Project Report GIM

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    INTRODUCTION

    In India the banking sector is segregated as public or privatesector banks, cooperative

    banks and regional rural banks. Private banking in India was practiced since the

    beginning of banking system in India.

    With years, banks are also adding services to their customers. 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

    has become more easy and convenient. This section of banking deals with the latestdiscovery in the banking instruments along with the polished version of their old

    systems.

    Commercial Banking

    The commercial banks are the usual type of institution, which dominates the entire

    banking system in every country. It derives its name from the fact that it confines its

    business largely to transactions with businessman and business institutions. According

    to the modern concept banking is a business which not only deals with borrowing,

    lending and remittance of funds but it is also an important instrument for fostering

    economic growth.

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    Bank credit is the primary institutional source of working capital finance in India. In

    fact, it represents the most important source for financing of current assets. The

    competitive climate in the financial market has changed dramatically over the last few

    years.

    Foams of working Capital

    Over Draft

    Cash Credit

    Term Loan

    Bill Discounting

    Letter of Credit

    Packing Credit

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    COMPANY PROFILE

    HDFC BANK LIMITED

    Background

    The Housing Development Finance Corporation Limited (HDFC) was amongst the

    first to receive an 'in principle' approval from the Reserve Bank of India (RBI) to set

    up a bank in the private sector, as part of the RBI's liberalisation of the Indian Banking

    Industry in 1994. The bank was incorporated in August 1994 in the name of 'HDFC

    Bank Limited', with its registered office in Mumbai, India. HDFC Bank commenced

    operations as a Scheduled Commercial Bank in January 1995.

    Promoter

    HDFC is India's premier housing finance company and enjoys an impeccable track

    record in India as well as in international markets. Since its inception in 1977, the

    Corporation has maintained a consistent and healthy growth in its operations to remain

    the market leader in mortgages. Its outstanding loan portfolio covers well over a

    million dwelling units. HDFC has developed significant expertise in retail mortgage

    loans to different market segments and also has a large corporate client base for its

    housing related credit facilities. With its experience in the financial markets, a strong

    market reputation, large shareholder base and unique consumer franchise, HDFC was

    ideally positioned to promote a bank in the Indian environment.

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    Business Focus

    HDFC Bank's mission is to be a World-Class Indian Bank. The objective is to build

    sound customer franchises across distinct businesses so as to be the preferred provider

    of banking services for target retail and wholesale customer segments, and to achieve

    healthy growth in profitability, consistent with the bank's risk appetite. The bank is

    committed to maintain the highest level of ethical standards, professional integrity,

    corporate governance and regulatory compliance. HDFC Bank's business philosophy

    is based on four core values - Operational Excellence, Customer Focus, Product

    Leadership and People.

    Capital Structure

    The authorised capital of HDFC Bank is Rs.450 crore (Rs.4.5 billion). The paid-up

    capital is Rs.309.9 crore (Rs.3.09 billion). The HDFC Group holds 22.2% of the

    bank's equity and about 19.5% of the equity is held by the ADS Depository (in respect

    of the bank's American Depository Shares (ADS) Issue). Roughly 31.7% of the equity

    is held by Foreign Institutional Investors (FIIs) and the bank has about 190,000

    shareholders. The shares are listed on the The Stock Exchange, Mumbai and the

    National Stock Exchange. The bank's American Depository Shares are listed on the

    New York Stock Exchange (NYSE) under the symbol "HDB".

    TimesBank Amalgamation

    In a milestone transaction in the Indian banking industry, Times Bank Limited

    (another new private sector bank promoted by Bennett, Coleman & Co./Times Group)

    was merged with HDFC Bank Ltd., effective February 26, 2000. As per the scheme of

    amalgamation approved by the shareholders of both banks and the Reserve Bank ofIndia, shareholders of Times Bank received 1 share of HDFC Bank for every 5.75

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    shares of Times Bank. The acquisition added significant value to HDFC Bank in terms

    of increased branch network, expanded geographic reach, enhanced customer base,

    skilled manpower and the opportunity to cross-sell and leverage alternative delivery

    channels.

    Distribution Network

    HDFC Bank is headquartered in Mumbai. The Bank at present has an enviable

    network of over 500 branches spread over 220 cities across India. All branches arelinked on an online real-time basis. Customers in over 120 locations are also serviced

    through Telephone Banking. The Bank's expansion plans take into account the need to

    have a presence in all major industrial and commercial centres where its corporate

    customers are located as well as the need to build a strong retail customer base for

    both deposits and loan products. Being a clearing/settlement bank to various leading

    stock exchanges, the Bank has branches in the centres where the NSE/BSE have a

    strong and active member base.

    The Bank also has a network of about over 1054 networked ATMs across these cities.

    Moreover, HDFC Bank's ATM network can be accessed by all domestic and

    international Visa/MasterCard, Visa Electron/Maestro, Plus/Cirrus and American

    Express Credit/Charge cardholders.

    Management

    Mr. Jagdish Capoor took over as the bank's Chairman in July 2001. Prior to this, Mr.

    Capoor was a Deputy Governor of the Reserve Bank of India.

    The Managing Director, Mr. Aditya Puri, has been a professional banker for over 25

    years, and before joining HDFC Bank in 1994 was heading Citibank's operations in

    Malaysia.

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    The Bank's Board of Directors is composed of eminent individuals with a wealth of

    experience in public policy, administration, industry and commercial banking. Senior

    executives representing HDFC are also on the Board.

    Senior banking professionals with substantial experience in India and abroad head

    various businesses and functions and report to the Managing Director. Given the

    professional expertise of the management team and the overall focus on recruiting and

    retaining the best talent in the industry, the bank believes that its people are a

    significant competitive strength.

    Technology

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

    technology and communication systems. All the bank's branches have online

    connectivity, which enables the bank to offer speedy funds transfer facilities to its

    customers. Multi-branch access is also provided to retail customers through the branch

    network and Automated Teller Machines (ATMs).

    The Bank has made substantial efforts and investments in acquiring the best

    technology available internationally, to build the infrastructure for a world class bank.

    In terms of software, the Corporate Banking business is supported by Flexcube, while

    the Retail Banking business by Finware, both from i-flex Solutions Ltd. The systems

    are open, scaleable and web-enabled.

    The Bank has prioritised its engagement in technology and the internet as one of its

    key goals and has already made significant progress in web-enabling its core

    businesses. In each of its businesses, the Bank has succeeded in leveraging its market

    position, expertise and technology to create a competitive advantage and build market

    share.

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    Business Profile

    HDFC Bank caters to a wide range of banking services covering both commercial and

    investment banking on the wholesale side and transactional / branch banking on the

    retail side. The bank has three key business segments:

    a) Wholesale Banking Services

    The Bank's target market is primarily large, blue-chip manufacturing companies in the

    Indian corporate sector and to a lesser extent, small & mid-sized corporates and agri-

    based businesses. For these customers, the Bank provides a wide range of commercial

    and transactional banking services, including working capital finance, trade services,

    transactional services, cash management, etc. The bank is also a leading provider of

    structured solutions, which combine cash management services with vendor and

    distributor finance for facilitating superior supply chain management for its corporate

    customers. Based on its superior product delivery / service levels and strong customer

    orientation, the Bank has made significant inroads into the banking consortia of a

    number of leading Indian corporates including multinationals, companies from the

    domestic business houses and prime public sector companies. It is recognised as a

    leading provider of cash management and transactional banking solutions to corporate

    customers, mutual funds, stock exchange members and banks.

    b) Retail Banking Services

    The objective of the Retail Bank is to provide its target market customers a full range

    of financial products and banking services, giving the customer a one-stop window for

    all his/her banking requirements. The products are backed by world-class service and

    delivered to the customers through the growing branch network, as well as through

    alternative delivery channels like ATMs, Phone Banking, NetBanking and Mobile

    Banking.

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    The HDFC Bank Preferred program for high net worth individuals, the HDFC Bank

    Plus and the Investment Advisory Services programs have been designed keeping in

    mind needs of customers who seek distinct financial solutions, information and advice

    on various investment avenues. The Bank also has a wide array of retail loan products

    including Auto Loans, Loans against marketable securities, Personal Loans and Loans

    for Two-wheelers. It is also a leading provider of Depository Participant (DP) services

    for retail customers, providing customers the facility to hold their investments in

    electronic form.

    HDFC Bank was the first bank in India to launch an International Debit Card in

    association with VISA (VISA Electron) and issues the Mastercard Maestro debit card

    as well. The Bank launched its credit card business in late 2001. By March 2005, the

    bank had a total card base (debit and credit cards) of 4.2 million cards. The Bank is

    also one of the leading players in the "merchant acquiring" business with over 42,000

    Point-of-sale (POS) terminals for debit / credit cards acceptance at merchant

    establishments. The Bank is well positioned as a leader in various net based B2C

    opportunities including a wide range of internet banking services for Fixed Deposits,

    Loans, Bill Payments, etc.

    c) Treasury

    Within this business, the bank has three main product areas - Foreign Exchange and

    Derivatives, Local Currency Money Market & Debt Securities, and Equities. With the

    liberalisation of the financial markets in India, corporates need more sophisticated risk

    management information, advice and product structures. These and fine pricing on

    various treasury products are provided through the bank's Treasury team. To comply

    with statutory reserve requirements, the bank is required to hold 25% of its deposits in

    government securities. The Treasury business is responsible for managing the returns

    and market risk on this investment portfolio.

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    RATINGS/AWARDS

    a) Credit Rating

    HDFC Bank has its deposit programmes rated by two rating agencies - Credit

    Analysis & Research Limited. (CARE) and Fitch Ratings India Private Limited. The

    Bank's Fixed Deposit programme has been rated 'CARE AAA (FD)' [Triple A] by

    CARE, which represents instruments considered to be "of the best quality, carrying

    negligible investment risk". CARE has also rated the Bank's Certificate of Deposit

    (CD) programme "PR 1+" which represents "superior capacity for repayment of short

    term promissory obligations". Fitch Ratings India Pvt. Ltd. (100% subsidiary of Fitch

    Inc.) has assigned the "tAAA (ind)" rating to the Bank's deposit programme, with the

    outlook on the rating as "stable". This rating indicates "highest credit quality" where

    "protection factors are very high". HDFC Bank also has its long term unsecured,

    subordinated (Tier II) Bonds of Rs.4 billion rated by CARE and Fitch Ratings India

    Private Limited. CARE has assigned the rating of "CARE AAA" for the Tier II Bonds

    while Fitch Ratings India Pvt. Ltd. has assigned the rating "AAA(ind)" with the

    outlook on the rating as "stable". In each of the cases referred to above, the ratings

    awarded were the highest assigned by the rating agency for those instruments.

    b) Corporate Governance Rating

    The bank was one of the first four companies, which subjected itself to a Corporate

    Governance and Value Creation (GVC) rating by the rating agency, The Credit Rating

    Information Services of India Limited (CRISIL). The rating provides an independent

    assessment of an entity's current performance and an expectation on its "balanced

    value creation and corporate governance practices" in future. The bank has been

    assigned a 'CRISIL GVC Level 1' rating which indicates that the bank's capability

    with respect to wealth creation for all its stakeholders while adopting sound corporate

    governance practices is the highest.

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    c) Awards and Accolades

    Over the years, HDFC Bank has received recognition and awards from various

    leading organisations and publications, both domestic and international. In June 2005,

    HDFC Bank won Asiamoney magazine's "Best Domestic Commercial Bank Award

    2005" for India. The Bank was awarded The Asian Banker's, "Excellence in Retail

    Banking Risk Management Award for 2004", a pan-Asia recognition of the bank's risk

    management abilities. The Asset (Triple A Country Awards) rated HDFC Bank as the

    "Best Domestic Bank in India - 2004" and "Best Domestic Bank in India - 2003".Forbes Global again named the Bank in its listing of 'Best Under a Billion, 100 Best

    Smaller Size Enterprises in Asia/Pacific and Europe", in its November 2004 issue.

    The Bank was rated as the "Best Overall Local/Domestic Bank - India" in the

    Corporate Cash Management Poll conducted by the Hong Kong based Asiamoney

    magazine. The said magazine also awarded the Bank with the titles of "Overall Most

    Improved Company for Best Management Practices in India" in the Best Managed

    Companies poll 2004, "Best Local Cash Management Bank", Best Overall Domestic

    Trade Finance Services Award", and also awarded the Managing Director, Mr. Aditya

    Puri as the "Best Chief Executive Officer in India". In May 2004, the Bank also won

    the "Operational Excellence in Retail Financial Services - India" award as part of the

    Asian Banker Excellence in Retail Financial Services Program 2003. HDFC Bank was

    selected by Finance Asia as the "Best Local Bank - India 2003", "Best Local Bank in

    India 2002", "Best Domestic Commercial Bank - India 2001", "Best Domestic

    Commercial Bank - India 2000" and "Best Domestic Commercial Bank - India 1999".

    Euromoney rated HDFC Bank as "Best Bank in India 2002", "Best Bank - India

    2001", "Best Domestic Bank - India 2000" and "Best Bank - India 1999". For its use

    of information technology the bank has been recognized as a "Computerworld Honors

    Laureate" and awarded the 21st Century Achievement Award in 2002 for Finance,

    Insurance & Real Estate category by Computerworld, Inc., USA.

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    Closer home, HDFC Bank was selected as the "Best Bank in India" for the second

    consecutive year in 2004 by Business Today. The Bank was selected by Business

    World as "one of India's Most Respected Companies" as part of The Business World

    Most Respected Company Awards 2004. In the FE-E&Y Best Banks Survey for 2002-

    03, HDFC Bank was selected as the number one new generation private-sector bank.

    Outlook Money Awards selected HDFC Bank as the "Best Bank - Private Sector

    2003-04" in February 2004. HDFC Bank was ranked India's Best Bank - 2003 by

    Business Today and as Best Bank for the year 2000 by Business India. It was also the

    winner of The Economic Times Award - Corporate Excellence for Emerging

    Company of the Year 2000-01. HDFC Bank was awarded the Best IT User award

    2003 (category: Banking) as part of the IT User Awards 2003 conferred by

    Economictimes.com & Nasscom.

    Product Range

    Savings, Fixed Deposits, Current and Demat Accounts Savings Account: Apart from

    the usual facilities, you get a free ATM Card, Interbranch banking, NetBanking,

    BillPay, PhoneBanking, Debit Card and MobileBanking, among others.

    HDFC Bank Preferred: A preferential Savings Account where you are assigned a

    dedicated Relationship Manager, who is your one-point contact. You also get

    privileges like fee waivers, enhanced ATM withdrawal limit, priority locker allotment,

    free Demat Account and lower interest rates on loans, to name a few.

    Sweep-In Account: A fixed deposit linked to your Savings Account. So, even if your

    Savings Account runs a bit short, you can issue a cheque (or use your ATM Card).

    The money is automatically swept in from your fixed deposit into your Savings

    Account.

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    Super Saver Account: Gives you an overdraft facility up to 75% of your Fixed

    Deposit. In an emergency, you can access your funds while your Fixed Deposit

    continues to earn high interest.

    HDFC Bank Plus: Apart from Regular and Premium Current accounts we also have

    HDFC Bank Plus, a Current Account and then some more. You can transfer up to Rs.

    50 lakh per month at no extra charge, between the four metros. You can also avail of

    cheque clearing between the four metros, get cash delivery/pickup upto Rs. 25,000/-,

    home delivery of Demand Drafts, at-par cheques, outstation cheque clearance facility,

    etc.

    Demat Account: Conduct hassle-free transactions on your shares. You can also

    access your Demat Account on the Internet.

    Innovative services for your convenience...

    PhoneBanking: 24-hour automated banking services with 39 PhoneBanking numbers

    available.

    ATM 24-hour banking: Apart from routine transactions, you can also pay your

    utility bills and transfer funds, at any of our ATMs across the country all year round.

    Inter-city/Inter-branch Banking: Access your account from any of our 500

    branches in 220 cities.

    NetBanking: Access your bank account from anywhere in the world, at anytime, at

    your own convenience. You can also view your Demat Account through NetBanking.

    International Debit Card: An ATM card you can shop with all over the country andin over 140 countries with. You can spend in any currency, and pay in Rupees.

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    MobileBanking: Access your account on your mobile phone screen at no airtime

    cost. Use SMS technology to conduct your banking transactions from your cellphone.

    BillPay: Pay your telephone, electricity and mobilephone bills through our ATMs,

    Internet, phone or mobile phone. No more standing in long queues or writing cheques.

    Loans for every need

    Now, our loans come to you in easy-to-pay monthly installments, and are available

    with easy documentation and quick delivery.

    Personal Loans: Take a loan of up to Rs. 3 lakh for a wedding, education, purchase

    of a computer or an exciting holiday.

    New Car Loans and Used Car Loans: Finance up to 90% of the cost of a car, new or

    used! And the loans come to you with easy documentation and speedy processing at

    attractive interest rates.

    Loans Against Shares: Get an overdraft up to Rs. 10 lakh at an attractive interest rate

    against physical shares, up to 50% of the market value of your shares. In case of

    Demat Shares, you can get a Loans Against Shares of up to 65% of the market value

    of your shares, till Rs. 20 lakh.

    Two Wheeler & Consumer Loans: To help you buy the best durables for your

    home.

    Demat Account: Protect your shares from damage, loss and theft, by maintaining

    your shares in electronic form. You can also access your demat account on the

    internet.

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    Current Account: Get a personalised cheque book, monthly account statements,

    inter-branch banking and much more.

    Mutual Funds: Apart from a wide choice of mutual funds to suit your individual

    needs, you benefit from expert advice on choosing the right funds based on in-depth

    market analysis.

    International Credit Card: Get an option of Silver, Gold, or Health Plus Credit card,

    accepted worldwide from a world-class bank. If you have outstanding balance on your

    other credit card, you can transfer that balance to this card at a lower interest rate.

    NRI Services: A comprehensive range, backed by unmatched features and world-

    class service, ensures NRIs all the banking support they need.

    Forex Facilities: Avail of foreign currency, travellers cheques, foreign exchange

    demand drafts, to meet your travel needs.

    Insurance*: HDFC Bank now brings you Life Insurance and Pension Solutions like

    Risk Cover Scheme, Savings Scheme, Children's Plan and Personal Plan from HDFC

    Standard Life Insurance Co. Ltd.

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    WORKING CAPITAL

    Working capital is the business's lifeblood, to help keep it flowing, and to. If a

    business is operating profitably, then it should, in theory, generate cash surpluses. If it

    does not generate surpluses, the business will eventually run out of cash and expire.

    The faster a business expands the more cash it will need for working capital

    and investment. The cheapest and best sources of cash exist as working capital right

    within business. Good management of working capital will generate cash will help

    improve profits and reduce risks. The cost of providing credit to customers and

    holding stocks can represent a substantial proportion of a firm's total profits.

    Two elements in the business cycle absorb cash - Inventory (stocks and work-

    in-progress) and Receivables (debtors). The main sources of cash are Payables (your

    creditors) and Equity and Loans.

    Nature of working Capital

    Working capital is the amount required to carry on the day-to-day operations in

    a business. It is difference between the current assets and current liabilities. The term

    current assets refers to those assets which in ordinary course of business can be, or

    will be, converted into cash within one year without undergoing a diminution in value

    and without disrupting the operations of the firm. The major current assets are cash,

    marketable securities, accounts receivables and inventory. Current liabilities are those

    liabilities, which are intended, at their inception, to be paid in the ordinary course of

    business, within a year, out of the current assets or earnings of the concern.

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    Concepts of working Capital

    There are two concepts of working capital, they are:

    Gross working capital: - it refers to the firms investment in current assets.

    Current assets are the assets which can be converted into cash within an

    accounting year and include cash, short-term securities, debtors, bills receivables

    and stock.

    Net working capital: - it refers to the difference between current assets and

    current liabilities or it is that portion of current assets which is financed with long-

    term funds. Current liabilities are those claims of outsiders, which are expected to

    mature for payment within an accounting year and include creditors, bills payable

    and outstanding expenses. Net Working capital can be positive or negative. A

    Positive net working capital will arise when current assets exceed current

    liabilities. A negative working capital occurs when current liabilities are in excess

    of current assets.

    Need for Working Capital

    The need for working capital to run the day-to-day activities cannot be over

    emphasized. We will hardly find a business firm, which does not require any amount

    of working capital. Indeed, firms differ in their requirements of the working capital. in

    order to maximize the wealth of its shareholders a firm should earn sufficient return

    from its operations. Earning a steady amount of profit requires successful activity. The

    firm has to invest enough funds in current assets for generating sales. Current assets

    are needed because sales do not convert into cash simultaneously. There is always an

    operating cycle involved in the conversion of sales into cash.

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    Operating Cycle

    Operating cycle is the time duration required to convert sales, after the conversion of

    resources into inventories, into cash. The continuing flow from cash to suppliers, to

    inventory, to accounts receivable and back to cash is what is called the operating

    cycle. involves :-

    Operating cycle is a continuous process. If it were possible to complete the sequences

    instantaneously, there would be no need for working capital. but since it is not

    possible, the firm is forced to have current assets. Since cash inflows and outflows do

    not match, firms have to necessarily keep cash or invest in short-term securities so that

    they will be in a position to meet obligations when they become due.

    Similarly, adequate inventory provides a cushion against being out of stock. It the

    firms have to be competitive they must sell goods to their customers on credit, when

    necessitates the holding of accounts receivables. It is in these ways than an adequate

    level of working capital is absolutely necessary for smooth sales activity, which, in

    turn, enhances owners wealth.

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    WORKING CAPITAL PRODUCTS

    Overdraft

    Bank provides overdraft facility to the current account holders through which they are

    allowed to withdraw more than their deposits. An over draft is a fluctuating account

    wherein the balance some times may be in credit and at other times in debit. In this

    case a limit is agreed upon by the banker and the customer, beyond which the

    customer is not allowed to withdraw. Interest is charged only on the amount actually

    overdrawn.

    Cash Credits

    A cash credit is essentially a drawing account against credit granted by the bank and is

    operated in the same way as a current account in which overdraft limit has been

    sanctioned. The bank opens a cash credit account in the name of the borrower and

    credits the amount sanctioned as cash credit. The Banker allows the borrower to

    withdraw money up to a certain limit. Interest is charged on the amount actually

    withdrawn from the account.

    Packing credit

    Packing credit is essentially a short-term advance granted by a bank to an exporter toassisting him to buy, process, pack and ship the goods.

    Letter of Credit

    Letter of credit is an indirect form of working capital financing and the banks assume

    only the risk, the being provided by the supplier himself. The purchaser of the goods

    on credit obtains a letter of credit from a bank. The bank undertakes the responsibilityto make payment to the supplier in case the buyer fails to meet his obligations.

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    Bill Discounting

    Under this method a holder of a bill of exchange can get it discounted by the bank.

    After making some marginal deductions as discount, the bank pays the value of the

    bill to the holder. When the bill of exchange matures, the bank gets its payment from

    the acceptor of the bill.

    Term Loan

    If the loans are granted for more than one year they are called term loans. Under this

    method bank advance loans for 3-7 years repayable in yearly or half-yearly

    installments.

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    NEED AND SCOPE OF THE STUDY

    The project concerns "A study on the identification of potential customers for working

    capital funds for HDFC Bank".

    The study is done to find out weather the current account holders of the HDFC bank

    are eligible for working capital funds. The scope and spectrum of this analysis

    revalues in and around banglore city. The primary objective of the study is to identify

    the potential customers from existing current account holders of HDFC Bank for the

    requirements of working capital funds.

    By this study I can understand the customers preferences and their interests about the

    working capital funds. Hope this study will be of considerable use to the company.

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    OBJECTIVES

    Primary objective

    To identify the potential customers from existing current account holders of HDFC

    Bank for the requirements of working capital funds.

    Secondary Objective

    1. To understand the interest rate of working capital funds of other banks.

    2. To identify customers preference for the different types of working capital

    products.

    3. To suggest a suitable target segment for working capital funds for small

    and medium segment.

    4. To know which facility is most widely used by the small and medium

    Enterprises.

    5. To know the existing clients interest towards HDFC Banks working capital

    products.

    6. To analyze the selected respondents in terms of their Vintage, Sales

    Turnover, Collateral etc.

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    RESEARCH METHODOLOGY

    The success of analysis mostly depends on the methodology on which it is carried out.

    The appropriate methodology will improve the validity of the findings generally

    methodology consists of the two type of data collection.

    Title of the study

    "A study on the identification of potential customers for working capital funds

    for HDFC Bank."

    Research Design

    The study is descriptive in nature. Descriptive research includes surveys and fact-

    findings enquire of different kind. However all the efforts have been made to collect

    both primary and secondary data as accurately as possible.

    Universe of the study

    All the current account holders of HDFC Bank C.M.H road Banglore is taken in to

    consideration as the universe of the study.

    Sample Design

    Convenience Sampling.

    Sample Area

    The study was under taken in some major places in banglore city.

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    Sample Size

    The sample size for the study is 75. From whom the data is collected directly from

    their office.

    Data Collection Method

    The study is based on the data collected through primary and secondary

    Sources.

    Primary Data

    A Interview schedule was designed to collect the primary data.

    Secondary Data

    Secondary data was collected from the company broachers, Magazines, Journals,

    websites etc.

    Tools used for analysis

    1. Simple Percentage method.

    2. Graphical aids.

    3. Constructed an index for ranking the eligibility of potential customers on the basis

    of their Turnover, Capacity to offer Collateral security, Vintage and Profitability.

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    METHODOLOGY USED FOR THE CONSTRUCTION

    OF INDEX

    An attempt is made to rank the potential customers to HDFC Bank wherein a ranking

    Index is constructed. There are four parameters, which the bank expects to be a

    potential customer. They are: -

    1. Annual turnover of the Customer should be more than 75lakhs per annum.

    2. The potential customers must be willing to offer collateral security for getting

    assistance.

    3. The potential customer should profit track record of business during the preceding

    three years.

    4. The length of experience\Existence in the business which in vintage to be a

    potential customer.

    Only the customers who fulfill the above four criteria are deemed to be the potential

    customers to the HDFC Bank. Thus to be a potential customer an index number is

    constructed based on the above four criteria of the four criteria appropriate weight age

    is given to identify the potential customer. Among the four criteria the HDFC Bank

    assigns grater weight age to volume of turnover generated by the customer. The

    Ability to offer collateral security as the second important factor. The third factor is

    given to profitability of the business. The fourth factor is given to the track record of

    existence with business. Accordingly the following weights are assigned to the four

    criteria.

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    Criteria Points

    1. Turnover = 40 points

    2. Capacity to offer Collateral = 30 points

    3. Profitability of the Business = 10 points

    4. Years of experience I.e. Vintage

    of theBusiness = 10 points

    Total = 100 points

    It is considered that a potential customer must have at least 100 points in theconstructed index. Out of 75 respondents from whom I have received the response in

    my primary survey, Only 25 customers are observed to fulfilling the bank created

    norms to be potential customers. Now the question is out of 25 customers, who are the

    preferable customer?

    In order to identify the preferable customers, the 25 customers need to be ranked

    based on the bank norms. Index numbers are constructed with appropriate weight age

    for each customer.

    The turnover of each customer is classified into different classes with class interval of

    25lakhs beginning with 75 lakhs to 300 lakhs. We have the following 10 classes.

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    Turn Over Points

    75-100 1

    100-125 2

    125-150 3

    150-175 4

    175-200 5

    200-225 6

    225-250 7

    250-275 8

    275-300 9

    > 300 10

    Depending the reported turnover of a customer. The frequencies are marked for each

    class. The weight age is given according to the magnitude of turnover. The highest

    turnover customer is given a weight age of 10 points whereas the lowest customer

    having a turnover of 75lakh will have weight age of one point. Like that according toreported turnover appropriate weight age points are assigned. The weighted points for

    the turnover criteria are multiplied by the weight age of importance (i.e. 40 points) for

    the turnover criteria in the constructed index.

    The second criterion to be a potential customer given by the bank is for the ability to

    offer collateral security. A weight age of 30 points is assigned if a customer is able to

    offer collateral security. If the a customer is not able to offer a collateral security, then

    the weight age will be zero in the construction of index.

    The third criteria considered for a potential customer considered by the bank is

    profitability of the business. The data available are in the form of profit margin of the

    turnover. The profit margin of the potential customers is ranging from 2 percent to 10

    percent of their turnover. The reported profit margin percentage of a customer is

    multiplied by the corresponding weight age (i.e. 20 points) in the construction of the

    index.

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    The forth criteria which the bank give significance for the identification of potential

    customer is track record of existence i.e. vintage of the customer for which 10 points

    are assigned in the construction of index number.

    The vintage of the customers range from 3 years to 25 years. The length of existence

    of each customer is directly multiplied by the weight age points say 10 points. If a

    customer has three years of experience then his vintage in the index would be

    3*10=30 points, and if 7 years 7*10=70 and so on. Thus index numbers are

    constructed for each potential customer. Based on the value of index numbers the

    potential customers are ranked in the ascending order. A customer whose index is

    highest is ranked as first and so on.

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    LIMITATION

    Scope of the study is limited to Bangalore City only.

    The result may not be widely applicable.

    Since the Data Collection tool is questionnaire, all the limitations of the

    questionnaire will reflect in this study.

    The Respondents were scattered in the city of Banglore and was difficult to

    reach them.

    Some of the respondents hesitated to give the required details due to security

    reasons.

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    Table No:1

    Constitution

    Type Total Number Percentage

    Pvt Ltd 6 8 %

    Public Ltd 0 0 %

    Proprietorship 65 87 %

    Partnership 4 5 %Total 75 100 %

    Interpretation

    From the above table it is understood that 87 % of the respondents were belongs to the

    proprietorship constitution.8% of the respondents are belongs to Pvt ltd, and

    remaining 5% coming under partnership. None of the respondents belongs toPublic Ltd.

    Inference

    The survey shows that majority of the respondents were belonging to sole

    proprietorship type of constitution.

    CHART SHOWING TYPE OF CONSTITUTION

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    CONSTITUTION

    8% 0%

    87%

    5%

    Pvt Ltd

    Public Ltd

    Proprietorship

    Partnership

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    Table No:2

    Segment

    Type Total Number Percentage

    Trader 36 48 %

    Manufacturer 8 11 %

    Distributor 10 13 %

    Retailer 15 20 %

    Services 6 8 %

    Total 75 100 %

    Interpretation

    The above table shows that majority of the customers are belongs to traders that is

    48% after that the retailers 20% followed by distributors 13%, and manufacturers

    11% finally the services 8%

    Inference

    The majority current account holders in the bank were traders and after that retailers

    the other categories are distributors and services.

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    CHART SHOWING TYPE OF SEGMENT

    SEGMENT

    48%

    11%

    13%

    20%

    8%

    Trader

    Manufacturer

    Distributor

    Retailer

    Services

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    Table No:3

    Vintage

    Type Total Number Percentage

    Less than one year 3 4 %

    1-10 years 41 55 %

    10-20years 25 33 %

    20-30 years 4 5 %

    30 years and above 2 3 %

    Total 75 100 %

    Interpretation

    The above table clearly interprets that majority of the respondents coming under the

    experience category 1-10 years. They were above 55%. 33% of the respondents

    belong to 10-20 years of vintage followed by the 20-30 category is about 5% and 4%

    less than one year experience. Finally 3% is has got about 30 years of experience.

    Inference

    The survey shows that majority of the respondents participated in the survey had

    around 1-10 years experience.

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    CHART SHOWING VINTAGE OF BUSINESS

    VINTAGE

    4%

    55%

    33%

    5%3%

    Less than one year

    1-10 years

    10-20years20-30 years

    30 years and above

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    Table No:4

    Current Banker

    Type Total Number Percentage

    SBI 16 21 %

    SBM 8 11%

    HDFC 10 13 %

    ICICI 8 11 %

    STANDARD

    CHARTERED

    4 5 %

    ING VYSHYA 3 4 %

    SYNDICATE BANK 9 12 %

    CENTURION BANK 3 4 %

    VIJAYA BANK 5 7 %

    UCO BANK 5 7 %

    CITY BANK 2 3 %

    CANARA BANK 1 1 %

    LORD KRISHNA

    BANK

    1 1 %

    Total 75 100 %

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    Interpretation

    Out of the 75 respondents 21% of the respondents were dealing with SBI.13% of them

    dealing with HDFC.12% of them deals with Syndicate Bank.11% of the respondents

    were deals with ICICI bank and SBM. 7% of the respondents deal with Vijaya bank

    and UCO bank. And rest of the respondents deals with various banks.

    Inference

    The respondents participated in the survey deals with different banks such us SBI,

    SBM, HDFC, Syndicate Bank, ICICI Bank etc.

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    CHART SHOWING CURRENT BANKER OF THE RESPONDENTS

    CURRENT BANKER

    21%

    11%

    13%11%

    5%

    4%

    12%

    4%

    7% 7%

    3%

    1%

    1%SBI

    SBM

    HDFC

    ICICI

    STANDARD CHARTERED

    ING VYSHYA

    SYNDICATE BANK

    CENTURION BANK

    VIJAYA BANK

    UCO BANK

    CITY BANK

    CANARA BANK

    LORD KRISHNA BANK

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    Table No-5

    Relationship with current Banker

    Type Total Number Percentage

    Less than one year 4 5 %

    1-5 years 51 68 %

    5-10 years 15 20 %

    More than 10 years 5 7 %Total 75 100 %

    Interpretation

    The above table clearly shows that 68% of the respondents have got 1-5 years

    experience with the bank. And 20%of the respondents deals with the banks at around

    5-10 years and 7% of the respondents has got more than 10 years experience finally

    only 5% of the respondents deals with the bank far less than one year.

    Inference

    The majority of the respondents who participated in the survey has got more than 5

    years or up to 5 years experience with the respective bank.

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    CHART SHOWING RELATIONSHIP WITH CURRENT BANKER

    45%

    51

    68%

    15

    20% 5 7%

    0

    10

    20

    30

    40

    50

    60

    Lessthan

    oneyear

    1-5years

    5-10years

    Morethan

    10years

    RELATIONSHIP WITH CURRENT BANKER

    Total Number

    Percentage

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    Table No:6

    Facility Enjoyed

    Type Total Number Percentage

    Cash Credit 11 15 %

    Overdraft 49 65 %

    Term Loan 13 17 %

    Packing Credit 0 0 %

    Bill discounting 0 0 %Letter of credit 0 0 %

    Total 75 100 %

    Interpretation

    From the above table it is clear that 65% of the respondents are enjoying the O.D

    facility followed by 17% at the respondents are enjoying term loans and 15% of the

    respondents enjoying C.C facility. None of the respondents are enjoying the like

    Packing credit, Bill Discounting and Letter of Credit.

    Inference

    Majority of the respondents opinioned that the most preferred working capital product

    was overdraft followed by Term Loan and Cash Credit.

    CHAPTER SHOWING FACILITY ENJOYED

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    FACILITY ENJOYED

    15%

    67%

    18%

    0%

    0%

    0%

    Cash Credit

    Overdraft

    Term Loan

    Packing Credit

    Bill discounting

    Letter of credit

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    Table No:7

    Facility Value

    Type Total Number Percentage

    Less than 1lakh 1 1 %

    1-20lakh 58 77 %

    20-40lakh 7 9 %

    40-60lakh 3 4 %

    60-80lakh 1 1 %

    80-1crore 1 1 %

    1crore & above 2 3 %

    Total 75 100 %

    Interpretation

    The above table clearly shows that majority of the respondents are enjoying 1-20lakhs

    facility value that is 77%.Followed by 9% of the customers enjoying 20-40lakhs and

    4% of the respondents has got 40-60lakhs of facility value.3% of the customers are

    having 1crore and above facility value and finally 1% of the respondents are using less

    than one lakh, 60lakhs, 80lakhs respectively.

    Inference

    The majority portion of the respondents has got more than 1lakh or up to 20lakh

    facility value with their respective banker

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    CHART SHOWING FACILITY VALUE

    FACILITY VALUE

    1%

    80%

    10%4%1%1% 3% Less than 1lakh

    1-20lakh

    20-40lakh40-60lakh

    60-80lakh

    80-1crore

    1crore & above

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    Table No:8

    Rate of interest

    Type Total Number Percentage

    9.5-11 % 17 23 %

    11-12 % 19 25 %

    12-13 % 29 39 %

    13 & above 3 4 %

    Total 75 100 %

    Interpretation

    The above table shows that 39% of the total respondents come under

    12-13% rate of interest.25% of the respondents are paying 11-12% of interest rate and

    23% of the respondents are paying 9.5-11% interest and 4% of the respondents pays

    13% and above interest.

    Inference

    Major portion of the respondents are paying 12-13% of interest rate to the respective

    bank for their loan.

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    CHART SHOWING RATE OF INTEREST

    RATE OF INTEREST

    25%

    28%

    43%

    4%

    9.5-11 %

    11-12 %

    12-13 %

    13 & above

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    Table No:9

    Collateral Offered

    Type Total Number Percentage

    Residential 55 73 %

    Commercial 18 24 %

    Industrial 2 3 %

    Other 0 0 %

    Total 75 100 %

    Interpretation

    From the above table it is clear that 73% of the total respondents are offering

    residential property as collateral.24% of the respondents are offering commercial

    property as collateral. And 3% of the respondents are offering industrial property as

    collateral. None of the respondents are offering property in others category.

    Inference

    The survey shows that majority of the respondents are offering collateral in the form

    of residential property.

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    CHART SHOWING COLLATERAL OFFERING

    CAPACITY OF RESPONDENTS

    COLLATERAL OFFERED

    73%

    24%

    3%0%

    Residential

    Commercial

    Industrial

    Other

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    Table No:10

    Annual sales turnover

    Type Total Number Percentage

    < 75lakh 48 64 %

    75-100lakhs 16 21 %

    100-200lakhs 10 13 %

    200-300lakhs 1 1 %

    Total 75 100 %

    Interpretation

    From the above table it is clear that 64% of the respondents are having less than

    75lakh turnover 21% of the respondents has got 75-100lakh turnover followed by

    13% has got 100-200lakh turnover and finally 1% has got

    200-300lakh turn over.

    Inference

    The annual sales turnover of the majority of the respondents are less than 75lakhs

    followed by 75-100lakh turnover.

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    CHART SHOWING ANNUAL SALES TURNOVER OF RESPONDENTS

    ANNUAL SALES TURNOVER

    65%

    21%

    13%1%

    < 75lakh

    75-100lakhs100-200lakhs

    200-300lakhs

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    Table No:11

    Profit Margin

    Type Total Number Percentage

    2-4 % 29 39 %

    4-6 % 14 19 %

    6-8 % 15 20 %

    8-11 % 15 20 %

    Total 75 100 %

    Interpretation

    The above table shows that the majority of the respondents are having a profit margin

    of 2-4% that is 39%.Followed by 20% of the respondents has got 6-8% and 8-11% of

    profit margin. And finally 19% of the respondents has got 4-6% profit margin.

    Inference

    The survey show that majority of the respondents has got more than 2% or up to 4%

    of profit margin. Followed by 6-8% and 8-11% respectively.

    CHART SHOWING PROFIT MARGIN OF RESPONDENTS

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    PROFIT MARGIN

    39%

    19%

    21%

    21%

    2-4 %

    4-6 %

    6-8 %

    8-11 %

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    Table No:12

    Satisfied with current Bankers service

    Type Total Number Percentage

    Good 39 52%

    Very good 22 29%

    Satisfactory 11 15%

    Not Satisfactory 1 1%

    Total 75 100 %

    Interpretation

    From the above table it is clear that 52% of the total respondents are having an

    opinion as good towards current bankers service. Followed by 29% of the

    respondents commented as very good and 15% of the customers commented as

    satisfactory .Finally 1% of the customers are not satisfactory with the existing level of

    service.

    Inference

    Majority of the customers say 99% of the respondents were found to be satisfied with

    the current banker.

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    CHART SHOWING THE RESPONDENTS OPINION ABOUT THEIR

    CURRENT BANKER

    SATISFIED WITH CURRENT BANKERS SERVICE

    54%30%

    15% 1%

    Good

    Very good

    Satisfactory

    Not Satisfactory

    3

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    Table No:13

    Interested to move to HDFC Bank

    Type Total Number Percentage

    Yes 54 72 %

    No 21 28 %

    Total 75 100 %

    Interpretation

    The table shows that majority of the respondents are ready to move to HDFC Banks

    working capital funds and 20% are not willing to move.

    Inference

    The survey shows that majority of the respondents are ready to move to HDFC from

    the current bank. Due to the speedy transaction, competitive interest rates and service

    quality.

    CHART SHOWING RESPONDENTS INTEREST TO MOVE TO

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    HDFC BANK

    INTERESTED TO MOVE TO HDFC BANK

    72%

    28%

    Yes

    No

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    TABLE SHOWING RANK OF THE PREFERRED

    CUSTOMERS

    Table showing rank 1-5

    Number Company

    Name

    Sales

    turnover

    Collatera

    l security

    Profitability Vintage Total

    weigh

    t age

    Rank

    1 Padmini

    Marketing

    400 30 60 140 630 1

    2 Rajadhani

    Tyres

    240 30 120 200 590 2

    3 S.P.N

    Enterprises

    320 30 80 130 560 3

    4 Sujeeth

    Enterprises

    240 30 60 200 530 4

    5 Paramesh

    wari

    Traders

    240 30 40 200 510 5

    Criteria-1 Criteria-2 Criteria-3 Criteria-4

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    Table showing Rank 5-10

    Number Company

    Name

    Sales

    turnover

    Collateral

    security

    Profitability Vintage Total

    weight

    age

    Rank

    6 Topaz 320 30 80 70 500 6

    7 Electrex

    India Pvt Ltd

    240 30 60 150 480 7

    8 Sree

    Nagalakshmi

    240 30 40 150 460 8

    9 Hittico 40 30 120 250 440 9

    10 Sri Andavar 40 30 140 200 410 10

    Criteria-1 Criteria-2 Criteria-3 Criteria-4

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    Table showing rank 10-15

    Number Company

    Name

    Sales

    turnover

    Collateral

    security

    Profitability Vintage Total

    weight

    age

    Rank

    11 Mahaveer 40 30 140 150 360 11

    12 Mubalia

    Traders

    240 30 50 30 350 12

    13 Sreegopu

    Enterprises

    40 30 120 150 340 13

    14 Sky

    Marketing

    40 30 140 120 330 14

    15 CeeDee

    Enterprises

    160 30 80 50 320 15

    Criteria-1 Criteria-2 Criteria-3 Criteria-4

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    Table showing rank 15-20

    Number Company

    Name

    Sales

    turnover

    Collateral

    security

    Profitability Vintage Total

    weight

    age

    Rank

    16 Apotex 80 30 40 150 300 16

    17 A one silks 40 30 120 100 290 1718 Meridian 40 30 180 40 290 17

    19 Lakshmi

    Enterprises

    40 30 80 130 280 18

    20 Cotton Fab 80 30 60 100 270 19

    21 Rvg &

    Sons

    80 30 80 70 260 20

    Criteria-1 Criteria-2 Criteria-3 Criteria-4

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    Table showing rank 20-25

    Number Company

    Name

    Sales

    turnover

    Collateral

    security

    Profitability Vintage Total

    weight

    age

    Rank

    22 JK garments 40 30 120 60 250 21

    23 Kanchipuram

    Silks

    40 30 60 90 220 22

    24 Ambika 40 30 80 70 220 22

    25 Nexus 40 30 60 10 140 23

    Criteria-1 Criteria-2 Criteria-3 Criteria-4

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    FINDINGS

    Majority of therespondents aretraders.

    Manufacturing firms are having high sales turnover and need more funds than

    other segment.

    Retailers are having high profit margin than other segment.

    Manufacturers, traders and distributors are showing more interest than other

    category because this segments needs more working capital funds for their

    operation.

    Majority of the respondents are using overdraft and cash credit facility because

    of convenience.

    Most of the respondents are really interested in HDFC banks working capital

    funds because of its innovative products and services.

    Other reason for opting Working capital funds from HDFC is comparatively

    low interest rates and easy terms and conditions.

    Majority of respondents has got more than one year or less than 10 years

    experience in business i.e. vintage.

    Majority of the respondents are banking with SBI because of easy terms and

    conditions.

    Other banks are also offering less interest rate.

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    Majority of the respondents has got 1-5 years relation with the current banker

    for their cash transactions.

    Majority of the respondents has got working capital loans in between

    1-20lakhs.

    All most all of the respondents are offering collateral security.

    Majority of the respondents are having less than 75lakhs turnover. But the

    eligibility as per HDFC Bank is more than 75lakh turn over.

    Majority of the respondents are satisfied with their current banker in terms of

    loans.

    Customers mainly taking working capital funds for improving their day today

    business activities.

    An index is constructed to find out the most preferred customer and the least

    preferred customer. Base on the index a list of eligible customers for HDFC

    Bank is created they are grouped in to five clusters based on their rank

    obtained. So the company can accordingly target based on the most eligible and

    least eligible customer.

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    SUGGESTION AND RECOMMENDATIONS

    1. Base on the index a list of eligible customers for HDFC Bank is created they

    are grouped in to five clusters based on their rank obtained. So the company

    can accordingly target based on the most eligible customers say 1 to 5 and least

    eligibility say 21 to 23.And the companies ranked in their order of importance

    with respect to the eligibility fulfilling criteria like turnover, capacity to offer

    collateral security, Profitability and Vintage.

    2. With respect to demand for working capital products there is huge potential

    even among the existing current account holders say out of 5000 current

    account holders at least one third of them might be eligible and can be easily

    tapped going by the current study.

    3. The company can attract the customers by using the strong sales force to tap

    the potential customers and try to influence the prospective customers because

    most of them are willing to shift.

    4. As among its prospective clients it is enjoying a very good brand image the

    company can use this aspect to its advantage and win more customers.

    5. Over and above the prospect of their own current account holders company can

    also generate leads through referrals.

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    CONCLUSION

    The project work entitled made an attempt to find out the potential customers and their

    interest towards HDFC Bank. Through the study researcher came to know about

    various factors that make their influence in working capital funds.

    The survey shows that majority of the respondents are ready to move to HDFC from

    their current banker. Because of its innovative products and the speedy dispersal of

    loans, competitive interest rates and service quality. Other reason for opting working

    capital funds from HDFC is easy terms and conditions. An index is constructed to find

    out the most preferred customer and the least preferred customer. Base on the index a

    list of eligible customers for HDFC Bank is created they are grouped in to five

    clusters based on their rank obtained. So the company can accordingly target based on

    the most eligible and least eligible customer.

    As among its prospective clients it is enjoying a very good brand image the company

    can use this aspect to its advantage and win more customers. With respect to demand

    for working capital products there is huge potential even from its existing current

    account holders at least one third of them might be eligible and can be easily tapped

    going by the current study.

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    BIBLIOGRAPHY

    Books: -

    AuthorsAuthors

    Kothari C.R, Research Methodology

    New Age International (P) Limited, New Delhi, 1985.

    Dr. D.D Sharma Marketing Research

    Sulthan Chand & sons 4792\23

    Daryagni, New Delhi-110002

    MY Khan, P.K Jain, Financial Management

    Third Edition,

    Tata McGraw-Hill Publishing Company Limited.

    New Delhi. 2000

    S.P Guptha, Operation Research ,S.Chand & Co New Delhi-110055

    Website