A RESEARCH STUDY REPORT ON

Titled A STUDY OF AUTO LOAN IN HDFC BANK WITH SPECIAL REFERENCE TO JODHPUR CITY Submitted in partial fulfillment for the Award of degree of Master of Business Administration

LACHOO MEMORIAL COLLEGE OF SCIENCE & TECHNOLOGY, JODHPUR

Submitted To: Dr. Rashmi Mathur Asst. Prof DMS, LMCST.

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Submitted By: Nitesh Khetani MBA IVth Semester.

CERTIFICATE

This is to certify that Mr Nitesh Khetani, student of MBA IV semester of Lachoo memorial College, Jodhpur has completed her project report on the topic of A STUDY OF AUTO LOAN IN HDFC BANK WITH SPECIAL REFERENCE TO JODHPUR CITY under supervision of Dr. Rashmi Mathur, Faculty member, Lachoo memorial College, to best of my knowledge, the report is original and has not been copied or submitted nor any where used. It is an independent work done by her.

Prof. R.L.DADHICH Director of Management Department, LMC. Jodhpur

PREFACE
It is true that Experience is best teacher In todays globalize world, where cutthroat competition is prevailing in the market, theoretical knowledge is not sufficient. Beside this one need to have practical knowledge, which would help an individual in his/her carrier activities.

The MBA programmed is well structured and integrated course of business studies. The main objective of practical training at MBA level is to develop skill in student by supplement to the theoretical study of business management in general. Industrial training helps to gain real life knowledge about the industrial environment and business practices. The MBA programmed provides student with a fundamental knowledge of business and organizational functions and activities, as well as an exposure to strategic thinking of management.

In every professional course, training is an important factor. Professors give us theoretical knowledge of various subjects in the college but we are practically exposed of such subjects when we get the training in the organization. It is only the training through which I come to know that what an industry is and how it works. I can learn about various departmental operations being performed in the industry, which would, in return, help me in the future when I will enter the practical field.

Acknowledgement

I express my sincere thanks to my project guide, Dr. Rashmi Mathur Associate Professor, Management Department, for guiding me right from the inception till the successful completion of project. I sincerely acknowledge him for extending their valuable guidance, support for literature, critical reviews of project and the report and above all the moral support he had provided to me with all stages of this project. I would also like to thank the supporting staff of HDFC Bank Auto Loan Department, for their help and cooperation throughout our project.

Nitesh Khetani

Executive Summary
Topic for project: A Study of Auto Loans in HDFC Bank with special reference to Jodhpur City. The Project report as the name suggests, A Study on Auto Loan with special reference to Jodhpur City is concerned with the approach, perspective and strategy of Auto Loans. The study starts with explaining all the features HDFC Bank with special reference to Jodhpur City. Now the main focus of the study comes on Cash Advance to Transporters The reader who wishes to understand the Concept of Auto Loan, then this project will provide a thorough and readable understanding of the issue.

INDEX

1.INTRODUCTION TO THE BANKING INDUSTRY 2.INTRODUCTION TO THE HDFC BANK 3.RESEARCH METHODOLOGY 4.ANALYSIS AND INTERPRETATION 5.FACTS AND FINDINGS 6.SWOT ANALYSIS 7.Conclussion 8.Appendix 9.Bibliography 07 11 97 104 114 116 119 123 126

INTRODUCTION TO THE BANKING INDUSTRY

1.1 INTRODUCTION TO THE BANKING INDUSTRY:

Banking, the business of providing financial services to consumers and businesses. The basic services a bank provides are checking accounts, which can be used like money to make payments and purchase goods and services; savings accounts and time deposits that can be used to save money for future use; loans that consumers and businesses can use to purchase goods and services; and basic cash management services such as check cashing and foreign currency exchange. A broader definition of a bank is any financial institution that receives, collects, transfers, pays, exchanges, lends, invests, or safeguards money for its customers. These institutions include finance companies, investment companies, investment banks, insurance companies, pension funds, security brokers and dealers, mortgage companies, and real estate investment trusts. Banking services serve two primary purposes. First, by supplying customers with the basic mediums-of-exchange (cash, checking accounts, and credit cards), banks play a key role in the way goods and services are purchased. Without these familiar methods of payment, goods could only be exchanged by barter (trading one good for another), which is extremely time-consuming and inefficient. Second, by accepting money deposits from savers and then lending the money to borrowers, banks encourage the flow of money to productive use and investments. This in turn allows the economy to grow. Without this flow, savings would sit idle in someone safe or pocket, money

would not be available to borrow, people would not be able to purchase cars or houses, and businesses would not be able to build the new factories the economy needs to produce more goods and grow. Enabling the flow of money from savers to investors is called financial intermediation.

1.2 Origin of Banking

Many of todays banking services were first practiced in ancient Lydia, Phoenicia, China, and Greece, where trade and commerce flourished. The temples of ancient Greece served as safe-deposit vaults for the valuables of worshipers. The Greeks also coined money and developed a system of credit. The Roman Empire had a highly developed banking system, and its bankers accepted deposits of money, made loans, and purchased mortgages. Shortly after the fall of Rome in ad 476, banking declined in Europe. The increase of trade in 13th-century Italy prompted the revival of banking. The moneychangers of the Italian states developed facilities for exchanging local and foreign currency. Soon merchants demanded other services, such as lending money, and gradually bank services were expanded. The first bank to offer most of the basic banking functions known today was The Bank of Barcelona in Spain. Founded by merchants in 1401, this bank held deposits, exchanged currency, and carried out lending operations. It also is believed to have introduced the bank check. Three other early banks, each managed by a committee of city officials, were the Bank of Amsterdam (1609), the Bank of Venice (1587), and the Bank of Hamburg (1619). These institutions laid the foundation for modern banks of deposit and transaction.

For more than 300 years, banking on the European continent was in the hands of powerful statesmen and wealthy private bankers, such as the Medici family in Florence and the Foggers in Germany. During the 19th century, members of the Rothschild family became the most influential bankers in all Europe and probably in the world. This international banking family was founded by German financier Mayer Amschel Rothschild (1743-1812), but it soon spread to all the major European financial capitals. The Bank of France was organized in 1800 by Napoleon. The bank had become the dominant financial institution in France by the mid-1800s. In Germany, banking experienced a rapid development about the middle of the 19th century with the establishment of several strong stock-issuing or publicly owned banks. Banking in the British Isles originated with the London goldsmiths of the 16th century. These men made loans and held valuables for safekeeping. By the 17th century English goldsmiths created the model for todays modern fractional reserve bankingthat is, the practice of keeping a fraction of depositors money in reserve while extending the remainder to borrowers in the form of loans. Customers deposited gold and silver with the goldsmiths for safekeeping and were given deposit receipts verifying their ownership of the gold deposited with the goldsmith. These receipts could be used as money because they were backed by gold. But the goldsmiths soon discovered that they could take a chance and issue additional receipts against the gold to other people who needed to borrow money. This worked as long as the original depositors did not withdraw all their gold at one time. Hence, the amount of receipts or claims on the gold frequently exceeded the actual amount of the gold, and the idea that bankers could create money was born.

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INTRODUCTION TO THE HDFC BANK

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2.1 Origin of HDFC

In MID-1994, when Economic Liberalization, as we know it today, was a glean in Man Mohan Singhs eye, somewhere in the Far East, the Head of Citibank of Malaysia made a rather strange decision: Even as his banker buddies laughed at him, he began blueprinting a plan to set up a full-fledged private bank in India, an opportunity that had just opened up in a market dominated by the sheer physical presence and reach of public sector banks and the pinstriped haughtiness of their foreign counterparts. Even more bizarrely, the Citibank decided to locate his headquarters in a grimy mil in the distinctly down-market are of Lower Parel in central Mumbai. Having done that, he went about the unenviable task of trying to persuade people to work for him out of the mill. He succeeded in recruiting a snug team, but the rats and cockroaches crawling out of night wouldnt have boosted the confidence of most of the new recruits as they want about blueprinting a strategy for the new bank. The ex-Citibanker in question is of course Aditya Puri, the bank is HDFC Bank, the location of the headquarters is still Lower Parel, but instead of a dusty mill, its a spanking new building with a glass faade. And the strategy that was on the drawing board in 1994, has translated into results. And how! If HDFC Bank tops the list of Indias Best Banks in this years BT-KPMG study, its for a variety of reasons. These ranges from: Deposits costs are amongst the lowest at 3.2 percent. 12

Healthy interest margin at 3.9 percent, despite declining asset yields. Net NPAs at 0.22 percent are amongst the lowest in the industry. One of the highest interest spreads, at 3.20 percent. Leading player in third-party distribution like MFs and life policies. Top three positioning in most major products in target segment. Enjoys high price-earning multiple in the capital market.

2.2 WHAT IS ALL ABOUT HDFC BANK:

LOGO OF HDFC BANK:

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 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 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. HDFC BANKs business philosophy is based on four core values 13

Customer Focus, Operational Excellence, Product Leadership and People. They believe that the ultimate identity and success of their bank will reside in the exceptional quality of our people and their extraordinary efforts. For this reason, they are committed to hiring, developing, motivating and retaining the best people in the industry.

Mission : HDFC Bank 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. Objective: 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. They are committed to do this while ensuring the highest levels of ethical standards, professional integrity, corporate governance and regulatory compliance. Business Strategy: Business strategy emphasizes the following: Increase the market share in Indias 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 the technology platform and open scaleable systems to deliver more products to more customers and to control operating costs.

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Maintain the current high standards for asset quality through disciplined credit risk management. Develop innovative products and services that attract the targeted customers and address inefficiencies in the Indian financial sector. Continue to develop products and services that reduce their cost of funds. Focus on high earnings growth with low volatility.

Who to HDFC

is Bank

covered online are

by covered under

this this

Policy: Policy

All visitors ("visitors") who visit the site http://www.hdfcbank.com and provide information

Information

covered

by

this

Policy

This Policy seeks to cover private information of the Visitors provided to HDFC Bank online as also any information collected by the bank server from the visitors browser. ("the The features of this policy: All Information collected shall only be used to provide the Visitor with the best possible services.

Information")

The Information shall not be shared with any external organisation unless the same is necessary to enable HDFC Bank to provide you services or to enable the compilation of a transaction, credit reporting, or the same is necessary or required pursuant to applicable banking norms or pursuant to the terms and conditions applicable to such Information as agreed to with HDFC Bank. Needless to add, confidentiality norms as applicable to banks shall be adhered to. HDFC Bank may also share Information to provide customer with superior services and a range of offers. If customer desire HDFC Bank to limit such sharing whereby they would not like to be informed of offers available you may contact us at support@hdfcbank.com.

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HDFC Bank will use the Information to improve the visitor experience on the site and make subsequent offers to the visitor on products which may be of interest to him / her. The HDFC Bank website uses cookies. Cookies are small data files that a website stores on your computer. They use persistent cookies which are permanently placed on your computer to store non-personal (Browser, ISP, OS, Clickstream information etc) and profiling information (age, gender, income etc). While cookies have unique identification nos, personal information (name, a/c no, contact nos etc) SHALL NOT be stored on the cookies. They will use the information stored in the cookies to improve visitor experience through throwing up relevant content where possible. They will also use the cookies to store visitor preferences to ease visitor navigation on the site. They may in the future implement encryption of the cookies HDFC Bank also may disclose information about customer as permitted or required by law. At HDFC Bank, they value customer relationship and will at all times strive to ensure customer privacy.

PROMOTER: HDFC is India's premier housing finance company and enjoys an impeccable track record in India as well as in international markets. Since its inception in 1977, the Corporation has maintained a consistent and healthy growth in its operations to remain the market leader in mortgages. Its outstanding loan portfolio covers well over a million dwelling units. HDFC has developed significant expertise in retail mortgage loans to different market segments and also has a large corporate client base for its housing related credit facilities. With its experience in the financial markets, a strong market reputation, large shareholder base and unique consumer franchise, HDFC was ideally positioned to promote a bank in the Indian environment. BUSINESS FOCUS:

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HDFC Bank's mission is to be a World-Class Indian Bank. The objective is to build sound customer franchises across distinct businesses so as to be the preferred provider of banking services for target retail and wholesale customer segments, and to achieve healthy growth in profitability, consistent with the bank's risk appetite. The bank is committed to maintain the highest level of ethical standards, professional integrity, corporate governance and regulatory compliance. HDFC Bank's business philosophy is based on four core values - Operational Excellence, Customer Focus, Product Leadership and People.

CAPITAL STRUCTURE: As on 31st March, 2009 the authorised share capital of HDFC Bank is Rs. 550 crore. The paid-up capital as on the said date is Rs. 425,38,41,090/- ( 42,53,84,109 equity shares of Rs 10/- each). The HDFC Group holds 19.38% of the Bank's equity and about 17.70 % of the equity is held by the ADS Depository (in respect of the bank's American Depository Shares (ADS) Issue). 27.69 % of the equity is held by Foreign Institutional Investors (FIIs) and the Bank has about 5,48,774 shareholders. The shares are listed on the Bombay Stock Exchange Limited and The National Stock Exchange of India Limited. The Bank's American Depository Shares ( ADS ) are listed on the New York Stock Exchange (NYSE) under the symbol 'HDB' and the Bank's Global Depository Receipts (GDRs) are listed on Luxembourg Stock Exchange under ISIN No US40415F2002. CBoP AND 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. 17

The merged entity will have a strong deposit base of around Rs. 1,22,000 crore and net advances of around Rs. 89,000 crore. The balance sheet size of the combined entity would be over Rs. 1,63,000 crore. 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. In a milestone transaction in the Indian banking industry, Times Bank Limited (another new private sector bank promoted by Bennett, Coleman & Co. / Times Group) was merged with HDFC Bank Ltd., effective February 26, 2000. This was the first merger of two private banks in the New Generation Private Sector Banks. As per the scheme of amalgamation approved by the shareholders of both banks and the Reserve Bank of India, shareholders of Times Bank received 1 share of HDFC Bank for every 5.75 shares of Times Bank. DISTRIBUTION NETWORK: HDFC Bank is headquartered in Mumbai. The Bank at present has an enviable network of over 1412 branches spread over 528 cities across India. All branches are linked on an online real-time basis. Customers in over 500 locations are also serviced through Telephone Banking. The Bank's expansion plans take into account the need to have a presence in all major industrial and commercial centres where its corporate customers are located as well as the need to build a strong retail customer base for both deposits and loan products. Being a clearing/settlement bank to various leading stock exchanges, the Bank has branches in the centres where the NSE/BSE have a strong and active member base. The Bank also has a network of about over 3295 networked ATMs across these cities.

Moreover, HDFC Bank's ATM network can be accessed by all domestic and international Visa/MasterCard, Visa Electron/Maestro, Plus/Cirrus and American Express Credit/Charge cardholders. MANAGEMENT:

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Mr. Jagdish Capoor took over as the bank's Chairman in July 2001. Prior to this, Mr. Capoor was a Deputy Governor of the Reserve Bank of India. The Managing Director, Mr. Aditya Puri, has been a professional banker for over 25 years, and before joining HDFC Bank in 1994 was heading Citibank's operations in Malaysia. The Bank's Board of Directors is composed of eminent individuals with a wealth of experience in public policy, administration, industry and commercial banking. Senior executives representing HDFC are also on the Board.

Senior banking professionals with substantial experience in India and abroad head various businesses and functions and report to the Managing Director. Given the professional expertise of the management team and the overall focus on recruiting and retaining the best talent in the industry, the bank believes that its people are a significant competitive strength.

TECHNOLOGY: HDFC Bank operates in a highly automated environment in terms of information technology and communication systems. All the bank's branches have online connectivity, which enables the bank to offer speedy funds transfer facilities to its customers. Multi-branch access is also provided to retail customers through the branch network and Automated Teller Machines (ATMs). The Bank has made substantial efforts and investments in acquiring the best technology available internationally, to build the infrastructure for a world class bank. The Bank's business is supported by scalable and robust systems which ensure that our clients always get the finest services we offer. The Bank has prioritised its engagement in technology and the internet as one of its key 19

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: HDFC Bank offers a wide range of commercial and transactional banking services and treasury products to wholesale and retail customers. The bank has three key business segments: WHOLE SALE BANKING SERVICES: The Bank's target market ranges from large, blue-chip manufacturing companies in the Indian corporate to 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. 20

RETAIL BANKING SERVICES: The objective of the Retail Bank is to provide its target market customers a full range of financial products and banking services, giving the customer a one-stop window for all his/her banking requirements. The products are backed by world-class service and delivered to 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. By March 2009, the bank had a total card base (debit and credit cards) of over 13 million. The Bank is also one of the leading players in the merchant acquiring business with over 70,000 Point-of-sale (POS) terminals for debit / credit cards acceptance at merchant establishments. The Bank is well positioned as a leader in various net based B2C opportunities including a wide range of internet banking services for Fixed Deposits, Loans, Bill Payments, etc . 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 21

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. RATING: CREDIT RATING: 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". CARE has also rated the bank's Certificate of Deposit (CD) programme "PR 1+" which represents "superior capacity for repayment of short term promissory obligations". Fitch Ratings India Pvt. Ltd. (100% subsidiary of Fitch Inc.) has assigned the "AAA ( ind )" rating to the Bank's deposit programme, with the outlook on the rating as "stable". This rating indicates "highest credit quality" where "protection factors are very high" The Bank also has its long term unsecured, subordinated (Tier II) Bonds rated by CARE and Fitch Ratings India Private Limited and its Tier I perpetual Bonds and Upper Tier II Bonds rated by CARE and CRISIL Ltd. CARE has assigned the rating of "CARE AAA" for the subordinated Tier II Bonds while Fitch Ratings India Pvt. Ltd. has assigned the rating "AAA (ind)" with the outlook on the rating as "stable". CARE has also assigned "CARE AAA [Triple A]" for the Banks Perpetual bond and Upper Tier II bond issues. CRISIL has assigned the rating "AAA / Stable" for the Bank's Perpetual Debt programme and Upper Tier II Bond issue. In each of the cases referred to above, the ratings awarded were the highest assigned by the rating agency for those instruments. CORPORATE GOVERNANCE RATING: The bank was one of the first four companies, which subjected itself to a Corporate Governance and Value Creation (GVC) rating by the rating agency, The Credit Rating 22

Information Services of India Limited (CRISIL). The rating provides an independent assessment of an entity's current performance and an expectation on its "balanced value creation and corporate governance practices" in future. The bank has been assigned a 'CRISIL GVC Level 1' rating which indicates that the bank's capability with respect to wealth creation for all its stakeholders while adopting sound corporate governance practices is the highest.

2.3 CORPORATE GOVERNANCE

HDFC Bank recognizes the importance of good corporate governance, which is generally accepted as a key factor in attaining fairness for all stakeholders and achieving organizational efficiency. This Corporate Governance Policy, therefore, is established to provide a direction and framework for managing and monitoring the bank in accordance with the principles of good corporate governance. Code of Corporate Governance Corporate Governance Rating Composition of the Board Profiles of Directors Board Committees Ownership Rights Promoters Rights (HDFC LTD.) Key Shareholders Rights Grievance Redressal Dividend Policy Memorandum of Association 23

 Board Meetings Quarterly Updates Fair Practice Code for Lending Code of Ethics / Conduct History of Shareholders

2.3 CODE OF CORPORATE GOVERNANCE

The bank believes in adopting and adhering to the most superior corporate governance practices and continuously benchmarking itself against each such practice in the industry. The bank understands and respects its fiduciary role and responsibility to shareholders and continually strives to fulfill their expectations. We strongly believe that the best board practices, transparent disclosures and shareholder empowerment are necessary for creating shareholder value. The bank has infused the philosophy of corporate governance in all its activities. The philosophy on corporate governance is an important tool for shareholder protection and maximization of their long term values. The cardinal principles such as independence, accountability, responsibility, transparency, fair and timely disclosures, credibility etc. serve as the means for implementing the philosophy of corporate governance in letter and in spirit.

2.4 CORPORATE GOVERNANCE RATING

The bank was amongst the first four companies, which subjected itself to a Corporate Governance and Value Creation (GVC) rating by the rating agency, The Credit Rating Information Services of India Limited (CRISIL). The rating provides an independent assessment of an entity's current performance and an expectation on its "balanced value creation and corporate governance practices" in future. The bank has been assigned a 'CRISIL GVC Level 1' rating for the second consecutive year, which indicates that the

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bank's capability with respect to wealth creation for all its stakeholders while adopting sound corporate governance practices is the highest.

2.5 COMPOSITION OF BOARD

The composition of the Board of Directors of the bank is governed by the Companies Act, 1956, the Banking Regulation Act, 1949 and the listing requirements of the Indian stock exchanges where the securities issued by the Bank are listed. The Board had strength of 11 Directors as on March 31, 2005. The Board had an optimum combination of Executive and Non-executive Directors and a majority of Directors are independent Directors. The Board consists of eminent personalities with considerable professional expertise and experience in banking, finance and other related fields. None of the Directors on the Board is a member of more than 10 committees and Chairman of more than 5 committees across all the companies in which he/she is a Director. All the Directors have made necessary disclosures regarding committee positions occupied by them in other companies. Mr. Vineet Jain is nominated by the Bennett, Coleman Group on the Board of the Bank. All Directors other than Mr. Aditya Puri, Managing Director, are Nonexecutive Directors on the Board. All Directors other than Mr. Jagdish Capoor, Mr. Aditya Puri, Mr. Keki Mistry and Mrs. Renu Karnad, are Independent Directors on the Board. The bank has not entered into any materially significant transactions during the year, which could have a potential conflict of interest between the bank and its promoters, directors, management and / or their relatives etc. other than the transactions entered into in the normal course of business. PROFILES OF DIRECTORS Mr. Jagdish Kapoor: He is a Certified Associate of the Indian Institute of Bankers.

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Prior to joining the bank, Mr. Capoor was Deputy Governor of the RBI. Mr. Capoor was Chairman of Deposit Insurance and Credit Guarantee Corporation of India and Bharatiya Reserve Bank Note Mudran Limited. Director on the Boards of Bank of Baroda, Export Import Bank of India, the State Bank of India, the National Bank for Agriculture and Rural Development and the National Housing Bank. Chairman of Agricultural Finance Corporation Limited. Director of The Indian Hotels Company Limited and Assets Care Enterprise Limited. Member of the Board of Governors of the Indian Institute of Management, Indore and the Governing Board of the Stock Exchange, Mumbai. Member of the Audit Committee and is a Chairman of the Remuneration Committee of Indian Hotels Company Limited. He is also a member of the Audit Committee of Assets Care Enterprise Limited. Mr.Aditiya Puri Associate member of the Institute of Chartered Accountants of India. Mr. Puri has over 28 years of experience in both domestic and international banking. Prior to joining the Bank, Mr. Puri was Chief Executive Officer of Citibank, Malaysia from 1992 to 1994. Mr. Puri has been appointed on the Board of SAMEA (South Asia, Middle East and Africa-Region) Board of the Master Card International for 2005.

Mr. Keki M. Mistry Mr. Mistry had been deputed on consultancy assignments for the Commonwealth Development Corporation to Thailand, Mauritius, the Caribbean Islands and Jamaica. He has also worked as a consultant for the Mauritius Housing Company and Asian Development Bank. Mr. Mistry is Managing Director of Housing Development Finance Corporation Limited (HDFC Ltd.) and Chairman of GRUH Finance Limited and Intelenet Global Services Private Limited. He is a director of HDFC Developers Limited, HDFC Chubb General Insurance Company Limited, HDFC Trustee Company Limited, HDFC Standard Life Insurance Company Limited, Credit Information Bureau (India) Limited, Infrastructure Leasing & Financial services companies. 26

Mr. Vineet Jain He is Managing Director of Bennett, Coleman & Company Limited and Chairman of Times Internet Limited, Times Online Money Limited, Bharat Nidhi Limited and Worldwide Media Limited (formerly known as Magz International Limited). He is also on the boards of Times Infotainment Media Limited, The Press Trust of India Limited, Times Journal India Private Limited and Times Centre for Media Studies. Mr. Jain has transformed the Times Group from Indias leading publishing house to Indias largest diversified and multi faceted media conglomerate. Mr. Jain is a nominee of the Bennett, Coleman Group.Mr. Vineet Jain is a member of Share Transfer Committee of Bennett, Coleman & Company Limited.

Dr. Venkat Rao Gadwal Doctorate in Agriculture from the Indian Agricultural Research Institute, New Delhi. He is also a Fellow Member of the Botanical Society of India and Indian Society of Genetics and Plant Breeding. Dr. Gadwal has been one of our non-executive directors since March 15, 1999. Dr. Gadwal also serves as consultant and advisor to agricultural research and development institutions such as Maharashtra Hybrid Seeds Company Limited ("MAHYCO") and MAHYCO Research Foundation. Presently, Dr. Gadwal is the President of the Indian Society for Cotton Improvements.

Mrs. Renu Karnad

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Mrs. Karnad is an executive director of HDFC Limited. Mrs. Karnad is Chairperson of HDFC Venture Capital Limited and a director of HDFC Asset Management Company Limited, GRUH Finance Limited, HDFC Realty Limited, Credit Information Bureau (India) Limited (CIBIL), Feedback Ventures Limited, HDFC Chubb General Insurance Company Limited, Mother Dairy Fruits & Vegetables Limited, Ascendas Pte Limited, ICI India Limited, Home Loan Services India Private Limited, Egyptian Housing Finance Company (EHFC), S.A.E. and Intelenet Global Services Private Limited. Mrs.Karnad is Chairperson of Remuneration Committee of ICI India Limited. She is a member of Compensation Committee of GRUH Finance Limited. She is a member of Audit Committee of HDFC Chubb General Insurance Company Limited, HDFC Asset Management Company Limited and ICI India Limited. Mr. Arvind Pande He started his career in Indian Administrative Services and has held various positions in the Government of India. He was a Joint Secretary to the Prime Minister of India for Economics, Science and Technology issues. He was a Director, Department of Economic Affairs in the Ministry of Finance, Government of India and has dealt with World Bank aided projects. He was a Director, Department of Economic Affairs in the Ministry of Finance, Government of India and has dealt with World Bank aided projects. He was the Chairman and Chief Executive Officer of The Steel Authority of India Limited (SAIL). Mr. Pande is a director of Sandhar Locking Devices Limited, IVRCL Infrastructure and Projects Limited, Visa Industries Limited, Bharatiya Co-operative General Insurance Limited, Assets Care Enterprise Limited and Era Constructions (India) Limited. Mr. Bobby Parikh He is member of various trade and business associations and their committees. He is also on the advisory/executive boards of certain non-government and non-profit organizations. Mr. Parikh was the Country Managing Partner of Arthur Anderson & Co. and the Chief Executive Officer of Ernst & Young Private Limited in India. 28

He is currently the Managing Partner of M/s. BMR & Associates. Mr. Bobby Parikh is an "audit committee financial expert" under U.S. regulations. Mr. Ranjan Kapur He started his career with Citibank, N.A. Mr. Kapur has held various senior positions in Ogilvy & Mather India Private Limited (O&M). He was nominated to the world wide board of O&M in 1998 and was elevated to the position of Executive Chairman, India and ViceChairman, Asia Pacific, a year later. He retired from O&M on December 31, 2003. Mr. Kapur is a director of Pidilite Industries Limited, MIRC Electronics Limited, Equus Advertising Company Limited, Meridian Communication Private Limited, Group M Media India Private Limited, Bates India Private Limited, Rediffusion-Dentsu, Young & Rubicam Private Limited and Everest Integrated Communications Private Limited.

Mr. Ashim Samanta He is a director of Samanta Organics Private Limited for the last 15 years. He possesses vast experience in day to day operations and management in the field of bulk drugs and pharmaceutical formulations. He is a partner of a firm which manages mid sized poultry farms. Mr. Samanta has also been engaged in setting up and running of film editing and dubbing studio.

2.6 BOARD COMMITTEES:

The Board has constituted specialized committees of directors to take informed decisions in the best interest of the bank. These committees monitor the activities falling within their terms of reference. 29

Audit and Compliance Committee The Audit and Compliance Committee of the bank is chaired by Mr. Ranjan Kapur. The other members of the Committee are Mr. Anil Ahuja, Mr. Arvind Pande, Mr. Bobby Parikh and Dr. V. R. Gadwal. Mr. Jagdish Capoor resigned as a member of the Audit Committee w.e.f. October 21, 2004. Mr. Ranjan Kapur was inducted as a member of the Audit Committee and appointed its Chairman with effect from October 21, 2004. Dr. V. R. Gadwal was inducted as a member of the Committee with effect from January6, 2005. All the members of the Audit Committee are financially literate independent directors and Mr. Bobby Parikh is an audit committee financial expert. During the year, the Committee held six meetings.

The term of reference of the Audit Committee are in accordance with clause 49 of the Listing Agreement entered into with the Stock Exchanges in India and inter alia includes the following: Overseeing the bank's financial reporting process and ensuring correct, adequate and credible disclosure of financial information; Recommending appointment and removal of external auditors and fixing of their fees; Reviewing with management the annual financial statements before submission to the Board with special emphasis on accounting policies and practices, compliance with accounting standards and other legal requirements concerning financial statements; and Reviewing the adequacy of the Audit and Compliance function, including their policies, procedures, techniques and other regulatory requirements. In addition to these, the Board has adopted a Charter for the Audit Committee in association with certain U.S. regulatory standard. Composition of committees of directors and their attendance at the meetings. Audit & Compliance Committee - Total 6 meetings held 30

Name Mr. Jagdish Capoor 1 Mr. Anil Ahuja Dr. (Mrs.) Amla Samanta 2 Mr. Arvind Pande Mr. Bobby Parikh 2 Mr. Ranjan Kapur 3 Dr. V. R. Gadwal 4 Compensation Committee

No. of Meetings attended 3 4 1 4 5 3 3

The Compensation Committee assesses the overall compensation structure and policies of the bank with an objective to attract, retain and motivate employees, consider grant of stock options to employees, reviewing compensation levels of the bank's employees vis-vis other banks and industry in general. The Committee comprises Mr. Jagdish Capoor, Mr. Anil Ahuja, Dr. Venkat Rao Gadwal and Mr. Ranjan Kapur. Mr. Ranjan Kapur was inducted as a member of the Compensation Committee on April 16, 2004. The Committee is chaired by Mr. Jagdish Capoor. All the members of the Committee except Mr. Capoor are independent directors. During the year the Committee held one meetin.

Composition of committees of directors and their attendance at the meetings. Compensation Committee - Total 1 meeting held

Name Mr. Jagdish Capoor Mr. Anil Ahuja Dr. (Mrs.) Amla Samanta 2 Dr. V. R. Gadwal 31

No. of Meetings attended 1 1 1 1

Mr. Ranjan Kapur 7 Investors' Grievance (SHARE) Committee

Nil

The Investors' Grievance (Share) Committee approves and monitors transfers, transmissions, splitting and consolidation of shares and bonds issued by the bank and allotment of shares to the employees pursuant to Employees Stock Option Scheme. The Committee also supervises redressal of complaints from shareholders relating to transfer of shares, non-receipt of Annual Reports, dividends etc. The Committee comprises Mr. Jagdish Capoor and Mr. Aditya Puri. The Committee is chaired by Mr. Jagdish Capoor and held 12 meetings in the year. The authority to approve share transfers and dematerialization requests have been delegated to executives of the bank to overcome delays that may arise due to non-availability of the members of the Committee. As on March 31, 2005, 136 instruments of transfer of shares were pending and since then the same have been processed. The details of the share transfers are reported to the Board of Directors from time to time. During the year, the bank received 193 complaints from shareholders, which have been successfully tackled. No penalties or structures were imposed on the bank by any of the Stock Exchanges, SEBI or any statutory authority, on any matter relating to capital markets, during the last three years.

Composition of committees of directors and their attendance at the meetings. Investors' Grievance (SHARE) Committee - Total 12 meetings held

Name No. of Meetings attended

32

Mr. Jagdish Capoor 12 Mr. Aditya Puri 12

Risk Monitoring Committee The Risk Monitoring Committee is formed as per the guidelines of the Reserve Bank of India on the Asset Liability Management / Risk Management Systems. The Committee develops bank's credit and market risk polices and procedures, verifies adherence to various risk parameters and prudential limits for treasury operations and reviews its risk monitoring system. The committee also ensures that the bank's credit exposure to any one group or industry does not exceed the internally set limits and that the risk is prudentially diversified. The Committee consists of Mr. Anil Ahuja, Mr. Aditya Puri and Mrs. Renu Karnad and is chaired by Mr. Anil Ahuja. The Committee held four meetings during the year. Composition of committees of directors and their attendance at the meetings. Risk Monitoring Committee - Total 4 meetings held

Name Mr. Anil Ahuja Mrs. Renu Karnad Mr. Aditya Puri

No. of Meetings attended 4 3 4

33

Credit Approval Committee The Credit Approval Committee approves credit exposures, which are beyond the powers delegated to executives of the bank. This facilitates quick response to the needs of the customers and speedy disbursement of loans. The Committee comprises Mr. Jagdish Capoor, Mr. Aditya Puri, Mr. Keki Mistry and Mr. Bobby Parikh. Mr. Bobby Parikh was inducted as a member of the Committee on April 16, 2004. The Committee is chaired by Mr. Jagdish Capoor and met three times during the year. Composition of committees of directors and their attendance at the meetings. Credit Approval Committee - Total 3 meetings held Name No. of Meetings attended Mr. Jagdish Capoor 3 Mr. Keki Mistry 1 Mr. Aditya Puri 3 Mr. Bobby Parikh 5 2 The Premises Committee The Premises Committee approves purchases and leasing of premises for the use of bank's branches, back offices, ATMs and residence of executives in accordance with the guidelines laid down by the Board. The Committee comprises Dr. V. R. Gadwal, Mr. Aditya Puri, Mr. Ranjan Kapur and Mr. K. G. Krishnamurthy, in an advisory capacity. Mr. Ranjan Kapur and Dr. V. R. Gadwal were inducted in the Committee on April 16, 2004. The Committee is chaired by Dr. V. R. Gadwal and met four times during the year.

34

Composition of committees of directors and their attendance at the meetings. Premises Committee - Total 4 meetings held

Name Mr. Aditya Puri Dr. (Mrs.) Amla Samanta 2 Dr. V. R. Gadwal 6 Mr. Ranjan Kapur 6 Mr. K. G. Krishnamurthy (Advisor)

No. of Meetings attended 4 1 3 3 3

Nomination Committee The bank has constituted a Nomination Committee for recommending the appointment of independent / non-executive directors on the Board of the bank. The Nomination Committee scrutinizes the nominations for independent / non-executive directors with reference inter alia to their qualifications and experience. For identifying 'Fit and Proper' persons, the Committee adopts the following criteria to assess competency of the persons nominated: Academic qualifications Previous experience and track record Integrity of the candidates.

For assessing the integrity and suitability, features like criminal records, financial position, civil actions undertaken to pursue personal debts, refusal of admission to and expulsion from professional bodies, sanctions applied by regulators or similar bodies and previous questionable business practices are considered. 35

The members of the Committee are Mr. Ranjan Kapur, Mr. Anil Ahuja, Dr. V. R. Gadwal and Mr. Arvind Pande. The Committee is chaired by Mr. Ranjan Kapur. Mr. Jagdish Capoor resigned from the membership of the Committee with effect from October 21, 2004 and on the same day; Mr. Ranjan Kapur was inducted in the Committee. All the members of the Committee are independent directors. One meeting of the Committee was held during the year. Composition of committees of directors and their attendance at the meetings. Nomination Committee - Total 1 meeting held

Name Mr. Jagdish Capoor 1 Mr. Anil Ahuja Dr. V. R. Gadwal Mr. Arvind Pande Mr. Ranjan Kapur 3

No. of Meetings attended 1 1 1 1 Nil

Fraud Monitoring Committee Pursuant to the directives of the RBI to all commercial banks, the bank has constituted a Fraud Monitoring Committee on April 16, 2004, exclusively dedicated to the monitoring and following up of cases of fraud involving amounts of Rs. 1 crore and more. The 36

objective of this Committee is the effective detection of frauds and immediate reporting thereof to regulatory and enforcement agencies and tackling of the perpetrators of frauds. The terms of reference of the Committee are as under: Identify the systems lacunae if any that facilitated perpetration of the fraud and implements the measures to plug the same; Identify the reasons for delay in detection, if any, reporting to top management of the bank and RBI; Monitor progress of CBI / Police Investigation and recovery position;

Ensure that staff accountability is analyzed at all levels in all the cases of frauds and staff side action, if required, is completed quickly without loss of time;

Review the efficacy of the remedial action taken to prevent recurrence of frauds, such as strengthening of internal controls;

Rectify other measures as may be considered relevant to strengthen preventive measures against frauds.

The Committee comprises Mr. Jagdish Capoor, Mr. Aditya Puri, Mr. Keki Mistry, Mr. Bobby Parikh and Mr. Arvind Pande. The Committee is chaired by Mr. Jagdish Capoor. One meeting of the Committee was held during the year. Composition of committees of directors and their attendance at the meetings. Fraud Monitoring Committee - Total 1 meeting held

Name

No. of Meetings attended

37

Mr. Jagdish Capoor Mr. Aditya Puri Mr. Keki Mistry Mr. Bobby Parikh Mr. Arvind Pande

1 1 1 1 1

Customer Service Committee The bank has constituted a Customer Service Committee on October 21, 2004 pursuant to the guidelines issued by the RBI. The Committee scrutinizes the quality of services rendered to the customers and also ensures implementation of directives received from RBI in this regard. The Committee would formulate a comprehensive deposit policy, incorporating the issues arising out of death of a depositor for operations of his account, the product approval process, the annual survey of depositor satisfaction and the triennial audit of such services. The members of the Committee are Mr. Ranjan Kapur, Mr. Keki Mistry, Dr. Venkat Rao Gadwal and Mr. Arvind Pande. The Committee is chaired by Mr. Ranjan Kapur. One meeting of the Committee was held during the year. Composition of committees of directors and their attendance at the meetings. Customer Service Committee - Total 1 meeting held

Name Mr. Ranjan Kapur Mr. Keki Mistry 38

No. of Meetings attended 1 1

Mr. Arvind Pande Dr. V. R. Gadwal

Nil 1

Mr. Jagdish Capoor ceased to be a member of the Audit and Compliance Committee and Nomination Committee w.e.f. October 21, 2004. Dr. (Mrs.) Amla Samanta ceased to be a Director w.e.f. April 25, 2004. Mr. Ranjan Kapur has been inducted as a member and Chairman of the Audit and Compliance Committee and Nomination Committee w.e.f. October 21, 2004. Dr. V. R. Gadwal has been inducted as a member of the Audit and Compliance Committee w.e.f. January 6, 2005. Mr. Bobby Parikh has been inducted as a member of Credit Approval Committee w.e.f. April 16, 2004 Mr. Ranjan Kapur and Dr. V. R. Gadwal have been inducted as members of the Premises Committee w.e.f. April 16, 2004. Mr. Ranjan Kapur has been inducted as a member of the Compensation Committee w.e.f. April 16, 2004.

2.7 OWNERSHIP RIGHTS

Certain rights that a shareholder in a company enjoys: To transfer the shares. To receive the share certificates upon transfer within the stipulated

period prescribed in the Listing Agreement. To receive notice of general meetings, annual report, the balance

sheet and profit and loss account and the auditors' report. 39

To appoint proxy to attend and vote at the general meetings. In case

the member is a body corporate, to appoint a representative to attend and vote at the general meetings of the company on its behalf. To attend and speak in person, at general meetings. Proxy cannot To vote at the general meeting on show of hands wherein every vote on show of hands but can vote on a poll. shareholder has one vote. In case of vote on poll, the number of votes of a shareholder is proportionate to the number of equity shares held by him. As per Banking Regulation Act, 1949, the voting rights on a poll of a shareholder of a banking company are capped at 10% of the total voting rights of all the shareholders of the banking company. resolution. To requisition an extraordinary general meeting of any company by shareholders who collectively hold not less then 1/10th of the total paid-up capital of the company. Act, 1956. proceedings. To apply for the winding-up of the company. To receive the residual proceeds upon winding up of a company. 40 To appoint or remove director(s) and auditor(s) and thus participate To proceed against the company by way of civil or criminal in the management through them. To move amendments to resolutions proposed at meetings. To receive dividends and other corporate benefits like rights, bonus To inspect various registers of the company. To inspect the minutes books of general meetings and to receive To demand poll along with other shareholder(s) who collectively hold 5,000 shares or are not less than 1/10th of the total voting power in respect of any

shares etc. as and when declared / announced.

copies thereof after complying with the procedure prescribed in the Companies

Kindly note that the rights mentioned above are prescribed in the Companies Act, 1956 and should be followed only after careful reading of the relevant sections. These rights are not necessarily absolute.

PROMOTERS RIGHTS (HDFC LTD.) The Memorandum and Articles of Association of the bank provides the following rights to HDFC Limited: The Board shall appoint non-retiring directors from amongst the directors nominated by HDFC Limited with the approval of shareholders, so long as HDFC Limited and its subsidiaries, singly or jointly hold not less than 20% of the paid-up share capital of the bank. HDFC Limited shall nominate either a part-time Chairman and the Managing Director or a full time Chairman, with the approval of the Board and the shareholders so long as HDFC Limited and its subsidiaries, singly or jointly hold not less than 20% of the paid-up share capital of the bank. Under the terms of our organizational documents, HDFC Limited has a right to nominate two directors who are not required to retire by rotation, so long as HDFC Limited, its subsidiaries or any other company promoted by HDFC Limited either singly or in the aggregate holds not less than 20% of paid up equity share capital of the bank. The two directors so nominated by HDFC Limited are the Chairman and the Managing Director. For detailed provisions, kindly refer to the Articles of Association of the bank. KEY SHAREHOLDER RIGHTS HDFC Limited, the promoters of erstwhile Times Bank Limited-Bennett, Coleman & Co. Ltd. and its group companies (Bennett, Coleman Group) and Chase Funds had entered 41

into a tripartite agreement dated November 26, 1999 for effecting amalgamation of Times Bank Limited with the bank. Under this agreement, Bennett, Coleman Group has a right to nominate one director on the Board of the bank as long as it's holding exceeds 5% of the share capital of the bank. Currently, (as on March 31, 2005), the Bennett, Coleman Group holds 5.23% of the share capital of the bank and Mr. Vineet Jain is nominated by the group on the Board of the bank. The bank had entered into an agreement dated February 9, 1999 with The India Private Equity Fund (Mauritius) and Indocean Financial Holdings Limited ('the Funds') which inter alia offered the right to the funds to nominate two directors on the Board of the bank as long as their holdings in the bank were not less than 10% of the share capital of the bank and to nominate one director as long as their holdings in the bank were not less than 7% of the share capital of the bank. The holdings of the Funds in the share capital of the bank are less than 7%. The said agreement has terminated.

2.8 GRIEVANCE REDRESSEL

Share Transfer Process The bank's shares which are in compulsory dematerialized (demat) list are transferable through the depository system. Shares in physical form are processed by the Registrars and Share Transfer Agents, MCS Limited and approved by the Investors' Grievance (Share) Committee of the bank. The share transfers are processed within a period of 8 days from the date of receipt of the transfer documents by MCS Limited. Investor Helpdesk 42

Share transfers, dividend payments and all other investors related activities are attended to and processed at the office of our Registrars and Transfer Agents. For lodgment of transfer deeds and any other documents or for any grievances/complaints, kindly contact at the following address:

Registrars and Transfer Agents MCS Limited , Unit HDFC BANK, Sri Venkatesh Bhavan, Plot No. 27, Road No. 11, MIDC Area, Andheri (East), Mumbai 400 093. Telephone: 91-22-55025235 (10 hunting lines) Fax: 91-22-55025245 Email: mailto:mcsmum@bom2.vsnl.net.in/ sachinm@mcsind.com Counter Timing: 10.00 a.m. to 4.00 p.m. (Monday to Saturday) Contact persons: Mrs. Valsa Sajan / Mr. Sachin Manve / Mr. Vikrant Deshmukh

Bank's Investor Helpdesk For the convenience of investors, transfers upto 500 shares and complaints from the investors are accepted at the bank's Office at Kamala Mills, Process House, 2nd Floor, Senapatii Bapat Marg, Lower Parel, Mumbai 400 013. Telephone: 2498 8484, 2496 1616 Extn: 3463 Fax: 2496 5235 Email: investor.helpdesk@hdfcbank.com Kindly contact Investor Helpdesk between 10.30 a.m. to 3.30 p.m. between Monday to Friday (except on bank holidays). 43

Compliance Officer Mr. Sanjay Dongre - Vice President (Legal) & Company Secretary Telephone: 2498 8484 Extn: 3473 Bank's Shares Listed on Bombay Stock Exchange Limited. Phiroze Jeejeebhoy Towers, Dalal Street, Fort, Mumbai 400 023 Stock code - 500180 The National Stock Exchange of India Limited Exchange Plaza, 5th Floor, Bandra Kurla Complex, Bandra, Mumbai 400 051 Stock code - HDFCBANK Names of the Depositories in India for dematerialization of equity shares (ISIN NO: INE040A01018) National Securities Depository Limited (NSDL) Central Depositories Services (India) Limited (CDSL) The American Depository Shares (ADS) of the Bank are listed on New York Stock Exchange (ticker-HDB) 11, Wall Street, New York, N.Y. - 11005 The Depository for ADS is (CUSIP NO: 40415F101) JP Morgan Chase Bank, New York, USA. The depository is represented in India (for ADS) by ICICI Bank Ltd. Bandra Kurla Complex, Mumbai 44

DIVIDEND POLICY Your bank has had a track record of moderate but steady increases in dividend declarations for the last 8 years and the dividend pay out ratio in the last few years has been in the range of 20 - 25 %. The bank's dividend policy has sought to balance the multiple objectives of rewarding shareholders with cash dividends, of retaining capital to meet the bank's investment needs and to maintain a healthy capital adequacy ratio to support future growth in risk assets. In line with this policy and in recognition of the healthy performance during 2004-05 your directors are pleased to recommend a dividend of 40% for the year ended march 31, 2005 as against 35% for the year ended march 31, 2004. In addition, in recognition of the bank having completed 10 years of rewarding operations, your board is pleased to recommend a special one-time dividend of 5%. The total dividend for the year ended March 31, 2005 will therefore be 45%. This dividend shall be subject to tax on dividend to be paid by the bank but will be tax free in the hands of the members.

Details of dividend declared by the Bank:

YEAR 2004-2005 2003-2004 2002-2003 2001-2002 2000-2001 1999-2000 1998-1999 1997-1998 1996-1997

DIVIDEND 45% 35% 30% 25% 20% 16% 13% 10% 8%

45

2.9 MEMORANDOM OF ASSOCIATION OF HDFC BANK LTD.

(Incorporated under the Companies Act, 1956) (Company limited by shares) I) The name of the Company is HDFC BANK LIMITED. II) The Registered Office of the Company will be situated in the State of Maharashtra. III) The objects for which the Company is established are: A. MAIN OBJECTS OF THE COMPANY TO BE PURSUED BY THE COMPANY ON ITS INCORPORATION. 1) To carry on the business of banking that is to say to accept, for the purpose of lending or investment of deposits of money from the public, repayable on demand or otherwise, and withdrawable by cheque, draft, and order or otherwise. 2) In addition to the business of banking to carry on the business of (a) Borrowing, raising or taking up of money; (b) lending or advancing of money by way of a loan, overdraft or on cash credit or other accounts or in any other manner whether without or on the security or movable or 46

immovable properties, bills of exchange, hundies, promissory notes, bills of lading, railway receipts, debentures, share warrants and other instruments whether transferable or not; (c) drawing, making, accepting, discounting, buying, selling, collecting and dealing in bills of exchange, hundies, promissory notes, coupons, drafts, bills of lading, railway receipts, warrants, debentures, certificates, scrips and other instruments and securities whether transferable or negotiable or not; (d) Granting and issuing of letters of credits, travelers' cheques and circulars notes; (e) Buying, selling and dealing in bullion and specie; (f) Buying and selling of and dealing in foreign exchange including foreign bank notes; (g) acquiring holding, issuing on commission, underwriting and dealing in stock, funds, shares, debentures, debenture stock, bonds, Obligations, securities and investments of all kinds; (h) Purchasing and selling of bonds, scrips or other forms of securities on behalf of itself, its constituents or others; (i) Negotiating of loans and advances; (j) Receiving of all kinds of bonds, scrips or valuables on deposit or for safe custody or otherwise; (k) Providing of safe deposit vaults; (l) Collecting and transmitting of money and all kinds of securities; (m) Issuing credit cards, meal vouchers and extending any other credits; (n) carrying on any other business specified in clause (b) to clause (n) of subsection (1) of section 6 the Banking Regulation Act, 1949 (10 of 1949), and such other forms of business which the Central Government has pursuant to clause (o) of sub-section (1) of Section 6 Of that Act, specified or may from time to time specify by notification in the Official Gazette as a form of business in which it would be lawful for a banking company to engage; 3) To carry on the business of merchant banking, investment banking, portfolio investment management, and corporate consultants and advisors.

47

4) To carry on the business of mutual fund management, equipment leasing and hire purchase, manage investment pools, syndicate in shares and other securities and act as Share and Stock brokers. 5) To carry on the business of factoring by purchasing and selling debts receivables and claims including invoice discounting and rendering bill collection, debt collection and other factoring services. 6) To carry on and transact the business of giving guarantees and counter guarantees and indemnities whether by personal covenants or by mortgaging or charging all or any part of the undertaking, property or assets of the Company, both present and future wherever situate or in any other manner and in particular to guarantee the payment of any principal moneys, interest or other moneys secured by or payable under debentures, bonds, debenture-stock, mortgages, charges, contracts, obligations and securities, and the repayment of the capital moneys and the payment of dividends in Respect of stocks and shares or the performance of any such other obligations. B) OBJECTS INCIDENTAL OR ANCILLARY TO THE ATTAINMENT OF THE MAIN OBJECTS 1) To borrow or raise money or secure loans or credits for the purpose of the Company under contracts or under promissory notes, bills of exchange, hundies and other negotiable or transferable instruments, or issue convertible or non-convertible, secured or unsecured debentures, debenture-stock, bonds and alternative to secured obligations and securities of all kinds and to frame, constitute and secure the same, as may seem expedient, with full power to make the same transferable by delivery or by instrument of transfer or otherwise and either perpetual or terminable and either redeemable or otherwise, and to charge or secure the same by trust deed or otherwise on the whole or any part of the undertaking of the company or upon any specific property, movable and immovable, and rights, both present and future, of the Company including, uncalled capital as may be authorized by law or otherwise however. 2) To carry on the activities of bill discounting, re-discounting dealing in commercial paper, treasury bills, certificate of deposits and other financial instruments. 3) To promote effect, insure, guarantee, underwrite, participate in manage and carry out any issue whether, public or private of company, corporation, association or Central or State Government, municipality or of the other loans or of shares stocks, 48

debentures or debenture stock and to lend monies for the purpose of any such issue and to act as an Issue House, Share Registrars, Share Transfer Agent, Investment and Share Consultant, Share Depository Agent and as Manager or any such issue. 4) To acquire by purchase, lease, exchange, hire, concession, grant or otherwise, either absolutely or conditionally and either alone or jointly with others, any movable or immovable property of any description, any patents, trade marks, concessions, privileges and any other rights for the objects and business of the Company or which the Company may think necessary or convenient to acquire or the acquisition of which in the opinion of the Company is likely to facilitate the realization of any securities held by the Company or to prevent or diminish any apprehended loss or liability or which may come into the possession of the Company in satisfaction or part satisfaction of any of its claims and to pay for all such property and rights purchased or acquired by the Company in any manner including by shares, debentures, debenture stock or bonds or other securities held by or of the Company or otherwise and to manage, sell, develop, improve, exchanges let on lease, or otherwise dispose of or turn to account all such property and rights purchased or acquired by the Company and to acquire and hold and generally deal with in any manner whatsoever all or any property and right, movable and immovable and any right, title or interest therein which may form part of the security for any loans or advances made by the Company or which may be connected with any such security and all at such time or times and in such manner and for such consideration as may be deemed proper or expedient. 5) To acquire and undertake the whole or any part of the business of any person or any Company with all or some of the assets and liabilities and to hold and purchase shares, stocks, debentures or other rights of any Company carrying on business which the Company is authorized to carry on or which is incidental or ancillary to it or which may conveniently be carried on by the Company or to manage the same on special contract or as mortgagee or in any manner whatsoever. 6) To deposit money with other banks by way of current deposits, fixed deposits and otherwise with or without interest, to accept bills of exchange, hundies and other negotiable instruments and to endorse the same to bankers and to do all such banking business as are generally done by bankers with bankers and others. 49

7) To undertake the agency of other Indian banks and of foreign banks and other financial institutions and to mange the issue of a loan for a corporation or company, firm or association whether incorporated or not, or of foreign Government. 8) To acquire, receive, hold, hold in trust as trustee, agent or nominee of any person, corporation, Company, any real or personal property, rights or interest acquired by or belonging to the Company or on behalf of or for the benefit of the Company, and with or without any declared trust in favor of the Company. 9) To sell, improve, manage, develop, exchange, lease, mortgage, and dispose of, acquire, turn to account, purchase or otherwise deal with all and hold, use, deal or trade in, whether with a view to profit or otherwise and by any means whatsoever property and rights of all kinds whether movable or immovable, legal or equitable and whosesoever situate, including but without prejudice to the generality of the foregoing, lands, buildings, easements, mortgages, product, plant , machinery, stock-in-trade tools, vehicles, aircraft, vessels, chattels, materials, concessions, options, contracts, book debts, business concerns and undertakings, claims, privileges and chooses in action of all kinds to carry on and promote such business or activity and either to retain the property acquired or to turn to account for the Companys business as it may seem expedient, subject to the provisions of any applicable law. 10) To act as foreign exchange dealer and to buy, sell or otherwise deal in all kinds of foreign currencies, foreign currency options, forward covers, swaps of all kinds and to transact for itself or on behalf of any persons, body corporate, company, corporation, society, firm or association of persons whether incorporated or not, all kinds of transactions in foreign currencies. 11) To established or support or aid in the establishment and support of associations, institutions, funds, trusts and conveniences for the benefit of past or present employees or Directors of the Company or the dependents of such persons; and to grant pensions, gratuities and allowances and superannuation and other benefits or ensure payment of any of them by taking insurance or any other promises and assurances as the Company may undertake, and to subscribe or guarantee money for charitable or benevolent object or useful objects for general public. 12) To form, establish or promote any other company, body corporate or any other entity either as subsidiary of this Company or otherwise for the purpose of carrying on any 50

of the business or activities of the Company or for the purpose of acquiring or taking overall or any other property, rights and liabilities of such company, body corporate, or any other entity or for any other purpose which may directly or indirectly benefit the Company. 13) To purchase or import, take on lease or in exchange, hire or otherwise acquire any movable or immovable property and any rights or privilege which the Company may think necessary or convenient for the purposes of its business and in particular any land, building, easement, machinery, plant or any other property or assets; 14) To invest and deal with money in such manner as may, from time to time, be thought fit subject to the provisions of the Companies Act, 1956. 15) To remunerate any person for services rendered, or to be rendered in placing or assisting to place or guaranteeing the placing of any of the shares, debenture or bonds in the Company's capital or any debentures or other securities issued by the Company. 16) To draw, make, accept, endorse, discount, execute and issue certificates of deposits, promissory notes, bills of exchange, and other negotiable or transferable instruments. 17) To adopt such means of making known and advertising the business and productions and services of the Company as may be expedient. 18) To apply for, promote and obtain any order, regulation, or other authorization or enactment which may directly or indirectly benefit the Company. 19) To procure recognition of the Company in any country or placing outside India. 20) To issue or allot fully or partly paid shares in the capital of the Company in payment or part payment of any movable or immovable property purchased or otherwise acquired by the Company or any services rendered to the Company. 21) To take or hold mortgages, liens, and charges to secure payment of the purchase price or any unpaid balance of the purchase price, or any part of the Company's property of any kind sold by the Company, or any money due to the Company from buyer or any other person. 22) To pay out of the funds of the Company all or any expenses which the Company may lawfully pay for the services rendered for the formation and registration of this company and for the promotion of any other company by it subject to the provisions of the Companies Act, 1956 and the Banking Regulation Act, 1949. 51

23) To insure any of the properties, undertakings contracts, risks or obligations of the Company in any manner whatsoever. 24) To make donations either in cash or in kind for such objects for causes as may be directly or indirectly conductive to any of the Company's objects or otherwise expedient. 25) To aid and support any person, association, body or movement, whose object is solution, settlement or surmounting an industrial or labor problems or the promotion of trade or business of the Company or for the promotion of science and technology, cultural activities, sports, environment, rural development and other social and welfare activities. 26) To establish or support associations, institutions, schools, hospitals, guesthouses clubs, funds and trusts which may be considered beneficial to any employees or ex-employees and to officers and ex-officers of the Company or the dependents of any such person. 27) To refer any questions, disputes or differences arising between the Company and any other person (other than a Director of the Company) in connection with or in respect of any matter relating to the business or affairs of the Company to arbitration in such manner and upon such terms as the Company and such other person may mutually agree upon each case and to institute legal proceedings or defend any proceedings and to appoint advocates, consultants or advisors in this behalf. 28) To enter into negotiations or collaborations, technical, financial or otherwise with any person or government for obtaining any grant, license or on other terms, formulae and other rights and benefits, and to obtain technical information, know-how and expert advice for providing or rendering services which the Company is authorized to provide or render. 29) To arrange for in India and abroad for providing services of the Company and purchase or otherwise acquire services as are necessary for carrying on the business of the Company and, for that purpose, either to establish its own branches, offices, agencies, or to appoint representatives or employees or both (whether individuals, firms or bodies corporate) in any place in or outside areas of operation and fix the terms and conditions of their appointment and pay fees or remuneration to such representatives and employees by way of commission or in such other manner as the Company may deem fit.

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30) To create any depreciation fund, reserve fund, sinking fund, redemption fund, insurance fund, or any special or other reserve or fund, whether for redemption of debentures or debentures-stock, for dividends, for equalizing dividends or for repairing improving, extending and maintaining any part of the property of the Company. 31) To open and operate any type of bank accounts with any bank or financial institution in India or abroad and obtain credit facilities with or without securities for its business. 32) To train or pay for training in India or abroad of any of the Companys employees or offices or any candidate in the interest of or furtherance of the Companys objects. 33) To establish research and development centers for the business of the Company. 34) To engage in acquiring and undertaking whole or any part of the business of any person or Company carrying business which this Company is authorized to carry on. 35) To take or otherwise acquire and hold shares in any other Company as may be authorized. 36) To promote or finance or assist in promoting or financing any business, undertaking or industry either existing or new and associate with them either through the instrumentality of syndicates or otherwise in conformity with the relevant laws governing banks. 37) To undertake the administration of estates as executors, trustees or otherwise. 38) To open, establish, maintain and operate currency chests and small coin depots on such terms and conditions as may be required by the Reserve Bank of India established under the Reserve Bank of India Act, 1934 and subject to the Companies Act, 1956 to enter into all administrative or other arrangements for undertaking such functions with the Reserve Bank of India. 39) To carry on the business of giving services to industrial enterprises for transfer of shares, debentures, bonds, stocks and various financial instruments and any other kind of securities issued by such enterprises in general by acting as registrars to the Issue and Registrars for issue of shares, debentures, bonds, stock and all kinds of securities and instruments and for fixed deposits and encouraging and promoting the participation of private capital, both internal and external, in such enterprises and private ownership of 53

industrial investments and the expansion of investment markets and to render custodial and depository services in respect of any type of securities and to do all such things as may be advised, remitted and required for related activities. 40) To amalgamate with any company or companies having objects altogether or in part similar to those of this Company, or to sell, exchange, lease, under lease, surrender, abandon, amalgamate, sub-divide, mortgage or otherwise deal with either absolutely, conditionally, or for any limited interest, all or any part of the undertaking, property rights or privileges of the Company, as a going concern or otherwise, with any public body, corporation, company, society, or association, or to any person or persons, for such consideration as the Company may think fit, and in particular for any stock, shares (whether wholly or partly paid), debentures, debenture-stock, securities or property of any other Company. 41) (a) To apply for, provide information and guidance on governmental policies, directives, instructions, regulations, ordinances or other authorizations or enactments of the Central or any State Government or any other similar semi-Government authorities or agencies which may be required for enabling the Company to establish an undertaking or to bring into effect any modification / diversification in any of the Companys business or constitution and to challenge any of the governmental bills, statutes, rules, regulations, guidelines, proceedings or applications which are likely to prejudice the Companys business or interests; (b) To study such Governmental policies, regulations, ordinances and advise the governmental authorities in formulating incentives schemes to attract industries and investments; 42) To establish and maintain agencies at any place or place in India or other parts of the world for the conduct of the business of the Company or for the purpose of enabling the Company to carry on its business more efficiently; and to discontinue and reconstitute any such branches or agencies. 43) To exercise all or any of its corporate powers, rights and privileges and to conduct its business in all or any of its branches in the Union of India and in any or all states, territories, possessions, colonies and dependencies thereby And in any or all

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foreign countries, and for this purpose to have and maintain and to discontinue such number of offices and agencies therein as may be convenient. 44) To assist in undertaking activities pertaining to leasing or hire-purchase asset credit, installment sale or / and deferred sale. 45) To open, maintain, operate and close account or accounts with any bank or banks or other financial Institutions in India or abroad and to pay or earn interest and to withdraw money from such account or accounts and to make, draw, co-accept, endorse, execute, discount or negotiable and issue cheques, promissory notes, hundies, bills of exchange, bills of lading, railway receipts, warrants, debentures and other negotiable or transferable instruments. 46) To indemnify officers, Directors, promoters and servants of the Company against, proceedings, costs, damages, claims and demands in respect of anything done, or ordered to be done, for and in the interests of the Company or for any loss or damages or misfortune whatever which happens in execution of the duties of their office or in relation thereto. C) OTHER OBJECTS 1) To carry on the business of financial services. 2) To carry on the business of providing and managing venture capital, seed capital and risk capital. And it is hereby declared that:(i) The word Company saves when used in reference to this Company in this Clause shall be deemed to refer and include any partnership or other body of persons whether incorporated or not incorporated whether domiciled in India or elsewhere; (ii) The several sub-clause of this clause and all the powers thereof are to be cumulative and in no case is the generality of any one sub-clause to be narrowed or restricted by any particularity of any sub-clause nor is any general expression in subclause to be narrowed or restricted by any particularity of expression in the same subclause or by the application of any rule of construction ejusdem generis or otherwise; (iii) The term India when used (in this Clause) unless repugnant to the context shall include all territories from time to time comprised in the Union of India; (iv)The Liability of the Members is Limited;

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(v) The Capital of the Company is Rs.450, 00, 00,000 (Rupees Four Hundred Fifty Crores only) divided into 45, 00, 00,000 (Forty Five Crores) Equity Shares of Rs.10 each with a power to increase or reduce the share capital. We, the several persons, whose names and addresses and description are hereunder subscribed, are desirous of being formed into a Company in pursuance of these Articles of Association, and we respectively agree to take the numbers of shares in the capital of the Company set opposite our respective names.

Sr. No

Name of addresses descriptions & Number occupations of the subscribers Equity Shares taken each with, their Signatures

of Name, and witness

addresses of their with

description

by Signatures

1.

S/d. Mr. Deepak Shantilal Parekh S/O Late Mr. Shantilal T Parekh 3 Bhaveshwat Sagar 20 Nepean Sea Road Bombay 400 036 -ServicesS/d. Mr. Deepak Madhav Satwalekar S/O Mr. Madhav S. Satwalekar 9 Nutan Alka Coop Hsg. Society Relief Road, Santa Cruz-(West) Bombay 400 025 - Services S/d.

subscriber 10 (Ten)

2.

10 (Ten)

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3.

Mr. Shobha Singh Thakur S/O Late Mr. Rajaran S Thakur A/62, Ocean Gold Twin Towers Lane, Prabhadevi Bombay 400 025 - Services S/d. Mr. Suryakant Nanalal Shroff S/O Late Mr. Nanalal K Shroff Victor Villa, 1 st Floor 5, Babulnath Road Bombay 400 007 - Service S/d. 5

10 (Ten)

4.

10 (Ten) S/d. Susir Kumar M S/o Late Mr. K.S.Rao B-2/10 Runwal Nagar Thane (W) 400 602 - Service 10 (Ten)

5.

Mr. Satish Gordnandas Mehta S/O Late Mr. Gordnandes Mehta 39/4 Walchand Terraces Opp Air conditioned Market Tardeo, Bombay 400 025 - Service S/d. 6

6.

Mr. Milind Gajanan Barve S/O Mr. Gajanan D Barve 604 Udyan Warshan Prabhadevi Bombay 400 025 - Service S/d.

10 (Ten)

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7 7. Mr. Joseph Conrad DSouza S/O Mr. Diago Cajetan DSouza 17/23 MHB Colony Bandra Reclamation Bombay 400 050 - Service Total (70) (Seventy) Bombay Dated 9 th August, 1994. 10 (Ten)

2.10 FAIR PRODUCT CODE FOR LENDING

Applications for loans and their processing The bank would have loan application forms in respect of priority sector advances up to Rs.2.00 lakhs These would include information about the fees/charges, if any, payable for processing, the amount of such fees refundable in the case of non acceptance of application, pre-payment options and any other matter which affects the interest of the borrower, so that a meaningful comparison with that of other banks can be made and informed decision can be taken by the borrower. The bank would give an acknowledgement for receipt of all loan applications. Time frame within which loan applications up to Rs.2 lakhs will be disposed of would be indicated in the acknowledgement of such applications. 58

The bank would verify the loan applications within a reasonable period of time. If additional details / documents are required, it would intimate the borrowers immediately. In the case of small borrowers seeking loans up to Rs. 2 lakhs the bank would convey in writing, the main reason/reasons which, in the opinion of the bank after due consideration, have led to rejection of the loan applications within stipulated time. In case the proposal does not meet the overall risk parameters of the bank, the borrower may be intimated accordingly. Loan appraisal and terms/conditions The bank would ensure that there is proper assessment of credit application made by borrowers. The assessment would be in line with the bank's credit policies and procedures. The bank would convey to the borrower the credit limit along with the terms and conditions thereof and keep the borrower's acceptance of these terms and conditions given with his full knowledge on record. In respect of loans up to Rs. 10 lacs, terms and conditions and other caveats governing credit facilities given by the bank would be reduced in writing and duly certified by the authorized official. A copy of the loan agreement along with a copy each of all enclosures quoted in the loan agreement may be furnished to the borrower if asked for. The loan agreement would stipulate if the credit facilities are solely at the discretion of the bank. The bank may disallow facilities that involve drawings beyond the sanctioned limits, honoring cheques issued for the purpose other than specifically agreed to in the credit sanction, and drawing on a borrowal account on its classification as a nonperforming asset or on account of non-compliance with the terms of sanction. Further the bank does not have an obligation to meet additional requirements of the borrowers on account of growth in business etc. without proper review of credit limits. In the case of lending under consortium arrangement, the bank would endeavor to evolve procedures to complete appraisal of proposals in a time bound manner to the extent feasible, and communicate its decisions on financing or otherwise within a reasonable time, in co-ordination with other members of the consortium.

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Disbursement of loans including changes in terms and conditions The bank would ensure timely disbursement of loans sanctioned in conformity with the terms and conditions governing such sanction. It would give notice of any change in the terms and conditions including interest rates, service charges etc. It would also ensure that changes in interest rates and charges are effected only prospectively.

Post disbursement supervision The bank would carry out post-disbursement supervision in accordance with normal banking practice, the terms of sanction, and the guidelines issued by the Reserve Bank of India from time to time. Before taking a decision to recall / accelerate payment or performance under the agreement or seeking additional securities, the bank would give notice to borrowers, as specified in the loan agreement or a reasonable period, if no such condition exits in the loan agreement. The bank would release all securities on receiving payment of loan or realization of loan subject to any legitimate right or lien for any other claim that it may have against borrowers. If such right of set off is to be exercised, borrowers shall be given notice about the same with full particulars about the remaining claims and the provisions under which the bank is entitled to retain the securities till the relevant claim is settle/paid.

General The bank would restrain from interference in the day-to-day affairs of the borrowers except for what is provided in the terms and conditions of the loan sanction documents (unless new information, not earlier disclosed by the borrower, has come to the notice of the bank).

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The bank would not discriminate on grounds of sex, caste and religion in the matter of lending. However, this does not preclude the bank from participating in credit-linked schemes framed for weaker sections of the society. In the matter of recovery of loans, the bank would not resort to undue harassment or use of force. In case of receipt of request for transfer of borrowal account, either from the borrower or from a bank/financial institution, which proposes to take- over the account, the consent or otherwise i.e., objection of the bank, if any, would be conveyed within 21 days from the date of receipt of request. Grievance Redressal Mechanism Disputes arising out of decisions of the bank's functionaries would be disposed of at the next higher level within the Department concerned. A review of compliance of the Fair Practices Code and the functioning of the grievance redressal mechanism would be conducted by the bank once a year.

2.11 CODE OF ETHICS/CONDUCT

Introduction This Code of Ethics / Conduct intends to ensure adherence to highest business and ethical standards while conducting the business of the Bank and compliance with the legal and regulatory requirements, including compliance of Section 406 of the SarbanesOxley Act of 2002 and the rules and regulations framed thereunder by the Securities and Exchange Commission of USA and other statutory and regulatory authorities in India and USA. The Bank values the ethical business standards very highly and intends adherence thereto in every segment of its business. Applicability 61

This Code of Ethics/Conduct is applicable to the following persons. The Board Members Officials of the Bank one level below the Board Ethical Conduct The Board members / Officials shall engage in and promote honest and ethical conduct of business, including the ethical handling of actual and / or apparent conflicts of interest between personal and professional relationships. Conflict of Interest The Board members / Officials shall avoid conflict of interest and disclose to the Board any material transaction or relationship that reasonably could be expected to give rise to such a conflict.

Confidentiality of Information The Board members / Officials shall ensure and take all reasonable measures to protect the confidentiality of non-public information about the Bank, its business, customers and other materially significant information obtained or created in connection with any activities with the Bank and to prevent the unauthorized disclosure of such information unless required by applicable laws or regulations or legal or regulatory process. Disclosure of Information The Board members / Officials shall endeavor to produce full, fair, accurate, timely and understandable disclosures in reports and documents that the Bank files with or submits 62

to the Securities and Exchange Commission and other regulators and in other public communications made by the Bank. Compliance with Governmental Laws, Rules and Regulations The Board members / Officials shall comply with all the applicable governmental laws and the applicable rules and regulations. Variation of the Code and Waivers The Code shall be reviewed from time to time for updation thereof. Any variation in the Code or any waivers from the provisions of the Code shall be approved by the Board and shall be disclosed on the Bank's website. Contract or Term of Employment Nothing in this Code or other related communications by itself creates or implies an employment contract or terms of employment. Violation of the Code The Board shall have the powers to take necessary action in case of any violation of the code.

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2.12 LOANS
Banks and thrifts make three types of loans: commercial and industrial loans, consumer loans, and mortgage loans. Commercial and industrial loans are loans to businesses or industrial firms. These are primarily short-term working capital loans (loans to finance the purchase of material or labor) or transaction or longer-term loans (loans to purchase machines and equipment). Most commercial banks offer a variable rate on these loans, which means that the interest rate can change over the course of the loan. Whether a bank will make a loan or not depends on the credit and loan history of the borrower, the borrower ability to make scheduled loan payments, the amount of capital the borrower has invested in the business, the condition of the economy, and the value of the collateral the borrower pledges to give the bank if the loan payments are not made. 64

Consumer loans are loans for consumers to purchase goods or services. There are two types of consumer loans: closed-end credit and open-end credit. Closed-end credit loans are loans for a fixed amount of money, for a fixed period of time (usually not more than five years), and for a fixed purpose (for example, to buy a car). Most closed-end loans are called installment loans because they must be repaid in equal monthly installments. The item purchased by the consumer serves as collateral for the loan. For example, if the consumer fails to make payments on an automobile, the bank can recoup the cost of its loan by taking ownership of the car. Open-end credit loans are loans for variable amounts of money up to a set limit. Unlike closed-end loans, open-end credit does not require a borrower to specify the purpose of the loan and the lender cannot foreclose on the loan. Credit cards are an example of open-end credit. Most open-end loans carry fixed interest rates that are; the rate does not vary over the term of the loan. Open-end loans require no collateral, but interest rates or other penalties or fees may be charged for example, if credit card charges are not paid in full, interest is charged, or if payment is late, a fee is charged to the borrower. Open-end credit interest rates usually exceed closed-end rates because open-end loans are not backed by collateral. Mortgage loans or real estate loans are loans used to purchase land or buildings such as houses or factories. These are typically long-term loans and the interest rate charged can be either a variable or a fixed rate for the term of the loan, which often ranges from 15 to 30 years. The land and buildings purchased serve as the collateral for the loan. Bank offer the following Foreign Exchange Products and Services. Personal Loans A wedding in the family? Maybe your house needs renovation? A dream vacation? Sons admission to a medical college? Daughters wedding? Our range of Personal Loans brings you one step closer to your dreams hatever the occasion, our range of Personal

65

Loans can help. The procedure is simple, documentation is minimal and approval is quick.

Features & Benefits Borrow up to Rs 10, 00,000 for any purpose depending on your requirements. Flexible Repayment options, ranging from 12 to 48 months. Repay with easy EMIs. One of the lowest interest rates. Hassle free loans - No guarantor/security/collateral required. Speedy loan approval. Convenience of service at your doorstep. Customer privileges

If you are an HDFC Bank account holder, we have special rates for you. If you are an existing Auto Loan customer with a clear repayment of 12 months or more from any of our approved financiers or us, you can get a hassle free personal loan (without income documentation). If you are an existing HDFC Bank Personal Loan customer with a clear repayment of 12 months or more, we can Top-Up your personal loan. Home Loans A two-bed apartment? The sea-facing penthouse? Or just the right piece of land to build your dream house? Get the home of your dreams - with a little help from us.

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HDFC Bank brings home loans at your doorstep. With over 25 years of experience, a dedicated team of experts and a complete package to meet all your housing finance needs, HDFC Ltd. - our parent company, helps you realize your dream. Features & Benefits Home Loan - We offer home loans for individuals to purchase (fresh /

resale) or construct houses. Home loans can be applied for jointly. HDFC finances up to 90% of the cost of the property (Agreement value + Stamp duty + Registration charges). Home Improvement Loan - HIL facilitates internal and external repairs and other structural improvements like painting, waterproofing, plumbing and electric works, tiling and flooring, grills and aluminum windows. HDFC finances up to 85% of the cost of renovation (100% for existing customers). Home Extension Loan - HEL facilitates the extension of an existing dwelling Land Purchase Loan - Be it land for a dream house, or just an investment unit. All the terms are the same as applicable to Home Loan. for the future, HDFC Land Purchase Loan is a convenient loan facility to purchase land. HDFC finances up to 70% of the cost of the land (Conditions Apply). Repayment of the loan can be done over a maximum period of 10 years. Choose from Fixed Rate or Floating Rate with options to structure your loan Flexible repayment options to suit your individual needs. E-age saving account - As a special offer you can open an HDFC Bank Eas Partly Fixed or Partly Floating.

Age Savings Account at a lower Average Quarterly Balance of Rs. 2,500, instead of the regular Rs. 5,000. You can avail of benefits like free Phone Banking, Free Net Banking, 24-Hour ATM access, Inter-branch/Inter-city banking, a personalized cheque book and much more. Free International credit card - Enjoy a waiver on the fees for the first year on International Credit Card from HDFC Bank. The credit card is accepted 67

world-wide and comes with the most comprehensive insurance coverage. You can even withdraw 30% of your entire credit limit through the ATM. Loan cover Term Assurance Plan - HDFC Standard Life Insurance Company Ltd. offers an insurance plan*, which is designed to ensure that life's uncertainties do not affect your family's interests and your precious home. LCTAP provides a lump-sum payment on the unfortunate demise of the life assured. This pure risk plan is designed in a way that the cover decreases as you *Insurance is the subject matter of solicitation. Automated Repayment of Home loan EMI - You can give us standing

repay your home loan making it a low cost premium insurance plan.

instructions to repay your Home Loan EMIs directly from your HDFC Bank Savings Account, thus, saving you the trouble of procuring, signing and tracking post-dated cheques. Two Wheeler Loans Whichever the bike, our Two Wheeler loan is the answer. Well help you buy the bike you desire. With flexible payment options and easy repayment, our Two Wheeler Loan offers the perfect excuse to purchase that bike you've always wanted. Features & Benefits Flexible repayment options, ranging from 12 to 48 months available even at the point of purchase. Repay through post-dated cheques with easy EMIs. Calculate your EMI. Hassle free loans - No guarantor required. Speedy loan approval. 68

Available for almost all models at attractive interest rates. Free gifts from time to time on approval of your Two Wheeler Loan. (Watch this space for more details on the free gift promotion). Special Schemes to suit your needs Fast Track - If a spot approval is what you need, this highly flexible scheme gets you a loan of up to 70% with minimum interest rates.

Easy Loan - This great scheme gets you a loan of upto up to 85% with minimal documentation. All you need as a Surrogate Income proof is: A copy of credit card and credit card billing statement for the last 2 months OR A repayment track record OR Last 3 months bank statements.

New Car Loans Drive away the car of your dreams - Small car? Family car? Or sheer luxury on wheels? Just decide on the make & model and our New Car Loan will bring it to your driveway in no time. Features & Benefits Covers the widest range of cars and multi-utility vehicles in India. Borrow up to 90% of the car's invoice value. Flexible repayment options, ranging from 12 to 84 months. Borrow up to 3 times your annual salary (for salaried professionals) and 6 Speedy processing - within 48 hours. Repay with easy EMIs. 69

times your annual income (for self employed professionals)*.

Attractive car loan plans - To Fastrack your loan, just choose the plan that is Among the lowest interest rates. Hassle-free documentation. Prepayment option - prepay the loan anytime after 6 months at a small Customer Privileges If you are an HDFC Bank account holder, we have special rates for you. If you have had a Preferred Account or a Corporate Salary Account with

right for you.

charge.

HDFC Bank for more than six months, you can get fast approvals on your loans with minimal documentation. If you are an existing HDFC Bank Car Loan customer with a clear repayment of 12 months or more we can Top-Up your car loan at a reduced interest rate. Used Car Loans Choose any used car manufactured in India and Single owner? Good average? And within your budget? HDFC Bank's Used Car Loan will put you in the driver's seat. What's more, HDFC Bank also helps you select good quality used cars and even value them. Features & Benefits Choose any car manufactured in India within a certain age*. Borrow up to 80% of the value of the car. Flexible repayment options, ranging from 12 to 60 months. Borrow up to 3 times your annual salary (for salaried professionals) and 6 times your annual income (for self employed professionals)**. Available for almost all car models at attractive interest rates. Repay with easy EMIs.

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Attractive car loan plans - To Fastbacks your loan, just choose the plan that is right for you. Customer Privileges Special benefits for HDFC Bank account holders. If you have had a Preferred Account or a Corporate Salary Account with HDFC Bank for more than six months, you can get fast approvals on your loans with minimal documentation.

Age of Car at loan maturity should not cross 10 years subject to maximum loan tenure of 60 months. **This would also vary with higher loan value

Overdraft Against Car Need extra cash? Want a lower rate of interest than a personal loan? Have a car to your name? Get an overdraft against your car and utilize the money for your personal or business needs. With HDFC Bank's Overdraft Against Car, you can get an overdraft against your car and utilize the money for your personal or business needs.

Features & Benefits Overdrafts available on cars hypothecated with the bank and up to 9 years Loans ranging from Rs. 50,000 to Rs. 7 lacs depending on your needs. Borrow up to 80% of the value of the car* Available for almost all car models at attractive interest rates. Pay interest only on the amount withdrawn. Simple and speedy processing. Avail of these features even if your car is hypothecated to another financier. 71 old.

To receive the overdraft amount, a Current Account with an overdraft limit is All vehicles will be valued by Bank empanelled valuer If you are an HDFC Bank account holder, we have special rates for you.

created in your name.

Express Loans House repairs? School admission? Sister's wedding? We now offer Express Loans to help fulfill all your needs. The procedure is simple, documentation is minimal and approval is quick. Borrow from Rs 10,000/- to 75,000/- for any purpose at low interest rates. Features & Benefits

Borrow from Rs 10,000/- to 75,000/- for any purpose depending on your needs. Flexible repayment options, ranging from 12 to 36 months. Repay with easy EMIs. One of the lowest interest rates in the market. Hassle free loans - No guarantor/security/collateral required. Customer Privileges

If you are an HDFC Bank account holder, we have special rates for you

Loans Against Securities Need extra cash? Want a lower rate of interest? Would like to benefit out of your securities without actually selling them?

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Get an overdraft against your securities like Equity Shares, Mutual Fund Units, GOI Relief Bonds, LIC Policies and IMDs/RIBs. With HDFC Bank's Loan against Securities, you can get an overdraft against your securities like Equity Shares, Mutual Fund Units, GOI Relief Bonds and LIC Policies, while still retaining ownership. And the best part is that you can continue to enjoy all your shareholder benefits such as rights, dividends and bonuses. Features & Benefits Overdraft facility can be availed against pledge of: Equity Shares* - Demat Shares up to 50% of the value. See approved scrips. Mutual Fund units* - Mutual Funds up to 50% of the value. See approved Mutual Fund Schemes. GOI Relief Bonds LIC Policies The contribution of single scrip should not exceed 65% of the total portfolio Single Scrip Lending - Lending up to 50% of the value with any Depository Minimum loan amount: Rs. 50,000/-, Maximum loan amount: Rs. 10 Rs.20 Lacs for shares & MF units E-Instant Loans: Online eligibility approval in 60 seconds and loan Pay interest only on the amount outstanding and only for the time you use it. Interest is calculated on the daily outstanding balance and debited to your Shares can be pledged from any Depository (NSDL or CDSL) and any

value at any point of time during the tenure of the account. Participant. Click here to know more. Crores*.

disbursement in 72 hours. Preferential rate of interest for online applications.

account every month end. Depository Participant across the country. 73

For availing the overdraft facility, the securities need not necessarily be in To receive the overdraft amount, a Current Account with an overdraft limit is

your name. created in your name. This entitles you to all the Current Account benefits like FREE International Debit Card, FREE Phone Banking, And FREE Net Banking. Special Benefits: If you have a Loan against securities from any other bank, simply transfer the loan to us at preferential interest rate.

Loans Against Property Need large amounts of cash? Have some property to your name? Would like to leverage your property without giving it on rent or selling it? Get a loan against your residential or commercial property. Flexibility to choose between an EMI based loan or an Overdraft. HDFC Bank brings to you Loan Against Property (LAP). You can now take a loan against your residential or commercial property, to expand your business, plan a dream wedding, and fund your child's education and much more. You can depend on us to meet all your business requirements even to purchase a new shop or office for your business. Loan to purchase Commercial Property (LCP) is a specially designed product to help you expand your business without reducing the capital from your business.

Features & Benefits Loans from Rs. 2 Lacs onwards depending on your needs. Borrow up to 60% of market value of the property. 74

Flexibility to choose between an EMI based loan or an Overdraft - We also offer to you overdraft against your self-occupied residential or commercial property and you save money by paying interest only on the amount utilized!

High tenure loans for ease of repayment. Attractive interest rates. Simple and speedy processing. Specially designed products for Self Employed.

INVESTMENT & INSURANCE When you bank with us, we ensure your money is not just in safe hands; it also works to your advantage. We help you invest wisely through our financial and investment services. Profit from our expertise. Mutual Funds-- Invest through the Mutual Fund route to meet your varied investment objectives. Insurance-- Invest through the Mutual Fund route to meet your varied investment objectives. Bonds-- A secure investment avenue giving you stable returns with tax benefits. Equity Advice-- Get advice on your equity investments. Financial Planning-- Start now...Plan your investments to meet your financial goals. Knowledge Centre-- Profit from our research and make informed investment decisions. Equities & Derivatives-- Leverage our vast information repository and transact online. Mudra Gold Bar-- Buy 24 Karat gold bars made in Switzerland and certified by Assay. CARDS Our range of Cards helps you meet your financial objectives. So whether you are looking to add to your buying power, conducting cashless shopping, or budgeting your expenditure, you will find a card that suits you. 75

Credit Cards Besides arming you with unmatched spending power, our Credit Cards are designed to meet your unique needs. Choose one that's tailored for you. Classic Cards Silver Credit Card Special Benefit Premium Cards Co-Branded Cards HDFC Bank Idea

Cards Value Plus Credit Gold Credit Card Card Health Plus Credit Titanium Card Card

Silver Card Credit HDFC Bank Idea Gold Card

Debit Cards What if you could carry your bank account with you? HDFC Bank Debit Cards give you complete and instant access to the money in your accounts without the risk or hassle of carrying cash. Choose from:

Classic Card Easy Shop International Card

Premium Cards Easy Shop Gold Card

Prepaid Cards HDFC Prepaid Cards allow you to budget your expenditure while providing the convenience of plastic. HDFC currently offer Forex Plus Card to help you manage your overseas expenses and the Gift Plus Card a gift with the freedom of choice.

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Cash Management and Other Services Although deposits and loans are the basic banking services provided by banks and thrifts, these institutions provide a wide variety of other services to customers. For consumers, these include check cashing, foreign currency exchange, safety deposit boxes in which consumers can store valuables, electronic wire transfer through which consumers can transfer money and securities from one financial institution to another, and credit life insurance which automatically pays off loans in the event of the borrower death or disability. In recent years, banks have made their services increasingly convenient through electronic banking. Electronic banking uses computers to carry out transfers of money. For example, automated teller machines (ATMs) enable bank customers to withdraw money from their checking or savings accounts by inserting an ATM card and a private electronic code into an ATM. The ATMs enable bank customers to access their money 24 hours a day and seven days a week wherever ATMs are located, including in foreign countries. Banks also offer debit cards that directly withdraw funds from a customer account for the amount of a purchase, much like writing a check. Banks also use electronic transfers to deposit payroll checks directly into a customer account and to automatically pay a customer bills when they are due. Many banks also use the Internet to enable customers to pay bills, move money between accounts, and perform other banking functions. For businesses, commercial banks also provide specialized cash management and credit enhancement services. Cash management services are designed to allow businesses to make efficient use of their cash. For example, under normal circumstances a business would sell its product to a customer and send the customer a bill. The customer would then send a check to the business, and the business would then deposit the check in the bank. The time between the date the business receives the check and deposits the check in the bank could be several days or a week. To eliminate this delay and allow the business to earn interest on its money sooner, commercial banks offer services to 77

businesses whereby customers send checks directly to the bank, not the business. This practice is referred to as lock services because the payments are mailed to a secure post office box where they are picked up by bank couriers for immediate deposit. Another important business service performed by banks is a credit enhancement. Commercial banks back up the performance of businesses by promising to pay the debts of the business if the business itself cannot pay. This service substitutes the credit of the bank for the credit of the business. This is valuable, for example, in international trade where the exporting firm is unfamiliar with the importing firm in another country and is, therefore, reluctant to ship goods without knowing for certain that the importer will pay for them. By substituting the credit of a foreign bank known to the exporter bank, the exporter knows payment will be made and will ship the goods. Credit enhancements are frequently called standby letters of credit or commercial letters of credit.

FOREX SERVICES Are you a frequent flyer for business or often holiday abroad? Are you an importer/exporter of foreign and Indian goods? If you need to deal in foreign currency and keep tabs on exchange rates every now and then, transfer monies to India, make payments etc., HDFC Bank has a range of products and services that you can choose from to transact smoothly, efficiently and in a timely manner. Foreign Exchange Services Bank offer the following Foreign Exchange Products and Services. The following are different methods of transacting in Foreign Exchange and remitting money.

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Travelers Cheques Cash Drafts Cheque Deposits Remittances Doorstep Delivery Cash to Master Trade Finance Forex Card Forex Services Branch Locator

Important guidelines and schedules All Foreign Exchange transactions are conducted by strictly adhering to RBI guidelines. Depending on the nature of your transaction or point of travel, you will need to understand your Foreign Exchange limits. RBI Guidelines Forex Limits Non HDFC Bank Account Holders

HDFC BANK PREFERRED How you would like a banker dedicated to take care of all your banking requirements and suggesting ways to invest your money with good returns from time to time? If you're a seasoned professional or have been running a successful business over the years, the HDFC Bank Preferred Programmed Account is meant for you. with

As a valued customer we benefit from our Relationship Pricing Programme

exclusive offers such as a free Gold International Debit card, a free International Titanium card or a free International Gold Credit Card, a free Demat Account, loans at preferential 79

rates,etc. Features & Benefits

Dedicated Relationship Manager--Your personal Relationship Manager is just a phone call away. These experienced and professionally trained individuals will cater to all your banking and financial services needs. So, whether it is expert advice that you seek on mutual funds or the urgency of having a demand draft issued, just ask and trust your Relationship Manager to get the job done promptly and efficiently. Customized Investment Solutions --Comprehensive Wealth Management solutions ranging from tax efficient investment avenues, buying and selling shares to convenient tax payment options- get it all under one roof. Investment Options--Choose from a wide range of Mutual Funds, RBI Relief Bonds, Insurance and other tax effective investment avenues like Infrastructure Bonds (NHAI bonds, Electrification Bonds and so on). We assure you that you will find a product that suits your need, be it high return, quick liquidity or capital preservation. Wealth Management Program--Benefit from extensive research across Equities, Derivatives, Debt and Mutual Funds, in addition to a dedicated Advisor to take care of your financial needs. Keeping your risk profile in mind, we will customize an investment strategy for you, restructure your portfolio and allocate your assets wisely in order to realize your long term investment goals. E-Broking--HDFC Bank offers a gateway for e-Broking, via HDFC Securities Trading account, to facilitate easy T+2 settlements at a special price. Enjoy the convenience and flexibility of buying and selling shares over the phone or the internet. Link your Savings Bank account and Demat Account to the Securities Trading account, thus allowing seamless flow of funds and shares between accounts. Being a Preferred customer enables you to open free multiple Demat accounts.

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Expedite Tax Payments--Step into the nearest authorized branch and pay your taxes by cash or through HDFC Bank cheque and collect your challan immediately over the counter. Relationship Pricing--Get preferential pricing across a wide range of products like Auto Loans, Personal Loans, Home Loans and Loans against Securities. Buy a Mudra Gold Bar at a 5% discount; get a free Demat Account with discounted rates on transactions, and many more such privileges.

On-demand exclusive privileges

Get Free Alerts on your mobile phone or in your mailbox by registering for your InstaAlert facility. It comes at no cost to you. Register for free e-Age Banking - through Mobile Banking, Net Banking or 24-hour Phone Banking facilities. You do not need to keep a minimum account balance in your accounts.

Free Preferred International Gold Debit Card, with higher spending limit of up to Rs. 50,000 and cash withdrawal of up to Rs. 25,000 in a single day. International or International Gold Credit Card. PRIVATE BANKING HDFC Bank offers Private Banking services to high net worth individuals and institutions. Our team of seasoned financial and investment professionals provide objective guidance backed by thorough research and in-depth analysis keeping in mind your financial goals. Multiple Recognition from Euro money At HDFC Bank, we have always strived towards providing exceptional service to each of our esteemed customers. As testament to this dedication, we have earned the following ranks in a recently conducted Euromoney Survey. Ranked No. 1 in India as the Best Private Bank in the Super Affluent Category. Ranked No. 1 in India as the Best Private Bank in Relationship Management. 81

HDFC Bank Investment Advisory Services - Helping you take your Investment portfolio further. Some of the advantages you can benefit from: Dedicated Investment Advisor. Advisory services across all asset categories - Direct Equity and its derivatives, Mutual Funds, Insurance and more. Dedicated Investment Advisor Our Private Banking service involves a high degree of personalization. When you avail of this facility, a dedicated Investment Advisor serves you. This seasoned finance professional adds value to your portfolio by keeping you up to date with financial markets and investment opportunities.

PAYMENT SERVICES With HDFC Bank's payment services, you can bid goodbye to queues and paper work. Our range of payment options make it easy for you to pay for a variety of utilities and services. Net Safe Now shop online without revealing your HDFC Bank Credit Card number. Whats more, you can now use your HDFC Bank Debit Card also for online purchases. Prepaid Refill If you are an HDFC Bank Account holder and a prepaid customer, you can now refill your Prepaid Mobile card with this service. Bill Pay Pay your telephone, electricity and mobile phone bills at your convenience. Through the Internet, ATMs, your mobile phone and telephone - with Bill Pay, our comprehensive bill payments solution.

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InstaPay Pay your bills, make donations and subscribe to magazines without going through the hassles of any registration. DirectPay Shop or Pay bills online without cash or card. Debit your account directly with our DirectPay service! Visa Money Transfer Transfer funds to any Visa Card (debit or credit) within India at your own convenience through HDFC Bank's Net Banking facility. E-Monies Electronic Funds Transfer Transfer funds from your account to any account in any Bank in India at 15 locations - FREE of cost! Online Payment of Excise & Service Tax Make your Excise and Service Tax payments at your own convenience through HDFC Bank's Net Banking facility.

ACCESS YOUR BANK Wherever you are, your bank is always accessible. Experience total control and convenience with our range of innovative services Net Banking Net Banking lets you manage your account from the comfort of your mouse - anytime, anywhere. Phone Banking Your phone is now your Bank! InstaAlerts Get regular updates on your bank account on your mobile phone or email ID. Mobile Banking

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Access your bank account and conduct a host of banking transactions and inquiries through your mobile, with our unique Mobile Banking service.

ATM 24-hour access to cash, view mini-statement, order cheque books, recharge your prepaid card all from our wide network of over 1200 ATMs.

One View One View is a revolutionary service from HDFC Bank that allows you to manage multiple accounts in different banks through one single online interface.

Branch Network Our sophisticated computerized network gives you the flexibility of accessing your Savings or Current Account from any of our over 531 branches and over 1200 ATMs across India.

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2.13 AUTO LOAN FINANCE (ASSET LOAN)

LOAN PROCEDURE

ATTEND CALL (TO MEET CUSTOMER) COLLECTION OF DOCUMENT

C.P.V. (F.I.)

LOGIN (C.P.A.)

CREDIT MANGER

APPROVAL

DISBURSEMENT

Auto loans are installment loan for the purchase of new and used vehicles to be used for personal, business or commercial purposes. Finance could also be availed on the basis of the security of an owned vehicleunder the refinance programe. The Auto loan programme is a Retail Asset Product and can be availed by Individualsm Sole Proprietors, Partnership Firms, HUFs, Private and Public Limited Companies who satisfy the credit parameters set out in this manual. The bank would assess the credit worthiness 85

of the applicant, approve and disburse the loan and also mark a lien on the vehicle as a security. The lien on the vehicle has to be a first lien.

Description of procedure I. Call attending or meeting to customer Customers calls are attended by HBL Agents. They are trained to attend customer on telephone. HBL Agents do marketing of bank products for which they are recruited. Agents even go door-to-door for finding customers. Bank also gets customer from its DSA. Both agents and DSA do marketing of Bank products. So we need do understand what is marketing? Marketing Marketing is the process of planning and executing the pricing, promotion, and distribution of goods, ideas, and services to create exchanges that satisfy individual and organizational goals. Simply, if it doesn't facilitate a "sale" then it's not marketing. Two major aspects of marketing are the recruitment of new customers (acquisition) and the retention and expansion of relationships with existing customers (customer base management or customer relationship management). An emerging area of study and practice concerns internal marketing, or how employees are trained and managed to deliver the brand in a way that positively impacts the acquisition and retention of customers. Marketing can also be classified by the way the marketing messages are communicated to the target audience. Direct marketing is a form of marketing that attempts to send its messages directly to consumers, using "addressable" media, such as mail. Therefore, direct marketing differs from regular advertising in that it does not place 86

its messages on a third party medium, or in the agora, such as a billboard or a radio commercial would. Instead, the marketing of the service or commodity is addressed directly to the end consumer. A related form of marketing is direct response marketing. In direct marketing, the marketer contacts the potential customer directly, but in direct response marketing the customer responds to the marketer directly. Its most common form today is infomercials. They try to achieve a direct response via television presentations. Agents and DSA firstly understand what customer wants and then ask them question which are helpful in knowing their eligibility and documentation requirements. Generally following questions are asked:Is customer's salaried or business man? What is the gross income of customer? For how much time he wants loan and how much loan he wants? If agents found that the person is capable of repaying the loan they told them the LTV that bank found suitable according to repaying capacity. If customer found its suitable then agents told them different EMI schemes that they can pay and customer choose the one which he found suitable. Finance is the art and science of managing money. Finance is the foundation of business. No business can be started without neither finance nor is its development possible. The success of business depends upon sufficient finance and its effective management. Financial services are concerned with the design and delivery of advice and financial products to individuals, businesses and governments.

II. Collection of Documents If customer is ready to take loan then he is asked to provide documents according to his condition and plan he takes. 87

Application form filled completely with signature and date: Name and date of birth (mandatory) Loan amount(mandatory) Program (mandatory) Photograph (mandatory) Signature on application form (mandatory) Date on application form (mandatory) DSA stamp & in case of branches, ranch name & code (mandatory) DBM Stamp

Residence & Office Address Proof (any one): Sales Deed Electricity Bill Telephone Bill Passport Copy / Photo Driving License Ration Card / Voter ID Leave & License Agreement Copy Co. accommodation letter (Cat A & Cat B cos. Only) LIC Policy/Credit Card statement with card copy Pan Card

Identity Proof (any One): Voters ID Card Passport Copy Photo Driving License PAN Card Copy Employee ID Card (Cat A & Cat B Cos only) Photo Credit Card Copy (front & back) MOA/AOA (Pvt. Ltd/Ltd Co)/Partnership Deed (Firm), Trust Deed

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Salaried Individuals Eligibility Criteria: Minimum age of Applicant: 21 years Maximum age of Applicant at loan maturity: 58 years Minimum employment: 1 year in current employment and minimum 2 years of employment Minimum Annual Income: Rs 100000 net annual income Telephone: Must at residence Documents required: Proof of Identity:- Passport copy, PAN Card, Voters Id car, license( Laminated, Recent, Legible) Income Proof: - Latest salary slip with form 16. Address Proof: - Ration card/Driving license/Voters card/passport copy/telephone bill/ electricity bill/Life insurance policy PAN Card. Bank Statement: - Not mandatory driving

Self Employed Eligibility Criteria: Minimum age of Applicant: 21 years Maximum age of Applicant at loan maturity: 65 years Minimum employment: At least 3 years in business Minimum Annual Income: Net profit Rs. 60000 p.a for standard cars Rs.100000 p.a for mid-sized and premium cars Telephone: Must at residence and

Documents required: 89

Proof of Identity:- Passport copy, PAN Card, Voters Id car, license( Laminated, Recent, Legible) Income Proof:- Latest ITR

driving

Address Proof:- Ration card/Driving license/Voters card/passport copy/telephone bill/ electricity bill/Life insurance policy PAN Card Bank Statement: - Waived for small cars, for mid - sized and premium cars if income is greater than Rs 1.5 lacs then bank statement requirement can be waived.

Partnership Firms Eligibility Criteria: Minimum Income: Net profit Rs. 60000 p.a for standard cars and Rs.100000 p a for mid-sized and premium cars Minimum turnover: Turnover Rs 4.5 lacs Telephone: One phone at least at business and at residence of the loan executing partner Documents required: Proof of Identity:- NA Income Proof: - Audited balance sheet, Profit & loss Account for latest two years and the latest 2 years IT returns of the company. Address Proof: - Telephone Bill/Electricity Bill/Shop & Establishment Act certificate/SSI registered certificate/Sales Tax certificate. Bank Statement: - Waived for small cars, for mid - sized and premium cars if income Is greater than Rs 1.5 lacs then bank statement requirement can be waived. Private Limited Company

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Eligibility Criteria: Minimum Income: Net profit Rs. 60000 p.a for standard cars and Rs.100000 p a for mid-sized and premium cars Minimum turnover: Turnover Rs 4.5 lacs Telephone: One phone at least at business premises Documents required: Proof of Identity:- NA Income Proof:- Audited balance sheet, Profit & loss Account for latest two years and the latest 2 years IT returns of the company Address Proof:Telephone Bill/Electricity Bill/Shop & Establishment Act certificate/SSI registered certificate/Sales Tax certificate Bank Statement:- NA

Public Limited Company Eligibility Criteria: Minimum Income: Net profit Rs. 60000 p.a for standard cars and Rs.100000 p a for mid-sized and premium cars Minimum turnover: Turnover Rs 4.5 lacs Telephone: One phone at least at business premises

Documents required: Proof of Identity:- NA Income Proof: - Audited balance sheet, Profit & loss Account for latest two years. Address Proof:Telephone Bill/Electricity Bill/Shop & Establishment Act

certificate/SSI registered certificate/Sales Tax certificate Bank Statement: - NA Applicant has to fill application form that also needs two references to be given. There is declaration, which has to be signed by applicant. 91

*Insurance copy and RC for used car is required as document.

III. FI to CPV FI contains: Name and profession of applicant Date of fulfillment of FI Office and Resident Address and Telephone numbers Loan amount Product and Tenure Seal of DSA or HBL seal with agent signature Then it is sended to CPV with a cc. Agent of CPV note down the time of its arriving at CPV and seal of CPV.CC is given back to bank. CPV report is made by CPV agency i.e. FIR. FIR has three parts: Residence verification Office verification Telephone verification (TVR) FIR is ended to CPA for login. IV. Document to CPA A file containing following documents is sended to CPA by bank for verification: Application Form Documents provided by Applicant 92

Activity Mapping Slip

If CPA found any document missing they call that to be filled when the entire documents are complete they feed in their computer information about applicant. CPA also check Bank Account, calculate salary, ITR and also check if their any duplication or fraud case. CAM is attested with file. After FIR is arrived one of following step is taken:Positive FIR and all documents are correct then file is sended back to credit manager with CAM. If negative FIR, CPA take out CAM, FIR, Activity Mapping Slip, Application form Etc. documents that were attested by bank. Send file having documents provided by customer to bank to return it to customer.

V. DOCUMENTS TO CREDIT MANAGER File sanded by CPA is checked by Credit Manager but he mainly checks CAM. If he found it suitable he signed it to make approved one. Credit Manager decides the amount of Loan, time and sends it to Auto Loan Department. After approval by Credit Manager the same time request is emailed to Head at Jaipur for rate approval.

VI.APPROVAL DO with Manager Cheque is given to customer to take car. Customer is asked to pay margin money and Margin money receipt copy. ICN (having Car chassis no.) is made with HDFC HYPN. Agreement and Stamp are signed from customer and guarantor. 93

ICN, Margin receipt copy, Disbursement Memo,

Plough back letter, PDC(with

Standing instrument letter), Service Charge letter, IRR sheet, Rate Approval, Agreement with Stamp and Document Checklist are sended back to CPA for making DV and then again taken for disbursement. VII. DISBURSEMENT When DV is received from CPA, Loan (file) is assumed to be disbursed and Disbursement Order is made.

2.14 AWARDS:

IN 2005:

Asiamoney Awards Asiamoney Awards

Best Domestic Commercial Bank Best Cash Management Bank - India.

The Asian Banker Retail Banking Risk Management Award in India for 2004 Excellence Hong Kong-based Best Bank - India Finance Asia magazine The Asian Banker Retail Banking Risk Management Award for 2004 Excellence Hong Kong-based "Best Bank in India" Finance Asiamoney Awards Best Domestic Commercial Bank Best Cash Management Bank India. 94

Economic Times Awards

"Company of the Year" Award for Corporate Excellence 2004-05.

Asiamoney also named the bank: Best Local Cash Management Bank in India 2004 - US$11-100m Best Local Cash Management Bank in India 2004 - >US$501m Best Local Cash Management Bank in India 1989-2004 (poll of polls) Best Overall Domestic Trade Finance Services in India 2004 Most Improved company for Best Management Practices in India 2004 HDFC Bank named the "Most Customer Responsive Company - Banking and Financial Services in The Economic Times - Avaya Global Connect Customer Responsiveness Awards 2005" HDFC Bank has been named Best Domestic Bank in India in The Asset Triple A Country Awards 2005. HDFC Bank has been named Best Domestic Bank in India Region in The Asset Triple A Country Awards 2004 and 2003. In 2004, HDFC Bank was selected by Business World as "One of India's Most Respected Companies" as part of The Business World Most Respected Company Awards 2004. In 2004, Forbes Global again named us in its listing of Best Under a Billion, 100 Best Smaller Size Enterprises in Asia/Pacific and Europe, in its November 1, 2004

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issue. In 2004, HDFC Bank won the award for "Operational Excellence in Retail Financial Services" - India as part of the Asian Banker Awards 2003. In 2003, Forbes Global named us in its ranking of "Best Under a Billion, 200 Best Small Companies for 2003". Leading business newspaper The Financial Express named HDFC Bank the "Best New Private Sector Bank 2003" in the FE-Ernst & Young Best Banks Survey 2003. Leading Personal Finance Magazine in India Outlook Money named HDFC Bank the "Best Bank in the Private Sector" for the year 2003. Leading Indian business magazine Business Today in a survey rated us "Best Bank in India" 2003, 2004 and 2005, and "Best Private Sector Bank" in India in 1999. NASSCOM and economictimes.com have named us the 'Best IT User in Banking' at the IT Users Awards 2003.

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There have been some other proud moments as well: London-based Euromoney magazine gave us the award for "Best Bank - India" in 1999, "Best Domestic Bank" in India in 2000, and "Best Bank in India" in 2001 and 2002 Asiamoney magazine has named us "Best Commercial Bank in India 2002". For our use of information technology we have been recognized as a "Computerworld Honors Laureate" and awarded the 21st Century Achievement Award in 2002 for Finance, Insurance & Real Estate category by Computerworld, Inc., USA. Our technology initiative has been included as a case study in their online global archives. The Economic Times has conferred on us The Economic Times Awards for Corporate Excellence as the Emerging Company of the Year 2000-01. Leading Indian business magazine Business India named us "India's Best Bank" in 2000. In the year 2000, leading financial magazine Forbes Global named us in its list of "The 300 Best Small Companies" in the world and as one of the "20 for 2001" best small companies in the world.

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RESEARCH METHODOLOGY

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RESEARCH METHODOLOGY:
Research is the careful investigation or inquiry especially through search for new facts in any branch of knowledge. Research methodology is a way to systematically solve the research problem. When we talk of research methodology we not only talk of the research methods but also consider the logic behind the methods we use in the context of our research study and explain why we are using a particular method or technique and why we are not using others.

3.1 TITLE OF THE STUDY:

A Study of Auto Loans in HDFC Bank with special reference to Jodhpur city.

3.2 OBJECTIVE OF THE STUDY:

The objectives of the executive training are as follows: Primary objective: To find out awareness level about auto loans among the customers. To find out the satisfaction level of the customers Secondary Objective: To gain a deeper understanding of the work, culture, deadlines, pressure etc. of HDFC Bank in Jodhpur City. The study will help to develop the corporate etiquettes in me. It will provide a good scope for developing Management skills along with communication and team working skills in my personality. It will provide a platform to show my talent and give direct corporate exposure. To identify the reasons for acceptance or non acceptance of finance.

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3.3 TYPE OF RESEARCH:

EXPLORATORY RESEARCH DESIGN This is used to formulate a problem for more precise investigation or for developing hypothesis. It is also used for establishing priorities for further research; it also clarifies the concepts and making analyst familiar with the problem.

EXPERIMENTAL RESEARCH DESIGN Experimental Research is also called experimentation or causal research. Experimental is defined as a process where events occur in a setting at the discretion of the researcher and controls are used to identify the resources of variation in subjects response.

DESCRIPTIVE RESEARCH DESIGN Descriptive studies undertaken in such a circumstances where researcher is

interested in knowing the demographic characteristic of the consumer of when he is interested in knowing the proportion of people in the given population who behaves in the particular manner making projections of the certain thing or determining relation between two or more variables. As the aim here was to estimate the proportion of people who are aware of loan scheme and also invested in car loan. Hence we used descriptive research design. The population taken for the purpose of study comprised of people from Middle Class Service Sector (Government and Public Sector both), upper middle class (Comprising of Business Class and High rank Service Officials), High Income Group (HNIs of city).

In this project Descriptive vs. Analytical research is used. 100

Descriptive research includes surveys and fact findings enquiries of different kinds. The major purpose of descriptive research is description of the state of affairs as it exists at present. In analytical research, on other hand, the researcher has to use facts or information already available, and analyze these to make a critical evaluation of the material.

3.4 Sample Size and method of selecting:

Sample size: The sample size is 108. The sample design I have opted for is Judgment Sampling to know their investment pattern and to aware them about auto loans. Judgment Sampling is that sampling in which elements from the population are purposively selected. Thats why; Judgment sampling is also called Purposive Sampling. SAMPLE SELECTING CRITERIA: Out of 100 people 55% of people were comprised of middle income group and rests are from higher income group people.

SamplingTechnique: Initially, a rough draft was prepared keeping in mind the objective of the research. A pilot study was done in order to know the accuracy of the Questionnaire. The final Questionnaire was arrived only after certain important changes were done. Thus my sampling came out to be judemental and convinent.

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3.5 Methods of Data Collection

There are two types of data secondary and primary data. The Secondary data refers to those data which were gathered for some other purpose and are already available in the firms internal records and commercials papers, magazines and who sites. On the other hand, primary data do not exist already is records and publications. The one has to gather primary data fresh from the specific study undertaken by him.

I have used both primary and secondary data for my research project.

DATA COLLECTION

PRIMARY

SECONDARY

Questionn aire

Books Interview Journals

Informat ion From Internet

Magazin es

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PRIMARY SOURCES OF DATA The Survey method was used. Personal interviews were conducted. Questionnaire

was specially designed for the research. The questionnaire was highly structured and was undisguised in nature. The purpose of the Study was not hidden from the respondents. Major of the questions were having a multiple choice. Sequencing and the structuring of the questionnaire was done in such a way that they were able to generate maximum out of the respondent.

SECONDARY SOURCE OF DATA The main of the secondary data was newspaper like investors guide. The Economic

times, Business times, and electronic media i.e. Internet (sites related to auto loan i.e. google.com, hdfc bank, journals, Brochures of HDFC Bank etc.

3.6 Scope of Study:

Study provides awareness of the market. It provides knowledge of the market. People thinking power gets increase. Customer behavior change and it think about investment.

SIGNIFICANCE TO THE INDUSTRY : This is a limited study which takes into consideration the responses of 108 people. This data can be explorated to take in the trends across the industry. The significance for the industry lies in studying these trends that emerge from the study. It is a rapiddly changing and evolving sector. People are only beginning to wake up to its vast possibilities. A study like this can attempt to guide the future of the industry based on current trends. 103

SIGNIFICANE FOR THE RESEARCHER : To facilitate and provide all the useful informtaion of the studt, the company, the insurance industry and also provide marketing ways, methods of reliance life insurance.

3.7 Limitations:
Though the present study aimed to achieve the above-mentioned objectives in full earnest and accuracy, it was hampered due to certain limitations. Some of the limitations of this study may be summarized as follows: Locating the target respondents for survey providers was very time consuming. Sample size was limited due to the limited period of time allocated for the survey Getting accurate responses from the respondents due to their inherent problems was difficult. They were partial, and refused to cooperate and some others responded by proxy. Some respondents were reluctant to divulge personal information which can affect the validity of all responses. In a rapidly changing industry, analysis on one day or in one segment can change very quickly. The environmental changes are vital to be considered in order to assimilate the findings.

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In a rapidly changing industry, analysis on one day or in one segment can change very quickly. The environmental changes are vital to be considered in order to assimilate the findings.

There are some limitations of this study. But in spite of these limitations I worked with the enthusiasm. And I tried to give the best results to the research of this report.

ANALYSIS AND INTERPRETATION

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1. Are you fully aware about the concept of auto loans?

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The awareness has really touched new level in 2009 As 100% respondents are aware with the concept of Auto Loans. 2. How much time is taken for Documentation? 107

When the question about the time taken for documentation was asked 64% of the respondent said that it is within 7 days, 24% of them said that it is between 7 to 14 days, 4% said that it is between 14 to 21 days; rest of them said that it is between 21 to 35 days.

3. Availability of Bank officials? 108

From the chart we can observe that 36% respondents said that the bank officials were always available in the bank. 20% respondents said it was satisfactory, while around 24% respondents stated that the availability of officials was less. Another 20% respondents stated that the availability was very less.

4. How was the behavior of other employees in the bank? 109

From the chart we can observe that 64% respondents stated that they found the behavior of other employees in the bank OK, 24% stated that it was good, 8% stated that it was bad and rest found it very good.

5. How much time is taken for disbursement? 110

From the chart we can observe that the time taken for disbursement as observed by the 68%respondents was 0-7 days and 20% respondents said that it took 7- 14 day, 8% said it took 14-21 days and rest of them said it took 21-28 days.

6. Repayment facilities available 111

From the chart we can observe that 88% people found the repayment facilities as satisfactory. The rest thought that repayment facilities were good in Kotak Mahindra Bank.

7. How is the infrastructure of the bank? 112

According to 68% of the respondents the infrastructure of bank was OK, 24% stated that infrastructure was Good rest of them stated that it was Bad

8. Are you satisfied with the level of services provided by the bank? 113

It was found that 72% of the respondents were found to be satisfied with the level of services provided by the bank, rest of them were not satisfied with the level of services provided by the bank.

9. Will you recommend this bank to others? 114

When it was asked to the respondents that whether they will recommend this bank to other 72% said yes we will recommend this bank to others.

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FACTS AND FINDINGS

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Major Findings: Most of the customers were found to be satisfied with the level of services provided by the Bank. Reason for unsatisfied customers was the time taken for disbursement of loan. All the respondents were found to be aware about the concept of Auto loans. Most of the customers said that the time taken for Documentation is less than 7 days. Most of the customers said that the Bank officials were always available in the Bank Most of the respondents said that the behavior of the employees in the bank is satisfactory Respondents said that the time taken for disbursement of loan is less than 7 days Respondents said that the repayment facilities available are satisfactory. The infrastructure of bank was fount to be satisfactory by most of the customers. Most of the respondents said that they will recommend this bank to others.

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SWOT ANALYSIS

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SWOT

STRENGTH Right strategy for the right products. Superior customer service vs. competitors. Great Brand Image Products have required

WEAKNESSES Some gaps in range for certain sectors. Customer service staff need training. Processes and systems, etc Management cover insufficient. Sectoral growth is constrained by low unemployment levels and competition for staff

accreditations. High degree of customer satisfaction. Good place to work Lower response time with efficient service. Dedicated workforce aiming at making a long-term career in the field. and effective

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Opportunities

Threats

Profit margins will be good. Could broadly. extend to overseas

Legislation could impact. Great risk involved Very high competition prevailing in the industry.

New specialist applications. Could deals. seek better customer

Vulnerable to reactive attack by major competitors

Fast-track career development opportunities on an industrywide basis.

Lack of infrastructure in rural areas investment. could constrain

An applied research centre to create opportunities for developing techniques to provide added-value services.

High volume/low cost market is intensely competitive.

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CONCLUSION

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Conclusion:
Many customers prefer sales promotion schemes of HDFC BANK so they purchase their product .After the study we can say candidly that HDFC finance is on the top in Jodhpur City among private banks but customer suggest that HDFC car finance should try to improve its services. It if company improves it they can target more customers at a time and penetration in the market would be better. To conclude we can say the HDFC car loan is leading product in Jodhpur City this can be prove from us the survey report. It is also an important factor. HDFC BANK (AUTO LOAN Group.) is taking an age over other financer. Rests of the factors do not play an important role at the time of purchasing. In Jodhpur City customer see monthly installment with loan scheme. Some people say that it is a matter to look after EMI of loan. They know that if installments are not paid in time that they will be pose with heavy penalties which other wise will become a matter of seriousness. Interest-rate differs from bank to bank. So people prefer to take loan from the bank which has less interest rate.

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RECOMMENDATION AND SUGGESTIONS

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RECOMMENTATRIONS AND SUGGETIONS:

The Bank must establish branches in rural areas where competitors dont have their branches. So that it can attract more customers. The company must advertise the product more in the market. So that every one in the market get aware about the product.

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Appendix

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Questionnaire
Dear Sir/Madam
You are a part of an important research. The information provided by you in this questionnaire will serve as a valuable input for my study. I promise to keep your personal information confidential. Thank for your cooperation. 1. Are you fully aware about auto loans? a) Yes b) No

2. You have taken Commercial Vehicle Finance for?

3. How much time is taken for documentation? a) 0 7 days e) 28 35 days 4. Availability of bank officials a) Never e) Always 5. How was the behavior of other employees in the bank? a) Very bad e) Very good 6. How much time is taken for disbursement? a) 0 7 days e) 28 35 days 7. Repayment facilities available in the bank? a) Very bad b) Bad c) OK 126 d) Good b) 7 14 days c) 14 21 days d) 21 28 days b) Bad c) OK d) Good b) Very less c) Less d) Satisfactory b) 7 14 days c) 14 21 days d) 21 28 days

e) Very good 8. How is the infrastructure of the bank? a) Very bad b) Bad e) Very good 9. Have you taken Commercial Vehicle Finance from any other bank? If yes then which bank? 10. What is the interest rate charged by your bank? c) OK d) Good

11. Do you foresee any benefit from Commercial Vehicle Finance from Kotak Mahindra Bank?

12. Are you satisfied with the level of services provided by the bank? a) Yes b) No

13. Will you recommend this Bank to others? a) Yes 14. Personal Details: Name: Age: Annual income a) 0 1 lakh b) 1 2.5 lakh e) More than 5 lakh c) 2.5 4 lakh d) 4 5 lakh b) No

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BIBLIOGRAPHY

128

BIBLIOGRAPHY
BOOKS
Kotler P., Marketing Management, New Delhi, Prentice Hall of India Pvt. Ltd., 2000. C. R. KOTHARI- RESEARCH METHODOLOGY, 7th edition @2007 by New Age International Limited, India. Research methodology methods and techniques by C.R kothari

WEBSITES
www.hdfcbank.com www.wikipedia.com www.google.com WWW.ICICIBANK.COM www.google.com

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