return on Asset in first year was 1.20% it increased to 1.29% in the year 07-08 and
decreased to 1.18% in 08-09.
5. Return on Capital employed is increased by 17.15% in the last year
6. Net interest margin in 06-07 was 3.16% and it increased by 3.45% to 3.46% in 07-08 &
08-09 and it’s constant for both years.
7. Ratio of interest income to average working fund is increased in 08-09 to 17.16% as
compared to last two year.
8. Ratio of non- interest income to average working fund is increasing year by year. In first
year it was 1.32% it increased to 1.79%.
9. There is no dividend paid for 06-07 & 08-09
10. EPS of the firm also increasing. First year it was 17.95% and it increased to 27.91%.
II. Operating Ratio

1. Ratio of interest earned to interest paid in the first year it was 2.10% and second year it
increased to 2.35% and it decreased by 4% compared to second year.
2. Ratio of interest paid to total income is decreased by 35.13% to 34.45% in 07-08 & 08-09
as compared to first year it was 39.98%.
3. Ratio of staff expenses to total expenses in the year 06-07 was 8.10% it has been increased
to 8.98% to 10.29% in last two year.
4. ratio of total expenditure to total income in first year it was 83.17% it decreased in 07-08
to 82.22% and in 05-06 it increased to 84.44%
5. Ratio of operating expenses to average working fund in first year i.e.06-07 was 2.22% it
increased to 2.31% to 2.70% on last two year.
6. Ratio of interest expenses to Average working fund in 06-07 was 3.33% and in second
year it was 2.80% and in last year it increased to 3.08%.
III. Solvency Ratio

1. Ratio of total cash to total deposits is decreasing from 8.35% in 03-04 to 5.92% in 08-09
2. Ratio of investment to total deposits in first year was 63.32% in second year it was
53.22% and it decreased to 50.88% in 08-09.
3. Credit deposits ratio in first year it was 58.35% it increased in second and third year
compared to first year.
4. Ratio of loans to total asset is increasing year by year. In first year it was 34.39% it
increased to 45.82%.
5. Ratio of provision for loan loss to Average asset in 06-07 was 0.49%, in 07-08 it was
0.37% and in 08-09 it increased to 0.76% compared to last two years.
IV. Safety
1. Ratio of net NPA to net advances is increasing year by year in first year it was 0.15% and
it increased to 0.44%
2. Capital Adequacy ratio in 06-07 was 11.66%, in 06-08 it was 12.11%, 08-09 it decreased
to 11.41% as compared to first and second year.
Chapter -5
Recommendation and
Conclusion
Recommendation
1. The organization can improve on selection of assets class for investment and other
related factors such as timing etc. This could enhance their Return to Total Assets
and Total Investment to Total Deposits ratios.
2. The organization can concentrate on improving on Net Margin ratio which is
relatively low. The above mentioned suggestion would extend to better this
position.
3. The organization might reconsider their dividend policy, which has been pretty
dormant. In view of increased free reserves as well as EPS, this suggestion holds
sanctity. It would enhance the market positioning of the organization.
4. The expense to income ratio seems stagnant (82 to 85%) in these 3 years. The
synergy of large scale operations may need to be looked into.
5. The organization could improve on its short term (liquid) investments to take care of returns
as well as liquidity.
6. Compared to previous year NPA has increased so Bank should adopt new strategy to improve
NPA and also take almost care in lending the money. It should follow tight credit
policy.
Conclusion
Overall Prospects of the bank looks good. HDFC is doing well in its performance. To maintain
the same position in market it as to concentrate on liquidity position and make the investment in
good class of asset to earn more returns. HDFC should also concentrate highly on expenses which
is increasing year by year which would lead to decrease in the profitability of the firm.
BIBOLOGRAPHY
Books:
● Financial Management : Prasanna chandra
● Financial Accounting : Narayanaswamy
● Annual Report of HDFC bank
● Magazine : Reserve Bank of India Bulletin
Websites:
● www.google.com
● www.HDFCbank.com

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MAJOR PROJECT REPORT

SUBMITTED IN FULFILLMENTS FOR THE AWARD OF THE DEGREE OF

MAHARAJA SURAJMAL INSTITUTE

completed under my guidance.

Signature of the student.

Meaning and Definition

ii. Intra firm comparison

iii. comparison of items within a single year’s financial statement of a firm

retaining to the marketing of goods and services.

possible decisions when such situations are encountered.

defined or only vaguely glimpsed.

may necessitate changes in research procedure for gathering relevant data.

The characteristic features of research are as follows: –

➢ Non-Probability Sampling Design

➢ No pre-planned design for analysis

➢ Unstructured instruments for collection of data

➢ No fixed decisions about the operational procedures

convenient sampling surveyed in research.

Data collection tool

maximum information possible.

Data was collected through two sources:

TOOLS AND TECHNIQUES OF ANALYSIS

Tools for analysis

over time or on different conditions, usually on small data set )

➢ Pie-chart (Circular chart divided in to sectors, illustrating relative magnitudes or

Tools and Techniques

used for project from statistics are-

b) Heard about it and used.

Q. 11. If problems are addressed, preference of non-users to use online payment ?

Q12. Which item you shop online?

g) Any other(Please specify)

Q13. How much money do you spent in online shopping? (Rupees)

d) 5000 & above

Q14. While shopping what affects your satisfaction the most?

a) Website User Friendly

c) Credit/Debit Card payment

d) Offers & Discounts

STATE Of THE PROBLEM

Importance of the ratio analysis

2. Long term solvency

Guidelines for the financial statement analysis

❖ Simplifies financial statements​: Ratio Analysis simplifies the comprehension of

d. Ratio of total expenses to total income.

DESIGN OF THE STUDY

Title of the project:

Statement of the problem

Purpose of the study

Scope of the study

BROAD AREAS IN WHICH IT OPERATES

HDFC Bank's mission is to be “a World-Class Indian Bank” which is benchmarked against

Objectives of HDFC bank

Multiple Recognition from Euro money

➢ Visa Bill Pay

➢ Visa money transfer

HDFC BANK CLASSIC BANKING

AWARDS AND ACHIEVMENTS

Asia money Awards

Asia money Awards

The Asian Banker

❖ Simplifies financial statements: Ratio Analysis simplifies the comprehension of

➢ Mr. Deepak S. Parekh, Chairman

his figure is determined as follows: