A Project Study Report

On Training Undertaken at

Titled ANALYSIS OF THE BANKING SERVICES OF HSBC

WITH COMPERISSION OF OTHER BANKS

Submitted in partial fulfillment for the Award of degree of

Master of Business Administration

ARYA COLLEGE OF ENGINEERING & IT

Submitted By: - Submitted To:- DAKSH SHARMA Dr. MANISH SHRIVASTAVMBA Part-IV SEM

2008-2010

1

PREFACE

Theories are being developed, designed and stated on the groundwork of their practical

implementation and usage. Work experience seems to be more effective and indispensable

factor of making an individual an adept. This is because one cannot do without being exposed

to varying circumstances and possible consequences. Training not only develops individual

skills and abilities but also provides proficiency in work performance.

This report is a concrete form of the knowledge that was acquired during summer

training in the bank that is part of two year full time management programmed. It emphasizes

on learning by doing. The training paves the way for successful entrance in the corporate world

for students.

I have studied and explored saving a/c and investment process of the bank, its market

share in the Jodhpur market and ways of increasing its market share. It was really a great

opportunity getting practical insight of the market.

Initially I felt that classroom study was irrelevant and to useless in any concern’s

working, but gradually I realized all the basic fundamental concepts studied are linked in one or

the other ways to the organization. Further it could be said that theory and practical training are

supplementary to each other and help in drawing meaningful conclusion and it’s just a matter

of modifying the theory, so as to apply in to given a practical solution.

I sincerely believe that there is no better place to learn the practical side of management

studies than the industry itself. With the data that was collected I have tried my best to provide

some fruitful suggestions and recommendations.

2

Acknowledgement

I express my sincere thanks to my project guide Dr.Manish Shrivastav, for guiding me right

form the inception till the successful completion of the project. I sincerely acknowledge

him for extending their valuable guidance , support for literature , critical reviews of

project and the report and above all the moral support she had provided to me with all

stages of this project.

I would also like to thanks the supporting staff for their help and cooperation

throughout our project.

(Signature of Student)

Name of the Student

3

EXECUTIVE SUMMERY

The main objective of this report is to study the wealth management products of HSBC and compare them with that of other banks. The study includes a competitive analysis of the different types of products being offered by the banks, their target customers, the services they render and the extra facilities that they provide to their clients.

As various employment scheme are also working with bank to uplift the existing economic status. In a nutshell, it provides employment, money management, interest incomes and lockers facilities to keep safe our precious things and provide many other value added services. It provides a broad view regarding various banking facilities, challenges and dealings with customers. Besides this administrative structure of bank was also analyzed the report to understand the functioning of the same at various levels.

The time has gone when people had fewer options to invest their surplus; banks these days are offering a range of customized products to attract investments from the public. The customer is the king in the industry and every bank whether public, private or foreign, is offering best services and facilities.

Wealth Management is one of the hottest potential in the market, which is aimed at providing the financial planning and investments services to the High Net Worth Individuals. These clients are treated as the privileged customers of the bank, with many exclusive services.

On one hand where there’s great cat and dogfight for clients, HSBC is one of the leading players in this category on the other, with many other banks in the foreign and private sectors. It is one of the fastest emerging banks in India with its strong foothold by 151 years of its existence.

HSBC leads in Treasury, Custody & Clearing (HSS) and Trade, with strong position in CIB and Mutual funds.

Last but not the least; HSBC has wider horizons for engaging the MBA students in a better and hopeful profession.

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INDEX

Cover page 1 Acknowledgement 2 Preface 3 Executive Summary 4

CONTENTS-

1. INTRODUCTION TO THE INDUSTRY 6

2. INTRODUCTION TO THE ORGANIZATION 14

HSBC the world’s local bank

3. RESEARCH METHODOLOGY 76

3.1 TITLE OF THE STUDY

3.2 OBJECTIVE OF THE STUDY

3.3 TYPE OF RESEARCH

3.4 SAMPLE SIZE AND METHOD OF SELECTING SAMPLE

3.5 SCOPE OF STUDY

3.6 LIMITATION OF STUDY

4. ANALYSIS AND INTERPRETATION 81 5. SWOT ANALYSIS 986. COCLUSION & RECOMMENDATION 103 7. HOW HSBC IS RESHAPING 108 8. APPENDIX 1099. BIBLIOGRAPHY 111

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INTRODUCTION

BANKING INDUSTRY

The Indian banking industry is passing through a phase of customers market. The customers

have more choices in choosing their banks. A competition has been established within the

banks operating in India.

With stiff competition and advancement of technology, the services provided by banks have

become more easy and convenient. The past days are witness to an hour wait before

withdrawing cash from accounts or a cheque from north of the country being cleared in one

month in the south.

Fact Files of Banking in INDIA

The first bank in India to be given an ISO certification Canara Bank

The first bank in Northern India to get ISO 9002 certification for

their selected branches

Punjab and Sind

Bank

The first Indian bank to have been started solely with Indian

capital

Punjab National

Bank

The first among the private sector banks in Kerala to become a

scheduled bank in 1946 under the RBI Act

South Indian Bank

India's oldest, largest and most successful commercial bank,

offering the widest possible range of domestic, international and

NRI products and service, through its vast network in India and

overseas

State Bank of India

India's second largest private sector banks and is now the

largest scheduled commercial bank in India

The Federal Bank

Limited

6

Bank which started as private shareholders banks, mostly

Europeans shareholders

Imperial Bank of

India

The first Indian bank to open a branch outside India in London in

1946 and the first to open a branch in continental Europe at

Paris in 1974

Bank of India,

founded in 1906 in

Mumbai

The oldest Public Sector Bank in India having branches all over

Indian and serving the customers for the lest 132 years

Allahabad Bank

The first Indian commercial bank which was wholly owned and

managed by Indians

Central Bank of

India

7

NEW GENERATION BANKING

The liberalize policy of Government of India permitted entry to private sector in the

banking, the industry has witnessed the entry of nine new generation private banks. The major

differentiating parameter that distinguishes these banks from all the other banks in the Indian

banking is the level of service that is offered to the customer. Verify the focus has always been

centered on the customer – understanding his needs, preempting him and consequently

delighting him with various configurations of benefits and a wide portfolio of products and

services. These banks have generally been established by promoters of repute or by ‘high

value’ domestic financial institutions. The popularity of these banks can be gauged by the fact

that in a short span of time, these banks have gained considerable customer confidence and

consequently have shown impressive growth rates. Today, the private banks corner almost

four per cent share of the total share of deposits. Most of the banks in this category are

concentrated in the high-growth urban areas in metros (that account for approximately 70% of

the total banking business). With efficiency being the major focus, these banks have

leveraged on their strengths and competencies viz. Management, operational efficiency and

flexibility, superior product positioning and higher employee productivity skills.

The private banks with their focused business and service portfolio have a reputation of being

niche players in the industry. A strategy that has allowed these banks to concentrate on few

reliable high net worth companies and individuals rather than cater to the mass market. These

well-chalked out integrates strategy plans have allowed most of these banks to deliver

superlative levels of personalized services. With the Reserve Bank of India allowing these

banks to operate 70% of their businesses in urban areas, this statutory requirement has

translated into lower deposit mobilization costs and higher margins relative to public sector

banks.

8

BUSINESS OF BANKING

Banking, in a traditional sense is the business of accepting deposits of money from

public for the purpose of lending and investment. These deposits can have a distinct feature of

being withdraw able by cheques, which no other financial institution can offer.

In addition to this banks also offer various other financial services also which include:-

Issuing Demand Drafts & Travelers Cheques

Collection of Cheques, Bills of exchange

Safe Deposit Lockers

Issuing Letters of Credit & Letters of Guarantee

Sale and Purchase of Foreign Exchange

Custodial Services

Investment services

The business of banking is highly regulated since banks deal with money offered to

them by the public and ensuring the safety of this public money is one of the prime

responsibilities of any bank. That is why banks are expected to be prudent in their lending and

investment activities. The major regulations and acts that govern the banking business are:-

Banking Regulations Act

Reserve Bank of India Act

Foreign Exchange Regulation (Amendment) Act, 1993

Indian Contract Act

Negotiable Instruments Act

Banks lend money either for productive purposes to individuals, firms, corporate etc. or

for buying house property, cars and other consumer durable and for investment purposes to

individuals and others. However, banks do not finance any speculative activity. Lending is risk

9

taking. The risk should be covered by having prudent norms for lending. The depositors of

banks are also assured of safety of their money by deploying some percentage of deposits in

statutory reserves like SLR & CRR.

10

HISTORY OF BANKING IN INDIA

Modern banking developed in the west, in response need to industrialize along a capitalist path. It is elaborated procedures institutionalized lending. Money circulation increased with the provision of various money deposit schemes by the banks. While “shaukari” practiced modern banking has developed strong roots. There are several types of banking in our country. At the apex is the reserve bank of India, with powers to regulate the entire banking system, print currency, extend loans to the government, and formulate credit policy.

Next comes the state bank of India and its subsidiaries. Then there are the nationalized banks, which are public sector undertakings. Under the new economic regime, private banks are once again coming up in a big way. Co-operative banks have also been set up. Local area banks in addition to credit thrifts societies formed by the staff of government departments are becoming popular. At the dawn of independence, hundred of the banks were in operation, often n by unscrupulous managements. In 1949, the government of India took two major steps. The first was the enactment of the banking regulation act, which gave regulatory powers to RBI the Indian banking system, grew not only geographically but also structurally. However, the number of scheduled banks came down from 94 to 76 over the same period. Their deposit rose from Rs 843 crore in 1950-51 to Rs 2,025 crore in 1969-70.

Time deposits, as did personal accounts comp aired to business accounts during the same period. The s5tste bank of India was setup in 1955. Eight regional banks were nationalized in 1960 and had to open new offices in semi urban and rural areas. They’re for their relative share in total deposits increased.

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Nationalization of banks

The need for and mode of social control over banks is required in order to prevent a monopoly and heck oligopolistic practice was debated .14 commercial ban Rs with deposits worth Rs 50 crore were nationalized in 1969.

The objective of the nationalization of the banks as stated by Mrs. Indira Gandhi, former prime minister of India were:

Removal of control by few. Provision for adequate credit to the agriculture sector, small industries and exports. Giving a professional trust to the managements of banks. Encouraging a new class of entrepreneurs. Provision of adequate training as well as better terms of service to bank staff.

The banking companies acquisition and transfer of undertaking act, 1969 spelt out of objectives of and reasons for nationalization as follows, “ the banking system touches the lives of millions and has to be inspired by a large purpose and has to subscribe to national priorities and objectives such as rapid growth in agriculture, small industries and exports raising of employment level, and the development of backward classes. For this purpose it is necessary for government to take direct responsibility for extension and diversification of banking services and for the working of substantial part of the banking system.”

The establishment of national bank for agriculture and rural development in 12992 was another milestone in banking. The export and import bank was setup in 1982 to look after the financial needs of the exporters and importers. In recent years there has been phenomenal growth in banking sector and continuing reforms have ensured their competitiveness, viability and profitability. The Cash Reserve Ratio (C.R.R.) cuts have increased liquidity and now enough lend able resources and the banks have reduced their Prime Lending Rates (P.L.R.). The overall negative growth rate of public sector banks is a matter of concern. The total non-performing assets of Indian banks have been taken to tackle these problems. In recent years there has been a phenomenal growth in banking services and activities.

12

STRUCTURE OF BANKS IN INDIA

13

Structure of banks in India

Scheduled Banks

Non-Scheduled Banks

Private Sector Banks

Commercial Banks

Central Co-operative Banks

Commercial Banks

State Co-operative Banks

Public Sector

Banks

ABOUT HSBC

HSBC - The world's local Bank

Headquartered in London, HSBC is one of the largest banking and financial services organizations in the world. HSBC's international network comprises around 9,500 offices in 85 countries and territories in Europe, the Asia-Pacific region, the Americas, the Middle East and Africa.

With listings on the London, Hong Kong, New York, Paris and Bermuda stock exchanges, shares in HSBC Holdings plc are held by around 200,000 shareholders in some 100 countries and territories. The shares are traded on the New York Stock Exchange in the form of American Depositary Receipts.

Through an international network linked by advanced technology, including a rapidly growing e-commerce capability, HSBC provides a comprehensive range of financial services: personal financial services; commercial banking; corporate, investment banking and markets; private banking; and other activities.

14

Business Principles And Values The HSBC corporate character defines the values

and principles inherent in all our everyday dealings.

THE HONGKONG & SHANGHAI BANKING CORPORATION LIMITED (HSBC)

15

Zone Branch Location No. of Branches

East Kolkata 7

West

Mumbai

Ahmedabad

Pune

Thane

Vadodara

Indore

Napier

10

1

2

1

1

1

5

North

New Delhi

Gurgaon

Chandigarh

Noida

Jaipur

Jodhpur

Ludhiana

1

1

1

1

1

1

2

South

Chennai

Kochi

Coimbatore

Bangalore

Hyderabad

Trivandrum

Visakhapatnam

Mysore

1

1

2

1

1

1

1

1

Total 45

Group History

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The HBSC Group has an international pedigree, which is unique. Many of its principal

companies opened for business over a century ago and they have a history, which is rich in

variety and achievement. The HSBC Group is named after its founding member, The Hong

Kong and Shanghai Banking Corporation Limited, which was established in 1865 to finance

the growing trade between China and Europe.

HSBC Group Structure

HSBC holding is a public holding company incorporated in England and Wales.

Headquartered in London, the HSBC group operates in five regions: Europe;

Hong Kong; the rest of Asia Pacific; including the Middle East and Africa; North

America; and South America.

The entities in which forms the HSBC GROUPS , provide a comprehensive

range of financial services to personal, commercial, corporate, institutional and

investment, and private banking clients. To more easily promote the Group as a

whole, HSBC was established as a uniform, international brand name in 1999. in

2002, HSBC launched a campaign to differentiate its brand from those of its

competitors by describing the unique characteristics, which distinguish HSBC,

summarized by the words ‘The world’s local bank’.

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Mission & Strategies

Mission

Leading in our chosen markets Delivering an outstanding client experience based on excellence in sales, service and

solutions Achieving a superior, ethically based, long-term return for our shareholders Building highly motivated, high-performance teams Creating a challenging, rewarding and fun work environment

Strategies

PeopleAttract, retain and reward top performers

ExecutionPerform with skill and speed

Customer-CentredAlways provide exceptional customer service

EfficiencyLower our costs and use resources wisely

Profitable GrowthGrow sales and increase our revenues

Credit QualityMaintain credit quality and understand our role in managing losses

OwnershipOwn our performance and our results

18

19

HSBC IN INDIA

The Mumbai (then Bombay) office The Head Office of HSBC Of Merchantile Bank, 1950 India, in Mumbai, 2002

20

HISTORY:

1853: The Merchant Bank of India, London & China – in Bombay

1958: The Merchantile Bank of India acquired globally by The Hongkong and Shanghai Banking Corporation

1969: 14 major private sector banks nationalized ( further 6 in 1980)

1983: The Hongkong and Shanghai Banking Corporation took over the Indian branches and business of the Merchantile Bank.

2000: Establishment of HSBC Electronic Data Processing (India) Private Limited (HDPI)

2002: Establishment of HSBC Software Development ( India ) Private Limited (GLT)

2003: 150 years of presence in India

2004: Purchase of 14.6% stake in UTI

The antecedents of the HSBC Group in India can be traced back to October 1853 when the

Mercantile Bank of India, London and China were founded in Bombay (now Mumbai). Starting

with an authorized capital of Rs. 5 million, the Mercantile Bank soon opened offices in London,

Madras (Chennai,) Colombo and Kandy, followed by Calcutta (Kolkata), Singapore, Hong

Kong, Canton (Guangchow) and Shanghai by 1855. The following hundred years where in

many ways propitious for the Mercantile Bank. In 1950 it moved into its new head office

building in Mumbai at Flora Fountain.

The acquisition in 1959 by The Hong Kong and Shanghai Banking Corporation Limited of the

Mercantile Bank was a decisive factor in laying the foundation for today's HSBC Group.

Founded in 1865 to serve the needs of the merchants of the merchants of the China coast and

finance the growing trade between China, Europe and the United States, HSBC has been an

international bank from its earliest days.

21

After the Mercantile Bank was acquired by The Hong Kong and Shanghai Banking

Corporation, the Flora Fountain building became and remains to this day, the Head Office of

the HSBC Group in India.

Through the 1990s, HSBC has vigorously developed its role as one of the leading banking and

financial services organizations in the world. Its strategy of 'managing for value' emphasizes

the Group's unique balance of business and earnings between older, mature economies and

faster-growing emerging markets.

HSBC in India is proud to have retained the Group's pioneering streak by being an active

partner in the development of the Indian banking industry-even giving Indian its first ATM way

back in 1987. The organization's adaptability, resilience and commitment to its customers have

further enabled it to service through turbulent times and prosper through good times over the

past 150 years.

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AWARDS AND RECOGNITION

1. Best Foreign Commercial Bank in India Finance Asia Awards – 2000, 2001, 2002, 2003, 2004

2. Voted as No. 1 Bank in Service Quality and Brand Facilities in the Outlook Money – Cfore Survey 2004

3. Voted “Safest Bank in India” by a Business Today – KPMG Survey – 2003, 2004

4. Best Bank in India Asset Triple A Country Award for 2003

5. Voted as Best Cash Management Bank in India Asia Money poll conducted for 2003

6. Voted as Best Sub- Custodian in India in a poll conducted by AsiaMoney for 2003,2004

7. Voted Top Rated No. 1 Sub- Custodian by Global Custodian Magazine survey 2003

8. AMIN – 4th CNBC Mutual Fund of the Year Award for 2003

9. Best performance in the open ended Diversified Equity Scheme – Defensive – HSBC Equity Fund – 2003, 2004 ( one year category), 2005 ( three year category)

10.HSBC Asset Management (India) Private Limited (AMIN) was declared the ‘India Fund House of the Year for 2004’ by Asian Investor Magazine.

23

PRODUCTS OF HSBC

At HSBC, regardless of your age, income or financial goals, we have an account to fit your

particulars need. From a basis savings account, to integrated services to meet your wealth

management objectives, we have a banking facility that suits your specifications.

Introduction

HSBC Premier

Power Vantage

Saving account

Fixed deposit

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Smart Money account

Cluster deposits

Certificate of deposit

Debit cards

Insurance

Our wide range of liability service help you better manage your money and translate into

greater convenience and flexibility. Our goal is to fulfill your requirement and offer you the best

value of money.

25

HSBC PREMIER

A premium service for you:

immediately recognized globally and given priority whenever you contact the Bank. Our range

of premium services is: HSBC Premier is one-to-one relationship banking which will

dramatically change and simplify the way you handle your finances today. Managing your

financial portfolio will be more convenient with our range of highly personalized,

comprehensive, time saving and rewarding facilities and services.

As an HSBC premier customer, you will be

Dedicated Relationship Manager: Your HSBC Premier Relationship manager will

be your single point contact with the Bank and will manage your financial portfolio

through customized solutions.

Financial Planning Services: You will have access to the services of an HSBC

Premier Relationship Manager or a Financial Planning Manager, who will provide

assistance and specialist advice on you investment portfolio and offer

recommendations on wealth creation and management.

Exclusive HSBC Premier Centers: You will have assessed to dedicate HSBC

premier Centres around the world.

Broking Services: Made available through HSBC Securities and Capital Markets

(India) Pvt. Limited.

GenNext account for children: Secure your child's future with HSBC's GenNext

account (special account for children). This zero balance Savings account offers a

range of benefits, such as Systematic Investment Plan (SIP), to secure your child's

future and also a Debit card**.

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No-bounce cheque protection which means, cheques presented through clearing,

will be honored (overdrawing of a maximum of Rs. 100,000)

High cash withdrawal limit of Rs. 100,000 per day from and HSBC/VISA ATM

worldwide.

HSBC Premier Master Card Credit Card ; An exclusive pre-approved Credit

card, with a minimum limit of Rs. 200,000, which provides access to the HSBC Group

ATMs as well as the Master Card ATMs in India and overseas.

Special HSBC Premier Debit card: Access to cash at over 10,000 HSBC and

VISA ATMs in India and over 670,000 HSBC and VISA ATMs across the world. You

can use your Debit card for purchases up to Rs. 25,000 per day at over 15,000

merchant establishments in India and over 10 million such establishments overseas.

Unlimited free transactions

(Cash withdrawals and balance enquires) at over 10,000 HSBC and VISA ATMs in

India, using your HSBC Premier Debit card.

Free cheque book with Cheques Payable at Par (CPP) in the cities where HSBC has

branches.

With Home banking you can enjoy the convenience of getting cash delivered, cheques

and Demand drafts delivered and picked up at your doorstep via special courier.

24-hour banking: Through Phone Banking and Interest banking.

As an HSBC Premier customer, you will also enjoy a host of other world-class services.

27

Eligibility

Available to both Resident and Non-resident Indian Individuals aged 18 years or

above, at a minimum average quarterly relationship balance of Rs. 25, 00,000.

Resident Indian Individuals: The relationship balance includes a combination of

deposits or investments and loans, of which a minimum of Rs. 20, 00,000 is to be held

in deposits or investments (Mutual Funds) purchased through the Bank.

Non-resident Indian Individuals: The relationship balance comprises of Rs. 25, 00,000

in deposits with the Bank.

28

POWER VANTAGE

Advantages so special, they almost seem unfair

Having a Power Vantage account entitles you to our exclusive attention and many reserved

privileges. So exclusive, in fact, they almost seem unfair.

Unlimited free transactions (cash withdrawals and balance enquiries) at over 10,000

HSBC and VISA ATMs in India, using your Power Vantage Debit card.

Dedicated Service Desk and Teller Counters to assist you with your banking needed.

Financial Planning Services to assist you in planning your future investments and

insurance needs.

GenNext account for children: Secure your child's future with HSBC's GenNext account

(special account for children). This zero balance Savings account offers a range of 29

benefits, such as Systematic Investment plan (SIP), to secure your child's future, and

also a Debit card**.

Free cheques book with cheques Payable at Par (CPP) in all cities where HSBC has

branches.

No-bounce cheque protection: Which means, cheques presented through clearing, will

be honored (overdrawing of a maximum of Rs. 10,000).

Joining fee waiver and 50% off on the annual fees of your Credit card.

Preferential processing fees on Home loans and Personal loans.

Higher cash withdrawal limit of Rs. 50,000 and funds transfer up to Rs. 100,000 per

day with your Power Vantage Debit card, in India or overseas.

HSBC Power Vantage Debit card: use your Debit Card for purchases of up to Rs.

15,000 per day at over 15,000 per day at over 15,000 merchant establishments in India

and over 10 million such establishments overseas.

24-hour banking access through Phone banking and internet banking.

Routine payments such as rent and school fees, etc., made on your behalf.

With home banking you can enjoy the convenience of getting cash delivered, cheques

and Demand drafts delivered and picked up at your doorstep at nominal rates.

Monthly composite statement which gives you a snapshot of all deposits, loans and

investments.

30

ELIGIBILITY

Resident Indian Individuals aged 18 years or above.

Maintain an overall average quarterly balance of Rs. 100,000 as a combination of

deposits and loans Home loan from HSBC or hold a minimum investment of Rs.

500,000 purchased through HSBC.

31

Convenience Banking

Maintain a minimum average quarterly balance of Rs. 25,000.

Withdraw cash up to Rs. 25,000 per day with your Debit card from over 10,000 HSBC

or VISA ATMs in India and over 670,000 such ATM's overseas.

You can use your debit card for purchases up to Rs. 10,000 per day at over 15,000

merchant establishments in India and 10 million such establishments overseas.

You have full access to funds in your accounts from the HSBC branch in the city where

you maintain your account. You can withdraw up to Rs. 10,000 per day from any HSBC

branch in the cities other than those where you maintain your account (s).

Earn interest on your Savings account on a quarterly basis.

Free quarterly account statement. Higher frequency of statement at a nominal charge.

Free personalized cheque book.

With 24-hour Phone banking, you can make balance enquires, transfer funds, request

a cheque book or statement and much more, with just one phone call.

With Internet banking, you can access your account from anywhere in the world. Check

your balance, transfer money and do much more, all with the click of the mouse.

With Home banking, you can enjoy the convenience of getting cash delivered, cheques

and Demand drafts delivered and picked up at your doorstep at nominal rate.

Avail of a joining fee waiver on HSBC Credit cards.

32

In addition, routine payments such as rent and school fees, etc., are made on you

behalf*.

Eligibility

Resident Indian Individuals

Should maintain an overall average quarterly balance of Rs. 25,000 to ensure a secure

future.

33

FIXED DEPOSIT

Minimum amount to open a fixed deposit is Rs. 10,000.

Customer convenience and flexibility due to a range of maturities offering completive

interest rates.

Minimum tenure is 15 days and the maximum tenure is 5 years.

Two types of Fixed deposits:

a. Ordinary: where is interest is transferred to your savings/current account on a

quarterly basis.

b. Cumulative: Wherein your interest is added to your principal quarter. You earn

interest on interest. On maturity, the entire amount is given to you by transferring

it to your Saving Account or by Demand draft.

High returns with security for funds.

24-hour Phone banking services.

Option to avail of the SmartMoney account facility.

Eligibility

Resident Indian individuals, HUF, Proprietorships, Limited Companies, Trusts,

Partnership, Societies/Clubs/Associations.

Minimum Deposits of Rs. 10,000.

34

Flexible fixed accounts

Flexibility of Savings Accounts with the interest of a fixed deposit. Your SmartMoney account is

a two-in-one account with an overdraft facility against your fixed deposit. You can withdraw

90% of the fixed deposit linked to the Savings/Current account, without breaking your fixed

deposits. You are charged interest on the amount that you withdraw and only for the time you

utilize the overdraft.

Overdraft Limit Interest rate

Overdraft of less than or equal to Rs. 200,000 2% over the deposit interest rate

Overdraft limit of over Rs. 200,000 Bank's prime lending rate

Example: When you deposit Rs. 25,000 in your SmartMoney account for one year and

withdraw Rs. 5000 on the day on which you open your account, here in what you gain within a

year.

Deposit Amount

withdrawn

SmartMoney

account

earnings p.a.

@ 5%

Interest

charged on

withdrawals

p.a. @ 7%

Your gain

Rs. 25,000 Rs. 5,000 Rs. 1,250 Rs. 350 Rs. 900

Minimum deposit of Rs. 25,000#.

Get high returns and a free Savings or current account.

Access to your funds any times through our ATMs, Phone banking", Internet banking or

your cheque book.

35

Access to cash from over 10,000 HSBC or VISA ATMs in India and 670,000 such

ATMs overseas, through your Debit card. You can make purchases from over 15,000

merchant establishments in India and 10 million such establishments overseas.

Free standing instructions.

Free quarterly account statement.

Eligibility

Resident Indian Individuals, Partnership firms, Sole proprietorship and HUF.

36

CLUSTER DEPOSITS

Enjoy liquidity plus high returns

HSBC's cluster deposit lets you enjoy the best of both worlds. Not only does your money earn

interest at a fixed deposit rate, but you also get the liquidity of a Savings/Current account.

When you open an HSBC cluster deposit, your money is held in clusters of Fixed deposits.

When you withdraw money or issue a cheque, only the required number of clusters are

encased to cover the withdrawal. The balance continues to earn Fixed deposit interest.

Freedom to issue cheques without locking your funds. Even if there is inadequate

balance in your Savings/Current account, your cheque will be honoured as long as you

have sufficient funds as Cluster Fixed deposit(s), by automatically transferring funds

from your Cluster Fixed deposit(s) to your savings/current account.

Access to your funds through Cheque book, Debit card, Internet banking or Phone

banking.

Eligibility

Resident Indian Individuals aged 18 years or above.

Maintain a minimum of Rs. 25,000 in your Cluster Fixed deposit (s) and open a

Savings/Current account in case you do not already have such an account.

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CERTIFICATE OF DEPOSIT

Earn interest in advance

The certificate of deposit (CD) facility works just like a fixed deposit, but has the additional

features of (a) being negotiable, and (b) issued in dematerialized form. They are issued at a

discount to face value.

The minimum lot for a Certificate of deposit is Rs. 100,000 and multiples thereof. All

Certificates of deposit are now issue in demat form except for NRIs, where they are issued in

physical form.

Tenure - A Certificate of deposit is issued for a period not less than 15 days and not

exceeding 1 year from the date of issue.

Transfer Mechanism - Certificates of deposit held in a physical form are freely transferable by

endorsement and delivery. Those in demat form can be transferred as per the procedure

applicable to other demat securities.

Eligibility

Resident Indian Individuals, HUF, Proprietorships, Private Limited Companies, Trusts,

Partnerships, Societies/Clubs/Associations.

Non-resident Indians (NRIs) may also subscribe to CDs on a non-repatriable basis only.

The Debit card represents that future of money and gives you unlimited access to your

Savings/Current accounts with HSBC.

Access up to 3 deposit accounts on Debit card from over 10,000 HSBC or VISA ATMs

in India and from over 670,000 such ATMs across the world.

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Purchase capability at 15,000 merchant establishments in India and at 10 million such

establishments overseas.

Unlimited FREE ATM transactions at non-HSBC VISA ATMs (HSBC Premier and

Power Vantage customers only).

Two FREE ATM transactions per month at other bank VISA ATMs (Debit Card Plus

cardholders only).

Fee quarterly itemized statement of account (monthly for HSBC Premier and Power

Vantage customers).

Zero Last Card Liability Insurance.

Eligibility

Resident or non-resident (External), Individual or joint, "Anyone or Survivor"

Savings/Current accountholders only.

BUSINESS BANKING

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Keeping in mind varying needs, HSBC has designed different packages for the customers.

BUSINESS VANTAGE

Drafts - Free drafts payable at any HSBC branch in India

Business Phone Banking - Access to bank accont, 24 hours a day, 7 days a week at

convenience, without actually stepping into bank. A state–of–art service that is secure

and easy-to-use.

Internet Banking for Businesses - It allows you to carry out your banking transactions

anywhere in the world, anytime of the day. With the click of a button you can check your

accounts, make transfers, pay your regular bills (mobile, electricity etc.) request for a

draft, make routine account enquires and much more.

Cheques Payable at par - Enjoy the benefits of issuing cheques for payment in any city

where HSBC has a branch.

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Business Doorstep Banking - Why rush to the bank when cash, cheques and drafts

can be picked up from or delivered to your office?

24-hour Cheque Deposit Facility - Deposit cheques, credit card payments and

instructions in HSBC deposit boxes, at any of their conveniently located ATMs.

ATM card - Customers can withdraw up to Rs.1 lakh per day from their Business

Vantage account and access their account 24 hours a day, through a wide network of

over 150 HSBC ATMs in India.

Telegraphic Transfers - Transfer funds between accounts held with any HSBC branch

across the country, free of charge. Telegraphic transfers to other banks in cities in India

where HSBC has a branch can be done at a nominal rate.

Auto sweep - Customers can transfer excess of their cash to a fixed deposit, it can be

done at no cost.

Standing Instructions - Customers can make recurring payments, by issuing standing

instructions to have fixed amounts paid to pre-defined parties, at absolutely no cost!

Personalized Cheques - Book as a Business Vantage customer you will have the

benefit of a free personalized cheque book.

Multi-Branch Banking Customer can operate his account from any branch in his city

and conduct certain transactions at any of HSBC branches across the country.

No Bounce Cheque Protection - HSBC offers it’s customers a ‘no bounce ‘limit of up

to Rs.1 lakh on cheques issued from the customer’s Business Vantage account.

Cluster Deposit - A Cluster Deposit Account for businesses gives its customers

interest earned at Term deposit rates and the liquidity of a Current / Savings

Account .To avail of this facility, just ensure a minimum combined average quarterly

balance of Rs.3 lakhs. This includes the minimum balance of the customer’s Current / 41

Savings Account, plus his fixed deposits. The minimum fixed deposit that can be linked

to his Current / Savings account is Rs.25, 000.

Rapid Cheque Clearance - Cheques drawn on over 85 locations are credited to the

customer’s account within 7 working days. HSBC also provide rapid collection of

cheques drawn on a further 1,000 locations through the bank’s correspondent banking

arrangements.

Monthly Statement - HSBC keeps a track of the customer’s finances with a monthly

statement. Use the internet for frequent updates.

Saving Account for Employees - It has simplify salary account payments by using ‘

‘Autopay ‘ to directly credit salaries to the employees’ accounts.

Trade Services - HSBC offers its local expertise and global reach in handling

customer’s trade business, including the complete range of services that would facilitate

the customer in his export and import. These include DC Confirmation, Export Bill

Negotiation, Documentary Collections and Remittances.

Credit cards - It enjoys worldwide acceptance and special features like enhanced

insurance benefits, travel benefits at special rates, Bonus Rewards Programme, global

ATM service and up to 48 days of interest free credit with the credit card from HSBC.

The detailed billing system will help the customer to keep track of his expenditure.

Joining fee shall be waived for Business Banking customers.

Mutual Fund Services - Invest in a pre-selected group of mutual funds, for which

HSBC provides account opening assistance, information on fund performance and after

sales service.

Insurance - Business Vantage in association with reputed insurance providers insures

the customer’s business against

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1. Fire

2. Money-in-safe

3. Public liability

Depository Services - Enjoy the convenience of keeping your shares in electronic

form.

BUSINESS ACCOUNT

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HSBC also has a Business Account which offers a wide range of products and services. As a

Business Account customer all that is required is to maintain an average quarterly current

account balance of Rs.25, 000

BUSINESS SELECT

Designed for dynamic and growing business, Business Select offers a host of exclusive

privileges and services that help the customers to manage their business, time and cash flows

more efficiently. As a Business Select customer the person is entitled to special relationship

banking facilities including a Relationship Manager.

OTHER PRODUCTS OF HSBC44

LOCKER

At HSBC, special care is taken to keep the valuables of the customers safely, so that they also

can have peace of mind. For this various sizes of lockers are available to suit the requirements

of the customer at different charges.

Canara HSBC Oriental Bank of Commerce Life Insurance Company Limited 

Introduces the Canara HSBC Life Unit Linked Whole Life Plan, a unique investment linked plan which not only ensures protection and investment returns but also covers you till age 99 years. The Plan allows you the flexibility of choice on amount of cover and flexibility of investing in fund options matching your risk profile and needs as well as Limited Pay Options to suit your financial capabilities. 

HSBC Investments

HSBC investment is the investment manager to HSBC mutual fund, launched in November

2002, HSC mutual fund help client assets of Rs. 7,569 crores as on 31 may, 2005 since its

inception, HSBC Mutual Fund has been one of the fastest growing mutual funds in the country.

Strengths of HSBC investments:

1. Reputation & financial strength with a global outlook.

2. Focused investment expertise for industry, sector & stock selection decisions.

3. Strong & consistent investment performance.

4. Risk control to enhance safety of investments

5. Client service commitment

6. Transparency using technology & the full range of media

Types of funds from HSBC:

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HSBC Equity fund

HSBC India opportunities fund

HSBC Midcap equity fund

HSBC Income fund

HSBC Monthly income plan

HSBC Gilt fund

HSBC Floating rate fund

HSBC Cash fund

Systematic Investment Plan (SIP)

A systematic investment plan is an investment vehicle that allows the customer to invest

amounts of money at regular intervals of time (monthly or quarterly) in a mutual fund scheme

for a continuous pre- defined period: just like a recurring deposit account with a bank or a post

office

HSBC SIP allows the investor to invest a fixed amount every month or quarter for purchasing

units of schemes at prevailing NAV based prices. Sip can be activated by giving post-dated

cheques for the duration of the sip of by using an auto debit facility where a fixed amount is

debited from your bank account on a monthly/quarterly basis.

Advantages:

1. Inculcates a disciplined investment approach that builds a saving habit.

2. Allows rupee cost averaging, which takes advantage of market volatility.

3. Prevents sentiment-driven investments

4. Allows investment in small amount.

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WEALTH MANAGEMENT

What is Wealth Management?

Wealth derives from the old English word “weal”, which meant “well-being” or “welfare”. “Wealth has come to mean an abundance of economic value, or the state of controlling or processing such items, and encompasses money, real estate and personal property.”

The term” Wealth Management” has been defined as the coordination of a client’s investment, tax and estate plans into a comprehensive plan to achieve their personal goals. What distinguishes their services from other type of financial advisors; emphasize the uniqueness of their client relationships- relationships that are broad in terms of encompassing all areas of a client’s financial life and deep with respect to the advisor’s intimate knowledge of a client’s values and priorities.

Wealth Management is the synthesis of a diverse range of financial services that affluent investors their families may require. Definition of Wealth Management, given by various wealth managers are as follows:-

“Wealth Management is a comprehensive and cohesive system aimed at accumulating and growing assets, preserving and protecting assets and transitioning assets.”

Wealth Management is the ability to engage in all aspects of our client’s financial situations.”

“Wealth Management is the ability to help people create, implement and monitor life plans.”

Wealth Management is the most discussed service in retail financial services today. The service epitomizes the concept of providing a customer-centric approach to the provision of financial services. The ultimate goal of wealth management is to build long-term relationships with clients by helping them reach their goals over the course of their lifetimes.

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Affluent individuals often need sophisticated advice and strategic guidance to capitalize on the opportunities to preserve, grow and transfer their wealth. In addition, a desire exists within wealthy families to simplify the management of multigenerational meets and lessen the profound emotional impact of wealth on family members.

Today’s wealth management technology is largely focused on the financial advisor. The race among firms offering wealth management services is to attain the status of trusted advisor, who acts as the client’s primary advisor and coordinates the activities of other advisor, with whom the client may also have a relationship. According to David Beatty, “Wealth managers don’t have to do everything themselves- but they do make sure everything gets done.”

Financial Advisor can provide comprehensive, integrated wealth management strategies to address your wealth management needs like:-

1. Planning Leaving a legacy Directing assets Optimizing philanthropic aspirations Disposition of unique assets Family business succession Minimizing tax impact

2. Risk management Preserving capital “Monetize” concentrated positions Diversify exposure to concentrated positions Defer tax implications of a sale Protecting assets

3. Advisory Services Managing an art collection Curatorial services Family governance and education

4. Lending Gaining liquidity Financing business needs Asset acquisition or financing Managing concentrated holding.

5. Asset Management Gross asset allocation Growth of capital Tax sensitive asset management

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Alternative investments Private equity

Highlights of Wealth Management:-

a) The wealth management industry is growing very rapidly- Wealth management as an organized industry is growing in terms of both the number of players as well as the number of high net worth individuals in India. Wealth managers are aggressively marketing their services to existing and potential high net worth clients. With the number of clients growing, wealth manager are ramping up their capabilities to manage growing volumes of assets.

b) Clients are becoming increasingly sophisticated-Wealth managers in India believe that high net worth clients are becoming more sophisticated in their understanding and demands of wealth providers, products and services. Many need a Relationship Manager to proactively assist them in managing their wealth. Wealth managers need to ensure that they are equipped with specialist skills and experienced staff to handle sophisticated client needs.

c) There is a shortage of skilled and experienced wealth management advisors- The demand for trained and talented wealth management professionals is increasing as the industry continues to experience growth. Relationship managers are required to have a sound knowledge of a wide range of products and services across asset classes being offered to high net worth clients.

d) Most wealth managers have adopted an open product architecture- Most wealth managers are moving beyond in- house products and are distributing products and services sourced from other providers e.g. third party mutual funds, fixed income products etc. Wealth managers are focusing on their core competencies and outsourcing products and services to complement their in-house offerings e.g. real estate, art advisory, taxation advisory etc.

e) Most wealth managers aim to be ‘trusted advisors’ to their clients-Open product architecture enables wealth managers to offer their services as a ‘trusted advisor’ to clients and offer unbiased wealth management services. A trusted advisor is capable of offering a comprehensive range of in-house and third party products and services and provision of proactive and objective advice based on in-depth financial planning. In terms of their strategic orientation, most wealth managers that participated in the survey believed that they were already their clients’ trusted advisors or would be within the next three years. Most wealth managers focusing on the ultra high net worth segment are pursuing a competitive strategy based on differentiation. Other

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wealth managers focusing on the mass affluent segment are pursuing a cost leadership strategy.

f) There is relatively low usage of technology tools by wealth managers-IBM Business Consulting Services believes that technology plays a very important role enabling the Relationship Manager to provide effective services to the customer. There is a need for system, which provides a single view of the customer’s entire wealth portfolio with the wealth provider. While most players provide a consolidated view through a combination of automated and spreadsheet applications, there are significant variations in their ability to provide online, real-time access. Additionally, as the mass affluent segment continues to grow in India, there is need for online financial planning tools to assist this segment of clients, eager to be in control of their portfolio and active in selecting and| or validating their selection of products in line with their asset allocation strategy.

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INSTRUMENTS UNDER WEALTH MANAGEMENT

Tax Planning ELSS Insurance

Investment Planning.

Mutual Funds

Pure Equity Real Estate

Commodities

Time Deposits

Fixed income securities( Government Bonds/Securities)

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TAX PLANNING

Tax planning is not a device to reduce tax burden. In fact, it help savings by investments in government securities. Savings reduces extravagance and corresponding inflation. Tax savings are permitted only for investment made in government securities and bonds of priority sectors which ultimately help the nation. Therefore, the savings in tax help the central and state governments to mobilize funds by investments and as such the government earns much by the way of other benefits, by sacrificing small amount of tax.

Savings and investment are interconnected. Before making investments the person has to consider various factors such as:

Liquidity – when he requires the amount to meet the educational expenses of children, for marriage, house construction or for a secure future after retirement.

Security of the investment. The return and tax on income on such investments.

Equity Linked Saving Scheme (ELSS):-

Equity linked saving schemes is savings schemes. These are mutual funds with tax benefits. These are mirror image of diversified equity funds. That means the fund manager will invest in shares of various companies across various industries.

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Advantages of investing in ELSS:-s There is the added tax benefit which a normal diversified equity fund will not have. ELSS funds have a lock-in period of three years, which prevents unnecessary

withdrawals and helps in growing the money over a period of time. When we invest in equity, there is a need to take a long-term view. The real potential starts to show only after a few years.

The returns are good in investing in ELSS. The earned dividends will be tax free. It is structured like open-ended equity funds. So investor can invest at any time of

the year.

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INSURANCE:-

Insurance is a form of contract whereby periodic payments (also known as insurance premiums) are made to an insurance company, in order to provide an individual or business compensation in the event of property loss or damage.

The type and amount of insurance an individual requires depends on age, assets, income and needs. Insurance is basically a way of replacing income.

Risks covered by insurance are:

1. Personal risks: are the uncertainties surrounding loss of income or life due to premature death, illness, disability, old age and unemployment.

2. Property risks: are possibilities of direct indirect losses to personal or real properties due to fire, windstorms, other natural disasters, accidents, theft, other and other hazards.

3. Liability risks: are possible losses due to actions that results in bodily harm or property damage to others. The harm or damage could be caused by something owned, like a car or a pet or a injury someone suffers on a property or the effects of professional misconduct, among other causes.

All these types of pure risk which are insurable, because there is a chance of loss only if specified events occur.

Pure risks are accidental and intentional risks for which the nature and financial cost of the loss can be predicted.

A Speculative risk is a risk in which there is a chance of either loss or gain. Starting a small business that may or may not succeed is an example of speculative risk. So is a gambling. Speculative risks are not legally insurable.

Types of insurance covers:

1. Life insurance: substitutes for income lost at the death of the wage earner.2. Disability insurance: assures a continued stream of income when isn’t able

to work fulltime.3. Health insurance covers all medical bills.4. Property /causality policies pay for losses caused by theft, fire and accident.5. General insurance: assures the full policy cover based only on the diagnosis

of your illness subject to policy terms and conditions.Life insurance:- is one the most valuable aids to financial planning. The money dependents receive is a important financial resource.

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There are four basic classes of life insurance contracts:-

1. Term insurance:- Term insurance is death protection for a specified period of time. It has no cash value or savings element and pays out only if the insured dies during the period covered by the policy. This is the cheapest form of life insurance because it provides the most coverage for the least money. Thus it can be seen that term insurance is nothing but the cost of pure protection.

2. Whole Life Insurance:- whole life insurance provides insurance coverage throughout the insured’s lifetime. Premium paid can be either for a fixed term for lifelong. Two primary characteristics distinguish permanent life insurance plans from term life insurance plans:

Whole life policies offer lifetime coverage. Whole life policies contain a savings element.

3. Pure Endowment Insurance:- it provides a specified benefit amount whether the insured lives to the end of the term of coverage or dies during that term. Each endowment policy specifies a maturity date, which is the date on which the insurer will the policy’s face amount / (sum assured), to the policy owner if the insured is still living. The maturity date is reached either at the end of a stated term or when the insured reaches a specified age.

4. Annuities: - It starts where life insurance ends. It is called the ‘reverse’ of life insurance. In general terms annuity is a series of periodic payments. In annuity contract, a person agrees to pay to the insurer a specified capital sum either a single premium or a series of premiums, in return for a promise from the insurer to make a series of payments to him so long as he lives. The insurer pools the money it has received from a large group of policyholders and it invests those pooled funds. The insurer uses the pooled funds and investment earnings on those funds to make periodic annuity benefits as they come due

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Types of insurance companies:

Insurance companies may be classified as: Life insurance companies, who sell life insurance, annuities and pensions

products. Non- life or general insurance companies, who sell other types of insurance.

How an insurance company makes money:

Profit=earned premium + Investment income – incurred loss - underwriting expenses.

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INVESTMENT PLANNING

DEFINITION OF INVESTMENT

Investment refers to a commitment of funds to one or more assets that will be held over some future time period. Almost all individuals have wealth of some kind, ranging from the value of their services in the workplace to tangible assets to monetary assets. Anything not consumed today and saved for future use can be considered an investment.

REASON FOR INVESTMENT

We invest to improve our future welfare. Funds to be invested come from asset already owned, borrowed money, and savings or foregone consumption. By forgoing consumption today and investing the savings, we accept to enhance our future consumption possibilities .Anticipated future consumption may be by other family member, such as education funds for children or by our self, possibly in retirement when we are less able to work and produce for our daily needs. Regardless of why we invest we should all seek to manage our wealth effectively, obtaining the most from it. This includes protecting our asset from inflation, taxes and other factors.

METHOD OF INVESTMENT

If we are making investment decisions today that will directly affect our future wealth, it would make sense that we utilize a plan to help and guide our decision. Surprisingly, the majority of people do not have in place any type of formalized investment plan. Taking some time to put together a financial plan can reap tremendous benefits .First, let’s define planning.Financial planning is the process of meeting your life goals through the proper management of yours finances. Life goals can include buying a home, saving for your child’s education or planning for retirement.Financial planning provides direction and meaning to your financial decisions. It allows you to understand how each financial decision you make affects other area of your finances. For

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example, buying a particular investment product might help you to pay off your mortgage faster or it might delay your retirement significantly. By viewing each financial decision as part of a whole, you can consider its short and long -term effects on your life goals. You can also adapt more easily to life changes and feel more secure that your goals are on track.

PROCESS OF INVESTMENT PLANNING

These six steps are:1. Establishing and defining the client-planner relationship.2. Gathering client data, including goals.3. Analyzing and evaluating your financial status.4. Developing and presenting financial planning recommendations or alternatives.5. Implementing the financial planning recommendations.6. Monitoring the financial planning recommendations.

COMMON MISTAKES

1. Don’t set measurable financial goals.2. Make a financial decision without understanding its effect on other financial issues.3. Confuse financial planning with investing.4. Neglect to re-evaluate their financial plan periodically.5. Think that financial planning is only for the wealthy.6. Think that financial planning is for when they get older.7. Think that financial planning is the same as retirement planning.8. Wait until a money crisis to begin financial planning.9. Expect unrealistic returns on investment.10.Think that using a financial planner means losing control.11.Believe that financial planning is primarily tax planning.

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MUTUAL FUNDS

What is Mutual Fund?

A mutual fund is a trust that pools the savings of a number of investors who shares a common financial goal. These investors buy units of a particular Mutual Fund scheme that has a defined investment objective and strategy. The money thus collected is then invested by the fund manager in different types of securities. These could range from shares to debentures to money market instruments, depending upon the scheme’s stated objectives. The income earned through these investments and the capital appreciation realized by the scheme is shared by its unit holders in proportion to the number of units owned by them. Thus the mutual fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost.

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Classification-Mutual fund schemes may be classified on the basis of their structure and its investment objective.

BY STRUCTURE Open-ended FundsAn Open-ended Fund is one that is available for subscription all through the year. These do not have a fixed maturity. Investors can conveniently buy and sell units at Net Asset Value (NAV) related prices.

Close-ended Funds A Close-ended Fund has a stipulated maturity period, which generally ranges from 3 to 15 years. The fund is open for subscription only during a specified period. Investors can invest in the scheme at the time of the initial public issue and thereafter they can buy or sell the units of the scheme on the Stock Exchanges, if they are listed. The market price at the stock exchange could vary from the scheme’s NAV on account of demand and supply situation, unit holders’ expectations and other market factors.

BY INVESTMENT OBJECTIVE

Growth FundsThe aim of growth funds is to provide capital appreciation over the medium to long term. Such schemes normally invest a majority of their corpus in equities. Growth schemes are ideal for investors who have a long-term outlook and are seeking growth over a period of time.

Income FundsThe aim of Income Funds is to provide regular and steady income to investors. Such schemes generally invest in fixed income securities such as bonds, corporate debentures and Government securities.Income funds are ideal for capital stability and regular income. Capital appreciation in such funds may be limited, though risk is typically lower than that in growth fund.

Balanced fundsThe aim of balanced funds is to provide both growth and regular income. Such schemes periodically distribute a part of their earning and invest both in equities and fixed income securities in the proportion indicated in their offer documents. This proportion affects the risks and the returns associated with the balance fund –in case equities are allocated a higher proportion, investors would be exposed to risks similar to that of equity market.

Balanced funds with equal allocation to equities and fixed income securities are ideal for investors looking for a combination of income and moderate growth.

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Money market FundsThe aim of Money Market Funds is to provide easy liquidity, preservation of capital and moderate income. These schemes generally invest in safer short-term instruments such as Treasury Bills, Certificates of Deposits, Commercial Paper and Inter Bank Call Money. Returns on these schemes may fluctuate depending upon the interest rates prevailing in the market.

These are ideal for corporate and individual investors as a means to park their surplus funds for short periods.

OTHER SCHEMES

Tax Saving SchemesThese schemes offer tax rebates to the investors under specific provisions of the Indian Income Tax laws as the Government offers tax incentives for investment in specified avenues. Investments made in equity linked savings schemes (ELSS) and Pension Schemes are allowed as deduction u/s 88 of the Income Tax Act, 1961. The Act also provides opportunities to investors to save capital gains u/s 54EA and 54EB by investing in Mutual Funds.

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HOW A MUTUAL FUND WORKS

YOUR MONEY

ADVANTAGE OF MUTUAL FUNDS:

Diversification – Each mutual fund is composed of a portfolio of many individual securities, i.e. you do not have all your eggs in one basket. This helps reduce the impact of any underperformed security in the portfolio.

Liquidity - Most mutual funds can be purchased or redeemed on short notice.

Professional management - The assets of a mutual fund are managed by a professional money manager who has the experience to make sound investment decisions on the investor’s behalf.

Opportunities - Mutual funds make it possible for an investor to participate in a wide array of investments, which individually were inaccessible.

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Joins a huge pool of money invested by other shareholders.

Is managed by professionals.

Fund earning and gains are distributed to shareholders or reinvested.

They purchase a diversified portfolio of securities for the fund.

DISADVANTAGES OF MUTUAL FUNDS

No mutual fund can promise a guaranteed rate of return like GICs. The value of mutual funds may rise or decline. For this reason, mutual funds should be

considered longer term investments.

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PURE EQUITY

PURE EQUITY INVESTMENTS:

Unlike fixed-income securities represent an ownership interest in a corporation. These securities provide a residual claim- after payment of all obligations to fixed/income claims- on the income and assets of a corporation. There are two forms of equities, preferred stock and common stock. Investors are primarily interested in common stocks.

i. Common stock

Common stock represents the ownership interest of corporations, or the equity of corporations, or the equity of the stockholders, and we can use the term equity securities interchangeably. Most companies choose to “go public;” that is, they sell common stock to the general public. This action is taken primarily to enable the company to raise additional capital more easily. If a corporation meets certain requirements. It may, if it chooses to, be listed on one or more exchanges. Otherwise, it will be listed in the over- counter market. As owners, the holders of common stock are entitled to elect the directors of the corporation and vote on major issues. Each owner is usually allowed to cast votes equal the number of shares owned for each director being elected. Such votes occur at the annual meeting of the corporation, which each shareholder is allowed to attend.

Stockholders also have limited liability, meaning that they cannot lose more than their investment in the corporation. In the event of financial difficulties, creditors have recourse only to the assets of the corporation, leaving the stockholders protected. This is perhaps the greatest advantage of the corporation and the reason why it has been so successful.

The par value (stated or face value) for a common stock, unlike a bond or preferred stock, is generally not a significant economic variable. Corporations can make the par value any number they choose.

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The book value of a corporation is the accounting value of the equity as shown as on the books (that is balance sheet).Although book value per share plays a role in making investments decisions, market value per share is the critical item of interest to investors.

The market value (i.e. price) of the equity is the variable of concern to investors. The market value of one share of stock, of course, is simply the observed current market price.

Dividends are the only cash payments regularly made by corporations to their stockholders. They are decided upon the declared by the directors and can range from zero to virtually any amount the corporation can afford to pay (typically, up to 100 percent and past net earnings).

ii. Preferred stock

Although technically an equity security, preferred stock is known as a hybrid security because it resembles both equity and fixed-income instruments. As an equity security, preferred stock has an indefinite life and pays dividends. Preferred stock resembles fixed-income securities in that the dividend is fixed in amount and known in advance, providing a stream of income very similar to that of a bond.

Preferred stockholders are paid after the bondholders but before the common stockholders in terms of priority of income and in case the corporation is liquidated. If the issuer fails to pay the dividend in any year, the unpaid dividend(s) will have to be paid in the future before common stock dividends can be paid if the issue is cumulative.(If non-cumulative, dividends in arrears do not have to be paid.)

More than one-third of the preferred stock sold in recent years is convertible into common stock at the owner’s option.

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iii. Derivatives

There are two types of derivatives securities that are of interest to most investors. Options and futures contracts are derivative securities, so named because their value is derived from their connected underlying security. Numerous types of options and futures are traded in world markets.

Options and futures contracts have important differences in their trading, the assets they can affect, and their risk factor, so forth. Perhaps the biggest difference to note now is that a futures contract is an obligation to buy or sell, but an options contract is only the right to do so, as opposed to an obligation.

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REAL ESTATE

Real estate has historically been useful in a portfolio for both income and capital gains. Home ownership, in itself, is a form of equity investment, as is the ownership of a second or vacation home, since these properties generally appreciate in value. Other types of real estate, such as residential and commercial rental properties, can create income streams as well as potential long-term capital gains.

Real estate investments can be made directly, with a purchase in your own name or through investments in limited partnerships, mutual funds, or Real Estate Investment Trusts (REIT).

Also, there are many kinds of real estate investments. Some are very speculative while others are more conservative. The major classification is:

Unimproved Land. Improved Real Estate. New and used residential property. Vacation homes. Low income housing. Certified historic rehab structures. Other income-producing real estate such as office buildings, shopping centers and

industrial or commercial properties.

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COMMODITY

In the world of business, a commodity is an undifferentiated product whose value arises from the owner’s right to sell rather than the right to use. Example: commodities from the financial world include oil (sold by the barrel), electricity (most users of electric power are only concerned with overall energy consumption; only a minority of users are concerned with the quality and technical details of voltage and frequency deviations, phase imbalance, etc.)Wheat, bulk chemicals such as sulfuric acid, base and other metals, and even pork-bellies and orange juice. More modern commodities include bandwidth, RAM chips and (experimentally) computer processor cycles, and negative commodity units like emissions credits.

Commodity markets:- These are markets where raw or primary products are exchanged. These raw commodities are traded on regulated commodities exchanges, in which they are bought and sold in standardized Contracts.

Commodities exchange:-Commodities exchange is an exchange where various commodities and derivatives products are traded. Most commodity markets across the world trade in agricultural products and other raw materials (like wheat, barley, sugar, maize, cotton, cocoa, coffee, milk products, pork bellies oil, metals, etc.) and contracts based on them. These contracts can include spots, forwards, futures, options on futures. Other sophisticated products may include interest rates, environmental instruments, swaps, or ocean freight contracts.

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FIXED OR TIME DEPOSITS

Time deposits are deposits accepted by the banks for a specified period of time. In terms of RBI directives the minimum period for which term deposits can be accepted is 15 days. The banks generally do not accept deposits for periods longer than 10 yrs.

Banks pay interest on term deposits based on the period of deposits and normally pay higher interest for a longer term deposits. Banks have full discretion to fix their interest rates on term deposits and these rates are varied from time to time depending on market conditions. Changes made in interest rates from time to time do not alter the interest paid on the existing deposits. When banks quote a certain percentage of interest per annum for a given period it is understood that interest payment are made on a quarterly basis. The depositor can collect interest on every quarter or its discounted value at monthly rests or avail quarterly compounding benefits and received principle and interest on maturity. RBI has now permitted banks to quote a higher rate of interest individual deposits more than Rs.15, 00,000. Banks are allowed to levy a penalty for premature encashment of deposit at their discretion. Banks generally pay interest on such deposits as applicable for the period which deposit has been kept with the bank (fewer penalties if levied). Bank allows loans against the fixed deposits on demand. Margin retained over the deposit outstanding interest charged thereon is decided by the bank and may vary from bank to bank.

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OTHER INVESTMENT VEHICLES

DEBT INVESTMENT

1. Certificate of deposit and cash equivalentsCommercial banks and institutions offer the variety of saving certificates known as certificate of deposits (CDs). These certificates are available for various maturities, with higher rates offered as maturity increases. (Larger deposits may also command higher rates, holding maturity constant.)Money markets:It include short-term highly liquid, relatively low-risk debt instruments sold by government, financial institutions, and corporations to investors with temporarily excess funds to invest. This market is dominated by financial institutions, particularly banks, and governments. The size of the transactions in the money market typically is large.Important Money Market SecuritiesTreasury bills: The premier money instrument, a fully guaranteed, and very liquid. They are sold on an auction basis every week at a discount from face value therefore, the discount determines the yield. The greater the discount at time of purchase, the higher the return earned by investors.

2. Negotiable certificates of deposit (CD) - The CD is a marketable deposit liability of the issuer, who usually stands ready to sell new CDs on demand. The deposit is maintained in the bank until maturity, at which time the holder receives the deposit plus interest. However, these CDs are negotiable, meaning that they can be sold in the open market before maturity.Commercial paper- A short-term, unsecured promissory note issued by large, well-known and financially strong corporations (including finance companies) Commercial paper is usually sold at a discount either directly by the issuer or indirectly through a dealer, with rates comparable to CDs. Although a secondary market exist for commercial paper, it is weak and most of it is held to maturity.

EURO DOLLARS:-Dollar denominated deposit held in foreign banks or in offices of US bank allocated abroad. Although this market originally developed in Europe, dollar denominated deposits can now be made in many countries, such as those of Asia. Euro dollar deposits consist of both time deposit and CDs, with the latter constituting the largest component of the Euro dollar market.

Repurchase agreements (RPs) - An agreement between a borrower and a lender (typically institution) to sell and repurchase the government securities. The borrower initiates and RPs by contracting to sell securities to a lender and agreeing to repurchase these securities at a pre-specified price on a stated date.

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3. Bonds:

Bonds can be simply as long-term debt instruments representing the issuer’s contractual obligations. The buyer of a newly issued coupon bond is lending money to the issuer who, in turn, agrees to pay interest on this loan and repay the principal at a stated maturity date. Bonds are fixed-income securities because the interest payments (if any) and the principal repayment for a typical bond are specified at the time the bond is issued and fixed for the life of the bond.

A. Zero coupon bonds:

The most radical innovation is format of traditional bonds is the zero coupon bond, which is issued with no coupons, or interest, to be paid during the life of the bond.

B. Corporate bonds:

Corporate bonds are senior securities. That is, they are senior to any preferred stock and to the common stock of a corporation in terms of priority of payments and in case of bankruptcy and liquidation. However, within the bond of category itself there are various degrees of securities. The most common type of unsecured bond is the debenture, a bond backed only by the issuer’s overall financial soundness. Debentures can be subordinated, resulting in a claim on income that stands belos (subordinate to) the claim of the other debentures.

C. Foreign Bonds

Why would one consider foreign bonds for inclusion in their portfolio? One reason is that at times foreign bonds may offer higher returns at a given

point in time than alternative domestic bonds. A second important reason for buying foreign bonds is the diversification aspect.

Diversification is extremely important ,both in a stock portfolio and a bond portfolio.

D. Convertible Bonds:Convertible bonds have a built-in conversion feature. The holders of these bonds have the option to convert whenever they choose

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Advantage of bonds:

The amount of income each year is fixed. They are safer than equity securities like common stocks.

Disadvantage of bonds:

When the company profitability improves, they do no participate, as common stock holders when theirs stocks appreciates.

Bonds carry no voting rights.

While choosing bonds there are five factors to take into account when considering bonds:1. Investment quality. How are the bonds rated2. Time to maturity:

Short term[0-5] Medium[6-15 yrs] Long term[over 15 yrs]

3. Call or conversion feature4. Tax status5. Yield to maturity6.

B. ASSET-BACKED SECURITIES:

Securitization refers to the transformation of illiquid, risky individual loans into more liquid, less risky securities referred to as asset-backed securities (ABS). Marketable securities have been backed by car loans, credit-card receivables, railcar leases, small business loans, photocopier leases, aircraft leases, and so forth.

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REGULATORY BODIES OF WEALTH MANAGEMENT INSTRUMENTS

Mutual Funds AMFI [Association of Mutual Funds, India] Direct Equity SEBI[Securities Exchange Bonds of India] Real Estate NHB[National Hosing Board] Insurance IRDA[Insurance Regularity & Development Authority] Commodities MCX[Multi Commodity Exchange] Time Deposits RBI[Reserve Bank of India] Govt bonds/ Securities RBI[Reserve Bank of India

Intermediaries/facilitators of wealth management services:

1. Brokers2. Insurance agents3. Distribution agencies4. Banks5. Real Estate Agents6. Commodity brokers7. Corporate consultancy firms

Stockbroker

A stockbroker is a person who sells stocks on the behalf of another person [or company] and charges the customer a commission for services offered.

Insurance Agent

An insurance agent is an individual who is licensed by a state to sell insurance for one or more specific insurance companies. Distribution agency

Distribution agency is the agency, which functions on a comparatively large scale than an individual broker. Eg. BSE and NSE.

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Bank

A bank is an institution that has the facilities and services to handle day to day financial transactions. It deals in money and most significantly creates money for individuals by offering advisory and other services. Real estate Agent

Real Estate Agent is a person with a state/provincial license to represent a buyer or a seller in a real estate transaction in exchange for commission.

Commodity Brokers

Commodity Broker is a person who trade in commodities like sugar, oil, gold etc.

Corporate consultancy firms

These are the firms which provide guidance and knowledge to the clients regarding their portfolio.

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Banks as facilitators of wealth management:-

Wealth management services offered by the banks are specially designed to provide the highest level of services, which are appropriate for the client’s unique requirements and status. Apart from personalized services these banks also provide banking, investments and lifestyle privileges, which make the banking experience a very fulfilling one for the customers.

Advantages:

a. All services can be availed under one roof.b. Brand recognition, which provides high reliability.c. Professional guidance from the relationship manager.d. Simplified procedures.e. Various add on services are provided.f. Events organized by the banks for imparting knowledge and also for the

entertainment of the customers.

Disadvantage:

1. Investment limited to cities and big towns only.2. Investment decisions are biased as funds are invested in selected AMC’s.3. Insurance payback commission is not passed on to the customers.4. A premium price has to be paid for the services being offered by bank.

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RESEARCH METHODOLOGY

Title of the study- Investment and wealth management analysis at HSBC.

Duration of the project- Short term poject

Objective of Study-

The main objective of my study is to find the main strategies, various sales promotional

activities & to know the state of mind of an individual who is opening a saving account with

HSBC bank; I also try to find out that investors are aggressive, moderate or conservative in

Jodhpur sector.

Services that influences the customer while he/she is into opening to know which others

banks are key players.

Customer perception regarding the services provided by the HSBC BANK.

To know what kind of investors are prevailing in Jodhpur market.

Data collection method

The data sources being used under such type of study are mainly of 2 types:

1. Primary Data

2. Secondary Data

Among which the former is being taken through the research undergone within the

organizational level itself & various other organizing reforms only. While the latter had been

taken through different statistical approaches or we can say through different marketing

reforms.

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SAMPLE PLAN

DATA COLLECTION

PRIMARY DATA :-

The primary data are which are collected afresh and for the first time, and thus happen

to be original in character. A primary survey was conducted at JODHPUR city. The survey was

carried out at various levels & the target group was retail investors, business men, builders,

industrialists, exporters, doctors etc. Questionnaires were used as an instrument to collect the

primary data.

This data was obtained by various promotion schemes like-

CANNOPIES- we put canopies in front of various financial institutions like banks, commercial

places, and entertainment places like Agarwal tower, Shastri circle, Corporate hub etc. There

people approach us and we give them the questionnaire to fill and provide the details of HSBC

products.

APPROACHING TO INDUSTRIAL UNITS - We approach to industrial areas like MIA, BASNI,

HIA, Boranada industrial area and give the questionnaire to fill and explain the details of

various HSBC products.

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SECONDARY DATA

The Secondary data are those, which have already been collected and

Being processed through the statistical process.

We got the secondary data through

PREVIOUS TRANSACTION RECORDS

I. We got the records of those people who have already invested in HSBC.

II. Through directory- We got the records of Exporters, Businessmen, architects etc.

MARKETING APPROACH

o Directly meeting them

o Through telephonic calls

o Through Canopies

POPULATION DEFINITION

1) Element: Retail Investors, Business Men, Builders, Industrialists,

2) Exporters, Senior Citizens, and others.

3) Sample Unit- JODHPUR City

4) Sampling Method- Simple Random Sampling

5) Sampling Size- Based on ages, income area etc.

6) Data collection- through directories, Previous records through

7) Friends and relatives.

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MODES OF MARKETING & PROMOTION

Directly Approaching:-

We directly approach people to invest like builders, investors, exporters, businessmen,

& even general mass.

Telephonic Calls:-

We approach them through telephones and take appointments & then directly contact

them for investment.

Canopies:-

We put canopies in front of Banks, Financial Institutions & other public gathering places.

There we approach people and take their telephone numbers. & contact them or even in

canopies itself make them invest.

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LIMITATION

1. No response by some employees in different banks and lack of interest shown by them resulted in incomplete data.

2. Non-availability of concerned person with complete knowledge to respond.

3. Lack of time with appropriate authorities.

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DATA INTERPRETATION & ANALYSIS

Q.1. Do you take services of any other banks..?

a) ICICI Bank b) State Bank of India (SBI)

c) HSBC d) Others

No. of respondents

ICICI Bank 17SBI 19HSBC 157OTHERS 7

79% persons takes services of HSBC bank.8% persons takes services of ICICI bank.9% persons takes service of SBI bank.4% persons takes service of other banks.

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Q.2. What are the features that influence your decision while availing any services of a bank?

a) Good customer care b) Security of your money

c) Goodwill of the Bank d) Network of the Bank

No. of Respondents

Good Customer Care 55Security of Money 61Goodwill of Bank 72Network of Bank 12

27.5% person’s decisions influenced by Good customer care.30.5% person’s decisions influenced by Security of money.36% person’s decisions influenced by Goodwill of bank.6% person’s decisions influenced by Network of bank.

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Q.3. Which all services of the bank do you use most?

a) ATM b) Door step Banking

c) Internet Banking d) Mobile Banking

No.of Respondents

ATM 93Door step Banking 44Internet Banking 50Mobile Banking 13

46% persons used ATM service because this service is commonly offered it require no technical knowledge.

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Q.4. INCOME LEVEL:

a) 60,000 – 1, 00,000 b) 2, 00,000 – 3, 00, 00

c) 1, 00,000 – 2, 00,000 d) above 3, 00, 00

Income LevelNo. of Respondents

60 thousand-1 Lacs 572 Lacs-3 Lacs 501 Lacs-2 Lacs 59above 3 Lacs 34

In the above table 57 investors are those who fell in the income slab from 60 thousand to 1 lakh, 59 investors fell in the income slab form 1 lakh-2lakh, 50 Investor’s fell in the income slab from 2 lakh-3lakh, 34 investor’s fell in the income slab of above 3 lakh.

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Q.5 How long have you been investing in market?

a)1-5 years b)5-10 years

c) Above 10 years

No.of yearsNo. of Respondents

1-5 Year 735-10 Year 58Above !0 Year 69

36.5% of the investors were investing since last 1-5 years.

29% of the investors were investing since last 5-10 years.

34.5% of the investors were investing since last 10 years & above.

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Q.6. You made investment through:

a) Your own b) Through Distribution house

c) Through broker d) others

Investment Through

No. of respondents

Your own 85Distribution house 18Broker 83Others 14

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Q.7. Are you

a)Long-term investor b)Short-term investor

No.of Respondents

Short term investor 138Long term investor 62

69%-short term investor.31% -long term investor.

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Q.8. What % of your income would you like to invest?

a) Up to 5% b) 5%-10%

c) Above 10%

No.of Respondents

up to 5% 995%-10% 53Above 10% 48

49% investors invest up to 5% of their income. 27% investors invest 5%-10% of their income. 49% investors invest above 10% of their income.

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Q.9. What do you think about the Loan facility?

a) 1 b) 2 C) 3 d) 4 e )5

Ranking

No.of

Respondents

Very good 32Good 165Average 3Poor 0very poor 0

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Q.10. What do you think about the customer care service?a) 1 b) 2 C) 3 d) 4 e) 5

RankingNo. of Respondents

Very good 84Good 114Average 2Poor 0very poor 0

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Q.11. What do you think about the interest rate?a) 1 b) 2 C) 3 d) 4 e) 5

RankingNo. of respondents

Very good 114Good 80Average 6Poor 0ivery poor 0

114 respondents are satisfied with the interest rate.It provide both fixed and floating rate.

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Q.12. What do you think about the ATM facility?a) 1 b) 2 C) 3 d) 4 e) 5

RankingNo. of Respondents

Very good 128Good 67Average 5Poor 0ivery poor 0

ATM facility is mostly used by the investors.

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Q.13. What do you think about the security of money? a) 1 b) 2 C) 3 d) 4 e) 5

RankingNo. of Respondents

Very good 105Good 86Average 9Poor 0very poor 0

Every investor want to secure his money and investors are highly satisfied with the bank.

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Q.14. How is the internet banking?a) 1 b) 2 C) 3 d) 4 e) 5

RankingNo. of Respondents

Very good 44Good 97Average 58Poor 1very poor 0

Today every person wants to save their time and HSBC bank provide the good E- banking facility which enable the investor to take care of his account from internet.

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Q.15. How is the 24 hours banking?a) 1 b) 2 C) 3 d) 4 e) 5

Ranking No. of respondentsVery good 42Good 65Average 90Poor 3very poor 0

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Q.16. What is the level of knowledge of employees about the different schemes?a) 1 b) 2 C) 3 d) 4 e) 5

RankingNo. of Respondents

Very good 68Good 116Average 15Poor 1very poor 0

In the above table 1 investors were found with poor knowledge about various investment schemes, 15 investors were found with average knowledge about various investment schemes, 116 investors were found with good knowledge about various investment schemes.

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Q.17. What is the level of satisfaction with the bank?a) 1 b) 2 C) 3 d) 4 e) 5

RankingNo. of Respondents

Very good 110Good 90Average 0Poor 0very poor 0

Investors highly satisfied with the services of the bank and the only reason behind this is the good services which provided by the bank and which helped in creating the goodwill of the bank.

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SWOT ANALYSIS

COMPETITIVE POSITION IN INDUSTRY

(USING PORTER’S FRAMEWORK )

This concept involves a relationship between competitors within an industry, potential competitors, suppliers, buyers and alternative solutions to the problem being addressed. We use the five-force model as a basic structure. In general, a business unit has to monitor key macro environmental Forces [Demographic, Economic, Technological, Political, Legal and socio-cultural] and significant Micro Environmental factors [Customers, Competitors] that affect its ability to earn profits. This SWOT analysis has been done to help bank to track trends and important developments and for each trend or developments, management needs to identify the associated Opportunities and Treats

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STRENGTH:

A credible and widely known Brand Name with a label of being world class and also known as the “World’s Local Bank”.

Support of HSBC group as a whole which provides sound back-up for HSBC bank.

HSBC has a reputation of being the best bank in providing services.

Successful multi-domestic strategy combined with global branding.

Successful management structure, valued and valuable employees.

Ability to successfully implement custom electronic banking application. Hexagon is the foundation of HSBC’s strategy to deliver innovative services via Information Technology.

Great Services provided to NRI’s, not only in India but world over, hence it enjoys a good share of NRI Business.

Automated Operations due to highly computerized environment.

Outstanding relationship management with hybrid customers.

WEAKNESS:

Less awareness among general masses.

People's faith in private bank is still not very high.

Less number of branches in India as compared to other Banks.

Only one ATM in Jodhpur (Located at the branch).

High charges on non-maintenance of minimum average quarterly balance.

The bank provides no cash credit limit. Thus the business flow is diverted to nationalize

banks.

Short banking hours (from 10:00 a.m. to 4:00 p.m.)

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OPPORTUNITIES:

Being a world class bank and having a good reputation, the goodwill can be cashed upon with the growing economy of India.

Internet banking can be cashed by making procedure even simpler.

They should focus more on the Common Customer for Wealth Management as they have more day to day spare money.

It requires transforming itself from a global bank to a more diversified global financial services company.

Current direction which could be expanded includes greater diversification into equity products, increased presence in insurance and card products.

THREATS:

Reorganization of public sector banks: All the public sector banks have started to

redefine their services in order to attract customer's attention:

The entry of other foreign banks can take away some of the business.

The nationalized banks are also coming up with ATMs, which will acts as a major

threat to the bank in near future.

Stringent norms by reserve bank of India at any time in near future can be threat to

foreign banks as their activities could be adversely affected.

The presence of other private sector and foreign banks in Jodhpur like HDFC, ICICI,

UTI etc.

The cash credit limit provided by other nationalized bank is the major threat.

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COMPETITIVE ANALYSIS

“Poor firms ignore their competitorsAverage firms copy their competitorsLeading firms lead their competitors”

Introduction

Today competition is not only rife but also growing intense every year. To stand in this competitive market any organization has to do its best to outperform its competitors.Competitors are the companies that satisfy the same customer need.Banking sector has undergone a second revolution where besides specialized lenders; the share of commercial banks and other financial organizations is increasing day by day.

Organizations have started paying attention to their competitors through designing and operating system for gathering continuous information about their competitors.

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Conclusion and Recommendations

Government banks like SBBJ , Bank of Baroda enjoy more faith among people rather

than private banks

ICICI bank, HDFC bank are into mass marketing so cater to a large number of

customers and therefore has a large client base.

HSBC only caters to elite customers and has no concept like ‘No Frills’ account that is

no provision for a 0 balance account and the minimum balance which has to be

maintained in the account is 5,000 which is sometimes not possible for the customers

and if they fail to do so they are charged heavily which causes repulsion to the

customers.

HSBC Bank should chalk out some programs to create general awareness regarding its

presence and various services of the bank. More attention is required in distant located

firms and caters the needs of those commercial areas.

Personal Marketing/Aggressive Marketing: Today is the era of competition. In order

to increase the banking network (in terms of clients and business volume) an

aggressive approach is required. The bank should recruit more number of marketing

personnel, so that they can cover the whole of the city. Personal marketing can be one

of the methods of modes of taking people into confidence.

STRONG NEED OF BRAND BUILDING: The bank needs to make a lot of marketing

effort. The level of recognition that may be desired by any brand has not been achieved

by HSBC Bank, Jodhpur. A lot of noise is made whenever a child is born and as long as

that noise is not made the doctors is not sure about the life of that child. Same is the

case in marketing. Whenever a new branch comes into existence it is necessary that

they announce their birth. Here comes the pre-launch exercise, and similar is the case

after the birth. The name has to be taken again. Boast about yourself, about the strong

points that you have over and above your competitors. Pull the consumer towards you.

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As said earlier it is a relationship of trust and this trust can be generated through better

and better performance of the bank. Now as working with the bank for some time the

facts have come out that they believe in low costing and want to keep low profile. So

better way of marketing can be sought which are low at cost. These are discussed

further.

PROMOTIONAL STRATEGIES

Press publicity:

Paper inserts

Advertisements in newspaper (local and national).

Interest cards distribution

Mailers/personal invitations to selective section of the society

Leaflets

Outdoor publicity:

Banners in commercial areas and prime sites.

Air balloons at shopping complex.

Bus stands shelters.

Off site ATM for developing business

Media:

Local channel advertisement (cable TV scrolls)

Advertisements in news channels and business channels

Face to face:

Personal interaction of marketing executives through

Meetings Detailing about schemes and updating them form time to time

Event sponsoring in local clubs and social gathering

Road shows

Contacting office goers in the morning and evening at stop lights by distribution of

interest cards.

Advertisement strategies segmented according to the target customer Senior

citizens, housewives, students, service class105

Personal mailers

Contacting at parks during morning and evening walks

Contacting at stop lights

Road shows at market sights

Cable TV advertisements during prime time

Stick on the newspaper

Leaflet on the wiper of the vehicles in the parking lots

Educational bodies

Sponsoring some events in schools and collages

Meeting the top management for opening of salary accounts

And fee payment system of the students.

Local clubs like youth clubs, laughter clubs, senior citizen clubs, ladies club, etc.

Event sponsoring

Temporary banners

Advertisements in club magazines

Opening of extension counters (in case of large club)

Professionals and other active samaj in the area (e.g. Jain samaj)

Direct mailers

Cold calling

Informal gathering arranger by the bank for some social cause.

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Commercial places and market establishments:

Cold calling

Personal visits of the executives.

NEED A CHANGE IN MARKETING FOCUS

The marketing team of the branch has until now focused on selling of their most

competitive product, which are there fixed deposits. The rates of interest, which they

provide on fixed deposits, are really competitive and highest in this market. But this

strategy could not be held for a longer period of time as in the long run it would become

liability to the bank to pay such high rate of interest and it would lower the revenues of

the branch. Even the survey conducted proved that the fastest selling product is savings

account amongst the consumer. With a network that is good enough this bank can

make efforts to increase the market share in the area where the competition is so tough.

This needs a brain storming from the top management in the branch as to how about

fixing the targets in each category of accounts.

Solid network required to develop the business further

If we see the results of the survey, it is evident that people prefer strong networking

system to make their banking life as comfortable and reachable as possible. For HSBC

Bank to enjoy a good customer base they should make efforts towards developing more

and more ATM in the city and extension counters to facilitate better and fast service.

Updating of technology from time to time is very necessary. HSBC Bank was the very

first bank to start few of the very good service like Internet banking; bringing about new

service to attract more and more consumers should carry on this tradition further.

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Corrective positioning of HSBC Bank

HSBCc bank is known for its corporate operations. Very big names in the corporate

world have their accounts with this bank. For the past so many years it has been

catering to these clients only and has generated an image of being a corporate bank.

This product extension into the retail segment need separate focus and separate

positioning in the market. The bank cannot carry on its old image for both the segments

of the market. For this a distinctive advertising campaign has to be developed (refer to

the promotional activities stated earlier) to reposition the brand in potential consumer’s

mind. It should be noted that both the type of clients differs from each other in their true

nature. One is a very low profile relationship, which talks about masses. This type of

client requires assurance, trust, information, and support. This is retail banking. While

on the other hand the second type of relationship is stronger, which is the corporate

client that requires different setup all together?

MAKE THE BRANCH SELF-INFORMATIVE

The branch should be decorated in a manner, which would provide maximum

information to the customers without any difficulty. All the schemes and products, all the

service charges, days and time of transactions should be printed in a beautiful manner

and hanged on the walls of the branch where customer can see with ease. This was

one of the things, which were found to be absent in this branch. By doing so the

customer would feel more attached and it will be converted in higher number of

accounts.

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HOW HSBC IS RESHAPING..........

Downsizing via VRS, redeploying Staff and hiring new sales executives.

Changing the remuneration structure to a cost-to-company approach.

Bringing in new heads for key departments such as marketing

Focusing on retail banking, home loans, and asset management

Shutting down unprofitable businesses like automobile loans

Exploring inorganic growth such s the acquisition of UTI Bank

And above statistical analysis how that HSBC ranks SECOND in Category of large Banks it

ranks closely at top of the list which huge potential to prove its Brand name.

The above analysis reveals that there are many parameters in which HSBC as a Bank has an

edge over the others but at the same time it also faces neck-to-neck competition from other

banks like CITI and STANDARD CHARTERED. It has to constantly keep upgrading the

technology and services provided to its customers in order to maintain its Brand Name.

In this competitive scenario where every bank is struggling to expand its market share, the

banks are adopting various means to sell their products. In this research, I got a very biased

opinion on the product most recommended to the customers I observed that the products were

being oversold or undersold to the customers and not on the needs and requirements of the

customers.

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1=VERY GOOD 2=GOOD 3=AVERAGE 4=POOR 5=VERY POOR

QUESTIONNAIRE

Name:Sex: Male Female Age:Q.1. Do you take services of any other banks..?

a) ICICI Bank b)State Bank of India (SBI)

c) HSBC d)Others

Q.2. What are the features that influence your decision while availing any services of a bank?

a)Good customer care b)Security of your money

c)Goodwill of the Bank d)Network of the Bank

Q.3. Which all services of the bank do you use most?

a)ATM b)Door step Banking

c)Internet Banking d)Mobile Banking

Q.4. INCOME LEVEL:

a)60,000 – 1, 00,000 b)2, 00,000 – 3, 00, 00

c)1, 00,000 – 2, 00,000 d) above 3, 00, 00

Q.5 How long have you been investing in market?

a)1-5 years b)5-10 years

c)Above 10 years

Q.6. You made investment through:

a) Your own b) Through Distribution house

c) Through broker d) others

Q.7. Are you

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a)Long-term investor b)Short-term investor

Q.8. What % of your income would you like to invest?

a)Up to 5% b)5%-10%

c)Above 10%

Q.9. What do you think about the Loan facility?

a) 1 b) 2 C) 3 d) 4 e) 5

Q.10. What do you think about the customer care service?a) 1 b) 2 C) 3 d) 4 e) 5

Q.11. What do you think about the interest rate?a) 1 b) 2 C) 3 d) 4 e) 5

Q.12. What do you think about the ATM facility?a) 1 b) 2 C) 3 d) 4 e) 5

Q.13. What do you think about the security of money? a) 1 b) 2 C) 3 d) 4 e) 5

Q.14. How is the internet banking?a) 1 b) 2 C) 3 d) 4 e) 5

Q.15. How is the 24 hours banking?a) 1 b) 2 C) 3 d) 4 e) 5

Q.16. What is the level of knowledge of employees about the different schemes?a) 1 b) 2 C) 3 d) 4 e) 5

Q.17. What is the level of satisfaction with the bank?a) 1 b) 2 C) 3 d) 4 e) 5

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BIBLIOGRAPHY

Books referred: -

Kothari C. R. , ‘Research Methodology’ , New Delhi, Wishwa Prakashan, Second Edition, 2004

Khan M. Y. and Jain P.K. , ‘Financial Management’ , New Delhi, Tata McGraw-Hill Publishing Co. Ltd., Fourth Edition, 2005

HSBC Brochure

Websites: -

www.hsbc.co.in www.banknetindia.com www.indiabank.com www.hsbcbank.com

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