INDUSTRIAL BACKGROUND

Meaning of Bank

According to banking regulation act of 1949 defines the term banking as

accepting for the purpose of lending or investment of deposits of money from the
public, repay on demand or otherwise and withdraw by cheques, draft or otherwise.

Kinds or types of bank: -

 Commercial bank

 Industrial bank

 Foreign exchange bank

 Co-operative bank

 Agricultural bank

 Land and development bank

 Saving bank

 Central bank

Commercial bank

These banks are also called as deposit banks as they accept deposits from the
public and lend them for short period. Commercial banks encourage savings among
general public and supply financial needs of modern business. These banks are purely
meant to finance traders and others. Thus commercial bank accepts deposits and lend
to needy customers from short terms.
Function of commercial banks

There are two functions namely primary and secondary function:

1. Primary function includes acceptance of deposits, advancing of loans.

2. Secondary function includes agency function General, utility services.

PRIMARY FUNCTIONS

Acceptance of deposits

Banks accept deposits from the public. People keep deposit of money for safety,
interest, easy to transfer cheques. So they accept following types of deposit.

Current Account Deposits

These deposits constitute major portion of banks circulating medium of

exchange. Normally business people keep money in his accounts as they can
withdraw and issues cheques any number of times. Banks does not pay any interest
for these deposits.

Saving Bank Account Deposits

People with steady and monthly income save their excess earning through this
account. There are certain restrictions in the withdrawals. Bank pays interest at a
nominal rate. Small savings are encouraged in this account.

Fixed Deposit Account

Money is accepted foe a fixed period it cannot be withdrawn before expiry of

fixed period. The interest rate is higher than other accounts. The longer the period is
the rate of interest.
Advancing of Loans

The deposits received are invested by advancing loans to needy borrowers for
higher rate of interest. This function is source of profit for banks.

Overdrafts

This facility is extended to current account holders where they are allowed to
overdraw more than the credit standing in their account. Since the facility is only for
respectable and reliable customers, bank may not insist on security. The security will
also be taken in the form of fixed deposits, NSC’S, shares, LIC policy and so on.

Cash Credit

Under this account bank gives loans to borrowers against certain security. The
entire loan amount will not be given at one time. It will allow the borrower to
withdraw from time to time depending on the values of stocks debt in the go-down.
The interest rate is charged on the amount withdrawn.

Discounting of the Bills of Exchange

This is a popular type of lending. If the holder of an exchange of bills needs

money immediately he can get it discounted by the bank.

The bank pays the present price of bills after deducting commission and when the
bills mature the banks can receive the payment form the party who accepted the bill.

Direct/Term Loans

Bank also gives loans to individuals or firms against collateral security. The
amount sanctioned will be credited to his requirements. Normally, industrialists
agriculturists and others borrow these loans to start industries and for his working
capital.
SECONDARY FUNCTIONS

Agency function

Transfer of Funds

 Banks help customers in transferring of funds from one place to the other
through drafts and other instruments, collect cheques, bills, salaries, pensions,
dividends, and rents on behalf of customers form other agencies.

 Undertake the payments of subscription, insurance, premiums, rents, etc.

 Undertake to buy and sell securities, acts as representative for customers in

other banks or financial institutions, acts as a trustee, execute and
administrator to manage trust.

 Carry out deceased customers’ desire, signs, transfer forms and documents.

 Banks give advice to customers on income tax matters.

General Utility Service

The banks will safe keep valuables and documents. It collects credit
information regarding customers, transfer of foreign exchange, providing advisory
services to industry, commerce, trade, project, prospectus, order writing the issue of
shares and debentures of companies.
 ORIGIN OF THE BANK

The Housing Development Finance Corporation Limited (HDFC) was amongst

the first to receive approval from the Reserve Bank of India (RBI) to set up a bank in
the private sector, as part of RBI’s liberalization of the Indian Banking Industry.
HDFC Bank was incorporated in August 1994 and commenced operation as a
Commercial Bank in January 1995. Currently, HDFC Bank has a nation spread over
110 cities across the country and operates in three segments.

Wholesale banking, retail banking and treasury services.

The challenge:

Efficiently Deploy Critical Applications to Branch offices. The sheer size and
complexity of HDFC Bank’s operation made it difficult to deploy new business-
critical banking applications to hundreds of branches swiftly and efficiently.
Operating in an industry where speed, efficiency and customer responsiveness are key
performance metrics, delays in application deployment mean a loss of productivity,
and spiraling maintenance and support costs.

“The deployment of the application across all access terminals was of

paramount importance”, explained Mr.S.V Surya Parsad, Assistance Vice President,
IT, HDFC Bank.

“However, our existing IT challenges at HDFC Bank also entailed bringing a

standardized system across the enterprise that would enable us to achieve a broader
spectrum of operational and strategic benefits”.
GROWTHS AND DEVELOPMENT OF THE BANK

It is well-recognized fact that the quality of financial management is a key

ingredient in determining the success of an organization. This is even more relevant in
a service industry like banks. At HDFC Bank, they work for ultimate identity and
success of their bank will reside, as it always has, in the exceptional quality of their
people and their extraordinary effort.

The bank is only as strong as its infrastructure and its processes. At HDFC
Bank, right from inception, they have invested in a robust technology platform, that’s
is seamlessly integrated with centralized and audited processes.

This has enabled them to expand rapidly and grow manifold while maintaining
acceptable service standards.

The bank’s well-documented procedures, high levels of automation, intensive

training of personnel and ongoing audit review had enabled then to improve the
reliability of their operational processes. ISO 9002 certifications of their cash
management, retail centralized processing and custody and depository operations are
indicative of their achievements in this regard.

FUNCTIONAL DEPARTMENTS OF BANK

The regulatory environment for the Indian banking sector was characterized
by greater liberalization in foreign ownership and related areas, tightening of certain
exposure norms and infrastructure improvements in the market..

Some of the developments are:

 Ceiling of 5% of the total advances imposed on the capital markets exposure

(fund based and non-fund based) for all commercial banks.
  Better systems for trading in government securities and settlement in the
foreign exchange and government securities markets operationalized through
the cleaning corporation of India ltd. (CCIL) and the electronic negotiated
dealing system (NDS).

In the growing competition faced by all the banks from various money market
and its effects bank deposits and advances, it has become necessary to design, develop
new instruments which would attack the customers by satisfying the identical needs.

The product should be evolved after studying customer’s needs and probable
due to the same. To give as idea two such products or instruments are described in the
following paragraph.

In the context of products of banks in recent days bank marketing it is

essential to take a look at the following products, which attract the middle class
customers and also are profitable to the bank.

 Customers loan
 Credit card

HDFC bank offers customers the convenience of banking in a manner of their choice.
Customers can bank via their telephone, through ATMS, on the Internet or even
through their mobile phones.

The bank has several respective departments to measure its performance to

decide fulfillment of expectation, deposits that are sources of funds, and break even
analysis can be used in bank marketing for deciding pricing of a new product all these
are in practice for taking the bank into profitable wings.

As a part of bank marketing it has been introduce two main distribution

channels:

 Branch network

 Specialized branches