Strategic management process of HDFC Bank

Strategic ManagementProcess 1
Chapter 1:
THE BANKING INDUSTRY
1.1 INTRODUCTION
In today’s dynamic world banks are inevitable for the development of a country.
Banks play a pivotal role in enhancing each and every sector. They have helped bring
a draw of development on the world’s horizon and developing country like India is no
exception.
Banks fulfill the role of a financial intermediary. This means that they act as a vehicle
for moving finance from those who have surplus money to (however temporarily)
those who have deficit. In everyday branch terms, the banks channel funds from
depositors whose accounts are in credit to borrowers who are in debit. Without the
intermediary of the banks, both their depositors and their borrowers would have to
contact each other directly. This can and does happen of course. This is what has lead
to the very foundation of financial institution like banks. The Banks have developed
their roles to such an extent that a direct contact between the depositors and borrowers
in now known as disintermediation. Banking industry has always revolved around the
traditional function of taking deposits, money transfer and making advances. These
three are closely related to each other, the objective being to lend money, which is the
profitable activity of the three. The Banks have introduced progressively more
sophisticated versions of these services and have diversified introduction in
numerable areas of activity not directly relating to this traditional trinity.
1.2 ABOUT THE BANKING INDUSTRY
1.2.1. History of Banking in India
Without a sound and effective banking system in India, there cannot be a healthy
economy. For the past three decades India's banking system has several outstanding
achievements to its credit. The most striking is its extensive reach. In fact, Indian
banking system has reached even to the remote corners of the country. This is one of
the main reasons of India's growth process.

2 Strategic ManagementProcess
The government's regular policy for Indian bank since 1969 has paid rich dividends
with the nationalization of 14 major private banks of India. Money has become the
order of the day.
The first bank in India, though conservative, was established in 1786. From 1786 till
today, the journey of Indian Banking System can be segregated into three distinct
phases. They are as mentioned below:
 Early phase from 1786 to 1969 of Indian Banks
 Nationalization of Indian Banks and up to 1991 prior to Indian Banking
Sector Reforms.
 New phase of Indian Banking System with the advent of Indian Financial
& Banking Sector Reforms after 1991.
The banking industry has moved gradually from a regulated environment to a
deregulated market economy. The market developments kindled by liberalization and
globalization have resulted in changes in the intermediation role of banks. The pace of
transformation has been more significant in recent times with technology acting as a
catalyst. While the banking system has done fairly well in adjusting to the new market
dynamics, greater challenges lie ahead.
1.2.2. Indian Banking System
The banking scenario in India has been changing at fast pace from being just the
borrowers and lenders traditionally, the focus has shifted to more differentiated and
customized product/service provider from regulation to liberalization in the year
1991, from planned economy to market. Political compulsion’s brought about
nationalization of bank in 1969 and lobbying by bank employees and their unions
added to the list of nationalized banks a few years later. Slowly the unions grew in
strength, while bank management stagnated. In the meantime, technology was
becoming a global phenomenon lacking a vision of the future and the banks erred
badly in opposing the technology upgradation of banks.
The rules of the game under which banks operated changed in 1993. Norms or income
Recognition, Assets classification and loan loss provisioning were put in place and
capital adequacy ratio become mandatory.

The amendment of banking regulation act in 1993 saw the entry of new private sector
banks and foreign banks.
Figure 1 :- Structure of Banking System in India
At present there are 27 Public Sector Banks, about 30 Private Sector Banks, 40
Foreign Banks and 196 RRB’s, 52 Urban Co-operative Banks, 16 State Co-operative
Banks, 19 Nationalized Banks, 8 State Bank of India Associates and about 68,000
branches exist across the country.
1.2.3. Growthand present status of the industry
Currently (2014), banking in India is fairly mature in terms of supply, product range
and reach-even though reach in rural India still remains a challenge for the private
sector and foreign banks. In terms of quality of assets and capital adequacy, Indian
banks are considered to have clean, strong and transparent balance sheets relative to
other banks in comparable economies in its region. The Reserve Bank of India is an
autonomous body, with minimal pressure from the government.

Figure 2 :- Projected growth rate for banks
1.2.4. Future of the industry
The burden of reporting and other regulatory requirements will fall heavily and
disproportionately on small banks unless remedial action is taken. Further advances in
information technology will permit the development of new products, BANK, and
risk-management techniques but may also pose important competitive and
supervisory issues. Nonbank entities will continue to offer bank-like products in
competition with banks, raising new the question of whether banks are still “special”
and, more fundamentally, whether banks are sufficiently different from nonblank
firms to justify the maintenance of a safety net for banks. It is useful, therefore, to try
to chart the course of the banking industry in the next five to ten years and to consider
what policy issues the industry and regulators will face. The authors of this study do
not pretend to be clairvoyant. They are mindful of the many financial predictions that
were once offered with confidence but turned out to be wrong or premature. This
study is perhaps best described as an exercise in strategic thinking. Its approach is to
analyze what has happened in the recent past, consider in detail reasons for expecting

Figure 3 :- Challenges faced by the banking industry
recent trends to continue or to change, and draw the consequences for bank and
regulatory policies. As always, uncertainties abound, and events that may now appear
fairly improbable may in fact shape the future.

Chapter 2:
THE COMPANY PROFILE: HDFC BANK LTD.
The Housing Development Finance Corporation Limited (HDFC) was amongst the
first to receive an ‘in principle’ approval from the Reserve Bank of India (RBI) to set
up a bank in the private sector, as part of RBI’s liberalization of the Indian Banking
Industry in 1994. The bank was incorporated in August 1994 in the name of ‘HDFC
Bank Limited’, with its registered office in Mumbai, India. HDFC Bank commenced
operations as a Scheduled Commercial Bank in January 1995.
PROMOTER
HDFC is India’s premier housing finance company and enjoys an impeccable track
record in India as well as in international markets. Since its inception in 1977, the
Corporation has maintained a consistent and healthy growth in its operations to
remain the market leader in mortgages. Its outstanding loan portfolio covers well over
a million dwelling units. HDFC has developed significant expertise in retail mortgage
loans to different market segments and also has a large corporate client base for its
housing related credit facilities. With its experience in the financial markets, strong
market reputation, large shareholder base and unique consumer franchise, HDFC was
ideally positioned to promote a bank in the Indian environment.
CAPITAL STRUCTURE
As on March 31, 2014 the authorized share capital of the Bank is Rs. 550 crore. The
paid-up capital as on the said date is Rs 479,81,00,870/- (2399050435 equity shares of
Rs. 2/- each). The HDFC Group holds 22.64 % of the Bank's equity and about 16.97
% of the equity is held by the ADS / GDR Depositories (in respect of the bank's
American Depository Shares (ADS) and Global Depository Receipts (GDR) Issues).
34.11 % of the equity is held by Foreign Institutional Investors (FIIs) and the Bank
has 4,22,314 shareholders.

CBoP & TIMES BANK AMALGAMATION
On May 23, 2008, the amalgamation of Centurion Bank of Punjab with HDFC Bank
was formally approved by Reserve Bank of India to complete the statutory and
regulatory approval process. As per the scheme of amalgamation, shareholders of
CBoP received 1 share of HDFC Bank for every 29 shares of CBoP. The
amalgamation added significant value to HDFC Bank in terms of increased branch
network, geographic reach, and customer base, and a bigger pool of skilled
manpower.
DISTRIBUTION NETWORK
HDFC Bank is headquartered in Mumbai. As of March 31, 2014, the Bank’s
distribution network was at 3,403 branches in 2,171 cities. All branches are linked on
an online real-time basis. Customers in over 1397 locations are also serviced through
Telephone Banking. The Bank also has a network of 11,256 ATMs across India.
HDFC Bank’s ATM network can be accessed by all domestic and international Visa /
MasterCard, Visa Electron / Maestro, Plus / Cirrus and American Express Credit /
Charge cardholders.
TECHNOLOGY
HDFC Bank operates in a highly automated environment in terms of information
technology and communication systems. All the bank’s branches have online
connectivity, which enables the bank to offer speedy funds transfer facilities to its
customers. Multi-branch access is also provided to retail customers through the
branch network and Automated Teller Machines (ATMs).    The Bank has made
substantial efforts and investments in acquiring the best technology available
internationally, to build the infrastructure for a world class bank. In terms of core
banking software, the Corporate Banking business is supported by Flexcube, while
the Retail Banking business by Finware, both from i-flex Solutions Ltd. The systems
are open, scaleable and web-enabled.  In each of its businesses, the Bank has
succeeded in leveraging its market position, expertise and technology to create a
competitive advantage and build market share.

MANAGEMENT
Mr. C.M. Vasudev has been appointed as the Chairman of the Bank with effect from
6th July 2010. A retired IAS officer, Mr. Vasudev has been a Director of the Bank
since October 2006. He has held several key positions in India and overseas,
including Finance Secretary, Government of India, Executive Director, World Bank
and Government nominee on the Boards of many companies in the financial sector.
    The Managing Director, Mr. Aditya Puri, has been a professional banker for over
25 years. Given the professional expertise of the management team and the overall
focus on recruiting and retaining the best talent in the industry, the bank believes that
its people are a significant competitive strength.
BUSINESSES
HDFC Bank caters to a wide range of banking services covering commercial and
investment banking on the wholesale side and transactional / branch banking on the
retail side. The bank has three key business segments:
(i) Wholesale Banking- The Bank’s target market is primarily large, blue-chip
manufacturing companies in the Indian corporate sector and to a lesser extent, small
& mid-sized corporates and agri-based businesses. For these customers, the Bank
provides a wide range of commercial and transactional banking services, including
working capital finance, trade services, transactional services, cash management, etc.
The bank is also a leading provider of structured solutions, which combine cash
management services with vendor and distributor finance for facilitating superior
supply chain management for its corporate customers. Based on its superior product
delivery / service levels and strong customer orientation, the Bank has made
significant inroads into the banking consortia of a number of leading Indian
corporates including multinationals, companies from the domestic business houses
and prime public sector companies. It is recognised as a leading provider of cash
management and transactional banking solutions to corporate customers, mutual
funds, stock exchange members and banks.

(ii) Treasury-  Within this business, the bank has three main product areas - Foreign
Exchange and Derivatives, Local Currency Money Market & Debt Securities, and
Equities. With the liberalisation of the financial markets in India, corporates need
more sophisticated risk management information, advice and product structures.
These and fine pricing on various treasury products are provided through the bank’s
Treasury team. To comply with statutory reserve requirements, the bank is required to
hold 25% of its deposits in government securities. The Treasury business is
responsible for managing the returns and market risk on this investment portfolio.
(iii) Retail Banking-   The objective of the Retail Bank is to provide its target market
customers a full range of financial products and banking services, giving the customer
a one-stop window for all his/her banking requirements. The products are backed by
world-class service and delivered to customers through the growing branch network,
as well as through alternative delivery channels like ATMs, Phone Banking,
NetBanking and Mobile Banking.     The HDFC Bank Preferred program for high
net worth individuals, the HDFC Bank Plus and the Investment Advisory Services
programs have been designed keeping in mind needs of customers who seek distinct
financial solutions, information and advice on various investment avenues. The Bank
also has a wide array of retail loan products including Auto Loans, Loans against
marketable securities, Personal Loans and Loans for Two-wheelers. It is also a
leading provider of Depository Participant (DP) services for retail customers,
providing customers the facility to hold their investments in electronic form.
    HDFC Bank was the first bank in India to launch an International Debit Card in
association with VISA (VISA Electron) and issues the MasterCard Maestro debit card
as well. The Bank launched its credit card business in late 2001. The Bank is well
positioned as a leader in various net based B2C opportunities including a wide range
of internet banking services for Fixed Deposits, Loans, Bill Payments, etc.

RATINGS
Credit Rating
HDFC Bank has its deposit programmes rated by two rating agencies - Credit Analysis
& Research Limited. (CARE) and Fitch Ratings India Private Limited. The bank's Fixed
Deposit programme has been rated 'CARE AAA (FD)' [Triple A] by CARE, which
represents instruments considered to be "of the best quality, carrying negligible
investment risk".
HDFC Bank also has its long term unsecured, subordinated (Tier II) Bonds of Rs.4
billion rated by CARE and Fitch Ratings India Private Limited. CARE has assigned the
rating of "CARE AAA" for the Tier II Bonds while Fitch Ratings India Pvt. Ltd. has
assigned the rating "AAA (ind)" with the outlook on the rating as "stable". In each of the
cases referred to above, the ratings awarded were the highest assigned by the rating
agency for those instruments.
AWARDS & ACHIEVEMENTS - BANKING SERVICES
Mr Paresh Sukthankar, Deputy
Managing Director, HDFC Bank
accepting the D&B Corporate Award
2014
HDFC Bank began operations in 1995 with a simple mission: to be a "World-class
Indian Bank". We realised that only a single-minded focus on product quality and
service excellence would help us get there. Today, we are proud to say that we are
well on our way towards that goal.

2014
Dun & Bradstreet - Manappuram Finance
Limited Corporate Award 2014
Best Corporate in Banking Sector
2013
Businessworld Best Bank in India (Large Banks)
Business Standard
Mr Aditya Puri - Banker of the Year
2013
Business India Best Bank 2013
Global Finance Survey -World's Best
Banks 2013
Best Bank in India
IBA Innovation Awards Most Innovative use of Technology
Forbes Asia Fab 50 Companies List for the 7th year
Figure 4 :- Milestones in the history
ORGANIZATION STRUCTURE AND ORGANIZATION HIERARCHY :
The organization structure of the company is headed by the administrative department
which coordinates and controls the executive department. The executive department is
a link from the top and the bottom comprising of the lower level employees such that
they work together to fulfill the common objective of getting business from the
persons who get in touch with them and see to it that they are provided with the best
of the BANK which constitute giving financial advise to providing Account to the
customers. The lower level employees and the corporate financial consultants work
together to see to it that the database for providing financial BANK to sufficient
number of people is made.

Each team lead has a team comprising only of both senior as well as junior market
research analyst who aid the team lead in the entire market research process as it has
been discussed previously. This is the basic organizational structure followed by
HDFC BANK.
Figure 5 :- Organizational Hierarchy
PRODUCT AND SERVICE PROFILE OF THE ORGANIZATION :-
HDFC Bank offers a bunch of products and services to meet the every need of the
people. The company cares for both, individuals as well as corporate and small and
medium enterprises. For individuals, the company has a range of accounts,
investment, and pension scheme, different types of loans and cards that assist the
customers. The customers can choose the suitable one from a range of products which
will suit their life-stage and needs. For organizations the company has a host of
customized solutions that range from Funded services, Non-funded services, Value
addition services, Mutual fund etc. These affordable plans apart from providing long
Managing
Director
Group Head
(Regional
Branch
Banking)
Regional Head/ Branch
Banking Head
Circle Head/ Zonal Head
Cluster Head
Branch Manager
ABM, PB Sales, PB Welcome Desk, PB Authorizer, Tellers,
Teller Authorizer, Head RMs, RMs

term value to the employees help in enhancing Goodwill of the company. The
products of the company are categorized into various sections which are as follows:
Personal Banking Salary Accounts
Saving Accounts Fixed Deposits
Demat Account Safe Deposit Lockers
Loans Credit Cards
Debit Cards Prepaid Cards
Investments & Insurance Forex Services
Payment Services NetBanking
InstaAlerts MobileBanking
InstaQuery ATM
PhoneBanking NRI Banking
Rupee Savings Accounts Rupee Saving Accounts
Rupee Fixed Deposits Foreign Currency Deposits
Accounts for Returning Indians Quick remit (North America, UK,
Europe, Southeast Asia)
India Link (Middle East, Africa) Coequal Lock Box
 
  Figure 6 :- Products & Services of the bank

Chapter 3:
STRATEGIC MANAGEMENT PROCESS (SMP)
Definition :
It is the full set of commitments, decisions and actions required for a firm to
achieve strategic competitiveness and above average returns.
 Strategic competitiveness: when a firm successfully formulates and implements a
value creating strategy
 Above –average Returns: Returns in excess of what an investor expects to earn
from other investments with a similar amount of risk
Figure 7 :- Strategic Management Process

Chapter 4:
VISION, MISSION & BUSINESS FOCUS
3.1. HDFC GOALS
1. Develop close relationships with individual households.
2. Maintain our position as the premier housing finance institution in the country.
3. Transform ideas into viable and creative solutions.
4. To grow through diversification by gaining leverage from our existing client
base.
5. To nurture the values and ethos of Brand HDFC through all its Subsidiaries
and Associate Companies.
3.2. VISION STATEMENT OF HDFC BANK
To build a World-Class Indian Bank.
By offering a wide variety of relevant products and services…
1) Tailored solutions for customers
2) Ensure Unmatched customer service
3) Providing the solution at right price
4) Have wide and extensive reach
The delivery backbone for providing the above shall be by adopting world class
technology.
3.3. MISSION STATEMENT OF HDFC BANK
Our mission is to be "a World Class Indian Bank", benchmarking ourselves against
international standards and best practices in terms of product offerings, technology,
service levels, risk management and audit & compliance. The objective is to build
sound customer franchises across distinct businesses so as to be a preferred provider
of banking services for target retail and wholesale customer segments, and to achieve
a healthy growth in profitability, consistent with the Bank's risk appetite. We are

committed to do this while ensuring the highest levels of ethical standards,
professional integrity, corporate governance and regulatory compliance.
3.4. BUSINESS FOCUS
HDFC Bank’s mission is to be a World Class Indian Bank. The objective is to build
sound customer franchises across distinct businesses so as to be the preferred provider
of banking services for target retail and wholesale customer segments, and to achieve
healthy growth in profitability, consistent with the bank’s risk appetite. The bank is
committed to maintain the highest level of ethical standards, professional integrity,
corporate governance and regulatory compliance. HDFC Bank’s business philosophy
is based on five core values: Operational Excellence, Customer Focus, Product
Leadership, People and Sustainability.
3.5. BUSINESS PHILOSOPHY
HDFC Bank is a young and dynamic bank, with a youthful and enthusiastic team
determined to accomplish the vision of becoming a world-class Indian bank.
Our business philosophy is based on five core values - Customer Focus,
Operational Excellence, Product Leadership, People and Sustainability. We
believe that the ultimate identity and success of our bank will reside in the exceptional
quality of our people and their extraordinary efforts. For this reason, we are
committed to hiring, developing, motivating and retaining the best people in the
industry.

Chapter 5:
ENVIRONMENTAL ANALYSIS
Definition :
Environment refers to all external forces which have a bearing on the functioning of
business. ”Environment are largely if not totally external, and beyond the control of
individual industrial enterprises and their management. These are essentially the
givers within which firms and their managements must operate in a specific country
and they vary, from country to country”.
Figure 8 :- Environment analysis
Business
Decision
Internal Environment
Mission / Objectives
Management Structure
Internal Power Relationship
Physical Assets & facilities
Company image
Human resources
Financial Capabilities
Technological Capabilities
Marketing Capabilities
Financiers
Suppliers
Customers
Competitors
Public
Mktg Intermediaries
Micro Environment
Economic
Technological
Global
Demographic
Socio-Cultural
Political
Macro Environment
BUSINESS ENVIRONMENT

Chapter 6:
INTERNAL ENVIRONMENTAL ANALYSIS
Any business has certain vision, mission and objectives and a strategy to achieve
them. Formulation of strategy is defined as establishing a proper firm-environment fit.
Indeed the objectives should be based on an assessment of the external environment
and the organizational factors (internal environment).
• Vision
• Mission
• Objectives
• Management Structure
• Human Resources
• Financial Factors
• Company Image and Brand Equity
Internal anaylsis tools used
(i) SWOT ANAYLSIS
(ii) BCG MATRIX

(i) SWOT ANALYSIS OF HDFC BANK
Strengths
 HDFC bank is the second largest private banking sector in India having 2,201
branches and 7,110 ATM’s
 HDFC bank is located in 1,174 cities in India and has more than 800 locations
to serve customers through Telephone banking
 The bank’s ATM card is compatible with all domestic and international
Visa/Master card, Visa Electron/ Maestro, Plus/cirus and American Express.
This is one reason for HDFC cards to be the most preferred card for shopping
and online transactions
 HDFC bank has the high degree of customer satisfaction when compared to
other private banks
 The attrition rate in HDFC is low and it is one of the best places to work in
private banking sector
 HDFC has lots of awards and recognition, it has received ‘Best Bank’ award
from various financial rating institutions like Dun and Bradstreet, Financial
express, Euro money awards for excellence, Finance Asia country awards etc
 HDFC has good financial advisors in terms of guiding customers towards right
investments
Weaknesses
 HDFC bank doesn’t have strong presence in Rural areas, where as ICICI bank
its direct competitor is expanding in rural market
 HDFC cannot enjoy first mover advantage in rural areas. Rural people are
hard core loyals in terms of banking services.
 HDFC lacks in aggressive marketing strategies like ICICI
 The bank focuses mostly on high end clients
 Some of the bank’s product categories lack in performance and doesn’t have
reach in the market
 The share prices of HDFC are often fluctuating causing uncertainty for the
investors

Opportunities
 HDFC bank has better asset quality parameters over government banks, hence
the profit growth is likely to increase
 The companies in large and SME are growing at very fast pace. HDFC has
good reputation in terms of maintaining corporate salary accounts
 HDFC bank has improved it’s bad debts portfolio and the recovery of bad
debts are high when compared to government banks
 HDFC has very good opportunities in abroad
 Greater scope for acquisitions and strategic alliances due to strong financial
position
Threats
 HDFC’s nonperforming assets (NPA) increased from 0.18 % to 0.20%.
Though it is a slight variation it’s not a good sign for the financial health of
the bank
 The non banking financial companies and new age banks are increasing in
India
 The HDFC is not able to expand its market share as ICICI imposes major
threat
 The government banks are trying to modernize to compete with private banks
 RBI has opened up to 74% for foreign banks to invest in Indian market.

SWOT ANAYLSIS OF HDFC BANK
HELPFUL HARMFUL
Figure 9 :- SWOT Analysis of the bank
 2nd largest private sector bank
 Approx. 3400 branches and 11250
ATMs across country
 Employee friendly organization-lower
attrition rates as compared to other
competitors
 Customer friendly approach
 Sound financial advisors for investment
clients
 Adoption of latest technology for bank
softwares and net banking facilities
 Low minimum balance in savings
account
 Low presence in rural areas as
compared to most of its top
competitors
 Lack of aggressive marketing
strategies in comparison to other
banks
 Heavy focus on mid and high level
clients
 Not all the verticals of the bank are
performing successfully
 Unstable share prices
 Scope in rural market
 Steady customer oriented approach to
drive business in future
 Corporate accounts, especially of the
growing SME sector
 Operations abroad – scope in countries
like Bangladesh, UAE and Sri Lanka
 Greater scope for acquisitions and
strategic alliances due to strong
financial position
 Improvement in bad debt recovery
strategies
 Increasing percentage if Non-
Performing assets of the company
 Major competition threat from banks
like ICICI, HSBC, AXIS and SBI
 Increasing number of NBFCs and
new age banks
 Attractive interest rates provided by
PSU banks in comparison to private
banks
 Shifting consumer base from private
players to PSU due to modernization
of PSUs
 RBI has opened up to 74% for foreign
banks to invest in Indian market
STRENGTHS WEAKNESSES
OPPORTUNITIES THREATS

(ii) BCG MATRIX
The BCG matrix is a chart that had been created by Bruce Henderson for the Boston
Consulting Group in 1970 to help corporations with analyzing their business units or
product lines. This helps the company allocate resources and is used as an analytical
tool in brand marketing, product management, strategic management, and portfolio
analysis.
HDFC Bank
HDFC BANK stands at star position in BCG matrix. As HDFC bank have the high
market growth and they also have high market share. There is a lot of growth
potential for the banking industry because of increasing disposable income of
customers, increasing working class, more volatility in other markets also increasing
importance of savings and already discussed almost 30% of the market is still
untapped.
HDFC Insurances
In insurance sector HDFC’s most of the products are in star position. HDFC insurance
products have high market share and high growth rate. So we have lot of opportunity
for investment.

HDFC Mutual Funds
Mutual fund stands at cash cow. This shows that HDFC high market share and low
market growth rate in mutual funds. This means we should only focus on profitable
products and try to investment on those products which are low market growth rate
but perform well if proper investment is theirs.
Growth and margins
Having the funds to grow is only half the problem. However, will the company
actually grow? The sluggish rate of growth in the economy suggests that growth could
indeed pose a problem. In fact, in the first quarter of the financial year-ended 2009,
HDFC Bank was able to record only a 43 per cent growth in profits. This, however,
may not be good enough to justify the valuation commanded by the stock. And if, due
to the slowdown, the bank is forced to invest in government securities rather than in
loans, which generate higher returns, the margins will be affected. On the other hand,
competition from other banks may increase. Hence it can be concluded that HDFC
BANK stands at cash cow in BCG matrix.
Figure 10 :- BCG Matrix

Chapter 7:
EXTERNAL ENVIRONMENTAL ANALYSIS
PESTEL ANAYLSIS
Political factors:
 Government regulations: Banks as a financial body are always restricted with
policies and rules.
 The RBI closely governs the banks and other financial institutions and budgets
made by the government affects the banking activities and also its business to a
certain extent.

 Government’s support to the PSU banks has an impact on the performance of
other private players.
 RBI is going to allow foreign banks to invest upto 74% into the Indian market.
Economic factors:
 Every year, the changes in monetary policy affect the workings of the bank.
The decisions on the monetary policy impact the interest rates at which banks
lend money.
 In the last 2 years RBI has modified its monetary rates 13 times to curb
inflation and other financial risks related.
 Banking sector has played a major role in the increasing GDP of the country,
thereby providing its support to strengthen the economy.
 Robust economic policies by the regulatory body helped Indian banks survive
the severe meltdown of 2009.
Social factors:
 The life style of Indians consumers is rapidly changing and the buying power
has also grown by leaps and bounds
 The rural market is expanding rapidly too. The concept of banking has slowly
begun to sink in the minds of the rural population and is making an impact on
the lives of the rural population and also on the banks operating in rural areas.
 Illiteracy is still an issue that India is fighting with and therefore not many can
read and understand the terms of banks, thereby making them keep distance
from banks.
Technological factors:
 Banks have a wide network of ATMs lately.
 Automated voice responsive machines help bank tackle small queries of
customers.
 Improved net banking and Mobile facility provided by banks has helped many
customers save time, money and also unnecessary hassles.

 Internet banking or banking via the Internet can be considered
a remarkable development in the banking sector. The ability
to carry out banking transactions through the Internet has
empowered customers to execute their financial transactions
within the comfort of their homes and offices.
Environmental factors:
 HDFC Bank Joins The Anti-Plastic Drive
 One of India's leading banks- HDFC Bank, is partnering with the city's
municipal authorities to educate people about the danger posed by plastic bags
to the environment, and to offer recycled paper bags instead.
 The bank reinforced the Kolkata Municipal Corporation (KMC) initiated anti-
plastic awareness drive by distributing recycled and eco-friendly paper bags to
retailers and customers across nine markets in the city.
 The initiative christened "Be Independent of Plastic on Independence Day" is
undertaken by the bank to encourage people to proactively get rid of plastic
bags and use eco-friendly recycled paper bags.
 HDFC bank urges its customers to use the internet to transact with them
especially in case of Mutual Funds by using HDFCMF Online …slogan
being….
 ‘With HDFCMC Online you will help save a lot of paper and we encourage
you to choose this eco-friendly mode of transacting. We hope you will help us
in our endeavor to protect our environment and help us SAVE PAPER, SAVE
TREES.’

Legal factors:
 Initiating appropriate legal proceedings as per Collections requirement and
helping Collections in meeting numbers and deadlines. Within the TAT
prescribed for each process.
 Effective vendor management including clearance of bills without delay.
Within 3 days of receipt of bills, bills to be forwarded to respective
departments.
 Overseeing and reviewing legal managers of the area by conducting periodical
reviews and ensuring that process adopted is in line with policy and
requirements. (Not quantifiable)
 Maintaining MIS of the area and providing it to higher ups within TAT. (Not
quantifiable)
 Handling the claims raised against the bank effectively before all forums/
statutory bodies and ensuring that no adverse orders are passed against the
bank. (Not quantifiable)

Chapter 8:
THE INDUSTRY ANALYSIS
Industry Structure (Using Porter’s five forces model)
Porter’s five forces analysis is a framework for industry analysis and business strategy
development formed by Michael E. Porter of Harvard Business School in 1979. It
draws upon industrial organization (IO) economics to derive five forces that
determine the competitive intensity and therefore, attractiveness of a market.
An "unattractive" industry is one in which the combination of these five forces acts to
drive down overall profitability. A very unattractive industry would be one
approaching "pure competition", in which available profits for all firms are driven to
normal profit.
Porters model is, applied microeconomic principles to business strategy and analyzed
the strategic requirements of industrial sectors, not just specific companies. The five
forces are competitive factors which determine industry competition and include:
suppliers, rivalry within an industry, substitute products, customers or buyers, and
new entrants.
Banking is mainly a client oriented business. A high-quality of services to the client is
crucial for the growth and stability of any bank. A wider distribution and access of
financial services helps both consumers and producers to raise their
welfare and productivity. Such access is especially powerful for the poor as it
provides them opportunities to build savings, make investments, avail credit, and
more important, insure themselves against income shocks and emergencies.
To survive in an increasingly competitive environment, bank need to come up with
various facilities like Internet banking, mobile banking etc. With the onset of mobile
banking, the industry finds itself at the threshold of the next major technological leap.

i. Bargaining power of Buyers - Moderate bargaining power of customers on
account of banks renders uniform services to the clients. Now a day’s almost
all banks would like to provide requisite information very easily by way to
Internet, Mobile banking to the clients
ii. Bargaining power of Suppliers - Low bargaining power of supplier’s on
account of RBI regulatory benchmarks. Banks have to meet numerous
regulatory standards created by RBI
iii. Competitive Rivalry - High competition of account of number of prominent
public, private, foreign along with cooperative banks.
Top Performing Public Sector Banks
a. Andhra Bank
b. Allahabad Bank
c. Punjab National Bank
Top Performing Private Sector Banks
a. ICICI Bank
b. AXIS Bank
c. Kotak Mahindra Bank

iv. Availability of Substitutes - High menace from substitutes like NBFC’s,
Mutual funds, Government securities and T-bills.
v. Threat of new entrants - Low threat of new entrants on account of banking
regulations. Before setting up of a new bank, it is essential to take the consent
of RBI.
Figure 11 :- Porter’s 5 Force Model

Chapter 9:
THE COMPETITORS’ ANALYSIS
Major Players in India :
1. HDFC BANK LTD
2. ICICI BANK LTD
3. STATE BANK OF INDIA LTD
4. PUNJAB NATIONAL BANK LTD
5. BANK OF BARODA LTD
6. FEDERAL BANK LTD
7. AXIS BANK LTD
8. INGVYSYA BANK LTD
9. IDBI BANK LTD
10. INDUSIND BANK LTD
11. YES BANK LTD
HDFC Bank is the second largest private bank in the country, the first being ICICI
Bank.
A table stating the comparative analysis is given below :

COMPETITION ANALYSIS : HDFC BANK VS ICICI BANK
Figure 12 :- Competitive analysis
Parameter ICICI Bank HDFC Bank
Revenue 13.9 bn $ 5.9 bn $
Profit 1.4 bn $ 923 mn $
Total assets 120 bn $ 66 bn $
Employees 79978 55752
Branches 2630 2544
ATM 8003 9709
International presence 19 countries 5 countries
Significant M&A Merger with Madura
in 2001
Acquisition of
Century Bank of
Punjab in 2008
Attractive offering DD call and collect
facility
Concessional rates
on savings account
for women
customers
Minimum balance in
Metro cities
10000 10000
Minimum balance in
Semi-urban
5000 500
Rate applicable on
savings account
3.5% on savings
account payable
every quarter
3.5% on savings
account payable
every half year
FD Rates-15 lacs cap-
General
8.50% 9.25%
FD Rates-15 lacs cap-
senior citizens
9.25% 9.50%
Enterprise stronghold enterprise banking
accounts
SME Lending
Distribution branches, ATM,
Internet banking,
Mobile banking,
branches, ATM,
Internet banking,
Mobile banking,
Student offers special campus
accounts for students
zero balance
accounts for students
and minors

COMPETITIVE SWOT ANALYSIS :
Figure 13 :- Competitive SWOT analysis
DETAILED ANALYSIS
i. Strength-Opportunity Analysis (S-O Strategy) :
Strength:
It is well know that HDFC Bank has the largest Authorised Capital Base in the
Banking System in India i.e. having a total capacity to raise Rs.19,000,000,000 (Non
– Premium Value).
STRENGTHS WEAKNESSES
O
P
P
O
R
T
U
N
I
T
I
E
S
S-O Strategies
 Strength : Large Capital Base.
 Opportunity : Market
Expansion.
 Strategy : Deep penetration into
the Rural market.
W-O Strategies
 Weakness : Workforce
Responsiveness.
 Opportunity : Outsourcing of
Non-core Business.
 Strategy : Outsource Customer
Care & other E-helps.
T
H
R
E
A
T
S
S-T Strategies
 Strength : Low operating costs.
 Threat : Increased competition
from other private banks.
 Strategy : Steps to ensure
Loyalty by old Customers.
W-T Strategies
 Weakness : Not equal to
International Standards.
 Threat : Entry of many Foreign
Banks.
 Strategy : Consider additional
benefits

Opportunity:
Seeing the present financial & economic development of Indian Economy and also
the tremendous growth of the Indian Companies including the acquisition spree
followed by them, it clearly states the expanding market for finance requirements and
also the growth in surplus disposal income of Indian citizens has given a huge rise in
savings deposits – from the above point it is clear that there is a huge market
expansion possible in banking sector in India.
Strategy:
From the analysis of Strength & Opportunity the simple and straight possible strategy
for HDFC Bank could be - to penetrate into the rural sector of India for expanding its
market share as well as leading all other Pvt. Banks from a great gap.
ii. Strength - Threat Analysis (S-T Strategy) :
Strength
HDFC Bank is not only known for large capital but also for having a low operations
cost though having huge number of branches and services provided.
Threat:
After showing a significant growth overall, India is able to attract many international
financial & banking institutes, which are known for their state of art working and
keeping low operation costs.
Strategy:
To ensure that HDFC Bank keeps going on with low operation cost & have
continuous business it should simply promote itself well & provide quality service
so as to ensure customer loyalty, therefore guaranteeing continuous business.
iii. Weakness - Opportunity Analysis (W-O Strategy) :
Weakness :

It is well known that workforce responsiveness in banking sector is very low in Indian
banking sector, though HDFC Bank has better responsible staff but it still lacks
behind its counterparts like HSBC, HDFC BANK, CITI BANK, YES BANK etc.
Opportunity :
In the present world, India is preferred one of the best places for outsourcing of
business process works and many more.
Strategy :
As international companies are reaping huge benefits after outsourcing their customer
care & BPO’s, this same strategy should be implemented by HDFC bank so as to
have proper customer service without hindering customer expectations.
iv. Weakness - Threat Analysis (W-T Strategy) :
Weakness :
Though having an international presence, HDFC Bank has not been able to keep
up the international standards in providing customer service as well as banking works.
Threat :
In recent times,India has witnessed entry of many international banks like CITI Bank,
YES Bank etc. which poses an external entrant threat to HDFC Bank – as these Banks
are known for their art of working and maintain high standards of customer service.
Strategy :
After having new entrants threat , HDFC Bank should come up with more additional
benefits to its customers or may be even reduce some fees for any additional works of
customers.

Chapter 10:
FINANCIAL RESOURCES & CORE COMPETENCIES
4.1. FINANCIAL RESOURCES :

Figure 14 :- Financial Statements for the year ending 31st March, 2014
4.2. CORE VALUES
The Bank’s five core values are :
(i) Customer Focus
To achieve sustainable competitive advantage, HDFC Bank relies not only on strong
customer service, but also on measuring customer experience. The Bank has invested
in CRM Technology which provides triggers for selling various products depending

on the customer profile. The Relationship Manager is a trusted advisor to the
customer – he/she has the best interest of the customer and can advise competitor
products, if the Bank’s product does not fit the customer needs.
(ii) Operational Excellence
With a dedicated team to monitor quality and service standards, many of HDFC
Bank’s process segments, including HR Operations are ISO certified. Over 2200
quality improvement projects, aimed at improving operational excellence have been
successfully implemented. Over 550 employees have qualified for Six Sigma
Certification and over 80 have earned the yellow belt
(iii) Product Leadership
HDFC Bank has consistently developed innovative products and services that attract
its targeted customers. Focusing on high earnings growth and low volatility, HDFC
Bank continues to develop and distribute products/services that reduce cost of funds,
by leveraging its extensive branch network. The Bank actively tracks the performance
of various products and depending on the feedback received, tweaks product features,
to better address customer needs.
(iv) Sustainability
We recognize Social and Environmental aspects as essential elements of a Sustainable
business philosophy and are committed to enhance our performance on these fronts. It
is an endeavor to drive a paradigm shift of viewing ESG (Environmental, Social and
Governance) parameters from risks to opportunities and to incorporate social and
environmental aspects into our business by embedding sustainability in our
Stakeholders, Products and Services.
(v) People
People are the Bank’s greatest strength. HDFC Bank believes that the ultimate
identity of success of our Bank will reside in the exceptional quality of our people and
their extraordinary efforts. For this reason, we are committed to hiring, developing,
motivating and retaining best people in the industry.

The People Value can be defined, as
 Professional : Transparency, fairness, absolute integrity and unbiased dealings
with stakeholders – customers, colleagues and vendors. People are not afraid
to experiment as long as there is a convincing business logic and an honest
attempt.
 Respect for the Individual : Absolute meritocracy at the time of hiring or
promoting individual or assigning tasks and positions. There is a formal sexual
harassment policy in place to ensure dignity of individuals in the workplace.
 ‘Can Do’ Attitude : The attitude to take oneself beyond one’s perceived
limitations emphasizes on persistence and perseverance in reaching one’s
goals.
 Employee Care : HDFC Bank cares for its employees. This is manifested in
the fact that Bank has instituted a Reward and Recognition Policy to
acknowledge and honour employee contribution, be it business, cost saving
initiatives or process improvements.
4.3. BUSINESS DIVISION :
 Retail banking - Loans to
Individuals (Auto loan, Housing
Loan, Education Loan and other
personal loan) or small businesses.
 Wholesale banking –
Loans to Mid and Large corporate
(Working Capital loans, Project
finance, Term loans, Lease
Finance)

 Treasury Operations – Investment in Equity, Derivates, Commodities,
Mutual Funds, Bonds, Trading and Forex operations
 Other Banking Businesses – Merchant Banking, Leasing business, Hire
purchase, Syndication services etc.

Chapter 11:
STRATEGIC ANALYSIS
STRATEGY DEFINITION :
A strategy is an integrated and coordinated set of commitments and actions designed
to exploit core competencies and gain a competitive advantage.
A firm has a competitive advantage when it implements a strategy competitors are
unable to duplicate or find too costly to try to imitate.
A strategy is a comprehensive master plan stating HOW the corporation will achieve
its mission and objectives. There are three types:
 Corporate - a corporation’s overall direction and the management of its businesses.
 Business - emphasizes improving the competitive position of a corporation’s products
or services in a specific industry or market segment.
 Functional - concerned with developing a distinctive competence to provide a
company or business unit with a competitive advantage.
Figure 15 :- Classification of Strategies

(A) CORPORATE LEVEL STRATEGY :-

(B)BUSINESS LEVEL STRATEGY :-
Our business strategy emphasizes the following :
Increase our market share in India’s expanding banking and financial services
industry by following a disciplined growth strategy focusing on quality and
not on quantity and delivering high quality customer service.
Leverage our technology platform and open scaleable systems to deliver more
products to more customers and to control operating costs.
Maintain our current high standards for asset quality through disciplined credit
risk management.
Develop innovative products and services that attract our targeted customers
and address inefficiencies in the Indian financial sector.
Continue to develop products and services that reduce our cost of funds.
Focus on high earnings growth with low volatility.
HDFC Bank’s General Business Strategy :
 Customer retention strategy (may 2, 2008) –
 All charges have been waived off
 Services like locker, de-mat, etc. would be charged at 50%.
 The charges on debit card have been taken off.
 Gave number to contact regarding any service.

(C)FUNCTIONAL LEVEL STRATEGY :-
Marketing strategy:
 Segmentation strategy -
• Demographics variables
Location - Metros & divisional cities
 Occupation - Business person & Salaried class (both govt. & private)
 Age - Senior citizens & Minor
• psychographic variables
Lifestyle - People who believes in modern banking with higher set of
service i. e. internet banking (incontact, mobile refill, travel currency card etc.)
 Targeting strategy -
• Target market
Corporate banking market : this market target the industries & fulfill
their financial needs.
Capital market : this segment is targeted on the long term needs of
the individual as well as of industries.
Retail banking market : this segment is for retail investors & provide them
short term financial credit for their personal, house hold needs.
 Positioning strategy -
• HDFC Bank has positioned itself as a bank which gives higher standard of
services through product innovation for the diverse need of individual &
corporate clients. So they want to highlight following points in their
positioning segment :
-Customer centric
-Service oriented
-Product innovation

Promotions strategyof HDFC Bank
"It plans to send personalized mailers about various products to all those HDFC come
in contact with during these mass promotions." The bank has also tied up with
Business Today, to sponsor 10,000 copies of the magazine in each metro. The cover
of the sponsored copies would be the December issue of Business Today, which rated
HDFC Bank as the best bank in the country. On the opposite side, would be an
advertorial which would talk about HDFC as a `one-stop financial supermarket'.
Gold Credit card: For providing the better services to the customers and
promoting their business, HDFC has launched the Gold Credit Cards. It's overloaded
with travel benefits - discounts, cash back offers, air miles redemption.
Gold Credit Card Features & Benefits
Attractive Reward Points - Earn 1 reward point per Rs 150 spent on the Gold
Credit Card.
Rewards points redemption - After earning all those reward points on your
HDFC Bank Gold Credit Card, redeem them for exciting gifts and services! You
could even convert them to airline miles with India's leading airlines through the
My Rewards programme.
Worldwide acceptance - Accepted at over 23 million Merchant Establishments
around the world, including 110,000 Merchant Establishments in India.
Revolving credit facility - Pay a minimum amount, which is 5% (subject to a
minimum amount of Rs.200) of your total bill amount or any higher amount
whichever is convenient and carry forward the balance to a better financial
month. For this facility you pay a nominal charge of just 3.25% per month
(39.0% annually).
Free Add-on card - You can share these wonderful features with your loved
ones too - we offer the facility of an add-on card for your spouse, children or
parents. Allow us to offer add-on cards to you FREE OF COST with our
compliments.
Interest free credit facility - Avail of up to 50 days of interest free period from

the date of purchase (subject to the submission of the charge by the Merchant).
Zero liability on lost card - If you happen to lose your Card, report it
immediately to our 24-hour call centre. After reporting the loss, you carry zero
liability on any fraudulent transactions on your card
Platinum Cards GetAdditional Benefits
HDFC Bank Platinum Card Customers Get Additional Benefits compared to Gold /
silver or other entry level cards. For instance, consider this, HDFC Cards has a Co-
Branded Online Shop with Surat Diamonds. By virtue of being HDFC Bank
Customer, you are already getting big discount. Now add any item to your cart and
enter 558818 [6 Starting Digits of Platinum Card], you get additional discount. This is
just one such instance. You also get Petrol Surcharge Waiver, IRCTC Charges
Waived, etc.
ClearTrip Discountto Debit Card Holders
Use your HDFC Bank Debit Card to book any flight, hotel or train & get 10%*
cashback Domestic Air Offer - Book any Domestic Flight and get 10% cash back on
Base Fare or Rs.250 cash back per booking (whichever is less).
Trains - Book any Train and get 10% cash back or Rs.50 cash back per booking
(whichever is less) International Air Offer - Book any International Flight and get
10% cash back on Base Fare or Rs.600 cash back per booking (whichever is less).
Hotels Offer - Book any Hotel (Domestic/International) and get 10% cash back on
Base Price or Rs.500 cash back per booking (whichever is less). To avail the cash
back kindly enter coupon code HDFCTRIP during step 3 of the booking process
before payment.

HR STRATEGY :-
The Bank is a team –focused organization that is characterized by
 Collaborative relationships; 
 Approachable and open communications; 
 Courteous, efficient and effective services; and
 Flexibility and fairness
PURPOSE
The purpose of this strategy is to ensure that the human resources values framework
incorporates four key principles, which are;
1. Communication
Bank’s management and staff will promote an environment where the principles of
open communication will be upheld. For the purpose of this policy ,open
communication encapsulates the idea of;
Mutual recognition an respect at all levels;
Freedom to express one’s views and a commitment to resolving any
interpersonal conflict;
Promotion and development of two way communication
incorporating constructive   feedback;
Appropriate dissemination of dissemination of information.  
2. Opportunity   Bank’s management and staff will promote a work environment
that provides opportunity for;
Improved work practices;
Support of individuals in pursuit of personal and career
growth and
individual strengths.
3. Innovation  Bank’s management and staff will promote an envioronment to
encourage initiative leading to flexibility and growth. This philosophy will facilitate
improved work practices , which meet organizational needs through the challenging
of preconceived ideas.
4. Individual
Bank’s management and staff acknowledge the importance of each individual’s
contribution to the work of the Bank by recognizing their qualities , strengths and
abilities and sharing these across the Bank.

STRATEGIC QUALITY POLICY
 SECURITY :
The bank provides long term financial security to their policy. The bank does
this by offering life insurance and pension products.·
 TRUST :
The bank appreciates the trust placed by their policy holders in the bank.
Hence, it will aim to manage their investments very carefully and live up to
this trust.·
 INNOVATION :
Recognizing the different needs of our customers, the bank offers a range of
innovative products to meet these needs.·
 INTEGRITY:
 CUSTOMER CENTRIC
 PEOPLE CARE“ONEFORALL ANDALL FOR ONE”
 TEAM WORK
 JOYAND SIMPLICITY
Operation Red Spider
• On 14 March 2013 an online magazine named Cobrapost.com released video
footage from Operation Red Spider showing high ranking officials and some
employees of HDFC bank willing to turn black money into white which is
violation of Money Laundering Control Act
• Following this the government of India and RBI have ordered an inquiry
• The enquiry confirmed violation of KYC (Know Your Customer) norms by
HDFC Bank. A penalty of Rs 45 million was imposed on the bank by RBI

HR Department
HR Department is responsible for;
 Regular review and development of human resource
management practices;
 Periodic review of the work priorities to determine skill
requirements needed to meet the   Bank’s strategic plan;
 Determination of an organizational structure that will facilitate
and improve teamwork; and
 Appointment and promotion of staff on merit and to ensure that
treatment of all employees is   fair and equitable.
The Organisational Competencies Required for ExcellentCustomer
Service :
What customers want from HDFC Bank is expressed into some organizational
competencies – so that you can see what you as Manager or Team Leader must
achieve within your team. If customers want excellent service, how does
the organisation or team go about providing it? Developing and Sustaining a
Reputation for Service Excellence, identifies the Organisational Competenciesthat
need to be in place to deliver that excellent service. These organisational
competencies have to be in place right across the organisation. Although you can do a
lot yourself with your own team, World Class Service Excellencerelies on a
commitment and drive from the very top of the organisation to build these
competencies. The competencies are described below.
Service Personality
The organisation has a well-defined personality which defines the particular way
itdelivers service and interacts with its customers. An excellent service provider
tendsto have its own Service Personality – an identifiable set of service characteristics
thatdefines how its service provision is different from that of its competitors.

Service Culture
There is a culture throughout the organisation’s people that focuses on givingexcellent
service o both internal and external customers. Leaders and managers arecommitted
to the service culture. They communicate the organisation’s vision, values,leadership
and continuous improvement methods to employees. Employees understandtheir own
role in supporting the service culture. An example is provided by a large,multinational
organisation that supplies food products to retail stores. It includescustomer service in
its mission statement, publishes its organizational valuesprominently on its website,
and issues a one-page “Customer Service Credo” to all itsemployees. It ensures that
all its people have a clear understanding of the importanceof customer service in all
that they do.
Committed Staff
Employees are well-motivated, have a can-do attitude, enjoy team working
andsupporting their internal customers. Professional relationships exist throughout
theorganisation, with high levels of trust, openness and a no-blame culture,
encouragingcontinuous improvement. An example is shown by an organisation where
teamsregularly have their own meetings to review customer service issues, talk
throughimprovements to processes and deal with customers’ problems. Each month

they appoint an “Employee of the Month” – and the winners of the award are
sometimespeople who deal only with internal customers.
Customer Focused Processes
Systems and processes are designed around customers, whether internal or external.
Six systems or processes in particular are seen as fundamental: communication
systems, systems for listening to customers and employees, training systems,
appraisal, reward and recognition systems, performance measurement systems and
service recovery systems. For example, at all sites of a European retailer there are
notice-boards to display up-to-date graphs showing customer satisfaction levels. This
ties employees’ and teams’ performances firmly to improvements for customers.
EasyTo DoBusinessWith
If the first four organisational competencies are in place, then they should lead
toreally positive results for customers – they will find the organisation easy to
dobusiness with.An example is provided by guests at a prominent hotel group. The
hotel finds that itwins and keeps many new customers because it has ensured its
online room bookingservice is highly customer focused and easy to use. Combined
with the excellentservice reported by customers when they stay at the hotel, this
means theorganisation is easy to do business with.
Financial Benefits
Once the organisational competencies are in place, your team and organisation
canbuild a reputation amongst its customers for service excellence. This in turn leads
to Customer Loyalty, recommendation and – in general – to financial success.
HR COMPETENCIES:-
 Competency is an underlying characteristic of an employee (i.e. a motive,
trait, skill, aspects of one’s self-image, social role, or a body of knowledge)
which results in effective and/or superior performance. (Prof. Boyatzis, 1982)

MANAGEMENT INFORMATION SYSTEM
A Management information system (MIS) is a subset of the overall internal control of
a business covering the application of people, documents, technologies, and
procedures by management accountants to solve business problems such as costing a
product, service or a business-wide strategy.
MIS should be designed to achieve the following goals:
 Enhance communication among employees.
 Deliver complex material throughout the institution.
 Provide an objective system for recording and aggregating information.
 Reduce expenses related to labor-intensive manual activities.
 Support the organization's strategic goals and direction
INFORMATION SYSTEM IN HDFC :
• Information technology can be a strategic tool in making HDFC more efficient
and effective. HDFC can reach more people in more efficient way by

implementing right management information system. IT creates an evolution
in whole world in every business and so in banking system.
• Due to IS employees can easily connect with other branches, customer service
get improved, online banking emerged and lot of others benefits
MAIN SERVICES:
 Consumer Banking
 Wholesale Banking
ORGANISATIONALRESOURCES :
Application Software:-
General Application Software :
 Microsoft Office
 NOD32 Anti-Virus
 Adobe Reader
 Database management software
 Integrated software : CLARIS , LOTUS
Specific Application Software :
 HR software called “ ATLAS “
 Accounting software called “TALLY”
 Marketing software called “ CALLPAN “
 Financial software called “SPSS”

B U S I N E S S I N D I A » November 29,2009 C o rp o r a t e W o m a n
A people's person
The HR head of HDFC Bank doesn't let controversy stop her
from performing
Ma n d e e p Mai tra , 4 4 , t h e h e a d of
h u m a n re so ur c e s ( H R ) a n d cor
p o r a t e services at p r i v at e sector H D F C
Bank, h a s b ee n t h r o u g h t w o m e r g e r s
a l r e a d y. First, w h i l e a t T i m e s Bank
in 1 99 9, w h e r e s h e m o v e d from
c o n s u l t a n c y firm A r t h u r A n d e r s e n .
Eight m o n t h s i n t o t h e jo b as h e a d of
H R , T i m e s was a c q u i r e d by H D F C
Bank. And t h e s e c o n d, m o r e recently,
w h e n H D F C Bank a c q u i r e d C e n t u r i o n
Bank of P un jab - itself a c o m b i n a t i o n
of so rts, f o r m e d b y t h e m e r g e r of
four b a n k s .
A ss i mi l at i n g t h e c u l t u r e s of t w o
o r g a n i s a t i o n s t o g e t h e r c a n b e t h e
trickiest exercise in a n y me r ge r; a n d
in t h i s area, Maitr a , a p s y c h o l o g i s t
w h o " a l m o s t b e c a m e a s h r i n k " , h a s
g a t h e r e d d e c e n t e x p e r i e n c e . Sh e
b e g a n h e r career at a m a n u f a c t u r i n g
o u t l e t of Eicher T r ac t o rs at P a r w a n o o
in F li m a ch al Pr a des h - f ol lo w in g h e r
e d u c a t i o n at Lady Sriram College a n d
Tata I n s t i t u t e of Social Sciences.
At age 2 2 , s h e w as t h e o n l y girl
in m a n a g e m e n t in a factory full of
u n i o n worke rs.
"Back t h e n , " s h e recalls, "we h a d
l a b o u r issues w i t h t h e wo rk er s,
b e c a u s e t h e y t h o u g h t w e w e r e p u s h
i n g for p r o d u c t i v i t y , i n s t e a d of b e i n g
k ee n a b o u t t heir welfare. It sorted ou t ,
b u t t h e s e e x p e r i e n c e s t e a c h y o u a lot
a b o u t b a l a n c i n g different ideas. At
t h e e n d of t h e day, y o u bet o n p eo ple ,
n o t strategies."
After h e r s ti nt at Eicher, Mai t ra
m o v e d t o M u m b a i w h e r e s h e j o i n ed
A N Z G r i n d l a y s Bank - first respons ible
for t h e i n v e s t m e n t b a n k i n g s e g m e n t ,
t h e n m o v i n g o n t o t h e H R f u n c t i o n ;
i n b e t w e e n h e r roles, s h e s p e n t a
c o n s i d e r a b l e a m o u n t of t i m e in t h e
Maitra: content being king maker
t re a s ury s e g m e n t t o o . A N Z G r i n d l a y s
wa s t h e n a 5 6 - b r a n c h o p e r a t i o n w i t h
3 , 0 0 0 e m p l o y e e s . T h i s w a s fo llowed
by a s tint at A rt h ur A n d e r se n for t h r e e
years, as part of a c o re t e a m t h a t
l o o k e d after H R i n i t i a t i ve s a cros s
Eu rope, Mi d d le East a n d Asia.
After N a n i J h a v e r i fro m A r t h u r
A n d e r s e n m o v e d t o h e a d T i m e s
Bank, Ma i t ra j u m p e d s h i p t o o . But
w i t h i n e igh t m o n t h s of j o i n i n g ,
T i m e s got m e r g e d i n t o H D F C : B ank. "I
w o n d e r e d b ack t h e n if I s h o u l d stay
o n ; H D F C Bank w a s lesser k n o w n
for its H R po licies a n d s t r a t e g i e s . "
But s h e d e c i d e d t o t a k e t h e p l u n g e .
S inc e t h e n , M ai t r a h a s s e e n t h e
b a n k g r o w from 1,300 e m p l o y e e s t o
Assimilating the cultures of two organisations
together can be the trickiest exercise in any merger;
and in this area, Maitra, a psychologist who "almost
became a shrink", has gathered decent experience
4 8 , 0 0 0 , w i t h i n t h e s p a n of a d e c a d e .
"It w a s a c o n s t a n t p r o c e s s , " s h e
says, "as w e w a n t e d e v e r y t h i n g t o fall
i n t o pl a c e " .
T h a t d i d n o t c o m e easy. Ta k e Lord
Krishn a Bank, for i n s t a n c e , w h i c h was
m e r g e d i n t o C e n t u r i o n Bank, a l o n g
w i t h Ban k of P u n j a b . T h e Kerala-
ba sed b a n k h a d a u n i o n t h a t o p p o s e d
its m e r g e r w i t h C e n t u r i o n , a n d t h e r e
w e r e b r a n c h e s t h a t h a d n ' t servic ed a
single c u s t o m e r in m o n t h s . W h e n it
c a m e t o a p p e a s i n g e m p l o y e e s in P u n
jab, M a i t r a (a P u nj ab i herself) trav
elled t h e d i s t a n c e a l o n e . T o a d d r e s s
e m p l o y e e s in Kerala, s h e j o i n e d m a n
a g i n g d ire cto r Aditya Puri, w h o ask ed
t h e m for a g o o d d a y ' s wo rk, for a g o o d
d a y ' s p a y . L o o k i n g b ack, t h a t u n i o n
still exists. "But w e n e v e r h a d a p r o b
l e m w i t h it," says Ma i t r a . "If t h e
e m p l o y e e s a re p e r f o r m i n g t h e i r
du t i e s , w h y s h o u l d t h e u n i o n b e a
p r o b l e m ? " she asks.
T h e n e x t few m o n t h s we re s p e n t in
b r i n g i n g t o g e t h e r p e o p l e , c u l t u r a l l y
i n t e g r a t i n g t h e m a n d d e v i s i n g pack
ages for c o m p e n s a t i o n a n d p er ks ,
ap art from cl e a ri n g g r i ev an c e s . T h e r e
w er e residual issues, ideological differ
e n c e s a n d d u p l i c a t i o n of wo rk. In
h i n d s i g h t , s h e says, p u l l i n g it off is
easier w h e n o n e is clear a b o u t t h e
po li c ies. "I s h o u l d be ab le t o d e f e n d
t h e m in front of a h u g e c r o w d ,
o t h e r w i s e t h e p o l i c y is n o t w o r t h
following ," s h e says.
As if H R w a s n o t e n o u g h , Ma i t r a
h a n d l e d c o r p o r a t e social r e sp o n s i b i l
ity ( C S R ) for H D F C Ba nk till s o m e t i m e
back, a n d m o r e r e c e n t l y , t o o k o n h e r
pl ate t h e role of d e v e l o p i n g H D F C
B an k 's 1,500 b r a n c h i n f r a s t r u c t u r e .
C S R , s h e says, a l l o w e d h e r t o w o r k at
t h e gr as s r o ot s level in e d u c a t i o n
a n d l i v e l i h o o d c r e a t i o n pr oj e ct s .
"Taking care of in fra st ru ctu re en t a i ls a
lot of e n e r g y . It r e q u i r e s k e e p i n g
co sts at a m i n i m u m , b u t at t h e s a m e
t i m e , b r i n g i n g t h e best t h a t is
offered," sh e says.
A p e o p l e ' s p e r s o n , for M a i t r a c o n
t e n t b e i n g k i n g m a k e r , r a t h e r t h a n
king. S h e co u ld h a v e t a k e n a line job a
few years ago, b u t H R r e m a i n s h e r first
p a s s i o n . " A n d it is g re a t w h e n y o u r
p e r s o n a l p a s s i o n c a n be b r o u g h t
a b o u t in y o u r j o b , " s h e a d d s .
V A I S H N A V I B A L A
^ 1 2 8 •
Business India Sunday, 29 Nov 2009 Page# :130 Size : 503.82 sq.cm.

Chapter 12:
HR SCORECARD
In order to perform an overall analysis we need to analyze KPIs, i.e. those factors
influencing performance of HR department.
Cost per Hire. By evaluating this factor you will be able to see how expensive the
recruiting process is. This process starts from posting job offer to the moment when a
new person is officially employed in the company. Logically, the shorter this process
is, the least expensive is cost per hire.
Turnover Cost. These are the costs related to termination, new hire and learning. In
other words, these are expenses related to integrating a new person into the company.
Turnover Rate. This value represents the situation in your company related to
leaving and hiring new employees. Many people would agree that it is not good to
change personnel too often. If the turnover rate is very high, then maybe you are
treating your personnel wrong? Or is it something wrong with your business in
general? Find out.
Time to Fill. Basically, this is the time needed to fill a vacant position in the
company. Of course, this time depends on how well HR managers are working with

recruiters, advertising and people in general. The shorter this time, the better
performance of your HR department.
Length of Employment. This indicator is very easy to understand. It is possible to
calculate an average value. For instance, in average an employee works 5 years for
your company. Of course, everything depends on the position. If you are changing
couriers or secretaries, this is not a big problem. But if chief managers work for your
company less than a year, this is definitely not good.
Training and Development. Even if you hire the best specialist you need to integrate
him into your company and train. Of course, you bear costs, related to training. If you
manage to cut this cost without harming quality of training, then your HR department
is doing a great job.
Salaries, compensation, bonuses. It is very important to know that you are not
overpaying and allocating recourses wisely. This also concerns HR department of any
company. With Balanced Scorecard you will be able to see how effectively
company’s funds are being used in HR branch.
Cost Effectiveness. It all comes to cost effectiveness after all. All above-mentioned
factors influence performance of HR department which has one goal – minimize costs
and boost performance.

HDFC Bank uses Oracle’s balanced scorecard as a technique for evaluating the
employees in the organization.
Figure 16 :-
HR Scorecard

Chapter
13:
CONCLU
SION
 HDFC
HR –
Key Metrics Considerations:
1.1 HR Capability Requirements of the Organization
1.1.1 Technical skills, knowledge and competencies to design, produce, deliver, and support the
products and services
1.1.2 Other skills and capabilities necessary – leadership, project management, functional
competencies (i.e. financial competency, systems thinking,…)
1.1.3 HR Practice skills, knowledge and competencies – Career planning/ employee
development, coaching/facilitating, problem solving, conflict management,
Communication skills, …
1.2 HR Processes & Systems
1.2.1 Those processes which the HR department/group manages and executes to support the
organization – staffing/hiring, resource planning, training and development,,
compensation and benefits, performance appraisals, personnel data management, labor
relations, succession planning.

Bank is among the top banks in the private sector domain. The bank boasts of
a huge amount of operational efficiencies for over the years. It has got a very
good asset quality and good coverage ratios. The bank has aggressively looked
into rural areas and tier-V and tier-VI cities.
 With this prospect HDFC is continuously working in this direction, but there
are several competitors already in the market with the similar strategy. This
concludes that with the changing economical and political scenario in order to
maintain the position HDFC needs to follow some differentiating strategy.
Because it has a very fine line of difference with its competitor ICICI and can
outshine HDFC.
 The organization must align its corporate and HR strategy by using a holistic
model concept. There are no specific HR strategies followed by the
organization. More emphasis towards such strategy formulation must take
place.
 A communication lab can be setup to attain more clarity in authority-
responsibility relationships.
 Proper training should be given to everyone about how to use the software
efficiently.
 Capacity within institution should be managed properly.
References

 Mr. Rakesh Garg, Branch Manager, Hdfc Bank Ltd., SCF 69-70, Phase
3B2, Mohali
 Verma, Anuj; Paper on Hdfc bank : A fundamental analysis
 Book : Business Environment- By Aswathappa
 Article - Business India Sunday, 29 Nov 2009
 Available from: http://www.hdfcbank.com/personal/default.htm
 Available from: http://www.wikipedia.org/
 Available from: http://www.google.com/
 Available from: http://www.marketing91.com/swot-analysis-
hdfc/#sthash.BTthsnti.dpuf
 Available from: http://www.moneycontrol.com

Strategic management process of HDFC Bank

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