A

project

of

Management information system

on

HDFC BANK

Submitted to-Ms.Amandeep
Submitted by-Sakshi Virmani

Roll no.180
 Index
1. Introduction

2.Company profile

3.Key technology of HDFC BANK

4.SWOT ANALYSIS

5.CRM in HDFC BANK

6.SCM in HDFC BANK

7.e-commererce

8.Compititive advantage

9.Datamining

10.conclusion
 1.INTRODUCTION

BANKING INDUSTRY

Industry Profile Banking: Banking industry has virtually been the embodiment of
the hedonistic mantra "bigger, faster, more"-- as in bigger corporations produced
by mergers and acquisitions, faster transactions via ATMs and the Internet, and
more products, such as insurance and securities. Bank has moved a long way from
the safe deposit houses that they were. They have now taken the role of an agent, a
Private sector investor etc . . . In simple words they have increased their scope by a
wide margin.

Until Private sector banks were introduced banking for Indians was an inevitable,
time consuming and a complicated activity. Private sector banks brought with them
personalized banking which has attracted major parts of the Indian population.
Major industrial houses and a large part of the business sector do bank with these
Private sector institutions. Due to the number and quality of services provided and
the case with an account can be operated; even the household sector has started
banking with these institutions.

These Private sector banks are providing new and innovative services like

 Tele banking

 Internet banking

 Tele Draft facility

 Credit cards

 Cash delivery at door step and

 ATM
PRIVATE SECTOR BANKS

The Banking Regulation Act was amended in 1993 permitting the entry of new
private sector banks. The act also specified certain criteria for establishing new
private sector banks. The criteria are as follows:

 The banks should have a minimum net-worth of Rs1bn.

 The promoters holding should be minimum 25% of the paid up capital.

 The banks should offer shares to the public within three years of their
operations. (This condition was relaxed in case of many banks due to poor state of
capital markets).

 The first new private sector bank started operations in 1995. The minimum
net-worth requirement of Rs1bn and difficulty in getting the banking license has
kept the option open for very few players. The financial institutions have promoted
many of these banks. After the CRB fiasco (the group was granted a license for
banking which was revoked after the exposure of the group in a scam), RBI has not
granted any further licenses.

 With emphasis on service and technology, it is for the first time that Indian
banks are challenging the foreign banks. These banks are making heavy use of
technology to give good service on par with foreign banks but to a much wider
audience e.g. branch size has been reduced considerably by using technology and
having less manpower. This saves the cost of the branch. In addition the ATM etc
helps drawing large customers to one branch.
 2.COMPANY PROFILE

BACKGROUND

Incorporated in 1977 with a share capital of Rs.100 million, HDFC has since
emerged as the largest mortgage finance institution in the country. Promoted by the
Industrial Credit and Investment Corporation of India, and with initial investments
from the International Finance Corporation and the Aga Khan, the corporation has
had a series of share issues raising it’s capital to Rs1.19 billion. The net worth of
the corporation as at March 31, 2001 is Rs.18, 000 crores.
Objectives
The primary objective of HDFC is to enhance residential housing stock and to
promote home ownership. One of HDFC’s major objectives is to increase the flow
of resources for housing through the integration of housing finance institutions
with the domestic capital market. During the past decade, HDFC has nurtured the
development of a housing finance industry by helping to promote housing finance
institutions in partnership with commercial banks and private sector institutions.
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.
Promoter
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 a 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.

Business Focus

HDFC BANK's mission is to be a World-Class Indian Bank. The Bank's aim is to

build sound customer franchises across distinct businesses so as to be the preferred
provider of banking services in the segments that the bank operates in 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 and regulatory compliance. HDFC BANK's business philosophy is based
on four core values: Operational Excellence, Customer Focus, Product Leadership
and People.

Distribution Network

HDFC BANK is headquartered in Mumbai. The Bank at present has an enviable

network of over 396 branches spread over 189 cities across the country. All
branches are linked on an online real-time basis. Customers in 90 locations are also
serviced through Phone Banking. The Bank's expansion plans take into account the
need to have a presence in all major industrial and commercial centers where its
corporate customers are located as well as the need to build a strong retail
customer base for both deposits and loan products. Being a clearing/settlement
bank to various leading stock exchanges, the Bank has branches in the centers
where the NSE/BSE have a strong and active member base.

The Bank also has a network of over 900-networked ATMs across these cities.
Moreover, all domestic and international Visa/MasterCard, Visa, can access HDFC
BANK’s ATM network

Electron/Maestro, Plus/Cirrus and American Express Credit/Charge cardholders.

Management
Mr. Jagdish kapoor took over as the bank's Chairman in July 2001. Prior to this,
Mr. kapoor was a Deputy Governor of the Reserve Bank of India.

The Managing Director, Mr. Aditya Puri, has been a professional banker for over
25 years, and before joining HDFC BANK in 1994 was heading Citibank's
operations in Malaysia.

The Bank's Board of Directors is composed of eminent individuals with a wealth of

experience in public policy, administration, industry and commercial banking.
Senior executives representing HDFC are also on the Board.

Senior banking professionals with substantial experience in India and abroad head
various businesses and functions and report to the Managing Director. Given the
professional expertise of the management team and the overall focus on recruiting
and retaining the best talent in the industry, the bank believes that its people are a
significant competitive strength.
Operations

HDFC commenced operations as a mortgage bank; it raised large wholesale

resources (domestic and international) and lent retail primarily to individual
households. In mid-1991, it entered the retail deposit market by offering savings
and investment opportunities to households in competition with other instruments
in the financial market.
Loans to Corporate Bodies: Deposit Facilities
Corporate loans Individual deposits
Lines of Credit - Cumulative option
Non-residential premises loans - Non-cumulative option
- Monthly income plan
Facilities to Developers - Double money option
Short term construction finance - Children’s gift fund
Financial guarantees Trust deposits
Advance processing facility Corporate deposits
HDFC provides finance on both sides of its balance sheet in order to provide
services that are the best suited to its customer base. Today, HDFC has a mix of
individual and corporate clients both on the funding and the lending side.

Individual Home Loans

 Purchase/Construction  Short-term bridging loans
 Home Improvement loans  Loans to Non-Resident Indians
 Home Extension loans  Flexi-Rate Individual loans
 Loans to professionals  Land Purchase loans
Development of Institutions
Housing will continue to be the core business of HDFC. While the main focus is to
grow the housing portfolio, organically and inorganically, in order to capitalize on
HDFC’s strong brand value and maximize returns for shareholders, HDFC has
made investments in various group companies. They have strong synergies with
HDFC and such diversification will enable it to offer a wide gamut of financial
services and products to customers. A few of these companies have been
mentioned below: -
Associate Companies
 GRUH Finance Ltd.  HDFC BANK Ltd.
 HDFC Securities Ltd.  CRISIL
Subsidiary Companies
 HDFC Standard Life Insurance Ltd.  HDFC Holdings Ltd.
 HDFC Asset Management Company Ltd.  HDFC Realty Ltd.

Other Services/Activities
Apart from providing a gamut of financial services to its customers, HDFC has
made its for a into various other activities too.
 Property related services
 Training
 International Union for Housing Finance
 Consultancy
(3)Key technology of HDFC BANK

HDFC BANK operates in a highly automated environment in terms of information

technology and communication systems. All the bank's branches have online
connectivity, which enables the bank to offer speedy funds transfer facilities to its
customers. Multi-branch access is also provided to retail customers through the
branch network and Automated Teller Machines (ATMs). 

The Bank has made substantial efforts and investments in acquiring the best
technology available internationally, to build the infrastructure for a world class
bank. The Bank's business is supported by scalable and robust systems which
ensure that our clients always get the finest services we offer. 

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

To understand the position among its competitors and in the industry segment as

such, a SWOT analysis can be attempted. This exposes the bank's positives and

negatives in a better way, which helps one properly, evaluate and quantify the

worth of its equity also.

STRENGTHS

 Largest bank among the new private sector banks in terms of deposits advances

and profits. Bank had maintained its leadership position all through the years

since it was established.

 Bank handles one of the largest volumes of international banking business in

India. All the branches of the bank are SWIFT facilitated. A correspondence

network of 178 foreign banks overseas is pivotal in this success.

 Frugal cost management system adopted by the bank helped it to achieve a

figure of 2.06 percent as the operating cost to average working funds ratio

which is the lowest operating cost in the whole banking sector. The bank is very

strong on this front.

 High profitability, reflected by the Return On Net Worth (RONW) of 88.64

percent. This was substantiated by an EPS figure of 6.11 as on 31 March 2005.

Extrapolating the half-yearly results, this showed an increase, which meant that

the profit earning capacity of the bank was increasing.

WEAKNESSES

 The bank's interest spread to Average Working funds ratio had been showing a

decline since last two years. This reflects an inherent weakness in interest risk

management, more often referred to as Asset-Liability Management (ALM).

 A weak credit monitoring exercise had resulted in the bank's provisioning of

nearly 22 crore which it had lent to the CRB group companies. Greater caution

has to be shown on this front.

 The investment banking division of the bank, though it had a category I

merchant banker status from SEBI, could not perform well. This was because

the bank had its competency in a different field like commercial banking, and

not in the area of investment banking.

OPPORTUNITIES

 The RBI reforms aimed at providing more functional autonomy to commercial

banks will help the new private sector banks in expanding their operations into

new customer segments and making use of their resources more productively.

 The phased introduction of rupee convertibility and other similar economic

reforms, aimed at linking the domestic economy with the foreign markets

would help banks like to have a leading edge over other banks. The bank can

increase its global business due to the vast network of links with foreign banks,

and rich experience.

 Removal of the 5 percent limit of advances to be put in investments, and

making it relative to the incremental deposits is a welcome decision for the

banking sector in general, and private banks in particular. At a time of lower

credit off take, the banks can go in for aggressive investment strategies to

maintain the profitability.

THREATS

 A slump in the industrial output has resulted in a low credit off take, which is

affecting the banking industry in a bad way. This has affected also, which is

evident from a decreasing credit-deposit ratio.

 Competition is intense in the banking sector, with many public sector banks

restructuring their way of functioning, and coming to the profitability track.

They are investing more in technology, and customer approach has also

changed considerably. The private banks like will have to fight these giants out,

who have a long market standing and rich deposit base.

 Changing regulatory environment is also a threat to the private banks like

IndusInd. With an unstable political set up, the rules of the game may change

any time to the disadvantage of these banks.

(5)CRM AT HDFC BANK

 In HDFC, the CRM is integrated with core banking solutions and offers end
to end functionality to effectively address the needs of the complete cycle of
marketing, sales and service of banking products.

 Key Modules:

-Enterprise customer information file

-Sales

-Loan origination

-Service
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-Marketing

Crm process

BENEFITS OF CRM

 Aggressive customer acquisition

 Improved cross sell framework

 Increased operational efficiencies and collaborations

 Lower total cost of ownership

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(6) Supply chain management at hdfc bank

HDFC BANK's Supply Chain Management team offers financial solutions for
Suppliers as well as Dealers and Distributors of large Corporate.

 
HDFC BANK dedicated Supply Chain Team offers a range of structured as well as
regular facilities to enable you to meet funding requirements in a timely and cost
efficient manner. In addition to meeting funding requirements, the supply chain
can be linked on an electronic platform to provide e-payment and e-collection
solutions.
(7)e-commerce in hdfc

The Housing and Development Finance Corp. (HDFC) Bank is building a secure
payments gateway for e-commerce. Full service Internet banking and smart cards
are in the works for June 1999.

HDFC BANK also plan to offer the facility to purchase goods online once its
Internet banking is up and running through tie-ups with other Web merchants.

Apart from this, the bank is also expanding to cities like Vijaywada, Mysore and
Jaipur and expanding its ATM network by adding 30 ATMs over the current fiscal.

About 10 to 15 percent of its ATMs are likely to be off-site ATM at areas like
petrol pumps.

The HDFC BANK has announced that it has become the first bank in India to link
up its ATM network with all the three major payment systems worldwide.

HDFC BANK senior manager Munish Mittal said that HDFC BANK will be the
first bank in the Asia-Pacific region to connect the American Express (Amex)
payment system. Using this system, Amex cardholders will be able to withdraw
cash from any of HDFC BANK's 50 ATMs in India.

The bank will earn a transaction fee in addition to being reimbursed the amount
paid out.

HDFC BANK has managed to cut its pay-back period on ATM investments by
more than half to approximately two years.

HDFC BANK provides dual language support, that is, operations in English or a
regional language like Hindi, Bengali or Tamil-based on the location of the ATM.

The bank also offers a facility to make utility bill payments for its customers to
BEST, BSES, Max Touch, BPL Mobile and Airtel and schools like Bombay
Scottish in Mumbai via ATMs or tele-banking.

"We are also speaking to MTNL for bill payments in Mumbai and Department of
Telecommunications in Chennai, MSEB and a couple of schools in Mumbai and
Calcutta to offer ATM based fees/bill payment facility," Mittal added.
(8) Competitive advantage-HDFC

HDFC Bank operates in a highly automated environment in terms of information

technology and communication systems. All the bank's branches have online
connectivity, which enables the bank to offer speedy funds transfer facilities to its
customers. Multi-branch access is also provided to retail customers through the
branch network and Automated Teller Machines (ATMs).

The Bank has made substantial efforts and investments in acquiring the best
technology available internationally, to build the infrastructure for a world class
bank. The Bank's business is supported by scalable and robust systems which
ensure that our clients always get the finest services we offer.

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

They offer customers a complete range of general insurance products ranging

from Motor, Health, Travel, Home, and Personal Accident in the retail space and
customized products like Property, Marine, and Liability Insurance in the corporate
space. HDFC ERGO has been expanding its presence across the country and is
today present across 46 cities with 52 branch offices with an employee base of
over 650 professionals. The company has a right balance of distribution channel
comprising of dealerships, brokers, retail and corporate Agents, banc assurance,
and direct sales team.

Tech-Savvy
HDFC Bank has always prided itself on a highly automated environment, be it in
terms of information technology or communication systems. All the braches of the
bank boast of online connectivity with the other, ensuring speedy funds transfer for
the clients. At the same time, the bank's branch network and Automated Teller
Machines (ATMs) allow multi-branch access to retail clients. The bank makes use
of its up-to-date technology, along with market position and expertise, to create a
competitive advantage and build market share.

(9)Datamining in bank

Datamining is gaining ground in banking. HDFC BANK have taken the lead in
datamining along with leading mobile telephony service providers. The intention is
quite simple - profile each other's customers so well that you can cross-sell
products and services. Not just cross-sell, but data-mine in such a way that you can
customize your offerings. The objective: to increase the existing customer base and
enhance loyalty, HDFC BANK with all of its mobile service providers - Hutchison
Max, BPL Mobile, Tata Cellular, RPG, Airtel, Aircell, Cellphone and Command.

HDFC BANK's datamining helps to increase sales by targeting the right customers
and to make the right offers to customers. Banks, who have their ears to the ground
regarding their customer's tastes and preferences, gather a lot of data...what
datamining does is that it sifts through all the voluminous data and ekes out a
pattern, which enables the bank to personalize its communication towards the
customer as much as possible.

With datamining, banks can get a better understanding what drives the customer
relationship.

 In recent times, Citibank, HDFC BANK and ICICI Bank have announced tailor-
made mobile banking offerings under their various schemes like `Suvidha',
`Freedom' and `Infinity'. 

HDFC BANK offers under its `Freedom - the e-age savings' account, customers
who are BPL Mobile users, a discount while settling mobile-bills.
 (10)CONCLUSIONS & IMPLICATIONS

It was found that all the branches have not been able to contribute their due share
to the overall growth of the bank.

About 14% of the branches decline in deposits levels whereas about 16% of
branches could not show even 5% growth in deposits.

Because of the stiff competition of various banks in the market, focus of Indian
Bank should be immense on advertisement and promotion.
ATM facility should be given to the students with "Zero balance of debit" so that
the students can easily get money at any time and at anywhere they want.
Sunday should be made as a full working day for both the branches so that people
will easily transact at any time.
Newspapers mainly, Times of India, Hindustan Times and Economic Times and
different magazines should be kept for the customers by which they feel relaxation
until their transactions are over.
Proper feedback system should be there and feed back forms should be kept for the
customers. The customers coming into the bank should fill up these forms and it
should be collected on daily basis. By analyzing these bank will easily come
across its feedback and accordingly modify them. So that the customers will feel
proud of themselves as well as their bank.
The head office should appoint smart and handsome/beautiful employees in the
metro cities so that customer will feel proud over himself or herself.