You are on page 1of 91


In the fulfillment of the requirement of the award of degree

Master of Business Administration (MBA)

Submitted ToMrs. Vikramjeet Kaur

Submitted by:Harpreet Kaur

Roll No-MB07578

Session 2007-2009




I hereby certify that the work which is being presented here in the project name
employees performance appraisal in H.D.F.C bank in fulfillment of the
requirement for the award of the degree of Master of Business Administration
under Punjab Technical University, Jalandhar, is an authentic record of my own
work carried out during 4th semester from 2nd- Feb-2009 to 7th-April -2009, under
the supervision of Mrs.Vikramjeet Kaur.
The matter presented here has not been submitted by me for the award of any
other degree of this or any other university.

Harpreet Kaur(MBO7578)

This is to certify that the above statement made by the candidate is correct to the
best of my knowledge.

Mrs.Vikramjeet Kaur
(Project Guide)


My working in this project is not only my efforts but this is to the result of the
guiednce, assistance and inspiration of several people who helped me
throughout my final project report.
I express my every debt of perfouned gratitude to Mrs.Vikramjeet Kaur (prof.H.R)
for her support in executing this project from its conceptual to completion stage.
I would like to thank Dr.D.S.Randhawa (Director-Principal of Rayat Institute of
Management) our course co-ordinator, who made it possible for me.

Harpreet Kaur (MBO7578)


Managing human resources in todays dynamic environment is becoming more and more
complex as well as important. Recognition of people as a valuable resource in the
organization has led to increases trends in employee maintenance, job security, etc
My research project deals with Performance Appraisal as carried out at H.D.F.C Bank.
In this report, I have studied &evaluated the performance appraisal process as it is carried
out in the bank.
The first section of my report deals with a detailed company profile. It includes the
companys history: its activities and operations, organizational structure, etc. This section
attempts to give detailed information about the company and the nature of its functioning.
The second section deals with performance appraisal. In this section, I have given a brief
conceptual explanation to performance appraisal. It contains the definition, process and
significance of performance appraisal.
In the third section of my report, I have conducted a research study to evaluate the
process of performance appraisal at H.D.F.C Bank. This section also contains my
findings, conclusions, suggestions and feedback.
The forth and final section of this report consists of extra information that I related to the
main contents of the report. These annexure include some graphs and diagrams relating to
the bank, graphs relating to the research study and important documents upon which the
project is based.

Harpreet Kaur


Study at HDFC Bank on employees performance appraisal. The objective of

study was to check out Identification of the technique of performance appraisal
followed in h.d.f.c bank. Employee attitude towards the present appraisal system.
. The study was commenced by getting familiarized with the various hr
departments of the banks. Understanding the different hr programmes carried out
in the banks.
The entire populations constituting 20 respondents were taken as the subjects for
the study. The collected data from the employees through a questionnaire and
these data were analyzed and interpreted using charts. The major findings
include the performance appraisal of employees with respect to their working



1.1 Performance appraisal
1.2 Industry profile
1.3 H.D.F.C Bank

2 Review of Literature




Research Methodology
Data Analysis and Interpretation

7 Conclusion


8 Annexure



Performance appraisal is the process of obtaining, analyzing and recording information about
relative worth of an employee. The focus of the performance appraisal is measure improving the
actual performance of the employee and also the future potential of the employee. Its aim is to
measure what an employee does.

According to Flippo, a prominent personality in the field of Human resources, performance

appraisal is the systematic, periodic and an impartial rating of an employees excellence in the
matters pertaining to his present job and his potential for a better job." Performance appraisal is a
systematic way of reviewing and assessing the performance of an employee during a given period of
time and planning for his future.

OBJECTIVES OF Performance appraisal:

To review the performance of the employees over a given period of time.

To judge the gap between the actual and the desired performance.

To help the management in exercising organizational control.

Helps to strengthen the relationship and communication between superior subordinates and
management employees.

To diagnose the strengths and weaknesses of the individuals so as to identify the training and
development needs of the future.

To provide feedback to the employees regarding their past performance.

Provide information to assist in the other personal decisions in the organization.

Provide clarity of the expectations and responsibilities of the functions to be performed by the

To judge the effectiveness of the other human resource functions of the organization such as
recruitment, selection, training and development.

To reduce the grievances of the employees.

Process of Performance Appraisal


The first step in the process of performance appraisal is the setting up of the standards which will be used to
as the base to compare the actual performance of the employees. This step requires setting the criteria to
judge the performance of the employees as successful or unsuccessful and the degrees of their contribution
to the organizational goals and objectives. The standards set should be clear, easily understandable and in
measurable terms. In case the performance of the employee cannot be measured, great care should be
taken to describe the standards.


Once set, it is the responsibility of the management to communicate the standards to all the employees of
the organization. The employees should be informed and the standards should be clearly explained to the.
This will help them to understand their roles and to know what exactly is expected from them. The standards
should also be communicated to the appraisers or the evaluators and if required, the standards can also be
modified at this stage itself according to the relevant feedback from the employees or the evaluators.


The most difficult part of the Performance appraisal process is measuring the actual performance of the
employees that is the work done by the employees during the specified period of time. It is a continuous
process which involves monitoring the performance throughout the year. This stage requires the careful
selection of the appropriate techniques of measurement, taking care that personal bias does not affect the
outcome of the process and providing assistance rather than interfering in an employees work.


The actual performance is compared with the desired or the standard performance. The comparison tells the
deviations in the performance of the employees from the standards set. The result can show the actual
performance being more than the desired performance or, the actual performance being less than the
desired performance depicting a negative deviation in the organizational performance. It includes recalling,
evaluating and analysis of data related to the employees performance.



The result of the appraisal is communicated and discussed with the employees on one-to-one basis. The
focus of this discussion is on communication and listening. The results, the problems and the possible
solutions are discussed with the aim of problem solving and reaching consensus. The feedback should be
given with a positive attitude as this can have an effect on the employees future performance. The purpose
of the meeting should be to solve the problems faced and motivate the employees to perform better.


The last step of the process is to take decisions which can be taken either to improve the performance of the
employees, take the required corrective actions, or the related HR decisions like rewards, promotions,
demotions, transfers etc.



Traditional Methods of Performance Appraisal


This traditional form of appraisal, also known as Free Form method involves a description of the
performance of an employee by his superior. The description is an evaluation of the performance of any
individual based on the facts and often includes examples and evidences to support the information. A major
drawback of the method is the inseparability of the bias of the evaluator


This is one of the oldest and simplest techniques of performance appraisal. In this method, the appraiser
ranks the employees from the best to the poorest on the basis of their overall performance. It is quite useful
for a comparative evaluation.

A better technique of comparison than the straight ranking method, this method compares each employee
with all others in the group, one at a time. After all the comparisons on the basis of the overall comparisons,
the employees are given the final rankings.


In this method of Performance appraisal, the evaluator rates the employee on the basis of critical events and
how the employee behaved during those incidents. It includes both negative and positive points. The
drawback of this method is that the supervisor has to note down the critical incidents and the employee
behavior as and when they occur.



In this method, a senior member of the HR department or a training officer discusses and interviews the
supervisors to evaluate and rate their respective subordinates. A major drawback of this method is that it is a
very time consuming method. But this method helps to reduce the superiors personal bias.

The rater is given a checklist of the descriptions of the behavior of the employees on job. The checklist
contains a list of statements on the basis of which the rater describes the on the job performance of the


In this method, an employees quality and quantity of work is assessed in a graphic scale indicating different
degrees of a particular trait. The factors taken into consideration include both the personal characteristics
and characteristics related to the on-the-job performance of the employees. For example a trait like Job
Knowledge may be judged on the range of average, above average, outstanding or unsatisfactory.

To eliminate the element of bias from the raters ratings, the evaluator is asked to distribute the employees in
some fixed categories of ratings like on a normal distribution curve. The rater chooses the appropriate fit for
the categories on his own discretion.




An assessment centre typically involves the use of methods like social/informal events, tests and exercises,
assignments being given to a group of employees to assess their competencies to take higher
responsibilities in the future. Generally, employees are given an assignment similar to the job they would be
expected to perform if promoted. The trained evaluators observe and evaluate employees as they perform
the assigned jobs and are evaluated on job related characteristics.
The major competencies that are judged in assessment centre are interpersonal skills, intellectual capability,
planning and organizing capabilities, motivation, career orientation etc. assessment centre are also an
effective way to determine the training and development needs of the targeted employees.


Behaviorally Anchored Rating Scales (BARS) is a relatively new technique which combines the graphic
rating scale and critical incidents method. It consists of predetermined critical areas of job performance or
sets of behavioral statements describing important job performance qualities as good or bad (for e.g. the
qualities like inter-personal relationships, adaptability and reliability, job knowledge etc). These statements
are developed from critical incidents.

In this method, an employees actual job behavior is judged against the desired behavior by recording and
comparing the behavior with BARS. Developing and practicing BARS requires expert knowledge.


Human resources are valuable assets for every organization. Human resource accounting method tries to
find the relative worth of these assets in the terms of money. In this method the Performance appraisal of the
employees is judged in terms of cost and contribution of the employees. The cost of employees include all
the expenses incurred on them like their compensation, recruitment and selection costs, induction and
training costs etc whereas their contribution includes the total value added (in monetary terms). The
difference between the cost and the contribution will be the performance of the employees. Ideally, the
contribution of the employees should be greater than the cost incurred on them.


360 degree feedback, also known as 'multi-rater feedback', is the most comprehensive appraisal where the
feedback about the employees performance comes from all the sources that come in contact with the
employee on his job.


360 degree respondents for an employee can be his/her peers, managers (i.e. superior), subordinates, team
members, customers, suppliers/ vendors - anyone who comes into contact with the employee and can
provide valuable insights and information or feedback regarding the on-the-job performance of the

360 degree appraisal has four integral components:

1. Self appraisal
2. Superiors appraisal
3. Subordinates appraisal
4. Peer appraisal.

Self appraisal gives a chance to the employee to look at his/her strengths and weaknesses, his
achievements, and judge his own performance. Superiors appraisal forms the traditional part of the 360
degree appraisal where the employees responsibilities and actual performance is rated by the superior.

Subordinates appraisal gives a chance to judge the employee on the parameters like communication and
motivating abilities, superiors ability to delegate the work, leadership qualities etc. Also known as internal
customers, the correct feedback given by peers can help to find employees abilities to work in a team, cooperation and sensitivity towards others.


Self assessment is an indispensable part of 360 degree appraisals and therefore 360 degree Performance
appraisal have high employee involvement and also have the strongest impact on behavior and
performance. It provides a "360-degree review" of the employees performance and is considered to be one
of the most credible performance appraisal methods.

360 degree appraisal is also a powerful developmental tool because when conducted at regular intervals
(say yearly) it helps to keep a track of the changes others perceptions about the employees. A 360 degree
appraisal is generally found more suitable for the managers as it helps to assess their leadership and
managing styles. This technique is being effectively used across the globe for performance appraisals.
Some of the organizations following it are Wipro, Infosys, and Reliance Industries etc.


M.B.O Method
The concept of Management by Objectives (MBO) was first given by Peter Drunker in 1954. It can be
defined as a process whereby the employees and the superiors come together to identify common goals,
the employees set their goals to be achieved, the standards to be taken as the criteria for measurement of
their performance and contribution and deciding the course of action to be followed. The essence of MBO is
participative goal setting, choosing course of actions and decision making. An important part of the MBO is
the measurement and the comparison of the employee actual performance with the comparison of the
employee actual performance with the standards set.


Purpose of Performance Appraisal


Performance Appraisal is being practiced in 90% of the organisations worldwide. Self-appraisal and potential
appraisal also form a part of the performance appraisal processes.

Typically, Performance Appraisal is aimed at:

to review the performance of the employees over a given period of time.
to judge the gap between the actual and the desired performance.
to help the management in exercising organizational control.
to diagnose the training and development needs of the future.

Provide information to assist in the HR decisions like promotions, transfers etc.

Provide clarity of the expectations and responsibilities of the functions to be performed by the employees.
To judge the effectiveness of the other human resource functions of the organization such as recruitment,
selection, training and development.
To reduce the grievances of the employees.
Helps to strengthen the relationship and communication between superior subordinates and management

Approaches to Performance Development


Performance appraisal - Traditional approach

Traditionally, performance appraisal has been used as just a method for determining and justifying the
salaries of the employees. Than it began to be used a tool for determining rewards (a rise in the pay) and
punishments (a cut in the pay) for the past performance of the employees.

This approach was a past oriented approach which focused only on the past performance of the employees
i.e. during a past specified period of time. This approach did not consider the developmental aspects of the
employee performance i.e. his training and development needs or career developmental possibilities. The
primary concern of the traditional approach is to judge the performance of the organization as a whole by the
past performances of its employees

Therefore, this approach is also called as the overall approach. In 1950s the performance appraisal was
recognized as a complete system in itself and the Modern Approach to performance appraisal was

Performance appraisal - Modern approach

The modern approach to performance development has made the performance appraisal process more
formal and structured. Now, the performance appraisal is taken as a tool to identify better performing
employees from others, employees training needs, career development paths, rewards and bonuses and
their promotions to the next levels.
Appraisals have become a continuous and periodic activity in the organizations. The results of performance
appraisals are used to take various other HR decisions like promotions, demotions, transfers, training and
development, reward outcomes. The modern approach to performance appraisals includes a feedback
process that helps to strengthen the relationships between superiors and subordinates and improve
communication throughout the organization.

The modern approach to Performance appraisal is a future oriented approach and is developmental in
nature. This recognizes employees as individuals and focuses on their development.

Challenges of Performance Appraisal

In order to make a performance appraisal system effective and successful, an organization comes across
various challenges and problems. The main challenges involved in the performance appraisal process are:


Determining the evaluation criteria

Identification of the appraisal criteria is one of the biggest problems faced by the top management. The
performance data to be considered for evaluation should be carefully selected. For the purpose of
evaluation, the criteria selected should be in quantifiable or measurable terms

Create a rating instrument

The purpose of the Performance appraisal process is to judge the performance of the employees rather than
the employee. The focus of the system should be on the development of the employees of the organization.

Lack of competence
Top management should choose the raters or the evaluators carefully. They should have the required
expertise and the knowledge to decide the criteria accurately. They should have the experience and the
necessary training to carry out the appraisal process objectively

Errors in rating and evaluation

Many errors based on the personal bias like stereotyping, halo effect (i.e. one trait influencing the evaluators
rating for all other traits) etc. may creep in the appraisal process. Therefore the rater should exercise
objectivity and fairness in evaluating and rating the performance of the employees

The appraisal process may face resistance from the employees and the trade unions for the fear of negative
ratings. Therefore, the employees should be communicated and clearly explained the purpose as well the
process of appraisal. The standards should be clearly communicated and every employee should be made
aware that what exactly is expected from him/her




Banking in India originated in the first decade of 18th century with the General
Bank of India coming into existence in 1786. This was followed by Bank of
Hindustan. Both these banks are now defunct. The oldest bank in existence in
India is the State Bank of India being established as The Bank of


Bengal in Calcutta in June 1806. A couple of decades later, foreign banks like
Credit Lyonnais started their Calcutta operations in the 1850s. At that point of
time, Calcutta was the most active trading port, mainly due to the trade of the
British Empire, and due to which banking activity took roots there and prospered.
The first fully Indian owned bank was the Allahabad Bank, which was established
in 1865.
By the 1900s, the market expanded with the establishment of banks such as
Punjab National Bank, in 1895 in Lahore and Bank of India, in 1906, in Mumbai both of which were founded under private ownership. The Reserve Bank of India
formally took on the responsibility of regulating the Indian banking sector from
1935. After Indias independence in 1947, the Reserve Bank was nationalized
and given broader powers

Banking services in India

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

This section of banking deals with the latest discovery in the banking instruments
along with the polished version of their old systems

Financial and Banking Sector Reforms

The last decade witnessed the maturity of India's financial markets. Since 1991, every governments of India
took major steps in reforming the financial sector of the country. The important achievements in the following
fields is discussed under separate heads:

Financial markets
The banking system
Non-banking finance companies
The capital market
Mutual funds
Overall approach to reforms
Deregulation of banking system
Capital market developments
Consolidation imperative


Now let us discuss each segment separately.

Financial Markets
In the last decade, Private Sector Institutions played an important role. They grew rapidly in commercial
banking and asset management business. With the openings in the insurance sector for these institutions,
they started making debt in the market.
Competition among financial intermediaries gradually helped the interest rates to decline. Deregulation
added to it. The real interest rate was maintained. The borrowers did not pay high price while depositors had
incentives to save. It was something between the nominal rate of interest and the expected rate of inflation.

The Finance Ministry continuously formulated major policies in the field of financial sector of the country. The
Government accepted the important role of regulators. The Reserve Bank of India (RBI) has become more
independent. Securities and Exchange Board of India (SEBI) and the Insurance Regulatory and
Development Authority (IRDA) became important institutions. Opinions are also there that there should be a
super-regulator for the financial services sector instead of multiplicity of regulators.

The banking system

Almost 80% of the business are still controlled by Public Sector Banks (PSBs). PSBs are still dominating the
commercial banking system. Shares of the leading PSBs are already listed on the stock exchanges.
The RBI has given licenses to new private sector banks as part of the liberalization process. The RBI has


also been granting licenses to industrial houses. Many banks are successfully running in the retail and
consumer segments but are yet to deliver services to industrial finance, retail trade, small business and
agricultural finance.
The PSBs will play an important role in the industry due to its number of branches and foreign banks facing
the constrait of limited number of branches. Hence, in order to achieve an efficient banking system, the onus
is on the Government to encourage the PSBs to be run on professional lines.

Development finance institutions

FIs's access to SLR funds reduced. Now they have to approach the capital market for debt and equity funds.
Convertibility clause no longer obligatory for assistance to corporate sanctioned by term-lending institutions.
Capital adequacy norms extended to financial institutions.
DFIs such as IDBI and ICICI have entered other segments of financial services such as commercial
banking, asset management and insurance through separate ventures. The move to universal banking has

Non-banking finance companies:

In the case of new NBFCs seeking registration with the RBI, the requirement of minimum net owned funds,
has been raised to Rs.2 crores.
Until recently, the money market in India was narrow and circumscribed by tight regulations over interest
rates and participants. The secondary market was underdeveloped and lacked liquidity. Several measures
have been initiated and include new money market instruments, strengthening of existing instruments and
setting up of the Discount and Finance House of India (DFHI).
The RBI conducts its sales of dated securities and treasury bills through its open market operations (OMO)
window. Primary dealers bid for these securities and also trade in them. The DFHI is the principal agency for
developing a secondary market for money market instruments and Government of India treasury bills. The
RBI has introduced a liquidity adjustment facility (LAF) in which liquidity is injected through reverse repo
auctions and liquidity is sucked out through repo auctions.
On account of the substantial issue of government debt, the gilt- edged market occupies an important
position in the financial set- up. The Securities Trading Corporation of India (STCI), which started operations
in June 1994, has a mandate to develop the secondary market in government securities.
Long-term debt market: The development of a long-term debt market is crucial to the financing of
infrastructure. After bringing some order to the equity market, the SEBI has now decided to concentrate on
the development of the debt market. Stamp duty is being withdrawn at the time of dematerialization of debt
instruments in order to encourage paperless trading.

The capital market

The number of shareholders in India is estimated at 25 million. However, only an estimated two lakh persons
actively trade in stocks. There has been a dramatic improvement in the country's stock market trading
infrastructure during the last few years. Expectations are that India will be an attractive emerging market with


tremendous potential. Unfortunately, during recent times the stock markets have been constrained by some
unsavory developments, which have led to retail investors deserting the stock markets.

Mutual funds
The mutual funds industry is now regulated under the SEBI (Mutual Funds) Regulations, 1996 and
amendments thereto. With the issuance of SEBI guidelines, the industry had a framework for the
establishment of many more players, both Indian and foreign players.
The Unit Trust of India remains easily the biggest mutual fund controlling a corpus of nearly Rs.70, 000
crores, but its share is going down. The biggest shock to the mutual fund industry during recent times was
the insecurity generated in the minds of investors regarding the US 64 schemes. With the growth in the
securities markets and tax advantages granted for investment in mutual fund units, mutual funds started
becoming popular.
The foreign owned AMCs are the ones which are now setting the pace for the industry. They are introducing
new products, setting new standards of customer service, improving disclosure standards and
experimenting with new types of distribution.
The insurance industry is the latest to be thrown open to competition from the private sector including
foreign players. Foreign companies can only enter joint ventures with Indian companies, with participation
restricted to 26 per cent of equity. It is too early to conclude whether the erstwhile public sector monopolies
will successfully be able to face up to the competition posed by the new players, but it can be expected that
the customer will gain from improved service.
The new players will need to bring in innovative products as well as fresh ideas on marketing and
distribution, in order to improve the low per capita insurance coverage. Good regulation will, of course, be

Overall approach to reforms

The last ten years have seen major improvements in the working of various financial market participants.
The government and the regulatory authorities have followed a step-by-step approach, not a big bang one.
The entry of foreign players has assisted in the introduction of international practices and systems.
Technology developments have improved customer service. Some gaps however remain (for example: lack


of an inter-bank interest rate benchmark, an active corporate debt market and a developed derivatives
market). On the whole, the cumulative effect of the developments since 1991 has been quite encouraging.
An indication of the strength of the reformed Indian financial system can be seen from the way India was not
affected by the Southeast Asian crisis.
However, financial liberalization alone will not ensure stable economic growth. Some tough decisions still
need to be taken. Without fiscal control, financial stability cannot be ensured. The fate of the Fiscal
Responsibility Bill remains unknown and high fiscal deficits continue. In the case of financial institutions, the
political and legal structures have to ensure that borrowers repay on time the loans they have taken. The
phenomenon of rich industrialists and bankrupt companies continues. Further, frauds cannot be totally
prevented, even with the best of regulation. However, punishment has to follow crime, which is often not the
case in India.

Deregulation of banking system:

prudential norms were introduced for income recognition, asset classification, provisioning for delinquent
loans and for capital adequacy. In order to reach the stipulated capital adequacy norms, substantial capital
were provided by the Government to PSBs.
Government pre-emption of banks' resources through statutory liquidity ratio (SLR) and cash reserve ratio
(CRR) brought down in steps. Interest rates on the deposits and lending sides almost entirely were
New private sector banks allowed promoting and encouraging competition. PSBs were encouraged to
approach the public for raising resources. Recovery of debts due to banks and the Financial Institutions Act,
1993 was passed, and special recovery tribunals set up to facilitate quicker recovery of loan arrears.
Bank lending norms liberalized and a loan system to ensure better control over credit introduced. Banks
asked to set up asset liability management (ALM) systems. RBI guidelines issued for risk management
systems in banks encompassing credit, market and operational risks.
A credit information bureau being established to identify bad risks. Derivative products such as forward rate
agreements (FRAs) and interest rate swaps (IRSs) introduced.

Capital market developments

The Capital Issues (Control) Act, 1947, repealed, office of the Controller of Capital Issues was abolished and
the initial share pricing were decontrolled. SEBI, the capital market regulator was established in 1992.
Foreign institutional investors (FIIs) were allowed to invest in Indian capital markets after registration with the
SEBI. Indian companies were permitted to access international capital markets through euro issues.
The National Stock Exchange (NSE), with nationwide stock trading and electronic display, clearing and
settlement facilities was established. Several local stock exchanges changed over from floor based trading
to screen based trading.


Private mutual funds permitted

The Depositories Act had given a legal framework for the establishment of depositories to record ownership
deals in book entry form. Dematerialization of stocks encouraged paperless trading. Companies were
required to disclose all material facts and specific risk factors associated with their projects while making
public issues.
To reduce the cost of issue, underwriting by the issuer were made optional, subject to conditions. The
practice of making preferential allotment of shares at prices unrelated to the prevailing market prices
stopped and fresh guidelines were issued by SEBI.
SEBI reconstituted governing boards of the stock exchanges, introduced capital adequacy norms for
brokers, and made rules for making client or broker relationship more transparent which included separation
of client and broker accounts.

Buy back of shares allowed

The SEBI started insisting on greater corporate disclosures. Steps were taken to improve
corporate governance based on the report of a committee.
SEBI issued detailed employee stock option scheme and employee stock purchase
scheme for listed companies.
Standard denomination for equity shares of Rs. 10 and Rs. 100 were abolished.
Companies given the freedom to issue dematerialized shares in any denomination.
Derivatives trading starts with index options and futures. A system of rolling settlements
introduced. SEBI empowered to register and regulate venture capital funds.
The SEBI (Credit Rating Agencies) Regulations, 1999 issued for regulating new credit
rating agencies as well as introducing a code of conduct for all credit rating agencies
operating in India.

Consolidation imperative

Another aspect of the financial sector reforms in India is the consolidation of existing
institutions which is especially applicable to the commercial banks. In India the banks are
in huge quantity. First, there is no need for 27 PSBs with branches all over India. A
number of them can be merged. The merger of Punjab National Bank and New Bank of
India was a difficult one, but the situation is different now. No one expected so many
employees to take voluntary retirement from PSBs, which at one time were much sought
after jobs. Private sector banks will be self consolidated while co-operative and rural
banks will be encouraged for consolidation, and anyway play only a niche role.


In the case of insurance, the Life Insurance Corporation of India is a behemoth, while the
four public sector general insurance companies will probably move towards consolidation
with a bit of nudging. The UTI is yet again a big institution, even though facing difficult
times, and most other public sector players are already exiting the mutual fund business.
There are a number of small mutual fund players in the private sector, but the business
being comparatively new for the private players, it will take some time.

Easy banking
We finally come to convergence in the financial sector, the new buzzword internationally. Hi-tech and the
need to meet increasing consumer needs is encouraging convergence, even though it has not always been
a success till date. In India organizations such as IDBI, ICICI, HDFC and SBI are already trying to offer
various services to the customer under one umbrella. This phenomenon is expected to grow rapidly in the
coming years. Where mergers may not be possible, alliances between organizations may be effective.
Various forms of bancassurance are being introduced, with the RBI having already come out with detailed
guidelines for entry of banks into insurance. The LIC has bought into Corporation Bank in order to spread its
insurance distribution network. Both banks and insurance companies have started entering the asset
management business, as there is a great deal of synergy among these businesses. The pensions market is
expected to open up fresh opportunities for insurance companies and mutual funds.
It is not possible to play the role of the Oracle of Delphi when a vast nation like India is involved. However, a
few tends are evident, and the coming decade should be as interesting as the last one.
This section is fully dedicated to the Tech Banking. A decade before, it was tough to belief that banking
sector will be at a finger tip. Now its possible. A mobile hand set with a connection is the only instrument
needed to make a gateway to your banking transaction, the latest innovation of technology.
Apart from the Mobile Banking, including of SMS Banking, Net Banking and ATMs are the major steps taken
by the banks in India towards modernization. With all these devises and systems, there is a complete
freedom to experience.
Check your account, transfer your fund, make payments and what more, do anything of everything what has
been followed in physical banking since ages. But this time no standing for hours in front of cash counter
and no time boundation in withdrawing your own money.


Banking System - Top Banks In India

Abn Amro Bank | Allahabad Bank | American Express Bank | Andhra Bank | Bank Of India | Canara Bank |
Central Bank Of India | Citibank | Corporation Bank | HDFC Bank | HSBC Bank | ICICI Bank | Indian
Overseas Bank | Oriental Bank Of Commerce | Punjab National Bank | State Bank Of India (SBI) | Standard
Chartered Bank | IDBI | United Bank Of India | Axis bank

Top Banks in India

With the advancement of technology and the birth of competition, banks are in the race of becoming the
best in the country. With an eye upon customer satisfaction policy they are providing best of the best
services with the minimum hazards.
Banks like ABN AMRO introduced banking with a coffee. It made a tie-up with one of the best coffee bar in
the country, Barista and remained open till late evening for customers with a setup of a coffee bar in the
premises. Few banks have introduced world ATM card to make travelers across the globe more safe and
secure. What else. Internet and Phone Banking is the call of the day for banks.
In this race towards the best, we have selected top 20 banks in the country from all segments. It is not the
ranking of banks but only for general information about the top banks in India


Indian Banks Association (IBA)

The Indian Banks Association (IBA) was formed on the 26th September, 1946 with 22 members. Today IBA
has more than 156 members comprising of Public Sector banks, Private Sector banks, foreign banks Having
offices in India, Urban Co-operative banks, Developmental financial institutions, Federations, merchant
banks ,mutual funds housing corporations etc.

The functioning of IBA

To promote sound and progressive Principles and practices.

To render assistance and to provide common services to members.

To organizes co-ordination and co-operation on procedural, legal, technical, administrative and
professional matters.
To collect, classify and circulate statistical and other information.
To pool together expertise towards common purposes such as reduction in costs, increase in
efficiency, productivity and improve systems, procedures and banking practices.
To project good public image of banking through publicity and public relations.
To encourage sports and cultural activities among bank employees.

The Organizational Structure of IBA


The Managing Committee manages the affairs, business and funds of IBA. The managing Committee is
elected by the Ordinary members of the Association, and is the highest management and policy making
body of the association The Chairman of the Association heads upon the working of the Association. He
provides guidelines to the Association. The administrative head of IBA is the Chief Executive of IBA. He is
also the Secretary to the Managing Committee. He leads a team of executives, officers and other staff

IBA constitutes standing committees/task forces/ small groups/ committees of experts from member banks
for the examining of various aspects relating to industry level issues to get solution Recommendations of
these groups/committees, are communicated to members with the approval of the managing committee or
taken up with the concerned authorities for action.

Banking System - Banking services in India

Bank Account


Open bank account - the most common and first service of the banking sector. There are different types of
bank account in Indian banking sector. The bank accounts are as follows:

Bank Savings Account - Bank Savings Account can be opened for eligible person / persons and
certain organizations / agencies (as advised by Reserve Bank of India (RBI) from time to time)

Bank Current Account - Bank Current Account can be opened by individuals / partnership firms /

Private and Public Limited Companies / HUFs / Specified Associates / Societies / Trusts, etc.
Bank Term Deposits Account - Bank Term Deposits Account can be opened by individuals /

partnership firms / Private and Public Limited Companies / HUFs/ Specified Associates / Societies /
Trusts, etc.
Bank Account Online - With the advancement of technology, the major banks in the public and
private sector has facilitated their customer to open bank account online. Bank account online is
registered through a PC with an internet connection. The advent of bank account online has saved
both the cost of operation for banks as well as the time taken in opening an account.

Note: - A minor account can be opened but jointly with a guardian and only the guardian would is allowed to
operate the account.

General procedure to open an account

The Bank will provide you with details of various types of accounts that you may open with the

You can have your choice on what type of account would best suit you, based on your needs and


The Bank will, prior to opening an account, require documentation and information as prescribed by

the "Know Your Customer" (KYC) guidelines issued by RBI and or such other norms or procedures
adopted by the Bank prior to opening the account.
The due diligence process that the Bank would follow, will involve providing documentation

verifying your identity, verifying your address, and information onyour occupation or business and
source of funds. As part of the due diligence process the Bank may also require an introduction
from a person acceptable to the Bank if they so deem necessary and will need your recent
The Bank is required by law to obtain Permanent Account Number (PAN) or General Index Register

(GIR) Number or, where you do not possess such registration, declaration in Form No. 60 or 61 as
specified under the Income Tax Rules.
In the event that the account opening process is likely to take longer than normal, the Bank will

inform you of the revised timeline.

You can also call your branch or the executive for any queries that you may have and the branch /

executive will revert on the query at the earliest.

The Bank will provide you with the account opening forms and other relevant material to enable you
open the account. Bank personnel will advise you on the complete details of information that would
be required by the Bank for the verification process.

The Bank reserves the right, at its sole discretion, to open any account and at such terms as the Bank may
prescribe from time to time

Credit Card
Credit cards in India are gaining ground. A number of banks in India are encouraging people to use credit
card. The concept of credit card was used in 1950 with the launch of charge cards in USA by Diners Club
and American Express. Credit card however became more popular with use of magnetic strip in 1970.
Credit card in India became popular with the introduction of foreign banks in the country.
Credit cards are financial instruments, which can be used more than once to borrow money or buy products
and services on credit. Basically banks, retail stores and other businesses issue these.

Major Banks issuing Credit Card in India


State Bank of India credit card (SBI credit card)

Bank of Baroda credit card or BoB credit card
ICICI credit card
HDFC credit card
IDBI credit card
ABN AMRO credit card
Standard Chartered credit card
HSBC credit card
Citibank Credit Card

Precautions taken after receiving credit card

To Avoid:

Bending the Card.

Exposure to electronic devices and gadgets.

Direct exposure to sunlight.
Be cautious about disclosing your account number over the phone unless you know you're dealing

with a reputable company.

Never put your account number on the outside of an envelope or on a postcard.
Draw a line through blank spaces on charge or debit slips above the total so the amount cannot be

Don't sign a blank charge or debit slip.
Tear up carbons and save your receipts to check against your monthly statements.
Cut up old cards - cutting through the account number - before disposing of them.


Open monthly statements promptly and compare them with your receipts. Report mistakes or

discrepancies as soon as possible to the special address listed on your statement for inquiries.
Under the FCBA (credit cards) and the EFTA (ATM or debit cards), the card issuer must investigate
errors reported to them within 60 days of the date your statement was mailed to you.
Keep a record - in a safe place separate from your cards - of your account numbers, expiration

dates, and the telephone numbers of each card issuer so you can report a loss quickly.
Carry only those cards that you anticipate you'll need.

To Do:

Please sign on the signature panel on the reverse of the Card immediately with a non-erasable
ball-point pen (preferably in black ink). This will ensure that the benefits of membership are yours
and yours alone.

Keep the Card in a prominent place in your wallet. You will notice if it is missing.

Reasons credit card being rejected at retail outlet:

One may have exceeded the borrowing limit or defaulted (constantly) on minimum payment due.

The Card is hot listed.

The card has crossed its expiration date.
Non-receipt of dues of one-card blocks future transactions on any other card(s) held of the same

card-issuing bank.
The magnetic stripe on the reverse of the card is damaged i.e. has been scratched or exposed to

continuous heat/direct sunlight or magnetic field-like card kept near a TV set / other electronic
Systems or technology failures have in rare instances also led to non acceptance of cards when
swiped through an Electronic Terminal.


Global player in credit card market

MasterCard is a product of MasterCard International and along with VISA are distributed by financial
institutions around the world. Cardholders borrow money against a line of credit and pay it back with interest
if the balance is carried over from month to month. Its products are issued by 23,000 financial institutions in
220 countries and territories. In 1998, it had almost 700 million cards in circulation, whose users spent $650
billion in more than 16.2 million locations.

VISA cards is a product of VISA USA and along with MasterCard is distributed by financial institutions
around the world. A VISA cardholder borrows money against a credit line and repays the money with interest
if the balance is carried over from month to month in a revolving line of credit. Nearly 600 million cards carry
one of the VISA brands and more than 14 million locations accept VISA cards.


The world's favorite card is American Express Credit Card. More than 57 million cards are in circulation and
growing and it is still growing further. Around US $ 123 billion was spent last year through American Express
Cards and it is poised to be the world's No. 1 card in the near future. In a regressive US economy last year,
the total amount spent on American Express cards rose by 4 percent. American Express cards are very
popular in the U.S., Canada, Europe and Asia and are used widely in the retail and everyday expenses
er club International

Diners Club is the world's No. 1 Charge Card. Diners Club cardholders reside all over the world and the
Diners Card is a all time favorite for corporate. There are more than 8 million Diners Club cardholders. They
are affluent and are frequent travelers in premier businesses and institutions, including Fortune 500
companies and leading global corporations.


JCB Cards
The JCB Card has a merchant network of 10.93 million in approximately 189 countries. It is supported by
over 320 financial institutions worldwide and serves more than 48 million cardholders in eighteen countries
world wide. The JCB philosophy of "identify the customer's needs and please the customer with Service
from the Heart" is paying rich dividends as their customers spend US$43 billion annually on their JCB cards.


/ Interest Free Period

The number of days you have on a card before a card issuer starts charging you interest is called period.
Usually this period is the number of days between the statement date and the due date of payment. Grace
periods on credit cards are usually 2-3 weeks. However, there is likely to be no grace for balances carried

The following are some of the varieties of credit cards in India

ANZ - Gold
ANZ - Silver
Bank Of India - India card
Bol - Taj Premium
Bol - Gold
BoB - Exclusive
BoB - Premium
Canara Bank - Cancard
Citibank - Gold
Citibank - Silver
Citibank WWF Card
Citibank Visa Card for Women
Citibank Cry Card
Citibank Silver International Credit Card
Citibank Women's International Credit Card
Citibank Gold International Credit Card
Citibank Electronic Credit Card
Citibank Maruti International Credit Card
Citibank Times Card
Citibank Indian Oil International Credit Card
Citibank Citi Diners Club Card
HSBC - Gold
HSBC - Classic
ICICI Sterling Silver Credit Card
ICICI Solid Gold Credit Card
ICICI True Blue Credit Card
SBI Card
Stan chart - Gold
Stan chart - Executive
Stan chart - Classic


Thomas Cook Standard Chartered Global Credit Card

Standard segregation of credit cards

Standard Card - It is the most basic card (sans all frills) offered by issuers.

Classic Card - Brand name for the standard card issued by VISA.
Gold Card/Executive Card - A credit card that offers a higher line of credit than a standard card.

Income eligibility is also higher. In addition, issuers provide extra perks or incentives to cardholders.
Platinum Card - A credit card with a higher limit and additional perks than a gold card.
Titanium Card - A card with an even higher limit than a platinum card.

The following are some of the plus features of credit card in India
Hotel discounts
Travel fare discounts
Free global calling card
Lost baggage insurance
Accident insurance
Insurance on goods purchased
Waiver of payment in case of accidental death
Household insurance

Some facts of credit cards

The first card was issued in India by Visa in 1981.

The country's first Gold Card was also issued from Visa in 1986.
The first international credit card was issued to a restricted number of customers by Andhra Bank in

1987 through the Visa program, after getting special permission from the Reserve Bank of India.
The credit cards are shape and size, as specified by the ISO 7810 standard. It is generally of
plastic quality. It is also sometimes known as Plastic Money.


Money Transfer
Beside lending and depositing money, banks also carry money from one corner of the globe to another. This
act of banks is known as transfer of money. This activity is termed as remittance business. Banks generally
issue Demand Drafts, Banker's Cheques, Money Orders or other such instruments for transferring the
money. This is a type of Telegraphic Transfer or Tele Cash Orders.

It has been only a couple of years that banks have jumped into the money transfer businesses in India. The
international money transfer market grew 9.3% from 2003 to 2004 i.e. from US$213 bn. to US$233 bn. in
2004. Economists say that the market of money transfer will further grow at a cumulative 10.1% average
growth rate through 2008.

With the use of high technology and varieties of product it seems that "Free" money transfers will become
commonplace. We will see more bundling of tailored money services by banks and non-traditional entrants
that will include "free" money transfers. Many banks will even use money transfer services as loss-leaders in
order to generate account openings and cross-sell opportunities. The price evolution of money transfer
products for banks will be similar to that of consumer bill pay-the product is worth giving away as an account
acquisition tool to win overall market share and establish banking relationships.
ATM money transfer card products have had terrible bank adoption rates since being introduced in the last
three to four years. Remittees who are highly educated and have been already been exposed to ATM
technology in receiving countries tend to have an interest in this product. Money transfer to India is one of
the most important part played by the banks. This service provides peace of mind to either the NRIs or to the
visitors to India. Many Indian banks have ATM'S (automatic teller machine), enable to draw foreign currency

By 2007, we will see a good percent of all foreign-born households doing some level of online banking. Firstmover banks will start having a window of opportunity to include online transfer functionality within the next
couple of years, which currently frequents traditional money transmitters such as Western Union. There is a
terrific opportunity for banks and non-banks to offer more robust global inter-institutional funds transfer
services online. More than half of Western Union's customers today are already banked, and most do not
have an alternative product marketed by their bank that is painless, quick, and cost-effective. That will
change as banks offer transfer services through their online channel.



Banks in India with the way of development have become easy to apply in loan market. The following loans
are given by almost all the banks in the country:
Personal Loan
Car Loan or Auto Loan
Loan against Shares
Home Loan
Education Loan or Student Loan
In Personal Loan, one can get a sanctioned loan amount between Rs 25,000 to 10, 00,000 depending
upon the profile of person applying for the loan. SBI, ICICI, HDFC, HSBC are some of the leading banks
which deals in Personal Loan. Almost all the banks have jumped into the market of car loan which is also
sometimes termed as auto loan. It is one of the fast moving financial product of banks. Car loan / auto loan
are sanctioned to the extent of 85% upon the ex-showroom price of the car with some simple paper works
and a small amount of processing fee. Loan against shares is very easy to get because liquid guarantee is
involved in it.
Home loan is the latest craze in the banking sector with the development of the infrastructure. Now people
are moving to township outside the city. More number of townships are coming up to meet the demand of
'house for all'. The RBI has also liberalized the interest rates of home loan in order to match the repayment
capability of even middle class people. Almost all banks are dealing in home loan. Again SBI, ICICI, HDFC,
HSBC are leading.

The educational loan, rather to be termed as student loan, is a good banking product for the mass. Students
with certain academic brilliance, studying at recognized colleges/universities in India and abroad are
generally given education loan / student loan so as to meet the expenses on tuition fee/ maintenance
cost/books and other equipment.

Visa Money Transfer


a has recently introduced the 'Visa Money Transfer' option for its savings and current account holder of any
bank with a visa debit card. This facility helps its customer to transfer funds from his bank account to any
visa card either debit or credit within India.

A Visa Money Transfer is of similar kind, in many respects, to the third-party fund transfer option given by
some banks to its account holders through e-cheque, but this is restricted to only visa cardholders.

How to transfer money?

Log on to your bank account

through your respective bank websites.

Fill the beneficiary details like visa card numbers, name, and address and then specify the amount
that needs to be transferred. For bank account specify the visa card number and credit card
number for paying credit card bill.

Click on to VISA Transfer Payments button.

Transfer immediately or on schedule date. Your account will be debited according to the date

Notable points of Visa Money Transfer

The time taken for money transfers could be the same or even more than that of a demand draft
i.e. two or three days or even more.

Currently there are no charges but limits have been set by certain banks on the current transfers.
It is available in 150 cities across the country now.
The transferred amount can neither be changed nor stopped once it is initiated.



HDFC Bank was incorporated in August 1994 in the name of HDFC Bank Limited, with its registered office
in Mumbai, India. The Bank commenced operations as a Scheduled Commercial Bank in January 1995The
Housing Development Finance Corporation Limited (HDFC) was amongst the first to receive an in principle
approval from the Reserve Bank of India (RBI) to set up a bank in the private sector, as part of the RBIs
liberalization of the Indian Banking Industry in 1994.


Headquartered in Mumbai, HDFC Bank, has a network of over 1412 branches spread over 528 cities across
India. All branches are linked on an online real-time basis. Customers in over 120 locations are serviced
through Telephone Banking. The Bank also has a network of about over 3275 networked ATMs across these
cities. HDFC Banks ATM network can be accessed by all domestic and international Visa / MasterCard,
Visa Electron / Maestro, Plus / Cirrus and American Express Credit / Charge cardholders.
HDFC Bank has won many awards for its excellent service. Major among them are Best Bank in India by
Hong Kong-based Finance Asia magazine in 2005 and Company of the Year Award for Corporate
Excellence 2004-05.
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.

Business philosophy is based on four core values

Customer Focus,

Operational Excellence

Product Leadership


Mission and Business Strategy

Our mission is to be a World Class Indian Bank, benchmarking ourselves against international standards
and best practices in terms of product offerings, technology, service levels, risk management and audit &
compliance. The objective is to build sound customer franchises across distinct businesses so as to be a
preferred provider of banking services for target retail and wholesale customer segments, and to achieve a
healthy growth in profitability, consistent with the Banks risk appetite. We are committed to do this while
ensuring the highest levels of ethical standards, professional integrity, corporate governance and regulatory

Business strategy emphasizes the following


Increase our 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
Leverage our technology platform and open scaleable systems to deliver more products to more customers
and to control operating costs.
Maintain our current high standards for asset quality through disciplined credit risk management.
Develop innovative products and services that attract our targeted customers and address inefficiencies in
the Indian financial sector Continue to develop products and services that reduce our cost of funds.
Focus on high earnings growth with low volatility.
CBOP merge HDFC bank.

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

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.



It is a path breaker in the Indian banking sector. In 2007 HDFC Bank acquired Centurion Bank of Punjab
taking its total branches to more than 1,000.
CBOP has been among the most proactive bank when it comes to merger and acquisitions. The erstwhile
Centurion Bank first acquired the lone branch of Bank of Muscat, followed up it with a merger with Bank of
Punjab to strengthen its operations in north India. Then in August 2007, it acquired Lord Krishna Bank to
take its tally to 394 branches all over India.
Once the deal happens, it would make HDFC Bank the seventh largest bank in terms of assets to take it
past other banks such as IDBI, Union Bank and Axis Bank. The total assets would rise to Rs.1, 10,110 crore,
with branch network of 1150, ATM network of 2100 and 27000 staff.
Earlier there were talks of CBOP merging with either IDFC or even ICICI Bank. But HDFC Bank has
emerged as a serious favorite and there are even talks that after CBOPHDFC Bank merger


In terms of performance, CBOP has not been performing well operationally its costs were high and growth
was low as compared to industry standards. While merging it with HDFC Bank would give it a shot in the
arm, as HDFC Bank is know to be among the best Indian bank for past many years.
For HDFC Bank, the merger would give increased presence in states like Punjab, Haryana and
Kerala and also increase its retail assets. It would also even out in terms of branch network and even
overtake ICICI Bank in number of branches. Centurion Bank of Punjab merged with HDFC Bank Ltd. with
effect from 23rd may 2008
With relaxation of norms due to happen in 2009, such time of deals may happen more in Indian banking
sector. And there may be many foreign banks who would be eying small private but tech-savvy banks such
as Yes Bank, Bank of Rajasthan, Dhanalaxmi Bank and Laxmi Vilas Bank for takeover.
HDFC Bank Limited (the Bank) operates in three segments: retail banking, wholesale banking and treasury
services. The retail-banking segment serves retail customers through a branch network and other delivery
channels. The wholesale banking segment provides loans and transaction services to corporate...

Retail-Banking Segment

The retail-banking segment serves retail customers through a branch network and other delivery channels.
This segment raises deposits from customers and makes loans and provides advisory services to such
customers. Revenues of the retail banking segment are derived from interest earned on retail loans, net of
commission (net of subvention received) paid to sales agents, interest on card receivables, gains / losses
from securitization receivables, fees for banking and advisory services and interest earned from other
segments for surplus funds placed with those segments.
In this business, the Bank provides financial services primarily to the middle class, mass affluent and highnet worth segments. The Banks range of retail financial products and services include various deposit
products, loans, credit cards, debit cards, depository (custody) services, investment advice, bill payments
and various transactional services. Apart from its own products, the Bank sells third-party financial products,
such as mutual funds and insurance to its retail customers. The Bank has invested in multiple channelsbranches, automated teller machines (ATMs), phone banking, Internet banking and mobile banking. The
distribution network was expanded with the number of branches increasing from 535 (in 228 cities) in March
2006, to 684 (in 316 cities) in March 2007, and the number of ATMs from 1323 to 1605 over the same
period. By March 2008, the bank had a total card base (debit and credit cards) of 9.1 million. The Bank is
also one of the leading players in the merchant acquiring business with over 61,000 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



Banking Segment

The wholesale banking segment provides loans and transaction services to corporate and institutional
customers. Revenues of the wholesale banking segment consist of interest earned on loans made to
corporate customers and the corporate supply chain customers, investment income from commercial paper,
debentures and bonds, interest earned on the cash float arising from transaction services, fees from such
transaction services and also trading operations on behalf of corporate customers in debt, foreign exchange
and derivatives segment.
In this business, the Bank provides its corporate and institutional clients a range of commercial and
transactional banking products, backed by quality service and relationship management. The Banks
commercial banking business covers the Emerging Corporate and Small and Medium Enterprise (SME)
segments. The Bank has four business groups catering to various SME customers extending a range of
banking services, including working capital and term finance, cash management services, foreign exchange
products and electronic banking. The Bank also achieved growth in its agriculture and micro finance
portfolios. With products, including the Kisan Gold Card, rural supply chain initiatives and commodity finance
covering the entire agriculture financing cycle, the Banks direct agriculture lending increased by over 40%
during the fiscal year ended March 31, 2007. The Bank has targeted potential outreach locations within a
certain radius of its semi-urban and rural branches, distributing a set of products that includes savings
accounts, fixed deposits, two wheeler and auto loans, kisan card loans, tractor loans and warehouse receipt
loans. The Bank has also rolled out special rural fixed deposit and savings account products. The Bank also
has specialized Agri Desks at certain branches across the country, which work as single point contacts for
farmers. The Bank has commenced direct lending to Self Help Groups (SHG). The Bank opened a branch
for lending to SHGs, in Thudiyalur village (Tamil Nadu).


Treasury Services Segment

Within this business, the bank has three main product areas - Foreign Exchange and Derivatives, Local
Currency Money Market & Debt Securities, and Equities. With the liberalization of the financial markets in
India, corporate need more sophisticated risk management information, advice and product structures.
These and fine pricing on various treasury products are provided through the bank's Treasury team. To
comply with statutory reserve requirements, the bank is required to hold 25% of its deposits in government
securities. The Treasury business is responsible for managing the returns and market risk on this investment

Awards and Achievements

HDFC Bank began operations in 1995 with a simple mission: to be a World-class Indian Bank. We
realized that only a single-minded focus on product quality and service excellence would help us get there.
Today, we are proud to say that we are well on our way towards that goal. It is extremely gratifying that our
efforts towards providing customer convenience have been appreciated both nationally and internationally

Nasscom IT User
Award 2008
Business India
Forbes Asia
Asian Banker
Excellence in Retail
Financial Services
Asia money

'Indian of the Year (Business)'

'Best IT Adoption in the Banking Sector'

'Best Bank 2008'

Fab 50 companies in Asia Pacific
Best Retail Bank 2008

Best local Cash Management Bank Award voted by Corporates


Microsoft & Indian

Express Group

Security Strategist Award 2008

World Trade Center

Award of honors

For outstanding contribution to international trade services.

Business TodayMonitor Group survey

One of India's "Most Innovative Companies"

Financial ExpressErnst & Young Award

Global HR Excellence
Awards - Asia Pacific
HRM Congress:
Business Today

Best Bank Award in the Private Sector category

'Employer Brand of the Year 2007 -2008' Award - First Runner up, &
many more

'Best Bank' Award

HDFC Product Range

HDFC Bank India provides the following range of products:

Savings Account

HDFC Bank Preferred

Sweep-In Account

Super Saver Account

HDFC Bank Plus

Demat Account

HDFC Mutual Fund

HDFC Standard Life Insurance

HDFC India innovative services

HDFC Phone Banking

HDFC Inter-city/Inter-branch Banking
HDFC Net Banking
HDFC International Debit Card


HDFC Mobile Banking

HDFC Bill Pay

HDFC Bank Loans

HDFC Personal Loan

HDFC New Car Loan and Used Car Loan
HDFC Loan Against Shares
HDFC Two Wheeler & Consumer Loan
HDFC Home Loan

Capital structure
The authorized capital of HDFC Bank is Rs550 crore (Rs5.5 billion). The paid-up capital is Rs424.6
crore (Rs.4.2 billion). The HDFC Group holds 19.4% of the bank's equity and about 17.6% of the
equity is held by the ADS Depository (in respect of the bank's American Depository Shares (ADS)
Issue). Roughly 28% of the equity is held by Foreign Institutional Investors (FIIs) and the bank has
about 570,000 shareholders. The shares are listed on the Stock Exchange, Mumbai and the National
Stock Exchange. The bank's American Depository Shares are listed on the New York Stock
Exchange (NYSE) under the symbol 'HDB'.

Infrastructure and Operations

Currently, HDFC Bank, India has over 1412 branches located in over 528 cities of India, and all branches of
the HDFC Bank, India are linked on an online real-time basis. The bank has over 3275 ATMs which is about
to increase
Further in the coming months. Besides, HDFC Bank is known to provide many innovative products &
services to individuals, corporate, trusts, governments, partnerships, financial institutions, mutual funds and
insurance companies.


HDFC Bank in India operates on the following basic


Personal Banking

Encompasses all financial dealings between a commercial bank and an


Wholesale Banking

Deals with all sorts of financial dealings with Corporate, medium and small
Enterprises, Financial Institutions and Trusts as well as the Government

NRI Banking Consists of personal banking relations with the Non Resident Indians (NRIs).
HDFC Bank has been recognized, rated and awarded by a number of Organizations (on successfully
operating in India for over a decade).


Performance appraisal system in H.D.F.C Bank

In H.D.F.C. Bank they have the system of performance appraisal of their empolyees.The
main objective of this performance appraisal system is to evaluate the performance,
promote their employees and to arrange for various training programmes if they require
enhancing their skills in their respective areas.
Employees are evaluated by how well they accomplish a specific set of objective that has
been determined to be critical in the successful completion of their job. This approach is
frequently referred to as management by objectives. Management by objectives is a
process that converts organization -1objectives into individual objectives. It can be
thought of as consisting of four steps: goal setting, action planning, self control, and
periodic review. In goal setting, the organizations overall objectives are used as
guidelines from which departmental and individual objectives are set. In action planning,
the means are determined for achieving the ends established in goal setting. That is
realistic plans are developed to attain the main objectives. Self control refers to the
systematic monitoring and measuring of performance. Finally, with periodic progress
reviews, corrective action is initiated when behavior deviates from the standards
established in the goal setting phase.

Outcome of performance appraisal

As far as H.D.F.C Bank is concerned, there are four outcomes possible:
A. Outstanding if the performance evaluated by the management turns to be
outstanding. If the employee performs in such a way as to collect outstanding
performance into his/ her credit he/ she get promoted.
B. Good - if the performance evaluated by the management turns to be good. If the
employee performs in such a way as to collect good performance into his/ her
credit he/ she get promoted.
C. Average -if the performance evaluated by the management turns to be average.
The management sends the employees to the training programme to improve
his/her skill to perform well.


D. Below average-if the performance evaluated by the management turns to be

below average. The management sends the employees to the training programme
to improve his/her skill to perform well.

Literature review


Budhwar and Sparrow (2008) Examined

with regards to performance appraisal

systems in the banking industry in public and private sector banks in India. It provides a
historical overview of the banking industry in India and looks at a future view of its banking
industry. The paper then discusses reforms and management issues in banking in India and
the need for performance appraisal.

Scott & Einstei (2005) Examined what a performance appraisal system is and what
difficulties there are in developing and implementing an effective system. It also explains that,
when designed and implemented correctly, a performance appraisal system can be a strong
competitive advantage.

Gabris and Ihrke (2002) Examined role of performance appraisals in personnel

management. Research on the topic. Various purposes including identification of employee
talents and behavioral tendencies; useful feedback; control of employee behavior. Beneficial
influence on human relations of an organizatioin. Negative aspects such as job
dissatisfaction. Performance appraisals & litigatrion. Value of effective performance

Losyk (2007).Examines the many issues involved in employee performance appraisals.

Several problems in performance appraisals are discussed, such as evaluator bias. Also
considered is the relationship of an evaluation to pay raise, which some feel put employees
and managers on opposite sides. Another problem that is explored is the lack of continuous
communication between managers and employees between appraisals. The author offers
several recommendations to make performance evaluations fair. The paper concludes by
stating there are a number of things an employer can do to improve the performance
appraisal process.


Nourayi & Daroca( 2002)Examined how experience, research and analysis of the
corporate world and its practices reveal that paying for performance systems are crucial to
the success of an organization and are essential for a constant development of its workforce.
It looks at how paying for performance is relatively a new term when compared to?
Performance appraisal? Though both terms can be used interchangeably and have similar
meaning in the corporate world.

Michael E. Gordon and

L. P. Stewart: ( 2009)

Examined its acknowledged importance,

performance appraisal (PA) continues to be one of the most persistent problems in organizations,
especially the appraisal interview (AI) component of PA, for which many techniques have been
attempted with only mixed success. The authors conceptualize the AI as a "conversation about
performance" and draw on an extensive review of the communication literature to identify the
discursive resources available to the organization, the appraiser, and the appraise for improving the
preparation for and conduct of a conversation about performance. The authors' conceptualization
extends research on PAs by identifying methodologies and conceptual underpinnings with
connections to interpersonal, organizational, and mass communication scholarship.

J. D. Elicker, P. E. Levy, and R. J. Hall:( August 1, 2006)

Performance appraisal (PA) feedback research suggests that agreement of others' performance feedback
with one's own views strongly determines feedback reactions, yet inconsistent results of feedback
interventions motivate a search for additional influences. The authors propose that supervisor-subordinate
exchange relationships create a social context that substantially influences the PA discussion and feedback
reactions. Key mediating variables in this process are employee voice during the PA session and justice
judgments. Structural equation modeling analyses of longitudinal data support our model. Exchange
relationship showed strong, mediated effects on feedback reactions, whereas performance rating
discrepancies had minimal unique effects.


N. P. Mero, R. M. Guidice, and A. L. Brownlee (April 1, 2007);

Examined how context influences accountability in a performance appraisal context. Results demonstrate
that audience characteristics influence rating quality, as raters accountable to higher status or mixed-status
audiences provided more accurate ratings, whereas those accountable to a lower status audience provided
more inflated ratings. Participant note taking also mediated the relationship between accountability to higher
status or mixed-status audiences and rating accuracy. Raters required to account for ratings in person as
opposed to in writing were more accurate when accountable to higher status or mixed audiences and
provided more positive indicators of behavior when accountable to a lower status audience.

Testa& Murph (2005) Examined a type of work appraisal known as the 360-degree
performance appraisal, describes the discomfort typically felt during appraisal periods at work and explains
why, in spite of some shortcomings, the 360-degree performance appraisal is better than traditional
approaches to performance appraisals. The paper also appends the surveys that were used to conduct this
Dresser&Dutton (2007)

Examined the utilization of performance appraisals within human resource

management. The paper discusses what should be included in performance appraisals and when and why
they should be used. The paper stresses the importance of following guidelines to use performance
appraisals and suggest that improperly used, they can demotivate employees and cause them to seek better
employment opportunities elsewhere.




Scope: Scope of study was limited to HDFC Bank

Type Of Data Used:

The data used for this research was the primary data. Since sample size selected was small so it was
convenient to use primary data as compared to Secondary data.

Procedure and Mode of Data Collection:

Data is collected with the help of questionnaire and the mode of data collection is personal field survey.

Sampling Unit And Element

Sampling unit and element for this particular study are the same.
Sampling unit /element used for this research is the people of the Ropar.

Sample Size:
Sample size for this research is 20 that means 20 people from Roper has filled the questionnaire. Sample
size used was only fifty because of time constraint.


Sampling technique:
Sampling technique used for this study is convenience or incidental or accidental
technique (non-probability)

Statistical Tool Used for Data Analysis:


To carry out the study of H.D.F.C Bank we framed the following objectives
1 To. Identify the techniques of performance appraisal followed in H.D.F.C Bank
2. To study Employee attitude towards the present appraisal system.


3. To know the extent of effectiveness of appraisal system

4. To provide suggestions & recommendations from the study conducted
5 To identify and know the area for improvement system


A few limitations and constraints came in way of conducting the present study, under
which the researcher had to work are as follows:
1) Although all attempts were made to make this an objective study, biases on
the part of respondents might have resulted in some subjectivity.


2) Though, no effort was spared to make the study most accurate and useful,
the sample Size selected for the same may not be the true representative of
the bank, resulting in biased results.
3) Some of the questionnaire could not be completed due to reasons other than
time factor.




Q: 1 how do you find the present the appraisal system?

how do you find the present
the appraisal system
Fully satisfied

No. of respondent






Cant say



.The graph shows that25% employees of the h.d.f.c bank were fully satisfied with the
present appraisal system. The 40% employees of the h.d.f.c bank were satisfied with the
present appraisal system. The 20% employees of the h.d.f.c bank were give the answer
that they cant say anything adout the present appraisal system. The15% employees of the
h.d.f.c bank were dissatisfied with the present appraisal system

Q2: how often the performance appraisal is done?

How often the performance

appraisal is done

No. of respondent






six monthly





not fixed


The graph shows that 4 employees say that the performance appraisal is done fortnightly.
The 6 employees say that the performance appraisal is done monthly. The 4 employees
say that the performance appraisal is done six month. The 3 employees say that the
performance appraisal is done annually. . The 3 employees say that the performance
appraisal is not fixed.


Q3: Who appraises you?

Who appraises you

No. of respondent


Appraisal committee




self appraisal


The graph shows that 6 employees say that the performance appraisal is done through the
appraisal committee. The9 employees say that the performance appraisal is done by the
supervisor. The 5 employee says that the performance appraisal is done by self appraisal


Q 4: what method is used for performance appraisal?

what method is used for
performance appraisal

No. of respondent






10 0%


The employees say that the bank management uses the modern method for the
performance appraisal of the employees


Q 5: If modern method than which one?

If modern method than which

360 degree
behaviorally anchored rating
Human resource accounting

No. of respondent







The employees say that the bank management uses the management by objective
method for the performance appraisal of the employees

Q6: In your opinion does it identify the training need?

In your opinion does it identify
the training need

No. of respondent



To large extent


To some extent


Cant say


Not at all


The graph shows that 35% employees say that it identify the training need to large extent.
The25% employees say that it identifies the training need to some extent. The 25%
employees told that they cant say anything about it. The remaining 15% says it need not
at all.

Q7: Does the appraisal system help in polishing the skill or performance area?

Does the appraisal system help

in polishing the skill or
performance area

No .of respondents



To large extent


To some extent


Cant say


The graph shows that 45%employees says that system help in polishing the skill or
performance area to large extent. The 35% employees says that system help in polishing
the skill or performance area to some extent. The remaining 20% employees tell that they
cant say anything about it.

Q 8: Does performance appraisal leads to identification of hidden potential of the

Does performance
appraisal leads to
identification of hidden
potential of the employees?
To large extent

No .of respondents




To some extent


Cant say



The graph shows that 45% employees say that system leads to identification of
hidden potential of the employees to large extent. The 35%employees say that system
leads to identification of hidden potential of the employees to some extent. The
remaining 20%employees tell that they cant say anything about it.

Q 9: Do the employees get the feedback of performance appraisal?

Do the employees get the
feedback of performance

No .of respondents


Almost always





Only when required







The graph shows that 50%employees say that they get almost always the feedback of
performance appraisal. The 20% employees say that they get often the feedback of
performance appraisal. The 20employees say that they get the feedback only when
required. . The 10%employees say that they get the feedback rarely.

Q 10: Is the employees sent to training if the employee performance is average

and below average?
Is the employees sent to training
if the employee performance is
No. of respondent
average and below average?








The employees say that the employee whose performance is average and below average
sent to training.

Q 11: Do the employees get the feedback of performance appraisal after this step?
Do the employees get the
feedback of performance
appraisal after this step?

No .of respondents








The graph show that all employees get feedback after this step.

Q 12: How do you rate the overall assessment of performance appraisal?

How do you rate the overall
assessment of performance

No .of respondents

Out standing






Below average




The graph shows that the overall assessment of performance appraisal 25% employees is
outstanding. The overall assessment of performance appraisal 45%employees is good The
overall assessment of performance appraisal 20%employees is average. The overall
assessment of performance appraisal 10%employees is below average

Q 13 Is the promotional policy linked with the performance appraisal system?

Is the promotional policy

linked with the performance
appraisal system

No .of respondents







Cant say



The graph shows that all employees say yes that the promotional policy is linked with the
performance appraisal system. The employees are promoted on account of their
performance of work and duties.



After going through the entire project and the collected data, some findings have been
extracted as:

Most employees are appraised between six month only. Few employees are appraised
after one year.

30% employees are appraised by the appraisal committee. 45% employees are
appraised by their supervisor

25% employees are fully satisfied and 40% employees are satisfied with the present
appraisal system.20% employees says that they cant say anything about it. Rests are
not satisfied with the present appraisal system.

The bank used the modern method for performance appraisal. The bank uses the
m.b.o method.


35% employees say that the appraisal system help to identify the training need to
large extent and 25% employees says that the appraisal system help to identify the
training need to some extent. 25% employees say that they cant say anything about

Most employees say that it helps in polishing the hidden skills of the employees.

Most of the employees get the feedback always almost.

Employees are sent to the training, if their performance is average.

Employees get the feedback after that training.

The promotion policy is linked with the performance appraisal.



The study undertaken brings some interesting result.

It is proposed that appraisal evaluated on above factor be given suitable remarks for being given
different quantitative grade.

It should be noted that the appraisal form for each job position should be different as each job has
different knowledge and skill requirements. There should not be a common appraisal form for every
job position in the organization.

The time period for conducting the appraisal should be revised, so that the exercise becomes a
continuous phenomenon.

The job and role expected from the employees should be decided well in advance and that too with
the consensus with them.

A neutral panel of people should do the appraisal and to avoid subjectivity to a marked extent,
objective methods should be employed having quantifiable data.

Performance appraisal system should be made more transparent and rationale.





The analysis and interpretation of data on study of performance appraisal and its
effectiveness in an organization led to the following conclusions:

In the organization the employees are satisfied with the present performance
appraisal system. There are few employees who are not satisfied and cant say
anything about it.
The employees performance is viewed on monthly base. There are few
employees whose performance is viewed annually and for some others review
time is not fixed.

The most employees say that it help in identification of the training need and in
polishing the skill of the employees.

The bank uses the modern method for the performance appraisal of the

The bank gives the feedback to the employees almost always on the base of their

If the employees performance is average and below average the bank provide
training, job rotation and counseling to improve their performance.

Overall employees are satisfied with the present performance appraisal system.





Reference Books

Aswathappa.k Human Resource and Personal Management Text and Cases Tata
McGraw-Hill Publishing Company limited Edition 2005
Decenzo.David.A Robbins Stephen p Human Resources Management Prentice
Hall of India Private Limited Edition 2002


Ghosh Biswanath Human Resource Development Management Vikas Publishing

House Private Limited Edition 2006
Rao V.S.P Human Resource Management Excel Books Edition 2007
Kothari .C.R. Research Methodology Methods and Techniques New AGE
International Publishers Edition 2008

Budhwar and Sparrow 2008 Performance Appraisal System in Banking in India,
Dresser&Dutton 2007.Performance Appraisals
Gabris and Ihrke 2002 Performance Appraisals
J. D. Elicker, P. E. Levy, and R. J. Hall August 1, 2006 The Role of LeaderMember Exchange in the Performance Appraisal Process

Losyk 2007 Performance Management

M. E. Gordon and L. P. Stewart February 1, 2009 Conversing About Performance
Nourayi & Daroca 2002 Measuring and Paying for Performance


N. P. Mero, R. M. Guidice, and A. L. Brownlee April 1, 2007 Accountability in a

Performance Appraisal Context
Scott & Einstein 2005 Performance Appraisal Systems,
Testa &Murphy 2005360-Degree Performance Appraisals,

Web links
www.h.d.f.c bank .com





Contact no:

Q: 1) how do you find the present the appraisal system?

a) Fully satisfied

b) satisfied

c) Cant say

d) dissatisfied

Q 2) how often the performance appraisal is done

a) Fortnightly

b) monthly


e) not fixed


c) six monthly

Q3) who appraises you?

a) Appraisal committee

b) your immediate supervisor

Q 4) what method is used for performance appraisal?

a) Traditional method

b) modern method

Q 5) If modern method than which one?


c) self appraisal

a) Management by objective

b) 360 degree

c) Behaviorally anchored rating scales

d) Human resource accounting method

Q 6) If traditional method than which one?

a) Essay appraisal method b) straight ranking method
c) Paired comparison

d) graphic rating scale

Q 7) In your opinion does it identify the training need?

a) To large extent

b) to some extent

c) Cant say

d) not at all

Q 8) does the appraisal system help in polishing the skill or performance area?
a) To large extent

b) to some extent

c) cant say

Q 9) Does performance appraisal leads to identification of hidden potential of the

a) To large extent

b to some extent

c cant say

Q 10) Do the employees get the feedback of performance appraisal?

A) Yes every time
d) rarely

b) often, but not always

c) only when required

e) never

Q 11) Is the employee sent to training if the employee performance is average

and below average?


a) Yes

b) no

Q12) Do the employees get the feedback of performance appraisal after this step?
a) Yes

b) no

Q13) How do you rate the overall assessment of performance appraisal?

a) Out standing

b) very good

d) satisfactory

e) poor

c) good

Q14) Is the promotional policy linked with the performance appraisal system?
a) Yes

b) no

c) cant say