Strategic management process of HDFC Bank

Strategic Management Process 1

Chapter 1: THE BANKING INDUSTRY

1.1 INTRODUCTION

In today’s dynamic world banks are inevitable for the development of a country.

Banks play a pivotal role in enhancing each and every sector. They have helped bring

a draw of development on the world’s horizon and developing country like India is no

exception.

Banks fulfill the role of a financial intermediary. This means that they act as a vehicle

for moving finance from those who have surplus money to (however temporarily)

those who have deficit. In everyday branch terms, the banks channel funds from

depositors whose accounts are in credit to borrowers who are in debit. Without the

intermediary of the banks, both their depositors and their borrowers would have to

contact each other directly. This can and does happen of course. This is what has lead

to the very foundation of financial institution like banks. The Banks have developed

their roles to such an extent that a direct contact between the depositors and borrowers

in now known as disintermediation. Banking industry has always revolved around the

traditional function of taking deposits, money transfer and making advances. These

three are closely related to each other, the objective being to lend money, which is the

profitable activity of the three. The Banks have introduced progressively more

sophisticated versions of these services and have diversified introduction in

numerable areas of activity not directly relating to this traditional trinity.

1.2 ABOUT THE BANKING INDUSTRY

1.2.1. History of Banking in India

Without a sound and effective banking system in India, there cannot be a healthy

economy. For the past three decades India's banking system has several outstanding

achievements to its credit. The most striking is its extensive reach. In fact, Indian

banking system has reached even to the remote corners of the country. This is one of

the main reasons of India's growth process.

2 Strategic Management Process

The government's regular policy for Indian bank since 1969 has paid rich dividends

with the nationalization of 14 major private banks of India. Money has become the

order of the day.

The first bank in India, though conservative, was established in 1786. From 1786 till

today, the journey of Indian Banking System can be segregated into three distinct

phases. They are as mentioned below:

Early phase from 1786 to 1969 of Indian Banks

Nationalization of Indian Banks and up to 1991 prior to Indian Banking

Sector Reforms.

New phase of Indian Banking System with the advent of Indian Financial

& Banking Sector Reforms after 1991.

The banking industry has moved gradually from a regulated environment to a

deregulated market economy. The market developments kindled by liberalization and

globalization have resulted in changes in the intermediation role of banks. The pace of

transformation has been more significant in recent times with technology acting as a

catalyst. While the banking system has done fairly well in adjusting to the new market

dynamics, greater challenges lie ahead.

1.2.2. Indian Banking System

The banking scenario in India has been changing at fast pace from being just the

borrowers and lenders traditionally, the focus has shifted to more differentiated and

customized product/service provider from regulation to liberalization in the year

1991, from planned economy to market. Political compulsion’s brought about

nationalization of bank in 1969 and lobbying by bank employees and their unions

added to the list of nationalized banks a few years later. Slowly the unions grew in

strength, while bank management stagnated. In the meantime, technology was

becoming a global phenomenon lacking a vision of the future and the banks erred

badly in opposing the technology upgradation of banks.

The rules of the game under which banks operated changed in 1993. Norms or income

Recognition, Assets classification and loan loss provisioning were put in place and

capital adequacy ratio become mandatory.


The amendment of banking regulation act in 1993 saw the entry of new private sector

banks and foreign banks.

Figure 1 :- Structure of Banking System in India

At present there are 27 Public Sector Banks, about 30 Private Sector Banks, 40

Foreign Banks and 196 RRB’s, 52 Urban Co-operative Banks, 16 State Co-operative

Banks, 19 Nationalized Banks, 8 State Bank of India Associates and about 68,000

branches exist across the country.

1.2.3. Growth and present status of the industry

Currently (2014), banking in India is fairly mature in terms of supply, product range

and reach-even though reach in rural India still remains a challenge for the private

sector and foreign banks. In terms of quality of assets and capital adequacy, Indian

banks are considered to have clean, strong and transparent balance sheets relative to

other banks in comparable economies in its region. The Reserve Bank of India is an

autonomous body, with minimal pressure from the government.


Figure 2 :- Projected growth rate for banks

1.2.4. Future of the industry

The burden of reporting and other regulatory requirements will fall heavily and

disproportionately on small banks unless remedial action is taken. Further advances in

information technology will permit the development of new products, BANK, and

risk-management techniques but may also pose important competitive and

supervisory issues. Nonbank entities will continue to offer bank-like products in

competition with banks, raising new the question of whether banks are still “special”

and, more fundamentally, whether banks are sufficiently different from nonblank

firms to justify the maintenance of a safety net for banks. It is useful, therefore, to try

to chart the course of the banking industry in the next five to ten years and to consider

what policy issues the industry and regulators will face. The authors of this study do

not pretend to be clairvoyant. They are mindful of the many financial predictions that

were once offered with confidence but turned out to be wrong or premature. This

study is perhaps best described as an exercise in strategic thinking. Its approach is to

analyze what has happened in the recent past, consider in detail reasons for expecting


Figure 3 :- Challenges faced by the banking industry

recent trends to continue or to change, and draw the consequences for bank and

regulatory policies. As always, uncertainties abound, and events that may now appear

fairly improbable may in fact shape the future.


Chapter 2: THE COMPANY PROFILE: HDFC BANK LTD.

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 RBI’s liberalization 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, strong

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

ideally positioned to promote a bank in the Indian environment.

CAPITAL STRUCTURE

As on March 31, 2014 the authorized share capital of the Bank is Rs. 550 crore. The

paid-up capital as on the said date is Rs 479,81,00,870/- (2399050435 equity shares of

Rs. 2/- each). The HDFC Group holds 22.64 % of the Bank's equity and about 16.97

% of the equity is held by the ADS / GDR Depositories ( in respect of the bank's

American Depository Shares (ADS) and Global Depository Receipts (GDR) Issues).

34.11 % of the equity is held by Foreign Institutional Investors (FIIs) and the Bank

has 4,22,314 shareholders.


CBoP & TIMES BANK AMALGAMATION

On May 23, 2008, the amalgamation of Centurion Bank of Punjab with HDFC Bank

was formally approved by Reserve Bank of India to complete the statutory and

regulatory approval process. As per the scheme of amalgamation, shareholders of

CBoP received 1 share of HDFC Bank for every 29 shares of CBoP. The

amalgamation added significant value to HDFC Bank in terms of increased branch

network, geographic reach, and customer base, and a bigger pool of skilled

manpower.

DISTRIBUTION NETWORK

HDFC Bank is headquartered in Mumbai. As of March 31, 2014, the Bank’s

distribution network was at 3,403 branches in 2,171 cities. All branches are linked on

an online real-time basis. Customers in over 1397 locations are also serviced through

Telephone Banking. The Bank also has a network of 11,256 ATMs across India.

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.

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 core

banking software, the Corporate Banking business is supported by Flexcube, while

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

are open, scaleable and web-enabled. 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.


MANAGEMENT

Mr. C.M. Vasudev has been appointed as the Chairman of the Bank with effect from

6th July 2010. A retired IAS officer, Mr. Vasudev has been a Director of the Bank

since October 2006. He has held several key positions in India and overseas,

including Finance Secretary, Government of India, Executive Director, World Bank

and Government nominee on the Boards of many companies in the financial sector.

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

25 years. 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.

BUSINESSES

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

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

retail side. The bank has three key business segments:

(i) Wholesale Banking- 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.


(ii) 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.

(iii) Retail Banking- The objective of the Retail Bank is to provide its target market

customers a full range of financial products and banking services, giving the customer

a one-stop window for all his/her banking requirements. The products are backed by

world-class service and delivered to customers through the growing branch network,

as well as through alternative delivery channels like ATMs, Phone Banking,

NetBanking and Mobile Banking. The HDFC Bank Preferred program for high

net worth individuals, the HDFC Bank Plus and the Investment Advisory Services

programs have been designed keeping in mind needs of customers who seek distinct

financial solutions, information and advice on various investment avenues. The Bank

also has a wide array of retail loan products including Auto Loans, Loans against

marketable securities, Personal Loans and Loans for Two-wheelers. It is also a

leading provider of Depository Participant (DP) services for retail customers,

providing customers the facility to hold their investments in electronic form.

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

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

as well. The Bank launched its credit card business in late 2001. 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.


RATINGS

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".

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.

AWARDS & ACHIEVEMENTS - BANKING SERVICES

Mr Paresh Sukthankar, Deputy

Managing Director, HDFC Bank

accepting the D&B Corporate Award

2014

HDFC Bank began operations in 1995 with a simple mission: to be a "World-class

Indian Bank". We realised that only a single-minded focus on product quality and

service excellence would help us get there. Today, we are proud to say that we are

well on our way towards that goal.


2014

Dun & Bradstreet - Manappuram Finance

Limited Corporate Award 2014

Best Corporate in Banking Sector

2013

Businessworld Best Bank in India (Large Banks)

Business Standard Mr Aditya Puri - Banker of the Year

2013

Business India Best Bank 2013

Global Finance Survey -World's Best

Banks 2013 Best Bank in India

IBA Innovation Awards Most Innovative use of Technology

Forbes Asia Fab 50 Companies List for the 7th year

Figure 4 :- Milestones in the history

ORGANIZATION STRUCTURE AND ORGANIZATION HIERARCHY :

The organization structure of the company is headed by the administrative department

which coordinates and controls the executive department. The executive department is

a link from the top and the bottom comprising of the lower level employees such that

they work together to fulfill the common objective of getting business from the

persons who get in touch with them and see to it that they are provided with the best

of the BANK which constitute giving financial advise to providing Account to the

customers. The lower level employees and the corporate financial consultants work

together to see to it that the database for providing financial BANK to sufficient

number of people is made.

http://www.hdfcbank.com/htdocs/aboutus/awards/pdf/DnB-Corporate-Awards2014.pdf

http://www.hdfcbank.com/htdocs/aboutus/awards/pdf/Businessworld-Best%20Bank.pdf

http://www.hdfcbank.com/htdocs/aboutus/awards/pdf/Website_Mr_Aditya_Puri_amed_Business_Standard_Banker_of_the_Year_2013.pdf

http://www.hdfcbank.com/htdocs/aboutus/awards/pdf/Website_Mr_Aditya_Puri_amed_Business_Standard_Banker_of_the_Year_2013.pdf

http://www.hdfcbank.com/htdocs/aboutus/awards/pdf/Website_HDFC_Bank_tops_Business_Today_Best_Banks_Survey.pdf

http://www.hdfcbank.com/htdocs/aboutus/awards/pdf/Website_HDFC_Bank_named_Best_Bank_in_India.pdf


Each team lead has a team comprising only of both senior as well as junior market

research analyst who aid the team lead in the entire market research process as it has

been discussed previously. This is the basic organizational structure followed by

HDFC BANK.

Figure 5 :- Organizational Hierarchy

PRODUCT AND SERVICE PROFILE OF THE ORGANIZATION :-

HDFC Bank offers a bunch of products and services to meet the every need of the

people. The company cares for both, individuals as well as corporate and small and

medium enterprises. For individuals, the company has a range of accounts,

investment, and pension scheme, different types of loans and cards that assist the

customers. The customers can choose the suitable one from a range of products which

will suit their life-stage and needs. For organizations the company has a host of

customized solutions that range from Funded services, Non-funded services, Value

addition services, Mutual fund etc. These affordable plans apart from providing long

Managing Director

Group Head (Regional

Branch Banking)

Regional Head/ Branch Banking Head

Circle Head/ Zonal Head

Cluster Head

Branch Manager

ABM, PB Sales, PB Welcome Desk, PB Authorizer, Tellers, Teller Authorizer, Head RMs, RMs


term value to the employees help in enhancing Goodwill of the company. The

products of the company are categorized into various sections which are as follows:

Personal Banking Salary Accounts

Saving Accounts Fixed Deposits

Demat Account Safe Deposit Lockers

Loans Credit Cards

Debit Cards

Prepaid Cards

Investments & Insurance Forex Services

Payment Services NetBanking

InstaAlerts MobileBanking

InstaQuery ATM

PhoneBanking NRI Banking

Rupee Savings Accounts Rupee Saving Accounts

Rupee Fixed Deposits Foreign Currency Deposits

Accounts for Returning Indians Quick remit (North America, UK,

Europe, Southeast Asia)

India Link (Middle East, Africa) Coequal Lock Box

Figure 6 :- Products & Services of the bank


Chapter 3: STRATEGIC MANAGEMENT PROCESS (SMP)

Definition :

It is the full set of commitments, decisions and actions required for a firm to

achieve strategic competitiveness and above average returns.

Strategic competitiveness: when a firm successfully formulates and implements a

value creating strategy

Above –average Returns: Returns in excess of what an investor expects to earn

from other investments with a similar amount of risk

Figure 7 :- Strategic Management Process


Chapter 4: VISION, MISSION & BUSINESS FOCUS

3.1. HDFC GOALS

1. Develop close relationships with individual households.

2. Maintain our position as the premier housing finance institution in the country.

3. Transform ideas into viable and creative solutions.

4. To grow through diversification by gaining leverage from our existing client

base.

5. To nurture the values and ethos of Brand HDFC through all its Subsidiaries

and Associate Companies.

3.2. VISION STATEMENT OF HDFC BANK

To build a World-Class Indian Bank.

By offering a wide variety of relevant products and services…

1) Tailored solutions for customers

2) Ensure Unmatched customer service

3) Providing the solution at right price

4) Have wide and extensive reach

The delivery backbone for providing the above shall be by adopting world class

technology.

3.3. MISSION STATEMENT OF HDFC BANK

Our mission is to be "a World Class Indian Bank", benchmarking ourselves against

international standards and best practices in terms of product offerings, technology,

service levels, risk management and audit & compliance. The objective is to build

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

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

a healthy growth in profitability, consistent with the Bank's risk appetite. We are


committed to do this while ensuring the highest levels of ethical standards,

professional integrity, corporate governance and regulatory compliance.

3.4. 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 five core values: Operational Excellence, Customer Focus, Product

Leadership, People and Sustainability.

3.5. BUSINESS PHILOSOPHY

HDFC Bank is a young and dynamic bank, with a youthful and enthusiastic team

determined to accomplish the vision of becoming a world-class Indian bank.

Our business philosophy is based on five core values - Customer Focus,

Operational Excellence , Product Leadership, People and Sustainability. We

believe that the ultimate identity and success of our bank will reside in the exceptional

quality of our people and their extraordinary efforts. For this reason, we are

committed to hiring, developing, motivating and retaining the best people in the

industry.


Chapter 5: ENVIRONMENTAL ANALYSIS

Definition :

Environment refers to all external forces which have a bearing on the functioning of

business. ”Environment are largely if not totally external, and beyond the control of

individual industrial enterprises and their management. These are essentially the

givers within which firms and their managements must operate in a specific country

and they vary, from country to country”.

Figure 8 :- Environment analysis

Business Decision

Internal Environment

Mission / Objectives Management Structure

Internal Power Relationship

Physical Assets & facilities

Company image Human resources

Financial Capabilities

Technological Capabilities

Marketing Capabilities

Financiers Suppliers

Customers

Competitors

Public

Mktg Intermediaries

Micro Environment

Economic Technological

Global

Demographic

Socio-Cultural

Political

Macro Environment

BUSINESS ENVIRONMENT


Chapter 6: INTERNAL ENVIRONMENTAL ANALYSIS

Any business has certain vision, mission and objectives and a strategy to achieve

them. Formulation of strategy is defined as establishing a proper firm-environment fit.

Indeed the objectives should be based on an assessment of the external environment

and the organizational factors (internal environment).

• Vision

• Mission

• Objectives

• Management Structure

• Human Resources

• Financial Factors

• Company Image and Brand Equity

Internal anaylsis tools used

(i) SWOT ANAYLSIS

(ii) BCG MATRIX


(i) SWOT ANALYSIS OF HDFC BANK

Strengths

HDFC bank is the second largest private banking sector in India having 2,201

branches and 7,110 ATM’s

HDFC bank is located in 1,174 cities in India and has more than 800 locations

to serve customers through Telephone banking

The bank’s ATM card is compatible with all domestic and international

Visa/Master card, Visa Electron/ Maestro, Plus/cirus and American Express.

This is one reason for HDFC cards to be the most preferred card for shopping

and online transactions

HDFC bank has the high degree of customer satisfaction when compared to

other private banks

The attrition rate in HDFC is low and it is one of the best places to work in

private banking sector

HDFC has lots of awards and recognition, it has received ‘Best Bank’ award

from various financial rating institutions like Dun and Bradstreet, Financial

express, Euro money awards for excellence, Finance Asia country awards etc

HDFC has good financial advisors in terms of guiding customers towards right

investments

Weaknesses

HDFC bank doesn’t have strong presence in Rural areas, where as ICICI bank

its direct competitor is expanding in rural market

HDFC cannot enjoy first mover advantage in rural areas. Rural people are

hard core loyals in terms of banking services.

HDFC lacks in aggressive marketing strategies like ICICI

The bank focuses mostly on high end clients

Some of the bank’s product categories lack in performance and doesn’t have

reach in the market

The share prices of HDFC are often fluctuating causing uncertainty for the

investors


Opportunities

HDFC bank has better asset quality parameters over government banks, hence

the profit growth is likely to increase

The companies in large and SME are growing at very fast pace. HDFC has

good reputation in terms of maintaining corporate salary accounts

HDFC bank has improved it’s bad debts portfolio and the recovery of bad

debts are high when compared to government banks

HDFC has very good opportunities in abroad

Greater scope for acquisitions and strategic alliances due to strong financial

position

Threats

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

Though it is a slight variation it’s not a good sign for the financial health of

the bank

The non banking financial companies and new age banks are increasing in

India

The HDFC is not able to expand its market share as ICICI imposes major

threat

The government banks are trying to modernize to compete with private banks

RBI has opened up to 74% for foreign banks to invest in Indian market.


SWOT ANAYLSIS OF HDFC BANK

HELPFUL HARMFUL

Figure 9 :- SWOT Analysis of the bank

2nd largest private sector bank

Approx. 3400 branches and 11250

ATMs across country

Employee friendly organization- lower

attrition rates as compared to other competitors

Customer friendly approach

Sound financial advisors for investment

clients

Adoption of latest technology for bank

softwares and net banking facilities

Low minimum balance in savings

account

Low presence in rural areas as compared to most of its top

competitors

Lack of aggressive marketing

strategies in comparison to other banks

Heavy focus on mid and high level clients

Not all the verticals of the bank are

performing successfully Unstable share prices

Scope in rural market

Steady customer oriented approach to

drive business in future

Corporate accounts, especially of the

growing SME sector

Operations abroad – scope in countries

like Bangladesh, UAE and Sri Lanka

Greater scope for acquisitions and

strategic alliances due to strong financial position

Improvement in bad debt recovery strategies

Increasing percentage if Non-Performing assets of the company

Major competition threat from banks like ICICI, HSBC, AXIS and SBI

Increasing number of NBFCs and new age banks

Attractive interest rates provided by PSU banks in comparison to private

banks

Shifting consumer base from private

players to PSU due to modernization of PSUs

RBI has opened up to 74% for foreign

banks to invest in Indian market

STRENGTHS WEAKNESSES

OPPORTUNITIES THREATS


(ii) BCG MATRIX

The BCG matrix is a chart that had been created by Bruce Henderson for the Boston

Consulting Group in 1970 to help corporations with analyzing their business units or

product lines. This helps the company allocate resources and is used as an analytical

tool in brand marketing, product management, strategic management, and portfolio

analysis.

HDFC Bank

HDFC BANK stands at star position in BCG matrix. As HDFC bank have the high

market growth and they also have high market share. There is a lot of growth

potential for the banking industry because of increasing disposable income of

customers, increasing working class, more volatility in other markets also increasing

importance of savings and already discussed almost 30% of the market is still

untapped.

HDFC Insurances

In insurance sector HDFC’s most of the products are in star position. HDFC insurance

products have high market share and high growth rate. So we have lot of opportunity

for investment.


HDFC Mutual Funds

Mutual fund stands at cash cow. This shows that HDFC high market share and low

market growth rate in mutual funds. This means we should only focus on profitable

products and try to investment on those products which are low market growth rate

but perform well if proper investment is theirs.

Growth and margins

Having the funds to grow is only half the problem. However, will the company

actually grow? The sluggish rate of growth in the economy suggests that growth could

indeed pose a problem. In fact, in the first quarter of the financial year-ended 2009,

HDFC Bank was able to record only a 43 per cent growth in profits. This, however,

may not be good enough to justify the valuation commanded by the stock. And if, due

to the slowdown, the bank is forced to invest in government securities rather than in

loans, which generate higher returns, the margins will be affected. On the other hand,

competition from other banks may increase. Hence it can be concluded that HDFC

BANK stands at cash cow in BCG matrix.

Figure 10 :- BCG Matrix


Chapter 7: EXTERNAL ENVIRONMENTAL ANALYSIS

PESTEL ANAYLSIS

Political factors:

Government regulations: Banks as a financial body are always restricted with

policies and rules.

The RBI closely governs the banks and other financial institutions and budgets

made by the government affects the banking activities and also its business to a

certain extent.


Government’s support to the PSU banks has an impact on the performance of

other private players.

RBI is going to allow foreign banks to invest upto 74% into the Indian market.

Economic factors:

Every year, the changes in monetary policy affect the workings of the bank.

The decisions on the monetary policy impact the interest rates at which banks

lend money.

In the last 2 years RBI has modified its monetary rates 13 times to curb

inflation and other financial risks related.

Banking sector has played a major role in the increasing GDP of the country,

thereby providing its support to strengthen the economy.

Robust economic policies by the regulatory body helped Indian banks survive

the severe meltdown of 2009.

Social factors:

The life style of Indians consumers is rapidly changing and the buying power

has also grown by leaps and bounds

The rural market is expanding rapidly too. The concept of banking has slowly

begun to sink in the minds of the rural population and is making an impact on

the lives of the rural population and also on the banks operating in rural areas.

Illiteracy is still an issue that India is fighting with and therefore not many can

read and understand the terms of banks, thereby making them keep distance

from banks.

Technological factors:

Banks have a wide network of ATMs lately.

Automated voice responsive machines help bank tackle small queries of

customers.

Improved net banking and Mobile facility provided by banks has helped many

customers save time, money and also unnecessary hassles.


Internet banking or banking via the Internet can be considered

a remarkable development in the banking sector. The ability

to carry out banking transactions through the Internet has

empowered customers to execute their financial transactions

within the comfort of their homes and offices.

Environmental factors:

HDFC Bank Joins The Anti-Plastic Drive

One of India's leading banks- HDFC Bank, is partnering with the city's

municipal authorities to educate people about the danger posed by plastic bags

to the environment, and to offer recycled paper bags instead.

The bank reinforced the Kolkata Municipal Corporation (KMC) initiated anti-

plastic awareness drive by distributing recycled and eco-friendly paper bags to

retailers and customers across nine markets in the city.

The initiative christened "Be Independent of Plastic on Independence Day" is

undertaken by the bank to encourage people to proactively get rid of plastic

bags and use eco-friendly recycled paper bags.

HDFC bank urges its customers to use the internet to transact with them

especially in case of Mutual Funds by using HDFCMF Online …slogan

being….

‘With HDFCMC Online you will help save a lot of paper and we encourage

you to choose this eco-friendly mode of transacting. We hope you will help us

in our endeavor to protect our environment and help us SAVE PAPER, SAVE

TREES.’


Legal factors:

Initiating appropriate legal proceedings as per Collections requirement and

helping Collections in meeting numbers and deadlines. Within the TAT

prescribed for each process.

Effective vendor management including clearance of bills without delay.

Within 3 days of receipt of bills, bills to be forwarded to respective

departments.

Overseeing and reviewing legal managers of the area by conducting periodical

reviews and ensuring that process adopted is in line with policy and

requirements. (Not quantifiable)

Maintaining MIS of the area and providing it to higher ups within TAT. (Not

quantifiable)

Handling the claims raised against the bank effectively before all forums/

statutory bodies and ensuring that no adverse orders are passed against the

bank. (Not quantifiable)


Chapter 8: THE INDUSTRY ANALYSIS

Industry Structure (Using Porter’s five forces model)

Porter’s five forces analysis is a framework for industry analysis and business strategy

development formed by Michael E. Porter of Harvard Business School in 1979. It

draws upon industrial organization (IO) economics to derive five forces that

determine the competitive intensity and therefore, attractiveness of a market.

An "unattractive" industry is one in which the combination of these five forces acts to

drive down overall profitability. A very unattractive industry would be one

approaching "pure competition", in which available profits for all firms are driven to

normal profit.

Porters model is, applied microeconomic principles to business strategy and analyzed

the strategic requirements of industrial sectors, not just specific companies. The five

forces are competitive factors which determine industry competition and include:

suppliers, rivalry within an industry, substitute products, customers or buyers, and

new entrants.

Banking is mainly a client oriented business. A high-quality of services to the client is

crucial for the growth and stability of any bank. A wider distribution and access of

financial services helps both consumers and producers to raise their

welfare and productivity. Such access is especially powerful for the poor as it

provides them opportunities to build savings, make investments, avail credit, and

more important, insure themselves against income shocks and emergencies.

To survive in an increasingly competitive environment, bank need to come up with

various facilities like Internet banking, mobile banking etc. With the onset of mobile

banking, the industry finds itself at the threshold of the next major technological leap.


i. Bargaining power of Buyers - Moderate bargaining power of customers on

account of banks renders uniform services to the clients. Now a day’s almost

all banks would like to provide requisite information very easily by way to

Internet, Mobile banking to the clients

ii. Bargaining power of Suppliers - Low bargaining power of supplier’s on

account of RBI regulatory benchmarks. Banks have to meet numerous

regulatory standards created by RBI

iii. Competitive Rivalry - High competition of account of number of prominent

public, private, foreign along with cooperative banks.

Top Performing Public Sector Banks

a. Andhra Bank

b. Allahabad Bank

c. Punjab National Bank

Top Performing Private Sector Banks

a. ICICI Bank

b. AXIS Bank

c. Kotak Mahindra Bank

http://bp0.blogger.com/_JdvvJXd0Y2M/SHeotTiSPNI/AAAAAAAAAAM/8_YIW5cCWTU/s1600-h/Porters_five_forces.PNG


iv. Availability of Substitutes - High menace from substitutes like NBFC’s,

Mutual funds, Government securities and T-bills.

v. Threat of new entrants - Low threat of new entrants on account of banking

regulations. Before setting up of a new bank, it is essential to take the consent

of RBI.

Figure 11 :- Porter’s 5 Force Model


Chapter 9: THE COMPETITORS’ ANALYSIS

Major Players in India :

1. HDFC BANK LTD

2. ICICI BANK LTD

3. STATE BANK OF INDIA LTD

4. PUNJAB NATIONAL BANK LTD

5. BANK OF BARODA LTD

6. FEDERAL BANK LTD

7. AXIS BANK LTD

8. ING VYSYA BANK LTD

9. IDBI BANK LTD

10. INDUSIND BANK LTD

11. YES BANK LTD

HDFC Bank is the second largest private bank in the country, the first being ICICI Bank.

A table stating the comparative analysis is given below :


COMPETITION ANALYSIS : HDFC BANK VS ICICI BANK

Figure 12 :- Competitive analysis

Parameter ICICI Bank HDFC Bank

Revenue 13.9 bn $ 5.9 bn $

Profit 1.4 bn $ 923 mn $

Total assets 120 bn $ 66 bn $

Employees 79978 55752

Branches 2630 2544

ATM 8003 9709

International presence 19 countries 5 countries

Significant M&A Merger with Madura in 2001

Acquisition of Century Bank of Punjab in 2008

Attractive offering DD call and collect

facility

Concessional rates

on savings account for women

customers

Minimum balance in

Metro cities

10000 10000

Minimum balance in

Semi-urban

5000 500

Rate applicable on

savings account

3.5% on savings

account payable every quarter

3.5% on savings

account payable every half year

FD Rates-15 lacs cap-

General

8.50% 9.25%

FD Rates-15 lacs cap-

senior citizens

9.25% 9.50%

Enterprise stronghold enterprise banking

accounts

SME Lending

Distribution branches, ATM, Internet banking,

Mobile banking,

branches, ATM, Internet banking,

Mobile banking,

Student offers special campus accounts for students

zero balance accounts for students and minors


COMPETITIVE SWOT ANALYSIS :

Figure 13 :- Competitive SWOT analysis

DETAILED ANALYSIS

i. Strength-Opportunity Analysis (S-O Strategy) :

Strength:

It is well know that HDFC Bank has the largest Authorised Capital Base in the

Banking System in India i.e. having a total capacity to raise Rs.19,000,000,000 (Non

– Premium Value).

STRENGTHS WEAKNESSES

O P P O R T U N I T I E S

S-O Strategies

Strength : Large Capital Base.

Opportunity : Market Expansion.

Strategy : Deep penetration into the Rural market.

W-O Strategies

Weakness : Workforce Responsiveness.

Opportunity : Outsourcing of

Non-core Business.

Strategy : Outsource Customer

Care & other E-helps.

T H R E A T S

S-T Strategies

Strength : Low operating costs.

Threat : Increased competition

from other private banks.

Strategy : Steps to ensure Loyalty by old Customers.

W-T Strategies

Weakness : Not equal to

International Standards.

Threat : Entry of many Foreign Banks.

Strategy : Consider additional

benefits


Opportunity:

Seeing the present financial & economic development of Indian Economy and also

the tremendous growth of the Indian Companies including the acquisition spree

followed by them, it clearly states the expanding market for finance requirements and

also the growth in surplus disposal income of Indian citizens has given a huge rise in

savings deposits – from the above point it is clear that there is a huge market

expansion possible in banking sector in India.

Strategy:

From the analysis of Strength & Opportunity the simple and straight possible strategy

for HDFC Bank could be - to penetrate into the rural sector of India for expanding its

market share as well as leading all other Pvt. Banks from a great gap.

ii. Strength - Threat Analysis (S-T Strategy) :

Strength

HDFC Bank is not only known for large capital but also for having a low operations

cost though having huge number of branches and services provided.

Threat:

After showing a significant growth overall, India is able to attract many international

financial & banking institutes, which are known for their state of art working and

keeping low operation costs.

Strategy:

To ensure that HDFC Bank keeps going on with low operation cost & have

continuous business it should simply promote itself well & provide quality service

so as to ensure customer loyalty, therefore guaranteeing continuous business.

iii. Weakness - Opportunity Analysis (W-O Strategy) :

Weakness :


It is well known that workforce responsiveness in banking sector is very low in Indian

banking sector, though HDFC Bank has better responsible staff but it still lacks

behind its counterparts like HSBC, HDFC BANK, CITI BANK, YES BANK etc.

Opportunity :

In the present world, India is preferred one of the best places for outsourcing of

business process works and many more.

Strategy :

As international companies are reaping huge benefits after outsourcing their customer

care & BPO’s, this same strategy should be implemented by HDFC bank so as to

have proper customer service without hindering customer expectations.

iv. Weakness - Threat Analysis (W-T Strategy) :

Weakness :

Though having an international presence, HDFC Bank has not been able to keep

up the international standards in providing customer service as well as banking works.

Threat :

In recent times,India has witnessed entry of many international banks like CITI Bank,

YES Bank etc. which poses an external entrant threat to HDFC Bank – as these Banks

are known for their art of working and maintain high standards of customer service.

Strategy :

After having new entrants threat , HDFC Bank should come up with more additional

benefits to its customers or may be even reduce some fees for any additional works of

customers.


Chapter 10: FINANCIAL RESOURCES & CORE COMPETENCIES

4.1. FINANCIAL RESOURCES :


Figure 14 :- Financial Statements for the year ending 31st March, 2014

4.2. CORE VALUES

The Bank’s five core values are :

(i) Customer Focus

To achieve sustainable competitive advantage, HDFC Bank relies not only on strong

customer service, but also on measuring customer experience. The Bank has invested

in CRM Technology which provides triggers for selling various products depending


on the customer profile. The Relationship Manager is a trusted advisor to the

customer – he/she has the best interest of the customer and can advise competitor

products, if the Bank’s product does not fit the customer needs.

(ii) Operational Excellence

With a dedicated team to monitor quality and service standards, many of HDFC

Bank’s process segments, including HR Operations are ISO certified. Over 2200

quality improvement projects, aimed at improving operational excellence have been

successfully implemented. Over 550 employees have qualified for Six Sigma

Certification and over 80 have earned the yellow belt

(iii) Product Leadership

HDFC Bank has consistently developed innovative products and services that attract

its targeted customers. Focusing on high earnings growth and low volatility, HDFC

Bank continues to develop and distribute products/services that reduce cost of funds,

by leveraging its extensive branch network. The Bank actively tracks the performance

of various products and depending on the feedback received, tweaks product features,

to better address customer needs.

(iv) Sustainability

We recognize Social and Environmental aspects as essential elements of a Sustainable

business philosophy and are committed to enhance our performance on these fronts. It

is an endeavor to drive a paradigm shift of viewing ESG (Environmental, Social and

Governance) parameters from risks to opportunities and to incorporate social and

environmental aspects into our business by embedding sustainability in our

Stakeholders, Products and Services.

(v) People

People are the Bank’s greatest strength. HDFC Bank believes that the ultimate

identity of success of our Bank will reside in the exceptional quality of our people and

their extraordinary efforts. For this reason, we are committed to hiring, developing,

motivating and retaining best people in the industry.


The People Value can be defined, as

Professional : Transparency, fairness, absolute integrity and unbiased dealings

with stakeholders – customers, colleagues and vendors. People are not afraid

to experiment as long as there is a convincing business logic and an honest

attempt.

Respect for the Individual : Absolute meritocracy at the time of hiring or

promoting individual or assigning tasks and positions. There is a formal sexual

harassment policy in place to ensure dignity of individuals in the workplace.

‘Can Do’ Attitude : The attitude to take oneself beyond one’s perceived

limitations emphasizes on persistence and perseverance in reaching one’s

goals.

Employee Care : HDFC Bank cares for its employees. This is manifested in

the fact that Bank has instituted a Reward and Recognition Policy to

acknowledge and honour employee contribution, be it business, cost saving

initiatives or process improvements.

4.3. BUSINESS DIVISION :

Retail banking - Loans to

Individuals (Auto loan, Housing

Loan, Education Loan and other

personal loan) or small businesses.

Wholesale banking –

Loans to Mid and Large corporate

(Working Capital loans, Project

finance, Term loans, Lease

Finance)


Treasury Operations – Investment in Equity, Derivates, Commodities,

Mutual Funds, Bonds, Trading and Forex operations

Other Banking Businesses – Merchant Banking, Leasing business, Hire

purchase, Syndication services etc.


Chapter 11: STRATEGIC ANALYSIS

STRATEGY DEFINITION :

A strategy is an integrated and coordinated set of commitments and actions designed

to exploit core competencies and gain a competitive advantage.

A firm has a competitive advantage when it implements a strategy competitors are

unable to duplicate or find too costly to try to imitate.

A strategy is a comprehensive master plan stating HOW the corporation will achieve

its mission and objectives. There are three types:

Corporate - a corporation’s overall direction and the management of its businesses.

Business - emphasizes improving the competitive position of a corporation’s products

or services in a specific industry or market segment.

Functional - concerned with developing a distinctive competence to provide a

company or business unit with a competitive advantage.

Figure 15 :- Classification of Strategies


(A) CORPORATE LEVEL STRATEGY :-



(B) BUSINESS LEVEL STRATEGY :-

Our business strategy emphasizes the following :

Increase our market share in India’s expanding banking and financial services

industry by following a disciplined growth strategy focusing on quality and

not on quantity and delivering high quality customer service.

Leverage our technology platform and open scaleable systems to deliver more

products to more customers and to control operating costs.

Maintain our current high standards for asset quality through disciplined credit

risk management.

Develop innovative products and services that attract our targeted customers

and address inefficiencies in the Indian financial sector.

Continue to develop products and services that reduce our cost of funds.

Focus on high earnings growth with low volatility.

HDFC Bank’s General Business Strategy :

Customer retention strategy (may 2, 2008) –

All charges have been waived off

Services like locker, de-mat, etc. would be charged at 50%.

The charges on debit card have been taken off.

Gave number to contact regarding any service.


(C) FUNCTIONAL LEVEL STRATEGY :-

Marketing strategy :

Segmentation strategy -

• Demographics variables

Location - Metros & divisional cities

Occupation - Business person & Salaried class (both govt. & private)

Age - Senior citizens & Minor

• psychographic variables

Lifestyle - People who believes in modern banking with higher set of

service i. e. internet banking (incontact, mobile refill, travel currency card etc.)

Targeting strategy -

• Target market

Corporate banking market : this market target the industries & fulfill

their financial needs.

Capital market : this segment is targeted on the long term needs of

the individual as well as of industries.

Retail banking market : this segment is for retail investors & provide them

short term financial credit for their personal, house hold needs.

Positioning strategy -

• HDFC Bank has positioned itself as a bank which gives higher standard of

services through product innovation for the diverse need of individual &

corporate clients. So they want to highlight following points in their

positioning segment :

-Customer centric

-Service oriented

-Product innovation


Promotions strategy of HDFC Bank

"It plans to send personalized mailers about various products to all those HDFC come

in contact with during these mass promotions." The bank has also tied up with

Business Today, to sponsor 10,000 copies of the magazine in each metro. The cover

of the sponsored copies would be the December issue of Business Today, which rated

HDFC Bank as the best bank in the country. On the opposite side, would be an

advertorial which would talk about HDFC as a `one-stop financial supermarket'.

Gold Credit card: For providing the better services to the customers and

promoting their business, HDFC has launched the Gold Credit Cards. It's overloaded

with travel benefits - discounts, cash back offers, air miles redemption.

Gold Credit Card Features & Benefits

Attractive Reward Points - Earn 1 reward point per Rs 150 spent on the Gold

Credit Card.

Rewards points redemption - After earning all those reward points on your

HDFC Bank Gold Credit Card, redeem them for exciting gifts and services! You

could even convert them to airline miles with India's leading airlines through the

My Rewards programme.

Worldwide acceptance - Accepted at over 23 million Merchant Establishments

around the world, including 110,000 Merchant Establishments in India.

Revolving credit facility - Pay a minimum amount, which is 5% (subject to a

minimum amount of Rs.200) of your total bill amount or any higher amount

whichever is convenient and carry forward the balance to a better financial

month. For this facility you pay a nominal charge of just 3.25% per month

(39.0% annually).

Free Add-on card - You can share these wonderful features with your loved

ones too - we offer the facility of an add-on card for your spouse, children or

parents. Allow us to offer add-on cards to you FREE OF COST with our

compliments.

Interest free credit facility - Avail of up to 50 days of interest free period from

http://www.hdfcbank.com/applications/misc/rewardcatalog/cc_rewards.asp


the date of purchase (subject to the submission of the charge by the Merchant).

Zero liability on lost card - If you happen to lose your Card, report it

immediately to our 24-hour call centre. After reporting the loss, you carry zero

liability on any fraudulent transactions on your card

Platinum Cards Get Additional Benefits

HDFC Bank Platinum Card Customers Get Additional Benefits compared to Gold /

silver or other entry level cards. For instance, consider this, HDFC Cards has a Co-

Branded Online Shop with Surat Diamonds. By virtue of being HDFC Bank

Customer, you are already getting big discount. Now add any item to your cart and

enter 558818 [6 Starting Digits of Platinum Card], you get additional discount. This is

just one such instance. You also get Petrol Surcharge Waiver, IRCTC Charges

Waived, etc.

Clear Trip Discount to Debit Card Holders

Use your HDFC Bank Debit Card to book any flight, hotel or train & get 10%*

cashback Domestic Air Offer - Book any Domestic Flight and get 10% cash back on

Base Fare or Rs.250 cash back per booking (whichever is less).

Trains - Book any Train and get 10% cash back or Rs.50 cash back per booking

(whichever is less) International Air Offer - Book any International Flight and get

10% cash back on Base Fare or Rs.600 cash back per booking (whichever is less).

Hotels Offer - Book any Hotel (Domestic/International) and get 10% cash back on

Base Price or Rs.500 cash back per booking (whichever is less). To avail the cash

back kindly enter coupon code HDFCTRIP during step 3 of the booking process

before payment.

http://hdfc.suratdiamond.com/


HR STRATEGY :-

The Bank is a team –focused organization that is characterized by

Collaborative relationships;

Approachable and open communications; Courteous, efficient and effective services; and Flexibility and fairness

PURPOSE

The purpose of this strategy is to ensure that the human resources values framework

incorporates four key principles, which are;

1. Communication

Bank’s management and staff will promote an environment where the principles of

open communication will be upheld. For the purpose of this policy ,open communication encapsulates the idea of;

Mutual recognition an respect at all levels;

Freedom to express one’s views and a commitment to resolving any interpersonal conflict;

Promotion and development of two way communication incorporating constructive feedback;

Appropriate dissemination of dissemination of information.

2. Opportunity Bank’s management and staff will promote a work environment that provides opportunity for;

Improved work practices;

Support of individuals in pursuit of personal and career

growth and

individual strengths.

3. Innovation Bank’s management and staff will promote an envioronment to encourage initiative leading to flexibility and growth. This philosophy will facilitate

improved work practices , which meet organizational needs through the challenging of preconceived ideas.

4. Individual

Bank’s management and staff acknowledge the importance of each individual’s contribution to the work of the Bank by recognizing their qualities , strengths and

abilities and sharing these across the Bank.


STRATEGIC QUALITY POLICY

SECURITY : The bank provides long term financial security to their policy. The bank does

this by offering life insurance and pension products.·

TRUST :

The bank appreciates the trust placed by their policy holders in the bank.

Hence, it will aim to manage their investments very carefully and live up to

this trust.·

INNOVATION : Recognizing the different needs of our customers, the bank offers a range of

innovative products to meet these needs.·

INTEGRITY:

CUSTOMER CENTRIC

PEOPLE CARE “ONE FOR ALL AND ALL FOR ONE”

TEAM WORK

JOY AND SIMPLICITY

Operation Red Spider

• On 14 March 2013 an online magazine named Cobrapost.com released video

footage from Operation Red Spider showing high ranking officials and some

employees of HDFC bank willing to turn black money into white which is

violation of Money Laundering Control Act

• Following this the government of India and RBI have ordered an inquiry

• The enquiry confirmed violation of KYC (Know Your Customer) norms by

HDFC Bank. A penalty of Rs 45 million was imposed on the bank by RBI

http://en.wikipedia.org/wiki/Operation_Red_Spider

http://en.wikipedia.org/wiki/Money_Laundering_Control_Act

http://en.wikipedia.org/wiki/Money_Laundering_Control_Act

http://en.wikipedia.org/wiki/Government_of_India

http://en.wikipedia.org/wiki/Reserve_Bank_of_India


HR Department

HR Department is responsible for;

Regular review and development of human resource

management practices;

Periodic review of the work priorities to determine skill

requirements needed to meet the Bank’s strategic plan;

Determination of an organizational structure that will facilitate

and improve teamwork; and

Appointment and promotion of staff on merit and to ensure that

treatment of all employees is fair and equitable.

The Organisational Competencies Required for ExcellentCustomer

Service :

What customers want from HDFC Bank is expressed into some organizational

competencies – so that you can see what you as Manager or Team Leader must

achieve within your team. If customers want excellent service, how does

the organisation or team go about providing it? Developing and Sustaining a

Reputation for Service Excellence, identifies the Organisational Competenciesthat

need to be in place to deliver that excellent service. These organisational

competencies have to be in place right across the organisation. Although you can do a

lot yourself with your own team, World Class Service Excellencerelies on a

commitment and drive from the very top of the organisation to build these

competencies. The competencies are described below.

Service Personality

The organisation has a well-defined personality which defines the particular way

itdelivers service and interacts with its customers. An excellent service provider

tendsto have its own Service Personality – an identifiable set of service characteristics

thatdefines how its service provision is different from that of its competitors.


Service Culture

There is a culture throughout the organisation’s people that focuses on givingexcellent

service o both internal and external customers. Leaders and managers arecommitted

to the service culture. They communicate the organisation’s vision, values,leadership

and continuous improvement methods to employees. Employees understandtheir own

role in supporting the service culture. An example is provided by a large,multinational

organisation that supplies food products to retail stores. It includescustomer service in

its mission statement, publishes its organizational valuesprominently on its website,

and issues a one-page “Customer Service Credo” to all itsemployees. It ensures that

all its people have a clear understanding of the importanceof customer service in all

that they do.

Committed Staff

Employees are well-motivated, have a can-do attitude, enjoy team working

andsupporting their internal customers. Professional relationships exist throughout

theorganisation, with high levels of trust, openness and a no-blame culture,

encouragingcontinuous improvement. An example is shown by an organisation where

teamsregularly have their own meetings to review customer service issues, talk

throughimprovements to processes and deal with customers’ problems. Each month


they appoint an “Employee of the Month” – and the winners of the award are

sometimespeople who deal only with internal customers.

Customer Focused Processes

Systems and processes are designed around customers, whether internal or external.

Six systems or processes in particular are seen as fundamental: communication

systems, systems for listening to customers and employees, training systems,

appraisal, reward and recognition systems, performance measurement systems and

service recovery systems. For example, at all sites of a European retailer there are

notice-boards to display up-to-date graphs showing customer satisfaction levels. This

ties employees’ and teams’ performances firmly to improvements for customers.

Easy To Do Business With

If the first four organisational competencies are in place, then they should lead

toreally positive results for customers – they will find the organisation easy to

dobusiness with.An example is provided by guests at a prominent hotel group. The

hotel finds that itwins and keeps many new customers because it has ensured its

online room bookingservice is highly customer focused and easy to use. Combined

with the excellentservice reported by customers when they stay at the hotel, this

means theorganisation is easy to do business with.

Financial Benefits

Once the organisational competencies are in place, your team and organisation

canbuild a reputation amongst its customers for service excellence. This in turn leads

to Customer Loyalty, recommendation and – in general – to financial success.

HR COMPETENCIES:-

Competency is an underlying characteristic of an employee (i.e. a motive,

trait, skill, aspects of one’s self- image, social role, or a body of knowledge)

which results in effective and/or superior performance. (Prof. Boyatzis, 1982)



MANAGEMENT INFORMATION SYSTEM

A Management information system (MIS) is a subset of the overall internal control of

a business covering the application of people, documents, technologies, and

procedures by management accountants to solve business problems such as costing a

product, service or a business-wide strategy.

MIS should be designed to achieve the following goals:

Enhance communication among employees.

Deliver complex material throughout the institution.

Provide an objective system for recording and aggregating information.

Reduce expenses related to labor-intensive manual activities.

Support the organization's strategic goals and direction

INFORMATION SYSTEM IN HDFC :

• Information technology can be a strategic tool in making HDFC more efficient

and effective. HDFC can reach more people in more efficient way by


implementing right management information system. IT creates an evolution

in whole world in every business and so in banking system.

• Due to IS employees can easily connect with other branches, customer service

get improved, online banking emerged and lot of others benefits

MAIN SERVICES:

Consumer Banking

Wholesale Banking

ORGANISATIONAL RESOURCES :

Application Software:-

General Application Software :

Microsoft Office

NOD32 Anti-Virus

Adobe Reader

Database management software

Integrated software : CLARIS , LOTUS

Specific Application Software :

HR software called “ ATLAS “

Accounting software called “TALLY”

Marketing software called “ CALLPAN “

Financial software called “SPSS”


B U S I N E S S I N D I A » November 29 ,2009 C orp orate W o m a n

A people's person The HR head of HDFC Bank doesn't let controversy stop her

from performing

M a n d e e p Mai t ra , 4 4 , t h e h e a d of

h u m a n re sources ( H R ) a n d cor

p o r a t e services at p r iva t e sector H D F C

Bank, ha s been t h r o u g h t w o mer ge r s

a l r eady . First, w h i l e a t T i m e s Bank

in 1999, w h e r e s h e m o v e d f rom

c o n s u l t a n c y firm A r t h u r A nd e r s e n .

Eight m o n t h s i n t o t h e job as h e a d of

H R , T i m e s was a c q u i r e d by H D F C

Bank. And the second, m o r e recent ly,

w h e n H D F C Bank acqu i r ed C e n t u r i o n

Bank of Punjab - itself a c o m b i n a t i o n

of sor t s , f o rm ed by t h e m er ge r of

four banks .

Ass imi la t ing t h e cu l t u r e s of t w o

o r g a n i s a t i o n s t o g e t h e r c a n b e t h e

t r ickiest exerc ise in a n y merger ; a n d

in t h i s area , Mai t r a , a p sy ch o l og i s t

w h o " a l m o s t b e c a m e a s h r i n k " , h a s

g a t h e r e d d e c e n t e x p e r i e n c e . She

b e g a n he r career a t a m a n u f a c t u r i n g

o u t l e t of Eicher Trac to rs at P a r w a n o o

in F l imachal Pradesh - fo l lowing he r

e d u c a t i o n at Lady Sri ram Col lege a n d

Tata In s t i tu t e of Social Sciences.

At age 22 , she was t h e o n l y girl

in m a n a g e m e n t in a factory full of

u n i o n workers .

"Back t h e n , " s he recalls , "we h a d

l a b o u r issues w i t h t h e worker s ,

be c au s e t h e y t h o u g h t we were p u s h

i ng for p r o du c t i v i t y , in s t ead of be i ng

keen a b o u t the i r welfare. It sor ted ou t ,

b u t t he s e e xpe r i e nce s t e a ch y o u a lot

a b o u t b a l a n c i n g dif ferent ideas . At

t h e e n d of t h e day, yo u bet o n people ,

no t s t ra tegies ."

After h e r s t in t a t Eicher , Mai t ra

m o v e d t o M u m b a i w h e r e s he jo ined

A N Z G r i nd l ay s Bank - first respons ib le

for t h e i n v e s t m e n t b a n k i n g s e g m e n t ,

t h e n m o v i n g o n t o t h e H R f un c t i on ;

in b e t w e e n he r roles , s h e s p e n t a

c o n s i d e r a b l e a m o u n t of t i m e in t h e

Maitra: content being king maker

t reasury s e g m e n t t o o . A N Z G r i n d l a y s

was t h e n a 5 6 - b r a n c h o p e r a t i o n wi t h

3 ,000 e m p l o y e e s . Th i s w as fo l lowed

by a s t int at Ar thur A nde rsen for t h r ee

years , as part of a core t e a m t h a t

l ooked after H R in i t i a t i ve s across

Europe, Midd le East a n d Asia.

After Na n i J ha v e r i f rom A r t h u r

A n de r s e n m o v e d to h e a d T i m e s

Bank, Mai t ra j u m p e d s h i p t o o . But

w i t h i n e igh t m o n t h s of j o i n i n g ,

T im es got merged i n t o H D F C : Bank. "I

w o n d e r e d back t h e n if I s h o u l d s tay

o n ; H D F C Bank was lesser k n o w n

for its H R pol ic ies a n d s t r a t eg ie s . "

But s h e d e c i d e d t o t ake t h e p l u n g e .

S ince t h e n , Mai t r a h a s s een t h e

b a n k g r o w from 1,300 e m p l o y e e s t o

Assimilating the cultures of two organisations

together can be the trickiest exercise in any merger;

and in this area, Maitra, a psychologist who "almost

became a shrink", has gathered decent experience

4 8 , 0 0 0 , w i t h i n t h e s p a n of a d e c a d e .

"It was a c o n s t a n t p r o c e s s , " s h e

says, "as we w a n t e d e v e r y t h i n g to fall

i n t o p lace" .

Tha t d id n o t c o m e easy. Take Lord

Kr ishna Bank, for in s t ance , w h i c h was

m e r g e d i n t o C e n t u r i o n Bank, a l o n g

w i t h Bank of P u n j a b . T h e Kerala-

based b a n k h a d a u n i o n t h a t o p p o s e d

its m e r g e r w i t h C e n t u r i o n , a n d t h e r e

we re b r a n c h e s t h a t h a d n ' t serv iced a

s ing le c u s t o m e r in m o n t h s . W h e n it

c a m e to a p pe a s i ng e m p l o y e e s in Pun

j ab , Ma i t r a (a Punj ab i herself) t rav

el led t h e d i s t a n c e a l o n e . To addres s

e m p l o y e e s in Kerala, she jo ined m a n

ag i ng d i rec to r Aditya Puri, w h o asked

t h e m for a g oo d d a y ' s work, for a g o o d

da y ' s p ay . Look i ng back , t h a t u n i o n

still exis ts . "But we ne v e r h a d a p r o b

l e m w i t h i t," says Mai t r a . "If t h e

e m p l o y e e s a re p e r f o r m i n g t he i r

du t i e s , w h y s h o u l d t h e u n i o n b e a

p r o b l e m ? " she asks.

T h e nex t few m o n t h s were spen t in

b r i n g i n g t o g e t h e r p e op l e , cu l t u ra l ly

i n t e g r a t i n g t h e m a n d de v i s i ng pack

ages for c o m p e n s a t i o n a n d perks ,

apar t f rom c lea r ing g r i evances . Th e r e

w ere res idual issues, ideological differ

ence s a n d d u p l i c a t i o n of work . In

h i n d s i g h t , she says , p u l l i ng it off is

easier w h e n o n e is c lear a b o u t t h e

po l i c ies . "I s h o u l d be ab le to d e f e n d

t h e m in front of a h u g e c rowd ,

o t h e r w i s e t h e p o l i c y is n o t w o r t h

fo l lowing ," she says.

As if H R w as n o t e n o u g h , Ma i t r a

h a n d l e d c o r p o r a t e social r e spons ib i l

ity ( C S R ) for H D F C Bank till s o m e t i m e

back, a n d m o r e r ecen t ly , t o o k o n he r

p l a te t h e role of d e v e l o p i n g H D F C

Bank 's 1,500 b r a n c h i n f r a s t r uc tu r e .

C S R , she says, a l l o w e d h e r t o w or k at

t h e grass root s level in e d u c a t i o n

a n d l i v e l i h o od c re a t i on pro jec t s .

"Taking care of in f ras t ruc ture en ta i l s a

lot of ene r gy . It r equ i re s k e e p i n g

costs at a m i n i m u m , b u t a t t h e s a m e

t ime , b r i n g i n g t h e best t h a t is

offered," she says.

A pe op l e ' s p e r s o n , for Ma i t r a c o n

t e n t b e i n g k ing m a ke r , r a t h e r t h a n

king. She cou ld h a v e t aken a l ine job a

few years ago, b u t H R r e m a i n s he r first

pa ss i on . "A nd it is g rea t w h e n yo u r

p e r s o n a l pa ss ion c a n be b r o u g h t

ab o u t in you r j o b , " she adds .

V A I S H N A V I B A L A

^ 1 2 8 •

Business India Sunday, 29 Nov 2009 Page# :130 Size : 503.82 sq.cm.


Chapter 12: HR SCORECARD

In order to perform an overall analysis we need to analyze KPIs, i.e. those factors

influencing performance of HR department.

Cost per Hire. By evaluating this factor you will be able to see how expensive the

recruiting process is. This process starts from posting job offer to the moment when a

new person is officially employed in the company. Logically, the shorter this process

is, the least expensive is cost per hire.

Turnover Cost. These are the costs related to termination, new hire and learning. In

other words, these are expenses related to integrating a new person into the company.

Turnover Rate. This value represents the situation in your company related to

leaving and hiring new employees. Many people would agree that it is not good to

change personnel too often. If the turnover rate is very high, then maybe you are

treating your personnel wrong? Or is it something wrong with your business in

general? Find out.

Time to Fill. Basically, this is the time needed to fill a vacant position in the

company. Of course, this time depends on how well HR managers are working with


recruiters, advertising and people in general. The shorter this time, the better

performance of your HR department.

Length of Employment. This indicator is very easy to understand. It is possible to

calculate an average value. For instance, in average an employee works 5 years for

your company. Of course, everything depends on the position. If you are changing

couriers or secretaries, this is not a big problem. But if chief managers work for your

company less than a year, this is definitely not good.

Training and Development. Even if you hire the best specialist you need to integrate

him into your company and train. Of course, you bear costs, related to training. If you

manage to cut this cost without harming quality of training, then your HR department

is doing a great job.

Salaries, compensation, bonuses. It is very important to know that you are not

overpaying and allocating recourses wisely. This also concerns HR department of any

company. With Balanced Scorecard you will be able to see how effectively

company’s funds are being used in HR branch.

Cost Effectiveness. It all comes to cost effectiveness after all. All above-mentioned

factors influence performance of HR department which has one goal – minimize costs

and boost performance.

http://www.hr-scorecard-metrics.com/wp-content/uploads/2010/03/bsc.png


HDFC Bank uses Oracle’s balanced scorecard as a technique for evaluating the

employees in the organization.

Figure 16 :-

HR Scorecard


Chapter

13: CONCLU

SION

HDFC

HR –

Key Metrics Considerations:

1.1 HR Capability Requirements of the Organization

1.1.1 Technical skills, knowledge and competencies to design, produce, deliver, and support the

products and services

1.1.2 Other skills and capabilities necessary – leadership, project management, functional

competencies (i.e. financial competency, systems thinking,…)

1.1.3 HR Practice skills, knowledge and competencies – Career planning/ employee

development, coaching/facilitating, problem solving, conflict management,

Communication skills, …

1.2 HR Processes & Systems

1.2.1 Those processes which the HR department/group manages and executes to support the

organization – staffing/hiring, resource planning, training and development,,

compensation and benefits, performance appraisals, personnel data management, labor

relations, succession planning.

http://www.hr-scorecard-metrics.com/wp-content/uploads/2010/03/Balanced_ScoreCard.png


Bank is among the top banks in the private sector domain. The bank boasts of

a huge amount of operational efficiencies for over the years. It has got a very

good asset quality and good coverage ratios. The bank has aggressively looked

into rural areas and tier-V and tier-VI cities.

With this prospect HDFC is continuously working in this direction, but there

are several competitors already in the market with the similar strategy. This

concludes that with the changing economical and political scenario in order to

maintain the position HDFC needs to follow some differentiating strategy.

Because it has a very fine line of difference with its competitor ICICI and can

outshine HDFC.

The organization must align its corporate and HR strategy by using a holistic

model concept. There are no specific HR strategies followed by the

organization. More emphasis towards such strategy formulation must take

place.

A communication lab can be setup to attain more clarity in authority-

responsibility relationships.

Proper training should be given to everyone about how to use the software

efficiently.

Capacity within institution should be managed properly.

References


Mr. Rakesh Garg, Branch Manager, Hdfc Bank Ltd., SCF 69-70, Phase

3B2, Mohali

Verma, Anuj; Paper on Hdfc bank : A fundamental analysis

Book : Business Environment- By Aswathappa

Article - Business India Sunday, 29 Nov 2009

Available from: http://www.hdfcbank.com/personal/default.htm

Available from: http://www.wikipedia.org/

Available from: http://www.google.com/

Available from: http://www.marketing91.com/swot-analysis-

hdfc/#sthash.BTthsnti.dpuf

Available from: http://www.moneycontrol.com

http://www.hdfcbank.com/personal/default.htm

http://www.wikipedia.org/

http://www.google.com/

http://www.marketing91.com/swot-analysis-hdfc/#sthash.BTthsnti.dpuf

http://www.marketing91.com/swot-analysis-hdfc/#sthash.BTthsnti.dpuf

http://www.moneycontrol.com/

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