SUMMER TRAINING

REPORT
ON
STUDY OF CONSUMER PERCEPTION REGARDING
CREDIT CARDS SCHEME OF HDFC BANK

Submitted to Punjab Technical University

In partial fulfillment of the requirements for the award of degree
of
MASTER OF BUSINESS ADMINISTRATION

SUBMITTED BY: SUPERVISOR:

 DECLARATION

I, "”, hereby declare that the work presented herein is genuine work done
originally by me and has not been published or submitted elsewhere for the
requirement of a degree programme. Any literature, data or works done by others
and cited within this dissertation has been given due acknowledgement and listed
in the reference section.

_______________________
(Student's name & Signature)

Date:__________________
 ACKNOWLEDGMENT

If words are considered as a symbol of approval and token of appreciation

then let the words play the heralding role expressing my gratitude.

Firstly I am thankful to that Gracie GOD who blessed me with all kinds of
facilities that had been provided to me for completion of my report.

I acknowledge my deepest sense of gratitude and sincere feeling of indebtness

to my divine teacher ……and all my faculty members whose guidance
and through their sustained efforts and encouraging attitude I was able to
complete my project.

I am extremely grateful to the management of the Bank for permitting me to

take a training and also for spending their precious time and sharing the
valuable information with me and in helping my project to be a success.

PREFACE
Theory & practice are the two aspects of the management education .In order to
produce dynamic & promising executive, the two have to be blend together.
Practical training exposes the potential manager to the actual work environment &
provides them rich insight into what actually goes on in the industrial climate of
India. In fact the implementation of theory in practice is the life of management. I
had the privilege of doing my Project on HDFC Bank credit card. I must say that
the staff provided me with an excellent work atmosphere for doing the project.
The project report is on “Consumer Perception regarding the Credit Card of
HDFC Bank”.

I have gained precious & valuable knowledge regarding practical aspects while
prepare my project report.

Executive summary
India is the second fastest growing market for financial cards in the Asia-Pacific
region. The country’s credit card base, pegged at 27 million in 2007, is growing at
an annual rate of 30-35%. The cardholders are increasingly using credit/debit
cards for dining, purchasing clothing, petrol, durable goods and jewellery. Most
Indians now have multiple cards, through which they utilize balance transfers to
reduce their interest burden over the short term. A thriving economy, substantial
increase in disposable incomes and consequent rise in consumer expenditure,
growing affluence levels and consumer sophistication have all led to robust
growth in credit cards, and each issuer has posted an enviable annual growth rate
for several years. New products, foreign participation and a booming tourism
industry are combining to create high levels of growth in India’s nascent financial
cards market, helped by product innovation and a supportive regulatory
environment
HDFC Bank Ltd. is one of the new private sector banks in India, which
commenced business in early 1995. In this relatively short span of less than 10
years, the bank has built for itself a reputation of being one of India’s leading,
innovative customer focused bank, with a consistent record of accomplishment of
superior financial performance and impeccable asset quality.
Some of the activities of the bank are: Loan from other bank, RBI’s Legal
formalities, Deposit Formalities, Lending Formalities, R & D Formalities,
Analyzing loan, Auto Loan, Loan against marketable securities, Personal loan,
Loan for two wheeler, Credit Card Facilities, Debit Card Facilities, Investment
Advisory services, Alternative Delivery Channels, ATM, Phone Banking, Net
Banking, Mobile Banking, Depository Participant Services for retail customers,
Working capital Finance, Trade services, Transactional Services, Cash
Management Services, Solutions to Corporate customers, Mutual funds, Stock
exchange member, Accounts and deposit products, Investment and insurance,
Payment services
Despite the high demand, the quality of services has not declined. Product features
match the best anywhere in the world. Almost all the credit cards come with
standard benefits such as free accident insurance, medical insurance at a heavy
discount and much more. The cardholder is offered the option of converting a big
purchase made on a credit card into a loan at a lower rate of interest spread over a
long period. Banks even offer details of expenses incurred on credit cards under
different headings – such as food, clothes and jewellery - to enable easier tracking
by the customer. E-mail alerts and mobile alerts on credit cards are commonplace.
India’s regulators have been generally supportive in the development of the
financial cards industry in the country. The Reserve Bank of India recently
allowed certain non-banking finance companies to issue co-branded credit cards
with commercial banks, though the non-bank partner’s activities are restricted to
the marketing and distribution of the co-branded cards. The government has also
been a leading player in encouraging access to financial cards for India’s poor,
especially in rural areas, through schemes such as the Kisan Credit Card, which is
aimed at the farming community.
Nevertheless the company’s mission and vision statement are mentioned to be the
same, which should not be the case since the mission of the company sets apart
one company from other companies in the same area of business. The mission
identifies the scope of company’s operations, describes company’s product market
and technological area. It also gives thrust to company’s strategically decisions.
So HDFC should have an alternate elaborated mission statement, which could be:
To be a financial bank which offers wide range of financial instrument which
works to deliver quality service to its customers equipped with latest technologies
and novelty of international standards.

Some of the strengths of HDFC bank found were: Company image and
technological capability. Weaknesses included: High cost involvement and
undifferentiated products, amongst opportunities were: International market and
recent technological development, and lastly the threats posed were: Price wars
with competitors and competitors having superior access to channels of
distribution.
Another contributing factor was the quiet but aggressive promotion campaign
launched by key `producers' in this sector. The growth of credit cards in number
and transaction volumes in India was low compared to other countries in the Asia-
Pacific region. But there is definitely room for further growth. Debit cards, too,
have yet to realise their full potential. Among the factors that limited growth was
the comparatively slow rate of growth of ATMs in India. This is not the way most
Indians perceive this issue, but cross-country statistics very definitely bear out the
position as stated in the Executive Summary of a $1400-report on `Financial
Cards in India', published by Euromonitor International.
Though Credit card is very old concept. But it gains more importance since last
few years only. It is clear from the research that majority of people have started to
purchase it since last 1 - 2 years only.
The main purpose of using credit card according to majority of people is shopping
because at most of the times the amount to be spent on shopping is not pre
planned and with the help of credit cards they do not have to worry for the cash
which they need if the shopping expenses rises.
 CONTENTS
Sr. No. CHAPTER Page
No.
I. INTRODUCTION TO PROJECT 1
SECTION A: THEORETICAL FOUNDATION 3-47
A.1 INTRODUCTION

A.2 History
A.3 How credit cards work
3.1 Interest charges
3.2 Benefits
3.3 Grace period
3.4 Merchant's side
3.5 Parties involved
3.6 Transaction steps

3.7 Prepaid credit cards

A.4 Features

A.5 Security
A.6 Problems

A.7 Profits and losses

7.1 Costs

7.2 Revenues

A.8 Credit card numbering:

A.9 Credit cards in ATMs

A.10 Types of credit cards

A.11 Detail of HDFC Bank Credit Card
11.1. Classic Cards
11.2 Special Benefit cards
11.3 Premium Cards: Access world-class privileges and benefits
11.4 Commercial Cards
A.12 Cardholder Dispute Form
A.13 Growth of credit cards
 SECTION B: REVIEW OF LITERATURE 48-55
II. INTRODUCTION TO COMPANY 56
SECTION C: INTRODUCTION TO ORGANISATION 57-64
C.1 OVERVIEW
C.2 Mission and Business Strategy

C.3 Business focus

C.4 Capital Structure

C.5 Merger of HDFC Bank and Centurion Bank of Punjab

C.6 Time banks Amalgamation
C.7 Growth
C.8 Subsidiaries and associate Companies
C.9 Technology
C.10 Distribution Network
C.11 Management
C.12 Business Profile of HDFC Bank
C.13 Wholesale Banking Services
C. 14 Retail Banking Services
C. 14 Retail Banking Services
C.15 Treasury
C.16 RATING

C.17 Awards and Recognition

C.18 Branches of HDFC

C.19 HDFC Product Range

C.20 Recent Achievements and milestones

C.21 Future Prospects

 C.22 PERFORMANCE OF HDFC BANK
C.23 FINANCIAL RESULTS
C.24 Financial Analysis of HDFC Bank Limited

SECTION D: INTODUCTION TO TRAINING UNIT 65-100

D.1 PROFILE
D.2 ORGANISATION STRUCTURE
D.3 Business Strategy
D.4 SWOT Analysis of Training Unit:-

III Objective of study 101-105

IV Research Methodology 106-109

RATIONALE OF THE PROJECT

V Data Analysis and Interpretation 110-113

Finding & Suggestion

LIMITATIONS OF THE STUDY

BIBLIGRAPHY
 Chapter I
INTRODUCTION TO THE
SUBJECT
SECTION A
 THEORETICAL
FOUNDATION

A.1 INTRODUCTION
Competition across the 1990s has changed credit card issuers’ pricing
strategy. Credit card issuers are competing by waiving annual fees, providing
enhancements, and since the early 1990s, lowering interest rates. In the past, credit
card issuers offered programs with a single interest rate, but more recently many
of them have offered a broad range of card plans with differing interest rates
depending on consumers’ credit risk and usage patterns. For example, they offer
lower rates to existing customers who have good payment records (prime or A
markets) while maintaining relatively high rates for higher-risk (sub-prime or B/C
markets) or late-paying cardholders. Card issuers have expanded into the subprime
markets not only through pricing but also by offering an array of different types of
cards, including secured cards in which the credit limit is tied to a security deposit
provided by the consumer. This aggressive approach has resulted in widening the
variety of credit card choices for consumers, as well as increasing potential
problems.
Credit is a method of selling goods or services without the buyer having cash in
hand. A credit card is only an automatic way of offering credit to a consumer.
Today, every credit card carries an identifying number that speeds shopping
transactions. Imagine what a credit purchase would be like without it, the sales
person would have to record your identity, billing address, and terms of
repayment.

A credit card is a system of payment named after the small plastic card
issued to users of the system. In the case of credit cards, the issuer lends money to
the consumer to be paid later to the merchant. It is different from a charge card,
which requires the balance to be paid in full each month. In contrast, a credit card
allows the consumer to 'revolve' their balance, at the cost of having interest
charged. Most credit cards are issued by local banks or credit unions, and are the
same shape and size, as specified by the ISO 7810 standard.

A.2 History

The concept of using a card for purchases was described in 1887 by Edward
Bellamy in his utopian novel Looking Backward. Bellamy used the term credit
card eleven times in this novel. The modern credit card was the successor of a
variety of merchant credit schemes. It was first used in the 1920s, in the United
States, specifically to sell fuel to a growing number of automobile owners. In 1938
several companies started to accept each other's cards.

The concept of paying merchants using a card was invented in 1950 by

Ralph Schneider and Frank X. McNamara in order to consolidate multiple cards.
The Diners Club, which was created partially through a merger with Dine and
Sign, produced the first "general purpose" charge card, which is similar but
required the entire bill to be paid with each statement; it was followed shortly
thereafter by American Express and Carte Blanche. Western Union had begun
issuing charge cards to its frequent customers in 1914.

Bank of America created the Bank Americard in 1958, a product which

eventually evolved into the Visa system ("Chargex" also became Visa).
MasterCard came to being in 1966 when a group of credit-issuing banks
established Master Charge. The fractured nature of the US banking system meant
that credit cards became an effective way for those who were traveling around the
country to move their credit to places where they could not directly use their
banking facilities. In 1966 Barclaycard in the UK launched the first credit card
outside of the US.

There are now countless variations on the basic concept of revolving credit
for individuals (as issued by banks and honored by a network of financial
institutions), including organization-branded credit cards, corporate-user credit
cards, store cards and so on.

In contrast, although having reached very high adoption levels in the US,
Canada and the UK, it is important to note that many cultures were much more
cash-oriented in the latter half of the twentieth century, or had developed
alternative forms of cash-less payments, such as Carte bleue or the EC-card
(Germany, France, Switzerland, among many others). In these places, the take-up
of credit cards was initially much slower. It took until the 1990s to reach anything
like the percentage market-penetration levels achieved in the US, Canada or UK.
In many countries acceptance still remains poor as the use of a credit card system
depends on the banking system being perceived as reliable.

In contrast, because of the legislative framework surrounding banking

system overdrafts, some countries, France in particular, were much faster to
develop and adopt chip-based credit cards which are now seen as major anti-fraud
credit devices.

The design of the credit card itself has become a major selling point in
recent years. The value of the card to the issuer is often related to the customer's
usage of the card, or to the customer's financial worth. This has led to the rise of
Co-Brand and Affinity cards - where the card designs is related to the "affinity" (a
university, for example) leading to higher card usage. In most cases a percentage
of the value of the card is returned to the affinity group.

A.3 How credit cards work

Credit cards are issued after an account has been approved by the credit
provider, after which cardholders can use it to make purchases at merchants
accepting that card. When a purchase is made, the credit card user agrees to pay
the card issuer. The cardholder indicates his/her consent to pay, by signing a
receipt with a record of the card details and indicating the amount to be paid or by
entering a Personal identification number (PIN). Also, many merchants now
accept verbal authorizations via telephone and electronic authorization using the
Internet, known as a 'Card/Cardholder Not Present' (CNP) transaction. Electronic
verification systems allow merchants to verify that the card is valid and the credit
card customer has sufficient credit to cover the purchase in a few seconds,
allowing the verification to happen at time of purchase.

A.3.1 Interest charges

Credit card issuers usually waive interest charges if the balance is paid in
full each month, but typically will charge full interest on the entire outstanding
balance from the date of each purchase if the total balance is not paid.
 For example, if a user had a $1,000 transaction and repaid it in full within
this grace period, there would be no interest charged. If, however, even $1.00 of
the total amount remained unpaid, interest would be charged on the $1,000 from
the date of purchase until the payment is received. The precise manner in which
interest is charged is usually detailed in a cardholder agreement which may be
summarized on the back of the monthly statement.

A.3.2 Benefits

Because of intense competition in the credit card industry, credit card

providers often offer incentives such as frequent flyer points, gift certificates, or
cash back (typically up to 1 percent based on total purchases) to try to attract
customers. Low interest credit cards or even 0% interest credit cards are
available. The only downside to consumers is that the period of low interest credit
cards is limited to a fixed term, usually between 6 and 12 months after which a
higher rate is charged.

A.3.3 Grace period

A credit card's grace period is the time the customer has to pay the balance
before interest is charged to the balance. Grace periods vary, but usually range
from 20 to 30 days depending on the type of credit card and the issuing bank.
Some policies allow for reinstatement after certain conditions are met. Usually, if
a customer is late paying the balance, finance charges will be calculated and the
grace period does not apply.

A.3.4 Merchant's side

For merchants, a credit card transaction is often more secure than other
forms of payment, such as checks, because the issuing bank commits to pay the
merchant the moment the transaction is authorized, regardless of whether the
consumer defaults on the credit card payment (except for legitimate disputes and
can result in charges back to the merchant). In most cases, cards are even more
secure than cash, because they discourage theft by the merchant's employees and
reduce the amount of cash on the premises.

For each purchase, the bank charges the merchant a commission for this
service and there may be a certain delay before the agreed payment is received by
the merchant. The commission is often a percentage of the transaction amount,
plus a fixed fee. In addition, a merchant may be penalized or have their ability to
receive payment using that credit card restricted if there are too many
cancellations or reversals of charges as a result of disputes. Some small merchants
require credit purchases to have a minimum amount to compensate for the
transaction costs, though this is not always allowed by the credit card consortium.

A.3.5 Parties involved

 Cardholder: The holder of the card used to make a purchase; the

consumer.
 Card-issuing bank: The financial institution or other organization that
issued the credit card to the cardholder. This bank bills the consumer for
repayment and bears the risk that the card is used fraudulently. American
Express and Discover were previously the only card-issuing banks for their
respective brands, but as of 2007, this is no longer the case.
 Merchant: The individual or business accepting credit card payments for
products or services sold to the cardholder
 Acquiring bank: The financial institution accepting payment for the
products or services on behalf of the merchant.
 Independent sales organization: Resellers (to merchants) of the services
of the acquiring bank.
  Merchant account: This could refer to the acquiring bank or the
independent sales organization, but in general is the organization that the
merchant deals with.
 Credit Card association: An association of card-issuing banks such as
Visa, MasterCard, Discover, American Express, etc. that set transaction
terms for merchants, card-issuing banks, and acquiring banks.
 Transaction network: The system that implements the mechanics of the
electronic transactions. May be operated by an independent company, and
one company may operate multiple networks. Transaction processing
networks include: Cardnet, Nabanco, Omaha, Paymentech, NDC Atlanta,
Nova, Vital, Concord EFS net, and Visa Net.
 Affinity partner: Some institutions lend their names to an issuer to attract
customers that have a strong relationship with that institution, and get paid
a fee or a percentage of the balance for each card issued using their name.
Examples of typical affinity partners are sports teams, universities and
charities.

A.3.6 Transaction steps

 Authorization: The cardholder pays for the purchase and the merchant
submits the transaction to the acquirer (acquiring bank). The acquirer
verifies the credit card number, the transaction type and the amount with
the issuer (Card-issuing bank) and reserves that amount of the cardholder's
credit limit for the merchant. An authorization will generate an approval
code, which the merchant stores with the transaction.
 Batching: Authorized transactions are stored in "batches", which are sent
to the acquirer. Batches are typically submitted once per day at the end of
the business day. If a transaction is not submitted in the batch, the
authorization will stay valid for a period determined by the issuer, after
 which the held amount will be returned back to the cardholder's available
credit (see authorization hold).
 Clearing and Settlement: The acquirer sends the batch transactions
through the credit card association, which debits the issuers for payment
and credits the acquirer. Essentially, the issuer pays the acquirer for the
transaction.
 Funding: Once the acquirer has been paid, the acquirer pays the merchant.
The merchant receives the amount totaling the funds in the batch minus the
"discount rate," which is the fee the merchant pays the acquirer for
processing the transactions.
 Charge backs: A chargeback is an event in which money in a merchant
account is held due to a dispute relating to the transaction. Charge backs are
typically initiated by the cardholder. In the event of a chargeback, the issuer
returns the transaction to the acquirer for resolution. The acquirer then
forwards the chargeback to the merchant, who must either accept the
chargeback or contest it.

A.3.7 Prepaid credit cards

A prepaid credit card is not a credit card since no credit is offered by the
card issuer: the card-holder spends money which has been "stored" via a prior
deposit by the card-holder or someone else, such as a parent or employer.
However, it carries a credit-card brand (Visa, MasterCard, American Express or
Discover) and can be used in similar ways just as though it were a regular credit
card.

After purchasing the card, the cardholder loads it with any amount of
money, up to the predetermined card limit and then uses the card to make
purchases the same way as a typical credit card. Prepaid cards can be issued to
minors (above 13) since there is no credit line involved. The main advantage over
secured credit cards is that you are not required to come up with $500 or more to
open an account. With prepaid credit cards you are not charged any interest but
you are often charged a purchasing fee plus monthly fees after an arbitrary time
period. Many other fees also usually apply to a prepaid card.

A.4 Features

As well as convenient, accessible credit, credit cards offer consumers an

easy way to track expenses, which is necessary for both monitoring personal
expenditures and the tracking of work-related expenses for taxation and
reimbursement purposes. Credit cards are accepted worldwide, and are available
with a large variety of credit limits, repayment arrangement, and other perks such
as rewards schemes in which points earned by purchasing goods with the card can
be redeemed for further goods and services or credit card cash back.

A.5 Security

Credit card security relies on the physical security of the plastic card as
well as the privacy of the credit card number. Therefore, whenever a person other
than the card owner has access to the card or its number, security is potentially
compromised. Merchants often accept credit card numbers without additional
verification for mail order purchases. Some merchants will accept a credit card
number for in-store purchases, whereupon access to the number allows easy fraud,
but many require the card itself to be present, and require a signature. Thus, a
stolen card can be cancelled, and if this is done quickly, no fraud can take place in
this way. For internet purchases, there is sometimes the same level of security as
for mail order (number only) hence requiring only that the fraudster take care
about collecting the goods, but often there are additional measures. The main one
is to require a security PIN with the card, which requires that the thief have access
to the card, as well as the PIN.
A.6 Problems

The low security of the credit card system presents countless opportunities
for fraud. This opportunity has created a huge black market in stolen credit card
numbers, which are generally used quickly before the cards are reported stolen.

The goal of the credit card companies is not to eliminate fraud, but to reduce it to
manageable levels. This implies that high-cost low-return fraud prevention
measures will not be used if their cost exceeds the potential gains from fraud
reduction.

Most internet fraud is done through the use of stolen credit card
information which is obtained in many ways, the simplest being copying
information from retailers, either online or offline. Despite efforts to improve
security for remote purchases using credit cards, systems with security holes are
usually the result of poor implementations of card acquisition by merchants. For
example, a website that uses SSL to encrypt card numbers from a client may
simply email the number from the web server to someone who manually
processes the card details at a card terminal. Naturally, anywhere card details
become human-readable before being processed at the acquiring bank, a security
risk is created. However, many banks offer systems where encrypted card details
captured on a merchant's web server can be sent directly to the payment processor.

A.7 Profits and losses

In recent times, credit card portfolios have been very profitable for banks,
largely due to the booming economy of the late nineties. However, in the case of
credit cards, such high returns go hand in hand with risk, since the business is
essentially one of making unsecured (uncollateralized) loans, and thus dependent
on borrowers not to default in large numbers.
A.7.1 Costs

Credit card issuers (banks) have several types of costs:

 Interest expenses: Banks generally borrow the money they then lend to
their customers. As they receive very low-interest loans from other firms,
they may borrow as much as their customers require, while lending their
capital to other borrowers at higher rates.
 Operating costs: This is the cost of running the credit card portfolio,
including everything from paying the executives who run the company to
printing the plastics, to mailing the statements, to running the computers
that keep track of every cardholder's balance, to taking the many phone
calls which cardholders place to their issuer, to protecting the customers
from fraud rings.
 Charge offs: When a consumer becomes severely delinquent on a debt
(often at the point of six months without payment), the creditor may declare
the debt to be a charge-off. It will then be listed as such on the debtor's
credit bureau reports (Equifax, for instance, lists "R9" in the "status"
column to denote a charge-off.) The item will include relevant dates, and
the amount of the bad debt.
 Rewards: Many credit card customers receive rewards, such as frequent
flier points, gift certificates, or cash back as an incentive to use the card.
Rewards are generally tied to purchasing an item or service on the card,
which may or may not include balance transfers, cash advances, or other
special uses. Depending on the type of card, rewards will generally cost the
issuer between 0.25% and 2.0% of the spend.
 Fraud: The cost of fraud is high; in the UK in 2004 it was over £500
million. When a card is stolen, or an unauthorized duplicate made, most
card issuers will refund some or all of the charges that the customer has
 received for things they did not buy. These refunds will, in some cases, be
at the expense of the merchant, especially in mail order cases where the
merchant cannot claim sight of the card

A.7.2 Revenues

Interchange fee: Bank card associations such as Visa and MasterCard require
merchants to pay billions of dollars in Interchange fees to banks that issue
their credit and debit cards. Card-issuing banks obtain these interchange
fees in addition to the enormous revenue they receive from card holder
interest and fees. Interchange fees are the single largest component of the
various fees that banks deduct from merchants' credit card sales. Merchants
pay their banks fees of 1 to 6 percent of each sale (for large merchants
these fees may be negotiated , but will vary not only from merchant to
merchant, but also from card to card, with business cards and rewards cards
generally costing the merchants more to process), which is why many
merchants prefer cash, PIN-based debit cards, or even cheques, or will
add a percentage to the sale price to cover the interchange fee.
Traditionally, interchange fees have been set by the bank card associations
and their major card-issuing banks, who are the primary beneficiaries of
these fees.

Interest on outstanding balances: Interest charges vary widely from card issuer
to card issuer. Often, there are "teaser" rates in effect for initial periods of
time, whereas regular rates can be as high as 40 percent.

Fees charged to customers: The major fees are for:

 Late payments or overdue payments

 Charges that result in exceeding the credit limit on the card (whether
done deliberately or by mistake), called over limit fees
  Returned cheques fees or payment processing fees (e.g. phone payment
fee)
 Cash advances and convenience cheques. Transactions in a foreign
currency (as much as 3% of the amount). A few financial institutions do
not charge a fee for this.
 Membership fees (annual or monthly), sometimes a percentage of the
credit limit.
 Exchange Rate Loading Fees (May not even appear on your statement!)

A.8 Credit card numbering:

The numbers found on credit cards have a certain amount of internal

structure, and share a common numbering scheme. The card number's prefix,
called the Bank Identification Number, is the sequence of digits at the beginning
of the number that determine the bank to which a credit card number belongs. This
is the first six digits for MasterCard and Visa cards. The next nine digits are the
individual account number, and the final digit is a validity check code.

In addition to the main credit card number, credit cards also carry issue and
expiration dates (given to the nearest month), as well as extra codes such as issue
numbers and security codes. Not all credit cards have the same sets of extra codes
nor do they use the same number of digits.

A.9 Credit cards in ATMs

Many credit cards can also be used in an ATM to withdraw money against
the credit limit extended to the card, but many card issuers charge interest on cash
advances before they do so on purchases. The interest on cash advances is
commonly charged from the date the withdrawal is made, rather than the monthly
billing date.
A.10 Types of credit cards

When we look back at the history of credit cards, they started out simple
and standard: Each issuer produced one card with one set of features. Today,
credit cards come in multiple levels with ranging interest rates, fees and reward
programs, so before you fill out an application, it's important to know which will
best suit your financial situation and lifestyle.

The following is a brief description of the most common types of credit cards
available.

1) Standard credit cards: These credit cards are the most common and are
readily available from most banks and financial groups. They are unsecured,
which means you do not have to put down a security deposit to prove the money
can be repaid. The way the annual percentage rate is offered or calculated for
these cards can vary. Here are two examples:

 Balance transfer credit cards allow consumers to transfer a high interest

credit card balance onto a credit card with a low interest rate. Typical in the
market today are balance transfer credit cards with an introductory annual
percentage rate (APR) of 0 percent, with that introductory or "teaser" rate
lasting several months up to a year. The terms of balance transfer credit
cards varies between offers.
 Low interest credit cards offer either a low introductory APR that jumps
to a higher rate after a certain period, or a single low fixed-rate APR. Low
interest cards can be very useful when consumers need make a large
purchase because it allows several months to a year to pay it off with very
low or no interest.
2) Credit cards with rewards programs: Reward credit cards allow users to earn
incentives for making purchases with their credit card. Reward cards usually
require better-than-average credit for approval. There are seven major types:

 Cash back credit card: Cash back credit card allows you to earn cash
rewards for making purchases. The more the card is used, the more cash
rewards you receive. Most cash back cards earn users around 1 percent of
total purchases, excluding interest and finance charges.
 Reward credit cards: Reward credit cards are similar to cash back cards in
that cardholders can accumulate points toward a reward structure, which is
based on how much the card is used over time. General reward cards offer
cardholders a variety of items to cash points in for: gift cards, electronics,
hotel stays, plane tickets, jewelry, pet supplies and more.
 Hotels or traval point credit cards: This is a genre of credit cards specific
to hotels and travel. Some cards are co-branded with hotels, such as the
Marriott Rewards Visa card, or the Hilton HHonors American Express
card. These credit cards allow you to earn points for all purchases, in
addition to bonus points for dollars spent on stays at the respective hotel
chain.
 Retail rewards credit cards: These credit cards are co-branded with a
major retailer, such as Disney, Amazon.com or Best Buy. Points are
accumulated by making everyday purchases, though cardholders are
awarded with double or triple points for making purchases from the co-
branded retailers.
 Gas cards with points: Gas cards come in two species: general and brand-
specific. General cards treat all gas companies equally, while brand-
specific cards favor one gas company. The Discover Open Road card, a
general gas rebate card, gives you 1 percent cash back for general
 purchases but rewards you with 5 percent back for buying gas or having
auto maintenance done at any company.
 Automobile manufacturer’s credit cards: Auto rewards cards allow
consumers to earn points that can be redeemed toward the purchase of a
new or used car, auto-related expenses or merchandise. With the GM
Flexible Earnings MasterCard, for example, cardholders can opt for cash
back rewards, or apply their earnings toward the purchase of a new GM
vehicle. This card is most beneficial to those looking to purchase a vehicle
in the near future.
 Home improvement reward credit cards: These credit cards allow
consumers to earn reward points for all purchases, while earning extra
points for home-related expenditures. For example, with the Citi Home
Rebate MasterCard, you earn 1 percent back on regular purchases, but 6
percent back on purchases involving utilities, cable/satellite TV, Internet
connection and telecom for the first year.

3) Airline mile frequent flier credit cards: While certain general reward credit
cards allow points to be redeemed for plane tickets among other things, there is a
subset of reward cards specifically for air travel. This type of card allows
consumers to earn airline mile credits whenever they make purchases. Some cards
are co-branded with a specific airline, while some are generic and can be
redeemed for tickets with a variety of airlines. Points can be redeemed for airline
travel, much like frequent flier miles.

 Airline specific credit cards:These cards are associated with one airline.
Typically, the cardholder accumulates points from both making purchases
with the card and by flying on the specified airline.
 Generic airlines miles cards: Credit cards such as Miles by Discover
allow you to redeem your reward points for air travel through any airline,
 travel agent or online travel site. This is a great option for people who aren't
involved in a frequent flier program and aren't loyal to any particular
airline.

4) Bad credit and/or credit repair cards: Credit can easily go from good to bad
due to poor budgeting or simply by an overlap between jobs. If your credit score is
less than satisfactory, it does not mean you cannot qualify for a credit card. There
are several options available to those who have had bad credit in the past and for
those who are currently trying to repair their credit.

Depending on your specific situation, debt consolidation or use of introductory

APRs on balance transfers may be wise choices. If you still need credit or want to
start repairing your credit by proof of action, there are several credit cards
designed to help rebuild poor credit histories.

5) Specialty credit cards: These types of cards are for consumers with unique
needs for their credit use, such as business professionals and students. These credit
card programs are designed specifically to meet the needs of those individuals.

 Business credit cards: These cards are available for business owners and
executives and have many of the same features as traditional credit cards:
low introductory rates, cash back programs and airline rewards.
 Student credit cards: Many college students need a credit card, but they
generally have little or no credit history, which makes it difficult to get
approved for a traditional card. Student credit cards are specifically
designed for those enrolled in accredited four-year colleges and universities
to help them build a credit history from the ground up.

A.11 Detail of HDFC Bank Credit Card

HDFC Bank has range of Cards help you meet your financial objectives. their
Credit Cards are designed to meet your unique needs.
List of hdfc credit cards:

Classic Cards Special Benefit Cards

Silver Credit Card Value Plus Credit Card
Health Plus Credit Card
Premium Cards Commercial Cards
Gold Credit Card Corporate Credit Card
Titanium Credit Card Business Credit Card
Woman's Gold Card
Platinum Plus Credit Card
Visa Signature Credit Card
World MasterCard Credit Card

A.11.1. Classic Cards

• Silver Credit Card

The HDFC Bank Silver Credit Card can be used for all your requirements, be it
shopping, eating out, holidaying, fuelling up vehicle, railway ticket reservations -
just about any financial requirement, planned or on impulse.
Eligibility Criteria

Salaried Self Employed

Minimum Age 21 21
Maximum Age 60 65
Annual Income (Rs.) Rs. 200,000/- p.a. Rs. 150,000/- p.a.
A.11.2 Special Benefit cards

• Value Plus Credit Card

A true value card that enables you to avail 5% cash back on all your purchases.
It's power packed with a host of unmatched features that provides your family
with true Value and savings.
Eligibility Criteria

Salaried Self Employed

Minimum Age 21 21
Maximum Age 60 65
Annual Income (Rs.) Rs. 200,000/- p.a. Rs. 150,000/- p.a.

• Health Plus Credit Card

Cashless Mediclaim, discounts at participating hospitals, extra protection for the

family. It brings unique features like the Cashless Mediclaim facility and
discounts at leading hospitals which make it an unmatched product.
Imagine a Credit Card that takes care of your financial health as well as your
family's health and fitness. This is not just a card but a guarantee of a healthy and
secure future.
Introducing the HDFC Bank Health Plus International Credit Card - India's first
health Care Credit Card with a free inbuilt Cashless Mediclaim. This card comes
to you from HDFC Bank in association with the United India Insurance Company
(UIIC), one of the leading insurance service providers. This card is designed
keeping your good health in mind. It brings you unique features like the Cashless
Mediclaim facility and discounts at leading hospitals which make it an unmatched
product.

Eligibility Criteria

Salaried Self Employed

Minimum Age 21 21
Maximum Age 60 65
Annual Income (Rs.) Rs. 200,000/- p.a. Rs. 150,000/- p.a.

A.11.3 Premium Cards: Access world-class privileges and benefits

• Gold Credit Card

A card to match premium lifestyle with features like special offers on air and train
ticketing, assured 50% discounts on hotel tariffs, and rewards redemption against
air miles.
It's overloaded with travel benefits - discounts, cashback offers, air miles
redemption.
Eligibility Criteria

Salaried Self Employed

Minimum Age 21 21
Maximum Age 60 65
Annual Income (Rs.) Rs 200,000/- p.a. Rs. 150,000/- p.a.

• Titanium Credit Card

The unique reward points structure gives 2 reward points for every Rs150 on
domestic spends and 5 reward points for every Rs150 on international spends

• Woman's Gold Card

The customers can Enjoy the benefits of the best premium card made specifically
for women.
Eligibility Criteria

Salaried Self Employed

Minimum Age 21 21
Maximum Age 60 65
Annual Income (Rs.) Rs 200,000/- p.a. Rs. 150,000/- p.a.

• Platinum Plus Credit Card

India's only Platinum Credit Card with exclusive travel and preferential benefits -
a recognition of those who have "arrived in life". Enjoy a world of exclusive
privileges on your HDFC Bank Platinum Plus Credit Card.

• Visa Signature Credit Card

A card for the rarest of the rare A card with unique and exclusive privileges that
complement your refinement and style.
• World MasterCard Credit Card
HDFC Bank presents the World MasterCard Credit Card - a very premium
offering for the truly elite. A card with tailor-made premium privileges that
complement a discerning lifestyle
A.11.4 Commercial Cards

• Corporate Credit Card

HDFC Bank Corporate card is the first among few to provide you with truly world
beating features on your credit card. It comes with a unique 24x7 Expense
management solution called SMART DATA ONLINE, powered by Mastercard
International
• Business Credit Card
It makes Perfect Business Sense - Better Business with HDFC Bank International
Business card.

Welcome to the world of exclusive privileges and world class services. The HDFC
Bank International Business Card is designed to add value to your business, while
keeping in mind the conveniences and lifestyle benefits for business owners and
the self employed community specifically.
A.12 Cardholder Dispute Form
A.13 Growth of credit cards

Bankers expect their credit card business to grow by over 30 per cent in 2007-
08. Credit cards have seen a gradual growth from about 7.1 million in 2003 to
22.6 million in 2007. There has been approximately a 30-40 per cent growth in the
number of cards in force and also the amount of annual spends on cards on a year-
on-year basis.The number of cards in force this year is about 30 per cent more
than that in 2006, which was at about 17.5 million.
 Section B

REVIEW
OF
LITERATURE
 Review of Literature
Here, an attempt is made to glance through the research carried out earlier in the
field of “Consumer Perception regarding Bank”. This chapter deals with the
review of the empirical studies by the experts and the researchers, no doubt there
have been large number of studies in the literature in this field and it is not
possible to comment on all these studies, but it is useful to briefly look at, as many
as possible.
Parasuraman, (1984): identified a set of discrepancies, or gaps, between how
executives perceive the quality of the service they provide and the tasks associated
with delivering those services to customers. They found that the customer's
perception of service quality depends upon the size and direction of the gap
between the service the customer expects to receive and what he or she perceives
to have been received. The magnitude of this gap (which can be either positive or
negative) was determined by four interrelated variables: (1) the difference between
actual consumer expectations and management perceptions of those expectations;
(2) between management perception of expectations and the translation of those
perceptions into service quality specifications; (3) between service quality
specifications and service delivery; and (4) between both service quality
specifications and service delivery, and external communications to customers.
Parasuraman, noted that these gaps "can be a major hurdle in attempting to deliver
a service which consumers would perceive as being of high quality." Because this
study focused on the interaction between the firm's representatives and its
customers, this author found the fourth gap (between both service quality
specifications and service delivery, and external communications to customers) to
be of particular relevance.

Schlesinger and Heskett (1991):Citing research on customer loyalty conducted

by the Forum Corporation, Schlesinger and Heskett (1991) noted that only 14% of
customers stopped patronizing service business because they were dissatisfied by
the quality of the product, while more than two-thirds defected because of what
they judged to be indifferent or unhelpful service. This finding supported the
observation of Parasuraman, (1984) that customers' judgments of high and low
service quality depend on "how consumers perceive the actual service
performance in the context of what they expected."

Zeithaml, (1990):studied whether customers' perceptions of quality were

influenced by whether or not they had experienced a recent service problem they
examined customers who had experienced recent service problems and those who
had not. They found that service problems adversely affect customers' perception
of service quality, and that customers who were dissatisfied with the resolution of
their problems were twice as dissatisfied as those whose problems were resolved
to their satisfaction
Lee’s (2001) Study has also shown that the more competitive the market, the
greater the importance of customer satisfaction and customer loyalty. In the credit
card market loyalty is typically measured by recency, frequency, and amount of
purchase

Paturi (2006): The advent of contact less payment technology brings with it new
opportunities for stealing information from a credit card without the owner’s
notice. A person with a credit card in a wallet is at a busy public place (say, on a
train), and a miscreant with a tag reader within the read range of the card. The
miscreant, after reading the card’s tag without the owner’s permission, would be
able to identify the cardholder, steal whatever data was transmitted and potentially
use that information to commit crimes. Of course, the information on the credit
card may not be complete enough to enable many kinds of fraud. A card is just
one of many sources of personal information a thief can get, but thieves can do
extra homework to fetch additional details of a particular cardholder.
Bach (2007): Of all the games the credit card companies play, that end up costing
the customers thousands of dollars (late fees, over-limit fees, transfer fees, and so
on), it is always been the interest rate game that hurt the most. There is a new,
completely legal game they are playing, and it can literally wipe the customer out
financially if he is not careful. A customer own a credit card, he knows that if he is
late with a payment the credit card company will charge him a late fee in addition
to raising his interest rate. But he did not know that they can raise his interest rate
if he has made a late payment on any of his other cards, including those issued by
other companies. The customers may ask that why so. The answer is found in the
fine print of their credit card agreement, and it's called a universal default clause.

Weston (2007): The thrill of a credit card rewards program is so fleeting. It’s
wonderful to get free stuff travel, cash back, and money for college just by using
credit card.
But with so many rewards programs out there, it's hard not to second-guess your
choice. Have you got the best card? Are you using it to its best advantage? Could
you get more from a different one?
But there is no single best card for everyone that the right card for a customer
depends on the kind of rewards he wants and how much you charge.

Bakshi (2008): Many of us do not realize that, when we use a credit card abroad
the card issuer adds on a foreign usage loading. In fact, a recent Moneyfacts.co.uk
user poll revealed that 67% of consumers do not know the charges for using their
credit card abroad. Foreign usage loading on cards averages 2.75%. That means if
we spent £1,000 on our credit card whilst on our holiday we would be charged
£27.50. We also need to consider the fact that if we are withdrawing cash whilst
abroad, we will also be charged our usual cash withdrawal fee, which averages
2%. Thus, if you withdrew £1,000 using your credit card abroad you would be
charged 4.75% - £47.50.
Crystal (2008): This is a modern age of shopping malls, big cars, expensive
clothes, watches, etc. If you want to live all the luxuries of life, you need to have a
good bank balance. This is why this generation likes to own a credit card. The
trend of using credit cards is increasing day by day. People like to be updated with
the trend. It has become risky to carry cash on the move. Carrying a card is easier
than carrying cash. On the other hand, expenses are on the rise and there can be
times when are in need of money. Credit cards are also convenient for travelers
and businessmen. So, you no longer need to save money each month to buy your
preferred product. But when shopping for a card, one needs to keep several things
in mind like the credit card interest rate, cost and rewards.

Grant (2008): Some relief is being offered by a surprising source: credit cards.
Now, consumers can earn cash for their health-savings accounts, and discounts on
prescriptions, as well as dental and vision care by paying for their medical
expenses with plastic. Bank of America offers two such credit cards. Citibank's
card offers discounts of up to 60% on prescription drugs. HSBC is market testing
a debit card linked to drugstore CSV’s Extra Care rewards program. Even Target
is in the game, offering a 10% discount coupon for every 10 prescriptions filled
and paid for with your store credit card.

Hynes (2008): Credit cards are convenient for buying things now and paying
later. Credit card companies are in business to make money. Don't forget that
every time you use your credit card you are borrowing money. You will pay a
finance charge if you don't pay off your balance each month. The pitfalls of credit
card use are the accumulation of large amounts of debt and the inability to make
more than the minimum monthly payment. It's important to look out for your own
interests. Limit the number of credit card applications you fill out. Consider what
you are looking for in a credit card such as the interest rate, annual fee, grace
period, and credit line.
Smart money (2008): When a customer is buried in debt, choosing a credit card
is typically a question of finding the one with the lowest interest rate, not one that
has a rewards program. After all, a 1% cash-back bonus isn't much of a perk when
he is paying 18% or more in annual interest.
Now some credit card companies, including Discover and Bank of America, are
trying to convince the customers otherwise by launching credit cards that offer
special cash-back rewards meant to appeal to those carrying a balance. According
to Mr. Margo Georgialis, the chief marketing officer for Discover,” We found
85% of (consumers who carry a balance) prefer rewards for paying on time versus
rewards on spending," So they are trying to combine these both

CHAPTER II
INTRODUCTION TO COMPANY
 INTRODUCTION TO ORGANISATION

C.1 OVERVIEW

HDFC or Housing Development Finance Corporation Limited, founded 1977 by

Hasmukhbhai Parekh, is an Indian company which is primarily in the business of
providing home loans.HDFC's distribution network spans 243 outlets that include
49 offices of HDFC's distribution company, HDFC Sales Private Limited. In
addition, HDFC covers over 90 locations through its outreach programmes.
HDFC's marketing efforts continue to be concentrated on developing a stronger
distribution network. Home loans are also marketed through HDFC Sales, HDFC
Bank Limited and other third party Direct Selling Agents (DSA).To cater to non-
resident Indians, HDFC has an office in London and Dubai and service associates
in Kuwait, Oman, Qatar, Sharjah, Abu Dhabi, Al Khobar, Jeddah and Riyadh in
Saudi Arabia.]

HDFC Bank

Type Public (NYSE: HDB)

Founded 1994
Headquarters HDFC Bank Ltd.,
 Mumbai, India
Banking
Industry Insurance
Capital Markets and allied industries
Products Loans, Credit Cards, Savings, Investment vehicles, Insurance etc.
Website www.hdfcbank.com

C.2 Mission and Business Strategy:

Mission of HDFC Bank 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.

Their business strategy emphasizes the following:

C.3 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 four core values - Operational
Excellence, Customer Focus, Product Leadership and People.
C.4 Capital Structure

The authorized capital of HDFC Bank is Rs.450 crore (Rs.4.5 billion). The paid-
up capital is Rs.311.9 crore (Rs.3.1 billion). The HDFC Group holds 22.1% of the
bank's equity and about 19.4% of the equity is held by the ADS Depository (in
respect of the bank's American Depository Shares (ADS) Issue). Roughly 31.3%
of the equity is held by Foreign Institutional Investors (FIIs) and the bank has
about 190,000 shareholders. The shares are listed on the The Stock Exchange,
Mumbai and the National Stock Exchange. The bank's American Depository
Shares are listed on the New York Stock Exchange (NYSE) under the symbol
"HDB".

C.5 Merger of HDFC Bank and Centurion Bank of Punjab

The Reserve Bank of India has sanctioned the Scheme of Amalgamation of

Centurion Bank of Punjab Ltd. with HDFC Bank Ltd. The Scheme has been
sanctioned in exercise of the powers contained in Sub-section (4) of Section 44A
of the Banking Regulation Act, 1949. All the branches of Centurion Bank of
Punjab will function as branches of HDFC Bank with effect from May 23, 2008.
With RBI’s approval, all requisite statutory and regulatory approvals for the
merger have been obtained. The combined entity would have a nationwide
network of 1,167 branches; a strong deposit base of around Rs. 1, 22,000 crores
and net advances of around Rs. 89,000 crores. The balance sheet size of the
combined entity would be over Rs. 1, 63,000 crores. HDFC will also acquire a
strong SME (small and medium enterprises) portfolio from CBoP. HDFC Bank
Board on 25th February 2008 has approved the acquisition of Centurion Bank of
Punjab (CBoP) for Rs 9,510 crore in one of the largest merger in the financial
sector in India. CBoP shareholders will get one share of HDFC Bank for every 29
shares held by them. This will be HDFC Bank’s second acquisition after Times
Bank.

HDFC Bank, Centurion boards approve 1:29 share swap ratio

Shareholders of Centurion Bank of Punjab would be eligible to exchange 29

shares into one share of HDFC Bank. This follows the board of directors of the
two banks approving on Monday a share-swap ratio of 1:29.
C.6 Time banks Amalgamation
In a milestone transaction in the Indian banking industry, Times Bank Limited
(another new private sector bank promoted by Bennett, Coleman & Co. /Times
Group) was merged with HDFC Bank Ltd., effective February 26, 2000. As per
the scheme of amalgamation approved by the shareholders of both banks and the
Reserve Bank of India, shareholders of Times Bank received 1 share of HDFC
Bank for every 5.75 shares of Times Bank. The acquisition added significant
value to HDFC Bank in terms of increased branch network, expanded geographic
reach, enhanced customer base, skilled manpower and the opportunity to cross-
sell and leverage alternative delivery channels.

C.7 Growth
The Indian economy seems likely to see some moderation in growth rates in 2008-
09 relative to 2007- 08. It is still likely to experience healthy growth in absolute
terms and will probably remain one of the fastest growing economies in the world.
Nonetheless, with a lower GDP growth coupled with tighter liquidity conditions
(as RBI tackles concerns on inflation) and stable or slightly higher interest rates,
system credit growth is likely to be lower than in 2007-08. Downward pressures
on economic growth may not immediately translate into an expansionary
monetary policy, given the continued risks of inflation from global energy and
commodity prices. Thus, slightly slower credit growth could coexist with firm, if
not rising, interest rates. Given India’s strong macro-economic fundamentals,
however, structural drivers will continue to support growth which is a positive for
banks as well.

C.8 Subsidiaries and associate Companies

HDFC Bank
HDFC Mutual Fund
HDFC Standard Life Insurance Company
HDFC Sales
HDFC General Insurance
Other Companies Co-Promoted by HDFC
Financial Information with regard to Subsidiary Companies

C.9 Technology

HDFC Bank operates in a highly automated environment in terms of information

technology and communication systems. All the bank's branches have online
connectivity, which enables the bank to offer speedy funds transfer facilities to its
customers. Multi-branch access is also provided to retail customers through the
branch network and Automated Teller Machines (ATMs). The Bank has made
substantial efforts and investments in acquiring the best technology available
internationally, to build the infrastructure for a world class bank. The Bank's
business is supported by scalable and robust systems which ensure that clients
always get the finest services offered. The Bank has prioritized its engagement in
technology and the internet as one of its key goals and has already made
significant progress in web-enabling its core businesses. In each of its businesses,
the Bank has succeeded in leveraging its market position, expertise and
technology to create a competitive advantage and build market share.

C.10 Distribution Network

HDFC Bank is headquartered in Mumbai. The Bank at present has an enviable

network of over 761 branches spread over 327 cities across India. All branches are
linked on an online real-time basis. Customers in over 120 locations are also
serviced through Telephone Banking. The Bank's expansion plans take into
account the need to have a presence in all major industrial and commercial centers
where its corporate customers are located as well as the need to build a strong
retail customer base for both deposits and loan products. Being a
clearing/settlement bank to various leading stock exchanges, the Bank has
branches in the centers where the NSE/BSE has a strong and active member base.
The Bank also has a network of about over 1977 networked ATMs across these
cities. Moreover, HDFC Bank's ATM network can be accessed by all domestic
and international Visa/MasterCard, Visa Electron/Maestro, Plus/Cirrus and
American Express Credit/Charge cardholders.

C.11 Management
Mr. Jagdish Capoor took over as the bank's Chairman in July 2001. Prior to this,
Mr. Capoor was a Deputy Governor of the Reserve Bank of India. The Managing
Director, Mr. Aditya Puri, has been a professional banker for over 25 years and
before joining HDFC Bank in 1994 was heading Citibank's operations in
Malaysia. The Bank's Board of Directors is composed of eminent individuals with
a wealth of experience in public policy, administration, industry and commercial
banking. Senior executives representing HDFC are also on the Board. Senior
banking professionals with substantial experience in India and abroad head
various businesses and functions and report to the Managing Director. Given the
professional expertise of the management team and the overall focus on recruiting
and retaining the best talent in the industry, the bank believes that its people are a
significant competitive strength.
Board of Directors
Jagdish Capoor Chairman / Chair Person
Aditya Puri Managing Director
Keki Mistry Director
Vineet Jain Director
Renu Karnad Director
Arvind Pande Director
Ashim Samanta Director
C M Vasudev Director
Gautam Divan Director
Pandit Palande Director
Harish Engineer Executive Director
Paresh Sukthankar Executive Director

C.12 Business Profile of HDFC Bank

HDFC Bank offers a wide range of commercial and transactional banking services
and treasury products to wholesale and retail customers. The bank has three key
business segments:

C.13 Wholesale Banking Services

The Bank's target market ranges from large, blue-chip manufacturing companies
in the Indian corporate to small & mid-sized corporate 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. It is recognized as a leading provider of cash management
and transactional banking solutions to corporate customers, mutual funds, stock
exchange members and banks.

C. 14 Retail Banking Services

The objective of the Retail Bank is to provide its target market customers a full
range of financial products and banking services, giving the customer a one-stop
window for all his/her banking requirements. The products are backed by world-
class service and delivered to the customers through the growing branch network,
as well as through alternative delivery channels like ATMs, Phone Banking, Net
Banking and Mobile Banking. 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.

C.15 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 liberalization of the financial markets in India, corporate need more
sophisticated risk management information, advice and product structures. These
and fine pricing on various treasury products are provided through the bank's
Treasury team. To comply with statutory reserve requirements, the bank is
required to hold 25% of its deposits in government securities. The Treasury
business is responsible for managing the returns and market risk on this
investment portfolio.

C.16 RATING

Credit Rating
The Bank has its deposit programs rated by two rating agencies - Credit Analysis
& Research Limited (CARE) and Fitch Ratings India Private Limited. The Bank's
Fixed Deposit programmed has been rated 'CARE AAA (FD)' [Triple A] by
CARE, which represents instruments considered to be "of the best quality,
carrying negligible investment risk”. Both Credit Rating and Information Services
of India Limited (CRISIL) and ICRA Limited (ICRA) have for the eighth
consecutive year, reaffirmed their 'AAA' rating for HDFC's deposits and bonds.
This rating represents 'highest safety as regards timely repayment of principal and
interest'.

Corporate Governance Rating

The bank was one of the first four companies, which subjected itself to a
Corporate Governance and Value Creation (GVC) rating by the rating agency,
The Credit Rating Information Services of India Limited (CRISIL). The rating
provides an independent assessment of an entity's current performance and an
expectation on its "balanced value creation and corporate governance practices" in
future. The bank has been assigned a 'CRISIL GVC Level 1' rating which
indicates that the bank's capability with respect to wealth creation for all its
stakeholders while adopting sound corporate governance practices is the highest.

C.17 Awards and Recognition

Over a decade of its operations, HDFC Bank has been recognized, rated and
awarded by a number of organizations. As in the past years, awards and
recognition have been conferred on your Bank by leading domestic and
international organizations during the fiscal 2007-08. Some of them are:

* For the fifth consecutive year, HDFC Bank has bagged the Business Today's
Best Bank Award.
* Outlook Money and NDTV Profit's Best Bank in the private sector category.

* Bombay Stock Exchange and Nasscom Foundation's Business for Social

Responsibility Award.

* 'Dun & Bradstreet -American Express Corporate Best Bank Award 2007.' There
were 26 categories in all, including FMCG, Telecom and Software & IT.

* The Financial Express-Ernst &Young Best Bank award in the Private Sector
category - HDFC bank shared the top slot with another bank

* The Asia Pacific HRM Congress in Mumbai - Bank bagged as many as ten
awards including "Organization with innovative HR Practices".

* Business Today Survey conducted by the Monitor Group Innovation Study -

HDFC Bank is one of India's most innovative 28 companies across ten major
business sectors

* The `Asian Banker Excellence in Retail Financial Service Awards'- The Best
Retail Bank in India.

C.18 Branches of HDFC

Currently HDFC Bank has 758 branches, 1,716 ATMs, in 325 cities in India, and
all branches of the bank are linked on an online real-time basis. The bank offers
many innovative products & services to individuals, corporates, trusts,
governments, partnerships, financial institutions, mutual funds, insurance
companies.It is a path breaker in the Indian banking sector. In 2007 HDFC Bank
acquired Centurion Bank of Punjab taking its total branches to more than 1,000.
Though, the official license was given to Centurion Bank of Punjab branches, to
continue working as HDFC Bank branches, on May 23, 2008

C.19 HDFC Product Range

HDFC Bank India provides the following range of products:

1. Accounts and Deposits

Saving Account: An easy-to-operate savings account that allows you to issue

cheques, draw Demand Drafts and withdraw cash. Check up on your balances
from the comfort of your home or office through Net Banking, Phone Banking
and Mobile Banking. Need money urgently? Withdraw cash from any of the1794
ATM centers spread across the country.

Current Account: Having a current account with HDFC Bank is the best way of
conducting your financial activities with ease, allowing you to make your
payments without carrying large sums of money with you. A Current account is
ideal for carrying out day-to-day business transactions.

Fixed Deposit: If you believe in long-term investments and wish to earn higher
interests on your savings, NOW is the time to invest your money in our Fixed
Deposit. Get up to 9.75% on HDFC Bank Fixed Deposit with an additional 0.50%
for Senior Citizens. What's more no penalty if you withdraw part of the FD in
times of need. Flexibility, Security and High Returns all bundled into one offering.

Demat account: HDFC BANK is one of the leading Depository Participant (DP)
in the country with over 8 Lac demat accounts. HDFC Bank Demat services offers
you a secure and convenient way to keep track of your securities and investments,
over a period of time, without the hassle of handling physical documents that get
mutilated or lost in transit.
Hdfc bank preferred: How would you like a banker dedicated to take care of all
your banking requirements and suggesting ways to invest your money with good
returns from time to time? If you're a seasoned professional or have been running
a successful business over the years, the HDFC Bank Preferred Program is meant
for you. As a valued customer you benefit from our Relationship Pricing
Programmer with exclusive offers such as a free Gold International Debit card, a
free International Titanium card or a free International Gold Credit Card, loans at
preferential rates, etc

Sweep-In Account: Do you wish to avoid taking overdrafts, and still take
advantage of your Fixed Deposits? Then what you need is a Sweep-In Facility on
your savings account. Link your Fixed Deposit to your Savings or Current
Account and use it to fall back on in case of emergencies. A deficit in your
Savings or Current Account is taken care of by using up an exact value from your
Fixed Deposit. Since deposits are broken down in units of Re 1/-, you will lose
interest only for the actual amount that has been withdrawn.

Super Saver Account: Enjoy a high rate of interest along with the liquidity of a
Savings Account by opting for a Supersaver Facility on your savings account.
Avail of an overdraft facility of up to 75% of the value of your Deposit. Get the
best of both worlds.

2. HDFC India innovative services

ATM: 24-hour access to cash, view mini-statement, order cheque books, recharge
your prepaid card... all from our wide network of over 1200 ATMs.
Net Banking: Net Banking is HDFC Bank's Internet Banking service. Providing
up-to-the-second account information, Net Banking lets you manage your account
from the comfort of your mouse - anytime, anywhere.

Mobile Banking: Your Mobile is now your bank! Now access your bank account
and conduct a host of banking transactions and inquiries through your mobile,
with our unique Mobile Banking service.

Phone Banking: When you dial in to Phone Banking, a voice prompt will guide
you through the various transactions. You may also talk to a Phone Banker, who
will provide you with the required assistance.

Bill Pay: Now, you have the luxury of paying your telephone, electricity and
mobile phone bills at your convenience through the Internet, ATMs, your mobile
phone or telephone - using Bill Pay, a comprehensive bill payments solution.
What’s more you can check the bill amount before you make any payments
ensuring you always pay the right amount. Bill Pay has made all your bill
payments easy.

Branch Banking: Welcome to the networked world of HDFC Bank. You can
open an account at any branch nearest to your residence or office and access it at
any branch in the city or anywhere in the country. The sophisticated computerized
network gives you the flexibility of accessing your Savings or Current Account
from any of our over branches and over ATMs across India.

Insta Alert: Now you can get regular updates on your bank account on your
mobile phone or email ID. Just register for our Insta Alert service and receive
updates on your account as and when the select transaction happens - all this
without visiting the branch or ATM
3. Loans

Whatever your need, our range of loans can help

Personal Loan: A wedding in the family? Maybe your house needs renovation?
Our range of Personal Loans brings you one step closer to your dreams.

Home Loan: HDFC Bank brings HDFC home loans to your doorstep. Over 3
decades of exclusive experience, a dedicated team of experts and a complete
package to meet all your housing finance needs, HDFC Home Loans, help you
realize your dream.

Two Wheeler Loan: With flexible payment options and easy repayment, our Two
Wheeler Loan offers the perfect excuse to purchase that bike you've always
wanted.

Car Loan: If you are a salaried individual holding any of the credit cards
mentioned below, your loan gets processed faster.
Express Loan: We now offer Express Loans Plus at your Doorstep to help fulfill
all your needs. The procedure is simple, documentation is minimal and approval is
quick.

Gold Loan: With HDFC Bank's Gold Loan, you can get an instant loan against
your gold jewellery and ornaments. The procedure is simple, documentation is
minimal and approval is quick.

Educational Loan: Bridging the gap between you and higher education
Loans Against Securities : Get an overdraft against your securities like Equity
Shares, Mutual Fund Units, GOI Relief Bonds, LIC Policies, NSC, KVP, UTI
Bonds (6.60% ARS Bonds & US64 Bonds).

Loans against Property: Get a loan against your residential or commercial

property. Flexibility to choose between an EMI based loan or an Overdraft.

Loans against Rental Receivables: Need additional funds for your business?
Our Loan against Rent Receivables gives you the perfect opportunity to
supplement your regular cash flow.

Tractor Loans: If you are looking for finance to buy your tractor, you have come
to the right place. We offer hassle-free Tractor loan with the best terms for
funding at the most attractive rates in India.

4. Cards

Our range of Cards helps you meet your financial objectives. So whether you are
looking to add to your buying power, conducting cashless shopping, or budget
your expenditure, you will find a card that suits you.

Credit card: Besides arming you with unmatched spending power, our Credit
Cards are designed to meet your unique needs. Choose one that's tailored for you.
The best credit cards are available here, including even the online credit cards
service Netsafe.

Debit card: What if you could carry your bank account with you? HDFC Bank
Debit Cards give you complete and instant access to the money in your accounts
without the risk or hassle of carrying cash. Choose from:
Prepaid card: Besides offering convenience, our Prepaid Cards have been
tailored to answer your travel and gifting needs.

5. Investment and Insurance

Mutual funds: Mutual funds are funds that pool the money of several investors to
invest in equity or debt markets. Mutual Funds could be Equity funds, Debt funds
or balanced funds. Funds are selected on quantitative parameters like volatility,
FAMA Model, risk adjusted returns, and rolling return coupled with a qualitative
analysis of fund performance and investment styles through regular interactions /
due diligence processes with fund managers.

Insurance: Life insurance is designed to offer financial protection for you and
your family during the times of uncertainties. Choose from a range of traditional
insurance and unit linked plans designed to help you with your savings,
retirement, investment and protection needs.

6. Forex and Trade Services: If you need to deal in foreign currency and keep
tabs on exchange rates every now and then, transfer monies to India, make
payments etc., HDFC Bank has a range of products and services that you can
choose from to transact smoothly, efficiently and in a timely manner.

C.20 Recent Achievements and milestones

500th Branch Inaugurated

HDFC Bank has now got 500 branches and over 1200 ATMs at 220 locations
across the country. It crossed the important milestone when Mr. Madhusudan
Hegde, Regional Business Manager, East, inaugurated HDFC Bank's new branch
at Shillong in Meghalaya.
HDFC Bank has got 177 branches in the North, 102 branches in the South, 168
branches in the West and 53 branches in the East region, and a presence in 220
locations spread over 24 states across the country.

Speaking about the landmark, Mr. Aditya Puri, Managing Director, HDFC Bank
said, "Crossing the 500-branch landmark is an important occasion for us. The vast
network of branches and ATMs helps us reach out to our customers, not just in the
metros, but in small towns and under banked regions as well. Our presence and
proximity in 220 locations has enabled us to strengthen our relationships across
various categories of product offerings, which is reflected in the overall
performance of the bank."

HDFC Bank-IDEA Credit Card launched

In an exclusive nationwide marketing alliance, HDFC Bank and IDEA Cellular

Ltd., have launched a range of co-branded products. An HDFC Bank-Idea Co-
Branded VISA Credit Card for subscribers of Idea Cellular and an Idea-HDFC
Bank Co-Branded postpaid connection for credit card customers of HDFC Bank.
The Co-Branded products were unveiled by Mr. Vikram Mehmi, CEO, IDEA
Cellular Ltd. and Mr. Aditya Puri, Managing Director, HDFC Bank Ltd. The
alliance targets at bringing best-in-class products to customers of both Idea
Cellular and HDFC Bank.

The HDFC Bank-Idea co-branded VISA credit card is available in Gold and Silver
variants.

C.21 Future Prospects

The financial system in India has witnessed considerably less turmoil and
volatility than that in advanced economies. Given this scenario, domestic
corporates are more likely to turn to local sources of funding. Cyclical slowdown
is unlikely to impact segments of the economy such as agriculture where a
structural shift is under way. The rural economy has been the greater focus of
government policy in recent years, and significant opportunities lie for banks here
where the penetration of credit and financial products is still relatively low. The
central and state governments appear to be driving an ambitious programme in the
infrastructure sectors. The eleventh five year plan (2007-2012) envisages an
investment of USD 500 billion, with approximately USD 80 billion envisaged for
2008-09 alone. This presents a major opportunity for banks and financial
institutions to finance these investments. Although growth in retail credit has
moderated in the last year, the low penetration levels of retail credit (estimated at
less than 12% of GDP), the shift in demographics towards a higher proportion of
younger working population, the changing attitudes towards borrowings, higher
income levels amongst the growing middle class, and the large pent-up demand
for housing, cars etc., all augur well for the long-term, sustainable growth of retail
lending in the Indian market.

C.22 PERFORMANCE OF HDFC BANK

Details of dividend declared by the Bank:
2007-2008 85%
2006-2007 70%
2005 – 2006 55%
2004 - 2005 45%
2003 - 2004 35%
2002 – 2003 30%
2001 – 2002 25%
2000 - 2001 20%
1999 - 2000 16%
1998 - 1999 13%
1997 - 1998 10%
1996 – 1997 8%

C.23 FINANCIAL RESULTS:

Profit & Loss Account: Quarter ended June 30, 2008
Total income for the bank for the quarter ended June 30, 2008 grew by
59.6% to Rs.4, 215.2 crores as against Rs.2, 641.7 crores in the
Corresponding quarter ended June 30, 2007. Net revenues (net interest
Income plus other income) were Rs.2, 316.9 crores for the quarter ended
June 30, 2008, an increase of 48.7% over Rs.1, 558.1 crores for the
Corresponding quarter of the previous year. Interest earned (net of loan
Origination costs and amortization of premia on investments held in the
Held to Maturity (HTM) category) increased from Rs.2, 069.2 crores in
the quarter ended June 30, 2007 to Rs.3, 621.7 crores in the quarter ended
June 30, 2008, up by 75.0%. Net interest income (interest earned less
interest expended) for the quarter ended June 30, 2008 increased by
74.9% to Rs.1, 723.5 crores, driven by average asset growth of 68.0% and
a core net interest margin of just over 4.1%.
Fees and commission was the main contributor to other income for the
quarter and increased by 37.3% to Rs.511.2 crores. The other two major
components of other income were foreign exchange/derivatives revenues
Of Rs.157.4 crores (corresponding quarter ended June 30, 2007 Rs 146.5
crores) and (loss) on revaluation/sale of investments of Rs. (77.6) crores,
as against profit of Rs.52.6 crores for the quarter ended June 30, 2007.
Other income (non-interest revenue) for the quarter ended June 30, 2008
was Rs.593.4 crores as against Rs.572.5 crores for the quarter ended June
30, 2007. Operating expenses for the quarter ended June 30, 2008 were at
30.6% of total income and 55.7% of net revenues. Provisions and
contingencies for the quarter were Rs.344.5 crores (against Rs.307.1
crores for the corresponding quarter ended June 30, 2007), comprising
Primarily of specific provisions for non-performing assets and general
provisions for standard assets of Rs.324.4 crores against Rs. 299.7 crores
for the quarter ended June 30, 2007. After providing Rs.218.7 crores for
taxation, the Bank earned a Net Profit of Rs.464.4 crores, an increase of
44.6% over the quarter ended June 30, 2007.

C.24 Financial Analysis of HDFC Bank Limited

a) Ratio Analysis
A ratio is an arithmetical expression of the relationship of one number to another.
A financial ratio is the relationship between two accounting figures expressed
mathematically. Ratio analysis is a technique of analysis and interpretation of
financial statements.
1. Liquidity Ratio
a) Current Ratio: Current ratio is defined as the relationship between current
assets and current liabilities.
Current Ratio =Current assets/ Current liabilities
Rs. in crores
2005-06 2004-05 2003-04
4207.30 2982.13 2396.45
2208.49 =1.90 1957.40 =1.52 1758.47 =1.36

Interpretation:-
This ratio is calculated to know the firm’s ability to meet its current obligations.
Ratio has been improved from 2003-04 to 2005-06, it is near to the rule of thumb
i.e 2:1. So the liquidity position of company is considered to be satisfactory.

2. Leverage Ratios
a) Debt equity Ratio:-Debt equity ratio is calculated to measure the relative claims
of outsiders and the owners against the firm’s assets.
Debt-Equity Ratio = Outsiders funds
Shareholders funds
Rs. in lacs
2006-07 2005-06 2004-05
328260 170200 50000
643315 =0.51 529953 = 0.32 451985 =0.11

Interpretation:-
The ratio indicates the proportionate claims of owners and outsiders against the
firm’s assets. Ratio has been increased from 2004-05 to 2006-07. Company’s debt
equity ratio is considered to be satisfactory because usually 1:1 ratio is considered
to be satisfactory.
3. Profitability Ratios
a) Operating Ratio: - Operating ratio establishes the relationship between cost of
goods sold and other operating expenses on the one hand and the sales on the
other.

Operating Ratio = Operating Cost * 100

Net Sale
Rs. in lacs
2006-07 2005-06 2004-05
242080 169109 108540
522580 = 46.32% 366982 = 46.08% 222927 = 44.68%

Interpretation: - Above figures shows that operating cost of company has been
increased. On the other hand sales of company are also increased. So this ratio is
favorable for the company
b) Net Profit Ratio: - Net profit ratio establishes a relationship between net profit
and sales, and indicates the efficiency of the management in manufacturing,
selling and other activities of the firm.

Net Profit Ratio = Net Profit After tax * 100

Net Sales
Rs. in lacs
2006-07 2005-06 2004-05
114145 87078 66556
522580 = 21.84% 366982 = 23.73% 242927 = 27.40%
Interpretation: - Above figures shows that ratios are going on decrease which
indicates that the profitability of company is not good. Performance of profits in
relation to sales is not good.

4. Over all Profitability Ratios

a) Return on Shareholders Investment:-

Return on Shareholders Investment = Net Profit After Interest and Tax

Shareholders fund
Rs. in lacs
2006-07 2005-06 2004-05
114145 87078 66556
63315 = 17.74% 529953 = 16.43% 451985 = 14.73%

Interpretation: - The ratio is going on increase. Investors would like to invest,

where returns are higher. Above ratios gives the idea of growth in the companies
profitability and efficiency.

b) Trend Analysis
The financial statements are analyzed by computing trends of series of
information. This method determines the direction upwards or downwards and
involves the computation of percentage relationship.
1. Trend analysis of Turnover (Interest income)

Year 2002-03 2003-04 2004-05 2005-06 2006-07

Turnover(in 201361 254893 309349 447534 688902
lacs)

700000
600000
500000
400000
300000
T u r n o v e r ( in l a c s )
200000
100000
0
2 0 0 22-0 0 32- 0 0 42-0 0 52- 0 0 6 -
03 04 05 06 07

Interpretation: - Above graph shows that interest income has continuously

increased in all years. Increase in interest income is quite satisfactory

2. Trend analysis of Profit after Tax

Year 2002-03 2003-04 2004-05 2005-06 2006-07
Profit After Tax 38760 50950 66556 87078 114145
(Rs. in crores)

120000
100000
80000
60000
P r o f it A f t e r T a x ( R s . in
40000 c rore s )
20000
0
2 0 0 22-0 0 32- 0 0 42- 0 0 52- 0 0 6 -
03 04 05 06 07

Interpretation: - Profit after tax has substantially increased. In five year period it is
more than doubled.

3. Trend analysis of Earning per Share

Year 2002- 2003-04 2004- 2005-06 2006-07
03 05
Earning Per Share 13.75 17.95 22.92 27.92 36.29
(in Rs.)

40
35
30
25
20
E a r n in g P e r S h a r e ( in
15
10 R s .)
5
0
2 0 0 22- 0 0 32-0 0 42-0 0 52- 0 0 6 -
03 04 05 06 07

Interpretation: - above graph shows that earning per share has continuously
increased. It means the performance of concern is good.
 SECTION D
INTRODUCTION TO
TRAINING UNIT

D.1 PROFILE

Branch in Ludhiana
Area Ferozpur road
Address Barewal road
Ludhiana - 141001
Punjab
Tel 0161 - 2413671 / 5035875
Fax 0161 - 5089503
ATM YES
Lockers YES

High Value Cut of Timing 1PM, 11Am on Sat

Weekday: Monday to Friday, Timings: 9.30 am to 3.30 pm
Weekend: Saturday, Timings: 9.30 am to 12.30 pm
Weekly Off: Sunday

D.2 ORGANISATION STRUCTURE

 Branch Manager

Back up Br. Manager Relationship manager Sales manager

PBA
PBA Teller authority Team Leader

Personal Banker
Personal Banker Teller Sales Team

Personal Banker Personal Banker

D.3 Business Strategy

 1. Increase the market share in India’s expanding banking and financial
services industry by following a disciplined growth strategy focusing on
balancing quality and quantity and on delivering a high quality customer
services.
2. Develop innovative products and services that attract our targeted
customers and address inefficiencies in the Indian financial sector.
3. Continue to develop products and services that reduce our cost of funds and
focus on high earning growth with low volatility.
4. Maintain high standards of asset quality through disciplined credit risk
management.

D.4 SWOT Analysis of Training Unit:-

Strengths
 • Popular brand name
• Standard services
• Technological up gradation of system
• Products and services are superior
• Good parking space
• Good location
Weaknesses
• Weak financial position
• Employees turnover
• Lack of cordial relations among the employees
• Less facilities as compare to other branches
Opportunities
• Untapped rural market
• Serve the additional customer groups by providing wide range of products
and services
• To expand in terms of new market or product segment
• Use of latest technology in business
Threats
• Stiff competition in the market
Less amount AQB (average quarterly balance ) maintained by other banks
 CHAPTER III

OBJECTIVES OF STUDY

Every research study has an objective. Until we have an objective, we cannot

conduct a research. Objective is like our goal of any research study. Objective tells
us the motive and right path of the study. After deciding the objective we can
choose the right path of our study. This study focused on the consumer perception
regarding the credit cards of HDFC Bank

1. To know about the causes of dissatisfaction of customers regarding the credit

card of HDFC Bank.
2. To know about the quality of the credit card services being provided by HDFC
Bank.
3. To suggest changes for improvement of credit card .
 CHAPTER RESEARCH METHODOLOGY

Research Methodology

Research can be defined as a scientific and systematic search for pertinent

information on a specific topic. According to Clifford Woody, “Research
comprises defining and redefining problem, formulating hypothesis or suggested
solutions; collecting, organizing and evaluating data; making deductions and
reaching conclusions and at last carefully testing the conclusions to determine
whether they fit the formulating hypothesis.” Research methodology is a way to
systematically solve the research problem. It may be understood as the science of
studying how research is done scientifically.
Need of Research:
The need of this research is to check the level of awareness and satisfaction of
consumers regarding the credit cards of HDFC bank among the customers and to
find the reasons for using those credit cards.
Research Design:
Research design is the arrangement of conditions for collection and analysis of
data in a manner that aims to combine relevance to the research purpose with
economy in procedure. In fact, the research design is the conceptual structure
within which research is conducted; it constitutes the blueprint for the collection,
measurement and analysis of data. The research design for my research is
exploratory.
Data Sources:
The task of data collection begins after a research problem has been defined and a
research design has been chalked out
Two types of data sources have been used:
Primary Data: Direct data collection through questionnaire.
Secondary Data: Indirect data sources i.e. reports, literature on banking
Sampling unit: LUDHIANA
Sample size: 50 respondents

Sampling Design:
Sample design is a definite plan for obtaining a sample from a given population. It
refers to the technique or procedure the researcher would adopt in selecting items
for the sample. Sample design may as well lay down the items to be included in
the sample i.e., the size of the sample. Sample design is designed before data are
collected. There are many sample designs from which a researcher can choose.

Population:
Population refers to part of universe from which the sample for conducting the
research is selected. Universe and population can be same in some researches. It
may be finite or infinite. In finite universe the number of items is certain, but in
case of infinite the number of item is infinite i.e., we cannot have an idea about the
total number of items. The population for this study is all the customers who have
account in any bank.

Sampling Unit:
Sampling unit refers to smallest possible individual eligible respondent. In my
study the sampling unit is single individual who have Credit cards of HDFC Bank.

Sampling Size:
This refers to the total number of respondents selected from the universe to
constitute a sample. The size of the sample should neither be excessively large,
nor too small. It should be optimum. An optimum sample is one which fulfills the
requirement of efficiency, representative ness, reliability and flexibility. The
sample size for my research is 50.

Sampling Techniques:
In this research study, non-probability convenience sampling is opted for.
Convenience sampling is done purely on the basis of convenience or accessibility.
CHAPTER
RATIONALE OF THE PROJECT
 RATIONALE OF THE PROJECT
In rationale of project the discussions are about various benefits that
are achieved while working the project, like
 It gave a chance to work with renown corporate which helped to have a
look upon what actually a ‘Corporate World’ is.
 It helped to become comfortable with different type of situations that a
person faces during his tenure of working and also provided me adequate
exposure related banking services.
 It taught the way of working in a corporate, like how to deal with different
type of situations as well as persons.
 The project has changed many things in the daily routine life like
punctuality, stress situations and most important the way of towards
different things.
 The project has helped to become more familiar with Microsoft Office even
more than earlier.
 CHAPTER
DATA ANALYSIS AND INTERPRETATION

Data Analysis and Interpretation

HDFC’s Credit card holding period.

Holding Period Responses Percentage
Less Than 1Year 21 42%
1 To 2 Years 19 38%
2 To 5 Years 10 20%
More Than 5 Years 0 0%
Total 50 100%

HDFC credit card holding period

More Than
5 Years
0%
2 To 5
Years less than less than one year
20% one year 1 To 2 Years
42%
2 To 5 Years
More Than 5 Years
1 To 2
Years
38%

Interpretation: Though Credit card is very old concept. But it gains more
importance since last few years only. It is clear from the research that majority of
people have started to purchase it since last 1 - 2 years only.
.Factors influencing people to purchase HDFC credit cards.

FACTORS Status Imitating Convenience Don’t Any Total

symbol others for want to other
purchasing carry
RESPONSES cash
5 2 20 23 0 50
PERCENTAG 10% 4% 40% 46% 0% 100%
E

factors influencing purchase of credit

Any other
cards
0%
Status
symbol Status symbol
10%
Imitating Imitating others
Dont want others
to carry 4% Convenience for
cash
purchasing
46% Convenienc
e for Dont want to carry
cash
purchasing
40% Any other

Interpretation: The most important factor that influences the purchase of credit
card is that the people do not want to carry cash along with them when they go for
shopping or for any of their expenses. It is convenient for them to carry a credit
card. Also it causes them convenience of purchasing. Very few people think that
they use credit cards just for imitating. So they own it because they feel it is safer.

Purposes for using credit card.

PURPOSE Shopping For For E- For Other Total

paying Shopping recharging Reason
Bills mobile
cards
RESPONSES 24 12 5 7 2 50
PERCENTAG 48% 24% 10% 14% 4% 100%
E

Purpose for using credit cards

Other
Reason
For 4%
recharging
mobile Shopping
cards
14% For paying Bills
For E-
Shopping For E-Shopping
Shopping
48%
10%
For recharging
For paying mobile cards
Bills
Other Reason
24%

The main purpose of using credit card according to majority of people is shopping
because at most of the times the amount to be spent on shopping is not pre
planned and with the help of credit cards they do not have to worry for the cash
which they need if the shopping expenses rises.

Frequency of using credit cards.

Frequency Once in a Once in a More than Total

week month once in a
month
Responses 17 13 20 50
Percentage 34% 26% 40% 100%
 Frequency of using credit cards

More than Once in a Once in a week

once in a week
month 34%
Once in a month
40%

More than once in

Once in a a month
month
26%

Interpretation: Majority of people use credit cards more than once in a month as
it has become a necessity in their life and they can shop when ever they want.
Credit card’s usage rate has been increased. People have started to use their Credit
cards on weekly basis.

Services of credit card offered by HDFC.

Services Insurance Cash back Any other Total

Services services
Responses 25 20 5 50
Percentage 50% 40% 10% 100%
 Services offered

Any other
10% Insurance Services

Insurance
Cash back
Cash back Services
services
services 50%
Any other
40%

Interpretation: majority of people think that the bank offers them most of
insurance services as compare to cash back services or any other kind of service

Amount of credit card provided for credit shield.

Amount Less than 10000-20000 More than Total

10000 20000
Responses 17 10 23 50
Percentage 34% 20% 46% 100%
 Credit shield

Less than
10000
More than Less than 10000
34%
20000
10000-20000
46%
More than 20000
10000-
20000
20%

Interpretation:People hold those credit cards which provide credit shield

according to their need. Majority prefer to hold a Credit card with more credit
shield.
Many of the people had credit shield availability more than 20000

Miscalculation of value of transaction.

Miscalculation Yes No Total

Responses 18 32 50
Percentage 36% 64% 100%
 Miscalculation of value

Yes
36%
Yes
No
No
64%

Interpretation: majority of people think that they have never gone through
miscalculation of the value of their credit transaction but still there are people who
are facing this kind of problem

Fulfillment of Promised facilities at the time of issuance.

Fulfillment Yes No Total

Responses 40 10 50
Percentage 80% 20% 100%
 Fulfillment of promises

No
20%

Yes
No

Yes
80%

Interpretation: majority of people think that that the bank has fulfilled the
promises which they made at the time of selling the credit card to the customers
but only few people think that they are not being fulfilled.

Problems regarding credit cards.

Problems Faced Yes No Total

Responses 20 30 50

Yes Responses
Problems Hidden Long Documentation Total
Charges Processing
Time
Responses 12 7 1 20
Percentage 60 35 5 100%

Problems
Documentat
ion
5%
Long
Processing
Hidden Charges
Time
35%
Long Processing
Hidden Time
Charges
Documentation
60%

Interpretation: the problem which many people feel regarding credit card is the
hidden charges behind them. Also the long processing time worries them.

Reliability of Security given to the bank regarding credit cards

Reliable Very Much Average Very Less Total

Responses 15 30 5 20
Percentage 30% 60% 10% 100%
 Reliability

Very Less
10% Very Much
30%
Very Much
Average
Very Less

Average
60%

Interpretation: majority of people neither rely too much on the security offered
by the HDFC bank regarding credit cards nor they are denying this factor but they
think security to be average

Satisfaction towards bank’s services.

Satisfied Yes No Total

Responses 45 5 50
Percentage 90% 10% 100%
 Satisfaction

No
10%

Yes
No

Yes
90%

Interpretation: nearly all of the people are satisfied with the services offered by
the bank except few exceptions. May be they expect more from the bank.
 CHAPTER
FINDINGS AND SUGGESTION

Finding
1) Credit cards have gain more importance since last few years only. It is clear
from the research that people have started to purchase it since last few years only.
2) Most of the people prefer to own a Credit card because it facilitates purchasing
and people do not want to carry cash with them. So they own it because they feel
it is safer.
3) There is some problem in the technology works behind the working of credit
cards. This is one reason behind the dissatisfaction of cardholders. Another reason
is hidden charges.
4) Cards are witnessing a gradual expansion to more cities with more segments
getting covered and with more and more customers preferring to make credit card
payments to cash.
Suggestion
1. Some customers complained that the bank is not sending the bank statements
properly, as a result of this the customers are facing a problem to pay the bills on
time, and the bank is charging late fees. So that can be improved.
2. The card should be resold to the customers who have already stopped the credit
card services due to some problem by solving their particular problems.
3 Given the competitive nature of the market, HDFC need to deliver superior
service in order to retain their customers.
4. Though the competition is very much the bank should decrease their interest
rates.
5. More and more services should offer along with Credit cards as it is an effective
way to attract more customers

CHAPTER
LIMITATION OF STUDY
 LIMITATIONS OF THE STUDY

Although I have done sincere efforts to collect the relevant information, the
study may have the following limitations:-

LIMITED SCOPE: - The scope of study is limited to Ludhiana only because of

limited time & money. So results of study may not be generalized.

DIFFICULT TO GET INFORMATION: - It was very difficult for me to get fulfill

the forms because of respondent’s busy schedule & not providing me sufficient
time to fill the form seriously.

OUTPUT MAY BE INACCURATE: - This study is based on the assumption that

responses are true & factual although at times that may not be the case.
DYNAMIC BEHAVIOUR OF CUSTOMER: - Customer behavior is dynamic in
nature & thus over the time, finding of today may become invalid tomorrow.

BIASNESS: - Though every care has been taken to eliminate such biases, but
considering the human factor the possibility of small bias having come up cannot
be ruled out altogether.

.
BIBLIOGRAPHY

Reference to web page:

http://www.google.com
http://www.major-media.com/learning-resources/customer-retention-lit.htm
http://www.emeraldinsight.com/Insight/ViewContentServlet;jsessionid=18DB603
D0BEFFE7A3013B0B4DBCD01D4?
Filename=Published/EmeraldFullTextArticle/Articles/0750180102.html
http://inventors.about.com/od/cstartinventions/a/credit_cards.htm
http://deadpresident.blogspot.com/2008/07/hdfc-bank-2007-2008-annual-
report.html
http://nmcc-
vikas.gov.in/ComptitivenessManagement/SMEFinanceCredit/CommercialBanksI
nitiatives/Pages/HDFCBank.aspx
http://www.networkmagazineindia.com/200305/tech3.shtml
http://www.misysbanking.com/Newsroom/Press_Releases_2007/pr_items/pr_932
0.html
http://www.businesswireindia.com/pressrelease.asp?b2mid=3164
http://www.cardbhai.com/hdfc/
www.hdfcbank.com
http://www.creditcardtipsetc.com
http://www.amazines.com/article_detail.cfm/214418?articleid=214418
cvc.nic.in/vscvc/cvcspeeches/sp21jan02.pdf
http://www.thehindubusinessline.com/mentor/2008/03/03/stories/2008030350391
200.htm
http://www.thehindubusinessline.com/iw/2008/08/17/stories/2008081750821100.
htm
http://www.hinduonnet.com/businessline/blnus/17281533.htm
http://www.scribd.com/doc/3757602/centurion-bank

Magazine
Business Today feb 24,2008
Business Today mar 23,2008
APPENDIX
Rs. lacs
DOCUMENTS