A PROJECT REPORT ON

“PARA BANKING SERVICES

WITH REFERENCE TO HDFC BANK”

SUBMITTED BY
PRIYANKA.J.SARAWAGI

SUBMITTED TO
UNIVERSITY OF MUMBAI

T.Y.B.COM (BANKING AND INSURANCE)

SEMESTER V

UNDER THE GUIDANCE OF

PROF.SUJATA KHANDILKAR

SK COLLEGE OF
ARTS, SCIENCE AND COMMERCE
VIDYAVIHAR, MUMBAI-400077
ACADEMIC YEAR-2009-2010
Declaration

I Sarawagi Priyanka Jagmohan of S K Somaiya college of Arts, Science and

Commerce of T YBCOM(Banking and Insurance) (SEM V) hereby declare that I
have completed this project on “Para banking services with reference to HDFC
Bank” in the Academic year 2009-2010. The information submitted is true and
original to the best of my knowledge.

Signature of Student

Acknowledgement
Many people’s input underlies any effective outlay. We would like to acknowledge
our indebtedness to every individual whose inquisitive mind and feedback made us
to attempt to bring about a project study on “Rural Credit and NBFCs”.
We present this project study to our college for BBI course, as part of semester VI.
This project has been prepared under the guidance of Prof. Neel Kantan who has
given positive feedback with regard to the project thus encouraging us in bringing
forth the project.
We express our gratitude towards college library for their unflagging support.
Last but not the least our heartfelt gratitude to family and friends for their
continued support and constant encouragement.
Table of contents
 Executive summary

With the expansion and boom in banking industry the scenario have changed to
great extent from its traditional activities
It has taken a great leap with the new dimensions in the market showcasing better
understanding, displaying dynamic role, exhibiting innovations and exploring new
creative areas to encourage banking perception.
The scope of banking has widened with changes made by RBI. It has started
rendering more of facilities and services to its valued customers other than its core
activities of term lending and accepting deposits.
It has created room in the economy for its self by acting as a financial
conglomerates and providing one stop shop of services. It is like all the things
available under one roof.
The term used for its services other than traditional ones is known as “Para”
Para banking includes services such as merchant banking, venture capital, ATM
services, and debit/credit cards, net banking, discounting and so on…
The following chapters’ deals with the meaning of services covered under the
parameters of Para banking as per the guidelines issued by RBI the regulatory
authority and the ones which are offered by the HDFC Bank.

Objectives and aim of the study

  To analyze the scope of Para banking in the banking environment

 To study Para Banking in Indian Banking Industry focusing through

HDFC bank

Research methodology

The information has been collected with the help of research methodology tools i.e
by collecting primary data as well as secondary data.
Primary data is in conduit to “interview method” and direct communication with
the concerned person in relation to the Indian banking sector.
Secondary source of information are gathered
➢ Through visit to relevant web sites
➢ Through reference books
➢ The friends, family who have helped to solve the problems of related topic
and collect data from the HDFC Bank.
 Chapter.1

Introduction and Scope of Para banking

In this chapter we will discuss:

• Introduction
• Meaning
• Meaning given by
RBI
• Object of Para
banking
• Scope
INTRODUCTION
The word Para refers branching out from the main. It is to offer multiple
activities by a bank to its customers other than its core functions of term
lending and bank deposits.
Para banking offers innumerable innovative products and instruments such as
merchant banking, leasing, hire purchase, forfeiting, discounting, factoring, mutual
funds, debit cards, credit cards, and venture capital and so on and so forth.

Banks can undertake certain eligible financial services or Para-banking activities

either departmentally or by setting up subsidiaries. Banks may form a subsidiary
company for undertaking the types of business which a banking company is
otherwise permitted to undertake, with prior approval of Reserve Bank of India.

MEANING OF PARA BANKING

The Indian banking scenario is in a phase of growing confusion and chaos with
plethora of ... line so it required a boost for its upliftment. It was possible through
integration of its services which added new term in the financial market as Para
banking
It is like an umbrella of activities which the bank is ready to offer its customers for
the very purpose of maintaining its existence in this competitive environment
by customer retention.

Examples for the Para-Banking activities that a Bank normally involves

1.Global Debit Card

2.Global Credit Card
3.Bancassurance
3.Life Insurance Products
4.Non Life Insurance Products
5.Cash Management (SCMS) and so on...
A banking company tries to provide its valued customers other than its core
functions UNDER THE HEAD OF PARA BANKING.
Banks are engaged in offering Para banking services such as mortgages, credit,
insurances and credit charge cards, Teller Machines, ATM Banking, leasing and
many more.
Meaning of Para banking by RBI
According to RBI Para banking permits bank to manage one or more classes of
collective investment undertakings, and establishes the general rules with which
they must comply, without prejudice with any additional requirements which may
be laid down from time to time by the laws governing such institutions

The object of Para banking shall consist of one or more of the following:
a) Management of collective investment undertakings which raise capital from
the public, namely

1. Real estate investment funds;

2. Pension funds
3. Other collective investment undertakings created by law.
4. Equity participation
5. Equipment Leasing, Hire purchase
6. Discounting, factoring and forfeiting

b) Discretionary and tailored management of portfolios on behalf of third

parties, based on powers conferred by the investors, provided that the
following instruments are included:

1. Securities;
2. Collective investment undertakings units;
3. Money market instruments;
4. Financial instruments futures, including other derivative instruments which may
be settled in cash;
5. Forward rate agreements (FRAs);
6. Interest rate swaps, currency swaps or equity swaps;
7. Put or call options on the abovementioned instruments, including cash
instruments; this category includes currency and interest rate options.

c) Investment consultancy regarding the assets whose management is the

object of the company.

SCOPE OF PARA BANKING

The Para banking Division has been accorded the status of Mother Division
amongst all division.
Para banking has a wide scope in the financial market because it offers more
and is the requirement of the competitive financial market. It will strengthen
the rural sector along with its great impact in the urban sector.
A bank shall carry out all the acts and transactions which are deemed necessary for
or incidental to the smooth running of the managed collective investment
undertakings and assets, according to normal standards of diligence and
professional skills. It is wider term used for banking activities.
It can also be said that an institution which mobilizes the savings of the community
and diverts them for financing different activities. It needs to be registered. Para
banking is a boon to the industry and has a great impetus in the society as it
contributes greatly to the economy under the supervision of the regulatory
authority.

Commercial banks render these services with the aim to target the right
market as well corporate sector which adds to the national economy.
The whole lot of directions to be followed by the banks in order to undertake
Para activities is given by RBI. It has a good scope as well as bright
future in upcoming years.
 Chapter2.

Services and activities included

Under Para banking

• Services covered under

Para banking

• Definitions of each
services
Services incorporated under Para banking
Equipment leasing, Hire purchase business and factoring services

A lease can be obtained directly through a lessor. It is a smart way to acquire

equipment. When the equipment is delivered, the lessee formally accepts it and
the lease takes effect. It is known as equipment leasing.

In case of hire purchase the goods are delivered by the owner to another person on
the agreement that such person pays the agreed amount in periodical installments.

Factoring refers to the process of managing the sales ledger of a client.

Mutual Fund business

Mutual fund business refers to fund raised by pooling the savings of small
investors and deploys it in various investments to earn considerable returns.
Smart / Debit Card Business

Smart /debit cards is an instrument of payment. The cards are plastic cards issued
by banks to their customer. It avoids the risk of handling cash.

Money Market Mutual Funds (MMMFs)

Money market mutual funds should comply with the provisions held by RBI before
publishing in the market.

Real estate initiatives

The leasing of houses and property is taken care of in real estate initiatives by
the bank

Micro finance

Microfinance refers to the provision of financial services to low-income clients,

including consumers and the self-employed.

Entry of banks into Insurance business

Entering of banks in the field of insurance is termed as banc assurance. It helps to

widen the scope and bring lot of advantages in the Indian banking history

Pension Funds Management (PFM) by banks

Banking Regulation Act, 1949, banks have been advised that they may now
undertake Pension Funds Management (PFM) through their subsidiaries set up for
the purpose.

'Safety Net' Schemes

It provides security measures one must follow by making the use of internet
facility to carry out their banking operations or transactions.
Merchant banking

Merchant banking may be defined as an institution which covers a wide range of

activities such as issue management, portfolio management, credit syndication,
counseling and advisory services.

Venture capital

It is a method of financing in the form of equity participation. A venture capital

finances the project based on the potentialities of a new innovative project.

Net banking

Internet is a channel of service to banking customer. One can carry out its
banking operations through internet facilities.

ATM Services

ATM is a mechanical device used o dispenses cash upon insertion of a plastic

card and its unique personal identification number.

Telco Billing System

Telco billing system allows the customer to make the payment at instance,
without being party to long queues by directing its bank to make the payment on
behalf of him.
 Chapter.3

About HDFC Bank

• Company profile
• Management
• Technology usage
• Business
classification
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.
HDFC was ideally positioned to promote a bank in the Indian environment.
HDFC Bank is a young and dynamic bank, with a youthful and enthusiastic team
determined to accomplish the vision of becoming a World-class Indian bank
The business philosophy is based on four core values –
• Customer Focus,
• Operational Excellence,
• Product Leadership and
• People.

It is believed that the ultimate identity and success of bank will reside in the
exceptional quality of people and their extraordinary efforts. For this reason,
HDFC Bank is committed to hiring, developing, motivating and retaining the
best people in the industry

HDFC Bank is one of the most preferred employers in banking industry in India

The mission is to be "a World Class Indian Bank", benchmarking it selves

against international standards and best practices in terms of product offerings,
technology, service levels, risk management and audit & compliance.

The objective is to build sound customer franchises across distinct

businesses so as to be a preferred provider of banking services for target
retail and wholesale customer segments, and to achieve a healthy growth in
profitability, consistent with the Bank's risk appetite.

HDFC bank is committed to do this while ensuring the highest levels of

ethical standards, professional integrity, corporate governance and
regulatory compliance.
HDFC Bank believes that what makes it different from other banks is not on the
basis of product differentiation but the brand image, people orientation and the
trust its customers have on the bank for the services it provides.
Bank doesn’t believe in adopting any marketing strategies or promotional tools to
advertise itself in the market because the core principle in what it emphasizes is as
such “services speak for themselves”.
HDFC Bank was incorporated in August 1994, and, currently has a nationwide
network of 1,506 Branches and 3,573 ATM's in 635 Indian towns and cities.
Management

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.

Excessive usage of technology

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 clients always get the finest services it 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.

Business is classified as under:

Wholesale banking business-

It is recognized as a leading provider of cash management and transactional
banking solutions to corporate customers, mutual funds, stock exchange members
and banks.
Retail banking business-
The objective of the Retail Bank is to provide its target market customers a full
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
world-class service and delivered to customers through the growing branch
network, as well as through alternative delivery channels like ATMs, Phone
Banking, Net Banking and Mobile Banking.
Treasury-
Within this business, the bank has three main product areas - Foreign Exchange
and Derivatives, Local Currency Money Market & Debt Securities, and Equities.

HDFC Bank had initiated Para banking services and activities to increase its
income by way of earning commission. When it offers these services it helps it to
not only provide new products and benefits to its customers but also ensures its
stability and growth in the market segment.
It offers varied variety of treasury, custodian, wholesale, retail services.
The Bank has its deposit programs rated by two rating agencies - Credit Analysis
& Research Limited (CARE) and Fitch Ratings India Private Limited. The Bank's
Fixed Deposit programme has been rated 'CARE AAA (FD)' [Triple A] by CARE,
which represents instruments considered to be "of the best quality, carrying
negligible investment risk"
The bank was one of the first four companies, which subjected itself to a Corporate
Governance and Value Creation (GVC) rating by the rating agency, The Credit
Rating Information Services of India Limited (CRISIL).
Leading Indian and international publications have recognized the bank for its
performance and quality. HDFC bank provides better safety too.

Chapter .4

Merchant banking and venture finance

• Meaning and process of merchant bank

• Merchant banking offerings by HDFC bank
• Scope of merchant banking
 • Meaning and process of venture finance
• HDFC bank entering into venture
• Stages involved in venture finance
• Reasons of growth for venture finance

Merchant banking/services
A merchant bank is a financial institution primarily engaged in offering financial
services and advice to corporations and to wealthy individuals. The term can also
be used to describe the private equity activities of banking. It refers to issue
management.
Merchant banking has been a very lucrative-and risky-endeavor for the small
number of bank holding companies.
The term merchant banking is generally understood to mean negotiated private
equity investment by financial institutions in the unregistered securities of either
privately or publicly held companies.
Both investment banks and commercial banks engage in merchant banking, and the
type of security in which they most commonly invest is common stock.
They also invest in securities with an equity participation feature; these may be
convertible preferred stock or subordinated debt with conversion privileges or
warrants. Other investment bank services-raising capital from outside sources,
advising on mergers and acquisitions
Merchant bank invests its own capital in a client company whereas an investment
bank purely distributes (and trades) the securities of that company in its capital
raising role
Provide fee based corporate advisory services

In a nut shell about merchant banking

Merchant services in HDFC Bank.
Why Merchant Services?

By enabling card acceptance procedure, a financial house would get benefited by

⊗ Providing the easiest and most convenient way for customers to pay
⊗ Prompt and assured payment
⊗ Speed at the point of sale, especially when using electronic terminals
⊗ Reduced back office administration
⊗ Reduced cash and cheque handling
And the combined effect of the above would result in customer loyalty, increased
spend and more revenue for the organization
Merchant Product Offerings

HDFC Bank Merchant Services is the national leader in electronic payment

solutions. It gives a competitive edge to businesses and financial institutions, by
offering a complete portfolio of systems, services and innovative products to meet
the ever-changing market dynamics
Technology infrastructure- The entire service is backed by superior technology
infrastructure in terms of the network, systems and processes.
Payment Options: Payment can be made by credit to current account with the
bank or manager's cheque
Personalized service: HDFC offers personalized service, there is one merchant
relationship officer will be designated for taking care of the relationship

Scope of merchant banking in India

There is a vast scope for merchant banking to enlarge their operations in domestic
market as well through:
Growth of new issues market
1. Entry of foreign investors
2. Changing policy of financial institution
3. Development of debt market
4. Innovations in financial instruments
5. Corporate restructuring
6. Disinvestment
7. Least restrictions and more liberalization
8. Corporate culture
9. Corporate dynamic
10.Banking policies

HDFC Bank offers merchant banking activities to its customers by underwriting

the issues, offering corporate advisory services, consultancy services, issue
management of companies.
The guidelines laid down by RBI are as follows:
 1. The underwriting exposure to any company which will include other
funded and non-funded credit limits is subject to the exposure limits
2. All merchant bankers will also require authorization by SEBI
3. All issues must be managed by at least one authorized banker functioning
s lead manager
4. Should fulfill capital adequacy
5. Merchant banker shall furnish to the board half early unaudited financial
results

Venture Finance
 Venture financing refers to organized private or institutional financing
that can provide substantial amount of capital, mostly through equity
purchases and occasionally through debt offerings. It denotes investors
that provide equity financing to young business and play active role in
advertising their managements.
It is provided for early stage projects, high potential growth companies in
the interest of generating a return through IPO of a company.

When approach a venture capital firm consider their portfolio as under:

a) Business Cycle
b) Industry
c) Investment
d) Location
 e) Return
f) Involvement

The process of venture capital

The process of venture capital initiates with the entrepreneur developing a novel
idea of starting up a techno based project.
He will approach venture capitalist who assess the capabilities of the entrepreneur
and if satisfied than it will finance the project and advertise for the subscription of
the issue
With all due diligence and skill the process is carried out and when the
entrepreneur reaches advanced stage of maturity at this instance venture capitalist
may either sell his part of shares to the promoters or in the market.

HDFC Bank entered into venture with Centurion Bank of Punjab

Centurion Bank of Punjab got amalgamated with HDFC Bank in March 2006 with
effect from March 2008.
This venture enabled both the banks to expand their data base and widen the
services offered to their customer which in turn would enhance its position.
Whereas, concerned regarding venture capital financing activities in relation to
HDFC Bank it is not provided by it.
Stages of financing involved in venture capital
It is in precise a four way method used by companies. Reasons of growth for
venture finance

Venture capital is at take off stage in India. It can play a catalytic role in the
development of entrepreneurship skills that remains unexploited among the
young and energetic technocrats and other professionally qualified talents. In
order to ensure success of venture capital in India following suggestions are
offered:
 a) Exemptions or concessions for capital gains
b) Development of stock market
c) Fiscal incentives
d) Private sector participation
e) Reviewing existing laws
The guidelines to be followed by banks as prescribed by RBI are as follows:
1. The banks have to ensure that underwriting commitments taken up by them
in respect of primary issue of shares or convertible bonds or convertible
debentures or units of equity-oriented mutual funds comply with the ceiling
prescribed for the banks’ exposure to the capital market.
2. Banks should not underwrite issue of Commercial Paper by any Company or
Primary Dealer.
3. Bank should not extend Revolving Underwriting Facility to short-term
Floating Rate Notes/Bonds or debentures issued by corporate entities.
4. Banks/ merchant banking subsidiaries of banks undertaking underwriting
activities are also required to comply with the guidelines contained in the
SEBI (Underwriters) Rules and Regulations, 1993, and those issued from
time to time.
5. An annual review covering the underwriting operations taken up during the
year, with company-wise details of such operations, the shares/debentures
devolved on the banks, the loss (or expected loss) from unloading the
devolved shares/debentures indicating the face-value and market value
thereof, the commission earned, etc. may be placed before their Boards of
Directors within 2 months of the close of the fiscal year.
 Chapter.5

Real estate initiatives and dealer financing

 • Meaning of real estate
initiative
• HDFC provides funding
• Definition of dealer financing
• Bill discounting and its
highlights
• Factoring solutions
• Working capital facilities
• Factoring and the drawbacks

Real estate initiatives

HDFC Bank offers significant solution for commercial properties leased to various
reputed corporate / banks / insurance companies / retail chains. The product
offering involves discounting the future receivables every month (or depending
on any other frequency) and providing an upfront loan to the landlord, thus
extending good liquidity in the hands of the landlord. The loan can be used for any
purposes except those restricted by the RBI.

HDFC provide funding….

a. To a borrower who presently owns commercial premises / property leased out to
reputed corporate(s) by obtaining liquidity in their hands.
b. To a borrower who is planning to buy a pre-leased property and looking to part
finance the purchase of such property.
c. To a borrower who is considering switching to another bank an existing account
due to competitive interest rate offering and
d. For a combination of (b) and (c) above.
HDFC Bank also provides solutions to various corporate/ banks / insurance
companies / retail chains who take premises on long term lease and helps them in
reducing interest free security deposit amount.
This is achieved by imparting good liquidity to their landlords via a loan at the
time of origination of the lease tenor.
Thus, the lessee benefits from the savings which would be otherwise blocked as
security deposit for the tenure of the lease.
Information evaluated in the product offering include :
Lessee details
Lessor details
Property profile including criticality of the premises for the lessee's operation

Deal structure and

Cash flow pattern envisaged in the agreement(s).
The loan eligibility of the prospective borrower is calculated based on the
evaluation of the above details.
Dealer financing
What Does Dealer Financing Mean-

Loans that are originated by a retailer to its customers and are then sold to a bank
or other third-party financial institution.

The bank purchases these loans at a discount and then collects principle and
interest payments from the borrower. Also called an indirect loan.

Investopedia explains Dealer Financing as

A well-known example of dealer financing is auto dealers that offer car purchase
financing. Many car dealers’ markup the finance company's interest rate and keep
the difference as additional profit.

Dealer financing with respect to HDFC bank

On the sales side, HDFC Bank offers a range of solutions for funding dealers and
end customers. Facilities are offered on a standalone basis against collateral as well
as through structured transactions.
Dealer financing is an effective tool that meets the funding requirements of
dealers at a competitive rate. It results in a satisfied and loyal dealer network, helps
in increasing sales and streamlines working capital management.
Bill discounting
Bill discounting refers to discounting the trade bill by the party with the bank
before the expiry of the bill at a price lower than the payable amount. The amount
lower is referred to as discount by the bank and it is a form of income for it. It is
highly negotiable.

Bill discounting is one of the essential activity performed by the HDFC Bank
under the head of Para banking services. It is the special feature of this commercial
bank

At HDFC Bank it dedicate trade finance set-up that combines the rich experience
in understanding customer needs and a nationwide network of branches and
correspondent banks to offer bill discounting. These are customized to suit the
requirement for short term finance, from the date of sale to the date of receipt of
payment thereon.
Its highlights are as under:

1. Short-term finance to selected dealers of large Corporate

2. Credit extended up to 90 days for purchase of goods from Corporate

3. Credit Lines would be set up on Dealers based on financials, funds.

4. Minimum documentation

5. In all cases, a letter of recommendation a specifying the dealer's history,

track record, etc. and a commitment of stop supply in case of default.

Factoring solutions

Commercial Mortgages make owning, refinancing, or renovating commercial real

estate easy and affordable. One can also strengthen their working capital
requirements using mortgaged backed term loans.

Term loans provided to dealers to strengthen working capital requirements,

acquisition of premises for business etc.

Tenors up to 5 years provided

Limits set up based on financial projections, security provided

Up to 75% of the project cost would be funded. Balance to be promoter's

contribution

Facilities to be secured by assets being financed.

 Collateral security may be obtained in certain cases

Working Capital Facilities

Working capital is the requirement of every banking company in the sustenance of

itself in the banking economy.
It refers to a continuous flow of cash in the business to avoid any crunches.
Working capital flow allows the company to carry out its operations without
hurdles
In order to propel business to new heights HDFC Bank provides with a Working
Capital Finance. These loans are designed to meet the cash flow requirements with
many hassles.

It is a process whereby the factor operates by buying from selling company an

invoice debt. By obtaining payment of invoices from the factor, usually up to 80%
of their value without having to wait until the buyers make payment the company’s
cash flow is improved. The factor charges the service fee.
Despite of various advantages added to this service HDFC bank doesn’t offer
factoring services to its customers owing to following drawbacks:
I. Dominance of western currency
II. Difficulty in procuring international bank guarantee
III. Non availability for financially weak countries and so on.
 Chapter .6

Automated teller machine services

&
Debit/credit cards
• Meaning and components of ATM
• Steps to use an ATM
• Debit cards and its types
• Features and advantages
• Credit cards and its kinds
• Features and advantages
Automated teller machine

ATM is a computerized telecommunication device that provides a customer of

financial institution with the access of financial transaction in a public place
without the need of a human clerk or bank teller.
On most modern ATMs, the customer is identified by inserting a plastic card
with a magnetic strip consisting of a chip that contains a unique card number and
some security information such as an expiry date. Authentication is provided by
the customer by entering into Personal Identification Number
(PIN)Diagrammatically the components of an ATM
Customers can access their bank accounts in order to make cash withdrawals and
check their account balances as well as purchasing mobile cell phone prepaid
credit. It is known by varied names such as, money machine, bank machine, cash
machine, hole-in–the–wall, cash point etc.

Is an ATM Card like a Credit Card?

No, an ATM Card is different from a Credit Card using your ATM Card ,one can
access their account and carry out most of banking transactions, round the clock.
But cannot shop with your ATM Card
Transactions that can be performed using ATM Card
Can carry out the following transactions at all ATMs across the country:
 Withdraw cash
  Deposit a cheque or cash
 Request a mini-statement
 Make a balance inquiry
 Transfer funds
 Change your PIN
 Request a cheque book or account statement
 Request product information
 Pay your utility bills
Will there be a charge?
HDFC Bank does not levy any charge on its customers for using HDFC Bank
ATM
Note: All cards which can be used at ATMs will need to have a Personal
Identification Number (confidential code) for ATM access. This is issued by the
bank issuing the card.

Limits and parameters are set by the card issuing banks regarding amount of cash
withdrawal, withdrawal limit, number of PIN log-in attempts, transaction set
allowed and declines
Can I use the HDFC Bank ATM Card at Citibank/Standard Chartered/Other
Bank's ATMs?
No. Your HDFC Bank ATM Card can only be used at our ATMs.
What is the cash withdrawal /cash advance limit for me?
HDFC Bank customers can withdraw up to Rs.10, 000/- per day using ATM Card
and Rs. 15,000 using Debit Card. For non-HDFC Bank customers, the limit is as
decided by the bank issuing the card.
How do I use my ATM?
To use the HDFC Bank ATM, just follow these easy steps:
Insert your card into the slot provided.

Select the language in which you want to be led through the transactions. Most
ATMs offer you the options of conducting your transactions in English or Hindi.
At some locations, you will be able to select between languages.

At the prompt, enter your PIN. Press the "Enter" key.

Select the transaction you wish to conduct (e.g.: withdrawal/balance) Select the
account type. If you are using a Credit Card, select the "Credit" option.
  If you are making a withdrawal, enter the amount you wish to receive.

 Confirm that the amount is correct.

 Then after transaction is processed you will receive receipt of transaction

ATM Services is a boon for the banking industry

HDFC Bank has 3,573 plus ATM centre in India. It is wide distribution channel
and posses good networking system for the customers. The advantages of an ATM
over personal teller are as follows: -1) can be assessed round the clock.2) no
employee interface is necessary.3) it offers cost effective measures.4)scope of
fraud and misappropriation is reduced.

Debit cards
 A debit card is also addressed as a bank card that provides an
alternative payment method to cash when making purchases.
It may be called as an electronic cheque as the funds are drawn directly
from either their bank account or from the remaining balance on the card.
In some cases, the cards are designed exclusively used on the internet and so
there is no physical card. It is termed as virtual card.
The use of debit cards has become widespread in many countries and has
overtaken the cheque and in some instances cash transactions by volume.
Like credit card, debit cards are used widely for telephone and internet
purchases and funds are transferred from the bearers account instead of having
bearer to pay back on a later date. Debit cards are used as an instant withdrawal of
cash, acting as the ATM card for withdrawing cash and as a bank guarantee card.
Merchants can also offer “cash back”/ “cash out” facilities to customers.
Various types of debit cards are offered by HDFC Bank depending upon the
preferences and different type of customers.
HDFC bank debit cards

Discover the power and convenience of HDFC Bank Debit Cards that not only let
to withdraw cash from ATMs but also let to shop cashless and hassle-free. It helps
to enhance the spending ability within the limits of the amount available in the
account.

Appearance of card Name of the card Customer

orientation
Easy Shop International Used for
Debit Card thousands of
establishment
functions

Easy Shop International Customer having

Gold Debit Card salary account
 Customers
having salary
Easy shop Pro Gold Debit
account
Card

Easy Shop International Drives and

Business Debit Card sustains need
of business

Easy Shop Woman’s Woman

Advantage Debit Card customer
 Easy Shop NRO Debit For
Card convenience
around the
world

Kisan Card Farmers of the

country

Features and benefits offered for each cards

1. Easy Shop International Debit Card:
a. Cash Back, Zero Surcharge at Petrol Pumps, Increased Insurance
cover, and Special Offers at Premium Outlets
b. zero liability
c. Withdraw cash at any of the VISA/PLUS ATMs around the world.

2.) Easy Shop International Business Debit Card:

Additional features other than mentioned above are-

Cash Back*: For every Rs. 200 that you will spend, you will receive Re. 1 as cash
back. This cash back is valid on all purchases made through the Card, at all times
of the year!!!
Insurance cover*: The following are included in the insurance covers:
 Fire & Burglary for the items purchased under Debit Card (up to 6 months) -
Sum assured Rs. 2, 00,000
 Loss of checked baggage - Sum assured Rs. 1, 00,000
 with effect 1st March 09, for Claims under Loss of Checked Baggage and Fire
& Burglary insurance to be accepted & processed, the cardholder should have
carried out at least 1 purchase transaction using the Debit Card, within 6 months
prior to the event date.

3.) Easy Shop Woman’s Advantage Debit Card:

1. HDFC Bank EasyShop Woman's Advantage Debit Card is India's first

Woman's Debit Card of its kind
2. It is primarily dedicated to Indian women
3. The HDFC Bank Women’s Cards – both Credit and Debit, are intended to
acquire a greater part of household spending, currently being split among
various other cards
4. Card offers a maximum credit limit of - Rs 3 lakh, with Life Insurance
Cover of Rs 25 lakh - due to air accident, Rs 3 lakh due to road accident and
up to Rs 50,000 on hospitalization due to accident
5. Spends above Rs.5,000 in a month would accrue 5 reward points for each
Rs.100. Spend of up to Rs.5,000 in a month would accrue the usual 2 points
for each Rs.100 spent.
6. Cash Back: 5% cash back on spends at Department stores

4.) Easy Shop NRO Debit Card:

1. Daily Limits
Rs. 15,000 at ATMs for Withdrawal and Rs. 25,000 at merchant
establishments for shopping.

2. Domestic Validity
The Debit Card can be used only in India to make purchases at Merchant
locations and withdraw local currency at ATMs. The NRO Debit Card can
be used at the following locations :
 3. HDFC Bank ATMs for all ATM transactions
4. Visa / NFS ATMs in India for Balance Inquiry and Cash Withdrawal only.
5. Merchant Locations in India for Purchases / Shopping
5.) Kisan card:

Kisan Gold Card d is designed to envisage a convenient and hassle-free

loan to the farmer for meeting his production and investment requirements
Banks have been giving these loans, but with our technology edge we
conceived a real plastic for the farmer for giving him the convenience to
bank anywhere, anytime and not being restricted to a 10am-2pm banking
culture.
It meets Post Harvest and Domestic consumption requirements. The Card can be
used at any HDFC Bank ATM across the country and all Visa establishments
worldwide. Debit cards help the customers to move freely n shop easily even
when they do not have cash in hand.

The return on investments is the best in the industry.

The Debit Card is backed by line of credit.
Daily withdrawal limit through the card is Rs. 15,000 at ATMs and Rs.
25,000 for usage at merchant outlets.

Credit cards
A credit card is a part of system of payments named after a small card issued to
users of the system. It is a card entitling its users to buy goods and services
based on the holders promise to pay for these goods and services. Credit cards
allow the consumers to revolve their balance at the cost of having interest charged.
Most credit cards are issued by local banks and are the shape and size specified by
the ISO/IEC 7810 standard as ID-1.This is defined as 85.60 X 53.98mm in size

HDFC Credit cards

Credit Cards offered by HDFC Bank

Various cards are:
Classic cards-product trusted by many
Special benefit cards-for those with special needs
Premium cards-access world class privileges and benefits

Appearance of the card Name of the card Purpose of the card

 Combined with all
Silver Credit Card the services
offered by a world-
class bank.

A true value card

that enables you to
Value Plus Credit avail 5% cash back
Card on all your
purchases

Gold Credit Card to match your

premium lifestyle

Titanium Credit Exclusive credit

Card card
Woman’s Gold best premium card
Credit Card made specifically
for women

with exclusive
Platinum Plus Credit travel and
Card preferential
benefits -

Visa signature credit A card with

card unique and
exclusive
privileges that
complement
your refinement
and style
 A very premium
World master card offering for the
truly elite, a card
with tailor-made
premium
privileges

Corporate credit
cards It's a designation

Corporate platinum offers to provide

card you with truly
world beating
features
 designed to add
Business credit card value to your
business,

credit card
solution given to
corporate by
Purchase card HDFC Bank to
facilitate quick
payments for
business expenses

It eliminates the
Distributor card use of cheques and
cash and speeds up
the turnaround
time of
transactions

Features and benefits available with the cards:

a) All-purpose credit card
b) Earn while you spend- money spent is money earned. For every Rs. 200
spent, you earn 1 reward point.
c) Add-on cards
d) Zero liability on lost cards
e) Widely accepted
Accepted at over 110,000 merchant establishments across India and
Nepal and close to 18 million merchant establishments around the world.

2).Value Plus Credit Card

a) Cash Advance -withdraw cash up to 10% of credit limit at a very nominal
charge
b) Revolving credit facility-This feature allows to pay a minimum amount,
which is 5% (subject to a minimum amount of Rs.200) of total bill amount
or any higher amount whichever is convenient. You can then carry forward
the balance to a better financial month, for which you pay a charge of 3.25%
per month.

3) Gold Credit Card

a) Attractive Reward Points-Earn 1 reward point per Rs 150 spent

b) Interest free credit facility

Avail of up to 50 days of interest free period from the date of purchase

3) Titanium Credit Card

a) Titanium Rewards
The unique reward points structure gives 2 reward points for every Rs150 on
domestic spends and 5 reward points for every Rs150 on international
spends
b) Applicable for Transactions between Rs. 400 - 5000

4) Platinum Plus Credit card

a) Utility bills through your credit card -Platinum plus Credit Card with
Smart Pay, HDFC Bank's Utility Bill payment service. Ensure that all utility
bills are paid on time, without any hassle.

5) Visa Signature Card

a) Signature Access
HDFC Bank Visa Signature Credit card entitles a Priority pass that provides
access to exclusive airport lounges across the world. Priority Pass is the
 world's largest independent airport lounge program, which gives the
cardholder access to more than 500 airport lounges in more than 275 cities
worldwide.
Priority Pass is Priced at Rs. 500/annum.
Earn 2 Reward Points for every Rs.150 spent on your card and double
Reward Points (2 extra points) for every Rs. 150 spent above Rs. 15000.
b) Signature benefits
c) interest free period up to 50 days, the lowest interest rate of 3.05% on
revolving credit facility (36.6% annually)# and petrol surcharge waiver of
2.5% across all petrol pumps in the country

6) World Master Card

a) HDFC Bank presents India's First World MasterCard Credit Card

b) World class card

World Luxury -HDFC Bank World Master Card entitles you to an exclusive
"Taj Epicure" membership. Taj Epicure Membership is Priced at Rs. 1500/annum

World rewards- Earn up to 4 reward points per Rs 150/- using the HDFC Bank
World Credit Card.

6) HDFC Bank Corporate Platinum Card -which comes with a unique 24x7
Expense management solution called SMART DATA ONLINE,
powered by Master card International.
A. 24x7 online MIS availability.

B. 60 MIS reports for better informed business decisions.

C. Substantial savings for the business through better negotiations with

airlines, hotel chains and other service providers.
 D. Streamlines accounting procedures by consolidating transaction data from
around the world.

E. Helps in integrating with the existing accounting systems.

F. Helps in minimizing paperwork and simplifying reconciliation and

compliance tasks.

Card programme analysis including transaction totals, ATM usage etc.

1. Spending Analysis by category
2. Expense reports
3. Cost allocation details & summary
4. Merchant summary & details
5. Account management for detailed transaction information at employee

6) Gold business card

Higher Credit limit
Get up to Rs.10 lacs as credit limit on the card basis the company
Attractive Business Savings-Save business related spends with unique
features and extensive partner tie- ups. These smart features include

a) 1% Cash back on Air spends

b) 1% Cash back on Utility Bill Payments
c) Petro Surcharge Waiver
d) Surcharge waiver on Rail tickets
.

6) Purchase cards

The HDFC Bank Corporate Purchasing Solution helps reduce purchasing costs
considerably as follows
a) Eliminates the delay and cost of traditional purchase transactions.

b) Enables effective control to track and manage spending.

c) Automates purchase process for easy account management.

Business benefits

1. 1. Reduces transaction processing time, cost of high volume and low value
transactions for the Corporate.

1. 1. Streamlines the payment process and enables account management

control.

1. 1. Reduces the cost of goods by consolidating the supplier base and

negotiating more favorable pricing from preferred suppliers.

1. 1. Minimizes risks associated with fraud, forgery and theft through a

secure, totally mechanized card programme.

1. 1. Provides online expense management solutions - minimizing paperwork

and simplifying reconciliation

6) Distributor card
Benefits to Corporate
a) Increases distributor's appetite for the corporate products.
b) Shorter working capital cycle and improved cash flow management
c) Removal of cheque and cash payments and consequent problems for
Corporate
d) Easy reconciliation of transactions
e) Helps quick delivery of goods or services
Benefits to Distributor
 Attractive finance charges and interest free credit periods.
 Flexibility of scheduling payments: part payment, pre-payment and post-
payments possible.
 Reduces operational hassles in processing and reconciling transactions.
 Reduces time for procurement of goods
 Chapter.7

Mutual funds
Meaning
○ A
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○ M
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○ Pr
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○ W
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Mutual funds
A mutual fund is a professionally managed type of collective investment scheme
that pools money from many investors and invests it in stocks, bonds, short-term
money market instruments, and/or other securities.
The mutual fund will have a fund manager that trades the pooled money on a
regular basis. The net proceeds or losses are then typically distributed to the
investors annually.
What is mutual fund through diagrammatic representation for better
understanding?
Mutual funds are funds that pool the money of several investors to invest in equity
or debt markets. Mutual Funds could be Equity funds, Debt funds or balanced
funds. Funds are selected on quantitative parameters like volatility, FAMA Model,
risk adjusted returns, and rolling return coupled with a qualitative analysis of fund
performance and investment styles through regular interactions / due diligence
processes with fund managers.

It has various benefits to it. They are as follows:

The reason that mutual funds are so popular is that they offer the ability to easily
invest in increasingly more complicated financial markets. A large part of the
success of mutual funds is also the advantages they offer in terms of
diversification, professional management and liquidity.

∝ a) Flexibility - Mutual Fund investments also offers you a lot of flexibility

with features such as systematic investment plans, systematic withdrawal
plans & dividend reinvestment.

∝ a) Affordability - They are available in units so this makes it very

affordable. Because of the large corpus, even a small investor can benefit
from its investment strategy.

∝ a) Liquidity - In open ended schemes, you have the option of withdrawing

or redeeming your money at any point of time at the current NAV

∝ a) Diversification - Risk is lowered with Mutual Funds as they invest across

 different industries & stocks.

∝ a) Professional Management - Expert Fund Managers of the Mutual Fund

analyze all options based on experience & research

∝ a) Potential of return -The fund managers who take care of your Mutual
Fund have access to information and statistics from leading economists
and analysts around the world. Because of this, they are in a better
position than individual investors to identify opportunities for your
investments to flourish.

∝ a) Low Costs - The benefits of scale in brokerage, custodial and other fees
translate into lower costs for investors.

∝ a) Regulated for investor protection - The Mutual Funds sector is regulated

to safeguard the investor's interests.

HDFC mutual funds

HDFC Asset Management Company Limited (AMC)

HDFC Asset Management Company Ltd (AMC) was incorporated under the
Companies Act, 1956, on December 10, 1999, and was approved to act as an
Asset Management Company for the HDFC Mutual Fund by SEBI
In terms of the Investment Management Agreement, the Trustee has appointed the
HDFC Asset Management Company Limited to manage the Mutual Fund. The
paid up capital of the AMC is Rs. 25.161 Crore.

The present equity shareholding pattern of the AMC is as under:

Particulars % of the paid up equity

capital
Housing Development Finance Corporation 60
Limited
Standard Life Investments Limited 40

Zurich Insurance Company (ZIC), the Sponsor of Zurich India Mutual Fund,
following a review of its overall strategy, had decided to divest its Asset
Management business in India. The AMC had entered into an agreement with ZIC
to acquire the said business, subject to necessary regulatory approvals.

The AMC is managing 24 open-ended schemes of the Mutual Fund

HDFC Growth Fund (HGF),
HDFC Balanced Fund (HBF),
HDFC Income Fund (HIF),
HDFC Liquid Fund (HLF),
HDFC Long Term Advantage Fund (HLTAF),
HDFC Children's Gift Fund (HDFC CGF),
HDFC Gilt Fund (HGILT) and so on.
 The AMC is also managing 13 closed ended Schemes of the HDFC Mutual
Fund viz.
a) HDFC Long Term Equity Fund,
b) HDFC Mid-Cap Opportunities Fund,
c) HDFC Infrastructure Fund,
d) HDFC Fixed Maturity Plans,
e) HDFC Fixed Maturity Plans – (Series II-X)
f) The AMC is also providing portfolio management / advisory services
and such activities are not in conflict with the activities of the Mutual
Fund

Products
Equity / Growth Fund Liquid Funds
Invest primarily in equity Provide high level of liquidity
and equity related by investing in money market
instruments. and debt instruments.
Children's Gift Fund Debt/ Income Fund
Children's Gift Fund Invest in money market and
debt instruments and provide
optimum balance of yield, ...

Fixed Maturity Plan Quarterly Interval Fund

Invest primarily in Debt / The primary objective of the
Money Market Instruments Scheme is to generate regular
and Government income through investment...
Securities...

HDFC Mutual Fund

HDFC Mutual Fund is one of the largest mutual funds and well-established fund
house in the country with consistent and above average fund performance across
categories since its incorporation on December 10, 1999. While past experience
does make it a veteran, but when it comes to investments, it has never believed that
the experience is enough.

Investment Philosophy
The single most important factor that drives HDFC Mutual Fund is its belief to
give the investor the chance to profitably invest in the financial market, without
constantly worrying about the market swings. The strong emphasis on managing
and controlling portfolio risk avoids chasing the latest “fads” and trends.

Offer
It believe, that, by giving the investor long-term benefits, it can constantly review
the markets for new trends, to identify new growth sectors and share this
knowledge with investors in the form of product offerings Besides, it also offer
Portfolio Management Services.

Achievements
HDFC Asset Management Company (AMC) is the first AMC in India to have been
assigned the ‘CRISIL Fund House Level – 1’ rating.

As on 30 September 09
Average Asset under Management: Rs. 90,427.25 cr.
No. of investors: 3,283,463
No. of ARN certified distributors: 30,282

Vision statement
Chapter 8
Micro finance


T


M

•
Micro finance
Over the last several decades the banking sector in the country has taken
significant strides to achieve profitability, financial stability and competitiveness to
cater to the increasing demand for financial services.
However, much of the benefits accrued due to the growth in banking services have
been limited to a minority of the total population of the country. Banks have not
been able to reach a vast segment of the population particularly in the rural areas
and take even basic banking services to the under served and disadvantaged
masses, for various reasons.
Banks have confined to only areas around their branch network whereas the need
for cheap and timely credit transcends the boundaries of these branches to remote
areas which lack even basic infrastructure.
Micro-credit is a process. Poor people ensure their development through this
process.
The poor becomes aware, efficient and hopeful. Credit is provided without any
security. People are motivated to be engaged in productive activities and inspired
to carry on trades and commerce
Savings, Credits, Insurance etc. are included in micro-credit management.
Although the poor people has got a very little entrance in the conventional finance
institutions used to get different types of financial assistance in micro-credit
Role of HDFC Bank
HDFC Bank is one of the first new generation private sector banks to enter the
microfinance sector four years back. Enthused by our experience and considering
the huge positive impact on
generation of livelihoods, financial empowerment to the rural women and poverty
alleviation, the bank has rapidly adopted different business models for providing
rural micro credit in unbanked areas to achieve the larger socio-economic objective
of inclusive growth through financial inclusion.
Financial inclusion can be defined as providing affordable access to basic banking
products and banking services like savings,loans, remittances, insurance, etc. to the
hitherto excluded and often underprivileged and disadvantaged sections of the
society.
This disadvantaged section of the population comprises of marginal farmers, daily
wage landless labourers, unorganised sector employees, urban slum dwellers, oral
lessees,minority communities, SCs/STs, socially excluded groups and women.
To conclude, HDFC Bank has a deeply felt commitment to financial inclusion and
has been the pioneer in using the business correspondent model to achieve this
purpose. A dedicated team of specialized and trained officers across the country
are working exclusively on the various initiatives of the bank on Financial
Inclusion and Literacy. With the introduction of technology and market linkage
initiatives by the bank, the scalability, viability and sustainability of financial
inclusion and literacy can be reasonably ensured. We expect that our efforts in
promoting financial inclusion would not only improve access to financial services
on competitive terms but also positively affect a market imperfection which can
have a potential demonstrative effect on the banking sector thereby bringing in
other players to serve the historically disadvantaged and under-served population
in the country.
HDFC Bank states that providing this type of financing not only open channels of
banking towards rural but also widens the scope of conduction of activity from the
bank’s point of view.
This vicious circle will enable the farmers and self help groups to overcome their
financial help and raise their standard of living without being explicated

Chapter 9

Entry of banks into insurance-

Banc assurance
Banc assurance

+ =

It is the provision of insurance services by banks, is an established and growing

channel for insurance distribution, though its penetration varies across different
markets. It is an important channel for mobilizing insurance business
Banking and insurance can be complementary to each other or they can
supplement each other adding profits
RBI has recognized the importance of insurance and accordingly given guidelines
for entry of banks into insurance business.
1. Banks can undertake agency for insurance services i.e. they can sell
insurance products for certain fees or commission. They can establish
joint venture companies for insurance business
2. Banks do not involve directly in insurance business due to risk
involved in it. It creates greater fee income and helps to retain the
customer for longer period. It adds to profitability .It creates synergy
through cross selling
3. Banks should have license issued to carry out insurance business It
should fulfill the requirements of IRDA, RBI, SEBI and Govt. of
India.

The outlook for banc assurance remains positive. Given the current relatively low
banc assurance penetration in emerging markets, it will likely see further
significant development in the coming years.

Though banc assurance has traditionally targeted the mass market, banc assurers
have begun to finely segment the market, which has resulted in tailor-made
products for each segment

In India the concept of banc assurance appears to be gaining ground quite rapidly
both through commission based arrangements and joint ventures between banks
and insurance companies

Banc assurance in HDFC Bank

Introduction
HDFC Standard Life Insurance Company Limited is one of India's leading private
insurance companies, which offers a range of individual and group insurance
solutions. It is a joint venture between Housing Development Finance Corporation
Limited (HDFC Limited), India's leading housing finance institution and a Group
Company of the Standard Life Plc, UK. As on February 28, 2009 HDFC Ltd. holds
72.43% and Standard Life (Mauritius Holding) 2006, Ltd. holds 26.00% of equity
in the joint venture.
One looks for insurance because of a factor called as

Our Key Strengths

Financial Expertise-As a joint venture of leading financial services groups,
HDFC Standard Life has the financial expertise required to manage your long-term
investments safely and efficiently.
Range of Solutions -We have a range of individual and group solutions, which can
be easily customized to specific needs.
Track Record So Far-Our gross premium income, for the year ending March 31,
2009 stood at Rs. 5,564.69 crores.
As on March 31, 2009, the company has more than 27 lakh policies in force.

WHY HDFC Standard Life?

Bank as a one stop financial shop to enhance customer satisfaction is

distributing Life and Non Life Insurance Products.

Strong Promoter

HDFC Standard Life is a strong, financially secure business supported by

two strong and secure promoters – HDFC Ltd and Standard Life. HDFC
Ltd’s excellent brand strength emerges from its unrelenting focus on
corporate governance, high standards of ethics and clarity of vision.
Standard Life is a strong, financially secure business and a market leader in
the UK Life & Pensions sector.

Preferred and Trusted Brand

Our brand has managed to set a new standard in the Indian life insurance
communication space. We were the first private life insurer to break the ice
using the idea of self-respect instead of ‘death’ to convey our brand
proposition (Sar Utha Ke Jiyo). Today, we are one of the few brands that
customers recognize, like and prefer to do business. Moreover, our brand
thought, Sar Utha Ke Jiyo, is the most recalled campaign in its category.

Investment Philosophy

We follow a conservative investment management philosophy to ensure that

our customer’s money is looked after well. The investment policies and
actions are regularly monitored by a formal Investment Committee
 comprising non-executive directors and the Principal Officer & Executive
Director.
As a life insurance company, we understand that customers have invested
their savings with us for the long term, with specific objectives in mind.
Thus, our investment focus is based on the primary objective of protecting
and generating good, consistent, and stable investment returns to match the
investor’s long-term objective and return expectations, irrespective of the
market condition.

Need-Based Selling Approach

Despite the criticality of life insurance, sales in the industry have been
characterized by over reliance on tax benefits and limited advice-based
selling. Our eight-step structured sales process ‘Disha’ however, helps
customers understand their latent needs at the first instance itself without
focusing on product features or tax benefits. Need-based selling process,
'Disha', the first of its kinds in the industry, looks at the whole financial
picture. Customers see a plan not piecemeal product selling.

Risk Control Framework

HDFC Standard Life has fully implemented a risk control framework to

ensure that all types of risks (not just financial) are identified and measured.
These are regularly reported to the board and this ensures that the company
management and board members are fully aware of any risks and the actions
taken to ensure they are mitigated

Focus on Training
 Training is an integral part of our business strategy. Almost all employees
have undergone training to enhance their technical skills or the softer
behavioural skills to be able to deliver the service standards that our
company has set for itself. Besides the mandatory training that Financial
Consultants have to undergo prior to being licensed, we have developed and
implemented various training modules covering various aspects including
product knowledge, selling skills, objection handling skills and so on.

Focus on Long-Term Value

HDFC Standard Life do not focus in the business of ramping up the topline
only, but to create maximisation of stakeholder's value. Today, we are
extremely satisfied with the base that we have created for the long-term
success of this company.

Transparent Dealing

We are one of the few companies whose product details, pricing, clauses are
clearly communicated to help customers take the right decision.

Strict Compliance with Regulations

We have initiated and implemented many new processes, some of which

were found useful by the IRDA and later made mandatory for the entire
industry.The agents who successfully completed this training only, were
authorized by the company to sell ULIPs. This has now been made
compulsory by IRDA for all insurance companies under the new Unit
Linked Guidelines.

Diversified Product Portfolio

 HDFC Standard Life’s wide and diversified product portfolio help
individuals meet their various needs, be it:

• Protection: Need for a sound income protection in case of your

unfortunate demise
• Investment: Need to ensure long-term real growth of your money
• Savings: Save for the milestones and protect your savings too
• Pension: Need to save for a comfortable life post retirement
Life insurance products at customers’ disposal by HDFC Bank: there are a
variety of insurance such as, health, life, motor, home, group and so on.

All Products
• Protection Plans - Safeguard your family’s financial independence
• Security against uncertainties
• Financial cushion in case of an eventuality
Types of Protection Plans
Our range of Protection Plans includes
Retirement Plans-
• Monetary security
• Financial independence even after retirement
• Live carefree in your golden years
Types of Retirement Plans
Our range of Retirement Plans includes

• Savings & Investment Plans - Dual benefit of protection and long term
savings
• Provide an assured sum for future needs
• Inculcate a habit of regular savings
• Types of Savings & Investment Plans
Our range of Savings & Investment Plans includes
• Health Plans

• Secure your health costs

• Financial independence despite illnesses
• Meeting medical expenses effortlessly
• Types Of Health Plans-Our range of Health Plans includes

• Children’s plans- Helps you secure your child’s dreams

• Economic support when your child needs it most
 • Funding major milestones
Types of Children’s Plans-Our range of Children's Plans includes

• Group Plans
• The most comprehensive list of products for progressive employers who
wish to provide the best and most innovative employee benefit solutions to
their employees
Life insurance products at customers’ disposal by HDFC Bank:
Group Term Insurance Plan
This plan offers Protection to organization employees

Group Variable Term Insurance Plan

This Protection plan is a tailor made insurance policy for third party institutions

Group Gratuity Solutions

This plan is a flexible and cost effective way to fund your Gratuity liability
Group Superannuation Solution
This plan helps you manage your employees Superannuation funds

Group Leave Encashment Solution

This plan is an effective way to fund your company's Leave Encashment liability
Our Vision
'The most successful and admired life insurance company, which means that we
are the most trusted company, the easiest to deal with, offer the best value for
money, and set the standards in the industry'.
'HDFC bank is the most obvious choice for all'.
Our Values
Values that we observe while we work:
• Integrity
• Innovation
• Customer centric
• People Care “One for all and all for one”
• Team work
• Joy and Simplicity
 Chapter 10
Specialized services
• Letters of credit and
guarantees
• Cash management services
• Forex desk
• Debt market instruments
• Derivatives desk
• Custodial services
Letter of credit

Para Banking reflects HDFC Bank's strengths in providing clients in India, a wide
array of commercial, transactional and electronic banking products. It achieves this
through innovative product development and a well-integrated approach to
relationship management.
HDFC Bank can extend import financing through Letters of Credit, which are well
accepted globally and supported by a strong trade finance set-up. We are direct
members of SWIFT and have correspondent banking arrangements with more
than 370 banks worldwide. We also structure complex Letters of Credit.
Guarantees

We offer to issue various types of guarantees - performance, financial, bid bond,

tenders, customs etc. Our guarantees are well accepted by all government agencies
including Customs, Excise, Insurance Companies, Shipping Companies, all Capital
Market Agencies such as NSE, BSE, ASE, CSE etc. and all major corporate. Our
overseas correspondent bank alliances also enable us to issue guarantees
overseas for participation in global tenders etc.

Cash management services

Cash Management is the stewardship or proper use of an entity’s cash
resources. It serves as the means to keep an organization functioning by making
the best use of cash or liquid resources of the organization. At the same time the
organizations have the responsibility to use timely, reliable and comprehensive
financial information systems.
Cash Management helps the organization in:
Eliminating idle cash balances.
Monitoring exposure and reducing risks.
Ensuring timely deposit of collections.
Properly timing the disbursements.

Cash Management Services (CMS) is one of HDFC Bank’s thrust areas. This has
been a result of a robust, end to end cash management product which offers
innovative and reliable solutions by combining an efficient collections and
disbursements product, backed by state of the art systems to ensure customized
delivery. The Bank has constructed a wide range of CMS products covering
collections and disbursements of operating flows, as well as specialized cash flow
streams such as rights/public issue collections, dividends, We operate out of a large
and expanding network of over 175 outlets across the country.
This is the largest network of online, electronically linked branches in the country.
This provides us with a clear competitive advantage, which naturally translates into
a lower cost and faster credit to corporate.

At HDFC Bank it offer a comprehensive range of Collections and Payments

solutions under our Cash Management Services (CMS) umbrella to meet needs
and put in control of your cash position.

Forex desk
HDFC Bank's Foreign Exchange Department has two desks, viz. the Inter
Bank Desk and the Corporate Desk.

The Inter Bank Desk (IB) does cover operations of the positions generated
by the Corporate Desk. Besides, it trades on its own account.
The bank has a state-of-the-art Dealing Room and is an
 active player in the local Inter Bank market. The Dealing Room is manned
by highly trained professionals. Because of its involvement in the
development of the market in the country, the Bank is a number of various
important committees of Foreign Exchange Dealers' Association of
India (FEDAI) as well as of Reserve Bank Of India (RBI). Currency
swaps, outward and inward remittances, prompt and competitive pricing,
economic and technical analysis.
Debt market instruments
Government of India securities: These are sovereign (credit risk-free)
coupon bearing instruments which are issued by the Government of India.
Securities are available in primary and secondary market in wide range. It is
highly liquid able and can be holded in physical form or in demat form
Commercial papers: It represents short term unsecured promissory notes
issued by top rated corporate, primary dealers (PDs), satellite dealers (SDs) and the
all-India financial institutions (FIs).
1. CP can be issued for a minimum
period of 15 days and a maximum up
to one year.
2. Minimum amount invested is
5,00,000 or multiples
3. Cps are issued at a discount to face
value
4. Issued in demat form
Treasury bills
It is a discounted instrument issued by the Central Government.
The main features of Treasury Bills are:

a) Sovereign zero risk instruments.

b) Treasury Bills: Short term, discounted Instruments with a maximum

tenor of 364 days.

c) Available in primary and secondary market.

d) Issued at a discount to face value i.e., investors will buy the Treasury
Bills at discount to face value of Rs.100 and on maturity the face value
of Rs.100 is received by the investor.

e) No Tax Deduction at Source (TDS)

f) Convenience of CSGL a/c as in case of Central Govt. securities such as

automatic credit of redemption money.

Derivatives desk
HDFC Bank has established itself as a leading player in the derivatives market.
The bank has a team exclusively dedicated to the area of derivatives.
In line with the bank's commitment of adding value to clients, the bank actively
advises its corporate clients on the use of derivatives to manage their currency and
interest rate risks.
The products offered by the desk include interest rate swaps, caps, floors, short
dated as well as long dated currency options, cross currency swaps embedded with
options and swaptions

The bank has carved a special niche for itself in rupee derivatives market. It takes
pride in being one of the most aggressive players in this market.

Custodial services

The Bank has set up the Custody Services group offering quality and reliable
custody services to the clients and has in place a customised Information system,
high security storage vaults and premises for processing / safekeeping securities.
HDFC Bank also has the capability to offer "Straight-through Processing"(STP)
through NSDL, NSE-IT and FT
The Bank has been appointed Custodian by the National Stock Exchange - the
country's leading automated exchange in respect of the securities deposited by the
trading members.
Chapter 11
NET BANKING
Net banking- popularly known as internet banking or E-banking by individuals.

Net Banking is a system of banking in which customers can view their account
details, pay bills, and transfer money by means of the Internet. Internet
banking, sometimes called online banking, is an outgrowth of PC banking. Internet
banking uses the Internet as the delivery channel by which they conduct banking
activity
For example, transferring funds, paying bills, viewing checking and savings
account balances, paying mortgages, and purchasing financial instruments and
certificates of deposit.
An Internet banking customer accesses his or her accounts from a browser—
software that runs Internet banking programs resident on the bank’s World Wide
Web server, not on the user’s PC.
Net Banker defines a “true Internet bank” as one that provides account
balances and some transactional capabilities to retail customers over the
World Wide Web. Internet banks are also known as virtual, cyber, net,
interactive, or web banks.
Net safe schemes
A typical Internet bank site specifies the types of transactions offered and
provides information about account security.

Because Internet banks generally have lower operational and transactional

costs.
Further, in some cases, web banks are not restricted to conducting transactions
within national borders and have the ability to make transactions involving
large amounts of assets instantaneously.
According to industry analysts, electronic banking provides a variety of
attractive possibilities for remote account access, including:

* Availability of inquiry and transaction services around the clock;

* worldwide connectivity;
* Easy access to transaction data, both recent and historical; and
* “Direct customer control of international movement of funds without
intermediation of financial institutions in customer’s jurisdiction.”

It is easy using electronic banking services

One may simply ask their institution for the software needed for PC banking or
obtain a password for Internet banking. Either approach requires minimal
paperwork.
Once they have joined the system, customers have electronic access to all of
their accounts at the bank. Net banking is a facility provided by bank to its
customers who do not have much time to visit bank again and again. One can
do transaction from their home. One can request for cheque book, balance
 inquiry, download statement, and can check their record of last so many years
which bank can't provide you.
Points of importance:
This service is provided free of cost by banks.
Always avoid using your net banking account in public computers and keep
changing your password and never set your password as your name, date of
birth, pin code, city name or your best friend name
It should be always unique otherwise your id and password can be hacked.
Mobile banking is also a new interface and HDFC Bank and reliance mobile
had significantly carried it out.

Net Banking is HDFC Bank's Internet Banking service. Providing up-to-the-

second account information, Net Banking lets you manage your account from the
comfort of your mouse - anytime, anywhere.
Our industry leading service provides a host of features at your finger-tips:

View Account Balances & Statements

Transfer Funds between accounts

Create Fixed Deposits Online

Request a Demand Draft

Pay Bills

Order a Cheque Book

Request Stop Payment on a Cheque

And lots more

Internet Banking is the most convenient to manage the account.
Net Banking is Real Time, giving you up-to-the-second details on your account. It
can be accessed anytime, from anywhere, giving you complete control over your
finances. There are no queues to stand in, or turns to wait for. With Net Banking
you are in control.

HDFC Bank's Net Banking service is secure. Using industry-standard

technologies and infrastructures, our service gives you peace of mind. But still
one should ensure security and safety at their end too otherwise it may lead to
bank frauds and scams via net

Net Safe schemes

Net Safe, the latest technology offering from HDFC Bank, is a unique
service which makes online shopping completely secure. With Net Safe
you create a virtual card (Net Safe Card) from your HDFC Bank Visa
Credit / Debit Card or Master card Credit/Debit Card number that
provides you with complete security while shopping online. The key
benefits of Net Safe are as follows:

1. Your HDFC Bank credit / debit card number is never used on the
merchant website
2. The Net Safe card you create is a onetime use card
 3. You can set your own limit for the Net Safe cards you generate
4. You can use it on any merchant website that accepts VISA/Master
card cards
5. All purchases you make with Net Safe Cards will appear on your
statement, just like any other transaction.

Net Safe offers a unique security feature, wherein your credit/debit card
number is never revealed on the Internet. Instead, you generate a virtual
card number, drawing funds from either your credit or debit card account
[for debit card, you can generate up to 5 virtual cards daily subject to your
Point of Sale(POS) limit per day, provided there is available balance in
your savings/current account and for your credit card up to available credit
limit]. You can then use this virtual card number at any online merchant
site and complete your shopping with security and ease.

Conclusion
We live in a world of rapid change. Today’s world is certainly more complex and
ambiguous than the world of yesterday, us new approach has to be different from
what we have been doing traditionally.
The emphasis on understanding what Para banking services and activities are and
research in this area is a relatively new development.

Financial institutions and banks through their Para-banking activities have played a
useful role in financing various sectors of the economy. Considering the current
scenario of branch banking, it will take some more time to reach the wider
population across the country and provide financial services in a cost-effective
manner from the larger banks. Para-banking services have to be carefully regulated
and supervised by the regulator both on financial health of the service provider as
well as customer protection.
Whilst there is a greater need for Para-banking services for the wider population
and supporting greater participation in the financial services “network coverage”, it
is important to evolve new workable models for appropriate supervision.

Finally, any thought and decision on banning Para banking activity or institution or
class of institutions should be considered after significant deliberations and giving
due weight age to the contributions and negative roles over the last few decades
rather than be motivated by some recent incidents relating to a certain entity.
Bibliography

Sources:

Business environment-The ICFAI University

India's banking and financial sector in the new millennium, Volume 2-Uma Kapila

Principles and Practices of Banking and Insurance-P.K. Bandgar

Development issues of Indian Economy-Misra and Puri

(Himalaya Publishing House)

Business line –Friday, Sep 21, 2007

The Hindu-Sunday, July 16, 2006

Websites hunted:

http://www.rbi.org.in

www.hdfc.com

www.hdfcbank.com

neeraj.jha@hdfcbank.com

http://www.labnol.org/india/knowledge/reliance-mpay-use-your-reliance-mobile-
as-a-virtual-hdfc-bank-credit-card/2316

sme@hdfcbank.com
www.Allbusiness.com

http://in.answers.yahoo.com/question/index?qid=20080911024357AATANmE

http://www.hdfcbank.com/wholesale/sme/value_added_services/merchant_service
s/Merchant_Services.htm
http://www.hdfcbank.com/wholesale/sme/value_added_services/merchant_service
s/Merchant_Services_program.htm
http://www.walletpop.com/specials/decoding-the-lingo-of-the-financial-crisis
www.krchoksey.com
http://www.hdfcbank.com/personal/cards/Debit_Cards/EasyShop_Gold_Debit_Car
d/dc_gold.htm
http://www.hdfcbank.com/personal/cards/dc_gold_faqs.htm
www.Moneycontrol.com
http://www.ivfa.com/present_hdfc.asp
http://www.comparecards.in/view-details/113/hdfc-bank-gold-credit-card.html
http://www.hdfcbank.com/wholesale/fit/financial_institutions/custodial_services/C
ustodial_Service.htm