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Impact of Merger of HDFC Bank and Centurion Bank Of Punjab
ACKNOWLEDGEMENT
Any accomplishment requires the effort of many people and this work is not different. Regardless of the source, I wish to express my gratitude to those who may have contributed to this work, even though anonymously. I extend my sincere thanks to Mr. Aman Partap for providing me this opportunity to undergo summer training in CENTURION BANK OF PUNJAB, Sector 16, PANCHKULA. I have been fortunate enough to get all the support, encouragement and guidance from him needed to explore, think new and initiate. I express my great thanks to Ms Ravinder Kaur (project guide) under whose guidance I was able to complete my project successfully. Her valuable advice and guidance at various stages of the project will always be cherished. Also, I am grateful to the authorities and employees of Centurion Bank of Punjab, who by giving their responses provided the base of my research. My final thanks go to my parents, family members, teachers who encouraged me countless times to persevere through this entire process.
ABSTRACT
The trend toward greater consolidation in Indian Banking industry has squeezed the number of banks but made it stronger. As more banks are becoming larger and fewer in number each entity is becoming more critical, making relationships and services offered are more important than even before. At the same time each customer has a greater impact on the cooperatives bottom line , the competition is also consolidating creating a fierce survival of the fittest in variety of business marketplace .In response, banks are engaging arrangements like mergers. The report has mainly two objectives the first is to examine a whole picture of merger Of CBOP Bank with HDFC bank. The main focus has been thrown on the deal and driving forces that motivated local cooperation to get involved in mergers. The second objective is to examine the relative important factors in the success of the new business arrangements. parameters on customers, movement in share price, employees and shareholders. The basic focus will be on various marketing strategies, impact emerging
CONTENTS
SECTION ONE Chapter 1 - Introduction (a ) Need of study ( b) Objective of study (c)Review of literature Chapter 2 Research Methodology (a) Methods (b) SECTION TWO 13 6 7 8 9
Chapter -3 Overview of Indian Banking Industry (a) (b) Indian Banking system Commercial banks 15 20
Chapter 4- Introduction of companies (a) Centurion Bank of Punjab (b) HDFC Bank Chapter 5 Mergers ( a) Overview of mergers (b ) Highlights of merged entity (CBoP with HDFC Bank ) 25 32 22 24

SECTION THREE Chapter 6 Conceptual Framework (a) Meaning of shareholders (b) Share deal (merged entity) (c) Employees (d) Working environment (after the merger ) (e) Customers (f) Effect on customers (after merger) (g) Marketing strategies (h) Financial Products by CBoP and HDFC bank (i) Wealth management ^ Mutual funds ^ Life and General Insurance ^Loans (j) Products offered by CBoP and HDFC Bank before merger 40 41 42 44 45 49 50 51 52 58 60 65 71 73
SECTION FOUR Chapter 7 Main text (a) Effect on share price after merger ( regression test) (b) Effect on employees after merger (annova test) 80 88
(c) Effect on customers saving and investment after the merger (correlation test) 96 4

(d) Product by HDFC Bank after merger (observation and detailed study) Conclusion Limitations of Study References Appendices 106 108 110 111
CHAPTER -1
INTRODUCTION
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Mergers are the eminent trend in which every company is stepping their feet. The project feels that mergers are apparently thorough due diligence process, where contributing factors play an important role. The changing conditions of merged entity add spur in project to have a detailed study on it. The project talks about latest merger in banking sector of HDFC Bank and CBoP. Emphasis has been laid down on post merger relationships, and the development of an emergent culture to support the new organizational form. It studied the post merger integration, according to the complexity of these entities. It interprets the dependent brother to adapt the new conditions. The project outlines the relevant characteristics of mergers. The project will explore the differences in attitude of the two companies and identify some of the key contributing factors to successful co-evolutionary integration by applying various methodology.
NEED OF STUDY:Studying books and merely passing exams is not worth, the education, knowledge and experience is incomplete without being exposed to what is happening in real.

In order to make students competent enough to face real world, there is a requirement of course for undergoing training for eight to ten weeks with some reputed organization. This exposure to real life situation gives an insight to the students the kind of pressure and problems they can expect to face during their career. For the requirement of undergoing training I sent my request for training to Centurion Bank of Punjab and fortunately it was accepted .I was assigned a project MERGER OF CBoP WITH HDFC BANK AND ITS IMPACT ON SHARE PRICE AND MARKETING STRATEGIES IN WEALTH MANAGEMENT The need of project is very much required as I was able to know the portfolio of two entities .The reason for choosing the title of merger was because its an upcoming trend which actually every company is following. The topic seems to be very unique and different . The project determines that change is the only permanent thing in the world and corporate world is no exemption either. The need for this title becomes attractive because the policy of decontrol and liberalization coupled with globalization of the economy has exposed the corporate sector to severe domestic and global competition. The project discusses the onset of this new era in the annals of the corporate India.
OBJECTIVE OF STUDY:MERGERS, ACQUISITIONS AND AMALGAMATION are the new trend in every sector .with the upcoming of foreign banks ,Indian banking are also following the same strategy in order to overcome the fear that foreign banks will swallow the small industry. 7

The latest trend of mergers and acquisitions attracted a project to make a detailed study. It feels decisions to merge assume that synergy will develop between two organization that combine resources and talent, and achieve economies of scale and integrated technologies. The project examines the recent merger of two strong entities CBoP and HDFC Bank. The main objective is to discuss the four important parameters impact on share price ,change in the working environment of employees, effect on customers and change in marketing strategies that the merging organization go through to develop also throws light on the highlights of the merger . The other objective is to determine that HDFC Bank will take care and adopt what strategies to integrate the two cultures instead of letting one dominating the other. The next objective is that project should also be helpful to my organization Centurion Bank of Punjab because it will be completely swallowed by HDFC Bank so they can also determine that what was their actual position and what will be situation after the merger.
REVIEW OF LITERATURE:Julie Issac , Pushpanjali mikkilineni (2006-2007) Indian Banking Sector Analysis (2006-2007), report provides extensive research and objective analysis on the growing banking industry because of mergers, 8

their clients product quality, and in their services in India . This report helps
to analyze the leading- edge Opportunities critical to the success India. Detailed data andanalysis helps an
of the banking Industry
investor, fina-ncial service providers, and global banking players navigate the evolving market of banks in India. Mainly the stress is given on the key products like deposits , retail credit , credit cards etc Wealth management products are also analyzed supported by the facts like revenue and market share. This section provides an overview , key facts and several number of players like Andhra Pradesh ,State bank of Mysore HDFC Bank , Citi Bank .Analysis has been with various research methodology Ratio Analysis, Historical Trend Analysis, Linear regression Analysis using software tools, Judgmental Forecasting and Cause and Effect Analysis. The thatIinvestments has key findings of the report is this been increasing due to rapid growth of banks .it
shows a positive result of merger on banking sector. Vivek Gupta,s.s george (2004 ) Has given a overview of the banking sector which includes banking ,capital markets,insurance ,mutual funds etc .He examined that within a decade ,there is a lot of transformation its banking sector .The sector has relinquished its grip on the financial sector .Its a competition which has been unleashed in the financial banking sector on a scale sufficient to produce visible benefits in terms of efficiency ,innovation and customer services. The article makes a critical review of the financial sector in key areas ,it shows an impact that these reforms have had on the corporate sector and retail investors .Further article gives a recent trend of mergers which says that its an warns of emerging threat of monopolies .The article further focus on unfinished agenda which talks about upcoming of foreign markets information through papers, Industry Books, portals, . The technique which is used is gathering Trade associations. Newspapers , Trade Journals, and White
Government
Agencies,
Monitoring Industry News and developments, Access to more than 3000 paid

databases.The author analyze that there will be significant impact in banking sector and they have to undergone a complete change. Dr Anil Kumar Kothari and Bichanga Walter (2007 ) This particular report gives us an overview of two strong banks ICICI and SBI . But they feel that due to upcoming of foreign banks , the market share of banks will be completely swallowed. The authors tried to bring innovation in their report which says With the emergence of India as a high growth economic developing country, many eying World Financial Institutions are to enter India. To meet the global competition Indian Financial
Institutions must equip themselves with the necessary power, skill and financial muscle. What's more important, though, is that Indian banks fare very poorly in comparison with others globally. India's best and brightest, the SBI, is roughly one-tenth the size of the world's biggest bank -- Citigroup -on the basis of Tier I capital. Citigroup's consolidated Tier I capital last year was $79 billion. For SBI, it was just $7.9 billion. On this basis, State Bank of India's global position is 72. It is not even within the first 10 big banks in Asia where the first three slots have been occupied by Chinese banks with each of them having a capital base of over $30 billion. In fact, six Chinese banks feature among the top 25 Asian banks while India has only two representatives -- SBI and ICICI Bank. The global Top 10 features three banks each from the United States and Japan, two from the United Kingdom, and one each from France and Spain. China's biggest bank, China Construction Bank Corporation, is the world's 11th largest bank with a capital base of $35.6 billion. An innovative idea can be the merger of two giant Indian Banks i.e. the State Bank of India and ICICI Bank ripples in the Indian . With the technological and has created financial innovation, and its marketing aggressiveness, ICICI
Financial System. With total branches 614 and 2200
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ATMs ICICI Bank has total assets of Rs.2513.89 billion (US$ 56.3bn) The total market capitalization of ICICI is Rs. 87372 Crores. The pan India reach and faith of brand SBI will be added advantage for this merged entity. The total branches were 4749 and 5572 Total market capitalization as of SBI is28993 Crores. This combined entity can be a leader in universal Banking with a focus on meeting international Standards for Indian financial institution. This paper tries to look into the possible merger of SBI and ICICI and its impact on Indian and Global financial markets. The reach of this combined entity will be inevery corner of India. The combined entity will be having largest base of depositors, credit card holders, along with interest in mutual fund and life insurance and will be one of the important financial institutions to meet the challenges of development of rural India through Microfinance.
Todd Creasy (2002)

The fourth article is Is culture clash in a merger or acquisition well modeled as managerial prisoners dilemma?the fourth article highlights some critical human resource issues in mergers and acquisitions and suggest some guidelines as to how these issues are resolved .This article then discusses in detail the importance of communication in M&As.communication plays an vital role in retaining the key talent , which is the most crucial ingredient of a merger success .Managing the psychological and behavioral reaction of employees towards M&A also plays a key role in success of a merger . Focus group meetings, company newsletters, telephone hotlines used during the merged process .The article also throws light on how strong leadership can make a difference between the merging firms and how the leader can create and articulate the new visions and values Ana Dutra ,Donna Peters Mergers Acquisitions the growth machine Why it pays to buid an In- HOUSE M&Acapability the article explains that organization would require an M&A machine that can capture and preserve 11

optimum value. For any merger to succeed, the in house M&Amachine deal with all stages of life cycle. That is from identifying target acquisitions, through strategy development and cultural due diligence, to carrying out the integration and evaluating its progress .Processing includes target identification, cultural assessment and quantifying culture. To build M&A machine one needs to identify which internal and external skills are most important and which are the skills that need to be centralized.
CHAPTER -2
METHODOLOGY:12
(1) Research design : observational technique, regression , annova,

correlation Regression was applied to determine the future analysis of share price, where historic and current data was gathered. Observational technique was used to study the dilemma of the customers, employees and gather information relation to marketing strategies. Annova was implied to find out the crux of the factors relating to employees after the merger. Correlation was applied to find the positive or negative correlation of employees after the implementation of merger.
(2) Methods of data collection: In order to study the detailed framework of

mergers, its very essential to gather information about the latest trend of banking sector. The study proposed to collect Primary data through questionnaire using survey method. so as to give a precise ,accurate ,realistic and relevant data about the impact of employees after the merger and change in investment by customers after the merger.
The secondary data as it has always been important for the completion of any report provides a reliable, suitable, equate and specific knowledge. The data is collected from various magazines, fact 13

sheets, newspapers and websites. The project gathers information on marketing strategies with the help of secondary data.
(3) Sampling technique: The study proposed to use random sampling the data
was taken as random out of whole population. Data was picked randomly also as project took as data complete last year to make comparison in share price and to evaluate it.
(4) Sample area: In order to make a financial overview of both the banks after
the merger. It is necessary to pick segments so study become easily assessable. Financial analysis of study will be undertaken, the data will be collected through survey and detailed study
CHAPTER -3
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INDIAN BANKING SYSTEM
Today the Indian Banking system is among the best in the world and the years tie come may see them taking on the global belmoths. Banks are among the main participants of the financial system in India. Banking offers several facilities & Opportunities. Banking in India originated in the first decade of the 18th century with The General Bank of India coming into existence in 1786. The first Banking institution in India was Bank of Bengal. In the year 1921, the government of India started the imperial Bank of India, which is presently known as State Bank of India .SBI continues to be the government bank handling the major chunk of government business. Till date, SBI continues to be the largest Bank in India in terms of deposits and credit size. By the 1990s the market expanded with the establishment of banks such as Punjab National Bank .The Reserve Bank of India formally took on the responsibility of regulating the Indian Banking sector .After Indias independence in 1947, the Reserve bank was nationalized and given broader powers.
NATIONALIZATION
The Indian Banking industry has become an important tool to facilitate the development of Indian Banking .At the same time ,it has emerged as a large employer , and a debate was ensued about the possibility to nationalize 15

the Banking Industry. The first phase of financial reforms resulted in the nationalization of 14 major banks in 1969 and resulted in a shift from Class banking to Mass banking. This in turn resulted in a significant growth in the geographical coverage of banks. A second dose of nationalization of 6 more commercial banks followed in 1980 .The stated reason for the nationalization was to give the government more control of credit delivery. The government of India controlled around 91% of the banking business of India. After this, until the 1990s, the nationalized banks grew at a pace around 4% ,closer to average growth rate of Indian economy.The number of scheduled commercial banks increased four-fold and the number of bank branches increased eight-fold.
LIBERALISATION
There was second phase of financial reforms and liberalization of this sector. In the early 1990s the then Narsimha Rao government embarked on a policy of liberalization and gave licenses to a small number of private banks, which came to be known as New Generation tech-savvy banks, which included banks such as Global Trust Bank (the first of such new generation banks to be set up)which later amalgamated with Oriental Bank of Commerce, UTI Bank(now re-named as Axis Bank), ICICI Bank and HDFC Bank. The Public Sector Banks (PSB) s found it extremely difficult to compete with the new private sector banks and the foreign banks. The new private sector banks first made their appearance after the guidelines permitting them were issued in January 1993. Eight new private sector banks are presently in operation. These banks due to their late start have access to state-of-the-art technology, which in turn helps them to save on manpower costs and provide better services. This move, along with the rapid growth in the economy of India, kickstarted the banking sector in India, 16

which has seen rapid growth with strong contribution from all the three sectors of banks, namely, government banks, private banks and foreign banks. The next stage for the Indian banking has been setup with the proposed relaxation in the norms for Foreign Direct Investment, where all Foreign Investors in banks may be given voting rights which could exceed the present cap of 10%,at present it has gone up to 49% with some restrictions. The new policy shook the Banking sector in India completely. Bankers, till this time, were used to the 4-6-4 method (Borrow at 4%;Lend at 6%;Go home at 4) of functioning. The new wave ushered in a modern outlook and tech-savvy methods of working for traditional banks. All this led to the retail boom in India. People not just demanded more from their banks but also received more.
Current situation
Currently (2007), banking in India is generally fairly mature in terms of supply, product range and reach-even though reach in rural India still remains a challenge for the private sector and foreign banks. In terms of quality of assets and capital adequacy, Indian banks are considered to have clean, strong and transparent balance sheets relative to other banks in comparable economies in its region. The Reserve Bank of India is an autonomous body, with minimal pressure from the government. The stated policy of the Bank on the Indian Rupee is to manage volatility but without any fixed exchange rate-and this has mostly been true. With the growth in the Indian economy expected to be strong for quite some time-especially in its services sector-the demand for banking services, especially retail banking, mortgages and investment services are expected to be strong. One may also expect M&As, takeovers, and asset sales. The industry is currently in a transition phase. On the one hand, the PSBs, which are the mainstay of the Indian Banking system are in the 17

process of shedding their flab in terms of excessive manpower, excessive non Performing Assets (NPAs) and excessive governmental equity, while on the other hand the private sector banks are consolidating themselves through mergers and acquisitions. PSBs, which currently account for more than 78 percent of total banking industry assets are saddled with NPAs (a mind-boggling Rs 830 billion in 2000), falling revenues from traditional sources, lack of modern technology and a massive workforce while the new private sector banks are forging ahead and rewriting the traditional banking business model by way of their sheer innovation and service. The PSBs are of course currently working out challenging strategies even as 20 percent of their massive employee strength has dwindled in the wake of the successful Voluntary Retirement Schemes (VRS) schemes. The private players however cannot match the PSBs great reach, great size and access to low cost deposits. Therefore one of the means for them to combat the PSBs has been through the merger and acquisition (M& A) route. Over the last two years, the industry has witnessed several such instances. For instance, Hdfc Banks merger with Times Bank ICICI Banks acquisition of ITC Classic, Anagram Finance and Bank of Madura. Centurion Bank, Indusind Bank, Bank of Punjab, Vysya Bank are said to be on the lookout. The UTI bank- Global Trust Bank merger however opened a pandoras box and brought about the realization that all was not well in the functioning of many of the private sector banks. Private sector Banks have pioneered internet banking, phone banking, anywhere banking, mobile banking, debit cards, Automatic Teller Machines (ATMs) and combined various other services and integrated them into the mainstream banking arena, while the PSBs are still grappling with disgruntled employees in the aftermath of successful VRS schemes. Also, following Indias commitment to the W To agreement in respect of the services sector, foreign banks, including both new and the existing ones, have been 18

permitted to open up to 12 branches a year with effect from 1998-99 as against the earlier stipulation of 8 branches. Talks of government diluting their equity from 51 percent to 33 percent in November 2000 has also opened up a new opportunity for the takeover of even the PSBs. The FDI rules being more rationalized in Q1FY02 may also pave the way for foreign banks taking the M& A route to acquire willing indian partners. Meanwhile the economic and corporate sector slowdown has led to an increasing number of banks focusing on the retail segment. Many of them are also entering the new vistas of Insurance. Banks with their phenomenal reach and a regular interface with the retail investor are the best placed to enter into the insurance sector. Banks in India have been allowed to provide fee-based insurance services without risk participation, invest in an insurance company for providing infrastructure and services support and set up of a separate joint-venture insurance company with risk participation.
COMMERCIAL BANKS
Commercial banks are those, which were established for meeting the financial needs of commerce, trade and industry .These can e mainly divided into various categories namely Indian Banks and foreign banks. Indian banks include nationalized Banks (including State Bank and group), Private sector banks, Regional Rural banks and Cooperative Banks.
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A commercial bank is a type of financial intermediary and a type of bank. Commercial bank is the term used for a normal bank to distinguish it from an investment bank. It raises funds by collecting deposits from businesses and consumers via checkable deposits, savings deposits, and time (or term) deposits. It makes loans to businesses and consumers. It also buys corporate bonds and government bonds. Its primary liabilities are deposits and primary assets are loans and bonds. Commercial banking can also refer to a bank or a division of a bank that mostly deals with deposits and loans from corporations or large businesses, as opposed to normal individual members of the public. Commercial banks engaged in the following activities:
processing of payments by way of telegraphic transfer, EFTPOS, internet banking or other means
issuing bank drafts and bank cheques accepting money on term deposit lending money by way of overdraft, installment loan or otherwise providing documentary and standby letter of credit, guarantees, performance bonds, securities underwriting commitments and other forms of off balance sheet exposures
safekeeping of documents and other items in safe deposit boxes currency exchange sale, distribution or brokerage, with or without advice, of insurance, unit trusts and similar financial products as a financial supermarkets.
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CHAPTER -4
INTRODUCTION OF COMPANIES
CENTURION BANK OF PUNJAB:21

The Centurion Bank of Punjab (formerly Centurion Bank) is an Indian private sector bank providing both retail and corporate banking services. History
1994 : The company was incorporated on 30th June, 1994 and the certificate of Commencement of Business on July 20th. It is promoted as a joint venture between 20th Century Finance Corporation Ltd, and its associates and Keppel Group of Singapore. It has got a network of ten branches. The main equity of the Bank was provided by the promoters, 20th Century Finance Corporation Ltd. & its associates and Keppel Bank of Singapore (now Keppel TatLee Bank Ltd.) through Kephinance Investment (Mauritius) Pte. Ltd.
1995
:20th Century Finance Corporation Limited, has been
amalgamated with Centurion Bank Limited. The Bank, set up in a fully computerized environment with ATM facility at every branch and Computer networking between branches can indeed claim to be a `Bank with a difference'. The Bank has introduced, for the first time in the country, the concept of `anywhere banking' which enables to operate the account from any other branch of the Bank.
2005 Boards of Directors of Centurion Bank and Bank of Punjab Ltd on June 29, 2005 approves merger of two banks. The combined bank will be called Centurion Bank of Punjab.
Centurion Bank of Punjab is one of the fastest growing and leading new generation private sector banks in India. The bank serves an individual consumer, small and medium businesses and large corporations with full range of financial products and services for investing, lending and advice on financial planning. The bank offers its customers an array of wealth management, products such as mutual funds, life and general insurance and 22

has established a leadership position . The bank is also a strong player in foreign exchange services, personal loans mortgages and agriculture loans. Additionally the bank offers a full suite of NRI banking products to overseas Indians. On 29th August 2007, Centurion Bank Of Punjab merged with Lord Krishna Bank, post obtaining all requisite and regulatory approvals. The merger has further strengthened in geographical reach of the bank in major towns and cities across the country, especially in the state of Kerala. In addition existing dominance in the northern part of the country. Centurion Bank Of Punjab now operates on a strong nationwide franchise of 394 branches and 452 ATMs in 180 locations across the country, supported by employee base of over 7500 employees .In addition to being listed on the major Indian stock exchanges, the bank shares are also listed on the Luxembourg stock exchange.
FUNCTIONS OF CENTUION BANK OF PUNJAB

Expansion of investment market. Providing finance in the form of long or medium term loans. Adopting strategies to attract customers through elite accounts, gift cards, etcMaking funds available for
ABOUT HDFC BANK:-
Promoted in 1995 by housing development finance Corporation (HDFC),Indias leading housing finance Company. HDFC bank is one of the Indias premier Banks provising a wide range of products and services to its over 10 million customers across 100 of Indian cities using multiple distribution channels including a pan- India network of branches, ATMs, phone banking, banking, net banking and mobile banking. With a relatively 23

short span of time, the bank has emerged as a leading player in retail banking, wholesale banking and treasury operations, its three principal business segments. The banks competitive strength lies in the use of technology and the ability to deliver world class service with rapid response time. Over the last 10 years, the bank has successfully gained market share in its target customer franchises while maintaining health profitability and asset quality. As on December 31, 2007, the bank had a network of Branches and 1906 ATMs in 327 town/cities. For the quarter ended December 31, 2007, the bank Reported a net profit of INR 4.29 billion (429.4 crore),up 45.2% over the corresponding quarter of previous year. Total deposits were INR 993.9 billion (99.387 crore) over 48.95% higher Leading Indian and international publications have recognized the bank for its performance and quality.
FUNCTIONS
OF
HOUSING
DEVELOPMENT
FINANCE
CORPORATION (HDFC BANK)

Its a leading finance company, provides loans to customers. Provides various investment plans and insurance policies. Provides educational loan. Helps in trade services.
CHAPTER -5
MERGERS
Accounting standard 14 covers mergers and acquisitions 24
Impact of Merger of HDFC Bank and Centurion Bank Of Punjab The phrase mergers and) refers to the aspect of corporate strategy, corporate finance and management dealing with the buying, selling and combining of different companies that can aid, finance, or help a growing company in a given industry grow rapidly without having to create another business entity.
A merger is a tool used by companies for the purpose of expanding their operations often aiming at an increase of their long term profitability. Usually mergers occur in a consens-usual(occurring by mutual consent) setting where executives from the target company help those from the purchaser in a due diligence process to ensure that the deal is beneficial to both parties .Acquisitions can also happen through a hostile takeover by purchasing the majority of outstanding shares of a company in the open market against the wishes of the target's board. In business or economics a merger is a combination of two
companies into one larger company. Such actions are commonly voluntary and involve stock swap or cash payment to the target. Stock swap is often used as it allows the shareholders of the two companies to share the risk involved in the deal. A merger can resemble a takeover but result in a new company name (often combining the names of the original companies) than an acquisition is done purely for political or marketing reasons. and in new branding; in some cases, terming the combination a "merger" rather
Business valuation
The five most common ways to evaluate a business are

asset valuation, historical earnings valuation, future maintainable earnings valuation, relative valuation (comparable company & comparable transactions), 25
discounted cash flow (DCF) valuation Professionals who valuate businesses generally do not use just one of these methods but a combination of some of them, as well as possibly others that are not mentioned above, in order to obtain a more accurate value. These values are determined for the most part by looking at a company's balance sheet and /or income statement and withdrawing the appropriate information. The information in the balance sheet or income statement is obtained by one of three accounting measures: a Notice to Reader, a Review Engagement or an Audit. Accurate business valuation is one of the most important aspects of M&A valuations like these will have a major impact on the price that a business will be sold for. Most often this information is expressed in a Letter of Opinion of Value (LOV) when the business is being evaluated for interests sake. There are other, more detailed ways of expressing the value of a business. These the case as there are many reports generally get more detailed and expensive as the size of a company increases , however , this is not always complicated industries which require more attention to detail, regardless of size.
FINANCING MERGERS
Mergers are generally differentiated from acquisitions partly by the way in which they are financed and partly by the relative size of the companies. Various methods of financing an MERGER deal exist:
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Cash Payment by cash. removed from the more sense during a Such transactions are usually termed acquisitions of the target company are under the ( indirect ) cash deal would make
rather than mergers because the shareholders control of the only bidder's shareholders
picture and the target comes alone. A
downward trend in the interest rates.
Another advantage of using cash for an acquisition is that there tends to lesser chances of EPS dilution for the acquiring company. But a caveat in using cash is that it places constraints on the cash flow of the company.
Financing Financing capital may be borrowed from a bank, or raised by an issue of consideration.
bonds. Alternatively, the acquirers stock may be
offered as
Acquisitions financed through debt are known as leveraged buyouts if they take the target private, and the debt will often be moved down onto the balance sheet of the acquired company.
Hybrids
An acquisition can involve a combination of cash and debt, or a combination of cash and stock of the purchasing entity.
Factoring Factoring can provide the necessary extra to make a merger or sale work.
MOTIVES BEHIND MERGERS

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These motives are considered to add shareholder value:
Synergy:
This
refers to the fact that the combined company can often
reduce Duplicate departments or operations, lowering the costs of the company relative to the same revenue stream, thus increasing profit.
Increased revenue/Increased Market Share:
This motive assumes that
the company will be absorbing a major competitor and thus increase its power (by capturing increased market share) to set prices.
Cross selling : For example, sell its banking products to
a bank buying a the stock
stock broker could then , while the
broker's customers
broker can sign up the bank's customers for brokerage accounts. Or, a manufacturer can acquire and sell complementary products.
Economies of Scale: increased Opportunity buying discounts.
For example, managerial economies such as the of managerial specialization. Another example are
purchasing Economies due to increased order size and associated bulkTaxes: A profitable company can buy a loss maker to use the target's loss as their advantage by reducing their tax liability. In the United States and many other countries, rules are in place to limit the ability of profitable companies to "shop" for loss making companies , limiting the tax motive of an
acquiring
company. Term smoothens the
Geographical or other diversification: This is designed to smoothen the earnings results of a company, which over the long investing in the company. stock price of a company, giving conservative investors more confidence in
MERGERS MARKET PLACE DIFFICULTIES
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No marketplace currently exists for the mergers and acquisitions of privately owned small to mid-sized companies Market participants often wish to maintain a level of secrecy about companies. Their concern for their efforts to buy or sell such secrecy usually arises from the possible
negative reactions a company's employees, bankers, suppliers, customers and others might have if the effort or interest to seek a transaction were to become known . This need for secrecy has thus far thwarted the emergence of a public forum or marketplace to serve as a clearinghouse for this large volume of business. At present, the process by which a company is bought or sold can prove difficult, slow and expensive. A transaction nine months and involves many steps. typically requires six to Locating parties with whom to
conduct a transaction forms one step in the overall process and perhaps the most difficult one. Qualified and interested buyers of multimillion dollar corporations are hard to find. Even more difficulties attend bringing a number of potential buyers forward simultaneously during negotiations . Potential acquirers in an industry simply cannot effectively "monitor" the economy at large for acquisition opportunities even though some may fit well within their company's operations or plans. An industry of professional middlemen" (known variously as intermediaries business brokers, and bankers) exists to facilitate M&A transactions. These professionals do not provide their services cheaply and generally resort to previously-established personal contacts, direct-calling campaigns, and placing advertisements in various media . In servicing their clients they attempt to create a one-time market for a one-time transaction .Certain types of merger and acquisitions require that these "middlemen" both sides .Despite transactions involve securities and may be securities licensed in order to be (investment
compensated. Many but not all, transactions use intermediaries on one or best intentions, intermediaries can operate inefficiently limiting nature of having to rely heavily on because of the slow and
telephone communications . Many phone calls fail to contact with the 29

intended party. Busy executives tend to be impatient when dealing with sales calls concerning opportunities in which they have no interest. These marketing problems typify any private negotiated markets. Due to these problems and other problems like these, brokers who deal with small to midsized companies often deal with much more strenuous conditions than other business brokers. Mid-sized business brokers have an average life-span of only 12-18 months and usually never grow beyond 1 or 2 employees. Exceptions to this are few and far between. Some of these exceptions include The Sundial Group, Geneva Business Services and Robbinex. The market inefficiencies can prove detrimental for this important sector of the economy. Beyond the intermediaries' high fees, the current process for mergers and acquisitions has the effect of causing private companies to initially sell their shares at a significant discount relative to what the same company might sell for were it already publicly traded. An important and large sector of the entire economy is held back by the difficulty in conducting corporate M&A (and also in raising equity or debt capital). Furthermore, it is likely that since privately held companies are so difficult to sell they are not sold as often as they might or should be. Previous attempts to streamline the M&A process through computers have failed to succeed on a large scale because they have provided mere "bulletin boards" - static information that advertises one firm's opportunities. Users must still seek other sources for opportunities just as if the bulletin board were not electronic. A multiple listings service concept was previously not used due to the need for confidentiality but there are currently several in operation. The most significant of these are run by the California Association of Business Brokers (CABB) and the International Business Brokers Association (IBBA) These organizations have effectively created a type of virtual market without compromising the confidentiality of parties involved and without the unauthorized release of information.
30

One part of the M&A process which can be improved significantly using networked computers is the improved access to "data rooms" during the due diligence process however only for larger transactions. For the purposes of small-medium sized business, these data rooms serve no purpose and are generally not used. Reasons for frequent failure of M&A was analyzed by Thomas Straub in "Reasons for frequent failure in mergers and acquisitions a comprehensive analysis", DUV Gabler Edition, 2007.
HDFC-CBoP MERGER
CONSOLIDATE TO CONQUER
In February .HDFC which is Indias largest second largest private bank after ICICI, sealed The largest ever merger in Indian financial history with CBoP for Rs 9510 crores. This has set up a new trend because ,earlier , bank mergers in India were largely bailout ,with the stronger banks 31

swallowing the weaker one or reverse mergers to develop new
business models ICICI & IDBI .However
in this case ,at the time of the
merger ,both the healthy banks and so it cant be dubbed as a merger of unequals or a larger bank gobbling up a smaller or weaker one ; rather it is akin to a merger of strength . However given the post of 2009 scenario , when foreign banks are likely to be on a par with domestic banks , despite some regulatory hitches , the merger of two strong banks heralds a new era of consolidation in the Indian banking industry as a whole.
FLASHBACK
Both these new generation banks were incorporated and licensed by the reserve bank of India (RBI) in the post liberalization era of the mid 1990s , and both of them had sipped merger waters beforehand . In fact, HDFC bank had orchestrated the first merger in private sector banking by taking over the troubled Times Bank from media giant Bennett, Coleman & co in 1999.CBoP is also no stranger to mergers. In fact ,it began its existence as Centurion Bank had merged with North India based Bank of Punjab , and last year ,CBoP took over Kochi based Lord Krishna Bank.
FINEPRINTS OF THE DEAL
A number of parameters were taken into consideration while finalizing the value of the deal .Among the ,the most important parameter was price /book value .Besides this, other factors considered for valuing the deal were geographical reach of size of the balance sheet, composition of the bank, management style,
loan book, asset quality ,etc .Judging all the pros and cons a swap ratio of 1:29
32

was determined which means that CBoP was determined ,which mean that CBoP shareholders will get one HDFC bank share for every 29 shares they hold Given the swap ratio, HDFC bank has valued CBoP at around Rs9500 crore .And HDFC bank is likely to issue preference shares to its parent body HDFC to keep the promoters shareholding above 20% after the merger. After the merger ,HDFC s stake in the bank will decline to 19 % .Now if HDFC wishes to keep its current stake at 23.2% , it will have to inject around rs3900crore. The most pertinent thing in this merger is that there will be no management integration issues as this will be a fair, professional and clean merger Moreover there will be downsizing of staffs and the merged entity would be large enough to accommodate everyone . CBoP chairman Rana Talwar will join the board on non executive director while CBoP MD Shailendra Bhandari will be the executive director in the merged entity.
DEAL LOGIC
The proposed merger is believed to have a positive impact on HDFC banks business profile over the medium term. The merger will give HDFC bank access to a wider ranch network, beating ICICI bank well over 100 ranches, and post merger, the branch size of the bank will increase by 52 % . According to a leading rating agency , Crisil , the branches , especially Punjab and kerala ,will extend HDFC Bank reach geographies where it had limited presence The total asset size of the bank will increase by 19 % and loan book and deposits by 21% each. HDFC banks robust risk control systems and emphasis on keeping high current and savings account (CASA) levels will ensure that the merged entity will maintain its asset quality and resource profile at levels significantly better than other banks over the medium-term . Valuation is another important issue .HDFC Bank is shelling out around onethird for CBoP branches ,it should have a long term positive impact on 33

the business and profitability of the merged entity. Again there are certain standard technology and people issues . In HDFC Bank , there is no union inherited from Lord Krishna Bank . And , in any merger, integration is primarily at three levelspeople, processes and technology In this HDFC CBoP merger, positive outweighs the negative . The management styles both the banks are more or less similar, and moreover, both understand consumer, retail banking business. From day one both have been on a technology platform and so there are no data related legacy issues. In fact clear- cut synergies exist, and it is expected that change management issues will be handled smoothly.
NEXT STOP : OVERSEAS
Rival ICICI Bank has already initiated its foreign odyssey. Now it is present in 18 countries and its overseas operations accounted for around 23 % of the consolidated banking assets as on December 31, 2007. Axis bank, the third largest private sector bank, boasts of having three international branches in Singapore, Hong Kong and Dubai and a respective office in Shanghai swayed . This might have HDFCs bank thinking. It has already acquired a license for a branch in
Behrain, which will be opened very soon. it is also planning to raise $1billion through medium term note issuance program . Thats where CBoP may come in Handy. The bank is already present in Canada. Moreover what could be immense help to bank , going forward ,in its international foray is the presence of Rana Talwar, the former CEO of Standard Chartered Bank , on Sabre On the capital , board who , through a fund which has Spearheaded along with other partners , Puri has
has gained immense experience in international banking as well in M&A activities . issue of overseas expansion , HDFC Bank MD Aditya commented , we could .Rana Talwar is coming provide global range of on board and he has got lot of want to 34
experience. The motive is not to challenge the Citigroups of the world .They want to products for Non Resident Indians (NRI) and

participate in trade (India specific export import related) finance . They are not thinking at this point of time to become a big bank abroad at this point of time and and even good not looking at the crowded western market come into play .So , would seriously check definitely be an where the bank s strengths and benefits like food processing good , credit skills distributions it would overcrowded market but probably somewhere in Eastern Europe Indonesia or rest of Asia .
POST- MERGER: CHALLENGES
Although this merger is the largest of its kind in the history of Indian Banking, it may not be free from loopholes .The merged entity will definitely have to yank for operational efficiencies in its line of business .Moreover ,it is anticipated that there will be a dilution of profits ,at least in the short term. the challenge could be that CBoP is more about low cost distributes more low - cost products while HDFC s operations and products are higher up
the value chain .It will take CBoP team to gel with HDFC products and this are more universal and sophisticated and could be an area of challenge . At the time of finalizing network surpassing as an the deal HDFC bank had considered branch important parameter and savored the moment of
the nearest competitor. ICICI Bank in terms of number of
branches .Although ICICI had 955 branches as on the date of merger, it has 425 in the pipeline, which are in the process of implementation by mid-2008. So post mid -2008 , as usual , the ICICI Bank would be the largest private sector bank in terms of branch network also .Moreover on the basis of pro forma consolidation as on December 31,2007, the gross Non Performing CBoP s comparatively weak resource Asset ( NPA)of the merged bank would be higher than current gross( NPA ) asset of HDFC bank . Also, given profile ,the proportion of current and saving account (CASA )for the merged entity is likely to go lower than current CASA for HDFC bank . The 35

integration of technology and people would be a serious challenge as well as a sensitive issue . Centurion Bank Of Punjab , by virtue of its acquisitions of Bank Of Punjab and Lord Krishna Bank , is currently on two different technology platforms Finacle and i-flex. The erstwhile Centurion bank was on Misys , but after taking Bank Of Punjab , the bank shifted to Finacle . And the 2006 merger with Lord Krishna Bank had further complicated things as Lord Krishna Bank was on platform. Given ( and partly still remains ) i-flex . So all its branches on to the Finacle of HDFC bank which
CBoP is still in the process of bringing works on the I-flex platform
these circumstances , the entry
will complicate the situation .Moreover , platform will take considerable time and that customers do not agency Crisil believes that and wider
bringing the banks onto a single resources , and
banks will also have to ensure
become disgruntled . Whatsoever , the rating
the benefits accruing from access to a larger branch net-work
geographical coverage will more than offset the negative impact of a sligh-tly weakened asset quality and other integration snags in the short term. Besides this, the merger of CBoP with HDFC Bank Will be a big low to their bancassurance partners. (banc assurance is the sale of life pension and Investment products through the branch network of a bank ). This merger will adversely impact the business of Aviva Life insurance co. Centurion Bank is the banc assurance partner for these two insurers, while HDFC Bank sells insurance for group company HDFC standard life .Post merger distribution deal between Aviva Life Insurance and ICICI because as per the existing law of the Lombard will be scrapped Insurance Regulatory and
Development authority IRDA, a bank cant sell products for more than one insurance company . Moreover, the merger may lead to a clash with HDFC Ltd. which provides home loans to customers and has a large customer base in this segment. CBoP also has a strong presence in home loans .Now the merged entity may not sell home loans as this may lead to conflict of interests with HDFC Ltd . But given the phenomenal progress HDFC Bank has made in recent times through its technology-driven and customer centric
36

business model, intertwined with smart and dedicated workforce and able to tackle the post merger challenges and optimize the synergies.
EMERGING TRENDS
This HDFC CBoP merger is a precursor to what lies ahead in the post -2009 scenario when the banking sector will be opened up .Cut throat competition and RBIs stingy branch licensing policy mean that the scale and geographical reach have become critical for the survival of bank .So it is better to grow inorganically rather than through slow organic process .Through merger, banks will manage the costs better and enjoy economies of scale .Moreover,retail lending will also get a boost . But despite the discernible synergies ,the truth is that except for Those negotiated by the RBI , including the banks in financial trouble , M & As in the Indian Banking sector have been few and far between. But the trigger should come from the government owned Public Sector Banks (PSBs) .These PSBs, though not quite occupying the commanding heights once envisioned for them, still are in a position of some strength to initiate consolidation moves .But these PSBs suffer from these political and institutional compulsions that come in the way of the merging of these banks despite having distinct operational synergies. The foreign banks which are operating in India see themselves more as predators in the M & A game and are not willing to be a target of acquisition by domestic banks. so the only private setor banks, both old and newly licensed ,are left for acquisition target. The new-age private banks which successfully battled their turbulent initial days, have every reason to be optimistic and so would be looking for acquisition rather than being the target of one. Finally the older private sector banks, though did not grow much, have a history of independent operations .Unless their operations suffer a dramatic downturn; they are unlikely to offer themselves as prospective candidates for acquisition.
37

This is not to say that there will be no consolidation in the future .In fact ,the Indian banks ,which are small compared to their overseas counterparts, are likely to go for consolidation given the fact that post -2009 foreign banks are likely to enjoy greater operational freedom in the Indian market Moreover , with increased competition , the banking sector is witnessing a general slump on all important parameters of profitability ,such as return on assets ,profit per employee , etc. This underscores the need for bringing cost efficiencies and opening up new revenue streams that only size can confer .So the basic instinct of survival will keep the consolidation activities ticking in the Indian Banking sector. And the present merger of two healthy banks shows that none can stop the inevitable.
Whats hot, and whats not The HDFC Bank-CBoP merger brings both advantages and downsides to the postmerger HDFC Bank. HDFC Punjab.
Bank
gets of
the
top
class of
management
Centurion
Bank
Share
of
low-cost
deposits
to
decline marginally as CBoP has a Strong two-wheeler, commercial much lower portfolio of such deposits 38
than HDFC Bank. vehicle total and construction assets equipment home
CBoP has relatively high net NPAs
portfolio. About 40 per cent of CBoP's retail comprise loans, car loans and personal loans.
of 1.31 per cent. This will affect HDFC Bank's asset quality.
Employee integration to be a big
Small
and
medium base of
enterprises 2,500 and
issue as CBoP has a large workforce.
(SME)
client
advances of over Rs 1,500 crore.
Technology
integration
to
take
time and also cost a packet as the two Gets 394 branches and licenses banks operate on different platforms.
for 350 more when RBI is being very stingy on doling out branch licenses.
It's an all-stock deal, but HDFC
Bank promoter HDFC will have to Gains geographical spread, pump in close to Rs 4,000 crore to maintain its stake at a little over 23 per cent. especially in Punjab and Kerala.
CHAPTER -6
CONCEPTUAL FRAMEWORK
MERGERS! MERGERS!
Its been a latest strategy which actually every company is trying to follow.Its very important to understand that Are mergers are giving positive results to industry or not ? The private players however cannot match the PSBs great reach , great size and access to low cost deposits. Therefore one of the means for them to combat the PSBs has been through the merger and acquisition (M& A) route.
39

Over the last two years , the industry has witnessed several such instances. For instance, Hdfc Banks merger with Times Bank ICICI Banks acquisition of ITC Classic, Anagram Finance and Bank of Madura . Centurion Bank, Indusind Bank , Bank of Punjab, Vysya Bank are said to be on the lookout.The objective of detailed study is very much required in project .It will help to analyze, observe and interpret the following elements after the merger. The project has made a study on listed parameters that how it will integrate and become synergies for merged entity. There will be a detailed study on the various parameter that what will be the effect on the following after the merger. The project will evaluate each element individually to know its effects.
SHAREHOLDERS
The term stakeholder, as traditionally used in the English language in law and notably gambling, is a third party who temporarily holds money or property while its owner is still being determined. More recently a very 40

different meaning of the term has become widely used in management. In a business context, a "stakeholder" is a person or organization that has a legitimate interest in a project or entity. The new use of the term arose together with and due to the spread of corporate social responsibility ideas, but there are also utilitarian and traditional business goals that are served by the new meaning of the term The word stakeholder has entered the vocabulary of management at a number of levels, and stakeholder analysis is the tool through which stakeholders and their interests are identified. The role of stakeholder is a very old concept in law. A stakeholder was originally a person who temporarily holds money or other property while its owner is being determined. This is, for example, the situation when two persons bet on the outcome of a future event and ask a third, disinterested, neutral person to hold the money (or "stake[s]") that they have wagered (or "staked"). After the event occurs, the stakeholder distributes the stakes to one or both of the original (or other) parties according to the outcome of the event and according to the previously decided conditions. Courts sometimes act as stakeholders, holding property while litigation between the possible owners resolves the issue of which one is entitled to the property. Trustees also often act as stakeholders, holding property until beneficiaries come of age, for example. An "escrow agent" is one kind of trustee who is a stakeholder, usually in a situation where part of the purchase price of property is being held until some condition is satisfied. In legal documents, the escrow agent is often referred to as a "mere stakeholder."
FINEPRINTS OF THE DEAL WITH SHARE PRICE AND SHAREHOLDERS
41

A number of parameters were taken into consideration while finalizing the value of the deal. Among them ,the most important parameter was price /book value. The strategy which was implemented to acquire share price was swap ratio of shares. After a long hour meeting the swap ratio was decided between 1 :26-30 .the issue was very senstive because the worked carried out by the valuers can prove unfavorable to CBoP shareholders .
Through long hour debate and judging all the prons and cons , the ratio is settled at 1 : 29.
The valuation is fair which means that CBoP shareholders will get one HDFC Bank share for every 29 shares they hold . Given the swap ratio HDFC Bank has valued CBoP at around RS 9500 crore .The valuation has been done on the basis of share price of last two years . The values measures both the entities considering the fundamental and technical analysis where theyalso evaluate the profitability , branches, deposits and advances of the bank. HDFC Bank is likely to issue preference shares to promote HDFC bank to enable the mortgage company to retain its shares holding above 20% after the merger.
The data of (
project sensex merger
has also collected the value , HDFC price) of the dataAfter the news announcement.
last 6 months and
42
Considering the above graph the project observes that share price of HDFC Bank and CBoP are remarkably similar .The graph determines the data of last year and evaluates the share price of both the entities are is almost similar .so project has evaluated the share price after the merger using different methodology.
EMPLOYEES
Employment is a contract between two parties, one being the employer and the other being the employee. An employee may be defined as: "A person in the
43

service of another under any contract of hire, express or implied, oral or written, where the employer has the power or right to control and direct the employee in the material details of how the work is to be performed." In a commercial setting, the employer conceives of a productive activity, generally with the intention of creating profits, and the employee contributes labour to the enterprise, usually in return for payment of wages. Employment also exists in the public, non-profit and household sectors. To the extent that employment or the economic equivalent is not universal, unemployment exists. An employee contributes labour and expertise to an endeavour. Employees perform the discrete activity of economic production. Of the three factors of production, employees usually provide the labour. Specifically, an employee is any person hired by an employer to do a specific "job". In most modern economies the term employee refers to a specific defined relationship between an individual and a corporation, which differs from those of customer, or client. Most individuals attain the status of employee after a thorough process of interviews with several departments within a company. If the individual is determined to be a satisfactory fit for the position, he is given an official offer of employment within that company for a defined starting salary and position. This individual then has all the rights and privileges of an employee, which may include medical benefits and vacation days. The relationship between a corporation and its employees is usually handled through the human resources department
EFFECT OF MERGER ON EMPLOYEES

The merged entities are strong enough in their respective fields , so the merger will the culmination of search done independent of each other who could help them capture and ride the growth in the financial services 44

industry more optimally.Employees are the most important and crucial element to consider after the merger. Organizations are managed and staffed by people .Without people organizations cannot exist .Indeed with the merger it will be a big challenge for management to create healthy working environment so employees can work efficiently and effectively. The culture and working environment for the employers will be entirely different. Merger will add multi site ,multi organizational and dynamic environment. The employees of both the entities before the merger was working like virtual workplace. Where they were remotely from each other. Restructuring of organization will mean restructuring of employees. Restructuring can assume a variety of forms in the working environmentchange in culture, tranfer, promotional or downsizing of employees. The merge entity says that trust is vey important culturer componant to make the organization prosper in the competitive era. Trust is instrumental in making the organization more effective and also help to cordinate, empower, delicate the work among the teams and help to perform according to competitive norms. HDFC management believes start that employees will now have a common goal. The management of HDFC promised that it will provide the environment which will match the strenth, addresses the weakness, convey the message and make them understand. This deal will help the employees to sustain the future address the other issues employees feel the working environment is efficient enough because of management of HDFC bank highlights that culture is unique and powerful ingredient that changes the fate of organization. The merger will identify the cultural issues and take step to integrate the healthy environment and give importance to communication and team work in employees. The management of HDFC feels that three steps will be required to merger to make it successful in employees mind. 1) By appointing internaly, externaly the best talent at key positions. 45

2) Reataining the talent from both organization 3) Promote cultural integration So both the organizattion need to cultural scan there they will be conacting both cultural and operational job. To implement these steps the merge entity should be ready to invite whole heartedly the new entrance that will the successful in making the employees happy. As in terms of operational level there will e change at hierarchy level CBoP Heriarchy
Branch Operational Senior Manager
Branch Officer
Operational Trainee
After the merger the herirarchy level at HDFC bank will be as follows HDFC Bank Heriarchy
46

Branch Operational Senior Manager
Branch Officer
Teller Authorizer
PB Desk
Operational trainee -
Teller As in terms of sales , the targets of relationship manager and
personal finance consultant will be increased as per HDFC Bank standards
Relationship manager:Minimum revenue benchmark at 3 lacs/ RM Minimum products benchmark at 100 products/RM
47
Personnel finance consultant
Minimum revenue benchmark at 1 lacs /PFC Minimum products benchmark at 50 products /PFC
Product targets
50 saving accounts 25 fixed deposit (average 3 lakhs ) 20 mutual funds (unique customer ) 5 insurance policy (unique customer ) 4 asset conversion
CUSTOMERS
A customer refers to individuals or households that purchase goods and services generated within the economy. shop , who made it a habit The word historically derives someone who from " custom ," whom the meaning " habit "; a customer was frequented a particular
to purchase goods there , and with
shopkeeper had to maintain a relationship to keep his or her "custom," meaning expected purchases in the future.Customer needs may be defined as the goods or 48

services a customer varying importance cultural requires to achieve Specific goals . Different needs are of
to the customer . Customer expectations are influenced by and other communications, both with other clear
values , advertising, marketing ,
the supplier and with other sources.Both customer needs and expectations may be determined through interviews, surveys, conversations, data mining or methods of collecting information . Customers at times do not have a
understanding of their needs. Assisting in determining needs can be a valuable service to the customer. In the process, expectations may be set or adjusted to correspond to known product capabilities or service. Customers are the paramount important source for any
organization. A company always try to provide efficient services to its customers . In an emerging scenario, bank must be endeavouring to maintain the customer loyalty and retention .The customer loyalty is recognized as the influencing factor in every aspect right from product designing to technology adaptation .while managing the change it should work on different prospectives. The project will analyze that after the merger HDFC bank have to analyze the culture of merged entities, branch/ service ambience ,influence factors in customers loyalty, the emotional frequencies of customers ,expectations and aspiration levels of customers from the new entity ,the counter moves by the peers to delink such loyalty. so it is very important to know the dilemma of customers after hearing the news of merger of two entities.The project evaluates the views of the customer The customers feel that merger is a win win situation and it will be interesting development in the Indian Banking Scenario because it has made the combined entity the largest private sector bank in terms of branch network. They feel that new institute will bring faster customer services at a lower cost ,so its a need for banking sector to expand their vistas . The customers are having confidence that they can have bigger deal in the market .customers are smart enough to understand that M&A and consolidation in the banking sector is a need of the hour which may drive valuations of the bank .The project further evaluates the customer investment decision after hearing the news of CBoP with HDFC bank 49

.Customers are bit confused about the products which will be offered by comined entity.Aviva and ICICI Lombard customers will not be served by CBoP . The contract between CBoP and Aviva life insurance , ICICI Lomabard will be clashed. Now merged entity will be selling HDFC Bank products.The project has analyzed the dilemma of customers on news of merger by gathering informationon the basis of their investment .The project has evaluated the correlation between savings and investment of the customers with change in organization .but overall customers have positive impact of mergers because they know they will e provided best services from brand HDFC Bank.
MARKETING STRATEGY
A marketing strategy is a process that can allow an organization to concentrate its limited resources on the greatest opportunities to increase sales and achieve a sustainable competitive advantage. A marketing strategy is most effective when it is an integral component of corporate strategy,defining how the organization will successfully engage customers,prospects, and competitors in the market arena . It is partially derived from broader corporate strategies , corporate missions , and 50

corporate goals. As the customer constitutes the source of a company's
revenue , marketing strategy is closely linked with sales . A key component of marketing strategy is often to keep marketing in line with a company's overarching mission statement.
Basic theory: 1) Target Audience 2) Proposition/Key Element 3) Call to Action A strategy consists of a well thought out series of tactic to make a marketing planmore effective. Marketing strategies serve as the fundamental underpinning of marketing plans designed to fill market needs and reach marketing objectives . Plans and object-ives are generally tested for measurable results.A marketing strategy of often integrates an organization'smarketing goals, policies , and action sequences (tactics) into a cohesive whole. Similarly, the various strands might include advertising, promotion and that then channel marketing , public relations the strategy , which internet marketing , tactics
can be orchestrated. Many companies for the next level or group. Each one
cascade a strategy throughout an organization, by creating strategy become strategy goals
group is expected to take that strategy goal and develop a set of tactics to achieve that goal. This is why it is important to make each strategy goal measurable.
PRODUCTS OFFERED BY CBOP AND HDFC BANK
Savings account Current account Fixed Deposit Loans Equity Broking

51
Impact of Merger of HDFC Bank and Centurion Bank Of Punjab Anywhere banking Cash Management Services Wealth Management Services
SAVING BANK ACCOUNT

A saving account is meant for the general public who wish to save a part of their current incomes to savings. The bank, therefore impose certain restrictions on the saving bank account and also offer a reasonable rate of interest . Opening a Saving Account with Centurion Bank of Punjab and HDFC bank allow customers to earn interest while the money lies parked for their convenience. In addition to the customary Centurion Bank of Punjab warmth and HDFC personal touch, the account comes with a host of banking services including atm cards, internet banking , safe deposit lockers, etc.
MINIMUM BALANCE Individuals can open a Saving Account with Rs. 10000\- . In the eventuality of the average minimum balance falling below the stipulated levels a charge of Rs. 660 Is levied.
INTEREST
RATE Interest @ 3.50 % p.a. calculated on the minimum balance in your
account between the 10th and the last day of the month, credited quarterly into your account.
CURRENT DEPOSIT ACCOUNT
52

A current account is a running and active account, which may be operated upon any number of times during a working day. There is no restriction on the number and the amount of withdrawls from a current account. Current account suits the requirements of big businessmen , joint stock companies , institutions , public authorities and public corporations ,etc whose banking transactions happen to be numerous on every working day. In order to avail the current account facility you need to fill in the account form and provide introduction. The account shall be introduced by another account holder of the bank or supporting documents based on the constitution of the applicant.
MINIMUM BALANCE Corporate houses can open a current account with Rs. 20000 .
FIXED DEPOSIT ACCOUNT Fixed deposit accounts include deposits with the bank for a fixed
period, which is specified at the time of making the deposit. A fixed deposit is repayable on the expiry of a specified period chosen by the depositor to suit his purpose and to enable him to get back the money as and when he needs it. These deposits constitute more than half of total bank deposits. In order to avail the Fixed Deposit facility customer need to fill in the account form and provide introduction documentation. The account could either be
53

introduced by another account holder of the bank\ staff member or through supporting documents based on the constitution of the applicant. MINIMUM DEPOSIT The minimum deposit for opening CBOP Fixed deposit Account is Rs. 10000 This deposit can be made in the form of cash or through a cheque.
Period
of Rate interest normal citizen 5.00%
of For to citizen
senior
term deposit
5.50 %
RATE INTEREST rates subject time)
OF (The are change
7 days
days-14
15 30 days 31 60 days 61 90 days 91 days
5.50 % 5.75% 6.00 %
6.00 % 6.25 % 6.50 % 7.25 %
to from time to
180 6.75 %
ANYWHERE BANKING The new concept of anywhere banking allows customer of one branch of a bank to transit their business at premises of another branch of the bank. This essentially means that the customers are treated as being the customer of a bank not of a branch.
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CBOP and HDFC bank has been able to offer Anywhere Banking and at par cheque facilities for its customers. Using this technology and networked infrastructure the bank is now in a position to introduce products like electronic utility bills collection ( Telephone , electricity bills etc.) as well as innovative products like acceptance of insurance premium over the internet.
CASH
MANAGEMENT
SERVICE
Cash Management Service at Centurion Bank of Punjab and HDFC is an efficient, technology-supported system of fast realization/ collection of cheques, drafts etc and / or making payments at any centre of choice in a fully secure manner. Centurion Bank of Punjab and HDFC bank Cash management Service works on the principle of Time value of money. Faster collection of funds ensures savings on high interest cost on borrowings, reduction of operating cycle and thereby reduction of borrowal needs, higher liquidity, opportunity to earn from deployment of surplus funds, tracking of funds through MIS and minimizing cost and risk associated with funds management.
CASH AND TRANSACTION SERVICES CENTURION BANK OF PUNJAB and HDFC bank offers Cash
management Services under the name "'Cash & Transaction Services'' (CATS) a service specially designed to suit your every business need, whether it is for Cheque collection or making payments at various locations.
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This service is fully supported by a framework of V-Sat and leased line connectivity with all our countrywide network of branches and through specific inter-linkages with carefully selected correspondent banks. Presently we have 240 branches covering 112 locations and a correspondent bank tieup with 14 major banks covering more than 3000 locations for collections and 700 locations for payments.
Benefits
Quick realization of your cheques saving on interest costs & efficient management of treasury.
Timely, Flexible MIS statements, and instrument wise if you choose.
MIS reports via E-mail. Interface with customer ERP also possible. Prompt query resolution at any of our branches enabling better control over your receivables.
Regular Support for efficient reconciliation. Low charges, even nil charges in some categories
Fully transparent charging system. No hidden charges. Overall operational convenience
ONLINE BROKING Centurion Bank of Punjab and HDFC bank offers one-stopsolutions for all your Capital Market needs. The services include E-Broking, Savings Bank Account and Demat. As a Centurion Bank of Punjab customer, you'll get an array of customized online trading products offered by IL&FS
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Invest smart. HDFC customers will have the account in bank itself You will be empowered with real-time streaming quotes, charts, alerts, portfolio, etc. You can also get historical financial data and charts, and advance technical analysis. Triple Advantage -Banking account, Demat account and Broking services at one terminal Seamless settlement of securities and funds - Automatic delivery of shares from and into your Centurion Bank of Punjab and HDFC Demat account. Credit of sale proceeds into your Centurion Bank of Punjab banking account on settlement dates Trading in BSE, NSE and derivatives from a single screen. High online security since all transactions executed are in a safe and secure environment as it uses 128 bit SSL (Secure Socket Layer) technology Speed - Orders are placed electronically and executed instantaneously E-mail confirmation of trades at the end of the day Dial-a-trade provides you opportunity to trade over phone and take care of your enquiries.
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WEALTH MANAGEMENT Wealth Management is a type of financial planning that provides high net worth individuals and families with private banking, estate planning, legal resources, and investment management, with the goal of sustaining and growing long-term wealth. Whereas financial planning can be helpful for individuals who have accumulated wealth or are just starting to accumulate wealth, you must already have accumulated a significant amount of wealth for the wealth management process to be effective. Examples of wealth managers include independent advisors large
corporate entities like Citibank's Citigold and other extensions of retail banking services designed to focus on high-net worth retail customers. Such customers would be called internally in a bank 'mass affluent' or 'upper retail' clients because of their net worth, the number of potential products they own from the bank, their assets under management and other methods of segmentation. The banks create separate branches, services and other 'benefits' to retain or attract these customers who are typically more profitable than other retail banking customers. However, wealth management clients are not Private Banking clients because they simply do not have the Net Worth or Assets under management to justify the level of banking services that Private Banks provide
Products
Products could include the following:

Stocks and Stock Trading Equity Linked Investments Structure Savings Products Structured Investment Products and Derivatives Foreign Exchange 58

Mutual Funds and Unit Trusts Property Management and Investments
The merger of both strong entities CBoP and HDFC Bank will be a win win situation Both the organization will undergone a completed transformation .The main focus will be to provide be only done if HDFC Bank strategies. excellent services to customers . It can will maintain high standards of products
in the market. It will add brand name,value added services in their marketing
The project will evaluate mainly on WEALTH MANAGEMENT PRODUCTS
The project will give a detailed study about the above products and their strategies of both banks before and after the merger.
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MUTUAL FUNDS
A Mutual fund is an organization that invests in a diversified portfolio of financial securities on behalf of a pool of subscribers to its schemes. These securities can be in the form of equity, debt instruments, money market instruments etc., or a mix of these securities, depending on the scheme objectives. A mutual fund pools the money of people with similar investment goals. The money in turn is invested in various securities depending on the objectives of the mutual fund scheme, and the profits (loss) are shared among the investors in proportion to their investments.
A mutual fund scheme issues that units are
normally priced at Rs.10 during offer. Thus , the number of units you own against the total number of units issued by the mutual fund scheme determines your share in the profit or loss of a scheme. In the case of open end schemes, units can be purchased from or sold back to the fund at a net asset value (NAV) based price on all business days. The NAV is the actual value of a unit of the fund on a given day. Thus, when you invest in a mutual fund scheme, you normally get an account statement mentioning the number of units that have been allotted to you and the NAV based price at which the units have been allotted. When you buy more units or redeem your units in part or full, you get an updated account statement, reflecting your transaction. ADVANTAGES OF INVESTING IN MUTUAL FUNDS
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Diversification : Mutual Funds invest their corpus in diversified portfolios which reduces the risk contained in the investment. This also means that you can invest a small sum of Rs.5000/- and still be a part of a portfolio where the market value of single scrip might be much more than the total investment. Liquidity: These funds are extremely liquid, some of them even have features like across-the-counter redemption. This feature is especially useful at times when the market is rising or falling. Professionally Managed: These funds are managed by professionals who have the required expertise in buying and selling stocks. As a result they make better decisions on entering and exiting a particular stock, which is very crucial for the overall performance of a portfolio. Moreover, mutual fund investment also rids the investor of maintaining records, eliminates hassles with the broker for payment, delivery and other arduous back office tasks. Savings on transaction costs: As purchases and sales are done in bigger quantities, the funds also get the advantages of lesser brokerage and other reduced transaction costs. Tax Advantages: In India these funds become even more attractive because of the tax advantages, like indexation benefits , long term capital gains tax , tax free dividends and much more.
SHORTCOMINGS OF MUTUAL FUNDS
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While the benefits of investing through mutual funds far out weigh the disadvantages, an investor and his advice will do be aware of a few shortcomings of using the mutual funds as investment vehicles. 1) No Control Over Costs 2) No Tailor-made Portfolio 3) Managing a portfolio of funds.
TYPES OF MUTUAL FUNDS

Mutual funds can be classified based on their objectives and their structure:I-On the basis of Objective Growth Funds: The aim of growth funds is to provide capital appreciation over the medium to long- term. Such schemes normally invest a majority of their corpus in equities. It has been proven that returns from stocks, have outperformed most other kind of investments held over the long term. Growth schemes are ideal for investors having a long-term outlook seeking growth over a period of time. Income Funds: The aim of income funds is to provide regular and steady income to investors. Such schemes generally invest in fixed income securities such as bonds, corporate debentures and Government securities. Income funds are ideal for capital stability and regular income.
Balanced Funds:
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The aim of balanced funds is to provide both growth and regular income. Such schemes periodically distribute a part of their earning and invest both in equities and fixed income securities in the proportion indicated in their offer documents. In a rising stock market , the NAV of these schemes may not normally keep pace, or fall equally when the market falls. These are ideal for investors looking for a combination of income and moderate growth. Money Market Funds: The aim of money market funds is to provide easy liquidity, preservation of capital and moderate income. These schemes generally invest in safer short- term instruments such as treasury bills, certificates of deposit, commercial paper etc. Returns on these schemes may fluctuate depending upon the interest rates prevailing in the market . These are ideal for corporate and individual investors as a means to park their surplus funds for short periods. Load Funds: A load Fund is one that charges a commission for entry or exit. That is , each time you buy or sell units in the fund , a commission is payable. Typically entry and exit loads range from 1% to 2%. No load Funds: A No- load Fund is one that does not charge a commission for entry or exit. That is , no commission is payable on purchase or sale of units in the fund .
II- On the basis of Structure63

Open-ended Funds: An open- end fund is one that is available for subscription all through the year. These do not have a fixed maturity . Investors can conveniently buy and sell units at Net Asset Value (NAV) related prices. The key feature of open-end schemes is liquidity. Close ended Funds: A close- end fund has a stipulated maturity period which generally ranges from 3- 15 years. The fund is open for subscription only during a specified period. Investors can invest in the scheme at the time of the initial public issue and thereafter they can buy or sell the units of the scheme on the stock exchanges where they are listed . In order to provide an exit route to the investors, some close- ended funds give an option of selling back the units to the mutual Fund through periodic repurchase at NAV related prices. Interval Funds: Interval funds combine the features of open-ended and close- ended schemes . They are open for sale or redemption during pre-determined intervals at NAV related prices.
INSURANCE
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In India, the concept of insurance was never given a serious thought, as compared to other countries. People still are under insured. The reason being lack of awareness and opportunities combined with poor state of services provided. Insurance is a method of spreading and transfer of risk. Here losses of unfortunate few are shared by and spread over to many exposed to the same risk. Assets created by the owner in expectations of future needs / benefits have a value. Loss of the asset for any reason deprives the owner of the expected benefit. Insurance in this context is a mechanism that helps to reduce the adverse consequences due to loss of assets. Insurance is a contract between the insurer (the insurance company) and the insured (the person or the entity seeking the cover) where in against receipt of certain amount, called premium, the insurer agrees to make good any financial loss that may be suffered by the insured, due to the operation of an insured peril on the subject matter of insurance Functional definition of insurance has following features It is a co-operative device It spreads the risk over a large number of persons who are insured against the risk, It provides security to the insured
KINDS OF INSURANCE
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Impact of Merger of HDFC Bank and Centurion Bank Of Punjab Insurance can be mainly classified into two categories.
LIFE INSURANCE According to sec 2 (ii) of Insurance Act 1938 , Life insurance is the business of effecting contracts of insurance upon human life including any contract, whereby the payment of money is assured on death except death by accident on the happening of any contingency dependent on human life and any contract which is subject to the payment of premium for a term dependent on human life and any contract which is subject to the payment of premium for a term dependent on human life. At present the life insurance enjoys maximum scope because life is the most important property of the society or an individual. Each and every person requires insurance up to a specific level. The insurance is not only the protection but is an investment because a certain sum is returnable to the insured at the death or at the expiry of the period. It includes-
Term Life Insurance Under a term life contract, the insurance company pays a specific lump sum to the designated beneficiary in case of death of the insured. These policies are usually for 5,10,15,20 years etc. The premium payable on these policies is low as they do not carry any cash value. If one survives the period of policy, he or she do not get any money at the end of the policy. The premium on such policies keeps on increasing with age mainly because the risk of death of older people is more. Over the age of 60, these policies become difficult to afford.
Permanent Life Insurance
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Under permanent Life insurance, a portion of the money paid as premium is invested in a fund that earns interest on a tax- deferred basis. Thus, over a period of time, this policy will accumulate certain cash value which you will be able to get back either during the period of the policy or at the end of the policy . This type of policy not only provides protection for your dependents by paying a death benefit to your designated beneficiary upon your death, but it also allows you to use some part of the money while you are alive or at the end of the policy. Some examples are whole life, universal Life etc. ENDOWMENT POLICIES These policies provide for payment of premiums and a lump sum amount either in the event of death of the insured or on the date of expiry of the policy, which ever occurs earlier. MONEY BACK POLICIES These policies provide for periodic payments of partial survival benefits during the term of the policy itself. A unique feature of these policies is that in the event of the death of the insured during the policy term, the designated beneficiary will get the full sum assured without deducting any survival benefits amount, which have already been paid as money-back components. PENSION POLICIES These policies require the insured to pay the premium as a single lump sum or through installments paid over a certain number of years. The insured in return will receive back a specific sum periodically from a specified date onwards ( the returns can be monthly, half- yearly , or annually) , either for life or for a fixed number of years . In case of the death of insured , or after the fixed annuity period expires for annuity payments, the invested
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annuity fund is refunded, usually with some additional amounts as per the terms of policy. Some of the major private players in the sector are: In Life insurance Sector:

Bajaj Allianz Life Insurance Corporation Birla Sun Life Insurance Co. Ltd. (BSLI) HDFC Standard Life Insurance Co. Ltd. (HDFC STD LIFE) ICICI Prudential Life Insurance Co. Ltd. (ICICI PRU) ING Vysya Life Insurance Co. Pvt. Ltd. (ING VYSYA) Max New York Life Insurance Co. Ltd. (MNYL) MetLife India Insurance Co. Pvt. Ltd. (METLIFE) Kotak Mahindra Old Mutual Life Insurance Co. Ltd. SBI Life Insurance Co. Ltd. (SBI LIFE) TATA AIG Life Insurance Co. Ltd. (TATA AIG) Aviva Life Insurance Co. Pvt. Ltd. (AVIVA) Sahara India Life Insurance Co. Ltd. (SAHARA LIFE)
GENERAL INSURANCE
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General Insurance includes property insurance, liability insurance and other forms of insurance. Fire and marine insurance are strictly called property insurance. Motor, theft, fidelity and machine insurances include the extent of liability insurance is fidelity insurance, where by the insurer compensates the loss to the insured when he is under the liability of payment to the third party. The common type of general insurance are:1. Property Insurance: This policy is designed to cover the various risks under a single policy. It provides protection for property and interest of the insured and family. 2. Health Insurance: It provides cover, which takes care of medical expenses following hospitalization from sudden illness or accident. 3. Personal Accident Insurance: This insurance policy provides compensation for loss of life or injury caused by accident. This includes reimbursement of cost of treatment and the use of hospital facilities for the treatment. 4. Travel Insurance: This policy covers the insured against various eventualities while traveling abroad. It covers the insured against personal accident, medical expenses, passport etc.
5. Motor Insurance:
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Motor vehicles act states that every motor vehicle plying on the road has to be insured with at least liability only policy. There are two types of policies one covering the act of liability, while the other covers the insurers all liability and damage caused to ones vehicles. In General Insurance sector:

Bajaj Allianz General Insurance Co. Ltd. (BAJAJ ALLIANZ) ICICI Lombard General Insurance Co. Ltd. (ICICI LOMBARD) IFFCO Tokyo General Insurance Co. Ltd. (IFFCO TOKIO) Reliance General Insurance Co. Ltd. (RELIANCE) Royal Sundaram Alliance Insurance Co. Ltd. TATA AIG General Insurance Co. Ltd. (TATA AIG) HDFC Chubb General Insurance Co. Ltd. (HDFC CHUBB)
LOANS
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A loan is a type of debt. All material things can be lent; this article, however, focuses exclusively on monetary loans. Like all debt instruments, a loan entails the redistribu-tion of financial assets over time, between the lender and the borrower. The borrower initially receives an amount of money from the lender, which they pay back, usually but not always in regular installments, to the lender. This service is generally provided at a cost , referred to as interest on the debt. A borrower may be subject to certain restrictions known as loan covenants under the terms of the loan.Acting as a provider of loans is one of the principal tasks for financial institutions. For other institutions, issuing of debt contracts such as bonds is a typical source of funding. Bank loans and credit are one way to increase the money supply. Legally, a loan is a contractual promise of a debtor to repay a sum of money in ex-change for the promise of a creditor to give another sum of money.
Types of loans
Secured A secured loan is a loan in which the borrower pledges some asset (e.g. a car or property) as collateral for the loan. A mortgage loan is a very common type of debt instrument, used by many indivi-duals to purchase housing. In this arrangement, the money is used to purchase the property. The financial institution, however, is given security a lien on the title to the house until the mortgage is paid off in full. If the borrower defaults on the loan, the bank would have the legal right to repossess the house and sell it, to recover sums owing to it. In some instances, a loan taken out to purchase a new or used car may be secured by the car, in much the same way as a mortgage is secured by housing. The duration of the loan period is considerably shorter often corresponding to the useful life of the car. There are two types of auto loans, direct and indirect. A direct auto loan is where a bank gives the loan directly 71

a consumer. An indirect auto loan is where a car dealership acts as an intermediary between the bank or financial institution and the consumer. A type of loan especially used in limited partnership agreements is the recourse note. A stock hedge loan is a special type of securities lending whereby the stock of a borrower is hedged by the lender against loss, using options or other hedging strategies to reduce lender risk. Unsecured Unsecured loans are monetary loans that are not secured against the borrowers assets. These may be available from financial institutions under many different guises or marke-ting packages:

credit card debt personal loans bank overdrafts credit facilities or lines of credit corporate bonds The interest rates applicable to these different forms may vary depending on the lender and the borrower. These may or may not be regulated by law.
PRODUCTS OFFERED BY CBoP AND HDFC BANK BEFORE MERGER
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Mutual funds HDFC Mutual Fund has been one of the best performing mutual funds in the last few years. HDFC Asset Management Company Limited (AMC) functions as an Asset Management Company for the HDFC Mutual Fund. AMC is a joint venture between housing finance giant HDFC and British investment firm Standard Life Investments Limited. It conducts the operations of the Mutual Fund and manages assets of the schemes, including the schemes launched from time to time. HDFC mutual funds sells equity funds, balanced funds and debt funds.The different Kinds of mutual funds which comes under HDFC are HDFC arbitrage fund ,HDFC Balanced fund ,HDFC capital builder fund, HDFC cash management fund etc. CBoP dont have its on asset management company .It sells all the listed mutual funds Of all companies.
Insurance
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CBOP has banc assurance partnerships with Aviva for Life Insurance & with ICICI Lombard for Non-life insurance.
LIFE INSURANCE Aviva is one of the leading providers of life and pensions products to Europe and has substantial businesses elsewhere around the world. With a history dating back to 1696, Aviva has a 35 million-customer base worldwide. It has more than US$ 485.4 billion of assets under management. Aviva India is a 74:26 per cent joint venture between the Dabur group and Aviva Life Plc of the UK. LIFE LONG-
age of entry- 18-60 policy term- whole life minimum premium- 6000/- Rs Flexibility in cover levels Protects the value of investment Tax Benefits
SAFE GUARD Entry age- 18-50 yrs No medical check up Choice of three funds: SaveGuard offers three Unit Linked investment fund options of Secure Fund, Growth Fund and Balanced Fund.
Flexiblity of withdrawal: You can make partial withdrawals from your policy after ten policy years. The sum insured will be reduced by the amount of partial withdrawal.
Tax benefits 74
LIFE SAVER PLUS
Entry age- 0-60yrs Minimum premium- 15000Rs Minimum SA- 0.5*10*15000 Maximum SA- 1.5*10*15000 Flexibility is there
EASY LIFE PLUS Entry age- 18-50 yrs No partial withdrawals No medicals required Tax benefit
HDFC Bank sells its own insurance which is commonly known as HDFC standard life insurance .
Products Offered by HDFC Standard Life Insurance
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Endowment Plans
Endowment Assurance Plan Unit Linked Endowment Plan

Money Back Plan
Money Back Plan

Group Insurance Policy
Development Insurance Plan Group Term Insurance Gratuity Plan Leave Encashment Plan
Term Insurance Policy Loan Cover Term Assurance Term Assurance Plan
Pension Plan
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Impact of Merger of HDFC Bank and Centurion Bank Of Punjab Personal Pension Plan Unit Linked Pension Plan
Special Plan
Single Premium Whole Of Life Insurance Plan

Children's Plan
Children's Plan Unit Linked Young Star Plan
Loans
Lending of funds to constituents, mainly traders, business and industrial enterprises, constitutes the main business of the banking company. 77

The main portionof the banks funds is employed by way of loans and advances, which is most profitable employment of its funds. The major part of banks income is earned from interest and discount on the funds so lent.
It is one of the primary functions without which an institution cannot be called bank. The bank lends a certain per
CHAPTER 7
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INTERPRETATION AND ANALYSIS OF OBSEVED DATA

The project wont give any fruitful results unless and until we interpret the results, what we have observed and analyzed .
A companys riskiness may change when it is merging or taking over a new company or investing heavily in a very different line of business altogether. Now we will calculate what will be the risk and return of shareholders after the merger of CBoP and HDFC bank. Business and firm specific risk factors affecting a security can also be understand in terms of unsystematic and systematic risk of diversifiable and non diversifiable risk. The project will be focusing main on non diversifiable risk . Non diversifiable risk is that part of total risk (from various sources interest risk, inflation risk, financial risk etc) that is related to general economy or the stock market as a whole and hence cannot be eliminated .So merger of CBoP and HDFC bank is also referred to as market risk or systematic risk or non diversifiable risk. The project will analyze the impact of shares price(with the help of graphs and charts based on current data),risk and returns for shareholders. The project will primarily concern investor. with returns from investors
perspective. The main concern is to compute or estimate the return for an
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Impact of Merger of HDFC Bank and Centurion Bank Of Punjab THE ESTIMATION OF RETURN WILL BE DONE USING REGREESION METHOD WHERE WE WILL MEASURE HISTORICAL (EX-POST) RETURNS AND EXPECTED RETURN (EX-ANTE) OF A SECURITY.
The N . This annual can rate of return done merely depends upon merely two
observation namely share Price on period and then on the period be only using a regression procedure It is essential to study the ex-post returns because it will properly measure the return generated by an investment ,it will account both the price change and the cash flow derived from the asset during the period the asset was held . Ex-ante (expected return) is also required in our project to study because it gives overall assessment of the investors. The evaluation will be further be done on risk because investors as to make choices based on two consideration expected return and riskiness of return The total risk of a security is measured in terms of the variance and standard deviation of its returns as risk comprises of both systematic and unsystematic components. To evaluate risk it is necessary to measure the returns for shareholders first. The project will undergo complete procedure to check the returns. The main focus will be on riskiness of security as its vulnerability to market risk. The vulnerability is measured by the sensitivity of the return of the security vis a-vis the market return and its denoted by the letter beta . Higher the riskiness of a security, the higher the value of its beta. The beta of a portfolio is nothing but the weighted average of the beta of the securities that constitute the portfolio, the weights being the proportions of investments in the respective securities. Beta is the slope of the regression and is calculated as co- variance of ri and rm divided by the Variance of rm. The project has stressed on beta value because it referred to as the measure of a security systematic risk or market risk, since it indicates the manner in which a security return changes systematically with changes in markets return The beta value 80

has been consider by using ex-post returns the sensex index, bse-100 and HDFC bank spreadsheet. The security return is calculated : Returns = Today price Yesterdays Price / Yesterdayprice prices where returns have been calculated in standard
Market Returns = Todays Index Yesterdays index / yesterday index
The statistical method of estimating the kind of dependence of one variable on other is known as simple linear regression .Typically, the regression specification takes the following general form Y = a + bX +e Where Y = dependent variable X = independent variable e = error term
Accordingly, is estimated from the following regression specification : ri = + rm +e ri is the dependent variable representing the return on the security rm is the independent variable representing the return on the market portfolio e is the error term
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There are various things which have been considered for the estimation of beta: 1. Daily,weekly or monthly returns : The project has considered daily returns because it give us more number of returns and therefore improve the accuracy of the estimate. 2. Period of analysis : The project has used a longer period as it give us more data to determine beta correctly because beta value keeps on changing as it determines the riskiness of the company. 3.Price movements : Interpretation of risk will be in the context of the variability of security returns. THE ESTIMATION OF RISKINESS WILL BE MEASURED BY EVALUATING STANDARD DEVIATION AND VARIANCE OF RETURNS . Standard deviation will merely measure the extent of deviation of returns from the average value of return. The announcement date of merger was on 1st April .The project has interpreted the data from 1 st November to 31st March which is called clean period .After the event ,the project has taken the fifteen days of April which is also called window period ,it will help to determine the shareholder return and risk. On the day of announcement returns were negative. The returns were very less comparatively to other days .But as we proceeds further it shows a positive result. It seemed that the news of mergers doesnt attract the shareholders and the returns were also not effective. Before the event, the result was positive. Due to high fluctuations in return, we cant conclude that it gave positive or negative returns. The main limitations was that merger was not implemented because there was no approval from RBI
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and there was still movement in shares of Centurion Bank Of Punjab. The accumulate share price of both entities were not able to trace. The returns of shareholder were analyzed by gathering the data from SENSEX index and HDFC Bank.
SENSEX RETURNS HDFC RETURNS
= =
19977-19983/19783 *100 1638-1618/1638 *100
In similar way returns were finding of all the days. It is analyzed that there is fluctuations in market trend. Expected return was found with the help of regression line by using the equation . = -0.00767 = 0.78538 expected return = + ( xn) ( xn ) = actual returns = -0.00767 + 0.7854 (1.9674 ) = 1.57368
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In a similar way we will find the values by applying the same formula Initially the returns are in positive but within time it is in decreasing trend and then become negative. To analyze the returns the project has analyzed the actual returns by finding the abnormal returns Abnormal return or residuals are analyzed to find the difference between actual return and expected return Abnormal returns = actual returns expected returns
Abnormal returns = 5.275591 1.537568 = 3.738022 As we analyze the later data, returns at initial stage were quite attractive but it goes on decreasing. The result shows that merger has no significant impact on the returns as results were quite fluctuating. The next step is to find the riskiness of security .The project has implemented the standard deviation to determine the risk. t = actual return/ standard deviation of current period
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The project examines that it is going again in decreasing trend.
As we check the returns of HDFC Bank and Sensex are constant and decreasing.
after the merger, the
graph interperts there is no change in returns, Returns are most of the time
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The next step is to find the riskiness of security .The project has implemented the standard deviation to determine the risk. The project examines that it is going again in decreasing trend.
This above graph interperates the data of abnormal returns which shows that retrns were bit positive .within due course of time it is going negative and then sustain its positions . the results are very fluctuating. ANALYSISThe project interprets that merger has no significant impact on shareholders and riskiness of security. its an clear cut indication that that situation will remain same till CBoP shares will be list on sensex. Stock prices of HDFC Bank and CBoP Bank which have been languishing in the past , spurt in the wake of an imminent takeover , which can be prove hostile or friendly too. We conclude that share prices were expected to fall, since markets of prices were out of line with mergers. The analysis shows an indication that investors believe that the premium valuation attached to HDFC Bank may not be justifiable after a merger with weaker Bank.
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ANALYZATION ON EMPLOYEES
The next interpretation has been done on employees where project evaluates that what will be the changing conditions in the functioning of employees after the merger. Here we are talking about merger between HDFC and CBOP. Specially here data is given related with employee perception about what they think. is this positive or negative for them? This data depends upon employee to employee what is their perception about given factors. All these factors we can take as working environment. Here before taking this theory we are considering hypothesis to be null. Here we are thinking both sides equal as this is positive as well as this is negative. If hypothesis is accepted is means this positive for the employees or if hypothesis is rejected so it means this is negative for the employees.
ANOVA
This is a statistical technique specially designed to test whether the means of more than two quantitative populations are equal or not. Basically it consists of classifying and cross classifying statistical results and testing whether the means of a specified classification differ significantly. If in any situation more than two samples are given than on that place we have to use at that vary place.
Factors wise and employees wise analysis

(In percentage)
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working environmen t caree r level salar y work load redu. In branche s retentio n benefit s rankin g financia product s up's 1.0 employee 1 1.00 1.00 1.00 1.00 3.00 1.00 2.00 1.00 0 1.0 employee 2 3.00 1.00 3.00 3.00 2.00 1.00 1.00 1.00 0 1.0 employee 3 2.00 2.00 3.00 3.00 2.00 1.00 1.00 1.00 0 1.0 employee 4 3.00 1.00 3.00 1.00 1.00 1.00 1.00 3.00 0 1.0 employee 5 1.00 1.00 1.00 2.00 3.00 1.00 1.00 3.00 0 1.0 employee 6 1.00 3.00 1.00 2.00 3.00 1.00 1.00 1.00 0 1.0 employee 7 2.00 1.00 1.00 3.00 2.00 2.00 2.00 1.00 0 1.0 employee 8 2.00 1.00 1.00 2.00 1.00 1.00 1.00 1.00 0 1.0 employee 9 3.00 1.00 1.00 15.0 Total 18.00 12.00 0 18.00 19.00 10.00 11.00 13.00 1.00 2.00 1.00 1.00 1.00 0 9.0 0 125.00 12.00 11.00 15.00 14.00 14.00 15.00 16.00 16.00 12.00 total
Note:- the above data is classified according to criteria i. ii. Working environment Employees
In order to simplify calculations we code the data by subtracting data by 1.54 from each figure. The data in coded form is given below. Substracting value:The total of all the numbers Total no.
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= =
working environment employee 1 employee 2 employee 3 employee 4 employee 5 employee 6 employee 7 employee 8 employee 9 Total career level (0.54) 1.46 0.46 1.46 (0.54) (0.54) 0.46 0.46 1.46 4.14 salary (0.54) (0.54) 0.46 (0.54) (0.54) 1.46 (0.54) (0.54) (0.54) (1.86) work load (0.54) 1.46 1.46 1.46 (0.54) (0.54) (0.54) (0.54) (0.54) 1.14 redu.
125 81 1.54
In retention 1.46 0.46 0.46 (0.54) 1.46 1.46 0.46 (0.54) 0.46 5.14 benefits (0.54) (0.54) (0.54) (0.54) (0.54) (0.54) 0.46 (0.54) (0.54) (3.86) ranking 0.46 (0.54) (0.54) (0.54) (0.54) (0.54) 0.46 (0.54) (0.54) (2.86) financialproducts (0.54) (0.54) (0.54) 1.46 1.46 (0.54) (0.54) (0.54) (0.54) (0.86) up's (0.54) (0.54) (0.54) (0.54) (0.54) (0.54) (0.54) (0.54) (0.54) (4.86) total (1.86) 2.14 2.14 1.14 0.14 0.14 1.14 (2.86) (1.86) 0.26
branches (0.54) 1.46 1.46 (0.54) 0.46 0.46 1.46 0.46 (0.54) 4.14
Correction of factor
T2 N
(0.26)2 81 (Here N is total no. of items.)
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Sum of squares between working environment This will be obtained by squaring up the working environments totals, dividing each total by the no of items included in it, adding these figures and subtracting the correction factor from them.
Thus, sum of squares between years:(4.86)2+(4.14)2+(1.86)2+(1.14)2+(4.14)2+(5.14)2+(3.86)2+(2.86)2+(.86)2 - T2 8 8 8 8 8 8 8 8 8 N
(4.86)2+(4.14)2+(1.86)2+(1.14)2+(4.14)2+(5.14)2+(3.86)2+(2.86)2+(.86)2 - 0 8 8 8 8 8 8 8 8 8
14.11
And
V = = = (C-1) (9-1) 8
Sum of squares between employees
90

This will be obtained by dividing the squares of the schemes totals by the no. of items that make up total, adding all such figures and subtracting there from the correction factor. Thus, sum of squares between sea:(1.86)2+(2.14)2+(2.14)2+(1.14)2+(.14)2+(.14)2+(1.14)2+(2.86)2+(1.86)2-
T2 8 8 8 8 8 8 8 8 8 N
(1.86)2+(2.14)2+(2.14)2+(1.14)2+(.14)2+(.14)2+(1.14)2+(2.86)2+(1.86)2-
0 8 = 8 8 3.36 8 8 8 8 8 8
And
V = = = Total sum of squares This will be obtained by adding the squares of all the items in the table and subtracting the correction factor there from. Thus:= (0.54)2+ (0.54)2+ (0.54)2+ (0.54)2+ (1.46)2+ (0.54)2+ (0.46)2+ (0.54)2+ (0.54)2+ (1.46)2+ (0.54)2+ (1.46)2+ (1.46)2+ (0.46)2+ (0.54)2+ (0.54)2+ (0.54)2+ (0.54)2+ (0.46)2+ (0.46)2+ (1.46)2+ (1.46)2+ (0.46)2+ (0.54)2+ (0.54)2+ (0.54)2+ (0.54)2+ (1.46)2+ (0.54)2+ 91 (R-1) (9-1) 8

(1.46)2+ (0.54)2+ (0.54)2+ (0.54)2+ (0.54)2+ (1.46)2+ (0.54)2+ (0.54)2+ (0.54)2+ (0.54)2+ (0.46)2+ (1.46)2+ (0.54)2+ (0.54)2+ (1.46)2+ (0.54)2+ (0.54)2+ (1.46)2+ (0.54)2+ (0.46)2+ (1.46)2+ (0.54))2+ (0.54))2+ (0.54))2+ (0.54))2+ (0.46)2+ (0.54)2+ (0.54)2+ (1.46)2+ (0.46)2+ (0.46)2+ (0.46)2+ (0.54)2+ (0.54)2+ (0.46)2+ (0.54)2+ (0.54)2+ (0.46)2+ (0.54)2+ (0.54)2+ (0.54)2+ (0.54)2+ (0.54)2+(1.46)2+ (0.54)2+ (0.54)2+ (0.54)2+ (0.46)2+ (0.54)2+ (0.54)2+ (0.54)2+ (0.54)2- T2 N
= ( 0.54)2+ (0.54)2+ (0.54)2+ (0.54)2+ (1.46)2+ (0.54)2+ (0.46)2+ (0.54)2+ (0.54)2+ (1.46)2+ (0.54)2+ (1.46)2+ (1.46)2+ (0.46)2+ (0.54)2+ (0.54)2+ (0.54)2+ (0.54)2+ (0.46)2+ (0.46)2+ (1.46)2+ (1.46)2+ (0.46)2+ (0.54)2+ (0.54)2+ (0.54)2+ (0.54)2+ (1.46)2+ (0.54)2+ (1.46)2+ (0.54)2+ (0.54)2+ (0.54)2+ (0.54)2+ (1.46)2+ (0.54)2+ (0.54)2+ (0.54)2+ (0.54)2+ (0.46)2+ (1.46)2+ (0.54)2+ (0.54)2+ (1.46)2+ (0.54)2+ (0.54)2+ (1.46)2+ (0.54)2+ (0.46)2+ (1.46)2+ (0.54))2+ (0.54))2+ (0.54))2+ (0.54))2+ (0.46)2+ (0.54)2+ (0.54)2+ (1.46)2+ (0.46)2+ (0.46)2+ (0.46)2+ (0.54)2+ (0.54)2+ (0.46)2+ (0.54)2+ (0.54)2+ (0.46)2+ (0.54)2+ (0.54)2+ (0.54)2+ (0.54)2+ (0.54)2+(1.46)2+ (0.54)2+ (0.54)2+ (0.54)2+ (0.46)2+ (0.54)2+ (0.54)2+ (0.54)2+ (0.54)2- 0 = 50.10 The above information will be presented in the following table of analysis of variance:-
Sources of Sum of square variation Between factors Between employees Residual error Total 14.11 3.36 32.63 50.10
Degree freedom 8 8 64 80
of Mean square 1.76 .42 .51
92

Let us take the hypothesis that there is no difference between the employees wise perception and factors wise perception or in other words, the three independent estimates of variance are the estimates of variance of a common population. Now first compare the factors variance estimate with the residual variance estimates:
Thus
F = 1.76 .51 = 3.46
Conclusion:The table value of F for V1= 8 and V2= 64 at 5% level of significance is 2.63. And the tabulated value is less than the calculated value and we conclude that the factors are not making them happy. If we talk only about merger so we will find that employees are not happy with this. According to 93

them this is not a good step for them they are losing their rights. Because factors are not clear to them they are not getting that much dilemma to face this situation. Now let us compare the schemes variance estimates with the residual variance estimates. Thus: F = .51 .42 = Conclusion:The critical value of F for V1= 64 and V2= 8 at 5% level of significance is 3.00. And the calculated value is less than this and hence there is no significant difference in the perception as far as factors are concerned. Thus the test shows that the employees and factors are alike so far as the perception is concerned. According this test they are very clear they are getting a good opportunity for their future. As we did this year employees and factors wise by checking this we get data related with their perception is not significant as compare to the other factors. There perception is not significant about other factors. Some employees are happy about this one and factors are not supporting them. So as the conclusion we can say they are confused because they know that they are getting a good opportunity for their future but if they also consider their factors relating with their job they are feeling that they can lose their current position. 1.21
ANALYZATION ON CUSTOMERS AFTER THE MERGER

The research process was designed to determine the
investment behavior of people after the date on event of merger. So
94

Descriptive research design was used in the study. Both Primary data and secondary data has been used for the purpose of data collection. Primary data has been a collected self by conducting PI of the respondents and administering designed, unbiased, undisguised structured
questionnaire. Deciding where to survey requires that the whole universe of the market from which data is sought to be defined so that appropriate sample can be selected. Sample profile signifies the type of respondents chosen. Since, the present study was related to difference in the perception and preference towards various investment schemes with merger So the sample taken here was all types of investors i.e different age-groups, different profession, gender etc. so that the data could be made conclusive and can be presented for whole of the population and accuracy of the results can be obtained. The size of the sample depends upon the size of the budget and the degree of the confidence that the markets want to place in the findings. It is difficult for the organization to have stability in market after the merger, they have to take crucial steps for retention of customers .the project will check the customers has positive or negative views on investment after the merger. A sample design not only seeks to determine the size of the sample Taken but also sampling unit . For study all the individuals in the project is considered to be universe. But population under the study was individuals who have invested their surplus money in some or the other venture. Sample Size is 60.
INCOME
95

Income No. of respondents Less than 1 lakh 1-3 lakh 3-5 lakh >5 lakh Total 2 25 15 18 60 3 42 25 30 100 %
96
In co m e Level P er ann u m
45 40 35 30 25 20 15 10 5 0 Les s than 1-3 lak h 1 lak h 3-5 lak h > 5 lak h
% and No.of respondents
No. of res pondents %
Incom e
AGE
AGE Less than 30 30-45 45-60 60-75
NO. OF RESPONDENTS 11 17 24 8
%AGE 18.33 28.33 40 13.33
97
respondent chart
60-75, 8, 13%
less than 30, 11, 18% less than 30 30-45 45-60 30-45, 17, 28% 60-75
45-60, 24, 41%
PORTFOLIO OF INVESTMENT
INVESTMENT BEHAVIOUR investment pattern MF PO Insurance bank deposit real estate Shares any other no. of respondents 20 9 26 49 15 17 9 %age 33.33% 15% 43.33% 81.60% 25% 28.33% 15%
98
investment portfolio
90.00% 80.00% 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00%
PO in su ra nc e ba nk de po sit re al es ta te F sh ar es ot he r M
%age
investment avenues
PURPOSE OF INVESTMENT
PURPOSE OF INVESTMENT Risk cover Tax Benefits Retirement Benefits Wealth Creation/ Growth NO. OF RESPONDENTS 36 17 9 30 PERCENTAGE 60% 28.33% 15% 50%
an y
99
Purpose of investment pattern

0.7 0.6 0.5 0.4 0.3 0.2 0.1 0
Co ve r Be ne fit s re at io n en ef it s
en tB
Ri s
Ta x
Purpose of investment
TYPE OF INVESTMENT
TYPE OF INVESTMENT short term Long term Both
Re tir e
NO. OF RESPONDENTS 15 14 31
W ea lth
%AGE 25% 23.33% 51.67%
100
type of investment prefered

no. of respondents 35 no. of respondents 30 25 20 15 10 5 0 short term long term both type of investment 25% 23.33% 51.67% 15 14 %age 31
PREFERNCE OF INVESTMENT
INVESTMENT MF Bonds Bank deposits PO Shares real estate
RANK 2 5 1 6 4 3
%AGES 15.87% 12.22% 22.64% 11.98% 13.78% 14.73%
101

Others 7 9.10%
others, 9.10% real estate, 14.73% shares, 13.78% PO, 11.98%
MF MF, 15.87% bonds, 12.22% bank deposits, 22.64% bonds bank deposits PO shares real estate others
The graphs and tales give an overview of the observation of study.

It shows the percentage and No. of respondents with different levels of income. Maximum no. of respondents i.e. 42% have their income lying in 102

category 1-3 lakhs per annum. The respondents were asked about their preference regarding investment patterns after the news of merger. The study reveals that out of the total no. of respondents about 81 % prefer to invest their money in Bank deposits and second preference is given to insurance & mutual funds. , 60% of respondents rate security of funds /risk cover as most important factor affecting their investment decision. While 50 % have preferred wealth creation and capital appreciation over other factors. The study reveals that out of total respondents 25% of the respondents are attracted towards short term investment and 23% for long term &51% consider both while investing their money. The project covers the investment avenues available and preferred by people. Ranks are given as 1 to most preferred investment avenue among the various investment avenues available. Bank Deposits is most preferred investment avenue as maximum no of respondents have ranked it as 1 i.e. 22.64% respondents
CORRELATION BETWEEN SAVINGS & INVESTMENT OF CUSTOMERS AFTER THE MERGER
0-
10-
20-
30-
fdy
fd
Fdxdy
103
10
m.p 5
20
15 0
30
25 1
40
35 2
y2
Y
0-25 2550 5075 75100 F Fdx Fdx2 Fdxd y
m.p x dy 12.5 -2
d -1
16 3
2 10
24 3
0 1
42 17
-84 -17
16 8 17
-16 -2
37.5
-1
62.5
0 0
0 0
0 0
1 0
1 0
0 0
0 0
0 0
87.5
19 -19 19 35
12 0 0 0
27 27 27 -51
2 4 8 -2
N=60
-101 18 5
-18
12 16 -18
r=
Nfdxdy-fdxdy
104
Nfdx2-(fdx)2Nfdy2-(fdy)2
60(-18) 12(-101) 60(16)-144 60(185)-10201
-1080+1212 816 899
132/856.32
r=
0.154
There is positive correlation between savings & investments. it shows that it does not affect customers savings and investment with the merger as it shows positive relation between savings and investments.
105
ANALYZATION OF MARKETING STRATEGIES AFTER THE MERGER Products offered by HDFC bank after the merger
The working of HDFC bank will be completely changed with the marketing strategies .The merger is are between two banks and both the banks excellent and outperforming in their field. The proposed merger of Centurion Bank of Punjab with HDFC Bank will be a big blow to Aviva Life Insurance, as the distribution deal between the two will now be scrapped. Besides this, the merger of CBoP with HDFC Bank Will be a big low to their banc assurance partners. (bancassurance is the sale of life pension and Investment products through the branch network of a bank ). This merger will adversely impact the business of Aviva Life insurance co. Centurion Bank is the bancassurance partner for these two insurers , while HDFC Bank sells insurance for group company HDFC standard life .Post merger distribution deal between Aviva Life Insurance and ICICI Lombard will be scrapped because as per the existing law of the Insurance Regulatory and Development authority IRDA, a bank cant sell products for more than one insurance company .the management of both the entities has to check when Centurion Bank of Punjabs contracts with their insurance partners expire. The bank currently has a tie-up with Aviva for life insurance and ICICI Lombard for general insurance. Industry sources said the bancassurance tie-up between Aviva and CBoP had a three-year lock-in and was due to come up for renewal in September this year. However, both were expected to renew the tie-up given the level of revenues it has generated. Also, insurance commission has contributed substantially to CBoPs profits. Although officials did not divulge the commissions earned from Aviva, they
106

indicated that it was high double digits Moreover , the merger may
lead to a clash with HDFC Ltd. which provides home loans to customers and has a large customer base in this segment . CBoP also has a strong presence in home loans .Now the merged entity may not sell home loans as this may lead to conflict of interests with HDFC Ltd. But given the phenomenal progress HDFC Bank has made in recent times through its technology-driven and customer centric business model, intertwined with smart and dedicated workforce and able to tackle the post merger challenges and optimize the synergies.
107
CONCLUSIONS
The project has gathered ample amount of data to study on Mergers and Acquisitions The data is well utilized for its analyzation and interpretations. The project evaluates that big merger in banking sector will be a win win deal. The merged entity will give a strong Competition to other banks. The merged entity will discover a vast network all over the India and will step ahead to capture the foreign market. The entity will be the largest private sector bank, will gain the maximum market share before the sector opens up for the foreign players. The merged entity will give positive results because total asset size will increase. The larger entity will now have greater eligibility for bigger deals in market. The way the market is heading it would appear that larger players have advantage over the parameters like operation, marketing, working environment etc. Studying the four ingredients was the most important. We conclude that share prices were expected to fall, since market prices were out of line with merger ratio. Both the ratio cannot be unfavorable for both banks and the fact that HDFC Bank , scrip too has come under a pressure is an indication that the investors believe that the premium valuation attached to HDFC Bank may not be justifiable after a merger as share price show negative or no significant movement. The most pertinent thing in this merger is that there will be no management integration issues as this will be a fair, professional and clean merger. Moreover, there will be no downsizing of staffs and the merged entity would be large enough to accommodate everyone.
108
There is lot of behind the scene activity that goes with merged entity .Every strategic move that is made can have far reaching impact for the players involves. The working environment will b well Diversified and healthy culture will be provided. The strategy of marketing the products will be entirely changed. The conclusion is All said and done at the final beneficiaries are the person who are involved in merger can make good amount of money if opportunity is encashed at right time.
109
LIMITATIONS OF STUDY
Time and Cost The time and cost play an important role where one goes for a particular study. Both of these factors become constraints especially when a study is conducted at academic level. Sample size Due to time and cost constraints the large sample was not taken. Since the study conducted was with a small sample hence the exact picture cannot be revealed and the findings cannot be generalized. Choice of populationThe population selected was limited to the places in Panchkula and Chandigarh. Hence results would have altered if some other population had been selected. Inherent Discrepancies in the QuestionnaireThe questionnaire might be having some undetectable errors and limitations , which could shape the responses into a particular fashion . No pre-test was done before the circulation of the questionnaire. Bias in ResponseThe data is entirely based on responses given by respondents which may be biased one due to their personal bias in replying the questions. They may not be very serious or interested in replying the questions and make it very lightly, due to which data may not be very accurate. Not implemented The decision to take this project was in February considering the merger will be happened within time , but due to delay with RBI approval merger is not actually implemented .so project was analyzed mainly on complete observation and studying the changes within the organization .
110
References
www.businessworld.com www.bseindia.com www.centurioncbop.com case studies on mergers and acquisitions by P.S Sharma Cultural integration in Mergers and Acquisitions Indian financial market by T R Venkatesh www.google.com www.hdfc.co.in Mergers and acquisitions by Julie issac Mergers and Acquisitions by Amit Singh Sisodia Mergers and acquisitions (ICFAI ) www.moneycontrol.com www.newseum.com Research methodology by C.R.Kothari Security analysis (ICFAI )
111
APPENDICES
QUESTIONAIRE
Personal Details Employee name: Designation: Branch:
Question 1) what do you think about the merger of CBOP and HDFC Bank as a whole? Positive Negative Question 2) Now you are going to employee of HDFC bank so will it have any changes in your carrier level and Designation? Yes No Cant Say Question 3) Is there any chance to change in your salary package? Yes No Cant Say 112

Question 4) Dont you think that after the merger there will be more work load and increase in your targets? Yes No Cant Say Question 5) As now you are employee of CBOP, how much scale in ranking will you give to HDFC bank? Rank ICICI Bank CBOP HDFC Bank SBI Axis Bank 1 2 3 4 5
Question 6) Are you planning to continue with this job or to shift? Yes No Cant Say
Question 7) According to you, what benefit will give to you after the employee of HDFC Bank? Brand Name Quality Products 113

Value Added Services Other
Questions 8) If we talk about the range of financial products of HDFC Bank then will it give any benefits to you? Yes No Cant Say Question 9) As CBOP is having tie ups with AVIVA Life Insaurance, ICICI Lombard, etc. but HDFC Bank is having its own products so how do you feels that whether will AVIVA and ICICI products be remained tie ups or not? Yes No Cant Say
Question 10) After the merger, there will be excessive branches of HDFC banks in one city so will there any reduction in branches and employees? Yes No Cant Say
114
QUESTIONAIRE
Ques : What kind of profession are you in?
Service Business Retired Others
Govt.
Priv
Your income per annum lies in
Less than 1lac 1lac 3 lac 3lac 5 lac More than 5lac
Que: What percentage of your total income do you save?
Not at all Less than 10 % 10% - 20 %
115

20 % - 30 % 30 % & more
Que
How much percentage of your total savings do you invest? Not at all Less than 25% 25 % - 50 % 50 % - 70% Above 70%
Que
What type of investment attracts you?
Long term
Sh short term
Que
What is your purpose of investment?
Secure future Tax benefits Retirement benefits Wealth creation & Growt
116

Que : What will your portfolio for investment after the merger ?
Savings Bank account FDs Shares and bonds Mutual funds Property Insurance Que : Please rank each of the following investment avenues in decreasing order will invest with the news of merger
the way u
Mutual Funds Bank Bonds Post Office Stocks Real Estate
117
Personal Details:
Name
Age
Gender
Address
Contact No
No of Dependents you have:
118
119

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Impact of Merger of HDFC Bank and Centurion Bank Of Punjab

Impact of Merger of HDFC Bank and Centurion Bank Of Punjab

Impact of Merger of HDFC Bank and Centurion Bank Of Punjab

Impact of Merger of HDFC Bank and Centurion Bank Of Punjab

Impact of Merger of HDFC Bank and Centurion Bank Of Punjab

Impact of Merger of HDFC Bank and Centurion Bank Of Punjab

Impact of Merger of HDFC Bank and Centurion Bank Of Punjab

Impact of Merger of HDFC Bank and Centurion Bank Of Punjab

Impact of Merger of HDFC Bank and Centurion Bank Of Punjab

of the banking Industry

Impact of Merger of HDFC Bank and Centurion Bank Of Punjab

Financial System. With total branches 614 and 2200

Impact of Merger of HDFC Bank and Centurion Bank Of Punjab

Todd Creasy (2002)

Impact of Merger of HDFC Bank and Centurion Bank Of Punjab

Impact of Merger of HDFC Bank and Centurion Bank Of Punjab

(1) Research design : observational technique, regression , annova,

(2) Methods of data collection: In order to study the detailed framework of

Impact of Merger of HDFC Bank and Centurion Bank Of Punjab

Impact of Merger of HDFC Bank and Centurion Bank Of Punjab

INDIAN BANKING SYSTEM

Impact of Merger of HDFC Bank and Centurion Bank Of Punjab

Impact of Merger of HDFC Bank and Centurion Bank Of Punjab

Impact of Merger of HDFC Bank and Centurion Bank Of Punjab

Impact of Merger of HDFC Bank and Centurion Bank Of Punjab

Impact of Merger of HDFC Bank and Centurion Bank Of Punjab

Impact of Merger of HDFC Bank and Centurion Bank Of Punjab

CENTURION BANK OF PUNJAB:21

Impact of Merger of HDFC Bank and Centurion Bank Of Punjab

:20th Century Finance Corporation Limited, has been

Impact of Merger of HDFC Bank and Centurion Bank Of Punjab

FUNCTIONS OF CENTUION BANK OF PUNJAB

ABOUT HDFC BANK:-

Impact of Merger of HDFC Bank and Centurion Bank Of Punjab

CORPORATION (HDFC BANK)

Accounting standard 14 covers mergers and acquisitions 24

The five most common ways to evaluate a business are

Impact of Merger of HDFC Bank and Centurion Bank Of Punjab

Impact of Merger of HDFC Bank and Centurion Bank Of Punjab

picture and the target comes alone. A

downward trend in the interest rates.

bonds. Alternatively, the acquirers stock may be

MOTIVES BEHIND MERGERS

Impact of Merger of HDFC Bank and Centurion Bank Of Punjab

These motives are considered to add shareholder value:

refers to the fact that the combined company can often

Increased revenue/Increased Market Share:

This motive assumes that

Cross selling : For example, sell its banking products to

a bank buying a the stock

stock broker could then , while the

Economies of Scale: increased Opportunity buying discounts.

company. Term smoothens the

MERGERS MARKET PLACE DIFFICULTIES

Impact of Merger of HDFC Bank and Centurion Bank Of Punjab

telephone communications . Many phone calls fail to contact with the 29

Impact of Merger of HDFC Bank and Centurion Bank Of Punjab

Impact of Merger of HDFC Bank and Centurion Bank Of Punjab

Impact of Merger of HDFC Bank and Centurion Bank Of Punjab

business models ICICI & IDBI .However

in this case ,at the time of the

FINEPRINTS OF THE DEAL