para banking services with reference to hdfc bank
TRANSCRIPT
A PROJECT REPORT ON
“PARA BANKING SERVICES
WITH REFERENCE TO HDFC BANK”
Acknowledgement
Many people’s input underlies any effective outlay. I would like to acknowledge my indebtedness to every individual whose inquisitive mind and feedback made me to attempt to bring about a project study on Para Banking services with reference to HDFC Bank
From corner cubicle to corporate suite, all have rendered unstinting guidance as regard the sources.
I present this project study to my college for BBI course, as part of semester V. This project has been prepared under the guidance of Prof. Sujatha Khandilkar who has given positive feedback with regard to the project thus encouraging me in bringing forth the project.
I solemnly express my gratitude towards our principal-in-charge Prof.Parvathy Venkatesh and our course co-coordinator Prof.Mahek Mansuri and the whole staff for their unflagging support.
Last but not the least my heartfelt gratitude to my family and friends for their continued support and constant encouragement.
Executive summary
With the expansion and boom in banking industry the scenario have changed to great extent from its traditional activities
It has taken a great leap with the new dimensions in the market showcasing better understanding, displaying dynamic role, exhibiting innovations and exploring new creative areas to encourage banking perception.
The scope of banking has widened with changes made by RBI. It has started rendering more of facilities and services to its valued customers other than its core activities of term lending and accepting deposits.
It has created room in the economy for its self by acting as a financial conglomerates and providing one stop shop of services. It is like all the things available under one roof.
The term used for its services other than traditional ones is known as “Para”
Para banking includes services such as merchant banking, venture capital, ATM services, and debit/credit cards, net banking, discounting and so on…
The following chapters’ deals with the meaning of services covered under the parameters of Para banking as per the guidelines issued by RBI the regulatory authority and the ones which are offered by the HDFC Bank.
Objectives and aim of the study
To analyze the scope of Para banking in the banking environment
To study Para Banking in Indian Banking Industry focusing through HDFC bank
Research methodology
The information has been collected with the help of research methodology tools i.e by collecting primary data as well as secondary data.
Primary data is in conduit to “interview method” and direct communication with the concerned person in relation to the Indian banking sector.
Secondary source of information are gathered
Through visit to relevant web sites Through reference books The friends, family who have helped to solve the problems of related topic
and collect data from the HDFC Bank.
Chapter.1
Introduction and Scope of Para banking
In this chapter we will discuss: Introduction Meaning Meaning given by RBI Object of Para banking Scope
INTRODUCTION
The word Para refers branching out from the main. It is to offer multiple activities by a bank to its customers other than its core functions of term lending and bank deposits.
Para banking offers innumerable innovative products and instruments such as merchant banking, leasing, hire purchase, forfeiting, discounting, factoring, mutual funds, debit cards, credit cards, and venture capital and so on and so forth. Banks can undertake certain eligible financial services or Para-banking activities either departmentally or by setting up subsidiaries. Banks may form a subsidiary company for undertaking the types of business which a banking company is otherwise permitted to undertake, with prior approval of Reserve Bank of India.
MEANING OF PARA BANKING
The Indian banking scenario is in a phase of growing confusion and chaos with plethora of ... line so it required a boost for its upliftment. It was possible through integration of its services which added new term in the financial market as Para banking
It is like an umbrella of activities which the bank is ready to offer its customers for the very purpose of maintaining its existence in this competitive environment by customer retention.
Examples for the Para-Banking activities that a Bank normally involves
1.Global Debit Card2.Global Credit Card3.Bancassurance
3.Life Insurance Products4.Non Life Insurance Products5.Cash Management (SCMS) and so on...
A banking company tries to provide its valued customers other than its core functions UNDER THE HEAD OF PARA BANKING.
Banks are engaged in offering Para banking services such as mortgages, credit, insurances and credit charge cards, Teller Machines, ATM Banking, leasing and many more.
Meaning of Para banking by RBI
According to RBI Para banking permits bank to manage one or more classes of collective investment undertakings, and establishes the general rules with which they must comply, without prejudice with any additional requirements which may be laid down from time to time by the laws governing such institutions
The object of Para banking shall consist of one or more of the following:a) Management of collective investment undertakings which raise capital from
the public, namely
1. Real estate investment funds;2. Pension funds3. Other collective investment undertakings created by law.4. Equity participation5. Equipment Leasing, Hire purchase6. Discounting, factoring and forfeiting
b) Discretionary and tailored management of portfolios on behalf of third parties, based on powers conferred by the investors, provided that the following instruments are included:
1. Securities;2. Collective investment undertakings units;3. Money market instruments;4. Financial instruments futures, including other derivative instruments which may be settled in cash;5. Forward rate agreements (FRAs);
6. Interest rate swaps, currency swaps or equity swaps;7. Put or call options on the abovementioned instruments, including cash instruments; this category includes currency and interest rate options.
c) Investment consultancy regarding the assets whose management is the object of the company.
SCOPE OF PARA BANKING
The Para banking Division has been accorded the status of Mother Division amongst all division.Para banking has a wide scope in the financial market because it offers more and is the requirement of the competitive financial market. It will strengthen the rural sector along with its great impact in the urban sector.
A bank shall carry out all the acts and transactions which are deemed necessary for or incidental to the smooth running of the managed collective investment undertakings and assets, according to normal standards of diligence and professional skills. It is wider term used for banking activities.It can also be said that an institution which mobilizes the savings of the community and diverts them for financing different activities. It needs to be registered. Para banking is a boon to the industry and has a great impetus in the society as it contributes greatly to the economy under the supervision of the regulatory authority.
Commercial banks render these services with the aim to target the right market as well corporate sector which adds to the national economy.The whole lot of directions to be followed by the banks in order to undertake Para activities is given by RBI. It has a good scope as well as bright future in upcoming years.
Chapter2.
Services and activities included
Under Para banking
Services covered under Para banking
Definitions of each services
Services incorporated under Para banking
Equipment leasing, Hire purchase business and factoring services
A lease can be obtained directly through a lessor. It is a smart way to acquire equipment. When the equipment is delivered, the lessee formally accepts it and the lease takes effect. It is known as equipment leasing.
In case of hire purchase the goods are delivered by the owner to another person on the agreement that such person pays the agreed amount in periodical installments.
Factoring refers to the process of managing the sales ledger of a client.
Mutual Fund business
Mutual fund business refers to fund raised by pooling the savings of small investors and deploys it in various investments to earn considerable returns.
Smart / Debit Card Business
Smart /debit cards is an instrument of payment. The cards are plastic cards issued by banks to their customer. It avoids the risk of handling cash.
Money Market Mutual Funds (MMMFs)
Money market mutual funds should comply with the provisions held by RBI before publishing in the market.
Real estate initiatives
The leasing of houses and property is taken care of in real estate initiatives by the bank
Micro finance
Microfinance refers to the provision of financial services to low-income clients, including consumers and the self-employed.
Entry of banks into Insurance business
Entering of banks in the field of insurance is termed as banc assurance. It helps to widen the scope and bring lot of advantages in the Indian banking history
Pension Funds Management (PFM) by banks
Banking Regulation Act, 1949, banks have been advised that they may now undertake Pension Funds Management (PFM) through their subsidiaries set up for the purpose.
'Safety Net' Schemes
It provides security measures one must follow by making the use of internet facility to carry out their banking operations or transactions.
Merchant banking
Merchant banking may be defined as an institution which covers a wide range of activities such as issue management, portfolio management, credit syndication, counseling and advisory services.
Venture capital
It is a method of financing in the form of equity participation. A venture capital finances the project based on the potentialities of a new innovative project.
Net banking
Internet is a channel of service to banking customer. One can carry out its banking operations through internet facilities.
ATM Services
ATM is a mechanical device used o dispenses cash upon insertion of a plastic card and its unique personal identification number.
Telco Billing System
Telco billing system allows the customer to make the payment at instance, without being party to long queues by directing its bank to make the payment on behalf of him.
Chapter.3
About HDFC Bank
Company profile Management Technology usage Business
classification
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 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.
HDFC was ideally positioned to promote a bank in the Indian environment. 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
The business philosophy is based on four core values –
Customer Focus, Operational Excellence, Product Leadership and
People.
It is believed that the ultimate identity and success of bank will reside in the exceptional quality of people and their extraordinary efforts. For this reason, HDFC Bank is committed to hiring, developing, motivating and retaining the best people in the industry
HDFC Bank is one of the most preferred employers in banking industry in India
The mission is to be "a World Class Indian Bank", benchmarking it selves 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.
HDFC bank is committed to do this while ensuring the highest levels of ethical standards, professional integrity, corporate governance and regulatory compliance.
HDFC Bank believes that what makes it different from other banks is not on the basis of product differentiation but the brand image, people orientation and the trust its customers have on the bank for the services it provides.
Bank doesn’t believe in adopting any marketing strategies or promotional tools to advertise itself in the market because the core principle in what it emphasizes is as such “ services speak for themselves ” .
HDFC Bank was incorporated in August 1994, and, currently has a nationwide network of 1,506 Branches and 3,573 ATM's in 635 Indian towns and cities.
Management
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.
Excessive usage of 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. The Bank's business is supported by scalable and robust systems which ensure that clients always get the finest services it offer.
The Bank has prioritized its engagement in technology and the internet as one of its key goals and has already made significant progress in web-enabling its core businesses. In each of its businesses, the Bank has succeeded in leveraging its market position, expertise and technology to create a competitive advantage and build market share.
Business is classified as under:
Wholesale banking business-
It is recognized as a leading provider of cash management and transactional banking solutions to corporate customers, mutual funds, stock exchange members and banks.
Retail banking business-
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-
Wholesale banking business
Retail banking business
treasury
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, Net Banking and Mobile Banking.
Treasury-
Within this business, the bank has three main product areas - Foreign Exchange and Derivatives, Local Currency Money Market & Debt Securities, and Equities.
HDFC Bank had initiated Para banking services and activities to increase its income by way of earning commission. When it offers these services it helps it to not only provide new products and benefits to its customers but also ensures its stability and growth in the market segment.
It offers varied variety of treasury, custodian, wholesale, retail services.
The Bank has its deposit programs 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"
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).
Leading Indian and international publications have recognized the bank for its performance and quality. HDFC bank provides better safety too.
Chapter .4
Merchant banking and venture finance
Meaning and process of merchant bank Merchant banking offerings by HDFC bank Scope of merchant banking Meaning and process of venture finance HDFC bank entering into venture Stages involved in venture finance Reasons of growth for venture finance
Merchant banking/services
A merchant bank is a financial institution primarily engaged in offering financial services and advice to corporations and to wealthy individuals. The term can also be used to describe the private equity activities of banking. It refers to issue management.
Merchant banking has been a very lucrative-and risky-endeavor for the small number of bank holding companies.
The term merchant banking is generally understood to mean negotiated private equity investment by financial institutions in the unregistered securities of either privately or publicly held companies .
Both investment banks and commercial banks engage in merchant banking, and the type of security in which they most commonly invest is common stock.
They also invest in securities with an equity participation feature; these may be convertible preferred stock or subordinated debt with conversion privileges or warrants. Other investment bank services-raising capital from outside sources, advising on mergers and acquisitions
Merchant bank invests its own capital in a client company whereas an investment bank purely distributes (and trades) the securities of that company in its capital raising role
Provide fee based corporate advisory services
In a nut shell about merchant banking
Merchant services in HDFC Bank.
Why Merchant Services?
By enabling card acceptance procedure, a financial house would get benefited by Providing the easiest and most convenient way for customers to pay
Prompt and assured payment
Speed at the point of sale, especially when using electronic terminals
Reduced back office administration
Reduced cash and cheque handlingAnd the combined effect of the above would result in customer loyalty, increased spend and more revenue for the organization
Merchant Product Offerings
HDFC Bank Merchant Services is the national leader in electronic payment solutions. It gives a competitive edge to businesses and financial institutions, by offering a complete portfolio of systems, services and innovative products to meet the ever-changing market dynamics
Technology infrastructure- The entire service is backed by superior technology infrastructure in terms of the network, systems and processes.
Payment Options: Payment can be made by credit to current account with the bank or manager's cheque
Personalized service: HDFC offers personalized service, there is one merchant relationship officer will be designated for taking care of the relationship
Scope of merchant banking in India
There is a vast scope for merchant banking to enlarge their operations in domestic market as well through:
Growth of new issues market
1. Entry of foreign investors2. Changing policy of financial institution3. Development of debt market4. Innovations in financial instruments5. Corporate restructuring6. Disinvestment7. Least restrictions and more liberalization8. Corporate culture9. Corporate dynamic10.Banking policies
HDFC Bank offers merchant banking activities to its customers by underwriting the issues, offering corporate advisory services, consultancy services, issue management of companies.The guidelines laid down by RBI are as follows:
1. The underwriting exposure to any company which will include other funded and non-funded credit limits is subject to the exposure limits
2. All merchant bankers will also require authorization by SEBI3. All issues must be managed by at least one authorized banker functioning
s lead manager4. Should fulfill capital adequacy5. Merchant banker shall furnish to the board half early unaudited financial
results
Venture Finance
Venture financing refers to organized private or institutional financing that can provide substantial amount of capital, mostly through equity purchases and occasionally through debt offerings. It denotes investors that provide equity financing to young business and play active role in advertising their managements.It is provided for early stage projects, high potential growth companies in the interest of generating a return through IPO of a company.
When approach a venture capital firm consider their portfolio as under:
a) Business Cycle
b) Industryc) Investmentd) Locatione) Returnf) Involvement
The process of venture capital
The process of venture capital initiates with the entrepreneur developing a novel idea of starting up a techno based project.
He will approach venture capitalist who assess the capabilities of the entrepreneur and if satisfied than it will finance the project and advertise for the subscription of the issue
With all due diligence and skill the process is carried out and when the entrepreneur reaches advanced stage of maturity at this instance venture capitalist may either sell his part of shares to the promoters or in the market.
HDFC Bank entered into venture with Centurion Bank of Punjab
Centurion Bank of Punjab got amalgamated with HDFC Bank in March 2006 with effect from March 2008.
This venture enabled both the banks to expand their data base and widen the services offered to their customer which in turn would enhance its position.
Whereas, concerned regarding venture capital financing activities in relation to HDFC Bank it is not provided by it.
Stages of financing involved in venture capital
It is in precise a four way method used by companies. Reasons of growth for venture finance
Venture capital is at take off stage in India. It can play a catalytic role in the development of entrepreneurship skills that remains unexploited among the young and energetic technocrats and other professionally qualified talents. In order to ensure success of venture capital in India following suggestions are offered:
a) Exemptions or concessions for capital gainsb) Development of stock marketc) Fiscal incentivesd) Private sector participatione) Reviewing existing laws
The guidelines to be followed by banks as prescribed by RBI are as follows:
1. The banks have to ensure that underwriting commitments taken up by them in respect of primary issue of shares or convertible bonds or convertible debentures or units of equity-oriented mutual funds comply with the ceiling prescribed for the banks’ exposure to the capital market.
2. Banks should not underwrite issue of Commercial Paper by any Company or Primary Dealer.
3. Bank should not extend Revolving Underwriting Facility to short-term Floating Rate Notes/Bonds or debentures issued by corporate entities.
4. Banks/ merchant banking subsidiaries of banks undertaking underwriting activities are also required to comply with the guidelines contained in the SEBI (Underwriters) Rules and Regulations, 1993, and those issued from time to time.
5. An annual review covering the underwriting operations taken up during the year, with company-wise details of such operations, the shares/debentures devolved on the banks, the loss (or expected loss) from unloading the devolved shares/debentures indicating the face-value and market value thereof, the commission earned, etc. may be placed before their Boards of Directors within 2 months of the close of the fiscal year.
Chapter.5
Real estate initiatives and dealer financing
Meaning of real estate initiative
HDFC provides funding Definition of dealer financing Bill discounting and its
highlights Factoring solutions Working capital facilities Factoring and the drawbacks
Real estate initiatives
HDFC Bank offers significant solution for commercial properties leased to various reputed corporate / banks / insurance companies / retail chains. The product offering involves discounting the future receivables every month (or depending on any other frequency) and providing an upfront loan to the landlord, thus extending good liquidity in the hands of the landlord. The loan can be used for any purposes except those restricted by the RBI.
HDFC provide funding….
a. To a borrower who presently owns commercial premises / property leased out to reputed corporate(s) by obtaining liquidity in their hands.
b. To a borrower who is planning to buy a pre-leased property and looking to part finance the purchase of such property.
c. To a borrower who is considering switching to another bank an existing account due to competitive interest rate offering and
d. For a combination of (b) and (c) above.
HDFC Bank also provides solutions to various corporate/ banks / insurance companies / retail chains who take premises on long term lease and helps them in reducing interest free security deposit amount.
This is achieved by imparting good liquidity to their landlords via a loan at the time of origination of the lease tenor.
Thus, the lessee benefits from the savings which would be otherwise blocked as security deposit for the tenure of the lease.
Information evaluated in the product offering include :
Lessee details
Lessor details
Property profile including criticality of the premises for the lessee's operation
Deal structure and
Cash flow pattern envisaged in the agreement(s). The loan eligibility of the prospective borrower is calculated based on the evaluation of the above details.
Dealer financing
What Does Dealer Financing Mean-
Loans that are originated by a retailer to its customers and are then sold to a bank or other third-party financial institution.
The bank purchases these loans at a discount and then collects principle and interest payments from the borrower. Also called an indirect loan.
Investopedia explains Dealer Financing as A well-known example of dealer financing is auto dealers that offer car purchase financing. Many car dealers’ markup the finance company's interest rate and keep the difference as additional profit.
Dealer financing with respect to HDFC bank
On the sales side, HDFC Bank offers a range of solutions for funding dealers and end customers. Facilities are offered on a standalone basis against collateral as well as through structured transactions.
Dealer financing is an effective tool that meets the funding requirements of dealers at a competitive rate. It results in a satisfied and loyal dealer network, helps in increasing sales and streamlines working capital management.
Bill discountingBill discounting refers to discounting the trade bill by the party with the bank before the expiry of the bill at a price lower than the payable amount. The amount lower is referred to as discount by the bank and it is a form of income for it. It is highly negotiable.
Bill discounting is one of the essential activity performed by the HDFC Bank under the head of Para banking services. It is the special feature of this commercial bank
At HDFC Bank it dedicate trade finance set-up that combines the rich experience in understanding customer needs and a nationwide network of branches and correspondent banks to offer bill discounting. These are customized to suit the requirement for short term finance, from the date of sale to the date of receipt of payment thereon.
Its highlights are as under:
1. Short-term finance to selected dealers of large Corporate
2. Credit extended up to 90 days for purchase of goods from Corporate
3. Credit Lines would be set up on Dealers based on financials, funds.
4. Minimum documentation
5. In all cases, a letter of recommendation a specifying the dealer's history,
track record, etc. and a commitment of stop supply in case of default.
Factoring solutions
Commercial Mortgages make owning, refinancing, or renovating commercial real estate easy and affordable. One can also strengthen their working capital requirements using mortgaged backed term loans.
Term loans provided to dealers to strengthen working capital requirements, acquisition of premises for business etc.
Tenors up to 5 years provided
Limits set up based on financial projections, security provided
Up to 75% of the project cost would be funded. Balance to be promoter's contribution
Facilities to be secured by assets being financed.
Collateral security may be obtained in certain cases Working Capital Facilities
Working capital is the requirement of every banking company in the sustenance of itself in the banking economy.
It refers to a continuous flow of cash in the business to avoid any crunches. Working capital flow allows the company to carry out its operations without hurdles
In order to propel business to new heights HDFC Bank provides with a Working Capital Finance. These loans are designed to meet the cash flow requirements with many hassles.
F
It is a process whereby the factor operates by buying from selling company an invoice debt. By obtaining payment of invoices from the factor, usually up to 80% of their value without having to wait until the buyers make payment the company’s cash flow is improved. The factor charges the service fee.
Despite of various advantages added to this service HDFC bank doesn’t offer factoring services to its customers owing to following drawbacks:
I. Dominance of western currencyII. Difficulty in procuring international bank guarantee
III. Non availability for financially weak countries and so on.
Chapter .6
Automated teller machine services
&
Debit/credit cards
Meaning and components of ATM Steps to use an ATM Debit cards and its types Features and advantages Credit cards and its kinds Features and advantages
Automated teller machine
ATM is a computerized telecommunication device that provides a customer of financial institution with the access of financial transaction in a public place without the need of a human clerk or bank teller.
On most modern ATMs, the customer is identified by inserting a plastic card with a magnetic strip consisting of a chip that contains a unique card number and some security information such as an expiry date. Authentication is provided by the customer by entering into Personal Identification Number (PIN)Diagrammatically the components of an ATM
Customers can access their bank accounts in order to make cash withdrawals and check their account balances as well as purchasing mobile cell phone prepaid credit. It is known by varied names such as, money machine, bank machine, cash machine, hole-in–the–wall, cash point etc.
Is an ATM Card like a Credit Card?No, an ATM Card is different from a Credit Card using your ATM Card ,one can access their account and carry out most of banking transactions, round the clock. But cannot shop with your ATM Card
Transactions that can be performed using ATM Card Can carry out the following transactions at all ATMs across the country:
Withdraw cash Deposit a cheque or cash Request a mini-statement Make a balance inquiry Transfer funds Change your PIN Request a cheque book or account statement Request product information Pay your utility bills
Will there be a charge?HDFC Bank does not levy any charge on its customers for using HDFC Bank ATM
Note: All cards which can be used at ATMs will need to have a Personal Identification Number (confidential code) for ATM access. This is issued by the bank issuing the card.
Limits and parameters are set by the card issuing banks regarding amount of cash withdrawal, withdrawal limit, number of PIN log-in attempts, transaction set allowed and declines
Can I use the HDFC Bank ATM Card at Citibank/Standard Chartered/Other Bank's ATMs? No. Your HDFC Bank ATM Card can only be used at our ATMs.
What is the cash withdrawal /cash advance limit for me?HDFC Bank customers can withdraw up to Rs.10, 000/- per day using ATM Card and Rs. 15,000 using Debit Card. For non-HDFC Bank customers, the limit is as decided by the bank issuing the card.
How do I use my ATM?To use the HDFC Bank ATM, just follow these easy steps:
Insert your card into the slot provided.
Select the language in which you want to be led through the transactions. Most ATMs offer you the options of conducting your transactions in English or Hindi. At some locations, you will be able to select between languages.
At the prompt, enter your PIN. Press the "Enter" key.
Select the transaction you wish to conduct (e.g.: withdrawal/balance) Select the account type. If you are using a Credit Card, select the "Credit" option.
If you are making a withdrawal, enter the amount you wish to receive.
Confirm that the amount is correct. Then after transaction is processed you will receive receipt of transaction
ATM Services is a boon for the banking industry
HDFC Bank has 3,573 plus ATM centre in India. It is wide distribution channel and posses good networking system for the customers. The advantages of an ATM over personal teller are as follows: -1) can be assessed round the clock.2) no employee interface is necessary.3) it offers cost effective measures.4)scope of fraud and misappropriation is reduced.
Debit cards
A debit card is also addressed as a bank card that provides an alternative payment method to cash when making purchases.
It may be called as an electronic cheque as the funds are drawn directly from either their bank account or from the remaining balance on the card.
In some cases, the cards are designed exclusively used on the internet and so there is no physical card. It is termed as virtual card.
The use of debit cards has become widespread in many countries and has overtaken the cheque and in some instances cash transactions by volume.
Like credit card, debit cards are used widely for telephone and internet purchases and funds are transferred from the bearers account instead of having bearer to pay back on a later date. Debit cards are used as an instant withdrawal of cash, acting as the ATM card for withdrawing cash and as a bank guarantee card. Merchants can also offer “cash back”/ “cash out” facilities to customers.
Various types of debit cards are offered by HDFC Bank depending upon the preferences and different type of customers.
HDFC bank debit cards
Discover the power and convenience of HDFC Bank Debit Cards that not only let to withdraw cash from ATMs but also let to shop cashless and hassle-free. It helps to enhance the spending ability within the limits of the amount available in the account.
easy shop international debit card
easy shop international gold debit card.
easy shop pro gold debit card
easy shop international business debit card
easy shop woman advantage debit card
easy shop NRO debit card
kisan card
Appearance of card Name of the card Customer orientation
Easy Shop International Debit Card
Used for thousands of establishment functions
Easy Shop International Gold Debit Card
Customer having salary account
Easy shop Pro Gold Debit Card
Customers having salary account
Drives and sustains need of business
Easy Shop International Business Debit Card
Easy Shop Woman’s Advantage Debit Card
Woman customer
Easy Shop NRO Debit Card
For convenience around the world
Kisan Card Farmers of the country
Features and benefits offered for each cards
1. Easy Shop International Debit Card: a. Cash Back, Zero Surcharge at Petrol Pumps, Increased Insurance
cover, and Special Offers at Premium Outletsb. zero liabilityc. Withdraw cash at any of the VISA/PLUS ATMs around the world.
2.) Easy Shop International Business Debit Card:Additional features other than mentioned above are-
Cash Back*: For every Rs. 200 that you will spend, you will receive Re. 1 as cash back. This cash back is valid on all purchases made through the Card, at all times of the year!!!Insurance cover*: The following are included in the insurance covers:
Fire & Burglary for the items purchased under Debit Card (up to 6 months) - Sum assured Rs. 2, 00,000
Loss of checked baggage - Sum assured Rs. 1, 00,000
with effect 1st March 09, for Claims under Loss of Checked Baggage and Fire & Burglary insurance to be accepted & processed, the cardholder should have carried out at least 1 purchase transaction using the Debit Card, within 6 months prior to the event date.
3.) Easy Shop Woman’s Advantage Debit Card:
1. HDFC Bank EasyShop Woman's Advantage Debit Card is India's first Woman's Debit Card of its kind
2. It is primarily dedicated to Indian women3. The HDFC Bank Women’s Cards – both Credit and Debit, are intended to
acquire a greater part of household spending, currently being split among various other cards
4. Card offers a maximum credit limit of - Rs 3 lakh, with Life Insurance Cover of Rs 25 lakh - due to air accident, Rs 3 lakh due to road accident and up to Rs 50,000 on hospitalization due to accident
5. Spends above Rs.5,000 in a month would accrue 5 reward points for each Rs.100. Spend of up to Rs.5,000 in a month would accrue the usual 2 points for each Rs.100 spent.
6. Cash Back: 5% cash back on spends at Department stores
4.) Easy Shop NRO Debit Card:
1. Daily Limits Rs. 15,000 at ATMs for Withdrawal and Rs. 25,000 at merchant establishments for shopping.
2. Domestic Validity The Debit Card can be used only in India to make purchases at Merchant locations and withdraw local currency at ATMs. The NRO Debit Card can be used at the following locations :
3. HDFC Bank ATMs for all ATM transactions 4. Visa / NFS ATMs in India for Balance Inquiry and Cash Withdrawal only. 5. Merchant Locations in India for Purchases / Shopping
5.) Kisan card:
Kisan Gold Card d is designed to envisage a convenient and hassle-free loan to the farmer for meeting his production and investment requirementsBanks have been giving these loans, but with our technology edge we conceived a real plastic for the farmer for giving him the convenience to bank anywhere, anytime and not being restricted to a 10am-2pm banking culture.
It meets Post Harvest and Domestic consumption requirements. The Card can be used at any HDFC Bank ATM across the country and all Visa establishments worldwide. Debit cards help the customers to move freely n shop easily even when they do not have cash in hand.
The return on investments is the best in the industry.
The Debit Card is backed by line of credit.
Daily withdrawal limit through the card is Rs. 15,000 at ATMs and Rs. 25,000 for usage at merchant outlets.
Credit cards
A credit card is a part of system of payments named after a small card issued to users of the system. It is a card entitling its users to buy goods and services based on the holders promise to pay for these goods and services. Credit cards allow the consumers to revolve their balance at the cost of having interest charged. Most credit cards are issued by local banks and are the shape and size specified by the ISO/IEC 7810 standard as ID-1.This is defined as 85.60 X 53.98mm in size
HDFC Credit cards
Credit Cards offered by HDFC BankVarious cards are:Classic cards-product trusted by many
Special benefit cards-for those with special needsPremium cards-access world class privileges and benefits
Appearance of the card Name of the card Purpose of the card
Silver Credit CardCombined with all the services offered by a world-class bank.
Value Plus Credit Card
A true value card that enables you to avail 5% cash back on all your purchases
Gold Credit Card to match your premium lifestyle
Titanium Credit Card
Exclusive credit card
Woman’s Gold Credit Card
best premium card made specifically for women
Platinum Plus Credit Card
with exclusive travel and preferential benefits -
Visa signature credit card
A card with unique and exclusive privileges that complement your refinement and style
World master cardA very premium offering for the truly elite, a card with tailor-made premium privileges
Corporate credit cards It's a designation
Corporate platinum card
offers to provide you with truly world beating features
Business credit carddesigned to add value to your business,
Purchase card
credit card solution given to corporate by HDFC Bank to facilitate quick payments for business expenses
Distributor cardIt eliminates the use of cheques and cash and speeds up the
turnaround time of transactions
Features and benefits available with the cards:
a) All-purpose credit card b) Earn while you spend- money spent is money earned. For every Rs. 200
spent, you earn 1 reward point. c) Add-on cards d) Zero liability on lost cardse) Widely accepted
Accepted at over 110,000 merchant establishments across India and Nepal and close to 18 million merchant establishments around the world.
2).Value Plus Credit Card
a) Cash Advance -withdraw cash up to 10% of credit limit at a very nominal charge
b) Revolving credit facility-This feature allows to pay a minimum amount, which is 5% (subject to a minimum amount of Rs.200) of total bill amount or any higher amount whichever is convenient. You can then carry forward the balance to a better financial month, for which you pay a charge of 3.25% per month.
3) Gold Credit Card
a) Attractive Reward Points-Earn 1 reward point per Rs 150 spent
b) Interest free credit facility Avail of up to 50 days of interest free period from the date of purchase
3) Titanium Credit Card
a) Titanium RewardsThe unique reward points structure gives 2 reward points for every Rs150 on domestic spends and 5 reward points for every Rs150 on international spends
b) Applicable for Transactions between Rs. 400 - 5000
4) Platinum Plus Credit card
a) Utility bills through your credit card -Platinum plus Credit Card with Smart Pay, HDFC Bank's Utility Bill payment service. Ensure that all utility bills are paid on time, without any hassle.
5) Visa Signature Card
a) Signature AccessHDFC Bank Visa Signature Credit card entitles a Priority pass that provides access to exclusive airport lounges across the world. Priority Pass is the world's largest independent airport lounge program, which gives the cardholder access to more than 500 airport lounges in more than 275 cities worldwide.Priority Pass is Priced at Rs. 500/annum. Earn 2 Reward Points for every Rs.150 spent on your card and double Reward Points (2 extra points) for every Rs. 150 spent above Rs. 15000.
b) Signature benefitsc) interest free period up to 50 days, the lowest interest rate of 3.05% on
revolving credit facility (36.6% annually)# and petrol surcharge waiver of 2.5% across all petrol pumps in the country
6) World Master Card
a) HDFC Bank presents India's First World MasterCard Credit Cardb) World class card
World Luxury -HDFC Bank World Master Card entitles you to an exclusive "Taj Epicure" membership. Taj Epicure Membership is Priced at Rs. 1500/annum World rewards- Earn up to 4 reward points per Rs 150/- using the HDFC Bank World Credit Card.
7) HDFC Bank Corporate Platinum Card -which comes with a unique 24x7 Expense management solution called SMART DATA ONLINE, powered by Master card International.
A. 24x7 online MIS availability.
B. 60 MIS reports for better informed business decisions.
C. Substantial savings for the business through better negotiations with airlines, hotel chains and other service providers.
D. Streamlines accounting procedures by consolidating transaction data from around the world.
E. Helps in integrating with the existing accounting systems.
F. Helps in minimizing paperwork and simplifying reconciliation and compliance tasks.
Card programme analysis including transaction totals, ATM usage etc.
1. Spending Analysis by category 2. Expense reports 3. Cost allocation details & summary 4. Merchant summary & details 5. Account management for detailed transaction information at employee
8) Gold business card Higher Credit limit Get up to Rs.10 lacs as credit limit on the card basis the company
Attractive Business Savings-Save business related spends with unique features and extensive partner tie- ups. These smart features include
a) 1% Cash back on Air spends b) 1% Cash back on Utility Bill Payments c) Petro Surcharge Waiver
d) Surcharge waiver on Rail tickets
.
9) Purchase cards
The HDFC Bank Corporate Purchasing Solution helps reduce purchasing costs considerably as follows
a) Eliminates the delay and cost of traditional purchase transactions.
b) Enables effective control to track and manage spending.
c) Automates purchase process for easy account management.
Business benefits
1. 1. Reduces transaction processing time, cost of high volume and low value transactions for the Corporate.
2. 2. Streamlines the payment process and enables account management control.
3. 3. Reduces the cost of goods by consolidating the supplier base and negotiating more favorable pricing from preferred suppliers.
4. 4. Minimizes risks associated with fraud, forgery and theft through a secure, totally mechanized card programme.
5. 5. Provides online expense management solutions - minimizing paperwork and simplifying reconciliation
10) Distributor card
Benefits to Corporate
a) Increases distributor's appetite for the corporate products.
b) Shorter working capital cycle and improved cash flow management c) Removal of cheque and cash payments and consequent problems for
Corporated) Easy reconciliation of transactions e) Helps quick delivery of goods or services
Benefits to Distributor
Attractive finance charges and interest free credit periods. Flexibility of scheduling payments: part payment, pre-payment and post-
payments possible. Reduces operational hassles in processing and reconciling transactions. Reduces time for procurement of goods
Chapter.7
Mutual funds
Meaningo Advantages of mutual fundso Mutual funds in HDFC banko Productso Why HDFC mutual fundso Vision statement
Mutual funds
A mutual fund is a professionally managed type of collective investment scheme that pools money from many investors and invests it in stocks, bonds, short-term money market instruments, and/or other securities.
The mutual fund will have a fund manager that trades the pooled money on a regular basis. The net proceeds or losses are then typically distributed to the investors annually.
What is mutual fund through diagrammatic representation for better understanding?
Mutual funds are funds that pool the money of several investors to invest in equity or debt markets. Mutual Funds could be Equity funds, Debt funds or balanced funds. Funds are selected on quantitative parameters like volatility, FAMA Model, risk adjusted returns, and rolling return coupled with a qualitative analysis of fund performance and investment styles through regular interactions / due diligence processes with fund managers.
It has various benefits to it. They are as follows:
The reason that mutual funds are so popular is that they offer the ability to easily invest in increasingly more complicated financial markets. A large part of the success of mutual funds is also the advantages they offer in terms of diversification, professional management and liquidity.
a) Flexibility - Mutual Fund investments also offers you a lot of flexibility with features such as systematic investment plans, systematic withdrawal plans & dividend reinvestment.
b) Affordability - They are available in units so this makes it very affordable. Because of the large corpus, even a small investor can benefit from its investment strategy.
c) Liquidity - In open ended schemes, you have the option of withdrawing or redeeming your money at any point of time at the current NAV
d) Diversification - Risk is lowered with Mutual Funds as they invest across different industries & stocks.
e) Professional Management - Expert Fund Managers of the Mutual Fund analyze all options based on experience & research
f) Potential of return -The fund managers who take care of your Mutual Fund have access to information and statistics from leading economists and analysts around the world. Because of this, they are in a better position than individual investors to identify opportunities for your investments to flourish.
g) Low Costs - The benefits of scale in brokerage, custodial and other fees translate into lower costs for investors.
h) Regulated for investor protection - The Mutual Funds sector is regulated to safeguard the investor's interests.
HDFC mutual funds
HDFC Asset Management Company Limited (AMC)
HDFC Asset Management Company Ltd (AMC) was incorporated under the Companies Act, 1956, on December 10, 1999, and was approved to act as an Asset Management Company for the HDFC Mutual Fund by SEBI In terms of the Investment Management Agreement, the Trustee has appointed the HDFC Asset Management Company Limited to manage the Mutual Fund. The paid up capital of the AMC is Rs. 25.161 Crore.
The present equity shareholding pattern of the AMC is as under:
Particulars % of the paid up equity capital
Housing Development Finance Corporation Limited
60
Standard Life Investments Limited 40
Zurich Insurance Company (ZIC), the Sponsor of Zurich India Mutual Fund, following a review of its overall strategy, had decided to divest its Asset Management business in India. The AMC had entered into an agreement with ZIC to acquire the said business, subject to necessary regulatory approvals.
The AMC is managing 24 open-ended schemes of the Mutual Fund
HDFC Growth Fund (HGF),
HDFC Balanced Fund (HBF),
HDFC Income Fund (HIF),
HDFC Liquid Fund (HLF),
HDFC Long Term Advantage Fund (HLTAF),
HDFC Children's Gift Fund (HDFC CGF),
HDFC Gilt Fund (HGILT) and so on.
The AMC is also managing 13 closed ended Schemes of the HDFC Mutual Fund viz.
a) HDFC Long Term Equity Fund, b) HDFC Mid-Cap Opportunities Fund, c) HDFC Infrastructure Fund, d) HDFC Fixed Maturity Plans, e) HDFC Fixed Maturity Plans – (Series II-X)f) The AMC is also providing portfolio management / advisory services
and such activities are not in conflict with the activities of the Mutual Fund
Products
Equity / Growth FundInvest primarily in equity and equity related instruments.
Children's Gift FundChildren's Gift Fund
Fixed Maturity PlanInvest primarily in Debt / Money Market Instruments and Government Securities...
Liquid FundsProvide high level of liquidity by investing in money market and debt instruments.
Debt/ Income Fund Invest in money market and debt instruments and provide optimum balance of yield, ...
Quarterly Interval FundThe primary objective of the Scheme is to generate regular income through investment...
HDFC Mutual Fund
HDFC Mutual Fund is one of the largest mutual funds and well-established fund house in the country with consistent and above average fund performance across categories since its incorporation on December 10, 1999. While past experience does make it a veteran, but when it comes to investments, it has never believed that the experience is enough.
Investment PhilosophyThe single most important factor that drives HDFC Mutual Fund is its belief to give the investor the chance to profitably invest in the financial market, without constantly worrying about the market swings. The strong emphasis on managing and controlling portfolio risk avoids chasing the latest “fads” and trends.
OfferIt believe, that, by giving the investor long-term benefits, it can constantly review the markets for new trends, to identify new growth sectors and share this knowledge with investors in the form of product offerings Besides, it also offer Portfolio Management Services.
AchievementsHDFC Asset Management Company (AMC) is the first AMC in India to have been assigned the ‘CRISIL Fund House Level – 1’ rating.
As on 30 September 09Average Asset under Management: Rs. 90,427.25 cr. No. of investors: 3,283,463 No. of ARN certified distributors: 30,282
Vision statement
Chapter 8
Micro finance
The topic to be discussed are Meaning of micro finance
Scope in industry Role of HDFC bank Vicious circle
Micro finance
Over the last several decades the banking sector in the country has taken significant strides to achieve profitability, financial stability and competitiveness to cater to the increasing demand for financial services.
However, much of the benefits accrued due to the growth in banking services have been limited to a minority of the total population of the country. Banks have not been able to reach a vast segment of the population particularly in the rural areas and take even basic banking services to the under served and disadvantaged masses, for various reasons.
Banks have confined to only areas around their branch network whereas the need for cheap and timely credit transcends the boundaries of these branches to remote areas which lack even basic infrastructure.
Micro-credit is a process. Poor people ensure their development through this process.
The poor becomes aware, efficient and hopeful. Credit is provided without any security. People are motivated to be engaged in productive activities and inspired to carry on trades and commerce
Savings, Credits, Insurance etc. are included in micro-credit management. Although the poor people has got a very little entrance in the conventional finance institutions used to get different types of financial assistance in micro-credit
Role of HDFC Bank
HDFC Bank is one of the first new generation private sector banks to enter the microfinance sector four years back. Enthused by our experience and considering the huge positive impact on
generation of livelihoods, financial empowerment to the rural women and poverty alleviation, the bank has rapidly adopted different business models for providing rural micro credit in unbanked areas to achieve the larger socio-economic objective of inclusive growth through financial inclusion.
Financial inclusion can be defined as providing affordable access to basic banking products and banking services like savings,loans, remittances, insurance, etc. to the hitherto excluded and often underprivileged and disadvantaged sections of the society.
This disadvantaged section of the population comprises of marginal farmers, daily wage landless labourers, unorganised sector employees, urban slum dwellers, oral lessees,minority communities, SCs/STs, socially excluded groups and women.
To conclude, HDFC Bank has a deeply felt commitment to financial inclusion and has been the pioneer in using the business correspondent model to achieve this purpose. A dedicated team of specialized and trained officers across the country
are working exclusively on the various initiatives of the bank on Financial Inclusion and Literacy. With the introduction of technology and market linkage initiatives by the bank, the scalability, viability and sustainability of financial inclusion and literacy can be reasonably ensured. We expect that our efforts in promoting financial inclusion would not only improve access to financial services on competitive terms but also positively affect a market imperfection which can have a potential demonstrative effect on the banking sector thereby bringing in other players to serve the historically disadvantaged and under-served population in the country.
HDFC Bank states that providing this type of financing not only open channels of banking towards rural but also widens the scope of conduction of activity from the bank’s point of view.
This vicious circle will enable the farmers and self help groups to overcome their financial help and raise their standard of living without being explicated
Chapter 9
Entry of banks into insurance- Banc assurance
Banc assurance
+ =
It is the provision of insurance services by banks, is an established and growing channel for insurance distribution, though its penetration varies across different markets. It is an important channel for mobilizing insurance business
Banking and insurance can be complementary to each other or they can supplement each other adding profits
RBI has recognized the importance of insurance and accordingly given guidelines for entry of banks into insurance business.
1. Banks can undertake agency for insurance services i.e. they can sell insurance products for certain fees or commission. They can establish joint venture companies for insurance business
2. Banks do not involve directly in insurance business due to risk involved in it. It creates greater fee income and helps to retain the customer for longer period. It adds to profitability .It creates synergy through cross selling
3. Banks should have license issued to carry out insurance business It should fulfill the requirements of IRDA, RBI, SEBI and Govt. of India.
The outlook for banc assurance remains positive. Given the current relatively low banc assurance penetration in emerging markets, it will likely see further significant development in the coming years.
Though banc assurance has traditionally targeted the mass market, banc assurers have begun to finely segment the market, which has resulted in tailor-made products for each segment
In India the concept of banc assurance appears to be gaining ground quite rapidly both through commission based arrangements and joint ventures between banks and insurance companies
Banc assurance in HDFC Bank
Introduction
HDFC Standard Life Insurance Company Limited is one of India's leading private insurance companies, which offers a range of individual and group insurance solutions. It is a joint venture between Housing Development Finance Corporation Limited (HDFC Limited), India's leading housing finance institution and a Group Company of the Standard Life Plc, UK. As on February 28, 2009 HDFC Ltd. holds 72.43% and Standard Life (Mauritius Holding) 2006, Ltd. holds 26.00% of equity in the joint venture.
One looks for insurance because of a factor called as
Our Key Strengths
Financial Expertise-As a joint venture of leading financial services groups, HDFC Standard Life has the financial expertise required to manage your long-term investments safely and efficiently.
Range of Solutions -We have a range of individual and group solutions, which can be easily customized to specific needs.
Track Record So Far-Our gross premium income, for the year ending March 31, 2009 stood at Rs. 5,564.69 crores.
As on March 31, 2009, the company has more than 27 lakh policies in force.
WHY HDFC Standard Life?
Bank as a one stop financial shop to enhance customer satisfaction is distributing Life and Non Life Insurance Products.
Strong Promoter
Preferred and Trusted Brand
Investment Philosophy
Need-Based Selling Approach
Risk Control Framework
Focus on Training
Focus on Long-Term Value
Transparent Dealing
Strict Compliance with Regulations
Diversified Product Portfolio
HDFC Standard Life’s wide and diversified product portfolio help individuals meet their various needs, be it:
Protection: Need for a sound income protection in case of your unfortunate demise
Investment: Need to ensure long-term real growth of your money Savings: Save for the milestones and protect your savings too Pension: Need to save for a comfortable life post retirement
Life insurance products at customers’ disposal by HDFC Bank: there are a variety of insurance such as, health, life, motor, home, group and so on.
All Products Protection Plans - Safeguard your family’s financial independence Security against uncertainties Financial cushion in case of an eventuality
Types of Protection Plans
Our range of Protection Plans includes
Retirement Plans-
Monetary security
Financial independence even after retirement Live carefree in your golden years
Types of Retirement Plans
Our range of Retirement Plans includes
Savings & Investment Plans - Dual benefit of protection and long term savings
Provide an assured sum for future needs Inculcate a habit of regular savings
Types of Savings & Investment PlansOur range of Savings & Investment Plans includes
Health Plans
Secure your health costs Financial independence despite illnesses Meeting medical expenses effortlessly Types Of Health Plans-Our range of Health Plans includes
Children’s plans- Helps you secure your child’s dreams Economic support when your child needs it most Funding major milestones
Types of Children’s Plans-Our range of Children's Plans includes
Group Plans The most comprehensive list of products for progressive employers who
wish to provide the best and most innovative employee benefit solutions to their employees
Life insurance products at customers’ disposal by HDFC Bank:
Group Term Insurance Plan
This plan offers Protection to organization employees
Group Variable Term Insurance Plan
This Protection plan is a tailor made insurance policy for third party institutions
Group Gratuity Solutions
This plan is a flexible and cost effective way to fund your Gratuity liability
Group Superannuation Solution
This plan helps you manage your employees Superannuation funds
Group Leave Encashment Solution
This plan is an effective way to fund your company's Leave Encashment liability
Our Vision
'The most successful and admired life insurance company, which means that we are the most trusted company, the easiest to deal with, offer the best value for money, and set the standards in the industry'.
'HDFC bank is the most obvious choice for all'.
Our Values
Values that we observe while we work:
Integrity Innovation Customer centric People Care “One for all and all for one” Team work Joy and Simplicity
Chapter 10
Specialized services
Letters of credit and guarantees
Cash management services Forex desk Debt market instruments Derivatives desk Custodial services
Letter of credit
Para Banking reflects HDFC Bank's strengths in providing clients in India, a wide array of commercial, transactional and electronic banking products. It achieves this through innovative product development and a well-integrated approach to relationship management.
HDFC Bank can extend import financing through Letters of Credit, which are well accepted globally and supported by a strong trade finance set-up. We are direct members of SWIFT and have correspondent banking arrangements with more than 370 banks worldwide. We also structure complex Letters of Credit.
Guarantees
We offer to issue various types of guarantees - performance, financial, bid bond, tenders, customs etc. Our guarantees are well accepted by all government agencies including Customs, Excise, Insurance Companies, Shipping Companies, all Capital Market Agencies such as NSE, BSE, ASE, CSE etc. and all major corporate. Our overseas correspondent bank alliances also enable us to issue guarantees overseas for participation in global tenders etc.
Cash management services
Cash Management is the stewardship or proper use of an entity’s cash resources. It serves as the means to keep an organization functioning by making the best use of cash or liquid resources of the organization. At the same time the organizations have the responsibility to use timely, reliable and comprehensive financial information systems.
Cash Management helps the organization in:
Eliminating idle cash balances.
Monitoring exposure and reducing risks.
Ensuring timely deposit of collections.
Properly timing the disbursements.
Cash Management Services (CMS) is one of HDFC Bank’s thrust areas. This has been a result of a robust, end to end cash management product which offers innovative and reliable solutions by combining an efficient collections and disbursements product, backed by state of the art systems to ensure customized delivery. The Bank has constructed a wide range of CMS products covering collections and disbursements of operating flows, as well as specialized cash flow streams such as rights/public issue collections, dividends, We operate out of a large and expanding network of over 175 outlets across the country.
This is the largest network of online, electronically linked branches in the country. This provides us with a clear competitive advantage, which naturally translates into a lower cost and faster credit to corporate.
At HDFC Bank it offer a comprehensive range of Collections and Payments solutions under our Cash Management Services (CMS) umbrella to meet needs and put in control of your cash position.
Forex desk
HDFC Bank's Foreign Exchange Department has two desks, viz. the Inter Bank Desk and the Corporate Desk.
The Inter Bank Desk (IB) does cover operations of the positions generated by the Corporate Desk. Besides, it trades on its own account.The bank has a state-of-the-art Dealing Room and is an active player in the local Inter Bank market. The Dealing Room is manned by highly trained professionals. Because of its involvement in the development of the market in the country, the Bank is a number of various important committees of Foreign Exchange Dealers' Association of India (FEDAI) as well as of Reserve Bank Of India (RBI). Currency swaps, outward and inward remittances, prompt and competitive pricing, economic and technical analysis.
Debt market instruments
Government of India securities: These are sovereign (credit risk-free) coupon bearing instruments which are issued by the Government of India.
Securities are available in primary and secondary market in wide range. It is highly liquid able and can be holded in physical form or in demat form
C ommercial papers: It represents short term unsecured promissory notes issued by top rated corporate, primary dealers (PDs), satellite dealers (SDs) and the all-India financial institutions (FIs).
1. CP can be issued for a minimum period of 15 days and a maximum up to one year.
2. Minimum amount invested is 5,00,000 or multiples
3. Cps are issued at a discount to face value
4. Issued in demat form
Treasury bills
It is a discounted instrument issued by the Central Government.
The main features of Treasury Bills are:
a) Sovereign zero risk instruments.
b) Treasury Bills: Short term, discounted Instruments with a maximum tenor of 364 days.
c) Available in primary and secondary market.
d) Issued at a discount to face value i.e., investors will buy the Treasury Bills at discount to face value of Rs.100 and on maturity the face value of Rs.100 is received by the investor.
e) No Tax Deduction at Source (TDS)
f) Convenience of CSGL a/c as in case of Central Govt. securities such as automatic credit of redemption money.
Derivatives desk
HDFC Bank has established itself as a leading player in the derivatives market. The bank has a team exclusively dedicated to the area of derivatives.
In line with the bank's commitment of adding value to clients, the bank actively advises its corporate clients on the use of derivatives to manage their currency and interest rate risks.
The products offered by the desk include interest rate swaps, caps, floors, short dated as well as long dated currency options, cross currency swaps embedded with options and swaptions
The bank has carved a special niche for itself in rupee derivatives market. It takes pride in being one of the most aggressive players in this market.
Custodial services
The Bank has set up the Custody Services group offering quality and reliable custody services to the clients and has in place a customised Information system, high security storage vaults and premises for processing / safekeeping securities. HDFC Bank also has the capability to offer "Straight-through Processing"(STP) through NSDL, NSE-IT and FT
The Bank has been appointed Custodian by the National Stock Exchange - the country's leading automated exchange in respect of the securities deposited by the trading members.
Chapter 11
NET BANKING
Net banking- popularly known as internet banking or E-banking by individuals.
Net Banking is a system of banking in which customers can view their account details, pay bills, and transfer money by means of the Internet. Internet banking, sometimes called online banking, is an outgrowth of PC banking. Internet banking uses the Internet as the delivery channel by which they conduct banking activity
For example, transferring funds, paying bills, viewing checking and savings account balances, paying mortgages, and purchasing financial instruments and certificates of deposit.
An Internet banking customer accesses his or her accounts from a browser— software that runs Internet banking programs resident on the bank’s World Wide Web server, not on the user’s PC.
Net Banker defines a “true Internet bank” as one that provides account balances and some transactional capabilities to retail customers over the World Wide Web. Internet banks are also known as virtual, cyber, net, interactive, or web banks.
Net safe schemes
A typical Internet bank site specifies the types of transactions offered and provides information about account security.
Because Internet banks generally have lower operational and transactional costs.
Further, in some cases, web banks are not restricted to conducting transactions within national borders and have the ability to make transactions involving large amounts of assets instantaneously.
According to industry analysts, electronic banking provides a variety of attractive possibilities for remote account access, including:
* Availability of inquiry and transaction services around the clock;* worldwide connectivity;* Easy access to transaction data, both recent and historical; and* “Direct customer control of international movement of funds without intermediation of financial institutions in customer’s jurisdiction.”
It is easy using electronic banking services
One may simply ask their institution for the software needed for PC banking or obtain a password for Internet banking. Either approach requires minimal paperwork.
Once they have joined the system, customers have electronic access to all of their accounts at the bank. Net banking is a facility provided by bank to its customers who do not have much time to visit bank again and again. One can do transaction from their home. One can request for cheque book, balance inquiry, download statement, and can check their record of last so many years which bank can't provide you.
Points of importance:
This service is provided free of cost by banks. Always avoid using your net banking account in public computers and keep changing your password and never set your password as your name, date of birth, pin code, city name or your best friend name It should be always unique otherwise your id and password can be hacked.Mobile banking is also a new interface and HDFC Bank and reliance mobile had significantly carried it out.
Net Banking is HDFC Bank's Internet Banking service. Providing up-to-the-second account information, Net Banking lets you manage your account from the comfort of your mouse - anytime, anywhere.
Our industry leading service provides a host of features at your finger-tips:
View Account Balances & Statements
Transfer Funds between accounts
Create Fixed Deposits Online
Request a Demand Draft
Pay Bills
Order a Cheque Book
Request Stop Payment on a Cheque
And lots more
Internet Banking is the most convenient to manage the account.
Net Banking is Real Time, giving you up-to-the-second details on your account. It can be accessed anytime, from anywhere, giving you complete control over your finances. There are no queues to stand in, or turns to wait for. With Net Banking you are in control.
HDFC Bank's Net Banking service is secure. Using industry-standard technologies and infrastructures, our service gives you peace of mind. But still one should ensure security and safety at their end too otherwise it may lead to bank frauds and scams via net
Net Safe schemes
Net Safe, the latest technology offering from HDFC Bank, is a unique service which makes online shopping completely secure. With Net Safe
you create a virtual card (Net Safe Card) from your HDFC Bank Visa Credit / Debit Card or Master card Credit/Debit Card number that provides you with complete security while shopping online. The key benefits of Net Safe are as follows:
1. Your HDFC Bank credit / debit card number is never used on the merchant website
2. The Net Safe card you create is a onetime use card 3. You can set your own limit for the Net Safe cards you generate 4. You can use it on any merchant website that accepts VISA/Master
card cards 5. All purchases you make with Net Safe Cards will appear on your
statement, just like any other transaction.
Net Safe offers a unique security feature, wherein your credit/debit card number is never revealed on the Internet. Instead, you generate a virtual card number, drawing funds from either your credit or debit card account [for debit card, you can generate up to 5 virtual cards daily subject to your Point of Sale(POS) limit per day, provided there is available balance in your savings/current account and for your credit card up to available credit limit]. You can then use this virtual card number at any online merchant site and complete your shopping with security and ease.
Conclusion
We live in a world of rapid change. Today’s world is certainly more complex and ambiguous than the world of yesterday, us new approach has to be different from what we have been doing traditionally.The emphasis on understanding what Para banking services and activities are and research in this area is a relatively new development.
Financial institutions and banks through their Para-banking activities have played a useful role in financing various sectors of the economy. Considering the current scenario of branch banking, it will take some more time to reach the wider population across the country and provide financial services in a cost-effective manner from the larger banks. Para-banking services have to be carefully regulated and supervised by the regulator both on financial health of the service provider as well as customer protection. Whilst there is a greater need for Para-banking services for the wider population and supporting greater participation in the financial services “network coverage”, it is important to evolve new workable models for appropriate supervision.
Finally, any thought and decision on banning Para banking activity or institution or class of institutions should be considered after significant deliberations and giving due weight age to the contributions and negative roles over the last few decades rather than be motivated by some recent incidents relating to a certain entity.
Bibliography
Sources:
Business environment-The ICFAI University
India's banking and financial sector in the new millennium, Volume 2-Uma Kapila
Principles and Practices of Banking and Insurance-P.K. Bandgar
Development issues of Indian Economy-Misra and Puri
(Himalaya Publishing House)
Business line –Friday, Sep 21, 2007
The Hindu-Sunday, July 16, 2006
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