“A COMPARATIVE ANALYSIS OF HDFC BANK FIXED DEPOSIT”

PROJECT REPORT On “A COMPARATIVE ANALYSIS OF HDFC BANK FIXED DEPOSIT”

Submitted in the partial fulfillment of the requirement of the degree of Master of Business Administration (Business Economics)

(Session: 2007-09)

Under the Supervision of :

Submitted By:

Dr. Sanjay Nandal Faculty Deptt. Of Business Economics

SURENDER SINGH Roll No-4907 MBA (BE) 4 th Sem

Submitted To:

Department Of Business Economics Maharshi Dayanand University, Rohtak 

1

DECLARATION:

I, Surender Singh Roll No. 4907 M.B.A (B.E) 4th Semester of Department of Business Economics hereby declare that the project Report entitled “A Comparative Analysis Of  HDFC fixed Deposit ” is an original work and the same has not been submitted to any other institute for the award of any other degree. The seminar presentation was made on ________. The suggestions as approved by the faculty were dully incorporated

Signature Of Supervisor

Signature of the Candidate

Countersigned

Head of Department

2

ACKNOWLEDGEMENT:

I want to clarify that this is not just a formal acknowledgement but also a sincere note of thanks and regard from my side. I feel a deep sense of gratitude and affection for those who were associated with the project and without whose cooperation and guidance this research could not have been conducted properly.

I would especially like to thank Dr. SANJAY NANDAL faculty of our (Department of  Business Economics-M.D.U Rohtak) For taking keen interest in the completion of my report.

Last but not least I dedicate this effort of mine to those persons who are light of my life: My Father, Mother, Friends who have been behind every successful endeavor in my life.

(Surender singh)

3

PREFACE

I am the sort of person who backs himself for whatever he goes. That is why whenever  someone used to mention about experienced people getting all the preference in jobs, I used to get assertive. I always persisted that I can compete with very best in the industry and it does not make sense to benefit someone on the basis of experience alone. But my slumber was broken in the very first day in the market. All my theoretical knowledge and  percentage  percentage counted for nothing. By the time I finished finished my training training I had firm belief in the old saying "Experience is the best teacher" .These eight weeks have taught me what all my education failed to. Now I feel more confidence about myself and have hardened to core. This training taught me what to expect from others. How the things move in corporate world, what the market has for you in store and much more, which can't be expressed in words? It is a great experience and one should try to take advantage of the opportunity given to him/her.

I thank everyone who has contributed to make this experience complete and stimulating.

4

TABLE OF CONTENTS Page No.

Declaration

I

Acknowledgement

II

Preface

III

Executive Summary

IV

Chapter 1 (a) Introduction to project 11-16 (b) Company profile •

Background

18

•

Business Objective

19

•

Board of Directors

20

•

Profit and Loss Account

21

•

Balance Sheet

23

•

Awards Won

24

(c) HDFC Fixe d De posi ts •

HDFC Fixed Deposits

28

•

Benefits

29

•

Features of Fixed De posits

33

•

Scheme of Fixed Deposits

38

5

•

Intere st on Fixed Deposits

•

Comparison of HDFC Fixed Deposits With Other Banks

47

50

Chapter 2 (a) Research Methodology 56 (b) Research Method used

60

Chapter 3 (a) Findings

69

(b) Reccomendations

71

Annexure

74

EXECUTIVE SUMMARY

6

Market research is the function that links the consumer, customer, and public to the marketer through information-information used to identify and define marketing opportunities and problems; generate r e f i ne ne ,

an d

e v al a l u a te te

m a rk r k e t i ng ng

a ct c t i o n s; s;

m o n it it o r

m a r k et et i n g

 p e r f o r m a n c e ; a n d i m p r o v e u n d e r s t a n d i n g o f m a r k e t i n g a s a p r o c e s s .

Speaking in laymen’s language marketing research is the systematic and objective identification, collection, analysis, dissemination and u se se

o f i nf n f or o r ma m a ti t i on on

f or or

t he he

p ur u r po p o se se

o f a ss s s is i s ti t i ng ng

m an a n ag a g em e m en en t

in

decision making related to the identification and solution of problems (and opportunities) in marketing.

A s m a rk r k e ti t i n g R e se s e a r ch c h i s s y st s t e ma m a t i c, c , t h u s, s , s y st s t e ma m a t i c p l an an n i n g i s required at all stages of the marketing research process. Marketing R e se s e a r ch c h a t te t e m pt p t s t o p p r ov o v i d e a c c ur u r a te t e i n f or o r m at a t i on o n t h a t r e fl f l e ct ct s a true state of affairs. Therefore the motto of every researcher should  b e , ” F i n d i t a n d t e l l i t l i k e i t i s . ”

Basically marketing research i s of two types: -

1. Problem identification Research 2. Problem Solving Research

P R O B L E M I D E N T I F I CA C A T I O N R E S E A RC RC H : -

7

It is the process under which complete survey is being done about the s ub u b je j e ct ct

i n w hi h i ch ch

 p r o b l e m a t i c

area

e ve v e ry ry is

i mp m p or o r ta t a nt nt

detected.

c on o n ce c e pt pt

Survey

can

i s b ei e i ng ng be

c ov o v er e r ed ed

regarding

a nd nd

available

r e s o u r c es e s , a p p r op o p r i a t io i o n o f a v a i l a b le l e f u n d s , c o m p e t i t or o r ’ s p o l i c y, y, e t c . Under this process we can under go followin g researches: -

1. Market Potential Research 2. Market Share Research 3. Image Research 4. Market characteristics Research 5. Sales Analysis Research 6. Forecasting Research 7. Business Trends Research

PROBLEM SOLVING RESEARCH: -

8

I n t h is i s p ro r o c es e s s a ft f t er e r f iin n d in i n g t he h e p ro r o b le l e m w e t ry r y t o f i nd nd o u t t h e solution and giving the recommendations to t h e c o nc n c er e r n ed e d p ar a r tty y . A ft f t er e r t hi h i s p ro r o c es e s s i t b ec e c o me m e s e as a s y f or o r t he he institution to grab the opportunities. For problem solving we can go for following researches: -

1. Segmentation research 2. Product research 3. Pricing research 4. Promotion research 5. Distribution research

NATURE OF JOB ASSIGNED

9



The job assigned was to conduct interviews with customers of  v a ri r i ou ou s

f ix i x ed ed

d ep ep o s i t s

to

s u rf r f a ce ce

a nd nd

d e f in in e

t h ei ei r

key

 p r e f e r e n c e s a n d p r i o r i t i e s w h i l e s e l e c t i n g d e p o s i t o f a n y b a n k .



To

study

the

attitude

of

depositors

by

kn o wi n g

t h ei ei r  

expectations and viewpoint about fixed deposits.



Prepare statistical findings and analysis and reports related to the customer’s choice for fixed deposits.



To prepare and define survey questionnaire to find the level and  p a t t e r n o f c o n s i d e r a t i o n s o f c u s t o m e r s w h i l e c h o o s i n g a n y b a n k  for



depositing the money.

T o c on o n d uc u c t d i sc s c us u s si s i on o n s a n d i n te t e rv r v i ew e w s t o c o ll l l ec e c t m ax a x im i m um um  p o s s i b l e i n f o r m a t i o n .



To correlate the data collected using Kendall’s Coefficient of  concordance and mode (measure of central tendency).

INTRODUCTION OF THE TOPIC

:-

10

T op o p ic ic

of

t he he

p ro r o je je c t

is

on

M a rk r k et et

r es e s ea e a rc rc h

f or or   “ C o m p a r a t i v e

analysis of HDFC deposits” The analysis of the project was based on

the Information fetched from various depositors coming to the banks. For the study of fixed deposits the primary data was collected based o n a s u r v e y r e s e a rc r c h , u s i n g a s t r u c t u r e d q u e s t i on on n a i r e w i t h b o t h o p e n ended and closed ended questions.

T h e s a m p l e s i z e w a s a r o u n d 2 0 S t u d e n t s f r o m d i f f e r e n t c u s t o m e rs rs o f    b a n k s t h e m o d e o f t h e s u r v e y w a s o f p e r s o n a l i n t e r v i e w o f t h e depositors of the banks fill the questionnaire. Secondary data was a l so s o t a k en e n f r o m t h e v a r io i o u s a n n ua u a l r e po p o r ts t s , b r o ch c h u r es e s o f d i ff f f e re re n t  b a n k s a n d t h e I n t e r n e t .

A f te t e r c o ll l l ec e c ti t i n g t he h e d a ta t a p ro r o p er e r a n al a l ys y s is i s h a s b ee e e n d on o n e b y u s in in g s ta t a ti t i st s t ic i c a l t oo o o ls l s s uc u c h a s K en e n d al a l l’ l ’ s m et e t h od o d a n d m od o d e ( m ea e a s ur ur e o f   central tendency). On analysis findings are being presented in such a form so that it can give proper results easily understandable by layman.

The project concludes with results and findings of the analysis, which we hope, will provide enough information about the factors influencing deposits coming to any bank.

Regular fixed deposits in India: Great way to earn more interest than savings account:-

11

Fixed deposits can help you secure your hard earned money for long durations while giving you higher risk-free returns on your money than regular savings account. With the stock market performing  p h e n o m e n a l l y , t h e p o p u l a r i t y o f f i x e d d e p o s i t s h a v e d e c l i n e d b u t , they are regaining ground at a gradual pace. As the name implies a fixed deposit is a financial instrument meant for people who want to deposit their money with ba nks for a fixed duration ranging from 15 days to 5 years and above, and earn a higher rate of interest on their money than conventional savings account. After the maturity of f ixed deposit the investor gets a return which is equal to the principal plus the interest earn ed on this  p r i n c i p a l o v e r t h e e n t i r e d u r a t i o n o f f i x e d d e p o s i t . Fixed deposits have been very popular among investors and keeping this fact in mind banks in India h ave a wide variety of fixed deposit schemes to suit almost every need.

Interest rates on regular fixed deposits At current prevailing rates a regular fi xed deposit can earn you an interest up to 8.75% and senio r citizens who opt for such a fixed deposit scheme are eligible for an additional 0.5 percent increase, which makes the effective interest rate 9.25% for certain fixed deposit intervals. Fixed deposits though are in vested for a certain time period but they can be a source of money an d funds can be withdrawn partly, from 12

fixed deposits in times of need. Depending on the bank's policies, this withdrawal may or may not attract penalty.

Features of a regular fixed deposit The interest rates on regular fix ed deposits are time based and fixed deposit for longer duration attract better interest rates. For example from HDFC Bank, a fixed deposit amount below 15 lak hs of 15 - 29 days will earn 5.50% interest rate for genera l public and 6.00% for  senior citizens. For the sa me amount , a fixed deposit of 100 - 101 days will earn you an interest rat e of around 6.75% and 7.25% if you are a senior citizen. Similarly, for an amount below 15 lakhs a fixed deposit between the period 2 years 15 days - 2 years 16 days will give a 8.75% interest rate return and this will be 9.25% for senior  citizens.

The power of compounding on your side The earning potential of fixed deposit is greatly increased by the  p o w e r o f c o m p o u n d i n g . I f t h e f i x e d d e p o s i t a l l o w s t h e p o t e n t i a l t o earn compound interest by reinvesting the principal amount along with the interest earned during the period, it can dramatically increase the amount you will g et at the maturity of fixed deposit. To get the maximum returns one should compare fixed deposit schemes from various banks before settling for one. If you have surplus funds, instead o f keeping them in your savings account and thereby earning a paltry interest rate, you can add them

13

to your fixed deposit. This way the funds will earn a much higher  rate of interest.

How to open a fixed deposit? The process of opening a fixed deposit is very simple and this is accessible to almost all section of Indian population. For example: resident individuals , Hindu undivided families, sole proprietorship firms, partnership firms, limited companies, trust accounts etc . all can open fixed deposits. Banks in India have a certain minimum initial deposit limit like Rs. 10,000 to open a fixed deposit and th e value of fixed deposit can be increased in multiples of a minimum amount (for example Rs. 5000). These limits can vary and also depend upon rural, urban or semi-urban nature of population. The limits are very low for rural areas so that even those with a low incomes can open a fixed deposit.

Calculation of interest rates and tax deductions on regular fixed deposit How the interest rate is calculated on your fixed deposit varies from  b a n k t o b a n k . F o r a f i x e d d e p o s i t o f s i x m o n t h s o r a b o v e t h e b a n k s may calculate the

interest on a quarterly basi s. In case the tenure of fixed deposit is less than six months the interest is calcula ted at maturity as simple interest. The compounding factor or interest for re-investment is calculated on a quarterly basis. Every fixed deposit is subject to the Indian income tax regulations  p r e v a l e n t f r o m t i m e t o t i m e . K e e p i n g t h e s e r e g u l a t i o n s i n m i n d b a n k s

14

deduct tax at source from you r fixed deposits and issue you a TDS certificate for the same. Regular fixed deposits bring increased returns on your savings as compared to regular fixed deposits. These are great instruments for  investing money. The fact that they can be used as guarantee for  loans and financial transactions make them even more valuable.

Documentation  Applicants  Applicants must satisfy satisfy the following following documenta documentation tion requirements: requirements: • • •

Identity proof  Proof of communication address Self cheque (if the applicant is not visiting the branch for account opening)

Fixed Deposit Eligibility •

Resident Indian.

OBJECTIVE

The basic objective of my comparative analysis was to analyze the general view of public on HDFC fixed deposits. The main aim of  the project is to study the current position of HDFC deposits in the market by taking public view with the h elp of questionnaire and then afterwards study the feedback got from the same.

The project also focuses on the people inclin ation towards a  p a r t i c u l a r c r i t e r i o n a f t e r i n t e r e s t r a t e s , w h i c h t h e y c o n s i d e r w h i l e choosing any bank for their fixed deposits. My research also browsed many different reasons which people take into account when they deposit their money in banks.

15

The research’s one of the aims was to find out the current  p o s i t i o n o f H D F C d e p o s i t s a s c o m p a r e t o o t h e r c o m p e t i t i v e b a n k s , finding out different areas o f improvement where HDFC is lagging  b e h i n d i n t h e r a c e o f d e p o s i t s w i t h o t h e r b a n k s .

Company profile 16

COMPANY PROFILE

BACKGROUND HDFC Bank was incorporated in August 1994, and, currently has an nationwide network of  1412

Branches

and

3275

ATM's

in

528 In Indian to towns an and ci cities.and wit h th e pr ima ry ob je ct iv e of mee ti ng a social need – that of promoting home ownership by providing longterm finance to households for their housing needs.

17

HDFC was promoted with an INITIAL SHARE CAPITAL of Rs. 100 .

The Housing Development Finance Corporation Limited (HDFC) was amongst the first to receive an 'in principle' approval from the Reserve Bank of India (RBI) to set up a bank in the private sector, as part of the RBI's liberalisation 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.

BUSINESS OBJECTIVE T h e m a i n o b j e c t i v e s o f H DF DF C a r e a s f o l l o w s : •

T o e n h an a n c e r e si s i d e nt n t i al a l h o u si s i n g s t oc o c k i n t h e c o u n t r y t h r o u gh gh th e

p r o vi vi s i o n

of

h ou ou s i n g

f i na n a nc nc e

in

a

systematic

an d

 p r o f e s s i o n a l m a n n e r , •

To promote home ownership, by enabling a common man to buy a house by providing him loans and advances.

•

Another objective is to increase the flow of resources to the housing sector by integrating the housing finance sector with the overall domestic financial markets.

18

ORGANISATIONAL GOALS

HDFC’s main goals are as follows: •

Develop close relationships with individual households,

•

Maintain its position as the premier housing finan ce institution in the country,

•

Transform ideas into viable and creative solutions,

•

Provide consistently high returns to shareholders, and

•

To grow through diversification by leveraging off the existing client base.

BOARD OF DIRECTORS

H DF D F C i s a p ro r o fe f e ss s s i on o n a ll l l y m an a n ag a g e d o r ga g a n iz i z at a t io i o n w it i t h a b oa oa r d o f   directors consisting of eminent persons who represent various fields i nc n c lu l u di din g

f in i n an a n ce ce ,

t a xa x a ti t i on on ,

c on o n st s t ru r u ct c t io io n

a nd nd

u rb r b an an

p o li l i cy cy

&

d e v e l o p me m e n t . T h e b o a r d p r i m a r i ly l y f o c u s es e s o n s t r a te t e g y f o r m u la la t i o n ,  p o l i c y

and

control,

designed

to

deliver

increasing

value

to

shareholders.

Board of directors: •

Mr. Deepak S Parikh …………………………Chairman

•

Mr. Keshub Mahindra ………………………… Vice Chairman

•

Ms. Renu S Karnad …………………………... Executive Director 

19

•

Mr. K. M. Mistry ……………………………….. Managing Director 

•

Dr. S.A Dave

•

Mr.D.N Ghosh

•

Mr. S. Venkitaramanan

•

Mr. Ram S Tarneja

•

Mr. N. M Munjee

•

Mr.D.M Satwalekar 

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 21, 2008 PARTICULARS AMOUNT (AS AMOUNT (AS ON 31, ON 31, MARCH MARCH 2007) 2008) INCOME Operating 3298,88,10,688 2943,05,25,838 expenses 101,72,31,818 125,87,73,832 Fees and other  charges 9,83,59,219 8,98,53,595 Other income 3410,44,01,725 3077,91,53,529

EXPENDITURE AND CHARGES Interest and other  charges Staff expenses Establishment expenses Other expenses Depreciation

1959,42,84,905

1873,66,31,762

64,89,50,919 23,05,37,209

58,15,85,302 22,71,62,152

73,58,92,173 18,68,79,984 14,00,00,000 2153,65,45,190

61,81,42,425 23,58,32,889 11,00,00,000 205 0,93,54,530 20

1256,78,56,535

1026,97,98,999

220,20,00,000

175,20,00,000

1036,58,56,535

851,77,98, 999

265,00,00,000 282,83,06,570 5,00,00,000

230,00,00,000 242,18,97,314 4,00,00,000

423,50,52,444

33293,31,134

59,39,66,105

42,65,70,551

85,31,416 1036,58,56,535

-851,77,98, 999

Provision for  contingencies PROFIT BEFORE TAX Less: Provision for tax PROFIT AFTER  TAX AVAILABLE F O R  APPROPRIATION

APPROPRIATIONS

21

BALANCE SHEET as at March 31, 2008 PARTICULARS

SOURCES OF FUNDS Share capital Reserve and surplus LOAN FUNDS

AMOUNT (As on 31, march 2008)

Amount (As on 31, march 2007)

249,11,68,170 3633,98,62,065 3883,10,30,235 36647,39,55,994 4 05 0 5 30 3 0 ,4 , 4 9, 9 , 86 8 6 ,2 , 2 29 29

246,61,32,060 3147,17,57,625 3393,78,89,685 28684,03,87,133 3 20 2 0 77 7 7 ,8 , 8 2, 2 , 87 8 7 ,1 , 1 33 33

22

36011,49,66,911 3130,03,63,692 69,38,29,546

27974,27,23,017 2793,36,56,515 54,58,29,546

2982,13,27,620

2396,44,44,070

(1957,39,84,793)

(1758,47,11,167)

567,86,33,512

734,11,57,629

(273,01,50,259)

(296,48,22,792)

4 05 0 5 30 3 0 ,4 , 4 9, 9 , 86 8 6 ,2 , 2 29 29

3 20 2 0 77 7 7 ,8 , 8 2, 2 , 76 7 6 ,8 , 8 18 18

APPLICATIONS OF FUNDS Loans Investments Deferred tax T o d a y H D F C L t d . i s a g r e a t b r a n d n a m e a n d h a s v e r y g o o d r e p u t a ti ti o n among all the nationalized banks. This is due to the fact that HDFC has won many prestigious awards.

AWARDS FOR HDFC LTD:-

23

CNN-IBN Nasscom IT User  Award 2008 Business India Forbes Asia Asian Banker  Excellence in Retail Financial Services Asiamoney

Microsoft & Indian Express Group

'Indian of the Year (Business)' 'Best IT Adoption in the Banking Sector'

'Best Bank 2008' Fab 50 companies in Asia Pacific Best Retail Bank 2008

Best local Cash Management Bank Award voted by Corporates Security Strategist Award 2008

World Trade For outstanding contribution to international trade Center Award of  services. honour  Business Today- One of India's "Most Innovative Companies" Monitor Group survey Financial Express-Ernst &  Young Award Global HR Excellence Awards - Asia Pacific HRM Congress: Business Today

Best Bank Award in the Private Sector category

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

'Best Bank' Award

2007 Dun &

'Corporate Best Bank' Award

24

Bradstreet – American Express Corporate Best Bank Award 2007 The Bombay Stock Exchange and Nasscom Foundation's Business for  Social Responsibility Awards 2007 Outlook Money & NDTV Profit The Asian Banker  Excellence in Retail Financial Services Awards Asian Banker 

•

'Best Corporate Social Responsibility Practice' Award

Best Bank Award in the Private sector category. Best Retail Bank in India

Our Managing Director Aditya Puri wins the Leadership Achievement

Mr. Deepak Parekh, Chairman, HDFC Ltd. Conferred with the

 p r e s t i g i o u s P a d m a B h u s h a n a w a r d . . •

HDFC receives award for ‘ The Best Presented Accounts’ of 

the institute of chartered accountants of India for 2004-05 •

HDFC Ranked as ‘India’s Third Best Managed Company’ by

Finance Asia – 2005 •

M rr.. D ee e e pa p a k P aarr e kh k h a wa w a rd r d ed e d t he h e ' H al a l l o f F am a m e' e ' a wa w a rd rd b y

Outlook Money magazine.

25

•

HDFC receives the 'Dream Home' award for the best Housing

Finance Company for 2004 from Outlook Money magazine •

Awards galore by HDFC at the 44th ABCI Awards!!!

•

5 t h B e s t C o m p a n y t o w o r k f o r i n I n d i a , r a n k e d b y  B u s i n e s s

Today in November 2004

HDFC fixed deposits

FIXED DEPOSI T TS S: - Fixed deposit is that deposit provided by banks

in which money can be deposited after equal intervals or after any  p e r i o d o f t i m e a s p r o v i d e d u n d e r t h e r e s p e c t i v e s c h e m e o f b a n k . Interest is provided by bank as in accordance with the interest rates of the scheme. Interest rate may vary from time to time as well as according to the amount deposited.

26

H DF DF C

F I XE XE D

D EP E P OS O S I TS TS :

-

H DF DF C

has

i n st s t it i t ut u t ed ed

w el e l ll - d ef e f iin ned

service standards for both depositors and deposit agents. HDFC has  b e e n

able

to

mobilize

deposits

from

over

8

lack

depositors.

Outstanding deposits grew from Rs. 1,458 crores in March 1994 to R s. s.

7 ,8 , 8 40 40

c ro r o re r e s i n M a rc r c h 2 00 0 0 5 . M u ch ch

of

t h is is

s u cc c c es e s s c an an

be

attributed to its strong brand image, superior services, security and a b ov o v e a ll ll ,

t he he

s ig i g n if i f i ca c a n t c on o n t ri r i b ut u t i on on

m ad ad e

by

H DF D F C' C' s

d ep e p o si si t

agents. HDFC has over 50,000 deposit agents and distributes all its retail savings (deposit) products primarily through this channel. H DF D F C h a s b e en e n a wa w a rd r d e d “ A AA A A ” r at a t in i n g f o r i ts t s d ep e p o si s i ts t s f ro r o m b o th th CRISIL and ICRA for the ELEVENTH consecutive year, representing highest safety as regards timely payment of prin cipal and interest.

Fixed deposits in India: Benefits, drawbacks and precautions:Any investment portfolio should comprise the righ t mix of safe, moderate and risky investments. While mutual funds and stocks are the favorite contenders for moderate and risky investments, fixed deposits, government bonds etc. are considered safe investments. Fixed deposits have been particularly popular among a large section of investors in India as a safe inv estment option for a long period.

With fixed deposits or FDs as they are popularly known, a person can

27

invest an amount for a fixed duration. The banks provide interest rates depending on this loan amount and the tenure of deposit. Here are the benefits, drawbacks of fixed deposits and precautions one should take while making such investments.

Benefits

1. Safety The fixed deposits of reputed banks and financial institutions regulated by RBI (Reserve Bank of India) the banking regulator in India are very secure and considered as one of the safest investment methods.

2. Regular Income 28

Fixed deposits earn fixed interest rates for their entire tenure, which is usually compounded quarterly. So, those who want an income on a regular basis can invest into fixed deposits and use the interest rate as their income. This makes a fixed deposit very popular way of  investing money for retirees.

3. Saves tax With the directives of the income tax department stating that investment in fixed deposits up to a maximum of Rs.100,000 for 5 years are eligible for tax dedu ctions under section 8 0 C of income tax act, fixed deposits have again become popular. Fixed deposits save tax and give high returns on invested money.

Drawbacks

1. Lower rate of returns While the money invested in stock markets may give you a return of  20% the fixed deposits will yield only about 10%. So, the money grows slowly in the case of fixed deposits.

2. Taxes The interest earned on fixed deposits is fully taxable and is added to the annual income of the individual. Gains from stocks are considered capital gains while dividends are tax free. 29

3. Rising inflation can wipe out t he interest benefits The actual benefits or income from fixed deposit can be annulled by a rising inflation. Suppose the inflatio n which is currently at 3 % rises to about 6%, your fixed deposit at 10% annua l return will effectively yield only(10%-6%) = 4% of return. This return would have b een (10% -3%) = 7% if the rate of inflation had not changed. This can drastically eat into your fixed deposit income.

Precaution 1. Company fixed deposits Company fixed deposits are not considered as safe as fixed deposits from leading banks and financial institutions regulated by the RBI. So, if a company runs into losses or goes ban krupt the money invested into its fixed deposit can be lost. To lure investors, such companies offer a fixed deposit interest rate which is much higher  than those offered by banks. Before investing in any company fixed deposit it is advised to check the credentials of the company.

2. Interest rate compounding period The interest rates offered on fixed deposit vary greatly with banks and tenures. Whether the interest rate is compounded quarterly or  monthly will determine how much a person earns from h is fixed deposit. A fixed deposit with interest rate co mpounded monthly will

30

earn more than one which is compounded quarterly. It is therefore advised to shop around for the righ t fixed deposit scheme.

3. Premature ending of fixed d e p o s i t s Banks will impose a penalty if you break your fix ed deposit before the maturity period. Make sure you get the facts right about this thing. How the bank calculates this penalty and what all charges will it levy when you break a fixed deposit should be noted carefully.

HDFC STAFF: H u m a n r e s o u r c es e s a r e H D F C ’ s m o s t v a l u a b l e a s s e ts t s . T h e e f f i c i en en c y o f   HDFC’s staff is evident from the fact that, the number of offices increased from 41 in 1998 to181 currently as against the number of  e m p l o y ee ee s w h i c h i n c r e a s e d f r o m 8 0 6 t o 1 2 9 1 d u r i n g t h e s a m e p e r i o d . This staff strength of 1291 includes professionals from the fields of  finance, law, accountancy, engineering and marketing.

SUBSIDIARY COMPANIES



HDFC Developers Limited.



HDFC Investment Limited.



HDFC Holdings Limited.



HDFC Trustee Company Limited.



HDFC Realty Limited.



Home Loan services India Private Limited.

31



HDFC Venture Capital Limited.



HDFC Venture Trustee Company Limited.



HDFC Chubb General Insurance Company Limited.



GRUH Finance Limited.



HDFC Asset Management Company Limited.



Intel net global Services Private Limited.



Credit Information Bureau (India) Limited.



HDFC Bank Limited.

32

LATEST

INTEREST

GRAPH

PROFITS OF HDFC

Profits of HDFC for past few years are showing a rising trend. It has showing average growth rate of 24.28% in 2005, 23.33% in 2006, 20.53% in 2007, and 22.39% in 2008.

33

P r o f i t s f o r t h e s e y e a r s c a n b e s h o w n w i t h t h e h e l p o f f o l l o wi wi n g schedule:

PROFITS OF HDFC

 P R O F I T   A F T E R T A X   P R O F I T   B E F O R E  T A X 

2004

2005

474

5 80

556

691

2006 

2007 

2008

690

852

1037

851

1027

1257

A f t e r a n a l y z i n g a b o v e t a b l e w e c a n s a y t h a t p r o f i ts ts o f H D F C L t d a r e increasing at fluctuating rate.

The above schedule can be explained with the help of following graph. The below shown graph represents that HDFC profits have  b e e n r i s i n g c o n t i n u o u s l y a f t e r 2 0 0 1 .

34

1400 1200 1000 profit after tax profit before tax

800 600 400 200 0 2004 2005 2006 2007 2008

The above graph also shows that HDFC profits are rising every year. For the years not shown in the graph growth rate is as follows: starting from 26.67% in 1995-96, 18.34% in 1996-97 to 22.46% in 2000-01.There is no consistency in the change in profits sometimes it is increasing to decreasing in few years.

HDFC Ltd today is competing to leading Indian  b a n k s d u e t o p r o p e r m a n a g e m e n t o f f u n d s a n d r e s o u r c e s a v a i l a b l e . Allocation of HDFC Ltd resources can be shown with the help of  35

 p r o f i t

and

loss

account.

Also

there

are

different

sources

and

a p p l i ca c a t i o n s o f f u n d s o f H D F C L t d . T h e r e c a n b e d i f f e r en en t s o u r c e s o f   funds like share capital, reserve and surplus, loan funds. Whereas a pp p p li l i c a ti t i on on s i n ve v e st s t me m e n ts ts

of

f un u n ds ds

m ad a d e, e,

ca n

be

l o a ns ns

c u rr r r en e n t a s se s e ts ts ,

g i ve ve n

f iix x ed ed

to

a ss s s e ts ts ,

g en e n er er a l w hi h i ch ch

p u b li li c ,

p la l a y v er er y

important role in development of any organization.

P ro r o p er e r a ll l l oc o c a ti t i o n o f f un u n d s l ik i k e e x pe p e ns n s es e s a n d i n co c o me m e s a lo l o n g w it it h c o mp m p o si s i t i on o n o f a s se s e t s a n d l i ab a b i l it i t i es e s c a n b e s h ow o w n w i th th t h e h e l p o f   following profit and loss account and balance sheet: -

CURRENT DEPOSIT SCHEMES OF HDFC: -

The current deposit rate scheme provid ed by HDFC is as follows: -

PERIOD Rate of interest (% p.a) (Months) Monthly  No  N o n –  Annual *Cumulative Income Cumulative Income Option Plan Option  p l a n Q u a r ttee r l y HalfYearly

36

12 13-59 60-84

7.25 7.00 7.25

7.30 7.05 7.30

7.35 7.10 7.35

7.50 7.25 7.50

7.50 7.25 7.50

*Interest compounded annually. Senior citizens – Additional rate of  0.25 % p.a T h i s a b o ve v e - m en e n t i on o n e d s c h em e m e i s a v ai a i l a bl b l e f o r a l l t h e i n d iv i v i du du a l s either they are customers of HDFC Ltd or not. There is one more s ch c h em e m e, e,

w hi h i ch ch

is

s pe p e ci c i al a l ly ly

d es e s ig i g ne ne d

f or or

H D FC FC

L td td

h om om e

l oa oa n

customers. The scheme is as follows: -

 T h e c u r r e n t d e p o s i t r a t e s c h e m e p r o v i d e d b y H D F C t o home loan customers is as follows: -

PERIOD Rate of interest (% p.a) (Months) Monthly  No  N o n –  Annual *Cumulative Income Cumulative Income Option Plan Option  p l a n Q u a r ttee r l y HalfYearly 12-59 60-84

7.50 7.75

7.55 7.80

7.60 7.85

7.75 8.00

7.75 8.00

*Interest compounded annually *0.25% p.a additional for senior citizens

37

VARIABLE RATE DEPOSIT: - Interest rate on variable deposit is

linked to the benchmark rate and will vary from time to time with  b e n c h m a r k r a t e . B e n c h m a r k r a t e i s t h a t r a t e w h i c h i s a p p l i c a b l e o n HDFC fixed rate deposit product for the corresponding period. Rate o f i n te t e r es e s t o n t h e f i r s t d a y o f i n t e r es e s t p e ri r i o d w i l l b e a p pl p l i ca c a b le le f o r   the entire interest period.

D ep e p os o s it it

o nc nc e

p la l a ce ce d

c an an n o t

be

i nt n t er e r ch c h a n ge ge d

b et e t we w e en en

f ix i x ed ed

a nd nd

variable rate till the date of maturity.

Benefits of an HDFC Individual Deposit: 1. Highest Safety 2. Tax benefit 3. Attractive Returns 4. Quick Loan Facility 5. Nomination Facility 6. Demand Draft Facility 7. High Service Standards 8. Electronic Clearing service

38

These benefits can be explained as follows: 1 . H ig i g h es e s t S af a f e ty ty :

' F AA A A A' A ' a n d ' MA M A AA A A ' r at a t in i n g a ff f f iirr m mee d f o r t he he

eleventh consecutive year by CRISIL and ICRA respectively.

2 . Q u ic i c k L o an a n F a ci ci l i t y : L o a n a g a i n s t d e p o s i t i s a v a i l a b l e a f t e r 3

months from the date of deposit up to 75% of the deposit amount subject to the other terms and conditions framed by HDFC. Interest on such loans will be 2% above th e deposit rate

3. Tax Benefits: TDS: No tax deduction at source on interest from

deposits upto Rs. 5,000/- per branch in a Financial Year.

ANNUAL INCOME PLAN PERIOD

RATE OF

(MONTHS)

INTEREST (% PER 

MAXIMUM DEPOSIT WITHOUT TDS (Rs) IN DI VI DUALS S EN IOR   CITIZENS

12-23

ANNUM) 5.75

86,000

80,000

24-35

6.00

83,000

76,000

36-59

6.50

76,000

71,000

60-84 6.75 74,000 Maximum Deposit Amount – Rs. 5,000

68,000

39

4. Attractive Returns: HDFC deposits are Available throughout the

y e a r a n d o f f e r   A t t r a c t i v e , A s s u r e d r e t u r n s t o i n v e s t or or s . I n t e r e s t r a t e s offered are higher than that offered by most of the commercial banks. 5. Nomination Facility: Individual depositors, singly or jointly, can

nominate under this facility. In case the deposit is placed in the name of a minor only a person lawfully entitled to act on behalf of the m in i n o r c an a n m a ke k e t h e n o mi m i n at a t io i o n . P o we w e r o f a tt t t or o r n ey e y h o ld l d er er o r a n y  p e r s o n a c t i n g i n r e p r e s e n t a t i v e c a p a c i t y a s h o l d e r o f a n o f f i c e o r  o t he h e rw r w is i s e c an a n n ot o t n o mi m i n at a t e. e . T he h e n o mi m i n ee e e s h al a l l h a ve v e t he h e r iig g ht ht t o r ec e c e iv i v e t h e a m o un u n t d u e i n r es e s pe p e c t o f d ep e p os o s i t o n d ea e a t h o f a ll l l t he he d e p o s i to t o r s a n d p a y m en e n t b y H D F C t o t h e n o m i n ee e e s h a l l c o n s t i tu tu t e f u l l discharge to HDFC of its liability in respect of th e deposit.

6 . D e ma m a n d D r af a f t F a ci c i l i t y: y: O u t s t a t i o n d e p o s i t o r s c a n s e n d d e m a n d

d r af a f ttss a f te t e r d ed e d u ct c t in i n g d em e m an a n d d r af a f t c h ar a r g es e s . T h is i s f a ci c i li l i ty ty i s n o t a v ai a i la l a b le le

t o i nv n v e st s t or o r s u n de d e r E as a s y w ay ay

S aav v i ng n g s. s.

T hi h i s f ac a c i li l i ty ty

is

a p p l i c a b l e f o r p l a c e s w h e r e H D F C d o e s n o t h a v e a n o f f i c e.

7 . H i g h S e r v i c e S t a n d a rd rd s : D e p o s i t o r s a r e o f f e r e d a c r o s s t h e c o u n t e r  

s e rv r v i c es e s f o r n e w d e po p o s it i t s , r e ne n e w al a l s , r e pa p a y m en e n t s a n d l o an a n a g ai ai n s t d e p o s i t f a c i l i ty t y . F u r t h e r, r , a l l e n q u i r i e s t h r o u g h e m a i l , p o s t , t e l e p h on on e and in person are attended to immediately.

40

8.

E le l e ct c t ro r o ni ni c

C le l e ar a r in in g

S er e r vi v i ce ce :

T h is is

f ac a c il i l i ty ty

is

p ro r o vi v i de de d

to

d e p os o s i to t o r s i n s e le l e c t c e n te t e r s w h er e r e by b y t h e i n te t e r es e s t w i ll l l b e c r ed e d i t ed ed d i r e c t ly l y t o t h e d e p o s it it o r s ' b a n k a c c o u n t . T h e d e p o s i t o r w o u l d r e c e i v e a

c re r e d it it

e n tr tr y

" EC EC S

H D FC FC "

in

h is is

p as a s sb s b oo o o k/ k / ba b a nk nk

s ta t a te t e m en e n t. t.

Intimation of interest credited would be sent on an annual basis. Your   b a n k w i l l n o t l e v y a n y c h a r g e f o r t h i s f a c i l i t y a s p e r p r e s e n t R B I guidelines. P r e s e n t ly l y t h i s f a c i l i ty t y i s b e i n g o f f e r e d b y u s a t t h e f o l l o w i n g c e n t e rs rs E CS CS

C en e n t e rs rs :

A hm h m ed e d ab a b ad ad ,

B an a n ga g a lo l o re re ,

B hu h u ba b a ne n e sh s h wa w a r, r,

K ol o l ka k a ta ta ,

C h a n d i g ar a r h , C h e n n a i , H y d e r a b a d , J a i p u r , K a n p u r , M u m b a i , N a g p u r, r,  N a s i k , N e w D e l h i , P u n e a n d V a d o d a r a .

Other main features attached to HDFC deposits: -

1.

Mode

of

acce ptance :

-Deposits

can

be

made

by

c a s h/ h / c h eq e q u e s/ s / d e ma m a n d d r af a f t s . C h eq e q u e s a n d d r a ft f t s a r e d r a wn wn i n t h e f a v ou o u r o f “ H OU O U S IN I N G D E VE V E L OP O P M EN E N T F I NA N A N CE C E C O RP R P O RA R A T IO IO N Ltd” or “HDFC Ltd” and should be marked “Account Payee Only”.

2 . Renewals and Repayment : - For renewals or repayment of deposit, the duly discharged deposit receipt must be surrendered to HDFC at l e a s t a w e e k b e f o r e t h e d a t e o f m a t u r it i t y . A c r o s s ed ed “ A c c o u n t P a y e e ”

41

c h e qu q u e f a vo v o r in i n g t h e f i rs r s t n a m ed e d d e po p o s i to t o r w i ll l l m a ke k e r e pa p a y me me n t o f   deposit amount.

3. Agents: - HDFC invites deposits through the channel of authorized n t n e t wo w o r k o f o v er e r 5 0 , 0 00 00 a n d a d e p o s i t o r a g e n t s . H D F C h a s a g e nt base of around 1 million.

4 . P r e m a tu re m maa tu t u r e w it i t hd h d ra r a wa w a ls l s w il il l n o t b e t u r e W i t h d r a wa w a l s : - p re allowed before completion of 3 months from the date of deposit. In case of request for premature withdrawal after the expiry of three months, the rates given in the following table shall apply: -

TABLE FOR PREMATURE WITHDRAWALS: -

Months completed from the Rate of interest payable date of deposit 3 less than 6

No interest

6 less than 12

3.50% p .a

42

12 less than

Fixed rate deposit: 2% less than the rate applicable for the completed  p e r i o d .

maturity Variable rate deposit: 2% less than the rate applicable for the completed  p e r i o d u n d e r v a r i a b l e r a t e deposit product on the respective interest reset dates.

POSITION OF HDFC DEPOSITS: -

HDFC has a depositor base of 1 million. Public deposits constitute a p p r o xi x i m a t e ly l y 8 0 % o f t h e t o t a l d e p o s i ts t s o f t h e c o r p o r at at i o n . D e p o s i t s of HDFC for past few years are as follows: -

43

YEARS

DEPOSITS

1995-96

2512.69

1996-97

3502.19

1997-98

4423.79

1998-99

5252.40

1999-00

6223.85

2000-01

7249.83

2001-03

8491.02

2002-05

9121.55

2003-07

9337.65

2004-08

7840.09

F i x e d d e p o s i t s c a n b e s h o w n w i t h t h e h e l p o f f o l l o wi wi n g d i a g r a m . T h e g r ap a p h s h ow o w s t h a t H D F C d e po p o s i ts t s a r e i n c re r e a si s i n g u p to t o 2 0 03 0 3 - 04 04 a n d showed a decline in 2007-08.

INTEREST RATE ON FIXED DEPOSITS OF HDFC BANK 

When you open a Fixed deposit with HDFC Bank Your interest is calculated on a quarterly basis for deposits of  6 months and above For those deposits with a tenure of  below 6 months, your interest is calculated at maturity as 44

Simple Interest. The period of Fixed Deposit is calculated in number of days. Interest for re-investment is calculated every quarter, and the Principal is increased to include interest earned during the previous quarter.  T a x a t s o u r c e i s d e d u c t e d a s p e r t h e I n c o m e T a x regulations prevalent from time to time.

DOMESTIC TERM DEPOSITS

Period

Amoun t

Interest Rate (per  annum)

7 - 14 days

Below Rs.15 Lacs

3.00%

3.50%

August 6, 2007

15 - 29 days

Below Rs.15 Lacs

5.50%

6.00%

August 6, 2007

6.00%

6.50%

30 - 45 days

Below Rs.15

**Senior  Citizen Rates (per  annum)

Effective From

July 3, 2008

45

Lacs 46 - 60 days

Below Rs.15 Lacs

6.00%

6.50%

July 3, 2008

61 - 90 days

Below Rs.15 Lacs

6.25%

6.75%

July 3, 2008

91 - 99 days

Below Rs.15 Lacs

7.00%

7.50%

July 3, 2008

100 - 101 days

Below Rs.15 Lacs

7.75%

8.25%

July 3, 2008

102 - 180 days

Below Rs.15 Lacs

7.00%

7.50%

July 3, 2008

6 months 1 day - 6 months 14 days

Below Rs.15 Lacs

8.00%

8.50%

July 3, 2008

6 months 15 days - 6 months 16 days

Below Rs.15 Lacs

8.25%

8.75%

July 3, 2008

6 months 17 days - 9 months 14 days

Below Rs.15 Lacs

8.00%

8.50%

July 3, 2008

9 months 15 days - 9 months 16 days

Below Rs.15 Lacs

9.00%

9.50%

July 3, 2008

9 months 17 days - 1 year 

Below Rs.15 Lacs

8.75%

9.25%

July 3, 2008

1 year 1 day - 1 year 14

Below Rs.15

9.00%

9.50%

August 8, 2008

46

days

Lacs

1 year 15 days - 1 year  16 days

Below Rs.15 Lacs

10. 00%

10.5 0%

August 8, 2008

1 year 17 days - 2 years

Below Rs.15 Lacs

9.00%

9.50%

August 8, 2008

2 years 1 day - 2 years 14 days

Below Rs.15 Lacs

9.50%

10.00%

August 8, 2008

2 years 15 days - 2 years 16 days

Below Rs.15 Lacs

10. 00%

10.5 0%

August 8, 2008

2 years 17 days - 3 years

Below Rs.15 Lacs

9.50%

10.00%

August 8, 2008

3 years 1 day - 5 years

Below Rs.15 Lacs

9.50%

10.00%

August 8, 2008

5 years 1 day - 8 years

Below Rs.15 Lacs

9.50%

10.00%

August 8, 2008

•

Interest rates are subject to chan ge from time to time. Applicable interest rates will be given as on th e date of receipt of the funds by the bank. When booking FD through NetBanking  p l e a s e n o t e t h e a c t u a l i n t e r e s t r a t e b e i n g a p p l i e d o n t h e "Confirm" screen. This screen appears before you confirm your  request for opening a new FD.

•

Only Senior Citizens / Retired Personn el (60 years and above) who are Resident Indians are eligible. The special rates are applicable only for INR deposits.

47

•

The FD rate applicable for a monthly interest option will b e a discounted rate over the standard FD Rate. Please contact the nearest Branch for further information.

•

For interest rates on Fixed Deposits for Rs. 15 Lacs an d above,  p l e a s e c o n t a c t y o u r n e a r e s t H D F C B a n k b r a n c h .

•

Effective 01st Dec'06, the interest rate applicable for premature closure of deposits will be lower of :

•

the original rate at which the deposit has been booked OR 

•

the base rate applicable for the tenu re for which the deposit has  b e e n i n f o r c e w i t h t h e B a n k .

•

The base rate is the rate applicable to depo sits of less than Rs.15 lacs.

•

The Fixed Deposit Advice will be dispatched to your recorded mailing address within 3-4 working days of account opening.

48

COMPARISON OF INTEREST RATES OF FIXED DEPOSITS OF DIFFERENT NATIONALISED BANKS

I n t e r e st s t r a t e s f o r f i x e d d e p o s it i t s f o r d i f f e re re n t n a t i o n a l i z e d b a n k s w i t h r es e s pe p e ct c t t o d if i f fe f e re r e nt n t t im i m e p er e r io i o d c an a n b e s ho h o wn w n w it i t h t he h e h el el p o f   following graphs: -

Interest rates are for following ban ks: (1). HDFC

49

(2). State Bank of India (3). Punjab and Sindh Bank  (4). Centurian Bank of Punjab (5). Indus Ind Bank  (6). Bank of Baroda (7). ICICI Bank  (8). IDBI Bank  (9). UTI Bank  (10). Standard chartered (11). HSBC Bank  (12). ING Vyasya (13). Union Bank of India (14). State Bank of Patiala

Table based on 16march 2009 data INTEREST RATES ON FIXED DEPOSITS In the above table we can see that HDFC Ltd provides interest rates for the time period of 1-2 years that is 8.00%.

In the above table we can see that Public sector banks provide interest rates for the time period of 2-3 years th at is 8.00%

50

In the above table we can see that Public sector banks provide maximum interest rates for the time period of 5years ab ove that is 8.00 %.

Below ONE Year  Foreign Banks BANK NAME / DURATION

15- 30- 46- 61- 91- 120- 180- 27129 45 60 90 120 179 270 364 days days days days days days days days

ABN-Amro Bank

4.00 4.50 4.50 4.50 6.50 6.50 6.50 6.50

Barclays

3.75 4.00 4.25 5.00 5.50 5.50 5.75 6.00

Citi Bank

3.50 4.50 5.00 5.50 7.00 7.00 8.00 8.00

DBS Bank

4.00 5.50 5.50 5.75 6.00 6.00 7.25 7.25

Standard Charted Bank

4.00 4.50 4.50 5.75 6.50 6.50 6.75 6.75

The Bank of Nova Scotia

4.75 5.75 5.75 5.75 6.75 6.75 6.75 6.75

The HongKong & Shanghai 3.50 4.25 5.25 5.25 5.25 5.25 5.50 8.00

Indian Banks - Public Sector 15- 30- 46- 61- 91- 120- 180- 271BANK NAME / DURATION 29 45 60 90 120 179 270 364 days days days days days days days days Allahabad Bank

4.25 4.25 5.50 5.50 6.75 6.75 7.75 8.25

Andhra Bank

4.50 4.50 5.25 5.25 6.75 6.75 7.00 7.00

Bank of Baroda

4.75 4.75 5.25 5.25 6.75 6.75 8.00 8.00

Bank of India

4.25 4.50 6.00 6.00 6.25 6.25 7.25 7.50

Bank of Maharashtra

4.50 4.75 5.50 5.50 7.25 7.25 7.75 8.25

Canara Bank

4.00 4.00 5.50 5.50 6.25 6.25 7.00 7.25

Central Bank of India

4.75 4.75 7.00 7.00 7.50 7.50 7.75 7.75

Corporation Bank

4.00 5.00 5.00 5.50 6.75 6.75 7.25 8.00

Dena Bank

4.25 4.75 5.25 5.25 6.75 7.00 7.50 8.00

IDBI Bank

5.00 5.00 5.50 5.50 6.75 6.75 8.00 8.00

Indian Bank

3.75 4.00 5.00 5.00 6.00 6.00 7.25 7.50

Indian Overseas Bank

4.25 4.75 5.00 5.00 6.00 6.50 7.50 7.75

Oriental Bank of Commerce 4.25 4.75 6.00 6.00 7.00 7.75 7.75 8.00 Punjab & Sind Bank

4.00 4.00 5.50 5.50 7.50 7.50 7.50 7.50

Punjab National Bank

4.00 4.00 5.00 5.00 5.50 5.50 7.00 7.00 51

State Bank of Bikaner &  Jaipur

4.50 4.50 5.50 5.50 6.75 6.75 7.50 7.50

State Bank of Hyderabad

4.50 4.50 5.25 5.25 6.50 6.50 7.25 7.25

State Bank of India

4.25 4.25 5.25 5.25 6.50 6.50 7.25 7.25

State Bank of Mysore

4.50 4.50 5.25 5.25 7.00 7.00 7.75 7.75

State Bank of Patiala

4.25 4.25 6.00 6.00 7.00 7.00 8.00 8.00

State Bank of Travancore

4.25 4.25 5.25 5.25 6.75 6.75 7.50 7.50

Syndicate Bank

3.75 4.25 5.00 5.25 6.00 6.50 7.25 7.50

UCO Bank

4.00 5.00 5.50 6.00 6.75 6.75 8.00 8.00

Union Bank of India

3.75 4.00 5.00 5.00 6.00 6.00 7.25 7.50

United Bank of India

4.00 4.50 5.00 5.50 6.50 6.50 7.50 7.50

Vijaya Bank

4.00 4.50 5.50 5.50 6.75 6.75 7.25 7.50

Indian Banks - Private Sector BANK NAME / DURATION

15- 30- 46- 61- 91- 120- 180- 27129 45 60 90 120 179 270 364 days days days days days days days days

Axis Bank

3.00 4.00 5.00 5.00 6.50 6.50 7.00 8.00

City Union Bank

5.50 5.50 6.00 6.00 7.25 7.25 8.75 8.75

Development Credit Bank

6.00 6.00 7.00 7.00 8.00 8.00 9.00 9.00

HDFC Bank

3.50 4.00 4.50 5.00 5.50 5.50 7.00 8.75

ICICI Bank

3.75 4.00 4.00 4.00 6.25 6.25 7.25 8.00

IndusInd Bank

4.25 5.00 5.00 5.25 7.00 7.00 7.25 7.75

ING Vysya Bank

5.00 5.50 5.50 7.00 8.00 8.00 8.00 8.00

Karnataka Bank

4.50 4.50 5.50 5.50 7.50 7.50 8.50 8.50

Kotak Bank

3.50 4.00 5.00 5.00 6.00 6.00 7.00 7.50

Tamilnadu Mercantile Bank 5.50 5.50 7.00 7.00 7.50 7.50 8.75 8.75 The Bank of Rajasthan Ltd

4.25 4.25 4.50 4.50 7.25 8.00 8.75

The Catholic Syrian Bank

4.75 5.75 5.50 5.50 7.25 7.25 8.50 8.50

The Dhanalakshmi Bank

4.75 4.75 5.50 5.50 7.00 7.00 8.00 8.00

The Federal Bank

4.50 4.50 5.50 5.50 7.00 7.00 8.00 8.00

The J & K Bank

4.00 6.00 6.00 6.00 7.50 7.50 7.50 7.75

The Karur Vysya Bank

4.50 5.00 5.00 5.00 6.00 6.00 7.50 7.50

The Lakshmi Vilas Bank

5.00 5.50 6.00 6.00 7.00 7.00 8.25 8.50

The South Indian Bank

4.50 4.50 5.50 5.50 7.00 7.00 8.00 8.00

52

TNSC Bank

4.00 4.50 5.00 5.00 6.00 6.00 7.50 7.50

1year-5 year 

Foreign Banks 1 year < 2 years

2 years < 3 years

3 years < 5 years

ABN-Amro Bank

8.00

8.00

8.00

Barclays

6.25

6.50

6.50

CitiBank

8.00

8.00

8.00

DBS Bank

9.00

7.50

8.25

Standard Charted Bank

7.00

7.00

7.25

The Bank of Nova Scotia

6.75

6.75

6.75

The HongKong & Shanghai

8.00

7.50

7.50

BANK NAME / DURATION

Indian Banks - Public Sector 1 year < 2 years

2 years < 3 years

3 years < 5 years

Allahabad Bank

8.50

8.75

8.75

Andhra Bank

8.00

8.00

8.00

Bank of Baroda

8.50

8.75

8.50

Bank of India

8.00

8.25

8.25

Bank of Maharashtra

8.75

8.75

8.50

Canara Bank

8.25

8.25

8.25

Central Bank of India

8.50

8.50

8.50

Corporation Bank

8.25

8.25

8.25

Dena Bank

8.75

8.75

8.50

IDBI Bank

8.50

8.50

8.25

Indian Bank

8.00

8.00

8.00

Indian Overseas Bank

8.00

8.50

8.00

Oriental Bank of Commerce

8.25

8.50

8.50

Punjab & Sind Bank

8.50

8.00

8.00

BANK NAME / DURATION

53

Punjab National Bank

8.00

8.00

8.00

State Bank of Bikaner & Jaipur

9.00

9.25

8.50

State Bank of Hyderabad

8.25

8.25

8.50

State Bank of India

8.10

8.25

8.50

State Bank of Mysore

8.50

9.00

8.50

State Bank of Patiala

8.50

8.75

8.50

State Bank of Travancore

8.50

8.75

8.50

Syndicate Bank

8.00

8.00

8.00

UCO Bank

8.50

8.50

8.25

Union Bank of India

8.00

8.00

8.00

United Bank of India

8.50

8.50

8.25

Vijaya Bank

8.00

8.00

8.00

Indian Banks - Private Sector 1 year < 2 years

2 years < 3 years

3 years < 5 years

8.55

8.25

8.00

City Union Bank

10.00

10.25

9.50

Development Credit Bank

10.25

10.25

9.00

HDFC Bank

8.00

8.00

8.00

ICICI Bank

8.25

8.25

8.25

IndusInd Bank

8.00

8.25

8.25

ING Vysya Bank

9.00

8.50

8.50

Karnataka Bank

9.00

9.00

9.50

Kotak Bank

8.00

8.00

8.00

Tamilnad Mercantile Bank

10.00

10.00

9.75

The Bank of Rajasthan Ltd

9.50

9.00

8.75

The Catholic Syrian Bank

9.50

9.50

9.25

The Dhanalakshmi Bank

9.00

9.00

8.50

The Federal Bank

9.00

9.00

8.75

The J & K Bank

8.75

8.75

8.25

BANK NAME / DURATION Axis Bank

54

The Karur Vysya Bank

9.50

9.50

8.00

The Lakshmi Vilas Bank

9.75

10.00

9.50

The South Indian Bank

9.00

9.00

8.75

TNSC Bank

8.00

7.75

7.50

This data is based on March, 2009

RESEARCH 55

METHODOLOGY

RESEARCH METHODOLOGY

STATEMENT OF THE PROBLEM AND ITS SIGNIFICANCE The study is on a special synopsis on fixed deposits. It covers aspects like interest rates, safety of funds, services provided etc. The study is a

m o de de

t o u nd n d er e r st s t an a n d t he he

i m po p o rt r t an a n ce ce

o f b ra r a nd nd

n am am e o f t h e

institute, financial aspects while choosing a fixed deposit.

T h e p r e s e n t s t u d y i s b o t h q u a l i ta t a t i v e a n d q u a n t i ta ta t i v e i n n a t u r e a s i t seeks to find out the aesthetical as well as financial considerations taken by customers while selecting a fixed deposit. Research simply m ea e a n s a s ea e a rc r c h f o r f a ct c t s – a ns n s we w e rs r s t o q u es e s ti t i o ns n s a n d s ol o l u ti t i on on s t o  p r o b l e m s . I t i s a p u r p o s i v e i n v e s t i g a t i o n . I t i s a n o r g a n i z e d e n q u i r y .

56

I n o t he h e r w o rd r d s r e se s e a r ch c h m e an a n s s e ar a r c h f o r k n o wl w l e dg d g e a n d r e se s e a r ch ch m e t h o d o lo l o g y i s a s y s t e ma m a t i c w a y t o s o l v e t h e r e s e a r c h p r o b l em em . I t i s a science of study how the search is actually done. It presents the s o ur u r ce c e o f d a ta t a c o ll l l ec e c t io i o n , t he h e s am a m pl p l in i n g p ro r o c ed e d u re r e s a n d t oo oo l s o f   i n v e s t i ga g a t i o n a n d l i m i t at at i o n s o f t h e s t u d y . O u r r e s e a r c h p r o j e c t h a s a specified framework for collecting the data in an effective manner. Such framework is called “research design”.

T h e r e s e a r c h m e t h o d o l o gy g y , w h i c h w a s f o l l o w e d b y u s , c o n s i s ts ts o f t h e following steps : -

( 1 ). ) . D EF E F I NI N I N G T HE H E R ES E S EA E A RC R C H P RO R O BL B L EM E M A ND N D R ES E S E AR A R CH CH OBJECTIVES: -

T h e d e f i n i t i o n o f t h e p r o b l em em i n c l u d e s t h e s t u d y o f f i x e d d e p o s i t s o f   v a r i o u s b a n k s , d i f f e r e n t p o l i c i es es o f c o m p e t i t o r b a n k s a n d f i n d i n g o u t t h e u n iq i q u e f ea e a tu t u r es es

o f v a ri r i ou o u s b an a n k s a lo l o n g w it i t h t h e c us u s to t o me m e r’ r’ s

 p r e f e r e n c e t o w a r d s a s p e c i f i c b a n k ’ s f i x e d d e p o s i t .

(2). D EVELOPING THE RESEARCH PLAN: -

The development of research plan has the following steps: 

D A T A S O U RC RC E : T h e s o u r c e o f t h e d a t a w a s p r i m a r y d a t a o n l y . P ri r i ma m a ry r y D at a t a d ef e f iin n e d a s t h e d a ta t a , w hi h i ch c h i s c o ll l l ec e c t ed e d f or or t h e

57

first time. It is new in nature. His type of data is collected d i r e c t ly l y f r o m t h e s o u r c e o f i n f o r ma ma t i o n . T h e t e c h n i q u e s , w h i c h w er e r e i n vo v o lv l v ed e d i n c o ll l l ec e c t in i n g t h e p ri r i ma m a ry r y d a ta t a , a re r e p er e r sso o n al al interview, questionnaire etc.



RESEARCH

APPROACH:

Surveys

are

best

suited

for  

d es e s cr c r iip p ti t i v e r es e s e ar a r ch c h . S u rv r v e ys y s a r e u n de d e rt r t ak a k e n t o l ea e a rn r n a bo bo u t  p e o p l e ’ s k n o w l e d g e , b e l i e f s , p r e f e r e n c e s , s a t i s f a c t i o n a n d s o o n a nd nd

to

m ea e a su s u re re

t h es es e

m a gn g n it i t ud u d es es

in

t he he

g en e n er er a l

p ub u b li l i c. c.

Therefore I have done this survey for the descriptive research  p r o c e s s . 

R E S E AR A R C H I NS N S T R U ME ME N T :

Q u e s t io i o n n a i r e wa w a s c o n d u ct ct e d f o r  

survey had both closed-ended and open-ended. A questionnaire considered a set of question was presented to customers.



SAMPLING PLAN: The sampling plan calls for three decisive



SAMPLING UNIT: S a m pl in g uni t i s wh o is to b e su r v e ye d?

The target population must be defined that’s to be sampled it is necessary so as o develop sampling frames so that everyone in t h e t a r g e t p o p u l a t i on on h a s a n e q u a l c h a n c e o f b e i n g s a m p l e d . M y sample unit was various Branches of different banks and the account holders in Chandigarh and Panchkula.

SAMPLE SIZE: Sample size is how many people have to be

surveyed?

SAMPLING METHOD: -

Here method used for sampling is convenience sampling.

58

G en e n er e r a ll l l y, y , l ar a r ge g e s am a m pl p l es e s g iv i v e m or o r e r es e s ul u l ts t s t ha h a n t he he s ma ma l l e r

samples.

The

sample

refers

to

the

number

of  

r e s p on o n d e nt n t s f r o m t h e u n i ve ve r s e . M y s a m p l e s i z e w a s t o t a l 2 2 Bank branches of various areas in Chandigarh and Panchkula CONTACT METHOD: once the sampling plan has determined, t he he

q ue u e st s t io io n

w as as

h ow ow

t he he

s ub u b je j e ct ct

s ho h o ul ul d b e

c on o n ta t a ct c t ed ed ,

i .e .e .

by

t e l e p h o n e, e , m a i l o r p e r s o n a l i n t e r v i ew ew s . B u t t h e s i n g l e w a y t o c o n t a c t the subject was personal interviews.

REASEARCH METHODS USED:-

T h e m et e t ho h o d u se s e d f or o r d er e r iiv v i ng n g s om o m e i mp m p or o r ttaa n t c on o n c lu l u si s i on o n s o ut ut o f   s u r ve v e y c o n du d u c te t e d a n d q u es e s t io i o n s b e in i n g a s ke k e d b y g e n er e r a l p u b li li c t h e following methods are being used: -

(1). Kendall’s method (2). Mode

(1). KENDALL’S METHOD Kendall’s coefficient of concordance, represented by the symbol “W”, is an important non-parametric measure of relationship. It is used for  59

d e te t e rm r m i ni n i n g t he h e d e gr g r ee e e o f a ss s s o ci c i a ti t i o n a mo m o n g s ev e v er e r a l ( k ) s et et s o f   r an a n ki ki n g

of

N

o bj b j ec e c ts ts

or

i nd n d iv i v id i d ua u a ls ls .

K en e n da d a ll l l ’s ’s

c oe o e ff f f ic i c ie ie n t

of 

concordance (W) is considered an appropriate measure of studying the degree of association among three or more sets of rankings.

T h e b a s i s o f K e n d a l l’ l’ s c o e f f i c i e n t o f c o n c o r d a n c e i s t o i m a g i n e h o w the given data would look if there were no agreement among several set of rankings, and then to imagine how it would look if there were  p e r f e c t a g r e e m e n t a m o n g s e v e r a l s e t s .

This method is being used for finding the criteria ranked highest by the maximum depositors while selecting as given to them by H DF D F C a s c om o m pa p a re r e t o o th t h e r b a nk n k s. s . U nd n d e r t hi h i s m et e t h od o d o nl nl y t h os o s e p o te t e n t i al a l d e p os o s i t o rs r s a r e c o ns n s i d e re r e d w h o k n o w a b ou ou t HDFC deposits.

By using kandell’s method calculations are being done as follows: -

ASSUMP TION : -

Before showing calculations here it is being observed that although  p e o p l e c o n s i d e r s a f e t y o f t h e i r f u n d s t h e m o s t i m p o r t a n t c r i t e r i a f o r  s e l e c t in i n g a n y d e p o s it i t b u t s t i l l t h e y w a n t h i g h i n t e r es es t r a t e s t h e r e f o r e i n o u r q u e st s t io i o n m os o s t o f p eo e o pl p l e m ar a r ke k e d i n te t e re r e s t r at a t es e s a s t h e m os os t s el e l ec e c te te d

c ri r i te t e ri r i a. a.

T he h e re r e fo f o re re

w hi h i le le

f in i n di d i ng ng

t he he

c ho h o ic ic e

to

w hi h i ch ch

m a xi x i m um u m p e op o p l e g i ve v e i m po p o r ta t a n c e w e h a v e e l i m i na n a t ed e d o u r o p ti ti o n o f   interest rate as to give unbiased results. 60

PROCEDURE: -

The procedure for computing and interpreting Kendall’s coefficient of concordance (W) is as follows.

( A ) A l l t h e o b j e c t s a r e r a n k e d b y a l l ( k ) d i f f e r e n t r e s p o n d en en t s a n d  p u t i n t h e f o r m o f k b y N m a t r i x

( B ) T h e s u m o f r a n k s ( R j ) f o r e ac a c h o b j e c t a s s i g n ed ed b y a l l j u d g e s i s determined.

(C). Rj’ is determined and then value of “s” is determined by the formula

S = E (Rj – Rj’) ^ 2

( D ). ) . K e n da d a l l’ l ’ s c o e ff f f i c ie i e n t o f c o n co c o r d an a n c e i s w o rk rk e d o u t b y t h e formula

61

S W = -------------------------1/12 x k^2 (N^3 – N)

Where, k = No. Of respondents N = No. Of objects ranked

(E). Significant value of W may be interpreted and understood as if the respondents are applyi applying ng essent essentiall ially y the same same standar standards ds in ranking ranking n objects objects under under conside considerati ration. on. Kendall therefore suggested that the best estimate of the ‘TRUE’ ranking is provided  by the order of sum of the ranks. The best estimate is related to the lowest value observed amongst Rj.

MET HOD : -

Let safety of funds be x1, liquidity be x2, services be x3, additional  b e n e f i t s b e x 4 , m a r k e t r e p u t a t i o n b e x 5 .

 N o w o n t h e b a s i s o f c a l c u l a t i o n s m a d e i n t h e table we will calculate as fo llows: -

HYPOTHESIS ASSUMED : -

For ranks given by public let us take a Null hypothesis that there i s n o s i g n i f ic i c a n c e d i f f e r e n c e b e t we w e e n t h e s a m p le le s i z e o f 2 0 p e o p l e a n d t h e i r c o n s i d e r a t i on on s o f s a f e t y o f f u n d s w h i l e s e l e c t i n g a f i x e d deposit. (Ho) .

62

By putting the values in the formula: -

1214.8 W =

-------------------------1/12 x 20^2 (5^3 – 5)

W = 0.3037

To judge the significance of this W, we look into table for critical v a lu l u es e s o f S i n t h e K AN A N DE D E LL L L ’S ’ S C oe o e ff f f i ci c i en e n t o f C on o n c or o r da d a n ce c e f or or   finding value of s at 5% level for k = 20 and N = 5. This value is 468.5 and our calculated value is 1214.8 much higher then the tabular  value therefore we reject the null hypothesis and infer that the people are applying essentially the same standard in ranking the N objects i.e., there is signific ant agreement in ranking by people at 5 % level.

T h e l o w e st s t v a l ue u e o b s er e r v e d a m o n gs g s t R j i s 4 1 a n d a s b e st s t e s ti t i m a te te o f   t ru r u e r an a n k in i n g s i n t he h e c a se s e o f c ri r i te t e ri r i a x 1, 1 , a ll l l p eo e o pl p l e o n t he h e w h ol ol e  p l a c e d t h i s c r i t e r i o n o n t h e f i r s t m o s t i m p o r t a n t c r i t e r i a .

Therefore we can say that people con sider SAFETY OF FUNDS as the most important criteria for going for any fixed d eposit.

(2). MODE

63

Mode is the most commonly or frequently occurring value in a series. The mode in a distribution is that around which there is m ax a x im i m um u m c on o n c en e n t ra r a ti t i o n. n . I n g en e n e ra r a l, l , m od o d e i s t he h e s iz i z e o f i te te m m,, w h i c h h a s m a x i m u m f r e q u en en c y , b u t a t i t e m s s u c h a n i t e m m a y n o t  b e

mode

on

account of

the

effect

of

the

frequencies

of

the

neighboring items. Like median, mode is a positional average and is not affected by the values of extreme items. It is therefore, useful in all situations where we want to eliminate the effect of  e x t re r e m e v a r ia i a t i on o n s . M o de d e i s p a rt r t i cu c u l a rl r l y u s ef e f u l i n t h e s t ud ud y o f    p o p u l a r s i z e s .

Mode represents the variable having highest frequency.

PROCEDURE F i n d i n g o u t t h e f r e q u en e n c y f o r e v e r y c r i t e r i o n f i r s t ly l y b y a s s i g n in in g t h e tally mark then by counting the tally mark and then finding the modal value by considering the highest frequency.

We are giving different time periods different variables. Let < 1 year be x1 1-2 years be x2 2-5 years be x3 And 5 years above be x4  N o w w h e n 3 0 p e o p l e w e r e a s k e d a b o u t t h e t i m e p e r i o d t h e y w i l l  p r e f e r t o d e p o s i t t h e i r m o n e y t h e n w e o b s e r v e f o l l o w i n g observations: -

CRETERIA

FREQUEN CY  

64

5 16 6 3

 X 1  X 2  X 3  X 4

 N o w w i t h t h e h e l p o f f o l l o w i n g t a b l e w e c a n f i n d t h a t g e n e r a l l y  p e o p l e p r e f e r 1 - 2 y e a r s f o r d e p o s i t i n g t h e i r m o n e y .

The above used method c an also be shown with the help of following graph as well.

16 14 12 10 8

East

6 4 2 0 X1

X2

X3

X4

Where X1 represents