CHAPTER-III

INDUSTRY PROFILE

&

COMPANY PROFILE

1
A bank is a financial institution that accepts deposits and channels those deposits into
lending activities. Banks primarily provide financial services to customers while enriching
investors. Government restrictions on financial activities by banks vary over time and
location. Banks are important players in financial markets and offer services such as
investment funds and loans. In some countries such as Germany, banks have historically
owned major stakes in industrial corporations while in other countries such as the United
States banks are prohibited from owning non-financial companies. In Japan, banks are
usually the nexus of a cross-share holding entity known as the keiretsu. In France,
bancassurance is prevalent, as most banks offer insurance services (and now real estate
services) to their clients.

Introduction

India’s banking sector is constantly growing. Since the turn of the century, there has been a
noticeable upsurge in transactions through ATMs, and also internet and mobile banking.

Following the passing of the Banking Laws (Amendment) Bill by the Indian Parliament in
2018, the landscape of the banking industry began to change. The bill allows the Reserve
Bank of India (RBI) to make final guidelines on issuing new licenses, which could lead to a
bigger number of banks in the country. Some banks have already received licences from the
government, and the RBI's new norms will provide incentives to banks to spot bad loans and
take requisite action to keep rogue borrowers in check.

Over the next decade, the banking sector is projected to create up to two million new jobs,
driven by the efforts of the RBI and the Government of India to integrate financial services
into rural areas. Also, the traditional way of operations will slowly give way to modern
technology.

Market size

Total banking assets in India touched US$ 1.8 trillion in FY18 and are anticipated to cross
US$ 28.5 trillion in FY25.

Bank deposits have grown at a compound annual growth rate (CAGR) of 21.2 per cent over
FY06–18. Total deposits in FY18 were US$ 1,274.3 billion.

2
Total banking sector credit is anticipated to grow at a CAGR of 19.1 per cent (in terms of
INR) to reach US$ 2.4 trillion by 2019.

In FY17, private sector lenders witnessed discernable growth in credit cards and personal
loan businesses. HDFC Bank witnessed 171.6 per cent growth in personal loan disbursement
in FY17, as per a report by Emkay Global Financial Services. Axis Bank's personal loan
business also rose 49.8 per cent and its credit card business expanded by 31.1 per cent.

Investments

Bengaluru-based software services exporter Mphasis Ltd has bagged a five-year contract
from Punjab National Bank (PNB) to set up the bank’s contact centres in Mangalore and
Noida (UP). Mphasis will provide support for all banking products and services, including
deposits operations, lending services, banking processes, internet banking, and account and
card-related services. The company will also offer services in multiple languages.

Microfinance companies have committed to setting up at least 30 million bank accounts

within a year through tie-ups with banks, as part of the Indian government’s financial
inclusion plan. The commitment was made at a meeting of representatives of 25 large
microfinance companies and banks and government representatives, which included financial
services secretary Mr GS Sandhu.

Export-Import Bank of India (Exim Bank) will increase its focus on supporting project
exports from India to South Asia, Africa and Latin America, as per Mr Yaduvendra Mathur,
Chairman and MD, Exim Bank. The bank has moved up the value chain by supporting
project exports so that India earns foreign exchange. In 2018–18, Exim Bank lent support to
85 project export contracts worth Rs 24,255 crore (US$ 3.96 billion) secured by 47
companies in 23 countries.

Government Initiatives

The RBI has given banks greater flexibility to refinance current long-gestation project loans
worth Rs 1,000 crore (US$ 173.42 million) and more, and has allowed partial buyout of such
loans by other financial institutions as standard practice. The earlier stipulation was that
buyers should purchase at least 50 per cent of the loan from the existing banks. Now, they get
as low as 25 per cent of the loan value and the loan will still be treated as ‘standard’.

3
The RBI has also relaxed norms for mortgage guarantee companies (MGC) enabling these
firms to use contingency reserves to cover for the losses suffered by the mortgage guarantee
holders, without the approval of the apex bank. However, such a measure can only be
initiated if there is no single option left to recoup the losses.

SBI is planning to launch a contact-less or tap-and-go card facility to make payments in

India. Contact-less payment is a technology that has been adopted in several countries,
including Australia, Canada and the UK, where customers can simply tap or wave their card
over a reader at a point-of-sale terminal, which reads the card and allows transactions.

SBI and its five associate banks also plan to empower account holders at the bottom of the
social pyramid with a customer call facility. The proposed facility will help customers get an
update on available balance, last five transactions and cheque book request on their mobile
phones.

Road Ahead

India is yet to tap into the potential of mobile banking and digital financial services. Forty-
seven per cent of the populace have bank accounts, of which half lie dormant due to reliance
on cash transactions, as per a report. Still, the industry holds a lot of promise.

India's banking sector could become the fifth largest banking sector in the world by 2020 and
the third largest by 2025. These days, Indian banks are turning their focus to servicing clients
and enhancing their technology infrastructure, which can help improve customer experience
as well as give banks a competitive edge.

Exchange Rate Used: INR 1 = US$ 0.0173 as on October 28, 2019

The level of government regulation of the banking industry varies widely, with countries such
as Iceland, having relatively light regulation of the banking sector, and countries such as
China having a wide variety of regulations but no systematic process that can be followed
typical of a communist system.

The oldest bank still in existence is Monte dei Paschi di Siena, headquartered in Siena, Italy,
which has been operating continuously since 1772.

4
History

Origin of the word

The name bank derives from the Italian word banco "desk/bench", used during the
Renaissance by Jewish Florentine bankers, who used to make their transactions above a desk
covered by a green tablecloth. However, there are traces of banking activity even in ancient
times, which indicates that the word 'bank' might not necessarily come from the word 'banco'.

In fact, the word traces its origins back to the Ancient Roman Empire, where moneylenders
would set up their stalls in the middle of enclosed courtyards called macella on a long bench
called a bancu, from which the words banco and bank are derived. As a moneychanger, the
merchant at the bancu did not so much invest money as merely convert the foreign currency
into the only legal tender in Rome—that of the Imperial Mint.

The earliest evidence of money-changing activity is depicted on a silver drachm coin from
ancient Hellenic colony Trapezus on the Black Sea, modern Trabzon, c. 350–325 BC,
presented in the British Museum in London. The coin shows a banker's table (trapeza) laden
with coins, a pun on the name of the city.

In fact, even today in Modern Greek the word Trapeza (Τράπεζα) means both a table and a
bank.

Traditional banking activities

Banks act as payment agents by conducting checking or current accounts for customers,
paying cheques drawn by customers on the bank, and collecting cheques deposited to
customers' current accounts. Banks also enable customer payments via other payment
methods such as telegraphic transfer, EFTPOS, and ATM.

Banks borrow money by accepting funds deposited on current accounts, by accepting term
deposits, and by issuing debt securities such as banknotes and bonds. Banks lend money by
making advances to customers on current accounts, by making installment loans, and by
investing in marketable debt securities and other forms of money lending.

5
Banks provide almost all payment services, and a bank account is considered indispensable
by most businesses, individuals and governments. Non-banks that provide payment services
such as remittance companies are not normally considered an adequate substitute for having a
bank account.

Banks borrow most funds from households and non-financial businesses, and lend most funds
to households and non-financial businesses, but non-bank lenders provide a significant and in
many cases adequate substitute for bank loans, and money market funds, cash management
trusts and other non-bank financial institutions in many cases provide an adequate substitute
to banks for lending savings to.

Entry regulation

Currently in most jurisdictions commercial banks are regulated by government entities and
require a special bank licence to operate.

Usually the definition of the business of banking for the purposes of regulation is extended to
include acceptance of deposits, even if they are not repayable to the customer's order—
although money lending, by itself, is generally not included in the definition.

Unlike most other regulated industries, the regulator is typically also a participant in the
market, i.e. a government-owned (central) bank. Central banks also typically have a
monopoly on the business of issuing banknotes. However, in some countries this is not the
case. In the UK, for example, the Financial Services Authority licences banks, and some
commercial banks (such as the Bank of Scotland) issue their own banknotes in addition to
those issued by the Bank of England, the UK government's central bank.

Accounting for bank accounts

Bank statements are accounting records produced by banks under the various accounting
standards of the world. Under GAAP and IFRS there are two kinds of accounts: debit and
credit. Credit accounts are Revenue, Equity and Liabilities. Debit Accounts are Assets and
Expenses. This means you credit a credit account to increase its balance, and you debit a
debit account to decrease its balance.

6
This also means you debit your savings account every time you deposit money into it (and the
account is normally in deficit), while you credit your credit card account every time you
spend money from it (and the account is normally in credit).

However, if you read your bank statement, it will say the opposite—that you credit your
account when you deposit money, and you debit it when you withdraw funds. If you have
cash in your account, you have a positive (or credit) balance; if you are overdrawn, you have
a negative (or deficit) balance.

The reason for this is that the bank, and not you, has produced the bank statement. Your
savings might be your assets, but the bank's liability, so they are credit accounts (which
should have a positive balance). Conversely, your loans are your liabilities but the bank's
assets, so they are debit accounts (which should also have a positive balance).

Where bank transactions, balances, credits and debits are discussed below, they are done so
from the viewpoint of the account holder—which is traditionally what most people are used
to seeing.

Economic functions

1. issue of money, in the form of banknotes and current accounts subject to cheque or
payment at the customer's order. These claims on banks can act as money because
they are negotiable and/or repayable on demand, and hence valued at par. They are
effectively transferable by mere delivery, in the case of banknotes, or by drawing a
cheque that the payee may bank or cash.
2. netting and settlement of payments – banks act as both collection and paying agents
for customers, participating in interbank clearing and settlement systems to collect,
present, be presented with, and pay payment instruments. This enables banks to
economise on reserves held for settlement of payments, since inward and outward
payments offset each other. It also enables the offsetting of payment flows between
geographical areas, reducing the cost of settlement between them.
3. credit intermediation – banks borrow and lend back-to-back on their own account as
middle men.
4. credit quality improvement – banks lend money to ordinary commercial and personal
borrowers (ordinary credit quality), but are high quality borrowers. The improvement

7
 comes from diversification of the bank's assets and capital which provides a buffer to
absorb losses without defaulting on its obligations. However, banknotes and deposits
are generally unsecured; if the bank gets into difficulty and pledges assets as security,
to raise the funding it needs to continue to operate, this puts the note holders and
depositors in an economically subordinated position.
5. maturity transformation – banks borrow more on demand debt and short term debt,
but provide more long term loans. In other words, they borrow short and lend long.
With a stronger credit quality than most other borrowers, banks can do this by
aggregating issues (e.g. accepting deposits and issuing banknotes) and redemptions
(e.g. withdrawals and redemptions of banknotes), maintaining reserves of cash,
investing in marketable securities that can be readily converted to cash if needed, and
raising replacement funding as needed from various sources (e.g. wholesale cash
markets and securities markets).

Law of banking

Banking law is based on a contractual analysis of the relationship between the bank (defined
above) and the customer—defined as any entity for which the bank agrees to conduct an
account.

The law implies rights and obligations into this relationship as follows:

1. The bank account balance is the financial position between the bank and the
customer: when the account is in credit, the bank owes the balance to the customer;
when the account is overdrawn, the customer owes the balance to the bank.
2. The bank agrees to pay the customer's cheques up to the amount standing to the credit
of the customer's account, plus any agreed overdraft limit.
3. The bank may not pay from the customer's account without a mandate from the
customer, e.g. a cheque drawn by the customer.
4. The bank agrees to promptly collect the cheques deposited to the customer's account
as the customer's agent, and to credit the proceeds to the customer's account.
5. The bank has a right to combine the customer's accounts, since each account is just an
aspect of the same credit relationship.
6. The bank has a lien on cheques deposited to the customer's account, to the extent that
the customer is indebted to the bank.

8
 7. The bank must not disclose details of transactions through the customer's account—
unless the customer consents, there is a public duty to disclose, the bank's interests
require it, or the law demands it.
8. The bank must not close a customer's account without reasonable notice, since
cheques are outstanding in the ordinary course of business for several days.

These implied contractual terms may be modified by express agreement between the
customer and the bank. The statutes and regulations in force within a particular jurisdiction
may also modify the above terms and/or create new rights, obligations or limitations relevant
to the bank-customer relationship.

Some types of financial institution, such as building societies and credit unions, may be partly
or wholly exempt from bank licence requirements, and therefore regulated under separate
rules.

The requirements for the issue of a bank licence vary between jurisdictions but typically
include:

1. Minimum capital
2. Minimum capital ratio
3. 'Fit and Proper' requirements for the bank's controllers, owners, directors, and/or
senior officers
4. Approval of the bank's business plan as being sufficiently prudent and plausible.

Types of banks

Banks' activities can be divided into retail banking, dealing directly with individuals and
small businesses; business banking, providing services to mid-market business; corporate
banking, directed at large business entities; private banking, providing wealth management
services to high net worth individuals and families; and investment banking, relating to
activities on the financial markets. Most banks are profit-making, private enterprises.
However, some are owned by government, or are non-profit organizations.

Central banks are normally government-owned and charged with quasi-regulatory

responsibilities, such as supervising commercial banks, or controlling the cash interest rate.
They generally provide liquidity to the banking system and act as the lender of last resort in
event of a crisis.

9
Types of retail banks

 Commercial bank: the term used for a normal bank to distinguish it from an
investment bank. After the Great Depression, the U.S. Congress required that banks
only engage in banking activities, whereas investment banks were limited to capital
market activities. Since the two no longer have to be under separate ownership, some
use the term "commercial bank" to refer to a bank or a division of a bank that mostly
deals with deposits and loans from corporations or large businesses.
 Community Banks: locally operated financial institutions that empower employees to
make local decisions to serve their customers and the partners.
 Community development banks: regulated banks that provide financial services and
credit to under-served markets or populations.
 Postal savings banks: savings banks associated with national postal systems.
 Private banks: banks that manage the assets of high net worth individuals.
 Offshore banks: banks located in jurisdictions with low taxation and regulation. Many
offshore banks are essentially private banks.
 Savings bank: in Europe, savings banks take their roots in the 19th or sometimes even
19th century. Their original objective was to provide easily accessible savings
products to all strata of the population. In some countries, savings banks were created
on public initiative; in others, socially committed individuals created foundations to
put in place the necessary infrastructure. Nowadays, European savings banks have
kept their focus on retail banking: payments, savings products, credits and insurances
for individuals or small and medium-sized enterprises. Apart from this retail focus,
they also differ from commercial banks by their broadly decentralised distribution
network, providing local and regional outreach—and by their socially responsible
approach to business and society.
 Building societies and Landesbanks: institutions that conduct retail banking.
 Ethical banks: banks that prioritize the transparency of all operations and make only
what they consider to be socially-responsible investments.
 Islamic banks: Banks that transact according to Islamic principles.

10
Types of investment banks

 Investment banks "underwrite" (guarantee the sale of) stock and bond issues, trade for
their own accounts, make markets, and advise corporations on capital market
activities such as mergers and acquisitions.
 Merchant banks were traditionally banks which engaged in trade finance. The modern
definition, however, refers to banks which provide capital to firms in the form of
shares rather than loans. Unlike venture capital firms, they tend not to invest in new
companies.

Both combined

 Universal banks, more commonly known as financial services companies, engage in

several of these activities. These big banks are very diversified groups that, among
other services, also distribute insurance— hence the term bancassurance, a
portmanteau word combining "banque or bank" and "assurance", signifying that both
banking and insurance are provided by the same corporate entity.

Other types of banks

 Islamic banks adhere to the concepts of Islamic law. This form of banking revolves
around several well-established principles based on Islamic canons. All banking
activities must avoid interest, a concept that is forbidden in Islam. Instead, the bank
earns profit (markup) and fees on the financing facilities that it extends to customers.

11
COMPANY PROFILE

HDFC Bank is India's largest private sector bank with total assets of Rs. 5,946.42 billion
(US$ 99 billion) at March 31, 2019 and profit after tax Rs. 98.15 billion (US$ 1,637 million)
for the year ended March 31, 2019.HDFC Bank currently has a network of 3,839 Branches
and 16,943 ATM's across India.

History

1955

The Industrial Credit and Investment Corporation of India Limited (HDFC) incorporated at
the initiative of the World Bank, the Government of India and representatives of Indian
industry, with the objective of creating a development financial institution for providing
medium-term and long-term project financing to Indian businesses. Mr.A.Ramaswami
Mudaliar elected as the first Chairman of HDFC Limited.

HDFC emerges as the major source of foreign currency loans to Indian industry. Besides
funding from the World Bank and other multi-lateral agencies, HDFC was also among the
first Indian companies to raise funds from international markets.

HDFC Bank was originally promoted in 1994 by HDFC Limited, an Indian financial
institution, and was its wholly-owned subsidiary. HDFC's shareholding in HDFC Bank was
reduced to 46% through a public offering of shares in India in fiscal 1998, an equity offering
in the form of ADRs listed on the NYSE in fiscal 2000, HDFC Bank's acquisition of Bank of
Madura Limited in an all-stock amalgamation in fiscal 2001, and secondary market sales by
HDFC to institutional investors in fiscal 2001 and fiscal 2002. HDFC was formed in 1955 at
the initiative of the World Bank, the Government of India and representatives of Indian
industry. The principal objective was to create a development financial institution for
providing medium-term and long-term project financing to Indian businesses.

In the 1990s, HDFC transformed its business from a development financial institution
offering only project finance to a diversified financial services group offering a wide variety

12
of products and services, both directly and through a number of subsidiaries and affiliates like
HDFC Bank. In 1999, HDFC become the first Indian company and the first bank or financial
institution from non-Japan Asia to be listed on the NYSE.

After consideration of various corporate structuring alternatives in the context of the

emerging competitive scenario in the Indian banking industry, and the move towards
universal banking, the managements of HDFC and HDFC Bank formed the view that the
merger of HDFC with HDFC Bank would be the optimal strategic alternative for both
entities, and would create the optimal legal structure for the HDFC group's universal banking
strategy. The merger would enhance value for HDFC shareholders through the merged
entity's access to low-cost deposits, greater opportunities for earning fee-based income and
the ability to participate in the payments system and provide transaction-banking services.
The merger would enhance value for HDFC Bank shareholders through a large capital base
and scale of operations, seamless access to HDFC's strong corporate relationships built up
over five decades, entry into new business segments, higher market share in various business
segments, particularly fee-based services, and access to the vast talent pool of HDFC and its
subsidiaries.

In October 2001, the Boards of Directors of HDFC and HDFC Bank approved the merger of
HDFC and two of its wholly-owned retail finance subsidiaries, HDFC Personal Financial
Services Limited and HDFC Capital Services Limited, with HDFC Bank. The merger was
approved by shareholders of HDFC and HDFC Bank in January 2002, by the High Court of
Gujarat at Ahmedabad in March 2002, and by the High Court of Judicature at Mumbai and
the Reserve Bank of India in April 2002. Consequent to the merger, the HDFC group's
financing and banking operations, both wholesale and retail, have been integrated in a single
entity.

13
HDFC Group Companies

HDFC Group HDFC Prudential AMC & Trust

http://www.HDFCgroupcompanies.com http://www.HDFCpruamc.com

   

HDFC Prudential Life Insurance Company HDFC Venture

http://www.HDFCprulife.com/public/defa http://www.HDFCventure.com
ult.htm
 
 
HDFC Direct
HDFC Securities http://www.HDFCdirect.com
http://www.HDFCsecurities.com
 
 
HDFC Foundation
HDFC Lombard General Insurance http://www.HDFCfoundation.org
Company
 
http://www.HDFClombard.com
Disha Financial Counselling
 
http://www.HDFCfoundation.org

 Board of Directors

Mr. K. V. Kamath, Chairman ..............................................

.............................................. Dr. Tushaar Shah

Mr. Dileep Choksi ..............................................

.............................................. Mr. V. K. Sharma

Mr. Homi R. Khusrokhan ..............................................

.............................................. Mr. V. Sridar

Mr. M.S. Ramachandran ..............................................

14
Mr. Alok Tandon

Ms. Chanda Kochhar,

Managing Director & CEO

...........................................

Mr. N. S. Kannan,

Executive Director

...........................................

Mr. K. Ramkumar,

Executive Director

...........................................

Mr. Rajiv Sabharwal,

Executive Director

15
 Awards - 2019

HDFC Bank

 Ms. Chanda Kochhar received an honorary Doctor of Laws from Carleton University,
Canada. The university conferred this award on Ms. Kochhar in recognition of her pioneering
work in the financial sector, effective leadership in a time of economic crisis and support for
engaged business practices.
 Ms Chanda Kochhar featured in The Telegraph (UK) list of '16 most important
women in finance'.
 HDFC Bank has been recognised as one of the 'Top Companies for Leaders' in India
in a study conducted by Aon Hewitt.
 IDRBT has given awards to HDFC Bank in the categories of 'Social Media and
Mobile Banking' and' Business Intelligence Initiatives'.
 HDFC Bank won the award for the Best Bank - Global Business Development
(Private Sector) in the Dun & Bradstreet - Polaris Financial Technology Banking Awards
2019.
 HDFC Bank was awarded the Certificate of Recognition as one of the Top 5
Companies in Corporate Governance in the 17th ICSI (The Institute of Company Secretaries
of India) National Awards for Corporate Governance.
 HDFC Bank has been honoured as The Best Service Provider - Risk Management,
India at The Asset Triple A Transaction Banking, Treasury, Trade and Risk Management
Awards 2019.
 Mr Rakesh Jha has been ranked as the Best CFO in India at the 17th Annual Finance
Asia's Best Managed Companies Poll.
 HDFC Bank has won The Corporate Treasurer Awards 2019 in the categories of 'Best
Cash Management Bank in India' & 'Best Trade Finance Bank in India'.
 HDFC Bank has been awarded the 'Best Retail Bank in India', 'Best Microfinance
Business' and Best Retail Banking Branch Innovation' under the 'Excellence in Retail
Financial Services awards 2019' by The Asian Banker.
 Ms Chanda Kochhar, MD & CEO, HDFC Bank, has been named among Fortune's 50
most powerful women in business for the fourth consecutive year.
 Ms. Chanda Kochhar, MD and CEO received the 'Mumbai Women Of The Decade'
award by ASSOCHAM.

16
 HDFC Bank, India’s largest private sector bank, today announced the launch of India’s only
credit card with a unique transparent design and a distinctive look. The ‘HDFC Bank Coral
American Express Credit Card’ is the latest addition to the Bank’s exclusive ‘Gemstone
Collection’ of credit cards.

Speaking at the launch, Mr. Rajiv Sabharwal, Executive Director, HDFC Bank said, "At
HDFC Bank, it is our constant endeavour to deliver innovative, powerful and distinctive
value propositions to our discerning customers. We are delighted to launch the ‘HDFC Bank
Coral American Express Credit Card’, the only card in the country with a youthful,
transparent design. Aimed at providing significant lifestyle benefits, this card re-affirms our
commitment to bring forth innovative services to our customers. We are also introducing a
host of exciting privileges including an introductory extended credit period offer and bonus
reward points on online transactions. We believe this card will be yet another compelling
addition to our Gemstone collection of credit cards."

Ms. Siew Choo Ng, Senior Vice President, Head of Global Network Partnerships, Asia,
American Express International, Inc. said, "We are delighted to have further strengthened
our long and cherished relationship with HDFC Bank with the launch of the new HDFC Bank
Coral American Express Credit Card. Designed to appeal to value seeking customers, the
Card reinforces our consistent endeavor to provide differentiated products and services to our
customers. The Card offers a wide array of exclusive privileges and features including
additional PAYBACK points on online spend and an innovative transparent design. At
American Express, we always strive to work closely with our partners to develop the most
relevant and compelling products for our valued card members."

Mr. Sanjay Rishi, President, South Asia, American Express, said, “This launch marks a
further strengthening of the relationship between HDFC Bank and American Express. We
already partner with HDFC Bank on customer loyalty programs, insurance services, retail
banking services as well as initiatives to expand card accepting merchants. The launch of the
HDFC Bank Coral American Express Card combines the strengths and capabilities of both
organizations to offer an exciting new payment choice to customers.

17
  

The HDFC Bank Coral American Express® Credit Card offers a wide range of attractive
benefits to its card members:

 Extended Credit Period; a unique proposition offering card members ability to carry
over the retail purchase balances in first two billing statements by simply paying the
minimum amount due. No interest shall be charged in such cases and the total amount due
shall be payable as per the third billing statement. TnC apply, for complete details please
visit www.HDFCbank.com.
 4 PAYBACK points per Rs.150 spent on dining, groceries and at supermarkets, 3
PAYBACK points per Rs.150 of online spends and 2 PAYBACK points per Rs.150 on other
spends
 Complimentary movie tickets with 'buy one get one free' offer
on www.bookmyshow.com
 Complimentary visits to Altitude lounges at Mumbai and Delhi airports
 Minimum 19% discount on dining bills at leading restaurants across India with the
HDFC Bank ‘Culinary Treats’ programme
 No fuel surcharge on fuel transactions at HPCL fuel stations

OVERVIEW HDFC Group

HDFC Group offers a wide range of banking products and financial services to corporate and
retail customers through a variety of delivery channels and through its specialised group
companies and subsidiaries in the areas of personal banking, investment banking, life and
general insurance, venture capital and asset management. With a strong customer focus, the
HDFC Group Companies have maintained and enhanced their leadership positions in their
respective sectors.

HDFC Bank is India's second-largest bank with total assets of Rs. 4,736.47 billion (US$ 93
billion) at March 31, 2018 and profit after tax Rs. 64.65 billion (US$ 1,271 million) for the
year ended March 31, 2018. The Bank has a network of 2,791 branches and 15,021 ATMs in
India, and has a presence in 19 countries, including India.

18
HDFC Prudential Life Insurance is a joint venture between HDFC Bank, a premier financial
powerhouse, and Prudential plc, a leading international financial services group
headquartered in the United Kingdom. HDFC Prudential Life was amongst the first private
sector insurance companies to begin operations in December 2000 after receiving approval
from Insurance Regulatory Development Authority (IRDA). HDFC Prudential Life's capital
stands at Rs. 47.91 billion (as of March 31, 2018) with HDFC Bank and Prudential plc
holding 74% and 26% stake respectively. For FY 2018, the company garnered Rs.170.22
billion of total premiums and has underwritten over 18 million policies since inception. The
company has assets held over Rs. 709.71 billion as on March 31, 2018.

HDFC Lombard General Insurance Company, is a joint venture between HDFC Bank
Limited, India's second largest bank with consolidated total assets of over USD 91 billion at
March 31, 2018 and Fairfax Financial Holdings Limited, a Canada based USD 30 billion
diversified financial services company engaged in general insurance, reinsurance, insurance
claims management and investment management. HDFC Lombard GIC Ltd. is the largest
private sector general insurance company in India with a Gross Written Premium (GWP) of
Rs. 5,358 crore for the year ended March 31, 2018. The company issued over 76 lakh policies
and settled over 44 lakh claims and has a claim disposal ratio of 99% (percentage of claims
settled against claims reported) as on March 31, 2018. 

HDFC Securities Ltd is the largest integrated securities firm covering the needs of corporate
and retail customers through investment banking, institutional broking, retail broking and
financial product distribution businesses. Among the many awards that HDFC Securities has
won, the noteworthy awards for 2018 were: Asiamoney `Best Domestic Equity House for
2018; 'BSE IPF D&B Equity Broking Awards 2018' under two categories:- Best Equity
Broking House - Cash Segment and Largest E-Broking House; the Chief Learning Officer
Award from World HRD Congress for Innovation in Learning category. IDG India's CIO
magazine has recognized HDFC Securities as a recipient of CIO 150 award in 2015, 2016,
2017 and 2018. I-Sec won this awards 4 times in a row for which the CIO Hall of Fame
award was additionally conferred in 2018.

HDFC Securities Primary Dealership Limited (‘I-Sec PD’) is the largest primary dealer in
Government Securities. It is an acknowledged leader in the Indian fixed income and money
markets, with a strong franchise across the spectrum of interest rate products and services -

19
institutional sales and trading, resource mobilisation, portfolio management services and
research. One of the first entities to be granted primary dealership license by RBI, I-Sec PD
has made pioneering contributions since inception to debt market development in India. I-Sec
PD is also credited with pioneering debt market research in India. It is one of the largest
portfolio managers in the country and amongst PDs, managing the largest AUM under
discretionary portfolio management.
I-Sec PD’s leadership position and research expertise have been consistently recognised by
domestic and international agencies. In recognition of our performance in the Fixed Income
market, we have received the following awards:

 “Best Domestic Bond House” in India - 2010, 2006, 2005, 2002 by Asia Money
 “Best Bond House” - 2015, 2010, 2009, 2006, 2005, 2001 by Finance Asia
 “Best Domestic Bond House” – 2015 by The Asset Magazine’s annual Triple A
Country Awards
 Ranked volume leader - by Greenwich Associates in 2016 Asian Fixed-Income
Investors Study. Ranked 5th in ‘Domestic Currency Asian Credit’ with market share
of 4.5%, Only Domestic entity to be ranked.
 “Best Debt House in India” – 2018 by EUROMONEY

HDFC Prudential Asset Management is the third largest mutual fund with average asset
under management of Rs. 688.17 billion and a market share ( mutual fund ) of 15.34% as on
March 31, 2018. The Company manages a comprehensive range of mutual fund schemes and
portfolio management services to meet the varying investment needs of its investors
through167 branches and 196 CAMS official point of transaction acceptance spread across
the country. 

HDFC Venture is one of the largest and most successful alternative asset managers in India
with funds under management of over US$ 2 billion. It has been a pioneer in the Indian
alternative asset industry since its establishment in 1988, having managed several funds
across various asset classes over multiple economic cycles. HDFC Venture is a wholly owned
subsidiary of HDFC Bank
GROUP PHILOSOPHY

20
As India transforms into a key player in the global economic arena, multiple opportunities for
the financial services sector have emerged. We, at HDFC Group, seek to partner the country's
growth and globalization through the delivery of world-class financial services across all
cross-sections of society.

From providing project and working capital finance to the buoyant manufacturing and
infrastructure sectors, meeting the foreign investment and treasury requirements of the Indian
corporate with increasing levels of international engagement, servicing the India linked needs
of the growing Indian diaspora, being a catalyst to the consumer finance story to serving the
financially under-served segments of the society, our technology empowered solutions and
distribution network have helped us touch millions of lives.
Vision:

To be the leading provider of financial services in India and a major global bank.

Mission:

We will leverage our people, technology, speed and financial capital to:

 be the banker of first choice for our customers by delivering high quality, world-class
products and services.
 expand the frontiers of our business globally.
 play a proactive role in the full realisation of India’s potential.
 maintain a healthy financial profile and diversify our earnings across businesses and
geographies.
 maintain high standards of governance and ethics.
 contribute positively to the various countries and markets in which we operate.
 create value for our stakeholders.

21
 REVIEWS OF LITERATURE

1. Morge (1953) in his study on the Job satisfaction of the employees of white collar

jobs found that fifty five male teachers were satisfied with their job with oppose to

thirty five percent female employees who were not satisfied with their job. This study

highlighted the relationship between gender and job satisfaction and concluded that

satisfaction is affected by gender.

2. Gardon (1955) in his research on the Job satisfaction of the workers of industrial

concern and human needs industries found that if person„s individual needs are

satisfied then their job satisfaction increases; thereby reflecting a positive relation

with the job satisfaction.

3. Bidwel and Charles (1956) studied on the Job satisfaction and school management

and concluded that effective education is necessary to develop good image of the

school and that teachers„Job satisfaction increased by perfect management.

4. Sinha and Singh (1961) studied the relationship between job satisfaction and

absenteeism. A random sample was selected from various departments of Tisco,

Jamshedpur. The sample consisted of high and low absentee workers. Respondents

consisted of 50 each from both the categories. Job satisfaction questionnaire consisted

of items of four components of job satisfaction namely nature of work, wages and

security, supervisors and supervision and company„s overall personnel policy. It was

22
 found that low absentees were significantly more satisfied with their job than high

absentees.

5. Sinha and Sharma (1962),conducted a research on attitude and job satisfaction with

the help of randomly selected 100 workers which were from a light engineering

factory around Culcutta. It was found that job satisfaction was inversely related to

favorable attitude towards the union. This implies, greater the job satisfaction, the less

favorable was the attitude towards the union. Prasad (1964) studied the personality

and the relative elements of Job satisfaction namely age and experience. In his study

he concluded that the age of professionals had no effect on job satisfaction, while job

satisfaction increase with the frequencies of experience thereby showing significant

relation with the Job satisfaction.

6. Rajgopal (1965) in his study explored the relationship between satisfaction and

productivity of textile mills workers belonging to high and low productive mills. Six

mills, three high and three low (Productivity was indexed in terms of operative hours

per unit of Production four the past three years) were chosen for the study. 75 workers

each from high Productive and low Productive mills were chosen for the study. They

were asked to indicate their degree of satisfaction/dissatisfaction on a 5-point scale

ranging from extreme satisfaction to extreme dissatisfaction on thirty items

representing seven aspect of work (i.e., salary, job, management, working condition,

welfare facilities , coworkers, and union management relations). The results

highlighted that high productive mill workers were significantly more satisfied with

five of the seven aspect excluding job and coworkers.

7. Lodahl&Kejner (1965) found in a study that Job satisfaction is affected by

meaningfulness of work and adequacy of supervision.

23
8. Kapoor and Rao (1969) had examined the age and attitude towards officers in

understanding the Job satisfaction of 146 female employees. His research highlighted

that female employee and married female employee having more than twenty five

years of age always oppose against injustice and struggle against management too.

9. Jawa (1971) collected data on 70 semi-skilled workers in his study on anxiety and job

satisfaction. On the basis of the anxiety scale filled by the respondents and their

scores, anxiety was divided into three groups of high, average and low anxiety. In

addition to this a satisfaction questionnaire was also filled by the respondents. The

results indicate a trend of increasing satisfaction with decreasing anxiety level Smith,

10. Scott and Hulin (1977) selected 4000 managers of the 145 company for the sample of

the study on Job satisfaction of professional employees of the company. It was found

out through this research that satisfaction increase with the age. Thus, indicating a

positive relation of Job satisfaction with the age.

11. Richmond, Mccroskey and Davis (1982), stated that “moderately satisfied employees

may be more productive than dissatisfied employee; extremely satisfied employees

may form the type of work group known as the “happiness for lunch bunch”

(McCroskey,

12. Larson & Knapp, 1971) and be more of a social group than a work group, hence

lowering productivity. Bhatt (1987) studied the personality determinations of Job

satisfaction of college teachers of Saurashtra University and all college teachers were

included in the sample of the study. It was found that female teachers were more

satisfied than male teachers, also no significant difference was found in the mean

scores of married and unmarried teachers. It was also found that Job satisfaction had

no significant relation with the age, area of the work, educational qualification and

experience.

24
 13. Sharma(1987) examined the effects of work culture on employee satisfaction, sense of

participation, role stress and alienation in private sector and public sector and found

that the private sector and the public sector varied

SWOT ANALYSIS

A SWOT, which stands for strengths, weaknesses, opportunities and threats, analysis for
employees entails a self-evaluation of a person's strengths and weaknesses. In addition,
the employee must evaluate her opportunities and threats. The employee's strengths and
weaknesses are essentially internal factors. Opportunities and threats are considered
external factors, for which the employee has less control. However, A SWOT analysis for
an employee can help an employee better deal with certain external factors.

Significance

The SWOT analysis for an employee commences with an evaluation of the individual's
strengths. An employee should write down all of her strengths during this stage of the
SWOT analysis. She can physically write down her strengths, or use available software,
which can ordered and downloaded online. Examples of strengths can be lots of experience,
and even strong oral and written communication skills. The key for evaluating strengths is
comparing individual skills versus other employees of the same pay grade.

Effects

This next phase of the SWOT analysis for an employee includes evaluating and recording
various weaknesses. An employee's weakness can be a lack of experience in a certain job
duty, according to the article titled "SWOT Your Way to Better Performance"
at beakware.com, a software technology firm. For example, a marketing research analyst
may not have database management experience. Consequently, this employee may need to
ask another person to run a query for her survey, which entails typing out commands on a
computer to create a list of customers.

25
This lack of technical skills can render the employee more vulnerable to a downsizing, if
the company needs to cut jobs. This would be especially the case if other marketing
analysts are highly skilled in database management. (See references 1 and 2)

Identification

A third phase of the SWOT analysis is for the employee to identify certain opportunities in
her current job. For example, the employee may discover that his company is expanding the
marketing research department. Consequently, there may be an opportunity for him to
become more specialized in competitive analysis, a particular area of interest. In addition,
the employee may have an opportunity to improve his computer skills through company-
paid training. These skills could potentially make the employee more valuable to the
company.

Considerations

Threats are usually the fourth phase of the individual SWOT analysis. Threats can include a
decrease in company sales and profits, new technology from competitors, and even a
potential takeover of the company. Any external threat that affects the company can
potentially threaten an employee's career. An increased workload can also be a potential
threat, which can inevitably have an effect on an employee's performance.

Prevention/Solution

An employee's primary goal for conducting a SWOT analysis is to determine ways to

secure her future with the company; and to improve her chances of getting promoted. This
can be accomplished by using the SWOT analysis to match certain internal factors, such as
strengths and weakness, with external factors like opportunities and threats. For example, a
regional manager's leadership skills, a strength, may help her get promoted to the corporate
office, an opportunity. Contrarily, an employee that has no college degree, a weakness, may
pursue her degree if her company starts requiring a degree for her job, a threat.

26
 CONCEPTUAL FRAMEWORK.
The term human resource can be thought of as, “the total knowledge, skills, creative abilities,
talents and aptitudes of an organizations work force, as well as the value, attitudes and
believes of the individuals involved.

HRM can be defined as the planning, directing and controlling of human resources.

HRM is an approach to the management of people, based on four fundamental

principles. First, human resources are the most important assets of an organization and their
effective management is the key to its success.

Second, this success is most likely to be achieved if His personal policies and
procedures of the enterprises are closely linked with, and make major contribution to the
achievement of corporate objectives and strategic plans.

Third, the corporate culture and the values, organizational climate and managerial
behavior that emanate from that culture will exert a major influence on the achievement of
excellence. This culture must, therefore, be managed which means that continuous effort,
starting from the top, will be required to get them accepted and acted upon. Finally, HRM is
concerned with integration getting all the members of the organization involved and working
together with a sense of common purpose.

HRM is proactive rather than reactive, that is always looking forward to what needs to
be done and then doing it, rather than waiting to be told what to do about recruiting, paying or

27
training people, or dealing with employee relation’s problems as they arise. The techniques
for the application of HRM or manpower planning, selection, performance appraisal, salary
administration, training and management development.

In its essence, HRM is the qualitative improvement of human beings who are considered the
most valuable assets of an organization the sources, resources, and end users of all product
and services.

NATURE AND SCOPE OF HUMAN RESOURCE:

Complex Dynamism:

A close observation of employee reveals that they are complex beings that are
physiological, psychological, sociological, ethical beings. If human factor is properly utilized,
it may even prove a dynamic motive force for running an organization otherwise, it becomes
a passive and destructive force.

A social System:-
HRM is task of dealing with human relationships, molding and developing the human
behavior and attitude towards the job and organizational requirements.

A challenging Task:-
HRM is a challenging task as employee; organizational and societal objectives with
the available resources must be attained.

FUNCTIONS OF HRM:-
Functions of HRM can are broadly classified into two categories, viz., 1). Managerial
functions.

2). Operative functions.

Managerial functions:-
Managerial functions of personnel management involve planning. Organizing
directing and controlling, all these functions influence the operative functions.

28
Operative Functions:-
Operative functions of personnel management are related to specific activities of
personnel management viz., employment, development, compensation and relations. All
these functions are interacted by managing functions.

1. Employment includes job analysis, human resource planning, recruitment,

selection, placement, induction and orientation.
2. HRD improves performance appraisal, training, management development, career
planning and development, organizational development.
3. Compensation: it includes job evaluation, wage and salary administration,
incentives, fringe benefits and social security measures.

Job satisfaction describes how content an individual is with his or her job. The happier
people are within their job, the more satisfied they are said to be. Job satisfaction is not the
same as motivation, although it is clearly linked. Job design aims to enhance job satisfaction
and performance, methods include job rotation, job enlargement and job enrichment. Other
influences on satisfaction include the management style and culture, employee involvement,
empowerment and autonomous work position. Job satisfaction is a very important attribute
which is frequently measured by organizations. The most common way of measurement is
the use of rating scales where employees report their reactions to their jobs. Questions relate
to rate of pay, work responsibilities, variety of tasks, promotional opportunities, the work
itself and co-workers. Some questioners ask yes or no questions while others ask to rate
satisfaction on 1-5 scale (where 1 represents "not at all satisfied" and 5 represents "extremely
satisfied").

Definition

Job satisfaction has been defined as a pleasurable emotional state resulting from the appraisal
of one’s job; an affective reaction to one’s job; and an attitude towards one’s job. Weiss
(2002) has argued that job satisfaction is an attitude but points out that researchers should
clearly distinguish the objects of cognitive evaluation which are affect (emotion), beliefs and
behaviors. This definition suggests that we form attitudes towards our jobs by taking into
account our feelings, our beliefs, and our behaviors.

History

29
One of the biggest preludes to the study of job satisfaction was the Hawthorne studies. These
studies (1924–1933), primarily credited to Elton Mayo of the Harvard Business School,
sought to find the effects of various conditions (most notably illumination) on workers’
productivity. These studies ultimately showed that novel changes in work conditions
temporarily increase productivity (called the Hawthorne Effect). It was later found that this
increase resulted, not from the new conditions, but from the knowledge of being observed.
This finding provided strong evidence that people work for purposes other than pay, which
paved the way for researchers to investigate other factors in job satisfaction.

Scientific management (aka Taylorism) also had a significant impact on the study of job
satisfaction. Frederick Winslow Taylor’s 1911 book, Principles of Scientific Management,
argued that there was a single best way to perform any given work task. This book
contributed to a change in industrial production philosophies, causing a shift from skilled
labor and piecework towards the more modern of assembly lines and hourly wages. The
initial use of scientific management by industries greatly increased productivity because
workers were forced to work at a faster pace. However, workers became exhausted and
dissatisfied, thus leaving researchers with new questions to answer regarding job satisfaction.
It should also be noted that the work of W.L. Bryan, Walter Dill Scott, and Hugo
Munsterberg set the tone for Taylor’s work.

Some argue that Maslow’s hierarchy of needs theory, a motivation theory, laid the foundation
for job satisfaction theory. This theory explains that people seek to satisfy five specific needs
in life – physiological needs, safety needs, social needs, self-esteem needs, and self-
actualization. This model served as a good basis from which early researchers could develop
job satisfaction theories.

Job satisfaction can also be seen within the broader context of the range of issues which
affect an individual's experience of work, or their quality of working life. Job satisfaction can
be understood in terms of its relationships with other key factors, such as general well-being,
stress at work, control at work, home-work interface, and working conditions.

Models of job satisfaction

Affect Theory

30
Edwin A. Locke’s Range of Affect Theory (1976) is arguably the most famous job
satisfaction model. The main premise of this theory is that satisfaction is determined by a
discrepancy between what one wants in a job and what one has in a job. Further, the theory
states that how much one values a given facet of work (e.g. the degree of autonomy in a
position) moderates how satisfied/dissatisfied one becomes when expectations are/aren’t met.
When a person values a particular facet of a job, his satisfaction is more greatly impacted
both positively (when expectations are met) and negatively (when expectations are not met),
compared to one who doesn’t value that facet. To illustrate, if Employee A values autonomy
in the workplace and Employee B is indifferent about autonomy, then Employee A would be
more satisfied in a position that offers a high degree of autonomy and less satisfied in a
position with little or no autonomy compared to Employee B. This theory also states that too
much of a particular facet will produce stronger feelings of dissatisfaction the more a worker
values that facet.

Dispositional Theory

Another well-known job satisfaction theory is the Dispositional Theory Template: Jackson
April 2007. It is a very general theory that suggests that people have innate dispositions that
cause them to have tendencies toward a certain level of satisfaction, regardless of one’s job.
This approach became a notable explanation of job satisfaction in light of evidence that job
satisfaction tends to be stable over time and across careers and jobs. Research also indicates
that identical twins have similar levels of job satisfaction.

A significant model that narrowed the scope of the Dispositional Theory was the Core Self-
evaluations Model, proposed by Timothy A. Judge in 1998. Judge argued that there are four
Core Self-evaluations that determine one’s disposition towards job satisfaction: self-esteem,
general self-efficacy, locus of control, and neuroticism. This model states that higher levels of
self-esteem (the value one places on his/her self) and general self-efficacy (the belief in one’s
own competence) lead to higher work satisfaction. Having an internal locus of control
(believing one has control over her\his own life, as opposed to outside forces having control)
leads to higher job satisfaction. Finally, lower levels of neuroticism lead to higher job
satisfaction.

Two-Factor Theory (Motivator-Hygiene Theory)

31
Frederick Herzberg’s two factor theory (also known as Motivator Hygiene Theory) attempts
to explain satisfaction and motivation in the workplace this theory states that satisfaction and
dissatisfaction are driven by different factors – motivation and hygiene factors, respectively.
An employee’s motivation to work is continually related to job satisfaction of a subordinate.
Motivation can be seen as an inner force that drives individuals to attain personal and
organizational goals (Hokinson, Porter, & Wrench, p. 133). Motivating factors are those
aspects of the job that make people want to perform, and provide people with satisfaction, for
example achievement in work, recognition, promotion opportunities. These motivating
factors are considered to be intrinsic to the job, or the work carried out. Hygiene factors
include aspects of the working environment such as pay, company policies, supervisory
practices, and other working conditions.

While Hertzberg's model has stimulated much research, researchers have been unable to
reliably empirically prove the model, with Hackman & Oldham suggesting that Hertzberg's
original formulation of the model may have been a methodological artifact. Furthermore, the
theory does not consider individual differences, conversely predicting all employees will
react in an identical manner to changes in motivating/hygiene factors. Finally, the model has
been criticized in that it does not specify how motivating/hygiene factors are to be measured.

Job Characteristics Model

Hackman & Oldham proposed the Job Characteristics Model, which is widely used as a
framework to study how particular job characteristics impact on job outcomes, including job
satisfaction. The model states that there are five core job characteristics (skill variety, task
identity, task significance, autonomy, and feedback) which impact three critical
psychological states (experienced meaningfulness, experienced responsibility for outcomes,
and knowledge of the actual results), in turn influencing work outcomes (job satisfaction,
absenteeism, work motivation, etc.). The five core job characteristics can be combined to
form a motivating potential score (MPS) for a job, which can be used as an index of how
likely a job is to affect an employee's attitudes and behaviors----. A meta-analysis of studies
that assess the framework of the model provides some support for the validity of the JCM.

Communication Overload and Communication Under load

32
One of the most important aspects of an individual’s work in a modern organization concerns
the management of communication demands that he or she encounters on the job (Krayer, K.
J., & Westbrook, L., p. 85). Demands can be characterized as a communication load, which
refers to “the rate and complexity of communication inputs an individual must process in a
particular time frame (Faraca, Mongo, & Russel, 1977).” Individuals in an organization can
experience communication over-load and communication under- load which can affect their
level of job satisfaction. Communication overload can occur when “an individual receives too
many messages in a short period of time which can result in unprocessed information or
when an individual faces more complex messages that are more difficult to process (Faraca,
Monge, & Russel, 1997).” Due to this process, “given an individual’s style of work and
motivation to complete a task, when more inputs exist than outputs, the individual perceives a
condition of overload (Krayer, K. J., & Westbrook, L., p. 86) which can be positively or
negatively related to job satisfaction. In comparison, communication under load can occur
when messages or inputs are sent below the individual’s ability to process them (Farace,
Monge, & Russel, 1997).” According to the ideas of communication over-load and under-
load, if an individual does not receive enough input on the job or is unsuccessful in
processing these inputs, the individual is more likely to become dissatisfied, aggravated, and
unhappy with their work which leads to a low level of job satisfaction.

Measuring job satisfaction

There are many methods for measuring job satisfaction. By far, the most common method for
collecting data regarding job satisfaction is the Liker scale (named after Resins Liker). Other
less common methods of for gauging job satisfaction include: Yes/No questions, True/False
questions, point systems, checklists, and forced choice answers. This data are sometimes
collected using an Enterprise Feedback Management (EFM) system.

The Job Descriptive Index (JDI), created by Smith, Kendall, & Hulin (1969), is a specific
questionnaire of job satisfaction that has been widely used. It measures one’s satisfaction in
five facets: pay, promotions and promotion opportunities, coworkers, supervision, and the
work itself. The scale is simple, participants answer either yes, no, or can’t decide (indicated
by ‘?’) in response to whether given statements accurately describe one’s job.

33
The Job in General Index is an overall measurement of job satisfaction. It is an
improvement to the Job Descriptive Index because the JDI focuses too much on individual
facets and not enough on work satisfaction in general.

Other job satisfaction questionnaires include: the Minnesota Satisfaction Questionnaire

(MSQ), the Job Satisfaction Survey (JSS), and the Faces Scale. The MSQ measures job
satisfaction in 20 facets and has a long form with 100 questions (five items from each facet)
and a short form with 20 questions (one item from each facet). The JSS is a 36 item
questionnaire that measures nine facets of job satisfaction. Finally, the Faces Scale of job
satisfaction, one of the first scales used widely, measured overall job satisfaction with just
one item which participants respond to by choosing a face.

Superior-Subordinate Communication

Superior-subordinate communication is an important influence on job satisfaction in the

workplace. The way in which subordinate’s perceive a supervisor’s behavior can positively
or negatively influence job satisfaction. Communication behavior such as facial expression,
eye contact, vocal expression, and body movement is crucial to the superior-subordinate
relationship (Teven, p. 156). Nonverbal messages play a central role in interpersonal
interactions with respect to impression formation, deception, attraction, social influence, and
emotional expression (Burgoon, Buller, & Woodall, 1996). Nonverbal immediacy from the
supervisor helps to increase interpersonal involvement with their subordinates impacting job
satisfaction. The manner in which supervisors communicate their subordinates may be more
important than the verbal content (Teven, p. 156). Individuals who dislike and think
negatively about their supervisor are less willing to communicate or have motivation to work
where as individuals who like and think positively of their supervisor are more likely to
communicate and are satisfied with their job and work environment. The relationship of a
subordinate with their supervisor is a very important aspect in the workplace. Therefore, a
supervisor who uses nonverbal immediacy, friendliness, and open communication lines is
more willing to receive positive feedback and high job satisfaction from a subordinate where
as a supervisor who is antisocial, unfriendly, and unwilling to communicate will naturally
receive negative feedback and very low job satisfaction from their subordinates in the
workplace.

Emotions

34
Mood and emotions form the affective element of job satisfaction. (Weiss and Cropanzano,
1996). Moods tend to be longer lasting but often weaker states of uncertain origin, while
emotions are often more intense, short-lived and have a clear object or cause.
There is some evidence in the literature that moods are related to overall job satisfaction.
Positive and negative emotions were also found to be significantly related to overall job
satisfaction
Frequency of experiencing net positive emotion will be a better predictor of overall job
satisfaction than will intensity of positive emotion when it is experienced.
Emotion work (or emotion management) refers to various efforts to manage emotional states
and displays. Emotion management includes all of the conscious and unconscious efforts to
increase, maintain, or decrease one or more components of an emotion. Although early
studies of the consequences of emotional work emphasized its harmful effects on workers,
studies of workers in a variety of occupations suggest that the consequences of emotional
work are not uniformly negative.

It was found that suppression of unpleasant emotions decreases job satisfaction and the
amplification of pleasant emotions increases job satisfaction. The understanding of how
emotion regulation relates to job satisfaction concerns two models:

1. Emotional dissonance. Emotional dissonance is a state of discrepancy between public

displays of emotions and internal experiences of emotions that often follows the
process of emotion regulation. Emotional dissonance is associated with high
emotional exhaustion, low organizational commitment, and low job satisfaction.
2. Social interaction model. Taking the social interaction perspective, workers’ emotion
regulation might beget responses from others during interpersonal encounters that
subsequently impact their own job satisfaction. For example: The accumulation of
favorable responses to displays of pleasant emotions might positively affect job
satisfaction.
3. Performance of emotional labor that produces desired outcomes could increase job
satisfaction.

Relationships and practical implications

Job Satisfaction can be an important indicator of how employees feel about their jobs and a
predictor of work behaviors such as organizational citizenship, absenteeism, and turnover.

35
Further, job satisfaction can partially mediate the relationship of personality variables and
deviant work behaviors.

One common research finding is that job satisfaction is correlated with life satisfaction. This
correlation is reciprocal, meaning people who are satisfied with life tend to be satisfied with
their job and people who are satisfied with their job tend to be satisfied with life. However,
some research has found that job satisfaction is not significantly related to life satisfaction
when other variables such as non-work satisfaction and core self-evaluations are taken into
account.

An important finding for organizations to note is that job satisfaction has a rather tenuous
correlation to productivity on the job. This is a vital piece of information to researchers and
businesses, as the idea that satisfaction and job performance are directly related to one
another is often cited in the media and in some non-academic management literature. A
recent meta-analysis found an average uncorrected correlation between job satisfaction and
productivity to be r = 0.18; the average true correlation, corrected for research artifacts and
unreliability, was r = 0.30. Further, the meta-analysis found that the relationship between
satisfaction and performance can be moderated by job complexity, such that for high-
complexity jobs the correlation between satisfaction and performance is higher (ρ = 0.52)
than for jobs of low to moderate complexity (ρ = 0.29). Job Satisfaction also have high
relationship with intention to quit. It is found in many research that Job Satisfaction can lead
to Intention to Stay / quit in an organization (Kim et al., 1996). Recent research has also
shown that Intention to Quit can have effect like poor performance orientation, organizational
deviance, and poor organizational citizenship behaviors. In short, the relationship of
satisfaction to productivity is not necessarily straightforward and can be influenced by a
number of other work-related constructs, and the notion that "a happy worker is a productive
worker" should not be the foundation of organizational decision-making.

With regard to job performance, employee personality may be more important than job
satisfaction. The link between job satisfaction and performance is thought to be a spurious
relationship; instead, both satisfaction and performance are the result of personality

JOB SATISFACTION

36
 Job satisfaction is one of the important factors that have drawn attention of managers
in the organization as well as academicians. Various studies have been conducted to find out
the factors which determine job satisfaction and the way it influences productivity in the
organization. Though there is no conclusive evidence that job satisfaction affects productivity
directly because productivity depends on so many variables, it is still a prime concern for
managers.

Meaning of job satisfaction:-

Job satisfaction is the mental feeling of favorableness, which an individual has about
his job. Dublin has defined job satisfaction in terms of pleasure and contentment when he
says that: job satisfaction is the amount of pleasure of contentment associated with a job. If
you like your job intensely, you will experience high job satisfaction. If you dislike your job
intensely, you will experience job dissatisfaction.

Definition:-
1). According to Hopped.

“Any combination of psychological, physiological and environmental circumstances

that causes and person truthfully to say I am satisfied with my job”
Job satisfaction defined as the

“Pleasurable emotional state resulting from the appraisal of one’s Job as achieving or
facilitating the achievement of one’s job values”.

Human Relations
The term relates to the total relationship between an individual and the employer for
which he is paid. Satisfaction does mean the simple feeling- state accompanying attainment
by an impulse of its objective. Job dissatisfaction does mean absence of motivation at work.
Research workers differently described the factors contributing to job satisfaction an job
dissatisfaction Hop pock describes job satisfaction as, “any combination of psychological,
physiological and environmental circumstances that cause and person truthfully to say I am
satisfied with my job”.

37
 Job satisfaction is defined as the “pleasurable emotional state resulting from the
appraisal of one’s job as achieving or facilitating the achievement of one’s job values”. In
contrast job dissatisfaction is defined as “the un -pleasurable emotional state resulting from
the appraisal of one’s job as frustrating or blocking the attainment of one’s job values or as
entailing disvalues. “ However, both satisfaction and dissatisfaction were seen as.” A
function of the perceived relationship between what on perceives it as offering or entailing”.

Theories of job satisfaction:

There are vital differences among experts about the concept of job satisfaction
basically, there are four approaches/theories of job satisfaction.

They are:

1). Fulfillment theory

2). Discrepancy theory

3). Equity theory, and

4). Two – factor theory.

1. Fulfillment Theory:-

The proponents of this theory measure satisfaction in terms of rewards a person

receives or the extent to which his needs as satisfied. Further they thought that there is a
direct/positive relationship between job satisfaction and the actual satisfaction of the expected
needs. The main difficulty in this approach is that job satisfaction as observed by willing, is
not only a function of what person receives but also what he feels he should receive as there
would be considerable difference in the actual and expectations of persons. Thus jib
satisfaction cannot be regarded as merely function of how much person receives from his job.
Another important factor/variable that should be include to predict job satisfaction actually is
the strength of the individuals” desire of his level of aspiration in a particular area. This led to
the development of the discrepancy – theory of job satisfaction.

2. Discrepancy Theory:

38
 The proponents of this theory argue that satisfaction is the function of what a person
actually receives from his job situation and what he thinks he should receive or what he
expects to receive. When the actual satisfaction derived is less than expected satisfaction, it
results in dissatisfaction, as discussed earlier.

“Job satisfaction, it results in dissatisfaction are functions of the perceived

relationship between what one wants from one’s job and what one perceives it is offering.
“This approach does not make it clear whether or not over satisfaction is a part of
dissatisfaction and if so, how does it differ from dissatisfaction. This led the development of
equity – theory of job satisfaction.

3. Equity Theory:

The proponents of this theory are of the view that a person’s satisfaction is determined by his
perceived equity, which in turn is determined by his input – output balance compared to his
comparison of others, input – output balance is the perceived Raito of what a person receives
for his job relative to what he contributes to the job. This theory is of the view that both under
the over rewards lead to dissatisfaction while the under – reward causes feelings of unfair
treatment, over – reward lead to feelings guilt and discomfort.
4. Two – factor Theory:

As discussed earlier, this theory was developed by Herzberg, Manusner, Peterson and
Capwell who identified certain factors satisfies and dissatisfies. Factor such as achievement,
recognition, responsibility etc., are satisfies the presence of which causes satisfaction but
their absence does not resulted in dissatisfaction. On the other hand, factors such as
supervision, salary, working conditions etc.., are dissatisfies, the absence of which causes
dissatisfaction. Their theory failed to give any support to this theory, as it seems that a person
can get both satisfaction and dissatisfaction at the same time, which is not valid.
Factors of job satisfaction:

Job satisfaction refers to a general attitude, which an employee retains on account of

many specific attitudes in the following areas: 1) Job satisfaction, 2). Individual
characteristics, 3). Relationships outside the job. There are different factors on which job
satisfaction depends. Important among them are discussed hereunder.

39
Personal Factors:-
They include workers sex, education, age marital status and their personal
characteristics, family background, socio-economic background and the like.

Factors Inherent in the Job:-

These factors have recently been studied and found to be important in the selection of
employee. Instead of being guided by their co-workers and supervisors, the skilled workers
would rather like to be guided by their own inclination to choose jobs in consideration of
‘what they have to do. These factors include: the work itself, conditions, and influence of
internal and external environmental on the job which are uncontrolled by the management
etc.

Factors Controlled by the Management:

They include the nature of supervision, job security, kind of work ground wage rate,
promotional opportunities, and transfer policy, duration of work and sense of responsibilities.
All these factors greatly influence the workers.

Their presence in the organization motivates the workers and provides sense of job
satisfaction.

Though performance and job satisfaction are influenced by different set of factors,
these two can be related if management like rewards to performance. It is viewed job
satisfaction is a consequence of performance of rather than a cause of it. Satisfaction is
strongly influences the productive efficiency of an organization whereas absenteeism,
employee turnover, alcoholism, irresponsibility, un-commitment, are the result of job
dissatisfaction. However job satisfaction or dissatisfaction forms opinion about the job and
the organization, which result in employee morale.

Effect of job Satisfaction:

Job satisfaction has a variety of effects. These effects may be seen in the context of an
individual’s physical and mental health, productivity, absenteeism, and turnover.

1. Physical and Mental Health:

40
 The degree of job satisfaction affects an individual’s physical and mental health.
Since job satisfaction is a type of mental feeling, its favorableness or un-favorableness affects
the individual psychologically, which ultimately affects his physical health. For example,
Lawyer has pointed out that drug abuse, alcoholism, and mental and physical health result
from psychologically harmful jobs. Further, since a job is an important part of life, job
satisfaction influences general life satisfaction. The result is that there is spillover effect,
which occurs in both directions between job and life satisfaction.

2. Productivity:

There are two views about the relationship between job satisfaction and productivity.

1. A happy worker is a productive worker,

2. A happy worker is not necessarily a productive worker.

The first view establishes a direct cause – effect relationship between job satisfaction
and productivity; when job satisfaction increases, productivity increases; when job
satisfaction decreases, productivity decreases. The basic logic behind this is that happy
worker will put more efforts for job performance. However, this may not be true in all cases.
For example, a worker having low expectations for his jobs may feel satisfied but he may not
put his efforts more vigorously because of his low expectations from the job. Therefore, this
view does not explain fully the compels relationship between job satisfaction and
productivity.

The other view that is a satisfied worker is not necessarily a productive worker
explains the relationship between job satisfactions and productivity. Various research studies
also support this view. This relationship may be explained in terms of the operation of two
factors: effect of job performance on satisfaction and organizational expectations from
individuals for job performance.

1. Job performance leads to job satisfaction and not the other way round. The basic
factor for this phenomenon is the rewards (a source of satisfaction) attached with
performance. There are two types of rewards intrinsic and extrinsic. The intrinsic

41
 reward stems from the job itself which may in the form of growth potential,
challenging job, etc. The extrinsic reward is subject to control by management such
as salary, bonus, etc. Any increase in these factors does not help to increase
productivity though these factors increase job satisfaction.
2. A happy worker does not necessarily contribute to higher productivity because he has
to operate under certain technological constraints and, therefore, he cannot go beyond
certain output. Further, this constraint effects the management’s expectations from the
individual in the form of lower output. Thus, the work situation is pegged to
minimally acceptable level of performance.

However, it does not mean that the job satisfaction has no

Impact on productivity. A satisfied worker may not necessarily lead to increased

productivity but a dissatisfied worker leads to lower productivity.

3. Absenteeism:

Absenteeism refers to the frequency of absence of a job holder form the

workplace either unexcused absence due to some avoidable reasons or long absence
due to some unavoidable reasons. It is the former type of absence which is a produces
a ‘lack of will to work’ and alienates a worker from as far as possible. Thus, job
satisfaction is related to absenteeism.

4. Employee Turnover:

Turnover of employees is the rate at which employees leave the organization within a
given period of time. When an individual feels dissatisfaction in the organization, he tried to
overcome this through various ways of difference mechanism, if he is not able do so, he opts
to leave the organization. Thus in general case, employee turnover is related to job
satisfaction. However, job satisfaction is not the only cause of employee turnover, the rate of
turnover of computer software professionals leave their organizations not simply because
they are not satisfied but because of the opportunities offered from other sources particularly
from foreign companies located abroad.

SIGNIFICANCE:

 Helps in increasing the productivity.

42
  It reduces Absenteeism.
 It helps in reduce the employee turnover.
 It increases the retention rate.

Over the years researchers have studied and attempted to quantify employee
commitment, loyalty, morale and overall employee satisfaction. This gave rise to many types
of employee surveys whose purpose was to measure one or all of these components

The Two factor theory otherwise called motivation – hygiene theory gives the
factors for employee satisfaction, proposed by Frederick Hertzberg.

According to Herzberg, the factors leading to job satisfaction are separate and
distinct from those that lead to job dissatisfaction. This theory proposes two important
factors. They are
Extrinsic – Hygiene factors
Intrinsic – Motivational Factors
Hygiene factors are Company policy and administration, supervision,
Interpersonal relationship with superiors, peers, subordinates, salary, job security, personal
life, working environment, status, etc. Extrinsic factors leads to dissatisfaction. These factors
when absent, increase dissatisfaction with the job. When present helps in preventing
dissatisfaction but do not increase satisfaction or motivation.

Motivational factors include achievement, recognition, advancement, work,

possibility of growth, responsibility, etc. Intrinsic factors are related with job satisfaction.
These factors when absent, prevent both satisfaction and motivation, when present leads to
satisfaction and motivation.
Some of the most extensive research in this area has been conducted by the
Gallop organization. This research came to the conclusion that overall employee satisfaction
is manifest in the level of engagement that employees have in their work. In other words,
employee engagement was the ultimate expression of employee commitment, loyalty, morale
and overall employee satisfaction. Therefore organizations needed to focus on employee
engagement rather than on these other components of employee satisfaction

43
 Based on their findings Gallup conducted further research which included over
100,000 employees in America. The research showed that 26% of employees are fully
engaged, 55% are not engaged: they are at work physically but not mentally or emotionally,
and 19% are actively disengaged/unhappy, spreading discontentment and actively trying to
sabotage their organizations. This research clearly pointed out the large gap in employee
engagement and the magnitude of the challenge facing most organizations.

A review has identified four factors conducive to high levels of employee job
satisfaction: mentally challenging work, equitable rewards, supportive working conditions
and supportive colleagues. Importantly, these factors are controllable by management.
Mentally challenging work: People prefer jobs that give them opportunities to
use their skills and abilities and offer a variety of tasks, freedom and feedback on how well
they are doing. These characteristics make work mentally challenging.
Equitable Rewards: Employee wants pay systems and promotion policies that
they perceive as being just, unambiguous and in line with their expectations. When pay is
seen as fair biased on job demands, individual skill level and community pay standards,
satisfaction is likely to result. Similarly employees seek fair promotion policies and practices.
Promotions provide opportunities for personal growth, more responsibilities and increased
social status. Individuals, who perceive that promotion decisions are made in the fair and just
manner, therefore are likely to experience satisfaction from their jobs.

Supportive working conditions: Employees are concerned with their work

environment for both personal comfort and facilitating doing a good job. Studies demonstrate
that employees prefer physical surroundings that are not dangerous or uncomfortable.
Additionally, most employees prefer working conditions to home, in clean and relatively
modern facilities and adequate tools and equipment.

Supportive colleagues: People get more out of work than merely money or
tangible achievements. For most of the employees, work also fills need for social interaction.
Not surprisingly, therefore, having friendly and supportive workers leads to increased job
satisfaction. Studies generally find that employee satisfaction is increased when the

44
immediate supervisor understanding and friendly, offers praise for good performance, listens
to employees’ opinions and shows a personal interest in them

Questionnaire

“A study on Job Satisfaction of

1. Name: …………………………………………………………………………………

2. Age: ………………

3. Gender: Male

Female

4. Designation……………..

Ques1- Working hours are convenient for me-

1 strongly agree 2 agree 3 neither agree nor disagree 4 disagree 5 strongly disagree

Ques2- I am happy with my work place-

1. strongly agree 2. agree 3.neither agree nor disagree 4. disagree 5. strongly disagree

Ques3- I feel I have too much work to do-

45
1. strongly agree 2. agree 3.neither agree nor disagree 4. disagree 5. strongly disagree

Ques4- Safety measures provided by the company are good-

1. strongly agree 2. agree 3.neither agree nor disagree 4. disagree 5. strongly disagree

Ques5- My relationship with my supervisor is cordial-

1. strongly agree 2. agree 3.neither agree nor disagree 4. disagree 5. strongly disagree

Ques6- My supervisor is not partial-

1. strongly agree 2. agree 3.neither agree nor disagree 4. disagree 5. strongly disagree

Ques7- My supervisor consider my ideas while taking decision-

1. strongly agree 2. agree 3.neither agree nor disagree 4. disagree 5. strongly disagree

Ques8- I am satisfied with the support from my coworkers-

1. strongly agree 2. Agree 3.neither agree nor disagree 4. disagree 5. strongly disagree

Ques9- People here have concern from one another and tend to help-

1. strongly agree 2. agree 3.neither agree nor disagree 4. disagree 5. strongly disagree

Ques10- I am satisfied with the refreshment facility-

1. strongly agree 2. agree 3.neither agree nor disagree 4. disagree 5. strongly disagree

Ques11- We are provided with the rest and lunch room and they are good-

1. strongly agree 2. agree 3.neither agree nor disagree 4. disagree 5. strongly disagree

Ques12- The parking spaces for vehicles are satisfactory-

46
1. strongly agree 2. agree 3.neither agree nor disagree 4. disagree 5. strongly disagree

Ques13- I feel I am paid a fair amount for the work I do-

1. strongly agree 2. agree 3.neither agree nor disagree 4. disagree 5. strongly disagree

Ques14- I am satisfied with the chances for my promotion-

1. strongly agree 2. agree 3.neither agree nor disagree 4. disagree 5. strongly disagree

Ques15- I am satisfied with the allowances provided by the organization-

1. strongly agree 2. agree 3.neither agree nor disagree 4. disagree 5. strongly disagree

Ques16- I feel my boss motivate me to achieve the organizational goals-

1. strongly agree 2. agree 3.neither agree nor disagree 4. disagree 5. strongly disagree

Ques17- My supervisor motivate me to increase my efficiency at a time when I am not-

1. strongly agree 2. agree 3.neither agree nor disagree 4. disagree 5. strongly disagree

Ques18- I feel my job little impact on the success of the company-

1. strongly agree 2. agree 3.neither agree nor disagree 4. disagree 5. strongly disagree

Ques19- Overall I am satisfied with my present job-

1. strongly agree 2. agree 3.neither agree nor disagree 4. disagree 5.

47
48