SUMMER INTERNSHIP PROJECT

ON

“DIGITALIZATION IMPROVED THE BANKING SERVICES

WITH SPECIAL REFERENCE TO HDFC BANK”

Towards partial fulfilment of MASTER OF

BUSINESS ADMINISTRATION (MBA)
Jai Narain Vyas University, Jodhpur

SUBMITTED BY
DIKSHA PARHIHAR
CERTIFICATE FROM THE ORGANISATION
 ACKNOWLEDGEMENT

No project report ever reflects the efforts of a single individual. The

report owes its existence to the constant support and guidance of a
number of people. I am grateful to all of them.

I owe a never-ending debt of post gratitude to Mr. Amit Bhandhari and

Mr. Saurabh Mathur for their expert guidance and support.

I would like to thank all the respondents for giving their valuable time and
providing useful information.

I am also grateful to all those who have either directly or indirectly

contributed towards the completion of the project, for their support and
encouragement.

Diksha Parihar
 DECLARATION

I do hereby declare that the Summer Internship Project Report titled "Digital Products
and Initiatives in HDFC Bank Limited" submitted by me towards the partial fulfilment
of the requirement of Integrated Master of Business Administration, exclusively
prepared and conceptualized by me and is not submitted to any other Institution or
University or published anywhere before for the reward of any
Degree/Diploma/Certificate. It is the Original work of mine and has not been obtained
from any other part.

Diksha Parihar
MBA (2nd SEM)
 PREFACE
As a part of our course curriculum I had to go through a Summer Internship Project
Report on any topic to get the right exposure to the practical aspects of business
management.

I want to express my gratitude for the experience and practical knowledge that I
earned during the Summer Internship. In this project report I had presented my great
experience in the form of words. In making the project report theoretical knowledge
was needed more than the practical which was given to us by my professors in my
institute.

The project flows logically consisting of a questionnaire. I hope that the findings and
the suggestions will help the company, confidently to formulate its strategy in
comparison to its competitors. I have enjoyed my report preparation and have learnt
lots of new things. I have tried my level best to make this report a reader friendly &
also did my level best to fulfil the objective of the study.
 INTRODUCTION OF BANKING INDUSTRY
MEANING AND DFFINITION:-
Bank is an institution that deals in money and its substitutes and provides crucial
financial services. The principal type of baking in the modern industrial world is
commercial banking & central banking.

Banking Means "Accepting Deposits for the purpose of lending or Investment of

deposits of money from the public, repayable on demand or otherwise and withdraw
by cheque, draft or otherwise."

-Banking Companies (Regulation) Act.1949

The concise oxford dictionary has defined a bank as "Establishment for custody of
money which it plays out on customers order." In fact this is the function which the
bank preformed when banking originated.

"Banking in the most general sense, is meant the business of receiving, conserving
& utilizing the funds of community or of any special section of it.”

-By H.Wills & J. Bogan

"A banker of bank is a person, a firm, or a company having a place of business

where credits are opened by deposits or collection of money or currency or where
money is advanced and waned.

By Findlay Sheras

Thus

A Bank:
• Accept deposits of money from public.
• Pays interest on money deposited with it.
 Lends or invests money.
 Repays the amount on demand.
 Allow the money deposited to be withdrawn by cheque or draft.

ORIGIN OF WORD BANK-

The origin of the word bank is shrouded in mystery. According to one view point the
Italian business house carrying on crude from of banking were called banchi
bancheri" According to another viewpoint banking is derived from German word
"Branck" which mean heap or mound. In England, the issue of paper money by the
government was referred to as a raising a bank.
ORIGIN OF BANKING-
Its origin in the simplest form can be traced to the origin of authentic history. After
recognizing the benefit of money as a medium of exchange, the importance of
banking was developed as it provides the safer place to store the money. This safe
place ultimately evolved in to financial institutions that accepts deposits and make
loans i.e., modem commercial banks.

INDIAN RANKING INDUSTRY

RANKING INDUSTRY AT GLANCE

Banking is nearly as old as civilization. The history of banking could be said to have
started with the appearance of money. The first record of minted metal coins was in
Mesopotamia in about 2500B.C. the first European banknotes, which was
handwritten appeared in1661, in Sweden. Cheque and printed paper money
appeared in the 1700's and I 800's, with many banks created to deal with increasing
trade.

The history of banking in each country runs in lines with the development of trade
and industry, and with the level of political confidence and stability. The ancient
Romans developed an advanced banking system to serve their vast trade network,
which extended throughout Europe, Asia and Africa.

Modem banking began in Venice. The word bank comes from the Italian word “ban
co”, meaning bench, because moneylenders worked on benches in market places.
The bank of Venice was established in 1171 to help the government raise finance for
a war.

At the same time, in England merchant started to ask goldsmiths to hold gold and
silver in their safes in return for a fee. Receipts given to the Merchant were
sometimes used to buy or sell, with the metal itself staying under lock and key. The
goldsmith realized that they could lend out some of the gold and silver that they bad
and charge interest, as not all of the merchants would ask for the gold and silver
back at the same time. Eventually, instead of charging the merchants, the goldsmiths
paid them to deposit their gold and silver.

The bank of England was formed in 1694 to borrow money from the public for the
government to finance the war of Augsburg against France. By 1709, goldsmith were
using bank of England noes of their own receipts.
New technology transformed the banking industry in the 1900's round the world,
banks merged into larger and fewer groups and expanded into other country.

HISTORY OF INDIAN BANKING INDUSTRY

Banking in India has a long and elaborate history of more than 200 years. The
beginning of this industry can be traced back to 1786. When the country's first bank.
Bank of Bengal, was established. But the industry changed rapidly and drastically,
after the nationalization of banks in 1969.

Indian Banking sector is dominated by Public sector banks (PSBs) which accounted
for 72.6% of total advances for all SCBs as on 31st March 2008. PSBs have rapidly
expanded their foot prints after nationalisation of banks in India in 1969 and further in
1980. Although there is a restrictive entry/expansion for private and foreign banks in
India, these banks have increased their presence and business over last 5 years.

Peculiar characteristic of Indian banks unlike their western counterparts such as high
share of household savings in deposits (57.4% of total deposits). Adequate
capitalization, stricter regulations and lower leverage makes them less prone to
financial crisis, as was seen in the western world in mid FY09.

The Scheduled Commercial Banks (SCBs) in India have shown an impressive

growth from FY04 to the mid of FY09. Total deposits, advances and net profit grew
at CAGR of 19.6%. 27.4% and 20.2% respectively from FY03 to FY08. Banking
sector recorded credit growth of 33.3% in FY05 which was highest in last 2 and half
decades and credit growth in excess of 30% for three consecutive years from FY04
to FY07, which is best in the banking industry so far. Increase in economic activity
and robust primary and secondary markets during this period have helped the banks
to garner larger increase in their fee based incomes.

A significant improvement in recovering the NPAs. lowest ever increase in new

NPAs combined with a sharp incense in grass advances for SCRs translated into the
best asset quality ratio for banking sector in last two decades. Gross NPAs to gross
advances ratio for SCRs decreased from the high of 14% in FY2000 to 2.3% in
FYOR.

With in the group of banks, foreign and private sector banks grew at higher rate than
the industry from FY03 to FYOR primarily because of lower base effect and rapid
expansion undertaken by these banks- In FY09, overall growth in credit and deposits
was led by PSBs. However, growth of private and foreign banks was significantly
lower in FY09 due to their high exposure to stressed sectors and problems at parent
level for foreign banks.

Unsecured bank credit has risen over the year; and stood at 23.3% of bank credit in
FY08 as compared to just 10.9% in FY2000. Lending to sensitive sector has also
grown at CAGR of 46.1% from FY05 to FYO8. In the backdrop of the economic
downturn. We feel that the excellent performance seen in last five years ended
FYO8 will be difficult to repeat in coming years.

We expect that with the downturn in the economy, credit and deposit growth will
moderate in coming years. Credit growth will be led by spending on the infrastructure
while retail credit will show a moderate growth. Margin pressures due to lag effect of
rate cuts between interest rate on deposits and advances, lower treasury gains and
core fee income and increasing in provisions for NPAs is likely to put pressure in the
bottom line of the banks.

Going forward, PSBs' which are close to the required lower level of government
stake and have concentrated presence in particular region are likely to consider its
merger with other PSB as an important option if they want to sustain the growth seen
in past.

FUNCTIONS OF BANKS
Primary Functions

Acceptance of Deposits

• Making loans & advances

• Loans
• Overdrafts
• Cash Credit
• Discounting of bills of exchange

Secondary Function

• Agency functions
• Collection of cheques & Bills etc.
• Collection of interest and dividends.
• Making payment on behalf of customer
• Purchase & sale of securities
• Facility of transfer of funds
• To act as trustee & executor.

Utility Functions

• Safe custody of customers valuable articles & securities.

• Underwriting facility
• Issuing of traveller's cheque letter of credit.
• Facility of foreign exchanges
• Providing trade information
• Providing information regarding credit worthiness of their customer.
STRUCTURE
The Indian banking system can be classified into nationalized banks, private banks
and specialized banking institutions. The Industry is highly fragmented with 30
banking units contributing to almost 50% of deposits and 60% of advances. The
Reserve Bank of India is the foremost monitoring body in the Indian Financial sector.
It is a centralized body that monitors discrepancies and shortcomings in the system.

Banking segment in India functions under the umbrella of Reserve Bank of India
(RBI) — the regulatory. centeral bank. This segment broadly consists of:-

1. Commercial Banks

2. Co-operative Banks

The commercial banking structure in India consists of:

1. Schedule Commercial Banks

2. Unscheduled Banks

Schedule Commercial Banks constitute of those banks, which have included second
schedule of Reserve Bank of India (RBI) act 1934. RBI in turn includes only those
banks in this schedule that satisfy the criteria laid down vide section 42 (60 of the
act) this sub sector can broadly classified into:

1. Public Sector

2. Private Sector

3. Foreign Sector

Public sector banks have either government of India Reserve Bank of India (RBI) as
the majority shareholder. This segment comprises of:

1. State Bank of India (SBI) and its subsidiaries

2. Other Nationalized Banks

Industry estimates Indicate that out of 274 commercial banks operating in the
country. 223 banks are in the public sector and 51 are in the private sector. These
private sector banks include 24 foreign banks that have begun their operations here.
The specialized banking institution that include cooperative, rural bank etc from a
part of a nationalized banks category.

CLASSIFICATION ON THE BASIS OF OWNERSHIP

On the basis of ownership banks are of the following types :

PUBLIC SECTOR BANKS

Public sector banks are those banks which are owned by the Government. The Govt.
runs these Banks. In India 14 banks were nationalized in 1969 & in 1980 another 6
banks were also nationalized. Therefore in 1980 the number of nationalized bank 20.
But at present there are 9 banks are nationalized. All these banks are belonging to
public sector category. Welfare is their principle objective.

PRIVATE SECTOR BANKS

These banks are owned and run by the private sector. Various banks in the country
such as ICICI Bank, HDFC Bank etc. An individual has control over there banks in
preparation to the share of the banks held by him.

CO-OPERATIVE BANKS

Cooperative banks are those financial institutions. They provide short term &
medium term loans to their members. Co-operative banks are in every state in India.
Its branches at district level are known as the central co-operative bank. The central
Cooperative bank in turn has its branches both in the urban & rural areas. Every
state Cooperative bank is an apex bank which provides credit facilities to the central
co operative bank. It mobilized financial resources from richer section of urban
population by accepting deposit and creating the credit like commercial bank and
borrowing from the money mkt. It also gets funds from RBI.

ACCORDING TO RESERVE. BANK OF INDIA ACT 1935

Banks are classified into following two categories son the basis of reserve bank Act.
1934.

SCHEDULED BANK

These banks have paid up capital of at least Rs. 5 lacks. These are like a joint stock
company. It is a co-operative organization. These banks find their mention in the
second schedule of the reserve bank.

NON SCHEDULED BANK

These banks are not mentioned in the second schedule of reserve bank paid up
capital of these banks is less then Rs.5 lacks. The no. such bank is gradually tolling
in India.

CLASSIFICATION ACCORDING TO FUNCTION

On the basis of functions banks are classified as under

COMMERCIAL BANK
The commercial banks generally extend short-term loans to businessmen & traders.
Since their deposits are for a short-period only. They cannot lend money for a long
period. These banks reform various types or agency job for their customers. These
banks are not in a position to grant long-term loans to industries because their
deposits are only for a short period. The majority of joint stock banks in India are
commercial banks which finance trade & commerce only.

SAVING BANKS

The principle function of these banks is to collect small saving across the country
and put them into productive use. These banks have shown marked development in
Germany & Japan. These banks are established in HAMBURG City of Germany in
1765. In India a department of post offices function as a saving banks.

FOREIGN EXCHANGE BANKS

These are special types of banks which specialize in financing foreign trade. Their
main function is to make international payments through purchase & sale of
exchange bills. As it well known, the exporters of a country prefer to receive the
payments for exports in their own currency. Thus these banks convert home
currency into foreign currency and vice versa. It is on this account that these banks
have to keep with themselves stock of the currency of various countries. Along with
that, they have to open branches in foreign countries to carry on their business

INDUSTIRAL BANKS

The industrial banks extends long term loans to industries. In fact, they also help
industrials firms to sell their debentures and shares. Some times, they even
underwrite the debentures & shares of big industrial concerns.

These banks found their origin in India. These banks made a significant contribution
to the development of agricultural and industries before independence. Mahajans,
rural moneylenders and jewellers have been the forerunner of these banks in India.

INDIGENIOUS BANKS

These banks found their origin in India. These banks made a significant contribution
to the development of agricultural and industries before independence. Mahajans,
rural moneylenders and jewellers have been the forerunner of these banks in India.

CENTRAL BANK

The central bank occupies a pivotal position in the monetary and banking structure of
the country. The central bank is the undisputed leader of the money market. As such
it supervises controls and regulates the activities of commercial banks affiliated with
it. The central bank is also the higher monetary institution in the country charged with
the duty & responsibility of carrying out the monetary policy formulated by the
government. India's central bank known as the reserve bank of India was set up in
1933.

AGRICULTURAL BANK

The commercial and the industrial banks are not in a position to meet the credit
requirements of agriculture. Hence, there arises the need for setting up special type
of banks of finance agriculture. The credit requirement of the farmers are two types.
Firstly the farmers require short term loans to buy seeds, fertilizers, ploughs and
other inputs. Secondly, the farmers require long-term loans to purchase land, to
effect permanent improvements on the land to buy equipment and to provide for
irrigation works. There are two types of agriculture banks.

1. Agriculture co-operative banks, and

2. Land mortgage banks. The farmer provide short-term credit, while the Ietter
extend long-term loans to the farmers.

OPPORTUNITIES

The Ranking sector is considered the most lucrative option in today's job market. In
the industry, a position in Treasury or Forex is considered right on top and this is
followed by careers in Private Ranking. Investment Ranking and Retail Ranking. One
could work in a variety of area in banking industry including Recurring Deposit
account, banking officer, probationary officer, loan officer, assessor, personal loan
officer, home loan officer, home loan agent, loan manager, mortgage loan
underwriter, loan processing officer, accountant, product marketing and sales
executive, and customer service executive among others.

In the Financial Services, some of the important jobs include that of a stockbroker
who is essentially a person who buys and sells securities on behalf of individuals and
institutions for some commission. While some brokers like to practice with individual
clients others work for institutions. Brokers who work for institutional investors are
often called Securities traders. Many prefer to work as dealers, advisors and
securities analysts. Security analysts are those who advise companies on floatation's
of shares as they are expected to have sound knowledge of capital markets.

Investment analysts are the backbone of the financial services sector. They
study the financial reports of companies, assess various statistical information,
profitability projections, compare financial results, survey the industry as a whole and
on the basis of the available information, and finally conclude to a decision. Equity
Analysts do jobs similar to investment analysts and research the equity markets and
make predictions.

MAJOR PLAYER IN INDIA

I. HDFC BANK LTD

2. ICICI BANK LTD

3. STATE BANK OF INDIA LTD

4. PUNJAB NATOINAL BANK LTD

5. BANK OF BARODA LTD

6. FEDERAL BANK LTD

7. AXIS BANX LTD

8. ING VYSYA BANK LTD

9. IDBI BANK LTD

10. INDUSIND BANK LTD

11. YES BANK LTD

 INTRODUCTION TO HDFC BANK
COMPANY PROFILE
History of HDFC Bank

The housing development Finance Corporation Limited (HDFC) was amongst the
first to receive as in principal approval from the Reserve Bank of India (RBI) to set up
a hank in the private sector, as ran of the RBI'S liberalization of the Indian Banking
Industry. The bank was incorporated in August 1994 in the name of HDFC Bank
Limited. With its registered office in Mumbai. India. The Bank commenced operation
as a scheduled Commercial Bank in January 1995.

Mission, Vision and Objectives

The mission of HDFC is to become "a world class Indian bank", benchmarking
themselves again' international standards and km practices in terms of product
offerings, technology, service levels, risk management and audit and compliance.
The objective is to build sound customer franchises across distinct business so as to
be a preferred provider of banking services for target retail and wholesale customer
segments and to achieve a healthy growth in profitability, consistence with the
Bank's risk appetite. The bank is committed to maintain the highest level of ethical
standards, professional integrity, corporate governance and regulatory compliance
HDFC Bank's business philosophy is based on five core values: Operational
Excellence. Customer Focus. Product Leadership. People and Sustainability.

HDFC Bank's business objectives emphasize the following:

• Increase their market share in India's expanding banking and financial services
industry by following a disciplined growth strategy and delivering high quality
customer service.

• Leverage their technology platform and open, scale able systems to deliver more
products to more customers and to control operating Cost.

• Maintain their current high standards for asset quality through disciplined credit risk
management.

• Develop innovative products and services that attract our targeted customers and
address inefficiencies in the Indian financial sector.

• Continue to develop product and services that reduce our cost of folds.

• Focus on high earning growth with low volatility.

Promoters
HDFC is India's premier housing finance company and enjoys an impeccable track
record in India as well as in international markets. Since its inception in 1977, the
Corporation has maintained a consistent and healthy growth in its operations to
remain the market leader in mortgages. Its outstanding loan portfolio covers well
over a million dwelling units. HDFC has developed significant expertise in retail
mortgage loans to different market segments and also has a large corporate client
base for its housing related credit facilities. With its experience in the financial
markets, strong market reputation, large shareholder base and unique consumer
franchise, HDFC was ideally positioned to promote a bank in the Indian environment

Capital Structure

As on 31 st March. 2015 the authorized share capital of the Bank is Rs. 550 crore.
The paid-up share capital of the Bank as on the said date is Rs501.29.90.634t- (
2506495317 ) equity shares of Rs. 2/- each). The HDFC Group holds 21.67 % of the
Bank's equity and about 18.87 % of the equity is held by the ADS / GDR
Depositories (in respect of the bank's American Depository Shares (ADS) and Global
Depository Receipts (GDR) Issues). 32.57 % of the equity is held by Foreign
Institutional Investors (Ells) and the Bank has 4.41.457 shareholders.

The shares are listed on the Bombay Stock Exchange Limited and The National
Stock Exchange of India Limited. The Bank's America Depository Shares (ADS) are
listed on the New York Stock Exchange (NYSE) under the symbol 'HDFE and the
Bank's Global Depository Receipts (GDRs) are listed on Luxembourg Stock
Exchange under ISIN No U540415F2002.

Total balance shit size as of June 10. 2016 was Rs.755.100 crows as against
Rs.629.322 crofts as of June 30. 2015. The Bank's total income for the quarter
ended June 30.2016 was Rs.19.322.6 crores as against R5.16.503.0 crores for the
quarter ended June 30. 2015. Net revenues (net interest income plus other income)
increased by 19.6% to Rs.10.5811. I crates for the quarter ended June 30.2016 as
against Rs.8.850.7 crows in the corresponding quarter of the previous year.

Distribution Network

HDFC Bank is headquartered in Mumbai. As of March 31 st 2015, the Bank's

distribution network was at 4,014 branches in 2,464 cities. All branches are linked on
an online real-time basis. Customers saws India are also serviced through multiple
delivery channels such as Phone Banking, Net Banking, Mobile Banking and SMS
based banking. The Bank's expansion plans take into account the need to have a
presence in all major industrial and commercial centres. Where its corporate
customers are located, as well as the need to build a strong retail customer base for
both deposits and loan products- Being a clearing / settlement Bank to various
leading stock exchanges. The Bank has branches in centres where the NSE /BSE
have a strong and active member base.
As of June 30, 2016, the Bank also has a network of 4,541 branches and 12,013
ATMs across. India. Moreover. HDFC Bank's ATM network can be accessed by all
domestic and international Visa/MaserCard, Visa Electron/Maestro, Plus/cirrus and
American Express Credit/Charge cardholders.

Management

Mrs. Shyamala Gopinath holds a Master's Degree in Commerce and is a CAIIB. Mrs.
Gopinath has 39 years of experience in financial sector policy formulation in different
capacities at RBI. As Deputy Governor of RBI for seven years and member of the
Board. Mrs. Cronin& had been guiding and influencing the national policies in the
diverse teens of financial sector regulation and supervision, development and
regulation of financial markets, capital account management, management of
government borrowings, forex resents management and payment and settlement
systems. The Managing Director. Mr. Aditya Puri, has been a professional banker for
over 25 years and before joining HDFC Bank in 1994 was heading Citibank's
operations in Malaysia. The Bank's Board of Directors is composed of eminent
individuals with a wealth of experience in public policy, administration, industry and
commercial banking. Senior executives representing HDFC are also on the Board.

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

Technology

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

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

The Bank has made substantial efforts and investments in acquiring the best
technology available internationally, to build the infrastructure for a world class bank.
In terms of core banking software, the Corporate Banking business is supported by
Flexcube, while the Retail Banking business by Finware, both from i-flex Solutions
Ltd. The systems are open, scaleable and web-enabled.

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

Business Profile
HDFC Bank caters to a wit` range of banking genies covering commercial and
investment banking on the wholesale side and transactional / branch banking on the
retail side. The bank has thus: key business segments:

Wholesale Banking Services

The Bank's target market ranges from large. Blue-chip manufacturing companies in
the Indian corporate to small & mid-sized corporate and again-based businesses.
For these Customers, the Bank provides a wide range of commercial and
transactional banking sea ices, including working capital finance, trade services,
Transactional services, cash management Etc. The bank is also a leading provider
of structured solutions. Which combine cash management services with vendor and
distributor finance for facilitating superior supply chain management for its corporate
customers. Based on its superior product delivery /service levels and strong
customer orientation, the Bank has made significant inroads into the banking
consortia of a number of leading Indian corporates including multinationals,
companies from the domestic business houses and prime public sector companies.
It is recognised as a leading provider of cash management and transactional banking
solutions to corporate customers, mutual funds, stock exchange members and
banks.

Retail Banking Services

The objective of the Retail Bank is to provide its target market customers a full range
of financial products and banking services, giving the customer a one-stop window
for all his/her banking requirements. The products are backed by world-class service
and delivered to customers through the growing branch network, as well as through
alternative delivery channel like ATMs, Phone Banking, Net Banking and Mobile
Banking.

The HDFC Bank Preferred program for high net worth individuals, the HDFC Bank
Plus and the Investment Advisory Services programs have been designed keeping in
mind needs of customers who seek distinct financial solutions, information and
advice on various investment avenues. The Bank also has a wide array of retail loan
products including Auto Loans. Loans against marketable securities. Personal loans
and Loans for Two-wheelers. It is also a leading provider of Depository Participant
(DP) services for retail customers, providing customers the facility to hold their
investments in electronic form.

HDFC Bank was the first bank in India to launch an International Debit Card in
association with VISA (VISA Electron) and issues the MasterCard Maestro debit card
as well. The Bank launched its credit card business in late 2001. By March 2015, the
bank had a 10131 card base (debit and credit cards) of over 25 million. The Bank is
also one of the leading players in the "merchant acquiring" business with over
135.000 Point-of-sale (POS) terminals for debit/credit cards acceptance at merchant
establishments. The Bank is well positioned as a leader in various net based B2C
opportunities including a wide range of internet banking services for Fixed Deposits.
Loans, Bill Payments etc.

Treasury

Within this business, the bank has three main product areas - Foreign Exchange and
Derivatives, Local Currency Money Market & Debt Securities, and Equities. With the
liberalisation of the financial markets in India, corporates need more sophisticated
risk management information, advice and product structures. These and fine pricing
on various treasury products are provided through the bank's Treasury team. To
comply with statutory reserve requirements, the bank is required to hold 25% of its
deposits in government securities. The Treasury business is responsible for
managing the returns and market risk on this investment portfolio.

Ratings/Awards:-

Credit Rating

HDFC Bank has its deposit programmes rated by two rating agencies - Credit
Analysis & Research Limited. (CARE) and Fitch Ratings India Private Limited. The
bank's Fixed Deposit programme has been rated 'CARE AAA (FD)' [Triple Al by
CARE, which represents instrument considered to be 'of the best quality, carrying
negligible investment risk".

CARE has also rated the bank's Certificate of Deposit (CD) programme "PR 1+-
which represents "superior capacity for repayment of short term promissory
obligations". Fitch Ratings India Pvt. Ltd. (100% subsidiary of Fitch Inc.) has
assigned the “tAAA (ind)” rating to the bank's deposit programme. with the outlook
on the rating as "stable”. This rating indicates 'highest credit quality where "protection
Dams are very high".

HDFC Bank also has its long term unsecured, subordinated (Tier II) Bonds of Rs. 4
billion rated by CARE and Fitch Ratings India Private Limited. CARE has assigned
the rating of 'CARE AAA' for the Tier II Bonds while Fitch Ratings India Pvt. Ltd. has
assigned the rating "AAA (ind)" with the outlook on the rating as "stable".

Corporate Governance Rating

The bank was one or the first four companies, which subjected itself to a Corporate
Governance and Value Creation (GVC) rating by the rating agency. The Credit
Rating Information Services of India Limited (CRISIL). The taring provides an
independent assessment of an entity's current performance and an expectation on
its "balanced value creation and corporate governance practices. The bank was
assigned a ‘CRISIL GVC Level I' rating in January 2007 which indicates that the
bank's capability with respect to wealth creation for all its stakeholders while
adopting sound corporate governance practices is the highest.
Awards and Achievements

HDFC Bank began operations in 1995 with a simple ration: to be a –“World-class

Indian Bank”. We realized that only a single-minded focus on product quality and
service excellence would help us get there. Today, we are proud to say that we are
well on our way towards that goal.

It is extremely gratifying that our efforts towards providing customer convenience

have been appreciated both nationally and internationally.

Products of HDFC Bank :-

HDFC bank provides very large range of financial product to the customer for their
boner financial transaction. The product of HDFC bank are

1. Savings Account
Everyone needs a savings account to store away the surplus cash. The bank
offers savings accounts under various types starting from basic accounts to
premium accounts with variety of features. The interest rates on the Saving
Account are 4% pa. which is calculated daily on the end of day balance. The
following accounts and their respective interest rates arc mentioned
underneath:

 Savings Max Account

• Regular Savings Account
• Women Savings Account
• Kids Advantage Account
• Senior Citizens Account
• Family Savings Group Account
• Basic Savings Bank Deposit Account
• institutional Savings Account
• BSBDA Small Account

2. Salary Accounts

The bank offers multiple types of salary accounts to suit the needs of all types of
C01110111e. The salary accounts offer various features to the accountholders like
free insurance coverage. The different types of Salary Accounts are:

• Premium Salary Account

• Regular Salary Account

• Defence Salary Account

• Salary Family Account

• Classic Salary Account

• Reimbursement Account

• Basic Savings Bank Deposit Accounts — Salary

3. Current Accounts

Current accounts are requited by businessmen and professionals who have regular
transactions through the bank. The account deals mainly in liquid deposits and
allows unlimited number of transactions every day like funds being withdrawn or
cheques being written again the account without worrying about the balance in the
account. Professional, traders, SME businessmen, agricultural businesses can avail
various benefits like fund transfers between all HDFC Accounts. Free local
collections through cheque and fund transfers as well as easy inter-city banking.
Moreover, the bank also offers a range of Current Accounts to suit individual
preferences like:

• ULTIMA Current Account

• Supreme Current Account

• Apex Current Account

• FLEE Current Account

• Max Current Account

• Agri Current Account

• Plus Current Account

• Current Account for Hospitals and Nursing Homes

• Trade Current Account

• Current Account for professionals

• Premium Current Account

• Merchant Advantage plus Curtest Account

• Regular Current Account

• Merchant Advantage Current Account

• Flexi Current Account

• Institutional Current Account

4. Deposits
Individuals who wish to save money for a longer term with a view to tarn a higher
rate of interest seek to invest money in term deposit accounts which guarantee
higher interest rates. HDFC Bank also offers various types of deposit accounts
promising high interest rates for customers seeking &posit accounts. Here are the
deposit accounts available with the bank:

• Regular Eked Deposit

• Recurring Deposit

• 5 year Tat Saving Eked Deposit

• Safe Deposit Locker — the bank also provides the facility of Safe Deposits lockers
for you to store your valuable deposits. The lockers are available in various sizes at
various locations.

5. Rural Accounts

Accounts offered by the bank to farmers for their banking needs. there are 2 types
of rural accounts available:

• Bask Savings Bank Deposit Accounts — Farmers

• Kisan Club Savings Accounts

6. Loans

HDFC bank is a leader in home loan sector and also offers various other kinds of
loans at attractive interest rates for various needs of the individuals. The following
types of loans are available with the bank:

 Personal Loan
 Business Loan
 Home Loan
 Car Loans
 two wheeler Loans
 Gold Loan
 Educational Loan

Credit Cards

The bank has a wide range of credit cards for customers which promise special
offers and privileges on dining, movies, lounge access of airports etc. The cards also
offer Reward Points on every spending made by the cardholder which can be
redeemed for attractive offers. The range of Credit Cards offered by the bank are as
follows:
Super Premium Cards- There are 3 variants under the Super Premium Variety which
are:

• InIbtla

• Regalia

• Diners Club Black

Co-Brand Credit Cards- These cards are offered in partnership with Jet Airways
and Times Group which offer special discounts on airline travel through Jet Airways
and offers on dining and movie tickets. The range of co-brand cards includes:

• Jet Privilege HDFC Bank World

• Jet Privilege HDFC Rank Platinum

• Platinum Times Card

• Titanium Times Card

Professional Credit Cards- Credit cards issued specifically to professionals like

Doctors and Teachers with best lounge programs and freedom to till fuels across any
fuel s respectively. The cards come in two variants:

• Doctor's Superia

• Teachers Platinum

Premium Travel Cards- These cards are specially designed to offer travel related
benefits and discounts. The cards offer reward points which can be redeemed
against air tickets or against dining and also lounge access of airports. The range
includes:

• Superia

• AIIMiles

Cash back cards- The specialty of these cards is that the card promises cash back
on everyday spends in the form of Reward Points which can be redeemed to get
cash back and also zero fuel surcharge. The range of cash back cards include:

• Platinum Edge

• Titanium Edge

• Money Back

Premium Cards- Credit cards, which offer premium range of offers, and discount, on
dining, entertainment and complimentary access to airport lounges. The premium
rage of credit cards include the following types of cards:
• World MasterCard

• Diners Club Premium

• Dinners club Rewardz

• Visa signature

Solitaire- A premium card especially for women customers with exclusive offers and
rewards for females.

Platinum Plus Card- It is a regular credit card designed for regular usage offering
Reward Points on everyday spends and also fuel surcharge waiver.

Commercial Cards- Arrange of credit cards especially designed for business usage
offering fuel surcharge waiver, lounge access to airports, travel and entertainment
benefits and also ail tickets discounts. The range of business cards include:

• Business Platinum

• Business Cold Credit Card

• Corporate Platinum

• Corporate world MasterCard

• Corporate VISA Signature

• Corporate Card

• Purchase Card

• Distributor Card

Debit Cards

HDFC Bank offers Debit cards with every Savings Account to customers which are
safer than carrying cash because- they require a PIN every time they are used, they
provide great discounts and cash back on fuel, shopping, dining, entertainment etc.
and are used across almost all outlets for payment. The range of debit cards issued
by the bank are:

• EasyShop Platinum Debit Card

• Jet Privilege HDFC Bank World Debit Card

• Easy Shop Titanium Royale Debit Card

• EasyShop Titanium Debit Card

• EasyShop Debit Card

• EasyShop Business Debit Card

• EasyShop Women's Advantage Debit Card

• EasyShop Nita Debit Card

• EasyShop Imperia Platinum Chip Debit Card

• EasyShop Gold Debit Card

• RuPay Premium Debit Card

Demat Account

HDFC Bank issues Deem Account for investors like traders, long term investors as
well as beginners for a flexible and customized solution. The demat account offered
by the bank is safe and dependable for buying and storing a customer's equity
investments, mutual funds, IPOs, ETF Exchange Traded Funds like Gold and Index,
bonds and NCDs. The account can also be opened online and the types of demat
accounts offered are as follows:

• Demat Account

• 2 In 1 Account

• 3 In I account

Investments

HDFC bank deals in various investment avenues to complete the financial portfolio
of the customer like Mutual Funds. Life Insurance products and General Insurance
Products. The investment products are further subdivided into the following
categories:

• Mutual Funds

• Equities & Derivatives through HDFC Securities Trading Account

• IPO Application through ASBA (Application Supported by Blocked Amount)

• Investment In Geld through Mudra Pure Gold Bars which come as 24 Kant pure
gold bars of 5g, 8g, 10, 20g, 50g and 100g with Assay Certification and tamper proof
packing

• Investment In Sliver through Mudra Silver Bars which are available in 50g and 100g
with Assay Certification and tamper proof entitled packaging.

• 8% Savings Bond which an risk-free and can be bought with a minimum

investment of Rs.1000
 • Sec 54 EC — Capital Gains Bond with a maximum investment of 50 lakhs and tax
exemption on capital gains

• Inflation Indexed National Savings Securities — Cumulative (INSS — C) with a

minimum investment of Rs.5000 and a maximum of Rs.5 lakh.

Insurance

HDFC Bank offers both life and non-life products to its customers. The life insurance
products are issued in association with HDFC Life Insurance Company Limited and
the non-life insurance products are issued in association with HDFC Ergo. The
following are the heads of insurance and their respective plans.

Digital Services at HDFC Bank

HDFC Bank provides a very good digital service to the customer for their transaction.
Through they sees ices the customer of the bank can also access their transaction.
Digital services include-

1. Fund transfer

HDFC Bank allows various categories of Fund Transfer options for safe and secure
fund transfers which make banking easy. The fund transfer options are:

E-Monles National Electronic Funds Transfer: Which is easy, fast and convenient
and supports fund transfers from any bank branch to any other bank branch
anywhere in India.

RTGS Fund Transfer: Real Time Gross Settlement is the fastest form of inter-bank
fund transfer in real time which is speedier, faster and has no geographical limits.

Visa Card Pay: A facility used to pay multiple Visa Credit Card hills issued by any
bank form the comfort of one's home and the payment is safe and charges at a
negligible fee.

IMPS: Immediate Payment Service from HDFC Bank is an instant real time inter-
bank electronic fund transfer service which can be done even on Sundays or Bank
holidays or late at night.

2. Online Banking

With an increasing trend of internet usage. everything has been digitalized and the
bank is not behind in this race. The bank offers the facility of Online banking to its
customers which is safe and reduces unnecessary hassles of visiting the branch to
carry out any transaction. Online banking service offered by HDFC Bank include:

Net Banking: Net Banking is HDFC Bank's Internet Banking service. Providing up-
to-the-second account information. Net Banking manages customer's account from
the comfort of costumer's mouse- anytime. anywhere.
Say goodbye to long queues and paper work. Presenting one more way for Net
Banking. Customer can now call the Phone Banking numbers in your city to register
for Net banking.

Net Banking offers a host of banking transactions from the comfort of the customer's
home. One can check the bank account balance, book a Fixed or Recurring Deposit,
recharge the mobile or DTH Connection, paying off utility paying taxes, applying for
IPO), invest in Mutual Funds online to name a few. The process is fast and
completely secured without having to worry about any fraud or theft.

Bank industry leading service provides a host of features at customer finger-tips:

• View Account Balances & statements

• Transfer Funds between accounts

• Create Fixed Deposits Online

• Request a Demand Draft Pay Bills

• Order a cheque Book

• Request stop payment on cheques

• And lots more

Benefit of Net Banking :

Internet Banking is the most convenient and powerful way to manage customer's
account. Net Banking is Real Time, giving them up-to-the-second details on
customer's account. It can be accessed anytime, from anywhere, giving them
complete control over their finances. There are no queues to stand in. or turn to wait
for. With Net Banking you are in control.

HDFC Bank's Net Banking is secure. Using indusary-standard technologies and

infrastructure, our service gives you peace of mind. So next time you think of visiting
your branch, switch on your PC instead. View the Net Banking Demo and see how
easy it is it use.

Credit Card Net Banking: Through this facility the customer can view the credit
card activities online, pay the credit card bills, view Credit Card Statements online,
know the unbilled transactions and get the complete account information

Email statements: A savings or a current accountholders are eligible to get their

account statements on their email id. The Savings accountholders get a monthly
statement and the Current Accountholders get daily, weekly or monthly statements.
The statements are free of cost and display all the relevant transactions of the
relevant period.

Loan accounts online: This feature enables the bank to provide post loan services
to the customers. Loan customers of the bank can log in and view their loan
summary, transaction history and loan account details.

3. Phone Banking

The bank extends banking information to your phone where information is available
at the end of a simple phone call. The customer can also call the bank and effect
transactions over the phone. Transactions like reporting loss of ATM, credit forex or
prepaid card, checking account balance and cheque status, ordering cheque books,
stopping cheque payments, credit card related queries can all be solved by a call to
the bank's phone banking division. Now your bank account is now just a phone call
away. Through Phone Banking you can:

• Check your account balance.

• Enquire on the cheque status.

• Have a mini statement faxed across to you.

• Request for a cheque book / Account statement.

• Enquire on your fixed deposits / TDS.

• Open a fixed &path

• Request for Demand Draft / Managers Cheques.

• Transfer funds amongst your linked accounts

• Pay utility and HDFC Bank Credit Card bilk.

• Do stop cheque payments.

• Report loss of your ATM /Debit Card.

• product information.

4. Mobile Banking

By simply downloading the bank's app on your smart phone, you can avail of over 75
transactions. The application is secure and fast. Mobile is now your bank! Now
access your bank account and conduct a host of banking transactions and inquiries
through your mobile, with our unique Mobile Banking services. Mobile Banking is a
service that allows you to do banking transactions on your mobile phone without
making a call, using the SMS facility.
uses of Mobile Banking:

Mobile Banking service provides a host of features at your finger-tips through SMS:

 Get your balance detail

 Obtain your last 3 transactions details
 Request a cheque book
 Stop a cheque payment
 Enquire cheque status
 Request an account statement
 Get fixed deposit detail
 Pay your bills

How does It work?

Mobile Banking works through a set of text massages (SMS). With SMS you can
perform a wide range of query-based transaction from your Mobile Phone, without
even making a call.

All you need to do is to type in the specified code for the transaction as a text
massage and send 5676712.

See designated codes for GSM Phone. You will receive the response in form of a
text message on your mobile phone screen within a few seconds.

How is this different from making a call on mobile phone or using Phone
Banking?

The differences between making a call on mobile phone and sending a text message
are as follows:

You are not required to dial a number, you send a text message i.e. a coded
message to 5676712

HDFC Bank does not charge anything for this service and these is no airtime
involved. However, the Cellular Service Provider may levy a nominal charge for the
SMS facility. In Mobile Ranking, you actually see your banking transactions on your
mobile phone screen as opposed to hearing a message through the phone.

How do avail of this service?

a) If you are opening an account with the bank, you can apply for MobileBanking
through the account opening document.

b) If you already have an account with the bank you can apply for MobileBanking
through the combined Direct Banking Channels form. You can download the form
and call for a sales representative. Alternatively you can fill this form and hand it over
to your nearest branch.
c) If you already have an account with the bank and if you are registered for Net
Banking services, then you can register online using the 'While Banking Registration'
option available inside Net Banking.

5. ATM

Automated Teller Machines or 24-hour Tellers are electronic terminals that let you
bank almost anytime. To withdraw cash, make deposits, or transfer funds between
accounts, you generally insert an ATM card and enter your PIN. Some financial
institution and ATM owners charge a fee, particularly to consumers who don't have
accounts with them or on transactions at remote locations. Generally, ATMs must tell
you they charge a fee and its amount on or at the terminal screen before you
complete the transaction. Check the rules of our institution and ATMs you use to find
out when or whether a fee is charged.

It won't be just if I start explaining what an ATM is. ATMs and cash dispensers are by
far the largest investment ever made in electronic self-service by financial
institutions. Over USS 40 billion has been invested in simply buying these machines
and many times that in running them. There are now over 1.1 million machines
operating in over 140 countries worldwide.

The banks are losing the cashier's checks, check cashing and even cash dispensing
to the c-store and grocery stores. They are asleep at the switch and watching more
transactions walk away to convenience stores and supermarkets that provide 24
hour access and integrated transactions.

ATMs do provide a larger set of functions, such as check cashing, ticket sales or
money orders. We already know that cash dispensing as a dedicated function is a
sustainable applications, the question is whether that application can be incorporated
successfully into a more complex consumer product that offers multiple applications.

Cash withdrawal: Withdraw up to Rs.50. 000'- per day from your account. Fast cash
options provide the facility of withdrawing prefixed amounts. Ultra Fast Cash option
allows you to withdraw Rs.3000/- in one shot.

Balance Enquiry: Know your ledger balance and available balance.

Mini Statement: Get a printout of your last 8 transactions and your current balance.

Deposit Cash/Cheques: Available at all full function ATMs. Customers can deposit
both cash and cheques. Cash deposited in ATMs will be credited to the account on
the same day (provided cash is deposited before the clearing) and cheques are sent
for clearing on the next working day.

Funds Transfer: Transfer funds from one account to another linked account in the
same branch.
PIN Changes: Change the Personal Identification Number (PIN) of ATM or Debit
card.

Payments: The latest feature of HDFC ATMs, that this functionality can be used for
payment of bills. making donations to temples/ trust, buying Internet packs. airtime
recharges far prepaid mobile phones and much more...

Others: Request for a cheque book from ATMs and our concerned branch will
dispatch it such that it reaches you within 10 working days.

BENEFITS TO THE INDIVIDUAL WHICH ULYMATELY BENEFIT TO THE HDFC

BANK

 Helps the individual in marketing better decisions and effective problem

solving
 Through training and development, motivational variables of recognition,
achievement, growth, responsibility and advancement are internalized.
 Aids in encouraging and achieving self-development and self-confidence
 Helps a person handle stress, tension. frustration and conflict
 Provides information for improving leadership, knowledge, communication
skills and attitudes
 increase job satisfaction and recognition
 Moves a person towards personal goals while improving interactive skills
 Satisfies personal needs of the trainer
 Provides the trainee an avenue for growth and a say in his own futur
 Develops a sense of growth in learning
 Helps a person develop speaking and listening skills
 Helps eliminate fear in attempting new tasks

Employees benefit

The employees of HDFC automatically become HDFC bank salary account Holders
with
special benefit and privileges and receive instant salary credit. The benefit include
international debit card, corporate card with individual liability (CCIL. access to
phone
banking and Internet banking, demat Account, and host of other services to
complement
their savings account. Here are some of the features of HDFC Bank's salary
account.

BEST PRACTICES

The most important thing in HR is to hold the confidence of people. Talent retention
is a challenge today. Another challenge is managing expectations of youngsters,
who are looking for fast tracking their career and want exposure quickly, they may
not be lured by money alone, but the profile that they work for. Bank gives ample
opportunity to those who seek job rotation. If they have a new opening, they
advertise it internally. Banks philosophy is that it is better to lose a person to another
department than to another bank. Their Performance management system is their
‘signature’ system. They have one of the lowest rates of attrition.
Middle management onwards their salaries here are good. Women have been rising
up the ranks in the bank. At the junior level, over 33% of the workforce in consumer
and retail banking comprises of women. In the senior levels, it is about 12% and in
the top management, it is about 6 to 9%. This organization was very cost conscious.
Today they have foreign tours, patties as national and regional levels, award nighty
and outings. As an organization they have started celebrating success.

Swot Analysis of HDFC Bank

Strengths

 HDFC bank is the second largest private banking seeing in India having 2.201
blanches and 7.110 ATMs.
 HDFC bank is located in 1,174 cities in India and has more than 800 locations
to send customers through Telephone banking.
 The bank's ATM card is compatible with all domestic and international
Visa/Master card. Visa Election/ Maestro, Plus/cirus and American express.
This is one reason for HDFC cards to be the most preferred card for shopping
and online transactions.
 HDFC bank has the high degree of customer satisfaction when compared to
other private banks.

 The attrition rate in HDFC is low and it is one of die best places to work in
private banking sector.

 HDFC has lots of awards and recognition, it has received ‘best Bank' award
from various financial rating institutions like Dim and Bradstreet, Financial
express , Euro money awards for excellence, Finance Asia country awards
etc.

 HDFC has good financial advisors in terms of guiding customer; towards right
investments.

Weaknesses

 HDFC bank doesn't have strong presence in Rural areas, where as ICICI
bank its direct competitor is expanding in rural market.
 HDFC cannot enjoy first moves advantage in rural areas. Rural people are
hard core loyals in terms of banking services.
 HDFC lacks in aggressive marketing strategies like ICICI.
 The bank focuses mostly on high end clients.
 Some of the bank's product categories lack in performance and doesn't have
reach in the market.
 The share prices of HDFC are often fluctuating causing uncertainty for the
investors.
 Opportunities

 HDFC bank has better asset quality parameters over government bank &
hence the profit growth is likely to increase.
 The companies in large and SME are growing at very fast pace. HDFC has
good reputation in terms of maintaining corporate salary accounts.
 HDFC bank has improved its bad debts portfolio and the recovery of bad
debts are high when compared to government banks.
 HDFC has very good opportunities in abroad.
 Greater scope for acquisitions and strategic alliances due to strong financial
position.

Threats

 HDFC's nonperforming assets (NPA) increased from 0.18 % to 0.20%.

Though it is a slight variation its not a good sign for the financial health of the
bank.
 The non banking financial companies and new age banks are increasing in
India.
 The HDFC is not able to expand its market share as ICICI imposes major
threat.
 The government banks are trying to modernize to compete with private banks.
 RBI has opened up to 74% for foreign banks to invest in Indian market.
 INTRODUCTION TO DIGITIZATION
Digitalization is the use of digital technologies to change a business model and
provide new revenue and value-producing opportunities, it is the process of moving
to a digital business.

Integration of digital technologies into everyday life by the digitization of everything

that can be digitized.

"Digital" is the new buzz word in the banking sector, with banks all around the globe
hopping onto the digital bandwagon. Just like how the introduction of mobile
technology massively disrupted innovation in the banking sector, digital is now doing
the same. Banks of all sizes are making sizeable investments in digital initiatives in
order to maintain a competitive edge. So, what does "digital" actually mean?

It definitely provides a glimpse into the future of banking. What digital essentially
does is that it uses technology to design experiences, both seen and unseen "Digital
is all about making what ran he seen unseen - making services set so smooth and
seamless that it becomes invisible to the customer." "Despite all the automation and
improvements that digital banking has the potential to achieve. customers and their
needs still form the very core of the banking sector."

It is the simplicity of design, the removal of friction and the ability to improve the
customer experience.

DIGITAL BANKING

MEANING AND DEFINITION

"Digital Banking - a new concept in the area of electronic banking, which aims to
enrich standard online and mobile banking services by integrating digital
technologies, for example strategic analytics tools, social media interactions,
innovative payment solutions, mobile technology and a focus on user experience.”

Digital banking is:

• Delivering a customized but consistent FT brand experience to customers across

all channels and points of interaction.

• underpinned by analytics and automation.

• ...and requiring a change in the operating model, namely products and services,
organization, culture, and skills and IT..

• ...in order to deliver demonstrable and sustainable economic value.

Digital Banking is the application of technology to ensure seamless end-to-end
processing of banking transactions/operations; initiated by the client, ensuring
maximum utility; to the client in terms of availability, usefulness and Cost; to the bank
in terms of reduced operating zero errors and enhanced services.

Benefits to the bank:

I. Lower operating costs through;

i. the elimination of costly back-office ',rooming operations

ii. fewer (or ideally no) errors.

iii. smaller branch footprint (the typical branch can become a kiosk affair, providing
technology interfaces for the client to use plus the ability to dial with banking
specialists via a video link) - a minimum number of actual staff will be required.

iv. concentrating banking/business specialists in a single centre, who are then

available to clients via a technology link (either on their mobile. pc or via a kiosk
branch).

Operating test savings of between 20% to 40% could he achieved this way,
according to industry experts. Cutting Cosa has the opposite effect on profits - they
go up.

2. Dumping legacy systems;

i. Make no mistake - one of the biggest drawbacks to going ‘Digital’ is this irrational
clinging to legacy systems (developed in the 1960s and 1970s) that hold progress
back. Banks plead the huge cost of making the change. They are wrong. The
ultimate onus of not making the change are far greater.

Benefits to the customer:

I. Improved services and product offerings:

i. 24/7 bank services and availability through your mobile, pc or kiosk branch,

ii. 'smart banking' applications that allow ALL transactions to be completed from the
device of your choice, from beginning to end (with clear instructions and fail safe
mechanisms),

iii. access to a FULL range of services (savings, investments, insurance, loans,

mortgages, foreign currency, etc.),

iv. new useful client services such as warnings, notifications, budgeting, expenditure
analyses, savings programs, calculators (you name it - the range is endless),

v. Lower charges (and therefore cheaper banking),

vi. Banking that meets the client's needs (not the banks)

vii. Banking will mean digital banking from 2015

2. 69% of customers already use the Internet to buy financial products

3. Customers are willing to pay for digital banking

4. Banks need to improve their digital offer to attract new customers

Digital banking is set to overtake branch networks as the preferred access channel
for how customers will interact with their bank by 2015.

Immersed in digital

Digital communication is pervasive; from mobile phones to tablet computers, we are

immersed in digital. Recent development of new digital features has led to:

• Improvements in user-experience design through interactive, game-like interfaces

that are starting to merge the boundaries between the real and the virtual and
bringing data to life through rich visualisations.

• Advances in mobile devices and networks, providing new services such as

enhanced digital security and the ability to access the Internet from anywhere
(partially limited by high international roaming charges).

• The rise of social media and collaboration tools, empowering customers and
employees, and moving control of the 'brand message' from businesses to
consumers.

• Innovation in digital analytics and predictive models, driving deeper insight into
customers' behaviour and enabling highly targeted and relevant treatment strategies
to be executed through digital media.

• New channel integration technologies, enabling a more seamless end-to-end

experience for customers with their bank.

Generation Y is fully embracing digital communication and is the customer group

with whom banks need to establish customer primacy relationships. The advantage
of being the primacy bank is increased share of wallet and higher revenue over time,
based on a strong sense of customer loyalty —and good customer service.

PwC research shows that Generation Y are more than 20% more likely to use, or
consider using online or mobile banking services, than Baby Boomers and nearby
twice as likely as 'matures'. According to this research their primary bank is
consistently more likely to be the bank of choice for Customers when they are
planning to buy another banking product.

Consumer expectations are changing with digital interaction

Present day consumers expect high quality digital communication. Rich content
including elegant designs, instant search results and interactive features. Bank
websites, especially online banking sections, are now required to offer a pleasent
experience while remaining highly functional.

It is still common for banks to send out account statements using the postal service:
however, for many people digital banking offers 24/ account balance control — there
is a clear preference, especially for younger customers, to want instantaneous
access to their accounts. The posted account statement is snail mail in comparison.
The utility of snail mail, by contrast, is rapidly dying.

Consumers have access to more information than ever before, they now
communicate with more people and more frequently — traditional word-of-mouth has
a completely different meaning when one considers the immediacy of Facebook,
Twitter or even email. Access to information and the ease with which consumers can
share views with those they know — or even 'the world' — is dramatic. Good
experiences can be easily shared online... as can negative ones.

It is important that banks understand the importance of customer thinking in deciding

where to trust their money and in choosing their primary banking relationship. This
has long-term influence personally, but also as an element of influence on their
friends and those they communicate with online.

Banks should consider four main aspects of a robust digital offering:

1. Customer attitudes and behaviour are changing

2. Digital is preferred globally.

3. Digital is a part of Generation y's lifestyle and this is the key time for them to
decide on their primary banking relationship.

4. Digital is evolving - technology devices and software all serve to disrupt traditional
means communication. Simultaneously, each brings opportunity.

Security is the foundation of digital banking

Security extends from the bank's hardware to the user's device - whether a PC/Mac
at home, an iPad or the newest Smartphone. In all cases, digital banking must
employ robust security technologies which protect the communication, user
information and the bank's IT infrastructure.

Indeed, it is clear that for digital banking to be a rewarding experience for the
customer and a profitable growth area for the banks, technology partners payment
processing service providers and mobile phone operators - there ought to be a
comprehensive agreement on shared technology standards and processes. The
European Commission has just issued a Green Papa. 'Towards an integrated
European market for card, Internet and mobile payments' which addresses many of
the issues while being much broader than online banking itself. Luxembourg's
LuxTrust is a strong step here in moving digital banking forward in terms of a security
standard.

Digital In Private Banking

Private Banks have been slow to introduce digital technology applications for their
customers arguing that the private banking industry is a personal and pre-dominantly
face to face business with little need for such applications to enhance the
relationship. Security and privacy issues are two of the reasons cited for not
embracing these new developments.

However, there are a number of arguments for private banks to seriously evaluate
their digital strategy and make it one of the cornerstones of their service offering and
brand building activities. As the next generation of private banking clients start to
dominate, private banks will need to avoid the image of an old out-of-date bank that
has lost touch with its clients.

Private banking is about being a trusted advisor as well as being connected and
recommended. Since the digital revolution, which started in the 1990's, people are
increasingly turning to the Internet not only to inform themselves regarding financial
products but also the reviews of other customers using the products and services.
Customers are already using social media to share their views on financial products
and services.

There is some recognition here in Luxembourg of the increasing place digital

communication is taking, as noted in The PwC Global Private Banking / Wealth
Management Survey 2011 which found that 38 percent of private bankers expected
to interact more with their clients through social media in the next two years and that
56 percent of private banks expected to use mobile technologies over the same
period.
 OBJECTIVE OF THE STUDY

• To identify the awareness and usage of Digital-Banking.

• To study the impact of digitalization.

• To know how much banking sector has been improved.

• To study the satisfaction loci of the respondents.

 SUGGESTION

+ Though the Digital Banking is an effective tool but many of the customers are not
using it due to the awareness of the particular digital banking services. Now the
responsibility lies with the bank to make them aware about various Digital banking
channels through publicity and advertisement

+ Bank should educate the customer about the usage of digital banking services and
also about their advantages. This would prompt the customers to shift from
traditional brick and mortar channel.

+ It has been observed that even the customers who know about digital banking
services are not using this facility due to misconception and lack of information.
These customers should be targeted by the bank and must be convinced to use the
same.

+ The result of the study show that customers are using only few services of various
digital banking services - for example ATM for view balance and cash withdrawal etc.
Though digital banking provides a full gamut of various services. Customer should
he made aware of these services and must be encouraged to use the same.

+ The bank may improve existing facilities in rural areas through advertising, spread
awareness about computer and internet banking.

+ The best way to motivate the customer to use digital banking is more efficient
customer care service.
 CONCLUSION

Digitalization has very much improved the banking services in India but it has to go
on further because the whole population of the country is not getting benefit from it.
There is hesitancy in their minds with regards to preference, so they use both the
techniques of banking i.e. Digital and Traditional.

People are not sure whether their transaction is completely secured in digital
banking. It has started many digital initiatives for the convenience of the customers.
All these initiatives of HDFC bank are focusing to save the time of their customers.
The customers of HDFC Bank are increasing rapidly as they are providing optimum
digital services to their customers.
 BIBLIOGRAPHY

Website

 http://www.forbesindia.com
 http://www.groupdiscussionideas.com
 https://www.hdfcbank.com/aboutus/default.htm
 https://www.hdfcbank.com/aboutus/News_Room/hdfc_p
rofile.htm