OVERVIEW OF

STATE BANK OF
INDIA

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 OVERVIEW OF STATE BANK OF INDIA

State Bank of India is the largest and one of the oldest commercial bank in India, in
existence for more than 200 years. The bank provides a full range of corporate, commercial
and retail banking services in India. Indian central bank namely Reserve Bank of India
(RBI) is the major share holder of the bank with 59.7% stake. The bank is capitalized to the
extent of Rs.646bn with the public holding (other than promoters) at 40.3%. SBI has the
largest branch and ATM network spread across every corner of India. The bank has a
branch network of over 14,000 branches (including subsidiaries). Apart from Indian
network it also has a network of 73 overseas offices in 30 countries in all time zones,
correspondent relationship with 520 International banks in 123 countries. In recent past,
SBI has acquired banks in Mauritius, Kenya and Indonesia. The bank had total staff
strength of 198,774 as on 31st March, 2006. Of this, 29.51% are officers, 45.19% clerical
staff and the remaining 25.30% were sub-staff. The bank is listed on the Bombay Stock
Exchange, National Stock Exchange, Kolkata Stock Exchange, Chennai Stock Exchange
and Ahmedabad Stock Exchange while its GDRs are listed on the London Stock Exchange.
SBI group accounts for around 25% of the total business of the banking industry while it
accounts for 35% of the total foreign exchange in India. With this type of strong base, SBI
has displayed a continued performance in the last few years in scaling up its efficiency
levels. Net Interest Income of the bank has witnessed a CAGR of 13.3% during the last five
years. During the same period, net interest margin (NIM) of the bank has gone up from as
low as 2.9% in FY02 to 3.40% in FY06 and currently is at 3.32%.
Management
The bank has 14 directors on the Board and is responsible for the management of the
Banks business. The board in addition to monitoring corporate performance also carries
out functions such as approving the business plan, reviewing and approving the annual
budgets and borrowing limits and fixing exposure limits. Mr. O. P. Bhatt is the Chairman of
the bank. The five-year term of Mr. Bhatt will expire in March 2011. Prior to this
appointment, Mr. Bhatt was Managing Director at State Bank of Travancore. Mr. Bhatt has
more than 30 years of experience in the Indian banking industry and is seen as futuristic
leader in his approach towards technology and customer service. Mr. Bhatt has had the best
of foreign exposure in SBI. We believe that the appointment of Mr. Bhatt would be a key to
SBIs future growth momentum. Mr. T S Bhattacharya is the Managing Director of the

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bank and known for his vast experience in the banking industry. Recently, the senior
management of the bank has been broadened considerably. The positions of CFO and the
head of treasury have been segregated, and new heads for rural banking and for corporate
development and new business banking have been appointed. The managements thrust on
growth of the bank in terms of network and size would also ensure encouraging prospects
in time to come.
Shareholding & Liquidity (Till 30th Sept. 2007)
Reserve Bank of India is the largest shareholder in the bank with 59.7% stake followed by
overseas investors including GDRs with 19.78% stake as on September 06. Indian financial
institutions held 12.3% while Indian public held just 8.2% of the stock. RBI is the
monetary authority and having majority shareholding reflects conflict of interest. Now the
government is rectifying the above error by transferring RBIs holding to itself. Post this,
SBI will have a further headroom to dilute the GOIs stake from 59.7% to 51.0%, which
will further improve its CAR and Tier I ratio.

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Key Areas of Operations

The business operations of SBI can be broadly classified into the key income generating
areas
such as National Banking, International Banking, Corporate Banking, & Treasury
operations.

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 HISTORY

The origin of the State Bank of India goes back to the first decade of the nineteenth
century with the establishment of the Bank of Calcutta in Calcutta on 2 June 1806. Three
years later the bank received its charter and was re-designed as the Bank of Bengal (2
January 1809). A unique institution, it was the first joint-stock bank of British India
sponsored by the Government of Bengal. The Bank of Bombay (15 April 1840) and the
Bank of Madras (1 July 1843) followed the Bank of Bengal. These three banks remained
at the apex of modern banking in India till their amalgamation as the Imperial Bank of
India on 27 January 1921.

Primarily Anglo-Indian creations, the three presidency banks came into existence either
as a result of the compulsions of imperial finance or by the felt needs of local European
commerce and were not imposed from outside in an arbitrary manner to modernise
India's economy. Their evolution was, however, shaped by ideas culled from similar
developments in Europe and England, and was influenced by changes occurring in the
structure of both the local trading environment and those in the relations of the Indian
economy to the economy of Europe and the global economic framework.

The three banks were governed by royal charters, which were revised from time to time.
Each charter provided for a share capital, four-fifth of which were privately subscribed
and the rest owned by the provincial government. The members of the board of directors,
which managed the affairs of each bank, were mostly proprietary directors representing
the large European managing agency houses in India. The rest were government
nominees, invariably civil servants, one of whom was elected as the president of the
board.

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Group Photograph of Central Board (1921)

Business

The business of the banks was initially confined to discounting of bills of exchange or
other negotiable private securities, keeping cash accounts and receiving deposits and
issuing and circulating cash notes. Loans were restricted to Rs.one Lakh and the period of
accommodation confined to three months only. The security for such loans was public
securities, commonly called Company's Paper, bullion, treasure, plate, jewels, or goods
'not of a perishable nature' and no interest could be charged beyond a rate of twelve per
cent. Loans against goods like opium, indigo, salt woollens, cotton, cotton piece goods,
mule twist and silk goods were also granted but such finance by way of cash credits
gained momentum only from the third decade of the nineteenth century. All commodities,
including tea, sugar and jute, which began to be financed later, were either pledged or
hypothecated to the bank. Demand promissory notes were signed by the borrower in
favour of the guarantor, which was in turn endorsed to the bank. Lending against shares
of the banks or on the mortgage of houses, land or other real property was, however,
forbidden.

Indians were the principal borrowers against deposit of Company's paper, while the
business of discounts on private as well as salary bills was almost the exclusive
monopoly of individuals Europeans and their partnership firms. But the main function of
the three banks, as far as the government was concerned, was to help the latter raise loans
from time to time and also provide a degree of stability to the prices of government
securities.

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First Five Year Plan

In 1951, when the First Five Year Plan was launched, the development of rural India was
given the highest priority. The commercial banks of the country including the Imperial
Bank of India had till then confined their operations to the urban sector and were not
equipped to respond to the emergent needs of economic regeneration of the rural areas. In
order, therefore, to serve the economy in general and the rural sector in particular, the All
India Rural Credit Survey Committee recommended the creation of a state-partnered and
state-sponsored bank by taking over the Imperial Bank of India, and integrating with it,
the former state-owned or state-associate banks. An act was accordingly passed in
Parliament in May 1955 and the State Bank of India was constituted on 1 July 1955.
More than a quarter of the resources of the Indian banking system thus passed under the
direct control of the State. Later, the State Bank of India (Subsidiary Banks) Act was
passed in 1959, enabling the State Bank of India to take over eight former State-
associated banks as its subsidiaries (later named Associates).

The State Bank of India was thus born with a new sense of social purpose aided by the
480 offices comprising branches, sub offices and three Local Head Offices inherited from
the Imperial Bank. The concept of banking as mere repositories of the community's
savings and lenders to creditworthy parties was soon to give way to the concept of
purposeful banking subserving the growing and diversified financial needs of planned
economic development. The State Bank of India was destined to act as the pacesetter in
this respect and lead the Indian banking system into the exciting field of national
development.

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COMPETITORS AND OTHER PLAYERS IN THE FIELD:-

Top Performing Public Sector Banks

Andhra Bank
Allahabad Bank
Punjab National Bank
Dena Bank
Vijaya Bank
Top Performing Private Sector Banks

HDFC Bank

ICICI Bank

AXIS Bank

Kotak Mahindra Bank

Centurion Bank of Punjab

Top Performing Foreign Banks

Citibank

Standard Chartered

HSBC Bank

ABN AMRO Bank

American Express

Strength/ Opportunities:
The growth for SBI in the coming years is likely to be fueled by the following factors:

Continued effort to increase low cost deposit would ensure improvement in NIMs and
hence earnings.

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 Growing retail & SMEs thrust would lead to higher business growth.

Strong economic growth would generate higher demand for funds pursuant to higher
corporate demand for credit on account of capacity expansion.

Weakness/ Threats:
The risks that could ensue to SBI in time to come are as under:

SBI is currently operating at a lowest CAR. Insufficient capital may restrict the growth
prospects of the bank going forward.

Stiff competition, especially in the retail segment, could impact retail growth of SBI and
hence slowdown in earnings growth.

Contribution of retail credit to total bank credit stood at 26%. Significant thrust on
growing retail book poses higher credit risk to the bank.

Delay in technology upgradation could result in loss of market shares.

Management indicated a likely pension shortfall on account of AS-15 to be close to

Rs50bn.

Slow down in domestic economy would pose a concern over credit off-take thereby
impacting earnings growth.

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DIFFERENT PRODUCTS OF SBI:
DEPOSIT LOANS CARDS DIFFERENT
CREDIT CARDS

Savings Home Consumer SBI

Account Loans Cards International
cards

Life Plus Senior Loan Credit Card SBI Gold cards

Citizens Against
Savings Property
Account

Fixed Personal Travel Card SBI Gold

Deposits Loans Master cards

Car Loan Debit Cards Your City Your

Security Cards
Deposits

Recurring Loans Commercial

Deposits against Cards
Securities

Tax-Saver Two Corporate Partnership

Fixed Deposit Wheeler Cards Cards

Salary Account Pre- Prepaid Card

approved
Loans

Advantage Retail Asset Purchase Card SBI Employee

Woman Cards
Savings
Account

Rural Savings Farmer Distribution

Account Finance Cards

People's Business Business Card SBI Advantage

Savings Installment Cards
Account Loans

Freedom Flexi Cash Merchant

Savings Services
Account

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SBI PRODUCTS
Introduction to Advance Product

SBI Advance Product

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 Introduction to Advance Product:
Now a day not all the people have the capacity to fulfill their requirement by their own earning,
thats why they need help from others. For this so many government & private sector bank
provide them money to fulfill their requirement, thats call the Advance Product (loan product)
of the bank. All the banks have so many different types of advance product as per the
requirement of the people or customers. In Bareilly also there are so many banks those provide
loan to the people for different causes.

Types of Advance Product

Home Loan
Educational Loan
Car Loan
Personal Loan
Property Loan
Loan Against Shares\Debentures
Etc.

Now a day a large no. of people are taking loan form different banks. It helps people to fulfill
their need and it really easy to repayment the loan amount with a longer repayment period.

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 SBI Advance Product

SBI Home Loans:

Purpose

Purchase/ Construction of House/ Flat

Purchase of a plot of land for construction of House

Extension/ repair/ renovation/ alteration of an existing House/ Flat

Purchase of Furnishings and Consumer Durables as a part of the project cost.

Takeover of an existing loan from other Banks/ Housing Finance Companies.

Eligibility

Minimum age 18 years as on the date of sanction

Maximum age limit for a Home Loan borrower is fixed at 70 years, i.e. the age by which the
loan should be fully repaid.

Availability of sufficient, regular and continuous source of income for servicing the loan
repayment.

Loan Amount

40 to 60 times of NMI, depending on repayment capacity as % of NMI as under

Net Annual Income EMI/NMI Ratio

Upto Rs.2 lacs 40%
Above Rs.2 lac to Rs. 5 lacs 50%
Above Rs. 5 lacs 55%

To enhance loan eligibility you have option to add:

1. Income of your spouse/ your son/ daughter living with you, provided they have a steady
income and his/ her salary account is maintained with SBI.
2. Expected rent accruals (less taxes, cess, etc.) if the house/ flat being purchased is proposed
to be rented out.
3. Depreciation, subject to some conditions.
4. Regular income from all sources

Margin (Special Festival Season Offer)

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 Purchase/ Construction of a new House/ Flat/ Plot of land: 15% for loans up to Rs. 1
cr., 20% for loans above Rs. 1 cr.
Repairs/ Renovation of an existing House/ Flat: 15%

Interest Rates w.e.f 27.2.2008

Floating interest rates

(linked to State Bank Advance Rate - SBAR)

(SBAR: 12.25% p.a.)

Above 5 years Above 15 years and

Loan Tenor -> Upto 5 years
and upto 15 years upto 25 years
Upto Rs.30 2.25% below 2.00% below 1.75% below
Lacs SBAR, 10.00% p.a. SBAR, 10.25% p.a. SBAR, 10.50% p.a.
Above Rs.30 2.00% below 1.75% below 1.50% below
Lacs SBAR, 10.25% p.a. SBAR, 10.50% p.a. SBAR, 10.75% p.a.

Fixed interest rates

Tenure Rate of Interest

(p.a.)*Upto 10 years 12.75%

* Fixed rate loans will be subject to: 'force maejure' clause and interest reset at the end of
every two years on the basis of fixed interest rates prevailing then.

CAR LOAN:

Purpose

You can take finance for:

A new car, jeep or Multi Utility Vehicles (MUVs)

A used car / jeep (not more than 5 years old). (Any make or model).

Take over of existing loan from other Bank/Financial institution (Conditions apply)

Eligibility

To avail an SBI Car Loan, you should be :

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 Individual between the age of 21-65 years of age.

A Permanent employee of State / Central Government, Public Sector Undertaking,

Private company or a reputed establishment or

A Professionals or self-employed individual who is an income tax assessee or

A Person engaged in agriculture and allied activities.

Net Annual Income Rs. 100,000/- and above.

Salient Features
Loan Amount
There is no upper limit for the amount of a car loan. A maximum loan amount of 2.5 times the
net annual income can be sanctioned. If married, your spouse's income could also be
considered provided the spouse becomes a co-borrower in the loan. The loan amount includes
finance for one-time road tax, registration and insurance!

No ceiling on the loan amount for new cars.

Loan amount for used car is subject to a maximum limit of Rs. 15 lacs.

Type of Loan
1. Term Loan
2. Overdraft - a) For New vehicles only
b) Minimum loan amount: Rs. 3 lacs.

Documents required
you would need to submit the following documents along with the completed application form
if you are an existing SBI account holder:

1. Statement of Bank account of the borrower for last 12 months.

2. 2 passport size photographs of borrower(s).
3. Signature identification from bankers of borrower(s).
4. A copy of passport /voters ID card/PAN card.
5. Proof of residence.
6. Latest salary-slip showing all deductions
7. I.T. Returns/Form 16: 2 years for salaried employees and 3 years for professional/self-
employed/businessmen duly accepted by the ITO wherever applicable to be submitted.
8. Proof of official address for non-salaried individuals.
If you are not an account holder with SBI you would also need to furnish documents that
establish your identity and give proof of residence.

Margin

New / Used vehicles: 15% of the on the road price.

Repayment

You enjoy the longest repayment period in the industry with us.
Repayment period:

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For Salaried: Maximum of 84 months
For Self-employed & Professionals: Maximum 60 months

Repayment period for used vehicles :Up to 84 months from the date of original purchase of the
vehicle (subject to maximum tenure as above).

Prepayment Penalty:

Prepayment fee of 2% of the amount of the loan prepaid will be levied subject to certain
conditions

FLOATING RATES:
A. for Term Loans

1. New Vehicles (Term Loan) Floating only W.E.F. February 27, 2008

Repayment Period All Centers (SBAR - 12.25%)

Upto 3 years (for loans Rs. 7.5 lac & above) 0.75% below SBAR i.e. 11.50% p.a.
Upto 3 years (for loans below Rs. 7.5 lac) 0.50% below SBAR i.e. 11.75%p.a.
Above 3 yrs up to 5 yrs (for all loans) 0.50% below SBAR i.e. 11.75% p.a.
Above 5 yrs up to 7 yrs (for all loans) 0.25% below SBAR i.e. 12.00% p.a.

2. Used Vehicles: Floating only W.E.F. February 27, 2008

Repayment Period All Centers (SBAR-12.25%)

Upto 3 years 3.00% above SBAR i.e. 15.25% p.a.
Above 3 yrs up to 7 yrs 3.25% above SBAR i.e. 15.50% p.a.

B. For Overdrafts: For New Vehicles only W.E.F. February 27, 2008

Repayment Period All Centres (SBAR 12.25%)

Upto 3 years (for loans Rs. 7.5 lac & above) 0.25% below SBAR i.e. 12.00% p.a.
Upto 3 years (for loans below Rs. 7.5 lac) At SBAR i.e. 12.25% p.a.
Above 3 yrs up to 5 yrs (for all loans) At SBAR i.e. 12.25% p.a.
Above 5 yrs up to 7 yrs (for all loans) 0.25% above SBAR i.e. 12.50% p.a.

EDUCATION LOAN:

A term loan granted to Indian Nationals for pursuing higher education in India or abroad where
admission has been secured.

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Eligible Courses

All courses having employment prospects are eligible.

Graduation courses/ Post graduation courses/ Professional courses

Other courses approved by UGC/Government/AICTE etc.

Expenses considered for loan

Fees payable to college/school/hostel

Examination/Library/Laboratory fees

Purchase of Books/Equipment/Instruments/Uniforms

Caution Deposit/Building Fund/Refundable Deposit (maximum 10% tution fees for the
entire course)

Travel Expenses/Passage money for studies abroad

Purchase of computers considered necessary for completion of course

Cost of a Two-wheeler upto Rs. 50,000/-

Any other expenses required to complete the course like study tours, project work etc.

Amount of Loan

For studies in India, maximum Rs. 10 lacs

Studies abroad, maximum Rs. 20 lacs

Interest Rates
(with effect from 1st June 2008)

For loans up to Rs.4 lacs - 11.75 % p.a. Floating

For loans above Rs. 4 lacs and upto Rs.7.50 lacs - 13.25 % Floating
For loans above Rs.7.50 lacs - 12.25% p.a. Floating
Processing Fees

No processing fee/ upfront charges

Deposit of Rs. 5000/- for education loan for studies abroad which will be adjusted in
the margin money

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Repayment Tenure

Repayment will commence one year after completion of course or 6 months after securing a
job, whichever is earlier.

Place of Study Loan Amount Repayment in Period

Years

Studies in India Rs. 10.0 lacs 5-7

Studies Abroad Rs. 20.0 lacs 5-7

Security

Amount For loans upto Rs. 10.00 lacs for Studies in

India and upto Rs. 20.00 lacs for studies abroad

Upto Rs. 4 lacs No Security

Collateral security in the form of suitable third party

Guarantee. The bank may, at its discretion, in
exceptional cases, weive third party guarantee if
satisfied with the net-worth/means of parent/s who
would be executing the documents as "joint
borrower"
Tangible collateral security of suitable value, along
with the assignment of future income of the student
For payment of installments.

All loans should be secured by parent(s)/guardian of the student borrower. In case of

married person, co-obligator can be either spouse or the parent(s)/ parents-in-law

Margin

For loans up to Rs.4.0 lacs : No Margin

For loans above Rs.4.0 lacs:

o Studies in India: 5%

o Studies Abroad: 15%

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Documentation Required

Completed Education Loan Application Form.

Mark sheets of last qualifying examination

Proof of admission scholarship, studentship etc

Schedule of expenses for the specified course

2 passport size photographs

Borrower's Bank account statement for the last six months

Income tax assessment order, of last 2 years

Brief statement of assets and liabilities, of the Co-borrower

Proof of Income (i.e. Salary slips/ Form 16 etc)

SBI SARAL PERSONAL LOAN:

Purpose
The loan will be granted for any legitimate purpose whatsoever (e.g. expenses for domestic or
foreign travel, medical treatment of self or a family member, meeting any financial liability,
such as marriage of son/daughter, defraying educational expenses of wards, meeting margins
for purchase of assets etc.)

Eligibility
You are eligible if you are a Salaried individual of good quality corporate, self employed
engineer, doctor, architect, chartered accountant, MBA with minimum 2 years standing.

Salient Features
Loan Amount
Your personal loan limit would be determined by your income and repayment capacity.
Minimum: Rs.24,000/- in metro and urban centres
Rs.10, 000/- in rural/semi-urban centres

Maximum: 12 times Net Monthly Income for salaried individuals and pensioners subject to a
ceiling of Rs.10 lacs in all centres

Documents Required
Important documents to be furnished while opening a Personal Loan Account:

For existing bank customers

Passport size photograph

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From salaried individuals
Latest salary slip and Form 16

Margin
We do not insist on any margin amount.

Interest Rates
3.25% above SBAR floating i.e. 15.50% p.a.

Repayment
The loan is repayable in 48 EMI. You are allowed to pay more than the EMI if you wish to,
without attracting any prepayment penalty.

Security
NIL

Processing Fee
Processing charges are 1-2% of the loan amount. This is amongst the lowest fees in the
industry. Processing fees have to be paid upfront. There are no hidden costs or other
administrative charges.

PROPERTY LOAN:

Purpose
This is an all purpose loan, i.e., the loan can be obtained for any purpose whatsoever. If amount
of loan is Rs.25.00 lacs and above then purpose of loan will have to be specified along with an
undertaking that loan will not be used for any speculative purpose whatever including
speculation on real estate and equity shares.

Eligibility
You are eligible if you are:

A. An individual who is;

a. An Employee or
b. A Professional, self-employed or an income tax assesse or
c. Engaged in agricultural and allied activities.

B. Your Net Monthly Income (salaried) is in excess of Rs.12,000/- or Net Annual Income
(others) is in excess of Rs.1,50,000/-.

The income of the spouse may be added if he/she is a co-borrower or a guarantor.

C. Maximum age limit: 60 years.

Salient Features

Loan Amount

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Minimum: Rs.25, 000/-
Maximum: Rs.1 crore. The amount is decided by the following calculation:

24 times the net monthly income of salaried persons (Net of all deductions including
TDS) OR

2 times the net annual income of others (income as per latest IT return less taxes
payable)

Margin
We will finance upto 75% of the market value of your property.

Interest
Term Loan 0.75% above SBAR. i.e.13.00% p.a. Floating

Repayment
Maximum of 60 equated monthly installments, upto 120 months for salaried individuals with
check-off facility. You could opt to divert any surplus funds towards prepayment of the loan
without attracting any penalty.

Security

As per banks extant instructions.

LOAN AGAINST SHARES \ DEBENTURES:

Eligibility
This facility is available to our existing individual customers enjoying a strong relationship
with SBI. This loan could be availed either singly or as a joint account with spouse in 'Either or
Survivor'/ 'Former or Survivor' mode. It is offered as an Overdraft or Demand Loan.

The facility is available at 50 select centers.

Salient Features:
Purpose

For meeting contingencies and needs of personal nature. Loan will be permitted for subscribing
to rights or new issue of shares / debentures against the security of existing shares / debentures.
Loan will not be sanctioned for (i) speculative purposes (ii) inter-corporate investments or (iii)
acquiring controlling interest in company / companies.
Loan Amount
You can avail of loans up to Rs 20.00 lacs against your shares/debentures.

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Documents Required
You will be required to submit a declaration indicating:

Details of loans availed from other banks/ branches for acquiring shares/ debentures.
Details of loans availed from other banks/ branches against security of shares/
debentures

Margin

You will need to provide a margin amount of 50% of the prevailing market prices of the shares/
non-convertible debentures being offered as security. (The market prices refer to the prices in
the Stock Exchanges as reported in the Economic Times.)

Interest
At SBAR Floating i.e. 12.25% p.a.

Repayment Schedule
To be liquidated in maximum period of 30 months through a suitable reducing DP programme.

In case of a default or if the outstanding is over Rs.20.00 lacs, the shares/debentures will be
transferred in the name of the Bank.

Security:
Pledge of the demat shares/debentures against which overdraft is granted.

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PROFILE OF THE

HDFC BANK

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 PROFILE OF THE HDFC BANK

ORIGIN OF THE ORGANIZATION

HDFC is India's premier housing finance company and enjoys an impeccable track record

in India as well as in international markets. Since its inception in 1977, the Corporation has

maintained a consistent and healthy growth in its operations to remain the market leader in

mortgages.

Its outstanding loan portfolio covers well over a million dwelling units. HDFC has

developed significant expertise in retail mortgage loans to different market segments and

also has a large corporate client base for its housing related credit facilities. With its

experience in the financial markets, a strong market reputation, large shareholder base and

unique consumer franchise, HDFC was ideally positioned to promote a bank in the Indian

environment.

GROWTH AND DEVELOPMENT OF THE ORGANIZATION

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

over 1400 branches spread over 600 cities across India. All branches are linked on an

online real-time basis. Customers in over 120 locations are also serviced through Telephone

Banking. The Bank's expansion plans take into account the need to have a presence in all

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major industrial and commercial centers where its corporate customers are located as well

as the need to build a strong retail customer base for both deposits and loan products.

The Bank also has a network of about over 200 networked ATMs across these cities.

Moreover, HDFC Bank's ATM network can be accessed by all domestic and international

Visa/MasterCard, Visa Electron/Maestro, Plus/Cirrus and American Express Credit/Charge

cardholders.

PRESENT STATUS OF THE ORGANIZATION

The Housing Development Finance Corporation Limited (HDFC) was amongst the first

to receive an in-principle approval from the Reserve Bank of India (RBI) to set up a bank

in the private sector, as part of the RBIs liberalization of the Indian Banking Industry in

1994. the bank was incorporated in August 1994 in the name of HDFC Bank Limited.

With its registered office in Mumbai, India. HDFC Bank commenced operations as a

Scheduled Commercial Bank in January 1995.

Promoter

HDFC is Indias premier housing finance company and enjoys an impeccable track record

in India as well as in international markets. Since its inception is 1977, the Corporation has

maintained a consistent and healthy growth in its operations to remain a market leader in

mortgages.

Business Focus
HDFC Banks mission is to be a World-Class Indian Bank. The Banks aim is to build

sound customer franchises across distinct businesses so as to be the preferred provided of

banking services in the segments that the bank operates in and to achieve healthy growth in

profitability, consistent with the banks risk appetite.

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Capital Structure

The authorized capital of HDFC Bank is Rs.450 crore (Rs.45 billion). The paid-up capital

is Rs282 crore (Rs.28.2 billion). The HDFC Group holds 24.2% of the banks equity while

about 13.1% of the equity is held by the depository in respect of the banks issue of

American Depository Shares (ADS/ADR Issue)..

Distribution Network

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

over 1400 branches spread over 600 cities across the country. All branches are linked on an

online real-time basis. Customers in 90 locations are also serviced through Phone Banking.

The Banks expansion plans take into account the need to have a presence in all major

industrial and commercial centers where its corporate customers are located as well as the

need to build a strong retail customer base for both deposits and loan products.

Management

Mr.Jagdish Kapoor took over as the banks Chairman in July 2001, Prior to this, Mr.Kapoor

was a Deputy governor of the Reserve Bank of India.

The Managing Director, Mr.Aditya Puri, has been a professional banker for over 25 years.

And before joining HDFC Bank in 1994 was heading Citibanks operations in Malaysia.

The Banks Board of Directors is composed of eminent individuals with a wealth of

experience in public policy, administration, industry and commercial banking. Senior

executive representing HDFC are also on the Board Senior banking professionals with

substantial experience in India and abroad head various businesses and functions and report

to the Managing Director.

2.4 FUNCTIONAL DEPARTMENTS OF THE ORGANIZATION

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The bank has three key business areas:

1. Wholesale Banking Services

Here our target market is primarily large, blue-chip companies and to a lesser extent,

emerging mid-sized corporate. For these corporate, we provide a wide range of services,

including working capital finance, trade services, transactional services, cash management,

etc. We are a leading provider of structured solutions, which combine cash management

services with vendor and distributor finance, for facilitating superior supply chain

management for our corporate customers. We are also recognized as a leading provider of

cash management and transactional banking solutions to mutual funds, stock exchange

members and banks.

30
2. Retail Banking Services

The objective of the Retail Bank is to provide our target market customers a full range of

financial products and banking services, giving the customer a one-stop window for all

his/her banking requirements. The products are backed by world-class service and

delivered to the customers through the growing branch network, as well as through

alternative delivery channels like ATMs, Phone Banking, Net Banking and Mobile

Banking. The HDFC Bank Preferred program for high net worth individuals, the HDFC

Bank Plus and the Investment Advisory Services programs have been designed keeping in

mind needs of customers who seek distinct financial solutions, information and advice on

various investment avenues. We have a wide array of retail loan products including Auto

Loans, Loans against Securities, Personal Loans and Loans for Two-wheelers.

3. Treasury Operations

Within this business, the bank has three main product areas -

a) Foreign Exchange and Derivatives

b)Local Currency Money Market &

c) Debt Securities and Equities.

With the liberalization of the financial markets in India, corporate need more sophisticated

risk management information, advice and product structures. These are provided through

the bank's Treasury team. The Treasury business is responsible for managing the returns

and market risk on the bank's investment portfolio

The above business groups are supported by the following groups:

31
 Audit & Compliance

Credit & Market Risk

Finance, Administration & Legal

Human Resources

Information Technology

Operations

4. Systems & Technology

The Bank uses state-of-the-art technology for both internal and external customers.

a) Banking Applications

In terms of software, the Corporate Banking business is supported by UBS, while the Retail

Banking business by Finware. These world-class systems have been specially customized

for HDFC Bank by i-flex Solutions Ltd. which is a Citigroup company. The Bank also uses

various other systems to support other infrastructure

b).Lotus Notes

Lotus Notes is the system that HDFC bank uses for internal communication.

c) Facilities Management

Wipro is the company appointed to give HDFC Bank the on-site support required at

different locations / cities.

32
ORGANIZATION STRUCTURE AND ORGANIZATION CHART

HDFC Bank Board of Directors comprises of eminent individuals with a wealth of

experience in public policy, administration, industry and commercial banking. Senior

executives representing HDFC are also on the Board.

33
 ORGANIZATION CHART

Chairman

Managing Director & CEO

Joint Managing Director Joint Managing Director

(Domestic Banking) (International Business)

Executive Director Executive Director Executive Director Executive Director

(Corporate Center) (Project Finance) (Retail Banking) (Wholesale
Banking)

Sr. General Managers

Sales SALES SALES SALES

Manage Manage Manage Manage
General Managers

TEAM TEAM TEAM TEAM

LEADER LEADER LEADER LEADER

BDE 1 BDE 1 BDE 1 BDE 1

BDE 2 BDE 2 BDE 2 BDE 2

34
PRODUCT AND SERVICE PROFILE OF THE ORGANIZATION

Products of HDFC Bank includes the following:

Deposits:

1) Savings Account

These accounts are primarily meant to inculcate a sense of saving for the future,

accumulating funds over a period of time. Whatever your occupation, we are confident that

you will find the perfect banking solution. Open an account in your name or register for

one jointly with a family member today. Some of its features are:

Debit-cum-ATM card

Auto Invest Account

Internet Banking

Phone banking

Anywhere Banking

Standing Instruction

Nomination facility

Doorstep service

Mobile banking

Monthly free E-Mail statement

35
3) Personal Loan

Loans up to Rupees one million for any purpose.

Flexible Repayment Options ranging from 12 to 48 months.

Repayment through Easy Monthly Installments (EMIs).

Low Rate of Interest

Hassle free loans - No guarantor/security/collateral required

Speedy loan approval

Service at the customer's doorstep

Further, there are additional privileges for HDFC Bank account holders like:

Special rates of interest.

For existing Auto Loan customers with a clear repayment of 12 months or more

from even any of the approved financiers of HDFC Bank, a hassle free personal

loan without income documentation can be obtained.

For existing HDFC Bank Personal Loan customer with a clear repayment of 12

months or more, personal loan can be enhanced.

5) Fixed deposits

Wide range of tenures

Choice of investment plans

Partial withdrawal permitted

Safe custody of fixed deposit receipts

Auto renewal possible

Loan facility available

36
37
6) Easy deposit

7) Recurring deposit

Encourage savings

High interest rates of interest

Loans against deposits available

Non-applicability of tax deduction at source (TDS)

8) Special savings account

Bank @ campus

9) Direct Banking Account

10) Tax Saver Fixed Deposits

11) Roaming Current Account

12) Young Stars or Kids Account

13) Savings Max Account / Regular Account / Plus Account

14) D-Mat Account

15) Family Account

16) NRI account

38
 PRODUCTS OFFERED

HOME LOAN :

Purpose : Purchase of

Flat, row house, bungalow from developers

Existing freehold properties

Properties in an existing or proposed co-operative housing society or

apartment owner's association

First Power of Attorney purchases in Delhi for DDA flats allotted before

1992.

Self Construction

Features :

Maximum loan upto 85% of the cost of the property (including the cost

of the land) and based on the repayment capacity of the customer.

Maximum Term 20 years subject to your retirement age.

Home Improvement Loans

Purpose :

External repairs

Tiling and flooring

Internal and external painting

Plumbing and electrical work

Waterproofing and roofing

39
 Grills and aluminum windows

Waterproofing on terrace

Construction of underground/overhead water tank

Paving of compound wall (with stone/tile/etc.)

Borewell

Features:

Maximum loan

Existing Customer 100% of the cost of improvement

New Customer 85% of the cost of improvement

Home Extension Loans :

Purpose :

It makes it convenient for customer to extend or add space to their home.

Features :

Maximum loan upto 85% of the cost of extension

Maximum Term is 20 years subject to retirement age

Short term Bridging Loans :

Short-Term Bridging loan makes customer realise their dream of buying a bigger

and better home and gives them time to sell their existing property to pay off the loan. This

is a short term loan to help customers with the interim period between the sale of your old

home and the purchase of a new home.

40
 Maximum loan utpo 90% of cost of new property

Maximum Term is 2 years

Fee in this case is 0.50% of the loan amount plus applicable service

tax and cess.

Security for the loan is a first mortgage of the new property to be financed

Land Purchase Loans :

Features :

Maximum Loan granted to

- Existing customers is on the balance of 60% of the market value &

present loan outstanding.

- New customers is 50% of the market value of the property

(including cost of the land).

Subject to minimum market value of the property being.

- 5 Lacs residential property.

- 7.5 Lacs for Non-residential property.

Minimum Term :

Property type Repayment Option No. of Years

Residential EMI Based 15
Non Residential EMI Based 10
Residential & Simple Interest 2

Non Residential
Home Equity Loans :

HDFC Home Equity Loans helps its customers to encash the present market value

of the property by taking a loan by mortgaging the property.

Purpose :

41
 Loan can be for any purpose. However, the funds should not be used for speculation

or any illegal purposes.

Customers have benefited by taking loans to meet the following funding

requirements

Education

Marriage Expenses

Medical Expenses etc.

Loan to Professionals for Non Residential Premises:

Purpose : Purchase, Construction, Improvement of Office, Clinic

Eligible :

Doctors

Chartered Accountants

Lawyers

Other self-employed professional

Features :

Maximum loan upto 85% of cost of the property

Maximum Term is 10 years while for improvement 5 years

42
 COMPANY
PROFILE OF
ICICI

43
COMPANY PROFILE OF ICICI:

44
 ICICI BANK | khayaal aapka
Khayaal Aapka:
Over the past decade ICICI Bank has redefined the banking landscape. Through a deep
understanding of customer needs, it has leveraged technology to introduce several
innovations to make banking simple and convenient for the consumer. Continuing with our
commitment towards deepening our relationship with our customers, we have undertaken
many initiatives to strengthen the customer experience through multiple touch points such
as bank branches, internet banking, mobile banking and phone banking. In addition we
have continued to offer products and services that have been thoughtfully designed,
keeping the consumer in mind.
Khayaal aapka is a reflection of this commitment that we have towards our customers.
Khayaal aapka embodies our relationships with customers that go beyond transactions it is
our commitment to treat our customers fairly, show empathy towards customer needs and
create and deliver products and services that make a difference to our customers' lives.
ICICI Bank is India's second-largest bank with total assets of Rs. 3,849.70 billion (US$ 82
billion) at March 31, 2010 and profit after tax Rs. 40.25 billion for the year ended March
31, 2010. The Bank has a network of about 2,529 branches and 6,000 ATMs in India and
presence in 19 countries.
ICICI Bank offers a wide range of banking products and financial services to corporate
and retail customers through a variety of delivery channels and through its specialized
subsidiaries and affiliates in the areas of investment banking, life and non-life insurance,
venture capital and asset management.
The Bank currently has subsidiaries in the United Kingdom, Russia and Canada, branches
in United States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and Dubai International
Finance Centre and representative offices in United Arab Emirates, China, South Africa,
Bangladesh, Thailand, Malaysia and Indonesia. Our UK subsidiary has established
branches in Belgium and Germany.

ICICI Bank's equity shares are listed in India on Bombay Stock Exchange and the National
Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed
on the New York Stock Exchange (NYSE).

45
HISTORY

ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian financial
institution, and was its wholly-owned subsidiary. ICICI's shareholding in ICICI Bank was
reduced to 46% through a public offering of shares in India in fiscal 1998, an equity
offering in the form of ADRs listed on the NYSE in fiscal 200, ICICI Bank's acquisition of
Bank of Madura Limited in an all-stock amalgamation in fiscal 2001, and secondary
market sales by ICICI to institutional investors in fiscal 2001 and fiscal 2002. ICICI was
formed in 1955 at the initiative of the World Bank, the Government of India and
representatives of Indian industry. The principal objective was to create a development
financial institution for providing medium-term and long-term project financing to Indian
businesses. In the 1990s, ICICI transformed its business from a development financial
institution offering only project finance to a diversified financial services group offering a
wide variety of products and services, both directly and through a number of subsidiaries
and affiliates like ICICI Bank. In 1999, ICICI become the first Indian company and the first
bank or financial institution from non-Japan Asia to be listed on the NYSE.

After consideration of various corporate structuring alternatives in the context of the

emerging competitive scenario in the Indian banking industry, and the move towards
universal banking, the managements of ICICI and ICICI Bank formed the view that the
merger of ICICI with ICICI Bank would be the optimal strategic alternative for both
entities, and would create the optimal legal structure for the ICICI group's universal
banking strategy. The merger would enhance value for ICICI shareholders through the
merged entity's access to low-cost deposits, greater opportunities for earning fee-based
income and the ability to participate in the payments system and provide transaction-
banking services. The merger would enhance value for ICICI Bank shareholders through a
large capital base and scale of operations, seamless access to ICICI's strong corporate
relationships built up over five decades, entry into new business segments, higher market
share in various business segments, particularly fee-based services, and access to the vast
talent pool of ICICI and its subsidiaries. In October 2001, the Boards of Directors of ICICI
and ICICI bank approved the merger of ICICI and two of its wholly-owned retail finance
subsidiaries, ICICI Personal Financial Services Limited and ICICI Capital Services
Limited, with ICICI bank. The merger was approved by shareholders of ICICI and ICICI
bank in January 2002, by the High Court of Gujarat at Ahmadabad in March 2002, and by

46
the High Court of Judicature at Mumbai and the Reserve Bank of India in April 2002.
Consequent to the merger, the ICICI group's financing and banking operations, both
wholesale and retail, have been integrated in a single entity. ICICI bank has formulated a
Code of Business Conduct and Ethics for its directors and employees.

ICICI bank (formerly Industrial Credit and Investment Corporation of India) is India's
largest private sector bank in market capitalization and second largest overall in terms of
assets. Bank has total assets of about USD 100 billion (at the end of March 2010), a
network of over 2,529 branches, 22 regional offices and 49 regional processing centers,
about 6000 ATMs (at the end of March 2010), and 24 million customers (at the end of
March 2010). ICICI bank offers a wide range of banking products and financial services to
corporate and retail customers through a variety of delivery channels and specialized
subsidiaries and affiliates in the areas of investment banking, life and non-life insurance,
venture capital and asset management. (These data are dynamic.) ICICI Bank is also the
largest issuer of credit cards in India. ICICI Bank has got its equity shares listed on the
stock exchanges at Kolkata and Vadodara, Mumbai and the National Stock Exchange of
India Limited, and its ADRs on the New York Stock Exchange (NYSE).

The Bank is expanding in overseas markets and has the largest international balance sheet
among Indian banks. ICICI Bank now has wholly-owned subsidiaries, branches and
representatives offices in 18 countries, including an offshore unit in Mumbai. This includes
wholly owned subsidiaries in Canada, Russia and the UK, offshore banking units in
Bahrain and Singapore, an advisory branch in Dubai, branches in Belgium, Hong Kong and
Sri Lanka, and representative offices in Bangladesh, China, Malaysia, Indonesia, South
Africa, Thailand, the United Arab Emirates and USA. Overseas, the bank is targeting the
NRI (Non-Resident Indian) population in particular.

SERVICES OF ICICI BANK TO ITS CUSTOMERS:

1. Personal Banking:

47
 Deposits
Loans
Cards
Investments
Insurance
Demat services
Wealth management
Mobile banking
Internet banking

A. Account & Deposit

ICICI Bank has designed a gamut of accounts and deposits to cater to your unique banking
needs. Add this to our extensive branch & ATM network and facilities like mobile, phone,
internet and doorstep banking, and experience banking at its best.
a) Current Account
ICICI Current Bank Account has the facility of unlimited cash deposit and cash
withdrawal and comes with an unlimited cheque book facility. This account of the ICICI
bank is suitable for: Stockiest or businessmen, partnership firms or joint stock companies,
public corporations or public authorities etc.
ICICI Bank offers you a suite of current account products that meet all your banking
requirements, these are.
Standard Current Account: Minimum Balance Rs. 10,000 (QAB)
Classic current Account: Minimum Balance Rs. 25,000 (QAB)
Premium Current Account: Minimum Balance Rs. 50,000 (QAB)
Gold Current Account: Minimum Balance Rs. 1,00,000 (QAB)
Gold Plus Current Account: Minimum Balance Rs. 3,00,000 (QAB)

48
Platinum Current Account: Minimum Balance Rs. 5,00,000 (QAB)
*QAB - Quarterly Average Balance
Benefits of current account:
*Unlimited Withdrawal and Deposit
* Unlimited Cheque book
* Demand Drafts and Pay orders
* Funds Transfer ( Local or Anywhere)
* Collection of Cheques/ Drafts
* Statements, Advices, Daily statement by e-mail
* Cash withdrawal and Deposits
* Call center
* Internet Banking
* Multicity Cheque payment facility at over 155 centers
* Anywhere Banking facility
* Doorstep Banking Pickup and delivery of Currency / Cheque
* Mobile Banking

b) Saving Account

Minimum average quarterly Balance

Metro and Urban - Rs.10,000

Semi-urban- Rs.5,000,
Rural - Rs.2,000

Interest Rate: 3.5 %p.a.

49
 B. Loans

ICICI Bank offers wide variety of Loans Products to suit your requirements. Coupled with
convenience of networked branches/ATMs and facility of E-channels like Internet and
Mobile Banking, ICICI Bank brings banking at your doorstep. Select any of our loan
product and provide your details online and our representative will contact you for getting
loans.
a) Home Loan

ICICI Bank Home Loans, offer unbeatable benefits to ensure that you get the best deal
without any hassles .As one of the leading home loan provider, ICICI Bank understands
how special building a new home is for you and our Home Loan help you lay the
foundation for your dream home.

ICICI offers you the most convenient home loan plans to suit your needs. With so many
attractive features in every type of home loan we offer, creating the home you always
wanted is no longer a distant dream. Some of our key benefits are:

Guidance throughout the process.

Home loan amounts suited to your needs.

Home Loan tenure upto 20 years.

Simplified documentation.

Doorstep delivery of home loan papers.

Sanction approval without having selected a property.

50
 Free Personal Accident Insurance.

Insurance options for your home loan at attractive premium.

51
 b) Car Loan

Turn your dream into reality. Own that new car you have always desired, with a little help
from us. ICICI offer loans up to 90% of the ex-showroom price of the car. Our interest rates
would pleasantly surprise you. What's more, you can take up to 5 years to repay the loan.
Worried about paperwork? Relax. The process for getting a loan involves only a few simple
steps and we will tailor-make the loan to suit your needs.

Pick your choice:

Loan on the Strength of Your Income: Submit income proofs as required and avail
finance up to 90% of the ex-showroom price of the car.*

Car Loans with Fixed Interest Rates: ICICI Bank offers new car loans with fixed
rate option only.

C. INSURANCE:

ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank - one of
India's foremost financial services companies-and Prudential plc - a leading international
financial services group headquartered in the United Kingdom. Total capital infusion stands
at Rs. 47.80 billion, with ICICI Bank holding a stake of 74% and Prudential plc holding
26%.

52
We began our operations in December 200 after receiving approval from Insurance
Regulatory Development Authority (IRDA). Today, our nation-wide reach includes 1,900
branches over 210,000 advisors; and 6 banc assurance partners.
For three years in a row, ICICI Prudential has been voted as India's Most Trusted Private
Life Insurer, by The Economic Times - AC Nielsen ORG Marge survey of 'Most Trusted
Brands'. As we grow our distribution, product range and customer base, we continue to
tirelessly uphold our commitment to deliver world-class financial solutions to customers all
over India.
ICICI Prudential Life Insurance offers wide range of Insurance Plan. These are-
Term Plan

Wealth Plan

Child Plan

Health Plan

Retirement Plan

53
PERFORMANCE
APPRAISAL
SYSTEM

54
 PERFORMANCE APPRAISAL SYSTEM
Human Resource (or personnel) management, in the sense of getting things done through
people, is an essential part of every managers responsibility, but many organizations find it
advantageous to establish a specialist division to provide an expert service dedicated to
ensuring that the human resource function is performed efficiently.

People are our most valuable asset is a clich, which no member of any senior
management team would disagree with. Yet, the reality for many organizations are that
their people remain under valued, under trained and under utilized.

Performance Appraisal is the process of assessing the performance and progress of an

employee or a group of employees on a given job and his / their potential for future
development. It consists of all formal procedures used in the working organizations to
evaluate personalities, contributions and potentials of employees.

Rationale Of The Study

Performance Appraisal is the important aspect in the organization to evaluate the

employees performance. It helps in understanding the employees work culture,
involvement, and satisfaction. It helps the organization in deciding employees promotion,
transfer, incentives, pay increase.

Introduction to Human Resource Management

Human Resource (or personnel) management, in the sense of getting things done through
people, is an essential part of every managers responsibility, but many organizations find it
advantageous to establish a specialist division to provide an expert service dedicated to
ensuring that the human resource function is performed efficiently.

People are our most valuable asset is a clich, which no member of any senior
management team would disagree with. Yet, the reality for many organizations are that
their people remain under valued, under trained and under utilized.

The market place for talented, skilled people is competitive and expensive. Taking on new
staff can be disruptive to existing employees. Also, it takes time to develop cultural

55
awareness, product / process / organization knowledge and experience for new staff
members.

Functions of Human Resource Management

Following are the various functions of Human Resource Management that are essential for
the effective functioning of the organization:

1. Recruitment

2. Selection

3. Induction

4. Performance Appraisal

5. Training & Development

Recruitment

The process of recruitment begins after manpower requirements are determined in terms of
quality through job analysis and quantity through forecasting and planning.

Selection

The selection is the process of ascertaining whether or not candidates possess the requisite
qualifications, training and experience required.

Induction

Induction is the technique by which a new employee is rehabilitated into the changed
surroundings and introduced to the practices, policies and purposes of the organization.

56
What Is Performance Appraisal?

Performance Appraisal is defined as the process of assessing the performance and progress
of an employee or a group of employees on a given job and his / their potential for future
development. It consists of all formal procedures used in working organizations and
potential of employees. According to Flippo, Performance Appraisal is the systematic,
periodic and an important rating of an employees excellence in matters pertaining to his
present job and his potential for a better job.

Characteristics

1. Performance Appraisal is a process.

2. It is the systematic examination of the strengths and weakness of an employee in

terms of his job.

3. It is scientific and objective study. Formal procedures are used in the study.

4. It is an ongoing and continuous process wherein the evaluations are arranged

periodically according to a definite plan.

5. The main purpose of Performance Appraisal is to secure information necessary for

making objective and correct decision an employee.

Process

The process of performance appraisal:

1. Establishing performance standards

2. Communicating the Standards

3. Measuring Performance

4. Comparing the actual with the standards

5. Discussing the appraisal

6. Taking Corrective Action

57
METHODS OF PERFORMANCE APPRAISAL

The foregoing list of major program pitfalls represents a formidable challenge, even
considering the available battery of appraisal techniques. But attempting to avoid these
pitfalls by doing away with appraisals themselves is like trying to solve the problems of life
by committing suicide. The more logical task is to identify those appraisal practices that are
(a) most likely to achieve a particular objective and (b) least vulnerable to the obstacles
already discussed.

Before relating the specific techniques to the goals of performance appraisal stated at the
outset of the article, I shall briefly review each, taking them more or less in an order of
increasing complexity.

The best-known techniques will be treated most briefly.

Essay appraisal

In its simplest form, this technique asks the rater to write a paragraph or more covering an
individual's strengths, weaknesses, potential, and so on. In most selection situations,
particularly those involving professional, sales, or managerial positions, essay appraisals
from former employers, teachers, or associates carry significant weight.

Graphic rating scale

This technique may not yield the depth of an essay appraisal, but it is more consistent and
reliable. Typically, a graphic scale assesses a person on the quality and quantity of his work
(is he outstanding, above average, average, or unsatisfactory?) and on a variety of other
factors that vary with the job but usually include personal traits like reliability and
cooperation. It may also include specific performance items like oral and written
communication.

Field review

The field review is one of several techniques for doing this. A member of the personnel or
central administrative staff meets with small groups of raters from each supervisory unit
and goes over each employee's rating with them to (a) identify areas of inter-rater

58
disagreement, (b) help the group arrive at a consensus, and (c) determine that each rater
conceives the standards similarly. .

Forced-choice rating

Like the field review, this technique was developed to reduce bias and establish objective
standards of comparison between individuals, but it does not involve the intervention of a
third party.

Management by objectives

To avoid, or to deal with, the feeling that they are being judged by unfairly high standards,
employees in some organizations are being asked to set - or help set - their own
performance goals. Within the past five or six years, MBO has become something of a fad
and is so familiar to most managers that I will not dwell on it here.

Ranking methods

For comparative purposes, particularly when it is necessary to compare people who work
for different supervisors, individual statements, ratings, or appraisal forms are not
particularly useful. Instead, it is necessary to recognize that comparisons involve an overall
subjective judgment to which a host of additional facts and impressions must somehow be
added. There is no single form or way to do this.

The best approach appears to be a ranking technique involving pooled judgment.

The two most effective methods are alternation ranking and paired comparison ranking.

1. Alternation ranking:

Ranking of employees from best to worst on a trait or traits is another method for
evaluating employees. Since it is usually easier to distinguish between the worst and the
best employees than to rank them, an alternation ranking method is most popular. Here
subordinates to be rated are listed and the names of those not well enough to rank are
crossed. Then on a form as shown below, the employee who is highest on the characteristic
being measured and the one who is the lowest are indicated. Then chose the next highest
and the next lowest, alternating between highest and lowest until all the employees to be
rated have been ranked.

59
2. Paired-comparison ranking:

This technique is probably just as accurate as alternation ranking and might be more so.
But with large numbers of employees it becomes extremely time consuming and
cumbersome.

Both ranking techniques, particularly when combined with multiple rankings (i.e., when
two or more people are asked to make independent rankings of the same work group and
their lists are averaged), are among the best available for generating valid order-of-merit
rankings for salary administration purposes.

Assessment centers

So far, we have been talking about assessing past performance. What about the assessment
of future performance or potential? In any placement decision and even more so in
promotion decisions, some prediction of future performance is necessary. How can this
kind of prediction be made most validly and most fairly?

360 Degree Feedback

Many firms have expanded the idea of upward feedback into what the call 360-degree
feedback. The feedback is generally used for training and development, rather than for pay
increases.

Most 360 Degree Feedback system contains several common features. Appropriate parties
peers, supervisors, subordinates and customers, for instance complete survey,
questionnaires on an individual. 360 degree feedback is also known as the multi-rater
feedback, whereby ratings are not given just by the next manager up in the organizational
hierarchy, but also by peers and subordinates. Appropriates customer ratings are also
included, along with the element of self appraisal. Once gathered in, the assessment from
the various quarters are compared with one another and the results communicated to the
manager concerned.

Another technique that is useful for coaching purposes is, of course, MBO. Like the
critical incident method, it focuses on actual behavior and actual results, which can be

60
discussed objectively and constructively, with little or no need for a supervisor to "play
God."

Benefits of Performance Appraisals

Measures an employees performance.

Helps in clarifying, defining, redefining priorities and objectives.

Motivates the employee through achievement and feedback.

Facilitates assessment and agreement of training needs.

Helps in identification of personal strengths and weaknesses.

Plays an important role in Personal career and succession planning.

Clarifies team roles and facilitates team building.

Plays major role in organizational training needs assessment and analysis.

Improves understanding and relationship between the employee and the reporting
manager and also helps in resolving confusions and misunderstandings.

Plays an important tool for communicating the organizations philosophies, values,

aims, strategies, priorities, etc among its employees.

Helps in counseling and feedback.

Rating Errors in Performance Appraisals
Performance appraisals are subject to a wide variety of inaccuracies and biases referred to
as 'rating errors'. These errors can seriously affect assessment results. Some of the most
common rating errors are: -

Leniency or severity: - Leniency or severity on the part of the rater makes the assessment
subjective. Subjective assessment defeats the very purpose of performance appraisal.
Ratings are lenient for the following reasons:
a) The rater may feel that anyone under his or her jurisdiction who is rated unfavorably
will reflect poorly on his or her own worthiness.

61
b) He/She may feel that a derogatory rating will be revealed to the rate to detriment the
relations between the rater and the ratee.
c) He/She may rate leniently in order to win promotions for the subordinates and
therefore, indirectly increase his/her hold over him.
Central tendency: - This occurs when employees are incorrectly rated near the average or
middle of the scale. The attitude of the rater is to play safe. This safe playing attitude stems
from certain doubts and anxieties, which the raters have been assessing the rates.

Halo error: - A halo error takes place when one aspect of an individual's performance
influences the evaluation of the entire performance of the individual. The halo error occurs
when an employee who works late constantly might be rated high on productivity and
quality of output as well as on motivation. Similarly, an attractive or popular personality
might be given a high overall rating. Rating employees separately on each of the
performance measures and encouraging raters to guard against the halo effect are the two
ways to reduce the halo effect.

Rater effect: -This includes favoritism, stereotyping, and hostility. Extensively high or low
score are given only to certain individuals or groups based on the rater's attitude towards
them and not on actual outcomes or behaviors; sex, age, race and friendship biases are
examples of this type of error.

Primacy and Regency effects: - The rater's rating is heavily influenced either by behavior
exhibited by the ratee during his early stage of the review period (primacy) or by the
outcomes, or behavior exhibited by the ratee near the end of the review period (regency).
For example, if a salesperson captures an important contract/sale just before the completion
of the appraisal, the timing of the incident may inflate his or her standing, even though the
overall performance of the sales person may not have been encouraging. One way of
guarding against such an error is to ask the rater to consider the composite performance of
the rate and not to be influenced by one incident or an achievement.

Performance dimension order: - Two or more dimensions on a performance instrument

follow each other and both describe or rotate to a similar quality. The rater rates the first
dimensions accurately and then rates the second dimension to the first because of the
proximity. If the dimensions had been arranged in a significantly different order, the ratings
might have been different.

62
Spillover effect: - This refers lo allowing past performance appraisal rating lo unjustifiably
influence current ratings. Past ratings, good or bad, result in similar rating for current
period although the demonstrated behavior docs not deserve the rating, good or bad.

63
 RESEARCH
METHODOLOGY

64
 RESEARCH METHODOLOGY

Methodology can properly refer to the theoretical analysis of the methods

appropriate to a field of study or to the body of methods and principles
particular to a branch of knowledge.
Methodological may have acquired this meaning because people had already
been using the more ordinary adjective methodical to mean orderly,
systematic. But the misuse of methodology obscures an important conceptual
distinction between the tools of scientific investigation (properly methods)
and the principles that determine how such tools are deployed and interpreted.

Methodology includes the following concepts as they relate to a particular

discipline or field of inquiry:

1. A collection of theories, concepts or ideas;

2. Comparative study of different approaches; and

3. Critique of the individual methods.

RESEARCH.

Different types of research are done by researchers. Research can basically

of two types:

DOCTRINAIRE

EMPIRICAL

First one DOCTRINAIRE RESEARCH is based on secondary data and has

descriptive type of nature. Descriptive research includes survey and fact
finding enquires of different kinds. The major purpose of descriptive research
is description of the state of affaires, as it exists at present.

65
 In doctrinaire method secondary data is used to find out the result from
collected data. I used the data which was collected by survey before two years
by the company. So I applied the method of Doctrinaire Research.

SECONDARY DATA

Secondary data are statistics not gathered for the immediate study at hand but
for some other purposes

In other words they may be described as those data have been compiled by
some agency other than the user.

Second one EMPIRICAL RESEARCH is based on primary data and has

experiment study nature. Empirical research includes facts, knowledge,
opinions, intentions and motivations. The major purpose of this type of
research is to find the facts of present situations, to record them and after
analyzing get out the results.

PRIMARY DATA

Primary data may be described as those data that have been observed and
recorded by the researchers for the first time to their knowledge.

In other words primary data is concerned with facts, knowledge and opinions
through which results are found out.

66
RESEARCH PROBLEM

The main problems involved in research (performance appraisal) are as

follows:-

o Errors in Rating.

o Performance appraisal may not be valid indicator of performance

and potential of employees due to the following types of errors..

Halo effect it is tendency to rate an employee consistently high or

low on the basis of overall impression.

Stereotyping this implies forming a mental picture of a person on the

basis of his age, sex, caste or religion.

Central tendency it means assigning average ratings to all employees

in order to avoid commitment or involvement. This is adopted because
the rater has not to justify or clarify the average rating.

Constant error-- some evaluators tend to be lenient while others are

strict in assessing performance.

Personal Bias performance appraisal may become invalid because

the rater dislikes an employee.

Spill over effectthis arises when past performance affects assessment

of present performance.

Lack of reliability.

o Reliability implies stability and consistency in the measurement.

Lack of consistency over time and among different raters may
reduce the reliability of performance.

67
 Negative approach.

o Performance appraisal loses most of its value when the focus of

management is on punishment rather than on development of
employees.

Multiple objectives.

o Raters may get confused due to two many objectives or unclear

objectives of performance appraisal.

Lack of knowledge.

o The staff appraising performance of employees might not be

trained and experienced enough to make correct appraisal.

Incompetence.

o Raters may fail to evaluate performance accurately due to lack of

knowledge and experience.

68
 RESEARCH IS AN ORGANIZED AND SYSTEMATIC WAY OF
FINDING ANSWERS TO QUESTIONS.

SYSTEMATIC because there is a definite set of procedures and steps which

you will follow. There are certain things in the research process which are
always done in order to get the most accurate results.

ORGANIZED in that there is a structure or method in going about doing

research. It is a planned procedure, not a spontaneous one. It is focused and
limited to a specific scope.

FINDING ANSWERS is the end of all research. Whether it is the answer to a

hypothesis or even a simple question, research is successful when we find
answers. Sometimes the answer is no, but it is still an answer.

QUESTIONS are central to research. If there is no question, then the answer

is of no use. Research is focused on relevant, useful, and important questions.
Without a question, research has no focus, drive, or purpose.

RESEARCH METHODOLOGY OF THE PROJECT.

69
 Problem identification: - The main motive of the project was to find out
the problem of employees or employees group and solve the problem.
Aim of the research: - To find out the opportunities to improve
employees performance for the benefit of organization.
Data collection method: - the main source of data collection was primary
data, which I found after making a questionnaire related to the points for
analysis of employees opinion and the other source of data collection was
secondary data which was provided by the company.

Types of questionnaire: - There are various types of questionnaire which

are used in the research studies. But I used structure and non-disguised
questionnaire in which only the direct questions are asked and manifest
reply of employees are noted, it does not include any descriptive note.

Routine Task: - Daily around 4-5 hr. stay at the company. Therefore the
whole exercise took around 45 days. Almost all the employees were very
helpful and forthcoming with the information.

DATA COLLECTION SOURCES

1. Primary data sources: -

Primary sources are used to make project efficient and fruitful.

70
 Observations.
Experts opinions.
QUESTIONNAIRE (I used).
2. Secondary data sources: -
Certain secondary data sources are also used.
Books.
Journals.
Business magazines.
News papers.
Web sites.
SURVEY DATA (I used).

71
TYPES OF QUESTIONNAIRE

The questionnaire is the list of questions to be asked from the employees. It

also contains a suitable space where the answers can be recorded.

The term questionnaire usually refers to a self- administrated process

whereby the employees himself reads the question and records his answers
without the assistance of an interviewer. This is a narrow definition of
questionnaire. While in my study I asked the questions from the employees
and fill the questionnaire myself.
While preparing the questionnaire I thought to prepare a structured and
non-disguised questionnaire so that the objectives of the study could be clear
to the employees.
Structured and non-disguised questionnaire: -
Most questionnaire studies made in HR research are of this type they are
structured and non-disguised. In this type of questionnaire only structured
questions are taken into consideration so that the questions should be clear to
the employees.
Structured and non-disguised studies can be handled by telephone, mail or
personal interview. But I chose to take interview of the employees so that I
could also observe the attitude of the employees.

STEPS TAKEN FOR PREPARING QUESTIONNAIRE.

72
Questionnaire construction is still much more of an art than a science. For
constructing a questionnaire I followed the given steps-
Determine what information is wanted.
Determine the type of questionnaire to use.
Determine the content of an individual question.
Determine the type of question to use.
Deciding on wording of questions.
Decide on questions sequence.
Decide on layout.
Pretest.
Revision and final draft.

DATA COLLECTION METHOD.

Data can be collected in two ways by:
1) Sampling Method
2) Census method

I used CENSUS METHOD because total population units were only 100.
Sampling is used where population is large and then population is divided in
different segment and from those segments samples are selected.
But the data which I got was only of 100 units so I
used census method. Census method also gives more accuracy and reliability
on which results are much stronger than doing sampling.

In census I went to every department and enquire the employees about

performance appraisal through the questionnaire.

73
Census data have become very comprehensive source of information, this
concentrated only one population census but now extends to many areas:
Census of population.
Census of agriculture.
Census of cattle.
Census of trade.
Census of transport.
Census of industry.
Census of banking and finance

In various researches census data is used because it gives more accuracy and
true findings. And above given areas more accurate results are important.
And I did census it is related to CENSUS OF INDUSTRY.

74
DATA INTERPRETATION,
FINDING AND
GRAPHICAL
REORESENTATION

DATA ANALYSIS AND INTERPRETATION

1- Age of BANKS employees.

18-22 10
23-25 13
26-30 18
31-35 32
above 35 37

75
 40
35
30
25
18-22 23-25 26-30 31-35 above 35
20
15
10
5
0

INTERPRETATION:-
1- As show in graph most of the employees of BANKS in age group of
31 35 and above to 35.
2- Whereas in age group of 18-22 most of the employees are

76
2- According to you how important is the work you do to organization?

Respondent
1- Very important, 36
2- Important, 39
3- Unimportant 13
4- Very unimportant, 5
5- Neither important nor unimportant. 7

40
35
1- Very 2- Important,
30 important,
25
20 3- Unimportant 4- Very
15 unimportant,
5- Neither
10 important nor
5 unimportant.

0
Respondent

77
3-How important to you is the performance appraisal system of the
organization?

Respondent
1- Very important, 53
2- Important, 39
3- Unimportant 5
4- Very unimportant, 0
5- Neither important nor unimportant. 3

60

50
1- Very 2- Important,
40 important,

30 3- Unimportant 4- Very
unimportant,
20 5- Neither
important nor
10 unimportant.

0
Respondent

78
4-How do you rate the overall relationship between the organization and its
employees?

Respondent

1 Excellent 23

2 very good 47

3 typical 13

4 fair 10

5 poor 7

50
45
40
35
30
1 Ex cellent
25 2 very good 3 typical 4 fair 5 poor

20
15
10
5
0
Respondent

79
5-How do you rate the organizations salary structure?

Respondent

1 Excellent 37

2 very good 39

3 typical 8

4 fair 10

5 poor 6

40
35
30
25
1 Ex cellent 2 very good 3 typical 4 fair 5 poor
20
15
10
5
0
Respondent

80
6-How do you feel about the quantity of work you are asked to perform?

Responde
nt
1 much too much 23
2 too much 27
3 just right 33
4 too little, much too little. 17

35
30
1 much too much 2 too much
25
20
15
103 just right 4 too little, much too little.

5
0
Respondent

81
7- Awareness of technique of Performance Appraisal being followed at
BANKS among Employees

Options Response

Yes 72

No 28

80
70
60
50 Yes No
40
30
20
10
0
Response

INTERPRETATION:-
As show in the graph most of the employees of BANKS
Aware from the technique of the performance appraisal.
The percentage of the yes is 72% and the percentage of the no is 28%.

82
 8- Do Employees being appraised during their service period?

Options Response

Yes 68

No 32

70
60
50
Yes No
40
30
20
10
0
Response

83
9- Employees opinion as to the present appraisal system

Options Responses

Fully Satisfied 2

Satisfied 24

Cant Say 44

Dissatisfied 30

45
40
35
30
25Fully Satisfied Satisfied Cant Say Dissatisfied
20
15
10
5
0
Responses

84
 10- Employee perception as to the frequency of appraisal

Options Response

Once During The 2

Service Period

Continuous 92

Never 0

Cant Say 6

100
90
80
Once During The Service Period Continuous Never
70
60
50
40
30
Cant Say
20
10
0
Response

85
11- If continuous appraisal what should be the gap between two appraisal
period?

Options Response

Quarterly 20

Half Yearly 44

Yearly 36

45
40
35
30
25 Quarterly Half Yearly Yearly
20
15
10
5
0
Response

86
12- How Performance Appraisal affects the productivity of the employees?

Motivated Indifferent Demotivated

+ Feedback
38 12 -

- Feedback
12 10 28

Neutral 24 21 5

90
80
70
60
50
40 East West North

30
20
10
0
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr

87
13- Who should do the appraisal?

Options Response ( in % )

Superior 24

Peer 0

Subordinate 0

Self Appraisal 8

Consultant 4

All of the above 48

Superior + Peer 16

50
45
Superior Peer Subordinate
40
35
30
Self Appraisal
25 Consultant All of the above
20
15
10
Superior + Peer
5
0
Response( in % )

88
.14- Does appraisal help in polishing skills and performance area?

Options Response ( in % )

Yes 74

No 10

Somewhat 16

80
70
60
50
Yes No Somewhat
40
30
20
10
0
Response( in % )

If the process of appraisal does not lead to the improvement of the skills and proficiency of
the employees, the very purpose of appraisal becomes illogical. In the survey conducted it
was observed that nearly 74 % of the respondents agree that Performance Appraisal does
leads to polishing the skills of the employees. Nearly 10 % of the respondents view that it
does not serve this purpose and around 16 % were not able to respond as to whether it serve
any such purposes or not.

89
 15- Does personal bias creeps-in while appraising an employee?

Options Response ( in % )

Yes 82

No 18

90
80
70
60
Yes No
50
40
30
20
10
0
Response( in % )

In the process of appraising, both the parties are human being, that is,
the one who is being apprised and the other who is appraising. Thus,
there bound to be subjectivity involved, be it an objective way of
appraising.

Thus, when asked from among the sample size of 50 respondents, as

huge as 82 % respondended that personal bias do creep in while
appraising an individual. Hence, it is inevitable to say that personal
likings do not come in the process of appraisal. It is the extent to which
the appraiser manages it so that it does not become very partial and
bias.

90
16- For given a chance, would employees like to review the current
appraisal technique?

Options Response ( in % )

Yes 72

No 4

Cant Say 24

80

70

60

50
Yes No Cant Say
40

30

20

10

0
Response( in % )

91
92
 FINDING,
SUGGESTIONS
AND
CONCLUSION

93
 FINDINGS OF STUDY

Findings are 1 percent inspiration while 99 percent perspiration it takes a lot of time and
labor but also gives a potential returns for our problem in the form solutions.
I am sure that the findings which I found during my project about employees performance
will be beneficial for the company. This study brought the strength and weaknesses about
employees performance in the company. On the basis of these findings major actions or
decisions can be taken by the company for employees performance.
This project was about to improve employees performance thats why this project was
named as performance appraisal. But this study was having more objectives too. This
project is proved beneficial for the company. Essentials of this study which I came to know
were brightened here:

1. Mutual trust.

2. Clear objective.

3. Standardization.

4. Training.

5. Job relatedness.

6. Feedback and participation.

7. Individual differences.

8. Post appraisal interview.

9. Review and appeal.

94
 SUGGESTIONS AND CONCLUSION
After having analyzed the data, it was observed that practically there was no appraisal in
the organization. To be an effective tool, it has to be on the continuous basis. This is the
thing that has been mentioned time and again in the report, as, in the absence of continuity,
it becomes a redundant exercise. Before actually deciding drafting what should be the kind
of appraisal the following things should be taken care of:

1- The very concept of performance appraisal should be marketed throughout the

organization. Unless this is done, people would not accept it, be it how important to the
organization.

2. To market such a concept, it should not start at bottom; instead it should be started by
the initiative of the top management. This would help in percolating down the concept to
the advantage of all, which includes the top management as well as those below them. This
means that the top management has to take a welcoming and positive approach towards the
change that is intended to be brought.

3. Further, at the time of confirmation also, the appraisal form should not lead to
duplication of any information. Instead, detailed appraisal of the employees work must be
done which must incorporates both the work related as well as the other personal
attributes that are important for work performance.

4. It should be noted that the appraisal form for each job position should be different as
each job has different knowledge and skill requirements. There should not be a common
appraisal form for every job position in the organization.

5. The job and role expected from the employees should be decided well in advance and
that too with the consensus with them.

6. A neutral panel of people should do the appraisal and to avoid subjectivity to a marked
extent, objective methods should be employed having quantifiable data.

7. The time period for conducting the appraisal should be revised, so that the exercise
becomes a continuous phenomenon.

8. Transparency into the system should be ensured through the discussion about the
employees performance with the employee concerned and trying to find out the grey areas
so that training can be implemented to improve on that.

95
9. Ideally in the present day scenario, appraisal should be done, taking the views of all the
concerned parties who have some bearing on the employee. But, since a change in the
system is required, it cannot be a drastic one. It ought to be gradual and a change in the
mindset of both the employees and the head is required.
I would like to give some other suggestions which are given here:

1. Give employees feedback on performance.

2. Identify employee training needs.

3. Document criteria used to allocate organizational rewards.

4. Form a basis for personnel decisions, salary increases, promotions, disciplinary

actions, bonuses, etc.

5. Provide the opportunity for organizational diagnosis and development.

6. Facilitate communication between employee and administration.

7. Validate selection techniques and human resource policies to meet federal Equal
Employment Opportunity requirements.

8. To improve performance through counseling, coaching and development.

9. To facilitate research in personnel management.

10. To develop positive superior-subordinate relations and thereby reduce grievances.

96
 BIBLIOGRAPHY

BOOKS
Human Resource Management by C.B.GUPTA.
(Sultan Chand & sons. Publication.)

Human Resource and Personnel Management by K. ASWATHAPPA. (Tata Mc-

Hill publication).

Human Resource Management by Dr. L.M. PRASAD.

(Sultan Chand & sons. Publication.)

WEB SITES

http://www.irfca.org/faq/faq-hist.html. Retrieved June 19, 2005.

http://www.rediff.com/news/2003/jul/03inter.htm. Retrieved June 19, 2005.

Various authors (2004). Guinness Book of World Records-2005. Guinness World

Records Ltd. ISBN 0-85112-192-6.

97
 QUESTIONNAIRE

Date: ----------
Name of the company :
Address of the company : Bareilly (U.P.)

1. Age of employee

(a) 18-22
(b) 23-25
(c) 26-30
(d) 31-35
(d) Above 35
2- According to you how important is the work you do to organization?
1-very important
2-Important
3-Unimportant
4-Very unimportant
5-Neither important nor unimportant
3-How important to you is the performance appraisal system of the organization?
1-very important
2-Important
3-Unimportant
4-Very unimportant
5-Neither important nor unimportant

4-How do you rate the overall relationship between the organization and its employees?

1-Excellent

2-Very good

3-Typical

4-Fair

5-Poor

5-How do you rate the organizations salary structure?

98
1-Excellent

2-Very good

3-Typical

4-Fair

5-Poor

6-How do you feel about the quantity of work you are asked to perform?

1-Much too much

2-Too much

3-Just right

4-Too little, much too much

7- Awareness of technique of Performance Appraisal being followed at BANKS among

Employees

1- Yes

2- No

8- Do Employees being appraised during their service period?

1- Yes

2- No

9- Employees opinion as to the present appraisal system

1-Fully satisfied

2-Satisfied

3-Cant say

4-Dissatisfied

10- Employee perception as to the frequency of appraisal

1- Once during the service period

2-continuous

3-Never

99
4-Cant say
11- If continuous appraisal what should be the gap between two appraisal period?
1- Quarterly

2-Half yearly

3-Yearly

12- How Performance Appraisal affects the productivity of the employees?

1- +Feedback

2- -Feedback

3- Neutral

13- Who should do the appraisal?

1- Superior

2- Peer

3- Subordinate

4- Self-Appraisal

5- Consultant

6- All of the above

7- Superior +Peer

14- Does appraisal help in polishing skills and performance area?

1-Yes

2- No

3- Somewhat

15- Does personal bias creeps-in while appraising an employee?

1-Yes

2- No

100
16- For given a chance, would employees like to review the current appraisal technique?

1-Yes

2- No

3- Cant say

101