Hdfc Project- Mohit Manchanda

7/27/2019 Hdfc Project- Mohit Manchanda

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Summer Training Report

On

"STUDY OF TRAINING AND

DEVELOPMENT HDFC BANK

A training report submitted in partial fulfillment of the requirement for the degree of

MASTERS OF BUSINESS ADMINISTRATION

(2007-2009)

Punjab Technical University

Submitted by:

Mohit Manchanda

Chandigarh Business School.Landran, Mohali, Punjab.

2008


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Declaration

I hereby declare that summer training report

entitled "STUDY OF TRAINING AND DEVELOPMENT HDFC

BANK is my own original research work & this report

has not been submitted to any university institute

for the award for professional degree.

(____________)Name: mohit

manchandaMBA

3

CBS


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Acknowledgement

The research study conducted to study the training and

development techniques of Hdfc bank has given me

the opportunity to enhance my knowledge in practical

application. It has given me a greater insight into tough

challenges of banking at the same time enhanced my

knowledge of basic banking system. I would like to express

my sincere gratitude to those persons who were

responsible for it.

I would like to express my Special regards towards

Honourable Director of Chandigarh Business School,Dr. (Col) S.P.S Bedi. And Training Placement Officer

for creating opportunity to undergo eight weeks

management/ industrial training. I would like to thank

Dr. R. K.Ghai (Dean, Chandigarh Business School), &

Dr. Meenu Jaitly (Head, MBA Programme) their

valuable guidance.

I am highly indebted and extremely thankful to Ms.

Geetika Sharma my project guide who was a constant

source of inspiration and encouragement to me. The strong


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interest evinced by her has helped me in dealing with the

problems; I faced during the course of the project work. I

express my profound sense of gratitude to her for timely

help and cooperation in completing the project.

At the outset I would like to convey my sincere thanks to

Mr. Lalit Batra the cluster Head of Hdfc for providing

me with all the facilities at their premier branch of Mohali.

(MohitManchanda)

Certificate


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Table of Contents

Objective of the Study

Objectives:

1.Sr. No Contents

2.

1 Objectives of the study3.

2 Executive Summary4.

3 An Introduction to the Indian Banking Industry5.

4 An Introduction to training and development.6.

5 Training in the Indian banking Sector7.

6 HDFC Bank Profile8.

7 Research Methodology9.

8 Findings and interpretation

10.

9 Recommendations11.

10 Conclusion12.

11 Annexure13.

12 Bibliography


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My objectives of studying the training and development techniques are as

under:

Major Objective:

The major objective of the study is to have an understanding of the concept of

training and development and to have an idea about the various training and

development methods be adopted by the banks. The major emphasizes is on

the training and development facilities adopted by the Hdfc bank and their

evaluation.

Sub - Objective:

To study the training process of the bank.

To study the various objectives for which the employees need to be

provided training.

To find the strengths and weakness of the methods adopted by the bank.

To evaluate performance of the training program of the organization.

To provide suggestion to the bank to make their training program more

effective and efficient.

Motivation of Research:

Desire to get a research degree along with its consequential benefits.

Desire to face the challenges in solving the unsolved problems i.e.

concern over practical problems initiates research.

Desire to get intellectual joy of doing some creative work.

Executive Summary


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The present day scenario training and development have a major role to play

in the success of an organization. It is important not only from the point of view

of the organization, but also for the employees. Training is valuable to the

employees because it will give them greater job security and an opportunity for

advancement. A skill acquired through training is an asset for the organization

and the employee. The project i have selected provides a deep insight

regarding the various training and development techniques that could be

adopted, and a better idea for making training process more effective and

result oriented.

Statement of Problem:

To have a deep insight of the concept of training and development.

Objective of study:

To study the various training and development methods adopted by hdfc bank,

the objectives for which these methods are being selected, the strengths of

these methods and the evaluation of the training process of the bank.

Methodology:

Primary data was obtained by getting questionnaire filled. Secondary data hasalso been used in the preparation of the report

Sample Size: I selected a sample of30 respondents, who are employeesof hdfc bank.


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Analysis Details:

1. To get an insight about the various training and development methods.

2. To study the various training and development method adopted by the

hdfc bank.

3. To find the strengths and weakness of the methods adopted by the

bank.

4. To evaluate performance of the training program of the organization.

LIMITATIONS OF THE STUDY:

In an attempt to make this project authentic and reliable, ever possible

aspect of the topic was kept in mind. Nevertheless, despite this fact lot

many constraints were at play during formulation of this project. The main

being:

Paucity of time resources due to which we cold take sample of only 25

respondents.

Despite the best efforts to include all important aspect the chances of

unintentional exclusion few cannot possible be ruled out.

The chances of biased cannot be eliminated, though all necessary steps

wee taken to avoid the same.

Lack of interest on the part of few respondents restricted the scope of

the research.


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An Introduction of the IndianBanking Industry


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News ReleaseHDFC BANK LTD. - FINANCIAL RESULTS (INDIAN GAAP)FOR THE YEAR ENDED MARCH 31, 2008

The Board of Directors of HDFC Bank Limited approved the annual audited

(Indian GAAP) accounts for the year ended March 31, 2008 at their meeting

held in Mumbai on Thursday, April 24, 2008.

FINANCIAL RESULTS:

Profit & Loss Account: Quarter ended March 31, 2008

The Bank earned total income of Rs.3,505.5 crores for the quarter ended March

31, 2008, as against Rs.2,321.0 crores in the corresponding quarter ended

March 31, 2007, registering a growth of 51.0%. Net revenues (net interest

income plus other income) were Rs.2,191.4 crores for the quarter ended

March 31, 2008, an increase of 51.2% over Rs.1,448.9 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 toMaturity (HTM) category) increased from Rs.1,926.5 crores in the quarter

ended March 31, 2007 to Rs.2,956.2 crores in the quarter ended March 31,

2008, up by 53.4%. Net interest income (interest earned less interest

expended) for the quarter ended March 31, 2008 increased by 55.7% to

Rs.1,642.1 crores, driven by average asset growth of 50.3% and a core net

interest margin of around 4.4%. Other income (non-interest revenue)

registered strong growth of 39.3% from Rs.394.4 crores for the quarter ended

March 31, 2007 to Rs.549.3 crores for the quarter ended March 31, 2008. The

main contributor to Other Income for the quarter was fees and commissions

of Rs.490.4 crores, up 37.6% from Rs.356.3 crores in the corresponding quarter

ended March 31, 2007. The other two major components of other income were

foreign exchange/derivatives revenues of Rs.60.4 crores and profit/ (loss) on

revaluation/sale of investments of Rs. 11.4 crores, as against Rs.103.3 crores

and Rs. (65.6) crores respectively for the quarter ended March 31, 2007.


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Operating expenses for the quarter were at Rs.1,102.7 crores, as against Rs.

683.9 crores for the corresponding quarter of the previous year. Provisions and

contingencies for the quarter were Rs.465.1 crores (against Rs.267.1 crores for

the corresponding quarter ended March 31, 2007), principally comprising of

specific provisions for non-performing assets and general provisions for

standard assets of Rs.293.0 crores and provisions for tax, legal and other

contingencies of Rs. 172.7 crores. After providing Rs.152.5 crores for taxation,

the Bank earned a Net Profit of Rs.471.1 crores, an increase of 37.1% over the

quarter ended March 31, 2007.

Profit & Loss Account: Year ended March 31, 2008

For the year ended March 31, 2008, the Bank earned total income of

Rs.12,398.2 crores as against Rs.8,164.2 crores in the previous year. Net

revenues (net interest income plus other income) for the year endedMarch 31, 2008 were Rs.7,511.0 crores, up 50.7% over Rs.4,984.7 crores

for the year ended March 31, 2007. Net Profit for year ended March 31,

2008 was Rs.1,590.2 crores, up 39.3%, over the corresponding year

ended March 31, 2007.

Balance Sheet: As of March 31, 2008Total balance sheet size increased by 46.0% from Rs.91,236 crores as of March

31, 2007 to Rs.133,177 crores as of March 31, 2008. Total deposits were

Rs.100,769 crores, an increase of 47.5% from March 31, 2007. With savings

account deposits of Rs.26,154 crores and current account deposits atRs.28,760 crores, the CASA mix continued to remain healthy at around 54.5%

of total deposits as at March 31, 2008. Net advances as at March 31, 2008

were Rs.63,427 crores, an increase of 35.1% over March 31, 2007. The Banks

total customer assets (including advances, corporate debentures, investments

in securitised paper, etc. net of loans securitized and participated out) were

Rs.70,403 crores as of March 31, 2008.

Dividend:The Board of Directors recommended an enhanced dividend of 85% for the

year ended March 31, 2008, as against 70% for the previous year. This would

be subject to approval by the shareholders at the next annual general meeting.

Capital Infusion & Capital Adequacy:

In June 2007, the Bank allotted 1,35,82,000 equity shares on a preferential

basis to HDFC Ltd. aggregating to Rs. 1,390 crores. In July 2007, the Bank


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made a public offering of 6,594,504 American Depositary Shares (ADS),

aggregating to of Rs. 2,393 crores (net of underwriting discounts and

commissions). The Banks total Capital Adequacy Ratio (CAR) as at March 31,

2008 stood at 13.6% as against the regulatory minimum of 9.0%. Tier-I CAR

was 10.3% as against 8.6% as of March 31, 2007.

BUSINESS UPDATE:

As of March 31, 2008, the Banks distribution network was at 761 branches and

1,977 ATMs in 327 cities as against 684 branches and 1,605 ATMs in 320 citiesas of March 31, 2007. Against the regulatory approvals for new branches in

hand, the Bank expects to further expand the branch network by around 150

branches by June 30, 2008. During the year, the Bank stepped up retail

customer acquisition with deposit accounts increasing from 6.2 million to 8.7

million and total cards issued (debit and credit cards) increasing from 7 million

to 9.2 million. Whilst credit growth in the banking system slowed down to about

22% for the year ended 2007-08, the Banks net advances grew by 35.1% with

retail advances growing by 38.6% and wholesale advances growing by 30%,

implying a higher market share in both segments. The transactional banking

business also registered healthy growth with cash management volumes

increased by around 80% and trade services volumes by around 40% over the

previous year.

Portfolio quality as of March 31, 2008 remained healthy with gross

nonperforming assets at 1.3% and net non-performing assets at 0.4% of total

customer assets. The Banks provisioning policies for specific loan loss

provisions remained higher than regulatory requirements.

Merger with Centurion Bank of Punjab Limited

On March 27, 2008, the shareholders of the Bank accorded their consent to a scheme of

amalgamation of Centurion Bank of Punjab Limited with HDFC Bank Limited. The

shareholders of the Bank approved the issuance of one equity share of Rs. 10/- each of

HDFC Bank Limited for every 29 equity shares of Re. 1/- each held in Centurion Bank of

Punjab Limited. This is subject to receipt of approvals from the Reserve Bank of India,

stock exchanges and other requisite statutory and regulatory authorities. The shareholders


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also accorded their consent to issue equity shares and/or warrants convertible into equity

shares at the rate of Rs.1,530.13 each to HDFC Limited and/or other promoter group

companies on preferential basis, subject to final regulatory approvals in this regard. The

Shareholders of the Bank have also approved an increase in the authorized capital from

Rs. 450 crores to Rs. 550 crores.

Note:

Rs. = Indian Rupees

1 crore = 10 million

(iii) All figures and ratios are in accordance with Indian GAAP.

Certain statements are included in this release which contain words or phrases

such as

will, aim, will likely result, believe, expect, will continue,

anticipate,

estimate, intend, plan, contemplate, seek to, future, objective,

goal,

project, should, will pursue and similar expressions or variations of these

expressions

that are forward-looking statements. Actual results may differ materially

from those suggested by the forward-looking statements due to certain risks or

uncertainties associatedwith our expectations with respect to, but not limited to, our ability to

implement our strategy

successfully, the market acceptance of and demand for various banking

services, future levels of our non-performing loans, our growth and expansion,

the adequacy of our allowance for credit and investment losses, technological

changes, volatility in investment income, cash flow projections and our

exposure to market and operational risks. By their nature, certain of the

market risk disclosures are only estimates and could be materially different

from what may actually occur in the future. As a result, actual future gains,

losses or impact on net income could materially differ from those that have

been estimated. n addition, other factors that could cause actual results to


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differ materially from those estimated by the forward-looking statements

contained in this document include, but are not limited to: general economic

and political conditions in India and the other countries which have an impact

on our business activities or investments; the monetary and interest rate

policies of the government of India; inflation, deflation, unanticipated

turbulence in interest rates, foreign exchange rates, equity prices or other

rates or prices; the performance of the financial markets in India and globally;

changes in Indian and foreign laws and regulations, including tax, accounting

and banking regulations; changes in competition and the pricing environment

in India; and regional or general change in asset valuations.

SCHEME OF AMALGAMATION

Centurion Bank of Punjab Limited Transferor Bank

with

HDFC Bank Limited... Transferee Bank

This Scheme of Amalgamation provides for the amalgamation of Centurion

Bank of Punjab Limited (formerly known as Centurion Bank Limited), a


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company incorporated under the Companies Act, 1956 (hereinafter referred to

as the Companies Act) and a banking company under the provisions of the

Banking Regulation Act, 1949 (hereinafter referred to as the Banking Act),

having its registered office at Shanta Durga Niwas, Mahatma Gandhi Road,

Panaji - 403 001, Goa (hereinafter referred to as the CBoP or the Transferor

Bank) with HDFC Bank Limited, a company incorporated under the Companies

Act and a banking company under the provisions of the Banking Act, having its

registered office at HDFC Bank House, Senapati Bapat Marg, Lower Parel,

Mumbai 400 013 (hereinafter referred to as HDFC Bank or the Transferee

Bank), pursuant to Section 44A and other relevant provisions of the Banking

Act. The Transferor Bank and the Transferee Bank intend that pursuant to the

consolidation to be effected through this Scheme, a strong bank with good

branch quality, and emphasis on commercial and social banking in compliance

with applicable Law and policy of the RBI, shall be created, and theconsolidated bank shall be an employee-friendly institution that would be a

preferred employer in the banking sector.

1 Definition

In this Scheme (as defined herein below), unless inconsistent with the subject

or context, the following expressions shall have the following meaning:

1.1 Appointed Datemeans April 1, 2008 or such other date as may be

fixed or sanctioned by Reserve Bank of India;

1.2 Assetsshall mean and include:(a) all the assets and properties of CBoP including without limitation, assets,

residential premise and properties of all branches and offices of CBoP including


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but not limited to the extension counters and automated teller machines

(ATMs), whether situated in India or outside India;

(b) without prejudice to the generality of sub-clause (a) above, it shall include

all the properties (whether movable or immovable, tangible or intangible),

assets, investments of all kinds

(including but not limited to shares, scrips, stocks, bonds, debentures,

debenture stocks, certificate of deposits, units or pass through certificates), all

cash balances with the RBI and other banks, money at call and short notice,

loans, advances, contingent rights or benefits deposits (made with any

authority or person whatsoever), lease and hire purchase contracts and assets,

securitized assets, receivables, security receipts, benefit of assets or properties

or other interest held in trust, benefit of any security arrangements,

authorities, allotments, approvals, reversions, buildings and structures, office

and residential premises, tenancies, leases, licenses, fixed assets and otherassets, powers, consents, authorities, registrations, exemptions, benefits,

waivers, security and other agreements, contracts, engagements,

arrangements of all kinds, rights, titles, interests, benefits and advantages of

whatsoever nature and where so ever situate belonging to, or in the

ownership, power or possession of, or in the control of, or vested in, or granted

in favour of, or held for the benefit of, or enjoyed by CBoP, or to which CBoP

may be entitled and include but without being limited to trade and service

names and marks and other intellectual property rights of any nature

whatsoever, permits, approvals (including approvals from the RBI for branches

and other offices), authorizations, rights to use and avail of telephones,

telexes, facsimile, email, internet, leased line connections and installations,

utilities, electricity and other services, reserves, provisions, funds, benefits of

all agreements, all records, files, papers, computer programs, manuals, data,

catalogues, sales and

advertising materials, lists and other details of present and former customers

and suppliers, customers credit information, customer and supplier pricing

information and other records in connection with or relating to CBoP and all

other interest of whatsoever nature belonging to or in the ownership, power or

possession and in the control of or vested in or granted in favour of or held forthe benefit of or enjoyed by CBoP in India.

1.3 Banking Actmeans the Banking Regulation Act, 1949 including the

guidelines for merger/ amalgamation of private banks issued by the Reserve


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Bank of India dated May 11, 2005 and shall include any statutory modification,

re-enactment or amendment thereof for the time being in force.

1.4 Board of Directors of CBoP means the Board of Directors of

CBoP, any committee(s) constituted or to be constituted by the Board of

Directors of CBoP or any other person authorized or to be authorized by the

Board of Directors of CBoP or any committee thereof nominated or authorized

by the Board of Directors of CBOP to exercise any powers including the powers

in terms of this Scheme.

1.5 Board of Directors of HDFC Bank means the Board of

Directors of HDFC Bank, any committee(s) constituted or to be constituted by

the Board of Directors of HDFC Bank or any other person authorized or to be

authorized by the Board of Directors of HDFC Bank or any committee thereof

nominated or authorized by the Board of Directors of HDFC Bank to exercise

any powers including the powers in terms of this Scheme.

1.6 CBoP means Centurion Bank of Punjab Limited, a banking company

incorporated under the Companies Act and licensed by the Reserve Bank of

India under the Banking Act and having its registered office at Shanta Durga

Nivas, Mahatma Gandhi Road, Panaji - 403 001, Goa.

1.7 Companies Act means the Companies Act, 1956 and shall include

any statutory modification, reenactment or amendment thereof for the time

being in force.

1.8 Cut-off Dateshall bear the meaning ascribed to the term in Clause

15 hereof;

1.9 Effective Datemeans the date on which the Scheme is sanctioned

by Reserve Bank of India or such other date as may be specified by Reserve

Bank of India by an order in writing passed in this behalf.

1.10 Employees means all the employees of CBoP in service as on the

Effective Date.


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1.11 HDFC Bank means HDFC Bank Limited, a banking companyincorporated under the Companies Act and licensed by the Reserve Bank of

India under the Banking Act and having its registered office at HDFC Bank

House, Senapati Bapat Marg, Lower Parel, Mumbai 400 013.

1.12 HR Integration Committee means the committee to beconstituted in terms of Clause 7.2.

1.13 Integration Committeemeans the committee to be constitutedin terms of Clause 8.3.

1.14 Lawmeans and includes all applicable statutes, enactments, acts oflegislature or parliament, ordinances, rules, bye-laws, regulations, notifications,

guidelines, directions of regulatory bodies and orders of any statutory

authority, or judicial authority including any quasi-judicial authority, tribunal,

court or such other authority of the Republic of India.

1.15 Legal Proceedingsshall bear the meaning ascribed to the

term in Clause 6 hereof.

1.16 Liabilities means all debts, liabilities, demand deposits, savingbank deposits, term deposits, certificate of deposits, time and demand

liabilities, rupee and foreign currency borrowings, bills payable, interest

accrued, statutory reserves, provisions and all other liabilities including tax and

contingent liabilities, duties, undertakings and obligations of CBoP whether ornot disputed or the subject matter of any court, arbitration or other

proceedings.

1.17 Licensemeans any of the licenses to carry on banking business inIndia issued by the Reserve Bank of India under Section 22(1) of the Banking

Act.

1.18 Material Adverse Change means any change, effect, event,occurrence or state of facts or discovery thereof which may result in:-

a) The License being revoked or suspended;

b) Either Party being unable to continue their Business or operations or asubstantial part thereof;

c) An order of any court, government, governmental authority, ministry,

administrative agency or tribunal of competent jurisdiction being issued the

effect of which would be to make the Merger illegal or which otherwise

prevents the consummation of the Merger; or


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d) The appropriation or institution of enforcement proceedings against any of

the Parties such that it is not feasible to consummate the Merger substantially

on the terms contemplated by this Scheme.

1.19 Members mean the shareholders of HDFC Bank or CBoP, as thecase may be.

1.20 Merged Entitymeans HDFC Bank in which the Undertaking of the

Merging Entity shall stand vested and transferred upon consummation of the

Scheme.

1.21 Merging Entitymeans CBoP.

1.22 New Equity Sharesshall bear the meaning ascribed to the term

in Clause 9.1 hereof.

1.23 Partiesmeans HDFC Bank and CBoP, collectively.

1.24 Partymeans HDFC Bank or CBoP, as the case may be.

1.25 RBImeans the Reserve Bank of India.

1.26 Record Date means such date to be fixed by the Board of

Directors of CBoP to determine the Members of CBoP to whom equity shares of

HDFC Bank will be allotted and to ensure allotment of equity shares of HDFC

Bank in accordance with Clause 9.1 of the Scheme.

1.27 Scheme means this scheme of amalgamation as approved and

passed by the Members of HDFC Bank and CBoP in their respective General

Meetings and shall include any modifications or amendments made in

accordance herewith and in terms of applicable Law.

1.28 Undertaking means the entire businesses of CBoP including

without limitation all the properties (whether movable or immovable, tangible

or intangible), all Assets, Liabilities, and Legal Proceedings of and against CBoP

including assets and liabilities of the branches and offices of CBoP.


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2. DATE OF TAKING EFFECT AND OPERATIVE DATE

The Scheme as set out herein in its present form shall be effective from the

Appointed Date and shall be operative from the Effective Date.

3. SHARE CAPITAL

3.1.The share capital of CBoP as on December 31, 2007 is as under: (Rupees

in lacs)

On and from the Effective Date, the authorised share capital of CBoP shall

stand merged into the authorised share capital of HDFC Bank and shall become

available for issuance of further equity shares by HDFC Bank, whether pursuant

to this Scheme of Amalgamation or otherwise.

4. TRANSFER AND VESTING OF UNDERTAKING


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4.1 With effect from the Appointed Date and upon the Scheme becoming

effective, the entire Undertaking of CBoP including all its Assets and Liabilities

of whatsoever nature shall, under the provisions of Section 44A of the Banking

Act and pursuant to the order of the RBI sanctioning the Scheme, without any

further act or deed stand transferred to and/or deemed to be transferred to

and vested in HDFC Bank.

4.2Transfer of Assets

Upon coming into effect of the Scheme and with effect from the Appointed

Date and subject to the provisions of the Scheme:

(a) all Assets of CBoP shall pursuant to the provisions of the Banking Regulation

Act except for the portions specified in Clause 4.2(c) and 4.2(d) below of

whatsoever nature and wheresoever situated and owned by CBoP and

incapable of passing by physical delivery and including in particular the Licenseand all other licenses, permits, approvals, incentives, rights, claims, leases,

tenancy rights, subsidies, liberties, and other benefits or privileges enjoyed or

conferred upon or held or availed of by and all rights and benefits that have

accrued to CBoP shall, under the provisions of the Banking Act and pursuant to

the order of the RBI, without any further act, instrument or deed, but subject to

the charges, liens, liabilities or restrictions affecting the same as on the

Effective Date, be and shall stand transferred to and vest in and be available to

HDFC Bank so as to become as and from the Appointed Date the estates,

assets, rights, title, interests and authorities of HDFC Bank and shall remain

valid, effective and enforceable on the same terms and conditions to the

extent permissible under Law without any further act, instrument or deed, and

be and stand transferred to and vested in or be deemed to have been

transferred to and vested in HDFC Bank as a going concern.

(b) HDFC Bank shall continue to honour the trade arrangements, and the

contractual obligations that CBoP has entered into and which exist as on the

Effective Date.

(c) Without prejudice to sub-Clause (a) above, in respect of such of the assets

of the Undertaking as are movable in nature or are otherwise capable of

transfer by physical delivery or by endorsement and/or delivery, the same maybe so transferred by CBoP, and shall, upon such transfer, become the property,

estate, assets, rights, title, interest and authorities of HDFC Bank.

(d) In respect of moveable assets of CBoP other than those specified in sub-

Clause 4.2(c) above, including sundry debtors, actionable claims, outstanding

loans, advances recoverable in cash or in kind or for value to be received and


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deposits with Government, semi-government, local and other authorities and

bodies the following procedure shall be followed:

i. HDFC Bank shall give a notice by a publication in a widely circulated

newspaper in India to its contract counter parties, debtors or depositees, as the

case may be, that pursuant to the order of the RBI having sanctioned the

Scheme, the said debt, loan, advances, etc., be paid or made good or held on

account of HDFC Bank as the person entitled thereto to the end and intent that

the right of CBoP to recover or realise the same stands extinguished and that

appropriate entry should be passed in their respective books to record the

aforesaid change.

ii. CBoP or in an event of inability of CBoP, HDFC Bank shall also give notice by

a publication in a widely circulated newspaper in India to its contract counter

parties, debtors or depositee, that pursuant to the order of the RBI having

sanctioned the Scheme between HDFC Bank and CBoP, the said person,debtor, or depositee should pay to HDFC Bank the debt, loan or advance or

make the same on account of CBoP and the right of CBoP to recover or realize

the same stands extinguished and that such right stands transferred to HDFC

Bank.

(e) All the post dated and other cheques issued in favour of CBoP which are un-

encashed or outstanding upon the coming into effect of the Scheme shall be

encashed by HDFC Bank on or after the due date which shall be entitled to the

proceeds thereof, as if such post dated cheques have been drawn and made in

favour of HDFC Bank.

(f) Security over any moveable and/or immoveable properties and security in

any other form (both present and future), if any, created by any person in

favour of CBoP for securing any obligation of the person to CBoP or for and on

whose behalf a guarantee, letter of credit, letter of comfort or other similar

instrument has been executed or arrangements entered into by CBoP shall,

without any further act, instrument or deed stand vested in and be deemed to

be issued in favour of HDFC Bank and the benefit of such security shall be

available to HDFC Bank as if such security was ab initio created in favour of

HDFC Bank.

4.3Transfer of Liabilities(a) With effect from the Appointed Date and upon the Scheme becoming

effective, all the Liabilities of CBoP shall without further act, instrument or deed

also be and stand transferred or deemed to be transferred to HDFC Bank, so as

to become the debts, liabilities, duties, undertakings and obligations of HDFC

Bank and further that it shall not be necessary to obtain the consent of any


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third party or other person who is a party to any contract or arrangement by

virtue of which such debts, liabilities, duties and obligations have arisen in

order to give effect to the provisions of the Scheme.

(b) With effect from the Appointed Date and upon the Scheme becoming

effective, any post dated cheques, debentures, bonds, notes or other debt

securities, if any, whether convertible into equity, or otherwise (hereinafter

collectively referred to as the Transferors Securities), issued by CBoP, which

remain un-encashed or outstanding or which have not matured on the scheme

coming into effect shall, without further act, instrument or deed become

securities of HDFC Bank and all rights, powers, duties and obligations in

relation thereto shall be transferred to and vest in and shall upon coming into

effect of the Scheme, be exercised by or against HDFC Bank as if it were CBoP,

in accordance with the terms of this Scheme. In the event of a default in

relation to the aforesaid obligation, HDFC Bank shall indemnify and keepindemnified the officers and directors of CBoP as on the Effective Date from

and against any liabilities that may arise due to such default in respect of the

Transferors Securities and in relation to any bona fide action on the part of

such officers and directors in the ordinary course of business, and in

consonance with this Scheme.

(c) With effect from the Appointed Date and upon the Scheme becoming

effective, any loans or other obligation (including any guarantees, letter of

credit, letters of comfort or any other instrument or arrangement which may

give rise to a contingent liability in whatever form), due between or amongst

CBoP and HDFC Bank, if any, shall stand discharged and there shall be no

liability in that behalf on either party. (d) The transfer and vesting of Liabilities,

as aforesaid, shall be subject to subsisting charges, if any, in respect of any

Assets.

5. CONTRACTS, DEEDS, ETC

5.1 With effect from the Appointed Date and upon the Scheme becoming

effective and subject to applicable Law and the provisions hereof all contracts,

deeds, tenancies, leases, licenses or other assurances, agreements,

arrangements and other instruments of whatsoever nature (including any

document by virtue of which security is created in favour of CBoP) to which

CBoP is a party or to the benefit of which CBoP may be eligible and which are

subsisting or having effect immediately before the Effective Date, shall be in

full force and effect against or in favour of HDFC Bank as the case may be and

all or any of the rights, privileges, obligations and liabilities of CBoP shall be


24/87

transferred to and vest in HDFC Bank and may be enforced as fully and

effectually as if, instead of CBoP, HDFC Bank had been a party, beneficiary or

obligor thereto.

5.2 HDFC Bank shall, wherever necessary, enter into and/or issue and/or

execute deeds, writings or confirmations or enter into tripartite arrangements,

confirmations or novations to which CBoP will, if ecessary, also be a party in

order to give formal effect to the provisions of the Scheme, on or prior to he

Effective Date. HDFC Bank shall, under the provisions of the Scheme, be

deemed to be authorized o execute any such writings on behalf of CBoP and to

implement or carry out all such formalities or compliances referred to

hereinabove on part of CBoP to be carried out or performed after the Effective

Date.

6. LEGAL PROCEEDINGS

With effect from the Appointed Date and upon the Scheme becoming effective,

all suits, actions and legal proceedings of whatsoever nature by or against

CBoP pending and/or arising on or before the Effective Date (Legal

Proceedings) shall be continued and be enforced by or against HDFC Bank as

effectually as if the same had been filed by, pending and/or arising against

HDFC Bank. On and from Effective Date, HDFC Bank shall, if required, initiate

or defend any legal proceedings in relation to CBoP.

7. EMPLOYEES7.1 All the Employees of CBoP in service on the Effective Date including the

Managing Director shall become the employees of HDFC Bank on such date

without any break or interruption in service, on terms and conditions which are

no less favourable to the Employees of CBoP than those on which they are

employed with CBoP as on the date immediately preceding the Effective Date.

7.2The Employees of CBoP, on becoming employees of HDFC Bank, shall have

the same standing as the continuing employees of HDFC Bank. To facilitate

efficient and equitable integration of the existing employees of HDFC Bank and

CBoP employees, a HR Integration Committee will be constituted by the Board

of HDFC Bank including representation from the current senior management of

CBoP and HDFC Bank.


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7.3 It is expressly provided that, the provident fund, superannuation fund or

any other special scheme(s), fund(s) created or existing for the benefit of the

employees of CBoP, on and from the Effective Date, shall stand transferred to

HDFC Bank and HDFC Bank shall stand substituted for CBoP for all purposes

whatsoever relating to the administration or operation of such schemes or

funds or in relation to obligations to make contributions to the said schemes or

funds in accordance with the provisions of such schemes or funds as per the

terms provided in the respective trust deeds or other documents to the end

and intent that all rights, duties, powers and obligations of CBoP in relation to

such funds or schemes shall become those of HDFC Bank. It is clarified that the

service of the Employees of CBoP will be treated as having been continued for

the purpose of the aforesaid funds or schemes or provisions.

8. CONDUCT OF BUSINESS

8.1 Upon the Scheme becoming effective, from the Appointed Date, and until

and including the Effective Date:

(a) CBoP shall be deemed to have carried on all its business and activities and

shall be deemed to have held and been in possession of and shall hold and be

in possession of all the Assets for and on account of and in trust for HDFC Bank;

and (b) all profits and incomes accruing or arising to CBoP or expenditure or

losses arising or incurred (including the effect of taxes, if any, thereon) by

CBoP shall, for all purposes, be treated and deemed to be and accrue as the

profits or incomes or expenditure or losses or taxes, as the case may be, of

HDFC Bank.

(c) The protection, if any, available to directors of CBoP shall continue to be

honoured by HDFC Bank in relation to all tax liabilities of CBoP.

8.2 HDFC Bank and CBoP shall be entitled, pending sanction of the Scheme, to

apply to any governmental or regulatory authority and other agencies as are

necessary under Law for such consents, approvals and sanctions which HDFC

Bank may require to own and carry on the business of CBoP.


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8.3 The Parties agree to constitute an integration committee consisting of an

equal number of employees from each Party (Integration Committee) to (a)

implement or act in furtherance of the provisions of this Scheme; and (b)

scrutinize until the Effective Date the proposals for placement before the

appropriate sanctioning authorities of the respective Parties for decision

including a review of the existing arrangements followed by the Parties for

sourcing and credit policy, underwriting and collection.

8.4 The Integration Committee may appoint sub-committees with the consent

of the Parties and delegate to such sub-committees such of its powers as it

deems fit. Save as contemplated in this Scheme of Arrangement, no proposal

shall be taken to the respective Boards by either Party unless the same is in

compliance with Clause 8.2 of this Scheme. No decision of the Integration

Committee shall be valid unless taken unanimously. It is clarified for the

avoidance of doubt that the Integration Committee shall not have powers to

amend this Scheme.

8.5The Integration Committee and each sub-committee shall comprise at least

one employee from each Party.


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9. CONSIDERATION

9.1 Upon coming into effect of the Scheme and in consideration of the transfer

of and vesting of the Undertaking of CBoP to HDFC Bank in terms of the

Scheme, HDFC Bank shall subject to the provisions of the Scheme and withoutany further application, act or deed, issue and allot, at the earliest in

accordance with Stock Exchange Listing Regulations, One equity share of HDFC

Bank of the face value of Rs. 10/- each credited as fully paid-up in the capital of

HDFC Bank which rank pari passu from the date of allotment with the existing

shares of HDFC Bank to those Members of CBoP whose names are recorded in

its Register of members (the said Members) on the Record Date for every 29

equity shares of the face value of Re. 1/- each held by the said Members of

CBoP (referred to as New Equity Shares). All entitlements to equity shares of

CBoP arising out of outstanding convertible instruments such as warrants and

stock options granted prior to December 31, 2007 shall stand modified to

entitlements to New Equity Shares in the same proportion i.e. the entitlement

for every 29 equity shares of Re. 1/- each in CBoP, shall stand replaced by an

entitlement to one equity share of a face value of Rs. 10/- each in HDFC Bank

with the price for such conversion standing adjusted in the same proportion as

the share swap ratio. All applicable fringe benefit tax shall be borne by and

paid by the respective employees. Any holding of shares or debt by either bank

in the other bank shall stand cancelled.

New Equity Shares issued in terms of the Scheme shall, in compliance with

applicable regulations, be listed and/or admitted to trading on the relevantstock exchange(s) in India where the equity shares of HDFC Bank are listed

and/or admitted to trading.

9.3 Upon the New Equity Shares being issued and allotted to the shareholders

of CBoP, the shares held by the said Members of CBoP, whether in the physical

form or in the dematerialized form, shall be deemed to have been

automatically cancelled and be of no effect, without any further act, deed or

instrument.

9.4 In so far as New Equity Shares are concerned, the same will be distributed

in dematerialized form to the equity shareholders of CBoP, provided all details

relating to the account with the Depository Participant are available to HDFC

Bank. All those equity shareholders who hold equity shares of CBoP and do not

provide their details relating to the account with the Depository Participant will

be distributed New Equity Shares in the Physical / Certificate form unless


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otherwise communicated in writing by the shareholders on or before such date

as may be determined by HDFC Bank or committee thereof.

9.5 Upon the coming into effect of the Scheme, the New Equity Shares of HDFC

Bank to be issued and allotted to the said Members as provided in the Scheme

shall be subject to the provisions of the Articles of Association of HDFC Bank

and shall rank pari passu from the date of allotment in all respects with the

existing equity share of HDFC Bank including entitlement in respect of

dividends. Nothing contained herein shall restrict the issuance of equity shares

of CBoP upon exercise of the stock options and warrants issued prior to

December 31, 2007 by CBoP. The issue and allotment of New Equity Shares by

HDFC Bank to the member of CBoP as provided in this scheme is an integral

part thereof and shall be deemed to have been carried out as if the procedure

laid down under Section 81(1A) and any other applicable provisions of the

Companies Act and such other statutes and regulations as may be applicablewere duly complied with.

9.6 Save and except as may otherwise be permitted or required under the

provisions of this Scheme or for the utilization of balances lying in the

securities premium account for adjustment of goodwill as appearing in the

books of CBoP as of December 31, 2007 or upon exercise of any stock options

or warrants granted prior to December 31, 2007 , CBoP shall not make any

change in its capital structure, either by issue of new equity or Preference

shares or Bonus shares, convertible debentures, share warrants, options or any

other securities convertible into equity shares or otherwise effect decrease,

subdivision, reduction, re-classification, consolidation, buy-back or in any other

manner which may affect the share exchange ratio, except by consent of the

Board of Directors of HDFC Bank. It is clarified for the avoidance of doubt that

HDFC Bank may issue further equity shares and / or warrants convertible into

equity shares to the Promoter Group of HDFC Bank Ltd. pending the final

approval of the RBI to this Scheme, without disturbing the share swap ratio set

out in Clause 9.1, subject to an overall cap on dilution at 2,62,00,220 shares of

HDFC Bank.

9.7 Notwithstanding anything contained herein, in the event of any Member of

CBoP having a shareholding such that such Member becomes entitled to afraction of a New Equity Share, all the fractional entitlements of various

Members shall be aggregated and without any further act, deed or thing to be

done, such consolidated New Equity Shares shall stand vested in a trust to be

set up by the Board of HDFC Bank. Such trust shall dispose of the aggregate of

all such fractional holdings and distribute the net proceeds (after deduction of


29/87

expenses incurred) to the respective Members of CBoP in proportion to their

respective fractional entitlements.

9.8 Upon the Scheme becoming effective, in connection with the global

depository receipts with the equity shares of CBoP being the underlying

securities, the Board of HDFC Bank may take any of the following actions at its

sole discretion:-

(a) Holders of global depository receipts with the equity shares of CBoP being

the underlying securities shall become entitled to global depository receipts of

HDFC Bank with the underlying securities being the New Equity Shares in the

proportion of one equity share of Rs. 10/- each of HDFC Bank for every 29

equity shares of Re. 1/- each of CBoP; or (b) Holders of global depository

receipts with the equity shares of CBoP being the underlying securities shall

become entitled to American Depository Shares of HDFC Bank with the

underlying securities being the New Equity Shares in the proportion of oneequity share of Rs. 10/- each of HDFC Bank for every 29 equity shares of Re. 1/-

each of CBoP; or (c) The global depository receipts with the equity shares of

CBoP being the underlying securities shall stand replaced by equity shares of

HDFC Bank in the same proportion as the share swap ratio set out in this

Scheme.

9.9 Upon the Scheme becoming effective, the following stock options granted

by CBoP shall stand vested on an accelerated basis:-

Inthe


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case of stock options, the entitlements to the shares of HDFC Bank after the

Effective Date shall stand adjusted in the same proportion as the share swap

ratio set out herein, with the entitlements to the underlying shares of HDFC

Bank being rounded off to the nearest higher integer

10. DECLARATION OF DIVIDENDS

HDFC Bank and CBoP shall be entitled to declare or pay dividends, whether

interim or final, to their respective equity shareholders in respect of the

accounting period prior to the Effective Date, such that

the total payout is broadly in line with past payout percentages in the ordinary

course. Any declaration or payment of dividend inconsistent with past practice

and outside the ordinary course shall be subject to the prior approval of the

Board of Directors of each of HDFC Bank and CBoP, and in accordance with

applicable Law.

11. ACCOUNTING TREATMENT

11.1 Upon the coming into effect of the Scheme and with effect from the

Appointed Date: a) All the Assets and Liabilities recorded in the books of CBoP

shall be transferred to and vested in HDFC Bank pursuant to the Scheme and

shall be recorded by HDFC Bank at their respective book values as appearing

in the books of CBoP;

b) The balance in Statutory Reserve Account of CBoP shall continue to bedesignated as Statutory Reserve Account in the books of HDFC Bank; c)

Amalgamation Expenses Provision Account shall be credited, in the books of

HDFC Bank, by an amount determined by the Board of Directors of HDFC Bank

for the expenses and costs of the Scheme as per Clause 17 and for expenses

and costs arising as a direct consequence on account of changes in the

business of CBoP proposed or considered necessary by the Board of Directors

of HDFC Bank (including but not limited to rationalization, upgradation and

enhancement of human resources and any costs in relation to stock options

and/or warrants of CBoP taken over upon this Scheme becoming effective and

extraordinary expenses relating to modifying signage, modifying stationery,

branding, changing systems and network, communication including media

costs, impairment of technology and fixed assets, conducting general

meetings, payment of listing fees and other statutory and regulatory charges,

any costs relating to termination of contracts consequent upon the


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implementation of this Scheme, costs of travel in relation to the consolidation

contemplated in this Scheme, valuation, due diligence, investment banking

expenses and charges relating to preparation of the Scheme, consultations in

relation to the consolidation contemplated in this Scheme and training), and

other extraordinary expenses on integration and consolidation under the

Scheme, to be incurred by HDFC Bank and the corresponding debit shall be

reckoned in arriving at the amount to be credited to the Amalgamation

Reserve / debited to General Reserve as referred to in Clause 11.1(d).

d) The excess of the value of the net assets of CBoP over the paid-up value of

the shares to be issued and allotted by HDFC Bank pursuant to the terms of

Clause 9 and after giving effect to aforesaid clauses and such further

adjustments as may be deemed necessary by the Board of Directors of HDFC

Bank, including provision against credit risk inherent in advances/assets and

provision towards unprovided business / contingent liabilities of CBoP, and/orrequired by any regulatory or statutory authority including such adjustments as

may be required to ensure the uniform application of accounting standards and

policies adopted by HDFC Bank after adjusting against the Floating Provision

Account to the extent available, and the balance shall be accounted for and

credited by HDFC Bank to its Amalgamation Reserve net of tax effect on the

said adjustment to record timing differences as deferred taxes. The shortfall, if

any, in the event of a deficit, occurring whilst giving effect to the adjustments

hereinabove, shall be debited to General Reserve. HDFC Bank shall record for

the deferred tax asset, if any, with respect to provision.

12. MODIFICATIONS, AMENDMENTS, AND WITHDRAWAL

12.1 HDFC Bank and CBoP may pending sanction of the Scheme by RBI make

or assent, from time to time, on behalf of all persons concerned to any

modifications or amendments to the Scheme or to any conditions or limitations

which the RBI or any other relevant or concerned authority under Law may

direct or impose or which may otherwise be considered necessary, and may do

and execute all acts, deeds, instruments, matters and things necessary for

putting the Scheme into effect, or for the purpose of better structuring and

effective implementation of the Scheme. The aforesaid power of CBoP and

HDFC Bank may be exercised by their respective Boards of Directors, or by any

sub-committee of the Boards of Directors as may be nominated by the

respective Parties.


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12.2 For the purpose of giving effect to the Scheme as sanctioned by the RBI,

the Board of Directors of HDFC Bank may give all such directions which are not

inconsistent with the provisions of the Scheme as are necessary, expedient,

ancillary or desirable including directions for settling or removing any question

of doubt or difficulty that may arise with regard to the implementation of the

Scheme, as it thinks fit, and such determination or directions as the case may

be, shall be binding on all persons connected herewith or otherwise interested

in the Scheme.

12.3 This Scheme may be withdrawn before the Effective Date in any of the

following events (i) by mutual consent of the Parties; or (ii) unilaterally by CBoP

on the occurrence of a Material Adverse Change in respect of HDFC Bank; or

(iii) unilaterally by HDFC Bank on the occurrence of Material Adverse Change in

respect of CBoP.

13. CONDITIONS OF THE SCHEME13.1 HDFC Bank and CBoP shall make applications under Section 44A and all

other applicable provisions of the Banking Act for sanctioning of the Scheme by

the RBI and obtain all approvals as may be required by the Law and for

dissolution of CBoP without being wound up under the provisions of the Law.

13.2The Scheme is specifically conditional upon and subject to:

a) the consent of a majority in number representing two-thirds in value of the

Members of HDFC Bank and of CBoP is obtained at their respective meetings,present either in person or by proxy at a meeting called for the purpose.

b) all necessary consents, authorizations or other approvals of any kind which

may be required from any governmental or other competent regulatory

authority for the consummation of amalgamation, including without limitation

the approval of the RBI under Section 44A and other applicable provisions of

the Banking Act and the guidelines thereof.

c) all other necessary consents, authorizations and other approvals which may

be required by CBoP or HDFC Bank under the provisions of the Companies Act,

any other applicable Law for the consummation of the amalgamation.

14. GENERAL TERMS AND CONDITIONS:14.1 An order in terms of Clause 13.2(b) hereinabove and sub-section (6C) of

Section 44A of the Banking Act shall be conclusive evidence that all

requirements of Section 44A of the Banking Act relating to amalgamation have

been complied with and a copy of the said order certified in writing by an


33/87

officer of the RBI to be a true copy of such order shall in all legal proceedings

(whether in appeal or otherwise) be admitted as evidence to the same extent

as the original order and the original scheme.

14.2 Any Member of HDFC Bank or CBoP, as the case may be, who has voted

against the Scheme at the meeting of HDFC Bank or CBoP, as the case may be,

or has given notice in writing at or prior to the meeting of HDFC Bank or CBoP,

as the case may be, or to the presiding officer of the meeting of the

shareholders of either HDFC Bank or CBoP, as the case may be, that he

dissents from the Scheme, shall subject to approval of the RBI, be entitled,

upto the Record Date, to claim from HDFC Bank or CBoP, as the case may be,

in respect of shares held by him in HDFC Bank or CBoP, as the case may be,

their value as determined by the RBI when sanctioning the Scheme and such

Member, in consideration thereof, shall compulsorily tender the shares held by

him, in HDFC Bank or CBoP, as the case may be, to HDFC Bank or CBoPrespectively for cancellation thereof and to that extent the share capital of

HDFC Bank or CBoP, as the case may be, shall stand reduced. The

determination by the RBI as to the value of the shares to be paid to the

dissenting Member shall be final and binding on such dissenting shareholders

for all purposes.

15. VALIDITY OF THE SCHEMEIn the event Effective Date shall not have occurred by March 31, 2009 or by

such later date as may be agreed to by and between the respective Boards ofDirectors of CBoP and HDFC Bank (the Cut-off Date), the Scheme shall

become null and void and in that event no rights and liabilities whatsoever

shall accrue to or be incurred inter se by the parties or their shareholders or

creditors or employees or any other person. In such case both, CBoP and HDFC

Bank, shall bear their own costs.

16. SAVINGS OF CONCLUDED TRANSACTIONSThe transfer of properties and liabilities under Clause 4 above and the

continuance of proceedings by or against CBoP shall not affect any transaction

or proceedings already concluded by CBoP until the Effective Date, to the end

and intent that HDFC Bank accepts and adopts all acts, deeds and things done

and executed by CBoP in respect thereto as done and executed on behalf of

itself.

17. COSTS


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Each Party shall bear its own costs and expenses in respect of all matters

arising out of, or in connection with, this Scheme unless otherwise expressly

agreed in writing. Expenses towards the joint valuation shall be borne by the

Parties equally.

The Housing Development Finance Corporation Limited (HDFC) was amongst

the first to receive an 'in principle' approval from the Reserve Bank of India

(RBI) to set up a bank in the private sector, as part of the RBI's liberalisation of

the Indian Banking Industry in 1994. The bank was incorporated in August 1994

in the name of 'HDFC Bank Limited', with its registered office in Mumbai, India.

HDFC Bank commenced operations as a Scheduled Commercial Bank in

January 1995.

Corporate Governance

HDFC Bank recognizes the importance of good corporate governance, which isgenerallyaccepted as a key factor in attaining fairness for all stakeholders and achievingOrganizational efficiency.This Corporate Governance Policy,


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therefore, is established to provide a direction and framework for managingand monitoringthe bank in accordance with the principles of good corporate governance.

Code of Corporate Governance

Corporate Governance Rating

Composition of the Board

Profiles of Directors

Board Committees

Ownership Rights

Promoters Rights (HDFC LTD.)

Key Shareholders Rights

Listing

Registrars and transfer agents

Grievance Redressal

Dividend Policy

Memorandum of Association

Articles of Association

Board Meetings

Quarterly Updates

Fair Practice Code for LendingCode of Ethics / Conduct
http://www.hdfcbank.com/aboutus/cg/Code_of_Corporate_Governance.htmhttp://www.hdfcbank.com/aboutus/cg/Corporate_Governance_Rating.htmhttp://www.hdfcbank.com/aboutus/cg/Composition_of_the_Board.htmhttp://www.hdfcbank.com/aboutus/cg/Profiles_of_Directors.htmhttp://www.hdfcbank.com/aboutus/cg/Board_Committees.htmhttp://www.hdfcbank.com/aboutus/cg/Ownership_Rights.htmhttp://www.hdfcbank.com/aboutus/cg/Promoters_Rights.htmhttp://www.hdfcbank.com/aboutus/cg/Key_Shareholders_Rights.htmhttp://www.hdfcbank.com/aboutus/cg/listing.htmhttp://www.hdfcbank.com/aboutus/cg/registrars_transfer_agent.htmhttp://www.hdfcbank.com/aboutus/cg/Grievance_Redressal.htmhttp://www.hdfcbank.com/aboutus/cg/Dividend_Policy.htmhttp://www.hdfcbank.com/common/pdf/corporate/memorandum-2003.pdfhttp://www.hdfcbank.com/common/pdf/corporate/Association-2003.pdfhttp://www.hdfcbank.com/aboutus/cg/board_meetings.htmhttp://www.hdfcbank.com/aboutus/cg/Quarterly_Updates.htmhttp://www.hdfcbank.com/aboutus/cg/Fair_Practices_Code_For_Lending.htmhttp://www.hdfcbank.com/aboutus/cg/code_of_ethics_conduct.htmhttp://www.hdfcbank.com/aboutus/cg/Corporate_Governance_Rating.htmhttp://www.hdfcbank.com/aboutus/cg/Composition_of_the_Board.htmhttp://www.hdfcbank.com/aboutus/cg/Profiles_of_Directors.htmhttp://www.hdfcbank.com/aboutus/cg/Board_Committees.htmhttp://www.hdfcbank.com/aboutus/cg/Ownership_Rights.htmhttp://www.hdfcbank.com/aboutus/cg/Promoters_Rights.htmhttp://www.hdfcbank.com/aboutus/cg/Key_Shareholders_Rights.htmhttp://www.hdfcbank.com/aboutus/cg/listing.htmhttp://www.hdfcbank.com/aboutus/cg/registrars_transfer_agent.htmhttp://www.hdfcbank.com/aboutus/cg/Grievance_Redressal.htmhttp://www.hdfcbank.com/aboutus/cg/Dividend_Policy.htmhttp://www.hdfcbank.com/common/pdf/corporate/memorandum-2003.pdfhttp://www.hdfcbank.com/common/pdf/corporate/Association-2003.pdfhttp://www.hdfcbank.com/aboutus/cg/board_meetings.htmhttp://www.hdfcbank.com/aboutus/cg/Quarterly_Updates.htmhttp://www.hdfcbank.com/aboutus/cg/Fair_Practices_Code_For_Lending.htmhttp://www.hdfcbank.com/aboutus/cg/code_of_ethics_conduct.htmhttp://www.hdfcbank.com/aboutus/cg/Code_of_Corporate_Governance.htm


36/87

Banking Regulation Act, 1949

The banking regulation act, 1949 was landmark legislation. The act conferred

wide range of powers to RBI relating to supervision and control over banking in

India, establishment of banks, mergers and amalgamation and maintenance of

certain operating standards for banks. The act vested licensing powers for

opening branches. The act also gave the authority to conduct inspection of

banks, thus enabling it to make qualitative assessment of the management is

including the method of business from the viewpoint of depositors.

The banking regulation act thus provided the framework for RBI supervision of

banks. Standards for evaluating bank performance were drawn on the basis of

the working of the well managed banks, which many small banks could not

meet. This led to growth of banks.

Nationalization of major banks

The year 1969 was the turning point in the history of Indian banking ins\dusty.

In July 1969, the government nationalized 14 major banks. It was felt by the

government that it was necessary to acquire the ownership of banks to achieve

the objectives of social control and enable the banks to play a more effective

role as a catalyst for economic growth. The objective and reason

accompanying bank system nationalization act 1969 started and institution

such as the banking system which touches the lives of millions has to be

inspired by large social purpose and has to serve national priorities andobjectives such as rapid growth of agriculture, small scale industries and

export, raising of employment levels, encouragement of new entrepreneurs

and the development of the backward areas. For this purpose it was necessary

for the government to take direct responsibility for extension and

diversification of banking services and for the working of substantial part of the

bank.


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FIGURE1.1

CLASSIFICATION OF BANKS

Types of bank

Commercial banks are of two types scheduled and non- scheduled of the RBIact, 1930. These banks satisfy the criteria laid down under section 42(6) of theact that they should have minimum required capital and their activities shouldnot be detained to the interest of the depositors. The scheduled banks arerequired to maintain cash reserve equal to minimum of 3%of the demand andtime liabilities which can go up to maximum of 15%under section 42(1) of theRBI act. These banks also enjoy certain privileges, as for example they canapproach RBI for financial assistance under section 17 of the RBI for financialassistance under section 17 of the RBI act. Non scheduled banks were in largenumber earlier but their number drastically reduced as a result of take overvalidations and also in some cases up gradation into the scheduled bankcategory.

Commercial bank Cooperative Bank

Scheduledbank

Non- Scheduledbanks


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Privatization of banks

The decision to nationalize banks in July 1969 was made to prevent unfair

competition and concentration of economic power with the industrial houses.

But unfortunately, with the passage of time it was seen that public sector

banks had degenerated into monopoly financial houses. Inspire of the vast

expansion in the branch network there was a general decline in efficiency and

profits.

For well over two decades after nationalization no bank had been allowed to

set up in the private sector. Progressively over this period the public sector

banks had their branch network considerably and had catered to the socio-

economic needs of the masses, especially the weaker section and those in

rural areas. The public sector banks had 91%of the total bank branches and

handled 86%of the total banking business in the country. While recognizing theimportance and the role of public sector banks and the need to introduce

greater competition lead to higher productivity and efficiency of the banking

system private section sector allowed to be set up. They have set up as

scheduled commercial bank just as the nationalized banks being also as

scheduled.

While permitting the entry of the new private sector banks following

considerations to be kept in mind.

1. They serve the goals underlying the financial sector reforms and thus

provide competitive, efficient and low cost financial intermediary services

for the society at large.

2. They are financially viable.

3. They should result in up gradation of technology in the banking sector,

4. They should avoid the shortcomings such as unfair pre-emption and

concentration of credit, monopolization of economic power, crossholdings with industrial groups.

5. Freedom of entry into the banking sector needs to be managed carefully

and judiciously


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6. Based on these considerations the reserve bank formulated the following

guidelines for establishment of new banks in private sector-

Such a bank shall be registered as a public limited company underthe companies act, 1956.

The RBI may, on merit, grant a license under the banking

regulation act, 1949, for such bank. The bank may also be included

in the second schedule of reserve bank of India, act, 1939 at the

appropriate time. The decision of RBI in these matters shall be

final.

The bank will be governed by the provision of the banking

regulation act will govern the bank, 1949 in regards to its

authorized , subscribed and paid up capital for such bank shall be

determined by the RBI and will also be subject to other applicable

regulation.

The shares of the bank should be listed on the stock exchange

To avoid concentration of the head quarters of new banks in

metropolitan cities and other over banked Ares, while granting a

license preference may be given to those the head quarters of

which are proposed to be located in a centre which does not have

the head quarters of any other bank.

The director of the bank should not be the director of any other

banking company or of companies which among themselves are

entitled to excise voting rights in excess of 20% of the total voting

of all the shareholders of the banking company as laid down in the

banking regulation act, 1949.

The bank will also have compile with such directions of the RBI as

are applicable to existing banks in the matter of export credit. Forfacilitating this it may issued an authorized dealers license to deal

in foreign exchange, when applied for.

The bank will be governed by the proviso of the reserve bank of

India act, 1934. Banking regulation act, 1949 and other relevant


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statutes, in regard to its management, set up, liquidity

requirements and the scope of tits activities. The directives,

instructions, guidelines and advice given by the RBI shall be

applicable to such banks as in case of other banks. It would be

ensured that a new bank would concentrate on core banking

activities initially.

Such a bank shall be subject to prudential norms in respect of

banking operations; RBI lays down accounting policies and other

policies as; the bank will have to achieve capital adequacy of 8% of

the risk weighted from the very beginning.

Introduction to Training and

development

After the newly appointed employees have joined the organization, the next

phase of the personnel programme is to impart necessary training to them to

make them fully fit for the jobs they are supposed to handle. In modern

industrial organization, the need for training of employees is also widely

recognized so as to keep the employees in touch with the new technological

developments. Every company must have systematic training programme for

the growth and development of the employees. It may be noted that the term

training is used in regard to teaching specific skills , whereas the term

development denotes overall development of personality of the employees.

Need and rationale of Training

Training is important not only from the point of view of the organization, but

also for the employees. Training is valuable to the employees because it willgive them greater job security and an opportunity for advancement. A skillacquired through training is an asset for the organization and the employee.The need for training arises because of the following reasons:


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1. Changing Technology: technology is changing at a fast pace. The workersmust learn new technologies to make use of advanced technology. Thustraining should be treated as a continuous process to update theemployees in new methods and procedures.

2. Quality Conscious Customers: the customers have become qualityconscious and their requirements keep on changing. To satisfy thecustomers quality of products must be continuously improved throughtraining of workers.

3. Greater Productivity: it is essential to increase productivity and educecost of production for meeting competition in the market. Effectivetraining can help increase productivity of the workers.

4. Stable Workforce: Training creates a feeling of confidence in the minds of

the workers. it gives them a security at the work place. As a result labourturnover and absenteeism are reduced.

5. Increased Safety: Trained workers handle the machines safely. They alsoknow the use of various safety devices in the factory. Thus, they are lessprone to industrial accidents.

6. Better Management: Training can be used as an effective tool of planningand control. It develops skills among workers for the future and alsoprepares them for promotion. It helps in reducing the costs ofsupervision, wastages and industrial accidents. it also helps increase

productivity and quality.

Definition of Training

Training is an organized activity for increasing the knowledge and skills ofpeople for a definite purpose. It involves systematic procedures for transferringtechnical know-how to the employees so as to increase their knowledge andskills for specific jobs with proficiency.

According to Edwin.B.Flippo, Training is the act of increasing the knowledgeand skills of an employee for doing a particular job

Training involves the development of skills that are usually necessary toperform a specific job. Its purpose is to achieve a change in the behavior ofthose trained and to enable them to do their jobs better. Training makes newlyappointed workers fully productive in the minimum of time. Training is


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4. Less Supervision: Training does not eliminate the need for supervision,

but it reduces the need for detailed and constant supervision. a well trained

employee is self reliant in his work because the knows what to do and how to

do.

5. Economical operation: trained personnel will be able o make better

and economical use of materials and equipment. Wastage will also be low. In

addition, the rate of accidents and damage to machinery and equipment will be

kept to the minimum by the trained employees. These will lead to lower cost of

production per unit.

6. Higher Morale:

The morale of employees is increased if they are given proper training. A good

training programme will mould employees attitudes towards organizational

activities and generate better cooperation and greater loyalty.

7. Preparation of future managers: when totally new skills are required byan organization, it has to face great difficulties in the selection process.

Training can be used in spotting out promising men and preparing them for

promotion.

8. Better management:

A manager can make use of training o manage in a better way. To him, training

the employees can assist improve his planning, organizing, directing,

controlling.

Benefits of Training to Employees:Training helps the employees or workers in the following ways.

1. Confidence: training creates a feeling of confidence in the minds ofworkers. It gives a feeling of safety and security to them at their workplace.2. New skills: training develops skills which serve as a valuable personal

asset of a worker. It remains permanently with the worker himself.3. Promotion: training provides opportunity for quick promotion and selfdevelopment.4. Higher earning: training helps in earning higher remuneration and othermonetary benefits to the workers as their productivity is increased.5. Adaptability: training develops adaptability among workers. They do notworry when work procedures and methods are changed.


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6. Increased safety: Trained workers handle the machines safely. They alsoknow the use of various safety devices in the factory. Thus they are less proneto accidents.

Types of Training

On the basis of purpose, several types of training programmes are offered tothe employees. It should be noted that these programmes are not mutuallyexclusive. The important types of training programmes are as follow

The job trainingOff the job trainingVestibule training

Exhibit: Methods of Training


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On the Job Training:

On the job training is considered to be most effective method of training the

operative personnel. Under this method the worker is given training at thework place by his immediate supervisor. In other words the worker learns inthe actual workplace. It is based on the principle of learning by doing.

Benefits of on the job training:

It is suitable for imparting skills and knowledge that can be learnt in a

relatively short period of time.

It has the chief advantage of strongly motivating the trainee to learn.

It is not located in an artificial situation; it permits an employee to learn

on the equipment and in the work environment.

Methods of Training

On the job training Off the job training Vestibule training

CoachingUnderstudy

Position rotation

ConferencesCase study

Sensitivity training

Special projectsCommittee assignments


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On the job methods are relatively cheaper and less time consuming.

There are four methods of on the job training described below:

Coaching: Under this method the supervisor imparts job knowledge andskills to his subordinate. The emphasis in coaching or instructing thesubordinate on learning by doing. This method is very effective if thesuperior has sufficient time to provide coaching to his subordinates.

Understudy: The superior gives training to a subordinate as hisunderstudy or assistant. The subordinate learn through experience andobservation. It prepares the subordinate to assume the responsibilities ofthe superiors job in case the superior eaves the organization

Position Rotation: The purpose of position rotation is to broaden thebackground of the trainee in various positions. The trainee is periodicallyis rotated from job to job instead of sticking to one job so that heacquires a general background of different jobs. However rotation of anemployee from one job to another should not be done frequently.

Job Rotation: Job rotation is used by many organizations to develop allround development. The employee learns new skills and gain experiencein handing different kinds of jobs. They also come o know theinterrelationship between different jobs.

Vestibule Training: The term vestibule training is used to designatetraining in a class-room for semi-skilled jobs. It is more suitable where a large

number of employees must be trained at the same time for the same kind of

work. It is frequently used to train clerks, machine operators, typists;

etc.Vestibule training is adapted to the same general type training problem

that is faced by on the job training. An attempt is made to duplicate, as nearly

as possible, the actual material, equipment and conditions found in the real

work place.

Benefits:


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It is particular suitable where it is advisable to put the burden of training

on line supervisors and where a special coaching is required.

The trainees avoid confusion and pressure of the work situation and are

thus able to concentrate on training.

No interference with the regular processes of production.

Demerits:

The artificial training atmosphere may create the adjustment problems

for the trainees when they return to the place of job.

It is relatively expensive because there is duplication of materials,

equipment and conditions found in a real workplace.

OFF THE JOB TRAINING

It requires the worker to undergo training for a specific period away from thework place. Off the job methods are concerned with both knowledge and skillsin doing certain jobs.

There are several off the job methods of training and development asdescribed below;

1.Special lecture cum discussion: training through special lectures is alsoknown as class room training. It is more associated with imparting

knowledge than skills. The special lectures may be delivered by someexecutives of the organization or specialists from vocational andprofessional institutes.

2.Conference Training: A conference is a group meeting conductedaccording to an organized plan in which the members seek to developknowledge and understanding buy oral participation. It is an effectivetraining device for persons in the positions of both conference member andconference leader. As a member a person can learn from others bycomparing his opinions with those of others. he learns to respect theviewpoint of others.

3.Case Study: The case study method is a means of stimulating experiencein the classroom. Under this method, the trainees are given a problem orcase which is more or less related to the concepts and principles alreadytaught. They analyze the problem and suggest solutions which arediscussed in the class. The instructor helps them reach a common solution


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to the problem this method gives the trainee an opportunity to apply hisknowledge to the solution of realistic problems

Designing a Training Programme.

The training program is an integral part of human resources management. As

in the following fig. it consists of interrelated steps.

1. Identification of training needs

2. Setting training objectives

3. Organization of training.

4. Evaluation of training.

Identification of training needs

Organizational AnalysisTask Analysis

Human Resources Analysis

Setting Training Objectives

Organization of Training ProgrammeTrainee and Instructor

Period of training

Training Methods and Materials

Evaluation of Training Results


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Concept of executive / management Development:

Executive or management development consists of all activities by which

executives learn to improve their behavior and performance. It is designed toimprove the effectiveness of managers in their present jobs and to preparethem for higher jobs in future.

According to Chhabra, Ahuja, and jainManagement development is the process by which managers acquirenot only skills and competency in their present jobs but alsocapabilities for future managerial tasks of increasing difficulty andscope.

Development of managers takes place not only by participating in formal

courses of instruction drawn by the organization, but also through actual jobexperience in the organization. But also through actual job experience in theorganization.

Nature of Executive Development:

1. Educational process:Development is more akin of education than it is to specific training in skills.Thus, a manager cannot be developed only by taking a course, attendinglectures and conferences, job rotation assignments and the like.

2. Behavioral Change:Executive or management development is a planned process of learning andgrowth designed to bring behavioral change among the executives. It impliesthat there will be a change in knowledge and behavior of the individualsundergoing development programme.

3. Self-Development:The organization can merely provide faculties for development but the realurge of development should arise from within the individuals.

4. Continuous process:Executive development is an ongoing or never ending exercise rather than aone-shot affair.


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Objectives of executive development

The objectives of management of executive development programme of anybusiness concern are:

To increase the overall knowledge and conceptual and decision making-

skills of executives.

To improve the performance of managers in their present positions.

To ensure an adequate reserve of capable well-trained managers for

future needs.

To influence the behavior of workers through the executives;

To introduce change in the organization by developing executives intochange agents or facilitators.

To provide opportunities to the managers for their career advancement.

To prevent obsolescence of executive by providing them opportunities

for updating their knowledge and skills.

Purpose Method/technique

1.Job Knowledge

2.Organisational Knowledge

3.General Knowledge

4.Decsion making skills

5.Inter-personal Skills

6. Specific Individual needs

a)on the job experienceb)Coaching

c)understudy

a)job rotationb)multiple management

a)special courseb)specific readings

a)in basketb)business game

c)case studya)role playb)sensitivity training

a)special projectsb)committee assignments


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Training vs. Development

1. Training means learning skillsand knowledge for doing a

particular jobit increases job skills.2. The term training isgenerally usedto denote imparting specific skillsamong operative workers andemployees.3. Training is concerned withmaintaining and improvingcurrentjob performance. Thus it has a

short term perspective.4. Training is job centered innature.5. The role of trainer orsupervisor isvery important in training.

1. Development means the growth ofan employee in all respects. It shapes

attitudes.2. The term development isassociated withthe overall growth of the executives.3. Executives development seeks todevelop competence and skills forfuture performance. Thus it has a longterm perspective.4. Development is career-centered innature.All development is self development.

5. The executive has to be internallymotivated for self development.


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On the job methods

Multiple Management: Multiple management is the name given to the systemwhereby permanent advisory committees of executives study problems of theorganization and make recommendations to higher management. The finaldecisions rest with the top management. Another device is the establishmentsof a junior board director

Hdfc Project- Mohit Manchanda

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