A

Project Study Report

On
Training Undertaken at

Titled
ANALYSIS OF THE BANKING SERVICES OF HSBC
WITH COMPERISSION OF OTHER BANKS

Submitted in partial fulfillment for the

Award of degree of
Master of Business Administration

ARYA COLLEGE OF ENGINEERING & IT

Submitted By: - Submitted To:-

DAKSH SHARMA Dr. MANISH SHRIVASTAV
MBA Part-IV SEM

2008-2010

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 PREFACE

Theories are being developed, designed and stated on the groundwork of their practical
implementation and usage. Work experience seems to be more effective and indispensable
factor of making an individual an adept. This is because one cannot do without being exposed
to varying circumstances and possible consequences. Training not only develops individual
skills and abilities but also provides proficiency in work performance.
This report is a concrete form of the knowledge that was acquired during summer
training in the bank that is part of two year full time management programmed. It emphasizes
on learning by doing. The training paves the way for successful entrance in the corporate world
for students.
I have studied and explored saving a/c and investment process of the bank, its market
share in the Jodhpur market and ways of increasing its market share. It was really a great
opportunity getting practical insight of the market.
Initially I felt that classroom study was irrelevant and to useless in any concern’s
working, but gradually I realized all the basic fundamental concepts studied are linked in one or
the other ways to the organization. Further it could be said that theory and practical training are
supplementary to each other and help in drawing meaningful conclusion and it’s just a matter
of modifying the theory, so as to apply in to given a practical solution.
I sincerely believe that there is no better place to learn the practical side of management
studies than the industry itself. With the data that was collected I have tried my best to provide
some fruitful suggestions and recommendations.

2
 Acknowledgement

I express my sincere thanks to my project guide Dr.Manish Shrivastav, for guiding me right

form the inception till the successful completion of the project. I sincerely acknowledge

him for extending their valuable guidance , support for literature , critical reviews of

project and the report and above all the moral support she had provided to me with all

stages of this project.

I would also like to thanks the supporting staff for their help and cooperation

throughout our project.

(Signature of Student)

Name of the Student

3
 EXECUTIVE SUMMERY

The main objective of this report is to study the wealth management products of HSBC and
compare them with that of other banks. The study includes a competitive analysis of the
different types of products being offered by the banks, their target customers, the services they
render and the extra facilities that they provide to their clients.

As various employment scheme are also working with bank to uplift the existing economic
status. In a nutshell, it provides employment, money management, interest incomes and
lockers facilities to keep safe our precious things and provide many other value added
services. It provides a broad view regarding various banking facilities, challenges and dealings
with customers. Besides this administrative structure of bank was also analyzed the report to
understand the functioning of the same at various levels.

The time has gone when people had fewer options to invest their surplus; banks these days
are offering a range of customized products to attract investments from the public. The
customer is the king in the industry and every bank whether public, private or foreign, is
offering best services and facilities.

Wealth Management is one of the hottest potential in the market, which is aimed at providing
the financial planning and investments services to the High Net Worth Individuals. These
clients are treated as the privileged customers of the bank, with many exclusive services.

On one hand where there’s great cat and dogfight for clients, HSBC is one of the leading
players in this category on the other, with many other banks in the foreign and private sectors.
It is one of the fastest emerging banks in India with its strong foothold by 151 years of its
existence.

HSBC leads in Treasury, Custody & Clearing (HSS) and Trade, with strong position in CIB and
Mutual funds.

Last but not the least; HSBC has wider horizons for engaging the MBA students in a better and
hopeful profession.

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 INDEX
Cover page 1
Acknowledgement 2
Preface 3
Executive Summary 4

• CONTENTS-
1. INTRODUCTION TO THE INDUSTRY 6
2. INTRODUCTION TO THE ORGANIZATION 14
HSBC the world’s local bank
3. RESEARCH METHODOLOGY 76
3.1 TITLE OF THE STUDY
3.2 OBJECTIVE OF THE STUDY
3.3 TYPE OF RESEARCH
3.4 SAMPLE SIZE AND METHOD OF SELECTING SAMPLE
3.5 SCOPE OF STUDY
3.6 LIMITATION OF STUDY

4. ANALYSIS AND INTERPRETATION 81

5. SWOT ANALYSIS 98
6. COCLUSION & RECOMMENDATION 103
7. HOW HSBC IS RESHAPING 108
8. APPENDIX 109
9. BIBLIOGRAPHY 111

5
 INTRODUCTION

BANKING INDUSTRY

The Indian banking industry is passing through a phase of customers market. The customers
have more choices in choosing their banks. A competition has been established within the
banks operating in India.
With stiff competition and advancement of technology, the services provided by banks have
become more easy and convenient. The past days are witness to an hour wait before
withdrawing cash from accounts or a cheque from north of the country being cleared in one
month in the south.
• Fact Files of Banking in INDIA

The first bank in India to be given an ISO certification Canara Bank

The first bank in Northern India to get ISO 9002 certification for Punjab and Sind
their selected branches Bank

The first Indian bank to have been started solely with Indian Punjab National
capital Bank

The first among the private sector banks in Kerala to become a South Indian Bank
scheduled bank in 1946 under the RBI Act

India's oldest, largest and most successful commercial bank, State Bank of India
offering the widest possible range of domestic, international and
NRI products and service, through its vast network in India and
overseas

India's second largest private sector banks and is now the The Federal Bank
largest scheduled commercial bank in India Limited
Bank which started as private shareholders banks, mostly Imperial Bank of
Europeans shareholders India

6
The first Indian bank to open a branch outside India in London in Bank of India,
1946 and the first to open a branch in continental Europe at founded in 1906 in
Paris in 1974 Mumbai

The oldest Public Sector Bank in India having branches all over Allahabad Bank
Indian and serving the customers for the lest 132 years

The first Indian commercial bank which was wholly owned and Central Bank of
managed by Indians India

NEW GENERATION BANKING

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 The liberalize policy of Government of India permitted entry to private sector in the
banking, the industry has witnessed the entry of nine new generation private banks. The major
differentiating parameter that distinguishes these banks from all the other banks in the Indian
banking is the level of service that is offered to the customer. Verify the focus has always been
centered on the customer – understanding his needs, preempting him and consequently
delighting him with various configurations of benefits and a wide portfolio of products and
services. These banks have generally been established by promoters of repute or by ‘high
value’ domestic financial institutions. The popularity of these banks can be gauged by the fact
that in a short span of time, these banks have gained considerable customer confidence and
consequently have shown impressive growth rates. Today, the private banks corner almost
four per cent share of the total share of deposits. Most of the banks in this category are
concentrated in the high-growth urban areas in metros (that account for approximately 70% of
the total banking business). With efficiency being the major focus, these banks have
leveraged on their strengths and competencies viz. Management, operational efficiency and
flexibility, superior product positioning and higher employee productivity skills.

The private banks with their focused business and service portfolio have a reputation of being
niche players in the industry. A strategy that has allowed these banks to concentrate on few
reliable high net worth companies and individuals rather than cater to the mass market. These
well-chalked out integrates strategy plans have allowed most of these banks to deliver
superlative levels of personalized services. With the Reserve Bank of India allowing these
banks to operate 70% of their businesses in urban areas, this statutory requirement has
translated into lower deposit mobilization costs and higher margins relative to public sector
banks.

BUSINESS OF BANKING

8
 Banking, in a traditional sense is the business of accepting deposits of money from
public for the purpose of lending and investment. These deposits can have a distinct feature of
being withdraw able by cheques, which no other financial institution can offer.

In addition to this banks also offer various other financial services also which include:-
 Issuing Demand Drafts & Travelers Cheques
 Collection of Cheques, Bills of exchange
 Safe Deposit Lockers
 Issuing Letters of Credit & Letters of Guarantee
 Sale and Purchase of Foreign Exchange
 Custodial Services
 Investment services

The business of banking is highly regulated since banks deal with money offered to
them by the public and ensuring the safety of this public money is one of the prime
responsibilities of any bank. That is why banks are expected to be prudent in their lending and
investment activities. The major regulations and acts that govern the banking business are:-

 Banking Regulations Act

 Reserve Bank of India Act
 Foreign Exchange Regulation (Amendment) Act, 1993
 Indian Contract Act
 Negotiable Instruments Act

Banks lend money either for productive purposes to individuals, firms, corporate etc. or
for buying house property, cars and other consumer durable and for investment purposes to
individuals and others. However, banks do not finance any speculative activity. Lending is risk
taking. The risk should be covered by having prudent norms for lending. The depositors of
banks are also assured of safety of their money by deploying some percentage of deposits in
statutory reserves like SLR & CRR.

9
 HISTORY OF BANKING IN INDIA

Modern banking developed in the west, in response need to industrialize along a capitalist
path. It is elaborated procedures institutionalized lending. Money circulation increased with the
provision of various money deposit schemes by the banks.

While “shaukari” practiced modern banking has developed strong roots. There are several
types of banking in our country. At the apex is the reserve bank of India, with powers to
regulate the entire banking system, print currency, extend loans to the government, and
formulate credit policy.

Next comes the state bank of India and its subsidiaries. Then there are the nationalized banks,
which are public sector undertakings. Under the new economic regime, private banks are once
again coming up in a big way. Co-operative banks have also been set up. Local area banks in
addition to credit thrifts societies formed by the staff of government departments are becoming
popular.

At the dawn of independence, hundred of the banks were in operation, often n by

unscrupulous managements. In 1949, the government of India took two major steps. The first
was the enactment of the banking regulation act, which gave regulatory powers to RBI the
Indian banking system, grew not only geographically but also structurally. However, the
number of scheduled banks came down from 94 to 76 over the same period. Their deposit
rose from Rs 843 crore in 1950-51 to Rs 2,025 crore in 1969-70.

Time deposits, as did personal accounts comp aired to business accounts during the same
period. The s5tste bank of India was setup in 1955. Eight regional banks were nationalized in
1960 and had to open new offices in semi urban and rural areas. They’re for their relative
share in total deposits increased.

10
 Nationalization of banks

The need for and mode of social control over banks is required in order to prevent a monopoly
and heck oligopolistic practice was debated .14 commercial ban Rs with deposits worth Rs 50
crore were nationalized in 1969.

The objective of the nationalization of the banks as stated by Mrs. Indira Gandhi, former prime
minister of India were:

• Removal of control by few.

• Provision for adequate credit to the agriculture sector, small industries and exports.
• Giving a professional trust to the managements of banks.
• Encouraging a new class of entrepreneurs.
• Provision of adequate training as well as better terms of service to bank staff.

The banking companies acquisition and transfer of undertaking act, 1969 spelt out of
objectives of and reasons for nationalization as follows, “ the banking system touches the
lives of millions and has to be inspired by a large purpose and has to subscribe to national
priorities and objectives such as rapid growth in agriculture, small industries and exports
raising of employment level, and the development of backward classes. For this purpose it
is necessary for government to take direct responsibility for extension and diversification of
banking services and for the working of substantial part of the banking system.”

The establishment of national bank for agriculture and rural development in 12992 was
another milestone in banking. The export and import bank was setup in 1982 to look after
the financial needs of the exporters and importers. In recent years there has been
phenomenal growth in banking sector and continuing reforms have ensured their
competitiveness, viability and profitability. The Cash Reserve Ratio (C.R.R.) cuts have
increased liquidity and now enough lend able resources and the banks have reduced their
Prime Lending Rates (P.L.R.). The overall negative growth rate of public sector banks is a
matter of concern. The total non-performing assets of Indian banks have been taken to
tackle these problems. In recent years there has been a phenomenal growth in banking
services and activities.

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 STRUCTURE OF BANKS IN INDIA

Structure of banks in India

Scheduled Non-Scheduled
Banks Banks

State Co- Commercial Central Co- Commercia

operative Banks Banks operative Banks l Banks

Private Sector
Public Sector Banks
B

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 ABOUT HSBC

HSBC - The world's local Bank

Headquartered in London, HSBC is one of the largest banking and financial services
organizations in the world. HSBC's international network comprises around 9,500 offices in 85
countries and territories in Europe, the Asia-Pacific region, the Americas, the Middle East and
Africa.

With listings on the London, Hong Kong, New York, Paris and Bermuda stock exchanges,
shares in HSBC Holdings plc are held by around 200,000 shareholders in some 100 countries
and territories. The shares are traded on the New York Stock Exchange in the form of
American Depositary Receipts.

Through an international network linked by advanced technology, including a rapidly growing

e-commerce capability, HSBC provides a comprehensive range of financial services: personal
financial services; commercial banking; corporate, investment banking and markets; private
banking; and other activities.

13
Business Principles And Values The HSBC corporate character defines the values
and principles inherent in all our everyday dealings.
THE HONGKONG & SHANGHAI BANKING CORPORATION LIMITED (HSBC)

Zone Branch Location No. of Branches

Kolkata
East 7
Mumbai 10
Ahmedabad 1
Pune 2
West Thane 1
Vadodara 1
Indore 1
Napier 5

New Delhi 1
Gurgaon 1
Chandigarh 1
North Noida 1
Jaipur 1
Jodhpur 1
Ludhiana 2

Chennai 1
Kochi 1
Coimbatore 2
Bangalore 1
South
Hyderabad 1
Trivandrum 1
Visakhapatnam 1
Mysore 1

Total 45

14
Group History

15
 The HBSC Group has an international pedigree, which is unique. Many of its principal
companies opened for business over a century ago and they have a history, which is rich in
variety and achievement. The HSBC Group is named after its founding member, The Hong
Kong and Shanghai Banking Corporation Limited, which was established in 1865 to finance the
growing trade between China and Europe.

 HSBC Group Structure

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 • HSBC holding is a public holding company incorporated in England and Wales.

• Headquartered in London, the HSBC group operates in five regions: Europe;

Hong Kong; the rest of Asia Pacific; including the Middle East and Africa; North
America; and South America.

• The entities in which forms the HSBC GROUPS , provide a comprehensive range
of financial services to personal, commercial, corporate, institutional and
investment, and private banking clients. To more easily promote the Group as a
whole, HSBC was established as a uniform, international brand name in 1999. in
2002, HSBC launched a campaign to differentiate its brand from those of its
competitors by describing the unique characteristics, which distinguish HSBC,
summarized by the words ‘The world’s local bank’.

Mission & Strategies

Mission

17
 • Leading in our chosen markets
• Delivering an outstanding client experience based on excellence in sales, service and
solutions
• Achieving a superior, ethically based, long-term return for our shareholders
• Building highly motivated, high-performance teams
• Creating a challenging, rewarding and fun work environment

Strategies

• People
Attract, retain and reward top performers
• Execution
Perform with skill and speed
• Customer-Centred
Always provide exceptional customer service
• Efficiency
Lower our costs and use resources wisely
• Profitable Growth
Grow sales and increase our revenues
• Credit Quality
Maintain credit quality and understand our role in managing losses
• Ownership
Own our performance and our results

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 HSBC IN INDIA

The Mumbai (then Bombay) office The Head Office of HSBC

Of Merchantile Bank, 1950 India, in Mumbai, 2002

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  HISTORY:

 1853: The Merchant Bank of India, London & China – in Bombay

 1958: The Merchantile Bank of India acquired globally by The Hongkong and Shanghai
Banking Corporation

 1969: 14 major private sector banks nationalized ( further 6 in 1980)

 1983: The Hongkong and Shanghai Banking Corporation took over the Indian branches
and business of the Merchantile Bank.

 2000: Establishment of HSBC Electronic Data Processing (India) Private Limited (HDPI)

 2002: Establishment of HSBC Software Development ( India ) Private Limited (GLT)

 2003: 150 years of presence in India

 2004: Purchase of 14.6% stake in UTI

The antecedents of the HSBC Group in India can be traced back to October 1853 when the
Mercantile Bank of India, London and China were founded in Bombay (now Mumbai). Starting
with an authorized capital of Rs. 5 million, the Mercantile Bank soon opened offices in London,
Madras (Chennai,) Colombo and Kandy, followed by Calcutta (Kolkata), Singapore, Hong
Kong, Canton (Guangchow) and Shanghai by 1855. The following hundred years where in
many ways propitious for the Mercantile Bank. In 1950 it moved into its new head office
building in Mumbai at Flora Fountain.

The acquisition in 1959 by The Hong Kong and Shanghai Banking Corporation Limited of the
Mercantile Bank was a decisive factor in laying the foundation for today's HSBC Group.
Founded in 1865 to serve the needs of the merchants of the merchants of the China coast and
finance the growing trade between China, Europe and the United States, HSBC has been an
international bank from its earliest days.

20
After the Mercantile Bank was acquired by The Hong Kong and Shanghai Banking
Corporation, the Flora Fountain building became and remains to this day, the Head Office of
the HSBC Group in India.

Through the 1990s, HSBC has vigorously developed its role as one of the leading banking and
financial services organizations in the world. Its strategy of 'managing for value' emphasizes
the Group's unique balance of business and earnings between older, mature economies and
faster-growing emerging markets.

HSBC in India is proud to have retained the Group's pioneering streak by being an active
partner in the development of the Indian banking industry-even giving Indian its first ATM way
back in 1987. The organization's adaptability, resilience and commitment to its customers have
further enabled it to service through turbulent times and prosper through good times over the
past 150 years.

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 AWARDS AND RECOGNITION

1. Best Foreign Commercial Bank in India Finance Asia Awards – 2000, 2001, 2002, 2003,
2004

2. Voted as No. 1 Bank in Service Quality and Brand Facilities in the Outlook Money –
Cfore Survey 2004

3. Voted “Safest Bank in India” by a Business Today – KPMG Survey – 2003, 2004

4. Best Bank in India Asset Triple A Country Award for 2003

5. Voted as Best Cash Management Bank in India Asia Money poll conducted for 2003

6. Voted as Best Sub- Custodian in India in a poll conducted by AsiaMoney for 2003,2004

7. Voted Top Rated No. 1 Sub- Custodian by Global Custodian Magazine survey 2003

8. AMIN – 4th CNBC Mutual Fund of the Year Award for 2003

9. Best performance in the open ended Diversified Equity Scheme – Defensive – HSBC
Equity Fund – 2003, 2004 ( one year category), 2005 ( three year category)

10. HSBC Asset Management (India) Private Limited (AMIN) was declared the ‘India Fund
House of the Year for 2004’ by Asian Investor Magazine.

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 PRODUCTS OF HSBC

At HSBC, regardless of your age, income or financial goals, we have an account to fit your
particulars need. From a basis savings account, to integrated services to meet your wealth
management objectives, we have a banking facility that suits your specifications.

Introduction

HSBC Premier

Power Vantage

Saving account

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 Fixed deposit

Smart Money account

Cluster deposits

Certificate of deposit

Debit cards

Insurance

Our wide range of liability service help you better manage your money and translate into
greater convenience and flexibility. Our goal is to fulfill your requirement and offer you the best
value of money.

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HSBC PREMIER
A premium service for you:

immediately recognized globally and given priority whenever you contact the Bank. Our range
of premium services is: HSBC Premier is one-to-one relationship banking which will
dramatically change and simplify the way you handle your finances today. Managing your
financial portfolio will be more convenient with our range of highly personalized,
comprehensive, time saving and rewarding facilities and services.
As an HSBC premier customer, you will be

• Dedicated Relationship Manager: Your HSBC Premier Relationship manager will

be your single point contact with the Bank and will manage your financial portfolio
through customized solutions.

• Financial Planning Services: You will have access to the services of an HSBC
Premier Relationship Manager or a Financial Planning Manager, who will provide
assistance and specialist advice on you investment portfolio and offer
recommendations on wealth creation and management.

• Exclusive HSBC Premier Centers: You will have assessed to dedicate HSBC
premier Centres around the world.

• Broking Services: Made available through HSBC Securities and Capital Markets
(India) Pvt. Limited.

• GenNext account for children: Secure your child's future with HSBC's GenNext
account (special account for children). This zero balance Savings account offers a

25
 range of benefits, such as Systematic Investment Plan (SIP), to secure your child's
future and also a Debit card**.

• No-bounce cheque protection which means, cheques presented through clearing,

will be honored (overdrawing of a maximum of Rs. 100,000)

• High cash withdrawal limit of Rs. 100,000 per day from and HSBC/VISA ATM
worldwide.

• HSBC Premier Master Card Credit Card ; An exclusive pre-approved Credit

card, with a minimum limit of Rs. 200,000, which provides access to the HSBC Group
ATMs as well as the Master Card ATMs in India and overseas.

• Special HSBC Premier Debit card: Access to cash at over 10,000 HSBC and
VISA ATMs in India and over 670,000 HSBC and VISA ATMs across the world. You
can use your Debit card for purchases up to Rs. 25,000 per day at over 15,000
merchant establishments in India and over 10 million such establishments overseas.

• Unlimited free transactions

(Cash withdrawals and balance enquires) at over 10,000 HSBC and VISA ATMs in
India, using your HSBC Premier Debit card.

• Free cheque book with Cheques Payable at Par (CPP) in the cities where HSBC has
branches.
• With Home banking you can enjoy the convenience of getting cash delivered, cheques
and Demand drafts delivered and picked up at your doorstep via special courier.
• 24-hour banking: Through Phone Banking and Interest banking.

As an HSBC Premier customer, you will also enjoy a host of other world-class services.

26
Eligibility

• Available to both Resident and Non-resident Indian Individuals aged 18 years or above,
at a minimum average quarterly relationship balance of Rs. 25, 00,000.

• Resident Indian Individuals: The relationship balance includes a combination of

deposits or investments and loans, of which a minimum of Rs. 20, 00,000 is to be held
in deposits or investments (Mutual Funds) purchased through the Bank.

• Non-resident Indian Individuals: The relationship balance comprises of Rs. 25, 00,000
in deposits with the Bank.

27
 POWER VANTAGE

Advantages so special, they almost seem unfair

Having a Power Vantage account entitles you to our exclusive attention and many reserved
privileges. So exclusive, in fact, they almost seem unfair.

• Unlimited free transactions (cash withdrawals and balance enquiries) at over 10,000
HSBC and VISA ATMs in India, using your Power Vantage Debit card.

• Dedicated Service Desk and Teller Counters to assist you with your banking needed.

• Financial Planning Services to assist you in planning your future investments and
insurance needs.

• GenNext account for children: Secure your child's future with HSBC's GenNext account
(special account for children). This zero balance Savings account offers a range of
28
 benefits, such as Systematic Investment plan (SIP), to secure your child's future, and
also a Debit card**.

• Free cheques book with cheques Payable at Par (CPP) in all cities where HSBC has
branches.

• No-bounce cheque protection: Which means, cheques presented through clearing, will
be honored (overdrawing of a maximum of Rs. 10,000).

• Joining fee waiver and 50% off on the annual fees of your Credit card.

• Preferential processing fees on Home loans and Personal loans.

• Higher cash withdrawal limit of Rs. 50,000 and funds transfer up to Rs. 100,000 per
day with your Power Vantage Debit card, in India or overseas.

• HSBC Power Vantage Debit card: use your Debit Card for purchases of up to Rs.
15,000 per day at over 15,000 per day at over 15,000 merchant establishments in India
and over 10 million such establishments overseas.

• 24-hour banking access through Phone banking and internet banking.

• Routine payments such as rent and school fees, etc., made on your behalf.

• With home banking you can enjoy the convenience of getting cash delivered, cheques
and Demand drafts delivered and picked up at your doorstep at nominal rates.

• Monthly composite statement which gives you a snapshot of all deposits, loans and
investments.

29
ELIGIBILITY

• Resident Indian Individuals aged 18 years or above.

• Maintain an overall average quarterly balance of Rs. 100,000 as a combination of

deposits and loans Home loan from HSBC or hold a minimum investment of Rs.
500,000 purchased through HSBC.

30
Convenience Banking

• Maintain a minimum average quarterly balance of Rs. 25,000.

• Withdraw cash up to Rs. 25,000 per day with your Debit card from over 10,000 HSBC
or VISA ATMs in India and over 670,000 such ATM's overseas.

• You can use your debit card for purchases up to Rs. 10,000 per day at over 15,000
merchant establishments in India and 10 million such establishments overseas.

• You have full access to funds in your accounts from the HSBC branch in the city where
you maintain your account. You can withdraw up to Rs. 10,000 per day from any HSBC
branch in the cities other than those where you maintain your account (s).

• Earn interest on your Savings account on a quarterly basis.

• Free quarterly account statement. Higher frequency of statement at a nominal charge.

• Free personalized cheque book.

• With 24-hour Phone banking, you can make balance enquires, transfer funds, request
a cheque book or statement and much more, with just one phone call.

• With Internet banking, you can access your account from anywhere in the world. Check
your balance, transfer money and do much more, all with the click of the mouse.
• With Home banking, you can enjoy the convenience of getting cash delivered, cheques
and Demand drafts delivered and picked up at your doorstep at nominal rate.

• Avail of a joining fee waiver on HSBC Credit cards.

31
 • In addition, routine payments such as rent and school fees, etc., are made on you
behalf*.

Eligibility

• Resident Indian Individuals

• Should maintain an overall average quarterly balance of Rs. 25,000 to ensure a secure
future.

32
 FIXED DEPOSIT

• Minimum amount to open a fixed deposit is Rs. 10,000.

• Customer convenience and flexibility due to a range of maturities offering completive

interest rates.

• Minimum tenure is 15 days and the maximum tenure is 5 years.

• Two types of Fixed deposits:

a. Ordinary: where is interest is transferred to your savings/current account on a
quarterly basis.
b. Cumulative: Wherein your interest is added to your principal quarter. You earn
interest on interest. On maturity, the entire amount is given to you by transferring
it to your Saving Account or by Demand draft.
• High returns with security for funds.

• 24-hour Phone banking services.

• Option to avail of the SmartMoney account facility.

Eligibility

• Resident Indian individuals, HUF, Proprietorships, Limited Companies, Trusts,

Partnership, Societies/Clubs/Associations.

• Minimum Deposits of Rs. 10,000.

33
Flexible fixed accounts

Flexibility of Savings Accounts with the interest of a fixed deposit. Your SmartMoney account is
a two-in-one account with an overdraft facility against your fixed deposit. You can withdraw
90% of the fixed deposit linked to the Savings/Current account, without breaking your fixed
deposits. You are charged interest on the amount that you withdraw and only for the time you
utilize the overdraft.

Overdraft Limit Interest rate

Overdraft of less than or equal to Rs. 200,000 2% over the deposit interest rate
Overdraft limit of over Rs. 200,000 Bank's prime lending rate

Example: When you deposit Rs. 25,000 in your SmartMoney account for one year and
withdraw Rs. 5000 on the day on which you open your account, here in what you gain within a
year.

Deposit Amount SmartMoney Interest Your gain

withdrawn account charged on
earnings p.a. withdrawals
@ 5% p.a. @ 7%
Rs. 25,000 Rs. 5,000 Rs. 1,250 Rs. 350 Rs. 900

• Minimum deposit of Rs. 25,000#.

• Get high returns and a free Savings or current account.

• Access to your funds any times through our ATMs, Phone banking", Internet banking or
your cheque book.

34
 • Access to cash from over 10,000 HSBC or VISA ATMs in India and 670,000 such
ATMs overseas, through your Debit card. You can make purchases from over 15,000
merchant establishments in India and 10 million such establishments overseas.

• Free standing instructions.

• Free quarterly account statement.

Eligibility

• Resident Indian Individuals, Partnership firms, Sole proprietorship and HUF.

35
CLUSTER DEPOSITS

Enjoy liquidity plus high returns

HSBC's cluster deposit lets you enjoy the best of both worlds. Not only does your money earn
interest at a fixed deposit rate, but you also get the liquidity of a Savings/Current account.
When you open an HSBC cluster deposit, your money is held in clusters of Fixed deposits.
When you withdraw money or issue a cheque, only the required number of clusters are
encased to cover the withdrawal. The balance continues to earn Fixed deposit interest.

• Freedom to issue cheques without locking your funds. Even if there is inadequate
balance in your Savings/Current account, your cheque will be honoured as long as you
have sufficient funds as Cluster Fixed deposit(s), by automatically transferring funds
from your Cluster Fixed deposit(s) to your savings/current account.

• Access to your funds through Cheque book, Debit card, Internet banking or Phone
banking.

Eligibility

• Resident Indian Individuals aged 18 years or above.

• Maintain a minimum of Rs. 25,000 in your Cluster Fixed deposit (s) and open a
Savings/Current account in case you do not already have such an account.

36
 CERTIFICATE OF DEPOSIT

Earn interest in advance

The certificate of deposit (CD) facility works just like a fixed deposit, but has the additional
features of (a) being negotiable, and (b) issued in dematerialized form. They are issued at a
discount to face value.

The minimum lot for a Certificate of deposit is Rs. 100,000 and multiples thereof. All
Certificates of deposit are now issue in demat form except for NRIs, where they are issued in
physical form.

Tenure - A Certificate of deposit is issued for a period not less than 15 days and not exceeding
1 year from the date of issue.

Transfer Mechanism - Certificates of deposit held in a physical form are freely transferable by
endorsement and delivery. Those in demat form can be transferred as per the procedure
applicable to other demat securities.

Eligibility

• Resident Indian Individuals, HUF, Proprietorships, Private Limited Companies, Trusts,

Partnerships, Societies/Clubs/Associations.

• Non-resident Indians (NRIs) may also subscribe to CDs on a non-repatriable basis only.

The Debit card represents that future of money and gives you unlimited access to your
Savings/Current accounts with HSBC.

• Access up to 3 deposit accounts on Debit card from over 10,000 HSBC or VISA ATMs
in India and from over 670,000 such ATMs across the world.

37
 • Purchase capability at 15,000 merchant establishments in India and at 10 million such
establishments overseas.

• Unlimited FREE ATM transactions at non-HSBC VISA ATMs (HSBC Premier and Power
Vantage customers only).

• Two FREE ATM transactions per month at other bank VISA ATMs (Debit Card Plus
cardholders only).

• Fee quarterly itemized statement of account (monthly for HSBC Premier and Power
Vantage customers).

• Zero Last Card Liability Insurance.

Eligibility

• Resident or non-resident (External), Individual or joint, "Anyone or Survivor"

Savings/Current accountholders only.

BUSINESS BANKING
38
Keeping in mind varying needs, HSBC has designed different packages for the customers.

BUSINESS VANTAGE

• Drafts - Free drafts payable at any HSBC branch in India

• Business Phone Banking - Access to bank accont, 24 hours a day, 7 days a week at
convenience, without actually stepping into bank. A state–of–art service that is secure
and easy-to-use.

• Internet Banking for Businesses - It allows you to carry out your banking transactions
anywhere in the world, anytime of the day. With the click of a button you can check your
accounts, make transfers, pay your regular bills (mobile, electricity etc.) request for a
draft, make routine account enquires and much more.

• Cheques Payable at par - Enjoy the benefits of issuing cheques for payment in any city
where HSBC has a branch.

39
• Business Doorstep Banking - Why rush to the bank when cash, cheques and drafts
can be picked up from or delivered to your office?

• 24-hour Cheque Deposit Facility - Deposit cheques, credit card payments and
instructions in HSBC deposit boxes, at any of their conveniently located ATMs.

• ATM card - Customers can withdraw up to Rs.1 lakh per day from their Business
Vantage account and access their account 24 hours a day, through a wide network of
over 150 HSBC ATMs in India.
• Telegraphic Transfers - Transfer funds between accounts held with any HSBC branch
across the country, free of charge. Telegraphic transfers to other banks in cities in India
where HSBC has a branch can be done at a nominal rate.

• Auto sweep - Customers can transfer excess of their cash to a fixed deposit, it can be
done at no cost.

• Standing Instructions - Customers can make recurring payments, by issuing standing

instructions to have fixed amounts paid to pre-defined parties, at absolutely no cost!

• Personalized Cheques - Book as a Business Vantage customer you will have the
benefit of a free personalized cheque book.

• Multi-Branch Banking Customer can operate his account from any branch in his city
and conduct certain transactions at any of HSBC branches across the country.

• No Bounce Cheque Protection - HSBC offers it’s customers a ‘no bounce ‘limit of up
to Rs.1 lakh on cheques issued from the customer’s Business Vantage account.

• Cluster Deposit - A Cluster Deposit Account for businesses gives its customers interest
earned at Term deposit rates and the liquidity of a Current / Savings Account .To avail
of this facility, just ensure a minimum combined average quarterly balance of Rs.3

40
 lakhs. This includes the minimum balance of the customer’s Current / Savings Account,
plus his fixed deposits. The minimum fixed deposit that can be linked to his Current /
Savings account is Rs.25, 000.

• Rapid Cheque Clearance - Cheques drawn on over 85 locations are credited to the
customer’s account within 7 working days. HSBC also provide rapid collection of
cheques drawn on a further 1,000 locations through the bank’s correspondent banking
arrangements.

• Monthly Statement - HSBC keeps a track of the customer’s finances with a monthly
statement. Use the internet for frequent updates.

• Saving Account for Employees - It has simplify salary account payments by using ‘
‘Autopay ‘ to directly credit salaries to the employees’ accounts.

• Trade Services - HSBC offers its local expertise and global reach in handling
customer’s trade business, including the complete range of services that would facilitate
the customer in his export and import. These include DC Confirmation, Export Bill
Negotiation, Documentary Collections and Remittances.

• Credit cards - It enjoys worldwide acceptance and special features like enhanced
insurance benefits, travel benefits at special rates, Bonus Rewards Programme, global
ATM service and up to 48 days of interest free credit with the credit card from HSBC.
The detailed billing system will help the customer to keep track of his expenditure.
Joining fee shall be waived for Business Banking customers.

• Mutual Fund Services - Invest in a pre-selected group of mutual funds, for which
HSBC provides account opening assistance, information on fund performance and after
sales service.

41
• Insurance - Business Vantage in association with reputed insurance providers insures
the customer’s business against

1. Fire
2. Money-in-safe
3. Public liability

• Depository Services - Enjoy the convenience of keeping your shares in electronic

form.

42
BUSINESS ACCOUNT
HSBC also has a Business Account which offers a wide range of products and services. As a
Business Account customer all that is required is to maintain an average quarterly current
account balance of Rs.25, 000

BUSINESS SELECT
Designed for dynamic and growing business, Business Select offers a host of exclusive
privileges and services that help the customers to manage their business, time and cash flows
more efficiently. As a Business Select customer the person is entitled to special relationship
banking facilities including a Relationship Manager.

43
OTHER PRODUCTS OF HSBC

LOCKER

At HSBC, special care is taken to keep the valuables of the customers safely, so that they also
can have peace of mind. For this various sizes of lockers are available to suit the requirements
of the customer at different charges.

Canara HSBC Oriental Bank of Commerce Life Insurance Company Limited

Introduces the Canara HSBC Life Unit Linked Whole Life Plan, a unique investment linked
plan which not only ensures protection and investment returns but also covers you till age 99
years. The Plan allows you the flexibility of choice on amount of cover and flexibility of
investing in fund options matching your risk profile and needs as well as Limited Pay Options
to suit your financial capabilities.

HSBC Investments

HSBC investment is the investment manager to HSBC mutual fund, launched in November
2002, HSC mutual fund help client assets of Rs. 7,569 crores as on 31 may, 2005 since its
inception, HSBC Mutual Fund has been one of the fastest growing mutual funds in the country.

Strengths of HSBC investments:

1. Reputation & financial strength with a global outlook.

2. Focused investment expertise for industry, sector & stock selection decisions.

3. Strong & consistent investment performance.

4. Risk control to enhance safety of investments

5. Client service commitment

6. Transparency using technology & the full range of media

44
Types of funds from HSBC:

 HSBC Equity fund

 HSBC India opportunities fund

 HSBC Midcap equity fund

 HSBC Income fund

 HSBC Monthly income plan

 HSBC Gilt fund

 HSBC Floating rate fund

 HSBC Cash fund

Systematic Investment Plan (SIP)

A systematic investment plan is an investment vehicle that allows the customer to invest
amounts of money at regular intervals of time (monthly or quarterly) in a mutual fund scheme
for a continuous pre- defined period: just like a recurring deposit account with a bank or a post
office

HSBC SIP allows the investor to invest a fixed amount every month or quarter for purchasing
units of schemes at prevailing NAV based prices. Sip can be activated by giving post-dated
cheques for the duration of the sip of by using an auto debit facility where a fixed amount is
debited from your bank account on a monthly/quarterly basis.

Advantages:

1. Inculcates a disciplined investment approach that builds a saving habit.

2. Allows rupee cost averaging, which takes advantage of market volatility.
3. Prevents sentiment-driven investments
4. Allows investment in small amount.

45
 WEALTH MANAGEMENT

What is Wealth Management?

Wealth derives from the old English word “weal”, which meant “well-being” or “welfare”.
“Wealth has come to mean an abundance of economic value, or the state of controlling or
processing such items, and encompasses money, real estate and personal property.”

The term” Wealth Management” has been defined as the coordination of a client’s
investment, tax and estate plans into a comprehensive plan to achieve their personal
goals. What distinguishes their services from other type of financial advisors; emphasize the
uniqueness of their client relationships- relationships that are broad in terms of encompassing
all areas of a client’s financial life and deep with respect to the advisor’s intimate knowledge of
a client’s values and priorities.

Wealth Management is the synthesis of a diverse range of financial services that affluent
investors their families may require. Definition of Wealth Management, given by various wealth
managers are as follows:-

 “Wealth Management is a comprehensive and cohesive system aimed at accumulating

and growing assets, preserving and protecting assets and transitioning assets.”

 Wealth Management is the ability to engage in all aspects of our client’s financial
situations.”

 “Wealth Management is the ability to help people create, implement and monitor life
plans.”

Wealth Management is the most discussed service in retail financial services today. The
service epitomizes the concept of providing a customer-centric approach to the provision of

46
financial services. The ultimate goal of wealth management is to build long-term
relationships with clients by helping them reach their goals over the course of their lifetimes.

Affluent individuals often need sophisticated advice and strategic guidance to capitalize on
the opportunities to preserve, grow and transfer their wealth. In addition, a desire exists
within wealthy families to simplify the management of multigenerational meets and lessen
the profound emotional impact of wealth on family members.

Today’s wealth management technology is largely focused on the financial advisor. The
race among firms offering wealth management services is to attain the status of trusted
advisor, who acts as the client’s primary advisor and coordinates the activities of other
advisor, with whom the client may also have a relationship. According to David Beatty,
“Wealth managers don’t have to do everything themselves- but they do make sure
everything gets done.”

Financial Advisor can provide comprehensive, integrated wealth management strategies to

address your wealth management needs like:-

1. Planning
 Leaving a legacy
 Directing assets
 Optimizing philanthropic aspirations
 Disposition of unique assets
 Family business succession
 Minimizing tax impact

2. Risk management
 Preserving capital
 “Monetize” concentrated positions
 Diversify exposure to concentrated positions
 Defer tax implications of a sale
 Protecting assets

3. Advisory Services
 Managing an art collection
 Curatorial services
 Family governance and education

4. Lending
 Gaining liquidity
 Financing business needs
 Asset acquisition or financing
 Managing concentrated holding.

47
5. Asset Management
 Gross asset allocation
 Growth of capital
 Tax sensitive asset management
 Alternative investments
 Private equity

Highlights of Wealth Management:-

a) The wealth management industry is growing very rapidly- Wealth

management as an organized industry is growing in terms of both the number
of players as well as the number of high net worth individuals in India. Wealth
managers are aggressively marketing their services to existing and potential
high net worth clients. With the number of clients growing, wealth manager
are ramping up their capabilities to manage growing volumes of assets.

b) Clients are becoming increasingly sophisticated-Wealth

managers in India believe that high net worth clients are becoming more
sophisticated in their understanding and demands of wealth providers,
products and services. Many need a Relationship Manager to proactively
assist them in managing their wealth. Wealth managers need to ensure that
they are equipped with specialist skills and experienced staff to handle
sophisticated client needs.

c) There is a shortage of skilled and experienced wealth

management advisors- The demand for trained and talented wealth
management professionals is increasing as the industry continues to
experience growth. Relationship managers are required to have a sound
knowledge of a wide range of products and services across asset classes
being offered to high net worth clients.

d) Most wealth managers have adopted an open product

architecture- Most wealth managers are moving beyond in- house products
and are distributing products and services sourced from other providers e.g.
third party mutual funds, fixed income products etc. Wealth managers are
focusing on their core competencies and outsourcing products and services to
complement their in-house offerings e.g. real estate, art advisory, taxation
advisory etc.

e) Most wealth managers aim to be ‘trusted advisors’ to their

clients-Open product architecture enables wealth managers to offer their
services as a ‘trusted advisor’ to clients and offer unbiased wealth
management services. A trusted advisor is capable of offering a
comprehensive range of in-house and third party products and services and
48
provision of proactive and objective advice based on in-depth financial
planning. In terms of their strategic orientation, most wealth managers that
participated in the survey believed that they were already their clients’ trusted
advisors or would be within the next three years. Most wealth managers
focusing on the ultra high net worth segment are pursuing a competitive
strategy based on differentiation. Other wealth managers focusing on the
mass affluent segment are pursuing a cost leadership strategy.

f) There is relatively low usage of technology tools by wealth

managers-IBM Business Consulting Services believes that technology plays
a very important role enabling the Relationship Manager to provide effective
services to the customer. There is a need for system, which provides a single
view of the customer’s entire wealth portfolio with the wealth provider. While
most players provide a consolidated view through a combination of automated
and spreadsheet applications, there are significant variations in their ability to
provide online, real-time access. Additionally, as the mass affluent segment
continues to grow in India, there is need for online financial planning tools to
assist this segment of clients, eager to be in control of their portfolio and
active in selecting and| or validating their selection of products in line with
their asset allocation strategy.

49
INSTRUMENTS UNDER WEALTH MANAGEMENT

 Tax Planning
• ELSS
• Insurance

 Investment Planning.

 Mutual Funds

 Pure Equity

 Real Estate

 Commodities

 Time Deposits

 Fixed income securities( Government Bonds/Securities)

50
  TAX PLANNING

Tax planning is not a device to reduce tax burden. In fact, it help savings by investments in
government securities. Savings reduces extravagance and corresponding inflation. Tax
savings are permitted only for investment made in government securities and bonds of priority
sectors which ultimately help the nation. Therefore, the savings in tax help the central and
state governments to mobilize funds by investments and as such the government earns much
by the way of other benefits, by sacrificing small amount of tax.

Savings and investment are interconnected. Before making investments the person has to
consider various factors such as:
 Liquidity – when he requires the amount to meet the educational expenses of children,
for marriage, house construction or for a secure future after retirement.
 Security of the investment.
 The return and tax on income on such investments.

Equity Linked Saving Scheme (ELSS):-

Equity linked saving schemes is savings schemes. These are mutual funds with tax
benefits. These are mirror image of diversified equity funds. That means the fund manager
will invest in shares of various companies across various industries.

51
Advantages of investing in ELSS:-s
 There is the added tax benefit which a normal diversified equity fund will not have.
 ELSS funds have a lock-in period of three years, which prevents unnecessary
withdrawals and helps in growing the money over a period of time. When we invest
in equity, there is a need to take a long-term view. The real potential starts to show
only after a few years.
 The returns are good in investing in ELSS.
 The earned dividends will be tax free.
 It is structured like open-ended equity funds. So investor can invest at any time of
the year.

52
 INSURANCE:-

Insurance is a form of contract whereby periodic payments (also known as insurance

premiums) are made to an insurance company, in order to provide an individual or
business compensation in the event of property loss or damage.

The type and amount of insurance an individual requires depends on age, assets,
income and needs. Insurance is basically a way of replacing income.

Risks covered by insurance are:

1. Personal risks: are the uncertainties surrounding loss of income or life due to
premature death, illness, disability, old age and unemployment.
2. Property risks: are possibilities of direct indirect losses to personal or real
properties due to fire, windstorms, other natural disasters, accidents, theft, other
and other hazards.
3. Liability risks: are possible losses due to actions that results in bodily harm or
property damage to others. The harm or damage could be caused by something
owned, like a car or a pet or a injury someone suffers on a property or the effects
of professional misconduct, among other causes.

All these types of pure risk which are insurable, because there is a chance of loss
only if specified events occur.

Pure risks are accidental and intentional risks for which the nature and financial cost
of the loss can be predicted.

A Speculative risk is a risk in which there is a chance of either loss or gain. Starting a
small business that may or may not succeed is an example of speculative risk. So is
a gambling. Speculative risks are not legally insurable.

Types of insurance covers:

1. Life insurance: substitutes for income lost at the death of the wage earner.
2. Disability insurance: assures a continued stream of income when isn’t able
to work fulltime.
3. Health insurance covers all medical bills.
4. Property /causality policies pay for losses caused by theft, fire and accident.
53
5. General insurance: assures the full policy cover based only on the diagnosis
of your illness subject to policy terms and conditions
.
Life insurance:- is one the most valuable aids to financial planning. The money
dependents receive is a important financial resource.

There are four basic classes of life insurance contracts:-

1. Term insurance:- Term insurance is death protection for a specified

period of time. It has no cash value or savings element and pays out only
if the insured dies during the period covered by the policy. This is the
cheapest form of life insurance because it provides the most coverage for
the least money. Thus it can be seen that term insurance is nothing but
the cost of pure protection.

2. Whole Life Insurance:- whole life insurance provides insurance coverage

throughout the insured’s lifetime. Premium paid can be either for a fixed
term for lifelong. Two primary characteristics distinguish permanent life
insurance plans from term life insurance plans:

 Whole life policies offer lifetime coverage.

 Whole life policies contain a savings element.

3. Pure Endowment Insurance:- it provides a specified benefit amount

whether the insured lives to the end of the term of coverage or dies during
that term. Each endowment policy specifies a maturity date, which is the
date on which the insurer will the policy’s face amount / (sum assured), to
the policy owner if the insured is still living. The maturity date is reached
either at the end of a stated term or when the insured reaches a specified
age.

4. Annuities: - It starts where life insurance ends. It is called the ‘reverse’ of

life insurance. In general terms annuity is a series of periodic payments. In
annuity contract, a person agrees to pay to the insurer a specified capital
sum either a single premium or a series of premiums, in return for a
promise from the insurer to make a series of payments to him so long as
he lives. The insurer pools the money it has received from a large group of
policyholders and it invests those pooled funds. The insurer uses the
pooled funds and investment earnings on those funds to make periodic
annuity benefits as they come due

54
Types of insurance companies:

Insurance companies may be classified as:

 Life insurance companies, who sell life insurance, annuities and pensions
products.
 Non- life or general insurance companies, who sell other types of insurance.

How an insurance company makes money:

Profit=earned premium + Investment income – incurred loss - underwriting expenses.

55
  INVESTMENT PLANNING

DEFINITION OF INVESTMENT

Investment refers to a commitment of funds to one or more assets that will be held over some
future time period. Almost all individuals have wealth of some kind, ranging from the value of
their services in the workplace to tangible assets to monetary assets. Anything not consumed
today and saved for future use can be considered an investment.

REASON FOR INVESTMENT

We invest to improve our future welfare. Funds to be invested come from asset already owned,
borrowed money, and savings or foregone consumption. By forgoing consumption today and
investing the savings, we accept to enhance our future consumption possibilities .Anticipated
future consumption may be by other family member, such as education funds for children or by
our self, possibly in retirement when we are less able to work and produce for our daily needs.
Regardless of why we invest we should all seek to manage our wealth effectively, obtaining the
most from it. This includes protecting our asset from inflation, taxes and other factors.

METHOD OF INVESTMENT

If we are making investment decisions today that will directly affect our future wealth, it would
make sense that we utilize a plan to help and guide our decision. Surprisingly, the majority of

56
people do not have in place any type of formalized investment plan. Taking some time to put
together a financial plan can reap tremendous benefits .First, let’s define planning.
Financial planning is the process of meeting your life goals through the proper management of
yours finances. Life goals can include buying a home, saving for your child’s education or
planning for retirement.
Financial planning provides direction and meaning to your financial decisions. It allows you to
understand how each financial decision you make affects other area of your finances. For
example, buying a particular investment product might help you to pay off your mortgage faster
or it might delay your retirement significantly. By viewing each financial decision as part of a
whole, you can consider its short and long -term effects on your life goals. You can also adapt
more easily to life changes and feel more secure that your goals are on track.

PROCESS OF INVESTMENT PLANNING

These six steps are:

1. Establishing and defining the client-planner relationship.
2. Gathering client data, including goals.
3. Analyzing and evaluating your financial status.
4. Developing and presenting financial planning recommendations or alternatives.
5. Implementing the financial planning recommendations.
6. Monitoring the financial planning recommendations.

COMMON MISTAKES

1. Don’t set measurable financial goals.

2. Make a financial decision without understanding its effect on other financial issues.
3. Confuse financial planning with investing.
4. Neglect to re-evaluate their financial plan periodically.
5. Think that financial planning is only for the wealthy.
6. Think that financial planning is for when they get older.
7. Think that financial planning is the same as retirement planning.
8. Wait until a money crisis to begin financial planning.
9. Expect unrealistic returns on investment.
10. Think that using a financial planner means losing control.
11. Believe that financial planning is primarily tax planning.

57
  MUTUAL FUNDS

What is Mutual Fund?

A mutual fund is a trust that pools the savings of a number of investors who shares a common
financial goal. These investors buy units of a particular Mutual Fund scheme that has a defined
investment objective and strategy. The money thus collected is then invested by the fund
manager in different types of securities. These could range from shares to debentures to
money market instruments, depending upon the scheme’s stated objectives. The income
earned through these investments and the capital appreciation realized by the scheme is
shared by its unit holders in proportion to the number of units owned by them. Thus the mutual
fund is the most suitable investment for the common man as it offers an opportunity to invest in
a diversified, professionally managed basket of securities at a relatively low cost.

58
59
Classification-Mutual fund schemes may be classified on the basis of their structure and its
investment objective.

• BY STRUCTURE

Open-ended Funds
An Open-ended 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.

Close-ended Funds
A Close-ended Fund has a stipulated maturity period, which generally ranges from 3 to 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, if they are listed. The market price at the stock
exchange could vary from the scheme’s NAV on account of demand and supply situation, unit
holders’ expectations and other market factors.

• BY INVESTMENT 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. Growth schemes are ideal for
investors who have a long-term outlook and are 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. Capital appreciation in such
funds may be limited, though risk is typically lower than that in growth fund.

Balanced funds
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. This proportion affects the risks

60
and the returns associated with the balance fund –in case equities are allocated a higher
proportion, investors would be exposed to risks similar to that of equity market.

Balanced funds with equal allocation to equities and fixed income securities 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 Deposits, Commercial Paper and Inter Bank Call Money. 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.

• OTHER SCHEMES

Tax Saving Schemes

These schemes offer tax rebates to the investors under specific provisions of the Indian
Income Tax laws as the Government offers tax incentives for investment in specified avenues.
Investments made in equity linked savings schemes (ELSS) and Pension Schemes are
allowed as deduction u/s 88 of the Income Tax Act, 1961. The Act also provides opportunities
to investors to save capital gains u/s 54EA and 54EB by investing in Mutual Funds.

61
HOW A MUTUAL FUND WORKS

Joins a huge pool of

money invested by other
YOUR MONEY
shareholders.

Fund earning and Is managed by

gains are distributed to professionals.
shareholders or
reinvested.

They purchase a
diversified portfolio of
securities for the fund.

ADVANTAGE OF MUTUAL FUNDS:

 Diversification – Each mutual fund is composed of a portfolio of many individual

securities, i.e. you do not have all your eggs in one basket. This helps reduce the impact
of any underperformed security in the portfolio.

 Liquidity- Most mutual funds can be purchased or redeemed on short notice.

 Professional management- The assets of a mutual fund are managed by a

professional money manager who has the experience to make sound investment
decisions on the investor’s behalf.

62
  Opportunities- Mutual funds make it possible for an investor to participate in a wide
array of investments, which individually were inaccessible.

DISADVANTAGES OF MUTUAL FUNDS

 No mutual fund can promise a guaranteed rate of return like GICs.

 The value of mutual funds may rise or decline. For this reason, mutual funds should be
considered longer term investments.

63
 PURE EQUITY

PURE EQUITY INVESTMENTS:

Unlike fixed-income securities represent an ownership interest in a corporation. These

securities provide a residual claim- after payment of all obligations to fixed/income
claims- on the income and assets of a corporation. There are two forms of equities,
preferred stock and common stock. Investors are primarily interested in common stocks.

i. Common stock

Common stock represents the ownership interest of corporations, or the equity of

corporations, or the equity of the stockholders, and we can use the term equity
securities interchangeably. Most companies choose to “go public;” that is, they sell
common stock to the general public. This action is taken primarily to enable the
company to raise additional capital more easily. If a corporation meets certain
requirements. It may, if it chooses to, be listed on one or more exchanges. Otherwise, it
will be listed in the over- counter market. As owners, the holders of common stock are
entitled to elect the directors of the corporation and vote on major issues. Each owner is
usually allowed to cast votes equal the number of shares owned for each director being
elected. Such votes occur at the annual meeting of the corporation, which each
shareholder is allowed to attend.

Stockholders also have limited liability, meaning that they cannot lose more than their
investment in the corporation. In the event of financial difficulties, creditors have
recourse only to the assets of the corporation, leaving the stockholders protected. This
is perhaps the greatest advantage of the corporation and the reason why it has been so
successful.
64
The par value (stated or face value) for a common stock, unlike a bond or preferred
stock, is generally not a significant economic variable. Corporations can make the par
value any number they choose.

The book value of a corporation is the accounting value of the equity as shown as on
the books (that is balance sheet).Although book value per share plays a role in making
investments decisions, market value per share is the critical item of interest to investors.

The market value (i.e. price) of the equity is the variable of concern to investors. The
market value of one share of stock, of course, is simply the observed current market
price.

Dividends are the only cash payments regularly made by corporations to their
stockholders. They are decided upon the declared by the directors and can range from
zero to virtually any amount the corporation can afford to pay (typically, up to 100
percent and past net earnings).

ii. Preferred stock

Although technically an equity security, preferred stock is known as a hybrid security

because it resembles both equity and fixed-income instruments. As an equity security,
preferred stock has an indefinite life and pays dividends. Preferred stock resembles
fixed-income securities in that the dividend is fixed in amount and known in advance,
providing a stream of income very similar to that of a bond.

Preferred stockholders are paid after the bondholders but before the common
stockholders in terms of priority of income and in case the corporation is liquidated. If
the issuer fails to pay the dividend in any year, the unpaid dividend(s) will have to be
paid in the future before common stock dividends can be paid if the issue is cumulative.
(If non-cumulative, dividends in arrears do not have to be paid.)

More than one-third of the preferred stock sold in recent years is convertible into
common stock at the owner’s option.

65
 iii. Derivatives

There are two types of derivatives securities that are of interest to most investors.
Options and futures contracts are derivative securities, so named because their value is
derived from their connected underlying security. Numerous types of options and futures
are traded in world markets.

Options and futures contracts have important differences in their trading, the assets they
can affect, and their risk factor, so forth. Perhaps the biggest difference to note now is
that a futures contract is an obligation to buy or sell, but an options contract is only the
right to do so, as opposed to an obligation.

66
  REAL ESTATE

Real estate has historically been useful in a portfolio for both income and capital gains. Home
ownership, in itself, is a form of equity investment, as is the ownership of a second or vacation
home, since these properties generally appreciate in value. Other types of real estate, such as
residential and commercial rental properties, can create income streams as well as potential
long-term capital gains.

Real estate investments can be made directly, with a purchase in your own name or through
investments in limited partnerships, mutual funds, or Real Estate Investment Trusts (REIT).

Also, there are many kinds of real estate investments. Some are very speculative while others
are more conservative. The major classification is:

 Unimproved Land.
 Improved Real Estate.
 New and used residential property.
 Vacation homes.
 Low income housing.
 Certified historic rehab structures.
 Other income-producing real estate such as office buildings, shopping centers and
industrial or commercial properties.

67
 COMMODITY

In the world of business, a commodity is an undifferentiated product whose value arises

from the owner’s right to sell rather than the right to use. Example: commodities from
the financial world include oil (sold by the barrel), electricity (most users of electric
power are only concerned with overall energy consumption; only a minority of users are
concerned with the quality and technical details of voltage and frequency deviations,
phase imbalance, etc.)
Wheat, bulk chemicals such as sulfuric acid, base and other metals, and even pork-
bellies and orange juice. More modern commodities include bandwidth, RAM chips and
(experimentally) computer processor cycles, and negative commodity units like
emissions credits.

Commodity markets:-
These are markets where raw or primary products are exchanged. These raw
commodities are traded on regulated commodities exchanges, in which they are bought
and sold in standardized Contracts.

Commodities exchange:-
Commodities exchange is an exchange where various commodities and derivatives
products are traded. Most commodity markets across the world trade in agricultural
products and other raw materials (like wheat, barley, sugar, maize, cotton, cocoa,
coffee, milk products, pork bellies oil, metals, etc.) and contracts based on them. These
contracts can include spots, forwards, futures, options on futures. Other sophisticated
products may include interest rates, environmental instruments, swaps, or ocean freight
contracts.

68
 FIXED OR TIME DEPOSITS

Time deposits are deposits accepted by the banks for a specified period of time. In
terms of RBI directives the minimum period for which term deposits can be accepted is
15 days. The banks generally do not accept deposits for periods longer than 10 yrs.

 Banks pay interest on term deposits based on the period of deposits and
normally pay higher interest for a longer term deposits.
 Banks have full discretion to fix their interest rates on term deposits and these
rates are varied from time to time depending on market conditions.
 Changes made in interest rates from time to time do not alter the interest paid on
the existing deposits.
 When banks quote a certain percentage of interest per annum for a given period
it is understood that interest payment are made on a quarterly basis.
 The depositor can collect interest on every quarter or its discounted value at
monthly rests or avail quarterly compounding benefits and received principle and
interest on maturity.
 RBI has now permitted banks to quote a higher rate of interest individual deposits
more than Rs.15, 00,000.
 Banks are allowed to levy a penalty for premature encashment of deposit at their
discretion. Banks generally pay interest on such deposits as applicable for the period
which deposit has been kept with the bank (fewer penalties if levied).
 Bank allows loans against the fixed deposits on demand. Margin retained over
the deposit outstanding interest charged thereon is decided by the bank and may vary
from bank to bank.
69
OTHER INVESTMENT VEHICLES

 DEBT INVESTMENT

1. Certificate of deposit and cash equivalents

Commercial banks and institutions offer the variety of saving certificates known as
certificate of deposits (CDs). These certificates are available for various maturities, with
higher rates offered as maturity increases. (Larger deposits may also command higher
rates, holding maturity constant.)
Money markets:
It include short-term highly liquid, relatively low-risk debt instruments sold by
government, financial institutions, and corporations to investors with temporarily excess
funds to invest. This market is dominated by financial institutions, particularly banks, and
governments. The size of the transactions in the money market typically is large.
Important Money Market Securities
Treasury bills: The premier money instrument, a fully guaranteed, and very liquid. They
are sold on an auction basis every week at a discount from face value therefore, the
discount determines the yield. The greater the discount at time of purchase, the higher
the return earned by investors.

2. Negotiable certificates of deposit (CD) - The CD is a marketable deposit liability of

the issuer, who usually stands ready to sell new CDs on demand. The deposit is
maintained in the bank until maturity, at which time the holder receives the deposit plus
interest. However, these CDs are negotiable, meaning that they can be sold in the open
market before maturity.
Commercial paper- A short-term, unsecured promissory note issued by large, well-
known and financially strong corporations (including finance companies)
Commercial paper is usually sold at a discount either directly by the issuer or
indirectly through a dealer, with rates comparable to CDs. Although a secondary market
exist for commercial paper, it is weak and most of it is held to maturity.

EURO DOLLARS:-Dollar denominated deposit held in foreign banks or in offices of US

bank allocated abroad. Although this market originally developed in Europe, dollar
denominated deposits can now be made in many countries, such as those of Asia. Euro
dollar deposits consist of both time deposit and CDs, with the latter constituting the
largest component of the Euro dollar market.

70
Repurchase agreements (RPs) - An agreement between a borrower and a lender
(typically institution) to sell and repurchase the government securities. The borrower
initiates and RPs by contracting to sell securities to a lender and agreeing to repurchase
these securities at a pre-specified price on a stated date.

3. Bonds:

Bonds can be simply as long-term debt instruments representing the issuer’s

contractual obligations. The buyer of a newly issued coupon bond is lending money to
the issuer who, in turn, agrees to pay interest on this loan and repay the principal at a
stated maturity date.
Bonds are fixed-income securities because the interest payments (if any) and the
principal repayment for a typical bond are specified at the time the bond is issued and
fixed for the life of the bond.

A. Zero coupon bonds:

The most radical innovation is format of traditional bonds is the zero coupon bond,
which is issued with no coupons, or interest, to be paid during the life of the bond.

B. Corporate bonds:

Corporate bonds are senior securities. That is, they are senior to any preferred stock
and to the common stock of a corporation in terms of priority of payments and in case of
bankruptcy and liquidation. However, within the bond of category itself there are various
degrees of securities. The most common type of unsecured bond is the debenture, a
bond backed only by the issuer’s overall financial soundness. Debentures can be
subordinated, resulting in a claim on income that stands belos (subordinate to) the claim
of the other debentures.

C. Foreign Bonds

Why would one consider foreign bonds for inclusion in their portfolio?
 One reason is that at times foreign bonds may offer higher returns at a given
point in time than alternative domestic bonds.
 A second important reason for buying foreign bonds is the diversification aspect.
Diversification is extremely important ,both in a stock portfolio and a bond
portfolio.

D. Convertible Bonds:

71
 Convertible bonds have a built-in conversion feature. The holders of these bonds have
the option to convert whenever they choose

Advantage of bonds:

 The amount of income each year is fixed.

 They are safer than equity securities like common stocks.

Disadvantage of bonds:

 When the company profitability improves, they do no participate, as common

stock holders when theirs stocks appreciates.
 Bonds carry no voting rights.

While choosing bonds there are five factors to take into account when considering
bonds:
1. Investment quality. How are the bonds rated
2. Time to maturity:
 Short term[0-5]
 Medium[6-15 yrs]
 Long term[over 15 yrs]

3. Call or conversion feature

4. Tax status
5. Yield to maturity
6.

B. ASSET-BACKED SECURITIES:

Securitization refers to the transformation of illiquid, risky individual loans into more
liquid, less risky securities referred to as asset-backed securities (ABS). Marketable
securities have been backed by car loans, credit-card receivables, railcar leases, small
business loans, photocopier leases, aircraft leases, and so forth.

72
REGULATORY BODIES OF WEALTH MANAGEMENT INSTRUMENTS

 Mutual Funds AMFI [Association of Mutual Funds,

India]
 Direct Equity SEBI[Securities Exchange Bonds of
India]
 Real Estate NHB[National Hosing Board]
 Insurance IRDA[Insurance Regularity & Development
Authority]
 Commodities MCX[Multi Commodity Exchange]
 Time Deposits RBI[Reserve Bank of India]
 Govt bonds/ Securities RBI[Reserve Bank of India

Intermediaries/facilitators of wealth management services:

1. Brokers
2. Insurance agents
3. Distribution agencies
4. Banks
5. Real Estate Agents
6. Commodity brokers
7. Corporate consultancy firms

Stockbroker

A stockbroker is a person who sells stocks on the behalf of another person [or
company] and charges the customer a commission for services offered.

Insurance Agent

An insurance agent is an individual who is licensed by a state to sell insurance for

one or more specific insurance companies.

Distribution agency
73
Distribution agency is the agency, which functions on a comparatively large scale
than an individual broker. Eg. BSE and NSE.

Bank

A bank is an institution that has the facilities and services to handle day to day
financial transactions. It deals in money and most significantly creates money for
individuals by offering advisory and other services.

Real estate Agent

Real Estate Agent is a person with a state/provincial license to represent a buyer or

a seller in a real estate transaction in exchange for commission.

Commodity Brokers

Commodity Broker is a person who trade in commodities like sugar, oil, gold etc.

Corporate consultancy firms

These are the firms which provide guidance and knowledge to the clients regarding
their portfolio.

74
Banks as facilitators of wealth management:-

Wealth management services offered by the banks are specially designed to provide
the highest level of services, which are appropriate for the client’s unique
requirements and status. Apart from personalized services these banks also provide
banking, investments and lifestyle privileges, which make the banking experience a
very fulfilling one for the customers.

Advantages:

a. All services can be availed under one roof.

b. Brand recognition, which provides high reliability.
c. Professional guidance from the relationship manager.
d. Simplified procedures.
e. Various add on services are provided.
f. Events organized by the banks for imparting knowledge and also for the
entertainment of the customers.

Disadvantage:

1. Investment limited to cities and big towns only.

2. Investment decisions are biased as funds are invested in selected AMC’s.
3. Insurance payback commission is not passed on to the customers.
4. A premium price has to be paid for the services being offered by bank.

75
 RESEARCH METHODOLOGY

Title of the study- Investment and wealth management analysis at HSBC.

Duration of the project- Short term poject

Objective of Study-
The main objective of my study is to find the main strategies, various sales promotional
activities & to know the state of mind of an individual who is opening a saving account with
HSBC bank; I also try to find out that investors are aggressive, moderate or conservative in
Jodhpur sector.

 Services that influences the customer while he/she is into opening to know which others
banks are key players.

 Customer perception regarding the services provided by the HSBC BANK.

 To know what kind of investors are prevailing in Jodhpur market.

Data collection method

The data sources being used under such type of study are mainly of 2 types:
1. Primary Data
2. Secondary Data
Among which the former is being taken through the research undergone within the
organizational level itself & various other organizing reforms only. While the latter had been
taken through different statistical approaches or we can say through different marketing
reforms.

76
SAMPLE PLAN
DATA COLLECTION

 PRIMARY DATA :-
The primary data are which are collected afresh and for the first time, and thus happen
to be original in character. A primary survey was conducted at JODHPUR city. The survey was
carried out at various levels & the target group was retail investors, business men, builders,
industrialists, exporters, doctors etc. Questionnaires were used as an instrument to collect the
primary data.

This data was obtained by various promotion schemes like-

CANNOPIES- we put canopies in front of various financial institutions like banks, commercial
places, and entertainment places like Agarwal tower, Shastri circle, Corporate hub etc. There
people approach us and we give them the questionnaire to fill and provide the details of HSBC
products.

APPROACHING TO INDUSTRIAL UNITS - We approach to industrial areas like MIA, BASNI,

HIA, Boranada industrial area and give the questionnaire to fill and explain the details of
various HSBC products.

77
  SECONDARY DATA
 The Secondary data are those, which have already been collected and
 Being processed through the statistical process.
 We got the secondary data through

PREVIOUS TRANSACTION RECORDS

I. We got the records of those people who have already invested in HSBC.
II. Through directory- We got the records of Exporters, Businessmen, architects etc.

MARKETING APPROACH
o Directly meeting them
o Through telephonic calls
o Through Canopies

POPULATION DEFINITION

1) Element: Retail Investors, Business Men, Builders, Industrialists,

2) Exporters, Senior Citizens, and others.
3) Sample Unit- JODHPUR City
4) Sampling Method- Simple Random Sampling
5) Sampling Size- Based on ages, income area etc.
6) Data collection- through directories, Previous records through
7) Friends and relatives.

78
MODES OF MARKETING & PROMOTION

Directly Approaching:-
We directly approach people to invest like builders, investors, exporters, businessmen,
& even general mass.
Telephonic Calls:-
We approach them through telephones and take appointments & then directly contact
them for investment.
Canopies:-
We put canopies in front of Banks, Financial Institutions & other public gathering places.
There we approach people and take their telephone numbers. & contact them or even in
canopies itself make them invest.

79
80
LIMITATION

1. No response by some employees in different banks and lack of interest shown by them
resulted in incomplete data.

2. Non-availability of concerned person with complete knowledge to respond.

3. Lack of time with appropriate authorities.

81
 DATA INTERPRETATION & ANALYSIS

Q.1. Do you take services of any other banks..?

a) ICICI Bank b) State Bank of India (SBI)

c) HSBC d) Others

No. of
respondent
s

ICICI Bank 17
SBI 19
HSBC 157
OTHERS 7

79% persons takes services of HSBC bank.

8% persons takes services of ICICI bank.
9% persons takes service of SBI bank.
4% persons takes service of other banks.

Q.2. What are the features that influence your decision while availing any services of a bank?
82
 a) Good customer care b) Security of your money

c) Goodwill of the Bank d) Network of the Bank

No. of
Respondents

Good Customer
Care 55
Security of Money 61
Goodwill of Bank 72
Network of Bank 12

27.5% person’s decisions influenced by Good customer care.

30.5% person’s decisions influenced by Security of money.
36% person’s decisions influenced by Goodwill of bank.
6% person’s decisions influenced by Network of bank.

Q.3. Which all services of the bank do you use most?

83
 a) ATM b) Door step Banking

c) Internet Banking d) Mobile Banking

No.of
Respondents
ATM 93
Door step Banking 44
Internet Banking 50
Mobile Banking 13

46% persons used ATM service because this service is commonly offered it require no
technical knowledge.

Q.4. INCOME LEVEL:

84
 a) 60,000 – 1, 00,000 b) 2, 00,000 – 3, 00, 00
c) 1, 00,000 – 2, 00,000 d) above 3, 00, 00

No. of
Income Level Respondents

60 thousand-1
Lacs 57
2 Lacs-3 Lacs 50
1 Lacs-2 Lacs 59
above 3 Lacs 34

In the above table 57 investors are those who fell in the income slab from 60 thousand to 1
lakh, 59 investors fell in the income slab form 1 lakh-2lakh, 50 Investor’s fell in the income slab
from 2 lakh-3lakh, 34 investor’s fell in the income slab of above 3 lakh.

Q.5 How long have you been investing in market?

85
 a)1-5 years b)5-10 years
c) Above 10 years

No. of
No.of years Respondents
1-5 Year 73
5-10 Year 58
Above !0 Year 69

36.5% of the investors were investing since last 1-5 years.

29% of the investors were investing since last 5-10 years.
34.5% of the investors were investing since last 10 years & above.

Q.6. You made investment through:

86
 a) Your own b) Through Distribution house
c) Through broker d) others

Investment No. of
Through respondents

Your own 85
Distribution house 18
Broker 83
Others 14

87
Q.7. Are you
a)Long-term investor b)Short-term investor

No.of
Respondents
Short term investor 138
Long term investor 62

69%-short term investor.

31% -long term investor.

Q.8. What % of your income would you like to invest?

88
 a) Up to 5% b) 5%-10%
c) Above 10%

No.of
Respondents
up to 5% 99
5%-10% 53
Above 10% 48

49% investors invest up to 5% of their income.

27% investors invest 5%-10% of their income.
49% investors invest above 10% of their income.

Q.9. What do you think about the Loan facility?

89
 a) 1 b) 2 C) 3 d) 4 e )5

No.of
Respondents
Ranking

Very good 32
Good 165
Average 3
Poor 0
very poor 0

90
Q.10. What do you think about the customer care service?
a) 1 b) 2 C) 3 d) 4 e) 5

No. of
Ranking Respondents
Very good 84
Good 114
Average 2
Poor 0
very poor 0

Q.11. What do you think about the interest rate?

a) 1 b) 2 C) 3 d) 4 e) 5
91
 No. of
Ranking respondents
Very good 114
Good 80
Average 6
Poor 0
ivery poor 0

114 respondents are satisfied with the interest rate.It provide both fixed and floating rate.

Q.12. What do you think about the ATM facility?

a) 1 b) 2 C) 3 d) 4 e) 5
92
 No. of
Ranking Respondents
Very good 128
Good 67
Average 5
Poor 0
ivery poor 0

ATM facility is mostly used by the investors.

Q.13. What do you think about the security of money?

a) 1 b) 2 C) 3 d) 4 e) 5
93
 No. of
Ranking Respondents

Very good 105

Good 86
Average 9
Poor 0
very poor 0

Every investor want to secure his money and investors are highly satisfied with the bank.

Q.14. How is the internet banking?

a) 1 b) 2 C) 3 d) 4 e) 5
94
 No. of
Ranking Respondents
Very good 44
Good 97
Average 58
Poor 1
very poor 0

Today every person wants to save their time and HSBC bank provide the good E- banking
facility which enable the investor to take care of his account from internet.

Q.15. How is the 24 hours banking?

a) 1 b) 2 C) 3 d) 4 e) 5
95
Ranking No. of respondents
Very good 42
Good 65
Average 90
Poor 3
very poor 0

96
Q.16. What is the level of knowledge of employees about the different schemes?
a) 1 b) 2 C) 3 d) 4 e) 5

No. of
Ranking Respondents
Very good 68
Good 116
Average 15
Poor 1
very poor 0

In the above table 1 investors were found with poor knowledge about various investment
schemes, 15 investors were found with average knowledge about various investment
schemes, 116 investors were found with good knowledge about various investment schemes.

Q.17. What is the level of satisfaction with the bank?

97
 a) 1 b) 2 C) 3 d) 4 e) 5

No. of
Ranking Respondents
Very good 110
Good 90
Average 0
Poor 0
very poor 0

Investors highly satisfied with the services of the bank and the only reason behind this is the
good services which provided by the bank and which helped in creating the goodwill of the
bank.

SWOT ANALYSIS
98
 COMPETITIVE POSITION IN INDUSTRY
(USING PORTER’S FRAMEWORK)

This concept involves a relationship between competitors within an industry, potential

competitors, suppliers, buyers and alternative solutions to the problem being addressed. We
use the five-force model as a basic structure. In general, a business unit has to monitor key
macro environmental Forces [Demographic, Economic, Technological, Political, Legal and
socio-cultural] and significant Micro Environmental factors [Customers, Competitors] that affect
its ability to earn profits. This SWOT analysis has been done to help bank to track trends and
important developments and for each trend or developments, management needs to identify
the associated Opportunities and Treats

99
100
STRENGTH:

 A credible and widely known Brand Name with a label of being world class and also
known as the “World’s Local Bank”.

 Support of HSBC group as a whole which provides sound back-up for HSBC bank.

 HSBC has a reputation of being the best bank in providing services.

 Successful multi-domestic strategy combined with global branding.

 Successful management structure, valued and valuable employees.

 Ability to successfully implement custom electronic banking application. Hexagon

is the foundation of HSBC’s strategy to deliver innovative services via Information
Technology.

 Great Services provided to NRI’s, not only in India but world over, hence it enjoys a
good share of NRI Business.

 Automated Operations due to highly computerized environment.

 Outstanding relationship management with hybrid customers.

WEAKNESS:

 Less awareness among general masses.

 People's faith in private bank is still not very high.
 Less number of branches in India as compared to other Banks.
 Only one ATM in Jodhpur (Located at the branch).
 High charges on non-maintenance of minimum average quarterly balance.
 The bank provides no cash credit limit. Thus the business flow is diverted to nationalize
banks.
 Short banking hours (from 10:00 a.m. to 4:00 p.m.)

101
OPPORTUNITIES:

 Being a world class bank and having a good reputation, the goodwill can be cashed
upon with the growing economy of India.

 Internet banking can be cashed by making procedure even simpler.

 They should focus more on the Common Customer for Wealth Management as they
have more day to day spare money.

 It requires transforming itself from a global bank to a more diversified global financial
services company.

 Current direction which could be expanded includes greater diversification into equity
products, increased presence in insurance and card products.

THREATS:

 Reorganization of public sector banks: All the public sector banks have started to
redefine their services in order to attract customer's attention:

 The entry of other foreign banks can take away some of the business.

 The nationalized banks are also coming up with ATMs, which will acts as a major
threat to the bank in near future.

 Stringent norms by reserve bank of India at any time in near future can be threat to
foreign banks as their activities could be adversely affected.

 The presence of other private sector and foreign banks in Jodhpur like HDFC, ICICI,
UTI etc.

 The cash credit limit provided by other nationalized bank is the major threat.

102
103
 COMPETITIVE ANALYSIS

“Poor firms ignore their competitors

Average firms copy their competitors
Leading firms lead their competitors”

Introduction

Today competition is not only rife but also growing intense every year. To stand in this
competitive market any organization has to do its best to outperform its competitors.
Competitors are the companies that satisfy the same customer need.
Banking sector has undergone a second revolution where besides specialized lenders; the
share of commercial banks and other financial organizations is increasing day by day.

Organizations have started paying attention to their competitors through designing and
operating system for gathering continuous information about their competitors.

104
 Conclusion and Recommendations

• Government banks like SBBJ , Bank of Baroda enjoy more faith among people rather
than private banks

• ICICI bank, HDFC bank are into mass marketing so cater to a large number of
customers and therefore has a large client base.

• HSBC only caters to elite customers and has no concept like ‘No Frills’ account that is
no provision for a 0 balance account and the minimum balance which has to be
maintained in the account is 5,000 which is sometimes not possible for the customers
and if they fail to do so they are charged heavily which causes repulsion to the
customers.

• HSBC Bank should chalk out some programs to create general awareness regarding its
presence and various services of the bank. More attention is required in distant located
firms and caters the needs of those commercial areas.

• Personal Marketing/Aggressive Marketing: Today is the era of competition. In order

to increase the banking network (in terms of clients and business volume) an aggressive
approach is required. The bank should recruit more number of marketing personnel, so
that they can cover the whole of the city. Personal marketing can be one of the methods
of modes of taking people into confidence.

• STRONG NEED OF BRAND BUILDING: The bank needs to make a lot of marketing
effort. The level of recognition that may be desired by any brand has not been achieved
by HSBC Bank, Jodhpur. A lot of noise is made whenever a child is born and as long as
that noise is not made the doctors is not sure about the life of that child. Same is the
case in marketing. Whenever a new branch comes into existence it is necessary that
they announce their birth. Here comes the pre-launch exercise, and similar is the case
after the birth. The name has to be taken again. Boast about yourself, about the strong
points that you have over and above your competitors. Pull the consumer towards you.
105
 As said earlier it is a relationship of trust and this trust can be generated through better
and better performance of the bank. Now as working with the bank for some time the
facts have come out that they believe in low costing and want to keep low profile. So
better way of marketing can be sought which are low at cost. These are discussed
further.

• PROMOTIONAL STRATEGIES
• Press publicity:
Paper inserts
Advertisements in newspaper (local and national).
Interest cards distribution
Mailers/personal invitations to selective section of the society
Leaflets
• Outdoor publicity:
Banners in commercial areas and prime sites.
Air balloons at shopping complex.
Bus stands shelters.
Off site ATM for developing business
• Media:
Local channel advertisement (cable TV scrolls)
Advertisements in news channels and business channels
• Face to face:
Personal interaction of marketing executives through
Meetings Detailing about schemes and updating them form time to time
Event sponsoring in local clubs and social gathering
Road shows
Contacting office goers in the morning and evening at stop lights by distribution of
interest cards.

106
• Advertisement strategies segmented according to the target customer Senior
citizens, housewives, students, service class
Personal mailers
Contacting at parks during morning and evening walks
Contacting at stop lights
Road shows at market sights
Cable TV advertisements during prime time
Stick on the newspaper
Leaflet on the wiper of the vehicles in the parking lots

• Educational bodies

Sponsoring some events in schools and collages

Meeting the top management for opening of salary accounts
And fee payment system of the students.

• Local clubs like youth clubs, laughter clubs, senior citizen clubs, ladies club, etc.

Event sponsoring
Temporary banners
Advertisements in club magazines
Opening of extension counters (in case of large club)

• Professionals and other active samaj in the area (e.g. Jain samaj)

Direct mailers
Cold calling
Informal gathering arranger by the bank for some social cause.

107
• Commercial places and market establishments:
Cold calling
Personal visits of the executives.

• NEED A CHANGE IN MARKETING FOCUS

The marketing team of the branch has until now focused on selling of their most
competitive product, which are there fixed deposits. The rates of interest, which they
provide on fixed deposits, are really competitive and highest in this market. But this
strategy could not be held for a longer period of time as in the long run it would become
liability to the bank to pay such high rate of interest and it would lower the revenues of
the branch. Even the survey conducted proved that the fastest selling product is savings
account amongst the consumer. With a network that is good enough this bank can
make efforts to increase the market share in the area where the competition is so tough.
This needs a brain storming from the top management in the branch as to how about
fixing the targets in each category of accounts.

• Solid network required to develop the business further

If we see the results of the survey, it is evident that people prefer strong networking
system to make their banking life as comfortable and reachable as possible. For HSBC
Bank to enjoy a good customer base they should make efforts towards developing more
and more ATM in the city and extension counters to facilitate better and fast service.
Updating of technology from time to time is very necessary. HSBC Bank was the very
first bank to start few of the very good service like Internet banking; bringing about new
service to attract more and more consumers should carry on this tradition further.

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• Corrective positioning of HSBC Bank

HSBCc bank is known for its corporate operations. Very big names in the corporate
world have their accounts with this bank. For the past so many years it has been
catering to these clients only and has generated an image of being a corporate bank.
This product extension into the retail segment need separate focus and separate
positioning in the market. The bank cannot carry on its old image for both the segments
of the market. For this a distinctive advertising campaign has to be developed (refer to
the promotional activities stated earlier) to reposition the brand in potential consumer’s
mind. It should be noted that both the type of clients differs from each other in their true
nature. One is a very low profile relationship, which talks about masses. This type of
client requires assurance, trust, information, and support. This is retail banking. While
on the other hand the second type of relationship is stronger, which is the corporate
client that requires different setup all together?

• MAKE THE BRANCH SELF-INFORMATIVE

The branch should be decorated in a manner, which would provide maximum

information to the customers without any difficulty. All the schemes and products, all the
service charges, days and time of transactions should be printed in a beautiful manner
and hanged on the walls of the branch where customer can see with ease. This was
one of the things, which were found to be absent in this branch. By doing so the
customer would feel more attached and it will be converted in higher number of
accounts.

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 HOW HSBC IS RESHAPING..........

 Downsizing via VRS, redeploying Staff and hiring new sales executives.
 Changing the remuneration structure to a cost-to-company approach.
 Bringing in new heads for key departments such as marketing
 Focusing on retail banking, home loans, and asset management
 Shutting down unprofitable businesses like automobile loans
 Exploring inorganic growth such s the acquisition of UTI Bank

And above statistical analysis how that HSBC ranks SECOND in Category of large Banks it
ranks closely at top of the list which huge potential to prove its Brand name.

The above analysis reveals that there are many parameters in which HSBC as a Bank has an
edge over the others but at the same time it also faces neck-to-neck competition from other
banks like CITI and STANDARD CHARTERED. It has to constantly keep upgrading the
technology and services provided to its customers in order to maintain its Brand Name.

In this competitive scenario where every bank is struggling to expand its market share, the
banks are adopting various means to sell their products. In this research, I got a very biased
opinion on the product most recommended to the customers I observed that the products were
being oversold or undersold to the customers and not on the needs and requirements of the
customers.

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1=VERY GOOD 2=GOOD 3=AVERAGE 4=POOR 5=VERY POOR

QUESTIONNAIRE

Name:
Sex: Male Female
Age:
Q.1. Do you take services of any other banks..?
a) ICICI Bank b)State Bank of India (SBI)

c) HSBC d)Others

Q.2. What are the features that influence your decision while availing any services of a bank?

a)Good customer care b)Security of your money

c)Goodwill of the Bank d)Network of the Bank

Q.3. Which all services of the bank do you use most?

a)ATM b)Door step Banking

c)Internet Banking d)Mobile Banking

Q.4. INCOME LEVEL:

a)60,000 – 1, 00,000 b)2, 00,000 – 3, 00, 00

c)1, 00,000 – 2, 00,000 d) above 3, 00, 00
Q.5 How long have you been investing in market?
a)1-5 years b)5-10 years
c)Above 10 years
Q.6. You made investment through:
a) Your own b) Through Distribution house
c) Through broker d) others
Q.7. Are you

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 a)Long-term investor b)Short-term investor
Q.8. What % of your income would you like to invest?
a)Up to 5% b)5%-10%
c)Above 10%
Q.9. What do you think about the Loan facility?
a) 1 b) 2 C) 3 d) 4 e) 5

Q.10. What do you think about the customer care service?

a) 1 b) 2 C) 3 d) 4 e) 5

Q.11. What do you think about the interest rate?

a) 1 b) 2 C) 3 d) 4 e) 5

Q.12. What do you think about the ATM facility?

a) 1 b) 2 C) 3 d) 4 e) 5

Q.13. What do you think about the security of money?

a) 1 b) 2 C) 3 d) 4 e) 5

Q.14. How is the internet banking?

a) 1 b) 2 C) 3 d) 4 e) 5

Q.15. How is the 24 hours banking?

a) 1 b) 2 C) 3 d) 4 e) 5

Q.16. What is the level of knowledge of employees about the different schemes?
a) 1 b) 2 C) 3 d) 4 e) 5

Q.17. What is the level of satisfaction with the bank?

a) 1 b) 2 C) 3 d) 4 e) 5

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 BIBLIOGRAPHY

Books referred: -

 Kothari C. R. , ‘Research Methodology’ , New Delhi, Wishwa Prakashan, Second

Edition, 2004
 Khan M. Y. and Jain P.K. , ‘Financial Management’ , New Delhi, Tata McGraw-
Hill Publishing Co. Ltd., Fourth Edition, 2005
 HSBC Brochure

Websites: -

 www.hsbc.co.in
 www.banknetindia.com
 www.indiabank.com
 www.hsbcbank.com

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